401 EPM MCQS

UNIT- 1

1. The term ‘performance management’ first came into wide use in the HR field in the year
a. 1970
b. 1980
c. 1990
d. 2000
2. Who proposes the following guiding principles for performance management?
a. Baron
b. Egan
c. William Glueck
d. Horgren
3. It is a disadvantage of performance management
a. Reduce the production of organization
b. Degrading of communication
c. Increases the skill of employees
d. Too much management commitment involves
4. “Performance management is, a means of getting better results by understanding and
managing performance within an agreed framework of planned goals, standards and
competence requirements. It is a process to establish a shared understanding about
what is to be achieved, and an approach to managing and developing people so that it
will be achieved.” It is said by:
a. Baron
b. Armstrong
c. Horngren
d. Foster
5. When goal setting, performance appraisal, and development are consolidated into a
single, common system designed to ensure that employee performance support a
company’s strategy, it is called ……………….
a. Strategic organizational development
b. Performance management
c. Performance appraisal
d. Human resource management
6. Performance management combines performance appraisal with ……………… to ensure
that employee performance is supportive of corporate goals.
a. Goal setting
b. Training
c. Incentive systems
d. All of the above
7. Managers following a performance management approach to appraisals will usually
meet with employees on a …………… basis.
a. Weekly
b. Monthly
c. Bi-annual
d. Yearly
8. The component of an effectively performance management process that communicates
the organization higher level goals throughout the organization and then translates
these goals into departmental goals is called ………………….
a. Role clarification
b. Goal alignment
c. Developmental goal setting
d. Direction sharing
9. The component of an effective performance management process that explain each
employee’s role in terms of his or her day-to-day work is called …………...
a. Role clarification
b. Goal alignment
c. Developmental goal setting
d. Direction sharing
10. When using goal setting in performance management, the goal should be ……………….
a. Difficult
b. Challenging
c. Doable
d. All of the above
11. Performance management is viewed as a process carried out as an
a. Once a year task
b. Twice a year activity
c. Ongoing process or cycle
d. None of above
12. Performance management is
a. The activity where a line manager sets objective for his/her staff
b. To develop punitive steps to address poor performance
c. To ensure all stakeholder requirements will be met
d. To comply with the requirements of HR
13. Planning of performance requires
a. Translating the job description into objective and measures
b. Assessing your culture
c. Setting the employee in place
d. Defining a development plan for employees
14. Maintaining performance includes
a. Checking up staff to ensure they perform optimally
b. Provide coaching and training where gaps exist
c. Informal feedback
d. Disciplining good performance
15. Key value drivers are
a. The assets of the company
b. The evaluation technique of managers
c. Formally reported in the annual report
d. The basis of strategy and operational focus areas
16. Benefits of a good PM system can include:
a. An effective HR department
b. Reduced labour costs
c. Focused development
d. Increases the salary
17. Key factors that can contribute to successful implementation are:
a. Do what the competition is doing
b. Finding the fault in the machines
c. To have a paper-less system
d. To be able to differentiate between poor and good performance
18. The following is important when giving feedback:
a. It should be forceful and personal to make an impact
b. It can be given to assist changing a person’s personal preferences
c. It should allow for a response from the recipient
d. It should be lengthy
19. Barriers of feedback can include:
a. It is vague and non-specific
b. Trust that is lacking
c. Avoidance of conflict
d. All of the above
20. Feedback will be effective when:
a. It makes a person aware of personality style and its impact on others
b. It is comparative (i.e comparing people with each other)
c. It is very specific and includes examples and consequences
d. It is neutral
21. It focuses on setting standards for the use of specific resources and on performance
tactics to achieve overall goals and objectives of the strategic and management plans. It
is also concerned primarily with the scheduling of detailed program activities.
a. Strategic planning
b. Operational planning
c. Management control
d. None of these
22. It provides the basic structure for coordinating the day-to-day activities of an
organization, encompassing all those activities involved in ensuring that the
organisation’s resources are appropriately used in the pursuit of goal and objectives.
a. Management control
b. Capital expenditure control
c. Operational control
d. Project control
23. …………………. entails the evaluation of alternative courses of action and the formulation
of policies that govern the acquisition, use and disposition of public resources.
a. Capital budgeting
b. Customer base
c. Responsibility accounting
d. Strategic planning
24. Rearrange the steps for performance management:
I. Draw up a performance agreement
II. Performance review
III. Draw up a performance and development plan
IV. Manage performance continually throughout the year
V. From the business plan, identify the requirements
a. i-ii-iii-iv-v
b. iii-v-ii-i-iv
c. v-ii-iii-iv-i
d. iv-i-iii-v-ii
25. Which of them is/are the advantage of performance management?
a. Increased performance of individuals and department
b. Succession and career planning
c. Recruitment and selection
d. All of these
26. A cost center is:
a. A production department where all production cost is aggregated
b. An area of the business accountable for both cost and revenues
c. The part of the business where all cost is paid to suppliers
d. An area for which cost are accumulated
27. An investment center is a responsibility center where the manager has control of:
a. Costs
b. Costs, profit and product quality
c. Costs, profit and assets
d. Costs and profits
28. Responsibility accounting aims to:
a. Allocate cost to all areas of a business
b. Ensure that costs become the responsibility of a specific manager
c. Reduce the costs that are department incurs
d. Ensure that the manager is punished if things go wrong
29. Which of the following best describe the fixed cost?
a. Increases proportionately without output
b. Has a direct relationship with output
c. Represent a fixed proportion of total costs
d. Remains constant irrespective of the level of activity
30. The operation of a responsibility accounting system usually involves each of the
following steps except:
a. Allocating common fixed costs among the responsibility centers that benefit from
these cost
b. The preparation of budget for each responsibility center.
c. The preparation of performance report, comparing the actual performance of each
responsibility center with the budgeted amount
d. Separate measurement of the performance of each responsibility center.
31. Contribution margin is equal to
a. Revenue, less variable cost and traceable fixed costs
b. Revenue, less variable cost and committed fixed cost
c. Revenue, less variable cost and controllable fixed costs
d. Revenue, less variable costs
32. Performance margin is equal to:
a. Revenue, less variable costs.
b. Revenue, less variable costs and traceable fixed costs.
c. Revenue, less variable cost and committed fixed costs.
d. Revenue, less variable cost and controllable fixed costs.
33. When an income statement is prepared by profit centers, costs traceable directly to a
cost center, such as the personnel department are:
a. Omitted from the income statement
b. Classified as common fixed costs.
c. Allocated among the profit centers based upon the number of employees in each
department
d. Classified as committed fixed cost and allocated among the profit center
34. In the long run, the contribution of a profit center to the overall profitability of the
business is best measured by the center’s:
a. Contribution margin
b. Performance margin
c. Responsibility margin
d. Taxable income
35. Which of the following is not an example of a responsibility center?
a. Cost center
b. Revenue center
c. Investment center
d. Contribution center
36. A manufacturer’s raw-material purchasing department would likely be classified as a:
a. Cost center
b. Revenue center
c. Investment center
d. Contribution center
37. Hitchcock corporation is in the process of overhauling the performance evaluation
system for its Los Angeles manufacturing division, which produces and sells part that are
 popular in the aerospace industry. Which of the following is least likely to be chosen to
evaluate the overall operations of the Los Angele division?
a. Cost center
b. Responsibility center
c. Profit center
d. Investment center
38. A cost center manager:
a. Does not have the ability to produce revenue
b. May be involved with the sale of new marketing programs to clients
c. Would normally be held accountable for producing an adequate return on invested
