IMPORTANT QUESTIONS WITH ANSWERS - IGNOU : MCOM : MCO 5 - ACCOUNTING FOR MANAGERIAL DECISIONS

IMPORTANT QUESTIONS & ANSWERS

IGNOU MCOM

MCO 5 - ACCOUNTING FOR MANAGERIAL DECISIONS

UNIT - 1

1) What are the objectives of Accounting ? Name the different parties interested in accounting information and state why they want it. 

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2) Briefly explain the accounting concepts which guide the accountant at the recording stage. 

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3) Explain the role of Management Accountant in a modern business organisation.

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4) What are the accounting concepts to be observed at the reporting stage ? Explain any two in detail.

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5) Explain the following :  i) Accounting equation ii) Accounting standards iii) Accounting process iv) Branches of accounting 

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UNIT - 2

1. Distinguish among variable, fixed and semi-variable costs. Why is this distinction important? 

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2. Describe briefly the different methods of costing and state the particular industries to which they can be applied. 

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3. Distinguish between the following : i) Product cost and period cost ii) Controllable and uncontrollable cost iii) Variable and fixed costs iv) Direct and indirect costs 

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UNIT - 4

1) What are the financial statements? How far are they useful for decision-making purposes? 

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2) Write a note on nature and limitations of financial statements.

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UNIT - 6

1) Compared to two principal financial statements namely, Profit and Loss Account and Balance Sheet, what is additional insight you get from funds flow statement? 

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2) Discuss a few basic differences between “cash” concept of funds flow statement and “working capital” concept of funds flow statement. 

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3) A firm is found to have negative changes in working capital. What does it mean? Is it good for the firm in the long-run if the negative change in working capital continues for a long period? 

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4) “Funds Flow Statement also suffers from window dressing of accounts and hence fails to give true view of funds movement; for instance, funds from operation can be increased by recording a few dummy sales” - Do you agree to this criticism? Give your views.

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UNIT - 7

1) How cash flow statement is different from income statement? What are the additional benefits to different users of accounting information from cash flow statement? 

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2) How does cash flow statement differ from funds flow statement? What are the uses of cash flow statement? 

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3) How does cash flow analysis help the management in decision making?

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4) What is a ‘Cash Flow Statement’? Explain the techniques of preparing a cash flow statement

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UNIT - 8

1) Define budgeting and Budgetary control. State the objective of Budgeting. 

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2) What is budgeting ? What are the advantages and limitations of Budgeting ? 

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3) What are the essentials of an effective system of Budgeting ? Explain.

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4) What is a Budget Manual ? State briefly the contents of a budget manual. 

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5) What are the essentials of establishment of sound system of Budgeting ? .

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6) Explain in brief different types of budgets. 

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7) “A budget is a means and budgetary control is the end result”. Explain. 

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                                                                        UNIT - 9

1) What is a Sales Budget ? How is it prepared ? 

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2) Write short notes on the following : 

        i) Sales Budget ii) Material Budget 

      iii) Production Cost Budget iv) Overhead Budget 

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3) What is a Cash Budget ? How is it prepared ? 

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4) What is a Master Budget ? What are its Components ?

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                                                                        UNIT - 10

1) What are fixed and flexible budgets? Differentiate between these two. 

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2) What do you understand by zero base budgeting? How is it different from traditional budgeting? 

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3) Why is a variable costing format useful for performance evaluation? 

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4) What are the three important control ratios? Explain them in brief.

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UNIT - 11

1. What is Estimating Costing and how does it differ from Standard Costing? 

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2. What is Standard Costing? State the objectives of standard costing. 

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3. Give a comparative account of standard costing and budgeting. .

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4. Write a detailed note explaining the advantages and limitations of standard costing. 

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5. Explain the meaning of Standard Hour. 

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6. Write a note on Revision of Standards. 

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UNIT - 12

1) Define Variance. What is variance analysis? 

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2) What are the methods of classification of variances?

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3) Write a detailed note on the uses of variance analysis?

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4) “Calculation of Variances in standard costing is not an end itself, but a means to an end” Discuss.

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5) Discuss material variance in detail. 

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6) Discuss labour variances in detail 

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7) Write notes on the following: 

    i) Material Price Variance    ii) Material Mix Variance           iii) Material Usage Variance 

   iv) Labour Rate Variance      v) Labour Idle Time Variance    vi) Labour Efficiency Variance 

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                                                                         UNIT - 13

1) Explain how the variance analysis relating to overheads differ from that relating to material and labour 

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2) In what ways can we analyse sales variances. Explain in detail. 

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3) Write short notes as the following: 

      i) Variable overhead expenditure variance  ii) Fixed overhead volume variance 

    iii) Fixed overhead calendar variance      iv) Variable overhead efficiency variance 

     v) Sales margin variance   vi) Sales price variance (based on turnover)   vii) Sales volume variance

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   UNIT - 14

1) “Responsibility accounting is a responsibility set-up of management accounting”. Comment. 

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2) Define Responsibility Accounting. How does it differ from conventional cost accounting?

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3) Explain clearly the terms cost center, revenue center, profit center, and investment center, and their utility to management.

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4) Explain ‘how the choice’ of the responsibility center type (cost revenue, profit or investment) affects budgeting and performance reporting.

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   UNIT - 15

1) What are the limitations of marginal costing techniques?

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2) Explain the application of marginal costing in managerial decision making. 

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   UNIT - 16

1) ‘Cost-volume profit analysis and break even point analysis are same’ Comment? 

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2) What are different methods of computing break even point? 

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3) “The break even chart is an excellent planning device” Comment.

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4) Explain the significance of Profit-Volume ratio, Margin of Safety and Angle of Incidence? 

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5) What is Contribution ? How does it helps the management in taking managerial decisions?

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6) Describe three ways to lower down the break even point? 

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7) What are various ways to improve the margin of safety and P/V ratio?

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   UNIT - 17

1) What do you understand by differential costing ? How does it differ from managerial costing?

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                                                                           UNIT - 18

1) What do you mean by accounting reports? What are the different types of reports for internal use? Discuss each of them. 

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2) What are the special reports? What matters may be covered by the special reports? 

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3) Describe the reporting needs of different levels of management and how a system of reporting can satisfy it? 

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4) What are the essentials of a good report? Describe.

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5) “Accounting Reports are a matter of necessity for the management and not a matter of convenience” Discuss.

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    UNIT - 19

1) What is the benefit of companies being socially responsible? 

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2) How does activity based costing differ from traditional costing approach?

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3) What is the role of cost accounting/cost data in strategic management? 

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4) List down some of the major benefits to a company on account of computerised accounting system. 

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5) How implementation of ERP is different from computerisation of accounting function?

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