Assertion Reason Questions in commerce
Objective Commerce Test containing Assertion Reason Type Questions
ASSERTION REASON QUESTIONS COMMERCE MCQ
Directions : The following Fourteen (14) items consist of two statements, one labelled as the ‘Assertion (A) ‘and the other as ‘Reason (R)’. You are to examine these two statements carefully and select the answers to these items using the Code given below:
(a) Both A and R are individually true and R is the correct explanation of A
(b) Both A and R are individually true but R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
1. Assertion (A): The role of the Doctrine of Indoor Management is opposed to the rules of constructive notice.
Reason (R): The constructive notice seeks to protect the company against the outsider whereas the Doctrine of Indoor Management operates to protect outsider against the company.
Ans. (a)
2. Assertion (A): Rules of Constructive Notice and Articles of Association are known to everyone who deals with the company.
Reason (R): After re4stration of the company, Memorandum and Articles of Association become public documents.
Ans. (a)
3. Assertion (A): Doctrine of Indoor Management does not apply to forgery.
Reason (R): Company Law recognizes ultra vires or illegal acts.
Ans (c)
4. Assertion (A): A Director of a company in his individual capacity can exercise powers conferred on him by the Companies Act, Memorandum and the Article of Association of the company.
Reason (R): The Directors have the power to enter into contract on behalf of the company with other parties.
Ans. (d)
5. Assertion (A): Capital expenditure is incurred for the purpose f acquiring fixed asset.
Reason (R): Capital expenditure item is shown in the asset side of the Balance Sheet.
Ans. (b)
6. Assertion (A): Staff officers and assigned an ‘authority of ideas’ and line officers and ‘authority to command’.
Reason (R): Functional authority is not restricted to managers of a particular type of department.
Ans. (b)
7. Assertion (A): Management Audit should be conducted by a team of experts.
Reason (R): Management Audit is a critical examination of policy and practices of management from the highest level to downward in order to ascertain that sound management prevails in the business concern.
Ans. (a)
8. Assertion (A): If it is found that some errors and/or frauds are remaining undetected due to the fact that a statutory auditor depended upon test checking, then the said auditor will be held responsible for negligence in the performance of his duties.
Reason (R): A statutory auditor cannot, in any way, avoid or reduce the responsibility laid on him by the statutes.
Ans. (d)
9. Assertion (A): An auditor of a large business concern has to adopt test checking based on scientific statistical sampling technique instead of checking the whole of transaction- of a particular class.
Reason (R): Test checking based on scientific statistical sampling technique, reduces the volume of unnecessarily cumbersome audit work involved in detailed checking of all transactions.
Ans. (a)
10. Assertion (A): Revenue expenditure is written off in the year in which it occurs.
Reason (R): The benefit of revenue expenditure is consumed in the year in which it arises.
Ans. (a)
11. Assertion (A): Cash flow Statement and Fund Flow Statement disclose same information.
Reason (R): Both are prepared out of the same data.
Ans. (d)
12. Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.
Reason (R): Liquid ratio analyses liquid assets and liquid liabilities of a business uhit in order to assess the extent of liquidity.
Ans. (a)
13. Assertion (A): Profit and Loss Account and Balance Sheet are financial statements showing financial position of a business unit.
Reason (R): Profit and Loss Account and Balance Sheet are prepared at the end of the financial year.
Ans. (d)
14. Assertion (A): The interest on debentures can be capitalized up to the complete construction of the fixed assets.
Reason (R): The construction of fixed assets could only be completed by the use of these funds.
Ans. (c)
Friday, April 29, 2011
Monday, April 11, 2011
Objective commerce for B.Ed
Objective commerce for B.Ed
MCQ Bed Commerce
Online Free Practice Test of Commerce for BEd Exam
1. Giffin goods may be characterized as—
(A) Inferior goods
(B) To have positive demand curve
(C) To have negative demand curve
(D) A case when income effect is positive and very strong
Ans. (A)
2. By which tax does the’ Government of India earn maximum revenue?
(A) Income-tax
(B) Custom duty
(C) Property-tax
(D) Excise duty
Ans. (D)
3. The main objective of controlling is—
(A) Maintaining discipline
(B) Motivating subordinates
(C) Reducing gap between planning and performance
(D) None of the above
Ans. (C)
4. A regressive tax will tend to redistribute income more—
(A) Equally
(B) Unequally
(C) Equitably
(D) Inequitably
Ans. (B)
5. Which of the following totals would not be included in a firm’s Profit and Loss Account?
(A) Overhead cost
(B) Direct cost
(C) Allowances for depreciation of assets
(D) All the above will be included
Ans. (B)
6. Which of the following is the basis for determining the national income?
(A) Total revenue of the State
(B) Production of goods and services
(C) Net profit earned and ‘expenditure incurred by the state
(D) All the above
Ans. (D)
7. All of the following totals would be included in a company’s Profit and Loss A/c except—
(A) Direct costs
(B) Allowances for depreciation of assets
(C) Overhead costs
(D) Value of premises owned by the company
Ans. (A)
8. When did WTO, which set out rules for world trade, come into force?
(A) 1984
(B) 1951
(C) 1954
(D) 1995
Ans. (D)
9. Who manage a joint stock company?
(A) Its Board of Directors
(B) Its General Body
(C) Its Management Council
(D) All the above
Ans. (A)
10. The costs which do not vary with the changes in a firm’s output are known as—
(A) Fixed costs
(B) Variable costs
(C) Implicit costs
(D) Social costs
Ans. (A)
11. Which of the following States leads in Commerce and Industry?
(A) Gujarat
(B) Tamil Nadu
(C) Maharashtra
(D) West Bengal
Ans. (C)
12. Which of the following States accounts for the largest share of industrial production and capital investment?
(A) Gujarat
(B) Maharashtra
(C) Tamil Nadu
(D) West Bengal
Ans. (B)
13. When the prices are rising, which of the following steps should the government adopt to bring about reduction in prices?
(A) Reduce the rate of tax on personal income
(B) Increase governmental spending
(C) Lower the interest rate
(D) Increase the availability of goods
Ans. (D)
14. Which of the following is not mathematical average?
(A) Geometric average
(B) Harmonic average
(C) Quadratic average
(D) Progressive average
Ans. (D)
15. Statutory Audit reports on—
(A) The efficiency of the Unit
(B) Accuracy of Stocjcs
(C) Accuracy of Accounts
(D) The proper follow-up of Government rules
Ans. (C)
16. Fourteen leading Commercial Banks were nationalized on—
(A) 15th August, 1947
(B) 26th January, 1949
(C) 19th July, 1969
(D) 29th July, 1969
Ans. (C)
17. According to Company Law a work done beyond the rights described in Memorandum of Association is—
(A) Legal
(B) Immoral
(C) Useless
(D) Opposed to public policy
Ans. (C)
18. Who issues the Certificate of Incorporation?
(A) Central Government
(B) Shareholders
(C) Director
(D) Company Registrar
Ans. (D)
19. Who stated ‘Bad money drives good money out of circulation’?
(A) Keynes
(B) Gresham
(C) Kent
(D) Mallows
Ans. (B)
20. A partner has a right—
(A) To take part in business
(B) To be consulted
(C) To interest on capital
(D) All of the above
Ans. (D)
21. What is the time duration of Managing director in a Public Company?
(A) 5 years
(B) 1 year
(C) 7 years
(D) Life-long
Ans. (A)
22. The concept of functional foreman as first developed by—
(A) Harrington Emerson
(B) F. W. Taylor
(C) F. B. Gilberth
(D) Elton Mayo
Ans. (B)
23. Motivation is basically a—
(A) Sociological process
(B) Physiological process
(C) Psychological process
(D) Intellectual process
Ans. (C)
24. Assets in the Balance Sheet of a company are arranged in the order of—
(A) Liquidity
(B) Market value
(C) Book value
(D) Permanence
Ans. (C)
25. Non-convertible debentures refer to—
(A) Owner capital
(B) Loan capital
(C) Short-term debts
(D) All of the above
Ans. (B)
26. Which of the following is not a current inability?
(A) Bills payable
(B) Bank overdraft
(C) Minority interest
(D) Unclaimed dividends
Ans. (C)
27. The term ‘depletion’ is used in relation to—
(A) Fixed Assets
(B) Wasting Assets
(C) Current Assets
(D) Intangible Assets
Ans. (B)
28. FIFO is advisable in case of—
(A) Rising prices
(B) Falling prices
(C) Constant prices
(D) None of the above
Ans. (B)
29. Main source of India’s national income is—
(A) Agriculture
(B) Industry
(C) Forestry
(D) Construction
Ans. (A)
30. Staffing includes—
1. Training 2.praisal
3. Placement 4.Directing
(A) 1 and3
(B) 1, 2 and 3
(C) 2 and 3
(D) 1, 2, 3 and 4
Ans. (B)
31. While delegating superior delegates—
(A) Only authority
(B) Authority and responsibility
(C) Authority, responsibility and accountability
(D) Authority and responsibility but not accountability
Ans. (A)
32. Which of the following is the most democratic form of organization?
(A) Line
(B) Line and Staff
(C) Functional
(D) Committee
Ans. (B)
33. The role of Staff in Line Staff organization is—
(A) Authoritative
(C) Responsible
(B) Advisory
(D) All of the above
Ans. (B)
34. A company secretary is appointed by—
(A) The Government
(B) Debenture holders
(C) The Board of Directors
(D) Shareholders
Ans. (C)
35. Which of the following would be fixed cost to manufacturing firm?
(A) Plant and Machinery
(B) Raw materials
(C) Wages
(D) Replacement of load
Ans. (D)
36. Public Sector consists of those enterprises in which
The State owns—
(A) 50% of the capital
(B) 66% of the capital
(C) 40% of the capital
(D) More than 50% of the capital
Ans. (D)
37. Which is a capital expenditure?
(A) Wages paid
(B) Salaries paid
(C) Heavy advertisement cost
(D) Patents acquired
Ans. (D)
38. A company can purchase its own—
(A) Equity shares
(B) Preference shares
(C) Debentures
(D) All of the above
Ans. (D)
39. A and B are of 7: 5 partners. C is admitted for 1/5 share. The new ratio is—
(A) 3:2:1
(B) 5:3
(C) 2: 2: 1
(D) None of the above
Ans. (B)
40. The sacrificing ratio in above case is—
(A) 7:5
(B) 2: l
(C) Equal
(D) 1:2
Ans. (A)
41. Immediate Liquidity Test is—
(A) Current ratio
(B) Quick ratio
(C) Fixed assets turnover ratio
(D) Stock turnover ratio
Ans. (B)
42. Cost accounting is a part of—
(A) Management accounting
(B) Financial accounting
(C) General accounting
(D) Special accounting
Ans. (A)
43. Theory ‘X’ and ‘Y’ was originated by—
(A) P. F. Drucker
(B) McGregor
(C) Maslow
(D) Herzberg
Ans. (B)
44. In a big office, efficient filing is—
(A) Vertical
(B) Horizontal
(C) Both
(D) None
Ans. (A)
45. Net worth of a business means—
(A) Total fixed assets
(B) Assets minus liabilities
(C) Fixed assets minus current assets
(D) Share capital plus current liabilities
Ans. (B)
46. Funds in relation to Funds Flow Statement earns—
(A)Net assets
(B)Current assets
(C) Net current assets
(D)Current liabilities
Ans. (C)
47. In the absence of an agreement, the partners are entitled to interest on their loans at the rate of—
(A) 5%
(B) 6%
(C) 7%
(D) 10%
Ans. (B)
48. Income and Expenditure A/c is prepared by—
(A) Manufacturing concerns
(B) Non-manufacturing concerns
(C) Trading concerns
(D) Non-trading concerns
Ans. (D)
49. Debit side of Income and Expenditure A/c shows—
(A) Income
(B) Expenditure
(C) Cash receipts
(D) Cash payments
Ans. (B)
50. Quick ratio is a test of—
(A) Liquidity
(B) Solvency
(C) Profitability
(D) None of the above
Ans. (B)
51. Franking Machine is a—
(A) Duplicating machine
(B) Dictating machine
(C) Calculating machine
(D) Mailing machine
Ans. (D)
52. Given: Current Ratio = 3: 1
Quick Ratio = 1:
Current Liabilities = Rs. 30, 000
What is the value of stock in trade?
(A) Rs. 45,000
(B) Rs. 60,000
(C) Rs. 90,000
(D) Rs. 50,000
Ans. (B)
53. When a supervisor is re designated as section officer under the need hierarchy theory of motivation, it satisfied—
(A) Social needs
(B) Esteem needs
(C) Seif-actualisation needs
(D) Economic needs
Ans. (B)
54. Principle of indemnity does not apply to—
(A) Life insurance
(B) Fire insurance
(C) Marine insurance
(D) Theft insurance
Ans. (A)
55. Cash sales are recorded in—
(A) Cash Book
(B) Sales Book
(C) Journal
(D) Ledger
Ans. (A)
56. Which one of the following is not a capital market instrument?
(A) Debentures
(B) Shares
(C) Public Sector Bonds
(D) Treasury Bills
Ans. (C)
57. Fixed Cost is known as—
(A) Special cost
(B) Direct cost
(C) Prime cost
(D) Overhead cost
Ans. (D)
58. Demand for electricity is—
(A) Inelastic
(B) Elastic
(C) Less elastic
(D) None of the above
Ans. (B)
59. The second largest agro-based industry in India is—
(A) Sugar industry
(B) Textile industry
(C) Food processing industry
(D) Poultry
Ans. (A)
60. Which of the following banks is known as lender of last resort?
(A) SBI
(B) RBI
(C) NABARD
(D) IDBI
Ans. (B)
61. The primary objective of India’s monetary policy has been—
(A)Maintenance of price stability
(B)Granting more autonomy to the RBI
(C)Purchasing and selling of Govt. securities
(D)Financing unlimited deficit of the Central Govt.
Ans. (A)
62. Which of the following has always remained in focus as the main objective of India’s Five Year Plans?
(A) Poverty
(B) Removal of unemployment
(C) Economic growth
(D) Reduction in income inequities
Ans. (C)
63. Finance Commission is constituted every—
(A) Three years
(B) Six years
(C) Four years
(D) Five years
Ans. (D)
64. Which of the following is not a calculating national income?
(A) Income method
(B) Export-Import method
(C) Production method
(D) Expenditure method
Ans. (B)
65. Trade Credit is source of—
(A) Short-term finance
(B) Medium-term finance
(C) Long-term finance
(D) None of the above
Ans. (A)
66. Fiscal Policy is related to—
(A) Issue of currency
(B) Credit creation
(C) Public revenue and expenditure
(D) All of the above
Ans. (C)
67. SIDO is related to the development of—
(A) Small industries
(B) Soap industries
(C) Software industry
(D) Sugar industry
Ans. (A)
68. The world’s largest private employer is—
(A) Ford Motors
(B) Suzuki
(C) General Motors
(D) General Electric
Ans. (A)
69. ‘Street’ is a motorcycle brand of —
(A) Escorts Ltd.
(B) Bajaj Auto
(C) Hero Honda Motors
(D) TVS Suzuki
Ans. (C)
70. The word ‘MODVAT’ is associated with—
(A) Medical Science
(B) Judiciary
(C) Banking
(D) Taxation
Ans. (D)
71. Fishing has been classified as—
(A) Extractive industry
(B) Genetic industry
(C) Manufacturing industry
(D) None of these
Ans. (A)
72. Which of the following is the top administrative organ of the company?
(A) Shareholders
(B) Managing Director
(C) General Manager
(D) Board of Directors
Ans. (D)
73. The founder of modern scientific management
(A) Henry Fayol
(B) McFarland
(C) F. W. Taylor
(D) Dickinson
Ans. (C)
74. The importer can not take delivery of goods unless he produces the—
(A) Bill of Sight
(B) Bill of Lading
(C) Shipping Bill
(D) Certificate of Origin
Ans. (B)
75. A statutory meeting requires a notice of at least—
(A) 7 days
(B) 4days
(C) 21 days
(D) 30 days amount of depreciation
Ans. (C)
76. In which method decreases every year—
(A) Straight line method
(B) Sum of years digit method
(C) Annuity method
(D) Sinking fund method is—
Ans. (B)
77. Under the Companies Act, a company must have—
(A)Board of Directors
(B)Managing Director
(C)Manager
(D)All of these
Ans. (A)
78. the most importer clause in the Memorandum of Association of a company is—
(A) Name Clause
(B) Objects Clause
(C) Registered Office Clause
(D) Liability Clause
Ans. (B)
79. Trading A/c is a—
(A) Personal A/c
(B) Real A/c
(C) Nominal A/c
(D) All of the above
Ans. (C)
80. Working of a Stock Exchange is governed by—
(A) Govt. of India
(B) Controller of Capital Issue
(C) Governing Board of that Stock Exchange
(D) Finance Minister
Ans. (C)
81. Internal audit helps in—
(A) Internal check
(B) Audit in depth
(C) Statutory audit
(D) Internal control
Ans. (D)
82. Day-today cash transactions of a club are recorded in—
(A) Receipts and Payments A/c
(B) Income and Expenditure A/c
(C) Cash Book
(D) Journal
Ans. (B)
83. An entry of Rs, 320 has been debited to Rajesh’s account, as Rs. 230. It is an error of—
(A) Commission
(B) Omission
(C) Principle
(D) None of these
Ans. (A)
84. An expense of Rs. 200 on cartage of a new machine purchased should be debited to—
(A) Cash A/c
(B) Machine Ale
(C) Cartage A/c
(D) None of these
Ans. (B)
85. A customer’s cheque returned dishonored is recorded in—
(A) Purchase Return Book
(B) Sales Return Book
(C) Cash Book
(D) Journal
Ans. (C)
86. Machinery purchased on account is recorded in—
(A) Purchase Book
(B) Cash Book
(C) Journal
(D) Ledger
Ans. (B)
87. Prepaid Insurance Account
(A) An expense
(B) A revenue
(C) An asset
(D) None of the above
Ans. (C)
88. The credit balance in the bank account is—
(A) An asset
(B) A liability
(C) A capital
(D) A revenue
Ans. (A)
89. Stock Exchange deals with—
(A) Second hand securities
(B) Issue of equity shares
(C) Issue of preference shares
(D) Issue of debentures
Ans. (A)
90. A Public Corporation is created by—
(A) Ministry of Finance
(B) Ministry of Industry
(C) Special Act of Parliament
(D) Ministry of Corporation
Ans. (C)
91. Chamber of Commerce is a form of—
(A) Trade Association
(B) Federation
(C) Merger
(D) Consolidation
Ans. (A)
92. Experts or specialists are attached to managers in—
(A) Line Organization
(B) Line and Staff Organization
(C) Functional Organization
(D) None of these
Ans. (B)
93. When dividend is declared, it must be paid within—
(A) 30 days
(B) 42 days
(C) 45 days
(D) 60 days
Ans. (A)
94. Management is—
(A) An Art
(B) A Science
(C) An Art as well as a Science
(D) None of these
Ans. (C)
95. ‘Esprit de corps’ principle of management states that—
(A) There is need for team-work
(B)Labor turnover should be minimized
(C)Discipline should be maintained
(D)There should be only one superior for each subordinate
Ans. (A)
96. Which theory of motivation assumes that average human being dislike work?
(A) Theory ‘X’
(B) Theory ‘Y’
(C) Maslow’s theory
(D) Equity theory
Ans. (A)
97. the most rigorous test of liquidity is—
(A) Current ratio
(B) Acid test ratio
(C) Stock turnover ratio
(D) Debtors turnover ratio
Ans. (B)
98. Which of the following is a Public corporation?
(A) TISCO
(B) TELCO
(C) ONGC
(D) DCM
Ans. (C)
99. Which of the following assets floes not depreciate?
(A) Machinery and equipments
(B) Patents
(C) Land
(D) Furniture
Ans. (C)
100. Of the following organizations, the easiest to wind up is the—
(A) Public Ltd. Company
(B) Multinational Corporation
(C) Private Ltd. Company
(D) Partnership Firm
Ans. (D)
MCQ Bed Commerce
Online Free Practice Test of Commerce for BEd Exam
1. Giffin goods may be characterized as—
(A) Inferior goods
(B) To have positive demand curve
(C) To have negative demand curve
(D) A case when income effect is positive and very strong
Ans. (A)
2. By which tax does the’ Government of India earn maximum revenue?
(A) Income-tax
(B) Custom duty
(C) Property-tax
(D) Excise duty
Ans. (D)
3. The main objective of controlling is—
(A) Maintaining discipline
(B) Motivating subordinates
(C) Reducing gap between planning and performance
(D) None of the above
Ans. (C)
4. A regressive tax will tend to redistribute income more—
(A) Equally
(B) Unequally
(C) Equitably
(D) Inequitably
Ans. (B)
5. Which of the following totals would not be included in a firm’s Profit and Loss Account?
(A) Overhead cost
(B) Direct cost
(C) Allowances for depreciation of assets
(D) All the above will be included
Ans. (B)
6. Which of the following is the basis for determining the national income?
(A) Total revenue of the State
(B) Production of goods and services
(C) Net profit earned and ‘expenditure incurred by the state
(D) All the above
Ans. (D)
7. All of the following totals would be included in a company’s Profit and Loss A/c except—
(A) Direct costs
(B) Allowances for depreciation of assets
(C) Overhead costs
(D) Value of premises owned by the company
Ans. (A)
8. When did WTO, which set out rules for world trade, come into force?
(A) 1984
(B) 1951
(C) 1954
(D) 1995
Ans. (D)
9. Who manage a joint stock company?
(A) Its Board of Directors
(B) Its General Body
(C) Its Management Council
(D) All the above
Ans. (A)
10. The costs which do not vary with the changes in a firm’s output are known as—
(A) Fixed costs
(B) Variable costs
(C) Implicit costs
(D) Social costs
Ans. (A)
11. Which of the following States leads in Commerce and Industry?
(A) Gujarat
(B) Tamil Nadu
(C) Maharashtra
(D) West Bengal
Ans. (C)
12. Which of the following States accounts for the largest share of industrial production and capital investment?
(A) Gujarat
(B) Maharashtra
(C) Tamil Nadu
(D) West Bengal
Ans. (B)
13. When the prices are rising, which of the following steps should the government adopt to bring about reduction in prices?
