Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Financial AccountingTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. What is the correct formula for calculating return on assets (ROA)? Net income / Total assets Net income / Shareholder equity Total assets / Net income Operating profit / Total assets None 2. Which of the following is a direct expense? Rent of factory Wages of factory workers Office salaries Depreciation on office furniture None 3. Which of the following is an example of an abnormal loss in cost accounting? Loss due to fire Loss due to regular wear and tear Loss due to bad debts Loss due to shrinkage of stock None 4. Which of the following is considered a part of a company's equity? Long-term debt Share capital Current liabilities Deferred tax liabilities None 5. Which of the following is an example of a variable cost? Factory rent Direct materials Salaries of factory managers Depreciation on machinery None 6. Which of the following is the main difference between absorption costing and marginal costing? Marginal costing includes all fixed costs Absorption costing assigns fixed costs to products Absorption costing is used for external reporting Both absorption and marginal costing have the same treatment for fixed costs None 7. Which of the following is true about the equity method of accounting for investments? It is used when the investor owns less than 20% of the investee company It is used when the investor has significant influence over the investee company It is used for investments in subsidiary companies It applies only to equity securities listed on the stock exchange None 8. The purpose of preparing a trial balance is to: Identify errors in the accounting books Ensure that all financial statements are accurate Summarize income and expenses Allocate costs to different departments None 9. In the context of cost accounting, which of the following is true about absorption costing? It assigns all direct costs to the product It assigns only variable costs to the product It assigns both fixed and variable costs to the product It only assigns indirect costs to the product None 10. Which of the following represents a financial statement that summarizes a company's revenue, expenses, and profit or loss over a period? Balance sheet Cash flow statement Income statement Statement of changes in equity None 11. Which of the following is an example of a financing activity in the cash flow statement? Payment of wages Borrowing money from a bank Purchase of equipment Collection of receivables None 12. What is the purpose of a bank reconciliation statement? To match the company’s accounting records with the bank’s records To determine the company’s profit for the period To calculate the company’s tax liabilities To determine the financial position of the company None 13. Which of the following is true about cost accounting? It only deals with financial reporting It focuses on the determination of the cost of goods produced or services rendered It is governed by generally accepted accounting principles (GAAP) It is not concerned with cost control or cost reduction None 14. Which of the following is a characteristic of variable costs? They remain constant per unit as production increases They do not vary with production or sales levels They vary in total with changes in production levels They include fixed costs like rent None 15. Which of the following is an example of indirect labor? Wages of factory supervisors Wages of machine operators Wages of production workers Wages of workers in the warehouse None 16. In the context of a trading account, what is the formula for calculating gross profit? Sales – Cost of Goods Sold Sales – Expenses C) Net Income – Cost of Goods Sold Sales – Depreciation None 17. Which of the following is an example of a cash inflow from operating activities? Issuance of shares Repayment of a loan Payment from customers for goods sold Purchase of machinery None 18. What does the term 'break-even point' refer to in cost accounting? The point where a company’s total costs are covered by revenue The point where variable costs exceed fixed costs The point where a company’s profit is maximized The point where a company’s sales surpass its expenses None 19. Which of the following is not a method of costing? Job costing Process costing Marginal costing Standard costing None 20. Which of the following is an example of a capital expenditure? Rent payment Purchase of land and buildings Payment for utilities Salaries of administrative staff None 21. In a cost sheet, what is the difference between prime cost and works cost? Prime cost includes direct materials, direct labor, and factory overhead Works cost includes prime cost plus factory overhead Works cost includes all the expenses related to the administration of the company Prime cost only includes raw material costs None 22. Which of the following statements is true about a partnership firm? The firm is a separate legal entity from the partners Partners have limited liability for the firm’s debts Partners share profits and losses according to the partnership agreement A partnership firm is required to maintain audited financial statements None 23. Which of the following is true about depreciation? Depreciation is not charged on intangible assets Depreciation reduces the market value of an asset Depreciation is a non-cash expense deducted from profits Depreciation is calculated only on the basis of asset replacement cost None 24. Which of the following accounts would be classified as a long-term liability? Accounts payable Bank overdraft Debentures payable after five years Salaries payable None 25. Which of the following is a feature of a perpetual inventory system? Inventory is updated periodically Inventory records are maintained only at the end of the accounting period Inventory is updated continuously as transactions occur Inventory records are maintained at the discretion of management None 26. Which of the following is a source of long-term financing? Bank overdraft Short-term loans Issuance of shares Trade creditors None 27. Which of the following is a characteristic of marginal costing? It includes both fixed and variable costs in the cost of goods sold It separates fixed and variable costs for decision-making It is used for preparing financial statements It does not take fixed costs into account for calculating contribution margin None 28. What is the formula for calculating working capital? Total liabilities – Current liabilities Total assets – Total liabilities Current assets – Current liabilities Current assets + Fixed liabilities None 29. Which of the following is a disadvantage of using the LIFO method of inventory valuation during periods of inflation? It results in lower cost of goods sold It leads to a higher taxable income It does not match the actual cost of inventory It results in inventory being valued at older costs None 30. Which of the following is an example of a period cost in financial accounting? Raw materials Direct labor Administrative expenses Manufacturing overhead None 31. In cost accounting, the term ‘contribution margin’ refers to: Sales revenue minus fixed costs Sales revenue minus variable costs Variable costs minus fixed costs Total revenue minus total expenses None 32. The term ‘solvency ratio’ is used to measure a company’s ability to: Meet its short-term obligations Cover fixed costs with variable revenue Generate a sufficient return on assets Meet its long-term obligations None 33. Which of the following is a characteristic of a sole proprietorship? Limited liability for the owner The business is a separate legal entity The owner has complete control over the business The business must issue shares to raise capital None 34. Which of the following is an example of a contra liability account? Accumulated depreciation Discount on bonds payable Reserve for bad debts Unearned revenue None 35. Which of the following is an example of an internal control measure for managing cash? Reconciliation of cash accounts with bank statements Delaying payments to suppliers Encouraging employees to make cash purchases Keeping all cash transactions off the books None 36. Which of the following methods of accounting does not consider fixed costs for decision-making? Absorption costing Marginal costing Process costing Job costing None 37. Which of the following statements is correct about the double-entry system of accounting? It requires that every transaction is recorded in only one account It involves recording transactions in two accounts, with equal debits and credits It is not based on the accounting equation It is primarily used for external financial reporting None 38. Which of the following is an example of a current liability? Bonds payable in 5 years Accounts payable Retained earnings Common stock None 39. Which of the following is a method of cost allocation used in absorption costing? Direct allocation Activity-based costing Step-down method Factory overhead absorption None 40. In cost accounting, which of the following is considered a non-controllable cost? Direct material cost Administrative overhead Sales commission Rent for office space None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test.Look out for results and future opportunities.Stay Connected !! Your quiz time is about to finish. Few seconds left. 1 2 3 4 Time's upYou cannot switch tabs while taking this quiz!You are not allowed to switch tabs violation has been recorded.you cannot minimize full screen mode!You are not allowed to minimize full screen while taking this quiz, violation has been recorded.Access denied! To begin the quiz, please grant this quiz access to your camera.Time is Up!Time is Up!
