Paper 10: COST & MANAGEMENT ACCOUNTING and Financial Management (True/False)
1.       Bill Discounting is defined as the relationship between the seller of goods and a financial firm, called the Factor. False
2.       Operating Leverage analyses the relationship between Sales Level and Earning Per Share (EPS). False
3.       The Cost of Capital is the required rate of return to maintain the value of the firm. True
4.       Production Budget is prepared before Sales Budget. False
5.       Budgets are always prepared for one year. False
6.       At Break Even Point, the Margin of Safety is nil. True
7.       Marginal Costing is useful for long term planning. False
8.       Profit Planning and Control is not a part of Budgetary Control Mechanism. False
9.       Standard Costs are based on technical assessments. True
10.   PV Chart exhibits the relationship between profit and overhead volume. False
11.   At break-even point, margin of safety is nil. True

12.   In mutually exclusive capital budgeting decisions, the firm can accept all feasible proposals. False
13.   Weighted Average Cost of Capital in always calculated with reference to book value of different sources of funds. False
14.   Debt-Equity Ratio is a measure of long-term solvency of a firm. True
15.   Capital Rationing as a situation when the Government has imposed a ceiling on investment by a firm. False
16.   The profit calculated under absorption costing and marginal costing is always equal. False
17.   A flexible budget takes into account only fixed costs. False
18.   Management Accounting is largely based on estimates and as such total accuracy is not ensured under Management Accountancy. True
19.   The main objective of Budgetary control is to co-ordinate the different departments. False
20.   Standard Costing are applicable in Banking Industry. False
21.   Learning Curve is a Cost Reduction technique. False
22.   Debt Service Coverage Ratio indicates the liquidity of a firm in relation to its ability to meet projected daily expenditure from operations. False
23.   Finance is called the "Chemistry of money". False
24.   An increase in production means an increase in overall productivity. False
25.   In Financial Management, the objective of Financial Manager is profit maximization. False
26.   Investment Decisions and Capital Budgeting are one and the same. False
27.   Capital Budgetary Forecasts Returns on proposed long-term investments and compares profitability of different Investments and their cost of capital. True
28.   Standard Costing may not be suitable for small concerns. True

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