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Test: Cost Accounting Techniques- 2 - B Com MCQ


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10 Questions MCQ Test Cost Accounting - Test: Cost Accounting Techniques- 2

Test: Cost Accounting Techniques- 2 for B Com 2024 is part of Cost Accounting preparation. The Test: Cost Accounting Techniques- 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Cost Accounting Techniques- 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Cost Accounting Techniques- 2 below.
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Test: Cost Accounting Techniques- 2 - Question 1
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Which of the following statements is true about a non-integrated accounting system?

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In a non-integrated accounting system, separate ledgers are maintained for cost and financial accounts. This means that cost accounts only record transactions related to the product or service being provided, while financial accounts include a broader range of expenses and balance sheet items. Notional expenses like rent or interest on capital tied up in the stock are also dealt with in the cost accounts. This system allows for better tracking and analysis of costs related to production or sales.
Test: Cost Accounting Techniques- 2 - Question 2
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What is a special feature of the non-integrated accounting system?

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One special feature of the non-integrated accounting system is its ability to deal with notional expenses like rent or interest on capital tied up in the stock. By recognizing the interest on capital tied up in stock, the system helps stores and works managers be aware of the money being blocked because of holding stock. This feature allows for better financial management and decision-making within the organization.
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Test: Cost Accounting Techniques- 2 - Question 3
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What is the main difference between a non-integrated accounting system and an integrated accounting system?

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The main difference between a non-integrated accounting system and an integrated accounting system is the number of accounts maintained. In a non-integrated system, separate ledgers are maintained for cost and financial accounts, resulting in fewer accounts overall. On the other hand, an integrated system maintains a single set of accounts for cost and financial records, eliminating the need for separate profit and loss accounts. This integration allows for easier maintenance of accounts and avoids unnecessary complications.
Test: Cost Accounting Techniques- 2 - Question 4
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What is the benefit of an integrated accounting system?
Detailed Solution for Test: Cost Accounting Techniques- 2 - Question 4
One of the benefits of an integrated accounting system is that there is no need for reconciliation. Since a single set of accounting records is maintained for both cost and financial accounts, there is no possibility of different profit figures being reported. This eliminates the need for reconciling different sets of books and ensures accurate and consistent financial reporting. It also saves time by avoiding the maintenance of separate books for cost and financial records.
Test: Cost Accounting Techniques- 2 - Question 5
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Which of the following is a prerequisite for an integral accounting system?
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One of the prerequisites for an integral accounting system is perfect coordination between the staff responsible for the financial and cost aspects. In order to ensure an efficient processing of accounting documents, there needs to be seamless collaboration between the finance department and the cost department. This coordination allows for the integration of cost and financial accounts, resulting in a single set of accounts that provides necessary information for both costing and finance purposes.
Test: Cost Accounting Techniques- 2 - Question 6
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What is a fixed cost in accounting?
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In accounting, a fixed cost is a cost that is independent of the level of sales. It is related to the passage of time rather than the volume of sales. Examples of fixed costs include rent, salaries, insurance, and other costs that remain constant regardless of the level of sales. Fixed costs are important to consider in break-even analysis or cost-volume-profit analysis, as they do not vary with changes in sales volume and can have a significant impact on overall profitability.
Test: Cost Accounting Techniques- 2 - Question 7
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What is break-even analysis also known as?
Detailed Solution for Test: Cost Accounting Techniques- 2 - Question 7
Break-even analysis is also known as cost-volume-profit analysis or CVP analysis. It is a method used to study the effects of changes in fixed costs, variable costs, sales price, quantity, and mix on future profits. It helps in determining the break-even point, which is the level of sales or production at which total costs are equal to total revenue. By analyzing the cost-volume-profit relationship, organizations can make informed decisions about pricing, production levels, and overall profitability.
Test: Cost Accounting Techniques- 2 - Question 8
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What is a variable cost in accounting?
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In accounting, a variable cost is a cost that is directly related to the level of sales. It varies in proportion to the volume or level of activity. Examples of variable costs include the cost of goods sold and commissions, which increase or decrease as sales volume changes. Variable costs are important to consider in break-even analysis or cost-volume-profit analysis, as they directly impact the profitability of each unit or product sold.
Test: Cost Accounting Techniques- 2 - Question 9
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What is the break-even point in a business?
Detailed Solution for Test: Cost Accounting Techniques- 2 - Question 9
The break-even point in a business is the level of sales or production at which total costs and total revenue are equal. It is the point at which there is neither a profit nor a loss under varying levels of activity. The break-even point is important for managers as it indicates the minimum level of output or activity required to cover all expenses and start making a profit. It reflects the relationship between costs, volume, and profits and helps in decision-making regarding pricing, production levels, and overall financial performance.
Test: Cost Accounting Techniques- 2 - Question 10
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What is the relationship between fixed costs and variable costs in break-even analysis?
Detailed Solution for Test: Cost Accounting Techniques- 2 - Question 10
In break-even analysis, there is a relationship between fixed costs and variable costs. Fixed costs, such as rent and salaries, remain constant regardless of sales volume. They do not change with the level of activity. On the other hand, variable costs, such as the cost of goods sold and commissions, vary in direct proportion to sales volume. As sales increase, variable costs also increase, and vice versa. Understanding this relationship is crucial for determining the break-even point and analyzing the impact of changes in sales volume on costs and profits.
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