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B Com Exam  >  B Com Tests  >  Test: Material Cost - B Com MCQ

Test: Material Cost - B Com MCQ


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10 Questions MCQ Test - Test: Material Cost

Test: Material Cost for B Com 2024 is part of B Com preparation. The Test: Material Cost questions and answers have been prepared according to the B Com exam syllabus.The Test: Material Cost MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Material Cost below.
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Test: Material Cost - Question 1
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Control over material is important to prevent which of the following?

Detailed Solution for Test: Material Cost - Question 1
Control over material is necessary to prevent pilfering and theft, excessive purchase of materials, and improper use of material. Effective control ensures that materials are used efficiently and that there is no unnecessary expenditure or wastage.
Test: Material Cost - Question 2
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What is the purpose of controlling material from deterioration and waste?

Detailed Solution for Test: Material Cost - Question 2
Controlling material from deterioration and waste is necessary to save storage space and costs. By preventing materials from deteriorating or being wasted, companies can optimize their storage space and reduce unnecessary expenses.
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Test: Material Cost - Question 3
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Which of the following is an important requirement of effective material control from an accounting point of view?

Detailed Solution for Test: Material Cost - Question 3
From an accounting point of view, effective material control requires proper storage facilities, regular supply to production departments, and a running balance of the value of materials on hand. These measures ensure accurate accounting and control over material usage.
Test: Material Cost - Question 4
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What does replenishment of stock involve?
Detailed Solution for Test: Material Cost - Question 4

Replenishment of stock involves restocking stores to ensure efficient functioning, regulating the inflow and outflow of materials, and preventing overstocking and blocking of capital funds. It is crucial to maintain a steady flow of materials to production departments without excessive stock or shortages.

Test: Material Cost - Question 5
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What is the order level/reorder level in relation to an item of stock?
Detailed Solution for Test: Material Cost - Question 5
The order level/reorder level is the point at which purchase orders are initiated for an item of stock. It is the level at which it becomes essential to replenish the stock to avoid shortages and ensure a continuous supply of materials.
Test: Material Cost - Question 6
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How is the maximum stock level determined?
Detailed Solution for Test: Material Cost - Question 6
The maximum stock level is determined by considering factors such as minimum rates of consumption, lead time, economic ordering quantity, availability of funds and storage space. It is important to establish the maximum quantity of an item of material that can be held in stock at any time to avoid excess stock and associated costs.
Test: Material Cost - Question 7
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What is the purpose of the minimum stock level?
Detailed Solution for Test: Material Cost - Question 7
The purpose of the minimum stock level is to maintain a minimum quantity of stock to ensure uninterrupted production. By having a minimum stock level, companies can avoid production delays or disruptions due to non-availability of materials.
Test: Material Cost - Question 8
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What is the danger level in relation to stock?
Detailed Solution for Test: Material Cost - Question 8
The danger level is the level below the minimum stock level and represents a stage where immediate steps are taken to restock. If the stock reaches the danger level without replenishment, it indicates that production may be completely halted due to material shortages.
Test: Material Cost - Question 9
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What is the purpose of stock verification?
Detailed Solution for Test: Material Cost - Question 9
Stock verification serves the purpose of preventing pilferage and fraudulent practices, ensuring accuracy of stock records, and reconciling stock records with physical quantities. It is an essential process to maintain control over inventory and identify any discrepancies.
Test: Material Cost - Question 10
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What is the adjustment for inventories in accounting?
Detailed Solution for Test: Material Cost - Question 10
The adjustment for inventories in accounting involves matching the cost of goods sold or the cost of purchases with revenue. This ensures that the cost of inventory is accurately reflected in the financial statements and aligns with the accrual concept of accounting.
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