JKSSB Accounts Assistant (Finance) - Cost Accounting, Budgetary Control & Developments in Accounting Practice Test 50 MCQs

JKSSB Accounts Assistant (Finance) - Cost Accounting, Budgetary Control & Developments in Accounting Practice Test

JKSSB Accounts Assistant (Finance) - Cost Accounting, Budgetary Control & Developments in Accounting Practice Test

Targeted 50 MCQ Practice Module focusing on: Cost Accounting Fundamentals, Costing Methods & Techniques, Cost Management & Budgetary Control, and Recent Developments in Accounting.

Select your answers and click Submit Assessment Answers at the bottom to calculate your total score and review explanations.

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SECTION I: Cost Accounting - Fundamentals & Elements of Cost [Questions 1 to 15]
1. Cost Accounting is primarily concerned with:
Explanation: Cost Accounting is the process of accounting for cost, which begins with recording expenditure and ends with ascertainment and control of cost.
2. Which of the following is the correct classification of the three basic elements of cost?
Explanation: Every cost, however it behaves, is ultimately traceable to one of three elements: Material, Labour, and Expenses.
3. A cost that can be conveniently and wholly identified with a particular product, job, or process is called:
Explanation: Direct costs (direct material, direct labour, direct expenses) are traceable directly to a specific cost unit.
4. Prime Cost is calculated as:
Explanation: Prime Cost is the aggregate of all direct costs: Direct Material + Direct Labour + Direct Expenses.
5. Indirect expenses incurred in running the factory, such as factory rent and depreciation of plant, are classified as:
Explanation: Costs incurred within the factory premises for production purposes, other than direct costs, are Factory/Works Overheads.
6. A cost which remains constant in total regardless of the level of output, within a relevant range, is called:
Explanation: Fixed costs (e.g., rent, salaries) do not change with the volume of production within a given capacity range.
7. Electricity bill consisting of a fixed minimum charge plus a variable charge based on units consumed is an example of:
Explanation: Semi-variable costs contain both a fixed element and a variable element that changes with output/usage.
8. A unit of quantity of product, service, or time in relation to which costs may be ascertained is called a:
Explanation: A Cost Unit is the measurable unit of product/service used for cost ascertainment, e.g., per tonne, per kWh, per bed-day.
9. A location, person, or item of equipment for which cost is ascertained and used for cost control purposes is known as a:
Explanation: A Cost Centre is a segment of an organisation (department, machine, person) to which costs are allocated for control and analysis.
10. Which statement is prepared to show the various components of the total cost of a product in a tabular, analytical form?
Explanation: A Cost Sheet is a periodical statement showing the various elements of cost building up to Prime Cost, Works Cost, Cost of Production, and Total Cost.
11. In a Cost Sheet, "Works Cost" (Factory Cost) is arrived at by adding which item to Prime Cost?
Explanation: Works Cost = Prime Cost + Factory/Works Overheads (adjusted for stock of work-in-progress).
12. Cost of Production is obtained by adding which overheads to Works Cost?
Explanation: Cost of Production = Works Cost + Office and Administration Overheads.
13. A costing technique that pre-determines costs based on efficient operating conditions and compares them with actual costs to find variances is called:
Explanation: Standard Costing sets predetermined standard costs and analyses variances between standard and actual cost for control purposes.
14. A costing technique under which only variable costs are charged to products/services and fixed costs are treated as period costs is called:
Explanation: Marginal Costing charges only variable costs to cost units; fixed costs are written off in full against the period's contribution.
15. The point at which total sales revenue exactly equals total cost, resulting in neither profit nor loss, is called:
Explanation: Break-Even Point (BEP) is the level of activity where total revenue equals total cost, i.e., zero profit/loss.
SECTION II: Methods & Techniques of Costing [Questions 16 to 30]
16. Which method of costing is used when production is carried out as per specific customer orders, each treated as a distinct unit?
Explanation: Job Costing is applied where production is undertaken against specific orders, and each job is treated as a separate cost unit.
17. A group of identical products manufactured together as one lot and treated as a single cost unit is costed under:
Explanation: Batch Costing treats a batch (group of identical units produced in one production run) as the cost unit; cost per unit is found by dividing total batch cost by number of units.
