Our only savior is our will power. Will is the switch that controls everything in this universe. If you don't exercise your will power, you will be a weakling, easily influenced by your environment. Development of the will is the secret of magnetism. Men of success are men of great will power. When you develop will, no matter how you are pounded down by life, you rise again and say, "I am successful. I can win." Regards from Prof Mahaley Head Gmsisuccess Your Career Mentor Gmsisuccess...

Thursday, March 5, 2026

Update for Case based questions

Here are 25 MCQ Questions on Types of Industry, Economy, Business, Organizational Structure, Governance, Finance, Ethics, Strategy, Stakeholders, and Business Objectives. These are useful for professional exams, business studies, CIA/CMA foundation concepts, and competitive exams, particularly Case based Questions ⁉️

Section A

MCQs on Business Environment, Organisation & Governance

1. Which industry involves extraction of natural resources?

A. Secondary Industry
B. Primary Industry
C. Tertiary Industry
D. Quaternary Industry

Answer:

2. Manufacturing activities belong to which type of industry?

A. Primary Industry
B. Secondary Industry
C. Tertiary Industry
D. Service Industry

Answer:

3. Banking, insurance and transportation belong to which industry?

A. Primary
B. Secondary
C. Tertiary
D. Extractive

Answer:

4. An economy where government owns most resources is called:

A. Market Economy
B. Mixed Economy
C. Command Economy
D. Capitalist Economy

Answer:

5. India follows which type of economic system?

A. Capitalist Economy
B. Command Economy
C. Mixed Economy
D. Socialist Economy

Answer:

6. Which type of business is owned by a single individual?

A. Partnership
B. Sole Proprietorship
C. Company
D. Cooperative

Answer:

7. Which business structure has limited liability and separate legal identity?

A. Partnership
B. Sole Proprietorship
C. Company
D. Joint Family Business

Answer:

8. Which business activity involves converting raw materials into finished goods?

A. Trading
B. Manufacturing
C. Service
D. Distribution

Answer:

9. Which document visually represents the structure of an organization?

A. Organization Policy
B. Organization Chart
C. Balance Sheet
D. Audit Report

Answer:

10. The chain of authority from top management to lower levels is called:

A. Span of Control
B. Organization Hierarchy
C. Job Rotation
D. Centralization

Answer:

11. Corporate governance mainly focuses on:

A. Profit maximization
B. Ethical management and accountability
C. Increasing sales
D. Reducing employees

Answer:

12. Which body is primarily responsible for corporate governance in a company?

A. Employees
B. Customers
C. Board of Directors
D. Suppliers

Answer:

13. Which of the following is an example of long-term finance?

A. Trade Credit
B. Bank Overdraft
C. Equity Share Capital
D. Cash Credit

Answer:

14. Which source of finance is internal?

A. Bank Loan
B. Retained Earnings
C. Debentures
D. Public Deposits

Answer:

15. Owners of a company are known as:

A. Directors
B. Shareholders
C. Managers
D. Employees

Answer:

16. Which stakeholder is primarily interested in job security and salary?

A. Government
B. Employees
C. Suppliers
D. Customers

Answer:

17. Which stakeholder is mainly concerned with tax payments?

A. Government
B. Customers
C. Employees
D. Suppliers

Answer:

18. A mission statement describes:

A. Company’s short-term profits
B. Purpose and reason for existence
C. Employee salaries
D. Share price

Answer:

19. A vision statement mainly focuses on:

A. Future aspirations of the organization
B. Current profits
C. Employee benefits
D. Accounting policies

Answer:

20. Business ethics refers to:

A. Legal rules only
B. Moral principles guiding business behavior
C. Tax planning
D. Accounting standards

Answer:

21. Which of the following is an example of unethical business practice?

A. Fair pricing
B. False advertising
C. Quality control
D. Customer service

Answer:

22. Business strategy mainly deals with:

A. Day-to-day accounting
B. Long-term planning to achieve competitive advantage
C. Payroll management
D. Employee attendance

Answer:

23. Which of the following is NOT a typical business objective?

A. Profit maximization
B. Customer satisfaction
C. Social responsibility
D. Personal hobby of owner

Answer:

24. The primary goal of a profit-making business is:

A. Charity work
B. Wealth maximization for owners
C. Reducing market competition
D. Government control

Answer:

25. Which stakeholder expects quality goods at reasonable prices?

A. Employees
B. Customers
C. Government
D. Creditors

Answer:

Section B...

