Under Activity Based Costing (ABC), costs are allocated based on: MCQ with Answer and Explanation

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Under Activity Based Costing (ABC), costs are allocated based on:

A. Direct Labor Hours

B. Cost Drivers

C. Volume of Production only

D. Machine Hours

Answer: Option B

Solution (By JKSSB Mock Tests)

ABC traces overheads to specific activities and allocates them to products based on the consumption of 'cost drivers'.

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

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Question #1

The 'Final Dividend' is recommended by:

A. Registrar

B. Board of Directors

C. Shareholders

D. Auditors

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Correct Answer: Option B

Explanation:
Board recommends final dividend, which is then approved by shareholders in AGM.

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

Question #2

In a BRS, when a cheque is issued but not presented, the cash book balance is:

A. Lower than the pass book balance

B. Higher than the pass book balance

C. Unaffected

D. Equal to the pass book balance

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Correct Answer: Option A

Explanation:
Issuing a cheque immediately reduces the cash book balance, but the bank balance (pass book) remains high until the cheque is cleared.

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

Question #3

Fair Value Accounting requires assets and liabilities to be measured at:

A. Written Down Value

B. Book Value

C. Historical Cost

D. Current market price or estimated exit price

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Correct Answer: Option D

Explanation:
Under Fair Value, items are reported based on current market valuations, replacing the traditional historical cost concept for many financial instruments.

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

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