(A) Reduce the rate of tax on personal income
(B) Increase governmental spending
(C) Lower the interest rate
(D) Increase the availability of goods
Ans. (D)
14. Which of the following is not mathematical average?
(A) Geometric average
(B) Harmonic average
(C) Quadratic average
(D) Progressive average
Ans. (D)
15. Statutory Audit reports on—
(A) The efficiency of the Unit
(B) Accuracy of Stocjcs
(C) Accuracy of Accounts
(D) The proper follow-up of Government rules
Ans. (C)
16. Fourteen leading Commercial Banks were nationalized on—
(A) 15th August, 1947
(B) 26th January, 1949
(C) 19th July, 1969
(D) 29th July, 1969
Ans. (C)
17. According to Company Law a work done beyond the rights described in Memorandum of Association is—
(A) Legal
(B) Immoral
(C) Useless
(D) Opposed to public policy
Ans. (C)
18. Who issues the Certificate of Incorporation?
(A) Central Government
(B) Shareholders
(C) Director
(D) Company Registrar
Ans. (D)
19. Who stated ‘Bad money drives good money out of circulation’?
(A) Keynes
(B) Gresham
(C) Kent
(D) Mallows
Ans. (B)
20. A partner has a right—
(A) To take part in business
(B) To be consulted
(C) To interest on capital
(D) All of the above
Ans. (D)
21. What is the time duration of Managing director in a Public Company?
(A) 5 years
(B) 1 year
(C) 7 years
(D) Life-long
Ans. (A)
22. The concept of functional foreman as first developed by—
(A) Harrington Emerson
(B) F. W. Taylor
(C) F. B. Gilberth
(D) Elton Mayo
Ans. (B)
23. Motivation is basically a—
(A) Sociological process
(B) Physiological process
(C) Psychological process
(D) Intellectual process
Ans. (C)
24. Assets in the Balance Sheet of a company are arranged in the order of—
(A) Liquidity
(B) Market value
(C) Book value
(D) Permanence
Ans. (C)
25. Non-convertible debentures refer to—
(A) Owner capital
(B) Loan capital
(C) Short-term debts
(D) All of the above
Ans. (B)
26. Which of the following is not a current inability?
(A) Bills payable
(B) Bank overdraft
(C) Minority interest
(D) Unclaimed dividends
Ans. (C)
27. The term ‘depletion’ is used in relation to—
(A) Fixed Assets
(B) Wasting Assets
(C) Current Assets
(D) Intangible Assets
Ans. (B)
28. FIFO is advisable in case of—
(A) Rising prices
(B) Falling prices
(C) Constant prices
(D) None of the above
Ans. (B)
29. Main source of India’s national income is—
(A) Agriculture
(B) Industry
(C) Forestry
(D) Construction
Ans. (A)
30. Staffing includes—
1. Training 2.praisal
3. Placement 4.Directing
(A) 1 and3
(B) 1, 2 and 3
(C) 2 and 3
(D) 1, 2, 3 and 4
Ans. (B)
31. While delegating superior delegates—
(A) Only authority
(B) Authority and responsibility
(C) Authority, responsibility and accountability
(D) Authority and responsibility but not accountability
Ans. (A)
32. Which of the following is the most democratic form of organization?
(A) Line
(B) Line and Staff
(C) Functional
(D) Committee
Ans. (B)
33. The role of Staff in Line Staff organization is—
(A) Authoritative
(C) Responsible
(B) Advisory
(D) All of the above
Ans. (B)
34. A company secretary is appointed by—
(A) The Government
(B) Debenture holders
(C) The Board of Directors
(D) Shareholders
Ans. (C)
35. Which of the following would be fixed cost to manufacturing firm?
(A) Plant and Machinery
(B) Raw materials
(C) Wages
(D) Replacement of load
Ans. (D)
36. Public Sector consists of those enterprises in which
The State owns—
(A) 50% of the capital
(B) 66% of the capital
(C) 40% of the capital
(D) More than 50% of the capital
Ans. (D)
37. Which is a capital expenditure?
(A) Wages paid
(B) Salaries paid
(C) Heavy advertisement cost
(D) Patents acquired
Ans. (D)
38. A company can purchase its own—
(A) Equity shares
(B) Preference shares
(C) Debentures
(D) All of the above
Ans. (D)
39. A and B are of 7: 5 partners. C is admitted for 1/5 share. The new ratio is—
(A) 3:2:1
(B) 5:3
(C) 2: 2: 1
(D) None of the above
Ans. (B)
40. The sacrificing ratio in above case is—
(A) 7:5
(B) 2: l
(C) Equal
(D) 1:2
Ans. (A)
41. Immediate Liquidity Test is—
(A) Current ratio
(B) Quick ratio
(C) Fixed assets turnover ratio
(D) Stock turnover ratio
Ans. (B)
42. Cost accounting is a part of—
(A) Management accounting
(B) Financial accounting
(C) General accounting
(D) Special accounting
Ans. (A)
43. Theory ‘X’ and ‘Y’ was originated by—
(A) P. F. Drucker
(B) McGregor
(C) Maslow
(D) Herzberg
Ans. (B)
44. In a big office, efficient filing is—
(A) Vertical
(B) Horizontal
(C) Both
(D) None
Ans. (A)
45. Net worth of a business means—
(A) Total fixed assets
(B) Assets minus liabilities
(C) Fixed assets minus current assets
(D) Share capital plus current liabilities
Ans. (B)
46. Funds in relation to Funds Flow Statement earns—
(A)Net assets
(B)Current assets
(C) Net current assets
(D)Current liabilities
Ans. (C)
47. In the absence of an agreement, the partners are entitled to interest on their loans at the rate of—
(A) 5%
(B) 6%
(C) 7%
(D) 10%
Ans. (B)
48. Income and Expenditure A/c is prepared by—
(A) Manufacturing concerns
(B) Non-manufacturing concerns
(C) Trading concerns
(D) Non-trading concerns
Ans. (D)
49. Debit side of Income and Expenditure A/c shows—
(A) Income
(B) Expenditure
(C) Cash receipts
(D) Cash payments
Ans. (B)
50. Quick ratio is a test of—
(A) Liquidity
(B) Solvency
(C) Profitability
(D) None of the above
Ans. (B)
51. Franking Machine is a—
(A) Duplicating machine
(B) Dictating machine
(C) Calculating machine
(D) Mailing machine
Ans. (D)
52. Given: Current Ratio = 3: 1
Quick Ratio = 1:
Current Liabilities = Rs. 30, 000
What is the value of stock in trade?
(A) Rs. 45,000
(B) Rs. 60,000
(C) Rs. 90,000
(D) Rs. 50,000
Ans. (B)
53. When a supervisor is re designated as section officer under the need hierarchy theory of motivation, it satisfied—
(A) Social needs
(B) Esteem needs
(C) Seif-actualisation needs
(D) Economic needs
Ans. (B)
54. Principle of indemnity does not apply to—
(A) Life insurance
(B) Fire insurance
(C) Marine insurance
(D) Theft insurance
Ans. (A)
55. Cash sales are recorded in—
(A) Cash Book
(B) Sales Book
(C) Journal
(D) Ledger
Ans. (A)
56. Which one of the following is not a capital market instrument?
(A) Debentures
(B) Shares
(C) Public Sector Bonds
(D) Treasury Bills
Ans. (C)
57. Fixed Cost is known as—
(A) Special cost
(B) Direct cost
(C) Prime cost
(D) Overhead cost
Ans. (D)
58. Demand for electricity is—
(A) Inelastic
(B) Elastic
(C) Less elastic
(D) None of the above
Ans. (B)
59. The second largest agro-based industry in India is—
(A) Sugar industry
(B) Textile industry
(C) Food processing industry
(D) Poultry
Ans. (A)
60. Which of the following banks is known as lender of last resort?
(A) SBI
(B) RBI
(C) NABARD
(D) IDBI
Ans. (B)
61. The primary objective of India’s monetary policy has been—
(A)Maintenance of price stability
(B)Granting more autonomy to the RBI
(C)Purchasing and selling of Govt. securities
(D)Financing unlimited deficit of the Central Govt.
Ans. (A)
62. Which of the following has always remained in focus as the main objective of India’s Five Year Plans?
(A) Poverty
(B) Removal of unemployment
(C) Economic growth
(D) Reduction in income inequities
Ans. (C)
63. Finance Commission is constituted every—
(A) Three years
(B) Six years
(C) Four years
(D) Five years
Ans. (D)
64. Which of the following is not a calculating national income?
(A) Income method
(B) Export-Import method
(C) Production method
(D) Expenditure method
Ans. (B)
65. Trade Credit is source of—
(A) Short-term finance
(B) Medium-term finance
(C) Long-term finance
(D) None of the above
Ans. (A)
66. Fiscal Policy is related to—
(A) Issue of currency
(B) Credit creation
(C) Public revenue and expenditure
(D) All of the above
Ans. (C)
67. SIDO is related to the development of—
(A) Small industries
(B) Soap industries
(C) Software industry
(D) Sugar industry
Ans. (A)
68. The world’s largest private employer is—
(A) Ford Motors
(B) Suzuki
(C) General Motors
(D) General Electric
Ans. (A)
69. ‘Street’ is a motorcycle brand of —
(A) Escorts Ltd.
(B) Bajaj Auto
(C) Hero Honda Motors
(D) TVS Suzuki
Ans. (C)
70. The word ‘MODVAT’ is associated with—
(A) Medical Science
(B) Judiciary
(C) Banking
(D) Taxation
Ans. (D)
71. Fishing has been classified as—
(A) Extractive industry
(B) Genetic industry
(C) Manufacturing industry
(D) None of these
Ans. (A)
72. Which of the following is the top administrative organ of the company?
(A) Shareholders
(B) Managing Director
(C) General Manager
(D) Board of Directors
Ans. (D)
73. The founder of modern scientific management
(A) Henry Fayol
(B) McFarland
(C) F. W. Taylor
(D) Dickinson
Ans. (C)
74. The importer can not take delivery of goods unless he produces the—
(A) Bill of Sight
(B) Bill of Lading
(C) Shipping Bill
(D) Certificate of Origin
Ans. (B)
75. A statutory meeting requires a notice of at least—
(A) 7 days
(B) 4days
(C) 21 days
(D) 30 days amount of depreciation
Ans. (C)
76. In which method decreases every year—
(A) Straight line method
(B) Sum of years digit method
(C) Annuity method
(D) Sinking fund method is—
Ans. (B)
77. Under the Companies Act, a company must have—
(A)Board of Directors
(B)Managing Director
(C)Manager
(D)All of these
Ans. (A)
78. the most importer clause in the Memorandum of Association of a company is—
(A) Name Clause
(B) Objects Clause
(C) Registered Office Clause
(D) Liability Clause
Ans. (B)
79. Trading A/c is a—
(A) Personal A/c
(B) Real A/c
(C) Nominal A/c
(D) All of the above
Ans. (C)
80. Working of a Stock Exchange is governed by—
(A) Govt. of India
(B) Controller of Capital Issue
(C) Governing Board of that Stock Exchange
(D) Finance Minister
Ans. (C)
81. Internal audit helps in—
(A) Internal check
(B) Audit in depth
(C) Statutory audit
(D) Internal control
Ans. (D)
82. Day-today cash transactions of a club are recorded in—
(A) Receipts and Payments A/c
(B) Income and Expenditure A/c
(C) Cash Book
(D) Journal
Ans. (B)
83. An entry of Rs, 320 has been debited to Rajesh’s account, as Rs. 230. It is an error of—
(A) Commission
(B) Omission
(C) Principle
(D) None of these
Ans. (A)
84. An expense of Rs. 200 on cartage of a new machine purchased should be debited to—
(A) Cash A/c
(B) Machine Ale
(C) Cartage A/c
(D) None of these
Ans. (B)
85. A customer’s cheque returned dishonored is recorded in—
(A) Purchase Return Book
(B) Sales Return Book
(C) Cash Book
(D) Journal
Ans. (C)
86. Machinery purchased on account is recorded in—
(A) Purchase Book
(B) Cash Book
(C) Journal
(D) Ledger
Ans. (B)
87. Prepaid Insurance Account
(A) An expense
(B) A revenue
(C) An asset
(D) None of the above
Ans. (C)
88. The credit balance in the bank account is—
(A) An asset
(B) A liability
(C) A capital
(D) A revenue
Ans. (A)
89. Stock Exchange deals with—
(A) Second hand securities
(B) Issue of equity shares
(C) Issue of preference shares
(D) Issue of debentures
Ans. (A)
90. A Public Corporation is created by—
(A) Ministry of Finance
(B) Ministry of Industry
(C) Special Act of Parliament
(D) Ministry of Corporation
Ans. (C)
91. Chamber of Commerce is a form of—
(A) Trade Association
(B) Federation
(C) Merger
(D) Consolidation
Ans. (A)
92. Experts or specialists are attached to managers in—
(A) Line Organization
(B) Line and Staff Organization
(C) Functional Organization
(D) None of these
Ans. (B)
93. When dividend is declared, it must be paid within—
(A) 30 days
(B) 42 days
(C) 45 days
(D) 60 days
Ans. (A)
94. Management is—
(A) An Art
(B) A Science
(C) An Art as well as a Science
(D) None of these
Ans. (C)
95. ‘Esprit de corps’ principle of management states that—
(A) There is need for team-work
(B)Labor turnover should be minimized
(C)Discipline should be maintained
(D)There should be only one superior for each subordinate
Ans. (A)
96. Which theory of motivation assumes that average human being dislike work?
(A) Theory ‘X’
(B) Theory ‘Y’
(C) Maslow’s theory
(D) Equity theory
Ans. (A)
97. the most rigorous test of liquidity is—
(A) Current ratio
(B) Acid test ratio
(C) Stock turnover ratio
(D) Debtors turnover ratio
Ans. (B)
98. Which of the following is a Public corporation?
(A) TISCO
(B) TELCO
(C) ONGC
(D) DCM
Ans. (C)
99. Which of the following assets floes not depreciate?
(A) Machinery and equipments
(B) Patents
(C) Land
(D) Furniture
Ans. (C)
100. Of the following organizations, the easiest to wind up is the—
(A) Public Ltd. Company
(B) Multinational Corporation
(C) Private Ltd. Company
(D) Partnership Firm
Ans. (D)
Thursday, April 7, 2011
Free Online Commerce practice test
Free Online Commerce practice test
1. ln double entry system of Book-
keeping transaction means-
(A) Transfer of goods and ser—
vices from one person to another
(B) Transfer of goods and ser-
vices within the firm
(C) Producing and selling goods
(D) None of the above
Answer.A
2. Goods taken for personal use
will be posted in the credit of»
(A) Drawings Account
(B) Sales Account
(C) Purchases Account
(D) Cash Account
Answer.C
More at http://test4in.com/practice-paper-objective-commerce-based-on-mp-state-services-exam/
1. ln double entry system of Book-
keeping transaction means-
(A) Transfer of goods and ser—
vices from one person to another
(B) Transfer of goods and ser-
vices within the firm
(C) Producing and selling goods
(D) None of the above
Answer.A
2. Goods taken for personal use
will be posted in the credit of»
(A) Drawings Account
(B) Sales Account
(C) Purchases Account
(D) Cash Account
Answer.C
More at http://test4in.com/practice-paper-objective-commerce-based-on-mp-state-services-exam/
Commerce Big Question bank for exams
Commerce Big Question bank for exams
Commerce practice Question bank for exams
Commerce Sample Question bank for exams
1. The assets which are purchased to improve profitability in the business not for the purpose of resale, are called?
(A) Intangible assets
(B) Current assets
(C) Fixed assets
(D) Wasting assets
2. As per the rule of Garner versus Murray, any loss that arises due to being insolvent of any partner should be divided among other partners in their?
(A) Profit and loss sharing ratio
(B) Capital ratio
(C) Average of both ratios
(D) None of these
3. Securities premium cannot be applied?
(A) For paying dividend to members
(B) For issuing bonus shares to members
(C) For writing off preliminary expenses of company
(D) For writing off discount on issue of debentures
4. Which method is legally accepted for redemption of preference shares?
(A) Issue of equity shares
(B) Issue of debentures
(C) Sale of fixed assets of the company
(D) Public deposits
5. A and B are partners in a firm. They admit C into partnership by giving him fourth share in future profits. The new profit sharing ratio of all the partners will be?
(A)3:2:1
(B)3:1:2
(C)3:3:2
(D) 3:3:3
6. Which of the following statements is not correct?
(A) The amount received from the sale of goods and services are called revenue
(B) Amount invested by the proprietor in the business is called capital
(C) Recording is the process of grouping transactions of one nature at one place
(D) Assets — Outside liabilities = Capital
7. The balance of which of the following items may have credit balance too?
(A) Cash
(B) Bank
(C) Investment
(D) Stock
8. Which of the following is not an intangible asset?
(A) Goodwill
(B) Debtors
(C) Copyright
(D) Patent
9. Which of the following statements indicates the essence of Robbins definition?
(A) “Economics is a subject concerned with an enquiry into the nature and causes of Wealth of Nations.”
(B) “Economics is the study of mankind in the ordinary busi ness of life.”
(C) “Economics is the science of scarcity.”
(D) “Economics is the study of allocation of scarce resources and of the determinants of employment, income and economic growth.”
10. A demand curve, parallel to X axis, shows the elasticity
(A) Infinite
(B) Less than l
(C) Zero
(D) Inelastic demand
11. According to the Malthusian theory of population which one of the following statements is not correct?
(A) Population tends to outrun the resources of subsistence
(B)There is a direct relationship between standard of living and population
(C) Increasing population can be checked through only positive checks
(D) Positive checks are those checks which are applied by the nature to stop population growth
12. When total utility is maximum, then marginal utility is
(A) Zero
(B) Less than average utility
(C) Equal to average utility
(D) More than average utility
13. Which of the following statements is correct?
(A) Perfectly elastic demand curve is parallel to X-axis
(B) Perfectly elastic demand curve is downward falling
(C) Perfectly inelastic demand curve is parallel to X-axis
(D) Generally highly elastic demand curve is a horizontal line
14. If 50% increase in the price of a commodity leads to only 10% reduction in demand, then such demand wilt be?
(A) Inelastic demand
(B) Perfectly elastic demand
(C) Perfectly inelastic demand
(D) Highly elastic demand
15. The equilibrium firm concept has been given by?
(A) Pigou
(B) Marshall
(C) Robinson
(D) J. K. Mehta
16. For ordinary business the maximum number of partners in a
Firm is?
(A)7
(B) 10
(C)20
(D) 50
17. By limited partnership is meant?
(A) Limited number of partners
(B) Unlimited liability of all partners
(C) Limited scope of partnership
(D) Limited liability of some partners
18. The voting right of the members of cooperative organization is?
(A) In the proportion of the shares purchased by them
(B) In the proportion of capital employed by them
(C) Equal voting right
(D) In the proportion of the total amount supplied by them
19. Line and staff organization is most suitable for?
(A) Small enterprises
(B) Medium sized enterprises
(C) Large sized enterprises
(D) Cottage enterprises
20. In sampling investigation, to arrive at valid conclusions, we may study?
(A) Only a very small unit of a population
(B) All the units of the population
(C) Representative units of the population
(D) None of these
21. ‘Law of Inertia of Large Numbers’ concludes?
(A) Smaller numbers are more stable than large ones
(B) Large numbers are more stable than small ones
(C) All of these
(D) None of these
22. Problem:
5 students secure less than 3 marks
12 students secure less than 6 marks
25 students secure less than 9 marks
33 students secure less than 12 marks
In the above problem, the number of students secure between 6 to 12 marks will be?
(A)12
(B)21
(C)25
(D)13
23.Statistical errors mean
(A)Errors committed while collecting data
(B) Errors committed while calculating
(C) Difference between the observed value and the true value
(D) Difference between old data and current data
24. A shopkeeper wants to stock shoes. The best suitable average for him will be?
(A) Arithmetic mean
(B) Median
(C) Mode
(D) Geometric mean
25. The mean marks of 100 students were found to be 40. Later on it was discovered that a score of 53 was misread as 83. The correct mean will be?
(A)39.5
(B)39.7
(C)39.8
(D)39.9
26. In which sequence are the following steps of communication taken?
(a) Getting participation in developing a solution to the problem
(b) Transmitting ideas or decisions
(c) Clarify the idea or problem
(d) Measuring the effectiveness of communication
Select your answer from the following codes—
(A) (a), (b), (c) and (d)
(B) (d), (c), (a) and (b)
(C) (d), (b), (a) and (c)
(D) (c), (a), (b) and (d)
27. Deficiency of capital, excessive dependency on agriculture and inequalities of income and wealth are some of the important features of a—
(A) Capitalistic economy
(B) Socialistic economy
(C) Developing economy
(D) Developed economy
28. Population census is made in India in every
(A) 7 years
(B) 10 years
(C) 15 years
(D) 20years
29. Which of the following banks stimulates the agricultural and rural development?
(A) EXIM Bank
(B) Exchange Bank
(C) HDFC Bank
(D) NABARD
30. Which bank’s old name was ‘Imperial Bank’?
(A) Reserve Bank of India
(B) Punjab National Bank
(C) State Bank of India
(D) Union Bank of India
31. Repo rate is the rate at which?
(A) The RBI takes money from banks
(B) Banks take money from the RBI
(C) One bank takes money from another bank
(D) The Government takes money from RBI
32. SIDBI is an apex financial insti tution for?
(A) Agricultural sector
(B) Collage industries
(C) Small and medium enterprises
(D) Large scale enterprises
33.The face value of a company’s share is Es. 100 Rs .The company
issued it at. 150 Rs The present market price of that share is Rs. 200. The company declares a dividend of 20% on these shares. The amount of dividend on per
share will be?
(A)Rs. 40
(B) Rs. 30
(C)Rs. 20
(D) Rs. 10
34.If own debenture of Rs. 1,000 is purchased for Rs. 975 from the
market by the company, the difference of Rs. 25 will be assumed?
(A) Profit on redemption of debenture
(B)Loss on redemption of debenture
(C)Goodwill
(D)None of these
35.Advance payment of tax is in the nature of?
(A) Asset
(B) Liability
(C) Prepaid Expenses
(D) Revenue expenses
36. Which of the following statements are true?
(a)Unclaimed dividend is an asset of a company.
(b)Dividend declared between two annual general meetings is called final dividend.
(c) A company can distribute interim dividend and final dividend in the same financial year.
Select your answer from the following codes?
(A) (b) and (c)
(B) (a), (b) and (c)
(C) (a) and (c)
(D) (a) and (b)
37. If debentures of Rs. 3,25,000 are issued for the consideration of
net assets of Rs. 3,50,000, balance of Rs. 25,000 will be credited to?
(A) Capital Reserve A / c
(B) General ReserveA/c
(C) Profit & Loss A/c
(D) Goodwill A / c
38. (Capital employed x Normal rate of return)/100=
(A)Average Profit
(B)Super Profit
(C)Normal Profit
(D) Adjusted Average Profit
39. Decrease in current liabilities is?
(A) Source of cash
(B)Use of cash
(C) None of (A) and (B)
(D) Both of (A) and (B)
40.Current liabilities are equal to?
(A) Working Capital ÷ Current Assets
(B) Working Capital — Current Assets
(C) Current Assets ÷ Working Capital
(D) Current Assets — Working Capital
41. In internal reconstruction?
(A) No company goes into liquidation
(B) Only one company goes into liquidation
(C) One or more companies go into liquidation
(D) Two or more companies go into liquidation
42. Intrinsic value of share can be determined by?
(A) Yield method
(B) Fair value method
(C) Net assets method
(D) Stock exchange quotation
43. In perfect competition the demand curve of a firm is?
(A)Horizontal
(B)Vertical
(C) Negative slope
(D) Positive slope
44.In a place the average rainfall was 4 centimeter during Monday
to Saturday. Due to heavy rainfall on Sunday the average of the
week was increased to 6 cm. The rainfall on Sunday will be?
