COMMERCE MATERIAL

Time Allowed: Two hours Maximum Marks: 300 1. If the operating expenses exceed gross profit, the excess is referred to as (a) Operating income (a) Operating loss (c) non-operating expenses (d) non-operating income 2. On using reducing balance method on an asset of Rs.20, 000 at the rate of 10% per annum, depreciation after three years will be. (a) Rs. 6,000 (b) Rs. 1,800 (c) Rs. 1,620 (d) Rs. 2,000 3. Owner's equity stands for (a) Fixed Assets minus Fixed Liabilities (b) Fixed Assets minus Current Liabilities (c) Current Assets minus Fixed Liabilities (d) Total Assets minus Total Liabilities 4. Accounting is (a) the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in the at part at best financial in character, and interpreting thereof. (b) A systematic and regular record of events affecting a firm with a view to obtaining a clear financial picture. (c) Preparation of various financial statements over a period of time of a firm to measure its performance in monetary terms. (d) nothing but book-keeping 5. Aush started business on 1st April, 1995 with a capital of Rs. 25,000 and a loan of Rs. 12,500. Total assets and liabilities at the end of 31st March, 1996 amounted to Rs. 75,000 and Rs. 12,500 respectively. He invested a further capital of Rs. 12,500 during the year and withdrew Rs. 7,500 during the relevant financial period. His closing capital and profits would be respectively (a) Rs. 62,500 and Rs. 32,500 (b) Rs. 50,000 and Rs. 40,000 (c) Rs. 70,000 and Rs. 47,500 (d) Rs. 55,000 and Rs. 42,500 6. A person started business with a cash of Rs. 22,000 and stock of Rs. 3,000 on 1st January, 1996.,Durihg the year , he made a profit of Rs. 6,000. His creditors were paid Rs. 4,500 for the office furniture supplied. He took goods worth Rs. 3,500 for his daughter's wedding on 30th June, 1996. The 9ross assets of his business on 31st December, 1996 was (a) Rs. 27,500 (b) Rs. 26,500 (c) Rs. 23,500 (d) Rs. 20,500 7. Match List I with List II and select the correct answer: List I List II (Item) (Type of asset) A. Brand equity 1. Tangible B. Plant and Machinery 2. Current
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 1

C. Advances to suppliers 3. Intangible D. Deferred revenue expenditure 4. Fictitious ABCDABCD (a) 3 1 4 2 (b) 3 1 2 4 (c) 1 3 2 4 (d) 1 3 4 2 8. In stock valuation, application of the principle 'at cost price or market price whichever is lower' will result in the valuation of stock sometimes at cost price and at other times at market price. This is an application of the principle of (a) Consistency (b) Materiality (c) Conservatism (d) Disclosure 9. Match List I with List II and select the correct answer: List I List II A. Heavy amount of 1. Capital expenditure premium on redemption of preference shares . B. Excess of sale proceeds 2. Deferred revenue expenditure fixed assets over their original cost C. Cost of installation 3. Capital gain of an old machine D. Freight paid on purchase 4. Revenue of raw material expenditure ABCDABCD (a) 2 3 4 1 (b) 3 2 4 1 (c) 2 3 1 4 (d) 3 2 1 4 10. Amount spent on an advertisement campaign, the benefit of which is likely to last for three years is a (a) capital expenditure (b) revenue expenditure (c) deferred revenue expenditure (d) contingent expenditure 11. Match List I with List II and select the correct answer : List I List II A. Preliminary expenses 1. Capital expenditure B. Traveling expenses of 2. Revenue expenditure r the salesman C. Profit on sale of a part 3. Capital gain of the business building D. Nazarene paid on the 4. Deferred revenue purchase of Land for expenditure business ABCDABCD (a) 4 2 3 1 (b) 4 2 1 3 (c) 2 4 3 1 (d) 2 4 1 3 12. Revenue is generally recognized as being earned at that point of time when (a) sale is effected (b) cash is received (c) production is completed (d) debts are collected 13. Which one of the following will be treated as revenue expenditure ? (a) Cost incurred for a new exit as required under the local bodies' bye laws (b) Interest paid on loan during the construction of works (c) Cost of pulling down an old building as also the payment made to the architect for the plan of a new building (d) A dealer in sewing machines purchases sewing machines and spends some money on the repair of ten machines damaged while in transit. 14. Which one of the following is capital expenditure ?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 2

(a) Cost of advertisement (b) Purchase of a delivery van (b) Purchase of raw material (d) Purchase of machine oil 15. Which one of the following is an intangible asset ? (a) Furniture (b) Patent Right (c) Investment in shares (d) Loose tools 16. Which one of the following depreciation methods is most suitable for a coal mine ? (a) Diminishing balance method (b) Depletion method (c) Fixed installment method (d) Sum of years' digits method 17. In the case of a sole proprietorship, Assets in Balance Sheet items are conveniently shown in (a) order of fixity (b) order of liquidity (c) alphabetical order. (d) order of dates of acquisition 18. Match List I (Names of accounts) with List II (Matters with which the accounts are concerned) and select the correct answer : List-I List-II A. Partners current 1. Dissolution of partnership accounts B. Goodwill account 2. Revaluation of assets on the admission of a partner C. Partners drawings 3. Fixed capitals of partners accounts D. Profit and Loss adjustment account 4. Goods taken by partners for private consumption ABCDABCD (a) 1 3 2 4 (b) 1 3 4 2 (c) 3 1 4 2 (d) 3 1 2 4 19. A business concern provides the following details : Cost of goods sold 1,50,000 Sales 2,00,000 Opening stock 60,000 Closing stock 40,000 Debtors 45,000 Creditors 50,000 The concerns' purchases would amount to (in Rs.) (a) 1,30,000 (b) 2,20,000 (c) 2,60,000 (d) 2,90,000 20. Match List I (transaction) with List II (Entry to be made) and select the correct : List I List II A. Loss on realisation 1. Debits partner's capital A/c B. Profit on realization 2. Credit realization A/c C. Assets sold 3. Credit partner's capital A/c D. Creditors paid 4. Debit realisation A/c ABCDABCD (a) 1 3 2 4 (b) 3 1 2 4 (c) 3 1 4 2 (d) 1 3 4 2 21. Which of the following statements are appropriate in respect of partnership accounts ? 1. In the absence of any provision in the partnership agreement to the contrary, partners can charge interest at 6% per annum on loans given by them to the partnership firm.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 3

2. An ordinary partnership firm can have not more than 50 partners. 3. A banking partnership firm can have not more than 10 partnership. 4. In the absence of any provision in the partnership agreement to the contrary, profits and losses are shared by the partners in the ratio of their capitals. Select the correct answer from the codes given below : (a) 1 and 2 (b) 1 and 3 (c) 2, 3 and 4 (d) 1, 3 and 4 22. A and B are equal partners in a firm. They submitted C as one-sixth partner who brought in Rs. 6O,000 as godown. The new profit sharing ratio is 3 : 2 : 1.lf goodwill of Rs. 60,000 is to be paid to the old partners as per profit sacrificing ratio, B will receive (a) Rs. 30,000 (b) Rs. 60,000 (c) Rs. 45,000 (d) Nil 23. R, admitted as a new partner for one-fourth share of future profits, fails to bring in cash of Rs. 5,000 to wards goodwill but the existing (old) partners S and T, sharing profits in the ratio of 3 : 2, raise the goodwill account at its full value. Therefore the partners will be credited for goodwill as S (Rs) T (Rs) R (Rs) (a) 3,000 2,000 Nil (b) 9 000 6000 5 000 (c) 12,000 8,000 Nil (d) 2,250 1,500 1,250 24. The following figures {all in Rs.) relate to a non trading concern : 1st January, 1995 stock of medicines 5,000 1st January, 1995 outstanding creditors for medicines 3,000 Amount paid for medicines during the years 15,000 Value of medicines spoiled during the year 400 Stock of medicines on 31st December, 1995 3,500 The amount to be debited to Income and Expenditure account would be (a) Rs. 15,000 (b) Rs. 18,500 (c) Rs. 18,000 (d) Rs. 13,500 25. Which one of the following statements is correct ? (a) Depreciation is not the process of valuation of asset it is a process of allocation of cost of asset to the period of its economic life (b) If the cost of machinery is more than the book value, then depreciation need not be provided (c) When the plant and machinery are maintained in good condition, through repairs and renewals, depreciation need not be provided (d) In the absence of any legal provisions, if the auditor finds that provision made for depredation is inadequate, then he is not required to refer to it in his report 26. What is the correct sequence of the following actions required for the preparation of Final Accounts ? (a) Preparation of Trial Balance (b) Balancing of Accounts (c) Preparation of Annual Financial Statements (d) Making Adjusting Entries Select the correct answer from the codes given below: (a) 4, 2, 1, 3 (b) 2, 4,3, 1 (c) 2, 1, 4, 3 (d) 4, 2, 3, 1 27. Consider the following items : 1.Debentures 2. Prepaid rent 3. Accrued interest
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 4

4. Bank overdraft , Current liabilities would include (a) 2, 3 and 4 (b) 1, 2 and 3 (c) 1 and 4 (d) 1, 2, 3 and 4 28. Which of the following items should be entered in the I Receipts and Payments account of a club ? 1. Sale of old newspapers 2. Loss on sale of some asset 3. Payments for investment Select the correct answer from the codes given below: (a) 1, 2 and 3 (b) 1 and 3 (c) 1 and 2 (d) 2 and 3 29. A cultural club discloses that subscription received during a particular accounting period as per Receipts and Payments account amount to Rs. 57,360. Subscription outstanding (opening and closing) was Rs. 4,800 and Rs. 6,000 respectively. Subscription received in advance (opening balance and closing balance) amounted to Rs. 3,600 and Rs. 2,160 respectively. The amount to be posted to Income and Expenditure account would be (a) Rs. 57, 360 (b) Rs. 54,000 (c) Rs. 60,000 (d) Rs. 63,360 30. Having reissued all forfeited shares, the credit balance remaining in forfeited shares account is transferred to (a) general reserve (b) reserve capital (c) capital reserve (d) none of the above 31. Rights issue refers to the shares issued to (a) employees (b) public (c) existing directors (d) none of the above 32. That portion of the share capital which can be called up only on the winding up of the company is the (a) authorised capital (b) issued capital (c) subscribed capital (d) reserve capital 33. If vendors are issued fully paid shares of Rs. 80,000 in consideration of net assets of Rs. 60,000, then the balance of Rs. 20,000 will be (a) debited to profit and loss account (b) Debited to goodwill account (c) credited to capital reserve account (d) credited to share premium account 34. Match List I with List II and select the correct answer : List I List II A. G.P. Ratio 1. Convention of conservatism B. Cash budget 2. Profitability C. E.O.Q. 3. Inventory management D. Provision for bad debts 4. Management of liquid assets ABCDABCD (a) 2 4 1 3 (b) 4 2 3 1 (c) 4 2 1 3 (d) 2 4 3 1 35. Given that the current ratio is 2 : 1, if the net working capital is Rs. 60,600, then the amount of current liabilities would be (a) Rs.30,300 (b) Rs.60,600 (c) Rs.1,21,200 (d) Rs.90,900
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 5

36. Project Engineering Ltd. has An adverse current ratio. Which one of the following would improve this ratio ? (a) Sale of fixed assets for cash (b) Collection of some of the current accounts receivables (c) Use of cash to pay off some long-term debts (d) Collection from sundry debtors 37. XYZ Ltd. incurs a net loss of Rs. 5,000 during an accounting year. Depreciation for the relevant year amount to Rs.1,000, preliminary expenses written off during the accounting year is Rs. 3,000 and a loss of Rs. 4,000 is due to sale of plant and machinery. Based on this data, found from operations would amount to (a) Rs. 3,000 (b) Rs. 2,000 (c) Rs. 5,000 (d) Rs. 4,000 38. Social obligation of accounting refers to (a) the completion of journal entries (b) the preparation of final accounts (c) cost recording (d) servicing the needs of various stake-holders 39. A countiuous audit is most suitable where the (a) transactions are few but complicated (b) there is no urgency to finalise the accounts on a particular date (c) internal audit work is being carried on in a satisfactory manner (d) system of internal check in operation is not satisfactory 40. Management audit is (a) an independent appraisal of the total management process (b) a statutory requirement (c) an investigation into the conduct of director (d) an independent appraisal of competitiveness of business 41. Management audit is conducted by (a) the statutory auditors (b) government auditors (c) cost auditors (d) none of the above 42. System of internal check is said to exist in an organisation when (a) an employee is specifically deputed to check the work of another employee (b) the departmental head checks the works of his subordinate (c) some outside experts check the work of employees (d) another employee of the same department checks the work of an employee in routine office procedure 43. Internal Auditor in appointed by the (a) shareholders of the company (b) statutory auditor (c) Institute of Internal Auditors of India (d) Board of Directors of the company 44. Which one of the following is true of the position of an auditor regarding the system of internal check in the organisation? (a) He should acquaint himself with the system of internal check (b) He should monitor and supervise the system of internal check (c) He himself should lay down the system of internal check (d) He has nothing to do with the system of internal check 45. The auditor has a right to ask for information and explanation from the (a) past auditors of the company (b) directors of the company (c) officers of the company
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 6

(d) internal auditors of the company 46. In the case of audit of Statutory Report, an auditor is expected to give his report on the (a) number of shares allotted, amount received in cash and summarised Receipts and Payments account (b) authorised capital, subscribed capital and paid up capital (c) Profit and loss account, Balance Sheet and directors' report (d) directors' qualification shares, calls in arrears and calls in advance 47. Working papers which contain a record of the audit work are the property of the (a) company (b) auditor (c) Registrar of Companies (d) Government of India 48. Sampling is used in the case of (a) collection of debts by the accountant (b) test checks by the auditor (c) supervision by the works manager (d) checking pass-book entried by the accountant 49. One of the consequences of non-registration of a partnership firm is that (a) a partner cannot sue the other partner to enforce a right arising from a contract (b) the partner of such a firm cannot sue third parties (c) third parties cannot sue the firm for claims exceeding Rs. 100 (d) the official Assignee or Receiver will have no power on the property of the dissolved firm 50. In the case of a deemed public limited company, the maximum number of members is restricted to (a) 10 (b) 50 (c) 100 (d)200 51. Consider the following rights : 1. Right to take part in the business 2. Right to share profits 3. Right to interest on advances in excess of capital 4. Right to expel a non-cooperative partner The legal rights of a partner would include (a) 1 and 2 (b) 2 and 4 (c) 1, 2 and 3 (4) 1, 3 and 4 52. Match List I with List II and select the correct answer : List I List II (Type of combinations) (Illustrations) A. Association 1. Cartel B. Federation 2. Chamber of commerce and industry C. Partial consolidation 3. Holding company D. Complete consolidation 4. Amalgamation ABCDABCD (a) 2 1 3 4 (b) 1 2 3 4 (c) 2 1 4 3 (d) 1 2 4 3 53. Which one of the following is an example of a company incorporated by a special Act of Parliament ? (a) Life Insurance Corporation of India (b) Indian Oil Corporation (c) State Trading Corporation of India (d) Bharat Heavy Electricals limited 54. Which one of the following types of registered companies will be the most appropriate for the promotion of science, culture, religion etc.? (a) Company limited by share (b) Company limited by guarantee
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 7

(c) Unlimited company (d) Government company 55. Match List I with list II and select the correct answer : List I List II A. Contract of Uberrimae fidei 1. Public utility concern B. Right of Eminent Domain 2. Co-operative society C. Statement in lieu of prospectus 3. Partnership D. System of 'one man one vote' 4. Sole trading concern 5. Public limited company ABCDABCD (a) 1 3 5 4 (b) 3 1 5 2 (c) 3 2 1 4 (d) 1 2 5 3 56. A joint stock company's letterhead must by law, have the address of the (a) Managing Director (b) Factory (c) Registered Office (d) Head Office 57. Which of the following are stated in the objects clause of the Memorandum of Association of a Public Limited Company? 1. General and specific objects 2. Main objects 3. Secondary objects 4. Objects incidental to main objects 5. Other objects (a) 2, 4 and 5 (b) 1, 3 and 5 (c) 2, 3 and 4 (d) 1, 2 and 4 58. The first auditors of a company are appointed by the (a) Registrar of Companies (b) shareholders of the company (c) promoters of the company (d) Board of Directors of the company 59. Who among the following has NO right to speak at the AGM ? (a) Chairman of the company (b) Whole-time director of the company (c) Proxy holder (d) None of the above, as everybody has a right to speak at the AGM 60. Which one of the following is the correct sequence of steps in the formation and commencement of business of a public limited company ? (a) Memorandum, Issue of Prospectus, Filing of Prospectus, Minimum subscription (b) Memorandum, Minimum subscription, Filing of Prospectus, Issue of Prospectus (c) Memorandum, Filing of Prospectus, Issue of Prospectus, Minimum subscription (d) Memorandum, Issue of Prospectus, Minimum subscription, Filing of Prospectus 61. Which of the following statements are correct? 1. A minor is not competent to become a member of a company. 2. A firm cannot be treated as a member of a company. 3. A foreigner may become a member of a company. 4. A partnership firm cannot hold shares in a company in the individual names of partners as joint holders. (a) 1 and 2 (b) 2, 3 and 4 (c) 1, 3 and 4 (d) 1, 2 and 3 62. In the case of a company making a public issue, 'Minimum Subscription' must provide for which of the following?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 8

1. Investments to be made 2. Preliminary expenses 3. Repayment of money borrowed for preliminary expenes 4. Working capital 5. Any other expenditure if it is specifically stated (a) 1, 2, 3, 4 and 5 (b) 1, 3 and 5 (c) 1, 2 and 4 (d) 2, 3, 4 and 5 63. Those preference shares which do not enjoy the right to share additional profits come under the category of (a) irredeemable preference shares (b) participating preference shares (c) non-cumulative preference shares (d) non-participating preference shares 64. Clauses in the Articles of Association can be altered by (a) a special resolution of the board of Directors (b) an ordinary resolution in the general meeting (c) a special resolution in the general meeting (d) obtaining permission from the Central Government 65. Under the Companies Act, 1956, the 'financial year' of a company (a) must be exactly 12 months (b) must not be less than 12 months (c) may be more or less than a calendar year, but it shall not exceed 15 months (d) may be more or less than a calendar year, but it shall not exceed 20 months 66. 'Doctrine of Constructive Notice' is the notice (a) of alteration of 'Objects' clause to the Registrar of Companies (b) of change of name to the members of the company (c) to the public as to the issue of prospectus (d) to outsiders delaing with the company as to the contents of the Memorandum and Articles of Association 67. A 'blue chip' security is one which (a) given assured high returns (b) almost every investor is willing to buy (c) offers the highest liquidity and sells always much above par (d) is issued by the reputed and profit making companies 68. Under the guidelines of SEBI, pricing of first capital issues should be on par value only in the case of (a) an existing company with no past reserves (b) a private company converting into a public company (c) a new company promoted by an existing company (d) a new company with no connections with other companies 69. Match List I (Activity) with List II (Associated organisation) and select the correct answer : List I List II A. Mutual fund 1. Stock exchange B. Public issue of capital 2. Assets management company C. Forward trading 3. Merchant banking D. Option pricing 4. Forex market ABCDABCD (a) 3 2 4 1 (b) 3 2 1 4 (c) 2 3 1 4 (d) 2 3 4 1
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 9

70. Integration of various units of similar character producing similar products or engaged in the same sphere of business activity under a single form of management and control is called (a) vertical combination (b) horizontal combination (c) circular or mixed combination (d) lateral or allied combination 71. The scope of MRTP Act, since 1992, has been confined only to the regulation of (a) consumer monopolies (b) monopolistic trade practices (c) restrictive and unfair trade practices (d) restrictive trade practices 72. EXIM bank can be described as a (a) non-banking financial company (b) commercial bank (c) non-banking non-financial company (d) scheduled bank 73. Match List I (Document) with List II (where used) and select the correct answer : List I List II A. Shipping bill 1. To certify the country of origin of goods B. Bill of lading 2. For having loaded the cargo in the ship C. Consular invoice 3. To transport cargo by ship D. Packing slip 4. to identify the cargo in transit ABCDABCD (a) 2 3 4 1 (b) 2 3 1 4 (c) 3 2 1 4 (d) 3 2 4 1 74. In the context of foreign trade, the CIF cost may be obtained by (a) adding freight and marine insurance premium to the FOB price (b) deducting freight and marine insurance premium from the FOB price (c) adding customs duties, freight and marine insurance premium to the cost (d) deducting customs duties, freight and marine insurance premium from the price 75. 'Paid up value' is payable on a life insurance policy (a) on the maturity of the policy (b) when the policy lapses (c) when the policy is surrendered (d) on maturity or expiry whichever is earlier 76. Setting the mission which encompasses objectives, policies and goals is known as (a) Operational planning (b) Strategic planning (c) Tactical planning (d) Contingency planning 77. Which one of the following statements is correct ? (a) Planning and controlling are assentially one and the same (b) Controlling is a part of the planning process (c) Cotrolling is a substitute for planning (d) A contral process is meaningless without pre-set goals 78. When jobs are broadened in scope and complexity so that the person's overall area of job responsibility increases, it is a case of (a) job rolation (b) job enrichment (c) job specification (d) job enlargement 79. Consider the following statements Planning involves 1. forecasting
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 10

2. choice among alternative courses of action. 3. wishful thinking 4. decision only by production manager. Of these statements (a) 1, 2, 3 and 4 are correct (b) 1, 3 and 4 are correct (c) 1 and 2 are correct (d) 2 and 3 are correct 80. Techniques of managerial control are useful in (a) Selection of plant location (b) identifying appropriate technology (c) profit planning (d) conducting shareholder's meetings 81. Motivational process and not the motivators as such is associated with the (a) Need hierarchy theory (b) Two-factor theory (c) ERG theory (d) Expectancy theory 82. "Perceived equity in reward results in satisfaction." Which one of the following motivation theories take this into account ? (a) Porter and Lawler Model (b) Victor Vroom's Expectancy model (c) F.W. Taylor's incentive scheme (d) Herzberg's Two-factor theory 83. One of the steps that may be required for achieving effective coordination is (a) reporting on performance and taking remedial measures (b) training in leadership and supervisory abilities of controllers of activity (c) transmission of messages in a full line communication channel (d) making an honest appraisal and initiating rewards/ punishments 84. An important aspect of control is that the (a) manager motivates his subordinates to give better performance (b) manager sets an effective management information system (c) plans are checked before implementation against predetermined measures of performance (d) performance is checked against predetermined standards 85. Consider the following steps 1. Analysis of variances 2. Initiating corrective action 3. Measurement of actual performance 4. Establishment of standards The correct sequence of these steps in the process of control is (a) 4, 3, 2, 1 (b) 3, 4, 2, 1 (c) 4, 3, 1, 2 (d) 3, 4, 1, 2 86. Consider the following elements : 1. Indicators 2. Objectives 3. Controls 4. Key Result Areas 5. Roles and Mission 6. Action Plans Their correct sequence in Management by Objectives and Results is (a) 5, 4, 2, 1, 3, 6 (b) 4, 5, 2, 1, 3, 6 (c) 5, 4, 1, 2, 6, 3 (d) 4, 5, 1, 2, 6, 3 87. Delegation of authority takes place when a manager thinks that (a) the job is too difficult and hazardous (b) the job requires the high skill that he does not possess (c) he cannot look after all the demanding tasks by himself (d) he needs to punish his subordinate 88. According to the principle of "span of control", there is (a) a tendency to overload supervisors with too much of work
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 11

(b) a limit to the number of subordinates a supervisor can effectively supervise (c) no limit to the number of subordinates a supervisor can supervise (d) a limit to delegation of authority to the subordinate 89. Establishment of management by objectives presupposes (a) that limits of authority are not defined (b) that the employees are provided with result expected (c) unlimited freedom to operate in the assigned task (d) unlimited freedom to set goals 90. Each subordinate should have only one superior whose command he has to obey. This is known as (a) Scalar principle (b) Exception principle (c) Unity of command principle (d) Authority-responsibility principle 91. Minimum wages are fixed by the (a) trade unions (b) employers (c) state government merits (d) Courts of Law 92. Brainstorming is used by the management for (a) work allocation on the shop floor (b) generating alternative for problem solving (c) the promotion of research and development (d) training employees 93. Which one of the following is the oldest form of organization ? (a) Functional organization (b) Line organization (c) Line and staff organization (d) Departmentation 94. The given chart represents (a) simple matrix structure (b) complex matrix structure (c) decentralization (d) General manager's span of control 95. Is card indexing system and improvement over simple indexing system ? (a) Yes, because it facilitates location of any name or subject with the minimum of searching as the cards are arranged in an alphabetical order (b) Yes, because the cards can be arranged in a particular order and the. order cannot be changed at will (c) No, because the cards wanted for reference cannot be taken out without holding up the work of recording of information ,as the other cards are left behind (d) No, because the system has a limited capacity for expansion as the number of drawers cannot be increased as desired 96. Which one of the following is the latest and most form of communication ? (a) Speed post (b) Telex (c) Fax (d) E-mail 97. Which one of the following pairs is correctly matched? (a) Manual of office procedures------ In its absence the workload cannot be distributed equitably and full-day's work cannot be assigned to different employees
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 12

(b) Methods study-------- Determine the share of things pertaining to office activities and provide a broad guide to the course of future operation (c) Organizing Undertaken by the office manager in respect of office services only (d) Office policies Compiled for the information and guidance of an office personnel 98. O & M in office management refers to (a) operations and management planning (b) organization and management (c) office orders and manuals (d) none of the above 99. A meeting of the Board of Directors must be held at least once every (a) two months (b) two months and at least three such meeting must be held every year (c) three month and at least four such meeting must be held every year (d) six months 100. The power to make cans on shares can be exercised by the (a) shareholders of the company in general meeting (b) company secretary on his own (c) Board of Directors of the company (d) Managing Directors of the company 101. One of the important powers that must be exercised by the Board of Directors. and cannot be delegated to a committee or any of the managerial personnel is the power to (a) issue debentures (b) take decisions on investment of company funds (c) make loans (d) declare dividends 102.Auditors of a company have to report to the (a) Board of Directors (b) Managing Director (c) institutional investors (d) shareholders at the annual general meeting 103. The annual general meeting can be called by the (a) Company Secretary (b) Board of Directors (c) Managing Director (d) non-executive director of the company 1 104. Under the companies Act, -1956, the Balance Sheet and Profit and loss account of a company are required to be signed by the manager or the secretary of the company and by how many directors including the Managing Director? (a) One (b) Two (c) Three (d) All 105.Special audit can be ordered by (a) preference shareholders (b) the Central Government (c) SEBI (d) debenture holders 106.A law graduate with specialization in company Law can be appointed as company secretary of a company having a id-up capital of (a) Above one core rupees (b) Above two crores rupees
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 13

(c) Above five crores rupees (d) None of the above Directions: The following fourteen items consist of two statements one labeled the Assertion At and the other labeled 'Reason R' You are to examine these two statements carefully and decide if the Assertion A and the Reason R are individually are and if so, whether the Reason is a correct explanation of the Assertion. select your answers to these items using the codes given below and mark your answer sheet accordingly. (a) Both A and R are true and R is the correct explanation of A (b) Both A and R are true but R is not a correct explanation of A (c) A is true but R is false (d) A is false but R is true 107. Assertion (A) : A construction company which by .Memorandum and Articles had powers to borrow and lend carries on a banking business. This is considered to be ultra vires the memorandum Reason (R) : The borrowing and lending should be received to the main (construction) activity only. 108. Assertion (A) : A minor can be admitted to the benefits of partnership with the consent of all the partners. Reason (R) : His liability is confined only the extent of his share in the profits and property of the firm. 109. Assertion (A) : The auditor should examine the “Objects clause" of the Memorandum of Association. Reason (R) : This would ensure that the company is carrying on business as specified in the Memorandum of Association. 110. Assertion (A) : The auditor of a proprietary firm need not be bound by professional propriety. Reason (R) : Proprietary auditor is responsible only to the person (s) who appoints (s) him. 111. Assertion (A) : The main purpose of auditing is to verify that the accounts have been prepared according to the principles of accounting and to see whether the financial statements so prepared reflect a true and fair view of the state of affairs of a business. Reason (R) : Auditing starts after the completion of recording of transactions in the books of account. 112. Assertion (A) : The auditor should visit the particular concern at intervals and check the book of accounts. Reason (R) : Some precaution is required to be taken by the auditor to avoid weaknesses of continuous audit. 113. Assertion (A) : Return on Investment is the ultimate relationship between earnings and investment. Reason (R) : Sales play the pivotal role in such a relationship as sales govern the earnings and investments in turn government sales. 114. Assertion (A) : In accounting, a distinction is made between the business and the owner . Reason (R) : Accounting concepts are based on objectivity and not on subjectivity. 115.Assertion (A) : Materiality concept refers to the state of ignoring relatively small items and values from accounts. Reason (R) : The effort involved in allocating the cost of a small item over a long period should be justified m terms of the benefit derived from this operation. Therefore. cost of such items may be treated as expenses for the period In which they are acquired.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 14

116. Assertion (A) : In a joint stock company, the shareholders have very restricted powers. Reason (R) : The personality of the company is separate and distinct from the humans who compose it. 117. Assertion (A) : Prediction of share price movement in a stock exchange is almost impossible. Reason (R) : Speculative activity has made the fundamentals of shares quite insignificant. 118. Assertion (A) : The investors in the capital market have been showing a decisive shift in favour of fixed income instruments. Reason (R) : The debt instruments have active secondary market. 119. Assertion (A): The floating policy protects the policy holder against errors and omissions. Reason (R): Goods are insured even if the policy holder fails. to report that goods have already been forwarded from the place of shipment. 120. Assertion (A): Social responsibility of business is an idea that cannot be put into practice by most of the businesses. Reason (R) : There are no norms to measure the extent of responsibility towards each segment of the society

Commerce 98 1. A second hand machinery was purchased for Rs. 1,00,000 five years ago and was overhauled by carrying out some current repairs at a cost of Rs.10,000. It has also accumulated depreciation of Rs. 50,000. It has been disposed of in the beginning of the sixth year for Rs. 60,000. Profit/loss on such disposal shall be (a) Profit of Rs. 10,000 (b) Loss of Rs. 50,000 (c) Loss of Rs. 40,000 (d) No profit, no loss 2. Match List I with List II and select the correct answer : List I List II A. Income measurement 1. Accrues to owner's equity B. Expense recognition 2. Revenue recognition C. Basis for realisation in 3. Matching revenue and expenses accounting D. Recognized revenue 4. Accounting period ABCDABCD (a) 3 4 2 1 (b) 3 4 1 2 (c) 2 3 4 1 (d) 2 3 1 4 3. It is given that the cost of the stock is Rs. 100. However, its current market price is Rs .95 (buying) and Rs. 90 selling). If the market price is interpreted in the sense of replacement cost, the stock should be valued at (a) Rs.95 (b) Rs. 100 (c) Rs.90 (d) Rs.93 4. In the last-in-first-out (LIFO) method, the closing stock is valued at (a) a price which is paid for the last consignment (b) a price which is paid for the earlier consignment
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 15

(c) an average price of all the consignments (d) none of the above 5. Charging a period for the proportionate cost of an intangible asset is termed as (a) depreciation (b) diminution (c) amortization (d) expiration 6. Obsolescence means decline in the value due to (a) fall in the market price (b) physical wear and tear (c) innovations and inventions (d) efflux of time 7. Concept of conservation refers to taking into account (a) all profit (b) only cash profit (c) only profit realised (d) profit realised and all possible losses 8. Which one of the following accounting standards is NOT mandatory in India ? (a) Fixed assets accounting and revenue recognition (b) Inventory and depreciation accounting (c) Non-Monetary assets and fixed assets (d) Monetary assets and depreciation accounting 9. If the total charge of depreciation and maintenance is considered, the method which would provide a uniform charge is (a) Annuity method (b) Straight-line method (c) Diminishing balance method (d) Insurance policy method 10. Which of the following expenditures are to be treated as revenue expenditure ? 1. Interest paid on money borrowed during construction period. 2. Cost of Patent Rights. 3. Loss of uninsured stock due to fire. 4. Retirement gratuity paid to an employee (a) 1, 2 and 3 (b) 2, 3 and 4 (c) 3 and 4 (d) l and 2 11. Payment of compensation to a worker, who has been discharged from service, is a (a) Capital expenditure (b) revenue expenditure (c) deferred-revenue expenditure (d) non-business expenditure 12. Expenditure incurred on research is an example of (a) Capital expenditure (b) revenue expenditure (c) deferred-revenue expenditure (d) party capital expenditure and partly revenue expenditure 13. Rs. 19,500 debited to building repairs on 31st Dec.1993 included Rs 9,500 as the cost of building a small room for the watch- man bill of Rs. 800 for color wash of the whole building during the year was not received till Dec. The amount to be debited to profit & loss account would be (a) Rs. 20,300 (b) Rs.19,500 (c) Rs. 10,800 (d) Rs.9,500 14. The term loan of Rs. 5,00,000 was received from IFCI. It was used as under : 1. Rs. 2,00 ,000 was advanced to suppliers for capital work in progress and
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 16

2. Rs. 3,00,000 was used for financing the working capital. The interest payable would be treated (a) on both (1) and (2) as capital expenditure (b) on (1) as capital expenditure and on (2) as revenue expenditure (c) on (1) as deferred expenditure and on {2) as revenue expenditure (d) on (1) as deferred revenue expenditure and on (2) as capital expenditure 15. The basic flow of activities of a business firm follows a certain cyclical sequence. A business would like to have as many such cycles as possible during a given time period, say a year. What will be the sequential flow of some of these activities in the cycle ? 1. Financing decision. 2. Investment decision. 3. Disposal of output. 4. Acquisition of resources. (a) 2, 1,4,3 (b) 4, 1,2,3 (c) 1,3,4,2 (d) 2,3, 1,4 16. Provision for discount on debtors shall be made on (a) Book debts before incurring bad debt and before providing for bad debt (b) Book debts after incurring bad debt and after providing for bad debt (c) Book debts before incurring bad debt but after providing for bad debt (d) Book debts after incurring .bad debt but before providing for doubtful debt 17. 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 (c) Rs. 1,34,000 (d) Rs.3,50,000 18. Closing stock appearing in trial balance will be taken to (a) trading account only (b) balance sheet only (c) trading account and balance sheet (d) profit & loss account only 19. In a trial balance, debtors appear at Rs. 45,000. Provision for doubtful debts at 5% to be made after considering the following adjustments : 1. An amount of Rs. 1,000 is included in debtor who is bankrupt and his estate is expected to realize 50 (fifty) paise in the rupee 2. Debtors include an amount of Rs. 2,000 for goods supplied to proprietor. 3. Bills receivable include a dishonored bill for Rs. 1,000. 4. Goods sold in 'Sale or Return' basis not approved by the customer for &. 5,000 recorded as sale. 5. Debtors include an amount of Rs. 500 from a customer whose financial position is doubtful. The total provision to be made for doubtful debts is (a) Rs. l,900 (b) Rs. 2,250 (c) Rs. 2,425 (d) none of the above 20. In the event of dissolution of a firm, the partners' personal assets are first applied for payment of (a) the personal liabilities (b) the firm's liabilities (c) both the personal and firm's liabilities (d) the preferential and tax liabilities 21. ' A' and 'B' are partners in a business sharing profits in the ratio of 5 : 3. They admit 'C' as a partner with 1/4 share in the profits which he acquires 3/4 from 'A' and 1/4 from 'B'. He pays Rs. 4,000 as his share of goodwill. 'A' and 'B' will be credited by
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 17

(a) Rs. 2,500 and Rs. 1,500 respectively (b) Rs. 2,000 each (c) Rs. 1,000 and Rs. 3,000 respectively (d) Rs. 3,000 and Rs. 1,000 respectively 22. ‘A' and ‘B', who are partners, share profits in the ratio of 7: 3. 'C' is admitted as a new partner. ' A' surrenders 1/7 of his share and 'B' surrenders 1/3 of his share in favor of ‘C'. The new profit sharing ratio will be (a) 6 : 2 : 2 (b) 4 : 1 : 1 (c) 3 : 2 : 2 (d) none of the above 23. ' A' and 'B' are two partners of a firm having capitals of Rs. 15000 and Rs. 5000 respectively, snaring profit and loss in the ratio of 2 : 1. On dissolution of the firm the assets realised is : 1st installment Rs. 3000 ; 2ndinstalment Rs.5000 Under Proportionate Capital Method, the loss to 'B' will be (a) Rs.1000 (b) Rs.2100 (c) Rs.3000 (d) Rs.4000 24. A, B, C, D are partners sharing profit and losses in the ratio 3 : 3 : 2 : 1. The partnership is dissolved and D becomes insolvent. C brings only his share of loss and shows inability to contribute any thing towards D's deficiency. According to Garner Vs Murray ruling. D's deficiency in the total will be shared by (a) A and B in their capital ratio (b) A, B and C in their profit sharing ratio (c) A, B and C in their capital ratio (d) A, B and C equally 25. According to Companies Act, "reserve capital" is created (a) for a specific purpose at any time during its working life (b) for issue to the existing shareholder as rights issue of shares (c) as the uncalled portion of share capital of a limited company to be called only in the event of winding up (d) for conversion of FCDS into equity shares 26. If a company adopts Table' A', the compare is required to pay interest on calls in advance at the rate of (a) 8% (b) 7% (c) 6% (d) 5% 27. Match List I with List II and select the correct answer : List I List II (Items of balance sheet (Heading of balance sheet) of a company) A. Profit prior to Incorporation 1. Provisions B. Proposed dividend 2. Miscellaneous expenditure C. Interest paid out of Capital 3. Current liabilities D. Unclaimed dividend 4. Reserves and Surplus ABCDABCD (a) 4 1 3 2 (b) 4 1 2 3 (c) 1 4 2 3 (d) 1 4 3 2 28. Amount set apart to meet probable losses on account of bad debts is a (a) liability (b) reserve (c) provision (d) contingent liability 29. Which one of the following is NOT a current Liability ? (a) Acceptances (b) Local installment payable in the current year (c) Temporary bank overdraft
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 18

(d) Arrears of preference dividend 30. Consider the following statements : Redeemable preference shares can be redeemed out of 1. sale proceeds of the new issue of shares. 2. Sale proceeds of the new issue of debentures. 3. profits available for dividends. 4. Sales proceeds of the assets of the company. Of these statements : (a) 1 and 3 are correct (b) 1 alone is correct (c) 2, 3 and 4 are correct (d) 1, 2, 3 and 4 are correct 31. Match List I with List II and select the correct answer: List I List II A. Balance of Debenture 1. Realisation account Redemption Fund B. Balance of Sinking Fund account 2. Funds-Flow statement for the replacement of an asset C. On dissolution of a firm, the 3. General Reserve provisions made for doubtful debts appearing in Balance sheet D. Financial consequences of 4. Asset account business operations ABCDABCD (a) 1 2 3 4 (b) 3 4 1 2 (c) 1 2 4 3 (d) 3 4 2 1 32. A company .issue 10,000 shares of Rs. 10 each at a discount of 10% payable as follows : On application Rs. 2.50 On allotment Rs. 3.00 On first & final call Rs. 3.5 A holder of 100 shares did not pay the final call and his shares were forfeited. Share Capital a/c will be debited by (a) Rs.650 (b) Rs.850 (c) Rs, 1000 (d) Rs.900 33. Whenever debentures are cancelled, any profit on cancellation is transferred to (a) profit and loss account (b) sinking fund account (c) capital redemption reserve account (d) capital reserve account 34. Given that :- Closing Stock Rs. 30,000 Opening Stock Rs, 20,000 Sales Rs. 1,00,000 Administrative and selling expenses Rs. 20,000 Purchases Rs. 70,000 the operating ratio is (a) 50% (b) 65% (c) 75% (d) 80% 35. Match List I with List II and select the correct answer : List I List II A. EAIT No. of equity shares 1. Liquidity outstanding B. Debt / equity 2. Solvency C. FA+ long term funds 3. Capital structure D. CA + CL 4. Overall performance ABCDABCD (a) 4 3 2 1 (b) 4 3 1 2 (c) 2 3 1 4 (d) 2 3 4 1 36. If the Stock turnover ratio is 4 times and the collection period is 30.days, the operating cycle would be (a) 30 days (b) 60 days (c) 90 days (d) 120 days
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 19

37. Given: Fixed assets Rs. 10,00,000 Current assets Rs. 6,00,000 Total net profit Rs. 2,60,000 Current liabilities Rs.3,00,000 Which one of the following will be the correct ROI ? (a) 26% (b) 25% (c) 20% (d) 16.5% 38. Consider the following income statement : Which one of the following will be the correct 'Fund from operation ? (a) Rs.73,000 (b) Rs.75,000 (c) Rs.83,000 (d) Rs.92,000 39. Minimum Alternative Tax (MAT) is applicable to the (a) joint stock company (b) co-operative society (c) partnership firm (d) sole proprietor concern 40. Non-registration of a partnership does NOT affect (a) the right of a partner to sue the firm (b) the right of the firm to sue, third parties (c) the right of a third party to proceed against the firm or its partners (d) any of the above 41. If a minor chooses to continue as a partner on attaining the age of majority, he \\ill be liable to the debts of the firm from the date of his (a) attaining majority (b) admission to profits of the firm (c) choosing to become a partner at a subsequent date (d) guardian giving the options 42. The liability of the Karla in a joint Hindu family is (a) limited to his interest in the joint family (b) unlimited (c) limited to the entire property of the family (d) limited to the private properties of all the members 43. Which one of the following is NOT an advantage of the incorporation of company ? (a) Perpetual succession (b) Limited liability of Members (c) Capital contributions fofll1ing part of the joint stock of the company (d) Freedom to do any business 44. Match List I with List II and select the correct answer: List I List II (Organisation) (Associated with) A. Joint stock company 1. Memorandum of Association (M/A) B. Co-operative society 2. Special Act C. Statutory corporation 3. Mutual contract D. Partnership 4. Bye-laws 5. Shareholding ABCDABCD (a) 1 4 3 2 (b) 5 2 4 3 (c) 1 4 2 3 (d) 5 2 3 4
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 20

45. Economic oligarchy, fraudulent practices, bureaucratic management and difficulty in formation are the limitations of a (a) sole proprietor concern (b) partnership firm (c) joint stock company (d) co-operative society 46. Which one of the following is NOT the distinctive feature of the co-operative form of business organisation ? (a) Service before self (b) Democratic management (c) Corporate status (d) One-share o1le-vote system 47. Consider the following statements regarding Indian industries : 1. Industrial modernization has not come up even in a modest way 2. A support system and a regulatory frame work has been developed so as to encourage and direct the industrial houses to modernize their plants. 3. Considerable advances have been made in the fields of managerial and technological skills in the country. 4. No effort has so far been made towards attaining the goal of self reliance in the manufacture of consumer items. Of these statements : (a) 1 and 2 are correct (b) 2 and 3 are correct (c) 3 and 4 are correct (d) 1 and 4 are correct 48. Which one of the following does NOT constitute the purpose of setting up SEBI ? (a) To protect the interest of the investors in securities (b) To promote the development of the securities' market (c) To regulate the global securities' markets (d) To deal with matters connected with fraudulent and unfair trade practices relating to securities' markets 49. Financial disintem1ediation results in larger (a) access to financial institutions (b) participation of foreign financial institutions (c) fee-based income (d) securities-related income 50. Which one of the following BEST supports the theory that Stock Exchange is a secondary market ? In a Stock Exchange (a) securities are bought and sold by way of transfer (b) an existing holder of securities can dispose of the holdings it another invest of who intends to buy them (c) no new investment is created (d) securities are dealt ill for dual purposes -investment and speculation 51. Match List 1 with List II and select the correct answer : List I List II (Type of mutual fund) (Features) A. Open-ended fund 1. Maximizes short term return to investors B. Income fund 2. Can sell unlimited number of units C. Close-ended fund 3. The units are not redeemable at their N A V D. Growth fund 4. Maximizes long term return to investors
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 21

