Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Fundamentals of Financial and Cost 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. Which of the following is a primary objective of financial accounting? To determine the cost of production To provide financial information to external users To calculate the tax liability To determine the value of inventories None 2. What does a Trial Balance primarily check? Correctness of the financial statements Arithmetic accuracy of ledger balances Calculation of profit and loss Classification of assets and liabilities None 3. Which of the following is NOT included in the Profit and Loss Account? Revenue from sales Cost of goods sold Rent expenses Capital expendit None 4. The accrual basis of accounting recognizes revenue when: Cash is received Goods are sold The order is received The payment is due None 5. Which of the following is a feature of the 'double-entry system of accounting'? One entry is made for each transaction The system records only income and expenditure Every transaction has a dual effect, with two entries It is not used for preparing financial statements None 6. Which of the following is an example of capital expenditure? Rent of office Salaries of employees Purchase of machinery Advertising expenses None 7. What is the formula for calculating Gross Profit? Sales - Cost of Goods Sold Sales - Operating Expenses Sales - Net Income Sales - Depreciation None 8. Which accounting method is used to calculate depreciation where the expense is the same each year? Declining Balance Method Sum of the Years' Digits Method Straight-Line Method Units of Production Method None 9. Which of the following is a method of inventory valuation? FIFO LIFO Weighted Average All of the above None 10. Which of the following statements is true about the Balance Sheet? It is prepared on the basis of trial balance It shows the financial position of the company over a period of time It summarizes the profit and loss of the company It is prepared for the entire year None 11. What is the correct order for preparing financial statements? Trial Balance → Balance Sheet → Profit and Loss Account Profit and Loss Account → Balance Sheet → Trial Balance Trial Balance → Profit and Loss Account → Balance Sheet Profit and Loss Account → Trial Balance → Balance Sheet None 12. What is the accounting treatment for a prepaid expense? Debit expense, Credit asset Debit asset, Credit expense Debit revenue, Credit asset Debit liability, Credit expens None 13. Which of the following is an example of a contingent liability? A loan payable A warranty liability Rent payable Bank overdraft None 14. Which of the following items would NOT be found in the income statement? Sales revenue Retained earnings Cost of goods sold Interest expense None 15. What is the basic assumption in financial accounting? Going concern Historical cost Realization Accrual None 16. In the case of inventory, the 'lower of cost or market' rule applies to which of the following? Purchase price Valuation of inventory Depreciation Net realizable value None 17. Which of the following is NOT a part of current liabilities? Accounts payable Short-term loans Bonds payable Accrued expenses None 18. The matching principle in accounting is associated with: Matching costs with revenues Matching expenses with liabilities Matching assets with liabilities Matching income with capital None 19. Which of the following would NOT be considered an accounting concept? Going Concern Historical Cost Entity Concept Inflation Accounting None 20. What is the treatment for an 'outstanding expense' in financial accounting? Debit expense, Credit liability Debit asset, Credit expense Debit liability, Credit expense Debit revenue, Credit asset None 21. Which of the following is NOT an element of cost? Direct materials Direct labor Cost of capital Overhead None 22. What is the formula for calculating Prime Cost? Direct materials + Direct labor + Overhead Direct materials + Direct labor Direct materials + Overhead Direct labor + Overhead None 23. What is the purpose of a cost sheet? To determine the gross profit To summarize costs for pricing decisions To calculate net income To prepare a balance sheet None 24. Which of the following is an example of fixed cost? Raw material cost Commission on sales Rent of factory building Direct labor cost None 25. The cost of labor that can be traced directly to a product is called: Indirect labor Direct labor Idle labor Overtime labor None 26. What is the basis for allocating overheads in job costing? Material cost Labor cost Machine hours All of the above None 27. Which of the following is an example of a variable cost? Rent of factory building Electricity cost based on production Depreciation on machinery Salaries of managers None 28. Which method is used to calculate overhead absorption? Direct labor rate method Machine hour rate method Percentage of prime cost method All of the above None 29. Which of the following is an objective of cost control? Reducing costs to maximize profits To increase production levels To prepare financial statements To minimize the selling price None 30. The break-even point is the level of sales where: Total costs equal total revenue Total revenue exceeds total costs Fixed costs equal variable costs Profit is maximized None 31. Which of the following would be classified as an indirect cost in a manufacturing company? Direct material Factory rent Direct labor Sales commissions None 32. Which cost is included in 'overhead' costs? Direct materials Direct labor Factory supervisor’s salary Sales expenses None 33. Which costing method is most appropriate for a company that produces a large number of identical units? Job costing Process costing Activity-based costing Marginal costing None 34. What is the cost of producing an additional unit of product under marginal costing? Total cost per unit Variable cost per unit Fixed cost per unit Both fixed and variable cost None 35. Which of the following is a feature of standard costing? It is based on actual costs It uses predetermined costs for comparison It eliminates variances It applies only to variable costs None 36. Which of the following is NOT a purpose of cost accounting? Price determination Profit analysis External reporting of financial position Cost control and reduction None 37. In which costing system are costs accumulated by job orders? Job order costing Process costing Activity-based costing Standard costing None 38. In cost-volume-profit analysis, the contribution margin is: Sales minus fixed costs Sales minus variable costs Sales minus total costs Sales minus gross profit None 39. Which of the following is an assumption made in cost-volume-profit analysis? Fixed costs change with sales volume Variable costs do not change with production level Prices of goods sold change with the sales volume All costs are fixed None 40. Which of the following is NOT part of the cost of production in manufacturing? Direct labor Depreciation on equipment Sales commissions Direct materials 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. 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