APPSC PORTAL: COMMERCE

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Monday, January 31, 2011

COMMERCE QUESTIONS FOR PSC EXAMS

1. Unpaid calls are shown in the balance sheet of a Company:

(a) by adding it to the share capital

(b) by deducting it from the called-up share capital

(d) under the head ‘Current liabilities’

Ans. (b)

2. Part-II Schedule VI to the Companies Act, 1956, prescribes:

(a) vertical form of balance sheet

(b) requirements as to profit and loss account

(d) contents of prospectus

Ans. (b)

3. X Ltd. forfeited 30 shares of Rs. 10 each fully called-up, for non-payment of allotment money of Rs. 3 per share and call money of Rs. 4 per share. These shares are re-issued for Rs. 8 per share fully paid.

What is the amount to be transferred to Capital Reserve Account?

(a) Rs. 300

(b) Rs. 60

(d) Rs. 90

Ans. (c)

4. Right’s shares are the shares that are offered to the:

(a) directors of the company

(b) debenture holders

(d) creditors of the company

Ans. (c)

5. Pro-rata allotment of shares means allotment of shares:

(a) equally amongst the applicants

(b) at the discretion of the Directors

(d) to only a few selected applicants

Ans. (c)

6. Interest on calls in arrears is charged according to Table A of Schedule I to the Companies Act 1956 at the rate of:

(a) 5% p.a.

(b) 6% p.a

(d) 10% p.a.

Ans. (a)

7. The best definition of ‘Capital employed’ in calculating the rate of return on investment is:

(a) current assets + gross fixed assets

(b) current assets + net fixed assets

(d) working capital + net fixed assets

Ans. (d)

8.Match list-I with list-II and select the correct answer using the Code given below the lists:

List—I List—II

A. Acid test ratio 1. Liquidity ratio

B. Gearing ratio 2. Profitability ratio

C. Working capital turnover ratio 3. Leverage ratio

D. Return on capital employed 4. Long-term solvency ratio

5. Activity ratio

Codes:

A B C D

(a) 1 3 5 2

(b) 2 5 1 3

(d) 5 3 4 1

Ans. (a)

9. Collection of sundry debtors would:

(a) increase current ratio

(b) decrease current ratio

(d) increase debtors’ turnover

Ans. (c)

10. A company with a paid up capital of 5000 equity shares of Rs. 10 each has a turnover of four times with a margin of 8% on sales. The ROI of the company will be:

(a) 28%

(b) 32%

(d) 42%

Ans. (b)

11. The ratios which measure the relative contribution of financing by owners and financing provided by outsiders are called:

(a) liquidity ratios

(b) leverage ratios

(d) profitability ratios

Ans. (b)

12. The debt equity ratio of a company is 8: 1. It was decided to issue bonus shares in the ratio of 1: 2. The debt : equity ratio after the issue of bonus shares would be:

(a) 8: 1

(b) 4: 1

(d) 1:4

Ans. (a)

13. Which of the following transaction(s) will improve the Current Ratio?

1. Bills receivable dishonored

2. Cash collected from customers

3. Issue of new shares

4. Payment of preliminary expenses by way of equity shares

Select the correct answer using the Code given below:

Code:

(a) 1, 2 and 3

(b) 4 alone

(d) 2 and 4

Ans. (c)

14. Which one of the following statements is NOT correct?

A high gross profit margin ratio is the result of:

(a) higher sales prices, cost of goods sold remaining constant

(b) lower cost of goods sold, sales price remaining constant.

(d) increase in the sales return, cost of goods sold remaining the same

Ans. (d)

15. Credit sales of a company during the year are Rs. 1,20,000; Debtors Rs. 20,000 and bills receivables, Rs. 10,000. The average collection period is:

(a) 3 months

(b) 4 months

(d) 6 months

Ans. (a)

16. While calculating the net present value under

discounted cash flow method of return on investment

analysis, the c4lculations involved are:

1. Cash outflow

2. Discounted net cash flow

3. Cash inflow

4. Net present value

The correct sequence of these calculations is:

(a) 4, 1, 3, 2

(b) 1, 3, 2, 4

(d) 3, 1, 4, 2

Ans. (b)

17. Ajoy Ltd. makes a net profit of Rs. 1,00,000, after providing for depreciation on assets amounting to Rs. 20,000 and writing off preliminary expenses amounting to Rs. 10,000 and gain of Rs. 5,000 on sale of a piece of machinery. Funds from operation of Ajoy Ltd. would be:

(a) Rs. 1,00,000

(b) 1,20,000

(d) 1,35,000

Ans. (b)

18. Match List-I with List-II and select the correct answer using the Code given below the lists:

List-I List-II

A. Net loss from operations 1. Source of funds

B. Changes in working capital 2. Drain of working capital

C. Depreciation 3. Flow of Funds

D. Issue of fully paid bonus shares 4. Neither source nor application of funds

Code:

A B C D

(a) 3 2 1 4

(b) 2 3 4 1

(d) 3 2 4 1

Ans. (c)

19. Which one of the following statements is correct?

(a) A decrease iii current liabilities causes an increase in the working capital

(b) An increase in current liabilities causes a decrease in the working capital

(d) An increase in the current assets causes a decrease in the working capital

Ans. (a)

20. Match List-I (Type of audit) with List-II (Purposes) and select the correct answer using the Code given below the lists:

List-I List-II

A. Continuous audit 1. To ensure efficient conduct of the business and prevent

wastage

B. Periodical audit 2. Detailed examination of the books of accounts at regular

intervals capital

C. Interim audit 3. Audit taken up at the close of the financial period

D. Internal audit 4. Audit conducted between the ends of two financial period

Codes:

A B C D

(a) 1 3 4 2

(b) 2 3 4 1

(d) 3 1 2 4

Ans. (b)