capital.
d. May be manager who oversees the operations of retail store
39. The telemarketing department of a residential remodelling company would most likely
be evaluated as a:
a. Cost center
b. Revenue center
c. Profit center
d. Investment centre
40. If the head of a hotel’s food and beverage operation is held accountable for revenue and
cost, the food and beverage operation would be considered an
a. Cost center
b. Revenue center
c. Profit center
d. Investment centre
41. Which of the following would have a low likelihood of being organized as a profit
center?
a. A movie theatre of a company that operates a chain of theatre
b. A maintenance department that changes user for its services
c. The billing department of an Internet Services Provider (ISP)
d. Both ‘C’ and ‘D’ above
42. The responsibility center in which the manager is held accountable the profitable use of
assets and capital is commonly known as
a. Revenue center
b. Profit center
c. Investment center
d. Contribution center
43. The Asian Division of a multinational manufacturing organization would likely be
classified as
a. Cost center
b. Revenue center
c. Profit center
d. Investment centre
44. Responsibility accounting system strive to:
a. Provide information to managers
b. Hold managers accountable for both controllable and non-controllable cost
c. Identify unfavourable variances
d. Provide information so that managers can make decisions that are in the best interest
of their individuals centers rather than in the best interests of the firm as a whole.
45. Controllable cost, as used in a responsibility accounting system, consist of:
a. Only fixed cost
b. Only direct material and direct labour
c. Those costs that a manager can influence in the time period under review
d. Those cost that are influenced by parties external to the organization
46. Which of the following types of organization provide the best indicator of
decentralization?
a. A company is organized into revenue centers.
b. A company is organized into cost centers.
c. A company is organized into profit centers.
d. A company is organized into investment centers.
47. Economic value added, or residual income is a measurement mainly used to evaluate
a. Cost center
b. Revenue center
c. Profit center
d. Investment centre
48. Which concept (or concepts) listed below is (are) consistent with traditional
responsibility accounting?
a. Vertical structure
b. Cross functional measurement
c. Bottom-up control
d. A and B
49. In relation to responsibility accounting controversy, goal displacement means
a. Assigning responsibility for profit rather than revenue and costs.
b. Assigning responsibility for financial result rather than activities and processes.
c. Assigning responsibility to individual rather than group.
d. Assigning functional responsibility rather than cross functional responsibility.
50. C. J. McNair’s concept of activity-based responsibility accounting emphasizes
a. Interdependence, outcomes, individual, and cost control.
b. Interdependence, processes, individual, and activities.
c. Interdependence, process, the organization, and activities
d. Independence, outcomes, the organization and cost control.
51. Decomposing, or separating, ROI into two parts provides the
a. Return on investment ratio and residual income ratio.
b. Net income to invest ratio and residual income & sales dollars to cost ratio.
c. Sales to net income ratio & investment to net income ratio.
d. Sales to investment ratio & net income to sales ratio.
52. Which investment basis for the ROI calculation tend to cause managers to dispose of
assets to soon?
a. Gross book value
b. Net book value
c. Replacement costs
d. A and B
53. Which investment basis for the ROI calculation tend to cause managers to dispose of
assets to long?
a. Gross book value
b. Net book value
c. Replacement costs
d. A and B
54. Residual income is
a. Income based on compound or annuity depreciation.
b. Income after subtracting interest on long term debt
c. Income after subtracting depreciation. D. income after adjusting assets to current
value
d. Income after subtracting a minimum desired amount of income.
55. Which measurement (or measurements) below would be favour large division over small
division if the division were ranked?
a. Return on investment
b. Residual income
c. Net income
d. a and b
e. b and c
56. which of the following represents arguments against traditional responsibility
accounting?
a. It tends to promote competition between segment of a company.
b. It tends to promote subsystem, or local optimization.
c. It tends to ignore many of the interdependencies within an organization
d. All of the above
57. Which of the following characteristics is not associated with traditional responsibility
accounting?
a. Assumes optimization of the parts will optimize the whole.
b. Assumes independence of the parts.
c. Places emphasis on the performance of individuals
d. Attempts to control processes
58. The characteristics of traditional responsibility accounting include
a. A vertical organizational structure.
b. A horizontal organizational structure.
c. A network organizational structure.
d. None of the above.
59. A report that accumulates the actual cost that a manager is responsible for and their
budgeted amounts is a:
a. Controllable expense report.
b. Responsibility accounting performance report.
c. Segmental accounting report.
d. Managerial cost report.
60. A profit center:
a. Incurs only indirect cost and directly generates revenues.
b. Incurs cost and directly generates revenue.
c. Incurs only indirect cost and generates revenue.
d. Incurs costs, but does not directly generate revenues.
61. A responsibility accounting performance report:
a. Only actual costs.
b. Only budgeted costs.
c. Both actual and budgeted costs.
d. Only direct cost
62. An accounting system that provides information that management can use to evaluate
the performance of a department’s manager is called a:
a. Managerial accounting system.
b. Financial accounting system.
c. Cost accounting system.
d. Responsibility accounting system.
63. A department that incurs costs without directly generating revenue is a:
a. Production center
b. Service center
c. Profit center
d. Cost center
64. The difference between a profit center and an investment center is
a. An investment center incurs cost, but does not directly generate revenues.
b. An investment center is responsible for effectively using center assets.
c. An investment center provides services to profit centers.
d. An investment center incurs no cost but does generate revenues.
65. Calculating return on total assets for an investment center is defined by the following
formula for an investment center:
a. Contribution margin/ending assets.
b. Contribution margin/average invested assets.
c. Net income/ending assets.
d. Net income/average invested assets.
66. Investment center managers are usually evaluated using performance measures
a. Based on assets only.
b. That combine assets and capital.
c. That combine income and assets.
d. Based on income only.
67. The Dupont analysis uses the following ratios except:
a. Debt ratio.
b. Profit margin.
c. Total asset turnover
d. Financial leverage.
68. The method of calculating return on assets which highlights the importance of sales,
profit margin and asset turnover is known as
a. The sales method
b. DuPont analysis
c. The Atman models
d. The Gordon models
69. The DuPont method return on assets uses two component ratios. What are they?
a. Inventory turnover, gross profit margin
b. Time interest earned, debt ratio
c. Return on equity, dividend pay-out
d. Net profit margin, total asset turnover
70. Which of the following would most likely cause a rise in net profit margin?
a. Increased sales
b. Decreased preferred dividends
c. Increased cost of sales
d. Decreased operating expenses
e. Decreased earnings per share
71. Which of the following could cause return on assets to decline when net profit margin in
increasing?
a. Sale of investment at year end
b. Increased turnover of operating assets
c. Decline in book value
d. A stock split
e. Purchase of a new building at year end
72. Return on investment measures:
a. Return to all suppliers of funds
b. Returns to all long-term creditors
c. Return to all long-term suppliers of funds
d. Return to stockholders
73. Which one is the principle of effective balance scorecard?
a. Believing in the BSC as a facilitator of organizational and cultural change.
b. Cascading the scorecard to team, division and functional levels
c. Developing appropriate budgeting, IT, communication and reward systems
d. All of the above
74. The company’s financial performance improves through two basic approaches
a. Employee growth and revenue
b. Revenue growth and productivity
c. Productivity and departments
d. Sales and shareholders
75. The Malcolm Baldrige Award was established in
a. 1983
b. 1978
c. 1987
d. 1991
76. Which of the following statements regarding flaws suffered by financial measures is not
correct?
a. They are hard to quantify.
b. They do little to motivate employees to improve accounting profits.
c. They are not effective in getting managers' attention.
d. They are useful in identifying operational problems.
e. None of the above.