ABCDABCD (a) 3 4 2 1 (b) 3 4 1 2 (c) 2 1 4 3 (d) 2 1 3 4 52. Match List I with List II and select the correct answer : List I List II A. Screen trading 1. Capital market reforms B. G. V. Ramakrishna 2. industrial sickness Committee Report C. B I F R 3. Disinvestment of PSU shares D. SEBI 4. Stock Exchange. ABCDABCD (a) 3 4 1 2 (b) 4 3 2 1 (c) 4 3 1 2 (d) 3 4 2 1 53. Combination of Printing and Dyeing Companies is a type of (a) vertical combination (b) horizontal combination (c) circular combination (d) allied combination 54. In addition to Consumer Forums which one of the following looks after the interests of consumers ? (a) High courts (b) Company Law Board (c) M R T P (d) Bureau of Industrial Costs and Prices 55. LIBOR refers to (a) Liberalized system of foreign exchange transfer between Banks (b) inter-bank lending rate for Eurodollars at London (c) lowest rate of interest at which banks in London lend Pound Sterling (d) lowest raleofiI1terest prescribed by the Reserve Bank of India 56. Members of the WTO/GA TT have NOT agreed even in principle on which one of the following issues ? (a) Observance of minimum labour standards (b) Protection of intellectual property rights (c) Dispute settlement mechanism (d) Export subsidies to agricultural produce 57. Match List I with List II and select the correct answer: : List I List II (some usages in trade & marine insurance) (Practical implication or name) A. Ex-workers contract 1. C.I.F. B. Freight paid by Importer 2. Method of settlement of disputes C. FORCE MAJEURE 3. Minimum obligation for the exporter D. Arbitration 4. Condition to be included in the contract if natural calamities are to be covered 5. F O B contract ABCDABCD (a) 3 5 2 1 (b) 1 2 3 4 (c) 1 2 4 3 (d) 3 5 4 2 58. Which one of the following is NOT a commercial risk ? (a) Insolvency of the buyer (b) New restrictions placed on import-export trade (c) Damage to goods in transit (d) Change in the exchange rate 59. The average clause in a fire policy states that the insured change it back , (a) only that portion of the actual loss suffered as the sum insured bears to total value
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 22

(b) the entire account of the total loss suffered (c) the entire amount of partial loss suffered (d) a fixed percentage of loss suffered 60. Consider the following statements : The social responsibility of business is to 1. do a business as per the public policy 2. obey all the rules and regulations of the Government. 3. make payment of the taxes imposed by the Government. 4. provide no necessarily adequate but good quality of goods. Of These statements (a) 2 and 3 are correct (b) 1 and 4 are correct (c) 1,2 and 3 are correct (d) 1,2,3 and 4 are correct 61. Which of the following pairs are correctly matched ? 1. Henry Fayol Administration Industrial at General. 2. F. W. Taylor The functions, of the Executive. 3. Douglas McGregor The Human Side of Enterprise. 4. Peter Drucker Management Tasks, Responsibilities and Practices (a) 1,2,3 and 4 (b) 3 and 4 (c) 2 and 4 (d) l and 3 62. According to the Peter Principle, managers tend to (a) work late as they go higher up the hierarchy (b) work even beyond their retirement age (c) get promoted to the level of their incompetence (d) lose their competence with successive promotions 63. Which of the following constitute man power planning ? 1. Determining human resource requirements both quantitatively and qualitatively. 2. Finding the sources of talented individuals. 3. Planning for the human resource needs of an organisation 4. Reaching out to the right source for procuring the right people. (a) 1, 2 and 4 (b) 2 and 3 (c) 1 and 3 (d) 1, 2, 3 and 4 64. Which one of the following may NOT necessarily be advantage of co-ordination ? (a) Effective supervision (b) Unity of distribution (c) Creative force (d) Summarization of all management functions 65. Understanding control does NOT signify understanding (a) how one controls (b) what is meant by control. (c) who controls (d) what is controlled 66. Consider the following statements : Strategic management process comprises . 1. goal setting, strategy formulation, administration and strategic control 2. setting courses of action attaining objective, process of seeking key areas and strategy formulation. 3. integrating the organisation with culture. 4. strategic planning and acting on these plans. Of these statements
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 23

(a) 1, 2 and 3 are correct (b) 2, 3 and 4 are correct (b) 1, 2 and 4 are correct (d) 1, 3 and 4 are correct 67. Match List I with List II and select the correct answer : List I List II A. Line authority 1. Some people in an organisation are vested with primary source of authority . B. Staff authority 2. Some people in an organisation have legitimate right to exert influence on others C. Functional 3. Some people in an organisation authority lack independent formal authority. D. Forma authority 4. Some people right to control activities of other departments as they relate to specific staff. ABCDABCD (a) 1 2 3 4 (b) 2 4 3 1 (c) 1 3 4 2 (d) 2 3 4 1 68.Consider the given structure of an Organisation : Which one of the following is represented by the same ? (a) Druckers' effective structure (b) Spane of festive control (c) Functional form of organisation (d) General Manager's view of the organisation 69. According to Graicuna's theory total number of relations among superior and subordinates can found by the formula 70. Match List I with List II and select the correct answer : List I List II A. Span of control 1. Tile superior helps, through continuous guidance the subordinate to reach his goals B. M. B. O. 2. Numerical limit of subordinates to be supervised by an executive C. M. B. E. 3. Subordinate remains accountable to his superior and the superior has authority to demand accountability from his subordinate. D. Delegation 4. The management will concern itself and of confirms its activities of authority to those areas and operations where the actual performance is short of the target. ABCDABCD (a) 1 2 3 4 (b) 1 2 4 3 (c) 2 1 3 4 (d) 2 1 4 3 71. Consider the following statements : 1. MBO is a control technique in which managers devote time only on the areas of deviation. 2. MBO integrates the individual with the organization and the organization with the environment. 3. In MBO the control over people is shifted to control over operations 4. The MHO principle must be accompanied in practice by the principle of critical-point control Of these statements: (a) 1 and 2 are correct (b) 2 and 3 are correct (c) 3 and 4 are correct (d) 1 and 4 are correct 72. Match List I with List II and select the correct answer : List I (Name) List II (Model) A. Kurt Levin 1. Action Research process model
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 24

B. H.J. Leavitt 2. Sequential process model C. Larry Greener 3. System model D. Floyd C. Mann 4. Three-step model ABCDABCD (a) 1 2 3 4 (b) 1 4 3 2 (c) 3 2 1 4 (d) 4 3 2 1 73. In the process of controlling office management, certain steps are normally taken. These include 1. Analyzing the actual performance. 2. Finding out the reasons for discrepancies. 3. Evaluating the performance. 4. Establishing the standards of work performance. The correct sequence in which these steps are usually taken is (a) 4, 1, 2, 3 (b) 1, 4, 2, 3 (c) 1, 4, 3, 2 (d) 4, 1, 3, 2

74. Steps to be taken in a selling system include : 1. Receipt of order. 2. Processing order 3. Shipment of merchandise. 4. Accounting for sale. The correct chronological sequence of these steps is (a) 1, 4, 3, 2 (b) 1, 4, 2, 2, 3 (c) 1, 2, 4, 3 (d) 1, 2, 3, 4 75. Which of the following advantages accrue from vertical filing ? 1. The system has universal application, as all types of papers and documents can be filed. 2 It products ample scope for the expansion of the filing facility 3. It is comparatively a cheap method. 4. The papers are kept in a chronological order (a) 1 and 3 (b) 1 and 2 (c) 2, 3 and 4 (d) 1, 2, 3 and 4 76. Organisation and Methods aim at simplification of office procedures through (a) elimination of all unnecessary work, minimizes the number of forms and direct communication (b) elaboration of specific work processes for better implementation (c) discarding all the records and treating each work on merit (d) allowing existing procedures to continue without adding an new procedures or amendments 77. The latest generation of personal computer (PCs) being used in an office set-up is (a) PC XT (b) PC Pentium (c) PC A T (d) PC 486 78. Which of the following advantages could be derived from the use of Franking machine? 1. It saves time because of its speed. 2. Valuable facts and figures can be obtained. 3. It is very convenient to use. 4. It ensures greater accuracy. (a) 1 and 4 (b) 1 and 3 (c) 1 and 2 (d) 2 and 3 79. According to the latest guidelines a company cannot issue (a) both equity and preference shares simultaneously (b) non convertible debentures
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 25

(c) irredeemable preference shares (d) partially convertible debentures 80. To enable a company to pay dividends a special authority is (a) not needed either in the Memorandum or in the Articles (b) needed either in the Memorandum or in the Articles (c) needed only in tile Memorandum (d) needed only in the Articles 81. A company can invest money in another company only if it is so authorized by its (a) Memorandum of Association (b) Articles of Association (c) Auditors (d) Company Secretarial 82. Which one of the following is NOT a feature of a Private Company as per Indian Companies Act? (a) Limitation on the number of its members (b) Restriction on the right to transfer its shares (c) Ban on floating of debentures (d) Prohibition of any invitation to tile public 83. According to the Companies Act. which one of tile following companies can commence allotment of shares even before the minimum subscription is subscribed or paid ? (a) Chartered Company (b) Private Company (c) Government Company (d) Public Limited Company 84.Which one of tile following types of Companies deals with only its shareholders for their benefit ? (a) Private Limited Companies (b) Chit Fund Company (c) Nidhi Company (d) Banking Company 85. Which one of the following is known as Registered Capita of the Company ? (a) Paid up capital (b) Authorized capital (c) Uncalled capital (d) Reserve capital 86. Those companies which can register themselves without the word "limited" under license granted by Central Government are (a) Private Companies (b) Charitable Companies (c) Public Companies (d) None of the above 87. Which one of the following reports is to be placed before the Parliament by a Government company? (a) Director's Report (b) Annual Report (c) Income Report (d) Statutory Report 88. Share premium received by issuing shares call be used for (a) payment of dividend (b) issue of bonus shares
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 26

(c) remuneration to management (d) any business purpose 89. Which one of the following is a joint stock company as per Companies Act, 1956 ? (a) A charitable trust (b) A partnership firm with fixed capital (c) A society with fixed reserve fund (d) None of the above 90. Which one of the following documents is known as Doctrine of constructive notice ? (a) The prospectus of the company (b) The certificate of commencement of business (c) The Memorandum and the Article of Association (d) List of working directors 91. Match List I with List II and select the correct answer : List I List II A. Compensating 1. Not recording a business transaction errors B. Errors of omission 2. Charging a Revenue item to capital C. Errors of principle 3. Writing a debit item on the credit side and a credit item on the debit side of equal amount D. Errors of 4. Posting a correct amount to a wrong Account commission ABCDABCD (a) 3 1 4 2 (b) 2 1 4 3 (c) 3 1 2 4 (d) 2 1 3 4 92. Audit report along with accounts is given by (a) Statutory Auditor (b) Internal Auditor (c) Government Auditor (d) Secretariat Auditor 93. Consider the following statements : Management audit may 1. cover performance audit. 2. protect the interest of the share holders 3.cover proprietor audit 4. refer to audit of work done by the management accountant. Of these statements (a) 1 and 2 arc correct (b) 3 and 4 arc correct (c) 1 and 3 are correct (d) 2 and 4 are correct 94. Management audit is ordered by the (a) Workers of a company (b) Government (c) Board of Directors (d) Securities Exchange Board of India 95. When an auditor detects material weaknesses in 1he internal checks and control system of the company under audit, he should report his findings as per (a) ICAI orders (b) SEBI orders (c) MAOC AR orders (d) ICW AI orders 96. Which of1he following statements are true ? 1. Dividend can be paid out of capital profits if only Articles of Association of the company permits. 2. Goodwill taken over may be written off out of profit prior to Incorporation
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 27

3. Dividend can be paid out of current profits in spite of un-provided depreciation for past years. 4. Capital redemption reserve can be used for issuing fully paid bonus shares to the shareholders according to Company's Act. (a) l and 2 (b) 1, 2 and 3 (c) 2 and 4 (d) 3 and 4 97. The remuneration of an auditor of a partnership firm is fixed by (a) the Partnership Act (b) The Companies Act (c) the Government (d) none of the above 98. If the shareholders fail to appoint or reappoint auditors of limited company in au Annual General Meeting. the vacancy will be filled by the (a) Securities Exchange Board of India (b) Comptroller and Auditor General of India (c) Central Government (d) Registrar of companies 99. Match list I List II and select the correct answer : List I List II (Appointment of auditor) (Appointing authority) A. First auditor of a non-Govt. 1. Shareholder of the company limited company B. Reappointment of a retiring 2. Board of directors limited of the company auditor of non-Govt limited C. Auditor of a Government 3. Central Government on the advice of Company Comptroller the and Auditor General of India D. Auditor of a non-Govt. 4. Central Government limited company, when shareholders fail to reappoint or reappoint an auditor ABCDABCD (a) 1 2 4 3 (b) 2 1 3 4 (c) 1 2 3 4 (d) 2 1 4 3 100. In so far as a company is concerned, which one of the following pairs is NOT correctly matched ? (a) Internal audit Obligatory (b) Statutory audit Mandatory (c) Continuous audit Optional (d) Management audit Voluntary 101. A file which contains rules governing the organisation Under audit is known as (a) current file (b) permanent file (c) routine file (d) precedence file 102. Where the auditor places a high degree of reliance on an internal control procedure. the acceptable risk of over reliance would be (a) low (b) high (c) moderate (d) nil 103. Under the Companies Act. which one of the following powers can be exercised by the Board of Directors ? (a) Power to sell any of the company's undertakings (b) Power to make call (b) Power to borrow money in excess of the paid up capital (d) Power to reappoint an auditor 104.The statutory meeting of the company must be held within six months
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 28

(a) from filing of statement in lieu of prospectus (b) of obtaining the certificate of commencement of business (c) of obtaining the certificate of incorporation (d) from the date when the first Board of Directors meeting was held 105. A public limited company can offer pre-emptive rights only to the (a) directors of the company (b) existing equity shareholders (c) debenture holders (d) short-term creditors of the company 106. Under the law, the inspector who does the inspection of the company's accounts has to submit his report to the (a) company's Board of Directors (b) Secretary to the company (c) Central Government (d) shareholders of the company 107. Account books for how many preceding years should be preserved in good condition ? (a) 5 (b) 8 (c) 10 (d) 13 108. A qualified company Secretary is needed to be appointed as Secretary to a company only on the basis of the (a) business of the company (b) paid up capital of the company (c) location of the company (d) listing of the company on any stock exchange 109. Match List I with List II and select the correct answer : List I List II A. Statutory functions of a Secretary 1. Non-statutory function B. Advice to the Managing Body 2. Executive function C. Filing tax returns 3. Functions imposed by law D. Image of organisation 4. Public Relations Officer ABCDABCD (a) 1 2 3 4 (b) 3 2 1 4 (c) 4 3 2 1 (d) 3 4 1 2 Directions:- The following 11 (eleven) items consist of two statements, one labeled as ' Assertion A' and the other labeled .as 'Reason R'. You are to examine these no statements carefully and decide if the Assertion A and the Reason R: are individually true and if so, whether the Reason is a correct explanation of the Assertion. Select your answers to these items using the codes given below and mark your answer sheet accordingly. (a) Both A and R are true and R is the correct explanation of A (b) Both A and R are 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 110. Assertion (A) : Amount realised on the disposal (sale) of discarded machine of the factory should be treated as revenue receipt. Reason (R): Sale proceeds are usually of revenue in nature. 111. Assertion (A) : Financial leverage is beneficial only when the rate of earning is higher than the cost of debt.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 29

Reason (R): Debt-equity ratio indicates the short- term financial soundness of a business concern. 112. Assertion (A) : Now-a-days, it is obligatory on the part of companies to disclose in their Annual Reports, work done for the benefit of the society . Reason (R): Annual Reports are used by members of the society in one capacity or another. 113. Assertion (A) : Co-ordination implies the avoidance , of all splintering efforts. Reason (R): One of the four benefits of co-ordination is unity of direction. 114. Assertion (A) : Break-even chart merely depicts the relationship between sales and expenses in such a way as to show at what volume revenues exactly cover expenses. Reason (R): The break-even chart shows that at any lesser volume of sale, the company would suffer a loss. and at a greater volume of sale it would enjoy a profit. 115. Assertion (A) : Programmed decisions are under conditions of certainty. Reason (R): Conditions of certainty provide . reliable information about consequences of alternatives 116. Assertion (A) : Management by Exception is not a control technique Reason (R): The principles of Management by Exception has first propounded by F. W. Taylor 117. Assertion (A) : Audit is conducted to find out the financial position of a concern. Reason (R): The objects of audit are the detection and prevention of errors and fraud 118. Assertion (A) : Internal audit must be carried out by a qualified Chartered Accountant. Reason (R): It is a management tool. 119. Assertion (A) : If the directors of a company commit any irregular act but within the provisions of the Companies Act or Memorandum of Articles, such acts will be binding on the company. But, in turn, the company may claim damages from the directors for such acts. Reason (R) : The directors have to conduct the , affairs of the business in a manner which is not detrimental to the interests of the company. 120. Assertion (A) : An accounting principle is that the relatively small item and values should be ignored from accounts Reason (R) : The cost of the efforts in the allocation of small. items over a long period does not justify the t benefit deprived from this operation and the cost of such items is treated as expense for the period in which they are acquired.

Commerce 99 Time Allowed : Two Hours Maximum Marks : 300 1. what is the correct sequence of the following functions of a Manager in an organization? 1. Motivating 2. Controlling 3. Organizing 4. Planning (a) 4, 3, 2, 1 (b) 4, 3, 1, 2 (c) 3, 4, 2, 1 (d) 3, 4, 1, 2 2. According to Need Hierarchy Theory of Maslow, human needs arise arise in which one of the following orders ? (a) Physiological needs -- Social need -Safety needs - Ego needs -Self-actualization needs
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 30

(b) Physiological needs -- Social needs- Ego needs - Safety needs -Self-actualization needs (c) Physiological needs --Safety. needs -Social needs - Ego needs -Self-actualization needs (d) Physiological needs--Safety needs -- Ego needs Social needs -Self-actualization needs 3. Scalar principle of organization implies that (a) all subordinates have only one. supervisor (b) line of authority is defined clearly (c) manager can directly supervise only a limited number of persons (d) The subordinates need not necessarily have a supervisor 4. consider the following statements 1. Planning is looking ahead. 2. Controlling is looking back 3. Delegation multiplies leadership. 4. Life insurance is a contract of indemnity. (a) 1, 2 and 4 are correct (b) 1, 2 and 3 are correct (c) 1, 3 and 4 are correct (d) 2, 3 and 4 are Correct 5. To indicate the functions of management, the catchword POSDCORB was coined by (a) Luther Gulik (b) Henry Fayol (c) Ernest Dale (d) None of the above 6. Job analysis involves 1. Developing training skills, knowledge and personal traits of the worker necessary for a specific job. 2. Identifying machines, tools and equipment to be used for the job. 3. Identification of the task to be performed by an individual. 4. Determination of the materials, products or services needed. The correct sequence of these steps while conducting job analysis is: (a) 3, 2, 4, 1 (b) 3, 2, 1, 4 (c) 2, 3, 4, 1 (d) 2, 3, 1, 4 7. Consider the following statements: 1. Authority flows downward but responsibility flows upward. 2. Authority should be equal to responsibility. 3.both authority and responsibility are divisible. 4. If delegation is the end then decentralization should be the means. (a) 1 and 2 are correct (b) 3 and 4 are correct (c) 1, 2 and 3 are correct (d) 2, 3 and 4 are correct 8. Following are the steps in the process of Delegation of Authority: 1. Assignment of task. 2. Creation of responsibility. 3. Granting authority. 4. Fixing accountability. The correct sequence of these steps is: (a) 1, 3, 2, 4 (b) 1, 4, 3, 2 (c) 1, 3, 4, 2 (d) 1, 2, 3, 4 9. Consider the following Organization Chart: Which one of the following is indicated by this chart ? (a) Wide span (b) Multiple levels of supervision (c) Narrow span (d) Decentralization
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 31

10. Match List I (Wage incentive plans) with List II (Name o contributors} and select the correct answer: List I List II A. Premium Plan 1. Gantt B. Efficiency Bonus Plan 2. Emerson C. Points Premium Plan 3. Beaux D. Task and Bonus Plan 4. Taylor 5. Halsey ABCDABCD (a) 5 3 2 1 (b) 1 2 3 4 (c) 2 3 4 1 (d) 5 2 3 1 11. Match List I (Management terms) with List II (Factors related to these terms) and select the correct answer : List I List II A. Resisting forces of change 1. Organization B. O. D. 2. New policy C. Driving. forces of change 3. Fear D. Conflict 4. Interpersonal relationships ABCDABCD (a) 3 1 2 4 (b) 1 2 3 4 (c) 1 3 2 4 (d) 3 4 2 1 12. Which one of the following routines best describes the chronology of steps taken in the selling process? (a) Receipt of order, invoicing, processing order, and shipment of goods (b) invoicing, processing order, shipment of goods, accounting for sale (c) Receipt of order, processing order, accounting for sale, shipment of goods (d) Processing order, invoicing, shipment of goods, accounting for sale. 13. Is Card indexing an improvement over the simple indexing system? (a) Yes, because the cards can be arranged in a particular order and the order can't be changed at will (b) No, because the cards wanted for reference can't be taken out without holding up the work of recording information as other cards are left behind (c) Yes, because it facilitates location of any name or subject with the minimum of searching, as the cards are arranged in alphabetical order (d) No, because the system has a limited capacity for expansion, as the number of drawers can't be increased or desired 14. The altered Memorandum of Association must be filed with the Registrar within (a) 6 months of the Company Law Board's order (b) 5 months of the Company Law Board's order (c) 3 months of the Company Law Board's order (d) 2 months of the Company Law Board's order 15. Whenever a company wants to alter its Memorandum for changing the place of registered office from one State to another, it has to pass. (a) ordinary resolution (b) special resolution (c) resolution requiring special notice (d) unanimous resolution 16. The document required to be filed with the Registrar of Companies at the time of incorporation of a company includes
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 32

(a) An agreement, if any, which the company proposes to enter into with any individual for appointment as manager or managing director (b) the Prospectus (c) an application for name availability (d) a statement of minimum subscription 17. A public company can be called as a body corporate alters it (a) Receives certificate of commencement of business (b) issues prospectus (c) receives certificate of incorporation (d) Receives approval from the Registrar for the proposed name of the company 18. Consider the following statements : 1. A Private Limited Co. must have at least 3 (three) directors and a Public Ltd. Co. at least (seven) Directors. 2. Liability of shareholder of a Public Ltd. Co. is limited to the extent of the total authorized Capital and liability of the company. 3. Transfer of shares is restricted in case of Private Ltd. Co. 4. A Private Ltd. Co. before commencement of business must issue statement in lieu of Prospectus. (a) 2 alone is correct (b) 2, 3 and 4 are correct (c) 3 alone is correct (d) 1,2 and 4 are correct 19. Under: Section 68A of the Companies Act 1956, any person who induces a company to allot shares or register transfer of shares in a fictitious name shall be punishable with (a) A fine of Rs. 500 (b) a fine of Rs. 5,000 (c) imprisonment up to 5 years (d) a fine of Rs. 500 and imprisonment up to 5 years 20. Which one of the following is an 'Ordinary Business' for the purpose of an Annual General meeting? (a) Change in the Articles of Association of the company (b) Issue of debentures (c) Change in the 'objects clause' of the Memorandum of Association (d) None of the above 21. When an act is performed or a transaction is carried out, which, though legal n itself, is not authorized by the object clause in the Memorandum or by Statute, It is said to be (a) Ultra vireos the powers of the company (b) intro vireos the powers of the company (c) ultra vireos the powers of the Board (d) ultra vireos the implied authority 22. An exception to the application of Doctrine of Indoor Management is made when (a) a person represents the company with or without actual authority to do so (b) outsiders have knowledge of irregularity of the conduct (c) the sum of the company is not affixed on the documents Issued to outsider’s (d) the directors of the company have delegated authority for the internal management to the Managing Director 23. A special notice is required for a resolution when (a) A director is to be removed before the expiry of his period of office (b) A statutory report has to be adopted (c) there is alteration of share capital (d) A Company wants to convene a meeting of creditors 24. A director should obtain his qualification shares within
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 33

(a) one month of his appointment (b) two months of his appointment (c) three months of his appointment (d) six months of his appointment 25. Which one of the following powers CANNOT be delegated to any person by the Board of Directors ? (a) Investment of funds of the company (b) Issue of debentures (c) Borrowing money otherwise than on debentures (d) making loans 26. The Board of Directors CANNOT appoint (a) additional directors (b) alternate directors (c) directors in casual vacancy (d) directors under Section 408 of Companies Act, 1956 27. Special audit of accounts of a company is directed by (a) Shareholders of the company (b) Comptroller and Auditor General of India (c) Company Law Board, (d) Central Government 28. Section 224 of the Companies Act 1956, deals with (a) special audit, (b) secretarial audit (c) cost audit (d) appointment and remuneration of auditors 29. Part II, schedule VI of the Companies Act; 1956 prescribes (a) Vertical form, of balance sheet (b) requirements as to profit and loss account (c) horizontal form of Balance sheet (d) contents of prospectus 30. Match List l (items) with List II (Section of Companies Act, 1956) and select the correct answer: List I List II A. Appointment of Auditors 1. Sec., 226 (1) by Central Govt. B. Qualification of Auditors 2. Sec. 224 (5) C. Appointment of Auditors 3. Sec. 224 (8) by Board of Directors D. Remuneration of Auditors 4. Sec. 224 (3) ABCDABCD (a) 4 1 3 2 (b) 1 4 2 3 (c) 4 1 2 3 (d) 1 4 3 2 31. A Secretary's duties under the Companies Act are (a) purely ministerial (b) either ministerial or administrative (c) Managerial (d) supervisory 32. The Secretary of a company is generally appointed by (a) Registrar of Companies (b) Central Government (c) Board of Directors (d) Board of Directors with the consent of the Institute of Company Secretaries of India
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 34

33. A person can act as Secretary for NOT more than (a) 2 companies (b) 3 companies (c) 5 companies (d) None of the above Directions : The following 10 (ten) items consist of two statements, one labeled as 'Assertion A' and the other labeled as 'Reason R'. You are to examine these two statements carefully and decide if the Assertion A and the Reason R are individually true and if so, whether the Reason is a correct explanation of the Assertion. Select your answers to these items using the codes given below and mark your answer sheet accordingly, (a) Both A and R are true and R is the correct explanation of A (b) Both A and R are true but R is NOT the correct explanation or A (c) A is true but R is false (d) A is false but R is true 34. Assertion (A) : A common projectionist argument has been that nurse the baby, protect the child, guide the boy and free the adult. Reason (R) : Protection given in most cases creates vested interests, which are averse for the removal of the protection. 35. Assertion (A) : The matching concept requires that costs be recognized as expenses in the period in which revenue is realised Reason (R) : There may not be a match between expenditure and expense over a short period. 36. Assertion (A) : According to Inter-national Accounting Standards Committee, fixed production expenses should be included in inventory valuation on the basis of normal capacity. According to the Institute of Chartered Accountants of India, it is for the management to decide the Question. Reason (R) : The Question to be decided is whether the fixed production expenses be excluded from inventory valuation and charged wholly to the revenue of that year or whether these expenses. Are includes on the basis of normal level of production. The former method IS called marginal costing' and the latter 'absorption costing'. 37. Assertion (A) : The fixed assets in the balance sheet of a limited company are required to be shown at cost less depreciation. Reason (R) : The balance sheet and profit and loss accounts are to disclose a true and fair view. 38. Assertion (A) : Share premium amount can be re- funded in cash to equity shareholders. Reason (R) : Share premium is usually collected when the market price of shares is higher than the face value of the share. 39. Assertion (A) : Conventionally, a newly started comp-any should adopt. A low-geared capital structure where the share of equity capital and reserves is higher than the share of fixed interest-bearing securities. Reason (R) : During initial years, the profit is low and the company tries to strengthen its financial position. 40. Assertion (A) : A new firm can be profitable and yet not be able to pay its debts as they become due. Reason (R) : new firms often have problem of having increased investments in inventory and fixed assets at an amount which exceeds cash generated from operations. 41. Assertion (A) : A company is accountable to the society since it makes use of community owned assets and other infrastructure facilities and concessions provided by the State from the tax payers' money. Reason (R) : The best way of social responsibility reporting is to prepare a Value Added Statement (VAS) which shows the income earned by shareholders. 42. Assertion (A) : Audit procedure and audit techniques are two different aspects of auditing but are complementary to each other.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 35

Reason (R) : Audit procedure is concerned with deter- mining the existence of documentary evidence and audit techniques are concerned with examination of those evidences. 43. Assertion (A) : The auditor of a partnership firm is appointed under a contract with firm but not under any statute Reason (R) : The firm can also appoint him to act as an accountant for preparation of accounts. 44. The author of the book Suma de Arithmetical is (a) H. A. Castle (b) Luca Paciolli (c) Adam Smith (d) Batliboi 45. When prices show a rising trend, which one of the following methods of inventory valuation will result in lower income and lower valuation .of inventory? (a) FIFO (b) LIFO (c) Simple average method (d) Weighted average method 46. Under which one of the following methods of depreciation is the amount of the asset never reduced to zero? (a) Straight line method (b) Diminishing balance method (c) Sum of years digit method (d) Annuity method 47. Consider the following statements : Secret reserves serve the purpose of 1. Enabling the directors to tide over unfavorable items. 2. Meeting exceptional losses. 3. Increasing the working capital. (a) 1 and 2 are correct (b) 2 and 3 are correct (c) 1 and 3 are correct 4 (d) 1,2and 3 are correct 48. A BC analysis is a (a) System of profit and loss appropriation (b) technique of financial planning (c) technique of inventory control (d) Technique of profit determination 49. A sum of Rs. 50,000 was spent by a factory in overhaul- 19 its existing plant and machinery and it enhanced its working by five years. The aforesaid expenditure is (a) capital expenditure (b) Partly capital and partly 'revenue expenditure (c) Revenue loss (d) deferred revenue expenditure 50. Match List I (Items of Expenditure and Receipt) with List II (Nature of Expenditure and Receipt) and select the correct answer: List I List II A .Replacement cost of 1. Revenue Expenditure an old asset B. Special repairing charges 2. Capital Receipt of an asset C. Huge advertisement 3. Deferred Revenue expenses Expenditure D. Sale value of an old 4. Capital Expenditure motor car ABCDABCD (a) 4 1 3 2 (b) 4 1 2 3 (c) 1 4 3 2 (d) 1 4 2 3 51. Which one of the following is NOT a capital expenditure? (a) Legal expenses incurred in raising a debenture loan (b) compensation paid to a dismissed employee (c) Brokerage paid to the broker at the time of purchase of land. (d) Expenses for pulling down an old structure
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 36

52. Outstanding wages is an item of (a) current asset (b) current liability (c) non-current asset (d) non-current liability 53. A and B are partners sharing profits and losses in the ratio of 3 : 1 they have agreed to admit C into the partnership firm, C is given 1/4th share of future profits which he acquires in the ratio of 2 : 1 from A and B. The new profit-sharing ratio would be : (a) 4 : 1 (b) 7 : 2 : 3 (c) 3: 1 : 7 (d) 7: 3 : 2 54. A, B, C were partners sharing profits in the proportion of 112, 113 and 116 respectively. On 31st March 1997 their capital stood as follows : A = Rs. 4,00,000 B = Rs. 3,00,000 C = Rs. 2, 50,000 A sum of Rs. 1,20,000, also appeared as reserve fund in their Balance sheet on this date. B retires on this date when the good: will of the firm was valued at Rs. 1,80,000 Profit and loss adjustment account prepared on that date with- out taking goodwill and reserve fund into consideration showed a net profit of Rs. 28,500 The net amount payable to B will be: (a) Rs. 3,82,500 (b) Rs. 4,09,500 (c) Rs. 3,63,800 (d) Rs. 4,04,000 55. X and Y are partners sharing profit in the ratio of 1 : 1. They admit Z for 115th share who contributed Rs. 25,000 for his share of goodwill. The total value of the goodwill of the firm will be (a) Rs. 25,000 (b) Rs. 50,000 (c) Rs. 1,00,000 (d) Rs. 1,25,000 56. 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 (c) entitled to interest on capital at the bank rate, only when there are profits (d) not entitled to any interest on their capitals 57. On the death of a partner; the amount of joint life policy showed be credited to the capital accounts of. (a) All partners including the deceased partner in their profit sharing ratio. (b) Remaining partners in the new. Profit-sharing ratio (c) remaining partners equally (d) All partners including the deceased partner in their Capitals ratio 58. In the absence of any contract to the contrary, capital profit arising on dissolution of a partnership firm is credited to the partners' capital account in (a) Equal proportion (b) capital ratio (c) Profit-sharing ratio (d) proportion to assets realized , 59. For piecemeal distribution of cash for return of capital among the partners on dissolution, the method adopted should ensure that the amount finally left unpaid i.e. the loss to be borne by the partners is in (a) Profit-sharing ratio (b) Proportion to closing capital at the time of dissolution (c) equal proportion (d) proportion to assets realised 60. According to the decision in Garner Vs Murray, in the absence of any agreement to the contrary, the deficiency of the insolvent partner must be borne by other solvent partners in (a) Profit-sharing ratio. (b) Capital ratio which stood after the dissolution of the firm (c) capital ratio which stood before the dissolution of firm (d) equal proportion
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 37

61. Writing off the expired cost of an intangible asset is called (a) amortization (b) capitalization (c) depletion (d) depreciation 62. 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 (c) 1:8 (d) 1:4 63. In the case of a particular depreciation method, the periodic depreciation is smaller than the asset's actual depreciation cost. The annual net incidence on profit and loss account remains constant due to incorporation of only fixed depreciation. The periodic depreciation 1s not recorded through the asset account. The depreciation method used in this case is : (a) Sinking fund method (b) Diminishing balance method (c) Annuity method (d) Sum-of-years digits method 64. 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 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 (c) Rs. 30 (d) Rs. 90 65. Right's shares are the shares that are offered to the (a) directors of the company (b) debenture holders (c) existing shareholders (d) creditors of the company 66. 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 (c) under the head 'Current assets' (d) under the head, 'Current liabilities' 67. Pro-rata allotment of shares means allotment of share (a) equally amongst .the applicants (b) at the discretion of the Directors (c) to all the applicants in proportion to the shares applied for (d) to only a few selected applicants 68. Profit prior to incorporation is an example of (a) revenue reserve (b) secret reserve (c) Capital reserve (d) general reserve 69. 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. (c) 12% p.a. (d) 10% p.a. 70. The ratios which measure the relative contribution of financing by owners and financing provided by outsiders are called (a) Liquidity ratios (b) leverage ratios (c) activity ratios (d) profitability ratios

71. Match List I with List II and select the correct answer: List I List II A. acid tests ratio 1. Liquidity ratio
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 38

B. Gearing ratio 2. Profitability ratio C. Working capital turnover 3. Leverage ratio ratio D.Return on capital employed4. Long-term solvency ratio 5. Activity ratio ABCDABCD (a) 1 3 5 2 (b) 2 5 1 3 (c) 1 5 4 2 (d) 5 3 4 1 72. Which of the following transaction (s) will 1tnprove 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 codes given below : (a) 1, 2 and 3 (b) 4 alone (c) 3 alone (d) 2 and 4 73. Credit sales of a company during the year are Rs. 1,20,000; Debtors, Rs. 20,000 and Bills receivable Rs. 10,000. The average collection period is (a) 3 months (b) 4 months (c) 5 months (d) 6 Months 74. Collection 0! sundry debtors would (a) increase current ratio (b) decrease current ratio (c) have no effect on current ratio (d) increase debtors' turnover 75. 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 good sold, sales price remaining constant (c) an increase in the proportionate volume of higher margin items (d) Increase in the sales return, cost of goods sold remaining the same 76. 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% (c) 35% (d) 42% 77. 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 (c) working capital + gross fixed assets (d) working capital + net fixed assets 78. While calculating the net present value under discounted cash flow method of return on investment analysis, the calculations 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 (c) 1, 2, 3, 4 (d) 3, 1, 4, 2 79. Patents and copyrights fall under the category of (a) current assets (b) liquid assets (c) Intangible assets (d) nominal assets
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 39

80. Match List I (Balance sheet items) with List II (Classification) and select the correct answer: List I List II A Discount on debenture 1. Current liability B. Forfeited shares account 2. Non-current asset C. Income taxes payable 3. Current asset D. Debtors' acceptance 4. Non-current liability ABCDABCD (a) 2 4 1 3 (b) 4 2 3 1 (c) 2 4 3 1 (d) 4 2 1 3 81. Ajoy Ltd. makes a profit of Rs. l,00,000, after providing for depreciation on assets amounting to Rs. 2.0,000 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) Rs. 1,20,000 (c) Rs. 1,25,000 (d) Rs. 1,35,000 82. Which one of the following statements is correct ? (a) A decrease in current liabilities causes an increase in the working capital (b) An increase in current liabilities causes a decrease in the working capital (c) A decrease in the current assets causes an increase in the working capital (d) An increase in the current assets causes a decrease in the working capital, 83. Match List I with List II and select the correct answer. List I List II A. Net loss from operations 1. Source of funds B. Changes in working 2. Drain on working capital C. Depreciation 3. Flow of Funds D. Issue of fully paid bonus shares 4. Neither source nor application of funds ABCDABCD (a) 3 2 1 4 (b) 2 3 4 1 (c) 2 3 1 4 (d) 3 2 4 1 84. Vouching may be termed as (a) Identification of the documentary evidence supporting the transaction (b) Verification of the document supporting the transaction (c) authentication of document supporting the transaction (d) Verification of the accuracy and authenticity of the transaction 85. Interim audit refers to an audit conducted (a) in two different accounting years (b) In-between two statutory annual audits within the same accounting period. (c) In-between one statutory audit and an internal audit in the same accounting period (d) In-between one statutory audit, one management audit and one internal audit 86. Audit Techniques are concerned with the (a) examination of those evidences which have. been traced by audit procedures (b) Application of generally accepted accounting principles to particular phases of a financial statement (c) accuracy and validity of management authorization to the account section employees (d) Method of conducting a business affair and reporting in annual report 87.What is the correct sequence of the following aspects in auditing? 1. Special audit 2. Internal audit 3. Internal check 4. Annual audit (a) 1., 3, 2, 4 (b) 3, 4, 1, 2 (c) 3, 2, 4, 1 (d) 1, 2, 3, 4 88. The main purpose of an independent audit is to
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 40

(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 89. Match List I (types of audit) with List II (purposes) and select the correct answer using the codes given below: List I List II A. Continuous 1. To ensure efficient conduct of the business and prevent wastage audit B. Periodical 2. Detailed examination of the books of accounts at regular intervals audit C. Interim 3. Audit taken up at the close of the financial period audit D. Internal 4. Audit conducted between the end of two financial periods audit ABCDABCD (a) 1 3 4 2 (b) 2 3 4 1 (c) 3 2 1 4 (d) 3 1 2 4 90. 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 is planning. Organizing. Actuating and controlling compared to norm of successful operation (d) auditor's assessment of the financial statement of the entity 91. An arrangement in which the accounting work of each individual is checked by other members is known as (a) Internal audit (b) external audit (c) internal check (d) test checking 92. The most important objective of internal audit is (a) early detection of errors and frauds (b) facilitating final audit (c) Early finalization of annual accounts (d) ensuring systematic accounting 93. Consider the following documents: 1. Audit Notebook 2. Audit Program 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 (c) 2, 1, 3, 4 (d) 1, 2, 4, 3 94. Test checking reduces the (a) Powers of an auditor (b) expenses of audit (c) Work of an auditor (d) liability of an auditor 95. Which one of the following clearly defines 'organization' as a function? (a) Management of business (b) Accomplishment of goals through means c) Centralized authority in the funds of an individual to achieve business goals (d) Process of assigning duties to individuals to achieve specific ends effectively
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 41

96. 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 dividend (b) Policy decisions are taken by the members in a General Meeting (c) Membership is open to all having a common interest (d) It is formed generally by the artisans and consumers of Limited means 97. Match List I (Forms of business organization) with List II (Distinctive characteristics) and select the correct answer: 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 copartners D. Co-operative organization 4. Limited company formed for promoting commerce, art, science etc. ABCDABCD (a) 3 2 1 4 (b) 1 3 2 4 (c) 3 2 4 1 (d) 1 3 4 2 98. 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 (c) 2 and 3 are correct (d) 3 and 4 are correct. 99. 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 subscriptions (a) 1 and 2 (b) 1, 2 and 3 (c) 3 and 4 (d) 1, 2, 3 and 4 100. 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 (c) first to predict the Great Depression (d) Architects of shop-floor trading 101. "Arbitrage" means. (a) A business arrangement by which a share broker tries to take advantage of difference 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 the other party is unable to meet its commitment (d) A compromise arrangement by which the transaction is postponed to the next settlement date 102. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 42

(c) facilitate barter deals between buyer and seller holding different securities (d) Enable Reserve Bank of India to trade in Government securities in their efforts to control money supply in the economy 103. Consider the following statements: 1. Foreign institutional investors have been allowed to in- vest 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 (c) 1, 2 and 3 are correct (d) 1, 3 and 4 are correct 104. Narasimha Committee has apart from other things, recommended (a) expanding priority sector financing (b) restricting priority sector financing (c) asking new foreign and private sector banks to follow the existing norms for priority sector financing (d) Total elimination of priority sector financing 105. Which one of the following sets is correct with regard to liberalization in financial sector? (a) Globalization, devaluation and privatization (b) Deregulation, moral suasion and branch expansion (c) Privatization, computerization and standardization (d) Globalization, deregulation and privatization 106. Prospectus issued by a company is to be vetted arid 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 (c) Disclosures are adequate to take an informed decision investors (d) project proposal is sound or satisfactory 107. Commercial papers represent a new financial instrument issued for the purpose of (a) Project financing (b) working capital (c) leasing of plant and equipment (d) import of capital goods 108. Match List I (landmark case) with List II (the legal point established by that case) and select the correct answer: List I List II A. Solomon Vs Solomon 1. The scope and limits of the Objects Clause B. Ewing Vs Butier 2. A Company should not be Cup Margarine registered with a name Co. Ltd. which resembles the name of an existing company C. Asbury Rail Carriage 3. Company is a distinct entity, different from its members & Iron Co. Vs Ritchie D. Royal British Bank 4. Limitation to the Doctrine of constructive notice Vs Turquand 5. Doctrine of Indoor Management ABCDABCD (a) 2 3 1 4 (b) 3 2 4 5 (c) 3 2 1 4 (d) 2 3 4 5 109. Which of the following pairs are correctly matched? 1. Cooperative movement : Nanavathi in India is breast-fed, Committee bottle-fed and spoon-fed
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 43

2. Tax on sole proprietor : Direct Taxes Enquiry Committee and partnership firms needs rationalization 3. Capital market in India : Narasimham Committee is tightly controlled by the Government (a) 1, 2 and 3 (b) 1 and 3 (c) 2 and 3 (d) 1 and 2 110. Does modernization of industrial enterprises call for mechanization? (a) Yes, because manual labors 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 mechanization will aggravate the unemployment situation in the country and will ultimately result in the collapse of the economy 111. A Red clause letter of credit authorizes the (a) banker to transfer the L/C to some other person (b) Banker to take recourse to the drawer in case of default (c) banker to fix the amount of credit (d) Negotiating banker to provide advance credit to the beneficiary for purchase of materials 112. Which of the following pairs are correctly matched? 1. Cash Compensatory Scheme : It is allowed in a selective basis for compensating the exporters for the elements of unrefined taxes and duties paid on the imports required for the manufacture of goods exported. 2. Inland container depots : confer all the facilities of dry ports and facilitate the movement of exports. 3. Duty Drawback Scheme : the exporters are allowed reimbursement of customs and central excise duties paid on raw materials components and packaging. Select the correct answer using the codes given below: (a) 1 and 3 (b) 1, 2 and 3 (c) 1 and 2 (d) 2 and 3 113. Which one of the following is NOT the primary cause of India's chronic balance of payments problem? (a) Value of imports not matched by value of exports (b) Deficits in merchandise trade (c) Membership of W.T.O. (d) POL imports 114. The following steps are normally taken in an import trade: 1. Indent and letter of credit 2. Ship's report 3. Delivery and customs formalities 4. Exchange and Bill of Exchange The correct sequence of these steps is: (a) 1, 4, 2, 3 (b) 4, 1, 2, 3 (c) 4, 1, 3, 2 (d) 1, 4,3, 2 115. Match List 1 with List II and select the correct answer : List I List II A. L U T 1. D G F T B. E P Z 2. Export promotion C. E p C G scheme 3. 100 % Exports D. Value Addition 4. 100% E O U ABCDABCD (a) 1 3 2 4 (b) 3 2 1 4
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 44