(A) 17 cm
(B) 18 cm
(C)19cm
(D) 20cm
45. If Median 27 and Mean = 30,Mode will be?
(A) 20
(B) 21
(C) 22
(D) 23
46. If the coefficient of correlation is+ 0 it indicates?
(A) perfect correlation
(B) Absence of correlation
(C) Limited degree of correlation
(D) High degree of correlation
47. The original cost of an asset is Rs. 4,15,000. The useful life of the asset is 20 years and net scrap value is estimated to be Rs. 65,000. The amount of depreciation to be charged every year will be?
(A) Rs. 17,000
(B) Rs. 17,500
(C) Rs. 18,000
(D) Rs. 18,500
48. Which of the following is not undistributed profit?
(A) General Reserve A/c
(B) Workmen Compensation Fund A / c
(C) Securities Premium A/c
(D) Dividend Equalisation Reserve A/c
49. Who is the Chairman of the Planning Commission?
(A) Prime Minister
(B) President
(C) Governor of Reserve Bank of India
(D) Finance Secretary
50. The debit balance in nominal account shows?
(A) Expenses
(B) Gains
(C) Assets
(D) Liabilities
51. The cost of goods sold on hire purchase system is transferred to?
(A)Sales Account
(B)Purchase Account
(C)Hire-Purchase Trading Account
(D) Profit and Loss Account
52.Short working is equal to?
(A) Minimum rent-Royalty
(B) Royalty-Minimum Rent
(C) Royalty-Amount paid to landlord
(D) Shortworking-Surplus
53. Which of the following errors will not affect the Trial Balance?
(A) Goods for Rs. 5,000 purchased on cash, expenses account was debited instead of purchases account
(B) Purchase Returns Book for December was overcast by Rs. 500
(C) Sales Book carried forward Rs 2,200 instead of Rs. 2,000
(D) None of these
54.X and Y are partners sharing profits in the firm in the ratio of
2: 3. Goodwill appears in the books of the firm at Rs. 10,000. Z
joins the firm as new partner for share of profits. His share of
Goodwill is estimated to be Rs. 15,000. The old partners’ account will be credited with Goodwill by—
(A) Rs 50,000
(B) Rs. 40,000
(C) Rs. 75,000
(D) Rs, 65,000
55. In case of opening stock Rs. 5,000, purchases Rs. 15,000, direct expenses Its. 2,000 and closing stock Rs. 2,500, the cost of goods sold had been?
(A) Rs. 20,000
(B) Rs. 19,500
(C) Rs. 21,500
(D) Rs. 22,000
56. Which of the following statements is ‘True’ ?
(A) Building Account is a nominal account
(B) Outstanding rent account is a non-personal account
(C) Every debit has a corresponding credit
(D) Income is debited
57. Which one of the following is not a kind of statistical series ?
(A) Individual
(B) Discrete
(C) Classified
(D) Signed
58. The formula for coefficient of variation is?
(A) Standard Deviation/ Mean
(B)Mean/ Standard Deviation
(C) (Mean—Mode)/ Standard Deviation
(D)Standard Deviation/ (Mean—Mode)
59. The value of mean, median and mode coincides in case of?
(A) Positively skewed distribution
(B) Negative]y skewed distribution
(C) Symmetrical distribution
(D) All of these
60. Classification of the students of a college in two categories ‘rural’ and ‘urban’ is?
(A) Qualitative
(B) Quantitative
(C) Geographical
( D)None of these
61. Which of the following statements is ‘True’ ?
(A) Henry Fayol was the resident of America
(B) Elton Mayo is the father of scientific management
(C) Henry Fayol was the founder of human relation approach
(D) The credit of behavioural approach in management goes to Ford Foundation
62. X and Y Motivation Theory has been propounded by?
(A) Maslow
(B) Ouchi
(C) Herzberg
(D) McGregor
63. Study the following statements and mark your answer according to the answer code given below—
I. Planning is the first function of management.
II. Planning provides a basis for organisation.
Ill. Planning does not involve decision-making.
IV. Planning is a static function.
Codes:
(A) I and III are correct
(B) I and I are correct
(C) I and IV are correct
(D) II and IV are correct
64. Motivational process is basically?
(A) Emotional process
(B) Psychological process
(C) Physiological process
(D) Intellectual process
65. The main objective of controlling is to—
(A) Punish the guilty person
(B) Ensure that performance is as per planning
(C) Maintain discipline
(D) Fix responsibility of subordinates
66. Indian Banking Regulation Act was passed in the yea?
(A)1971
(B) 1969
(C)1949
(D) 1947
67. Which one of the following will not act as an incentive for exports?
(A) Raising the internal value of money
(B) Lowering the prices of goods within the country
(C) internal devaluation of money
(D) Granting low interest loans for exports.
68. Received Rs. 5,000 from Ram but credited his account by Rs. 50,000 is?
(A)Error of Omission
(B)Error of Principles
(C)Compensation Error
(D) None of these
69. The subsidiary voucher produced in the absence of primary voucher is called?
(A) General voucher
(B) Note-book voucher
(C) Counterfoil
(D) Collateral voucher
70. In how many days from the registration, the first Auditor of the company be appointed?
(A)10
(B) 20
(C)30
(D) 60
71. The main objective of Auditing is?
(A) To detect errors and fraud
(B) To prevent errors and fraud
(C) To find out accuracy, completeness and validity of accounts and documents
( D)All of these
72. Internal Auditor can be removed by the?
(A) Management
(B) Shareholders
(C) Statutory Auditor
(D) Government
73. In his report the Auditor gives his?
(A) Judgment
(B) Opinion
(C) Guarantee to correctness of accounts
(D) All of these
74. According to Section 227(1) of the Companies Act, 1956, the Auditor does not have the right
(A) To sign the Audit Report
(B) To see the books, accounts and vouchers of the company
(C) To obtain information and explanation
(D) To correct any wrong statement
75. Consider the following documents?
(a) Audit Report
(b) Audit Note-book
(c) Audit Programme
(d) Audit Files
The correct sequence in which the Auditor prepares these documents is?
(A) (c) (b) (d) (a)
(B) (d) (c) (a) (b)
(C) (c) (a) (d) (b)
(D) (a) (b) (c) (d)
76. Consider the following Statements
I Scope of audit
II Validity of appointment
III Knowledge about business
IV Instruction to client
V. Division of work among audit clerks.
The correct sequence of these elements for the commencement of a new audit will be?
(A) II, I ,III, IV and V
(B) I,II, III, IV and V
(C) V, I IV, III and II
(D)IV, I, III, II and V
77. Working papers which contain a record of the audit work done, are the property of?
(A) The company
(B) The auditor
(C) The company and the auditor both
(D) The Company Law Board
78. Under which Section of Companies Act, has the remuneration of the Auditor been discussed?
(A) Section 224(2)
(B) Section 224(8)
(C) Section 225
(D) Section 231
79. Marginal cost curve cuts the average cost curve
(A) At the left of its lowest point
(B) At the lowest point
(C) At the right of its lowest point
(D) At its highest point
80. In short term production function which of the following changes in factors?
(A) Ratio
(B) Scale
(C)Both of these
(D)None of these
81. Which one of the following is not a method of depreciation?
(A) Insurance Policy Method
(B) Diminishing Return Method
(C) The Sum of the Year Digits Method
(D)Replacement Cost Method
82. Which one of the following is not an accounting convention?
(A) Consistency
(B) Full disclosure
(C) Materiality
(D) Secrecy
83. Domestic use of office telephone is
(A) Embezzlement of Labour
(B) Embezzlement of Property
(C) Embezzlement of Facility
(D) None of these
84. The Geometric Mean of two numbers 8 and 18 shall be?
(A)12
(C)15
(B)13
(D)11.09
85. For open-end classes, the most appropriate measure of dispersion ?
(A) Range
(B) Quartile deviation
(C) Mean deviation
(D) Standard deviation
86. When the Cross Price Elasticity of demand between two goods is zero then those goods are called?
(A) Independent goods
(B) Luxury goods
(C) Substitute goods
(D) Complementary goods
87. The feature of monopolistic competition that drives a firm’s profit to zero in the long run is?
(A) Product differentiation
(B) Price leadership
(C) Market power
(D) Free entry
88. As a result of increase in the price of tea from Rs. 40 to Rs. 50 per pound, the demand for coffee increases from 500 pounds to 600 pounds. The cross elasticity of demand is?
(A)1/2
(B)2/3
(C)3/4
(D)4/5
89. Which of the following prevents National Income from falling to zero when Gross Investment falls to zero?
(A) Consumption
(B) Multiplier
(C) Accelerator
(D) None of these
90. In an Economy, where capital output ratio is 5.2 what should be the saving income ratio to bring about a growth rate of 6.2% in the National Income?
(A)1.00%
(B) 32.24%
(C)11.4%
(D)1.19%
91. Which of the following will happen when statutory liquidity ratio of banks is reduced by the central banks?
(A) Government can borrow more funds from the banks than before
(B) Government can sell more securities to the banks than before
(C) Private sector will be able to get less credit from banks than before
(D) Government will be able to sell less securities to banks than before
92. Which of the following growth models includes the population growth function?
(a) Classical Model
(b) Harrod-Domar Model
(c) New classical Model
(d) Schumpeter Model
Codes:
(A) (a) and (c)
(B) (a), (b) and (c)
(C) (a)and(d)
(D)(b) and (d)
93. Longer the period of time, elasticity of supply will be?
(A) Perfectly elastic
(B) Inelastic
(C) More elastic
(D) Constant
94. The production function expresses the relationship between?
(A) Cost and benefit
(B) Stock and flow variables
(C) Demand and supply
(D) Input and output
95.Which among the following is not the liability of a Commercial Bank?
(A) Share capital
(B) Reserve fund
(C) Bills, which are to be paid
(D) Balance with central bank and other banks
96. Which one of the following is not a method of credit control?
(A) Bank rate policy
(B) Open market operations
(C) Credit deposit ratio
(D) Cash reserve ratio
97. Economic development can be best measured by?
(A)D increase in Gross National Income
(B) Poverty ratios
(C) Growth in real per capita in GNP
(D) Faster capital formation
98. In calculating a country’s GNP at market prices, which one of the following is not included?
(A) Indirect taxes
(B) Subsidies
(C) Wages and salaries before tax
(D) Retirement pension
99. As against revenue deficit, gross fiscal deficit will always be?
(A). Lower
(B) Higher
(C) Similar
(D) Some times higher and sometimes lower
100. Consider the following statements
(a) Money is a stock whereas spending is a flow
(b) Wealth is a stock while income is a flow.
(c) The government debt is a stock but interest payment is a flow.
(d) The lending by bank is a flow and its outstanding loan is a stock.
Which of the statements given above are correct?
(A) Only (a) and (b)
(B) (a), (b) and (c)
(C) (a), (c) and (d)
(D) All of these
101. Unclaimed dividends should be shown in the Balance Sheet of a company under the heading
(A) Reserve and Surplus
(B) Provisions
(C) Current liabilities
(D) Miscellaneous items
102. The term, ‘imprest system’ is used in relation to?
(A) Purchases Book
(B) Sales Book
(C) Cash Book
(D) Petty Cash Book
103. On 31st December, 2007 the assets and liabilities of a firm were Rs. 40,000 and Rs. 30,000 respectively. The firm was dissolved and a sum of 60 paise per rupee was paid to the creditors. Loss on realization was?
(A) Rs. 10,000
(B ) Rs, 12,000
(C) Rs. 18,000
(D) Rs. 22,000
104. The rate of commission payable on the issue of shares should not be more than?
(A) 2%
(C) 4%
(B) 3%
(D) 5%
105. If sales are Rs. 18,000, Gross Profit Rs. 5,000, Net Loss Rs. 1,000, the operating expenses will be?
(A) Rs. 4,000
(B) Rs. 6,000
(C) Rs. 13,000
(D) Rs. 17,000
106. At what price is the stock valued under conventional method?
(A) At cost price
(B) At market price
(C) At cost price or market price whichever is lower
(D) At cost price or market price whichever is higher
107. Cumulative Preference share holders can claim unpaid dividend of earlier years as a matter of right only when?
(A) There are sufficient profits
(B) Company goes into winding up
(C) There are sufficient liquid funds
(D) Directors propose to distribute dividend to equity share holders before giving dividends to them
108. A firm had a capital balance of Rs. 1,00,000 at the beginning of a year. At the end of the year, the firm has total assets of Rs. 1,50,000 and total liabilities of Rs. 70,000. If the total withdrawals during the period were Rs. 30,000, what was the amount of Net Profit/Net Loss for the year?
(A) Rs. 10,000 profit
(B) Rs. 20,000 loss
(C) Rs. 50,000 loss
(D) Rs10,000 loss
109. You are given the following item
(a) Bills Receivables
(b) Short-term Investments
(c) Debtors
(d) Accrued but not received Interest.
Which of the following arrangements in the order of liquidity is
correct?
(A) (a), (b), (c) and (d)
(B) (b), (a), (d) and (c)
(C) (b), (c), (a) and (d)
(D) (c), (a), (d) and (b)
110. A private company does not?
(A) Restrict the right to transfer the shares
(B) Limit the number of its members
(C) Appoint auditor
(D) Publicity invite subscription to shares
111. Opening Stock : Rs. 15,000
Purchases : Rs. 95,000
Closing Stock :Rs. 29,000
Gross Profit 10% of sales
The amount of sales will be?
(A) Rs. 60,000
(B) Rs. 72,000
(C) Rs. 80,000
(D) Rs. 90,000
112. In case of retirement of a partner, the total amount of good will is credited to the account
of—
(A) The retiring partner only
(B) The remaining partners only
(C) All the partners
(D) None of these
113. If the rate of Gross Profit is 25% of sales and the -total cost of goods sold is RS. 1,00,000, the amount of gross profit will be?
(A) Rs. 25,000
(B) Rs. 20,000
(C) Rs. 30,000
(D) Rs. 33,333
114. The installation expenses for a new machine will be debited to?
(A) Installation Expense account
(B) Cash account
(C) Profit and Loss account
(D) Machinery account
115. A machine was purchased for Rs. 10,000 and its life was estimated to be 3 years, and at the end of its life, its book value was Rs. 5,120. If depreciation is calculated according to Diminishing Balance Method, the rate of depreciation would be?
(A) 25%
(B) 15%
(C) 20%
(D) 10%
116. Changing of capital expenditure to revenue expenditure results
in
(A) Secret reserve
(B) Revenue reserve
(C) Capital reserve
(D) None of these
117. X Ltd. has current ratio of 2 1 and quick ratio of 1: 1. If the current liabilities are Rs. 80,000 then the value of stock would be?
(A) Rs. 1,60,000
(B) Rs. 1,20,000
(C) Rs. 40,000
(D) Rs. 80,000
118. Profit prior to incorporation of a company?
(A) Can be paid as dividend
(B) Cannot be paid as dividend
(C) Can be used for revenue expenses
(D) None of these
Answers
1 C
2 B
3 A
4 A
5 C
6 C
7 A
8 B
9 D
10 A
11 B
12 B
13 A
14 C
15 C
16 C
17 D
18 C
19 B
20 C
21 A
22 B
23 C
24 D
25 B
26 D
27 C
28 B
29 D
30 C
31 B
32 B
33 C
34 A
35 C
36 A
37 A
38 C
39 B
40 D
41 A
42 C
43 A
44 A
45 B
46 D
47 B
48 C
49 A
50 A
51 C
52 A
53 A
54 C
55 B
56 C
57 D
58 A
59 D
60 C
61 D
62 D
63 B
64 B
65 B
66 C
67 A
68 A
69 D
70 C
71 C
72 A
73 B
74 D
75 A
76 A
77 B
78 B
79 C
80 C
81 D
82 D
83 B
84 A
85 A
86 D
87 A
88 D
89 C
90 A
91 A
92 B
93 C
94 D
95 D
96 C
97 D
98 B
99 B
100 D
101 C
102 D
103 B
104 D
105 B
106 C
107 A
108 A
109 C
110 D
111 D
112 C
113 D
114 D
115 C
116 A
117 C
118 B
Commerce practice Question bank for exams
Commerce Sample Question bank for exams
1. The assets which are purchased to improve profitability in the business not for the purpose of resale, are called?
(A) Intangible assets
(B) Current assets
(C) Fixed assets
(D) Wasting assets
2. As per the rule of Garner versus Murray, any loss that arises due to being insolvent of any partner should be divided among other partners in their?
(A) Profit and loss sharing ratio
(B) Capital ratio
(C) Average of both ratios
(D) None of these
3. Securities premium cannot be applied?
(A) For paying dividend to members
(B) For issuing bonus shares to members
(C) For writing off preliminary expenses of company
(D) For writing off discount on issue of debentures
4. Which method is legally accepted for redemption of preference shares?
(A) Issue of equity shares
(B) Issue of debentures
(C) Sale of fixed assets of the company
(D) Public deposits
5. A and B are partners in a firm. They admit C into partnership by giving him fourth share in future profits. The new profit sharing ratio of all the partners will be?
(A)3:2:1
(B)3:1:2
(C)3:3:2
(D) 3:3:3
6. Which of the following statements is not correct?
(A) The amount received from the sale of goods and services are called revenue
(B) Amount invested by the proprietor in the business is called capital
(C) Recording is the process of grouping transactions of one nature at one place
(D) Assets — Outside liabilities = Capital
7. The balance of which of the following items may have credit balance too?
(A) Cash
(B) Bank
(C) Investment
(D) Stock
8. Which of the following is not an intangible asset?
(A) Goodwill
(B) Debtors
(C) Copyright
(D) Patent
9. Which of the following statements indicates the essence of Robbins definition?
(A) “Economics is a subject concerned with an enquiry into the nature and causes of Wealth of Nations.”
(B) “Economics is the study of mankind in the ordinary busi ness of life.”
(C) “Economics is the science of scarcity.”
(D) “Economics is the study of allocation of scarce resources and of the determinants of employment, income and economic growth.”
10. A demand curve, parallel to X axis, shows the elasticity
(A) Infinite
(B) Less than l
(C) Zero
(D) Inelastic demand
11. According to the Malthusian theory of population which one of the following statements is not correct?
(A) Population tends to outrun the resources of subsistence
(B)There is a direct relationship between standard of living and population
(C) Increasing population can be checked through only positive checks
(D) Positive checks are those checks which are applied by the nature to stop population growth
12. When total utility is maximum, then marginal utility is
(A) Zero
(B) Less than average utility
(C) Equal to average utility
(D) More than average utility
13. Which of the following statements is correct?
(A) Perfectly elastic demand curve is parallel to X-axis
(B) Perfectly elastic demand curve is downward falling
(C) Perfectly inelastic demand curve is parallel to X-axis
(D) Generally highly elastic demand curve is a horizontal line
14. If 50% increase in the price of a commodity leads to only 10% reduction in demand, then such demand wilt be?
(A) Inelastic demand
(B) Perfectly elastic demand
(C) Perfectly inelastic demand
(D) Highly elastic demand
15. The equilibrium firm concept has been given by?
(A) Pigou
(B) Marshall
(C) Robinson
(D) J. K. Mehta
16. For ordinary business the maximum number of partners in a
Firm is?
(A)7
(B) 10
(C)20
(D) 50
17. By limited partnership is meant?
(A) Limited number of partners
(B) Unlimited liability of all partners
(C) Limited scope of partnership
(D) Limited liability of some partners
18. The voting right of the members of cooperative organization is?
(A) In the proportion of the shares purchased by them
(B) In the proportion of capital employed by them
(C) Equal voting right
(D) In the proportion of the total amount supplied by them
19. Line and staff organization is most suitable for?
(A) Small enterprises
(B) Medium sized enterprises
(C) Large sized enterprises
(D) Cottage enterprises
20. In sampling investigation, to arrive at valid conclusions, we may study?
(A) Only a very small unit of a population
(B) All the units of the population
(C) Representative units of the population
(D) None of these
21. ‘Law of Inertia of Large Numbers’ concludes?
(A) Smaller numbers are more stable than large ones
(B) Large numbers are more stable than small ones
(C) All of these
(D) None of these
22. Problem:
5 students secure less than 3 marks
12 students secure less than 6 marks
25 students secure less than 9 marks
33 students secure less than 12 marks
In the above problem, the number of students secure between 6 to 12 marks will be?
(A)12
(B)21
(C)25
(D)13
23.Statistical errors mean
(A)Errors committed while collecting data
(B) Errors committed while calculating
(C) Difference between the observed value and the true value
(D) Difference between old data and current data
24. A shopkeeper wants to stock shoes. The best suitable average for him will be?
(A) Arithmetic mean
(B) Median
(C) Mode
(D) Geometric mean
25. The mean marks of 100 students were found to be 40. Later on it was discovered that a score of 53 was misread as 83. The correct mean will be?
(A)39.5
(B)39.7
(C)39.8
(D)39.9
26. In which sequence are the following steps of communication taken?
(a) Getting participation in developing a solution to the problem
(b) Transmitting ideas or decisions
(c) Clarify the idea or problem
(d) Measuring the effectiveness of communication
Select your answer from the following codes—
(A) (a), (b), (c) and (d)
(B) (d), (c), (a) and (b)
(C) (d), (b), (a) and (c)
(D) (c), (a), (b) and (d)
27. Deficiency of capital, excessive dependency on agriculture and inequalities of income and wealth are some of the important features of a—
(A) Capitalistic economy
(B) Socialistic economy
(C) Developing economy
(D) Developed economy
28. Population census is made in India in every
(A) 7 years
(B) 10 years
(C) 15 years
(D) 20years
29. Which of the following banks stimulates the agricultural and rural development?
(A) EXIM Bank
(B) Exchange Bank
(C) HDFC Bank
(D) NABARD
30. Which bank’s old name was ‘Imperial Bank’?
(A) Reserve Bank of India
(B) Punjab National Bank
(C) State Bank of India
(D) Union Bank of India
31. Repo rate is the rate at which?
(A) The RBI takes money from banks
(B) Banks take money from the RBI
(C) One bank takes money from another bank
(D) The Government takes money from RBI
32. SIDBI is an apex financial insti tution for?
(A) Agricultural sector
(B) Collage industries
(C) Small and medium enterprises
(D) Large scale enterprises
33.The face value of a company’s share is Es. 100 Rs .The company
issued it at. 150 Rs The present market price of that share is Rs. 200. The company declares a dividend of 20% on these shares. The amount of dividend on per
share will be?
(A)Rs. 40
(B) Rs. 30
(C)Rs. 20
(D) Rs. 10
34.If own debenture of Rs. 1,000 is purchased for Rs. 975 from the
market by the company, the difference of Rs. 25 will be assumed?
(A) Profit on redemption of debenture
(B)Loss on redemption of debenture
(C)Goodwill
(D)None of these
35.Advance payment of tax is in the nature of?
(A) Asset
(B) Liability
(C) Prepaid Expenses
(D) Revenue expenses
36. Which of the following statements are true?
(a)Unclaimed dividend is an asset of a company.
(b)Dividend declared between two annual general meetings is called final dividend.
(c) A company can distribute interim dividend and final dividend in the same financial year.
Select your answer from the following codes?
(A) (b) and (c)
(B) (a), (b) and (c)
(C) (a) and (c)
(D) (a) and (b)
37. If debentures of Rs. 3,25,000 are issued for the consideration of
net assets of Rs. 3,50,000, balance of Rs. 25,000 will be credited to?
