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Fundamentals of Management Accounting Questions 146–150 (page: 31)

Updated On: 9-Feb-2026

In investment appraisal, the calculation of the payback period

  1. places the same value on all cash flows received over the whole life of a project.
  2. places the same value on all cash flows received during the payback period.
  3. places greater value on cash flows received in earlier years during the payback period.
  4. places greater value on cash flows received in later years during the payback period.

Answer(s): B



In an integrated cost and financial accounting system, the accounting entries for charging gross direct wages to production would be:

  1. Debit: Wages control accountCredit: Bank account
  2. Debit: Work in progress control accountCredit: Production overhead control account
  3. Debit: Production overhead control accountCredit: Wages control account
  4. Debit: Work in progress control accountCredit: Wages control account

Answer(s): D



In investment appraisal, the net present value (NPV) is

  1. The discount rate at which the project's cash inflows are equal to the cash outflows.
  2. The present value of the project's cash inflow.
  3. The difference between the present value of the project's cash inflows and the present value of the cash outflows.
  4. The difference between the present value of the project's profit and the present value of the initial investment.

Answer(s): C



An abnormal loss in a process occurs when:

  1. Actual losses are greater than the normal loss level
  2. Costs are increased as a result of defective materials
  3. Actual losses are less than the normal loss level
  4. Production levels are below budget

Answer(s): A



CORRECT TEXT

A chemical process has a normal wastage of 8% of input. For the month of June, 5,000 liters of materials were input and there was an abnormal gain of 200 liters.

The quantity of good production achieved was

  1. 4800 liters

Answer(s): A



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