95. Which of the following does not come under the purview of working capital management? (A) Inventory Management (B) Debtors Management (C) Fixed Assets Management (D) Cash Management
Explanation: Working Capital Management deals with the efficient management of Current Assets and Current Liabilities. Fixed Assets Management is part of Capital Budgeting and Long-Term Investment Decisions.
96. Accounting Standards are mainly prepared for: (A) Management (B) Stakeholders (C) Customers (D) None of these
Explanation: Accounting Standards are rules and guidelines that ensure the reliability, consistency, and comparability of financial statements, which primarily serve the interests of stakeholders (investors, creditors, etc.) who use the statements to make informed decisions.
97. In a partnership firm, if the fixed capital method is followed, then the sale of assets to meet a capital deficit will be debited to: (A) Realization Account (B) Cash Account (C) Partner’s Capital Account (D) None of these
Explanation: When a partner has a debit balance (deficit) in their capital account during dissolution, the partner must bring in cash to clear it. The necessary adjustment is made through the Partner’s Capital Account (Credited when cash is brought in) to reflect the settlement of the deficit.
98. If goodwill is raised in the books of the firm at the time of admission of a new partner, it will be shared by the old partners in: (A) Old profit sharing ratio (B) New profit sharing ratio (C) Sacrificing ratio (D) Gaining ratio
Explanation: When goodwill is raised (created) in the books, it is credited to the Old Partners’ Capital Accounts in their Old Profit Sharing Ratio because the goodwill was generated by their past efforts.
99. Which of the following is an example of an external transaction? (A) Depreciation (B) Purchase of goods on credit (C) Interest on capital (D) All of these
Explanation: External transactions involve two separate entities (the business and an external party). The purchase of goods from a supplier on credit involves an external party. Depreciation and Interest on Capital are internal adjustments.
100. In India, Accounting Standards are formulated by: (A) Ministry of Corporate Affairs (MCA) (B) Securities and Exchange Board of India (SEBI) (C) Institute of Chartered Accountants of India (ICAI) (D) Reserve Bank of India (RBI)
Explanation: The Institute of Chartered Accountants of India (ICAI) is the primary body responsible for formulating Accounting Standards (AS) in India.
101. Which of the following is not a method of Inventory Valuation? (A) First in First out (FIFO) (B) Last in First out (LIFO) (C) Weighted Average (D) Annuity Method
Explanation: FIFO, LIFO, and Weighted Average are methods for valuing inventory. The Annuity Method is used for calculating depreciation on fixed assets.
102. Which of the following is not a source of Long-term Finance? (A) Retained Earnings (B) Trade Credit (C) Debentures (D) Equity shares
Explanation: Trade Credit (credit from suppliers) is a spontaneous source of Short-term Finance. Equity shares, Debentures, and Retained Earnings are sources of Long-term Finance.
103. Which of the following statement is not correct? (A) Break Even Analysis indicates at what level cost and revenue are equal. (B) Absorption costing is different from marginal costing. (C) Halsey premium plan was introduced by Frederick A. Halsey. (D) Rowan wage incentive plan was introduced by Frederick W. Taylor.
Explanation: Statement (D) is incorrect. The Rowan wage incentive plan was introduced by James Rowan. Frederick W. Taylor is known for the Differential Piece Rate System.
104. First in First out method is based on the assumption that: (A) the price of the last batch of materials issued are charged at the rate of the highest priced materials in stores (B) materials issued are charged at the rate of the highest priced materials in stores (C) the price of the first batch of materials purchased is used for all issues until all units from this batch have been issued. (D) None of the above
Explanation: The FIFO method assumes that the oldest units of stock (first in) are the first ones issued or sold (first out), and therefore, the cost of the oldest batch is applied to the issues until that batch is depleted.
105. The process of computing the amount of, and isolating the cause of variances between actual costs and standard costs is known as:
(A) Implicit Cost
(B) Explicit Cost
(C) Both (A) and (B)
(D) Variance analysis
Explanation: Variance analysis is the technique used in standard costing to determine the difference (variance) between the actual cost incurred and the predetermined standard cost, and to identify the underlying reasons for that difference.
106. Formula for calculating total earnings according to Halsey incentive plan is:
(A) Time Rate × Time Taken + 50% of (Time Saved × Time Rate)
(B) Time saved + Time allowed × Time Taken × Time Rate
(C) (Hours Worked × Hourly Rate) + bonus
(D) Actual output + standard output × 100
Explanation: The Halsey Premium Plan formula calculates total earnings as the guarantee time wage plus a bonus based on time saved. The standard formula is:
Answer: A