(c) 1 4 3 2 (d) 2 4 1 3 116. Globalization of financial services is being promoted by (a) World Trade Organization (b) International Finance Corporation (c) International Bank for Reconstruction and Development (d) International Monetary Fund 117. Which of the following pair’s is/are correctly matched: 1. Presence of insurance at the time of taking the interest in life policy and at the time of making the claim 2. Presence of insurable At the time of loss but may interest in a fire policy not be required at the time of taking the policy 3. Presence of insurable at the time of taking the policy interest in marine policy and also at the time of loss (a) 1 and 2 (b) 2 alone (c) 2 and 3 (d) 3 alone 118. Which one of the following generalizations can be drawn from the Principle of Subrogation? (a) It is the principle by which the insurer, after having paid the loss to the insured, step into the shoes of the insured person and acquires all rights and remedies as the insured would have enjoyed regarding the said loss (b) A person who keeps a stock of inflammable material in his premises must mention the fact while taking out a fire policy (c) The insured can get only the compensation against ac- tulles and he can't make profit out of insurance. (d) In marine insurance the immediate cause arid not the Remote cause shall be considered for bearing the loss 119. A clause included in the marine policy which covers all losses due to willful misconduct of the master or re of the ship to the prejudice of the insured is called (a) Jettison (b) waiver (c) Preventive penalty (d) barratry 120. Which one of the following is the first industrial organization to have conducted social audit of its performance? (a) Associated Cement, Companies (b) Reliance Industries Limited (c) Bharat Heavy Electricals Limited (d) rata Iron & Steel

Commerce 2000 Time Allowed : Two Hours Maximum Marks : 300 1. Consider the following ratios 1. Acid test ratio 2. Capital turnover ratio 3. Bad debts to sales ratio 4. Inventory turnover ratio Which of these ratios are more appropriate for testing the liquidity of a concern ? (a) 1 and 3 (b) 1 and 4 (c) 2 and 4 (d) 2 and 3 2. Consider the given data
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 45

1. Proprietary ratio = 0.75 2. Current ratio = 2 : 1 3. Proprietary fund = Rs. 60,000 4. Fixed assets = Rs. 50,000 The working capital will be computed as (a) Rs.10,000 (b) Rs.15,000 (c) Rs.20,000 (d) Rs.25,000 3. Consider the following Balance Sheet of ABC Company Limited as on March 31, 1999 : Liabilities Rs Assets Rs Equity share capital 20,00,000 Fixed assets 60,00,000 Preference share capital 10,00,000 Less depreciation 20,00,000 General reserve 5,00,000 40,00,000 10% debentures 11,00,000 Debtors 10,00,000 Creditors 7,00,000 Stock 6,00,000 Outstanding expenses 3,00,000 Cash 1,00,000 Profit & Loss A/c 1,05,000 Formation expenses 5,000 57,05,000 57,05,000 The current ratio of ABC Company Limited is (a) 2.00 (b) 1.90 (c) 1.85 (d)1.70 4. Match List I with List II and select the correct answer List I List II A. Current assets 1. Performance of equity capital Current liabilities B. Fixed assets 2. Short-term solvency Long-term funds C. Debt 3. Capital structure Equity D. Earnings after interest and taxes 4. Overall performance Number of shares issued 5. Long-term solvency ABCDABCD (a) 2 5 3 4 (b) 1 2 3 4 (c) 2 5 4 3 (d) 1 2 4 3 Directions : The next three questions are based on the following Balance Sheet of Messrs A Limited as on 31st December, 1998 Liabilities Rs. (in lacks) Assets Rs. (in lacks) Owned funds 25.00 Fixed assets 27.00 Long – term debt 5.00 Current assets 6.10 Current liabilities 1.50 Other assets 0.40 Unclaimed dividends 0.20 Provisions 1.80 33.50 33.50 Study the Balance Sheet carefully and attempt the following three questions 5. Owned funds' would be (a) Rs.25 lakhs (b) Rs.8.50 lakhs (c) Rs.25.20 lakhs (d) Rs.27 lakhs
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 46

6. The 'margin of safety', i.e., the cushion of protection for creditors is (a) 4.06 : 1 (b) Rs 4.60 lakhs (c) 0.20 : 1 (d) Rs 22 lakhs 7. If the management of A Limited want to evaluate the general efficiency, which one of the following additional information is required ? (a) Sales and earnings after income tax and interest (b) Break-up of owned funds into share capital, reserves and surpluses, etc. (c) Earnings before income tax and interest (d) Operating expenses and sales 8. Financial indicators of four companies are as follows Company Current ratio Debt- equity ratio Rate of return on investment Fixed assets turnover A 2.0 : 1 2.5 : 1 10% 5 B 2.5 : 1 3.0 : 1 25% 4 C 1.5 : 1 4.0 : 1 20% 3 D 1.0 : 1 3.5 : 1 15% 2 In general, which of the above companies would fall in the highest risk class ? (a) A and B (b) B and C (c) C and D (d) A and D 9. Consider the particulars given below Sales = Rs. 60,000 Variable cost = Rs. 25,000 Fixed cost = Rs. 30,000 Based on these data, the operating leverage shall be (a) 5 (b) 7 (c) 8 (d) 9 10. The main purpose of depreciation accounting is to (a) charge the cost of asset (b) allocate the cost of the asset over its estimated useful life (c) provide for replacement of the asset on the expiry of its useful life (d) value the assets on the closing date of the year 11. Which one of the following pairs is not correctly matched? (a) Increase in working capital : Application of fund (b) Increase in current liability : Source of fund (c) Issue of shares : Source of fund (d) Issue of bonus shares : Source of fund 12. Consider the following statements 1. Operational loss is a source of funds 2. Decrease in working capital is a source of funds 3. Additions to fixed assets are an application of funds 4. Fresh introduction of capital is an application of funds Which of the above statements are applicable while preparing the funds flow statements ? (a) 1 and 2 (b) 1 and 3 (c) 2 and 3 (d) 1, 3 and 4 13. A company's reported current profit is Rs 70,000 after incorporating the following : Loss on sale of investments Rs 10,000; Premium on redemption of debentures Rs 1,500; Depreciation on machinery and plant Rs 20,000; Goodwill and preliminary expenses written off Rs 30,000; Gain from sale of non-current assets Rs 40,000 The net inflow of funds from the operation would be
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 47

(a) Rs 91,500 (b) Rs 80,000 (c) Rs 70,000 (d) Rs 59,500 14. For the purpose of analysing changes in financial position, enterprises prepare (a) Balance Sheet and Profit & Loss A/c (b) Cash flow statements and Funds flow statement (c) Statement of cash from operations and Balance Sheet (d) Statement of changes in working capital and Statement of cash from operations 15. Consider the following actions taken by an auditor 1. Carrying on vouching 2. Preparing the audit report 3. Checking the valuation of assets 4. Decision to qualify the report The correct sequence of these actions is (a) 1, 3, 4, 2 (b) 4, 1, 3, 2 (c) 3, 4, 2, 1 (d) 1, 2, 4, 3 16. It is necessary that an auditor should prepare an 'Audit Programme'; maintain an 'Audit Note Book'; use an Internal Control Questionnaire' and a 'Flow Chart of Accounting System adopt 'Special Ticks' for each class of transaction checked and divide work as well as responsibility among the members of his staff for an efficient conduct of audit work. All these refer to (a) general principles of internal auditing (b) general principles of internal checking (c) basic principles of auditing (d) general techniques of auditing 17. Materiality in accounting is decided (a) by the size of an item (b) by the knowledge as to whether an individual item is having a significant influence on financial statement (c) solely by the discretion of the accountant (d) by the physical volume of the transaction 18. Match List I (Event) with List II (Result) and select the correct answer using the codes given below : List I List II A. Collusion between two 1. Payments of dividends or more persons otherwise not possible B. Falsification of accounts 2. Error of principle committed to increase apparent profits C. Operation of an effective 3. Trial balance may agree system of internal check D. Purchase of raw 4. Frauds per-petrated and concealed materials is debited to loose tools account 5. Possibility of errors and frauds is considerably reduced ABCDABCD (a) 3 4 5 2 (b) 4 1 5 2 (c) 4 1 2 5 (d) 2 4 1 3 19. Which one of the following is the main object of auditing? (a) Ascertaining whether all cash receipts and payments of an organisation have been correctly recorded and accounted for
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 48

(b) Preventing errors and frauds connected with financial trans, actions of an organisation (c) Verifying books of accounts and annual financial statements of an organisation so as to give a report on the view presented by the said accounts and statements (d) Recording properly all financial transactions in various books of accounts and preparing annual financial statements indicating the resuits of such transactions 20. Management audit refers to (a) audit on behalf of the management (b) audit of management accounting system in operation (c) systematic appraisal of management's objectives and procedures (d) audit of managerially initiated financial transactions 21. In evaluating internal control, the first step is to prepare an internal control questionnaire or a flow chart of the system. The subsequent steps should be to 1. determine the extent of audit work necessary to form an opinion 2. gather enough evidence to determine as to whether the internal control system is functioning as described 3. write a letter to the management describing the weaknesses in the internal control system 4. form a final judgement on the effectiveness of the internal control system The correct sequence of these steps would be (a) 1, 2, 3, 4 (b) 2, 4, 1, 3 (c) 2, 1, 3, 4 (d) 2, 4, 3, 1 22. When an auditor tests sales transactions, one step is tracing a sample of sales invoices to debits in the accounts receivable ledger. Based upon this step, he will form an opinion as to whether (a) each sales invoice represents a valid sale (b) all sales have been recorded (c) all debits in accounts receivable ledger are supported by sales invoices (d) recorded sales invoices are properly posted to customer accounts 23. Accounting is the process of matching (a) benefits and costs (b) revenues and costs (c) cash inflows and outflows (d) potential and real performance 24. A had started business with Rs 20,000 in the beginning of the year. During the year he borrowed Rs 10,000 from B. He further introduced Rs 20,000 in the business. He also gave Rs 5,000 as loan to his son. Goods given away as charity by him was Rs 2,000. Profits earned by him was Rs 25,000. He also withdrew Rs 3,000 from the business. His capital at the end of the year would be (a) Rs 50,000 (b) Rs 40,000 (c) Rs 62,000 (d) Rs 48,000 25. When it is not registered, a partnership firm is (a) deemed to be an illegal association and is disallowed to carry on business (b) allowed to carry on business subject to payment of penalty (c) allowed to carry on business subject to certain disabilities (d) allowed to carry on business only with the special permission of the Registrar of Firms 26. Match List I (Organisation) with List II and select the correct answer using the codes given below List I List II A. Cooperative society 1. Collective business
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 49

B. Joint Hindu family 2. Purchase/Transfer of share C. Joint Stock company 3. By virtue of birth D. Partnership firm 4. Common mutual interest 5. Mutual contract ABCDABCD (a) 1 3 2 5 (b) 5 4 1 3 (c) 4 3 2 5 (d) 4 1 2 3 27. Match List I with List II and select the correct answer List I List II A. Ashbury Rail Carriage & Iron 1. Corporate entity Co. Ltd. vs. Riche B. Peek vs. Gurney 2. Objects clause C. Saolmon vs. Salomon & Co. 3. Misstatement in prospectus D. Royal British Bank vs. Turquand 4. Indoor management ABCDABCD (a) 2 1 3 4 (b) 3 4 1 2 (c) 2 3 1 4 (d) 2 3 4 1 28. A special resolution passed for the purpose of reduction of capital of a company must be confirmed by the (a) Registrar of Companies (b) Company Law Board (c) SEBI (d) Appropriate Law Court 29. Equity shares issued by a company to its-employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions are known as (a) Employees'/ Directors' stock option (b) Promoters' quota (c) Sweat equity (d) Right shares 30. A preliminary contract refers to a contract made on behalf of a company (a) before the incorporation of the company (b) after the incorporation of the company (c) after the company obtains the certificate to commence business (d) after incorporation but before obtaining the certificate of commencement of business 31. The criterion for deeming a private company as a public company on the basis of average annual turnover is (a) Rs 25 crores (b) Rs 20 crores (c) Rs 10 crores (d) Rs 5 crores 32. Match List I with List II and select the correct answer List I List II A. Registrar of Companies 1. Specified Securities B. Memorandum of Association 2. Rules and Regulations of the Company C. Buy back of shares 3. Certificate of Incorporation D. Articles of Association 4. Objects of the Company 5. Minimum Subscription ABCDABCD
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 50

(a) 3 4 5 1 (b) 4 3 1 2 (c) 3 4 1 2 (d) 1 2 5 4 33. All those who are dealing with the company are expected to know the contents of the Memorandum and Articles of Association. This is called (a) Doctrine of indoor management (b) Doctrine of ultra virus (c) Constructive notice (d) Doctrine of merger 34. An act of a director which is intra vires the Memorandum and ultra vires the Articles of Association (a) cannot be ratified by the company (b) must necessarily be ratified by the company (c) may be ratified by the company (d) is void ab initio 35. Match List I with List II and select the correct answer List I List II A. Doctrine of ultra vires 1. Articles of Association B. Doctrine of indoor management 2. Prospectus C. Doctrine of golden rule 3. Memorandum of Association ABCABC (a) 1 3 2 (b) 3 1 2 (c) 2 1 3 (d) 3 2 1 36. Which one of the following statements correctly explain the term 'Doctrine of Indoor Management' ? (a) The doctrine seeks to protect the outsiders against the company (b) Every person dealing with the company is presumed to have read and understood the contents of company's Memorandum and Articles of Association (c) If a person enters into a contract with the company which is contrary to the provisions of Memorandum and Articles of Association, he will not get any right under such contract (d) It protects the company against the outsiders. 37. Match List I with List II and select the correct answer List I List II A. A long-term debt instrument on which 1. Mutual Fund interest is accumulated and paid on maturity B. A debt instrument on which rebate is 2. Deep Discount Bond available under the Income Tax Act C. Pooling together the money of different 3. Infrastructure Bond investors and investing it in diversified securities D. Buying the right but not the obligation 4. Put option to sell a security for a specific price ABCDABCD (a) 4 1 2 3 (b) 2 3 1 4 (c) 3 1 2 4 (d) 3 1 4 2 38. The comprehensive meaning of an efficient stock market is that it is a market which (a) allocates resources efficiently (b) reflects the effective use of information in the price of the shares traded therein (c) signals the changes in the listed company's performance (d) safeguards the investors' money
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 51

39. Global depository receipts (GDRs) are issued by successful corporations with a view to attracting (a) overseas loan funds (b) remittances from NRIs (c) foreign equity capital (d) foreign direct investment 40. Stock Holding Corporation of India Ltd. is expected to achieve, in the long run, the objective of (a) sale of all kinds of securities in all stock exchanges (b) purchasing all shares issued in the country (c) paperless trading in respect of all stock market transactions (d) holding shares of all new companies and selling them later 41. Which one of the following documents attests the fact that goods of specified quantity, value and description are entering the bounds of the country ? (a) Bill of lading (b) Consular invoice (c) Documentary bill (d) Bill of entry 42. Match List I (Name of the Authority) with List II (Function/Activity) and select the correct answer List I List II A. Port Authority 1. Claim for damage B. Insurance Company 2. Demurrage for goods unloaded C. ECGC 3. Export finance guarantee D. Advising Bank 4. Bank in the ekporters country 5. Bank issuing L/C on the request of controller ABCDABCD (a) 2 1 4 3 (b) 1 4 3 5 (c) 2 1 3 4 (d) 4 1 3 5 43. Which one of the following is an example of a trading block (regional integration in trade) ? (a) North American Free Trade Agreement (b) Madras Export Trade Processing Zone (c) Free Trade Zone at Kandla (d) Indo-American Chamber of Commerce 44. To guard against the dangers of excess payment arising out of double insurance or overinsurance made by the insured, insurance companies provide in their agreement (a) Average clause (b) Subrogation clause (c) Risk clause (d) Indemnity clause 45. A person insured his property worth Rs 10,000 against fire for Rs 8,000. His actual loss by fire is Rs 5,000 and there is an average clause in the policy. His claim will be (a) Rs 10,000 (b) Rs 8,000 (c) Rs 5,000 (d) Rs 4,000 46. Scalar principle refers to the (a) responsibility of a subordinate to a superior (b) conflict of instructions from two or more superior (c) existence of a clear line of authority in all parts of the organisation (d) delegation of authority at all levels of an organisation 47. 'Matrix Organisation' refers to a form of (a) organisation where authority and responsibility coexist (b) organisation in which two or more basic types of departmentation are combined
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 52

(c) mathematical arrangement of events in columns and rows (d) organisation where mathematical simulation is used 48. Match List I (Management Functions) with List II (Terms related to each of them) and select the correct answer List I List II A. Planning 1. Morale B. Controlling 2. Goal C. Directing 3. Coding D. Communicating 4. Deviation 5. Recruitment ABCDABCD (a) 1 2 3 5 (b) 2 4 1 3 (c) 1 2 5 3 (d) 2 4 3 1 49. Consider the following steps 1. Measurement of performance 2. Establishment of standards 3. Comparison between performance and standards 4. Correction of deviations The correct sequence in which these steps are undertaken in the process of controlling is (a) 1, 2, 3, 4 (b) 2, 1, 3, 4 (c) 3, 1, 2, 4 (d) 1, 3, 2, 4 50. Consider the following elements 1. Policies 2. Objectives 3. Programmes 4. Procedures The correct sequence of these elements in the planning process is : (a) 1, 2, 3, 4 (b) 1, 2, 4, 3 (c) 2,1, 4, 3 (d) 2, 1, 3, 4 51. Match List I with List II and select the correct answer List I List II A. Ohio State University study 1. Production-centred and Employee-centred B. University of Michigan study 2. Consideration and initiating structure C. Likert's System Four 3. Country-club, Team manager, Impoverished, Task manager D. Fiedler's Leadership Model 4. Exploitative authoritative, Benevolent authoritative, Consultative, Participative 5. Leader-member relations, Task structure, Position power ABCDABCD (a) 1 2 4 5 (b) 2 1 3 4 (c) 2 1 4 5 (d) 5 2 3 4 52. Match List I with List II and select the correct answer List I List II A. Principles of Management 1. Douglas McGregor B. Management by objectives 2. Chester Barnard C. Human Resources 3. Henry Fayol Approach School D. Human Relations School 4.George Elton Mayo 5. Peter Drucker
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 53

ABCDABCD (a) 1 2 3 4 (b) 4 5 1 2 (c) 2 1 3 4 (d) 4 5 2 1 53. Consider the following principles 1. Harmony of objectives 2. Unity of command 3. Division of work 4. Responsibility Which of these principles are NOT parts of 'Direction'? (a) 1 and 2 (b) 2 and 3 (c) 3 and 4 (d) 1 and 4 54. An optimising model is designed to (a) get the maximum results with minimum inputs (b) solve problems by eliminating the blocks in the process of goal achievement (c) lead the selection of the best course of action from among available alternatives (d) reduce the burden of organisational hierarchy. 55. Gantt chart is essentially a pictorial presentation of (a) a modified procedure for productivity improvement (b) an organisation chart in the form of bar diagram (c) a time-event network analysis (d) position chart of the functions to be carried out by the members of a work team 56. Match List I with List II and select the correct answer List I List II A. Managerial Grid 1. H. Koontz B. 3-D Approach 2. E E. Fiedler C. Contingency Model 3. R. R. Blake D. Systems Approach 4. R. Likert 5. W. I. Reddin ABCDABCD (a) 1 4 2 3 (b) 3 5 4 2 (c) 4 1 2 3 (d) 3 5 2 4 57. Consider the following steps 1. Analysis of each decision unit in the context of total decision package 2. Identification of decision units 3. Allocation of resources to each unit based upon ranking 4. Evaluation and ranking of all decision units to develop the budget request The correct sequence of these steps in Zero-base budgeting is (a) 1, 2, 3, 4 (b) 2, 1, 4, 3 (c) 2, 4, 1, 3 (d) 2, 3, 4, 1 58. TQM's major emphasis is on (a) product quality (b) company profitability (c) customer delight (d) employee training 59. The approach that considers an organisation to be in a dynamic relationship with its environment, is called (a) Contingency approach
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 54

(b) Scientific approach (c) Societal approach (d) Systems approach 60. Under which one of the following types of organizational structure does a person become accountable to two or more bosses at the same time ? (a) Matrix structure (b) Centralized structure (c) Decentralized structure (d) Vertical structure 61. Consider the following stages in delegation of authority : 1. Creation of obligation 2. Determination of results expected 3. Assignment of duties 4. Authorisation for actions The correct sequence of these stages is (a) 1, 2, 3, 4 (b) 2, 1, 4, 3 (c) 2, 3, 4, 1 (d) 1, 3, 4, 2 62. Consider the following stages in Management by Exception 1. Setting criteria that the management will use to follow progress towards organisational objectives 2. Measurement of current performance in the organisation 3. Making comparison of actual and planned performance and identifying the exceptions 4. Decision-making prescribing the action to be taken The correct sequence of these stages is (a) 2, 3, 4, 1 (b) 2, 1, 3, 4 (c) 1, 3, 2, 4 (d) 1, 2, 3, 4 63. The delegation of authority from higher to lower levels of an organisation is called (a) Diminution of authority (b) Division of labour (c) Departmentalisation (d) Decentralisation 64. In an organisation, performance appraisal is NOT expected to (a) integrate and coordinate the endeavour of individuals (b) monitor the efforts of inviduals (c) provide a means of correcting or commending the efforts of individuals (d) calculate the living wage of the worker 65. A collection of duties, tasks and responsibilities assigned to a single individual is (a) occupation (b) position (c) job (d) grade 66. Consider the following steps in Management of change : 1. Identifying the elements to be changed 2. Identifying need for change 3. Assessing change forces 4. Implementing change The correct sequence of these steps is (a) 1, 2, 3, 4 (b) 2, 1, 3, 4 (c) 1, 3, 2, 4 (d) 2, 3, 1, 4
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 55

67. Consider the following statements : The difference between office systems and routines are that the 1. systems are plans while routines are procedures 2. systems are all-inclusive while routines are parts of systems 3. systems are people oriented while routines are financial in nature 4. systems are the goals while routines are the means Which of the above statements are correct ? (a) 1, 2 and 3 (b) 1 and 2 (c) 1, 3 and 4 (d) 2 and 4 68. Computerised communication system existing within an organisation is called (a) Internet (b) Extranet (c) Local Area Network (d) Intranet 69. The Board's Report shall give the prescribed particulars of employees, who are in receipt of yearly remuneration, which is not less than (a) Rs 1.44 lakhs (b) Rs 3 lakhs (c) Rs 6 lakhs (d) Rs 12 lakhs 70. The provisions relating to inter-corporate loans are interalia laid down in (a) Section 370 of the Companies Act, 1956 (b) Section 372 of the Companies Act, 1956 (c) Section 372 A of the, Companies Act,. 1956 (d) Section 371 of the Companies Act, 1956 71. The books of account of a company should be preserved for a period of not less than (a) 2 years (b) 5 years (c) 8 years (d) 10 years 72. In the Balance Sheet, under the subheading 'current liabilities and provisions', disclosure of the name(s) of small-scale industries/undertakings is required if the company owes a sum (a) exceeding Rs 1 lakh as outstanding for more than 6 months (b) not exceeding Rs 1 lakh as outstanding for more than 6 months (c) exceeding Rs 1 lakh as outstanding for more than 30 days (d) exceeding Rs 50,000 as outstanding for more than 2 months 73. Investor Education and Protection Fund is required to be established by (a) the Central Government (b) the SEBI (c) over the Counter Exchange (d) the National Stock Exchange 74. If an auditor, after his appointment, becomes disqualified as specified in Section 226 (3) and (4) of the Companies Act, 1956 (a) the appointing authority will ask him to vacate his office (b) the Company Law Board will ask him to tender his resignation (c) he will be deemed to have vacated his office (d) the Institute of Chartered Accountants of India will terminate him from office 75. According to Companies Act, when the dividend proposal is exceeding 20 per cent of the paid-up capital, the amount to be transferred to reserve shall not be less than (a) 7.5 per cent of the current profit (b) 10 per cent of the current profit (c) 12.5 per cent of the current profit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 56

(d) 15 per cent of the current profit 76. The cost auditor in a company shall be appointed by (a) the Board of Directors (b) the Board of Directors with the previous approval of the Central Government (c) the members of the company with the previous approval of the Central Government (d) the C & AG 77. For appointing an auditor other than a retiring auditor (a) special resolution is required (b) ordinary resolution and approval of C & AG are required (c) unanimous resolution and approval of the Central Government are required (d) special notice is required 78. A company Secretary has (a) neither statutory liabilities nor contractual liabilities (b) only statutory liability (c) only contractual liability (d) both statutory and contractual liabilities 79. Secretarial Audit is (a) compulsory in companies having paid-up share capital of less than Rs 50 lakhs (b) compulsory where the statutory audit reveals inadequacy of internal check in secretarial department (c) optional and would help the Board of Directors and the Registrar of Companies in regard to compliance aspects, mainly under the Companies Act, 1956 (d) compulsory in such companies as may be notified by the Central Government 80. The membership of the Institute of Company Secretaries of India is a must for a person to become the Secretary of a company having paid-up share capital of (a) Rs 25 lakhs (b) Rs 50 lakhs (c) Rs 1 crore (d) Rs 2 crores Directions :- The following 13 (thirteen) items consist of two statements, one labelled as 'Assertion A' and the other labelled as 'Reason R'. You are to examine these two statements carefully and decide if the Assertion A and the Reason R are individually true and if so, whether the Reason is a correct explanation of the Assertion. Select your answers to these items using the codes given below and mark your answer sheet accordingly. (a) Both A and Rare true and R is the correct explanation of A (b) Both A and R are 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 81. Assertion (A) : Management accounting provided management with information for decision making. Reason (R) : Management accounting is a branch of cost accounting 82. Assertion (A) : Under diminishing balance method of depreciation, the charge for depreciation keeps on diminishing year after year in all subsequent years. Reason (R) : Under diminishing balance method, the rate per cent of which depreciation is written off goes on diminishing from year to year.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 57

83. Assertion (A) : No item of capital expenditure finds its place in the Trading and Profit & Loss Account or some other form of revenue accounts. Reason (R) : Capital expenditure consists of expenditure, the benefit of which is not fully consumed in one accounting period but is spread over several periods. 84. Assertion (A) : Now-a-days many companies prepare their Balance Sheet in a vertical form rather than in the traditional horizontal form. Reason (R) : Part IV of Schedule VI to the Companies Act, 1956 permits both the forms. 85. Assertion (A) : When pro-rate allotment of shares is made, the surplus application money is transferred to Share Allotment A/c. Reason (R) : The company is not required to pay any interest on such surplus application money. 86. Assertion (A) : One single primary ratio, that measures the financial outcome of all recorded business activities, is RO' Reason (R) : In practice, however, variations are also found in the ratio because capital and return are subject to different interpretations by firms. 87. Assertion (A) : ROI is the index to study management efficiency. Reason (R) : Earning power in relation to total investment is measured by ROI. 88. Assertion (A) : Detection of errors is not of considerable importance to an auditor. Reason (R) : Some mistakes which appear to be in the first instance merely clerical errors are ultimately found to be fraudulent manipulation of accounts, but vast majority of mistakes are merely clerical errors committed due to either carelessness or ignorance on the part of clerical staff. 89. Assertion (A) : Detection of frauds committed by the manipulation of accounts is a very difficult task for an auditor. Reason (R) : Frauds of the type 'Manipulation of Accounts' are committed without any misappropriation of cash or goods. 90. Assertion (A) : E-commerce is an emerging field, which cannot be ignored. Reason (R) : The legal framework relating to E-commerce is yet to be crystallised. 91. Assertion (A) : External alignment of wage rates is possible only when internal alignment is achieved. Reason (R) : Internal alignment of wage rates is dependent on increase in profits. 92. Assertion (A) : Job evaluation facilitates framing a suitable incentive system for workers. Reason (R) : Incentives can be rationally based on timesaving by workers on a particular job, which can rightly be known from job evaluation. 93. Assertion (A) : For a company, every debt is not a loan, but every loan is a debt. Reason (R) : In the case of deposit of money with the company, it is the depositor who is the prime mover, whereas in the case of loan it is the company who is the prime mover. 94. Consider the following activities connected with the accounting information system 1. Preparation of the table of accounting 2. Communication of accounting information 3. Preparation of accounting information report 4. Collection of accounting data The correct sequence of these activities is
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 58

(a) 4, 1, 3, 2 (b) 1, 4, 3, 2 (c) 4, 3, 1, 2 (d) 1, 2, 4, 3 95. A cooperative store having a turnover of Rs 10 lakhs and profit of Rs 50,000 purchase locks costing Rs 300 for use in the shop. The accountant charged it in the P & L A/c of current year, but the auditor raised an objection saying that it should be capitalised. On which one of the following conventions could the accountant be defended ? (a) Disclosure (b) Materiality (c) Conservation (d) Consistency 96. Consider the following statements Notes forming part of accounts of companies invariably display significant Accounting Policies 1. as per the requirement of SEBI guidelines for disclosure and investor protection 2. because it is a mandatory requirement under the Companies Act, 1956 3. as required by AS-1-disclosure of accounting policies, which is mandatory 4. as it is required under the listing agreement with the stock exchanges Which of the above statements are correct ? (a) 1, 2 and 3 (b) 2 and 3 (c) 2, 3 and 4 (d) 1 and 4 97. Match List I with List II and select the correct answer List I List II A. Showing joint life policy at 1. Concept of consistency surrender value B. Team spirit and dedication of 2. Concept of cost employees are not recorded in the books of accounts C. Methods of depreciation and 3. Concept of conservatism inventory valuation should not be changed frequently D. Fixed assets are recorded 4. Concept of money measurement at 'cost less depreciation' ABCDABCD (a) 3 4 1 2 (b) 3 4 2 1 (c) 4 3 1 2 (d) 4 3 2 1 98. If depreciation is calculated on the basis of formula, n (n + 1) then which one of the following methods is adopted? 2 (a) Diminishing value method (b) Annuity method (c) Sum of years digits method (d) Sinking fund method 99. Consider the following methods of inventory valuation 1. Simple average 2. First in first out 3. Last in first out 4. Weighted average. Which of these methods DO NOT match current cost with current revenues ? (a) 1 and 3 (b) 1, 2 and 3 (c) 1. 2 and 4 (d) 2, 3 and 4 100. Consider the following fundamental assumptions
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 59

1. Prudence 2. Going concern 3. Accrual . 4. Consistency As per Accounting Standard-1, which of these assumptions are taken into consideration while preparing financial statements ? (a) 1 and 4 (b) 2 and 3 (c) 1, 2, 3, and 4 (d) 2, 3 and 4 101. Which one of the following statements is correct ? (a) Preliminary expenses are revenue expenses (b) Cost of issuing shares and debentures and raising loans, such as legal expenses and underwriting commission are capital expenditure (c) Interest on loan is a capital expenditure (d) Cost of machinery purchased is a revenue expenditure 102. The ending balance of owner's equity is Rs 21,000. During the year, the owner contributed Rs 6,000 and withdrew Rs 4,000. If the firm had Rs 8,000 net income for the year, what was the owners equity at the beginning ? (a) Rs 23,000 (b) Rs 21,000 (c) Rs 19,000 (d) Rs 11,000 103. The ending balance of the accounts receivable account was Rs 12,000. Services billed to customers for the period were Rs 21,500 and collection on account from customers was Rs 23,600. The beginning balance of account receivable was (a) Rs 33,500 (b) Rs 14,100 (c) Rs 9,800 (d) Rs 33,300 104. Which one of the following is a capital expenditure ? (a) Compensation paid for breach of a contract of supply of goods (b) Interest on borrowing during the period of construction of works (c) Loss of stock by fire (d) Loss due to embezzlement by the Manager 105. A company issues 14% debentures of Rs 10,00,000 at a discount of 10%. The discount allowed will be treated in the account books as (a) Capital expenditure (b) Revenue expenditure (c) Deferred revenue expenditure (d) Capital loss 106. A building standing in the books at Rs 30,000, was sold for Rs 45,000. The gain on the sale of building was transferred to profit and loss account thus taking the net profit to Rs 1,70,000. The fund from operation will be (a) Rs 2,15,000 (b) Rs 1,70,000 (c) Rs 1,55,000 (d) Rs 2,00,000 107. Match List I with List II and select the correct answer List I List II A. Leasehold property 1. Depreciation fund method B. Mines, quarries, etc. 2. Annuity method C. The interest lost on the 3. Fixed instalment method
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 60

acquisition of an asset D. To provide for replacement 4. Depletion method of asset at the end of its useful life ABCDABCD (a) 2 1 4 3 (b) 3 4 1 2 (c) 3 4 2 1 (d) 4 3 1 2 108. Following are the extracts from the Trial Balance of a firm : Particulars Dr. (Rs) Cr. (Rs) Sunday debtors 50,000 Provision for doubtful debts - 5,000 Bad debts 3,000 Additional information (i) Additional bad debts Rs 3,000 (ii) Keep the provision for bad debts @ 10% on debtors The net amount of bad debts that will appear in the Profit and Loss Account will be (a) Rs 8,000 (b) Rs 7,500 (c) Rs 5,700 (d) Rs 4,500 109. A and B sharing profits in the ratio of 3 : 2 and having capitals of Rs 30,000 and Rs 15,000 respectively decided to dissolve the firm. After paying off all liabilities, cash realised from various assets is Rs 15,000. This amount will be distributed between A and B as (a) Rs 9,000 and Rs 6,000 respectively (b) Rs 10,000 and Rs 5,000 respectively (c) Rs 7,500 and Rs 7,500 respectively. (d) Rs 12,000 and Rs 3,000 respectively 110. A, B and Care partners sharing profits in the ratio of 6 :3 : 1. They decided to dissolve the firm when their capitals were Rs 8,000, Rs 3,000 and Rs (-) 1,000 respectively. Other liabilities and assets were-Bank overdraft Rs 3,500. A's advance to the firm Rs 500; sundry creditors Rs 2,500; plant and machinery Rs 7,500; stock in trade Rs 2,500; sundry debtors Rs 6,000 and cash Rs 500. Plant and machinery realised at.20% less, stock in trade at 25% less and sundry debtors at 30% less than their respective book value. Expenses of dissolution amounted to Rs 250. C became insolvent and his private estate yielded Rs 100 only. What is the loss on realisation? (a) Rs 4,125 (b) Rs 4,150 (c) Rs 4,175 (d) Rs 4,225 111. A, Band Care the partners in a business firm sharing their profits in the ratio of 4 : 3 : 2. A new partners D enters the firm. The new profit sharing of A, B, C and D is 5 : 4 : 2 : 1. D contributes a goodwill of Rs 36,000. This goodwill is to be allocated among A, B and C. Which one of the following will be the correct allocation ? A Rs B Rs C Rs (a) 16,000 12,000 8,000 (b) 12,000 8,000 16,000 (c) 12,000 Nil 24,000 (d) 24,000 Nil 12,000 112. A, Band Care equal partners in a firm with capital of Rs 16,800, Rs, 12,600 and Rs 6,000 respectively. With bills payable Rs 3,300; creditors Rs 6,000; cash Rs 600; debtors Rs 10,800; stocks Ps. 11,400; furniture Rs 2,400 and building Rs 19,500. E is admitted to the firm and brings Rs 9,000 as goodwill and Rs 15,000 as capital. Half the goodwill is withdrawn by old
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 61

partners, and stock and furniture is depreciated by 10%. A provision of 5% on debtors is created and value of building is taken at Rs 27,000. The profit on revaluation will be (a) Rs 5,500 (b) Rs 5,580 (c) Rs 5,400 (d) Rs 5,680 113. A and Bare partners in a firm sharing profits in the ratio of 3 : 2. They admit C as a new partner for 1/3 share in the profits of the firm. The new profit sharing ratio of A, B and C is (a) 3 : 2 : 1 (b) 3 : 2 : 2 (c) 3 : 2 : 3 (d) 6 : 4 : 5 114. Some companies give cash flow statements in their annual reports as prescribed by (a) Part IV of Schedule VI to the Companies Act, 1956 (b) the listing agreement with the stock exchanges (c) the SEBI regulations (d) the Accounting Standard-3 on cash flow statements 115. Under the net worth method, the basis of ascertaining profit is the (a) difference between the liabilities on two dates (b) difference between the gross assets on two dates (c) difference between the capital on two dates (d) increase in net worth before adjusting for drawings and additions to capital 116. A non-performing asset with a financial institution denotes an asset on which (a) regular dividend is not being received (b) interest is on default for two quarters or more (c) repayment of capital appears difficult (d) there is no earning of profit 117. Consider the following statements : Redeemable preference shares of a company can be redeemed out of 1. profits of the company which would otherwise be available for dividend 2. company's share premium account 3. fresh issue of shares made for the purpose of redemption Which of the above statements are correct (a) 1 and 2 (b) 1 and 3 (c) 2 and 3 (d) 1, 2 and 3 118. A company forfeited 100 shares of Rs 10 each owing to the default in the payment of share call money of Rs 5 each. These shares were issued at Rs 9 each, payable at Rs 2 on application, Rs 2 on allotment and the balance of Rs 5 on call. The shares were then reissued to another shareholder at a price of Rs 6 per share. The amount to be debited to forfeited shares account on account of discount on reissue of shares would be (a) Rs 100 (b) Rs 300 (c) Rs 400 (d) Rs 500 119. The issue of bonus shares must be in accordance with the guidelines issued by the (a) Company Law Board (b) Controller of capital issues (c) Securities and Exchange Board of India (d) Registrar of Companies 120. Consider the following statements : A low inventory turnover may be the result of 1. obsolescence of some of the stock 2. slow-moving inventory 3. frequent stock-outs
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 62

4. fast-moving inventory Which of the above statement(s) is/are correct ? (a) 1 and 2 (b) 4 alone (c) 2 alone (d) 2 and 3

Commerce 2006 Questions 1)."Each individual in an organization must know in advance what one is expected to achieve." It is related to which of the following steps of MBO? (a) Setting of organizational purpose and objectives (b) Key result areas. (c) Setting subordinates' objectives (d) Appraisal 2).Which one of the following statements about MBO (Management by Objectives) is not correct? (a) The greater the participation of the manager and his Employees in setting goals, the more likely that the goals would be achieved (b) Autonomy in implementation of the plans is a pre Requisite for the success of MBO (c) Individual goal setting is not necessary for the success Of MBO (d) Top level goal setting is a pre-requisite for the success Of MBO. 3). Match List- I with List-II and select the correct answer using the code given below the lists: List-I (Description) List-II (Functional Feature A. Decentralization in Organization 1. Machine-oriented and not man-oriented B. Chain of communication 2. Line authority C. Task of top management 3. Setting goals of Organization D. Movement of task Management 4. Empowerment of sub ordinates ABCD ABCD (a) 3 1 4 2 (b) 4 2 3 1 (c) 3 2 4 1 (d) 4 1 3 2 4).What is the job evaluation method in which a number d compensable factors are identified and then the degree to which each of these factors is present on the job is determined, called? (a) Job classification (b) Point rating (c) Factor comparison (d) Job ranking 5). Consider the following steps with regard to job 'ranking' method: 1. Obtain job information 2. Rank jobs 3. Select jobs 4. Select compensable factors 5. Combine ratings what is the correct sequence of the steps given above? a) 1 - 3 - 2 - 5 -4 (b) 2 - 1 - 3 - 5 - 4 (c) 2 - 3 - 1 - 4 - 5 (d) 1 - 3 - 4 - 2 - 5
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 63

6). Match List- I with List-II and select the correct answer using the code given below the lists: List - I (Concept) List - II (Explanation) A.Theory of Specialisation 1. Number of subordinates to be supervised B.Departmentation 2. Plan of reporting in an Organization C.Span of Management 3. Pattern of grouping Activities D.Chain of command 4. Breakdown of a complex task ABCD ABCD (a) 2 1 3 4 (b) 4 3 1 2 (c) 2 3 1 4 (d) 4 1 3 2 7). What is the method used in a standard costing system which analyses the factors that resulted in the deviation between standard costs and actual costs, called? a) Bill of Materials (b) Progress Report (c) Variance Analysis (d) Cost Statement 8). Consider the following statements regarding coordination 1. Coordination cannot be voluntarily produced by a number of cooperating persons 2. Most part of it is the result of voluntary attitudes on the part of people in an organization. 3. Coordination is a far more inclusive term embracing the idea of cooperation. 4. Charismatic leaders do not give weightage to coordination Which of the statements given above are correct? (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 4 only (d) 1 and 4 only 9). Which one of the following describes best the organization's values, aspirations and reasons for being? (a) Vision (b) Mission (c) Objectives (d) Goals 10).In. the Blake and Mouton's Managerial Grid Theory, what is the point (1.9) known as? (a) Improverished management (b) Country club management (c) Middle of the road management (d) Team management 11. Ann effective direction tries to get work. accomplished by subordinates without affecting their need satisfaction adversely. What. Is this principle of directing known as? (a) Principle of maximum individual contribution (b) Principle of harmony of objectives (c) Principle of efficiency of direction (d) Principle of authoritative direction 12). In Vroom's theory of motivation, what is valence related to? List I (Types of Cloud) (a) The strength of an individual's preference to a total outcome. (b) The strength of a group's preference to a total outcome. (c) The strength of a group's preference to a. particular outcome (d) The strength of an individual's preference to a particular outcome 13. Match List-I (Basic Components of Expectancy Theory) with List-II (Definition) and select the correct answer using i I the code given below the Lists : List-I List-II A. Expectancy 1. Force directing specific behavioural alternatives B. Instrumentality 2. Preference of an 'individual for a particular outcome
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 64

C. Motivation 3. Probability that effort will lead to good performance D. Valence 4. Probability that successful performance will lead to certain outcomes ABCD ABCD (a) 1 4 2 3 (b) 2 3 1 4 (c) 1 3 2 4 (d) 2 4 1 3 14). 14. The following information is given: Sales 70,000 Purchases 40,000 Expenses 8,000 Creditors at the end 15,000 Creditors at the beginning 12,000 What is the value of cash from operations? (a) Rs 22,000 (b) Rs 19,000 (c) Rs 30,000 (d) Rs 25,000 15. Which one of the following statements is correct? (a) If the value of current assets (in the current year) increases (compared with last year), the working capital decreases (b) If the value of current liabilities (in the current year) decreases (compared with last year), 'the working capital increases (c) If the value of current liabilities (in the current year) increases (compared with last year), the working capital increases (d),If the value of current assets (in the current year) decreases (compared with last year), the working capital increases 16).A machinery whose book value was Rs 1,20,000 was sold for Rs 1,68,000. The gain on sale of machinery was taken to Profit and Loss Account which ultimately showed net profit for the year as Rs 1,50,000. What is the value of funds from operations? (a) Rs 1,02,000 (b) Rs 1,98,000 (c) Rs 48,000 (d) Rs 1,68,000 17. Which one of the following is the correct statement? Business draws benefit from the society; it has an obligation to communicate its contribution to society. For this purpose accounting must (a) deal with measurement and reporting of the performance to its stakeholders (b) confine to going concern stipulation (c) show its concern for revenue recognition and distribution (d) be secluded from commercial consideration 18. Which one of the following is the correct statement? The most important factor influencing evolution and growth of auditing is (a) Industrial Revolution (b) divorce of ownership from management (c) establishment of the Institute of Chartered Accountants of India (d) adoption of mechanised accounting 19. Match List-I with List-II and select the correct answer using the code given below the Lists : List-I List-II (Basis of Classification) (Types of Audit) A. Time 1. Complete Audit B. Subject matter 2. Public Audit C. Extent or coverage 3. Periodical Audit D. Organization structure 4. Government Audit 5. Cost Audit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 65