77. The description of an organisation values, definition of responsibilities to stakeholders,

and identification of its major strategy is known as
a. Business level strategies.
b. Business model.
c. Mission statement.
d. Balanced scorecard.
78. The description of how different level of thyroid in the organisation must perform for
the organisation to achieve its goal is a:
a. Business level strategies.
b. Business model.
c. Mission statement.
d. Balanced scorecard.
79. What term is used to describe a set of performance targets and result that show how
well an organisation formed in meeting its objectives relating to its stakeholders?
a. Business level strategies.
b. Business model.
c. Mission statement.
d. Balanced scorecard.
80. If return on investment is measure used on the balanced scorecard, under which
perspective would it be listed?
a. Financial perspective
b. Customer perspective
c. Learning and growth perspective
d. Process perspective
81. Which of the following statements is true?
a. Balanced scorecard always has four perspective
b. Balanced scorecard can only be updated on an annual basis
c. Balanced scorecard can be used in mot-for-profit organizations
d. Balanced scorecard is a feedback mechanism
82. Which of the following statement is false? Balanced scorecard
a. Cannot be used in conjunction with budgetary control system
b. Can be cascaded to different level/parts of organisation
c. Are one type of performance dashboard
d. Can be used to produce strategy maps
83. Which of the following statement is correct?
a. One fundamental idea of balanced scorecards is to increase the number of
performance indicator used to manage the business.
b. Organisations sometimes use a ‘traffic-light’ system on their balanced scorecard to
help them prioritise their activities.
c. Balanced scorecards always report using the same time periods as the financial
accounting system.
d. The fundamental idea of balanced scorecards is to create corporate strategy.
84. The percentage of manufacturing processes with real-time feedback is a performance
measure under which perspective in the balanced scorecard?
a. Customer perspective
b. Financial perspective
c. Process perspective
d. Learning and growth perspective
85. Reengineering relates to which perspective in the balanced scorecard?
a. Learning and growth perspective
b. Financial perspective
c. Customer perspective
d. Process perspective
86. The complete balanced scorecard strategy map lists perspective along with sub items.
Identify the correct link for financial perspective.
a. Customer solutions.
b. Operations theme.
c. Strategic competencies
d. Productivity strategy
87. Identify the correct link for customer perspective in The Complete Balanced Scorecard
Strategy Map.
a. Regulatory and society theme
b. Customer solution
c. Strategic technologies.
d. Revenue growth strategy
88. Internal perspective is part of the Complete Balanced Scorecard strategy. Which is a
correct sub item for this perspective?
a. Regulatory and society theme.
b. Customer solution.
c. Strategic technologies.
d. Revenue growth strategy.
89. Learning and growth perspective: role for intangible assets – people, system, climate
and culture is part of BSC strategy. Identify which of the following is a sub item of
learning and growth perspective.
a. Improve shareholder value.
b. Low total cost.
c. Operations theme.
d. Strategic technologies.
90. The U.S. National Quality Award is named after
a. Genichi tanguchi.
b. Malcolm Baldrige.
c. W. Edwards deming.
d. Joseph juran.
91. Malcolm Baldrige national quality award is for (MBNQA).
a. International standard organization
b. Total productive maintenance
c. Total quality management
d. Total quality control.
92. Malcolm Baldrige national quality award has the following eligibility
categories/dimensions
a. Approach
b. Deployment
c. Result
d. Manufacturing service & small business
93. It is an operating division of firm which serves a distinct product-market segment or a
well-defined set of customers or a geographic area.
a. KPI
b. SBU
c. MBO
d. ABC
94. SBU have dimensions.
a. 4
b. 3
c. 2
d. 1
95. It is an advantage of SBUs
a. Decentralization of authority
b. Positive attitudes of managers
c. Assured evaluation of market
d. None of the above
96. Who said, “The essential task of management is to arrange organizational conditions and
methods of operations, so that people can achieve their own goals best by directing their
own efforts towards organizational objectives”.
a. L.C. Cropper
b. Douglas Magregor
c. Gartner
d. Vollman and Cordon

97. Transferring pricing is also referred as

a. Intracompany
b. Exchange price
c. Intra money
d. Extra divisional

98. They are the rules for fixing the right transfer price
a. Lower limit and medium limit
b. Medium limit and maximum limit
c. Minimum, medium and maximum limit
d. Minimum limit and maximum limit

99. When managers of subunits throughout an organization strive to achieve the goals set by
top management, the result is:
a. Goal congruence
b. Responsibility accounting
c. Strategic control
d. Planning and control

100. When a perfectly competitive market exists and the firm uses market based transfer
pricing, the firm can achieve all of the following except for:
a. Management effort
b. Subunit performance evaluation
c. Goal congruence
d. Price monopoly

101. A company that uses a separate transfer price for each division in a single transaction
is employing:
 a. Full cost pricing
b. Negotiated pricing
c. Market-based pricing
d. Dual pricing

102. If the selling subunit is operating at full capacity and can sell everthing
produced either internally or externally, it will only be willing to use a transfer
price set by:

a. Cost plus a mark-up

b. Variable costing

c. Negotiation

d. The market

103. Which transfer pricing method will preserve the subunit autonomy?

a. Cost-based pricing

b. Variable cost pricing

c. Negotiated pricing

d. Full-cost pricing

104. Transfer pricing is due to:

a. The operations of parallel or ‘grey’ marketers

b. Counter trading by countries

c. A way for international marketers to avoid paying tax

d. International marketers transferring goods and services in their organization

between different countries

105. When is goal congruence achieved?

a. When managers of subunits throughout the organization strive to achieve

goals set up by top management

b. When managers of subunits strive to achieve goals that will benefit their
particular subunits

c. When managers of subunits are directed toward achieving goals for their
subunits

d. When responsibility-accounting systems give managers of subunits

complete autonomy
106. Which of the following is a broad managerial approach consistent with an
emphasis on obtaining goal congruence?

a. Management by crisis

b. Management by objectives

c. Management through goal congruence

d. Just-in-time philosophy

107. Which is the formula for the general transfer-pricing rule?

a. Transfer price = additional outlay costs + opportunity cost

b. Transfer price = actual variable costs + opportunity cost

c. Transfer price = external market price – opportunity cost

d. Transfer price = external market price – additional outlay cost

108. Which of the Transfer pricing techniques will cause dysfunctional

decision-making behaviour?

a. General transfer pricing

b. Transfers based on external market prices

c. Transfers based on variable costs

d. Transfers based on full cost

109. Consistency between goals of the firm and the goals of its employees is:

a. Goal optimization

b. Goal conformance

c. Goal congruence

d. Goal dispersion

110. Which of the following is an example of business level strategies?

a. Diversification strategies

b. Diversification

c. Vertical integration

d. International expansion
111. ONE form of strategy that focuses on how the organisation will compete in
each of its business is

a. Business level strategy

b. Corporate level strategy

c. Renewal strategy

d. Functional level strategy

112. Which of the following aspects of international pricing is false:

a. It is the only marketing variable that produces revenue

b. Price is set independently of other elements of the international marketing

mix

c. Demand and price are usually inversely related

d. Price affects demand

113. The main two motives for transfer pricing have been identified as:

a. To manage tax and be a good corporate citizen

b. To manage tax and to improve competitive position

c. To manage tax and reflect actual costs

d. To improve competitive position and reflect actual costs

114. In international marketing, a feature of reference prices is that:

a. Reference prices are fixed and constant

b. The price that an international buyer pays for a product becomes a reference
price

c. Reference prices refer to average industry prices

d. Buyers often establish a specific price in completion to the reference price

115. External variables that are relevant to international pricing do not include:

a. Corporate goals of the firm

b. Government regulations

c. Location of the foreign market

d. Customer factors
116. The term ‘loading the price’ in international pricing refers to the practice
of charging:

a. Higher prices from low volume customers

b. Normal prices from average volume customers

c. Lower prices from higher volume customers

d. Higher prices for various pay-offs to get business

117. Cultural aspects that should normally be considered in international

pricing include:

a. The role of bargaining and negotiations

b. The role of interest on monetary deposits

c. The relationship of price and quality

d. All of these

118. Which of the following statements regarding transfer pricing is false?

a. When idle capacity exists, there is no opportunity cost to producing

intermediate products for another division.

b. Market based transfer prices should be reduced by any costs avoided by

selling internally rather than externally.

c. No contribution margin is generated by the transferring division when

variable cost-based transfer prices are used.

d. The goal of transfer pricing is to provide segment managers with incentive

to maximize the profits of their divisions.

