Preparing Commerce Optional For UPSC Prelims

Preparing Commerce Optional For UPSC Prelims
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Sample paper Preparing Commerce Optional For UPSC Prelims
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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)