The primary purpose of a cost sheet is to: MCQ with Answer and Explanation

Question
The primary purpose of a cost sheet is to:
A. Ascertain cost per unit of a product
B. Prepare financial statements
C. Ascertain profit for the year
D. Calculate tax liability
Answer: Option A
Solution (By JKSSB Mock Tests)
Cost sheet shows the various elements of cost and total cost per unit of output.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Practice More Accountancy and Book Keeping Questions

Question #1
The 'Indian Audit and Accounts Department' works under:
A. Planning Commission
B. Ministry of Finance
C. RBI
D. Comptroller and Auditor General
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Correct Answer: Option D

Explanation:
The IA&AD is headed by the CAG.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
For calculating the Current Ratio, which of the following is excluded from Current Assets?
A. Prepaid Expenses
B. Cash at Bank
C. Sundry Debtors
D. Loose Tools
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Correct Answer: Option D

Explanation:
Loose tools and spares are generally excluded from current assets while calculating liquidity ratios because they cannot be easily converted into cash to pay off liabilities.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
As per AS 3, interest paid on loan is classified as:
A. Operating activity
B. Financing activity
C. Investing activity
D. None
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Correct Answer: Option B

Explanation:
Interest paid on borrowings is a financing activity under AS 3.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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