18. Costing method suitable for large, long-duration projects such as construction of buildings, bridges, and dams is:
Explanation: Contract Costing is a variant of job costing applied to large-scale contracts (construction, shipbuilding) usually executed at the client's site over a long period.
19. Costing method used in industries like sugar, chemicals, and textiles where a product passes through a series of continuous stages of production is called:
Explanation: Process Costing is used where production is continuous and the product passes through two or more distinct processes before completion.
20. Costing method applied by service organisations such as transport companies, hospitals, and hotels is known as:
Explanation: Operating/Service Costing is used by undertakings rendering services (e.g., transport, power, hospitals) rather than manufacturing tangible goods.
21. Costing method applicable to industries producing a single product on a continuous basis, such as mining, cement, and brick-making, is called:
Explanation: Unit (Output) Costing is used where a single article or a few similar grades of a single product are produced continuously.
22. When more than one method of costing is combined for costing a complex product having several assembled parts (e.g., a car or an aircraft), it is called:
Explanation: Multiple/Composite Costing combines two or more costing methods where a product involves multiple components each costed differently.
23. Under Absorption Costing, fixed factory overheads are treated as:
Explanation: Under Absorption Costing, both fixed and variable manufacturing costs are absorbed into product cost and hence form part of closing stock valuation.
24. "Contribution" in Marginal Costing is calculated as:
Explanation: Contribution = Sales - Variable Cost. It first covers fixed costs, and the balance thereafter represents profit.
25. The Profit-Volume (P/V) Ratio is expressed as:
Explanation: P/V Ratio = (Contribution ÷ Sales) × 100. It measures the rate at which contribution increases with sales.
26. Margin of Safety represents:
Explanation: Margin of Safety = Actual Sales - Break-Even Sales; it indicates the cushion available before the business starts incurring losses.
27. The order quantity of material that minimises the total of ordering cost and carrying cost is known as:
Explanation: EOQ is that order size at which the sum of ordering costs and carrying costs is at its minimum.
28. Under a period of rising prices, which inventory valuation method shows a higher closing stock value and lower cost of goods sold?
Explanation: Under FIFO, older (cheaper) costs are charged to cost of goods sold first during rising prices, leaving closing stock valued at recent, higher prices.
29. The rate at which employees leave and are replaced in an organisation over a period is called:
Explanation: Labour Turnover measures the rate of change in the labour force during a given period, expressed as a percentage.
30. The time for which wages are paid to workers but during which no direct production takes place (e.g., machine breakdown, power failure) is called:
Explanation: Idle Time is the difference between time paid for and time actually utilised in production, caused by normal or abnormal factors.
SECTION III: Cost Management - Budgetary Control [Questions 31 to 42]
31. A Budget is best defined as:
Explanation: A Budget is a financial and/or quantitative statement, prepared and approved prior to a defined period of time, of the policy to be pursued during that period.
32. Budgetary Control refers to:
Explanation: Budgetary Control is a system of controlling costs through budgets, involving continuous comparison of actual with budgeted results and acting on variances.
33. A summary budget that consolidates all the functional budgets (sales, production, purchase, cash, etc.) of an organisation is called the:
Explanation: The Master Budget is the consolidated summary of all functional budgets, ultimately presenting a budgeted Profit & Loss Account and Balance Sheet.
34. A budget that forecasts the expected receipts and payments of cash over a specified future period is called a:
Explanation: A Cash Budget forecasts cash inflows and outflows to ensure the organisation maintains adequate liquidity.
35. A budget designed to change in accordance with the actual level of activity attained is called a:
Explanation: A Flexible Budget is designed to furnish budgeted costs for any level of activity actually attained, distinguishing fixed and variable elements.
36. A budget prepared for one level of activity only, which does not change with actual volume achieved, is called a:
Explanation: A Fixed Budget remains unchanged irrespective of the level of activity actually attained, making it less useful for cost control when volumes fluctuate.