(A) Capital Reserve A / c
(B) General ReserveA/c
(C) Profit & Loss A/c
(D) Goodwill A / c
38. (Capital employed x Normal rate of return)/100=
(A)Average Profit
(B)Super Profit
(C)Normal Profit
(D) Adjusted Average Profit
39. Decrease in current liabilities is?
(A) Source of cash
(B)Use of cash
(C) None of (A) and (B)
(D) Both of (A) and (B)
40.Current liabilities are equal to?
(A) Working Capital ÷ Current Assets
(B) Working Capital — Current Assets
(C) Current Assets ÷ Working Capital
(D) Current Assets — Working Capital
41. In internal reconstruction?
(A) No company goes into liquidation
(B) Only one company goes into liquidation
(C) One or more companies go into liquidation
(D) Two or more companies go into liquidation
42. Intrinsic value of share can be determined by?
(A) Yield method
(B) Fair value method
(C) Net assets method
(D) Stock exchange quotation
43. In perfect competition the demand curve of a firm is?
(A)Horizontal
(B)Vertical
(C) Negative slope
(D) Positive slope
44.In a place the average rainfall was 4 centimeter during Monday
to Saturday. Due to heavy rainfall on Sunday the average of the
week was increased to 6 cm. The rainfall on Sunday will be?
(A) 17 cm
(B) 18 cm
(C)19cm
(D) 20cm
45. If Median 27 and Mean = 30,Mode will be?
(A) 20
(B) 21
(C) 22
(D) 23
46. If the coefficient of correlation is+ 0 it indicates?
(A) perfect correlation
(B) Absence of correlation
(C) Limited degree of correlation
(D) High degree of correlation
47. The original cost of an asset is Rs. 4,15,000. The useful life of the asset is 20 years and net scrap value is estimated to be Rs. 65,000. The amount of depreciation to be charged every year will be?
(A) Rs. 17,000
(B) Rs. 17,500
(C) Rs. 18,000
(D) Rs. 18,500
48. Which of the following is not undistributed profit?
(A) General Reserve A/c
(B) Workmen Compensation Fund A / c
(C) Securities Premium A/c
(D) Dividend Equalisation Reserve A/c
49. Who is the Chairman of the Planning Commission?
(A) Prime Minister
(B) President
(C) Governor of Reserve Bank of India
(D) Finance Secretary
50. The debit balance in nominal account shows?
(A) Expenses
(B) Gains
(C) Assets
(D) Liabilities
51. The cost of goods sold on hire purchase system is transferred to?
(A)Sales Account
(B)Purchase Account
(C)Hire-Purchase Trading Account
(D) Profit and Loss Account
52.Short working is equal to?
(A) Minimum rent-Royalty
(B) Royalty-Minimum Rent
(C) Royalty-Amount paid to landlord
(D) Shortworking-Surplus
53. Which of the following errors will not affect the Trial Balance?
(A) Goods for Rs. 5,000 purchased on cash, expenses account was debited instead of purchases account
(B) Purchase Returns Book for December was overcast by Rs. 500
(C) Sales Book carried forward Rs 2,200 instead of Rs. 2,000
(D) None of these
54.X and Y are partners sharing profits in the firm in the ratio of
2: 3. Goodwill appears in the books of the firm at Rs. 10,000. Z
joins the firm as new partner for share of profits. His share of
Goodwill is estimated to be Rs. 15,000. The old partners’ account will be credited with Goodwill by—
(A) Rs 50,000
(B) Rs. 40,000
(C) Rs. 75,000
(D) Rs, 65,000
55. In case of opening stock Rs. 5,000, purchases Rs. 15,000, direct expenses Its. 2,000 and closing stock Rs. 2,500, the cost of goods sold had been?
(A) Rs. 20,000
(B) Rs. 19,500
(C) Rs. 21,500
(D) Rs. 22,000
56. Which of the following statements is ‘True’ ?
(A) Building Account is a nominal account
(B) Outstanding rent account is a non-personal account
(C) Every debit has a corresponding credit
(D) Income is debited
57. Which one of the following is not a kind of statistical series ?
(A) Individual
(B) Discrete
(C) Classified
(D) Signed
58. The formula for coefficient of variation is?
(A) Standard Deviation/ Mean
(B)Mean/ Standard Deviation
(C) (Mean—Mode)/ Standard Deviation
(D)Standard Deviation/ (Mean—Mode)
59. The value of mean, median and mode coincides in case of?
(A) Positively skewed distribution
(B) Negative]y skewed distribution
(C) Symmetrical distribution
(D) All of these
60. Classification of the students of a college in two categories ‘rural’ and ‘urban’ is?
(A) Qualitative
(B) Quantitative
(C) Geographical
( D)None of these
61. Which of the following statements is ‘True’ ?
(A) Henry Fayol was the resident of America
(B) Elton Mayo is the father of scientific management
(C) Henry Fayol was the founder of human relation approach
(D) The credit of behavioural approach in management goes to Ford Foundation
62. X and Y Motivation Theory has been propounded by?
(A) Maslow
(B) Ouchi
(C) Herzberg
(D) McGregor
63. Study the following statements and mark your answer according to the answer code given below—
I. Planning is the first function of management.
II. Planning provides a basis for organisation.
Ill. Planning does not involve decision-making.
IV. Planning is a static function.
Codes:
(A) I and III are correct
(B) I and I are correct
(C) I and IV are correct
(D) II and IV are correct
64. Motivational process is basically?
(A) Emotional process
(B) Psychological process
(C) Physiological process
(D) Intellectual process
65. The main objective of controlling is to—
(A) Punish the guilty person
(B) Ensure that performance is as per planning
(C) Maintain discipline
(D) Fix responsibility of subordinates
66. Indian Banking Regulation Act was passed in the yea?
(A)1971
(B) 1969
(C)1949
(D) 1947
67. Which one of the following will not act as an incentive for exports?
(A) Raising the internal value of money
(B) Lowering the prices of goods within the country
(C) internal devaluation of money
(D) Granting low interest loans for exports.
68. Received Rs. 5,000 from Ram but credited his account by Rs. 50,000 is?
(A)Error of Omission
(B)Error of Principles
(C)Compensation Error
(D) None of these
69. The subsidiary voucher produced in the absence of primary voucher is called?
(A) General voucher
(B) Note-book voucher
(C) Counterfoil
(D) Collateral voucher
70. In how many days from the registration, the first Auditor of the company be appointed?
(A)10
(B) 20
(C)30
(D) 60
71. The main objective of Auditing is?
(A) To detect errors and fraud
(B) To prevent errors and fraud
(C) To find out accuracy, completeness and validity of accounts and documents
( D)All of these
72. Internal Auditor can be removed by the?
(A) Management
(B) Shareholders
(C) Statutory Auditor
(D) Government
73. In his report the Auditor gives his?
(A) Judgment
(B) Opinion
(C) Guarantee to correctness of accounts
(D) All of these
74. According to Section 227(1) of the Companies Act, 1956, the Auditor does not have the right
(A) To sign the Audit Report
(B) To see the books, accounts and vouchers of the company
(C) To obtain information and explanation
(D) To correct any wrong statement
75. Consider the following documents?
(a) Audit Report
(b) Audit Note-book
(c) Audit Programme
(d) Audit Files
The correct sequence in which the Auditor prepares these documents is?
(A) (c) (b) (d) (a)
(B) (d) (c) (a) (b)
(C) (c) (a) (d) (b)
(D) (a) (b) (c) (d)
76. Consider the following Statements
I Scope of audit
II Validity of appointment
III Knowledge about business
IV Instruction to client
V. Division of work among audit clerks.
The correct sequence of these elements for the commencement of a new audit will be?
(A) II, I ,III, IV and V
(B) I,II, III, IV and V
(C) V, I IV, III and II
(D)IV, I, III, II and V
77. Working papers which contain a record of the audit work done, are the property of?
(A) The company
(B) The auditor
(C) The company and the auditor both
(D) The Company Law Board
78. Under which Section of Companies Act, has the remuneration of the Auditor been discussed?
(A) Section 224(2)
(B) Section 224(8)
(C) Section 225
(D) Section 231
79. Marginal cost curve cuts the average cost curve
(A) At the left of its lowest point
(B) At the lowest point
(C) At the right of its lowest point
(D) At its highest point
80. In short term production function which of the following changes in factors?
(A) Ratio
(B) Scale
(C)Both of these
(D)None of these
81. Which one of the following is not a method of depreciation?
(A) Insurance Policy Method
(B) Diminishing Return Method
(C) The Sum of the Year Digits Method
(D)Replacement Cost Method
82. Which one of the following is not an accounting convention?
(A) Consistency
(B) Full disclosure
(C) Materiality
(D) Secrecy
83. Domestic use of office telephone is
(A) Embezzlement of Labour
(B) Embezzlement of Property
(C) Embezzlement of Facility
(D) None of these
84. The Geometric Mean of two numbers 8 and 18 shall be?
(A)12
(C)15
(B)13
(D)11.09
85. For open-end classes, the most appropriate measure of dispersion ?
(A) Range
(B) Quartile deviation
(C) Mean deviation
(D) Standard deviation
86. When the Cross Price Elasticity of demand between two goods is zero then those goods are called?
(A) Independent goods
(B) Luxury goods
(C) Substitute goods
(D) Complementary goods
87. The feature of monopolistic competition that drives a firm’s profit to zero in the long run is?
(A) Product differentiation
(B) Price leadership
(C) Market power
(D) Free entry
88. As a result of increase in the price of tea from Rs. 40 to Rs. 50 per pound, the demand for coffee increases from 500 pounds to 600 pounds. The cross elasticity of demand is?
(A)1/2
(B)2/3
(C)3/4
(D)4/5
89. Which of the following prevents National Income from falling to zero when Gross Investment falls to zero?
(A) Consumption
(B) Multiplier
(C) Accelerator
(D) None of these
90. In an Economy, where capital output ratio is 5.2 what should be the saving income ratio to bring about a growth rate of 6.2% in the National Income?
(A)1.00%
(B) 32.24%
(C)11.4%
(D)1.19%
91. Which of the following will happen when statutory liquidity ratio of banks is reduced by the central banks?
(A) Government can borrow more funds from the banks than before
(B) Government can sell more securities to the banks than before
(C) Private sector will be able to get less credit from banks than before
(D) Government will be able to sell less securities to banks than before
92. Which of the following growth models includes the population growth function?
(a) Classical Model
(b) Harrod-Domar Model
(c) New classical Model
(d) Schumpeter Model
Codes:
(A) (a) and (c)
(B) (a), (b) and (c)
(C) (a)and(d)
(D)(b) and (d)
93. Longer the period of time, elasticity of supply will be?
(A) Perfectly elastic
(B) Inelastic
(C) More elastic
(D) Constant
94. The production function expresses the relationship between?
(A) Cost and benefit
(B) Stock and flow variables
(C) Demand and supply
(D) Input and output
95.Which among the following is not the liability of a Commercial Bank?
(A) Share capital
(B) Reserve fund
(C) Bills, which are to be paid
(D) Balance with central bank and other banks
96. Which one of the following is not a method of credit control?
(A) Bank rate policy
(B) Open market operations
(C) Credit deposit ratio
(D) Cash reserve ratio
97. Economic development can be best measured by?
(A)D increase in Gross National Income
(B) Poverty ratios
(C) Growth in real per capita in GNP
(D) Faster capital formation
98. In calculating a country’s GNP at market prices, which one of the following is not included?
(A) Indirect taxes
(B) Subsidies
(C) Wages and salaries before tax
(D) Retirement pension
99. As against revenue deficit, gross fiscal deficit will always be?
(A). Lower
(B) Higher
(C) Similar
(D) Some times higher and sometimes lower
100. Consider the following statements
(a) Money is a stock whereas spending is a flow
(b) Wealth is a stock while income is a flow.
(c) The government debt is a stock but interest payment is a flow.
(d) The lending by bank is a flow and its outstanding loan is a stock.
Which of the statements given above are correct?
(A) Only (a) and (b)
(B) (a), (b) and (c)
(C) (a), (c) and (d)
(D) All of these
101. Unclaimed dividends should be shown in the Balance Sheet of a company under the heading
(A) Reserve and Surplus
(B) Provisions
(C) Current liabilities
(D) Miscellaneous items
102. The term, ‘imprest system’ is used in relation to?
(A) Purchases Book
(B) Sales Book
(C) Cash Book
(D) Petty Cash Book
103. On 31st December, 2007 the assets and liabilities of a firm were Rs. 40,000 and Rs. 30,000 respectively. The firm was dissolved and a sum of 60 paise per rupee was paid to the creditors. Loss on realization was?
(A) Rs. 10,000
(B ) Rs, 12,000
(C) Rs. 18,000
(D) Rs. 22,000
104. The rate of commission payable on the issue of shares should not be more than?
(A) 2%
(C) 4%
(B) 3%
(D) 5%
105. If sales are Rs. 18,000, Gross Profit Rs. 5,000, Net Loss Rs. 1,000, the operating expenses will be?
(A) Rs. 4,000
(B) Rs. 6,000
(C) Rs. 13,000
(D) Rs. 17,000
106. At what price is the stock valued under conventional method?
(A) At cost price
(B) At market price
(C) At cost price or market price whichever is lower
(D) At cost price or market price whichever is higher
107. Cumulative Preference share holders can claim unpaid dividend of earlier years as a matter of right only when?
(A) There are sufficient profits
(B) Company goes into winding up
(C) There are sufficient liquid funds
(D) Directors propose to distribute dividend to equity share holders before giving dividends to them
108. A firm had a capital balance of Rs. 1,00,000 at the beginning of a year. At the end of the year, the firm has total assets of Rs. 1,50,000 and total liabilities of Rs. 70,000. If the total withdrawals during the period were Rs. 30,000, what was the amount of Net Profit/Net Loss for the year?
(A) Rs. 10,000 profit
(B) Rs. 20,000 loss
(C) Rs. 50,000 loss
(D) Rs10,000 loss
109. You are given the following item
(a) Bills Receivables
(b) Short-term Investments
(c) Debtors
(d) Accrued but not received Interest.
Which of the following arrangements in the order of liquidity is
correct?
(A) (a), (b), (c) and (d)
(B) (b), (a), (d) and (c)
(C) (b), (c), (a) and (d)
(D) (c), (a), (d) and (b)
110. A private company does not?
(A) Restrict the right to transfer the shares
(B) Limit the number of its members
(C) Appoint auditor
(D) Publicity invite subscription to shares
111. Opening Stock : Rs. 15,000
Purchases : Rs. 95,000
Closing Stock :Rs. 29,000
Gross Profit 10% of sales
The amount of sales will be?
(A) Rs. 60,000
(B) Rs. 72,000
(C) Rs. 80,000
(D) Rs. 90,000
112. In case of retirement of a partner, the total amount of good will is credited to the account
of—
(A) The retiring partner only
(B) The remaining partners only
(C) All the partners
(D) None of these
113. If the rate of Gross Profit is 25% of sales and the -total cost of goods sold is RS. 1,00,000, the amount of gross profit will be?
(A) Rs. 25,000
(B) Rs. 20,000
(C) Rs. 30,000
(D) Rs. 33,333
114. The installation expenses for a new machine will be debited to?
(A) Installation Expense account
(B) Cash account
(C) Profit and Loss account
(D) Machinery account
115. A machine was purchased for Rs. 10,000 and its life was estimated to be 3 years, and at the end of its life, its book value was Rs. 5,120. If depreciation is calculated according to Diminishing Balance Method, the rate of depreciation would be?
(A) 25%
(B) 15%
(C) 20%
(D) 10%
116. Changing of capital expenditure to revenue expenditure results
in
(A) Secret reserve
(B) Revenue reserve
(C) Capital reserve
(D) None of these
117. X Ltd. has current ratio of 2 1 and quick ratio of 1: 1. If the current liabilities are Rs. 80,000 then the value of stock would be?
(A) Rs. 1,60,000
(B) Rs. 1,20,000
(C) Rs. 40,000
(D) Rs. 80,000
118. Profit prior to incorporation of a company?
(A) Can be paid as dividend
(B) Cannot be paid as dividend
(C) Can be used for revenue expenses
(D) None of these
Answers
1 C
2 B
3 A
4 A
5 C
6 C
7 A
8 B
9 D
10 A
11 B
12 B
13 A
14 C
15 C
16 C
17 D
18 C
19 B
20 C
21 A
22 B
23 C
24 D
25 B
26 D
27 C
28 B
29 D
30 C
31 B
32 B
33 C
34 A
35 C
36 A
37 A
38 C
39 B
40 D
41 A
42 C
43 A
44 A
45 B
46 D
47 B
48 C
49 A
50 A
51 C
52 A
53 A
54 C
55 B
56 C
57 D
58 A
59 D
60 C
61 D
62 D
63 B
64 B
65 B
66 C
67 A
68 A
69 D
70 C
71 C
72 A
73 B
74 D
75 A
76 A
77 B
78 B
79 C
80 C
81 D
82 D
83 B
84 A
85 A
86 D
87 A
88 D
89 C
90 A
91 A
92 B
93 C
94 D
95 D
96 C
97 D
98 B
99 B
100 D
101 C
102 D
103 B
104 D
105 B
106 C
107 A
108 A
109 C
110 D
111 D
112 C
113 D
114 D
115 C
116 A
117 C
118 B
Preparing Commerce Optional For UPSC Prelims : Practice Solved paper
Preparing Commerce Optional For UPSC Prelims : Practice Solved paper
upsc prelims commerce question papers
Commerce Optional For UPSC Prelims :Check your preparation
1. Depreciation Accounting is a process of:
(a) allocation of cost
(b) valuation of assets
(c) provision for replacement of assets
(d) estimation of net profit
Ans. (a)
2. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Amortisation 1.Diminution of the life of the asset due to excessive use.
B. Depreciation 2.Exhaustion of natural resources
C. Depletion 3.Expiration of tangible assets
D. Obsolescence 4.Expiration of intangible. assets
5. Economic deterioration due to improved inventions
Codes:
A B C D
(a) 1 2 3 4
(b) 1 2 4 5
(c) 5 2 3 4
(d) 4 3 2 5
Ans. (d)
3. Given that the value of furniture on 1.1.93 is Rs.8000, furniture purchased during the year is Rs. 4,000 sale of furniture on no loss no profit basis is Rs. 2,000 and the furniture is valued at Rs. 7000 on 31.12.93, the depreciation for the year 1993 will be:
(a) Rs. 1000
(b) Rs. 3000
(b) Rs. 5,000
(c) Rs. 7,000
Ans. (b)
4. Which one of the following methods of inventory valuation matches current cost with current revenues?
(a) Last In first Out
(b) First In First Out
(c) Simple average
(d) Weighted average
Ans. (a)
5. Which of the following statements are correct?
1. Inventory includes raw materials, finished goods and goods in process.
2. Inventory is a part, of the working capital.
3. Inventory includes goods likely to be purchased in the coming months.
Select the correct answer using the codes given below:
(a) 1, 2 and 3
(b) 2 and 3
(c) 1 and 3
(d) 1 and 2
Ans. (d)
6. The success of perpetual inventory system depends upon:
(a) placing order for materials at regular intervals
(b) exercising control over the issue of materials
(c) recording the receipt and issue of materials immediately after each transaction
(d) recording the receipt of materials by storekeeper in the ‘Bin Cards’.
Ans. (c)
7. A person starts a business with a capital of Rs. 45000.
He purchases goods on credit worth Rs. 5,000.
These transactions can be expressed in an Accounting Equation as:
(a) Rs. 5,000 = Rs. 50,000-Rs. 45,000
(b) Rs. 50,000 = Rs. 50,000 + 0
(c) Rs. 50,000 = Rs. 45,000 + Rs. 5,000
(d) Rs. 45,000 = Rs. 50,000 - Rs. 5,000
Ans. (c)
8. Which of the following are applicable to Sinking Fund Method of depreciation?
1. Periodic depreciation is smaller than the asset’s actual annual depreciable cost.
2. Amount of the interest constantly declines due to asset’s reducing balances.
3. Annual net incidence on P/LA/c remains constant due to incorporation of only fixed depreciation.
4. Periodic depreciation is recorded through the Asset Account.
Select the correct answer using the codes given
Codes:
(a) 2 and 4
(b) 1 and 3
(c) l, 2and3
(d) 2, 3 and 4
Ans. (b)
9. The value of which one of the following assets increases in the initial years of its life remains constant Thereafter and finally begins to decline?
(a) Livestock
(b) Patents
(c) Goodwill
(d) Machinery
Ans. (b)
10. Consider the following factors:
1. Margin of safety
2. Lead time
3. Ordering Cost
4. Economic Order Quantity
5. Average Quantity Consumed
6. Storage Cost
The ordering level is fixed by taking into account.
(a) 1, 4 and 6
(b) 1.2 and 5
(c) 2, 3 and 4
(d) 3, 5 and 6
Ans. (b)
11. Match List-I with List-II and select the correct answer using the codes given below the list:
List-I List—II
(Accounting (Principle involved)
Concept)
A. Consistency 1.Losses are anticipated and accounted for in advance but
profits are not accounted for until realized.
B. Comparability 2. All the relevant financial information should be summarized and
presented in the accounting statements.
C. Conservatism 3. Accounting procedures in an entity should be followed
uniformly from period to period.
D. Disclosure 4. Accounting statements of different periods of an entity and those
of different entities of a period should be based on the same
accounting principles and procedures.
5. Personal judgment of accountants should not influence
accounting measurements.
Codes:
A B C D
(a) 4 3 5 2
(b) 3 4 1 2
(c) 4 3 1 5
(d) 3 4 2 5
Ans. (b)
12. Which one of the following should be considered as revenue expenditure?
(a) Rs.1000 paid for the erection of a new plant
(b) Cost of Rs. 10,000 incurred in increasing the sitting accommodation of a hotel
(c) Damages paid on account of breach of a contract to supply certain goods
(d) Repairs to machinery purchased second hand.
Ans. (c)
13. The written down value of a plant is Rs. 6,000 (the original value being Rs. 10,000). It is sold for Rs. 12000 during the current financial year. Which one of the following is true in this regard?
(a) Capital Profit = Rs. 6,000
(b) Revenue Profit = Rs. 6,000
(c) Capital Profit = Rs. 2,000 and Revenue Profit = Rs.4000
(d) Capital Profit = Rs. 12,000
Ans. (c)
14. Match List-I (Item of expenditure / receipt) with List-II (Nature of expenditure / receipt) and select the correct answer using the codes given below the lists:
List- I List - II
A. Carriage charges on a new machine 1. Revenue Receipt
purchased for factory
B. Legal expenses incurred in defending 2. Revenue Expenditure
a case of violation of a provision of Factories
Act
C. Grant in aid re from the Government for the 3. Deferred Revenue Expenditure
construction of a building
D. Amount received for a part of the office 4. Capital Expenditure
building sub-let
5. Capital Receipt
Codes:
A B C D
(a) 2 3 1 5
(b) 4 2 5 1
(c) 3 4 1 5
(d) 4 3 1 5
Ans. (b)
15. Profit under single entry system of book keeping means:
(a) the difference between opening and closing cash balances as reduced by fresh capital introduced.
(b) the difference between opening net assets and closing net assets as increased by drawings and reduced by new capital introduced.