21. Match List-I (Items) with List-II (Section of Companies Act, 1956) and select the correct answer using the Code given below the lists:

List-I List-II

A. Appointment of Auditors by Central Government 1. Sec. 22 (1)

B. Qualification of Auditors 2. Sec. 224 (5)

C. Appointment of Auditors by Board of Directors 3. Sec. 224 (8)

D. Remuneration of Auditors 4. Sec. 224 (3)

Code:

A B C D

(a) 4 1 3 2

(b) 1 4 2 3

(d) 1 4 3 2

Ans. (c)

22. Special audit of the accounts of a company is directed by:

(a) shareholders of the company

(b) Comptroller and Auditor General, of India

(d) Central Government

Ans. (d)

23. The author of the books ‘Suma de Arithmetica ‘is:

(a) H. A. Cassel

(b) Luca Paciolli

(d) Batliboi

Ans. (b)

24. Vouching may be termed as:

(a) identification of the documentary evidence supporting the transaction

(b) verification of the document supporting the transaction

(d) verification of the accuracy and authenticity of the transaction

Ans. (d)

25. Interim audit refers to n audit conducted:

(a) in two different accounting years

(b) in between two statutory annual audits within the same accounting period

(d) in between one statutory audit, one management audit and one internal audit

Ans. (b)

26. Various plans that an organization may formulate are for—purpose or mission, objective, strategies, policies, rules and procedures, programmes or projects and budget. These can be arranged in a hierarchy because higher level plans give/generate lower level plans. -

Identify the correct order according to hierarchy of plans from amongst the following:

(a) Purpose or mission, objective, strategies, policies, rules and procedures, programmes or projects and budget

(b) Budget, objectives, policies, rules and procedures, purpose or mission, strategies and programmes or – projects

(d) Strategies, objectives, policies, purpose or mission, programmes or projects, rules and procedures, and budget

Ans. (c)

27. What is the correct sequence of the following aspects in auditing?

1. Special audit

2. Internal audit

3. Internal check

4. Annual audit

Select the correct answer using the Code given below:

Code:

(a) 1, 3, 2, 4

(b) 3, 4, 1, 2

(d) 1, 2, 3, 4

Ans. (c)

28. Test checking reduces the:

(a) powers of an auditor

(b) expenses of audit

(d) liability of an auditor

Ans. (c)

29. Management audit refers to:

(a) examination of books and audit of accounts done by the management

(b) the periodic assessment of company’s activities by the statutory auditor

(c) periodic assessment of company’s managerial planning, organizing, actuating and controlling compared to norm of successful operation

(d) auditor’s assessment of the financial statement of the entity

Ans. (c)

30. 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) 2, 1, 4, 3

(b) 1, 2, 3, 4

(d) 1, 2, 4, 3

Ans. (a)

31. The most important objective of internal audit, is:

(a) early detection of errors and frauds

(b) facilitating final audit

(d) ensuring systematic accounting

Ans. (a)

32. Section 224 of the Companies Act, 1956 deals with:

(a) special audit

(b) secretarial audit

(d) appointment and remuneration of auditors

Ans. (d)

33. An arrangement in which the accounting work of each individual is checked by other members is

known as:

(a) internal audit

(b) external audit

(d) test checking

Ans. (c)

34. The main purpose of an independent audit is to:

(a) check and correct frauds and errors

(b) help in detecting frauds and errors

(c) determine if the financial statements fairly represent the actual financial position and the working results of the organization

(d) help in formulating future plans

Ans. (c)

35. Consider the following statements:

I. Foreign institutional investors have been allowed to invest in Mutual Funds

2. The main objective of SEBI is to protect the investors

3. Private placement is the route through which Promoters’ contribution is mobilized by a public company

4. RBI lays down the guidelines governing the capital market operation

Of these statements:

(a) 1 and 2 are correct

(b) 2, 3 and 4 are correct

(d) 1, 3 and 4 are correct

Ans. (b)

36. Dow and Jones, now popularly known as ‘Dow-Jones’ in the stock market parlance, were the:

(a) first financial journalists

(b) first bull operators in the New York Stock Exchange

(d) architects of shop-floor trading

Ans.(b)

37. The primary function of Stock Exchange is to:

(a) mobilize savings from the public for long-term investment

(b) offer a secondary market for shares and other securities

(d) enable Reserve Bank of India to trade in Government securities in their efforts to control money supply in the economy

Ans. (b)

38. Consider the following statements:

A mutual fund helps the ‘investor in securing:

1. professional management

2. diversification of risk

3. steady appreciation

4. lower cost of operation

Of these statements:

(a) 1, 2, 3 and 4 are correct

(b) 1, 2 and 4 are correct

(d) 3 and 4 are correct

Ans. (a)

39. Which of the following pairs are correctly matched?

1. Cooperative movement in India : Nanavahi Committee

is breast-fed, bottle-fed and spoon-fed

2. Tax on sole proprietor and partnership : Direct Taxes, Enquiry Committee

firm’s needs rationalization

3. Capital market in India is tightly controlled : Narasimham Committee

by the Government

Select the correct answer using the Code given below:

Code:

(a) 1, 2 and 3

(b) 1 and 3

(d) 1 and 2

Ans. (a)

40. “Arbitrage” means:

(a) a business arrangement by which al share broker tries to take advantages of different in ‘Spot’ and ‘Futures’ prices of a share

(b) a business arrangement in which a share broker tries to take advantage of difference in prices between two Stock Exchange centers on a particular share

(c) an arbitration proceedings that is invoked by either the buyer or the seller when he other party is unable to meet its commitment

(d) a compromise arrangement by which the transaction is postponed to the next settlement date

Ans. (b)