119. This occurs when a company charges more than governments perceive is
fair for products and/or services; typically by taking advantage of demand
where customers/consumers are reliant on a particular product/service:

a. Product gouging

b. Price gouging

c. Brand gouging

d. Demand pricing

120. Prices are determined on the basis of customers’ locations. This is referred
to as:

a. Flexible pricing
 b. Negotiated pricing

c. Segmentation pricing

d. Geographical pricing

121. This approach is often used for fast-moving consumer goods and consumer
durable items, where the new product introduced is not demonstrably different
from existing formulations available:

a. Price discrimination

b. Skim pricing

c. Market penetration

d. Price bundling

122. This typically occurs in large organizations, and represents the pricing
approach used when one unit of a company sells to another unit within the
same company:

a. Transfer pricing

b. Internal pricing

c. Listed pricing

d. Cost pricing

123. The pricing approach where prices are set based on what competitors are
charging is called the:

a. Cost-oriented approach

b. Demand-oriented approach

c. Competitor-oriented approach

d. Value-oriented approach

124. With the pricing approach, the pricing process begins with the customer;
not the cost of the product offering:

a. Value-based pricing

b. Cost-based pricing

c. Customer-led pricing

d. Sales pricing

125. What are the aspects of dual pricing:

a. Behavioural Consideration

b. Deterring competitors

c. Product Life Cycle

d. All of the above

UNIT 2
1) Spending on which of the following is NOT revenue expenditure?
a) Fees paid to accounting and legal advisers for annual services
b) Bank charges
c) Purchase of desktop computers and laptops
d) Bonuses paid to directors and other senior management

2) If revenue expenditure is treated as capital expenditure by mistake, which of the

following is true?
a) Cash balances will be understated
b) Profit will be overstated
c) Profit will be understated
d) There is no effect in profit

3) Which of the following is an example of capital expenditure?

a) Salaries of staff employed handling stocks in a warehouse
b) Purchase of automated handling equipment in a warehouse
c) Annual insurance costs for a warehouse
d) Wages paid to security staff looking after a warehouse

4) Which of the following items of expenditure would be listed in the profit and loss
account as an expense?
a) Consultancy fees for the design of significant new information systems
b) Architect’s fees for the design of new factory
c) Depreciation charged on the fleet of company cars
d) Purchase of security equipment for an office

5) Companies receive tax benefits from investing in capital expenditure. These are
known as…
a) Company perks
b) Tax bands
c) Capital allowances
d) Profit adjustments

6) Spending on which of the following is NOT capital expenditure?

a) Building an extension to a warehouse
b) Payment for the purchase of office equipment
c) Installation costs of a new computer system
d) Interest on a loan to fund the purchase of a factory
7) Which of the following is an example of capital expenditure?
a) Payments for heat and light supplied to a factory
b) Purchase of a “server” to run a company’s information system
c) Repairs to company lorries
d) Purchase of raw materials used in large production runs

8) Which of the following is an example of capital expenditure?

a) Purchase of desktop design equipment to prepare and print promotional
materials “in-house”
b) Printing and stationary costs for a promotional campaign
c) Payment for an advertising campaign that runs for more than 6 months
d) Payment to a design agency for help with a promotional campaign

9) The capital budget for the year is approved by a company’s

a) Board of directors
b) Capital budgeting committee
c) Officers
d) Stockholders

10) The capital budgeting decision depends in part on the

a) Availability of funds
b) Relationships among proposed projects
c) Risk associated with a particular project
d) All of these

11) Capital budgeting is a process…

a) Used in sell or process further decisions
b) Of determining how much capital stock to issue
c) Of making capital expenditure decisions
d) Of eliminating unprofitable product lines

12) Which of the following is not a typical cash flow related to equipment purchase and
replacement decisions?
a) Increased operating cost
b) Overhaul of equipment
c) Salvage value of equipment when project is complete
d) Depreciation expense

13) The process of selecting from alternative long-term investment projects is called:
a) Net cash inflow maximization
b) Capital budgeting
c) Discounting cash inflows
d) Cash flow management

14) The time value of money refers to:

a) The earning power of an investment or stream of investments over time.
 b) The opportunity cost of capital.
c) The interest rate earned on an investment.
d) The discount rate used to calculate the present value of an investment.

15) Capital budgeting is a part of:

a) Investment decision
b) Working capital management
c) Marketing management
d) Capital structure

16) Capital budgeting deals with:

a) Long-term decisions
b) Short-term decisions
c) Both (a) and (b)
d) Neither (a) nor (b)

17) Which of the following is not used in Capital Budgeting?

a) Time value of money
b) Sensitivity analysis
c) Net asset Method
d) Cash flows

18) Capital budgeting decisions are?

a) Reversible
b) Irreversible
c) Unimportant
d) All of the above

19) Which of the following is not incorporated in Capital budgeting?

a) Tax-effect
b) Time value of money
c) Required rate of return
d) Rate of cash discount

20) Which of the following is not a Capital Budgeting decision?

a) Expansion programme
b) Merger
c) Replacement of an asset
d) Inventory level
21) A sound Capital Budgeting technique is based on:
a) Cash flows
b) Accounting profit
c) Interest rate on borrowings
d) Last dividend a paid

22) Which of the following is not a relevant cost in Capital Budgeting?

a) Sunk cost
 b) Opportunity cost
c) Allocated overheads
d) Both (a) and (c) above

23) Capital Budgeting decisions are based on:

a) Incremental Profit
b) Incremental Cash Flows
c) Incremental Assets
d) Incremental Capital

24) Which of the following does not affect cash flows proposal?
a) Salvage value
b) Depreciation amount
c) Tax rate change
d) Method of Project Financing

25) Cash Inflows from a project include:

a) Tax Shield of Depreciation
b) After-tax Operating Profits
c) Raising of Funds
d) Both (a) and (b)

26) Which of the following is not true with reference capital budgeting?
a) Capital Budgeting is related to asset replacement decisions
b) Cost of capital is equal to minimum required return
c) Existing investment in a project is not treated as sunk cost
d) Timing of cash flows is relevant

27) Which of the following is not followed in Capital Budgeting?

a) Cash flows Principle
b) Interest Exclusion Principle
c) Accrual Principle
d) Post-tax Principle

28) Depreciation is incorporated in cash flows because it:

a) is unavoidable cost
b) is a cash flow
c) reduces tax liability
d) involves an outflow

29) Which of the following is not true for Capital Budgeting?

a) Sunk costs are ignored
b) Opportunity costs are excluded
c) Incremental cash flows are considered
d) Relevant cash flows are considered

30) Which of the following is not applied in Capital Budgeting?

 a) Cash flows be calculated in incremental terms
b) All costs and benefits are measured on cash basis
c) All accrued costs and revenues be incorporated
d) All benefits are measured on after-tax basis

31) Evaluation of Capital Budgeting Proposals is based on Cash Flows because:

a) Cash Flows are easy to calculate
b) Cash Flows are suggested by SEBI
c) Cash is more important than profit
d) None of the above

32) Which of the following is not included in incremental A flows?

a) Opportunity Costs
b) Sunk costs
c) Change in Working Capital
d) Inflation effect

33) A proposal is not a Capital Budgeting proposal if it:

a) is related to Fixed Assets
b) brings long-term benefits
c) brings short term benefits only
d) has very large investment

34) In capital Budgeting, Sunk cost is excluded because it is:

a) of small amount
b) not incremental
c) not reversible
d) all of the above

35) Savings in respect of a cost is treated in Capital Budgeting as:

a) An Inflow
b) An outflow
c) Nil
d) None of the above

36) Which of the following ignores the time value of money?

a) Internal rate of return
b) Profitability index
c) Net present value
d) Cash payback

37) Brady Corp. is considering the purchase of a piece of equipment that costs $23,000.
Projected net annual cash flows over the project’s life are:
Year Net Annual Cash flow ($)
1 3,000
2 8,000
3 15,000
 4 9,000
The cash payback period is
a) 2.63 years b) 2.80 years
c) 2.20 years d) 2.37 years

38) If project A has a lower period than project B, this may indicate that project A may
have a
a) Lower NPV and be less profitable.
b) Higher NPV and be less profitable.
c) Higher NPV and be more profitable.
d) Lower NPV and be more profitable.