Here are 10 Integrated Caselets with MCQs on Corporate Governance, Business Strategy, Stakeholders, Ethics, Finance, Organization Structure and Business Objectives. These are designed in a professional exam style (CIA / CMA / MBA level) where one scenario leads to multiple questions.

---

Integrated Caselets – Business Environment & Governance

---

Caselet 1: Stakeholders & Business Objective

A manufacturing company faced criticism because it reduced employee benefits to increase profits. At the same time, the company increased dividend payouts to shareholders. Employees protested, claiming management was ignoring their interests.

Which stakeholder group is most dissatisfied?

A. Shareholders

B. Government

C. Employees

D. Customers

Answer:

Which governance principle is being questioned?

A. Accountability

B. Fairness to stakeholders

C. Transparency

D. Profit maximization

Answer:

---

Caselet 2: Corporate Governance Failure

The Board of Directors approved a risky investment without adequate analysis. Later the investment failed causing heavy losses to shareholders.

Which governance principle was primarily violated?

A. Responsibility of Board oversight

B. Market competition

C. Employee training

D. Customer satisfaction

Answer:

Which stakeholder suffered the most financial loss?

A. Employees

B. Shareholders

C. Government

D. Suppliers

Answer:

---

Caselet 3: Business Strategy

A technology firm decided to differentiate its products by providing superior quality and innovation rather than competing on price.

Which strategy is the company adopting?

A. Cost Leadership Strategy

B. Differentiation Strategy

C. Market Penetration Strategy

D. Downsizing Strategy

Answer:

Which department plays the most important role in implementing this strategy?

A. Research & Development

B. Payroll Department

C. Legal Department

D. Security Department

Answer:

---

Caselet 4: Organizational Structure

A company expanded rapidly and introduced several management levels to control operations across regions.

This structure represents:

A. Flat organization

B. Tall organization hierarchy

C. Informal organization

D. Matrix organization

Answer:

One disadvantage of this structure is:

A. Lack of control

B. Slow decision making

C. No specialization

D. No accountability

Answer:

---

Caselet 5: Business Ethics

A pharmaceutical company intentionally withheld information about side effects of a drug to maintain sales growth.

This action represents:

A. Ethical leadership

B. Social responsibility

C. Unethical business practice

D. Strategic decision making

Answer:

Q10

Which stakeholder group is most directly harmed?

A. Government

B. Customers (patients)

C. Employees

D. Suppliers

Answer:

---

Caselet 6: Business Finance

A company issued debentures to raise long-term funds for expansion.

Q11

Debentures represent:

A. Ownership capital

B. Borrowed long-term capital

C. Internal financing

D. Retained earnings

Answer:

Q12

Debenture holders are considered:

A. Owners

B. Creditors

C. Employees

D. Managers

Answer:

---

Caselet 7: Mission & Vision

A company states:

“Our mission is to provide affordable and high-quality healthcare products to improve people's lives.”

Q13

This statement represents:

A. Vision statement

B. Mission statement

C. Strategic objective

D. Corporate policy

Answer:

Q14

Which element is clearly emphasized?

A. Profit maximization

B. Social responsibility and customer focus

C. Employee benefits

D. Market monopoly

Answer:

---

Caselet 8: Economy System

A country allows private businesses to operate but also regulates important sectors such as banking and defense.

Q15

This type of economy is:

A. Capitalist economy

B. Command economy

C. Mixed economy

D. Traditional economy

Answer:

Q16

Which entity typically controls strategic industries in such economies?

A. Employees

B. Government

C. Customers

D. Suppliers

Answer:

---

Caselet 9: Corporate Governance & Transparency

A listed company failed to disclose major liabilities in its financial statements.

Q17

Which governance principle was violated?

A. Transparency

B. Employee welfare

C. Market competition

D. Profit strategy

Answer:

Q18

Which stakeholders rely most on financial disclosures?

A. Customers

B. Shareholders and investors

C. Employees

D. Suppliers

Answer:

---

Caselet 10: Business Objectives

A company launched an eco-friendly product line even though short-term profits were lower.