(c) Profit shown by Trading and Profit and Loss Account and Balance Sheet.
(d) The amount of closing cash balance as reduced by expenses.
Ans. (b)
16. Given that:
Opening Capital : Rs.5, 000
Closing Capital : Rs.6, 000
Drawings : Rs.1, 000
New capital Invested: Rs. 500
the profit for the year will be:
(a) Rs. 2,000
(b) Rs. 1,500
(c) Rs. 1,000
(d) Rs. 500
Ans. (b)
17. Which of the following are prepared by the organizations keeping only incomplete accounting records?
I. Cash Book
II. Customers’ Accounts
III. Expenses Accounts
IV. Day Books
Choose the correct answer using the codes given below:
(a) I, II and III
(b) 1, II and IV
(c) I, III and IV
(d) I III and IV
Ans. (b)
18. Match List-I (Financial Statements and Accounts) with List-II (Special matters associated with Statements and Accounts) and select the correct answer using the codes given below the list:
List-I List-II
A. Receipts and Payments Account 1. Revenue
B. Income and Expenditure Account 2. Cash
C. Dividend Equalization Reserve 3. Liability
D. Club Subscription Received in Advance Account 4. Balance Sheet
5. General Reserve
Codes:
A B C D
(a) 2 1 4 3
(b) 3 2 4 5
(c) 2 1 5 3
(d) 1 2 4 5
Ans. (c)
19. Interim payments to partners of a dissolved partnership firm are made according to the:
(a) assumption that remaining unrealized assets would be able to realize their book value
(b) balances of capital of the partners
(c) existing profit-sharing ratios of the partners
(d) assumption that the realizable value of the remaining assets is zero
Ans. (d)
20. A, B and C are partners in a business sharing profit in the ratio of 2:2: 1. C dies on 31.3.94. The profits for the Financial Year 1993-1994 (April-March) is Rs. 64,000. The share of the deceased partner in the profits for the year will be Rs:
(a) 12,800
(b) 9,600
(c) 6,400
(d) 3:200
Ans. (a)
21. A and B are partners sharing profits and losses in the ratio of 2: 5. They admit C on the condition that he will bring good will in cash which is distributed between A and B. C’s share in future profit and losses is to be 1, The new profit sharing ratio of A, Band C will be:
(a) 6: 15:7
(b) 15:6:7
(c) 7:6: 15
(c) 6: 7: 15
Ans. (a)
22. In a common size Balance Sheet each item expressed as a percentage of:
(a) Equity Capital
(b) Debt Capital
(c) Fixed Assets
(d) Total Assets
Ans. (a)
23. Which of the following pairs is/are correctly matched?
1. Sinking Fund: Replacement of wasting assets
2. Secret Reserve: Overvaluation of liabilities
3. General Reserve: Provision for drop in value of assets
Select the correct answer using the codes given below codes:
(a) 1, 2 and 3
(b) 1 and 3
(c) 2 alone
(d) 1 alone
Ans. (c)
24. Match List-I and with List-land select the correct answer using the codes given below the lists:
List-I List-II
A. Dividend 1. Accumulated Reserves
B. Interest 2. Always paid whenever the firm makes a profit
C. Bonus shares 3. Can be used for issue of Bonus shares
D. Premium on share Price 4. Can be paid out of capital
5. Divisible part of profit
Codes:
A B C D
(a) 2 1 5 4
(b) 5 4 1 3
(c) 5 1 2 4
(d) 2 5 1 3
Ans. (b)
25. An estimate of the assets and liabilities of a firm as on a given date is called:
(a) Balance sheet
(b) Statements of Affairs
(c) Statement of Capital
(d) Income Statement
Ans. (b)
26. A provision is a:
(a) General Reserve
(b) Specific Reserve
(c) Capital Reserve
(d) Contingency Reserve
Ans. (b)
27. ‘Final Accounts’ of a Manufacturing company generally include the following types of documents:
1. Balance Sheet
2. Manufacturing Account
3. Profit and Loss Account
4. Trading Account
5. Profit and Loss Appropriation Account
The correct sequence in which these documents are prepared is:
(a) 1, 4, 3, 2, 5
(b) 2, 4, 3, 5, 1
(c) 1, 2, 4, 3, 5
(d) 2, 4, 5, 3, 1
Ans. (b)
28. While preparing Annual Financial Statements, the balance of Bill Receivable A/c can be treated as:
1. an Accrued Income
2. an item of Assets
3. a” Personal Account” balance
Of these statements
(a) 2 and 3 are correct
(b) 1 and 3 are correct
(c) 1and 2 is correct
(d) none is correct
Ans. (a)
29. While preparing the Annual Financial Statements, the balance of Prepaid Rent A/c should be treated as the balance of a:
(a) personal account
(b) real account
(c) nominal account
(d) deferred expenditure Account
Ans. (a)
30. Advance received from customers is:
(a) an item of current liability
(b) an item of non-current asset
(c) an item of contingent liability
(d) an item of non-cash cost
Ans. (a)
31. Which one of the following statements is incorrect?
(a) Share premium received on issue of shares can be utilized for writing off the preliminary expenses of the company
(b) Capital Redemption Reserve is available only for issuing fully paid bonus shares
(c) Discount on issue of shares is shown as a reduction from Capital Account in the Balance Sheet
(d) At the time of Rights issue, the existing shareholders gain because the shares are generally issued at a price lower than the market price.
Ans. (c)
32. The directors of a limited company resolved to forfeit 1,000 equity shares of Rs.10 each, Rs. 7.50 paid up, for non-payment of the final call money of Rs. 2.50 per share. 700 of these shares were re-issued at Rs. 7 per share. The amount to be transferred to the Capital Reserve Account would be:
(a) Rs. 2,500
(b) Rs. 3,150
(c) Rs. 3,500
(d) Rs. 3750
Ans. (b)
33. The nominal and book value of Sinking Fund Investments Account are respectively Rs. 100,000 and Rs. 96,000; The company has sold investments of the nominal value of Rs. 20,000 at a price that was sufficient to redeem the debentures of Rs. 20,000 at Rs. 102. The profit on sale of investments is:
(a) Rs. 800
(b) Rs. 1,000
(c) Rs. 1,200
(d) Nil
Ans. (c)
34. A company’s Balance Sheet inter alia contains Rs. 1, 60,000 fully paid 10% redeemable preference shares, Rs. 1,000 as shares Premium and Rs. 1, 31,000 as Revenue Reserves. It resolves to immediately redeem the above mentioned shares at 5% prem. by maximum utilization of earnings from fresh issue. If the issue is made at 20% premium, the MINIMUM amount of Fresh equity issue proceeds will be:
(a) Rs. 28,800
(b) Rs. 32,000
(c) Rs. 36,000
(d) Rs. 37,000
Ans. (c)
35. The following accounting entries are required in connection with the allotment of shares of a company:
1. Adjustment entry in respect of the discount allowed, if any, on the issue of shares.
2. Transfer entry for the application money received on shares allotted.
3. Adjustment entry for the excess application money, if any, being adjusted against the allotment money due:
The correct sequence of these entries is:
(a) l, 2
(b) 2,
(c) 2, 3, 1
(d) 3, 2, 1
Ans. (c)
36. When shares are forfeited, called up amount on shares is debited to
(a) Forfeiture Account
(b) Capital Reserve Account
(c) General Reserve Account
(d) Capital Account
Ans. (d)
37. Which one of the following statements is NOT correct?
(a) Bonus shares can be issued out of General Reserves
(b) Bonus shares can be issued in lieu of dividends
(c) Bonus shares can be issued even if the shares of the company are partly paid up
(d) Bonus shares can be issued even if there is a default in the payment of any term loans outstanding to any Public Financial Institution
Ans. (c)
38. Operating Ratio is given by:
(a) Total Operating Profit
Total shareholders’ Equity
(b) Total Operating Cost
Total Operating Revenue
(c) Total Operating Cost
Total Capital Employed
(d) Total Operating Profit
Total Operating Capital
Ans. (a)
39. Interest Coverage Ratio is given by:
(a) Net Profit
Interest on Debt
(b) Debt Capital
Interest on Debt
(c) Earnings Before Interest and Taxes
Interest on Debt
d Profit Before Tax
Interest on Debt
Ans. (c)
40. Given that:
Current Ratio = 2.5
Acid test ratio = 1.5
Net working capital = Rs. 60,000
The value of current-liabilities will be:
(a) Rs. 15000
(b) Rs. 40,000
(c) Rs. 60,000
(d) Rs. 100,000
Ans. (b)
41. Match List-I (Ratios) with List-II (Method of Calculation) and select the correct answer using the codes given below the lists:
List-I List-II
A. Debt-Equity Ratio 1. Equity Capital
Total Debt Capital
B. Proprietary Ratio 2 External Equity
Owners’ Equity
C. Capital Gearing ratio 3. Total shareholder’s Fund
Total Assets
D. ROI 4. Profit Before Int. & Tax
Net Assets
Codes:
A B C D
(a) 2 3 1 4
(b) 2 3 4 1
(c) 3 2 1 4
(d) 3 2 4 1
Ans. (a)
42. Match List-I and List-Il and select the correct using the codes given below the lists:
List-I List-II
A. Financial Leverage 1. Efficiency
B. Quick Ratio 2. Profitability
C. Stock Turnover Ratio 3. Risk
D; Margin on sales 4. Liquidity
Codes:
AB C D
(a) 3 4 1 2
(b) 4 3 1 2
(c) 4 3 2 1
(d) 3 4 2 1
Ans. (a)
43. Trading on equity take place:
(a) when capital other than that of equity shareholders also employed
(b) only when equity capital is employed
(c) only when debenture funds are employed
(d) when profits are ploughed back
Ans. (d)
44. Payout ratio means the ratio of:
(a) debtors to creditors
(b) profit distributed to profit retained
(c) earnings that are distributed through dividends
(d) interest payment to dividends
Ans. (c)
45. Given that:
Sales = Rs. 50,000
Variable cost = 20,000
Fixed cost = 10,000
Capital employed = Rs. 200,000
The profit-volume ratio will be:
(a) l0%
(b) 15%
(c) 50%
(d) 60%
Ans. (d)
46. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Operating income 1. Cost of sold to average stock
B. Capital Employed 2. Profits before depreciation, interest and taxes
C. Inventory Turnover 3. Net fixed Assets Investment and Net Working capital
D. Gross Cash Flow 4. Total Funds invested
5. Profit before interest and taxes only
Codes:
A B C D
(a) 2 1 4 5
(b) 2 3 4 2
(c) 2 1 3 2
(d) 5 3 1 2
Ans. (d)
AUDITING
47. Consider the following activities:
1. Valuation
2. Verification
3. Vouching
The correct sequence of these activities undertaken by auditor is:
(a) 3, l, 2
(b) 3, 2, l
(c) 2, 3, 1
(d) 1, 2, 3
Ans. (b)
48. Consider the following statements:
Continuous adult is useful because:
1. more detailed checking is possible
2: audit can be completed quite quickly
3. figures in the accounts cannot be altered as the auditor visits several times during the year
4. Internal check can be done away with
Of these statements:
(a) 1 and 2 are correct
(b) 2 and 4 are correct
(c) 2, 3 and 4 are correct
(d) 1, .3 and 4 are correct
Ans. (d)
49. Match List-I (Nature of audit) with List-II (Related types of audit) and select the correct answer using the codes given below the list:
List-I List-II
A. Audit work is carried on almost 1.Balance Sheet Audit
simultaneously with the recording of transactions
B. Auditor starts his work when the final accounts have 2.Continuous Audit
been prepared
C. Audit conducted in between two annual audits 3.Interim Audit
D. Some of the books and records of the whole period are audited 4. Cost Audit
5. Partial Audit
Codes:
A B C D
(a) 4 1 2 3
(b) 2 1 5 3
(c) 2 1 3 5
(d) 1 2 3 4
Ans. (c)
50. Which one of the following would be sufficient ground for an auditor to submit a qualified report even though the management had given a note to the accounts?
(a) Securities belonging to the client are lodged with a depository.
(b) Fixed assets have been mortgaged.
(c) Bank balance as shown by the pass-book is different from that indicated by the cash book.
(d) Closing stock is valued at cash plus 10%.
Ans. (d)
.
upsc prelims commerce question papers
Commerce Optional For UPSC Prelims :Check your preparation
1. Depreciation Accounting is a process of:
(a) allocation of cost
(b) valuation of assets
(c) provision for replacement of assets
(d) estimation of net profit
Ans. (a)
2. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Amortisation 1.Diminution of the life of the asset due to excessive use.
B. Depreciation 2.Exhaustion of natural resources
C. Depletion 3.Expiration of tangible assets
D. Obsolescence 4.Expiration of intangible. assets
5. Economic deterioration due to improved inventions
Codes:
A B C D
(a) 1 2 3 4
(b) 1 2 4 5
(c) 5 2 3 4
(d) 4 3 2 5
Ans. (d)
3. Given that the value of furniture on 1.1.93 is Rs.8000, furniture purchased during the year is Rs. 4,000 sale of furniture on no loss no profit basis is Rs. 2,000 and the furniture is valued at Rs. 7000 on 31.12.93, the depreciation for the year 1993 will be:
(a) Rs. 1000
(b) Rs. 3000
(b) Rs. 5,000
(c) Rs. 7,000
Ans. (b)
4. Which one of the following methods of inventory valuation matches current cost with current revenues?
(a) Last In first Out
(b) First In First Out
(c) Simple average
(d) Weighted average
Ans. (a)
5. Which of the following statements are correct?
1. Inventory includes raw materials, finished goods and goods in process.
2. Inventory is a part, of the working capital.
3. Inventory includes goods likely to be purchased in the coming months.
Select the correct answer using the codes given below:
(a) 1, 2 and 3
(b) 2 and 3
(c) 1 and 3
(d) 1 and 2
Ans. (d)
6. The success of perpetual inventory system depends upon:
(a) placing order for materials at regular intervals
(b) exercising control over the issue of materials
(c) recording the receipt and issue of materials immediately after each transaction
(d) recording the receipt of materials by storekeeper in the ‘Bin Cards’.
Ans. (c)
7. A person starts a business with a capital of Rs. 45000.
He purchases goods on credit worth Rs. 5,000.
These transactions can be expressed in an Accounting Equation as:
(a) Rs. 5,000 = Rs. 50,000-Rs. 45,000
(b) Rs. 50,000 = Rs. 50,000 + 0
(c) Rs. 50,000 = Rs. 45,000 + Rs. 5,000
(d) Rs. 45,000 = Rs. 50,000 - Rs. 5,000
Ans. (c)
8. Which of the following are applicable to Sinking Fund Method of depreciation?
1. Periodic depreciation is smaller than the asset’s actual annual depreciable cost.
2. Amount of the interest constantly declines due to asset’s reducing balances.
3. Annual net incidence on P/LA/c remains constant due to incorporation of only fixed depreciation.
4. Periodic depreciation is recorded through the Asset Account.
Select the correct answer using the codes given
Codes:
(a) 2 and 4
(b) 1 and 3
(c) l, 2and3
(d) 2, 3 and 4
Ans. (b)
9. The value of which one of the following assets increases in the initial years of its life remains constant Thereafter and finally begins to decline?
(a) Livestock
(b) Patents
(c) Goodwill
(d) Machinery
Ans. (b)
10. Consider the following factors:
1. Margin of safety
2. Lead time
3. Ordering Cost
4. Economic Order Quantity
5. Average Quantity Consumed
6. Storage Cost
The ordering level is fixed by taking into account.
(a) 1, 4 and 6
(b) 1.2 and 5
(c) 2, 3 and 4
(d) 3, 5 and 6
Ans. (b)
11. Match List-I with List-II and select the correct answer using the codes given below the list:
List-I List—II
(Accounting (Principle involved)
Concept)
A. Consistency 1.Losses are anticipated and accounted for in advance but
profits are not accounted for until realized.
B. Comparability 2. All the relevant financial information should be summarized and
presented in the accounting statements.
C. Conservatism 3. Accounting procedures in an entity should be followed
uniformly from period to period.
D. Disclosure 4. Accounting statements of different periods of an entity and those
of different entities of a period should be based on the same
accounting principles and procedures.
5. Personal judgment of accountants should not influence
accounting measurements.
Codes:
A B C D
(a) 4 3 5 2
(b) 3 4 1 2
(c) 4 3 1 5
(d) 3 4 2 5
Ans. (b)
12. Which one of the following should be considered as revenue expenditure?
(a) Rs.1000 paid for the erection of a new plant
(b) Cost of Rs. 10,000 incurred in increasing the sitting accommodation of a hotel
(c) Damages paid on account of breach of a contract to supply certain goods
(d) Repairs to machinery purchased second hand.
Ans. (c)
13. The written down value of a plant is Rs. 6,000 (the original value being Rs. 10,000). It is sold for Rs. 12000 during the current financial year. Which one of the following is true in this regard?
(a) Capital Profit = Rs. 6,000
(b) Revenue Profit = Rs. 6,000
(c) Capital Profit = Rs. 2,000 and Revenue Profit = Rs.4000
(d) Capital Profit = Rs. 12,000
Ans. (c)
14. Match List-I (Item of expenditure / receipt) with List-II (Nature of expenditure / receipt) and select the correct answer using the codes given below the lists:
List- I List - II
A. Carriage charges on a new machine 1. Revenue Receipt
purchased for factory
B. Legal expenses incurred in defending 2. Revenue Expenditure
a case of violation of a provision of Factories
Act
C. Grant in aid re from the Government for the 3. Deferred Revenue Expenditure
construction of a building
D. Amount received for a part of the office 4. Capital Expenditure
building sub-let
5. Capital Receipt
Codes:
A B C D
(a) 2 3 1 5
(b) 4 2 5 1
(c) 3 4 1 5
(d) 4 3 1 5
Ans. (b)
15. Profit under single entry system of book keeping means:
(a) the difference between opening and closing cash balances as reduced by fresh capital introduced.
(b) the difference between opening net assets and closing net assets as increased by drawings and reduced by new capital introduced.
(c) Profit shown by Trading and Profit and Loss Account and Balance Sheet.
(d) The amount of closing cash balance as reduced by expenses.
Ans. (b)
16. Given that:
Opening Capital : Rs.5, 000
Closing Capital : Rs.6, 000
Drawings : Rs.1, 000
New capital Invested: Rs. 500
the profit for the year will be:
(a) Rs. 2,000
(b) Rs. 1,500
(c) Rs. 1,000
(d) Rs. 500
Ans. (b)
17. Which of the following are prepared by the organizations keeping only incomplete accounting records?
I. Cash Book
II. Customers’ Accounts
III. Expenses Accounts
IV. Day Books
Choose the correct answer using the codes given below:
(a) I, II and III
(b) 1, II and IV
(c) I, III and IV
(d) I III and IV
Ans. (b)
18. Match List-I (Financial Statements and Accounts) with List-II (Special matters associated with Statements and Accounts) and select the correct answer using the codes given below the list:
List-I List-II
A. Receipts and Payments Account 1. Revenue
B. Income and Expenditure Account 2. Cash
C. Dividend Equalization Reserve 3. Liability
D. Club Subscription Received in Advance Account 4. Balance Sheet
5. General Reserve
Codes:
A B C D
(a) 2 1 4 3
(b) 3 2 4 5
(c) 2 1 5 3
(d) 1 2 4 5
Ans. (c)
19. Interim payments to partners of a dissolved partnership firm are made according to the:
(a) assumption that remaining unrealized assets would be able to realize their book value
(b) balances of capital of the partners
(c) existing profit-sharing ratios of the partners
(d) assumption that the realizable value of the remaining assets is zero
Ans. (d)
20. A, B and C are partners in a business sharing profit in the ratio of 2:2: 1. C dies on 31.3.94. The profits for the Financial Year 1993-1994 (April-March) is Rs. 64,000. The share of the deceased partner in the profits for the year will be Rs:
(a) 12,800
(b) 9,600
(c) 6,400
(d) 3:200
Ans. (a)
21. A and B are partners sharing profits and losses in the ratio of 2: 5. They admit C on the condition that he will bring good will in cash which is distributed between A and B. C’s share in future profit and losses is to be 1, The new profit sharing ratio of A, Band C will be:
(a) 6: 15:7
(b) 15:6:7
(c) 7:6: 15
(c) 6: 7: 15
Ans. (a)
22. In a common size Balance Sheet each item expressed as a percentage of:
(a) Equity Capital
(b) Debt Capital
(c) Fixed Assets
(d) Total Assets
Ans. (a)
23. Which of the following pairs is/are correctly matched?
1. Sinking Fund: Replacement of wasting assets
2. Secret Reserve: Overvaluation of liabilities
3. General Reserve: Provision for drop in value of assets
Select the correct answer using the codes given below codes:
(a) 1, 2 and 3
(b) 1 and 3
(c) 2 alone
(d) 1 alone
Ans. (c)
24. Match List-I and with List-land select the correct answer using the codes given below the lists:
List-I List-II
A. Dividend 1. Accumulated Reserves
B. Interest 2. Always paid whenever the firm makes a profit
C. Bonus shares 3. Can be used for issue of Bonus shares
D. Premium on share Price 4. Can be paid out of capital
5. Divisible part of profit
Codes:
A B C D
(a) 2 1 5 4
(b) 5 4 1 3
(c) 5 1 2 4
(d) 2 5 1 3
Ans. (b)
25. An estimate of the assets and liabilities of a firm as on a given date is called:
(a) Balance sheet
(b) Statements of Affairs
(c) Statement of Capital
(d) Income Statement
Ans. (b)
26. A provision is a:
(a) General Reserve
(b) Specific Reserve
(c) Capital Reserve
(d) Contingency Reserve
Ans. (b)
27. ‘Final Accounts’ of a Manufacturing company generally include the following types of documents:
1. Balance Sheet
2. Manufacturing Account
3. Profit and Loss Account
4. Trading Account
5. Profit and Loss Appropriation Account
The correct sequence in which these documents are prepared is:
(a) 1, 4, 3, 2, 5
(b) 2, 4, 3, 5, 1
(c) 1, 2, 4, 3, 5
(d) 2, 4, 5, 3, 1
Ans. (b)
28. While preparing Annual Financial Statements, the balance of Bill Receivable A/c can be treated as:
1. an Accrued Income
2. an item of Assets
3. a” Personal Account” balance
Of these statements
(a) 2 and 3 are correct
(b) 1 and 3 are correct
(c) 1and 2 is correct
(d) none is correct
Ans. (a)
29. While preparing the Annual Financial Statements, the balance of Prepaid Rent A/c should be treated as the balance of a:
(a) personal account
(b) real account
(c) nominal account
(d) deferred expenditure Account
Ans. (a)
30. Advance received from customers is:
(a) an item of current liability
(b) an item of non-current asset
(c) an item of contingent liability
(d) an item of non-cash cost
Ans. (a)
31. Which one of the following statements is incorrect?
(a) Share premium received on issue of shares can be utilized for writing off the preliminary expenses of the company
(b) Capital Redemption Reserve is available only for issuing fully paid bonus shares
(c) Discount on issue of shares is shown as a reduction from Capital Account in the Balance Sheet
(d) At the time of Rights issue, the existing shareholders gain because the shares are generally issued at a price lower than the market price.