41. Which one of the following sets is correct with regard to liberalization in financial sector?

(a) Globalization, devaluation and privatization

(b) Deregulation, moral suasion branch expansion

(d) Globalization, deregulation and privatization

Ans. (b)

42. Which of the following are the means of marketing new issues of securities?

1. By listing of securities

2. Through jobbers and brokers

3. By private placing of securities

4. Through privileged subscription

Select the correct answer using the Code given below:

Code:

(a) 1 and 2

(b) 1,2 and 3

(d) 1, 2, 3 and 4

Ans. (d)

43. Narasimham Committee has, apart from other things, recommended:

(a) expanding priority sector financing

(b) restricting priority sector-financing

(d) total elimination of priority sector financing

Ans. (b)

44. Prospectus issued by a company is to be vetted and approved by the SEBI. This, however, does not mean that:

(a) disclosures are adequate as per its guidelines

(b) project proposal has been presented in conformity with its guidelines

(d) project proposal is sound or satisfactory

45. Commercial papers represent a new financial instrument issued for the purpose of:

(a) project financing

(b) working capital

(d) import of capital goods

Ans. (b)

46. Match List-I (Forms of business organization) with List-II (Distinctive characteristics) and select the correct answer using the Code given below the lists:

List-I List-II

A. Joint Hindu Family Firm 1. Association of persons for their common interests

B. Public Enterprise 2. Ownership and control by Government

C. Section 25 of Company 3. Ownership by coparceners

D. Co-operative organization 4. Limited company formed for promoting

art, commerce, science etc.

Codes:

A B C D

(a) 3 2 1 4

(b) 1 3 2 4

(d) 1 3 4 2

Ans. (c)

47. Does modernization of industrial enterprises call for mechanization?

(a) Yes, because manual labour alone cannot deliver the goods

(b) Yes, because mechanization holds the key to industrial success in most developing countries

(c) No, because it is rationalization and not mechanization that holds the key to modernization and higher productivity in the industrial sector

(d) No, because it is mechanization will aggravate the unemployment situation in the country and will ultimately result in the collapse of the economy

Ans. (a)

48. In the absence of an agreement to the contrary, the partners are:

(a) entitled to 6% interest on their capitals, only when there are profits

(b) entitled to 9% interest on their capitals, only when there are profits

Ans. (d)

49. Match List-I (landmark case) with List-II (the legal point established by that case) and select the correct answer using the Code given below the lists:

List—I List—II

A. Solomon vs. Solomon 1. The scope and limits of the Objects

Clause

B. Ewing vs. Butter Cup Margarine Co. Ltd. 2. A company should not be registered

with a name which resembles the

name of an existing Co.

C. Ashbury Rail Carriage & Iron Co. vs. Ritchie 3. Company is a distinct entity,

different from its members

D. Royal British Bank vs. Turquand 4. Limitation to the Doctrine of

constructive notice

5. Doctrine of Indoor Management

Codes:

A B C D

(a) 2 3 1 4

(b) 3 2 4 5

(d) 2 3 4 5

Ans. (b)

50. Which one of the following is NOT applicable to a .Co-operative form of business organization?

(a) Major portion of profit is distributed to members by way of dividend

(b) Policy decisions are taken by the members in a General Meeting

(d) It is formed generally by the artisans and consumers of limited means

Ans. (d)

COMMERCE QUESTIONS FOR PSC EXAMS

1. Sree media Company Limited acquired the business of M/s Bharat Traders. The valuation of the items acquired was—building Rs. 1,20,000; machinery Rs. 80,000 and stock-in-trade Rs. 30,000. The company issued in lieu of the above items 800, 10% debentures of Rs. 100 each at par and 1 5000 equity shares of Rs. 10 each.

How much was the flow of funds in the above transaction?

(a) Rs. 2,30,000

(b) Rs. 1,00,000

(d) Rs. 30,000

Ans. (d)

2. What are the aspects to be considered while qualifying the audit report on the accounts of a company?

1. An item requiring specific disclosure under the Companies Act is not so disclosed

2. Where the auditor has not been able to form an opinion due to his inability to obtain sufficient, appropriate evidence information and explanation

3. An auditor realizes that items in a financial statement are misstated to such an extent that the financial statement does not give a true and fair view

Select the correct answer using the Code given below:

Code:

(a) 1 only

(b) 1 and 2

(d) 1, 2 and 3

Ans. (d)

3. Analytical review by an auditor mainly includes:

(a) examining vouchers and other documents

(b) physical verification of assets

(d) study of ratios and trends

Ans. (d)

4. Statements on Standard Auditing Practices (SAPs) are important while discharging the auditing function by a member of the ICAI in case of a company, because SAPs are:

(a) prescribed by the ICAI

(b) contained in the Companies Act, 1956

(d) approved by the Central Government in consultation with Comptroller and Auditor-General

Ans. (a)

5. Which audit is carried out during the accounting period with some interval, it is called:

(a) periodic audit

(b) partial audit

(d) interim audit

Ans. (c)

6. Which one of the following pairs is NOT correctly matched?

(a) Suppression of invoices : Window dressing

(b) Overcharging depreciation : Secret reserves

(d) Omission of credit sale : Understatement of debtors

Ans. (a)

7. Internal audit report is submitted to:

(a) Government

(b) Shareholders

(d) Board of Directors

Ans. (d)

8. The main purpose of auditing is to:

(a) detect accounting offences and to punish the offender

(b) prepare and authenticate the accounts

(d) certify the financial position of the business

Ans. (d)

9. Every auditor appointed under Section 224 (1) of the Companies Act, 1956 shall inform in writing as to whether he has accepted or refused to accept the appointment. Such an intimation shall be given by him to the

(a) company within 30 days of receipt from the company of the intimation of his appointment