Q19

Which objective does this decision support?

A. Social responsibility

B. Cost minimization

C. Market exit strategy

D. Downsizing

Answer:

Q20

Which stakeholder group benefits most from this decision?

A. Environment and society

B. Competitors

C. Suppliers

D. Employees only

Answer:

✅ www.gmsisuccess.in

Casebased question ⁉️ Manufacturing operations & irregularities

Below are Case-Based Questions (CIA Part 1 style) on Functions of Different Departments in a Manufacturing Organization, focusing on internal audit observations, discrepancies, irregularities, risk owners, documents, and controls.

Case-Based Questions – Manufacturing Departments (CIA Part 1 Style)

Case 1: Unauthorized Purchase

During an internal audit of the procurement process, the auditor observed that several purchases of raw materials were made without an approved Purchase Order (PO). The materials were received and recorded in inventory based only on supplier invoices.

Question

Which control weakness is MOST evident in this situation?

A. Lack of vendor evaluation

B. Absence of purchase authorization control

C. Ineffective production scheduling

D. Poor inventory valuation method

✅ Answer:

Case 2: Inventory Discrepancy

During a warehouse audit, the internal auditor noticed that the physical inventory count of raw materials was significantly lower than the quantities recorded in the inventory system. Investigation revealed that materials were frequently issued to production without a Material Requisition Note (MRN).

Question

Which control should be implemented to reduce this risk?

A. Increase production capacity

B. Require authorized material requisition before issuing materials

C. Reduce supplier lead time

D. Increase marketing budget

✅ Answer:

Case 3: Quality Control Failure

An internal audit review found that defective finished goods were shipped to customers because quality inspection reports were not completed before dispatch.

Question

Who should be the primary risk owner for this issue?

A. Procurement Manager

B. Quality Assurance Manager

C. HR Manager

D. Sales Manager

✅ Answer:

Case 4: Segregation of Duties Issue

During an audit of the purchasing cycle, the auditor observed that the same employee creates purchase requisitions, approves purchase orders, and records supplier invoices.

Question

Which internal control principle is being violated?

A. Budgetary control

B. Segregation of duties

C. Preventive maintenance

D. Cost allocation

✅ Answer:

Case 5: Production Planning Problem

Internal auditors observed frequent production delays due to shortages of critical raw materials. The procurement department reported that they were not receiving timely production forecasts.

Question

Which department should provide the required information?

A. Human Resources

B. Production Planning Department

C. Finance Department

D. IT Department

✅ Answer:

Case 6: Obsolete Inventory

An internal audit identified large quantities of obsolete raw materials stored in the warehouse. There was no periodic review of slow-moving inventory.

Question

Which control would BEST mitigate this issue?

A. Increase safety stock levels

B. Implement periodic inventory review and aging analysis

C. Increase production capacity

D. Eliminate quality inspection

✅ Answer:

Case 7: Payroll Irregularities

During an HR audit, the auditor discovered that some employees listed in the payroll register did not appear in the attendance records.

Question

This situation MOST likely indicates:

A. Production inefficiency

B. Ghost employees in payroll

C. Vendor fraud

D. Inventory theft

✅ Answer:

Case 8: Machine Downtime

The production department reported significant downtime due to machine breakdowns. Internal audit found that preventive maintenance schedules were not followed.

Question

Which department is responsible for managing this risk?

A. Maintenance Department

B. Sales Department

C. HR Department

D. Procurement Department

✅ Answer:

Case 9: Unapproved Vendor

During the audit of procurement records, the internal auditor noticed that purchases were made from vendors not listed in the approved vendor database.

Question

What is the MOST appropriate control to prevent this risk?

A. Increase warehouse space

B. Restrict purchases to approved vendor list

C. Increase advertising budget

D. Reduce production output

✅ Answer:

Case 10: Missing Shipping Documentation

Internal auditors observed that some finished goods shipments to customers lacked delivery challans or dispatch documentation.

Question

Which risk is MOST significant in this situation?

A. Marketing risk

B. Revenue recognition risk and shipment disputes

C. HR compliance risk

D. IT system failure

✅ Answer:

Case 11: IT System Access

During an IT audit, it was discovered that warehouse staff had unrestricted access to modify inventory records in the ERP system.

