The 'Transfer Price' in cost accounting for internal transfers is: MCQ with Answer and Explanation

Question
The 'Transfer Price' in cost accounting for internal transfers is:
A. Price at which goods/services are transferred between divisions of the same company
B. Market price only
C. Cost plus fixed profit
D. Government regulated price
Answer: Option A
Solution (By JKSSB Mock Tests)
Transfer price is the value placed on internal transfers between responsibility centres.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Practice More Accountancy and Book Keeping Questions

Question #1
Examining documentary evidence to ascertain the accuracy and authenticity of transactions is called:
A. Verification
B. Vouching
C. Internal checking
D. Valuation
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Correct Answer: Option B

Explanation:
Vouching is the practice of checking the entries in the books of accounts with supporting documents (vouchers) to prove their accuracy.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
A bank reconciliation statement starting with overdraft as per Cash Book will treat a cheque issued but not presented:
A. Adjusted in capital
B. No effect
C. Added
D. Subtracted
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Correct Answer: Option C

Explanation:
When starting with overdraft as per Cash Book (negative bank balance), cheque issued reduces the overdraft in cash book but not yet in passbook, so to reconcile, add back.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
The term 'Liquidity Ratio' includes:
A. Stock Turnover Ratio and Debtors Turnover Ratio
B. Debt-Equity Ratio and Proprietary Ratio
C. Current Ratio and Quick Ratio
D. Gross Profit Ratio and Net Profit Ratio
Discuss
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Correct Answer: Option C

Explanation:
Liquidity ratios measure the short-term solvency of a firm and include the Current Ratio and the Quick (or Acid-Test) Ratio.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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