39) If an asset costs $210,000 and is expected to have a $30,000 salvage value at the end
of its ten-year life, and generates annual net cash inflows of $30,000 each year, the
cash payback period is
a) 8 years
b) 7 years
c) 6 years
d) 5 years

40) A disadvantage of the cash payback technique is that it

a) Ignores obsolescence factors.
b) Ignores the cost of an investment.
c) Is complicated to use.
d) Ignores the time value of money.

41) If a company’s required rate of return is 10% and, in using the net present value
method, a project’s net present value is zero, this indicates that the
a) Project’s rate of return exceeds 10%.
b) Project’s rate of return is less than the minimum rate required.
c) Project earns a rate of return of 10%.
d) Project earns a rate of return of 0%.

42) The primary Capital Budgeting method that uses discounted cash flow techniques is
the
a) Net present value method.
b) Cash payback technique.
c) Annual rate of return method.
d) Profitability index method.

43) When a Capital Budgeting project generates a positive net present value, this means
that the projects earns a return higher than the
a) Internal rate of return
b) Annual rate of return
c) Required rate of return
 d) Profitability index

44) Intangible benefits in Capital Budgeting would include all of the following except
increased
a) Product quality
b) Employee loyalty
c) Salvage value
d) Product safety

45) The profitability index is computed by dividing the

a) Total cash flows by the initial investment
b) Present value of cash flows by the initial investment
c) Initial investment by the total cash flows
d) Initial investment by the present value of each flows.

46) The Capital Budgeting method that takes into account both the size of the original
investment and the discounted cash flows is the
a) Cash payback method.
b) Internal rate of return method.
c) Net present value method.
d) Profitability index.

47) Future value may be defined as:

a) The discounted value of future cash flows.
b) The interest rate earned on future cash flows.
c) The compounded value of future cash flows.
d) The opportunity costs of future cash flows.

48) Present value may be defined as:

a) The discounted value of future cash flows.
b) The interest rate earned on future cash flows.
c) The compounded value of future cash flows.
d) The opportunity costs of future cash flows.

49) If the interest (discount) rate is positive, then:

a) The present value of a series of cash flows will be greater than its future value.
b) The future value of a series of cash flows will be greater than its present value.
c) The present value of a series of cash flows will be equal to its future value.
d) The present value is only greater than the future value of an annuity.

50) A series of fixed payments that are made at fixed intervals for a specified period of
time is called:
a) An annuity/
b) A cash flow.
c) Mutually exclusive payments.
d) A payback period compounding.
51) A series of fixed payments that are made at fixed intervals at the end of each period is
called:
a) An annuity due.
b) An ordinary annuity.
c) A payback annuity.
d) Discounting
e) Compounding

52) A series of fixed payments that are made fixed intervals at the beginning of each
period is called:
a) An annuity due.
b) An ordinary annuity.
c) A payback annuity.
d) Discounting.

53) The payback period is:

a) The number of cash-flow periods of a capital investment project.
b) The number of years that it takes to earn a profit of a capital investment
project.
c) The number of periods required to pay for the original investment.
d) The number of periods required to calculate the net present of an investment
project.

54) An advantage of the payback period method of evaluating a capital investment project
is that it:
a) Does not consider the time value of money.
b) Ignores cash flows beyond the payback period.
c) Provides a rough approximation of a projects liquidity and risk.
d) Provides a rough approximation of the present value of net cash flows.

55) An advantage of the discounted payback period method of evaluating a capital

investment project is that it:
a) Considers the time value of money.
b) Ignores cash flows beyond the payback period
c) Provides a rough approximation of a projects liquidity and risk
d) Both (a) and (c) are correct

56) When the cost of capital is less than IRR for two mutually exclusive projects, then:
a) The NPV and IRR methods will always result in the same accept and reject
decisions.
b) The NPV method will lead to a accept decision while the IRR method will
lead to a reject decision.
c) The IRR method will lead to a accept decision while the NPV method will
lead to a reject decision.
d) The project with the highest IRR should be chosen.
 57) _____ is the ratio of total original authorized duration versus total final project
duration. The ability to accurately forecast schedule helps meet time-to-meet
windows.
a) Profitability index
b) Schedule performance index
c) Payback period
d) Net present value

58) It is a key indicator of progress, parameter or a metric that can be used to monitor the
progress or performance of selected requirements.
a) Technical Performance Measure
b) Financial Audit
c) Capital Expenditure Control
d) Post Completion Audit

59) It is a study made to ascertain the actual performance results, to compare those results
with those predicted in the proposal, and to take action regarding any differences
between the two.
a) Technical Performance Measure
b) Performance Management
c) Post Completion Audit
d) Responsibility Accounting

60) The formula to calculate Cost Performance Index is:

a) (Earned Value)/(Planned Value)
b) (Actual Cost)/(Earned Value)
c) (Planned Value)/(Earned Value)
d) (Earned Value)/(Actual Cost)
EPM – MCQ
Unit 3 –
1 The Bank investment policy is been categorised into ______ policies.
a. 3
b. 5
c. 2
d. 4
2 Spread
a. It is the flexibility of investment
b. it is the providing interest to the customers for longer duration.
c. it is the addition of banks interest rate and customer’s income.
d. it is the difference between the interest rate charged to borrower and the interest rate
paid to depositor.
3 Prudential accounting norms relating to advance issued by the RBI consists of:
a. norms of income break cognition
 b. norms for asset classification
c. norms for provisioning
d. all of the above
4 A cash credit accounts will be treated as NPA
a. if its interest remains past due for 180 days or more
b. if it remains out of order for 180 days or more
c. if it remains out of order for more than 90 days
d. if it remains out of order for 30 days
5 with effect from 31 March, 2005 doubtful assets is one which has remained in the
substandard category for:
a. 18 months
b. 12 months
c. 6 month
d. 4 months
6 provision is created for substandard asset @
a. 10%
b. 15%
c. 20%
d. 25%
7 provision is created for unsecured doubtful debts @
a. 25%
b. 50%
c. 75%
d. 100%
8 fixed deposit and recurring deposits Are?
a. Repayable after an agreed period
b. repayable 011 demands
c. Re payable after death of depositor
d. repayable 011 demand or after an agreed period as per Bank choice
9 accounts are allowed to be operated by cheques in respect of?
a. both savings bank accounts and fixed deposit accounts
b. savings bank account and current account
c. both savings accounts and loan account
d. both current accounts and fixed deposit account
10 which of the following is correct statement?
a. no interest is paid on current deposit account
b. interest is paid on current accounts at the same rate is as term deposit accounts
c. the rate of interest on current accounts and savings accounts are the same
d. no interest is paid on any deposit by the bank
11 financial inclusion means provision of?
a. financial services namely payments, remittances, saving, loans and insurance at
affordable cost to person not yet given the bank.
b. Ration at affordable cost to person not yet given the same
c. house at affordable cost to person not yet given the same
d. educational at affordable cost to person not yet given the same
Statutory liquidity requirement (SLR) means____.
a. Minimum cash reserve with RBI
b. Minimum liquid assets in the form of cash,gold and approved securities
c. A maximum ratio of cash holding to total liabilities of bank
d. A minimum ratio of cash holding to total liabilities of bank
13 _____ is a parameter by which the banks and bank groups compete with each other.
a. Deposite Account
b. Interest rate
c. Loan distribution
d. Customer base
14 those assets which have been classified as NPA for a period less than or equal to tweleve
(12) months are called
a. Sub-standard Assets
b. Doubtful Assets
c. Standard Assets
d. Non-Performing Asset
15 It is one of the methods suggested for the reduction of NPAs.Its objective is to ensure a
timely and transparent mechanism for restructure of corporate debts of viable corporate
entities.
a. Organizational Restructuring
b. Corporate Debt Restructuring
c. Debt Recovery Tribunals
d. None of these
16 These institutions help banks to settle disputes involving accounts in doubtful and loss
categories
a. Lok Adalats
b. Asset Reconstruction Company
c. Financial Institutions
d. All of These
17 The process by which a leader appraises the creditworthiness of the prospective borrower
is known as
a. Bank Investment
b. Financial Inclusion
c. Credit Appraisal
 d. None of these
18 A _____ account is an account provided by a bank for individuals to save money and earn
interest on the cash held in the account.
a. Fixed deposit
b. Current deposit
c. Recurring deposit
d. Savings deposit
19 A non-performing asset is ______
a. Money at cell and short notice
b. An asset that ceases to generate income
c. Cash balance in till
d. Cash balance with RBI
20 A per RBI guidelines, a Savings Bank Account can be opened with a bank by a minor in
his/her name and operated by himself/herself provided the Age of the minor is?
a. Above 5 years
b. About 10 years
c. Above 8 years
d. About 12 years
21 Bank in India can dispose of their bad loans known as NPAs (Non-Performing Assets)
through which of the following models?
a. By selling them to ARCS (Asset Reconstruction Com-paries)
b. By Writing off the NPAs in their Books
c. By Recovering the Dues using all available means
d. ‘a’, ‘b’ and ‘c’ of the above
22 It enhances investment in Information Communication Technology (ICT) for promoting
financial inclusion.
a. Financial Inclusion Technology Fund
b. Financial Inclusion Fund
c. Technology Preventive Measure
d. All of these
23 Interest on Savings Bank Deposits is paid
a. Every month
b. Quarterly
c. Half yearly
d. Yearly
24 Which of the following committee has given its recommendations on “Financial
inclusions”?
a. Rakesh Mohan committee;
b. Rangarajan committee;
 c. Gadgil committee;
d. Sinha committee
25 Which of the following is the best option to park money for a long period of time to earn a
high rate of interest?
a. Savings account
b. Current Account
c. Fixed deposit account
d. Recurring account
26 From a legal and financial accounting standpoint, the term ____ is used by the banking
industry in financial statement to describe the liability owed by the bank to its depositor and
not the funds (weather cash or cheque) themselves, which are shown an asset of bank
a. Deposit
b. Spread
c. Asset
d. Credit
27 Which of the following ratios would be considered useful in assessing operating
profitability?
a. Debt/Equity ratio
b. Acid test ratio
c. Gross profit margin
d. Return on equity
28 What ratios can be used to inefficient buying habits?
a. Inventory Turnover Ratio
b. Gross Margin Ratio
c. Equity Multiplier
d. Debt Ratio
29 A ratio that pares investor’ and creditors’ stack in company.
a. Debt Ratio
b. Debt To Equity Ratio
c. Equity Ratio
d. Investor Creditor Ratio
30 Which best describes the gross margin ratio?
a. Leverage Ratio
b. Liquidity Ratio
c. Coverage Ratio
d. Profitability Ratio
31 Inventory turnover ratio evaluates:
a. A company’s ability to move inventory
b. A company’s inventory purchasing efficiency
 c. Both A and B
d. None of the above
32 The primary purpose of the liquidity ratios is to determine
a. How much working capital is tied up in inventory.
b. The relative level of short-term debt.
c. How well a firm is able to pay off short-term obligations.
d. More than one of the above.
33 Which of the following statements about liquidity ratios is true?
a. The higher the current ratio, the more likely a firm is able to pay its short-term
obligations.
b. The lower the quick ratios relative to the current ratio, the safer a firm is in term of
liquidity.
c. The ratio of net working capital to total assets always lies between 0 and 1.
d. Relatively high current ratio are usually a sign of efficient working capital
management.
34 The type of ratio that allows the analyst to measure the ability of the firm to earn an
adequate return on sales, total assets, and invested capital is:
a. Liquidity ratios
b. Profitability ratios
c. Asset-utilization ratios
d. Debt-utilization ratios
35 Gross profit margin is an important ratio of merchandising firm because:
a. Their investments in real property are high
b. Cost of goods sold is usually the largest expense
c. Selling expenses, like advertising, are usually quite high
d. It measures their ability to collect receivables
36 GMROI is
a. Gross Margin Return on Investment
b. Gross Margin Retail of Inventory
c. Gross Margin Return on Inventory
d. Gross Margin Retail on Investment
37 Retailers use two types of buying system known as
a. Staple merchandise buying system for basics
b. A merchandise budget for fashion merchandise
c. Staple merchandise buying system for fashion
d. Both A and B
38 The financial ratio that is useful for planning and measuring/evaluating merchandise
performance is a return on investment major called
a. ROI
 b. GROI
c. GMROI
d. ROA
39 This analysis utilizes the general 80-20 principle that implies that approximately 80
percentages of a retailers sale or profits come from 20 percentage of the products
a. Multi-Attribute Analysis
b. ABC Analysis
c. Sell-through Analysis
d. Gross Margin Analysis
40 The smallest unit for making inventory control decision is called
a. SKU
b. Category
c. Assortment
d. Classification
41 In the Multi-attribute method
a. Develop a list of issues to consider in evaluation
b. Importance weights for each issue should be determined by merchandise manager
c. Make Judgement about each brand’s for performance on each issue
d. All of the above
42 Calculation the GMROI for a Christian Bookstore that has annual sales of RS 20,000 for
T-shirts Gross Margin of 45%, and Average Inventory (at cost) of RS 75,000
a. 14.67%
b. 8%
c. 12%
d. 10%
43 Calculate the Inventory Turnover for a Christian Bookstore that has annual sale of RS
20,000 for T-shirts, Gross Margin of 45% and Average Inventory (at cost) of RS 75,000
a. 0.14 67
b. 800
c. 0.1200
d. 0.1000
44 Average Inventory in GMROI is measured at
a. Cost because a retailer’s investment in inventory is the cost of the inventory.
b. Cost because a retailer’s investment in inventory is the retail of the inventory.
c. Retail because a retailer’s investment in inventory is the retail of the inventory.
d. Retail because a retailer’s investment in inventory is the cost of the inventory
45 GMROI that is
a. Higher is better for business
b. Lower is better for business
 c. Higher is worse for business
d. Lower is worse for business
46 Which of the following is a characteristic of the retail method of accounting
a. Few retailers utilize the retail method.
b. The retail method of accounting is ideal for bakeries and restaurant.
c. The retail method is easy to use when taking a physical inventory.
d. The retail method of accounting is easier to implement than the cost method.
47 A major limitation of the retail method is:
a. The inability to calculate the cost complement without an ending inventory valuation
b. The inability to determine ending inventory value
c. The inability to determine ending retail values base on current market conditions
d. The heavy book keeping burden of recording data
48 A retailing firm has which type of inventory?
a. Raw materials
b. Work in process
c. Merchandise
d. Raw materials and Merchandise
49 Liquidity ratios can be used:
a. To measure the degree of protection of long-term suppliers of funds
b. To measure the earning ability of a firm
c. To measure the firm's ability to meet its current obligations
d. To measure the worth of the firm
50 Which of these statements is false?
a. Given the large quantity of variables included in financial statements, a very long list
of meaningful ratios can be drived.
b. Comparing ratios computed from income statement and balance sheet number can
create difficulties due to the timings of the financial statements.
c. Financial ratios are usually expressed in percent or times.
d. In vertical analysis, a figure from the year’s statement is compared with a base
selected from the prior statement.
51 In financial statement analysis, ratios are:
a. The only type of analysis where industry data are available
b. Absolute numbers converted to a common base
c. Fractions usually expressed in percent or time
d. The only indication of the financial position of the firm
52 Which of the following does not represent a problem with financial analysis?
a. Financial statement analysis is an art; it requires judgement decisions on the part of
the analyst.
b. Financial analysis can be used to detect apparent liquidity problems.
 c. There are as many ratios for financial analysis as there are pairs of figures.
d. Some industry ratio formula vary from source to source.
53 Which of the following is a false statement as it relates to analysis?
a. Profitability may not be a major consideration as long as the resources for repayment
can be projected.
b. Equity capital provides creditors with a cushion against loss
c. There is a difference between the objectives that are sought by short-term grantors of
credit and those sought by long-term grantors of credit
d. If merchandise with a 20% markup is sold on credit it would take ten successful sale
of the same amount to make up for one sale not collected
54 It is usual for a retail shop to recognise revenue when:
a. The customer pays for the goods sold
b. The goods have been delivered to the customer’s premises
c. The good for sale have arrived from the supplier
d. The customer becomes legally obliqed good to pay for the goods
55 Total sales, average sale per store, gross margin return on investment and inventory
turnover are examples of:
a. Operating ratios
b. Financial ratios
c. A sale opportunity grid
d. Performance measures
56 The retail performance index encompasses:
a. One-year trends in revenue and profit growth, and two-year average return on assets
b. Two-year trends in revenue and profit growth, and one-year average return on assets
c. Five-year trends in revenue and profit growth and six-year average return on assets
d. Six-year trends in revenue and profit growth and five-year average return on assets