(b) Company Law Board within 30 days of receipt from the company of the intimation of his appointment

(d) Registrar within 30 days of receipt from the company of the intimation of his appointment

Ans. (d)

10. If an auditor does something wrongfully in the performance of his duties resulting in financial loss to the company, he will be held guilty of:

(a) civil negligence

(b) misfeasance

(d) financial irregularity

Ans. (b)

11. Audit Committee shall act in accordance with the terms of reference to be specified by:

(a) Statutory Auditors

(b) SEBI

(d) Central Government

Ans. (c)

12. The selection of items, to be included in the audit on a subjective basis without consideration of sample size of method of selection, is:

(a) probability sampling

(b) systematic sampling

(d) judgment sampling

Ans. (a)

13. The scope of audit in a partnership firm is governed by:

(a) partnership act

(b) partnership deed

(d) number of partners of the firm

Ans. (c)

14. While establishing the statistical sampling plan, the degree of precision required is determined by:

(a) keenness of the management

(b) suitability of accounting systems and. procedures

(d) random number table used for the purpose

Ans. (d)

15. Match List- I with List -II and select the correct answer using the Code given below the Lists:

List—I List—II

A. Inspection of books of account under 1. Central government

Section 209A of the Companies Act, 1956

B. Constitution of National Advisory Committee 2. Registrar of Companies

on Accounting Standards

C. Books of account 3. Registered office

D. Reasons for failure to buy back shares 4. The ICAI

5. Directors’ Report

Code:

A B C D

(a) 2 1 3 5

(b) 3 1 2 4

(d) 3 4 2 1

Ans. (c)

16. The scope of ‘management audit’ is determined by the:

(a) shareholders

(b) Board of Directors

(d) Comptroller and Auditor-General in consultation with the Central Government

Ans. (b)

17. In the case of an auditor appointed under Section 619 of the Companies Act, 1956 by the Comptroller and Auditor-General of India, the remuneration shall be fixed by the

(a) company in general meeting

(b) comptroller and Auditor-General of India

(d) Company Law Board

Ans. (d)

18. Test checking reduces:

(a) the work of an auditor

(b) tie liability of an auditor

(d) the remuneration of an auditor

Ans. (a)

19. X is proposed to be appointed as the auditor of ABC Co. Ltd. at the ensuing AGM in place of the retiring auditor Y. This requires:

(a) a special resolution and approval of the Company Law Board

(b) a special notice

(d) a special resolution and approval of Central Government

Ans. (b)

20. Test checking of entries in the audit work refers to:

(a) the internal checks

(b) the internal controls

(d) checking the cash flow of business

Ans. (c)

21. The First Standard Auditing Practice (SAP-I) is related to:

(a) objectives and scope of the audit of financial statements

(b) basis principles governing an audit

(d) detecting fraud and error

Ans. (a)

22. Which of the following relating to Audit’ Programme is NOT correct?

(a) The auditor cannot defend himself on the basis of audit programme if there is a charge of negligence against him

(b) it is useful basis for planning the programme for ‘the subsequent year

(d) it simplifies the allocation of work amongst the audit staff

Ans. (a)

23. Who is ‘bull’?

(a) A stock broker who deals or specializes in a few shares

(b) An investor who sells securities in anticipation of being able to re-buy them later at a lower price

(d) An investor who expects the price of a security or of the market as a whole to fall

Ans. (c)

24. Commercial paper is a:

(a) long-term corporate security meant for small investors

(b) medium-term corporate security meant for institutional investors

(d) short-item corporate security meant for large-scale investors

Ans. (c)

25. A cartel is a combination of firms:

(a) which are functioning in a particular industry

(b) whose combined assets are worth more than 90% of total assets of the industry

(d) whose combined profits are enormous

Ans. (d)

26. Social responsibility of business assumes considerable importance towards:

(a) owners and workers

(b) consumers and community

(d) All the above

Ans.(d)

27. The distinctive characteristic of ‘perpetual succession’ of a joint stock company refers to:

(a) uninterrupted business in spite of continuous losses

(b) immunity from government direction for the closure of the company

(d) uninterrupted existence not affected by the death or insolvency of members of the company

Ans. (d)

28. A statutory corporation is one which comes into being

by:

(a) registration under Companies Act, 1956

(b) virtue of enactment of a Special Act

(d) the entrepreneurial effort of the government

Ans. (d)

29. Consider the following statements:

An unregistered partnership firm suffers from the following disabilities4.

1. A partner of such firm cannot file a suit for the dissolution of the firm

2. The firm cannot file a suit against any third party for realization of its dues

3. A partner cannot file a suit against any other partner to enforce any right arising out of partnership deed

Which of the above statements are correct?

(a) 1, 2 and 3

(b) 1 and 3

(d) 2 and 3

Ans. (d)

30. Exim Bank of India provides financial assistance to exporters and importers in India:

(a) in foreign currency only

(b) both in Indian currency and foreign currencies

(d) as subsidies

Ans. (d)

31. In life insurance, the risk insured is:

(a) certain to occur and also the timing of its occurrence is known

(b) certain to occur, but its timing of its occurrence is not known

(d) not likely to occur

Ans. (c)

32. The national re-insurer in India is:

(a) General Insurance Corporation of India

(b) United India Insurance Company Ltd.

(d) Oriental Fire and General Insurance Company Ltd.

Ans. (a)

33. Which one of the following risks is not insured by the Export Credit and Guarantee Corporation?

(a) The risk of non-payment by the foreign buyer

(b) The risk that the importer may return the goods on the ground of lower quality

(d)The risk of war, revolution, etc.; in the buyer’s country

Ans. (b)

34. Which one of the following indicates the correct chronological order of the ‘system’ designed for purchasing ‘office supplies’?