ABCD ABCD (a) 3 4 1 5 (b) 1 5 2 3 (c) 3 5 1 4 (d) 1 4 2 5 20)What does the total auding situation comprise? (a) Inherent risk, process risk and control risk (b) Appropriate evidence and oral evidence (c) Detailed evidence and appropriate evidence (d) Sufficient evidence and appropriate evidence 21. Which of the following should be obtained as a basis of 10 conclusions by the auditor? (a) Sufficient evidence and detailed evidence (b) Terrigenous deposits (c) Pelagic deposits (d) Coral reefs 22. Which one of the following is the correct statement? An independent financial audit is conducted because (a) the top management may have indulged in fraud and the auditor would detect the same and report to the shareholders (b) the audit may result in suggesting improvement in the internal control system (c) the audit enhances credibility to financial statement (d) the audit guaran~ees that no material misstatement intentional or unintentional-remains in the financial statements 23. What is an in-depth examination to detect a suspected fraud in an enterprise termed as ? (a) Internal audit (b) Independent financial audit (c) Operations audit (d) Investigation 24. Match List- I (Audit Test) with List-II (Situation) and select the correct answer using the code given below: list-I list-II (A) Depth testing 1. Examination in depth by the auditor of the accounting function or department at an interval planned by auditor (B)Vouching audit 2. Used in situations where evidence of a single error gives hint to the auditor of a serious lapse which may require (C)Discover Sampling 3. Applied in situations where auditor has absent or unreliable adn as a result, it would be necessary to check all the documentary evidences. (d)Rotational test 4. Involves tracing through the entire system all the aspects of a transaction which the auditor wishes to check. ABCD ABCD (a)1 3 4 2 (b)4 2 3 1 (c)1 4 3 2 (d)4 3 2 1 25. Which one of the following is the best way for an auditor to satisfy himself that the amount of cash-in-hand shown in the balance sheet is correct ? (a) To obtain a certificate from the cashier to this effect (b) To visit the location where cash is kept at the close of business hours on the last working day of the financial year and count the cash-in-hand (c) To visit the location where cash is kept at the close of business hours on the first working day of the financial year and count the cash-in-hand (d) To compare the amount of cash-in-hand at the balance sheet date with the corresponding amount in the previous year's balance sheet 26. Match List- I (Method of Auditing) with List-II (Pr.ocedure) and select the correct answer using the code given below the Lists : list-I list-II
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 66

A. Vouching 1. To select and examine a representative sample from large number of similar items. B. Audit programme 2.Testion and checking done by quality control department of an organization . C. Internal Audit 3. Audit conducted by regular employees of a business concern. D. Test Checking 4. The inspection of documentary evidence supporting and substantiating a transaction. 5. A detailed plan of the auditing work to be performed. ABCD ABCD (a)3 1 2 5 (b)4 5 3 1 (c)3 5 2 1 (d)4 1 3 5 27. Match list- I with List-II and select the correct answer using the code given below the Lists : list-I list-II A. Minutes Book 1. Recording entires of creditors payment B.Log Book 2.Recording entries of raw matrial receipts C.Subsidiary Ledger 3.Recording entries of resolution passed D.Stores Ledger 4.Recording entries of production 5. Recording entries of cash withdrawn from bank ABCD ABCD (a)2 4 1 3 (b)3 1 5 2 (c)2 1 5 3 (d)3 4 1 2 28) Which of the following are examined to verify the legal charges? 1. Examine the payment made to the lawyer by reference to the bill and money receipt from the lawyer as well as any amount paid in advice. 2. Examine the basis of allocation of expenditure under capital and revenue head C.Subsidiary Ledger 3.Recording entries of resolution passed Inspect the register of law suits, if maintained by the company. (a) 1 and 3 only (b)1,2 and only (c)2 and 4 only (d)1,2,3 and 4 29)Which one of the following is the correct statement? Book Debts should be verified with the help of (a) book debts from the balance sheet (b) amount received from debtors (c) debtors' schedule (d) certificate of book debts from the management 30. Which one of the following is the correct statement? Negative confirmation procedure in relation to debtors is applied where (a) the number of debtors is small & each owes a large sum (b) the number of debtors is large & each owes a small sum (c) the number of debtors is small & each owes a small sum (d) the number of debtors is large & each owes a large sum 31. Under which of the following circumstances an auditor may refuse to accept the vouchers? 1. The amount written in words does not match with the amount written in figures 2. The date of voucher does not match with the date of entry in the books of accounts 3. The amount mentioned in the voucher does not correspond to the entry in the cash book 4. The voucher has not been endorsed by a competent authority Select the correct answer using the code given below: (a) 1 'and 2 only (b) 2 and 3 only (c) 1, 3 and 4 only (d) 1, 2, 3 and 4
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 67

32. Which one of the following statements is correct ? The auditor in a cooperative society conducts the audit on behalf of the (a) Members of Cooperative Society (b) Central Government (c) Registrar of Cooperative Societies (d) Managing Committee of Cooperative Society 33).Which one of the following statements is correct ? Management audit is an extension of (a) cost audit (b) efficiency auditc (c) special audit (d) internal audit 34. In case of insolvency of a partner, how is the loss due to insolvency borne by other solvent partners ? (a) Equally (b) In the profit sharing ratio (c) In the ratio of their capitals (d) In the ratio of their assets 35. Which one of the following statements regarding appointment of auditor is correct ? ((a) A company where sixty percent shares are owned by private investors and forty percent shares are owned by the Central Government; private investors shall appoint the auditor (b) A company where thirty percent shares are owned by the Centre and twenty-five percent by a State Government; auditor is appointed by the Comptroller and .Auditor-General of India (c) A company where thirty percent shares are owned by the State Government and forty-five percent shares are owned by private investors; auditor is appointed by the State Government (d) A company where controlling shares are held neither by Central Government nor by State Government; auditor is appointed by the Comptroller and AuditorGeneral of India 36. What is the trading activity that seeks a profit from price variations of securities in the different markets termed as? (a) Margin trading (b) Market rigging (c) Option dealings (d) Arbitrage 37. Consider the following procedures adopted for settlement of accounts at the time of dissolution of a partnership firm: 1. The loans of partners are returned 2. All outside creditors are paid 3. Capital of each partner is returned What is the correct sequence of using the proceeds of assets of the firm? (a) 1 - 2 - 3 (b) 3 - 1 - 2 (c) 2 - 1 - 3 (d) 2 - 3 - 1 38)Consider the following in respect of the procedure adopted for buying and selling at stock exchange 1. Making the contract 2. Contract note 3. Selection of broker 4. Placing order 5. Settlement What is the correct sequence of the procedure for dealing at stock exchange (a) 1-3-2-5-4 (b) 3-1-5-2-4 (c) 1-4-2-3-5 (d) 3-4-1-2-5 39. Consider the following statements :
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 68

1. Shares payable in cash must have been a110ted up to the amount of the minimum subscription 2. Directors must have paid in cash the application and allotment money in respect of the shares contracted to be taken by them for cash. 3.No money is liable to be repaid to the applicants by reason of failure to apply for or to obtain permission for shares or debentures to be dealt on in any recognised stock exchange. As per Section 149 (1) of the Companies Act, 1956, the above conditions are imposed on companies for which one of the following? (a) For listing of shares at the stock exchange (b) To obtain Certificate of Commencement of Business (c) To obtain Certificate of Incorporation (d) To hold Statutory Meeting of the company 40)Consider the following statements : The Bill of Lading issued by the Master of ship serves as at an . 1. receipt for the goods shipped 2. open general license 3. evidence of the contract 4. dock challan Which of the statements given above are correct ? (a) 1 and 3 only (b) 1 and 2 only (c) 2 and 4 only (d) 3 and 4 only 41). Consider the following statements The Life Insurance Contracts are contracts of utmost good faith because 1. only insured knows about his health 2. only insured knows about his family 3. insured cannot attempt to make profit out of his health condition 4. insurer's risk is related to the disclosures made by insured Which of the statements given above is/are correct ? (a) 1, 2 and 3 only (b) 1, 2, 3 and 4 (c) 4 only (d) 2, 3 and 4 only 42. In a contract of insurance, under which of the following principles the insurer, after having paid the loss to the insured, acquires all rights and remedies as the insured would have enjoyed regarding the said loss? (a) Principle of Subrogation (b) Principle of Contribution (c) Principle of Causa Proxima (d) Principle of Insurable Interest 43. Which of the following theories offers ways to profile or ~ analyse individuals to identify the needs that motivate their behaviour? (a) Process theories (b) Content theories (c) Reinforcement theories (d) Adams's theory 44. Which one of the following functions involves conceptualising ~ missions and objectives of the organization and also the actions for achieving them? (a) Planning (b) Organizing (c) Staffing (d) Directing
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 69

45. Which one of the following is the correct hierarchy of the strategies formulated in organizations? (a) Corporate strategies - business strategies-functional strategies (b) Functional strategies - corporate strategies - business strategies . (c) Business strategies - functional strategies-corporate strategies (d) Business strategies-corporate strategies-functional strategies 46. Which one of the following helps in determining long, out of his objectives of an organization, adoption of course of allocation of resources necessary to achieve the goals? (a) Rules (b) Policies (c) Procedures (d) Strategies 47. An organization which was earlier operating in highly 51 conditions, is now facing stiff competition in the libera era. For quick response to rapidly changing environn how should the organization change its organizati structure? (a) From flat structure to tall structure (b) From tall structure to flat structure (c) From flat structure to bureaucratic structure (d) From flexible structure to rigid structure 48. Which one of the following approches to the organization gives managers a way of looling at the organization as a whole and as a part of the large external environment? (a).Behavioural science (b). Contingency (c). Human relations (d). Systems. 49.Consider the following steps with regard to a recruitment process. 1. Develope a job specification. 2. Perform job analysis 3. Design job description. 4. Attract a pool of applicants 5. Select the best recruits. 50. Which one of the following training methods compels trainees to assume different identities (a). Vestibule (b). Role playing (c). On-the-Job training (d). Job rotation 51. Match List-I (Staff AuthoritY) with List-II (function) and select the correct answer using the code given below: List-I List-II A. Service Staff 1. Provides specialised Authority counselling to line managers B. Control Staff 2. Provides service authority Authority relationship to the line manager C. Advisory Staff 3. Specific authority for Authority certain functions D. Functional 4. Not only advises but Staff Authority restrains line authority ABCD ABCD (a) 1 3 2 4 (b) 2 4 1 3 (c) 1 4 2 3 (d) 2 3 1 4 52. Consider the following statements : 1. According to Trait theory of leadership, leaders are born, not made. 2. There is high concern for production but low concern for people. It is called as Middle of the road management.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 70

3. There is a high concern for both production as well as people. It is called as Impoverished management. Which of the statements given above is/are correct ? (a) 1 only (b) 1 and 2 only (c) 2 and 3 only (d) 1 and 3 only 53. Consider the following statements : Managerial Grid is a leadership style that emphasizes on 1. Concern for production 2. concern for people 3. concern for personality traits 4. concern for credibility of leadership Which of the statements given above are correct ? (a) 1 and 2 only (b) 2 and 3 only (c) 3 and 4 only (d) 2 and 4 only 54. Match List-I (Style. of Leadel) with List-II (Approach) and . select the correct answer using the. code given below List-I List-II A. Impoverished Management 1. Highest concern for production and people B. Country Club Management 2. Highest concern for production but low concern for people C. Autocratic Task Managers 3. Very low concern for production but concern for people D. Team Managers 4.4. Very low concern for production and people ABCD ABCD (a) 4 3 2 1 (b) 2 1 4 3 (c) 4 1 2 3 (d) 2 3 4 1 55. Which one of the following types of leadership is based on organizational status? (a) Informal leadership (b) Diplomatic leadership (c) Charismatic leadership (d) Bureaucratic leadership 56. Which of the following is the most appropriate management control technique for timely completion of a project ? (a) Organization Chart (b) Bar Chart (c) PERT (b) Load Chart Directions: The next five (5) 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 but R is the correct explanation of A (b) Both A andR 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 57. Assertion (A) : The top management in an organization should be mainly concerned with very important and complex problems and not with routine day-to-day problems Reason (R): This is stated by the scalar principle of organization. 58. Assertion (A): Only listed securites are dealt with in the stock exchanges. Reason (R): Listion at stock exchanges indicates that a company is a blue chip. 59.Assertion: While vouching an auditor should check entries against related vouchers and ascertain the genuineness and validity of vouchers. Reason (R): Vouching is a method of examination to substantiate an entry in the books of account.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 71

60. Assertion (A): While vouching an auditor should check entries against related vouchers and ascertain the genuineness and" validity of vouchers, Reason (R): Vouching is a method of examination to substantiate an entry in the books of account. 61. Assertion (A): The total assets of a business are always equal to its liabilities. Reason (R): All assets of the business are claimed either by the owners or by the outsiders. 62. What is the limit of paid up capital for a company to mandatorily appoint a whole time company secretary ? (a) Not less than Rs 25 lakhs (b) Not less than Rs 50 lakhs (c) Not less than Rs 1 crore I (d) Not less than Rs 2 crores 63. Which one of the following statements is correct ? A company's balance sheet and profit and loss account, other than a banking company, require the authenticity from (a) the Managing Director only (b) the Manager or the Secretary, if any, and by not less than two Directors of the company one of whom is Managing Director, if there is one (c) any two Directors of the company and one of whom is the Managing Director, if there is one (d) one of the Directors who is looking after the finance 64. Any dividend remaining unpaid/unclaimed for seven years is transferred to which one of following accounts ? (a) Investor Education and Protection Fund (b) Central Government's General Revenue Fund (c) Capital Redemption Reserve Account (d) General Reserve Account 65. Consider the following statements : Share premium account may be used by the company 1. in paying up un-issued share~ of the company to be issued to members of the company as fully paid bonus shares 2. in providing for premium payable on redemption of preference shares or debentures 3. in buying back of securities 4. in writing off the expenses or commission paid or discount allowed on issue of securities Which of the statements given above is/are correct ? (a) 1, 2, 3 and 4 (b) 1, 2 and 4 only (c) 2 and 4 only (d) 3 only 66. Which doctrine emanated from the famous case of Royal British Bank v. Turquand (1856) 119 ER 886 ? (a) Doctrine of ultra vires(b) Doctrine of subjugation (c) Doctrine of indoor management (d) Doctrine of proportional representation 67. In the event of not accepting the recommendations of the Audit Committee, what is the responsibility of the Board of Directors ? (a) That it will simply pass a resolution by recording the reasons' for not accepting the report. (b) That it will record the reasons and communicate such reasons to the shareholders (c) That it will record the reasons and communicate to the Central Government (d) That it will record the reasons and communicate to the Registrar of Companies 68. The public documents of a company should not only be read but to be understood as they are and therefore deemed to have been read by those who deal with the company. What is this rule known as ? (a) The rule of equality (b) The rule of constructive notice (c) The rule of increasing liability (d) The rule of abrogation
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 72

69. What is the penalty for making any statement, promise or forecast which is false, deceptive or misleading, or by any other dishonest concealment of material fact to enter into any agreement for acquiring shares or debentures through the pr'Jspectus ? (a) With imprisonment extending to five years or with a fine of rupees one lakh or with both (b) With imprisonment extending to three years or with a fine of rupees one lakh or with both (c) With imprisonment extending to five years only (d) With a fine of rupees one lakh only 70. Which one of the following statements in the context of the famous case of Solomon v. Solomon & Co. Ltd. (1897), AC 22, is correct ? (a) A company is entirely distinct from and independent of its members even if a member owns virtually the whole of its shares (b) A company is distinct from and independent of its members; but in case a member owns virtually the whole of its shares, they are actually the same (c) A company and its members are not distinct and independent from each other (d) A person having issued at least 51% of company's share would only be treated distinctly 71. Match List-I (Office Equipment) with List-II (Function and Utility) and select the correct answer using the code given below the Lists : List-I List-II A. Pen Drive 1. Fixed data storage device B. Hard Disc 2. Conversion of Hard copy of text/picture into soft copy D. Scanner C. Administrative Manual 3. Mobile data storage device D. Handbook 4. Weather forecasting. ABCD ABCD (a) 3 1 4 2 (b) 2 4 1 3 (c) 3 4 1 2 (d) 2 1 4 3 72)Match List-I (Manual/Handbook) with List-II (Activity) and select the correct answer using the code given below: List -IList - II A. Policy Manual 1. Filing, correspondence and communication B. Organization Manual 2. Selected aspects in combined form C. Administrative Manual 3. Decisions and pronouncements of management D. Handbook 4. Responsibility and authority of different positions ABCD ABCD (a) 3 2 1 4 (b) 1 4 3 2 (c) 3 4 1 2 (d) 1 2 3 4 73).Which one of the following is the correct statement? The most appropriate purpose of accounting standards is (a) to facilitate auditing task of diverse nature (b) reduction of alternatives and bringing uniformity (c) to make adequate volume of information available to its end-users (d) to ensure better tax compliance including VAT 74). Which one of the following is the correct statement? The first Accounting Standard (AS-1) relates to (a) information to be disclosed in financial statements (b) consolidated financial statements (c) disclosure of accounting policies (d) reporting of financial information by segments
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 73

75). Outstanding wages due for the month of March, 2005 and prepaid expenses and incomes are taken into account in determining profit or loss for the year ended on 31st March, 2005 Under which one of the following systems is the above practice carried out? (a) Cash system of accounting (b) Accrual system of accounting (c) Hybrid system of accounting ( d) Stock and debtor system 76. Which one of the following is the correct statement? According to the convention of conservatism, the stock in trade is valued at (a) the market price (b) the cost price (c) the market price or cost price whichever is more B (d) the market price or cost price whichever is less 77. On which one of the following concepts is determination of expenses for an accounting period based ? (a) Accounting period concept (b) Matching concept (c) Cost concept (d) Money measurement concept 78). Match Ust-I (Accounting Concept) with List-II (Assumption Involved) and select the correct answer using the code given below the Lists : List -IList - II A. Accrual concept 1. Entity shall remain in operation long enough to carry out its existing commitments B. Entity concept 2. Existence of business separate from its owners, creditors,employees and customers, etc. C. Going concern concept 3. Method of identifying revenue and expenses with specific period of time D. Consistency concept 4. Accounting principles and procedures should be followed uniformly from one period to another 5. All material information should be disclosed in the financial statements ABCD ABCD (a) 4 2 1 5 (b) 3 1 2 4 (c) 4 1 2 5 (d) 3 2 1 4 79). Which one of the following is the correct statement? The revenue is generally considered as realized at the time of (a) receipt of order (b) Agreement to sell (c) receipt of cash (d) sale 80). In XY partnership firm, X is to get 10% commission on net profit before charging any commission, and Y is to get 10% commission after commissions of both X and Yare charged. Net profit is Rs 40,000. What is the value (approximate) of commission of Y? (a) Rs 3,272 (b) Rs 4,508 (c) Rs 4,896 (d) Rs 5,255 81)What is the amount of sales, when Opening stock Rs 50,000 Purchases Rs 1,50,000 Wages Rs 20,000 Closing stock Rs 40,000 and the Gross profit IS 1/7th on sales?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 74

(a) Rsl,37,142 (c) Rs 2,10,000

(b) Rs 2,00,000 (d) Rs 1,86,669

82). If land and property are recorded in the books of accounts at market price and profit on disposal of an item of the same is credited to Profit and Loss Account, which accounting principle is violated ? (a) Cost principle (b) Realization principle (c) Matching principle (d) Principle of Quality 83). Which one of the following is prescribed by the generally accepted accounting principles ? (a) Uniformity in accounting practices in all enterprises within a country (b) Uniform accounting practices in all enterprises all over the world (c) Different accounting practices in different industries (d) Different accounting practices in different regions 84). Given: Rs Opening Capital 10,000 Closing Capital 12,000 New Capital introduced 1,000 What is the profit for the year? (a) Rs 4,000 (b) Rs 3,000 (c) Rs 2,000 (d) Rs 1~000 85). Accounting as an information system in business is looked upon as the process of communication. It consists of the following four steps: 1. Communication 2. Recording of data 3. Business activities and transactions 4. Processing of data 86).Match List-I (Accounting Concept) with List-II (Example) and select the correct answer using the code given below the Lists List -IList - II A. Business entity 1. Capital in the liability side of Balance Sheet B. Dual aspect 2. Balance Sheet as on 31st December, 2004 C. Accounting period 3. Wages paid Rs 5,000 D. Money measurement 4. Goodwill in Balance Sheet for Rs 10,000 ABCD ABCD (a) 1 4 2 3 (b) 2 3 1 4 (c) 1 3 2 4 (d) 2 4 1 3 87). Which one of the following contains two frequently discussed cross-sectional techniques of accounting information and their analysis? (a) Abridged profit and loss account and balance sheet (b) Cash flow statement and statement of changes in financial position (c) Common size statements and financial ratio analysis 88).Which one of the following is the correct statement? When an auditor finds significant unexplained fluctuations in various financial ratios while performing analytical review procedures, he should normally (a) qualify the audit report
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 75

(b) issue a letter of weaknesses to the management (c) extend his substantive procedures for detailed verification of transactions and balances (d) make other quantitative checks 89). During analytical review, which one of the following is used by an auditor to calculate the Return on Investment (ROI)? (a) Net profit before tax and interest/Fixed assets plus current assets (b) Net profit before tax and interest/Fixed assets (c) Net profit before tax and interest/Working capital (d) Net profit before tax and interest/Fixed assets plus working capital 90). Text checking is applied in which of the following audit functions? 1. Vouching 2. Cash verification 3. Physical stock verification 4. Internal control evaluation Select the correct answer using the code given below: (a) 1 and 2 only (b) 2, 3 and 4 only (c) 1, 2 and 4 only (d) 1 and 3 only 91).Match List-I (Explanation) with List-II (Types of Audit) and select the correct answer using the code given below List –I List - II A. Audit work is carried on almost simultaneously with recording transaction 1. Balance Sheet Audit B. Auditor starts his work after the final accounts have been prepared 2. Continuous Audit C. Audit conducted in between two annual audits 3. Interim Audit D. Some of the books & records of the whole period or specific period are audited 4. Partial Audit ABCD ABCD (a) 2 4 3 1 (b) 3 1 2 4 (c) 2 1 3 4 (d) 3 4 2 1 92). What is/are the purpose(s) of using working papers prepared by an auditor? 1. Planning' and conduct of the audit efficiently 2. Supervision and review of audit work performed by the juniors . 3. Producing the working papers as evidence of the audit work performed by him Select the correct answer using the code given below.: (a) 1, 2 and 3 (b) 2 only (c) 2 and 3 only (d) 1 and 3 only 93). Match List-I (Method of Collecting Audit Evidence) with List-II (Example) and select the correct answer using the code given below the Lists List -IList - II A. Observation 1. Auditor finds that although there is no increase in salaries and wages, contribution to Provident Fund has increased B. Correlation with related information 2. On a thorough Scrutiny of payroll auditor comes across 13 entries instead of 12 entries, one extra entry being for the succeeding month of next year C. Enquiry 3. Auditor, on a visit of company's godowns, finds that there is a huge pile of damaged and obsolete stock. On investigation he is told that the same are not shown as such in the inventory sheets
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 76

D.Scanning 4. On a prolonged interaction with various persons connected with cash transactions auditors find that there is system of internal check in regard to cash transactions ABCD ABCD (a) 3 2 4 1 (b) 4 1 3 2 (c) 3 1 4 2 (d) 4 2 3 1 94). Match List-I (Specific Item) with List-II Relevant internal Control Query) and select the correct answer using the code given below the Lists : List -IList - II A. Fixed assets 1. Are bank reconciliation statements prepared from time to time? B. Purchase 2. Are invoices checked and verified in regard to description of materials, terms of payments, etc? C. Sales 3. Are all invoices duly approved for payment? D. Disbursement 4. Who authorises for the sale of scraps? 5. Who prepares payroll ? ABCD ABCD (a) 2 3 4 1 (b) 4 1 2 5 (c) 2 1 4 5 (d) 4 3 2 1 95)What is an independent appraisal function established with in an organisation to examine and evaluate its activities as a service to the organisation called? (a) Internal auditing (b) Internal Check (c) Internal Control (d) Adminstrative Control 96. Consider the following statements : The techniques of auditing' include 1. physical examination of tangible assets 2. confirmation from third parties 3. interview with the article clerk 4. study of the type of the organization Which of the statements given above are correct ? (a) 1 and 4 only (b) 2, 3 and 4 only (c) 1, 2 and 3 only (d) 1 and 2 only 97). Match Ust-I (Accounting Standard) with List-II (Subject and select the correct answer using the code given below, List -IList - II A. AS-13 1. Consolidated Financial Statements B. AS-2 2. Accounting for Investments C. AS- 3 3. Cash Flow Statements D. AS-12 4. Valuation of Inventories 5. Accounting for Government ABCD ABCD (a) 3 4 2 5 (b) 2 1 3 4 (c) 3 1 2 4 (d) 2 4 3 5 98). A company purchased a machine for Rs 30 lakhs on 1st April, 2002. The estimated life of the machine is 9 years and scrap value is Rs 3 lakhs. The company follows straigh~ line method for charging depreciation.' If the method of depreciation is changed from straight line method
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 77

(SLM) to written down method, what is the depreciation provided on the machine in the financial year 2003-04 ? (a) Rs 3,00,000 (b) Rs 2,70,000 (c) Rs 2,40,000 (d) Rs 2,43,000 99). 99. Which one of the following reasons provides the best theoretical support for accelerated depreciation? (a) Assets are more efficient in early years and initialiy generate more revenue (b) Expenses should be allocated in a manner so as to smoothen earnings (c) Repairs and maintenance costs will increase in later years so depreciation should decline (d) Accelerated depreciation provides earlier replacement because of time value of money 100). Which one of the following is the correct statement? Drawings by proprietor in anticipation of future profit, made during the year would (a) reduce owner's equity and increase assets (b) reduce owner's equity and increase liabilities (c) reduce both owner's equity and assets (d) increase liabilities and assets and reduce owner's equity 101). In which account are the revenue as well as expenses shown on cash basis? (a) Income and Expenditure account (b) Profit and Loss account (c) Profit and Loss Appropriation account (d) Receipts and Payments account 102). X and Yare partners in a firm sharing profits and losses in the ratio 5:3. They admitted Z into the firm. The new. profit and loss sharing ratio is 3 : 2 : 1. What are the values of sacrificing ratios of X and Y? X Y (a) 1/8 1/24 (b) 1/3 1/6 (c) 3/8 1/24 (d) 1/12 1/12 (Le., equal) 103).Match List.I (Transaction) with List-II (Entry to be Made) and select the correct answer using the code given below the Lists : List -IList - II A. Loss on realization 1. Debit partner's capital account B. Profit on realization 2. Credit realization account C. Assets sold 3. Credit partner's capital account D. Creditors paid 4. Debit drawings account 5. Debit realization account ABCD ABCD (a) 1 3 2 5 (b) 2 5 4 3 (c) 1 5 2 3 (d) 2 3 4 5 104. Which one of the following is the correct statement? As per the provisions in the Companies Act & the relevant Accounting Standard AS-5, depreciation provision is : (a) a process of allocation of the depreciable amount of an asset over its estimated useful life (b) a process of valuation of the depreciable amount of an asset over its remaining useful life (c) a process of writing off the unrealized portion of an asset at the end of its useful life (d) simply a statutory provision optional for a business entity 105. Which one of the following is the correct statement? By maintaining the provision for depreciation account, the asset account
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 78

(a) is shown after deducting the annual provision made for depreciation (b) is maintained at its original cost throughout its lifetime (c) is reduced annually by the depreciation amount (d) is reproduced at net realizable value 106. Subscriptions received by a non-profit organization during the year 2004 amounted to Rs 10,000. The subscriptions outstanding on 31-12-2003 and 31-12-2004 were Rs 2,000 and Rs 4,000 respectively, while the subscriptions received in advance on those dates were Rs 3,000 and Rs 2,000 respectively. What was the income from subscriptions of the organization for the year 2004 ? (a) Rs 16,000 (b) Rs 15,000 (c) Rs 13,000 (d) Rs 9,000 107. Which one of the following is the correct statement? In the case of non-profit organization, ifafter the adjustment of incomes and expenses related to specific fund the fund balance is negative, it is transferred to (a) the assets side of the Balance Sheet (b) the liabilities side of the Balance Sheet (c) the credit side of Income and Expenditure Account (d) the debit side of Income and Expenditure Account 108. If proprietary ratio (Shareholders funds/Net assets) is 0.75; and the debentures, current liabilities and current assets are Rs 45,000, .Rs 40,000 and Rs 85,000 respectively, what is the amount of Net Block (Fixed assets)? (a) Rs 1,35,000 (b) Rs 1,40,000 (c) Rs 1,80,000 (d) Rs 1,00,000 109. Match List-I (Computation of goodwill) with List-II (Method) and select the correct answer using the code given below List -IList - II A. Goodwill is determined on the basis of the excess of actual profits over the normal profits expected in future 1. Super Profit Method B. Goodwill is determined on the basis of the total value of the firm

Commerce 2009 answers 1.(D) Audit Note Book-Which one is maintained by auditor 2.(D) 2-3-1-4 Consider the following functions of purchase department 3.Not Sure 4.(c) As per AAS 15 5.(A) In which meeting auditor has right to attend 6.(C) When an auditor certifies a financial statement 7.(B) Who among the following....resignation of auditor 8.(c) Within which one..first auditor appointed 9.(a) How would...machinery damaged 10.(c) Which one.... warrant an expression of opinion
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 79

11.(b) but many guys including me favour (d) ......Management auditor 12.( b) i think maybe (a) 13.(a) Directing Which one ... unifying actions of a group of people in an organization 14.(a) force field analysing 15.(c) Consider ...partnership registered compulsory 16.(b) Bill Lading, Consular Invoice 17.(c) Mutual Fund .... though i believe it should be (a) as steady appreciation doesn't happen always 18.(b) Particular average....marine insurance 19.(d) auditor...special resolution 20.(d) F.W. Taylor...separating planning from operation 21.(d) Satisficing Model...Herbert A Simon 22.(d) Need Based Minimum Wage 23.(d) Northcote Parkinson 24.(c) Selection Scores 25.(a) Match List....Reference Checks, Preliminary Interview 26.(c) Kurt Lewin 27.(a) Robert Blake, W.J. Reddin 28.(d) Entreprunership Management 29.(d) Sender-Message-Encoding 30.(c) Gang Plank 31.(d) Match List X Y Theory, Expectancy Theory 32.(b) Maslow 33.(a) Under... dissolution partnership 34.(d) Henry Mintzberg 35.(b) Coordination 36.(d) David C McClelland 37.(a) Grading Method 38.(c) 20,000 39.(c) Collection of Rs 40,000 from debtors 40.(d) X ltd...40% dividend 41.(c) Policy surrender Value 42.(b) ..preferential payments 43.(c) non compliance of accounting standards 44.(c) profit prior to incorporation 45.(d) Schedule VI 46.(b) Rs 800 Cr 47.(d) Issue of fully paid bonus shares 48.(c) Rs 11,200 49.(a) X Y Z Partners 50.(c) 6:4:5 51.(c) between A and B 52.(d) Consider.. Reserves Surplus...Securities Premium Account 53.(b) Bonus to Shareholders Account 54.(a) Forfeited 55.(b) 4 % ..Journal entry in books of F ltd 56.(a) Rs 12.50 Rights 57.(a) Rs 20,000 X ltd issued ...discount to be written off 58.(b) Rs 60 59.(b) Rs 20..XYZ LTD forfeited
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 80

60.(b) Reduce Liquidity 61.(c) Acid test Ratio.. issue of convertible debentures 62.(b) 1.125: 1 acid test ratio 63.(c) operating profit ratio 64.(d) ICAI Guidelines 65.(c) Information Memorandum 66.(a) Statutory Report 67.Not Sure (D) 68.(C) Shelf Prospectus 69.(b) Statutory Meeting 70.(b) Doctrines.. 71.(b) Ruben V/S Great Fingall 72.(a) Indoor Management 73.(c) Sec 292 A 74.(a) removal Secretary 75.(c) Freud 76.(c) Matrix 77.(d) Eric Berne 78.(a) Sec 233 A 79.A...Assertion 80.b 81.d 82.d....NAME CHANGE 83.c...power BOD 84.(b) Share premium increase 85.(d) if due to certain circumstances..no auditor appointed 86.(c) Match List...Suppression Receipts 87.(a) Secret Reserve 88.(c) which..correct sequence..auditor 89.(c) Balance Sheet Audit 90.(a) Teeming Lading 91.(b) kiting 92.(c) Consider..verification 93.(a) Inventory by product 94.(b) advantage..direct confirmation 95.(c) ..example direct confirmation 96.(d) Performance Peer Firms...AAS 8 97.(a) consider the following steps,,audit programme 98.(d) Match List..Test Checking 99.(b) which..correct..sequence..accounting..transactions 100.(c) Match List Fixed Asserts 101.(c) Rs 68,000 102.(a) Purchases equal to.. 103.(b) If Assets of a business 104.(d) Rs 16,800..Given Below..income expenses 105.(a) Match List..Valued At Cost 106.(c) Match List Capital Expenditure 107.(a) Match List..Accounting Amalgamations 108.(c) Revenue Expenditure...Patent renewal fees 109.(b) Rs 39,000 Given Purchases ...33 1/3 % on cost
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 81

110.(a) Rs 70,000 X started a garment ..her profit year ended 31.12.2007 111.(c) Rs 3,600 If a traders sales account..no indirect income 112.(c) Rs 8,400 S Ltd has in stock 113.(d) Consider,, Individual Incentive Plans 114.(b) subsequent auditor removal 115.(b) Point Rating Method...Analytical method Job Evaluation 116.(b) Match List Mary Parker 117.(d) identify...correct..sequence.. 118.(a) Consider MBO 119.(a) 30 Days...A Private Company..altered ..public company 120.(a) Moosa Goolam Arif

IAS Prelims Commerce 1995 1. 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 2. A, B and C are partners in a business sharing profits at the ratio of 2 : 2 : 1. C dies on 31.3.94. The profits for the financial year 93-94 (April-March) is Rs. 64,000. The share of the deceased partner in the profits for the year will be rupees a. 12,800 b. 9,600 c. 6,400 d. 3,200 3. Consider the following balance Sheet as on 1.1.94 Liabilities Rs. Assets Rs. 300 12,350 350 1,000 11,000 300 Salaries
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 82

Outstanding XXXX 12,650 Cash Furniture Books & buildings Subscriptions outstanding 12,650 In the above Balance Sheet, the missing narration XXXX is a. Capital b. Capital fund c. Profit for the year d. Reserve fund 4. 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 lists: List I A. Receipts and Payments Account B. Income and Expenditure Account C. Dividend Equalisation Reserve D. Club subscription received in Advance Account List II 1. Revenue 2. Cash 3. Liability 4. Balance Sheet 5. General Reserve Codes; ABCD a. 2 1 4 3 b. 3 2 4 5 c. 2 1 5 3 d. 1 2 4 5 5. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 83

d. the amount of closing cash balance as reduced by expenses 6. 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 7. Which of the following are prepared by the organizations keeping only incomplete accounting records 1. Cash Book 2. Customers Accounts 3. Expenses Accounts 4. Day Books Choose the correct answer using the codes given below: Codes a. 1, 2 and 3 b. 1, 2 and 4 c. 1, 3 and 4 d. 2, 3 and 4 8. 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 share 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 9. The Directors of a Limited Company resolved to forfeit 1,000 equity shares of Rs. 10 each, Rs. 7.50 paid up, for nonpayment of the final call money of Rs. 2.50 per share. 700 of these shares were reissued at Rs. 7 per share. The amount to be transferred to the Capital Reserve Account would be
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 84

a. Rs. 2,500 b. Rs. 3,150 c. Rs. 3,500 d. Rs. 3,750 10. The nominal and book value of Sinking Fund Investments Account are respectively Rs. 1,00,000 and Rs. 6,000. 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. 1200 d. nil 11. A company’s Balance Sheet inter alia contains Rs. 1,60,000 fully paid 10% redeemable preference shares, Rs. 1,000 as share premium and Rs. 1,3 1,000 as Revenue Reserves. It resolves to immediately redeem the above-mentioned shares at 5% premium 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. Ps. 36,000 d. Rs. 37,000 12. 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. 1, 2, 3 b. 2, 1, 3 c. 2, 3, 1 d. 3, 2, 1 13. What is the correct sequence of the following functionaries/authorities in the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 85

life of a company? 1. Board of Directors 2. Promoters 3. Registrar of Companies 4. Underwriters 5. Liquidators Select the correct answer using the codes given below Codes: a. 1, 2, 3,4,5 b. 2, 1,3,4,5 c. 5,4, 1,3,2 d. 2,4, 1,3,5 14. Depreciation Accounting is a process of a. allocation of cost b. valuation of assets 3 of 15 c. provision for replacement of assets d. estimation of net profit 15. 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 16. 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. 7,000 on 31.12.93, the depreciation for the year 1993 will be a. Rs. 1,000 b. Rs. 3,000 c. Rs. 5,000 d. Rs. 7,000 17. 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 18. Which of the following are applicable to
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 86

Sinking Fund method of depreciation? 1. Periodic depreciation is smaller than the assets’ actual annual depreciable cost. 2. Amount of interest constantly declines due to assets’ reducing balances. 3. Annual net incidence on Profit and Loss Account 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 below: Codes: a. 2 and 4 b. 1 and 3 c. 1, 2 and 3 d. 2, 3 and 4 19. Match List I with List II and select the correct answer using the codes given below the lists: List I A. Amortisation B. Depreciation C. Depletion D. Obsolescence List II 1. Diminution in the life of the asset due to excessive use Exhaustion of natural resource 2. Expiration, of tangible assets 3. Expiration of intangible assets 4. Economic deterioration due to improved inventions Codes: ABCD a. 1 2 3 4 b. 1 2 4 5 c. 5 2 3 4 d. 4 3 2 5 20. 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 21. Which of the following statements are correct?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 87

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 coming months. Select the correct answer using the codes given below: Codes: a. 1, 2 and 3 b. 2 and 3 c. 1 and 3 d. 1 and 2 22. The success of perpetual inventory system depends upon 4 of 15 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 23. 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 24. 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 25. Interest Coverage Ratio is given by a. Net Profit/Interest on Debt b. Debt Capital/Interest on Debt
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 88

c. Earnings Before Interest and Taxes/Interest on Debt d. Profit Before Tax/Interest on Debt 26. In a common-size balance Sheet each item is expressed as a percentage of a. Equity Capital b. Debt Capital c. Fixed Assets d. Total Assets 27. 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. 15,000 b. Rs. 40,000 c. Rs. 60,000 d. Rs. 1,00,000 28. Match List I (Ratios) with List II (Method of calculation) and select the correct answer using the codes giver below the lists: List I A. Debt-Equity Ratio B. Proprietary Ratio C. Capital Gearing Ratio D. ROI List II 1. Equity Capital! Total Debt Capital 2. External Equity/ Owners’ Equity 3. Total Shareholders’ Funds/Total Assets 4. Profit Before Interest & Tax/ Net Assets Codes; ABCD a. 2 3 1 4 b. 2 3 4 1 c. 3 2 1 4 d. 3 2 4 1 29. Match List I with List II and select the correct answer using the codes given below the lists List I A. Financial Leverage B. Quick Ratio C. Stock Turnover Ratio D. Margin on Sales List II 1. Efficiency
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 89

2. Profitability 3. Risk 4. Liquidity Codes; ABCD a. 3 4 1 2 b. 4 3 1 2 c. 4 3 2 1 d. 3 4 2 1 30. Trading on equity takes place a. when Capital other than that of equity shareholders also employed 5 of 15 b. only when equity Capital is employed c. only when debenture funds are employed d. when profits are ploughed back

31. Pay out 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 32. Given that Sales = Rs. 50,000 Variable Cost = Rs. 20,000 Fixed Cost = Rs. 10,000 Capital employed = Rs. 2,00,000 the profit-volume ratio will be a. 10% b. 15% c. 50% d. 60% 33. Consider the following activities: 1. Valuation 2. Verification 3. Vouching The correct sequence of these activities undertaken by an auditor is a. 3, 1, 2 b. 3, 2, 1 c. 2, 3, 1 d. 1, 2, 3 34. The value of which one of the following assets increases in the initial years of its life remains constant thereafter and finally
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 90

begins to decline? a. Livestock b. Patents c. Goodwill d. Machinery 35. Consider the following statements Continuous audit 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 36. Match List I (Nature of audit) with List II (Related types of audit) and select the correct answer using the codes given below the lists: List I A. Audit work is carried on almost simultaneously with the recording, of transactions B. Auditor starts his work when the final accounts have been prepared C. Audit conducted in between two annual audits D. Some of the books and records of the whole period or specific period are audited List II 1. Balance Sheet Audit 2. Continuous Audit 3. Interim Audit 4. Cost Audit 5. Partial Audit Codes; ABCD a. 4 1 2 3 b. 2 1 5 3 c. 2 1 3 5 d. 1 2 3 4 37. Which one of the following would be a sufficient ground for an auditor to submit a qualified report even though the management had given a note to the accounts?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 91

a. Securities belonging to the client are lodged with a depository b. Fixed assets have been mortgaged c. Bank balance as shown by the passbock is different from that indicated by the cash book d. Closing stock is valued at cost plus 10% 38. Consider the following documents 1. Audit Notebook 2. Audit Programme 3. Audit Report 4. Audit Files The correct sequence which an auditor prepares these documents is 6 of 15 a. 1, 2, 3, 4 b. 2, l, 3, 4 c. 2, 1, 4, 3 d. 1, 2, 4, 3 39. Which of the following pairs are correctly matched? 1. Test check …………Random checking 2. Internal check …………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 40. 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 41. A Chartered Accountant who has purchased on credit goods worth Rs. 2,000 from a company ‘Z’ Ltd., is a. not disqualified 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 92

auditor of Z Ltd. d. Disqualified from being appointed an auditor of any company having dealings with Z Ltd. 42. 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. Goodwill 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 some of these books 43. Consider the following situations 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 4. The Central Government NEED NOT NECESSARILY appoint inspectors to investigate the affair 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 44. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 93

c. 2 alone d. 1 alone 45. Assertion (A): The Chairman’s speech in NOT required under the-Companies Act. It is a matter of custom or tradition. Reason (R) The Chairman’s speech is comp1emen material and has to be read in conjunction with the Annual Report where he provides’ additional information on the status of the company’s activities and the overall development taking place in that industry. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A 7 of 15 c. A is true but R is false d. A is false but R is true 46. Assertion (A): Intrusion of an outsider as member is. undesirable unless he is found to be a persona grata to the existing Reason (R): The Articles of a private limited company must for this reason contain restrictions 85 to transfer of Shares, limitation of members to 50 and prohibition of invitation to public to subscribe to any share in the company. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 47. Assertion (A): The Prospectus of a company must state the management perception of the risk factors. Reason (R): The investor can make the decision to invest or not to invest at his own risk. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 48. Assertion (A): Everything that goes to increase the importance of the subordinate’s role is decent ration Reason (R): When the degree of
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 94

delegation of authority is more than the degree of reservation of authority, it is a case of decentralization a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 49. Assertion (A): MBO is effective way of planning and organizing the work. Reason (R): Employees participate in setting the objectives. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 50. Assertion (A): O & M is a conscious attempt to improve the quality of management and to maintain efficient administrative machinery. Reason (R): 0 & M involves a detailed study of the subject to be investigated, say procedures currently being followed. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 51. Assertion (A): A Company Secretary with the requisite qualification and experience may still not be appointed by the Board if he is judged by the Board to be not trustworthy. Reason (R): The Company Secretary deals with several confidential matters of the company. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 52. Assertion (A): Agenda is the genesis of the meeting to be held and of the minutes to be recorded subsequently, Reason (R): The agenda, if prepared in
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 95

brief, would enable the Secretary and the Chairman to prepare and finalize the minutes correctly and without difficulty. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 53. Assertion (A): Owners’ claims (equities) are often referred to as Residual. Reason (R): Owners do not have any claim on the assets until all the claims of the creditors have been satisfied in full. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false 8 of 15 d. A is false but R is true 54. Assertion (A): Interest on Working Capital should be treated as an item of Revenue Expenditure. Reason (R): Interest is the cost of Capital employed in the business. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 55. Assertion (A): Wages paid for the installation of a new machine are treated as Capital Expenditure. Reason (R): It is connected with the task of putting a new asset in working condition. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 56. Assertion (A): Legacy is treated as Capital Receipt and shown in the liability side of the Balance Sheet of a non-profit organization. Reason (R): Property received under legacy creates liability for the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 96

organization. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 57. Assertion (A): Depreciation amount is added back to net profit for calculating ‘funds from operations’ in preparing a funds flow statement. Reason (R): Depreciation is an item of cost but not funds. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 58. Assertion (A): Quick realization of receivables will improve the debtor’s turnover of an enterprise. Reason (R): Realization of receivables increases the quantum of Working Capital. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 59. Assertion (A): In a large company, internal control is the responsibility of the management. Reason (R): The external auditor has to certify that the company has internal control commensurate with the size of its operations. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 60. Assertion (A): The return On Investment (ROI) is regarded as a primary ratio because it is one single measure where the final outcome of all business activities is recorded. Reason (R): The ‘Capital’ and ‘Return’ are subject to varying interpretations by firms.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 97