Unit 4 -
1. Cybernetic controls also known as
a. Automatic controls
b. Steering controls
c. Robotic control
d. Gear control
2. It is a type of project control
a. Start/stop Controls
b. Pre/Future Controls
c. Go/No-go Controls
d. None of the above
3.Project control has ____approaches
a. 4
b. 2
c. 3
d. 5
4. Adequate project controls have the advantage(s) of:
a. Holding people accountable
b. Prevents small problems for getting large
c. Keeping focus
d. All of the above
5. The second step in the project control process of the measurement and evolution a project
performance is to:
a. Review the baseline plan with top management
b. Analyze inputs to control system
c. Compare plan against actual
d. Measure progress and performance
6. In monitoring project time (schedule) performance actual performance should be compared
to:
a. Budget for the current year
b. Project network schedule derived from the WBS/OBS
c. Progress on similar past projects
d. Previous status reports
7. An Earned Value System is used to monitor project progress includes comparison of
a. Actual costs versus budget
b. Schedule progress versus plan
c. Quality progress versus plan
d. Both A and B are correct
8. The cost variance for a project is calculated by:
a. EV – AC
b. AC – SV
c. PV – EV
d. CU – EV
9. Generally the method for measuring accomplishments centres on comparing
a. Earned value with the expected schedule value
b. Earned value with actual costs
c. Actual costs with budgets costs
d. Both A and B are correct
10. Which of the following are required to access the current status of a project using earned-
value cost/scedule system?
a. BAC, EAC, and ETC
b. VAC, EAC, and BAC
c. CV, SU, and BAC
d. PV, EV, and AC

11. Scope creep affects

a. The organization
b. The project team
c. The project supplier
d. All of the above
12. Small refinements that eventually built to be major changes are known as:
a. Project erosion
b. Scope creep
c. Specification refinements
d. Continuous improvements
13. Which of the following is not true regarding scope creep?
a. It is common late in projects
b. It is frequently unnoticed until time delays or cost overruns are observed
c. It wears down team motivation and cohesiveness
d. Project suppliers resent frequent changes
14.The percent complete index that looks at percent complete in terms of actual amount is
calculated by which of the following?
a. EV/BAC
b. (EV-PV)/BAC
c. AC/EAC
d. (EV-AC)/BAC
15. Which of the following will calculate the estimated cost to complete the project?
a. (VAC-EV)/(PV/AC)
b. (BAC-EV)/(EV/AC)
c. (PV/AC)/(VAC-EV)
d. (EVA/AC)/(BAC-EV)
16. What terms can be defined as a means of assessing the difference between a
predetermined amount and the actual amount?
a. Investment appraisal
b. Variance analysis
c. Master budgeting
d. Activity based costing
17. A total variance is best defined as the difference between total
a. Actual cost and total cost of applied for the standard output of the period.
b. Standard cost and total cost applied to production.
c. Actual cost and total standard cost of the actual input of the period.
d. Actual cost and total cost applied for the actual output of the period
18. Which of the following factors should not be considered when deciding whether to
investigate a variance?
a. Magnitude of the variance
b. Trend of the variance over time
c. Likelihood that an investigation will reduce or eliminate future occurrence of the
variance
d. Whether the variance is favorable or unfavourable
19. ____are tools developed to diagnose the system for deviations from the actual plan and
reset them back with the actual plans/schedule.
a. Management control
b. Performance Management
c. Project controls
d. Responsibility accounting
20. Project controls are used to assess:
a. Schedule
b. Budget
c. Quality
d. All of the above
21. ______ controls are instituted to check whether the output meets the preset cost and time
standards. These control systems are flexible and apply to all the aspects of project
management.
a. Cybernatic
b. Go/No-go
c. Post Control
d. Start/Stop Controls
22. Large changes in scope are easily identified. It is the “minor refinements” that eventually
built to be major scope changes that can cause problems. These small refinements are known
in the field as _______.
a. Contingency Reserve
b. Baseline
c. Scope creep
d. None of these
23. Quality control is
a. Ensured by use of standard like ISO
b. The responsibility of every team member
 c. Can be added at the end of the project
d. Not important in small projects
24. In an Earned Value Analysis, the Schedule Variance(SV) is calculated as:
a. EV-AC
b. EV-PV
c. AC+ETC
d. PMB-ETC
25. the Schedule Performance Index (SPI) is calculated from
a. EV/PV
b. EV/PV
c. (BAC-EV)/CPI
d. None of the above
26. The following are methods for project estimation
a. Standards within the company
b. Estimates based on costing individual activities
c. Algorithmic techniques
d. All of these
27. Social audits and sustainability reports together constitute ______:
a. Corporate charitable philanthropy
b. Proactive social responsibility
c. Triple bottom line reporting
d. Company-wide business ethics
28. Resources of a non-profit organisation’s unrestricted fund that have been set aside for a
specific purpose by the board of directors of the organisation are accounted for in:
a. The unrestricted fund
b. A term endowment fund
c. A restricted current fund
d. An annuity fund
29. The fund used to record resources contributed to a non-profit organization on the
condition that the organization pay a fixed periodic amount to a named individual for a fixed
time period is:
a. Loan fund
b. Agency fund
c. Life income fund
d. Annuity fund
30. Which of the following is generally considered as a non profit oriented organization?
a. Charitable organization
b. Corporation
c. Audit firms
 d. Insurance companies
31. The receipts and payments account of a non-profit organization is a
a. Nominal account
b. Real account
c. Income statement account
d. Financial statement
32. Non-profit organizations prepare all of the above following accounts except the
a. Receipts and payment accounts
b. Income and Expenditure accounts
c. Balance sheet
d. Income statement
33. Expenditures greater than incomes of a non-profit organization give rise to a
a. Loss
b. Profit
c. Surplus
d. Deficit
34. Rent expense of a non-profit organization paid in advance. Which of the following is the
correct classification of rent?
a. Expense
b. Liability
c. Equity
d. Asset
35. An advance receipt of subscription from a member of the non-profit organization is
considered as a/an
a. Expense
b. Liability
c. Equity
d. Asset
36. In the preparation of the statement of activities for a non-governmental not-for-profit
organization, all expenses are reported as decreases in which of the following net asset
classes?
a. Total net assets.
b. Unrestricted net assets.
c. Temporarily restricted net assets
d. Permanently restricted net assets
37. According to Lynch, in a public sector or a non-profit organisation, strategy is likely to be
governed by:
a. Public policy issues
b. Institutional values
 c. Both
d. Neither
38. The purpose or strategic planning systems are:
a. To assist in the communication, co-ordination and control of strategy.
b. Develop ownership of the strategy.
c. To provide a structured means of analysing and thinking about complex strategic
problems and expanding the planning horizons of strategists.
d. All of the above.
39. One of the danger in the formalisation of strategic planning is:
a. That is stifles communication, coordination and control of strategy
b. That it often does not take sufficiently into account cultural and political dimensions
in the development of strategy
c. It does not facilitate the most efficient allocation of resources.
d. Planning system result in to many new ideas being promoted in the organization
40. ______ is the process of determining objectives, deciding upon strategies, and
implementing the tactics.
a. Marketing planning
b. Marketing research
c. Strategic research
d. Strategic planning