(a) Select sources of supply, initiate requisition, order supplies, receive supplies and pay vendor

(b) Initiate requisition, order supplies, select sources of supply, receive supplies and pay vendor

(d) Initiate requisition, select sources of supply, order supplies, receive supplies and pay vendor

Ans. (b)

35. Which one among the following is an instance of Participative Management?

(a) Board of Directors

(b) Trade Unions

(d) Task Force

Ans. (c)

36. The size of an office can be measured in which of the following ways?

1. Production capacity of the organization

2. Number of employees

3. Investment in equipment and machines

4. Total administrative expenses

Select the correct answer using the Code given below:

Code:

(a) 1 and 4 are correct

(b) 1 and 2 are correct

(d) 2, 3 and 4 are correct

Ans. (d)

37. Contingency School of Management

(a) practice-oriented

(b) principle-oriented

(d) profit and loss-oriented

Ans. (a)

38. The term ‘organizational climate’ best represents:

(a) human environment prevailing in an organization

(b)union management relations within an organization

(d) socio-cultural environment in an organization

Ans. (d)

39. Which one of the following is the correct sequence in terms of the four management functions, first identified by Henry Fayol?

(a) Planning, Organizing, Leading and Controlling

(b) Planning, Organizing, Staffing and Coordinating

(d) Planning, Staffing, Communicating and Leading

Ans. (b)

40. Match List-I (Office records) with List-II (Need of such record) and select the correct answer using the Code given below the Lists:

List-I List-II

A. File 1. Recording small and necessary expenses

B. Ledger 2. Recording transactions

C. Petty cash book 3. Keeping necessary documents

D. Office manual 4. Computerizing office system

Code:

A B C D

(a) 3 2 1 4

(b) 4 5 3 1

(d) 4 2 3 1

Ans. (a)

41. Organizations require narrow span of control if there are:

(a) mature subordinates within

(b) competent and trained managers

(d) well defined plans for repetitive operations

Ans. (b)

42. Which one f the following traits describes properly organic or behavioral structure of organization?

(a) Wider spans of control

(b) More centralization

(d) Taller hierarchy

Ans. (a)

43. People resist change in organization because of:

(a) fear of unemployment

(b) increase in responsibility

(d) All the above

Ans. (d)

44. When there are large number of smaller projects and the activities of those projects are to be accomplished by setting up some temporary departments, the appropriate organizational structure should be:

(a) project organization

(b) functional organization

(d) divisional organization

Ans. (c)

45. The managerial function of organizing involves:

(a) reviewing and adjusting plan in the light of changing conditions

(b) establishing programme for the accomplishment of objectives

(d) getting things done through others

Ans. (c)

46. Which one of the following is the major consideration for decentralization?

(a) Organization’s environment

(b) Nature of management function

(d) Ability of higher-level managers

Ans. (c)

47. Which among the following is the most popular approach for accomplishing the results?

(a) Management by exception

(b) Reward system

(d) Mentor system

Ans. (c)

48. Which among the following is the oldest and simplest device for achieving coordination?

(a) Hierarchy

(b) Planning

(d) Rules

Ans. (b)

49. Centralizing the office work is desirable mostly because it:

(a) fixes responsibility

(b) avoids duplication

(d) permits better delegation

Ans. (a)

50. Match List-I with List-II and select the correct answer using the Code given below the List:

List- I List-II

A. F.W. Taylor 1. Principles of Management

B. Maslow 2. Team Work

C. Esprit de Corps 3. Scientific Management

D. V Henry Fayol 4. Theory of Human Motivation

Code:

A B C D

(a) 1 4 2 3

(b) 3 2 4 1

(d) 3 4 2 1

Ans. (d)

Friday, October 22, 2010

Uttarakhand P.C.S. (Pre.) Exam Papers 2008 - COMMERCE

Uttarakhand P.C.S. (Pre.) Exam Papers 2008

Commerce : Solved Paper

(Held on 9-3-2008)

1. The share of new partner in the profits is 1/5 and his capital is Rs. 20,000. The new profit sharing ratio is 3 : 1 : 1. The share of partners in total capital will be—

(A) 60,000 : 20,000 : 20,000

(B) 80,000 : 20,000 : 20,000

(D) None of the above

2. At the time of dissolution the loss of the business, will be compensated first of all from—

(A) Capital

(B) Profits

(D) Donations

3. The meaning of written down value is—

(A) Original cost – Scrap value

(B) Book value + Depreciation

(D) None of these

4. Given :

Depreciation on the basis of Fixed Instalment Method Rs. 2,000 p.a.

Establishment expenses Rs. 5,000

Scrap value Rs. 1,000

Span of life 10 years

The cost of assets will be—

(A) Rs. 20,000

(B) Rs. 16,000

(D) None of these

5. Given :

Cost Rs. 1,00,000

Scrap Value Rs. 10,000

Span of Life 10 years

Rate of depreciation 20% p.a.