Therefore ROI is in practice. a. Both A and R are true and R is the correct explanation of A b. Both A and R are true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true

IAS Prelims Commerce 1995 61. 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 62. Match List I with List II and select the correct answer using the codes given below the lists: List I (Type of organization) A. Sole Trader B. Partnership C. Cooperatives D. Public Limited Company List II (Important characteristic) 1. Larger number of risk takers 2. Betterment of the weaker sections 3. Contractual relationship 4. Unlimited liability Codes; ABCD a. 1 2 3 4 b. 4 3 2 1 c. 4 2 3 1 d. 1 3 2 4 63. The liability of shareholders of a public limited company is limited to the a. paid up value of shores b. extent of their private assets c. nominal value of shares d. amounts called up 64. The “Instrument of transfer” is used at the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 98

time of a. issue of new shares to the public by the company b. issue of debentures. to the public by the company c. sale of shares by a member d. conversion of shares into stock 65. Match List I with List II and select the correct answer using the codes given below the lists List I A. Dividend B. Interest C. Bonus shares D. Premium on share price List II 1. Accumulated Reserves 2. Always paid whenever the firm makes a profit 3. Can be used for issue of Bonus shares 4. Can be paid out of Capital 5. Divisible part of profit Codes; ABCD a. 2 1 5 4 b. 5 4 1 3 c. 5 1 2 4 d. 2 5 1 3 66. Which one of the following statements is correct? a. A prospectus is a notice, circular, advertisement 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 67. Match List I with List II and select the correct answer using the codes given below the lists List I (Post held in the company) A. Director B. Company Secretary C. Managing Director D. Statutory auditor List II (Duties responsibility)
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 99

1. In charge of statutory and administrative duties 2. Reports to the management 3. Reports to the shareholders 4. Reports to the Board of Directors 5. Trustee of Company’s assets Codes; ABCD a. 2 4 5 1 b. 5 1 2 3 c. 5 1 4 3 d. 3 2 5 4 68. 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 articles of Association, 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 69. 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 A. Blue Chip B. Deep Discount Bonds C. Commercial Paper D. Debentures List II 1. Issued by a private limited company 2. Highly profitable investments in a stock exchange 3. Issued by financially sound companies 4. Small investments yielding a big sum after a long-term 5. Issued by companies having large reserves 6. Issued in lieu of loans Codes;
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 100

ABCD a. 2 1 3 6 b. 1 4 6 5 c. 2 3 1 5 d. 2 4 3 6 70. A public limited company CANNOT issue a. Debentures b. Deferred shares c. Participating Preference shares d. Redeemable Preference shares 71. 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, it may do so d. A company issuing shares to the public has no right to select a Merchant Banker to manage the issue 72. 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 73. Consider the following institutions 1. Securities Exchange Board of India 2. Board for Industrial and Financial Reconstruction 3. EXIM bank 4. National Stock Exchange The correct chronological sequence of the establishment of these institutions is
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 101

a. 4, 1, 2, 3 b. 3, 1, 2, 4 c. 3, 2, 1, 4 d. 4, 2, 1, 3 74. Vertical combination helps to a. achieve economy by combining allied activities b. survive during the times of depression c. fight a common enemy d. add new product lines 75. A part dealing with restrictive trade practices 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 76. 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 77. Technological updating would invariably require a. change in Management b. privatization of public enterprises c. retrenchment of workers d. induction of fresh capital 78. Letter of credit is now becoming an increasingly popular method of financing a. fixed capital needs b. working capital needs c. redemption o1 debentures d. distribution of dividend 79. Deferred payment arrangements a. working capital needs b. redemption of debts c. purchase of GDRs d. import of plant and machinery aim at financing 80. In general, export incentives are permitted within the regulatory framework of a. OECD b. UNCTAD c. IMF d. WTO
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 102

81. Import procedure begins with a. indent b. marine insurance c. Mate’s certificate d. shipping order 82. 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 nonfunded hci1ity to Indian exporters c. Overseas Investment Finance facility is not a part of the functions of EXIM Bank d. EXIM Bank was established to provide assistance in raising capital in international markets 83. 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 and Marine instirance 84. Match List I with List H aid select the correct answer using the codes given below the lists List I A. Causa Proxima B. Reinsurance C. Indemnity List II 1. Financial stake 2. Main reason behind the event 3. Compensation for the loss 4. Risking with other insurer Codes; ABC a. 2 4 3 b. 1 2 3 c. 2 3 1 d. 2 4 1 85. ‘Insurer’ is a person a. insured his life or goods b. helped a person to get an insurance policy c. undertaken to make good the loss of the subject matter of insurance
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 103

d. filed a suit in a court of law to recover an insurance claim 86. In insurance contract Uberima Fidel aspect is used as synonym of a. insurable interest b. free consent of parties c. utmost good faith d. legality of consideration 87. 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 88. Match List I (Management experts) with List II (Sequence of functions advocated 12 of 15 by them) and select the correct answer using the codes given below the lists List I A. Newman and Summer B. Henry Fayol C. Luther Gulick D. Koontz and O’Donnel List II 1. Organizing, Planning, Leading and Controlling 2. Planning, Organizing, Commanding, Coordinating and Controlling 3. Planning, Organizing, Staffing, Directing and Controlling 4. “POSDCORB” Codes; ABCD a. 1 2 4 3 b. 2 1 3 4 c. 1 2 3 4 d. 2 1 4 3 89. 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 manage pent requires more technical skills than others c. Supervisory level men require less technical skill than others d. Top management requires more conceptual skill than ethers 90. From the point of view of Functional
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 104

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 91. Match List I (Managerial Activity) with List II (Managerial Function) and select the correct answer using the codes given below the lists: List I A. Forecasting B. Communication C. Selection of managers D. Establishing performance standards List II 1. Controlling 2. Planning 3. Leading 4. Staffing Codes; ABCD a. 2 3 4 1 b. 1 2 4 3 c. 2 4 3 1 d. 1 3 4 2 92. 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 longterm planning 93. Consider the following statements: 1. Decentralization and delegation are closely interrelated 2. Delegation and decentralization are both desirable 3. Decentralization is not suitable for large organizations 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 105

d. 1, 3 and 4 are correct 94. Organization Theory deals with a. forms of business organization b. structure of an organization c. industrial relations d. incentives and wage policy 95. Which one of the following statements is correct? a. Responsibility of the delegatee cannot be greater than the authority delegated b. Delegation frees the delegator of the responsibility c. Delegation is merely the division of work 13 of 15 d. Delegation does not bestow an obligation on the part of the delegatee 96. The basis of Theory ‘Z’ is the reliance on a. external control of human behaviour 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 97. Delegation of authority is linked to a. managerial planning b. management coordination c. management control d. scientific management 98. Match List I with List II and select the correct answer using the codes given below the lists: List I A. F.W. Taylor B. Henry Fayol C. Elton Mayo D. Peter Drucker List II 1. MBO 2. Scientific Management 3. Fourteen principles of Management 4. Theory ‘X’ Codes; ABCD a. 2 3 - 1 b. 1 2 4 c. 2 - 4 1 d. 3 2 - 1 99. When an office manager selects different colours of paper and ink for printing forms
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 106

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 100. Office management is generally speaking, the responsibility area of a. Corporate Controller b. Works Manager c. Chairman, Board ‘of Directors d. Chief Executive 101. File Movement register keeps track of a. indexing of records b. classification of records c. inventory of records d. none of the above 102. The use of office machine CANNOT a. enhance production b. save labour c. promote accuracy d. relieve monotony. 103. Which one of the following sections of the Company’s Act 1956 makes it obligatory that with effect from 1994, every company with a paid-up share capital of Rs. 50 lakhs or more should have a qualified wholetime Company Secretary? 104. 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. 1,2,4,5,3 105. Which one of the following statements regarding the rights, duties and liabilities of a Company Secretary is correct? a. A Company Secretary does not have access to the books of accounts of the Company b. Remuneration of a Company Secretary is taken into account for the purpose of
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 107

calculating the overall managerial remuneration under Section 198 of the Companies Act c. A Company Secretary is liable for any misstatement made in the prospectus d. A Company Secretary is responsible for Signing various returns and statement. and filing the same with the Registrar of Companies 106. Match List I with List II and select the correct answer using the codes given below the lists List I (Relevant materials for a Company meeting) A. Agenda B. Quorum C. Adjournment D. Proxy List II (Meaning) 1. Minimum number of members required to be present 2. Entitlement to. vote 3. Matters to be taken up for decision 4. A meeting in progress postponed to some other date 5. Minimum number of directors 6. Entitlement to participate Codes; ABCD a. 1 6 4 2 b. 3 5 1 2 c. 3 1 4 2 d. 2 1 4 6 107. Consider the following events 1. Demand for poll 2. Chairman’s declaration of result of voting by show of hands 3. Appointment of scrutinizers at poll 4. Declaration of the result of the poll The correct sequence of these events is a. 1,3,4,2 b. 1,4,3,2 c. 2,3,1,4 d. 2, 1,3,4 108. An estimate of the assets and liabilities of a firm as on a given date is called a. Balance Sheet b. Statement of Affairs c. Statement of Capital d. Income Statement
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 108

109. A provision is a a. General Reserve b. Specific Reserve c. Capital Reserve d. Contingency Reserve 110. A person starts a business with a Capital of Rs. 45,000. 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. 5,000 111. Match List I with List II and select the correct answer using the codes given below the lists: List I (Accounting concept) A. Consistency B. Comparability C. Conservatism D. Disclosure List II (Principle involved) 1. Losses- are anticipated and accounted for in advance but profits are not accounted for until realized 2. All the relevant financial information should be summarized and presented in the accounting statements 3. Accounting procedures in an entity should be followed uniformly from period to period 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; ABCD a. 4 3 5 2 b. 3 4 1 2 c. 4 3 1 5 d. 3 4 2 5 112. Which one of the following should be considered venue expenditure? a. Rs. 1,000 paid for the erection of a new plant b. Cost of Rs. 10,000 incurred in
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 109

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 secondhand 113. The written down value of a plant is Rs. 6,000 (the original value being Rs. 10,000). It is sold for Rs. 12,000 during the current financial year. Which one of the following is true in this regard? a. Capital Profit = Rs. 6,000 15 of 15 b. Revenue Profit = Rs. 6,000 c. Capital Profit = Rs. 2,000 and Revenue Profit = Rs. 4,000 d. Capital Profit = Rs. 12,000 114. 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 A. Carriage charges on a new machine purchased for factory B. Legal expenses incurred in defending a case of violation of a provision of Factories Act C. Grant-in-aid received from the Government for the construction of a building D. Amount received for a part of the office building sub-let List II 1. Revenue Receipt 2. Revenue Expenditure 3. Deferred Revenue Expenditure 4. Capital Expenditure 5. Capital Receipt Codes: ABCD a. 2 3 1 5 b. 4 2 5 1 c. 3 4 1 5 d. 4 3 1 5 115. 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 116. While preparing the Annual Financial
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 110

Statements, the balance of Prepaid Rent Account should be treated as the balance of a a. Personal Account b. Nominal Account c. Real Account d. Deferred Expenditure Account 117. Consider the following statements: Whale preparing Annual Financial Statements, the balance of Bills Receivable Account can be treated as 1. an Accrued Income 2. an item of assets 2. a “Personal Account” balance Of these statements a. 2 and 3 are correct b. 1 and 3 are correct c. 1 and 2 are correct d. none is correct 118. 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 a. 1,4,3,2,5 b. 2,4,3,5,1 c. 1,2,4,3,5 d. 2,4,5,3,1 119. Match List I with List II and select the using the codes given below the lists: List I A. Operating Income B. Capital Employed C. Inventory Turnover D. Gross Cash Flow List II 1. Cost of goods sold to average stock 2. Profits before depreciation, interest and taxes 3. Net Fixed Asset Investment and Net Working Capital 4. Total Funds invested 5. Profit before interest and taxes only 120. 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 goodwill in
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 111

cash which is distributed between A and B. C’s share in future profits or losses is to be one-fourth. The new profit sharing ratio of A, B and C will be a. 6 : 15 : 7 b. 15 : 6 : 7 c. 7 : 6 : 15 d. 6 : 7 : 15

IAS Prelims Commerce 1996 1. Which of the following pairs are correctly matched? 1. Planning ………………. Sets out the objectives and a complete set of policies 2. Organization ……………. Enables the owner or top executive of a business to interweave men, money, materials and methods 3. Coordination ……………. Ordely arrangement of group effort to provide unity of action 4. Control …………. Verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established Select the correct answer using the codes given below: a. 1, 3 and 4 b. 2 and 4 c. 1, 3 and 4 d. 1, 2 and 3 2. A written statement of the main duties and responsibilities which a particular job entails is called a. Job analysis b. Job specification c. Job description d. Job evaluation 3. Selection process in any organization is usually preceded by the preparation of a. Human resources audit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 112

b. Operations audit c. Human resources inventory d. Human resources accounting 4. Which one of the following monitors critical inputs and suggests preventive measures in the form of correctives action to correct inputs and processes? a. Feedback control b. Feedforward control c. Budgetary control d. Operational control 5. Consider the following elements in a feedback loop: 1. Identification of deviations 2. measurement of actual performance 3. Actual performance 4. Comparison of actual against standards The correct sequence of these elements in the feedback loop is a. 3, 2, 1, 4 b. 3, 2, 4, 1 c. 2, 3, 1, 4 d. 2, 3, 4, 1 6. Span of Management may be larger in the case of a. hard working subordinates b. loya subordinates c. centralized works and less responsibility d. repetitive work and clear responsibility 7. If the span of control is narrow, a number of managers would be required in each unit of the organization and there would be many managerial levels or layers. Such an organizational structure is referred to as a. Flat structure b. Tall structure c. Matrix structure d. Project structure 8. Span of management means that a. An organization must have well defined golas or objectives b. Each person is the organization must manage within a clearly defined functional area c. Each subordinate should report to only one supervisor d. A manager can supervise only limited number of subordinates 9. The following steps are involved in the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 113

process of organizing: 1. Forming supportive objectives 2. Delegating to the head of each group the authority necessary to perform the activities 3. Establishing enterprise objectives 4. Identifying and classifying activities The correct sequence of these steps is a. 3, 1, 2, 4 b. 3, 1, 4, 2 c. 1, 3, 4, 2 d. 1, 3, 2, 4 10. When management pays attention to more important areas and when the day-to-day routine problems are looked after by lower level management, it is known as a. Management by Objectives b. Management by Exception c. Participative Management d. Critical path method 11. The following steps are involved in managing by objectives: 1. Preliminary setting of objectives at the top 2. Setting subordinate’s objectives 3. Tying resources with the goals 4. Clarifying the organizational roles The correct sequence of these steps is a. 1, 2, 3, 4 b. 1, 2, 4, 3 c. 1, 3, 2, 4 d. 1, 4, 2, 3 12. A company Secretary must always be a. A part of a secretarial agency b. A firm or a corporation c. Registered with the Securities and Exchange Board of India d. An individual with specified professional qualifications 13. The company Secretary is the agent of the a. Managing Director b. Shareholders c. Board of Directors d. promoters 14. In the case of transmission of shares, the Company Secretary is required to check a. The ‘letter of request’ submitted by the executor b. Whether the transfer from submitted by the administrator is duly stamped
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 114

c. The deed of settlement between the parties d. If everything is in conformity with the orders the central Government. 15. In principle, in the case of transfer of share, the Company Secretary after he is satisfied that everything is in order is required to issue a. Transfer receipt to the transferee and the transferor b. Letter of probate receipt to the transferee and the transferor c. Notices of lodgment of transfer’ to the transferee and the transferee d. An advertisement by way of public notice regarding the transfer 16. Declaration of dividend is and important part of the agenda of a. statutory meeting b. Annual General meeting c. Extraordinary general meeting d. Joint meeting of the shareholders and debenture 17. The minutes of the proceedings of every general meeting should be recorded in the books kept for that purpose within a. 30 days of every such meetin b. Three months of any such meeting c. The intervening period between that meeting and the next meeting d. Such time as approved by the Chairman of the company 18. Which one of the following statements is correct? a. Minutes has Company’s Act, while reports have no such legal sanctity b. Minutes have no legal sanctity but reports have legal sanctity by virtue of the provisions contained in the Company’s act c. Minutes contain a much more detailed account of all matters of the meeting whereas report have fewer details d. There is very little difference between the minutes and reports except that one is brief and contains only action points while the other (reports) contains details including pros and cons of a particular decision 19. Assertion (A): The balance Sheet fails to
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 115

reveal the worth of a business. Reason (R): Assets are merely unamortized costs a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 20. Assertion (A): For ascertaining the correct profit current cost are to be matched with current revenues. Reason (R): LIFO method ensures matching of current cost with current revenues. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 21. Assertion (A): An equal increases in both current assets and current liabilities decreases current ratio. Reason (R): Equal decreases in current assets and current liabilities also decrease current ratio. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 22. Assertion (A): ROI has aptly been regarded as theprimary ration as it specifies the relative net profit earned on capital employed. Du pont chart shows the manner in which the key elements converge into the ROI. Reason (R): An approximate measure of Return on Equity (ROE) cannot be derived from ROI as the portion of assets financed by equity is difficult to determine. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 23. Assertion (A): The cost of demolishing an
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 116

old building preparatory to the construction of a new building in that place is to be treated as Capital Expenditure. Reason (R): Such cost is not incidental to the construction of the new building. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 24. Assertion (A): Once incorporated, the name of a public limited company cannot be changed. The name of a public limited company must be distinct and should not mislead or resemble that any other company. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 25. Assertion (A): A transferee of shares cannot sue the promoters of a company for misinformation in the prospectus. Reason (R): The information provided by the company promoters in the prospectus is addressed only to the original allottees. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false 4 of 15 d. A is false but R is true 26. Assertion (A): Effective motivation is moderated by organizational complexity and conflicts. Reason (R): An individual’s motives may be complex and conflicting. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 27. Assertion (A): According to Theory X all employees dislike workd and must be
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 117

coerced, controlled or threatened to make them work. Reason (R): Theory X makes an assumption about the basic human nature which is relevant to the employees also. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 28. Assertion (A): Everything that goes to increase the importance of the subordinate’s role is delegation. Reason (R): Subordinates can be trained by delegation a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 29. Assertion (A): An office system is a standard sequence of operations in a particular business activity and is concerned with how those operations are perfumed as well as by whom and when they are perfumed. Reason (R): Systems include operations, people and purpose. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 30. Assertion (A): Franking machines are used for printing postage on mailed letters. Reason (R): Franking machines are to be purchased from the market and it does not require a license from the postal dept. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true IAS Prelims Commerce 1996 31. Assertion (A): Organization and methods is a conscious attempt to improve the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 118

quality of management and maintain efficient administrative machinery. Reason (R): It involves detailed investigation with regard to the subject to be investigated, say procedures already being followed. a. Both A and R are true and R is the correct explanation of A b. Both A and R or true but R is NOT a correct explanation of A c. A is true but R is false d. A is false but R is true 32. The fundamental accounting equation, Assets = Equities, is the formal expression of a. Dual aspect concept b. Matching concept c. going-concern concept d. money measurement concept 33. A business is considered to be having and indefinite life according to a. Accounting period concept b. Cost concept c. Going concern concept d. Dual aspect concept 34. Which of the following pairs are correctly matched? 1. Business entity ………….. Accounting standard 2. Stock valuation ………. Consistency 3. Capital ………. Drawings 5 of 15 4. Going concern ………… Assumption Select the correct answer using the codes given below: Codes: a. 2, 3 and 4 b. 1, 2 and 3 c. 1, 2 and 4 d. 1, 3 and 4 35. Money-measurement concept of Accounting Theory is based on the assumption that the value of money will a. Remain constant b. Fluctuate c. Decreases d. go up 36. match List I (Items of Expenditure and Receipt) with List II (Nature of Expenditure and Receipt) and select the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 119

correct answer using the codes given below the list: List I A. Premium paid for a leasehold property B. Insurance premium paid for risks against accidental losses of properties (fixed assets) C. Amount realized from the sale of securities (investments) purchased earlier D. Huge sales promotion expense List II 1. Revenue expenditure 2. Capital receipt 3. Deferred revenue expenditure 4. Capital expenditure. Codes; ABCD a. 4 2 1 3 b. 3 2 1 4 c. 4 1 2 3 d. 3 1 2 4 37. Match List I (Items of Expenditure and Receipt) with List II (Nature of expenditure and receipt) and select the correct answer using the codes given below the lists: List I A. Compensation paid to retrenched workers of the factory for the loss of service B. Legal expenses incurred in connection with the purchase of a plot of land C. Compensation received from the government for the compulsory removal of a business premises to another place D. Sale proceeds of merchandise (goods) List II 1. Capital expenditure 2. Capital receipt 3. Revenue Expenditure 4. Revenue receipt Codes; ABCD a. 1 3 4 2 b. 1 3 2 4 c. 3 1 4 2 d. 3 1 2 4 38. The cash price of a machine is Rs.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 120

1,20,000 and its hire purchase price is Rs. 1,50,000 to be paid in five equal yearly installments. If a company purchases the machine on hire purchase basis, the amount of capital expenditure will be a. Rs. 1,20,000 b. Rs. 1,35,000 c. Rs. 1,50,000 d. Rs. 1,60,000 39. Which one of the following is a capital expenditure? a. Compensation paid to Directors on termination of their services b. Expenditure incurred in connection with the renewal of a Trade Mark c. Gratuities paid to employees on their retirement d. Royalty paid in installments for the purchase of rights to manufacture and sell patient medicines 40. A private limited company earns a net profit of Rs. 2,00,000 after tax during a certain financial period. Provision for taxation is Rs. 2,00,000 and income from investment is Rs 20,000 Capital employed 6 of 15 during the same period is Rs. 10,00,000 return on capital employed is a. 10% b. 20% c. 38% d. 42% 41. After taking into consideration the noncash charges of Rs. 30,000 the operating loss of a company is Rs. 20,000. The fund generated from operations is a. Rs. 50,000 b. Rs. 30,000 c. Rs. 20,000 d. Rs. 10,000 42. If profit is one-fourth of selling price. The share of profit to cost will be a. 1/3 b. 1/4 c. 1/5 d. 1/6 43. If balance sheets on two different dates show machinery account at Rs. 1,85,600 and Rs. 1,73,800 respectively and the machinery and depreciated by Rs. 30,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 121

and one piece of machinery of book value of Rs. 5,000 had been sold in the beginning of the year for Rs. 3,100 then the application of fund is a. Rs. 6,800 b. Rs. 11,800 c. Rs. 14,900 d. Rs. 23,200 44. Given that M = opening stock, N = purchases, O = closing stock, P = cost of goods sold, The correct equation will be a. M – N = O + P b. M – O = P – P c. M – O = P – N d. P – M = N + O 45. Messers. XXXX Ltd., provides the following information: Net profit before income tax : Rs. 40,000 Depreciation charged during the year : Rs. 10,000 Goodwill written off during the year : Rs. 10,000 Income tax for the year : Rs. 20,000 Funds from operations will be a. Rs. 60,000 b. Rs. 50,000 c. Rs. 40,000 d. Rs. 20,000 46. A business entity has an opening balance of Rs. 5,000 as provision for bad and doubtful debts. Total sales amounts to Rs. 6,00,000 and out of which Rs. 1,00,000 worth of sales is for cash. A provision of 1% is to be made on outstanding debtors. The amount to be debited to profit and loss account for current year’s provision on debtors will be a. Rs. 6,000 b. Rs. 5,000 c. Rs. 1,000 d. Nil 47. Which of the following method(s) is/are followed for the purpose of piecemeal distribution in the case of dissolution of a partnership firm? 1. Proportionate Capital Method 2. Maximum Possible Loss Method
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 122

3. Reconstruction and Distribution Method Select the correct answer using the codes given below: a. 3 alone b. 1 and 3 c. 2 and 3 d. 1 and 2 48. Consider the following parties: 1. Secured creditors 2. unsecured creditors 3. Partners who granted loans 4. partners who contributed capitals in excess as compared to the profit sharing ratio 7 of 15 The correct sequence is which payments are to be made to these parties in the event of the dissolution of a partnership firm is a. 2, 1, 3, 4 b. 1, 2, 4, 3 c. 1, 2, 3, 4 d. 2, 1, 4, 3 49. Match list I (Provision of partnership Act with List II (Matters with which the provision are related) and select the correct answer using the codes given below the list: List I A. Interest must be allowed @6% p.a. B. No interest shall be allowed C. No interest shall be charged D. Must be shared equally by all the partners unless otherwise agreed List II 1. Drawings of partners 2. Net loss of the firm for an accounting year 3. capitals contributed by the partners 4. Loan given by a partner to the firm Codes: ABCD a. 1 3 2 4 b. 4 3 2 1 c. 3 2 4 1 d. 4 3 1 2 50. The following information pertains to a cultural club: Stock of tinned provisions: Rs. 25,000 (as on 1.4.94)
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 123

Purchased during the year: Rs.1, 50, 000 Stock of tinned provisions: Rs. 50,000 (as on 31.3.95) Sale of tinned provisions: Rs. 1,50,000 Suring the year The amounts to be debited and credited respectively to the income and Expenditure Account would be a. Rs. 1,75.000 and Rs. 1,50,000 b. Rs. 1,25,000 and Rs. 1,75,000 c. Rs. 1,25,000 and Rs. 1,50,000 d. Rs. 1,75,000 and Rs. 1,25,000 51. A cricket club has 50 members and each member pays Rs. 20 as monthly subscription 5 members paid advance subscription for the financial year. 199494 and 10 members failed to pay subscription for the year. 1993-94. The amount to be credited as subscription to Income and Expenditure Account would be a. Rs. 12,000 b. Rs. 10,800 c. Rs, 9,600 d. Rs. 8,000 52. The following information is provided by a culture club: Stock of sports goods : Rs. 20,000 Purchase of sports goods : Rs. 80,000 during the accounting period Sports goods sold as scrap : Rs. 500 Closing balance : Rs. 30,000 The amount to be charged to Income and Expenditure Account as sports goods consumed will be a. Rs. 69,500 b. Rs. 70,000 c. Rs. 70,500 d. Rs. 80,000 53. A trader maintains his books of accounts on Single Entry basis. His books of accounts show that his total purchases during the year were Rs. 90,000.of which he returned goods worth Rs. 10,000. His credit sales were Rs. 50,000 and eash sales were Rs. 80,000. Of the total sales goods returned was Rs. 30,000. Closing stock is Rs. 12,000. He sells his goods at cost plus 33 1/3%. His opening stock is a. Rs. 12,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 124

b. R.s. 10,000 c. Rs. 8,000 d. Rs. 7,00 54. A firm which keeps its books of accounts on Single Entry system has opening balance and closing balance of Bills Receivable as Rs. 9,000 and Rs. 11,000 respectively. Bills collected during the financial period amount to Ps. 29,000, 8 of 15 Bi1s Receivable received during the financial period amount to a. R.s. 22,000 b. Rs. 18,000 c. Rs. 12,000 d. Rs. 11,000 55. Which preparing accounts from incomplete records, the amount of credit sales is determined by a. preparing total creditors account b. preparing total debtors account c. ascertaining the balance in trading account other than closing stock d. ascertaining the balance in debtors account and cash book 56. The minimum share application money is a. Rs. 5 per share b. 5% of the nominal value of shares c. 10% of the nominal value of shares d. 20% of the nominal value of shares 57. When shares are forfeited, Capital Account is debited by a. forfeited art amount b. called up amount on shares c. paid up amount on shares d. amount of Capital Reserve 58. After the redemption of debentures, the balance of debenture sinking fund is transferred to a. Debenture account b. General Reserve c. Profit and Loss account d. Capital Reserve 59. Right shares are the shares a. issued to the directors of the company b. first offered to the debenture holders c. first offered to the existing shareholders d. issued by a newly formed company 60. Debentures can be redeemed be
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 125

a. purchase of own debentures in the open market b. convening them into a new class of debenture c. converting them into shares d. any of the methods mentioned in(a), (b) and (c) above IAS Prelims Commerce 1996 61. A company wishes to redeem its preference shares amounting to Rs. 1,00,000 at a premium of 5% and for this purpose issues 5,000 equity shares of Rs. 10 each at a premium of 5%. The company also has a balance of Rs. 1,00,000 as General Reserves and Rs. 50,000 in profit and loose account. The amount to be transferred to Capital Redemption Reserve account for the purpose of redemption is a. Rs. 47,500 b. Rs. 50,000 c. Rs. 52,500 d. Rs. 1,05,000 62. An asset is purchased for Rs. 50,000 on which depreciation is to be provided annually according to the straight line method. The useful life of the asset is 10 years and the residual value is Rs. 10,000. The rate of depreciation is a. 20% b. 18% c. 10% d. 8% 63. An asset is NEVER reduced to zero in the a. fixed installment method b. reducing balance method c. annuity method d. sum of years’ method 64. The main objective of providing depreciation is to a. create secret Reserves b. reduce the book value of assets c. value the assets properly d. allocate cost of the assets 65. Bonus shares can be issued by a company a. out of the Reserves created by revaluation of fixed assets b. out of share premium not collected in cash c. without any provision for it in the Articles of Association of the company
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 126

d. out of free Reserves built out of genuine profits 9 of 15 66. Revaluation method of ‘depreciation is generally used in the case of a. plant b. land and building c. stock d. loose tools 67. The Balance Sheet of a limited company as on 31.12.1992 is as under: Rs. Rs Share Capital: 5,000 equity shares of Rs. 10 each 2,000 equity shares of Rs. 10 each, Rs. 8 Per share paid up General Reserve 50,000 16,000 50,000 Sundry Assets 1,16,000 1,16,000 1,16,000 The company decided to capitalize the necessary part of the General Reserve by issuing. 1. a bonus share per share on the partly paid up shares in order to make them fully paid and 2. fully paid bonus shares at a premium of 5% per share amongst the existing shareholders to be distributed in the ratio of one share for every five shares held. The amount to be transferred from the General Reserve account is a. Rs. 14,700 b. Rs. 15,000 c. Rs. 18,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 127

d. Rs. 21,000 68. Rate of consumption of materials is one of the most important factors while fixing a. maximum level b. maximum level and reorder level c. maximum level and reorder level d. maximum level, minimum level and reorder level 69. During a period of declining prices, which one of the following inventory pricing methods will result in lower cost of goods sold? a. FIFO b. LIFO c. Simple average method d. Inflated price method 70. Match List I with List II and select the correct answer using the codes given below the lists: LIST I A. ABC Analysis B. Fund Flow Analysis C. ROI D. MM Theory LIST II 1. Capital Structure 2. Inventory Control 3. Working Capital Management 4. Overall Profitability Codes; ABCD a. 2 3 4 1 b. 1 2 4 3 c. 4 3 1 2 d. 1 3 2 4 71. Match List I (Objectives of Analysis with List II (Regions to be Computed) and select the correct answer using the codes given below the lists: LIST I A. Trading on Equity B. Efficiency of Inventory Control C. Overall Efficiency D. Immediate Solvency LIST II 1. Earnings Per Share 2. Liquidity Ratio 3. Capital Gearing 4. Stock Turnover Ratio Codes;
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 128

ABCD a. 2 1 4 3 b. 3 4 1 2 c. 3 1 4 2 d. 2 4 1 3 72. A particular firm provided the following data for 1994: Current Ratio : 2.5:1 Liquid Ratio : 1.5:1 Net Working Capital : Rs. 3,00,000 Current Assets and Current Liabilities of this firm are respectively a. Rs. 3,00,000 and Rs. 1,50,000 b. Rs. 5,00,000 and Rs. 2,00.000 c. Rs. 5,00,000 and Rs. 1,00,000 d. Rs. 3,00,000 and Rs. 1,00,000 73. Match List I with List II and select the correct answer using the codes given below the lists: LIST I A. Leverage Ratio B. Acid Test C. Turn-over Ratio D. Current Ratio LIST II 1. Liquidity position 2. Efficiency of assets management 3. Management of working capital 4. Debt and Equity relationship CODES: ABCD a. 4 1 3 2 b. 2 4 1 3 c. 2 3 1 4 d. 4 1 2 3 74. Match List I with List II and select the correct answer using the codes given below the lists: LIST I A. Debt Service Coverage Ratio B. Turn-over of Receivable C. Proprietary Ratio D. Capital Turn-over Ratio LIST II 1. Solvency Ratio 2. Structural Ratio 3. Activity Ratio 4. Efficiency of Credit and Collection Policy CODES:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 129

ABCD a. 1 4 3 2 b. 4 1 3 2 c. 1 4 2 3 d. 4 1 2 3 75. Which one of the following ratios is most important for judging the long-term solvency of a firm? a. Debt-Equity Ratio b. Stock-Turn over ratio c. Return on Investments d. Fixed Assets Turn-over Ratio 76. Given that Opening Stock : Rs. 12,000 Purchases : Rs. 90,000 Return Outward : Rs. 4,000 and that the closing stock is Rs. 2,000 less than the opening stock the Stock Turnover ratio is a. 5 times b. 7 times c. 8 times d. 10 times 77. EBIT/Total Assets Ratio is a. Liquidity Ratio b. Profitability Ratio c. Solvency Ratio d. Turn-over Ratio 78. The dividend declared by a limited company is Rs. 2/- per share of face value of Rs. 10/- and the average market value is Rs. 25/- The yield is a. 5% b. 8% c. 10% 11 of 15 d. 12.5% 79. The primary objective of audit is to a. verify and value assets as per Company’s Act b. verify liabilities and report to Registrar of Companies c. verify and report on the state of affairs of the business d. appoint auditors 80. Balance Sheet audit is useful if the concern a. is weak in internal check b. has no internal check c. is a small one d. is a big one
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 130

81. When the auditor examines and tests the client’s accounting and other control systems to see whether or not they constitute a reliable base for the preparation of accounts, the it is known as a. Balance Sheet audit b. System audit c. Continuous audit d. Internal audit 82. Match List I (Items) with List II (Heads in Balance Sheet) and select the correct answer using the codes given below the lists: LIST I A. Loss on issue of debentures B. Unclaimed dividend C. Prepaid rent D. Profit prior to incorporation LIST II 1. Reserves and Surpluses 2. Miscellaneous Expenditure 3. Current Liabilities 4. Current Assets CODES: ABCD a. 3 2 1 4 b. 3 2 4 1 c. 2 3 4 1 d. 2 3 1 4 83. Audit Notebook is a a. personal notebook of and auditor b. record of work performed by an auditor c. record of important points and enquiries which as auditor has to refer to his clients d. record of mistakes and errors detected during the course of audit of account books 84. Consider the following statements: In order to plan and prepare his audit programme, an auditor must obtain information relating to 1. client’s history and business 2. purpose and nature of engagement 3. time schedule for the completion of audit Of these statements a. 1, 2 and 3are correct b. 1 and 3 are correct
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 131

c. 2 and 3 are correct d. 3 alone is correct 85. Which one of the following statements regarding the internal check system is correct? Its purpose is to a. have an accurate record of all the business transactions b. know the accounting method followed in the business c. plan for future audit works d. ascertain the profit, earning capacity of the business 86. By observing, testing and assessing, an auditor examines the system of a. internal audit b. internal control c. continuous audit d. statutory audit 87. An auditor of a partnership firm is appointed as per a. statute b. government orders c. agreement d. convention 88. A company auditor may be removed in the meeting of the a. Board of Directors when the Managing Director is also present b. Board of Directors c. majority shareholders d. General Body of shareholders 89. According to Sec. 224 of the Companies Act, 1956, a company auditor may be appointed by any of the three appointing authorities. The correct sequence of the order in which they can exercise their power to appoint a company auditor in the life of a company other than a government company is a. Board of Directors, Central Government, Shareholders b. Central Government, Shareholders, Board of Directors c. Shareholders, Board of Directors, Central Government d. Board of Directors Shareholders, Central Government 90. The liability of auditor can be a. only civil
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 132

b. only criminal c. either civil or criminal d. civil and/or criminal 91. Match List I (Items) with List II (Heagings) a select the correct answer using the codes given below the lists LIST I A. Interim Dividend B. Share Premium C. Unclaimed Dividend D. Discount on Issue of Shares LIST H 1. Miscellaneous expenses 2. Current Liabilities 3. Reserves and Surpluses 4. Profit and Loss Appropriation Account Codes; ABCD a. 3 4 1 2 b. 4 3 1 2 c. 3 4 2 1 d. 4 3 2 1 92. A ‘Co-parcener’ is one who is a. an active member of a partnership b. a member of a Joint Hindu Family firm c. a member of a Joint Stock company d. a member of a co-operative society 93. Every partner must account to the firm for any benefit derived by bun without the consent of the other partners and thus make no secret profits. This is based on a. the general law of contract b. the general law of agency c. the law of sale of goods d. business ethics 94. In a broader sense, the activities of a cooperative organization are expected to ensure primarily a. Profitability to the members b. Socialism in the economy c. Equity to the members d. Productivity to the society 95. Which of the following statements are correct? 1. A Trust form of organization cannot do business. 2. A society registered under the Societies Registration Act can be formed only for non-profit purpose 3. A partnership does not require
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 133

registration. 4. A company limited by guarantee is almost always registered for non-profit activities. Select the correct answer using the codes given below: a. 2, 3 and 4 b. 1 and 4 c. 2 and 3 d. 1, 2, 3 and 4 96. The basic charactereristics of a partnership firm include a. Existence of relationship, plurality of persons, contract and profit maximization 13 of 15 b. Unlimited liability, contractual binding principal agent relationship and profit motive c. Existence of business, contractual relationship, group of persons, task orientation and employment conditions d. Existence of business, plurality of persons, contractual relationship, profit motive and principal-agent relationship 97. Converting a public company into a private company requires a special resolution a. passed by members b. passed by members and approval of the Registrar of Companies c. of the member and approval of the Company Law Board d. of the members and approval by the creditors 98. The Stock Invest is used for the payment of a. Allotment money b. calls in arrears c. application money d. allotment money, application money and calls in arrears. 99. In a public limited company, there CANNOT be a. equity shares without voting rights b. bonus shares where current profit are low c. preference share with voting rights when dividends are not paid d. equity shares with high premium
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 134

100. The contents of the prospectus of a public limited company should be approved by the a. Registrar of Companies b. Merchant Banker c. Stock Exchange in which the company is to be listed d. Securities and Exchange Board of India 101. Principle of Constructive Notice means a. notice of the objects clause of the Memorandum of Association b. any notice issued/published in newspapers c. notice to outsiders dealing with the company as to the contents of the Memorandum and Articles of Association d. notice to the public regarding the issue of prospectus 102. Which one of the following statements illustrates the Doctrine of Indoor Management? Persons dealing with the company are a. bound to enquire whether the internal proceedings of the company are regular or not b. bound to enquire whether the decisions of the management are taken with proper authority c. entitled to assume that what has been done, has been regularly done by the company d. always to presume that the internal affairs of a Company cannot be questioned. 103. It is compulsory for a share. broker to register with the a. concerned Stock Exchange b. Securities and Exchange Board of India c. Department of Company Affairs d. Concerned Stock Exchange in concurrence with the Securities and Exchange Board of India 104. Who among the following is NOT a speculator Stock Exchange? a. Broker b. Bull c. Bear
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 135

d. Stag 105. Match List I with List II and select the correct answer using the codes given below the lists List I A. Option dealing B. Private placement C. Deep discount D. Law of large numbers List II 1. Stock Exchâne 2. Bonds of big companies 3. New Public Limited Companies 4. Statistical probability CODES; ABCD a. 1 2 3 4 b. 4 2 3 1 c. 1 3 2 4 d. 4 3 2 1 106. One of the uses of ‘Commercial Paper’ is that it can a. help to understand business news b. transactions c. be circulated to raise money just like a Bill of Exchange d. be issued to finance an important transaction 107. The gilt-edged market refers o the marketfor a. industrial securities b. govt. and semi-govt. securities ties c. shares and debentures d. public limited company securities 108. Match List I with List II and select the correct answer using the codes given below the lists: List I A. Simple Association B. Federation C. Partial consolidation D. Complete’ Consolidation List II 1. Pool 2. Chamber of Commerce 3. Merger 4. Holding Company CODES: ABCD a. 3 1 2 4 b. 2 4 1 3
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 136

c. 2 1 4 3 d. 3 2 4 1 109. The combination of firms in successive stages of the same industry may be referred to as a. Horizontal integration b. Vertical integration c. Forward integration d. Backward integration 110. Modernisation of an industrial unit involves mainly a. technological up gradation of its production process b. technological reorientation towards low-cost production c. reengineering the basics of production and procedures d. reduction in labour and cost to the absolute minimum 111. Which one of the following statements is true? a. Supplier’s credit and buyer’s credit are one and same thing b. EXIM hank generally deals with export transactions above Rs. 5 crore c. The main focus of EXIM bank is on Export and Import credits for shortterm d. ECGC provides no protection against hazards of nature 112. Which one of the following statements is true in the context of Import-Export Trade? a. Under a C & F contract, the cost of insurance is to be borne .by the buyer or the importer b. Marine insurance covers the risks during the sea voyages only c. The standard “all risks cover” automatically covers war risk as well d. Under a C & F contract, the exporter need not bother about insuring goods 113. The special facilities and benefits provided to approved Export Houses (EH), Trading Houses (TH) and Star Trading Houses (STH) may be arranged in descending order as a. EH, TH and STH b. STH, EH and TH c. TH, STH and EH 15 of 15
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 137

d. STH, TH and EH 114. A letter of credit is opened on behalf of a. an exporter b. an importer c. a buying agent d. a bank 115. Which of the following guarantees are offered by the ECGC which help the banks to extend credit to exporters? 1. Packing credit guarantee 2. Post shipment export credit guarantee 3. Export production finance guarantee 4. Transfer of funds guarantee Select the correct answer using the codes given below CODES: a. l, 2 and 3 b. 2 and 3 c. 1, 3 and 4 d. 1, 2, 3 and 4 116. Which of the following statements are correct? 1. Bill of lading is a document of title. 2. Green shipping bill is used for export of goods entitled to duty draw back. 3. An airway bill is not a document of title. 4. A consular invoice and a proforma invoice are one and the same. a. 2 and 4 b. 1, 3 and 4 c. 1, 2 and 4 d. 1, 2 and 3 117. Actuary is a person who a. acts as an insurance agent b. certifies the loss incurred by the insured c. audits claims relating to insurance claims d. computes the net liability of an insurance business 118. Life insurance is a contact on the life- of a man in which the insurer promises to pay a sum of money. For the Consideration of a definite premium, to the insured person on his death or on attaining a particular age. Which one of the following assumptions is implicit in the above definition? a. It is a contract of indemnity b. It is a contract of guarantee
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 138

c. It is a contract of compensation d. It is a contract of return on investment 119. “Causa promixa” implies that the loss must arise from a. the nearest place b. an ascertainable source c. the cause insured against d. unforeseen sources 120. Which of the following risks are NOT covered by a marine insurance policy? 1. Damage caused by delay in ships’ transit 2. Damage caused by unsuitable package 3. Loss due to sinking of the vessel 4. Loss due to jettison Select the correct answer using the codes given below a. 1, 3 and 4 b. 1 and 2 c. 2 and 4 d. 1, 2, 3 and IAS Prelims Commerce 2001 1. Which one of the following is an ingredient of the entity convention of accounting? a. The owner of a unit and the unit itself is one and the same b. The owner and the unit are treated separately c. No separate accounts for the unit is required d. The unit is a private affair of the owner, hence no accounting is required 2. Which one of the following accounting equations is correct? a. Assets = Owner’s Equity b. Assets = Liabilities + Owner’s Equity c. Assets = Liabilities — Owner’s Equity d. Assets + Liabilities = Owner’s Equity 3. Which one of the following accounting conventions stipulates that contingent assets appear as a footnote in the balance sheet? a. Materiality b. Consistency c. Disclosure d. Conservatism 4. Which one of the following is NOT related to the convention of conservatism? a. Making provision for doubtful debts
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 139

and discount on debtors in anticipation of actual bad debts and discount b. Valuation of stock at Market Price or Cost Price which ever is higher c. Charging of small capital items as Revenue d. Adopting Written - down Value Method of depreciation as against Straight- line Method 5. Match List I (Standards issued by ICAI) with List II (Objects/areas covered) and select the correct answer: List I A. AS-1 B. AS-2 C. AS-3 D. AS-9 List II 1. Valuation of Inventories 2. Cash Flow Statement 3. Revenue Recognition 4. Disclosure of Accounting Policies Codes; ABCD a. 4 1 2 3 b. 4 1 3 2 c. 1 4 3 2 d. 1 4 2 3 6. On 31st March 2001, the closing stock of X Ltd. was Rs. 3,45,000. On April 1, 2001, stock of Rs. 2,25,000 was destroyed by fire. The company closes its account on 31st March. If the balance sheet of the company on 31st March 2001 was finalized on 25th April 2001, then the balance sheet will show the closing stock at a. Rs. 3,45,000 with no mention of fire b. Rs. 1,20,000 with no mention of fire c. Rs. 3,45,000 showing loss by fire in footnote d. Rs. 1,20,000 showing loss by fire in footnote 7. Consider the following The investment portfolio of a business as on 31-12-2000 stood as follows 1. 8% Debentures of X Co. Ltd. (Rs. 6,000). Interest payable on 31st March and 30th September. 2. 7% Debentures of Y Co. Ltd. (Rs.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 140

