Contract Costing MCQ | Cost Accounting MCQs (Free Resource)
Contract Costing MCQ
1. Contract costing is a basic method of
(a) Historical costing
(b) Specific order costing
(c) Process costing
(d) Standard costing
2. Contract costing is a variant of _________ Costing.
(a) Job
(b) Process
(c) Unit
(d) Batch
3. Contract costing is usually applicable in
(a) Constructional Works
(b) Textile Mills
(c) Cement Industries
(d) Chemical Industries
4. __________ is the person for whom the Contract job is undertaken.
(a) Contractor
(b) Contractee
(c) Sub-contractor
(d) Job-worker
5. Which one of the following is not a contract cost ?
(a) Direct wages
(b) Depreciation of plant
(c) Sub-contractors’ fees
(d) Architects’ certificates
6. The degree of completion of work is determined by comparing the work certified with
(a) Contract price
(b) Work in progress
(c) Cash received on contract
(d) Retention money
7. In contract costing credit is taken only for a part of the profit on
(a) Completed contract
(b) Incomplete contract
(c) Work uncertified
(d) Work Certified
8. In contract costing payment of cash to the contractor is made on the basis of
(a) Uncertified work
(b) Certified work
(c) Work in progress
(d) Retention Money
9. The cost of any sub-contracted work is
(a) A direct expense of a contract and is debited to the contract account
(b) An indirect expense of a contract and is debited to the contract account
(c) A direct expense of a contract and is debited to the client account
(d) An indirect expense of a contract and is debited to the client account
10. Progress payments received by the contractor from the client are
(a) Debited to the contract account
(b) Credited to the contract account
(c) Debited to the client account
(d) Credited to the client account
| Answers: 1)Specific order costing 2)Job 3)Constructional Works 4)Contractee 5)Architects’ certificates 6)Contract price 7)Incomplete contract 8)Certified work 9)A direct expense of a contract and is debited to the contract account 10)Credited to the client account |
11. Retention Money is equal to
(a) Work certified Less Work uncertified
(b) Contract price Less Work certified
(c) Work certified Less Payment received by contractor
(d) None of the above
12. Material supplied by the Contractee
(a) is debited to the Contract Account
(b) is ignored in the Contract Account
(c) is credited to the Contract Account
(d) is debited to the Contractee’s Account
13. Cost of material lost or destroyed
(a) is credited to the Contract Account
(b) is debited to the Contract Account
(c) is debited to the Costing Profit and Loss Account
(d) is credited to the Costing Profit and Loss Account
14. Work Certified is valued at
(a) Cost price
(b) Market price
(c) Cost or market price whichever is less
(d) Estimated price
15. Value of Work Certified Less Profit =
(a) Work-in-progress
(b) Cost of Work Certified
(c) Retention Money
(d) Cost of uncertified work
16. The Total Value of Work Completed during an accounting year is equal to
(a) Work Certified + Progress Payment Received
(b) Work Certified + Work Uncertified
(c) Work Certified + Retention Money
(d) None of the above
17. Notional Profit is equal to
(a) Work certified Less Cost of work certified
(b) Work certified Less Cost of work completed
(c) Payment received Less Work certified
(d) None of the above
18. Work-in-progress at year end is equal to
(a) only closing stock of materials
(b) only work certified
(c) only work uncertified
(d) the total of all the above
19. Work certified is less than 25% of the contract price. The transfer to P & L A/c will be
(a) 1/3 rd of Notional profits
(b) NIL
(c) 2/3 rd of Notional profits
(d) 100% of Notional profits
20. Work certified is between 25% and 50% of the contract price. The transfer to P & L A/c will be
(a) 1/3 rd of Notional profits, reduced in the ratio of cash received to work certified
(b) NIL
(c) 2/3 rd of Notional profits, reduced in the ratio of cash received to work certified
(d) 100% of Notional profits
| Answers: 11)Work certified Less Payment received by contractor 12)is ignored in the Contract Account 13)is credited to the Contract Account 14)Cost price 15)Cost of Work Certified 16)Work Certified + Work Uncertified 17)Work certified Less Cost of work certified 18)the total of all the above 19)NIL 20)1/3 rd of Notional profits, reduced in the ratio of cash received to work certified |
21. Work certified is between 50% and 90% of the contract price. The transfer to P & L A/c will be
(a) 1/3 rd of Notional profits, reduced in the ratio of cash received to work certified
(b) NIL
(c) 2/3 rd of Notional profits, reduced in the ratio of cash received to work certified
(d) 100% of Notional profits
22. The entire contract is complete. The transfer to P & L A/c will be
(a) 1/3 rd of Notional profits
(b) NIL
(c) 2/3 rd of Notional profits
(d) Entire profit
23. If a contract is 40% complete, credit taken to the profit and loss account is
(a) 40% of the notional profit
(b) 1/3 rd of Notional profits, reduced in the ratio of cash received to work certified
(c) NIL
(d) 2/3 rd of Notional profits, reduced in the ratio of cash received to work certified
24. Value of work certified – Rs 5,00,000
Cost of work to date – Rs 4,00,000
Cost of work not yet certified – Rs 1,00,000
Notional Profit is
(a) Rs 1,00,000
(b) Nil
(c) Loss Rs 1,00,000
(d) Rs 2,00,000
25. The total profit on a contract for Rs 3,00,000 is Rs 60,000 and the contract is 60% complete and has been certified accordingly. The retention money is 20% of the certified value, then the amount of profit that can be prudently credited to Profit and Loss Account
(a) Rs 60,000
(b) Rs 36,000
(c) Rs 28,800
(d) Rs 48,000
26. Contract cost – Rs 2,80,000
Contract value – Rs 5,00,000
Cash received – Rs 2,70,000
Uncertified work – Rs 30,000
Deduction from bills by way of retention money is 10%.
How much profit, if any, you would take to the profit and loss account?
(a) Rs 50,000
(b) Rs 33,333
(c) Rs 30,000
(d) Nil
27.Total cost of contract to date – Rs 3,83,000
Cost of contract not yet to certified – Rs 23,000
Value of work certified – Rs 4,20,000
Cash received to date – Rs 3,78,000
Value of work-in-progress is
(a) Rs 65,000
(b) Rs 41,000
(c) Rs 23,000
(d) Rs 14,000
28. Total cost of contract to date – Rs 3,83,000
Cost of contract not yet to certified – Rs 23,000
Value of work certified – Rs 4,20,000
Cash received to date – Rs 3,78,000
Reserve for contingencies is
(a) Rs 60,000
(b) Rs 24,000
(c) Rs 36,000
(d) Rs 1,000
| Answer: 21)1/3 rd of Notional profits, reduced in the ratio of cash received to work certified 22)Entire profit 23)1/3 rd of Notional profits, reduced in the ratio of cash received to work certified 24)Rs 2,00,000 25)Rs 28,800 26)Rs 30,000 27)Rs 41,000 28)Rs 24,000 |
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