The amount of depreciation for the first year on the basis of diminishing balance method will be—

(A) Rs. 20,000

(B) Rs. 18,000

(D) Rs. 10,000

6. Match the following List-I with List-II and select the correct answer from the answer codes given below—

List-I

(a) AS-6

(b) AS-10

(d) AS-20

List-II

1. Accounting for Earning per share

2. Accounting for intangible and fictitious assets

3. Accounting for fixed assets

4. Depreciation Accounting

Codes :

(a) (b) (c) (d)

(A) 1 2 3 4

(B) 3 2 1 4

(D) 4 3 2 1

7. Establishment expenses of a new machine will be debited to—

(A) Expenses Account

(B) Profit and Loss Account

(D) None of the above

8. Goodwill is—

(A) Floating Asset

(B) Wasting Asset

(D) Intangible Asset

9. A Balance Sheet shows only—

(A) Personal Accounts and Nominal Accounts

(B) Real Accounts and Nominal Accounts

(D) Personal, Real and Nominal Accounts

10. Discount on Issue of Shares A/c is shown at the—

(A) Debit side of P & L A/c

(B) Assets side of B/S

(D) None of the above

11. Pre-incorporation Profit is transferred to—

(A) General Reserve

(B) Capital Reserve

(D) Trading A/c

12. Which of the following is shown in Profit & Loss Appropriation A/c ?

(A) Provision for Income Tax

(B) Provision for Depreciation

(D) Contribution to General Reserve

13. On liquidation of a Company first payment is made in respect of—

(A) Liquidator’s remuneration

(B) Legal expenses

(D) None of the above

14. Workmen’s Compensation Fund is a—

(A) Provision

(B) Surplus

(D) Loan

15. Debentures of Rs. 4,25,000 are issued against the purchase of assets of Rs. 4,50,000. In this case the amount of Rs. 25,000 is—

(A) Capital Reserve

(B) Securities Premium

(D) Goodwill

16. A Company can reissue its forfeited shares—

(A) At a premium

(B) At a face value

(D) All of the above

17. Which of the following is an example of capital expenditure ?

(A) Insurance Premium

(B) Taxes and Legal expenses

(D) Custom duty on import of machinery

18. Given :

Average profit of a firm Rs. 21,000

Normal Profit Rs. 18,000

Value of goodwill on the basis of 3 years purchases of super profit shall be—

(A) Rs. 39,000

(B) Rs. 9,000

(D) Rs. 12,000

19. A co-operative auditor starts his work of audit from—

(A) Account Books

(B) Payment Books

(D) None of the above

20. Accounting for research and development relates to—

(A) AS-7

(B) AS-8

(D) AS-10

21. Goods worth Rs. 2,000 were distributed to employees free of charge. The account to be debited is—

(A) Profit and Loss A/c

(B) Advertisement A/c

(D) Goods A/c

22. The maximum rate of underwriting commission on debentures is—

(A) 10%

(B) 2•5%

(D) 5%

23. X Ltd. forfeited 20 shares of Rs. 10 each on which Rs. 6 per share were paid. If out of these shares, 8 shares were reissued to Ram as fully paid up on payment of Rs. 5•50 per share, the amount that will remain standing to the credit of Share Forfeited A/c will be—

(A) Rs. 48

(B) Rs. 72

(D) Rs. 120

24. Bonus Shares are issued to—

(A) Equity Shareholders

(B) Preference Shareholders

(D) Secured Creditors

25. On an equity share of Rs. 100, the minimum amount payable on application under the law should be—

(A) Rs. 20

(B) Rs. 15

(D) Rs. 5

26. Share Premium received by a Company may be used for—

(A) Payment of dividend

(B) Payment of remuneration to management

(D) None of these

27. Garner Vs. Murray rule applies in case of—

(A) Admission of a partner

(B) Dissolution of a firm

(D) Death of a partner

28. When sale is Rs. 4,80,000, gross loss is 25% on cost, purchase is Rs. 3,50,000 and closing stock is Rs. 60,000, the stock in the beginning would be—

(A) Rs. 70,000

(B) Rs. 94,000

(D) Rs. 3,50,000

29. Balance of Debenture Redemption Fund Account is transferred to—

(A) Capital Reserve A/c

(B) Profit and Loss A/c

(D) None of these

30. Planning includes—

(A) Objectives

(B) Policy

(D) All of the above

31. Hawthorne Experiments were conducted by—

(A) Elton Mayo

(B) Henry Fayol

(D) Peter F. Drucker

32. Who is called ‘The Father of Scientific Management’ ?

(A) Elton Mayo

(B) Henry Fayol

(D) F. W. Taylor

33. A plan when expressed in quantitative terms is called—

(A) Policy

(B) Procedure

(D) Budget

34. Theory ‘X’ and Theory ‘Y’ of Motivation was propounded by—

(A) Herzberg

(B) Maslow

(D) McGregor

35. Direction involves—

(B) Physical factors

(B) Financial factors

(D) None of the above

36. Which is the oldest form of organisation ?

(A) Line

(B) Line and staff

(D) Matrix

37. Decentralisation—

(A) Reduces burden of chief executives

(B) Increases burden of chief executives

(D) None of the above

38. Planning is a—

(A) Primary function

(B) Secondary function

(D) None of the above

39. Planning function of management is performed by—

(A) Top management

(B) Middle management

(D) All of the above

40. MBO approach in management was introduced by—

(A) M. P. Follet

(B) Keith Davis

(D) Oliver Sheldon

41. Which of the following is not an element of marketing mix ?

(A) Product

(B) Price

(D) Product life cycle

42. Market segmentation means—

(A) Grouping of buyers

(B) Grouping of sellers

(D) Grouping of producers

43. Standard costing is a technique of—

(A) Planning

(B) Organising

(D) Control

44. The principle of ‘Unity of Command’ was introduced by—

(A) Elton Mayo

(B) Henry Fayol

(D) Urwick

45. The last step of communication process is—

(A) Controlling

(B) Implementation

(D) Reaction

46. Strategy is used in—

(A) Military

(B) Business

(D) All of the above

47. ‘3-D’ Model of leadership is propounded by—

(A) Likert Reinsis

(B) Kurt Levis

(D) Henry Fayol

48. Personal selling includes—

(A) Selling

(B) Services to the customers

(D) All of the above

49. The process of evaluating employees is called—

(A) Performance appraisal

(B) Recruitment

(D) Job evaluation

50. Franking machine is used for—

(A) Specimen signature

(B) Postage stamps

(D) None of the above

51. Grapevine communication is a type of—

(A) Formal communication

(B) Informal communication

(D) Vertical communication

52. The ‘Principle of Exception’ states that management should—

(A) Check everything without exception

(B) Invariably take corrective action without exception

(D) Concentrate their attention on exceptions

53. Which of the following is not a component of ‘SWOT Analysis’ ?

(A) Threats

(B) Strengths

(D) Options

54. Organisational change is necessitated by—

(A) External environmental pressure

(B) Internal strengths and weaknesses

(D) All the above

55. Which management functions are closely related to ?

(A) Planning and Organising

(B) Organising and Staffing

(D) Planning and Control

56. Match List-I with List-II and select the correct answer from the codes given below—

List-I

(a) Planning

(b) Staffing

(d) Controlling

List-II

1. Training

2. Forecasting

3. Evaluating

4. Motivating

Codes :

