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SOCPA Fellowship Exam: Managerial and Governmental Accounting: free practice test

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Practice test questions with answers and explanations

Try the questions in the test above first, then open each one here to see the correct answer and why every other option is wrong.

01Maintenance cost at Al-Waha Factory is semi-variable. Data for five months (operating hours / maintenance cost in SAR): January 5,000 / 67,000; February 4,000 / 60,000; March 9,000 / 95,000; April 7,000 / 81,000; May 8,000 / 88,000. Using the high-low method, what is the variable rate per operating hour?

Practice question Unit: Cost accounting

  1. ASAR 3.89

    Wrong: dividing by 9,000 hours instead of the hours difference (35,000 ÷ 9,000).

  2. BSAR 10.56

    Wrong: this is the average cost per hour in the highest month (95,000 ÷ 9,000) and includes the fixed part.

  3. CSAR 15.00

    Wrong: this is the average cost per hour in the lowest month (60,000 ÷ 4,000) and includes the fixed part.

  4. DSAR 7.00 ✓ Correct answer

    Correct: (95,000 − 60,000) ÷ (9,000 − 4,000) = SAR 7 per hour.

Reference: Cost accounting principles: cost behaviour and the high-low method (SOCPA Fellowship syllabus, Managerial and Governmental Accounting, topic 1, item 2)

02Al-Sahl Company estimated manufacturing overhead at SAR 440,000 based on 55,000 machine hours (SAR 8 per hour). Actual hours were 52,000 and actual overhead was SAR 431,000. What is the amount of over- or underapplied overhead?

Practice question Unit: Cost accounting

  1. AUnderapplied by SAR 15,000 ✓ Correct answer

    Applied overhead 8 × 52,000 = 416,000 is below actual 431,000, so the SAR 15,000 gap is underapplied.

  2. BOverapplied by SAR 15,000

    The direction is reversed: applied is below actual, which means underapplied, not overapplied.

  3. CUnderapplied by SAR 24,000

    Applied overhead was compared with estimated overhead (440,000 − 416,000) instead of actual.

  4. DOverapplied by SAR 9,000

    Actual was compared with estimated overhead (440,000 − 431,000), a budget variance rather than an absorption gap.

Reference: Cost accounting principles: predetermined overhead absorption rates (SOCPA Fellowship syllabus, Managerial and Governmental Accounting, topic 1, item 3)

03Al-Rayyan Company reports for the period: direct materials used SAR 110,000, direct labour 90,000, applied overhead 54,000, opening work in process 40,000 and closing work in process 52,000. What is the cost of goods manufactured?

Practice question Unit: Cost accounting

  1. ASAR 242,000 ✓ Correct answer

    254,000 + 40,000 − 52,000 = 242,000.

  2. BSAR 254,000

    254,000 is only the current period's cost and ignores opening and closing work in process.

  3. CSAR 346,000

    346,000 adds closing work in process instead of deducting it.

  4. DSAR 266,000

    266,000 reverses both signs: it deducts opening and adds closing work in process.

Reference: Cost accounting principles: job-order costing (SOCPA Fellowship syllabus, Managerial and Governmental Accounting, topic 1, item 4)

04A contract is priced at SAR 5,000,000 with estimated total cost of SAR 4,000,000 (unchanged). In year 1 revenue of SAR 2,000,000 was recognised on costs of SAR 1,600,000. Cumulative costs at the end of year 2 are SAR 2,800,000. What contract revenue is recognised in year 2 alone?

Practice question Unit: Cost accounting

  1. ASAR 1,500,000 ✓ Correct answer

    Cumulative progress is 2,800,000 ÷ 4,000,000 = 70%; cumulative revenue 3,500,000 − 2,000,000 = 1,500,000.

  2. BSAR 3,500,000

    3,500,000 is cumulative revenue with year-1 revenue not deducted.

  3. CSAR 1,200,000

    1,200,000 is year-2 cost (2,800,000 − 1,600,000), not revenue.

  4. DSAR 2,000,000

    2,000,000 repeats year-1 revenue.

Reference: Cost accounting principles: contract and operation costing (SOCPA Fellowship syllabus, Managerial and Governmental Accounting, topic 1, item 6); IFRS 15, paragraphs 35 and 39

05Al-Fajr Company produces a blend of two materials. The standard mix per 100 kg of input is 60 kg of A at a standard price of SAR 5 and 40 kg of B at a standard price of SAR 10. Actual use was 10,000 kg: 7,000 kg of A and 3,000 kg of B. What is the material mix variance?

Practice question Unit: Management accounting

  1. ASAR 5,000 favorable ✓ Correct answer

    Actual mix at standard prices costs 65,000 against 70,000 for the standard mix of the same total; the SAR 5,000 difference is favorable.

  2. BSAR 5,000 unfavorable

    Right amount but reversed: more of the cheaper material A lowered cost, so the variance is favorable.

  3. CSAR 10,000 favorable

    This is material B alone (1,000 kg × 10); it must be netted against material A, which is SAR 5,000 unfavorable.