Question

Which control should be implemented?

A. Remove ERP system

B. Implement role-based access controls

C. Increase warehouse staff

D. Increase production targets

✅ Answer:

Case 12: Sales Order Irregularity

Internal auditors found that some sales orders were processed without customer credit approval.

Question

Which department is responsible for managing this risk?

A. Credit Control / Finance Department

B. Production Department

C. Maintenance Department

D. IT Department

✅ Answer:

✅ These case-based questions are very similar to what appears in the

Certified Internal Auditor (CIA) Part 1 Exam

Topics: Internal Control, Risk Ownership, Governance, Operational Audit

www.gmsisuccess.in

Wednesday, March 4, 2026

Manufacturing Organization Departments (Function,Risk Owner, Deliverables, Documents)

MCQs – Manufacturing Organization Departments (Function,Risk Owner, Deliverables, Documents)

Accounting Information System AIS

Which department is primarily responsible for forecasting product demand and preparing sales budgets?

A. Production Department

B. Marketing / Sales Department

C. Finance Department

D. Human Resource Department

✅ Answer:

In a manufacturing organization, the risk owner for raw material quality risk is generally:

A. Finance Manager

B. Procurement Manager

C. Quality Control Manager

D. Sales Manager

✅ Answer:

Which document is typically generated by the production department to authorize manufacturing of goods?

A. Sales Invoice

B. Production Order

C. Goods Receipt Note

D. Purchase Requisition

✅ Answer:

The primary deliverable of the procurement department is:

A. Finished goods

B. Purchased materials at optimal price and quality

C. Marketing campaign

D. Payroll processing

✅ Answer:

Which document is issued by the store department when materials are issued to production?

A. Purchase Order

B. Material Requisition Note

C. Sales Order

D. Debit Note

✅ Answer:

Which department owns the risk related to employee turnover and skill shortages?

A. HR Department

B. Production Department

C. Procurement Department

D. Finance Department

✅ Answer:

Which department prepares the Bill of Materials (BOM)?

A. Engineering / Design Department

B. Finance Department

C. Marketing Department

D. HR Department

✅ Answer:

The primary deliverable of the quality assurance department is:

A. Employee training

B. Defect-free products

C. Vendor contracts

D. Sales forecast

✅ Answer:

Which document confirms that goods received from suppliers are inspected and accepted?

A. Goods Receipt Note (GRN)

B. Purchase Order

C. Sales Invoice

D. Production Schedule

✅ Answer:

10.

Which department is responsible for machine maintenance and equipment reliability risk?

A. Maintenance Department

B. Sales Department

C. Finance Department

D. HR Department

✅ Answer:

11.

The risk owner for inventory obsolescence is usually:

A. Warehouse / Stores Manager

B. HR Manager

C. Sales Manager

D. Legal Department

✅ Answer:

12.

Which document authorizes procurement of raw materials from suppliers?

A. Purchase Order

B. Sales Order

C. Delivery Challan

D. Payroll Register

✅ Answer:

13.

Which department prepares the master production schedule (MPS)?

A. Production Planning Department

B. Finance Department

C. HR Department

D. IT Department

✅ Answer:

14.

The primary deliverable of the finance department is:

A. Product design

B. Financial statements and financial control

C. Raw materials

D. Marketing strategies

✅ Answer:

15.

Which document records finished goods transferred from production to warehouse?

A. Finished Goods Transfer Note

B. Purchase Requisition

C. Sales Contract

D. Credit Memo

✅ Answer:

16.

Which department is responsible for supplier evaluation and vendor risk management?

A. Procurement Department

B. Sales Department

C. HR Department

D. Production Department

✅ Answer:

17.

Which document is used to record defective products detected during inspection?

A. Non-Conformance Report (NCR)

B. Purchase Order

C. Sales Invoice

D. Payroll Record

✅ Answer:

18.

The risk owner for workplace safety hazards is usually:

A. Health & Safety / Operations Manager

B. Sales Manager

C. Procurement Manager

D. Finance Manager

✅ Answer:

19.

Which department is responsible for processing customer orders and generating sales invoices?

