Management Accounting

It is also known as management accounting. Accounting for a company’s income and costs is one of its many subspecialties. An organisation’s financial performance may be enhanced with the aid of management accounting. Identifying, evaluating, analysing and communicating financial information to management are all part of the curriculum. Performance reports are used to identify any out-of-the-ordinary increases or decreases in revenue or costs. Obtaining financial data necessitates the use of specialised expertise and methodologies. This accounting is used by managers to develop policies and determine future choices.

Multiple Choice Questions (MCQs)-

1. What is considered the language of business used to communicate financial information?

1. 1. Marketing
   2. Profit
   3. Pricing
   4. Accounting

Answer- D) Accounting

Explanation- Accounting is considered the way of communication to attract customers through marketing.

2. When was the term Management Accounting coined?

1. 1.  1970
   2. 1950
   3.  1940
   4.  1931

Answer- B) 1950

Explanation- In 1950, management accounting was considered in its original form to keep track of the businesses. 

3. What is the main objective of management accounting?

1. 1. To identify and analyse the result of business operations.
   2. To study business transactions
   3. To check and maintain accounting records 
   4. To remind the amount due to customers 

Answer- A) To identify and analyse the result of business operations.

Explanation- Management accounting is focused on analysing the financial performance of a company and creating reports for future use.

4. Which personnel of a financial firm play a key role in management accounting?

1. 1. Investors
   2. Managers
   3. Suppliers
   4. Customers

Answer- B)Managers

Explanation- Management accounting helps the managers in initiating policies and in decision making.

5. What are the instruments/ tools related to management accounting?

1. 1. Marginal costing
   2. Standard costing
   3. Budget control
   4. All of the above

Answer- D)All of the above

Explanation- Marginal costing, standard costing, and budget control are tools based on cost-accounting information and for future information on management accounting.

6. Where is management accounting applied?

1. 1. Small trading organisations
   2. NPOs
   3. Cooperative societies
   4. Large industrial and trading organisations

Answer- D) Large industrial and trading organisations

Explanation- Large-scale companies use management accounting to get an idea about the competition, business environment and production of technology. 

7. Who discovered the term Management Accounting?

1. 1. R. N Carter
   2. James H Bliss
   3. Philip Cotler
   4. F.W. Taylor

Answer- B) James H Bliss

Explanation- James discovered the term Management through accounts, and he contributed to accounting through his book with the same title.

8. What is the main function of management accounting?

1. 1.  Decision making
   2.  Planning 
   3. Direction 
   4.  Provision of information to management

Answer- D) Provision of information to management

Explanation- Management accounting analyses and creates reports related to the financial performance management of a company with the help of available information.

9. Which of the following options is not characteristic of management accounting? 

1. 1. Future-oriented 
   2. Accounting information 
   3. Compulsory accounting.
   4.  Management oriented 

Answer- C) Compulsory accounting

Explanation- Management accounting is not mandatorily done in all financial institutions or companies.

10. Who stated the definition of management accounting as “Management Accounting is concerned with accounting information which is useful to management”?

1. 1. Robert Anthony
   2. Michael Porter
   3. J. Batty
   4. James H Bliss

Answer- A) Robert Antony

Explanation- Robert Anthony has introduced the hierarchy of management in an organisation and created a framework related to managerial accounting.

11. Management accounting is used as …………

1. 1. Compulsory 
   2.  Optional
   3.  Mandatory 
   4.  Any of the above

Answer- B) Optional

Explanation- The reports and business performance results may not be compulsorily maintained in all the organisations so management accounting is optional.

12. The management is provided with invaluable services by management accounting through?

1. 1. Controlling functions
   2. Financial data evaluation
   3. All managerial functions
   4. None of the above

Answer- C) All managerial functions

Explanation- The management accounting handles and regulates all the management functions of a company. 

13. Which of the following statements are true according to management accounting?

1. 1. Management accounting is compulsory.
   2. Is objective in nature?
   3. It is mainly focused on future
   4. Management accounting and cost-accounting are similar.

Answer– A) It is only focused on the future.

Explanation- Management accounting helps in evaluating and keeping records of the activities and performance of the business which will be important for managers in the future.

14. Which of the following is not a management accounting tool?

1. 1. Cash flow statement
   2. Fund flow statement
   3. Ratio analysis
   4. Process costing

Answer- D)Process costing

Explanation- Process costing is a part of the management accounting which is used to ascertain the cost, process and operations of manufacture.

15. What is the scope of management accounting?

1. 1. Cost accounting
   2. Budgeting
   3. Forecasting
   4. All of the above

Answer- D)All of the above

Explanation- Management accounting aims to perform correct budgeting, forecasting and cost accounting based on the information source.

16. The accounting data are analysed and evaluated with the help of …………

1. 1. Tools and techniques
   2. Auditory
   3. Statutory forms
   4. None of the above

Answer- A) tools and techniques

Explanation– It facilitates the financial and accounting data by using appropriate tools and techniques.

17. Management accounting deals with managing …………

1. 1. Decision making
   2. Raising finance
   3. Tax returns
   4. Final accounts preparation

Answer- A) Decision making 

Explanation- Decision making is the most important function of a management account which helps the managers to resolve any financial problems.

18. What are the decisions that are made for a long term period called?

1. 1. Working capital decision
   2. Future decisions
   3. Capital budgeting decisions
   4. Profit volume analysis.

Answer- C) Capital budgeting decisions

Explanation- These decisions are made for long term investment whether or not the project will be fruitful in terms of cash flow.

19. What is the basic function of management accounting?

1. 1. To serve public
   2. To manage the performance of the financial function
   3. To serve government
   4. All of the above

Answer- B) To manage the performance the financial function

Explanation- The financial operations are managed and regulated by management accounting.

20. Which type of information can be recorded in management accounting?

1. 1. Quantitative
   2. Qualitative
   3. Both (a) and (b)
   4. All of the above

Answer- A) Quantitative information

Explanation- Management accounting identifies and stores the quantitative information of the operations performed in a company.