  4. DSAR 15,000 favorable

    This adds the absolute values (10,000 + 5,000); the correct figure nets them because A's variance opposes B's.

Reference: Management accounting principles: standard costing and variance analysis (SOCPA Fellowship syllabus, Managerial and Governmental Accounting, topic 2, item 1)

06Annual demand for a material is 8,000 units, an order costs 90 SAR to place, and holding one unit costs 9 SAR a year. If Al-Waha Company buys in the economic order quantity, what is the total annual ordering and holding cost?

Practice question Unit: Management accounting

  1. A3,600 SAR ✓ Correct answer

    EOQ = √(2 × 8,000 × 90 ÷ 9) = 400 units. Ordering: 20 × 90 = 1,800; holding: (400 ÷ 2) × 9 = 1,800; total 3,600 SAR.

  2. B1,800 SAR

    This is only one component: ordering cost (20 orders × 90) or holding cost (200 × 9). The question asks for both.

  3. C5,400 SAR

    Holding was charged on the full quantity (400 × 9 = 3,600) and added to 1,800. Holding applies to average inventory (200 units).

  4. D7,200 SAR

    This doubles the correct total; the correct figure is 3,600 SAR.

Reference: Management accounting principles: inventory control, economic order quantity, reorder point and safety stock (SOCPA Fellowship syllabus, Managerial and Governmental Accounting, topic 2, item 2)

07The market price of a product is 600 SAR, management requires a profit of 25% of unit cost, and the current cost is 520 SAR. By how much must unit cost fall to reach the target cost?

Practice question Unit: Management accounting

  1. A70 SAR

    Profit was treated as 25% of price (target cost 450), but it is 25% of cost.

  2. B40 SAR ✓ Correct answer

    Target cost = 600 ÷ 1.25 = 480, so the required reduction is 520 − 480 = 40 SAR.

  3. C150 SAR

    This is 25% of the price and does not represent the cost gap.

  4. D80 SAR

    This is the current profit (600 − 520), not the cost cut required.

Reference: Management accounting principles: target costing, value engineering and kaizen costing (SOCPA Fellowship syllabus, Managerial and Governmental Accounting, topic 2, item 3)

08Which description matches the 4th edition (2025) of the Public Sector Accounting Concepts and Standards Manual?

Practice question Unit: Accounting in government entities

  1. AIt contains the conceptual framework and only 20 standards without any guides, and was approved directly by royal order

    20 is wrong, and approval was by ministerial decision under Royal Order 51574.

  2. BIt contains 40 standards with no conceptual framework or guidance

    The manual includes a conceptual framework and guides as well as the standards.

  3. CIt contains independent standards with new Saudi numbering unrelated to IPSAS numbers

    The manual keeps IPSAS numbers and content, with specific Saudi additions.

  4. DIt contains the conceptual framework, 40 standards and 3 guides, and was approved by Minister's Decision 50 ✓ Correct answer

    This was approved by Minister's Decision 50 of 7/1/1447 AH: a conceptual framework, 40 standards and 3 guides.

Reference: Minister of Finance Decision 50 (7/1/1447 AH, 2 July 2025) – Public Sector Accounting Concepts and Standards Manual, 4th edition (Ministry of Finance, 2025)

09A public entity bought equipment for SAR 600,000 in cash at the start of the year, with a 10-year life, no residual value and straight-line depreciation. How does the first-year surplus on the accrual basis differ from that on the cash basis?

Practice question Unit: Accounting in government entities

  1. AIt is higher by SAR 600,000

    600,000 ignores the depreciation expense.

  2. BIt is lower by SAR 60,000

    60,000 is the depreciation only; compared with the cash expense the surplus is higher, not lower.

  3. CIt is higher by SAR 540,000 ✓ Correct answer

    The cash basis charges 600,000 as expense while accrual charges only 60,000 depreciation, so the surplus is 540,000 higher.

  4. DIt does not change because payment is in cash under both

    Timing, not the payment method, changes the expense recognised.

Reference: Saudi Public Sector Accounting Standard 17 (IPSAS 17), property, plant and equipment – Public Sector Accounting Concepts and Standards Manual, 4th edition (Ministry of Finance, 2025)

10A charity's restricted net assets at the start of the year were SAR 400,000. During the year it received restricted donations for education of SAR 250,000 and spent SAR 180,000 on the education programme, releasing that amount from restriction. What are restricted net assets at year end?

Practice question Unit: Non-profit organisations

  1. ASAR 650,000

    This ignores deducting the amount released (400,000 + 250,000).

  2. BSAR 470,000 ✓ Correct answer

    400,000 + 250,000 - 180,000 = 470,000; additions increase the balance and releases decrease it.

  3. CSAR 830,000

    This adds the released amount instead of deducting it.

  4. DSAR 220,000

    This ignores the new restricted donations (400,000 - 180,000).

Reference: SOCPA Accounting Standards for Non-Profit Organisations: classification of net assets

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