The 'Reconciliation of Cost and Financial Accounts' is necessary because: MCQ with Answer and Explanation

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The 'Reconciliation of Cost and Financial Accounts' is necessary because:

A. Audit requirement

B. Tax requirement

C. Both use same principles

D. Different bases of valuation and items included lead to different profit figures

Answer: Option D

Solution (By JKSSB Mock Tests)

Differences arise due to items like notional rent, depreciation method, etc., so reconciliation explains the divergence.

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

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Question #1

A favourable variance in materials cost indicates that:

A. Actual cost of materials was less than the standard cost

B. More material was used than budgeted

C. Material price increased in the market

D. Sales volume increased

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Correct Answer: Option A

Explanation:
Favourable means beneficial to profit, which happens when actual costs are lower than standard expected costs.

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

Question #2

The 'Provisional Assessment' under GST can be requested when:

A. Audit is pending

B. Tax rate is not known

C. Return is delayed

D. Value of supply or rate of tax cannot be determined at the time of supply

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Correct Answer: Option D

Explanation:
Provisional assessment under Section 60 allows payment of tax on a provisional basis when valuation/rate is uncertain.

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Question #3

Cost Accounting defines 'Cost Centre' as:

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

B. A unit of product ready for sale

C. The bank account where funds are kept

D. The total profit of the organization

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Correct Answer: Option A

Explanation:
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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