(a) (b) (c) (d)

(A) 2 4 1 3

(B) 1 2 3 4

(D) 3 4 2 1

57. Memorandum of Association contains—

(A) Objective clause

(B) Name clause

(D) All of the above

58. ‘Table A’ is an alternative to—

(A) Prospectus

(B) Articles of Association

(D) None of the above

59. The ‘Doctrine of Indoor Management’ provides protection to the—

(A) Board of Directors

(B) Shareholders

(D) Outsiders

60. By which of the following methods a Company Secretary can be removed from his post ?

(A) By passing a resolution in Board Meeting

(B) By order of Registrar of Companies

(D) None of the above

61. Dividend paid between two Annual General Meetings is known as—

(A) Final dividend

(B) Interim dividend

(D) None of the above

62. In a Private Company there are restrictions regarding—

(A) Transfer of shares

(B) Issue of prospectus

(D) All of the above

63. The gap between two General Meetings of the Company should not be more than—

(A) 12 months

(B) 18 months

(D) 20 months

64. Statement containing details of items to be considered in a meeting is called—

(A) Agenda

(B) Minutes

(D) Notice

65. The minimum and maximum number of members in a Private Company is—

(A) 2 and 50

(B) 2 and 20

(D) None of the above

66. What is the maximum limit of remuneration for a whole time manager in a company ?

(A) 3% of net annual profit

(B) 5% of net annual profit

(D) None of the above

67. Which among the following documents defines the relationship between a company and outsiders ?

(A) Memorandum of Association

(B) Articles of Association

(D) None of the above

68. Registration is not essential in case of a—

(A) Company

(B) Co-operative organisation

(D) Business of Joint Hindu Family

69. The Meeting of Board of Directors must be called at least once—

(A) In four months

(B) In three months

(D) In one month

70. The Secretary of a Company should file copies of Special Resolution passed at Extraordinary General Meeting to the Registrar of Companies within—

(A) 7 days

(B) 14 days

(D) 30 days

71. What is the quorum of General Meetings in the case of a Private Company ?

(A) 2 members

(B) 3 members

(D) 5 members

72. Which of these must hold a Statutory Meeting ?

(A) Public Limited Company

(B) Private Company

(D) All of these

73. When three sugar mills combine, it is an example of—

(A) Vertical combination

(B) Horizontal combination

(D) None of the above

74. The first electronic computer system was developed in—

(A) 1920

(B) 1940

(D) 1950

75. An Index is—

(A) A filing system

(B) A photostat procedure

(D) An important help in filing

76. Indian Partnership Act was passed in the year—

(A) 1956

(B) 1936

(D) 1930

77. According to the Partnership Act, the maximum number of partners in a banking firm may be—

(A) 10

(B) 12

(D) 20

78. Dissolution of Partnership takes place when—

(A) A partner misbehaves

(B) A partner becomes of unsound mind

(D) A partner dies

79. The existence of a Partnership Firm is—

(A) Separate from partners

(B) Not separate from partners

(D) None of the above

80. In which State the Mitakshara form of H.U.F. business does not apply ?

(A) Rajasthan

(B) Gujarat

(D) Kerala

81. Letter of Credit is presented by—

(A) Exporter

(B) Importer

(D) Shipping Company

82. The Agreement of Partnership—

(A) Must be oral

(B) Must be in writing

(D) Must be in writing on a stamp paper

83. Export procedure begins with—

(A) Indent

(B) Shipping order

(D) None of these

84. ‘Self-help by mutual help’ is a feature of—

(A) Public enterprise

(B) Public corporation

(D) All of the above

85. In India private sector entered into the Life Insurance business in the year—

(A) 1995

(B) 1998

(D) 2001

86. General Insurance Corporation of India was set up in—

(A) 1956

(B) 1972

(D) 2000

87. ‘Salvage Charges’ is related to—

(A) Life Insurance

(B) Marine Insurance

(D) None of the above

88. In ‘Life Insurance Contract’ the insurable interest is examined at the time of—

(A) Entering the contract

(B) Filing the claim

(D) Never

89. In connection with marine insurance the ‘Doctrine of Utmost Good Faith’ is based on the concept of—

(A) Disclosure

(B) Concealment

(D) None of the above

90. Which statement is not true in respect of a Balance Sheet ?

(A) It is an account

(B) It is prepared every month

(D) All the above

91. A machinery is purchased for Rs. 3,00,000 and Rs. 50,000 is spent on its installation. Rs. 5,000 is spent on fuel. What will be the amount of capital expenditure ?