4,000). Interest payable on 30th June and 31st December. 3. 10% Debentures of Z Co. Ltd. (Rs. 9,000). Interest payable on 1st June and 1st December. Amount of interest accrued on the closing date will be. a. Rs. 335 b. Rs. 1,025 c. Rs. 195 d. Rs. 830 8. Which one of the following is correct with respect to going concern convention? a. The enterprise is not going to terminate its operations in the period ahead b. The enterprise may go out of business in the next accounting period c. The enterprise may not divest or diversify its operational spheres d. The enterprise may not revalue its assets during the current accounting Period 9. Consider the following statements: Continuous evaluation of the relevance of generally accepted accounting principles is required, because 1. They are the everlasting operating realities. 2. The environment, in which business operates, undergoes constant change. 3. The business enterprises can develop financial statements of value to the end-users. 4. Realities of social, economic and legal framework have to be considered by professional accountants. Which of the above statements are correct? a. 1, 2 and 3 b. 2, 3 and 4 c. 3 and 4 d. 1 and 4 10. Which one of the following will lead to understate merit of net profit? a. Amortization of Fictitious Assets b. Treating capital expenditure as revenue expenditure c. Treating revenue expenditure as capital expenditure d. Creation of general reserve 11. Which one of the following items is
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 141

considered revenue expenditure? a. Expenditure by way of maintenance that has increased productivity b. Repair of gearbox in a car that has enhanced its operational life c. Complete overhaul of a machine, spending around 20% of its value d. Changing a small component of a machine to maintain its operating efficiency 12. After the construction of their new factory building M/s XYZ Co. shifted to it. During this process Rs. 20,000 were s1d on pulling down the old structure and Rs. 2,000 were spent on shifting the stocks to new building. These expenditures are to be classified as a. Capital expenditure b. Revenue expenditure c. Capital and Revenue expenditure respectively d. Deferred Revenue expenditure 13. Match List I with List II and select the correct answer List I A. Reducing capital B. Sales > Variable cost C. Sales > Break-even sales D. Take-over of firm List II 1. Contribution margin 2. Reorganization 3. Absorption 4. Margin of safety Codes; ABCD a. 2 1 3 4 b. 1 2 3 4 c. 1 2 4 3 d. 2 1 4 3 14. Preparation of Trial Balance helps, mainly,in a. summarizing business transactions b. verifying that ‘generally accepted accounting principles’ have been observed c. finalizing the ‘sources and uses of funds’ statement d. locating errors, if any, in books of accounts 15. Match List I with List II and select the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 142

correct answer: List I A. Goodwill B. Overdraft C. Preliminary expenses D. Premium on issue of Shares List II 1. Current liability 2. Fixed assets 3. Reserves and surpluses 4. Fictitious assets Codes; ABCD a. 2 1 4 3 b. 1 2 4 3 c. 1 2 3 4 d. 2 1 3 4 16. If opening stock = Rs. 2,45,000; purchases = Rs. 15,00,000; sales = Rs. 17,40,000 and rate of gross profit = 20% on cost of goods sold, then the closing stock would be at a. Rs. 3,53,000 b. Rs. 2,95,000 c. Rs. 2,45,000 d. Rs. 1,95,000 17. Match List I (Items) with list II (Recorded in) and select the correct answer List I A. Wrapping material B. Wages and salaries C. Prepaid expenses D. Opening stock List II 1. Trading account 2. Profit and loss account 3. Balance sheet Codes; ABCD a. 2 1 1 3 b. 2 1 3 1 c. 3 2 2 1 d. 3 2 1 3 18. The basis adopted for piecemeal distribution cash of among the partners should be such that amounts finally left unpaid are in the ratio in which a. capital stands on the date of dissolution b. profits and losses are shared c. capital balances stood at the beginning of partnership
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 143

d. private assets appear on the date of dissolution 19. The capital of a firm is Rs. 80,000. The reasonable return in the industry is 7.5 percent, If the profit earned by the firm during past five years was Rs. 8.000: Rs. 9,000; Rs. 7,000; Rs. 8,500 and Rs. 10.000: then the super profit of the firm will be a. Rs. 2,000 b. Rs. 2,500 c. Rs. 3,000 d. Rs. 3,500 20. Consider the following A football club has received the following subscriptions during the year ending 31st March 2001: 31-3-00 31-3-01 Outstanding subscription 19,500 25,500 Advance subscription 12,800 9,500 Subscription received during the year 2000-01: Rs. 2,45,000 The subscription income of the club for the year 2000-01 was a. Rs. 2,63,800 b. Rs. 2,80,000 c. Rs. 2,47,700 d. Rs. 2,84,000 21. ‘A’ and ‘B’ are partners in a firm sharing profits and losses in the ratio of 2 : 3. ‘C’, a new partner is admitted for 1/4th share. ‘A’ and ‘B’, old partners share C’s profit into their profit sharing ratio. The new profit sharing ratio of ‘A’, ‘B’ and ‘C’ would be a. 1:1:1 b. 2:3:4 c. 1:2:2 d. 6:9:5 22. Consider the following statements with respect to the sinking-fund method of depreciation 1. Depreciation is smaller than the assets’ annual depreciable cost. 2. Amount of interest constantly declines due to assets’ reducing balance. 3. Annual net incidence on profit and loss account remains constant due to changing fixed depreciation. 4. Periodic depreciation is recorded
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 144

through the asset account. Which of the above statements are correct? a. 2 and 3 b. 1 and 3 c. 1, 2 and 4 4 of 15 d. 2, 3 and 4 23. The following information about share capital is required to be disclosed in the balance sheet of a Ltd. Company 1. Issues, subscribed and paid-up capital 2. Add forfeited shares 3. Less calls in arrear from directors 4. Less calls in arrear from others The chronological order of their disclosure under the head ‘Share Capital’ in the balance sheet would be a. 1, 2, 3, 4 b. 1, 3, 4, 2 c. 1, 4, 3, 2 d. 1, 2, 4, 3 24. Match List I (Fund) with list II (Purpose of fund) and select the correct answer: List I A. Sinking fund B. Capital redemption reserve fund C. Dividend equalization fund D. General reserve fund List II 1. Maintaining stable rate of dividend 2. Periodical redemption of debentures 3. Strengthening financial position 4. Redeeming preference shares ABCD a. 4 2 1 3 b. 2 4 3 1 c. 4 2 3 1 d. 2 4 1 3 25. Provisions are amounts set aside out of profits and other surpluses for a. meeting a liability, the amount of which can be determined with exact figure b. any known liability of which the amount cannot be determined with substantial accuracy c. meeting an eventuality arising out of revaluation of assets in ordinary course of business d. meeting a liability arising out of
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 145

arbitration 26. A trader does not keep a complete set of books and gives the following information: He started business with Rs. 10,000 on 1st June. 2000. He drew at the rate of Rs. 500 per month for the last six months. He also introduced further capital of Rs. 2,000 in the business during the year. His total assets on 31st December, 2000 were Rs. 23,700 and his creditors were Rs. 3,000 on the same date: Outstanding expenses on 31st December, 2000 were Rs. 500. His net profit during the year would be a. Rs. 11,200 b. Rs. 11,500 c. Rs. 13,000 d. Rs. 14,200 27. X, who holds 100 shares of Rs. 10/- each, fails to pay a finall call of Rs. 2/-. The directors forfeited all the shares and subsequently reissued 50 shares of is. 6/each as fully paid. The amount to be transferred to ‘Capital Reserve A/c would be a. Rs. 200 b. Rs. 300 c. Rs. 400 d. Rs. 800 28. A Ltd. Company issues 3000, 15% debentures of Rs. 100 each at a discount of 7.5% repayable at a premium of 5% at the end of 5 years. The loss on issue of debentures will be: a. Rs. 22,500 b. Rs. 30,000 c. Rs. 37,500 d. Rs. 45,000 29. Match List I with List II and select the correct answer: List I A. Technique of Cash Management B. Technique of Working Capital Management C. Technique of Inventory Management D. Technique of Analysis of Financial Statements List II 1. Fund Flow Analysis 2. Economic Order Quantity
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 146

3. Common size Balance Sheets 4. Cash Flow Analysis Codes ABCD a. 1 4 2 3 b. 1 4 3 2 c. 4 1 3 2 d. 4 1 2 3 30. Match List I (Transactions) with List II (Impact on current ratio) and select the correct answer List I A. Goods sold at profit B. Creditors paid C. Debts realized D. Materials purchased on credit List II 1. Improvement 2. Deterioration 3. No change Codes; ABCD a. 1 3 2 2 b. 2 3 1 3 c. 1 1 3 2 d. 2 1 3 3 IAS Prelims Commerce 2001 31. The following information had been made available from the profit and loss account for the year ending 31st March, 2001: Gross profit Rs. 2,00,000 Gross profit margin 20% Stock velocity 4 If, in current year, the sales are expected to increase by 50%, then the average inventory, required would be a. Rs. 2,00,000 b. Rs. 2,50,000 c. Rs. 3,00,000 d. Rs. 3,50,000 32. X Ltd. has current ratio of 2 : 1 and quick ratio of 1.5 : 1: If its 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 33. If earnings per share of a company is Rs. 5
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 147

and the price earning ratio of other similar companies is 4, then the market value of the share of the company would be a. Rs. 0.80 b. Rs. 1.25 c. Rs. 9 d. Rs. 20 34. If the cost of goods sold is Rs. 1,00,000/-, the value of opening stock is Rs. 20,000/and the value of closing stock is Rs. 80,000/-, then the stock turnover ratio would be a. 5 Times b. 4 Times c. 2 Times d. 1 Times 35. Match List I with List II and select the correct answer: List I A. Current Ratio B. Debt-Equity Ratio C. Net Profit Margin Ratio D. Interest Coverage Ratio List II 1. Sufficiency of EBIT to cover interest charges interest charges 2. Short-term solvency 3. Exposure to financial risk 4. Earnings left for shareholders Codes; ABCD a. 2 3 1 4 b. 3 2 1 4 c. 3 2 4 1 d. 2 3 4 1 36. Match list I with List II and select the correct answer: List I A. Leverage Ratio B. Liquid Ratio C. Turn-over Ratio D. Profitability Ratio List II 1. Short-term solvency 2. Earning capacity 3. Relationship of Debt and Equity 4. Efficiency of Assets Management Codes; ABCD a. 2 1 4 3
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 148

b. 3 2 1 4 c. 4 3 1 2 6 of 15 d. 3 1 4 2 37. EPS is calculated as a. EBIT Equity shares b. EBIT - Preference Dividend Equity shares c. EAT Equity shares d. EAT - Preference Dividend Equity shares 38. Consider the following information provided by XY.Ltd.: Net profit before depreciation and taxes: Rs. 44,000 Depreciation for the year: Rs. 8,000 Goodwill written-off during the year: Rs. 10,000 Rate of tax: 50% The cash flow of Ltd. from operations will be a. Rs. 36,000 b. Rs. 28,000 c. Rs. 26,000 d. Rs. 13,000 39. If profit made during the year is Rs. 10,000; increase and decrease in the current assets is Rs. 5,000 and Rs. 4,000 respectively, then the cash from operation equals a. Rs. 9,000 b. Rs. 10,000 c. Rs. 11,000 d. Rs. 19,000 40. Consider the following statements: The important techniques of auditing are 1. Test check and sampling. 2. Flow charting of interrelated operations in the accounting system of an organization. 3. Using Internal Control Questionnaire. 4. Collecting information on price fluctuations from market- research organizations. Which of the above statements are correct? a. 1, 2 and 3 b. 1, 2 and 4 c. 2, 3 and 4
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 149

d. 1, 3 and 4 41. Match List I with List II and select the correct answer: List I A. Auditor is a watch dog but not a blood hound B. An auditor should sign the balance sheet with open eyes. He should not depend on the officials of the company C. Capital profit cannot be divided as dividend unless all the assets have been revaluated and the profit has been actually realized D. An action for negligence can be brought against the auditor in tort by a person with whom he is not in a contractual relationship but to whom he owes duty List II 1. Union Bank of Allahabad case 2. Hedley Byrne and Co. Ltd. Vs. Hiller 4 partners case 3. Kingston Cotton Mills case 4. Fostar Vs. The Trinidad Lake Ashalte Co. case Codes; ABCD a. 1 3 2 4 b. 3 1 2 4 c. 1 3 4 2 d. 3 1 4 2 42. Consider the following documents: 1. Audit Report 2. Audited Final Accounts 3. Audit Note Book 4. List of Lost Vouchers 5. Audit Programme Which of the above documents re Auditor’s working papers? a. 1,2 and 4 b. 1, 3 and 4 c. 1, 3, 4 and 5 d. 2, 3 4 and 5 43. Match List I with List II and select the correct answer List I A. Interest on capital in construction works B. Management Audit C. Financial Audit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 150

7 of 15 D. Valuation in Balance Sheet List II 1. Performance and Propriety 2. Capital Expenditure 3. Authorization of Expenditure 4. Critical review by Management 5. Entity Concept Codes; ABCD a. 2 4 5 3 b. 4 1 2 5 c. 2 1 3 5 d. 4 2 3 1 44. Which of the following is NOT correct about the management auditor? a. He appraises and reviews the past performance and future plans of the company b. He evaluates the performance of management and finds out whether they are efficient or not c. He works simultaneously with the statutory auditor verifying the financial state of affairs of the company d. He examines both financial and non financial records of the organization 45. The Companies Act 1956 require the annual accounts to show a ‘true and fair view’ of the financial position of the company instead of ‘true and correct view’ because a. too much of dependence on arithmetical accuracy may lead to window dressing b. annual accounts should not only be made correctly but should also convey an overall fair view without any misleading impression c. all financial transactions cannot be correctly expressed in terms of money d. most of the stake holders do not have reasonable idea about accounting rules and regulations 46. Which one of the following pairs is not correctly matched? a. Internal check: Staff of the concern b. Internal Audit: Chartered Accountant c. Cost Audit: Cost Accountant or Chartered Accountant
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 151

d. Propriety Audit: Comptroller, and Auditor General of India 47. Consider the following statements: 1. Audit working papers enable the auditor to know the weaknesses of the internal check system. 2. Audit programme assures adherence to the principles of auditing and accounting. 3. Manipulation of accounts is done by under valuation of assets. 4. Internal check maximizes the possibilities of errors and frauds. Which of the above statements are correct? a. 1, 2 and 3 b. 2, 3 and 4 c. 1, 2 and 4 d. 1, 2, 3 and 4 48. Consider the following duties of the auditor: 1. He should see that the provisions of Sec. 78 have been complied with. 2. He should see that the sum available has been utilized in the manner as laid down by the Articles. 3. He should examine the Prospectus, the Articles and the Minutes of the Directors’ meeting to see whether the issue of shares at a premium is duly authorized or not. The correct sequence of these duties in case of audit of issue of shares at a premium, is a. 1,2,3 b. 2,1,3 c. 3,1,2 d. 3, 2 1 49. Consider the following with regard to furniture and fixtures 1. Valuation with reference to bills and invoices. 2. Authorization of expenditure and its capitalization. 3. Adequate provision of depreciation. 4. Whether furniture is mortgaged or free from any mortgage. The correct sequence to be adopted by the auditor during the course of analytical review, vouching and examination of document would be
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 152

8 of 15 a. 1, 2, 3, 4 b. 2, 3, 1, 4 c. 3, 4, 2, 1 d. 4, 1, 2, 3 50. Match List I with List II and select the correct answer: List I A. Public limited company B. Partnership firm C. Cooperative society D. Private limited company List II 1. One man one vote 2. Can make public issue 3. Restricted membership 4. Unlimited liability 5. Direct supervision Codes; ABCD a. 5 4 2 3 b. 2 4 1 3 c. 5 3 2 1 d. 2 3 1 4 51. The account of a company shall be audited by the company auditor, or by a person qualified to be appointed as auditor, if the company has to a. wind up b. amalgamate c. finalize branch office accounts d. declare interim dividend 52. Which one of the following is NOT included under the rights and powers of an Auditor in the Companies Act 1956? a. Right of access to books of Accounts b. Right to call for a General Meeting c. Right to receive notice of and attend the General Meeting d. Right to make statement at the General Meeting 53. Consider the following rights: 1. The right of a partner to sue for dissolution of the firm or for accounts thereof. 2. The power of the receiver to realize the properties of an insolvent partner. 3. The right of the firm to sue any partner. 4. The right of a partner to file a suit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 153

against the firm for enforcing his rights. Which of the above rights are NOT affected due to on registration of .a partnership firm? a. 1 and 2 b. 2 and 3 c. 1, 2 and 3 d. 2, 3 and 4 54. The most suitable form of business organization for the people of weaker sections is a. partnership firm b. cooperative society c. sole-trading business d. joint stock company 55. Which one of the following is NOT a feature of sole-proprietorship business? a. Undivided risk b. No government regulation c. Separate entity of the firm d. Unlimited liability 56. A partner under his ‘Implied Authority’ can a. enter into partnership with others on behalf of the firm b. submit a dispute relating to the business of the form for arbitration c. defend any suit filed against the firm d. withdraw any suit or proceedings filed on behalf of the firm 57. Which one of the following firm is considered to be illegal to do trading business? a. A firm with 11 partners b. A firm with 18 partners c. A firm with 20 partners d. A firm with 22 partners 58. Match list I with List II and select the correct answer List I A. The Indian Partnership Act B. SEBI C. The Cooperative Societies Act D. Stock exchange List II 1. listing of company shares 2. Members mutual benefit 9 of 15 3. Brokers deal with their customers
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 154

4. Listed companies are supervised 5. No compulsory registration: Codes; ABCD a. 3 2 4 5 b. 5 4 2 1 c. 5 2 4 1 d. 3 4 2 5 59. The fund available with a company after paying all claims including tax and dividend is called a. net profit b. net operating profit c. capital profit d. retained earnings 60. The capital of a public limited company can be reduced with the confirmation of the a. Registrar of Companies b. Company Law Board c. Securities and Exchange Board of India d. High Court 61. Merchant Banker does NOT offer services in regard to. a. project appraisal b. capital issue c. project preparation d. Subscription to Equity shares. 62. The net asset value (NAV) of a unit of mutual fund scheme is compared as a. Market value of the fund's investments + Receivables + Accrued incom - Liabilities - Accrued expenses No. of units outstanding b. Market value of the fund' sinvestments No. of units outstanding c. Liabilities of the fund No. of units outstanding d. Face the value of the unit + Dividend per unit 63. Match List I with List II and select the correct answer: List I A. S E B I B. OTCEI C. IDBI D. CRISIL
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 155

List II 1. Apex institu1on of development banks 2. Credit rating 3. Trading in securities of small company and government 4. Regulation and development of capital market Codes; ABCD a. 4 3 1 2 b. 3 4 1 2 c. 4 3 2 1 d. 3 4 2 1 64. Combination of Printing and Dyeing in a textile company is called a. circular combination b. vertical combination c. allied combination d. horizontal combination 65. 65. A voluntary association of traders, industrialists, bankers and professionals formed for the purpose of promotion of common business interests in a particular locality is called a. Association of industrialists b. Chamber of Commerce c. Entrepreneurs’ Association d. Barkers’ Union 66. Match List I with List II and select the correct answer: List I A. Simple Association B. Federation C. Complete consolidation D. Partial consolidation List II 1. Amalgamation 2. Cartels 3. Chamber of Commerce 4. Holding company Codes; ABCD a. 3 2 4 1 b. 2 3 1 4 c. 2 3 4 1 10 of 15 d. 3 2 1 4 67. Dumping is an example of a. monopolistic practice in international trade
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 156

b. monopoly in international trade c. oligopoly in international trade d. perfect competition in international trade 68. Who among the following does NOT have insurable interest in fire insurance? a. A shop owner in the property of his customers b. A creditor in the property mortgaged with him c. A trustee in the property of the trust d. An insurance company in the property insured 69. In marine insurance, warranty means a guarantee a. against the loss of the ship in the voyage b. for the safety of the captain of the ship c. for payment of shipping freight d. to comply with conditions mentioned in the policy 70. In a consequential loss policy which one of the following losses is indemnified? a. Loss of corporate image b. Loss of net profits due to fire c. Loss due to theft during fire d. Loss due to damage around the venue of fire 71. Which one of the following indicates the correct chronological order of management approaches in the History of Management Thoughts? a. Classical, Human Relations, Behavioural, Systems, Contingency b. Contingency, Systems, Behavioural, Human Relations, Classical c. Classical, Behavioural, Human Relations, Systems, Contingency d. Classical, Human Relations, Behavioural, Contingency, Systems 72. David C. McClelland’s mOtivát1ig needs are a. Needs for power, affiliation and growth b. Needs for affiliation, achievement and security c. Needs for power, achievement and relatedness d. Needs for power, affiliation and achievement
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 157

73. Which one of the following gives the correct sequence with respect to communication process? a. Sender Message, Encoding, Receiver, Channel, Decoding and Feedback b. Message, Sender, Encoding, Receiver, Channel, Decoding and Feedback c. Encoding, Message, Sender, Decoding, Feedback, Receiver and Channel d. Sender, Message, Encoding, Channel, Receiver, Decoding and Feedback 74. Mechanistic structures are designed to a. promote flexibility and quick responses to fast changing situations b. induce people to behave in predictable and accountable manner c. make people happy by assigning specific tasks to them d. perform assigned tasks within the scheduled time 75. The degree of decentralization in an organization depends most on a. technology b. size of workforce c. volume of transactions d. competence of subordinates 76. One of the major disadvantages of the Matrix form of organization structure is that a. it does not pinpoint product-profit responsibility b. it is not oriented towards results c. there is possibility of disunity of command d. it generates rivalry between line and staff members 77. Wider span of control is effective in organizations where a. authority delegation is inadequate b. tasks are complex c. thorough subordinate training scheme exists d. the leadership style is authoritarian 78. Maintenance of intended delegation requires that decisions lying within the individual managers’ authority should be 11 of 15 made by them and not referred upwards in the organizational hierarchy. This is known as
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 158

a. principle of unity of command b. scalar principle c. authority level principle d. principle of absoluteness of responsibility 79. Management by Exception is to improve a. control over personnel b. strategic management c. steady flow of information d. high morale 80. Job Evaluation is carried on mainly for a. identifying geographical locational factors of business enterprise b. promoting job satisfaction c. simplifying wage administration d. meeting competition effectively 81. Consider the following stages of planned change: 1. Moving 2. Refreezing 3. Unfreezing. According to Kurf Lewin, the correct sequence of these is a. 1,2,3 b. 2,3, 1 c. 3,1,2 d. 1,3,2 82. In which one of the following, Crisis Management is reflected? a. Future expansion plans of business b. Organization Development Programme c. Short-term Manpower Planning d. Prudent managerial leadership 83. Which one of the following is the most appropriate task of office management? a. Creation of profit centre b. Creation of control centre c. Making office supplies available d. Supervision of production Quality Control 84. Which one of the following functions is served most by information technology? a. Replacement of human labour b. Provision for a handle to the management to improve industrial relations c. Substitution of human information processing d. Rationalization of office work 85. The most suitable method of filing for a
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 159

transnational corporation is a. Numerical b. Alphabetical — Numerical c. Numerical — Territorial d. Territorial 86. Which one of the following correctly signifies the purpose of an Organization Chart? a. Office Decor b. Indication of available Office services c. Flow of Authority d. High Morale 87. The most important advantage of centralization of office services is a. Specialization b. higher departmental loyalty c. no delay, in providing services d. less burden of work 88. Which one of the following aims is achieved most through Office Record keeping? a. Efficiency of operations on shop floor b. Business reputation c. Storage of documents d. Helping decision making 89. Increase in the installation of Personal Computer is mainly due to a. monotony of work b. reduction of fatigue c. improvement of efficiency d. lowering work load 90. Greater mechanization of offices, results in a. better house keeping b. greater accuracy in the work c. making employees cogs of the machines d. higher cost of running office 91. O & M can be strengthened chiefly through a. wage incentive plans b. good store-keeping 12 of 15 c. improved office layout d. better work measurement 92. Informal organization is as necessary as formal organization chiefly for the reason that it a. resists change b. builds morale c. has close association with decision
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 160

making d. fulfils separate goals and standards 93. After the commencement of the Companies Act, 1956 no person, save as otherwise provided in Section 276, shall hold office as director at the same time in more than a. 5 Companies b. 10 Companies c. 15 Companies d. 20 Companies 94. Consider the following statements : 1. Board of Directors appoints the first auditor of the company. 2. A shareholder of a company can become member of the Board. 3. Board of Directors can act as auditors. 4. Director of one company can be appointed as Director to any number of companies. Which of the above statements are correct? a. 1, 2 and 3 b. 1 and 3 c. 1 and 2 d. 2, 3 and 4 95. Match List I with List II and select the correct answer List I A. Company Secretary B. Director C. Managing Director D. Internal Auditor List II 1. In charge of statutory and administrative duties 2. Reports to the shareholders 3. Reports to the Management 4. Trustee of Company’s assets 5. Reports to the Board of Directors Codes; ABCD a. 1 5 2 3 b. 3 5 2 1 c. 1 4 5 3 d. 3 4 5 1 96. Consider the following statements 1. The minimum number of directors in a public company is three. 2. The first directors are appointed by the first general meeting.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 161

3. An official director appointed by the government in a public company is required to possess qualification shares within 2 months of his appointment. 4. The Company Secretary is appointed by Board of Directors. Which of the above statements are correct? a. 1 and 2 b. 1 and 4 c. 2 and 3 d. 2 and 4 97. A director having direct or indirect, interest or concern in a transaction of the company, has to disclose his interest in a meeting to the a. Board of Directors b. Shareholders c. Company Secretary d. Registrar of Companies 98. Which one of the following reports should have “responsibility statement” under the Companies Act, 1956? a. Auditor’s report b. Board of Director’s report c. Company Secretary’s report d. Audit Committee’s report 99. Which ore of the following reports deals with “Corporate governance”? a. Sabhanayagam Report b. Kumaramangalam Birla Report c. Narasimhan Report d. L. C. Gupta Report 100. Minimum paid - up capital required to incorporate a public -limited company is a. Rs. 20,000 b. Rs. 1,00,000 c. Rs. 5,00,000 d. Rs. 10,00,000 13 of 15 101. As per the Companies Act, 1956, who among the following must be included in the Audit Committee constituted in a company? a. Managing Director and whole-time Director b. Auditor and Internal Auditor c. Company Secretary V d. Directors who are not whole-time and Managing Director 102. Match List I (Concept relating to company
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 162

meetings) with List II (Meaning) and select the correct answer: List I A. Proxy B. Quorum C. Statutory Meeting D. Annual General Meeting List II 1. Minimum number of members required to be present 2. Getting the right to vote only 3. Conducted once in a year 4. Once in the lift time of a company 5. Meeting of a particular group of shareholders Codes; ABCD a. 5 3 2 1 b. 2 1 4 3 c. 5 1 2 3 d. 2 3 4 1 103. Match List I (Company having paid-up capital more than) with list II (Must have / be a) and select the correct answer using the codes given below: List I A. One lakh rupees B. Ten lakh rupees C. Fifty lakh rupees D. Five crore rupees Lift II 1. Whole-time Director 2. Secretarial compliance report 3. Qualified Company Secretary 4. Public limited Company 5. Private limited Company Codes; ABCD a. 5 4 3 1 b. 3 4 1 5 c. 5 2 3 1 d. 3 2 1 5 104. Assertion (A): The best way of reporting of social responsibility is to prepare a Value Added Statement (VAS) to show the income earned by the providers of capital, the employees and the government. Reason (R): A business is accountable to the society since it makes use of
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 163

community-owned assets such as roads, railways, communication and other infrastructural facilities and concessions provided by the state from the tax-payers’ money. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 105. Assertion (A): The interest on borrowed funds can be capitalized upto the completion of fixed assets. Reason (R): The completion of fixed assets has been possible only because of these funds. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 106. Assertion (A): A claim lodges with Railways in March 1998 for loss of goods of Rs. 2,00,000 had been passed for payment in March 2001 for Rs. 1,50,000. No entry was passed in 1998. Reason (R): The collect ability of the claim was not certain in 1998. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 107. Assertion (A): Life-membership fees are to be capitalized. Reason (R): Often these are non-recurring receipts and the members take advantage of the services provided during the tenure of membership. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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

KAVITHA TUTORIALS, TIRUVURU[Type text]

Page 164

108. Assertion (A): The Company is said to be trading on equity. Reason (R): The capital structure of the company is highly geared. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 109. Assertion (A): R.O.I. measures the final outcome of all recorded business activities. It is the ratio that measures the performance of the firm that generates returns. Reason (R): However, interpretation regarding the amount of capital invested and size of returns generated by a firm differ from one interpreter to another and one organization to another. In other words, practices are not uniform and as such the acceptability of the concept is being questioned. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 110. Assertion (A): An auditor of a company gives a critical review of accounts. Reason (R): He gives collaborative evidence that accounts are properly drawn up. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 111. Assertion (A): Internal Audit does not comprise a means by which the management of a business concern maintains Internal Control Reason (R): Internal Audit is a continuous critical examination of accounts of a business concern by its employees. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are true but R is NOT
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 165

the correct explanation of A c. A is true but R is false d. A is false but R is true 112. Assertion (A): The Auditors Report is very significant; it should be read very carefully, particularly any qualificatory notes that it may contain. The Manufacturing and other Companies (Auditors Report) Orders, 1975, as amended in September 1998, required the auditors to include a statement of certain matters in their report on the accounts of the company. Reason (R): A the auditor should make a specific observation and in case the report is qualified, then reason for such qualification should also be mentioned. In case the auditor is not able to give any answer against any particular point, he should also explain the reasons thereof. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 113. Assertion (A): Section 227(1) of the Companies Act, 1956 has empowered an auditor of a limite4 company with certain rights. Reason (R): Section 227(2) of the Companies Act, 1956 has given an auditor of a limited company certain duties to be performed in connection with his audit work. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 114. Assertion (A): Audit requires application of professional judgment in a tremendously wide variety of situation and circumstances. An auditor broadly expresses his judgment of the fairness with which these statements present the state of affairs of a particular organization. Thus even the audited accounts may be incorrect, sometimes.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 166

Reason (R): The very object of auditing is to find out the truth and fiamess of the financial position of the concern and also to prevent and detect errors and frauds. Auditor will be liable for any incorrect information in the audited accounts. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 115. Assertion (A): The dissolution of partnership may or may not include the dissolution of the firm, but the dissolution of the fin-n includes dissolution of partnership. Reason (R): When the dissolution of partnership takes place, all businesses come to a close, but on the dissolution of the firm, the business may be carried on by a reconstituted firm. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 116. Assertion (A): The provisions of double insurance are not applicable to life insurance. Reason (R): Life insurance is not a contract of indemnity. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 117. Assertion (A): To-day managers with leadership qualities and skills are preferred to managers with expertise alone. Reason (R): The major organizational changes now emphasize managing people and processes. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are true but R is NOT the correct explanation of A c. A is true but R is false
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 167

d. A is false but R is true 118. Assertion (A): Larger number of people report to one manager. Reason (R): Organization has a tall structure. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 119. Assertion (A): MBO is an effective way of planning and organizing. Reason (R): Employees participate in setting objectives. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 120. Assertion (A): Among efficiency conscious enterprises, integrated office is becoming popular. Reason (R): Greater flexibility, better work flow and lower operating cost are benefits of open office. a. Both A and Rare true and R is the correct explanation of A b. Both A and R are 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 IAS Prelims Commerce 2002 1. Contingency School of Management says that management is a. practice - oriented b. principle - oriented c. result- oriented d. profit and loss - oriented 2. Which among the following is the oldest and simplest device for achieving coordination? a. Hierarchy b. Planning c. Incentives d. Rules 3. Which one among the following is an instance of Participative Management?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 168

a. Board of Directors b. Trade Unions c. Work Committees d. Task Force 4. 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 c. Planning, Motivating, Directing and Reporting d. Planning, Staffing, Communicating and Leading 5. According to behavioural scientists, organization means the structure of a. physical facilities b. tasks and relationships c. behaviour of the management with the working force d. attitude of workers with the management 6. Which one of the following styles of leadership is the most effective for a Job Order firm? a. Participative leadership b. Authoritarian leadership c. Transformational leadership d. Free-rein leadership 7. Match List I with List II and select the correct answer: List I A. F. W. Taylor B. Maslow C. Esprit de Corps D. Henry Fayol List II 1. Principles of Management 2. Tarn Work 3. Scientific Management 4. Theory of Human Motivation Codes; ABCD a. 1 4 2 3 b. 3 2 4 1 c. 1 2 4 3 d. 3 4 2 1 8. The managerial function of organizing involves
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 169

a. reviewing and adjusting plan in the light of changing conditions b. establishing programme for the accomplishment of objectives c. creating a structure of functions and duties to be performed by a group d. getting, things done through others 9. Which one of the following is the most important function of a manager? a. Communication b. Directing c. Supervising d. Decision - making 10. 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 organisation b. functional organisation c. matrix organisation d. divisional organisation 11. Which one of the following is the major consideration for decentralization? a. Organization’s environment b. Nature of management function c. Size of the organisation d. Ability of higher-level managers 12. Organizations require narrow span of control if there are a. mature subordinates within b. competent and trained managers c. unclear plans for non-repetitive operations d. well-defined plans for repetitive operations 13. Which one of the following traits describes properly organic or behavioural structure of an organisation? a. Wider spans of control b. More centralization c. I lighter degree of specialization d. Taller hierarchy 14. Which among the following is the most popular approach for accomplishing the results? a. Management by exception b. Reward system c. Management by objectives d. Mentor system,
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 170

15. systematic and orderly process of determining the of worth of a job in relation to other jobs is known as a. job analysis b. job evaluation c. job specification d. job description 16. Which one of the following factors does NOT influence wage and salary structure? a. Demand and supply b. Cost of living c. Job rotation d. Job requirements 17. Which among the following is a direct advantage of incentive compensation? a. Mutual cooperation among the workers b. Decrease in absenteeism c. Increase in j3roductivity d. Better industrial relations 18. Among tile following ‘change management’ methods which one is the most appropriate when the employees are unwilling to accept change? a. Participative method b. Directive method c. Leading by example d. Negative reinforcement 19. In a group process there are some forces favoring and some other forces opposing changes. As a result equilibrium is maintained. This is described by Kurt Lewin as a. field of forces b. field of disputes c. field of conflicts d. cognitive dissonance 20. People resist change in organizations because of a. fear of unemployment b. increase in responsibility c. need for new social adjustments d. All the above 21. The size of an office can be measured in which of the following ways? 1. Production capacity of the organisation. 2. Number of employees 3. Investment in equipment and machines 4. Total administrative expenses Select the correct answer using the codes
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 171

given below a. 1 and 4 are correct b. 1 and 2 are correct c. 1, 2 and 3 are correct d. 2, 3 and 4 are correct 22. Centralizing the office work is5lesirable mostly because it a. fixes responsibility b. avoids duplication c. permits better supervision d. permits better delegation 23. Which one of the following indicates the correct chronological order of the ‘system’ designed for purchasing ‘office supplies’? a. Select sources of supply, initiate question, order supplies, receive supplies and pay vendor b. Initiate requisition order supplies, select sources of supply receive supplies and pay vendor c. Select sources of supply initiate requisition. order supplies, pay vendor and receive supplies d. Initiate requisition, select sources of supply, order supplies, receive supplies and pay vendor 24. Match List I with List II and select the correct answer: List I (Office records) A. File B. Ledger C. Petty cash book D. Office manual, List II (Need of such record) 1. Recording small and necessary expenses 2. Recording transactions 3. Keeping necessary documents 4. Various rules of office procedures 5. Computerizing office system Codes; ABCD a. 3 2 1 4 b. 4 5 3 1 c. 3 5 1 2 d. 4 2 3 1 25. Impact of O & M is that a. promotion possibility becomes restricted b. it leads to less scope for high salary
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 172

and wages c. entire organization is streamlined d. work measurement is costly 26. The term ‘organizational climate’ best represents a. human environment prevailing in an organisation b. union-management relations within an organisation c. problems introduced by faulty organizational structure d. socio - cultural environment in an organisation 27. The Memorandum of Association shall be signed by each a. director b. shareholder c. subscriber d. promoter and director 28. Changing the name of a company requires a. special resolution and approval of Company Law Board b. special resolution and approval of Securities and Exchange Board of India c. special resolution and approval of Central Government d. ordinary resolution and approval of Company Law Board 29. Registration of Articles of Association is optional in the case of a. unlimited company b. priv1te company limited by shares c. company limited by guarantee public d. company limited by shares 30. Power to use official seal of a company outside India is to be authorized by a. Articles of Association b. Memorandum of Association c. Both Memorandum and Articles of Association d. Central Government IAS Prelims Commerce 2002 31. The approval of which one of the following authorities is required to shift registered office of the company iron the jurisdiction of one Registrar of Companies to another Registrar of Companies within a State?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 173

a. Company Law Board b. Central Government c. Regional Director d. Registrar of Companies 32. Body corporate’ under the Companies Act, 1956 includes a. cooperative society b. company incorporated outside India c. corporation sole d. any other body corporate. not being a company, which the Central Government may specify 33. Which one of the following is the correct statement? a. One can be a shareholder without voting right b. A preference shareholder can exercise voting right from the date of allotment c. An equity shareholder has no voting right d. A debenture holder can vote at annual general meeting 34. A person shall not he appointed as Director if he is found to be of unsound mind by a. the company b. the company court c. a court of competent jurisdiction and the finding is in force d. the shareholders 35. Which one of the following statutory committees needs to be constituted in a listed company? a. Tender Committee b. Audit Committee c. Management Committee d. Recruitment Committee. 36. Which one of the following pairs is NOT correctly matched? a. Suppression of invoices: Window dressing b. Overcharging depreciation: Secret reserves c. Omission of cash receipts from debtors: Understatement of sales d. Omission of credit sale: Understatement of debtors 37. The main purpose of auditing is to a. detect accounting offences and to punish the offender
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 174

b. prepare and authenticate the accounts c. prepare the accounts and authenticate their true and fair view d. certify the financial position of the business 38. Statement of 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 c. Approved by the Department of Company Affairs. d. approved by the Central Government in consultation with Comptroller and Auditor General 39. The selection’ of items, to be included in the audit on a subjective basis without consideration of sample size or method of selection, is a. probability sampling b. systematic sampling c. random sampling d. judgment sampling 40. Internal audit report is submitted to a. Government b. Shareholders c. Creditors d. Board of Directors 41. The scope of audit in a partnership firm, is governed by a. partnership act b. partnership deed c. agreement between partnership firm and auditor d. number of partners of the firm 42. 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 c. criminal negligence d. financial irregularity 43. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 175

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 codes given below: a. 1 only b. 1 and 2 c. 2 and 3 d. 1 and 2, 3 44. Match the List I with List II and select the correct answer: List I A. Reduction of share capital B. Reissue of redeemed debentures C. Branch audit D. Presentation of annual accounts List II 1. Sec. 100 2. Sec. 228 3. Sec. 121 4. Sec. 210 Codes; ABCD a. 4 2 3 1 b. 1 3 2 4 c. 4 3 2 1 d. 1 2 3 4 45. Match List with List II and select the correct answer: List I A. Statutory report B. Prohibition of tax-free remuneration C. Underwriting commission D. Issue of shares at premium List II 1. Sec. 200 2. Sec. 165 3. Sec. 78 4. Sec. 76 Codes; ABCD a. 4 1 2 3 b. 2 3 4 1
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 176

c. 4 3 2 1 d. 2 1 4 3 46. The first Standard Auditing practice (SAP – 1) is related to a. objectives and scope of the audit of financial statements b. basic principles governing an audit c. documentation d. detecting fraud and error 47. 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 c. It helps in the final review before the report is signed d. simplifies the allocation of work amongst the audit staff 48. The scope of ‘management audit’ is determined by the a. Shareholders b. Board of Directors c. Comptroller and Auditor-General (C & AG) d. Comptroller and Auditor General in consultation with the Central Government 49. Test checking of entries in the audit work refers to a. the internal checks b. the internal controls c. checking some sample items from a large number of similar items d. checking the cash flow of business 50. Test checking reduces a. the work of an auditor b. the liability of an auditor c. both work and liability of an auditor d. the remuneration of an auditor 51. While establishing the sta1itical sampling plan, the degree of precision required is determined by a. keenness of the management b. suitability of accounting systems and procedures c. allowable margin of error the auditors are willing to accept
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 177

d. random number table used for the purpose 52. consider the following statements: An unregistered partnership firm suffers from the following disabilities 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 Fight arising out of partnership deed 6 of 13 Which of the above statements arc correct? a. 1, 2 and 3 b. 1 and 3 c. 1 and 2 d. 2 and 3 53. 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 c. immunity from resolution passed n the annual general body meeting for closure of the company d. uninterrupted existence not affected by the death or insolvency of members of the company 54. Who is a 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 rebuy them later at a lower price c. An investor who buys securities in anticipation of being able to sell them later at a higher price d. An investor who expects the price of a security or of the market as a whole to fall 55. Commercial paper is a a. long-term corporate security meant for small investors b. medium-term corporate security meant for institutional investors c. treasury paper meant for corporate investors
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 178

d. short - term corporate security meant for large-scale investors 56. 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 c. who control major chunk of the market d. whose combined profits are enormous 57. The takeover of a company in which most of the purchase price is paid with borrowed money is referred to as a. hostile takeover b. illegal takeover c. leverage buy-out d. management buy-out 58. One of the major difficulties in improving the industrial efficiency in enterprises is a. low investment b. low productivity c. ineffective marketing d. poor inventory control 59. Exam 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 c. as zero-interest loans d. as subsidies 60. The national re-insurer in India is a. General Insurance corporation of India b. United India Insurance Company Ltd. c. Insurance Regulatory and Development Authority d. Oriental Fire and General Insurance Company Ltd

61. 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 occurrence is not known c. not certain to occur and also the timing of its occurrence is not known d. not likely to occur 62. Which one of the following risks is not insured by the Export Credit and Guarantee Corporation?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 179

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 c. The political risk that the import license may be revoked d. The risk of war, revolution. etc., in the buyer’s country 63. Social responsibility of business assumes considerable importance towards a. owners and workers b. consumers and community c. government and nation 7 of 13 d. All the above 64. Which one of the following is NOT a useful tool in decision - making? a. Annual return b. linear programming c. Sales forecasts d. Operation research 65. A statutory corporation is one, which COCS into being by a. Registration under Companies Act. I 956 b. virtue of enactment of a special Act c. registration under the enforceable Act operating in India d. the entrepreneurial effort of the government 66. Match List I with List II and select the correct answer List I A. Inspection of books of account under Section 209 A of the Companies-Act 1956 B. Constitution of National Advisory Committee on Accounting Standards C. Books of account D. Reasons for failure to buy back shares List II 1. Central Government 2. Registrar of Companies 3. Registered office 4. The ICAI 5. Directors’ Report Codes; ABCD a. 2 1 3 5
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 180

b. 3 1 2 4 c. 2 4 3 5 d. 3 4 2 1 67. 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 c. company within 7 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. 68. Audit Committee shall act in accordance with the terms of reference to be specified by a. Statutory Auditors b. SEBI c. Beard of Directors d. Central Government 69. 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 c. an ordinary resolution and approval of the Company Law Board d. a special resolution and approval of Central Government 70. 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 c. Comptroller and Auditor—General of India in consultation with the Central Government
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 181

d. Company Law Board 71. Financial year of a company shall not exceed a. calendar year b. 15 months c. 18 months with special permission of Registrar of Companies d. 15 months with special permission of Registrar of Companies 72. Secretarial Compliance Report is a. optional for a company 8 of 13 b. required when a company does not have a whole-time secretary c. required If a company is not required to employ a whole- time secretary and has a paid-up share capital of Rs 10 lakh or more d. required for, companies as are notified by the Central Government 73. Assertion (A): There is no error when the totals of the debit side and the credit side of the Thai Balance are equal. Reason (R): Trial Balance is a two-column statement showing names and balances of all the accounts in the order in which they appear in the ledger. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 74. Assertion (A): Companies are required to use Written down Value (WDV) method and the rates specified in Schedule XIV to the Companies Act. Reason (R): A change from WDV method dl providing depreciation to Straight line Method (SLM) should he made if it is considered that the change would result in a more appropriate preparation or presentation of the financial statements of the company. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 182

