The 'Target Costing' approach begins with: MCQ with Answer and Explanation

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The 'Target Costing' approach begins with:

A. Setting a desired selling price and then deducting desired profit margin to arrive at target cost

B. Budgeting

C. Determining cost of production

D. Calculating actual cost

Answer: Option A

Solution (By JKSSB Mock Tests)

Target costing is a market-driven approach: Target cost = Target selling price - Desired profit.

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

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Question #1

The journal entry for transferring 'Net Profit' to capital account is:

A. Profit & Loss Appropriation A/c Dr. To Capital A/c

B. Capital A/c Dr. To Profit & Loss A/c

C. Profit & Loss A/c Dr. To Capital A/c

D. Drawings A/c Dr. To Capital A/c

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Correct Answer: Option C

Explanation:
Net profit is closed by debiting Profit & Loss A/c and crediting Capital A/c (or Retained Earnings for companies).

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

Question #2

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

A. Internal auditor

B. CAG

C. Chartered accountant

D. Tax auditor

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Correct Answer: Option B

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

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Question #3

A suspense account is opened when:

A. Trial balance does not agree

B. Cash book shows overdraft

C. A fraud is detected

D. Final accounts are prepared

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Correct Answer: Option A

Explanation:
When trial balance totals do not match, the difference is temporarily placed in a suspense account to allow final accounts preparation.

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

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