Skip to content

CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)

Which of the following items is excluded from a cost sheet because it is a financial item and not a part of cost of production or sales?

Interest on debentures is excluded from a cost sheet. It is a financial charge related to how the business is funded, not a cost of manufacturing or selling the product. Factory rent, carriage outward and depreciation of office equipment are operating overheads and are included.

  1. AInterest on debentures paidCorrect
  2. BFactory rent
  3. CCarriage outward
  4. DDepreciation of office equipment

Explanation

Interest on debentures is a financial charge and an appropriation of profit rather than a cost of producing or selling goods, so it is excluded from the cost sheet. Factory rent is a factory overhead, carriage outward a selling and distribution overhead, and office equipment depreciation an administration overhead; all are included.

Did you get it right without looking?

One question tells you little. A timed set on Statement of Cost and Profit (Cost Sheet) shows your real accuracy, how long you take and where you lose marks.

Practise Statement of Cost and Profit (Cost Sheet)Free diagnostic mock

More Statement of Cost and Profit (Cost Sheet) questions