When analyzing Cost Accounting data, 'Contribution' is useful for: MCQ with Answer and Explanation

When analyzing Cost Accounting data, 'Contribution' is useful for:
A. Make or Buy decisions
B. Calculating Income Tax
C. Determining depreciation
D. Valuing Goodwill
Answer: Option A
Solution (By JKSSB Mock Tests)
Contribution (Sales - Variable Cost) is a key metric in marginal costing used for managerial decisions like 'Make or Buy', dropping a product, or accepting special orders.

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Practice More Accountancy and Book Keeping Questions

Question #1
On dissolution of a firm, an asset taken over by a partner is credited to:
A. Asset Account
B. Realisation Account
C. Bank Account
D. Partner's Capital Account

Correct Answer: Option B


Explanation:
Asset taken over is recorded: Partner's Capital A/c Dr., To Realisation A/c. So Realisation A/c is credited.

Question #2
The 'Hedge Accounting' under Ind AS 109:
A. Only for foreign exchange
B. Is prohibited
C. Aligns accounting with risk management activities, with three types: fair value, cash flow, net investment
D. Only for derivatives

Correct Answer: Option C


Explanation:
Ind AS 109 provides hedge accounting models.

Question #3
The term 'Cloud Accounting' refers to:
A. Manual accounting on paper
B. Accounting for cloud computing expenses
C. Accounting for weather-related losses
D. Using accounting software hosted on remote servers accessed via internet

Correct Answer: Option D


Explanation:
Cloud accounting uses online software, enabling real-time access and collaboration.