41. ______ are what you want to accomplish with the strategic plan.
a. Strategies
b. Objectives
c. Tactics
d. Motives
42. ______ determine how to accomplish objectives outlined in a strategic plan.
a. Strategies
b. Objectives
c. Tactics
d. Motives
43. ______ make the strategic plan come to life.
a. Strategies
b. Objectives
c. Tactics
d. Motives
44. Strategic planning is the three-tiered process that starts with the _______.
a. Marketing plan
b. Initial investment
 c. Business plan
d. Advertising plan
45.For most organizations, strategic planning starts by ________.
a. Formulating a business mission statement
b. Identifying the target market
c. Determining the required return-on-investment
d. Conducting an internal and external environment analysis
46. Which of the following is not a function of budgeting?
a. Motivating
b. Planning
c. Controlling
d. Decision-making
47. The term “budgetary period” relates to:
a. The period for which the budget is prepared
b. A specific year for which the budget has been prepared
c. The period in which the budget is finalised
d. The subdivisions of the main budget
48. A budget is “accepted” by a manager when they:
a. Relate it to their own personal objectives
b. Are consulted by top management
c. Agree to it verbally
d. Receive the budget in writing
49. What functional role do management accountants play in the budgeting process?
a. They facilitate and coordinate the budgeting process
b. They decide what bonuses should be paid to the staff
c. They audit the financial statements
d. They set targets for other managers
50. A fixed budget is:
a. A budget that itemises the fixed costs of a department
b. A budget that ignores inflation
c. A budget that is set for a specified level of activity
d. A budget that never changes
51. When a production budget is being prepared the quantity that needs to be produced is
calculated by the following equation:
a. Quantity sold plus closing stock less opening stock
b. Opening stock less quantity sold
c. Opening stock less quantity sold plus closing stock
d. Opening stock plus quantity sold plus closing stock
52. The master budget will comprise:
 a. The budgeted profit and loss account and the budgeted balance sheet
b. The cash budget, the budgeted profit and loss account and the budgeted balance sheet
c. The cash budget
d. All the production, selling and cost budget for the organisation
53. Advantages of maintaining cash budgets would not include one of the following:
a. Debtors can be paid more quickly
b. Surplus cash can be put to more profitable uses if expected to occur
c. Overdraft can be negotiated in advance of when they are needed
d. Time is available to investigate the possible future sources of finance

Unit 5 -
1. Cost audit is conducted to:
a. Judge the accuracy of cost records
b. Reconcile cost records with financial records
c. Keep businessmen under control
d. Ensure productivity
2. The principal objective of cost audit is:
a. To bring out the inaccuracy in the cost records
b. Reveal the inaccuracies in the cost accounting system
c. Highlight inefficiencies in aspect of operation and management of the organisation
d. None of these
3. The important aspects of cost audit are said to be:
a. Internal audit
b. Social audit
c. Efficiency audit
d. Environmental audit
4. It is said that cost audit has the following social aspects:
a. Exercise proper control over businessmen
b. Prevent workers from raising wages
c. Curb profiteering and ensure the availability of products to the consumer’s at the most
economic and competitive prices
d. Creates cost awareness
5. Statutory cost audit is conducted under:
a. Section 209 (1) (d) of the Companies Act
b. Section 617 of the Companies Act
c. Section 233B of the Companies Act
d. None of the these
6. Which of these statements are true:
a. Cost audit is a compulsory affair every year for a company
b. The cost auditor is appointed by the share holders under section 227 of the companies
Act
c. The disqualifications of a cost auditors are given in Section 207 of the companies Act
d. The cost auditor is appointed for one year
7. It is said that:
a. The cost auditor has more powers and duties than the statutory auditors
b. The cost auditor has the same powers and duties as an auditor is appointed under
section 227 (1)
c. The cost auditors has the right to access to books, accounts, etc., kept at the
company's head office
d. A cost audit programme involves checking of arithmetical accuracy of records
8. The major device for measuring the profitability of a firm over a defined period of time is
the
a. Income statement.
b. Balance sheet.
c. Statement of cashflow.
d. None of above
9. The _________ does not represent continuing operations in any way, but is simply a
snapshot of the total worth of a firm at a given point in time
a. Income statement
b. Balance sheet.
c. Statement of cashflow.
d. None of above
10. Auditing should be done by
a. A professional accountant
b. A certified management accountant.
c. A competent and independent person
d. A chartered accountant
11. It is important for the auditor to be independent because
a. The audit conclusions cannot be relied upon if the auditor was biased in accumulating
and evaluating evidence
b. The auditors would not charge a fair rate to the client.
c. The auditor might not be as at knowledgeable of the subject matter and the criteria
d. The Canadian Tax Authorities require that the auditors be independent.
12. What type of organizations use auditing services?
a. Non-for-profit organization
b. Business
c. Governments
 d. All of the above
13. The auditor must have a through understanding of the entity and its environment. The
auditor must also consider the client's business strategies, processes, and measurement
indicators for critical success factors related to those strategies. This analysis help the auditor
a. Decide if they want to accept the engagement
b. Identify risks associated with the client strategy that could affect the financial
statements
c. Assess the level of maternality that is appropriate for the audit
d. Identify the potential for fraud in the financial reporting process
14. To operate effectively, an internal auditor must be independent of
a. The line functions of the organizations.
b. The employer-employee relationship which exists for other employees in the
organization
c. The entity
d. All of the above.
15. The internal auditor typically reports directly to
a. The management of the company.
b. The audit committee and the management of the company.
c. The audit committee and the board of director.
d. The board of director and the external auditors.
16. The objective of the audit of financial statements by the auditor is the expression of an
opinion on
a. The accuracy of the financial statements.
b. the fairness of the financial statements.
c. The balance sheet and income statement.
d. The annual report
17. The responsibility for the preparation of the financial statements and the accompanying
footnotes belongs to
a. Both management and the auditors equally.
b. Management for the statements and the auditor for the notes.
c. The auditor.
d. Management.
18. The date on auditor’s report should not be____
a. The date of AGM
b. Later than the date on which the accounts are approved in board’s meeting
c. Earlier than the date on which the accounts are approved by the management
d. Both (a) and (b)
19. Section 227(2) of the companies Act, requires the auditor to give his report to the member
of the company on certain matters. Which of the following is not included in the above?
 a. Accounts examined by him
b. Every balance sheet and profit and loss account laid before a general meeting during
his tenure
c. Every document that is part of or ‘annexed to’ the balance sheet
d. Every document which is attached to the profit and loss account
20. A departure from recognized accounting principle is disclosed in a note to the financial
statements. The auditor should
a. Issue a standard unqualified audit report
b. Issue a qualified report
c. Issue an unqualified report with ‘emphasis of matter’ paragraph
d. Disclaim opinion
21. Companies exempted from application of CARO, 2003 does not include__
a. A Banking company
b. An Insurance company
c. A private limited company with paid up capital and reserves not more than fifty five
lac
d. A licensed company
22. Under CARO, 2003, the auditor's report should include report about maintenance of
proper recording relating to_____
a. Fixed assets and cost
b. Fixed assets, cost and investments
c. Fixed assets, cost investments and inventories
d. Fixed assets, cost and inventory
23. Under CARO, 2003, the auditor is required to report on__
a. Arrears of cumulative preference dividends
b. Preferential allotment of shares to related party
c. Disposal of fixed assets and its effect on going concern
d. Unsecured loans granted to related party.
24. It is an objective and independent appraisal of the effectiveness of managers and
effectiveness of the corporate structure in the achivement of company objectives and policies.
a. Financial audit
b. Internal audit
c. Cost audit
d. Management audit
25. Which of them is the technique of management audit:
a. Vouching
b. Preliminary Survey
c. Questionnaires
d. Working Papers
26. ________report is one which is issued by the auditor when he does not have any
reservation with regard to the matters contained in the financial statements
a. Clean audit
b. Statutory
c. Qualified
d. Audit
27. Report is one in which the auditor does not give clean report about the truthfulness and
fairness of financial statement but makes certain reservations.
a. Statutory
b. Clean Audit
c. Qualified audit
d. None of These

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