Ans. (c)
32. The directors of a limited company resolved to forfeit 1,000 equity shares of Rs.10 each, Rs. 7.50 paid up, for non-payment of the final call money of Rs. 2.50 per share. 700 of these shares were re-issued at Rs. 7 per share. The amount to be transferred to the Capital Reserve Account would be:
(a) Rs. 2,500
(b) Rs. 3,150
(c) Rs. 3,500
(d) Rs. 3750
Ans. (b)
33. The nominal and book value of Sinking Fund Investments Account are respectively Rs. 100,000 and Rs. 96,000; The company has sold investments of the nominal value of Rs. 20,000 at a price that was sufficient to redeem the debentures of Rs. 20,000 at Rs. 102. The profit on sale of investments is:
(a) Rs. 800
(b) Rs. 1,000
(c) Rs. 1,200
(d) Nil
Ans. (c)
34. A company’s Balance Sheet inter alia contains Rs. 1, 60,000 fully paid 10% redeemable preference shares, Rs. 1,000 as shares Premium and Rs. 1, 31,000 as Revenue Reserves. It resolves to immediately redeem the above mentioned shares at 5% prem. by maximum utilization of earnings from fresh issue. If the issue is made at 20% premium, the MINIMUM amount of Fresh equity issue proceeds will be:
(a) Rs. 28,800
(b) Rs. 32,000
(c) Rs. 36,000
(d) Rs. 37,000
Ans. (c)
35. The following accounting entries are required in connection with the allotment of shares of a company:
1. Adjustment entry in respect of the discount allowed, if any, on the issue of shares.
2. Transfer entry for the application money received on shares allotted.
3. Adjustment entry for the excess application money, if any, being adjusted against the allotment money due:
The correct sequence of these entries is:
(a) l, 2
(b) 2,
(c) 2, 3, 1
(d) 3, 2, 1
Ans. (c)
36. When shares are forfeited, called up amount on shares is debited to
(a) Forfeiture Account
(b) Capital Reserve Account
(c) General Reserve Account
(d) Capital Account
Ans. (d)
37. Which one of the following statements is NOT correct?
(a) Bonus shares can be issued out of General Reserves
(b) Bonus shares can be issued in lieu of dividends
(c) Bonus shares can be issued even if the shares of the company are partly paid up
(d) Bonus shares can be issued even if there is a default in the payment of any term loans outstanding to any Public Financial Institution
Ans. (c)
38. Operating Ratio is given by:
(a) Total Operating Profit
Total shareholders’ Equity
(b) Total Operating Cost
Total Operating Revenue
(c) Total Operating Cost
Total Capital Employed
(d) Total Operating Profit
Total Operating Capital
Ans. (a)
39. Interest Coverage Ratio is given by:
(a) Net Profit
Interest on Debt
(b) Debt Capital
Interest on Debt
(c) Earnings Before Interest and Taxes
Interest on Debt
d Profit Before Tax
Interest on Debt
Ans. (c)
40. Given that:
Current Ratio = 2.5
Acid test ratio = 1.5
Net working capital = Rs. 60,000
The value of current-liabilities will be:
(a) Rs. 15000
(b) Rs. 40,000
(c) Rs. 60,000
(d) Rs. 100,000
Ans. (b)
41. Match List-I (Ratios) with List-II (Method of Calculation) and select the correct answer using the codes given below the lists:
List-I List-II
A. Debt-Equity Ratio 1. Equity Capital
Total Debt Capital
B. Proprietary Ratio 2 External Equity
Owners’ Equity
C. Capital Gearing ratio 3. Total shareholder’s Fund
Total Assets
D. ROI 4. Profit Before Int. & Tax
Net Assets
Codes:
A B C D
(a) 2 3 1 4
(b) 2 3 4 1
(c) 3 2 1 4
(d) 3 2 4 1
Ans. (a)
42. Match List-I and List-Il and select the correct using the codes given below the lists:
List-I List-II
A. Financial Leverage 1. Efficiency
B. Quick Ratio 2. Profitability
C. Stock Turnover Ratio 3. Risk
D; Margin on sales 4. Liquidity
Codes:
AB C D
(a) 3 4 1 2
(b) 4 3 1 2
(c) 4 3 2 1
(d) 3 4 2 1
Ans. (a)
43. Trading on equity take place:
(a) when capital other than that of equity shareholders also employed
(b) only when equity capital is employed
(c) only when debenture funds are employed
(d) when profits are ploughed back
Ans. (d)
44. Payout ratio means the ratio of:
(a) debtors to creditors
(b) profit distributed to profit retained
(c) earnings that are distributed through dividends
(d) interest payment to dividends
Ans. (c)
45. Given that:
Sales = Rs. 50,000
Variable cost = 20,000
Fixed cost = 10,000
Capital employed = Rs. 200,000
The profit-volume ratio will be:
(a) l0%
(b) 15%
(c) 50%
(d) 60%
Ans. (d)
46. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Operating income 1. Cost of sold to average stock
B. Capital Employed 2. Profits before depreciation, interest and taxes
C. Inventory Turnover 3. Net fixed Assets Investment and Net Working capital
D. Gross Cash Flow 4. Total Funds invested
5. Profit before interest and taxes only
Codes:
A B C D
(a) 2 1 4 5
(b) 2 3 4 2
(c) 2 1 3 2
(d) 5 3 1 2
Ans. (d)
AUDITING
47. Consider the following activities:
1. Valuation
2. Verification
3. Vouching
The correct sequence of these activities undertaken by auditor is:
(a) 3, l, 2
(b) 3, 2, l
(c) 2, 3, 1
(d) 1, 2, 3
Ans. (b)
48. Consider the following statements:
Continuous adult is useful because:
1. more detailed checking is possible
2: audit can be completed quite quickly
3. figures in the accounts cannot be altered as the auditor visits several times during the year
4. Internal check can be done away with
Of these statements:
(a) 1 and 2 are correct
(b) 2 and 4 are correct
(c) 2, 3 and 4 are correct
(d) 1, .3 and 4 are correct
Ans. (d)
49. Match List-I (Nature of audit) with List-II (Related types of audit) and select the correct answer using the codes given below the list:
List-I List-II
A. Audit work is carried on almost 1.Balance Sheet Audit
simultaneously with the recording of transactions
B. Auditor starts his work when the final accounts have 2.Continuous Audit
been prepared
C. Audit conducted in between two annual audits 3.Interim Audit
D. Some of the books and records of the whole period are audited 4. Cost Audit
5. Partial Audit
Codes:
A B C D
(a) 4 1 2 3
(b) 2 1 5 3
(c) 2 1 3 5
(d) 1 2 3 4
Ans. (c)
50. Which one of the following would be sufficient ground for an auditor to submit a qualified report even though the management had given a note to the accounts?
(a) Securities belonging to the client are lodged with a depository.
(b) Fixed assets have been mortgaged.
(c) Bank balance as shown by the pass-book is different from that indicated by the cash book.
(d) Closing stock is valued at cash plus 10%.
Ans. (d)
.
Preparing Commerce Optional For UPSC Prelims
Preparing Commerce Optional For UPSC Prelims
prepare for Commerce exams
Sample paper Preparing Commerce Optional For UPSC Prelims
Prepare for commerce Exams in India for Free
1. Consider the following documents:
1. Audit Notebook
2. Audit Programme
3. Audit Report
4. Audit Files
The correct sequence in which an auditor prepares these documents is
(a) 1, 2, 3, 4
(b) 2, 1, 3, 4
(c) 2, 1, 4, 3
(d) 1, 2, 4, 3
Ans. (c)
2. Which of the following pairs are correctly matched?
1. Test check-Random Checking
2. Internal Cheek-A system of automatic checking
3. Internal Control-Includes internal check and internal audit
4. Investigation-General examination of all accounting records
Select the correct answer using the codes given below:
Codes:
(a) 1, 2, 3 and 4
(b) 1, 2 and 4
(c) 3 and 4
(d) 1, 2 and 3
Ans. (d)
3. The scope of external audit in the case of a partnership firm is decided by the:
(a) Companies Act
(b) Partnership Act
(c) Letter of Appointment of the auditor
(d) Income Tax Act
Ans. (c)
4. A C.A. who has purchased on credit goods worth Rs. 2000 from a company ‘Z’ Ltd. is:
(a) not qualified from being appointed an auditor of Z Ltd.
(b) disqualified from being appointed an auditor of any company of the group
(c) disqualified from being appointed an auditor of Z Ltd.
(d) disqualified from being appointed an auditor of any company having dealings with Z Ltd.
Ans. (c)
5. The auditors of a company are NOT supposed to issue an unqualified report when:
(a) goodwill worth Rs.1, 00,000 built up by the company is not shown in the Balance sheet
(b) good will is shown in the Balance sheet of the company although it has been totally lost
(c) Balance sheet and Profit and Loss Account show a true and correct view of the company’s affairs and are drawn in conformity with the law
(d) proper Books of accounts as required by law have been kept by the company but the auditor has been refused access to same of these books
Ans. (d)
6. Consider the following situation:
1. The business of the company is being conducted fraudulently.
2. The persons connected with the formation of the company have been guilty of fraud.
3. The company so desires it by way of a special resolution.
The central Government NEED NOT NECESSARILY appoint Inspectors to investigate the affairs of the company in respect of situations Listed at:
(a) 1, 2 and 3
(b) 1 and 2
(c) 1 and 3
(d) 2 and 3
Ans. (b)
7. Consider the following institutions:
1. SEBI (Securities Exchange Board of India) 1988
2. Board for Industrial and Financial Reconstruction (BIFR)
3. EXIM Bank
4. National Stock Exchange
The correct chronological sequence of the establishment of these institutions is:
(a) 4,1,2,3
(b) 3 1, 2, 4
(c) 3,2,1,4
(d) 4, 2, l, 3
Ans. (c)
8. Consider the following steps in the process of allotment of shares:
1. Issue of Prospectus
2. Appointment of Manager to the issue
3. Receipt of application money
4. Listing in a stock exchange
5. Minimum subscription
The correct chronological sequence of these steps is:
(a) 1, 2,5,4,3
(b) 2, 1,3,5,4
(c) 2, 1,5,3,4
(d) 1, 2,4,5,3
Ans. (b)
9. Which one of the following statements is correct?
(a) Cooperative organizations are based on the principle of “One share One Vote”
(b) A public limited company does not invite capital from the public.
(c) Most of the public enterprises in India are organized on the pattern of private limited companies
(d) Registration of partnership is compulsory
Ans. (c)
10. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Sole Trader 1. Larger no. of risks takers
B. Partnership 2. Betterment of the weaker sections
C. Cooperatives 3. Contractual relationship
D. Public Limited Company 4. Unlimited liability
Codes:
AB C D
(a) 1 2 3 4
(b) 4 3 2 1
(c) 4 2 3 1
(d) 1 3 2 4
Ans. (b)
11. The liability of shareholders of a Public Limited Co. is limited to the:
(a) paid up value of shares
(b) extent of their private assets
(c) nominal value of shares
(d) amounts called up
Ans. (c)
12. The ‘Instrument of Transfer’ is used at the time of:
(a) issue of new shares to public by the Co.
(b) issue of debentures to the public by the Co.
(c) sale of shares by a member
(d) Conversion of shares into stock
Ans. (c)
13. Vertical combination helps to:
(a) achieve economy by combining allied activities
(b) survive daring the times of depression
(c) fight a common enemy
(d) add new product lines
Ans. (a)
14. A part dealing with restrictive trade practice of the MRTP Act was amended in 1991. This Amendment is applicable:
(a) only to private sector companies
(b) only to public sector companies
(c) to both public and private limited companies
(d) both public and private sector companies
Ans. (d)
15. Modernization leads to:
(a) higher productivity and higher production
(b) lower investment and cheaper quality
(c) cost reduction through reduced expenditure
(d) higher cost of production
Ans. (a)
16. Technological updating would invariably require:
(a) change in management
(b) privatization of public enterprises
(c) retrenchment of workers
(d) induction of fresh capital
Ans. (d)
17. Letter of credit is now becoming an increasingly popular method of financing:
(a) fixed capital needs
(b) working capital needs
(c) redemption of debentures
(d) distribution of dividend
Ans. (b)
18. Deferred Payments arrangement aim at financing:
(a) working capital needs
(b) redemption of debts
(c) purchase of GDRs
(d) import of plant and machinery
Ans (d)
19. In general, expert incentives are permitted within the regulatory framework of:
(a) OECD
(b) UNCTAD
(c) IMF
(d) WTO
Ans. (d)
20. Import procedure begins with:
(a) indent
(b) marine insurance
(c) mate’s certificate
(d) shipping order
Ans. (a)
21. Which one of the following statements is correct?
(a) EXIM Bank promotes Indian exports through a wide variety and range of lending programmes
(b) EXIM Bank does not extend non-funded facility to Indian exporter
(c) Overseas investment finance facility is not a part of the functions of EXIM Bank
(d) EXIM Hank was established to provide assistance in raising capital in international markets.
Ans. (a)
22. In which of the following types of insurance should insurable interest be present only at the time when policy is taken?
(a) Fire insurance
(b) Life Insurance
(c) Marine insurance
(d) Life & Marine insurance
Ans. (b)
23. Match List-I with List-Il and select the correct answer using the codes given below the lists:
List-I List-II
A. Causa Proxima 1. Financial Stake
B. Re-insurance 2. Main Reason behind the event
C. Indemnity 3. Compensation for the loss
4. Risking with other insurer
Codes:
A B C
(a) 2 4 3
(b) 1 2 3
(c) 2 3 1
(d) 2 4 1
Ans. (a)
24. ‘Insurer’ is a person who has:
(a) insured his life on goods
(b) helped a person to get an insurance policy
(c) undertaken to make good the loss of the subject matter of insurance
(d) filed a suit in a court of law to recover an insurance claim
Ans. (c)
25. In Insurance contract UBERIMA FIDEI’ aspect is
used as synonym of:
(a) insurable interest
(b) free consent of parties
(c) utmost good faith
(d) legality of consideration
Ans. (c)
26. Both ‘Security’ and ‘Investment’ elements are available:
(a) only in Life Insurance
(b) in both Life and Fire Insurance
(c) in both Marine and Fire Insurance
(d) in Life, Marine and Fire Insurance
Ans. (a)
27. Match List-I (Management experts) with List-II (sequence of functions advocated by them) and select the correct answer using the codes given below the lists:
List-I List-II
A. Newman and Summer 1. Organizing, Planning, Leading and controlling
B. Hendry Fayol 2. Planning, Organizing, Commanding and Controlling
C. Luther Gullick 3. Planning, Organizing, Staffing, Directing and Controlling
D. Koontz and O’ Donnel 4. “POSDCORB”
Codes:
A B C D
(a) 1 2 4 3
(b) 2 1 3 4
(c) 1 2 3 4
(d) 2 1 4 3
Ans. (c)
28. Which one of the following statements regarding “Skill-Mix” of management is correct?
(a) Top Management requires more human relations skill than others.
(b) Middle Level Management requires more technical skills than others
(c) Supervisory Level men require less technical skill than other
(d) Top management requires more conceptual skill than others
Ans. (d)
29. From the point of view of functional organization, which one of the following cannot be claimed to be an advantage?
(a) It ensures a greater division of labour
(b) It leads to a higher degree of efficiency
(c) It helps in the assignment of specific responsibilities
(d) It facilitates small scale production
Ans. (d)
30. Match List-I (A Managerial Activity) with List-II (Managerial Function) and select the correct answer using the codes given below the lists:
List-I List-II
A. Forecasting 1. Controlling
B. Communication 2. Planning
C. Selection of managers 3. Leading
D. Establishing performance standards 4. Staffing
Codes:
A B C D
(a) 2 3 4 1
(b) 1 2 4 3
(c) 2 4 3 1
(d) 2 3 4 2
Ans. (a)
31. Organization Theory deals with:
(a) forms of business organization
(b) structure of an organization
(c) industrial relations
(d) incentives and wage policy
Ans. (b)
32. The potential disadvantage of MBO is:
(a) its inability to control progress of work and achievement of results
(b) its over emphasis on production and productivity
(c) the additional commitment to the organization
(d) the absence of short term and long term planning
Ans. (b)
33. Consider the following statements:
1. Decentralization and Delegation are closely inter- related.
2. Delegation and decentralization are h desirable.
3. Decentralization is not suitable for large organization.
4. Delegation is not possible in the case of small organizations
Of these statements:
(a) 1 and 2 are correct
(b) 2 and 3 are correct
(c) 1 and 4 are correct
(d) 1, 3 and 4 are correct
Ans. (c)
34. Which one of the following statements is correct?
(a) Responsibility of the delegate cannot be greater than the authority delegated
(b) Delegation frees the delegator of the responsibility
(c) Delegation is merely the division of work
(d) Delegation does not bestow an obligation on the part of the delegatee
Ans. (a)
35. The basis of Theory ‘Z’ is the reliance on:
(a) external control of human behavior
(b) self control and self-direction
(c) the belief that productivity is linked to trust, openness, subtlety and intimacy in the work environment
(d) governmental regulatory framework
Ans. (c)
36. Delegation of authority is linked to:
(a) managerial planning
(b) management coordination
(c) management control
(d) scientific management
Ans. (c)
37. Match List-I with List-II and select the correct answer using the codes given below the list:
List-I List-II
A. F. W. Taylor 1. MBO
B. Henry Fayol 2. Scientific Management
C. Elton Mayo 3. Fourteen principles of Management
D. Peter Drucker 4. Theory ‘X’
Codes:
A B C D
(a) 2 3 - 1
(b) 1 2 4 -
(c) 2 - 4 1
(d) 3 2 - 1
Ans. (a)
38. When an office manager selects different colors of paper and ink for printing forms according to the purpose for which they are intended, he is following the principle of:
(a) systems integration
(b) standardization
(c) identification
(d) multiple use
Ans. (c)
39. Office Management is generally speaking, the
responsibility area of:
(a) Corporate controller
(b) Works manager
(c) Chairman, Board of Directors
(d) Chief Executive
Ans. (d)
40. File Movement Register keeps track of:
(a) indexing of records
(b) classification of records
(c) inventory of records
(d) None of the above
Ans. (c)
41. The use of office machine cannot:
(a) enhance production
(b) save labour
(c) promote accuracy
(d) relieve monotony
Ans. (d)
42. What is the correct sequence of the following functionaries I authorities in the life of a company?
1. Board of Directors
2. Promoters
3. Underwriters
4. Registrar of Companies
5. Liquidators
Select the correct answer using the codes given below:
Codes:
(a) l, 2, 3, 4, 5
(b) 2, 1, 3, 4, 5
(c) 5, 4, 1, 3, 2
(d) 2, 4, 1, 3, 5
Ans. (d)
43. Which one of the following statements is correct?
(a) A prospectus is a notice, circular, advertisement or other intimation inviting offers from the public for the purchase of goods of a company
(b) The amount of minimum subscription is mentioned in the Memorandum of Association
(c) All the directors must sign the prospectus
(d) Investors are not duly protected against any misstatement in a Prospectus
Ans. (c)
44. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Director 1. In charge of statutory and administrative duties
B. Company Secretary 2. Reports to the management
C. Managing Director 3. Reports to the shareholders
D. Statutory auditor 4. Reports to the Board of Directors
5. Trustee of company’s assets
Codes:
A B C D
(a) 2 4 5 1
(b) 5 1 2 3
(c) 5 1 4 3
(d) 3 2 5 4
Ans. (c)
45. Which one of the following statements correctly explains the “Doctrine of Indoor Management”?
(a) Every person dealing with the company is presumed to have read and understood the contents of the Company’s Memorandum and Articles of Association
(b) It is aimed at protecting outsiders while dealing with the company
(c) If a person enters into a contract with the Company. which is contrary to the provisions of the Memorandum and AOA, he will not have any right under such a contract
(d) It is a rule that seeks to protect the company while dealing with the outsiders
Ans. (b)
46. Match List-I (Types of securities) with List-II (Special features) and select the correct answer using the codes given below the lists:
List-I List-II
A. Blue Chip 1. Issued by a. private limited company
B. Deep Discount Bonds 2. Highly Profitable investments in stock exchange
C. Commercial Paper 3.Issued by financially sound companies
D. Debentures 4. Small investments yielding a big sum after a long-term
5. Issued by cos. having large reserves
6. Issued in lieu of loans
Codes:
A B C D
(a) 2 1 3 6
(b) 1 4 6 5
(c) 2 3 1 5
(d) 2 4 3 6
Ans. (a)
47. A public limited company cannot issue:
(a) debentures
(b) deferred shares
(c) participating preference shares
(d) redeemable preference shares
Ans. (b)
48. “Which one of the following statements is correct?
(a) Merchant bankers shall furnish a Due Diligence certificate while forwarding a draft prospectus / letter of offer to registrar of companies
(b) Employee stock option scheme is a compulsory scheme on the part of the company to encourage employees to have a greater sense of participation in the activities of the company
(c) When a private limited or a closely held or an unlisted public company desires to get listed in a stock exchange by disinvestment, if may do so
(d) A company issuing shares to the public has no sight to select a Merchant Banker to manage the issue
Ans. (a)
49. Which of the following are the methods of marketing new issues of securities?
1. Listing of securities
2. Jobbers and brokers
3. Private placement of securities
4. Privileged subscriptions
Select the correct answer using the codes given below:
Codes:
(a) 1 and 2
(b) 2 and 3
(c) 3 and 4
(d) 1, 2, 3 and 4
Ans. (c)
50. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Agenda 1.Minimum number of members required to be present
B. Quorum 2. Entitlement to vote
C. Adjournment 3. Matters to be taken up for decision
D. Proxy 4. A meeting in progress postponed to some other date
5. Minimum no. of directors
6. Entitlement to participate
Codes:
A B C D
(a) 1 6 4 2
(b) 3 5 1 2
(c) 3 1 4 2
(d) 2 1 4 6
Ans. (c)
prepare for Commerce exams
Sample paper Preparing Commerce Optional For UPSC Prelims
Prepare for commerce Exams in India for Free
1. Consider the following documents:
1. Audit Notebook
2. Audit Programme
3. Audit Report
4. Audit Files
The correct sequence in which an auditor prepares these documents is
(a) 1, 2, 3, 4
(b) 2, 1, 3, 4
(c) 2, 1, 4, 3
(d) 1, 2, 4, 3
Ans. (c)
2. Which of the following pairs are correctly matched?
1. Test check-Random Checking
2. Internal Cheek-A system of automatic checking
3. Internal Control-Includes internal check and internal audit
4. Investigation-General examination of all accounting records
Select the correct answer using the codes given below:
Codes:
(a) 1, 2, 3 and 4
(b) 1, 2 and 4
(c) 3 and 4
(d) 1, 2 and 3
Ans. (d)
3. The scope of external audit in the case of a partnership firm is decided by the:
(a) Companies Act
(b) Partnership Act
(c) Letter of Appointment of the auditor
(d) Income Tax Act
Ans. (c)
4. A C.A. who has purchased on credit goods worth Rs. 2000 from a company ‘Z’ Ltd. is:
(a) not qualified from being appointed an auditor of Z Ltd.
(b) disqualified from being appointed an auditor of any company of the group
(c) disqualified from being appointed an auditor of Z Ltd.
