AIMA Management Control System Assignment

AIMA Online Assignments

Management Control System (FM02)

Note :- The answers are boldly marked

Question 1:- The primary purpose of the balance sheet is to                       

a)      measure the net income of a business up to a particular point in time.                       

b)      report the difference between cash inflows and cash outflows for the period.                                  

c)       report the current value of the business.                       

d)      report the financial position of the reporting entity at a particular point in time.                            

Question 2:- Financial accounting             

a)       provides information primarily for external decision makers.                        

b)      is required for corporations but probably would not be done by other business entities.                       

c)       provides information primarily for the use of managers of the company.                       

d)      has been practiced in this country for approximately the last 15 years.                       

Question 3:- The margin of safety can be expressed as:

a)       The excess of stocks held over the expected demand                       

b)      The difference between actual and budgeted output                       

c)       The difference between actual output and the break even point                             

d)      The excess of selling price over cost of sales                       

Question 4:- An example of a semi-variable cost would be:                          

a)       Electricity costs                       

b)      Supervisor Salary                       

c)       Direct Material                       

d)      Insurance cost                       

Question 5:- The master budget does NOT contain which of the following?                         

a)       operating budget                       

b)      financial budget                       

c)       sales budget                       

d)      All of the above                        

Question 6:- Costing can be used in the field of:                               

a)       Manufacturing Industries                       

b)      Service Industries                       

c)       Trading firms                       

d)      All of the above                       

Question 7:- For a business, an example of an internal decision maker is               

a)       a loan officer at a bank.                       

b)      one of the business's managers.                        

c)       one of the business's long-term customers.                       

d)      a supplier who sells goods to the company on an account.                                

Question 8:- For a business, a supplier                  

a)       is a company or individual that owns shares of the business.                       

b)      provides goods and services used by the business.                       

c)       makes loans to the company to help finance its activities.                       

d)      is a company or individual to whom the business sells goods or services.                              

Question 9:- A responsibility center where the manager is accountable for only the revenues and costs is a(n)                  

a)       cost center.                       

b)      revenue center.                        

c)       investment center.                       

d)      profit center.                       

Question 10:- Sunk cost are generally –

a)       Variable cost                       

b)      Fixed cost                       

c)       Production cost                        

d)      Relevant cost                       

Question 11:- For EOQ which of the following is true:                     

a)       Total cost is minimum                       

b)      Ordering cost is equal to carrying cost                                   

c)       Both A & B                       

d)      None of the above                       

Question 12:- Which of the following step is the 3rd step towards budgeting process?   

a)       Forecasting                        

b)      Determination of Principle budget factor                       

c)       Decision about the removal of constraints                       

d)      Construction of budget on agreed basis                       

Question 13:- In the long run a business must:                  

a)       Charge a price that covers both fixed and variable costs                               

b)      Charge a price that covers its variable costs only                       

c)       Charge a price that covers its fixed costs only                       

d)      Charge a price that leads to a positive contribution                       

Question 14:- Which of the following is not considered to be a liability?                 

a)       accounts payable                       

b)      notes payable                        

c)       wages payable                       

d)      cost of goods sold                       

Question 15:- Accounting information developed primarily for internal decision makers is called                               

a)       financial accounting.                       

b)      management accounting.                       

c)       risk accounting.                       

d)      auditing                       

Question 16:- Which of the following would NOT lead to an increase in net cash flow?                   

a)       Larger sales volume                        

b)      Higher selling price                       

c)       Charging of lower depreciation                       

d)      Reduced material cost                       

Question 17:- When a budget is administered wisely, it will         

a)       provide a framework for performance evaluation.                        

b)      discourage managers and employees.                       

c)       eliminate coordination and communication between subunits.                                 

d)      discourage strategic planning.                       

Question 18:- Which of the following is one of the ways variances can help management implement and evaluate strategies?                         

a)       early warning                       

b)      performance evaluation                        

c)       evaluating strategy                       

d)      All of the above                       

Question 19:- Which of the following reports the cash inflows, cash outflows, and change in cash for a period?                     

a)       Income statement.                       

b)      Balance sheet.                       

c)       Statement of cash flows.                        

d)      Statement of retained earnings                       

Question 20:- Which of the following is true for the manufacturing overhead budget?                   

a)       Provides a schedule of all costs of production other than direct materials and direct labor                   

b)      Includes both variable and fixed costs associated with overhead                        

c)       Depreciation has to be deducted as a non-cash expense in order to determine the level of cash required for overhead                           

d)      All of the given options                       

Question 21:- Most businesses earn revenues                  

a)       when they collect accounts receivable.                       

b)      through sales of goods or services to customers.                             

c)       by borrowing money from a bank.

d)      by selling shares of stock to stockholders.                       

Question 22:- A budget that requires management to justify all expenditures, rather than just changes from the previous year is referred to as:    

a)       Master budget                        

b)      Zero-based budget                        

c)       Perpetual budget                       

d)      Participative budget                       

Question 23:- The objective of costing is to –     

a)       Control cost                       

b)      Ascertain cost                       

c)       Classification of cost                       

d)      None of the above                       

Question 24:- The objective of Value chain analysis is –                 

a)       To ascertain the cost of each activity                       

b)      To control the cost of each activity                       

c)       To make each activity cost effective.                        

d)      To recognize the cost incurred for each activity.                               

Question 25:- A business's assets are                     

a)       the economic resources of the business.                       

b)      Reported at current cost.                       

c)       Reported on the income statement.                        

d)      equal to liabilities minus stockholders' equity.    

Question 26:- A Fixed budget is based on which of the following factor?   

a)       Theoretical capacity                       

b)      Actual capacity                        

c)       Normal capacity                       

d)      None of the given options                       

Question 27:- When closing stock is over valuate, what would its effect on profit?           

a)       Can not be determined with given statement                        

b)      It will decrease the profit                       

c)       No effect on profit                       

d)      It will Increase the profit                       

Question 28:- A Company reported the following amounts at the end of the first year of operations: capital Rs.100,000; sales revenue Rs.400,000; total assets Rs.300,000; Rs.20,000 dividends; and total liabilities Rs.160,000. Retained earnings and total expenses would be                             

a)       retained earnings Rs.60,000 and expenses Rs. 320,000.                       

b)      retained earnings Rs.140,000 and expenses Rs.240,000.                       

c)       retained earnings Rs.160,000 and expenses Rs.220,000.                        

d)      retained earnings Rs.40,000 and expenses Rs.340,000.                       

Question 29:- The financial statement that reports the financial position of a business is the                       

a)       income statement.                       

b)      cash flows statement                       

c)       balance sheet.                        

d)      footnotes to the financial statements.                       

Question 30:- The break even point in units is represented by the equation:                      

a)       Fixed costs / Variable costs                       

b)      Fixed costs / Contribution per unit                       

c)       Fixed costs / selling price per unit                       

d)      (Sales revenue - Fixed costs) / Contribution per unit