75. Assertion (A): Section 205 of the Companies Act makes it obligatory for every company to make provision for depreciation. Reason (R): Depreciation is a charge against revenue. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 76. Assertion (A): Existence of secret reserve contradicts the disclosed network of a business. Reason (R): Secret reserve helps promote managerial efficiency. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 77. Assertion (A): Entrance fees in case of non-profit concerns can be treated as revenue receipt or capital receipt. Reason (R): Some accountants consider entrance fees to be recurring in nature, whereas others consider it to be nonrecurring. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 78. Assertion (A): Performance ratios show where we are going Reason (R): Balance Sheet ratios show how we stand. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 79. Assertion (A): One single primary ratio that measures the final outcome of all recorded business activities is ROI. Reason (R): In practice, however variations are also found in the ratio
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 183

because capital and return are subject to different interpretations by firms. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 80. Assertion (A): According to Accounting Standard 3 (revised) of the Institute of Chartered Accountants of India, a Cash 9 of 13 Flow Statement should be divided into three heads—cash flows from operating activities, cash flows from investing activities and cash flows from financing activities. Reason (R): Operating activities involve income determining items and relate to changes in current assets and liabilities; investing activities concern changes in non-current assets and financial activities concern changes in non-current liabilities and shareholder& equity. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 81. Assertion (A): It is the duty of the auditor to see that costing records as required under Section 209(1)(d) of the Cornpones Act, 1956, have been maintained by certain class of companies. Reason (R): Mere-maintenance of cost records does not make manufacturing companies cost-effective. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 82. Assertion (A): Analytical Review is not the part of Company Statutory Audit. Reason (R): Analytical Review goes beyond true and fair presentation of the financial position. a. Both A and R are true and R is the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 184

correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 83. Assertion (A): Management audit is a statutory audit. Reason (R): Management audit is performed through innovative ideas. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 84. Assertion (A): The Companies Act. 1956 requires that internal audit must be carried out by a Chartered Accountant. Reason (R): It is to help the management to protect the interests of the shareholders and the society. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 85. Assertion (A): Certificate of Origin is an export-related document and it is issued by the Chamber of Commerce. Reason (R): Certificate of Origin is used by importer to take delivery of goods. 86. Assertion (A): A company registered under the Companies Act, 1956 is a judicial person distinct from its members. Reason (R): Corporate veil cannot be lifted. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 87. Assertion (A): The doctrine of indoor management does not give absolute protection to outsiders who deal with a company. Reason (R): lithe majority of members have their way, the minority has its say. a. Both A and R are true and R is the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 185

correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 88. Assertion (A): The powers of Board of Directors that are to be exercised by Board only at its meeting cannot go beyond those prescribed under Section 292 of the Companies Act, 1956. Reason (R): The members in general meeting cannot impose restriction on the exercise of powers by the Board of Directors. a. Both A and R are true and R is the correct explanation A b. Both A and H are true but R is NOT the correct explanation of A c. A is true but R is false d. A is false hut R is true 89. Accounting is generally understood as 1. summarization of business transactions 2. language of the business 3. source of business information 4. means of communication Select the correct answer using the codes given below: a. 1 only b. 1 and 2 c. 2 and 3 d. 1. 2, 3 and 4 90. Which one of the following types of information, a creditor would be interested to gather while reading Annual Reports of an enterprise? a. Profitability b. Liquidity c. Continuity d. Solvency

91. Consider the following statements: 1. Closing stock is valued on the principle of cost price or market price whichever is lower 2. The manufactured goods in a year are transferred from the manufacturing account to trading account at selling
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 186

price 3. The going concern concept assumes that a business will continue its operations indefinitely 4. Revenue is not increased by taking loans although assets and liabilities are increased Which of the above statements are correct? a. 1, 3 and 4 b. 1 and 2 c. 2 and 3 d. 2, 3 and 4 92. In case of disclosure of accounting policies, the following fundamental accounting assumptions may NOT be required to be stated if they are followed in the preparation of final accounts of a company 1. Materiality and accounting period 2. Going concern and consistency 3. Accrual basis of accounting 4. Conservatism and accounting period Select the correct answer using the codes given below: a. 2 and 3 b. 1 and 4 c. 1, 2 and 3 d. 1, 2, 3 and 4 93. Match List I (Accounting Standards (AS) issued by the Institute of Chartered Accountants of India) with List II (Standard on) and select the correct answer List I A. AS - 1 B. AS - 2 C. AS - 3 D. AS – 6 List II 1. Valuation of Inventories 2. Disclosure of Accounting Policies 3. Depreciation Accounting 4. Cash Flow Statement Codes; ABCD a. 2 3 4 1 b. 4 1 2 3 c. 4 3 2 1 d. 2 1 4 3 94. Which one of the following pairs is not correctly matched?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 187

a. Accounting equation: Assets Liabilities- Capital b. Accounting year: 1st April 31st March c. Accrual concept: Recognizing revenue on receipt of cash d. Cost concept: Recognizing transactions at historical cost 95. Included in production overhead of hardware division of Rs. 3,00,000 is Rs 50,000 being the cost of prototype computers manufactured by the company itself. These are not to be sold but to be kept for demonstrating alive the medical imaging software programme. 11 of 13 The cost of prototype computers of Rs. 50,000 should be treated as a. fixed assets b. deferred revenue expenditure c. production overhead cost of hardware division d. advertising cost 96. The loss on the sale of old furniture is debited to a. profit & loss account b. furniture account c. trading account d. depreciation account 97. If the purchases made during the year were Rs. 60,000, the balance of stock in trade at the beginning and at the end of the year were Rs. 12,000 and Rs. 9,000 respectively and the gross profiting sale was 1/5th then which one of the following represents the figure of gross profit for the year? a. Rs. 15.750 b. Rs. 14,000 c. Rs. 12.500 d. Rs. 17,250 98. Given: Opening stock: Rs. 5,000 Closing stock: Rs. 7,000 Purchase: Rs. 10,000 Manufacturing expenses: Rs. 20,000 Loss of materials due to fire: Rs. 1,000 The cost of production would be a. Rs. 28,000 b. Rs. 29,000 c. Rs. 27,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 188

d. Rs. 30,000 99. A and B are sharing profits in the ratio of 2 : 1. They admit C into the firm with 1/4th share in profits for which he brings Rs. 12.000 as his share of capital. Therefore, the adjusted capital of B will be a. Rs. 48,000 b. Rs. 12,000 c. Rs. 16,000 d. Rs. 24,000 100. While making an adjusting entry in respect of interest on capital, we credit a. capital account b. profit & loss account c. interest on capital account d. drawing account 101. A and B are partners sharing profits \and losses, in proportion 2: 1. They admist new partner C whom they give 1/5th share in profits. The new profit-sharing ratio will be a. 8:4:3 b. 3:2:1 c. 2:1:1 d. 4:2:1 102. Match List I with List II and select the correct answer: List I A. Revaluation Account B. Realization Account C. Piecemeal Distribution D. Gaining Ratio List II 1. Retirement of a partner 2. Maximum loss method 3. Admission of a partner 4. Dissolution of partnership firm Codes; ABCD a. 2 1 3 4 b. 3 4 2 1 c. 2 4 3 1 d. 3 1 2 4 103. Dividend can be paid generally out of a. share premium account b. capital redemption reserve account c. current years profits d. All of these 104. The following four assets normally appear in the balance sheet:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 189

1. Advance salary 2. Copyright 3. Preliminary expenses 4. Loose tools The correct order in which these are to appear in the balance sheet if drawn in order of permanency will be a. 4, 2, 1, 3 b. 3, 2, 4, 1 c. 1,2,3,4 d. 2,4,1,3 12 of 13 105. What is the correct sequence of the following items of current assets in the balance sheet of a company as per the Companies Act, 1956? 1. Cash balance on hand 2. Interest accrued on investments 3. Stores and spare parts 4. Loose tools 5. Sundry debtrs 6. Stock-in-trade 7. Work-in-progress Select the correct answer using the codes given below: a. 2, 5, 4, 6, 7, 3, 1 b. 1, 2, 4, 3, 5, 7, 6 c. 7, 6, 4, 1, 2, 5, 3 d. 2, 3, 4, 6, 7, 5, 1 106. Under the head ‘provisions’ in the balance sheet of a limited company. the following provisions made for, are to be disclosed 1. Proposed dividend 2. PF schemes 3. Pension and other staff-benefit schemes 4. Taxation The correct chronological order of their disclosure is a. 4, 2, 1, 3 b. 3, 2, 1, 4 c. 4, 1, 2, 3 d. 3, 1, 2, 4 107. Under the head ‘current ‘liabilities’, the following are disclosed : 1. Unclaimed dividend 2. Sundry creditors 3. Unexpired discounts 4. Bills payable The correct chronological order of their
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 190

disclosure is a. 4, 3. 2, 1 b. 1, 3, 2. 4 c. 4, 2, 3, 1 d. 1, 2, 3.4 108. A company can forfeit shares if the a. shareholder fails to pay the amount of the call during the stipulated time b. shareholder pays calls in advance c. shareholder does not pay the application money d. shares have been issued at par 109. The balance appearing the books of a company at the end of the financial year were Capital Redemption Reserve Account Rs. 5000O; Share Premium Account Rs. 10,000: General Reserve Account Rs. 5.000; Revaluation Reserve Rs. 2,000; Profit & Loss Account (Debit) Rs. 10,000 Maximum amount available for distribution as; Bonus Shares’ will be a. Rs. 50,000 b. Rs. 55,000 c. Rs. 45,000 d. Rs. 57,000 110. A company forfeited 30 equity shares of Rs 10 each fully called-up, for nonpayment of allotment money of Rs 3 and call- money of Rs 4 per share, If these shares are reissued at Rs 8 per share fully paid, the amount transferable to capital reserve will be a. Rs 300 b. Rs 60 c. Rs 90 d. Rs 30 111. Match List I with List II and select the correct answer List I A. Nominal share capital B. Right shares C. Bonus shares D. Preference shares List II 1. Capitalization of reserve 2. Fixed dividend 3. Maximum amount of share capital of a company 4. First offered to the existing
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 191

shareholders ABCD a. 3 4 1 2 b. 2 1 4 3 c. 2 4 1 3 d. 3 1 4 2 13 of 13 112. The current ratio is 3:2 and the amount of current liabilities is Rs. 40.000. What is the amount of current assets? a. Rs. 60,000 b. Rs. 70,000 c. Rs. 80,000 d. Rs. 1,00,000 113. Which one the following ratios is likely to be of affected the most on account of price level changes? a. Current Ratio b. Inventory Turnover Ratio c. Debtors’ Turnover Ratio d. Fixed Assets Turnover Ratio 114. Consider the following statements: The current ratio would reduce by 1. collection of book debts 2. payment to trade creditors 3. purchase of machinery for cash 4. cash deposited into bank Which of the above statements are correct? a. 1 and 3 b. 2 and 3 c. 2 and 4 d. 1, 3 and 4 115. The return on capital employed shows the combined effect of a. net profit ratio and inventory turnover ratio b. operating ratio and net profit ratio c. net profit ratio and capital turnover ratio d. gross profit ratio and capital turnover ratio 116. With regard to the rate of return on investment (ROI), which one of the following statements is NOT valid? a. It is an overall indicator of the profitability of an enterprise b. It is a triangular relationship in he sense that ROI = Profit margin x Asset turnover c. It is a superior measure compared to
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 192

the cash flow generated per share d. It was first developed by du Pont, USA 117. Alfa Company Limited acquired the business of M/s Bharat Traders. The valuation of the items acquired wasbuildings 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 15000 equity spares 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 c. Rs. 50,000 d. Rs. 30,000 118. Which among the following is the societal obligation of accounting? a. To ascertain profit correctly b. To maintain the records of the assets and liabilities of organization c. To establish effective organizational control d. To be helpful in correct tax assessment 119. When audit is carried out during the accounting period with some interval, it is called a. periodic audit b. partial audit c. continuous audit d. interim audit 120. Analytical review by an auditor mainly includes a. examining vouchers and other documents b. physical verification of assets c. examining day books with ledgers d. study of ratios and trends

IAS Prelims Commerce 2003 1. A company takes a loan of Rs. 70 lakhs on which it has to pay interest @ 15% p.a. Company’s return on investment is 25% before tax and the tax payable on net earnings is 60%. What gain accrues to the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 193

shareholders because of this loan? a. Rs. 2,40,000 b. Rs. 2,43,000 c. Rs. 2,77,000 d. Rs. 2,80,000 2. Equity shares represent owner’s capital. Therefore, an equity shareholder a. has preferential claim over income and wealth of the company b. has residual claim over income and width of the company c. has no. right over income and wealth of the company d. is personally liable for all the liabilities of the company even beyond his paidup capital 3. Which one of the following is not true of GDR? a. It is an instrument issued abroad and is listed and traded on a foreign stock exchange b. A GDR may represent one or more shares of the issuing company c. It can be converted into equity shares at any time d. A GDR may represent either equity shares or debentures or preference shares 4. A company must refund the amour4 of subscription received from the public including the development of the amount received is less than the mandatory minimum subscription. The mandatory minimum subscription is a. 75% b. 80% c. 90% d. 95% 5. For a firm, the particulars are Rs. Stock 60,000 Debtors 45,000 Bill Receivable 12,000 Advances (Recoverable cash or kind) 4,000 Cash in Hand 40,000 Creditors 70,000 Bills Payable 45,000 Bank Overdraft 4,000 Net Sales 7,50,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 194

Gross Profit 60,000 Net Profit 40,000 The Current Ratio for the firm is, nearly a. 27 : 20 b. 17 : 13 c. 9 : 7 d. 11 : 9 6. Z is admitted in a firm for a 1/4 share in the profits for which he brings Rs. 30,000 for goodwill. It will be taken away by the old partners X and Y in a. old profit-sharing ratio b. new profit-sharing ratio c. sacrificing ratio d. capital ratio 7. Forty thousand 10% redeemable preference shares of Rs. 10 each are redeemed at a premium of Rs. 10 each by the issue o120000 equity shares of Rs. 10 each at a premium of Rs. 10 each. The amount transferred to Capital Redemption Reserve Account would be a. Rs. 1,80,000 b. Rs. 2,00,000 c. Rs. 2,20,000 d. Rs. 2,40,000 8. Consider the following two statements and select the correct answer using the codes given, below: 1. The office supervisor is concerned with the overall managerial functions of the office activities. 2. The office manager is concerned with guiding and directing the routing work assigned to his subordinates. a. Only 1 is correct b. Only 2 is correct c. Both 1 and 2 are correct d. Neither 1 nor 2 is correct 9. A planned sequence of operations for handling recurring business transactions uniformly and consistently is known as a. System b. Procedure c. Routine d. Control 10. The undertaking by insurer to compensate the insured for the loss caused to him by the damage or destruction of the property insured is under the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 195

a. principle of utmost good faith b. principle of insurable interest c. principle of indemnity d. principle of contingency 11. In a draft Balance Sheet, the stock at valuation Rs. 1,00,000 was shown on assets side. While finalizing the Balance Sheet, an item which was valued at Rs. 37,400 had realizable of Rs. 26,000 only. In the Profit and Loss Account, the stock would be shown at a. Rs. 62,600 b. Rs. 88,600 c. Rs. 1,00,000 d. Rs. 1,26,000 12. Consider the following statements: Capital expenditure is incurred for the purpose of 1. Obtaining a long-term benefit for the business. 2. Increasing earning capacity of the business. 3. Purchasing of marketable securities. 4. Acquiring of an asset in the business. Which of these statements are corrects? a. 1 and 4 b. 1, 2 and 4 c. 2 and 3 d. 3 and 4 13. Which one among the following shall result in ‘capital losses to a firm? a. Pilferage of certain items b. Loss of goods in transit c. Loss due to delay in delivery by port authorities d. Confiscation of goods by custom authorities on account of false declaration 14. Which one of the following is the correct sequence regarding preparation of final accounts? a. Ledger - Trial Balance - Journal Profit and Loss Account - Balance Sheet b. Journal - Ledger - Trial Balance Profit and Loss Account - Balance Sheet c. Trial Balance - Ledger – Journal Balance Sbeet - Profit and Loss Account
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 196

d. Journal - Trial Balance - Ledger Profit and Loss Account - Balance Sheet 15. A, B and C are equal partner. After distributing the loss on realization of assets and paying all liabilities, their capital accounts show the following balances A - Rs. 10,000 (Cr.) B - Rs. 4,000 (Cr.) C - Rs. 14,000 (Dr.) What is the amount of cash with the firm? a. Rs. 18,000 b. Rs. 4,000 c. Rs. 14,000 d. Rs. 10,000 16. An investor while trading in a stock in the share market Lays greatest emphasis upon a. earning before interest and tax b. rate of return on equity c. earning, price ratio d. dividend price ratio 17. Which one of the following statements is true of bonus shares? a. Bonus shares are issued to the promoters only b. Bonus shares are issued only to the existing shareholders c. Bonus shares are the shares issued to the employees of the company as an incentive d. Bonus shares are issued at par value 18. Which one of the following is a leveraged buy-out? a. When a company is taken over by financing through borrowed funds b. When a company is taken over by the employees’ funds c. When a lender takes over a company to whom it is indebted d. When a company is bought out directly by buying its shares in the market 19. Profit from re-issue of forfeited shares should be transferred to a. Profit and Loss Account b. General Reserve c. Share Premium Account d. Capital Account. 20. The quotation that includes all charges for delivery of goods at the buyer’s stated place is known as
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 197

a. Franco randu b. Landed price c. CIF price d. FOB 21. Consider the following statements: In social accounting, the following are the measuring parameters 1. Value added statement 2. Employee turnover ratio 3. Saving in the foreign exchange 4. Capital output ratio Which of these statements are correct? a. 1 and 4 b. 1 and 2 c. 2, 3 and 4 d. 1, 2, 3 and 4 22. Which one of the following pairs is correctly matched? a. Adjusted Profit and Loss Account: Fund from operations b. Proposed Dividend: Current liability c. Investment: Current assets d. Depreciation: Inflow of fund 23. The main function of the Export Credit and Guarantee Corporation is a. to provide clearing facility to exporters b. to cover the risk related to exports c. to act as a trade association d. to finance directly the exports and imports 24. Consider the following 1. Preparation of Balance Sheet 2. Preparation of Funds Flow Statement 3. Preparation of Trial Balance 4. Preparation of Profit and Loss Account The correct chronological sequence of the above in the preparation of periodical financial statement is a. 4, 2, 3, 1 b. 3, 4, 1, 2 c. 2, 4, 3, 1 d. 1, 3, 2, 4 25. The current assets to the current liabilities ratio is said to be satisfactory if it is a. 1:2 b. 2:1 c. 1:1 d. 1.5:1 26. Under which principle is the insurer entitled to succeed to all the rights of the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 198

insured regarding the subject matter of insurance after the claim of insurance has been fully and finally settled? a. Principle of indemnity b. Principle of subrogation c. Principle of insurance d. Principle of causa proxima 27. The balance left in the capital accounts on dissolution of a firm is transferred to a. Realization Account b. Profit and Loss Account c. Bank Account d. None of the above 28. Consider the following statements: The purposes of charging depreciation to the Profit and Loss Account are 1. to provide for replacement of an asset 2. to ascertain true profit 3. to present real financial position 4. to arrive at the scrap value of the asset Which of these statements are correct? a. 1 and 4 b. 1 and 2 c. 1, 2 and 3 d. 2, 3 and 4 29. Insurable interest in a life Insurance Contract should be a. at the time of contract b. at the time of maturity c. at the time of claim d. at the time of surrender 30. One of the consequences of highly protective tariff walls would be that a. foreign producers find their imports attractive b. domestic producers sell exportable goods at a premium in the domestic market c. foreign producers find their exports attractive d. domestic producers find imports to be cheaper

IAS Prelims Commerce 2003 31. What is the kind of expenditure incurred on heavy advertising whose benefit is to
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 199

continue for years to come? a. Revenue Expenditure b. Capital Expenditure c. Deferred Revenue Expenditure d. Prepaid Expenditure 32. Consider the following statements The importance of the Memorandum of Association of a Joint-Stock Company is that 1. It is an unalterable Charter of the company 2. for the incorporation of every company, it is essential 3. its objective is to express clearly the risks to its shareholders and members 4. it ascertains the limit within which the company works and deals Which of these statements are correct? a. 1, 2 and 3 b. 2 and 4 c. 1 and 3 d. 1, 2, 3 and 4 33. According to Section 33(2) of the Companies Act, a declaration stating that all the requirements of the Companies. Act and other formalities relating to registration have been corn- piled with, shall be signed by which one of the following? a. An Advocate of the Supreme Court or High Court b. An Attorney or a Pleader entitled to appear before the High Court c. A whole-time practicing Secretary or a Chartered Accountant in India and engaged in the formation of the Company d. A person named in the Articles of the Company as a Director / Manager / Secretary 34. Financial audit in Joint-Stock Company in India is a. necessary b. voluntary c. statutory d. voluntary for companies which operate in certain activities only 35. Select the pairs which are correctly matched 1. Statutory Audit: Review of various
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 200

operations of a company 2. Management Audit: Verification of top level policy and its implications 3. Operational Audit: Examining the production planning and control operations 4. Internal Audit: According to the company objectives Select the correct answer using the codes given below: a. 1 and 2 b. 1 and 3 c. 2 and 3 d. 1 and 4 36. Consider the following statements: According to Section 34 of the Companies Act when a company is registered and a certificate of incorporation is issued by the Registrar, important consequences which follow ate that 1. the company becomes a distinct entity 2. the company acquires a perpetual succession 3. a private company can commence its business immediately 4. the company becomes owner of its properties Which of these statements are correct? a. 1 and 2 b. 3 and 4 c. 1, 2, 3 and 4 d. 1 and 3 37. According to Section 385 of the Companies Act, which one of the 5 of 14 following is not disqualified for the post of Manager in a company? a. An undercharged insolvent, or one who has at any time within the preceding five years been adjudged an insolvent b. One who suspends, or has at any time within the preceding five years suspended, payment to his creditors, or makes, or has at any time within the preceding five years made, a composition with them c. One who has not attained the age of 48 years d. One who is, or has at any time within
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 201

the preceding five years been, convicted by a Court in India of an offence involving moral turpitude 38. Internal Auditor is appointed by the a. Board of Directors of the Company b. Shareholders of the Company c. Institute of Chartered Accountants of India d. Company Secretary 39. Consider the following statements: An ‘Internal- Audit’ is not a part of 1. Continuous Statutory Audit 2. Internal Check System 3. Internal Control System Which of these statements are correct? a. 1, 2 and 3 b. 1 and 2 c. 2 and 3 d. 1 and 3 40. In case of winding-up of a company, an official liquidator realizes the amount due and proceeds from the sale of the assets and distributes the same among the following: 1. Preferential creditors 2. Debenture holders 3. Legal expenses and cost of liquidation 4. Shareholders 5. Unsecured creditors The correct sequence of distribution s a. 1,2, 3, 4, 5 b. 2, 4, 5, 1, 3 c. 3, 1, 2, 5, 4 d. 4, 2, 5, 3, 1 41. Consider the following sacraments: The Auditor is generally expected to carry out the following in a particular seriatim: 1. Verification of assets and liabilities 2. Vouching of transactions 3. Checking of valuation of assets and liabilities The correct chronological sequence of these acts is a. 1, 3, 2 b. 3, 2, 1 c. 2, 1, 3 d. 3, 1, 2 42. Which of the following chief characteristics of a Joint- stock Company are false?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 202

1. A company is a legal person 2. A company has its separate entity 3. A company has its citizenship 4. A company owns, enjoys, sells and purchases properties in its name 5. A company has voting rights and caste votes in its favour 6. A company can sue and be sued against Select the correct answer using the codes given below: a. 1, 3 and 6 b. 2, 4 and 5 c. 3 and 5 d. 2 and 4 43. According to the Company Law, the First Ordinary General Meeting of the Company must be convened within a. 18 months of its incorporation b. 12 months of its incorporation c. 9 months of its incorporation d. 3 months of its incorporation 44. Consider the following functions 1. Checking of valuation and physical verification of assets 2. Routine checking and vouching 3. Scrutiny of internal check system The correct sequence of these functions to be performed by an Auditor during the course of auditing is a. 2, 1, 3 b. 3, 1, 2 c. 3, 2, 1 d. 1, 2, 3 45. Various plans that an organization may formulate are for - purpose or mission, objectives, 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, objectives, strategies, policies, rules and procedures, programmes or projects and budget b. Budget, objectives, policies, rules and procedures, purpose or mission,
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 203

strategies and programmes or projects c. Purpose or mission, objectives, policies, strategies, programmes or projects, budget and rules and procedures d. Strategies, objectives, policies, purpose or mission, programmes or projects, rules and procedures, and budget 46. Match List I with List II and select the correct answer: List I A. Holding Company B. Government Company C. Public Company D. Private Company List II 1. Maximum of 50 Members 2. Minimum of 7 Members 3. Partly Public 4. Business Combination Codes; ABCD a. 2 1 4 3 b. 4 1 2 3 c. 2 3 4 1 d. 4 3 2 1 47. The Balance Sheet of M/s ABC as on 31 December is The liquidity Ratio is a. 2 : 5 b. 9 : 20 c. 1 : 2 d. 1: 1 48. Four important acts performed by an Auditor in. connection with an audit work are 1. verification of assets and checking valuation of the same 2. checking of Annual Accounts and Balance Sheet 3. preparation of an audit programme 4. test checking of financial, transactions The correct sequence in which these acts are performed by the Auditor is a. 2, 1, 3, 4 b. 2, 3, 4, 1 c. 3, 1, 4, 2 d. 3, 4, 1, 2 49. The type of control that provides a means for taking corrective action even ‘after
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 204

viability of the programme is known as a. pre-action control b. post-action control c. screening control d. steering control 50. The Mechanistic Model of organizational design achieves high levels of production and efficiency because’. a. of its de-emphasis of specialization and its emphasis on increasing job range b. it is highly decentralized and informal c. of both (a) and (b) above d. it is highly complex, centralized and formalized 51. Match List I with List II and select the correct answer: List I (Concepts of Accounting) A. Money measurement concept B. Business entity concept C. Cost concept D. Dual aspect concept List II (Suitability of the Accounting Concepts) 1. Applicable to all forms of business organizations 2. Basic accounting 3. Original purchase price of assets 7 of 14 4. Applicable to those trans actions/events which are of financial nature in accounting Codes; ABCD a. 4 2 3 1 b. 3 1 4 2 c. 4 1 3 2 d. 3 2 4 1 52. Which of the following may be included in Audit Working Papers’? 1. Audit notebook 2. Audit programmes 3. Schedules of sundry debtors and sundry creditors 4. Audit manuals Select the correct answer using the codes given below: a. 1 and 4 b. 1 and 2 c. 2, 3 and 4 d. 1, 2 and 3
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 205

53. Consider the following statements: An ‘Internal Control System’ may include 1. interim audit 2. internal audit 3. financial controls Which of these statements are correct? a. 1, 2 and 3 b. 1 and 2 c. 2 and 3 d. 1 and 3 54. For a firm Opening Stock - Rs. 32,000 Closing Stock - Rs. 34,000 Sales - Rs. 4,40,000 Gross Profit Ratio - 25% on sales The stock turnover ratio of the firm is a. 8.0 b. 8.5 c. 9.0 d. 10.0 55. The traditional concept is that authority flows from top to bottom. But a new concept of authority has been developed. This is known as acceptance theory. Who is the exponent of this view? a. Herbert A. Simon b. Douglas McGregor c. Chester Barnard d. Keith Davis 56. The principle that a natural and unbroken series of event is responsible for a loss or damage, is known as a. principle of subrogation b. principle of mitigation of loss c. principle of contribution d. principle of causa proxima 57. Match List I (Different Types of Shares/Events) with List II (Transaction by the Company) and select-the correct answer: List I A. Sweat equity shares. B. Bonus shares C. Right shares D. Buy-back of shares List II 1. A company gives its shares to the shareholders in the form of extra dividend 2. Shares issued by the company at a
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 206

discount 3. A company provides an opportunity to the existing shareholders to purchase subsequent issue of shares on priority basis 4. A company exercises its call option to buy shares from the shareholders Codes; ABCD a. 3 1 2 4 b. 2 4 3 1 c. 3 4 2 1 d. 2 1 3 4 58. If net profits are Rs. 30,000 and expenses not resulting in the application of fund are Rs. 10,000, then the funds from operation will be a. Rs. 30,000 b. Rs. 40,000 c. Rs. 10,000 d. Rs. 20,000 59. Premium Method is used for good will treatment in the case of a. retirement of partner b. admission of partner c. dissolution of partnership firm d. sale of partnership to a company 60. Compatibility of technology refers to suitability of technology with respect to a. consumption pattern of consumers b. skills of available human resource c. development of product line of the company d. changing taste of consumers

IAS Prelims Commerce 2003 61. Which one of the following functions does not relate to O & M Division? a. To enlarge the organization b. To improve organization c. To simplify methods d. To create and maintain an efficient administrative machinery 62. Which one of the following statements explains the concept of unity of command? a. All the workers focus on a common goal
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 207

b. All the workers receive instructions from one authority c. All the workers are accountable to one authority d. All the workers aim at One objective at a time 63. An organizational manual is designed to promote a. better clientele for a company b. better relationship between the units in an industry c. better understanding of basic organizational structures d. better information about business of the company 64. The psychologist A. H. Maslow has developed a widely acclaimed conceptual framework for understanding human motivation. Human needs, according to Maslow, tend to follow the classification of five categories of needs given as under 1. Egoistic needs 2. Safety needs 3. Social needs 4. Physiological needs 5. Self-fulfillment needs These needs, according to Maslow, follow a basic hierarchical pattern from the most basic to the highest level needs as follows a. 1, 2, 3, 4,5 b. 4, 2, 3, 1, 5 c. 5, 4, 3, 2, 1 d. 1, 3, 2, 4, 5 65. Douglas McGregor made five basic assumptions about people in his theory Y. First four assumptions are 1. People are ambitious 2. They seek responsibility 3. They are dynamic 4. They recognize and accept organizational goals The fifth assumption is a. people are always cooperative and cheerful at their work b. people are not self-centered c. people are by nature resistant to change d. people are intelligent and possess creative potential 66. In case of retirement of a partner, the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 208

partner’s loan account would be shown a. in his capital account b. in his wife’s loan account c. in his loan account d. in the total amount due to him 67. As per Garner v. Murray Rule, the loss resulting from a partner’s. insolvency, is borne by other partners in a. equal ratio b. their capital ratio c. their profit-sharing ratio d. 3 : 1 ratio 68. The movement of securities from one stock exchange to another with the object of reaping a profit from the disparity in share prices is called a. Averaging b. Arbitraging c. Backwardation d. Forward trading 69. Consider the following statements 1. Transfer and transmission of shares are the same thing 2. ‘Stag’ is a speculative person who applies for shares in a new issue expected to be over-subscribed to make profit by selling such shares at a premium 3. Stock is a bundle of fully paid shares put together for convenience 9 of 14 Which of the above statements is/are correct? a. 1 and 2 b. 2 and 3 c. 3 only d. 2 only 70. When a company exceeds the powers granted to it by its Memorandum of Association, it is called a. Intra vires b. Ultra vires c. Lien d. Mutatis mutandis 71. Consider the following statements: Issue of bonus shares can be made out of the 1. General Reserve Account 2. Realized Capital Profits Account 3. Revaluation Reserve Account
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 209

4. Profit and Loss Account (Cr.) Which of these statements are correct? a. 1 and 4 b. 2 and 3 c. 1, 2 and 4 d. 2, 3 and 4 72. In case the partnership deed does not specify the rights and obligations, the provisions of the Partnership Act, 1932 lay down which of the following rights and duties of a partner? 1. Every partner has a right to take part in the conduct and management of the firm’s business 2. Every partner has the right to receive interest on loans and advances made by him to the firm. The rate of interest should be 8% unless otherwise agreed to by the parties 3. Every partner has the right to be indemnified for the expenses incurred and losses sustained by him in the firm’s business Select the correct answer using the codesgiven below a. 1 and 3 b. 2 only c. 1, 2 and 3 d. 2 and 3 73. Which of the following is not the legal position of sole proprietorship? a. The proprietor and his business have separate personality b. Free from legal formalities in operation c. The liability is unlimited d. Not governed by any Special Act 74. Kurt Lewins’ three phases of organizational change consist of a. unfreezing, changing, feedback b. Changing, refreezing. feedback c. unfreezing, evaluation, refreezing d. unfreezing, changing, refreezing 75. Which one of the following statements is not correct? a. Management by objectives is a philosophy of management b. Management by objectives is an approach of management c. Management by objectives is a process of participative management
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 210

d. Management by objectives is a control technique 76. The quality of information is measured by its a. accuracy b. cost c. degree of statistical validity d. timeliness 77. Which one of the following transactions can change the current ratio? a. Purchase of goods for cash b. Payment to outstanding trade creditors c. Acceptance on a Bill of Exchange written by a trade creditor d. Dishonour of a Bill of Exchange

78. Which one of the following is not correctly matched? a. Company : Authorized capital b. Shares : Face value c. Bonus shares : Market value d. Preference shares : Fixed dividend 79. Auditing is compulsory in case of a. Joint-stock Company b. Charitable Trust c. Cooperative Society d. All of the above 80. Which one of the following statements is not correct in respect of private limited companies? a. Number of members is limited to 50 b. Operations are restricted to a particular State c. Invitation to public for subscription to capital is prohibited d. Transfer of shares is restricted 81. A company needs to issue prospectus a. for every Public issue b. for every Public issue as well as Rights issue c. for every Public issue. Rights issue and Bonus shares d. for every Public issue if it is a private limited company 82. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 211

downward in order to ascertain that sound management prevails in the business concern. 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 83. 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. 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 84. 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 on scientific statistical sampling technique, reduces the volume of unnecessarily cumbersome audit work involved in detailed checking of all transactions. 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 85. 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. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 212

c. A is true but R is false d. A is false but R is true 86. Assertion (A): Cash Flow Statement and Fund Flow Statement disclose same information. Reason (R): Both are prepared out of the same data. 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 87. 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 unit in order to assess the extent of liquidity. 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 88. 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. 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 89. 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. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 213

90. 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. 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 91. Assertion (A): Rules of Constructive Notice and Articles of Association are known to everyone who deals with the company. Reason (R): After registration of the company, Memorandum and Articles of Association become public documents. 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 92. Assertion (A): Doctrine of Indoor Management does not apply to forgery. Reason (R): Company Law recognizes ultra virus or illegal acts. 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 93. Assertion (A): A Director of a company in his individual capacity can exercise powers conferred on him by the Companies Act, Memorandum and the Articles of Association of the company. Reason (R): The Directors have the power to enter into contract on behalf of the company with other parties. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 214

d. A is false but R is true 94. Assertion (A): Capital expenditure is incurred for the purpose of acquiring fixed asset. Reason (R): Capital expenditure item is shown in the asset side of the Balance Sheet. 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 95. Assertion (A): Staff officers are assigned an ‘authority of ideas’ and line officers an ‘authority to command. Reason (R): Functional authority is not restricted to managers of a particular type of department. 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 96. According to the Companies Act, account books of a company are to be preserved for the preceding a. six years b. eight years c. five years d. nine years 97. Cost of goods purchased for resale is an example of a. capital expenditure 12 of 14 b. revenue expenditure c. deferred revenue expenditure d. None of the above 98. One of the important weaknesses of the decentralized structure is a. unsuitability in a fast-changing environment b. difficulty in pinpointing responsibilities c. difficulty in coordinating common functions d. difficulty in promoting innovations 99. Which of the following is/are included in income and expenditure account?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 215

1. Accrued expenses 2. Credit purchases 3. Prepaid expenses 4. Opening cash balance Select the correct answer using the codes given below a. 1 only b. 1 and 2 c. 2 and 3 d. 3 and 4 100. For which of the following industry/industries, I. G. Patel Enquiry Committee was constituted by the Government of India for examining the justification of existence of Managing Agency System in the Company? 1. Sugar industry 2. Cotton-textile industry 3. Jute Industry 4. Cement Industry 5. Paper Industry Select the correct answer using the codes given below: a. 1 and 2 b. 5 only c. 1, 2, 3, 4 and 5 d. 3 and 4 101. Under which of the following circumstances, the Directors of a Company, being the agents/representatives become personally responsible? 1. When they act beyond their power 2. When they are convicted for any fraud 3. When they have given any false statement in the prospectus 4. When they have clearly accepted the responsibility of being liable for some fault of theirs. Select the correct answer using the codes given below: a. 2 and 3 b. 1 and 4 c. 1, 2, 3 and 4 d. 1, 3 and 4 102. Which one of the following types of duties, is not to be performed by a dulyappointed Secretary of a Company? a. All statutory duties of the Company b. Duties towards Directors of the Company
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 216

c. Duties towards Shareholders of the Company d. Duties towards Registrar of the Company 103. Within how much period a copy of the Profit and Loss Account and Balance Sheet of Company are to be filed with the Registrar? a. 14 days of Annual Meeting of the Company b. 21 days of Annual Meeting of the Company c. 30 days of Annual Meeting of the Company d. 45 days of Annual Meeting of the Company 104. Following particulars are given for a firm: Closing Stock - Rs. 45,000 Other Current Assets -Rs. 1,05,000 Current Liabilities - Rs. 70,000 Sales - Rs. 3,20,000 The Working Capital Turnover Ratio is a. 5 : 1 b. 4 : 1 c. 3 : 1 d. 2 : 1 105. Match List I with List Il and select the correct answer: List I A. VED Analysis B. Ratio Analysis C. Fund-flow Analysis D. Income and Expenditure Analysis List II 1. Sources and uses of fund 2. Inventory control 3. Analysis and interpretation of financial statements 4. Non-profit organization Codes ABCD a. 1 4 2 3 b. 2 3 1 4 c. 1 3 2 4 d. 2 4 1 3 106. Management by objectives is implemented in an organization by stages. One such stage action planning includes 1. assigning responsibilities for achieving objectives
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 217

2. choosing strategies appropriate to the objectives 3. allocating resources for achieving objectives 4. scheduling specific activities to achieve maximum resource utilization Identify horn the following combinations the correct sequence in which the, action planning stage& are implemented a. 1, 2, 3, 4 b. 2, 3, 4, 1 c. 3, 4, 1, 2 d. 2, 1, 3, 4 107. The concept ‘Management by Exception’ implies a. Exceptional contributions by the top management b. achievement of objectives by participation of all concerned c. that the immediate superior has to deal with deviations only and not with details of the work assigned to the subordinate d. that the highest officer need not worry about the results if he/she has delegated his/her authority 108. Match List l with List II and select the correct answer: List I A. Partners and Firm B. Sole Proprietorship C. Public Limited Company D. Nominal Partnership List II 1. Agent and Principal relationship 2. Prospectus 3. Personal supervision 4. Firm image Codes; ABCD a. 1 3 2 4 b. 4 2 3 1 c. 1 2 3 4 d. 4 3 2 1 109. Following particulars are given for a firm: Quick Ratio - 1.5 Current Assets - Rs. 1,50,000 Current Liabilities - Rs. 60,000 The value of stock is: a. Rs. 60,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 218

b. Rs. 70,000 c. Rs. 80,000 d. Rs. 90,000 110. The most complex and widely used method of job evaluation is a. the job ranking method b. the job classification method c. the market pricing method d. the points method 111. Consider the following 1. Measurement 2. Projection 3. Selection 4. Observation 5. Comparison 6. Decision making 7. The correct sequence of the above ingredients of management by exception is a. 1, 2, 3, 4, 5, 6 b. 1, 2, 3, 5, 4, 6 c. 1, 2, 3, 6, 4, 5 d. 1, 2, 3, 4, 6, 5 112. A wage which should enable a worker to provide for himself’ and his family not merely the bare essentials like food clothing and shelter but also a measure of comfort in the form of education for his children and protection against diseases and illness is. known as a. Fair Wage b. Minimum Wage c. Living Wage 14 of 14 d. Incentive Wage 113. 113. Emerson Efficiency System of wage. payment means a. the worker is allowed a certain time within which he is required to complete his job b. the completion of job within the prescribed time, the worker is paid bonus of a certain percentage c. where the worker takes 50% more than the prescribed time, he is paid no bonus d. All of the ‘above 114. Match List I (Basis of Departmentation) with List II (Example) and select the correct answer
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 219

List I A. Customer B. Functional C. Geographical D. Temporal List II 1. Day and night shifts in a hospital 2. Retail and ‘wholesale sales of a trader 3. Northern and Southern Divisions of a railway 4. Production and sales of a factory 5. Consumer durables and fast moving consumable goods Codes; ABCD a. 2 3 4 1 b. 1 4 3 5 c. 2 4 3 1 d. 1 3 4 5 115. The cost of a machine is Rs. 70,000. It has 10-year life at the end of which it is expected to realize Rs. 5,000. The depreciation for first four year on a straight line basis is a. Rs. 28,000 b. Rs. 26,000 c. Rs. 22,000 d. Rs. 20,000 116. A partner’s capital at the end of a year was Rs. 3,00,000. His share of profit for the year was Rs. 60,000 and he had drawn Rs. 20,000 from the firm during the year. Then his capital at the beginning of the year was a. Rs. 3,00,000 b. Rs. 3,20,000 c. Rs. 3,80,000 d. Rs. 2,60,000 117. The source of the rules relating to internal management of a company is known from a. Memorandum of Association b. Prospectus c. Articles of Association d. Fundamental Rules 118. The phenomenon of the stock market in which almost the entire supply of a particular security is held by a few people is named as a. Wash Sales b. Cornering c. Rigging
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 220

d. Arbitrage 119. Which one of the following statements pertaining to mutual funds is true? a. Mutual funds can be operated only by government organizations b. The maximum investment in mutual funds by an individual should not exceed a particular ceiling fixed by government from time to time c. Return on investment and safety of principal is not guaranteed in mutual funds d. Unit Trust of India is the regulatory authority for mutual funds in India 120. Underwriters are persons who a. purchase the shares and debentures of a company b. work as agents of the company for the sale of shares and debentures c. undertake to buy those shares and debentures not subscribed for by the public d. publicize the share-issue on behalf of the company

IAS Prelims Commerce 2004 1. Which one of the following is the correct explanation of the Principle of Constructive Notice? a. The company will have to deliberately inform everybody about what it is for and what it is doing b. The company will canvass about its Articles of Association and Memorandum of Association time and again c. The Articles of Association and Memorandum of Association are considered to be public documents and accessible to all d. Every one dealing with the company is not supposed to know the contents of the Articles of Association and Memorandum of Association 2. In case of a cultural club subscriptions received during a particular accounting period as per Receipt and Payment Account amount to Rs. 57,360.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 221

