Cost Accounting defines 'Cost Centre' as: MCQ with Answer and Explanation

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Cost Accounting defines 'Cost Centre' as:

A. The total profit of the organization

B. A person, location, or item of equipment for which costs may be ascertained for control

C. A unit of product ready for sale

D. The bank account where funds are kept

Answer: Option B

Solution (By JKSSB Mock Tests)

A cost centre is a logical segment (like a department or machine) used to accumulate and trace costs for management purposes.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

If goods worth Rs 2,000 returned to a supplier are not recorded at all, this error is called:

A. Error of Commission

B. Error of Omission

C. Error of Principle

D. Compensating Error

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Correct Answer: Option B

Explanation:
A complete failure to record a transaction in the books of original entry is an error of complete omission.

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Question #2

When converting Single Entry to Double Entry, the Bills Receivable dishonored will be:

A. Ignored

B. Credited to Total Debtors A/c

C. Debited to Cash A/c

D. Debited to Total Debtors A/c

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Correct Answer: Option D

Explanation:
Dishonor of a bill reinstates the debtor's liability, thus the Total Debtors Account is debited to increase the balance.

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Question #3

Tax Audit under Income Tax Act is mandatory for businesses with turnover exceeding:

A. ₹2 crore

B. ₹10 crore

C. ₹50 lakh

D. ₹1 crore

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Correct Answer: Option D

Explanation:
Tax audit is required if turnover exceeds ₹1 crore in case of business (subject to digital transaction threshold of ₹10 crore in certain cases). Standard limit ₹1 crore.

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