37. A budgeting technique where every item of expenditure must be justified afresh for each new budget period, starting from a "zero base" rather than the previous year's figures, is known as:
Explanation: Zero-Base Budgeting requires every expenditure to be justified from scratch each period, rather than simply adjusting the prior year's budget.
38. Among the functional budgets, which one is generally regarded as the starting point ("key factor" budget) for preparing the Master Budget?
Explanation: Since sales is usually the limiting/key factor, the Sales Budget is normally prepared first, and all other functional budgets are built around it.
39. The difference between budgeted figures and actual figures, analysed to identify areas needing corrective action, is termed:
Explanation: Budget Variance is the difference between the budgeted amount and the actual amount, which management analyses to take corrective/control action.
40. A responsibility centre held accountable for both the costs incurred and the revenue earned, but not for the investment made, is called a:
Explanation: A Profit Centre's manager is responsible for both costs and revenues (i.e., profit), while an Investment Centre also holds responsibility for capital invested.
41. A budgeting approach that presents budgets in terms of functions, programmes, and activities rather than just objects of expenditure, linking inputs to physical outputs/performance, is called:
Explanation: Performance Budgeting correlates physical/performance targets with financial outlays for programmes and activities, commonly used in government departments.
42. A budget that is continuously updated by adding a further period (e.g., a month or quarter) as the earlier period expires, so that it always covers a full future cycle, is known as a:
Explanation: A Rolling (Continuous) Budget is perpetually updated by dropping the period just completed and adding a new period, keeping the budget horizon constant.
SECTION IV: Recent Developments in Accounting [Questions 43 to 50]
43. The branch of accounting concerned with identifying, measuring, and reporting the value of employees as an organisational asset is called:
Explanation: Human Resource Accounting attempts to measure and report the cost/value of human resources as assets of an organisation.
44. Accounting that adjusts historical financial statements for changes in the general price level (purchasing power of money) is known as:
Explanation: Inflation (Price Level) Accounting restates financial statements to reflect current purchasing power rather than historical cost, correcting distortions caused by rising prices.
45. Accounting that reports on an organisation's activities and their effect on society, including environmental and community welfare impact, is called:
Explanation: Social Responsibility Accounting measures and reports the social costs and benefits generated by an organisation's activities, beyond pure financial performance.
46. An accounting system that segments the organisation into responsibility centres and evaluates each manager based on controllable costs/revenues assigned to them is called:
Explanation: Responsibility Accounting assigns accountability to individual managers for the revenues, costs, or investments under their control, enabling performance evaluation by responsibility centre.
47. The specialised branch of accounting that applies investigative and analytical skills to detect fraud, financial irregularities, and is often used as evidence in legal proceedings, is known as:
Explanation: Forensic Accounting integrates accounting, auditing, and investigative skills to examine financial records for evidence of fraud suitable for litigation or legal proceedings.
48. A standardised, machine-readable digital language used globally for electronic communication and filing of business and financial reporting data (e.g., with regulators like MCA/SEBI) is called:
Explanation: XBRL is an XML-based standardised language that enables companies to tag and electronically file financial statements in a uniform, machine-readable format, now mandated for many statutory filings.
49. Modern accounting software that stores financial data on remote servers, allowing real-time, multi-location access via the internet rather than local desktop installation, reflects the development of:
Explanation: Cloud-based accounting software (e.g., web-hosted ERP/accounting packages) allows real-time, remote, multi-user access to financial data over the internet, a key modern development in accounting.
50. The emerging branch of accounting that identifies, measures, and discloses the cost of a company's impact on natural resources and the environment (e.g., carbon emissions, resource depletion) is called:
Explanation: Green (Environmental) Accounting incorporates the cost of environmental impact and depletion of natural resources into financial reporting and decision-making.

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