A. Sales Department

B. Production Department

C. Maintenance Department

D. IT Department

✅ Answer:

20.

Which document is used to track movement of goods from warehouse to customer?

A. Delivery Challan

B. Payroll Sheet

C. Purchase Requisition

D. Journal Voucher

✅ Answer:

21.

Which department manages IT system risks and cybersecurity controls?

A. IT Department

B. Production Department

C. Procurement Department

D. Sales Department

✅ Answer:

22.

Which document is used by HR to record employee attendance and wages?

A. Time Sheet / Attendance Register

B. Purchase Order

C. Sales Contract

D. Production Order

✅ Answer:

23.

The primary deliverable of the production department is:

A. Purchase orders

B. Finished goods produced efficiently

C. Employee training programs

D. Vendor contracts

✅ Answer:

24.

Which department is responsible for cost accounting and variance analysis?

A. Finance / Cost Accounting Department

B. HR Department

C. Production Department

D. Marketing Department

✅ Answer:

25.

Which document provides details of raw materials required to produce a product?

A. Bill of Materials (BOM)

B. Sales Invoice

C. Payroll Sheet

D. Delivery Note

✅ Answer

If you want to check your answers Click here link 🖇️

https://gmsisuccess.in/?p=2629

www.gmsisuccess.in

Mocktest Financial statement

**25 US CMA Part 1 MCQs on Financial Reporting Topics** ANSWERS

These multiple-choice questions focus on US CMA exam-style topics like income statements, dividends, stock events, cash flows, investments, ratios, accounting concepts, and more, drawing from US GAAP principles tested in Part 1 Section A.