(d) disqualified from being appointed an auditor of any company having dealings with Z Ltd.
Ans. (c)
5. The auditors of a company are NOT supposed to issue an unqualified report when:
(a) goodwill worth Rs.1, 00,000 built up by the company is not shown in the Balance sheet
(b) good will is shown in the Balance sheet of the company although it has been totally lost
(c) Balance sheet and Profit and Loss Account show a true and correct view of the company’s affairs and are drawn in conformity with the law
(d) proper Books of accounts as required by law have been kept by the company but the auditor has been refused access to same of these books
Ans. (d)
6. Consider the following situation:
1. The business of the company is being conducted fraudulently.
2. The persons connected with the formation of the company have been guilty of fraud.
3. The company so desires it by way of a special resolution.
The central Government NEED NOT NECESSARILY appoint Inspectors to investigate the affairs of the company in respect of situations Listed at:
(a) 1, 2 and 3
(b) 1 and 2
(c) 1 and 3
(d) 2 and 3
Ans. (b)
7. Consider the following institutions:
1. SEBI (Securities Exchange Board of India) 1988
2. Board for Industrial and Financial Reconstruction (BIFR)
3. EXIM Bank
4. National Stock Exchange
The correct chronological sequence of the establishment of these institutions is:
(a) 4,1,2,3
(b) 3 1, 2, 4
(c) 3,2,1,4
(d) 4, 2, l, 3
Ans. (c)
8. Consider the following steps in the process of allotment of shares:
1. Issue of Prospectus
2. Appointment of Manager to the issue
3. Receipt of application money
4. Listing in a stock exchange
5. Minimum subscription
The correct chronological sequence of these steps is:
(a) 1, 2,5,4,3
(b) 2, 1,3,5,4
(c) 2, 1,5,3,4
(d) 1, 2,4,5,3
Ans. (b)
9. Which one of the following statements is correct?
(a) Cooperative organizations are based on the principle of “One share One Vote”
(b) A public limited company does not invite capital from the public.
(c) Most of the public enterprises in India are organized on the pattern of private limited companies
(d) Registration of partnership is compulsory
Ans. (c)
10. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Sole Trader 1. Larger no. of risks takers
B. Partnership 2. Betterment of the weaker sections
C. Cooperatives 3. Contractual relationship
D. Public Limited Company 4. Unlimited liability
Codes:
AB C D
(a) 1 2 3 4
(b) 4 3 2 1
(c) 4 2 3 1
(d) 1 3 2 4
Ans. (b)
11. The liability of shareholders of a Public Limited Co. is limited to the:
(a) paid up value of shares
(b) extent of their private assets
(c) nominal value of shares
(d) amounts called up
Ans. (c)
12. The ‘Instrument of Transfer’ is used at the time of:
(a) issue of new shares to public by the Co.
(b) issue of debentures to the public by the Co.
(c) sale of shares by a member
(d) Conversion of shares into stock
Ans. (c)
13. Vertical combination helps to:
(a) achieve economy by combining allied activities
(b) survive daring the times of depression
(c) fight a common enemy
(d) add new product lines
Ans. (a)
14. A part dealing with restrictive trade practice of the MRTP Act was amended in 1991. This Amendment is applicable:
(a) only to private sector companies
(b) only to public sector companies
(c) to both public and private limited companies
(d) both public and private sector companies
Ans. (d)
15. Modernization leads to:
(a) higher productivity and higher production
(b) lower investment and cheaper quality
(c) cost reduction through reduced expenditure
(d) higher cost of production
Ans. (a)
16. Technological updating would invariably require:
(a) change in management
(b) privatization of public enterprises
(c) retrenchment of workers
(d) induction of fresh capital
Ans. (d)
17. Letter of credit is now becoming an increasingly popular method of financing:
(a) fixed capital needs
(b) working capital needs
(c) redemption of debentures
(d) distribution of dividend
Ans. (b)
18. Deferred Payments arrangement aim at financing:
(a) working capital needs
(b) redemption of debts
(c) purchase of GDRs
(d) import of plant and machinery
Ans (d)
19. In general, expert incentives are permitted within the regulatory framework of:
(a) OECD
(b) UNCTAD
(c) IMF
(d) WTO
Ans. (d)
20. Import procedure begins with:
(a) indent
(b) marine insurance
(c) mate’s certificate
(d) shipping order
Ans. (a)
21. Which one of the following statements is correct?
(a) EXIM Bank promotes Indian exports through a wide variety and range of lending programmes
(b) EXIM Bank does not extend non-funded facility to Indian exporter
(c) Overseas investment finance facility is not a part of the functions of EXIM Bank
(d) EXIM Hank was established to provide assistance in raising capital in international markets.
Ans. (a)
22. In which of the following types of insurance should insurable interest be present only at the time when policy is taken?
(a) Fire insurance
(b) Life Insurance
(c) Marine insurance
(d) Life & Marine insurance
Ans. (b)
23. Match List-I with List-Il and select the correct answer using the codes given below the lists:
List-I List-II
A. Causa Proxima 1. Financial Stake
B. Re-insurance 2. Main Reason behind the event
C. Indemnity 3. Compensation for the loss
4. Risking with other insurer
Codes:
A B C
(a) 2 4 3
(b) 1 2 3
(c) 2 3 1
(d) 2 4 1
Ans. (a)
24. ‘Insurer’ is a person who has:
(a) insured his life on goods
(b) helped a person to get an insurance policy
(c) undertaken to make good the loss of the subject matter of insurance
(d) filed a suit in a court of law to recover an insurance claim
Ans. (c)
25. In Insurance contract UBERIMA FIDEI’ aspect is
used as synonym of:
(a) insurable interest
(b) free consent of parties
(c) utmost good faith
(d) legality of consideration
Ans. (c)
26. Both ‘Security’ and ‘Investment’ elements are available:
(a) only in Life Insurance
(b) in both Life and Fire Insurance
(c) in both Marine and Fire Insurance
(d) in Life, Marine and Fire Insurance
Ans. (a)
27. Match List-I (Management experts) with List-II (sequence of functions advocated by them) and select the correct answer using the codes given below the lists:
List-I List-II
A. Newman and Summer 1. Organizing, Planning, Leading and controlling
B. Hendry Fayol 2. Planning, Organizing, Commanding and Controlling
C. Luther Gullick 3. Planning, Organizing, Staffing, Directing and Controlling
D. Koontz and O’ Donnel 4. “POSDCORB”
Codes:
A B C D
(a) 1 2 4 3
(b) 2 1 3 4
(c) 1 2 3 4
(d) 2 1 4 3
Ans. (c)
28. Which one of the following statements regarding “Skill-Mix” of management is correct?
(a) Top Management requires more human relations skill than others.
(b) Middle Level Management requires more technical skills than others
(c) Supervisory Level men require less technical skill than other
(d) Top management requires more conceptual skill than others
Ans. (d)
29. From the point of view of functional organization, which one of the following cannot be claimed to be an advantage?
(a) It ensures a greater division of labour
(b) It leads to a higher degree of efficiency
(c) It helps in the assignment of specific responsibilities
(d) It facilitates small scale production
Ans. (d)
30. Match List-I (A Managerial Activity) with List-II (Managerial Function) and select the correct answer using the codes given below the lists:
List-I List-II
A. Forecasting 1. Controlling
B. Communication 2. Planning
C. Selection of managers 3. Leading
D. Establishing performance standards 4. Staffing
Codes:
A B C D
(a) 2 3 4 1
(b) 1 2 4 3
(c) 2 4 3 1
(d) 2 3 4 2
Ans. (a)
31. Organization Theory deals with:
(a) forms of business organization
(b) structure of an organization
(c) industrial relations
(d) incentives and wage policy
Ans. (b)
32. The potential disadvantage of MBO is:
(a) its inability to control progress of work and achievement of results
(b) its over emphasis on production and productivity
(c) the additional commitment to the organization
(d) the absence of short term and long term planning
Ans. (b)
33. Consider the following statements:
1. Decentralization and Delegation are closely inter- related.
2. Delegation and decentralization are h desirable.
3. Decentralization is not suitable for large organization.
4. Delegation is not possible in the case of small organizations
Of these statements:
(a) 1 and 2 are correct
(b) 2 and 3 are correct
(c) 1 and 4 are correct
(d) 1, 3 and 4 are correct
Ans. (c)
34. Which one of the following statements is correct?
(a) Responsibility of the delegate cannot be greater than the authority delegated
(b) Delegation frees the delegator of the responsibility
(c) Delegation is merely the division of work
(d) Delegation does not bestow an obligation on the part of the delegatee
Ans. (a)
35. The basis of Theory ‘Z’ is the reliance on:
(a) external control of human behavior
(b) self control and self-direction
(c) the belief that productivity is linked to trust, openness, subtlety and intimacy in the work environment
(d) governmental regulatory framework
Ans. (c)
36. Delegation of authority is linked to:
(a) managerial planning
(b) management coordination
(c) management control
(d) scientific management
Ans. (c)
37. Match List-I with List-II and select the correct answer using the codes given below the list:
List-I List-II
A. F. W. Taylor 1. MBO
B. Henry Fayol 2. Scientific Management
C. Elton Mayo 3. Fourteen principles of Management
D. Peter Drucker 4. Theory ‘X’
Codes:
A B C D
(a) 2 3 - 1
(b) 1 2 4 -
(c) 2 - 4 1
(d) 3 2 - 1
Ans. (a)
38. When an office manager selects different colors of paper and ink for printing forms according to the purpose for which they are intended, he is following the principle of:
(a) systems integration
(b) standardization
(c) identification
(d) multiple use
Ans. (c)
39. Office Management is generally speaking, the
responsibility area of:
(a) Corporate controller
(b) Works manager
(c) Chairman, Board of Directors
(d) Chief Executive
Ans. (d)
40. File Movement Register keeps track of:
(a) indexing of records
(b) classification of records
(c) inventory of records
(d) None of the above
Ans. (c)
41. The use of office machine cannot:
(a) enhance production
(b) save labour
(c) promote accuracy
(d) relieve monotony
Ans. (d)
42. What is the correct sequence of the following functionaries I authorities in the life of a company?
1. Board of Directors
2. Promoters
3. Underwriters
4. Registrar of Companies
5. Liquidators
Select the correct answer using the codes given below:
Codes:
(a) l, 2, 3, 4, 5
(b) 2, 1, 3, 4, 5
(c) 5, 4, 1, 3, 2
(d) 2, 4, 1, 3, 5
Ans. (d)
43. Which one of the following statements is correct?
(a) A prospectus is a notice, circular, advertisement or other intimation inviting offers from the public for the purchase of goods of a company
(b) The amount of minimum subscription is mentioned in the Memorandum of Association
(c) All the directors must sign the prospectus
(d) Investors are not duly protected against any misstatement in a Prospectus
Ans. (c)
44. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Director 1. In charge of statutory and administrative duties
B. Company Secretary 2. Reports to the management
C. Managing Director 3. Reports to the shareholders
D. Statutory auditor 4. Reports to the Board of Directors
5. Trustee of company’s assets
Codes:
A B C D
(a) 2 4 5 1
(b) 5 1 2 3
(c) 5 1 4 3
(d) 3 2 5 4
Ans. (c)
45. Which one of the following statements correctly explains the “Doctrine of Indoor Management”?
(a) Every person dealing with the company is presumed to have read and understood the contents of the Company’s Memorandum and Articles of Association
(b) It is aimed at protecting outsiders while dealing with the company
(c) If a person enters into a contract with the Company. which is contrary to the provisions of the Memorandum and AOA, he will not have any right under such a contract
(d) It is a rule that seeks to protect the company while dealing with the outsiders
Ans. (b)
46. Match List-I (Types of securities) with List-II (Special features) and select the correct answer using the codes given below the lists:
List-I List-II
A. Blue Chip 1. Issued by a. private limited company
B. Deep Discount Bonds 2. Highly Profitable investments in stock exchange
C. Commercial Paper 3.Issued by financially sound companies
D. Debentures 4. Small investments yielding a big sum after a long-term
5. Issued by cos. having large reserves
6. Issued in lieu of loans
Codes:
A B C D
(a) 2 1 3 6
(b) 1 4 6 5
(c) 2 3 1 5
(d) 2 4 3 6
Ans. (a)
47. A public limited company cannot issue:
(a) debentures
(b) deferred shares
(c) participating preference shares
(d) redeemable preference shares
Ans. (b)
48. “Which one of the following statements is correct?
(a) Merchant bankers shall furnish a Due Diligence certificate while forwarding a draft prospectus / letter of offer to registrar of companies
(b) Employee stock option scheme is a compulsory scheme on the part of the company to encourage employees to have a greater sense of participation in the activities of the company
(c) When a private limited or a closely held or an unlisted public company desires to get listed in a stock exchange by disinvestment, if may do so
(d) A company issuing shares to the public has no sight to select a Merchant Banker to manage the issue
Ans. (a)
49. Which of the following are the methods of marketing new issues of securities?
1. Listing of securities
2. Jobbers and brokers
3. Private placement of securities
4. Privileged subscriptions
Select the correct answer using the codes given below:
Codes:
(a) 1 and 2
(b) 2 and 3
(c) 3 and 4
(d) 1, 2, 3 and 4
Ans. (c)
50. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Agenda 1.Minimum number of members required to be present
B. Quorum 2. Entitlement to vote
C. Adjournment 3. Matters to be taken up for decision
D. Proxy 4. A meeting in progress postponed to some other date
5. Minimum no. of directors
6. Entitlement to participate
Codes:
A B C D
(a) 1 6 4 2
(b) 3 5 1 2
(c) 3 1 4 2
(d) 2 1 4 6
Ans. (c)
UGC sample commerce exam paper
UGC sample commerce exam paper
Free Sample UGC NET Exam Papers
UGC NET Solved Sample Question Paper Commerce
1. On January 1, 1992 there was a balance of Rs. 4,000 in the plant and machinery account. An addition of Rs. 2,000 was made on July 1, 1992. Accounts were closed for the year on December, 31, 1992. If depreciation was charged 10% per annum, the balance in the plant and machinery account on the closing date would be:
(a) Rs. 5,300
(b) Rs. 5,400
(c) Rs. 5,500
(d) Rs. 5,600
Ans. (c)
2. A machinery having a residual value of Rs. 5,000 was purchased on 1-1-1988 for Rs. 1, 00,000 and was depreciated @ 9.5% on a straight line method. On 1-1-91, it was estimated that its useful life has been reduced to eight years. Under the changed circumstances, the annual depreciation charges for the year 1991 and onwards will be:
(a) Rs. 11,875
(b) Rs. 13,300
(c) Rs. 9,500
(d) Rs. 12,500
Ans. (b)
3. In which one of the following methods of charging depreciation shall the balance never be reduced to zero?
(a) Fixed installment method
(b) Depreciation fund method
(c) Diminishing balance method
(d) Depletion unit method
Ans. (c)
4. Match List-I with List-II and select the correct answer using the following codes given below the lists:
List-I List-II
(Types of accounts) (Principles)
A. Real Accounts 1. Debit the receiver, credit the give.
B. Nominal Accounts 2. Debit what comes in credit what goes out.
C. Personal Accounts 3. Debit all expenses, credit all gains.
Codes:
A B C
(a) 3 2 1
(b) 1 3 2
(c) 2 3 1
(d) 1 2 3
Ans. (c)
5. Which one of the following branches of accounting primarily deals with processing and Goodwill presenting of accounting data for internal one?
(a) Financial Accounting
(b) Tax Accounting
(c) Management Accounting
(d) Inflation Accounting
Ans. (c)
6. “Holding gains in relation to stocks should not be used for payment of Dividend.” Which one of the following accounting principles is involved in this?
(a) Consistency
(b) Cost
(c) Materiality
(d) Realization
Ans. (d)
7. X started business with a capital of Rs. 20,000 and purchased goods worth Rs. 2,000 on credit. These transactions may be expressed in the form of ‘Accounting Equation’ such as:
(a) Rs. 22,000 = Rs. 20,000 - Rs. 2,000
(b) Rs. 20,000 = Rs. 22,000 - Rs. 2,000
(c) Rs. 22,000 = Rs. 22,000 + 0
(d) Rs. 22,000 = 0 + Rs. 22,000
Ans. (b)
8. Accounting records transaction in terms of:
(a) commodity units
(b) monetary units
(c) production units
(d) none of the above
Ans. (b)
9. Market price or actual cost, whichever is less, is the generally accepted accounting principle for valuation of:
(a) Stock in trade
(b) Fixed assets
(c) Current assets
(d) All assets
Ans. (a)
10. Capital employed in a business is Rs.1, 50,000. Profits are Rs. 50,000 and the normal rate of profits is 20%. The amount of goodwill as per capitalization method would be:
(a) Rs. 1, 00,000
(b) Rs. 1, 50,000
(c) Rs. 2, 00,000
(d) Rs. 3, 00,000
Ans. (a)
11. Consider the following data:
Jan. 1, 1989 Opening Stock 500 units Rs. 5 per unit
Jan. 15, 1989 Purchases 400 units @ Rs. 6 per unit
Jan. 30, 1989 issued 300 units
Feb. 15, 1989 Purchases 200 units Rs. 7 per unit
Feb. 28, 1989 Issued 300 units
March 25, 1989 Purchases 200 units @ Rs. 8 per unit
Based on the above data, the value of inventory in hand on 31st March, 1989 as per ‘First in First out’ (FIFO) method will be:
(a) Rs. 3,700
(b) Rs. 3,600
(c) Rs. 4,800
(d) None of the above
Ans. (c)
12. Renewal fee for Patents is a:
(a) capital expenditure
(b) revenue expenditure
(c) deferred revenue expenditure
(d) development expenditure
Ans. (a)
13. A manufacturing company spent the following amounts on the import and installation of a machine:
Rs. 50,000 Price of the machine
Rs. 5,000 Freight
Rs, 1,050 Insurance premium
Rs. 6,000 Replacement of a part damaged in transit, not covered under the insurance policy.
Based on the above data, Capital expenditure would be:
(a) Rs. 50, 000
(b) Rs. 56, 050
(c) Rs. 62, 050
(d) Rs.57, 050
Ans. (b)
14. Given, subscription received in 1990:
For the year 1989 Rs. 500
For the year 1990 Rs. 7,000
For the year 1991 Rs 400
1990-Subscription outstanding Rs. 250.
The amount of subscription to be posted to Income on 31st December 1990 and Expenditure account of 1990 is:
(a) Rs. 7,000
(b) Rs. 7,250
(c) Rs. 7,900
(d) Rs. 8,150
Ans. (b)
15. What is the correct sequence of the preparation of the following accounts and statements of a non-profit organization?
1. Income and Expenditure account
2. Receipts and Payment account
3. Balance Sheet
Select the correct answer from the codes given below:
(a) 1, 2, 3
(b) 1, 3, 2
(c) 2, 1, 3
(d) 2, 3, 1
Ans. (c)
16. Profit as per accounts from incomplete records may be construed as equivalent of:
(a) excess of assets over liabilities at the close of the period.
(b) excess of capital at the end over the capital at the beginning
(c) excess of assets over liabilities at the commencement of the period
(d) excess of capital at the beginning over the capital at the beginning
Ans. (b)
17. If the rate of gross profit is 20% on cost of goods sold and the sales are Rs. 1, 50,000 then the total gross profit would be:
(a) Rs. 25,000
(b) Rs. 30,000
(c) Rs. 37,500
(d) None of the above
Ans. (a)
18. According to records of a firm which does not keep its accounts on double entry system, all sales were made on credit so as to realize a profit of 33 % sale proceeds. The
3
stock of unsold goods at the beginning and at the end of the trading period were valued at Rs. 21,000 and Rs. 18,000 respectively. Goods worth Rs.1, 39,500 were purchased for resale during the period. The proprietor withdrew goods worth Rs. 1, 500 during the accounting period for personal use. What were the total sales during the period?
(a) Rs. 1, 80,000
(b) Rs. 2, 11,500
(c) Rs. 2, 25,000
(d) Rs. 2, 31,500
Ans. (b)
19. In the absence of partnership deed provision of Partnership Act, 1932 became applicable under which a partner is entitled to interest on money advances to the firm at:
(a) 4% p.a.
(b) 5% p.a.
(c) 6% p.a.
(d) 10% pa.
Ans. (c)
20. Which one of the following as not applicable to a co-operative form of business organization?
(a) Membership is open to all having a common interest
(b) Transferability of shares is permitted among general public
(c) Policy decisions are taken by the members in a general meeting
(d) Major portion of profit is distributed to members by way of dividend
Ans. (d)
21. Which one of the following statements is correct?
(a) A company consists of heterogeneous members
(b) A body corporate includes a co-operative society
(c) The expression ‘corporation’ or ‘Body corporate’ are the same
(d) A partner cannot contract with his firm, whereas a member of a company can
Ans. (d)
22. Dividend declared and paid by a company is:
(a) an expense of the company
(b) an income of the company
(c)the distribution of profit earned by the company
(d) the source of fund for the company
Ans. (c)
23. Long term liabilities are:
(a) fixed assets minus current assets
(b) fixed assets minus current liabilities
(c) current Assets plus current liabilities
(d) total liabilities minus current liabilities
Ans. (d)
24. A business entity has assets of Rs. 26,000 and liabilities of Rs. 6,000. Owner’s equity in this case is:
(a) Rs. 32,000
(b) Rs. 26,000
(c) Rs. 20,000
(d) Rs. 6,000
Ans. (c)
25. While preparing ‘Annual Financial Statements’, credit balance shown by the Bank pass book should be treated as:
(a) a liability
(b) an income
(c) an excess of payments over receipts
(d) an asset
Ans. (d)
26. If the trial balance does not tally in spite of through scruting and the difference is substantial, then which one of the following courses should an accountant adopt?
(a) Defer preparation of financial statements
(b) Open suspense account.
(c) Write off the difference to profit and losses A/c
(d) Ignore the difference and prepare financial statements
Ans. (b)
27. ‘A’ and ‘B’ are sharing profit and losses in the ratio of 4 I. ‘C’ is admitted as a new partner for 1/3rd share of profits for which he pays Rs. 30,000 as goodwill. Lf ’A’ and ‘B’ agree to share future profits equally, then the amount of goodwill to be credited to ‘A’ would be:
(a) Rs. 30.000
(b) Rs. 90,000
(c) Rs. 48,000
(d) Rs. 42,000
Ans. (d)
28. The joint life policy account received on the death of a partner is credited to the:
(a) Joint life policy reserve account
(b) Capital accounts of all the partners in their profit sharing ratio
(c) General Reserve account
(d) Profit and Loss Account
Ans. (b)
29. In setting the accounts of a firm after its dissolution, the assets of the firm shall be applied first in paying:
(a) each partner proportionately what is due to him on account of loans advanced by him
(b) each partner proportionately what is due to him account of capital
(c) each partner proportionately what is due to him on account of past profits
(d) the debts of the firm to the third parties
Ans. (d)
30. A limited company issued equity shares of Rs. 100 each. It has called up Rs. 75 on each share but received only Rs. 60 per share. The share capital account will be credited with:
(a) Rs. 60 per share
(b) Rs. 75 per share
(c) Rs. 100 per share
(d) None of the above
Ans. (b)
31. Redeemable preference shares can be redeemed:
(a) only if they are fully paid
(b) even if they are partly paid
(c) if they are paid not less than 50% of the nominal value of shares
(d) only if they are issued at a premium
Ans. (a)
32. Where all the debentures are redeemed, the balance left in the Debenture Sinking Fund Account is transferable to:
(a) Debentures Account
(b) Sinking Fund Investment Account
(c) Capital Redemption Reserve
(d) General Reserve
Ans. (d)
33. The balance in share forfeiture account, after the reissue of all forfeited shares, should be:
(a) added to paid up capital
(b) transferred to goodwill account
(c) transferred to capital reserve account
(d) shown as share forfeiture account
Ans. (c)
34. A company issued Rs. 20,000, 4% bonds repayable on equal installments over 10 years. What is the amount required in the initial year, to pay interest and to redeem the bonds (ignore tax and DCF)?
