Tag: commercial applications

Questions Related to commercial applications

Book-keeping is mainly related to _________.

commercial applications generally accepted accounting principles (gaap) distinction between accounting and book-keeping distinction between book-keeping and accounting meaning and objectives of accounting

  1. recording of financial data

  2. designing the systems in recording, classifying and summarizing the recorded data

  3. interpreting the data for internal and external users

  4. all of the above

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Correct Option: A
Explanation:

Book keeping is that branch of knowledge which tells us how to keep a record of financial transactions. The need for recording such transactions arises because it is difficult to remember the various financial transactions. 

Book  Keeping is mainly related to recording of financial data.

Absorption costing technique is also termed as ___________________.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. Traditional or full cost method

  2. Contribution in Marginal costing

  3. Direct costing technique

  4. Incremental costing technique

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Correct Option: A
Explanation:

Absorption costing, is also termed as Traditional or full costing method , it includes everything that is a direct cost in producing a good in its cost centre.

Cost, which is related to specific cost object and economically traceable, will be classified as ____________.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. direct cost

  2. indirect cost

  3. line cost

  4. staff cost

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Correct Option: A
Explanation:

 A direct cost is a cost that can be completely attributed to the production of specific goods or services.

Aggregate of direct costs is known as _________.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. Direct material costs

  2. Direct wages

  3. Direct expenses

  4. Prime cost

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Correct Option: D
Explanation:
 Direct Material  xxxx
 Direct Labor  xxxx
 Direct Expense  xxxx
 PRIME COST  XXXX
   

Variable cost per unit ___________________.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. Remains fixed

  2. Fluctuates with volume of production

  3. Varies in consideration with the volume of sales

  4. None of the above

Show answer
Correct Option: B
Explanation:

Cost may be classified as fixed cost and variable cost.  


Fixed cost is that cost which remains constant in terms of value. It does not change with the level of production. For example, rent or salary.

Variable cost is just opposite to fixed cost. Its fixed in terms of per unit but fluctuate with the level of production. For example, raw material cost.

The work of factory employees that can be physically associated with converting raw material into finished goods is classified as ________________.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. Manufacturing overhead

  2. Indirect materials

  3. Indirect labour

  4. Direct labour

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Correct Option: D
Explanation:

Employees who are involved directly in to the production activity are direct labor. The cost of labor is directly associated to a specific unit or cost or product.

The principle types of inventories are raw materials, ___________ and finished goods.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. Processed materials

  2. Goods-in-progress

  3. Stored goods

  4. Goods for dispatch

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Correct Option: B
Explanation:

Inventories may be classified as raw material, work in progress and finished goods. Goods which is partly finished is considered as goods in progress or work in progress. 

When factory overhead control account has an ending debit balance, factory overhead was ___________.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. Over applied

  2. Under applied

  3. Both A and B

  4. None of the above

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Correct Option: B
Explanation:

This is the situation in which the overheads applied to a product is less than the actual overhead incurred. This results in the overheads having a debit balance.

When _________ is used on the basis of budgeted overheads and the rate is applied to the actual base, the actual overhead expenses may be different from the charged overheads.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. A predetermined rate

  2. Actual rate method of absorption

  3. Both A and B

  4. None of the above

Show answer
Correct Option: A
Explanation:

A predetermined rate of overhead is calculated by dividing the estimated overhead cost by the estimated number of hours. It refers to the estimation hence actual overheads may be different from the charged overheads.

________ forms part of cost of production.

commercial applications fundamental concepts of cost meaning, elements and classification of cost methods of costing cost accounting: an introduction

  1. Abnormal waste

  2. Normal waste

  3. Both A and B

  4. None of these

Show answer
Correct Option: B
Explanation:

Wastage can be classified as normal waste and abnormal waste. There is a part of input which constitutes as waste in the normal course of production. This kind of waste is considered as normal waste, the value of which should be recorded as part of cost of production.