In cost accounting, the prime cost is equal to: MCQ with Answer and Explanation

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In cost accounting, the prime cost is equal to:

A. Cost of production + Selling overheads

B. Direct materials + Direct labor + Direct expenses

C. Factory cost + Admin overheads

D. Total cost - Profit

Answer: Option B

Solution (By JKSSB Mock Tests)

Prime cost is the aggregate of all direct costs, specifically direct materials, direct labor, and direct expenses.

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

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Question #1

Which module of PFMS allows tracking of fund utilization by implementing agencies at lower tiers?

A. EAT (Expenditure, Advance and Transfer) Module

B. E-Kuber Module

C. DBT Module

D. GSTN Module

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Correct Answer: Option A

Explanation:
The EAT module maps the entire hierarchy of implementing agencies, ensuring funds transferred are tracked until final expenditure.

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Question #2

S1: Carriage Inwards is added to the Trading Account. S2: Carriage Outwards is added to the Trading Account. Which statement(s) is/are correct?

A. Both S1 and S2

B. S1 only

C. S2 only

D. Neither S1 nor S2

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Correct Answer: Option B

Explanation:
Carriage Inwards is a direct expense related to purchases and is added to the Trading Account. Carriage Outwards is a selling and distribution expense, shown in the Profit and Loss Account.

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Question #3

In government accounting, the 'Appropriation Audit' is conducted by:

A. CAG

B. Internal auditor

C. Chartered accountant

D. Tax auditor

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Correct Answer: Option A

Explanation:
CAG audits appropriation accounts to ensure expenditure is within the grants authorized by Parliament.

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