### Income Statement & Equity Events

1. In a multi-step income statement, gross profit is calculated as:

A. Net sales minus operating expenses

B. Net sales minus cost of goods sold

C. Operating income minus taxes

D. Net income plus interest

**Answer: B** – Gross profit reflects sales less direct production costs.

2. A small stock dividend (under 20-25%) is recorded by debiting retained earnings at:

A. Par value of shares

B. Fair market value of shares

C. Book value per share

D. Zero impact on equity

**Answer: B** – Small stock dividends use fair value to reclassify from retained earnings to paid-in capital.

3. For a 2-for-1 stock split on $80/share stock paying $1 dividend, post-split price expectation if dividend stays $1:

A. Exactly $40

B. Above $40 if yield rises

C. Below $40

D. Unchanged at $80

**Answer: B** – Splits increase shares; unchanged dividend raises yield, potentially lifting price above $40

4. Preferred dividends are typically:

A. Variable like common dividends

B. Fixed percentage of par value

C. Paid after common dividends

D. Non-cumulative by default

**Answer: B** – Preferred stock has fixed dividend rates based on par, with priority over common.

5. A property dividend declares asset with book value $50, fair value $75 at declaration:

A. No gain/loss recognized

B. Gain of $25 recorded

C. Loss of $25 recorded

D. Fair value at distribution date

**Answer: B** – Property is remeasured to fair value at declaration, recognizing gain.

### Cash Flow Statement

6. A statement of cash flows helps evaluate a firm's:

A. Economic resources and obligations

B. Liquidity, solvency, financial flexibility

C. Insider stock trades

D. Operating income components

**Answer: B** – Cash flows assess cash generation for short- and long-term viability

7. Gain on sale of available-for-sale (AFS) securities is:

A. Added to net income in operating cash flows

B. Subtracted from net income in operating section

C. Included in investing inflows

D. Ignored in cash flow statement

**Answer: B** – Gains are in net income but non-operating; subtract to avoid double-counting investing inflow.

8. Cash flows from financing activities include:

A. Cash from customers

B. Proceeds from issuing shares or loans

C. Purchase of equipment

D. Collections of receivables

**Answer: B** – Financing covers equity/debt issuance, repayments, dividends.

9. Decrease in accounts receivable is:

A. Subtracted in operating cash flows (indirect)

B. Added in operating cash flows

C. Investing outflow

D. Financing inflow

**Answer: B** – Indicates cash collected beyond sales revenue.

10. Past period bad debt recovery in current year (direct method):

A. Operating inflow

B. Investing inflow

C. Financing inflow

D. Off the cash flow statement

**Answer: A** – Recovery is cash from operations.

### Investments & Losses

11. AFS investments are reported at:

A. Amortized cost

B. Fair value; unrealized gains/losses in OCI

C. Lower of cost or market

D. Historical cost only

**Answer: B** – Not trading or held-to-maturity; fair value with OCI impact.

12. Allowance for credit losses uses:

A. Direct write-off only

B. Percentage of sales or receivables aging

C. Historical cost adjustment

D. Cash basis estimation

**Answer: B** – Matches expected losses to revenues or receivables.

### Liquidity, Solvency, Leverage

13. Current ratio formula:

A. Cash / Current liabilities

B. Current assets / Current liabilities

C. (Current assets - Inventory) / Current liabilities

D. Operating cash flow / Current liabilities

**Answer: B** – Measures short-term liquidity.

14. Cash flow ratio assesses:

A. Solvency via operating cash / current liabilities

B. Leverage via debt/equity

C. Activity via inventory turns

D. Profitability via ROE

**Answer: A** – Operating cash coverage of short-term obligations.

15. Solvency best represented by:

A. Cash balance end of period

B. Operating cash flows

C. Investing cash flows

D. Financing cash flows

**Answer: B** – Internal generation shows long-term viability over borrowing.

### Concepts & Components

16. Accrual concept records expenses when:

A. Cash paid

B. Incurred, not necessarily paid

C. Profit is high

D. Tax due

**Answer: B** – Matches revenues and expenses in period earned/incurred.

17. Going concern assumption justifies:

A. Liquidation basis

B. Depreciation and current/noncurrent classification

C. Fair value for all assets

D. No asset impairments

**Answer: B** – Assumes continuity beyond year.

18. Historical cost concept uses:

A. Fair value at reporting

B. Original transaction cost

C. Inflated replacement cost

D. Future estimated value

**Answer: B** – Objective, verifiable basis.

19. Cash equivalents include:

A. Long-term investments

B. Highly liquid investments maturing within 3 months

C. Inventory

D. Accounts receivable

**Answer: B** – Short-term, low-risk holdings.

20. Capital maintenance (financial):

A. Physical capacity preserved

B. Nominal capital not reduced by distributions

C. Real purchasing power maintained

D. Residual equity focus

**Answer: B** – Profits available after maintaining invested capital.

### Advanced & Mixed

21. Principal-agent problem in separate entity concept:

A. Owners manage operations

B. Managers (agents) act for owners (principals)

C. No separation of firm and owners

D. Consolidated reporting only

**Answer: B** – Agency theory addresses conflicts.

22. Recovery of prior bad debt:

A. Credit to allowance, debit cash; no P&L

B. Income in current year

C. Balance sheet only

D. Off-balance sheet

**Answer: A** – Reverses prior allowance; excess as income if applicable.

23. Components of cash & equivalents exclude:

A. Treasury bills <90 days

B. Commercial paper

C. Equity investments

D. Money market funds

**Answer: C** – Equity is not cash-like.

24. Leverage ratio example:

A. Current ratio

B. Debt-to-equity

C. Inventory turnover

D. Gross margin

**Answer: B** – Measures debt financing vs. equity.

25. Residual capital maintenance:

A. Physical assets at original cost

B. Distributions from residual equity after maintenance

C. Nominal dividends only

D. No distributions allowed

**Answer: B** – Profits beyond capital recovery.

www.gmsisuccess.in

Sunday, March 1, 2026

Integrated Case based questions ⁉️

Here are integrated, case-based questions (MCQ, Fill-in-the-Blank, Drag & Drop style) covering Budgetary Control, Variance Analysis, Relevant Costing, Internal Control, Risk Assessment, Governance, AIS, Job Order Costing, ABC, and Strategic Management — CMA/CIA level difficulty.

🔹 CASE 1 – Budgetary Control & Variance Analysis

Scenario:

A company budgeted production of 10,000 units.

Standard material: 5 kg per unit @ $4/kg

Actual production: 9,000 units

Actual material used: 48,000 kg

Actual price: $4.50/kg

Q1 (MCQ)

Material Price Variance is:

A. $24,000 U

B. $24,000 F

C. $20,000 U

D. $20,000 F

Answer:

Q2 (Fill in the Blank)

Material Usage Variance = ________ (F/U)

Answer: $.....