(a) Rs. 56,000
(b) Rs. 28,000
(c) Rs. 20,000
(d) Rs. 8,000
Ans. (b)
35. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Deferred shares 1. Repayment obligation
B. Preference shares 2. Resembles Stock dividend
C. Bonus shares 3. No dividend obligation
D. Equity Shares 4. Not being used
Codes:
A B C D
(a) 4 3 1 2
(b) 4 1 3 2
(c) 3 2 1 4
(d) 4 1 2 3
Ans. (d)
36. Which one of the following statements is false?
(a) The process of issue of bonus shares is also known as capitalization of reserves
(b) Fully paid bonus shares are issued only out of capital reserves
(c) Only revenue reserves should be used when bonus is declared in order to make partly paid shares into fully paid shares.
(d) Bonus shares one shares issued without payment.
Ans. (b)
37. The Balance Sheet of a company showed the following balances at the end of the year under the head ‘Reserves and surplus’: General Reserve Rs. 5,00,000; Share Premium account Rs. 50,000; Premium on issue of Debentures account Rs. 20,000; Dividends equalization fund Rs. 40,000; Surplus on revaluation of assets Rs. 30,000 Profit and Loss account (credit) Rs. 60,000. Maximum amount available for distribution as dividend to the shareholders of the company will be:
(a) Rs. 60,000
(b) Rs.1, 00,000
(c) Rs. 6, 00,000
(d) Rs.6, 70,000
Ans. (c)
38. Capital Gearing ratio denotes the relationship between:
(a) assets and capital
(b) loan and capital
(c) equity shareholder’s fund and long term borrowed funds
(d) debentures and share capital
Ans. (c)
39. The following balances appear on the liability side of a company’s Balance Sheet:
Rs.
Equity Share Capital: 10,000 Shares of Rs. 10 each 1.00.000
10% Redeemable Preference shares 1, 00,000
5,000 shares of Rs 20 each
Capital redemption reserve account 40,000
14% Debentures 1, 00,000 Deb. of Rs. 2 each 2, 00,000
RFC loan 1, 50,000
Profit and Loss A/c 50,000
The Debt Equity ratio of the company is
(a) 35: 20
(b) 35: 26
(c) 35: 25
(d) 35: 21
Ans. (c)
40. Consider the following financial information in respect of two companies namely ‘M’ Co. and ‘Z’Co. :
Items of Assets and Liabilities ‘M’ Co. (Rs) ‘Z’ Co. (Rs)
Current Assets 7, 50,000 7, 50,000
Closing inventory 3, 00,000 2, 50,000
Goodwill 5, 00,000 3, 50,000
Current Liabilities 3, 00,000 5, 00,000
Based on the above data, acid test of M Co. in comparison to Z Co. is:
(a) lower
(b) equal
(c) higher
(d) indeterminate
Ans. (c)
41. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
(Names of Accounting Ratios) (Nature of Accounting Ratios)
A. Capital gearing ratio 1. Revenue Statement Ratio
B. Stock velocity ratio 2. Coverage Ratio
C. Debtors velocity ratio 3. Market Price ratio
D. Dividend Yield ratio 4. Balance Sheet ratio
5. Balance Sheet and Revenue statement combined ratio
Codes:
ABCD
(a) 4 1 5 3
(b) 5 4 2 1
(c) 1 5 4 2
(d) 3 2 5 1
Ans. (a)
42. For the purpose of calculating ROI capital employed means:
(a) Net Fixed Assets
(b) Current Assets-Current Liabilities
(c) Gross Block
(d) Fixed Assets + Current assets - Current liabilities
Ans. (d)
43. Given that the net profit for a certain year of company ‘X’ Ltd. is Rs. 1,23,000, equity-share capital for the same period is Rs. 10,00,000 and reserve and surplus is Rs. 2,30,000 the rate of ‘return on owners fund’ would be:
(a) 12:3%
(b) 10%
(c) 9.98%
(d) none of the above
Ans. (b)
44. Consider the following data:
Costs: Fixed = Rs. 40,000
Variable Rs. 30,000
Rate of income tax = 30%
Return on capital employed = 10%
Based on the above data the sales volume required to increase the return on capital employed to 18% would be:
(a) Rs. 5,000
(b) Rs. 7,500
(c) Rs. 8,000
(d) Rs. 8,500
Ans. (c)
45. Consider the following details of companies ‘A’ ‘B’ ‘C’ and ‘D’:
A/Rs. B/Rs. C/Rs. D/Rs.
Fixed Assets 100 125 150 200
Net Current 50 55 50 40
Assets
Sales 200 250 250 300
Contribution 150 196 200 180
Fixed Cost 20 27 30 60
If the cut off point of return on investment is l5% then which of the following companies fulfill this criterion?
(a) A and C
(b) B and C
(c) A, B and D
(d) B, C and D
Ans. (c)
46. Which one of the following is an example of sources of funds?
(a) Decrease in share capital
(b) Increase in long term liabilities
(c) Decrease in long term liabilities
(d) Increase in Fixed assets
Ans. (b)
41. Current Assets are Rs. 3, 00,000 and current liabilities are Rs. 1, 50,000. Now, if the debtors realized are Rs. 20,000, then its impact on working capital would be:
(a) an increase of Rs. 20,000
(b) a decrease of Rs. 40,000
(c) an increase of Rs. 40,000
(d) nil
Ans. (d)
48. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Fund flow Analysis 1. Working Capital Management
B. Common Size Profit 2. Inventory Control
and Loss Account
C. ABC analysis 3. Management of receivables
D. Debt Collection Period 4. Financial Statement Analysis
Codes:
ABC D
(a) 4 1 2 3
(b) 1 4 2 3
(c) 2 3 1 4
(d) 3 1 2 4
Ans. (b)
49. The main object of audit is to:
(a) detect the errors and faults
(b) help the company in developing a sound accounting system
(c) verify the correctness of final accounts
(d) prevent commission of errors and faults
Ans. (c)
50. ‘Surprise Checks’ are part of:
(a) an auditor’s working papers
(b) an audit programme
(c) an auditor’s report
(d) an accounting standard
Ans. (b)
Free Sample UGC NET Exam Papers
UGC NET Solved Sample Question Paper Commerce
1. On January 1, 1992 there was a balance of Rs. 4,000 in the plant and machinery account. An addition of Rs. 2,000 was made on July 1, 1992. Accounts were closed for the year on December, 31, 1992. If depreciation was charged 10% per annum, the balance in the plant and machinery account on the closing date would be:
(a) Rs. 5,300
(b) Rs. 5,400
(c) Rs. 5,500
(d) Rs. 5,600
Ans. (c)
2. A machinery having a residual value of Rs. 5,000 was purchased on 1-1-1988 for Rs. 1, 00,000 and was depreciated @ 9.5% on a straight line method. On 1-1-91, it was estimated that its useful life has been reduced to eight years. Under the changed circumstances, the annual depreciation charges for the year 1991 and onwards will be:
(a) Rs. 11,875
(b) Rs. 13,300
(c) Rs. 9,500
(d) Rs. 12,500
Ans. (b)
3. In which one of the following methods of charging depreciation shall the balance never be reduced to zero?
(a) Fixed installment method
(b) Depreciation fund method
(c) Diminishing balance method
(d) Depletion unit method
Ans. (c)
4. Match List-I with List-II and select the correct answer using the following codes given below the lists:
List-I List-II
(Types of accounts) (Principles)
A. Real Accounts 1. Debit the receiver, credit the give.
B. Nominal Accounts 2. Debit what comes in credit what goes out.
C. Personal Accounts 3. Debit all expenses, credit all gains.
Codes:
A B C
(a) 3 2 1
(b) 1 3 2
(c) 2 3 1
(d) 1 2 3
Ans. (c)
5. Which one of the following branches of accounting primarily deals with processing and Goodwill presenting of accounting data for internal one?
(a) Financial Accounting
(b) Tax Accounting
(c) Management Accounting
(d) Inflation Accounting
Ans. (c)
6. “Holding gains in relation to stocks should not be used for payment of Dividend.” Which one of the following accounting principles is involved in this?
(a) Consistency
(b) Cost
(c) Materiality
(d) Realization
Ans. (d)
7. X started business with a capital of Rs. 20,000 and purchased goods worth Rs. 2,000 on credit. These transactions may be expressed in the form of ‘Accounting Equation’ such as:
(a) Rs. 22,000 = Rs. 20,000 - Rs. 2,000
(b) Rs. 20,000 = Rs. 22,000 - Rs. 2,000
(c) Rs. 22,000 = Rs. 22,000 + 0
(d) Rs. 22,000 = 0 + Rs. 22,000
Ans. (b)
8. Accounting records transaction in terms of:
(a) commodity units
(b) monetary units
(c) production units
(d) none of the above
Ans. (b)
9. Market price or actual cost, whichever is less, is the generally accepted accounting principle for valuation of:
(a) Stock in trade
(b) Fixed assets
(c) Current assets
(d) All assets
Ans. (a)
10. Capital employed in a business is Rs.1, 50,000. Profits are Rs. 50,000 and the normal rate of profits is 20%. The amount of goodwill as per capitalization method would be:
(a) Rs. 1, 00,000
(b) Rs. 1, 50,000
(c) Rs. 2, 00,000
(d) Rs. 3, 00,000
Ans. (a)
11. Consider the following data:
Jan. 1, 1989 Opening Stock 500 units Rs. 5 per unit
Jan. 15, 1989 Purchases 400 units @ Rs. 6 per unit
Jan. 30, 1989 issued 300 units
Feb. 15, 1989 Purchases 200 units Rs. 7 per unit
Feb. 28, 1989 Issued 300 units
March 25, 1989 Purchases 200 units @ Rs. 8 per unit
Based on the above data, the value of inventory in hand on 31st March, 1989 as per ‘First in First out’ (FIFO) method will be:
(a) Rs. 3,700
(b) Rs. 3,600
(c) Rs. 4,800
(d) None of the above
Ans. (c)
12. Renewal fee for Patents is a:
(a) capital expenditure
(b) revenue expenditure
(c) deferred revenue expenditure
(d) development expenditure
Ans. (a)
13. A manufacturing company spent the following amounts on the import and installation of a machine:
Rs. 50,000 Price of the machine
Rs. 5,000 Freight
Rs, 1,050 Insurance premium
Rs. 6,000 Replacement of a part damaged in transit, not covered under the insurance policy.
Based on the above data, Capital expenditure would be:
(a) Rs. 50, 000
(b) Rs. 56, 050
(c) Rs. 62, 050
(d) Rs.57, 050
Ans. (b)
14. Given, subscription received in 1990:
For the year 1989 Rs. 500
For the year 1990 Rs. 7,000
For the year 1991 Rs 400
1990-Subscription outstanding Rs. 250.
The amount of subscription to be posted to Income on 31st December 1990 and Expenditure account of 1990 is:
(a) Rs. 7,000
(b) Rs. 7,250
(c) Rs. 7,900
(d) Rs. 8,150
Ans. (b)
15. What is the correct sequence of the preparation of the following accounts and statements of a non-profit organization?
1. Income and Expenditure account
2. Receipts and Payment account
3. Balance Sheet
Select the correct answer from the codes given below:
(a) 1, 2, 3
(b) 1, 3, 2
(c) 2, 1, 3
(d) 2, 3, 1
Ans. (c)
16. Profit as per accounts from incomplete records may be construed as equivalent of:
(a) excess of assets over liabilities at the close of the period.
(b) excess of capital at the end over the capital at the beginning
(c) excess of assets over liabilities at the commencement of the period
(d) excess of capital at the beginning over the capital at the beginning
Ans. (b)
17. If the rate of gross profit is 20% on cost of goods sold and the sales are Rs. 1, 50,000 then the total gross profit would be:
(a) Rs. 25,000
(b) Rs. 30,000
(c) Rs. 37,500
(d) None of the above
Ans. (a)
18. According to records of a firm which does not keep its accounts on double entry system, all sales were made on credit so as to realize a profit of 33 % sale proceeds. The
3
stock of unsold goods at the beginning and at the end of the trading period were valued at Rs. 21,000 and Rs. 18,000 respectively. Goods worth Rs.1, 39,500 were purchased for resale during the period. The proprietor withdrew goods worth Rs. 1, 500 during the accounting period for personal use. What were the total sales during the period?
(a) Rs. 1, 80,000
(b) Rs. 2, 11,500
(c) Rs. 2, 25,000
(d) Rs. 2, 31,500
Ans. (b)
19. In the absence of partnership deed provision of Partnership Act, 1932 became applicable under which a partner is entitled to interest on money advances to the firm at:
(a) 4% p.a.
(b) 5% p.a.
(c) 6% p.a.
(d) 10% pa.
Ans. (c)
20. Which one of the following as not applicable to a co-operative form of business organization?
(a) Membership is open to all having a common interest
(b) Transferability of shares is permitted among general public
(c) Policy decisions are taken by the members in a general meeting
(d) Major portion of profit is distributed to members by way of dividend
Ans. (d)
21. Which one of the following statements is correct?
(a) A company consists of heterogeneous members
(b) A body corporate includes a co-operative society
(c) The expression ‘corporation’ or ‘Body corporate’ are the same
(d) A partner cannot contract with his firm, whereas a member of a company can
Ans. (d)
22. Dividend declared and paid by a company is:
(a) an expense of the company
(b) an income of the company
(c)the distribution of profit earned by the company
(d) the source of fund for the company
Ans. (c)
23. Long term liabilities are:
(a) fixed assets minus current assets
(b) fixed assets minus current liabilities
(c) current Assets plus current liabilities
(d) total liabilities minus current liabilities
Ans. (d)
24. A business entity has assets of Rs. 26,000 and liabilities of Rs. 6,000. Owner’s equity in this case is:
(a) Rs. 32,000
(b) Rs. 26,000
(c) Rs. 20,000
(d) Rs. 6,000
Ans. (c)
25. While preparing ‘Annual Financial Statements’, credit balance shown by the Bank pass book should be treated as:
(a) a liability
(b) an income
(c) an excess of payments over receipts
(d) an asset
Ans. (d)
26. If the trial balance does not tally in spite of through scruting and the difference is substantial, then which one of the following courses should an accountant adopt?
(a) Defer preparation of financial statements
(b) Open suspense account.
(c) Write off the difference to profit and losses A/c
(d) Ignore the difference and prepare financial statements
Ans. (b)
27. ‘A’ and ‘B’ are sharing profit and losses in the ratio of 4 I. ‘C’ is admitted as a new partner for 1/3rd share of profits for which he pays Rs. 30,000 as goodwill. Lf ’A’ and ‘B’ agree to share future profits equally, then the amount of goodwill to be credited to ‘A’ would be:
(a) Rs. 30.000
(b) Rs. 90,000
(c) Rs. 48,000
(d) Rs. 42,000
Ans. (d)
28. The joint life policy account received on the death of a partner is credited to the:
(a) Joint life policy reserve account
(b) Capital accounts of all the partners in their profit sharing ratio
(c) General Reserve account
(d) Profit and Loss Account
Ans. (b)
29. In setting the accounts of a firm after its dissolution, the assets of the firm shall be applied first in paying:
(a) each partner proportionately what is due to him on account of loans advanced by him
(b) each partner proportionately what is due to him account of capital
(c) each partner proportionately what is due to him on account of past profits
(d) the debts of the firm to the third parties
Ans. (d)
30. A limited company issued equity shares of Rs. 100 each. It has called up Rs. 75 on each share but received only Rs. 60 per share. The share capital account will be credited with:
(a) Rs. 60 per share
(b) Rs. 75 per share
(c) Rs. 100 per share
(d) None of the above
Ans. (b)
31. Redeemable preference shares can be redeemed:
(a) only if they are fully paid
(b) even if they are partly paid
(c) if they are paid not less than 50% of the nominal value of shares
(d) only if they are issued at a premium
Ans. (a)
32. Where all the debentures are redeemed, the balance left in the Debenture Sinking Fund Account is transferable to:
(a) Debentures Account
(b) Sinking Fund Investment Account
(c) Capital Redemption Reserve
(d) General Reserve
Ans. (d)
33. The balance in share forfeiture account, after the reissue of all forfeited shares, should be:
(a) added to paid up capital
(b) transferred to goodwill account
(c) transferred to capital reserve account
(d) shown as share forfeiture account
Ans. (c)
34. A company issued Rs. 20,000, 4% bonds repayable on equal installments over 10 years. What is the amount required in the initial year, to pay interest and to redeem the bonds (ignore tax and DCF)?
(a) Rs. 56,000
(b) Rs. 28,000
(c) Rs. 20,000
(d) Rs. 8,000
Ans. (b)
35. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Deferred shares 1. Repayment obligation
B. Preference shares 2. Resembles Stock dividend
C. Bonus shares 3. No dividend obligation
D. Equity Shares 4. Not being used
Codes:
A B C D
(a) 4 3 1 2
(b) 4 1 3 2
(c) 3 2 1 4
(d) 4 1 2 3
Ans. (d)
36. Which one of the following statements is false?
(a) The process of issue of bonus shares is also known as capitalization of reserves
(b) Fully paid bonus shares are issued only out of capital reserves
(c) Only revenue reserves should be used when bonus is declared in order to make partly paid shares into fully paid shares.
(d) Bonus shares one shares issued without payment.
Ans. (b)
37. The Balance Sheet of a company showed the following balances at the end of the year under the head ‘Reserves and surplus’: General Reserve Rs. 5,00,000; Share Premium account Rs. 50,000; Premium on issue of Debentures account Rs. 20,000; Dividends equalization fund Rs. 40,000; Surplus on revaluation of assets Rs. 30,000 Profit and Loss account (credit) Rs. 60,000. Maximum amount available for distribution as dividend to the shareholders of the company will be:
(a) Rs. 60,000
(b) Rs.1, 00,000
(c) Rs. 6, 00,000
(d) Rs.6, 70,000
Ans. (c)
38. Capital Gearing ratio denotes the relationship between:
(a) assets and capital
(b) loan and capital
(c) equity shareholder’s fund and long term borrowed funds
(d) debentures and share capital
Ans. (c)
39. The following balances appear on the liability side of a company’s Balance Sheet:
Rs.
Equity Share Capital: 10,000 Shares of Rs. 10 each 1.00.000
10% Redeemable Preference shares 1, 00,000
5,000 shares of Rs 20 each
Capital redemption reserve account 40,000
14% Debentures 1, 00,000 Deb. of Rs. 2 each 2, 00,000
RFC loan 1, 50,000
Profit and Loss A/c 50,000
The Debt Equity ratio of the company is
(a) 35: 20
(b) 35: 26
(c) 35: 25
(d) 35: 21
Ans. (c)
40. Consider the following financial information in respect of two companies namely ‘M’ Co. and ‘Z’Co. :
Items of Assets and Liabilities ‘M’ Co. (Rs) ‘Z’ Co. (Rs)
Current Assets 7, 50,000 7, 50,000
Closing inventory 3, 00,000 2, 50,000
Goodwill 5, 00,000 3, 50,000
Current Liabilities 3, 00,000 5, 00,000
Based on the above data, acid test of M Co. in comparison to Z Co. is:
(a) lower
(b) equal
(c) higher
(d) indeterminate
Ans. (c)
41. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
(Names of Accounting Ratios) (Nature of Accounting Ratios)
A. Capital gearing ratio 1. Revenue Statement Ratio
B. Stock velocity ratio 2. Coverage Ratio
C. Debtors velocity ratio 3. Market Price ratio
D. Dividend Yield ratio 4. Balance Sheet ratio
5. Balance Sheet and Revenue statement combined ratio
Codes:
ABCD
(a) 4 1 5 3
(b) 5 4 2 1
(c) 1 5 4 2
(d) 3 2 5 1
Ans. (a)
42. For the purpose of calculating ROI capital employed means:
(a) Net Fixed Assets
(b) Current Assets-Current Liabilities
(c) Gross Block
(d) Fixed Assets + Current assets - Current liabilities
Ans. (d)
43. Given that the net profit for a certain year of company ‘X’ Ltd. is Rs. 1,23,000, equity-share capital for the same period is Rs. 10,00,000 and reserve and surplus is Rs. 2,30,000 the rate of ‘return on owners fund’ would be:
(a) 12:3%
(b) 10%
(c) 9.98%
(d) none of the above
Ans. (b)
44. Consider the following data:
Costs: Fixed = Rs. 40,000
Variable Rs. 30,000
Rate of income tax = 30%
Return on capital employed = 10%
Based on the above data the sales volume required to increase the return on capital employed to 18% would be:
(a) Rs. 5,000
(b) Rs. 7,500
(c) Rs. 8,000
(d) Rs. 8,500
Ans. (c)
45. Consider the following details of companies ‘A’ ‘B’ ‘C’ and ‘D’:
A/Rs. B/Rs. C/Rs. D/Rs.
Fixed Assets 100 125 150 200
Net Current 50 55 50 40
Assets
Sales 200 250 250 300
Contribution 150 196 200 180
Fixed Cost 20 27 30 60
If the cut off point of return on investment is l5% then which of the following companies fulfill this criterion?
(a) A and C
(b) B and C
(c) A, B and D
(d) B, C and D
Ans. (c)
46. Which one of the following is an example of sources of funds?
(a) Decrease in share capital
(b) Increase in long term liabilities
(c) Decrease in long term liabilities
(d) Increase in Fixed assets
Ans. (b)
41. Current Assets are Rs. 3, 00,000 and current liabilities are Rs. 1, 50,000. Now, if the debtors realized are Rs. 20,000, then its impact on working capital would be:
(a) an increase of Rs. 20,000
(b) a decrease of Rs. 40,000
(c) an increase of Rs. 40,000
(d) nil
Ans. (d)
48. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Fund flow Analysis 1. Working Capital Management
B. Common Size Profit 2. Inventory Control
and Loss Account
C. ABC analysis 3. Management of receivables
D. Debt Collection Period 4. Financial Statement Analysis
Codes:
ABC D
(a) 4 1 2 3
(b) 1 4 2 3
(c) 2 3 1 4
(d) 3 1 2 4
Ans. (b)
49. The main object of audit is to:
(a) detect the errors and faults
(b) help the company in developing a sound accounting system
(c) verify the correctness of final accounts
(d) prevent commission of errors and faults
Ans. (c)
50. ‘Surprise Checks’ are part of:
(a) an auditor’s working papers
(b) an audit programme
(c) an auditor’s report
(d) an accounting standard
Ans. (b)
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