(A) Rs. 3,00,000

(B) Rs. 3,50,000

(D) None of these

92. Which of the following errors are not disclosed by Trial Balance ?

(A) Compensatory Errors

(B) Errors of Principle

(D) All the three

93. A large amount spent on special advertisement is—

(A) Capital Expenditure

(B) Revenue Expenditure

(D) Deferred Revenue Expenditure

94. Double Entry System was introduced in—

(A) America

(B) Japan

(D) Italy

95. According to going concern concept a business entity is assumed to have—

(A) A long life

(B) A small life

(D) A definite life

96. The policy of ‘anticipate no profit and provide for all possible losses’ is followed due to—

(A) Convention of consistency

(B) Convention of conservation

(D) None of the above

97. Receipts and Payments Account is prepared by—

(A) Companies

(B) Banks

(D) Non-trading organizations

98. Examination of documents and vouchers is called—

(A) Physical verification

(B) Test checking

(D) None of the above

99. Internal Audit is done by—

(A) External Auditors

(B) Employees of the organisation

(D) Neither (A) nor (B)

100. Audit Programme is prepared by—

(A) The Auditor

(B) The Company

(D) Financial Controller

101. First Auditor of a Company is appointed by the—

(A) Shareholders

(B) Central Government

(D) Board of Directors

102. Which of the following is not qualified to be a Company Auditor ?

(A) A body corporate

(B) An employee of the company

(D) All of the above

103. Which of the following statement is correct ?

(A) Valuation is a part of verification

(B) Verification is a part of valuation

(D) None of the above

104. Test checking refers to—

(A) Testing of accounting records

(B) Testing of honesty of employees

(D) Checking of all transactions recorded

105. Continuous audit is suitable for—

(A) Big institutions

(B) Small institutions

(D) None of the above

106. The function of an Auditor is—

(A) To examine arithmetical accuracy of accounts

(B) To detect and prevent errors

(D) All of the above

107. Audit is compulsory for—

(A) Sole Trader

(B) Partnership Firms

(D) All of the above

108. Match List-I with List-II of the following and select the correct answer from answer codes given below—

List-I

(a) At cost price

(b) At market price

(d) Average profit method

List-II

1. Valuation of shares

2. Perishable goods

3. Raw material

4. Valuation of Goodwill

Codes :

(a) (b) (c) (d)

(A) 3 2 1 4

(B) 1 2 3 4

(D) 1 4 3 2

109. In the absence of Articles of Association, an Auditor should keep in mind—

(A) Prospectus

(B) Table ‘A’

(D) Legal Declaration

110. Who may recommend Special Audit of a Company ?

(A) Directors of the Company

(B) Shareholders of the Company

(D) Central Government

111. Internal check is a part of—

(A) Internal Audit

(B) Internal Control

(D) Standard Audit

112. Cost Audit Report is to be submitted to—

(A) The Company

(B) The Central Government with a copy to the Company

(D) The Company Secretary

113. A company auditor addresses his report to—

(A) Board of Directors

(B) Members

(D) Company Secretary

114. Which of the following Sections of the Companies’ Act 1956 relates to the maintenance of proper books of accounts ?

(A) Section-211

(B) Section-217

(D) Section-205

115. X and Y are partners sharing profits in the ratio of 4 : 3. They admit a new partner Z and new profit sharing ratio is 7 : 4 : 3. The sacrificing ratio between X and Y will be—

(A) Equal

(B) 4 : 3

(D) 1 : 2

116. Given :

Realised value of assets Rs. 60,000

Profit on Realisation Rs. 3,000

Book value of assets will be—

(A) Rs. 63,000

(B) Rs. 57,000

(D) Rs. 61,500

117. A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. D is admitted for 1/10 share. The new ratio will be—

(A) 5 : 4 : 3 : 2

(B) 4 : 4 : 3 : 2

(D) None of the above

118. If actual average profit is Rs. 30,000 and normal rate of return is 12%, then capitalization value of the profits will be—

(A) Rs. 3,60,000

(B) Rs. 2,50,000

(D) None of the above

119. Under which Section of Companies’ Act an auditor has a right to participate and to speak in the General Meeting ?

(A) 231

(B) 229

(D) 224

120. New profit sharing ratio is calculated at the time of—

(A) Admission of a new partner

(B) Retirement of a partner

(D) All of the above

Answers

1. (A) 2. (B) 3. (C) 4. (A) 5. (B) 6. (D) 7. (C) 8. (D) 9. (C) 10. (B)

11. (B) 12. (D) 13. (C) 14. (B) 15. (A) 16. (D) 17. (D) 18. (B) 19. (C) 20. (B)

21. (A) 22. (B) 23. (D) 24. (A) 25. (D) 26. (C) 27. (B) 28. (D) 29. (C) 30. (D)

31. (A) 32. (D) 33. (D) 34. (D) 35. (C) 36. (A) 37. (A) 38. (A) 39. (D) 40. (C)

41. (D) 42. (A) 43. (D) 44. (B) 45. (D) 46. (D) 47. (C) 48. (D) 49. (A) 50. (B)

51. (B) 52. (D) 53. (D) 54. (D) 55. (D) 56. (C) 57. (D) 58. (B) 59. (D) 60. (A)

61. (B) 62. (D) 63. (C) 64. (A) 65. (A) 66. (B) 67. (A) 68. (D) 69. (B) 70. (D)

71. (A) 72. (A) 73. (B) 74. (B) 75. (D) 76. (C) 77. (A) 78. (D) 79. (B) 80. (C)

81. (B) 82. (C) 83. (A) 84. (C) 85. (C) 86. (B) 87. (B) 88. (A) 89. (A) 90. (D)

91. (B) 92. (D) 93. (D) 94. (D) 95. (A) 96. (B) 97. (D) 98. (C) 99. (B) 100. (A)

101. (D) 102. (D)103. (A) 104. (C) 105. (A) 106. (D) 107. (C) 108. (A) 109. (B) 110. (D)

111. (B) 112. (B) 113. (B) 114. (C) 115. (D) 116. (C) 117. (C) 118. (B) 119. (A) 120. (D)