Q3 (MCQ – Control Concept)

The MOST appropriate control to prevent material usage variance is:

A. Segregation of duties

B. Standard cost revision

C. Engineering efficiency review

D. External audit

Answer:

🔹 CASE 2 – Relevant Costing Decision

Scenario:

A division has idle capacity. Variable cost per unit = $30.

Fixed costs = $200,000 (unavoidable).

Special order price = $35 for 5,000 units.

Regular selling price = $50.

Q4 (MCQ)

Should the company accept the special order?

A. Yes, because contribution = $25,000

B. No, because price < regular price

C. No, because fixed cost per unit exceeds price

D. Yes, because fixed cost is relevant

Answer:

Q5 (Fill in the Blank)

The relevant cost per unit is ________.

Answer: $....

Q6 (MCQ – Strategic Angle)

Rejecting the order WITHOUT considering idle capacity violates which principle?

A. Goal congruence

B. Relevant costing

C. Agency theory

D. Responsibility accounting

Answer:

🔹 CASE 3 – Internal Control & Risk Assessment

Scenario:

ABC Ltd. allows the same employee to:

Approve vendors

Record purchases

Process payments

Q7 (MCQ)

This represents violation of:

A. Authorization control

B. Segregation of duties

C. Preventive control

D. Detective control

Answer:

Q8 (Fill in the Blank)

This weakness increases risk of ________ fraud.

Answer:

Q9 (MCQ – Risk Response)

The BEST immediate control improvement is:

A. External audit

B. Vendor rotation

C. Segregating authorization and payment functions

D. Increasing budget

Answer:

🔹 CASE 4 – Job Order Costing

Scenario:

Job 101:

Direct Material = $20,000

Direct Labor = $15,000

OH rate = 150% of Direct Labor

Q10 (Fill in the Blank)

Applied overhead = ________.

150% × ...... = ......

Answer: $..,.......

Q11 (MCQ)

Total Job Cost =

A. 57,500

B. 52,500

C. 35,000

D. 22,500

Total = ......... + ........ + .......= ........

Answer:

Q12 (MCQ – Control Perspective)

Underapplied overhead indicates:

A. Overestimation of activity

B. Inefficient labor

C. Actual overhead > applied overhead

D. Budget variance only

Answer:

🔹 CASE 5 – Activity Based Costing (ABC)

Scenario:

Two products:

Product X (high volume)

Product Y (low volume, complex setup)

Traditional costing allocates overhead based on labor hours. ABC uses setup hours and inspection hours.

Q13 (MCQ)

Under traditional costing, which product is MOST likely overcosted?

A. Product Y

B. Product X

C. Both equally

D. Neither

Answer:

Q14 (Fill in the Blank)

ABC improves costing accuracy by identifying ________.

Answer:

Q15 (MCQ – Strategic Decision)

ABC is MOST useful when:

A. Overhead is insignificant

B. Product diversity is low

C. Overhead is high and products vary

D. Only one product is produced

Answer:

🔹 CASE 6 – Governance & Strategic Management

Scenario:

The Board of Directors approves risk appetite but does not monitor risk exposure reports.

Q16 (MCQ)

This reflects weakness in:

A. Risk identification

B. Risk assessment

C. Risk monitoring

D. Risk avoidance

Answer:

Q17 (Fill in the Blank)

Approving risk appetite is part of ________ governance responsibility.

Answer:

Q18 (MCQ – Agency Issue)

Failure to monitor management increases:

A. Moral hazard

B. Diversification

C. Operating leverage

D. Contribution margin

Answer:

🔹 CASE 7 – Accounting Information System (AIS)

Scenario:

Company uses batch processing. Errors are detected after month-end.

Q19 (MCQ)

Switching to real-time processing would improve:

A. Detective controls

B. Preventive controls

C. Timeliness of information

D. Audit trail elimination

Answer:

Q20 (Drag & Drop – Match Control Type)

Match the control to type:

Control Type

Password authentication Preventive

Bank reconciliation Detective

Backup server Corrective

Internal audit Detective

www.gmsisuccess.in

For answers.. please click here. ...

https://gmsisuccess.in/?p=2619