Subscription outstanding (Opening and Closing) were Rs. 4,800 and Rs. 6,000 respectively. Subscription received in advance (Opening and Closing) were Rs. 3,600 and Rs. 2,160 respectively. The amount to be credited to Income and Expenditure account would be a. Rs. 57,360 b. Rs. 54,000 c. Rs: 60,000 d. Rs. 63,360 3. Receipts and Payments account records transaction of a. Revenue receipts and payments only b. Capital receipts and payments only c. All receipts and payments relating to the current year only d. All receipts and payments relating to the current year, succeeding year as well as preceding year 4. X and Y are sharing profits in the ratio of 2 : 1. They admit Z into the firm with 1/4 shares in profits for which he brings Rs. 12,000 as his share of capital. The partners decide to have their capitals according to the new profit sharing ratio. As a result, the adjusted capital of Y will be a. Rs. 10,000 b. Rs. 12,000 c. Rs. 16,000 d. Rs. 24,000 5. Which of the following will not be the source for buying back of share by a company? a. Company’s free reserves b. Company’s securities premium account c. Proceeds of any shares or other specified securities as per Section 77 A(1) (iii) d. Company’s borrowings from financial institutions 6. Any person aggrieved by any decision or order of the National Company Law Appellate Tribunal can appeal to which one of the following and within how much period? a. High Court, within 30 days b. Supreme Court, within 60 days c. SEBI, within 90 days
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 222

d. Department of Companies Affairs, within 60 days 7. When an incoming partner purchases his share from any one of the existing partners, then a. Total assets of the firm do not change b. Total assets of the firm will be augmented to the extent of payment received from the new partner c. Total assets of the firm will be reduced to the extent of payment received from the new partner d. Change in total assets of the firm will depend upon the new profit sharing ratio of the partners 8. If the goodwill raised at the time of retirement of a partner is to be written off, then the capital accounts of the remaining partners are debited in a. New profit sharing ratio b. Capital ratio c. Old profit sharing ratio d. Sacrificing ratio 9. Consider the following statements regarding proceedings at general meetings of a company 1. The chairman, if any, of the Board shall preside as chairman at every general meeting of the company 2. The chairman may adjourn the meeting 3. When a meeting is adjourned for 15 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting Which of the above statements is/are correct? a. 1 only b. 2 and 3 c. 3 only d. 1 and 2 10. Consider the following statements: 1. Audit programme is the management’s plan of action 2. The primary basis of preparing an audit programme is the system of internal control 3. The idea implied in the preparation of an audit programme is to ensure to the auditor a complete grip over his staff Which of the statements given above is/are
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 223

correct? a. 3 only b. 1, 2 and 3 c. 1 and 2 d. 2 and 3 11. Match List I with List II and select the correct answer using the codes given below the Lists List I A. Partners’ current accounts B. Goodwill account C. Partners’ drawings account D. Realization account List II 1. Dissolution of partnership 2. Admission of a partner 3. Fixed capital of partners 4. Goods taken by partner for self – consumption Codes ABCD a. 1 4 2 3 b. 3 2 4 1 c. 1 2 4 3 d. 3 4 2 1 12. Identify the correct sequence of the following steps with regard to delegation of authority 1. Creation of obligation 2. Authorization for actions 3. Determination of the expected results 4. Assignment of duties Select the correct answer using the codes given .below a. 3-2-4-1 b. 1-2-4-3 c. 1 -4-2-3 d. 3-4-2-1 13. Which one of the following securities cannot be issued by a Public limited company in India? a. Participating preference shares b. Redeemable preference shares c. Deferred shares d. Debentures 14. Which of the following are included in auditor’s working papers? 1. Audit manuals 2. Audit programme
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 224

3. Audit procedures 4. Audit note - book Select the correct answer using the codes given below a. 1 and 2 b. 3 and 4 c. 1, 2 and 3 d. 2 and 4 15. Match List (Theories of Wages) with List II (Theorists Who Developed) and select the correct answer using the codes given below: List I A. Subsistence theory B. The surplus value theory of wage C. Residual claimant theory D. Marginal productivity theory List II 1. Philip Henry and John Bats 2. Francis A. Walker 3. David Ricardo 4. Karl Marx Codes; ABCD a. 3 1 2 4 b. 2 4 3 1 c. 3 4 2 1 d. 2 1 3 4 16. The tool used by auditor to monitor and control the progress of audit work is a. Engagement diary b. Audit programme c. Audit working papers d. Audit notes 17. Which one of the following is the most appropriate management control technique for timely completion of a project? a. Organization chart b. Management by Objectives c. PERT d. Span of control 18. Which of the following pairs are correctly matched? 1. Frederick Herzberg: Scientific management 2. Henry Fayol: Modern management 3. Max Weber: Bureaucracy 4. Philip Kotler: Marketing Select the correct answer using the codes
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 225

given below a. 1 and 2 b. 2 and 3 c. 1 and 3 d. 2, 3 and 4 19. Hawthorne studies have underlined the significance of which of the following? a. System approach to management b. Contingency approach to management c. Modern approach to management d. Human relations approach to management 20. Which of the following is called ‘Backbone of auditing? a. Routine checking b. Vouching c. Internal checks d. Internal control 21. Match List I with List II and select the correct answer using the codes given below: List I A. Receipts and payments account B. Income and expenditure account C. Dividend equalization reserve. D. Subscription received in advance account List II 1. Revenue 2. Cash 3. Liability 4. General reserve ABCD a. 2 1 4 3 b. 3 4 1 2 c. 2 4 1 3 d. 3 1 4 2 22. Burns and Stalker, model for categorizing organization by structural design uses the terms a. Functional and geographic b. Functional and organic c. Geographic and mechanistic d. Mechanistic and organic / 23. In management principles, grid refers to a. Diverse managerial styles b. Coordination c. Communication d. Motivation 24. Who among the following is a bear
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 226

operator? a. A stock broker who sells shares now and buys the same shares later b. An investor who expects the price of a security or that of the whole securities market to rise c. An investor who sells securities in anticipation’ of being able to repurchase them later at a lower price d. A broker who indulges in rigging of share prices 25. Consider the following statements regarding’ Information ‘Memorandum 1. A company inviting subscription by an information memorandum shall be bound to file a prospectus prior to the opening of the subscription lists and the offer as a red-herring prospectus, at least 10 days before the opening of the offer. 2. The information memorandum and red-herring prospectus shall carry same obligations as are applicable in the case of a prospectus. 3. 3. Any variation between the information memorandum and the red4 of 15 herring prospectus shall be highlighted as variations by the issuing company. Which of the statements given above is/are correct? a. 1 only b. 1, 2 and 3 c. 2 and 3 d. 3 only 26. Match List I with List II and select the correct answer: List I A. Financial leverage B. Quick ratio C. Stock turnover D. Margin on sales List II 1. Efficiency 2. Profitability 3. Liquidity 4. Risk Codes; ABCD a. 4 3 1 2
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 227

b. 1 2 4 3 c. 4 2 1 3 d. 1 3 4 2 27. In a partnership business if there is no specific agreement among partners, profit is distributed in the a. Ratio of capital contributions b. Ratio of time spent in the business c. Ratio to be decided by the Court d. Equal ratio 28. Rules concerning meetings and reports of a joint stock company are contained in its a. Prospectus b. Memorandum of Association c. Articles of Association d. Bye -laws 29. Consider the following statements about management of change: 1. Job enlargement and job enrichment are examples of techno-structural approaches to change 2. Organizational development is short range effort supported by top management to increase an organization’s problem solving and renewal processes Which of the statements given above is/are correct? a. 1 only b. 2 only c. Both 1 and 2 d. Neither 1 nor 2 30. Consider the following statements about organizational structure 1. Functional organization is used by large, multi - product companies 2. Product or market organization is used by smaller firms that offer a limited line of products 3. Matrix organizational structure is a hybrid Which of the statements given above is/are correct? a. 1 and 2 b. 3 only c. 2 and 3 d. 1, 2 and 3 IAS Prelims Commerce 2004 31. Consider the following statements about office auto-motion:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 228

1. The growth of EDP (electronic data processing) departments and emergence of MIS (management information system) are two independent entities 2. DSS (decision support system) is accessible only to the computer specialists 3. Which of the statements given above is/are correct? a. 1 only b. 2 only c. Both 1 and 2 d. Neither 1 nor 2 32. A company purchased 8% bonds at a cost of Rs. 12,00,000 (Face value Rs. 10,00,000) on January 1,2003. Half yearly interest is payable on this investment on June 30 and December 31 each year. The Company closes its accounts on 31.3.2003. The amount of accured interest shown in profit and loss account for the year ended is a. Rs. 40,000 b. Rs. 60,000 c. Rs. 20,000 d. Rs. 80,000 33. Goods worth Rs. 24,000 were returned by X. The accountant, however, credited the sales returns account by Rs. 42,000. In 5 of 15 order to rectify this error, what should be done? a. Debit the sales return account by Rs. 42,000 b. Credit the sates return account by Rs. 24,000 c. Debit the sales return account by Rs. 66,000 d. Debit the sales return account by Rs. 18,000 34. A machine with a written down value of Rs. 10,000 has been sold for Rs. 13,000. The amount realized is a a. Capital receipt and profit involved should be transferred to Capital. Reserve b. Revenue receipt c. Capital receipt and profit involved should be transferred to General
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 229

Reserve d. Capital receipt and profit involved should be transferred to Profit and Loss A/c 35. In case of winding up of a company, in what order does the official liquidator distribute the amounts realized among the following different creditors? 1. Legal expenses and the cost of liquidation 2. Debenture holders 3. Unsecured creditors Select the correct answer using the codes given below a. 1-2-3 b. 3-2-1 c. 3-1-2 d. 1-3-2 36. Rs. 10,000 spent on the replacement of worn - out parts of an electronic machinery is treated as a. Capital expenditure b. Revenue expenditure c. Deferred revenue expenditure d. Capital loss 37. Preliminary expenses are an example of a. Revenue expenditure b. Capital expenditure c. Deferred revenue expenditure d. All of the above 38. Which of the following is/are capitalized along with the purchase of a fixed asset? 1. Import duty 2. Delivery and handling cost 3. Cash discount 4. Cost of installation Select the correct ‘answer using the codes given below a. 3 only b. 2 and 3 c. 1, 2 and 4 d. 1, 2, 3 and 4 39. Match List I (Items) with List II (Standards) and select the correct answer using the codes given below: List I A. Accounting for fixed assets B. Revenue recognition C. Depreciation accounting D. Cash flow statement
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 230

List II 1. AS – 9 2. AS - 10 3. AS - 3 4. AS - 6 Codes; ABCD a. 2 3 4 1 b. 4 1 2 3 c. 2 1 4 3 d. 4 3 2 1 40. Accounting Standard AS - 2 provides that inventories should be valued at a. Lower of historical cost and net realizable value b. Lower of historical cost and market value c. Only estimated selling price d. All of the above three 41. ABC Company purchased cassettes during three months as follows The Company sold 1600 cassettes @ Rs. 100 each. What will be the value of closing stock if the cost flow assumption of weighted average method is followed? a. Rs. 23,500 b. Rs. 35,200 c. Rs. 37,500 d. Rs. 36,200 42. While making an adjustment entry in respect of interest on capital, credit is made to a. Capital account b. Interest on capital account c. Profit & Loss account d. Interest account 43. Given the following data extracted from the book of Abdul Traders: (Rs) Opening stock: 30,000 Closing stock: 40,000 Purchases: 1,25,000 Carriage inwards: 2,000 Carriage outwards: 3,000 Return outwards: 5,000 Sales: 1,50,000 The cost of goods sold will be a. Rs. 1,30,000 b. Rs. 1,12,000 c. Rs. 1,20,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 231

d. Rs. 1,15,000 44. Consider the following statements: A credit purchase during the accounting year which was not recorded in the books of account but included in the closing stock is to be 1. added to the credit purchases account 2. added to the creditors account 3. subtracted from the closing stock 4. added to the opening stock Which of the statements given above is/are correct? a. 3 only b. 1 and 2 c. 2 and 3 d. 2, 3 and 4 45. In which of the following ways Secretary of a company can be removed from his office? a. By a resolution passed in the meeting of the Board of Directors b. By an order of the Registrar of the company c. By a resolution passed in the Annual General Meeting d. None of the above three 46. Match List I (Items) with List II (Headings) and select the correct answer using the codes given below List I A. Provision for income tax B. Share premium C. Unclaimed dividend D. Discount oh issue of shares List II 1. Miscellaneous expenses not written off 2. Current liabilities 3. Reserves and surplus 4. Profit and Loss account Codes; ABCD a. 4 3 2 1 b. 2 3 4 1 c. 4 1 2 3 d. 2 1 4 3 47. Match List I (Item of Balance Sheet) with List II (Head in the Balance Sheet) and select the correct answer using the codes given below:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 232

List I A. Govt. securities B. Stock in trade C. Unclaimed dividend D. Proposed dividend List II 1. Current liabilities 2. Provisions 3. Liquid assets 4. Current assets Codes; ABCD a. 3 1 4 2 b. 2 4 1 3 c. 3 4 1 2 d. 2 1 4 3 48. Continuous audit is used a. where volume of the transactions is not very large b. where it is desired to present the accounts just after the close of the financial year and where the statement of accounts is to be presented to the management after every month or quarter c. where satisfactory system of internal check is not in operation d. where interim audit is not in operation 49. Which one of the following is a conclusive proof of the existence of a company? a. Certificate of incorporation b. Certificate of commencement of business c. Filing of registration papers duly stamped with the Registrar of the Companies d. Share certificate 50. Secret reserves are created by means of a. transfer to general reserve b. providing excessive depreciation c. overvaluation of inventories d. undervaluation of liabilities 51. Match List I with List II and select the correct answer using the codes given below: List I A. Inventory of material B. Retained earnings C. Listing fees of shares in a stock exchange
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 233

D. Plant and machinery List II 1. Shareholders equity 2. Fixed asset 3. Current asset 4. Fictitious asset 5. Intangible asset 52. A company purchased the following assets and paid through 1,00,000 fully paid equity shares of Rs. 10 at a premium of Rs. 2: Building: Rs. 5,00,000 Machinery: Rs. 4,00,000 Stock in trade: Rs. 1,00,000 In the context of funds flow statement, this transaction will result in a. Funds inflow of Rs. 10,00,000 b. Funds outflow of Rs. 12,00,000 c. Funds inflow of Rs. 1,00,000 d. Funds inflow of Rs. 9,00,000 53. Call option is a. A contract to buy a certain number of shares at a stated price within a specified period of time b. A contract to sell a certain number of shares at a stated price within a specified period of time c. The option of the issuing company to demand the shareholders to pay for the partly paid shares d. The option available to the convertible debenture holders to demand equity shares in conversion of debentures 54. Following is the summarized balance sheet of a company earning profit (before tax) of Rs. 3,00,000 during the previous financial year The rate of return on investment of the company during the relevant financial year is a. 25% b. 20% c. 21.5% d. 23% 55. An audit in which the auditor examines the financial statements of an enterprise to express an opinion as to whether or not they reflect a true and fair view of its state of affairs and working results is known as a. Management audit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 234

b. Cost audit c. Financial audit d. Periodical audit 56. Which of the following are statutory audits? 1. Financial audit of insurance companies 2. Financial audit of partnership firms 3. Financial audit of proprietorship firms 4. Financial audit of manufacturing companies Select the correct answer using the codes given below: a. 1 and 4 b. 1 and 2 c. 1 and 3 d. 3 and 4 57. Is management by exception one of the important principles of control? a. Yes; because only the unusual deviations from standards should be brought to the notice of the management b. No; because less significant deviations and the actual performance according to the standards are not brought to the notice of the management c. Yes; because exception principle saves time of the subordinate staff d. No; because the manager can attend to operative decisions and the strategic problems can be left to the technocrats. 58. Consider the following statements 1. in a computer, operating system acts as an interface between the user and the hardware 2. Operating system takes care of the power supply and other hardware requirements 3. CPU is the control centre for a computer Which of the statements given above is/are correct? a. 1 and 3 b. 2 and 3 c. 1 only d. 2 only 59. Job evaluation is used for a. Study of progress of production b. Study of job composition c. Determining wage - rate differentials d. Rating the merit of an employee
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 235

60. The first step of the control process actually gets initiated in the managerial function of a. Staffing b. Planning c. Communication d. Coordination 61. Which one of the following statements is correct? a. Business policy is another name for long range planning b. Strategic planning is the function of middle management c. Operational planning is the function of top management d. Strategic planning is largely influenced by external environment 62. What is indent in foreign trade? a. Shipping documents in duplicate b. A certificate indicating that the goods have been loaded on board the ship c. A firm and binding order from the importer d. A letter of intent from the overseas supplier 63. Assertion (A): According to the Doctrine of Indoor Management, persons dealing with the company are only required to see that the proposed dealings are apparently regular and consistent With the Memorandum of Association and Articles of Association. Reason (R): It is presumed that the Directors are acting lawfully 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 64. Assertion (A): Individual perceptions, expectations, expected outcome of a given behaviour and situational factors also play a vital role in motivation. Reason (R): Though need is not fully rejected, need satisfaction is not the only aspect of a person’s behaviour. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 236

R is not the correct explanation of A c. A is true but R is false d. A is false but R is true 65. Assertion (A): Holding company is a partial consolidation. Reason (R): If company C is the subsidiary of B, and B is a subsidiary of A, then C will be deemed to be a subsidiary of A through the medium of B. 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 66. Assertion (A): A private limited company must prepare its own Articles of Association. Reason (R): A private limited company can invite public to subscribe to its share and debentures. 9 of 15 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 67. Assertion (A): While preparing Trading and Profit and Loss A/c and Balance Sheet, the adjustments given outside the trial balance are to be shown in final accounts at two places, if treated directly. Reason (R): Adjustments are to be made to comply with the matching principle. 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 68. Assertion (A): Current ratio shows the ability of the firm to meet its short term obligations. Reason (R): Current ratio is also used in inventory 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 237

c. A is true but R is false d. A is false but R is true 69. Assertion (A): Vouching refers to examination by the auditor of documentary evidence supporting and substantiating a transaction recorded in books. Reason (R): Verification refers to confirming the actual existence, possession, ownership, basis of valuation and freedom from encumbrance. 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 70. Consider the following statements 1. A. letter of credit eliminates the risk of payment in foreign trade 2. Revolving letter of credit and circular letter of credit are two different entities 3. Revocable letter of credit is a confirmatory letter of credit Which of the statements given above is/are correct? a. 1 only b. 2 and 3 c. 1 and 3 d. 1, 2 and 3 71. Consider the following statements: 1. A public limited company can commence business only after getting the Certificate of Commencement of Business 2. In a public limited company, Directors cannot borrow from the company without the approval of the Central Government Which of the statements given above is/are correct? a. 1 only b. 2 only c. Both 1 and 2 d. Neither 1 nor 2 72. Consider the following statements 1. Sole - proprietorship type of business unit is not governed by the Contract Act. 2. A private limited company is governed by the Partnership Act whereas a
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 238

public limited company is governed by the Companies Act Which of the statements given above is/are correct? a. 1 only b. 2 only c. Both 1 and 2 d. Neither 1 nor 2 73. Consider the following statements 1. In case of the marine insurance, the insurable interest must exist at the time the loss occurs 2. In case of fire insurance, insurable interest must exist both at the time of the contract and at the time of loss Which of the statements given above is/are correct? a. 1 only b. 2.oniy c. Both 1 and 2 d. Neither 1 nor 2 74. Consider the following statements 10 of 15 1. Workmen’s Compensation and Third Party insurance are examples of guarantee insurance 2. Re-insurance is more common under fire and marine insurance Which of the statements given above is/are correct? a. 1 only b. 2 only c. Both 1 and 2 d. Neither 1 nor 2 75. A change in the exchange rate will change the amount of local currency receivable on a bill denominated in a foreign currency. The risk involved is called a. Foreign exchange risk b. Import risk c. Transaction risk d. Monetary risk 76. Export promotion is indispensable for overcoming disequilibrium in a. balance of payments b. Balance of trade c. Terms of trade d. All the above three 77. Match List I with List II and select the correct answer using the codes given
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 239

below the Lists List I A. Horizontal combination B. Vertical combination C. Diagonal combination D. Circular combination List II 1. Mixed combination 2. Service combination. 3. Industry combination 4. Trade combination Codes; ABCD a. 4 3 2 1 b. 2 1 4 3 c. 4 1 2 3 d. 2 3 4 1 78. The marine policy which insures incidental inland risks along with the marine perils is called a. Block policy b. Currency policy c. Blanket policy d. Voyage policy 79. Which of the following does not mean the Qualified Institutional Buyer (QIB) under the SEBI (Disclosure & Investor Protection) guidelines as amended by the recent DIP Circular? a. Mutual Funds b. Pension Funds with a corpus below Rs. 20 crores c. Pension Funds with minimum corpus of Rs. 25 crores. d. Provident Funds with minimum corpus of Rs. 25 crores 80. The process of determining how to pursue long - term goals with the expected resource available to the organization is called a. Operational planning b. Strategic planning c. Intermediate planning d. Tactical planning 81. The dividend per share in a company is Rs. 2, earning per share is Rs. 5, and the market value is Rs. 25. What will e its yield? a. 20% b. 12.5%
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 240

c. 8% d. 25% 82. Which one of the following statements related to auditing is not correct? a. Chances of frauds are maximum in the case of cash sales b. While routine checking is carried out, vouching may be considered unnecessary c. While vouching the cash receipts, the auditor should study the system of internal check in operation d. Vouching is the essence of auditing 83. When an Annual General Meeting can be called after giving shorter notice than that specified? a. If consent is accorded to by all the members entitled to vote b. If consent is accorded to by 30% of the members entitled to vote c. If Board of Directors takes a majority decision in this regard d. If the company secretary so wishes 84. Under which one of the following circumstances, the Central Government is 11 of 15 empowered to direct special audit of the companies? a. Where any director has misappropriated the company’s fund b. Where a shareholder has complained to the Government about the non payment of dividend c. Where the company has continuously defaulted in the payment of interest to the debenture holders d. Where the conduct of management is in the manner which is injurious to trade, industry or business to which it pertains 85. Consider the following statements 1. Although purchasing department in a Departmental Store is a key department, only the sales department and not the purchasing department can be considered as line activities 2. Line managers offer staff managers advice through research and analysis 3. Functional authority is the authority of members of staff department to control
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 241

the activities of other departments Which of the statements given above is/are correct? a. 1 and 2 b. 2 only c. 3 only d. 1 and 3 86. While auditing the financial statements of non - corporate enterprises, the auditor’s duties and scope of work would be governed by a. The Statute passed by the Parliament b. The Companies Act, 1956 & the client concerned jointly c. The agreement with his client d. The provisions of the Income Tax Act, 1961 87. Consider the following statements 1. First auditors of a company are appointed by the Board of Directors within one month of the, incorporation 2. Subsequent auditors of a company are appointed every year by the shareholders in the Annual General Meeting 3. A body corporate can be appointed as auditor of a company 4. Section 226 of the Companies Act, 1956 prescribes the qualifications and disqualifications for appointment of the auditors of companies Which of the statements given above are correct? a. 1, 2 and 3 b. 1 and 2 c. 1, 2 and 4 d. 2 and 3 88. Consider the following statements 1. The auditor should verify that the Directors do not enter into contracts for which they are not authorized to do so by the Articles of Associations, the Board and the Statute 2. The auditor should ensure that the qualification shares are held by the Directors as laid down by the Articles of Association 3. The auditor should refer to the Minutes of the Meeting of Board of Directors if remuneration hs been paid on the bills
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 242

of their attendance at the Board’s Meetings Which of the statements given above is/are correct? a. 1 only b. 2 and 3 c. 2 only d. 1, 2 and 3 89. Under Section 25 of the Companies Act; 1956 there is a power to dispense with the word “Limited” in name to certain association that may be registered as a company with limited liability. Who has the power of this dispensation? a. National Company Law Tribunal b. Central Government c. SEBI d. Registrar of Companies 90. Which one of the following is not a valid observation with reference to the declaration or payment of dividend for any financial year? a. Depreciation for the current financial year must be provided b. Arrears of depreciation must be provided c. Losses incurred in previous year (s) must be set off d. 10% of the profits must be transferred to the reserves in all cases 91. The auditor must ensure that the amount of premium on the issue of shares is not utilized for a. issue of bonus shares b. writing off commission paid on the issue of shares c. providing for premium paid on redemption of preference shares d. transfer to capital redemption reserve 92. According to the Companies Act, 1956 every registered company shall have to prepare which of the following accounts and statements at the end of the financial year for approval of the shareholders and submission to the Register of Companies? a. Profit and Loss Account and Balance Sheet after making adjustments for inflation b. Profit and Loss Account, Balance Sheet and Funds Flow statement
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 243

c. Profit and Loss Account, Balance Sheet and Cash Flow statement d. Profit and Loss Account and Balance Sheet 93. Under which of the following circumstances can an auditor give a qualified report? 1. When the accounts have not been prepared in accordance with the provisions of the Companies Act 2. When books of accounts have not been kept 3. When the financial statements are in agreement with books of accounts and returns 4. When the accounts of the company do not show a true and fair view of the company as at the end of the financial year 5. Select the correct answer using the codes given below a. 1, 2 and 4 b. 1, 2 and 3 c. 2, 3 and 4 d. 1, 3 and 4 94. The system of internal check ensures that a. Work is distributed among the employees according to their merit and qualifications b. Work is completed as per the prescribed time schedule c. Work performed by one employee is automatically checked by another employee d. Work performed by an employee is checked by internal audit staff 95. Section 210A concerning the Constitution of National Advisory Committee on Accounting Standards by the Central Government for advice on the formulation and laying down of accounting policy and accounting standards for adoption by the companies or class of companies under the Act, has been inserted by a. the Companies (Amendment) Act, 1999 with retrospective effect of 31.10.1998 b. the Companies (Amendment).Act, 1988 c. the Companies (Central Government)
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 244

General Rules and Forms, 1956 d. None of the above 96. Which of the following Is not disqualified for appointment as auditor of a company? a. A firm having chartered accountants as its partners b. An officer or employee of the company c. A person who is a partner or who is in the employment of an officer or employee of the company d. A person who is indebted to the company for an amount exceeding Rs. 1000 or a guarantor for more than Rs. 1000 97. The auditor is generally expected to carry out the following in a particular sequence 1. Verification of assets and liabilities 2. Vouching the transactions 3. Checking the valuation of assets and liabilities Select the correct sequence using the codes given below: a. 2-3-1 b. 1-2-3 c. 2-1-3 d. 3-1-2 98. Match List I (Statements) with List II (Forms of combination) and select the correct answer using the codes: List I 13 of 15 A. A. X Co. Ltd. buys up the Y Co. Ltd. & shareholders of Y Co. Ltd. get shares in the X Co. Ltd. B. X Co. Ltd. and Y Co. Ltd. both join to form a new company, namely, Z Co. Ltd. to which they transfer all of their assets and liabilities; and their shareholders receive the shares of Z Co. Ltd. C. X Co. Ltd. buys 51% of shares in the Y Co. Ltd. D. X Co. Ltd. and Y Co. Ltd. have the same Directors List II 1. Amalgamation 2. Merger 3. Cartel 4. Holding Company
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 245

5. Community of Interest Codes; ABCD a. 4 5 3 1 b. 2 1 4 5 c. 4 1 3 5 d. 2 5 4 1 99. Which of the following amounts shall be credited to Investor Education and Protection Fund, if they remain unpaid/ unclaimed for seven years from the date they become due? a. Matured debentures of a company b. Tax arrears c. Proceeds of sale of property d. Provision for doubtful debts 100. Match List I with List II and select the correct answer using the codes given below List I A. Uncertain liability B. Expiry of tangible asset C. Basis for all valuations in the Balance Sheet D. Accounting Standard - AS -8 List II 1. Amortization 2. Long term liability 3. Research and development 4. Estimated obligation 5. Conservatism convention Codes; ABCD a. 5 1 2 3 b. 4 3 5 1 c. 5 3 2 1 d. 4 1 5 3 101. Any causal vacancy in the office of a statutory auditor caused by the resignation of the auditor shall be filled by the company a. At the Board Meeting b. At the Annual General Meeting c. By means of a circular resolution d. At the Statutory Meeting 102. In verification of assets, the duty of the auditor is a. to ensure that assets have actually been acquired b. to ensure that they are clearly stated in
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 246

the balance sheet c. to satisfy himself that they are properly valued d. to satisfy himself with regard to the existence, ownership and value of the assets 103. Consistency with reference to application of accounting principles refer to the fact that a. Companies in the same industry use identical accounting procedures and methods b. Income and assets have not been overstated c. Accounting methods and procedures used have been consistently applied from year to year d. All the methods and procedures have been utilized 104. Making the provision for bad and doubtful debts in anticipation of actual bad debts is on the basis of a. Convention of disclosure b. Convention of consistency c. Convention of conservatism d. Conventions of disclosure and consistency 105. Following data appear in the books of XY & Co. as on 31.03.03 Capital account: Rs. 13,00,000 Drawing account: Rs. 12,000 Land & Building account: Rs. 10,00,000 Goodwill account: Rs. 3,50,000 Suspense account (Dr): Rs. 50,000 Loss by theft account: Rs. 20,000 Business loss: Rs. 50,000 Loan given to AB & Co.: Rs. 60,000 What will be the amount of sundry creditors? a. Rs. 2,30,000 b. Rs. 1,72,000 c. Rs. 3,42,000 d. Rs. 2,42,000 106. Who among the following is the ‘Officer who is in default’ within the definition given under Section 5 of the Companies Act, 1956? a. All employees b. Secretary c. Contractor who has been assigned to
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 247

complete certain work within stipulated time d. Supplier of raw material 107. Under the accrual concept, which one of the following will not be shown as an asset/liability in the balance sheet of an entity? a. Interest due but not paid b. Interest due but not received c. Interest due and paid d. Interest paid but not due 108. Which of the following is/are the reason(s) for centralization of authority in an organization? 1. Specialized skills, talent and technology are neither affordable nor practical in multiple locations. 2. Decentralization usually results in an increase in overhead and staff 3. Recent improvements in communication technology facilitate the movement of money, credit information and data processing from a single centre of authority Select the correct answer using the codes given below a. 3 only b. 1 and 2 c. 1 and 3 d. 1, 2 and 3 109. Consider the following statements about Management by Objectives (MBO) 1. Effective MBO programmes usually start with the top managers who determine the organization’s strategy and set preliminary goals. 2. Employees enjoy wide autonomy in implementation of plans. 3. Managers and employees periodically meet to review progress towards the objectives. Which of the statements given above is/are correct? a. 2 and 3 b. 1 and 3 c. 1 only d. 1, 2 and 3 110. A particular firm provided the following data for an accounting year: Current ratio: 25:1
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 248

Liquid ratio: 1.5:1 Net Working capital: Rs. 6,00,000 Current assets and current liabilities of the firm are, respectively a. Rs. 9,00,000 and Rs. 3,00,000 b. Rs. 10,00,000 and Rs. 4,00,000 c. Rs. 8,50,000 and Rs. 2,50,000 d. Rs. 7,50,000 and Rs. 1,50,000 111. Match List I (Motivation Theory) with List II (Management Expert) and select the correct answer using the codes given below List I A. Hygiene Theory B. Theory ‘X’ and Theory ‘Y’ C. Expectancy theory List II 1. Abraham H. Maslow 2. Victor Vroom 3. Fredrick Hertzberg 4. Douglas McGregor Codes; ABC a. 3 4 2 b. 1 4 2 c. 3 2 4 d. 1 2 4 112. In vouching, an auditor verifies a. The authority of transactions only b. The authenticity of transactions only c. Both the authority and authenticity of transactions d. The arithmetical accuracy of the transactions only 113. When shares are forfeited, the share capital account is debited by a. Paid-up amount b. Called-up amount c. Nominal value of the shares d. Market value of the shares 114. Which one of the following reflects the overall efficiency with which capital is used? a. Return on shareholders’ funds b. Investment turnover ratio c. Earning per share d. Operating ratio 115. The following journal entry appears in the books of X Co. Ltd. Dr. (Rs.) Cr. (Rs.)
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 249

Bank A/c 96,000 Loss on issue of debentures A/c 10,000 To 8% debentures N/c 1,00,000 To premium on redemption of debentures A/c 6,000 The debentures have been issued at a. Discount of 4% b. Discount of 6% c. Premium of 6% d. Discount of 10% 116. A company can pay dividend out of a. Profits of the company for the year for which dividends are to be paid b. Undistributed profits of the previous financial years c. Money provided by the Central and State Governments for the payment of dividends in pursuance of their guarantees d. All of the above three 117. A limited company has to redeem redeemable preference shares of the value of Rs. 1,00,000 for which the company has issued 3000 equity shares of Rs. 10 each at a premium of 10%. The amount to be transferred to capital redemption reserve account will be a. Rs. 1,00,000 b. Rs. 97,000 c. Rs. 70,000 d. Rs. 67,000 118. To test the liquidity of a concern, which of the following ratios are useful? 1. Acid test ratio 2. Capital turnover ratio 3. Bad debts to sales ratio 4. Inventory turnover ratio Select the correct answer using the codes given below a. 1 and 3 b. 1 and 4 c. 2 and 4 d. 2 and 3 119. The following figures are taken from a
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 250

Balance: Sheet Rs. Equity share capital : 1,10,000 6% Preference share capital : 30,000 General reserve : 50,000 Reserve for contingencies : 20,000 6% Mortgage debentures : 50,000 Sundry creditors : 20,000 Preliminary expenses : 5,000 Prepaidexpensés : 4,000 In this case, the debt equity ratio is a. 1:2 b. 2:1 c. 24 : 1 d. None of the above 120. Match List I (Type of Audit) with List II (Feature) and select the correct answer using the codes given below List I A. Continuous audit B. Internal audit C. Occasional audit D. Periodical audit List II 1. Continuous review of the operations and records of the business by special staff 2. Audit which is not statutory 3. Audit convenient and useful specially in the case of small concerns 4. Audit work carried on almost simultaneously with the recording of transactions Codes; ABCD a. 2 1 4 3 b. 4 3 2 1 c. 2 3 4 1 d. 4 1 2 3IAS Prelims Commerce 2005 1. Which one of the following is a contract for the purchase or sale of securities for the performance of which no time is specified, and which is to be performed immediately or within a reasonable time? a. Spot delivery contract b. Ready delivery contract c. Forward contract d. Option in securities 2. Match List-I with List-II and select the correct answer using the codes given
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 251

below the lists List-I (Types of Mutual Fund) A. Open-ended mutual fund B. Interval fund C. Close—ended mutual fund D. Balanced fund List-II (Explanation) 1. They are open for sale or redemption during pre—determined intervals at NAV related prices 2. The fund is open for subscription only during a specified period 3. Provides both growth and regular income 4. One that is available for subscription all throughout the year ABCD a. 2 1 4 3 b. 4 3 2 1 c. 2 3 4 1 d. 4 1 2 3 3. Following are the information pertaining to X Company Ltd. Right to buy one share @ Rs. 17 per share for every five shares of Rs. 10 each held in the company. Market value of the shares on the date of such offer is Rs. 35 per share. Which one of the following is the value of the right? a. Rs. 8.67 b. Rs. 3.00 c. Rs. 4.50 d. Rs. 13.00 4. Which one of the following statements regarding forfeiture of shares is not correct? a. Forfeited shares may be re-issued at a discount or at a premium b. The title of the new purchaser is not affected by any irregularity in the forfeiture or sale of the shares c. Return of allotment of re-issue of forfeited shares is filed with the Registrar of Companies d. Board may. consider the request from the defaulting ex-shareholder for the cancellation of forfeiture before the disposal of forfeited shares 5. For which of the following purposes can
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 252

the share premium of the company be used in case the company issues share at premium? 1. For the cost of underwriting and distributing the share capital. 2. For—the issues of fully paid bonus shares to the members of the company. 3. For writing off preliminary expenses of the company. For providing premium payable on the redemption of any redeemable preference shares or debentures of the company. Select the correct answer using the code given below a. 1, 2 and 3 b. 1,2 and 4 c. 1 and 4 d. 2, 3 and 4 6. Which one of the following is correct for cooperative organizations? a. There is a cap on the maximum number of members b. There is a cap on the dividend payment c. There are restrictions on their business growth d. There is a ceiling on the salaries paid to employees of cooperative organizations. 7. Which of the following tate9ents regarding a private company are correct? 1. A private company can proceed to allot shares without having to wait for minimum subscription. 2. There are restrictions on the powers of Board of Directors of a private company as to the selling of whole or part of the undertaking. 3. A private company can keep its affairs secret. 4. Right of pre-emption does not apply to a private company. Select the correct answer using the code given below: a. 1, 2, 3 and 4 b. 1, 3 and 4 c. 2 and 3 d. 1, 2 and 4 8. Consider the following statement A company can be compared with a river which retains its identity though the parts
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 253

which compose it are constantly changing. Which one of the following characteristic of a company is implied from the above statement? a. Limited liability b. Artificial legal person c. Perpetual succession d. Separate property 9. Which one of the following describes the correct effect when a registered partnership firm is dissolved? a. All the partners will be relieved from the debt obligations of the firm b. The partners cannot start any other business within one year of dissolution c. One or two of the old partners can continue the business of the firm with a new name d. The partners will not be entitled to any personal loans from banks 10. When does a retiring partner of a partnership firm continue to be liable for obligations incurred after his retirement? a. When he does not give public notice b. When unpaid amount is not transferred to him c. When he had left the firm within 3 months of joining it d. All the above 11. Match List-I with List-II and select the correct answer using the codes given below the lists List-I (Provision of Partnership Act) A. Interest must be allowed @ 6% p.a. B. No interest shall be paid C. No interest shall be charged D. Must be shared equally by all the partners unless otherwise agreed List-II (Matter with Which the Provisions are Related) 1. Drawings of partners 2. Net loss of the firm for an accounting year 3. Capital contributed by the partners 4. Loan given by a partner to the firm Codes; ABCD a. 1 3 4 2 b. 4 2 1 3 c. 1 2 4 3
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 254

d. 4 3 1 2 12. What is/are the effect(s) of non registration of a partnership firm? 1. The partners cannot sue outsiders. 2. Outsiders cannot sue the firm. 3. A partner cannot sue for the dissolution of the firm. 4. A partner cannot sue the firm or any other partner of the firm. Select the correct answer using the code given below a. 2, 3 and 4 b. 3 and 4 c. 4 only d. 1 and 2 13. Consider the following statements: 1. Management, auditor makes the audit of planning and policies of the company. 2. Statutory auditor makes the comments on the financial position statements of the company. 3. The work of statutory auditor begins with the end of management auditor’s work. 4. Statutory auditor comments on the operational areas of the concern. Which of the statements given above are correct? a. 1 and 2 b. 3 and 4 c. 1, 2 and 3 d. 2, 3 and 4

14. Match List-I with List-Il and select the correct answer using the codes given below the lists List-I (Type of Audit) A. Management audit B. Statutory audit C. Audit of non-Corporate enterprise D. Internal control and audit List-II (Function) 1. Report to the shareholders 2. A future oriented, independent and systematic evaluation of activities at all levels 3. Both accounting and operational controls
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 255

4. Voluntary 5. Report to Company Law Board Codes; ABCD a. 2 3 4 1 b. 4 1 5 3 c. 2 1 4 3 d. 4 3 5 1 15. Which one of the following is correct regarding management audit? It is a method a. to evaluate the efficiency of management at all levels throughout the organization from the highest to lower levels b. to evaluate the efficiency of accounts departments throughout the organization from the highest to lower levels c. to determine the efficiency of Management Information System (MIS) d. to determine the compliance with accounting standards by the management 16. Which one of the following documents is not required for permanent file in audit of a non-corporate enterprise? a. Copy of the constitution of the enterprise b. Copy of the appointment letter of an auditor c. Copy of the registration certificate of the enterprise d. Copy of the financial statements of the enterprise 17. Change of the Registered Office of a company from one place to another in the same city required which one of the following resolution? a. Board resolution b. Ordinary resolution c. Special resolution d. Special resolution with government approval 18. Liability of shareholders of a limited company or of a company limited by guarantee can be made unlimited only it is expressly agreed to by which of the following? a. A qualified majority
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 256

b. A majority of shareholders c. Each and every member concerned d. The Registrar of joint stock companies 19. Match List I (Part and Component of Computer) with List II (Function and Utility) and select the correct answer using the codes given below: List I A. Portable Disk B. RAM C. Key Board D. Mouse List II 1. Selection and movement of files and objects 2. Data entry 3. Floppy drive 4. Speed Codes; ABCD a. 3 1 2 4 b. 2 4 3 1 c. 3 4 2 1 4 of 16 d. 2 1 3 4 20. What is PERT in management? a. A refinement of the original Gantt Charts b. A refinement of what Dr. Taylor said c. A refinement of what Alwin Toffler envisioned as an “Electronic Cottage” with computer terminals installed at home d. A refinement of Critical Path Method (CPM). 21. Computer system accessible to nonspecialists to assist in planning and decision making is called a. Decision Support System b. Management Information System c. Disk Operating System d. Expert System 22. What is Mimeography? a. A method of photocopying b. A method of stencil duplication c. A process of blue printing d. A process of digital photography 23. Match List I (Type of Record) with List II (Example) and select the correct answer using the codes given below:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 257

List I A. Accounting Records B. Legal Records C. Correspondence Records D. Personnel Records List II 1. Casual leave report 2. Invoice 3. Minutes 4. Copy of letter sending product details & rates Codes; ABCD a. 2 3 4 1 b. 1 4 3 2 c. 2 4 3 1 d. 1 3 4 2 24. Match List I (1’pe of Report) with List II (Example) and select the correct answer using the codes given below: List I A. Routing Reports B. Special Reports C. Statutory Reports D. Technical Reports List II 1. Project Report 2. Market research Report 3. Production Report 4. Auditor’s Report Codes; ABCD a. 3 1 4 2 b. 4 2 3 1 c. 3 2 4 1 d. 4 1 3 2 25. Theory Z refers to which one of the following? a. Selected Japanese managerial practices adapted to the environment of the USA b. Selected Indian managerial practices adapted to the environment of the UK c. Selected Russian managerial practices adapted to Chinese environment d. Selected German managerial practices adapted to Japan’s environment 26. The continuous process of comparing organizational strategies, products or processes with those of the best-in-class organizations is
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 258

a. Quality circle b. Benchmarking c. Kaizen d. TQM 27. Following are the ingredients of management by exception. What should be their correct logical sequence? 1. Measurement 2. Observation 3. Projection 4. Comparison 5. Selection 6. Decision making Select the correct answer using the codes given below a. 1—3—5—2—4—6 b. 5—2—6—3—1—4 c. 5—3—6—2—1—4 d. 1—2—5—3—4—6 5 of 16 28. Match List I (Type of Committee) with List II (Explanation) and select the correct answer using the codes given below List I A. Standing Committee B. Ad hoc Committee C. Executive Committee D. Advisory Committee List II 1. Authority to take and execute decisions 2. Exists continuously far an indefinite period of time 3. Authority only to make recommendations 4. Constituted temporarily for specific purpose Codes; ABCD a. 4 2 1 3 b. 2 4 3 1 c. 4 2 3 1 d. 2 4 1 3 29. Consider the following steps 1. Assignment of duties 2. Authorization for actions 3. Creation of obligation 4. Determination of results expected. Select the correct sequence of these processes of delegation of authority using the following code
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 259

a. 4—2—l—3 b. 3—1—2—4 c. 4— 1 —2 —3 d. 3—2—1—4 30. Following are the steps in designing an organization structure: 1. Grouping of activities 2. Delegation of authority 3. Identification of activities 4. Assignment of duties The correct sequence of the steps is a. 4—2—3— 1 b. 3—1—4—2 c. 4—1—3—2 d. 3—2—4—1 31. M/s. ABC Ltd. forfeited 20 shares of Rs. 10 each, Rs. 8 called up, on which X had paid application and allotment money of Rs. 2 and Rs. 3 respectively. These shares were re-issued to Y at Rs. 6 each fully paid. What was the balance in share forfeiture account before the shares were re-issued? a. Rs. 40 b. Rs. 60 c. Rs. 100 d. Rs. 160 32. X Ltd. issued 1,000 9% preference shares of Rs. 100 each at a premium of 10%, redeemable at par after 5 years. What is the cost of preference capital of the company? a. 3.5% b. 6.7% c. 5.3% d. 7.6% 33. A firm employs Rs. 10,00,000 as capital. Investors expect an income of 15%. The actual profits (likely to be continued) is Rs. 2,00,000. What will be the value of Goodwill of the firm according to Super Profit method if it is to be valued at 3 years purchase? a. Rs. 50,000 b. Rs. 1,50,000 c. Rs. 2,00,000 d. Rs. 2,15,000 34. Income and Expenditure account of a college is credited with which of the following?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 260

1. Tuition fees paid by the students 2. Cost of science laboratory equipments 3. Fines realized by the authority from students 4. Price of prizes Select the correct answer using the codes given below a. 1 and 2 b. 2 and 3 c. 1 and 3 d. 2 and 4 35. The following information is available regarding subscription from the members of X Club during the year 2003-04 Subscription Income : Rs. 28,000 Outstanding subscription at the end of the year : Rs. 1,160 6 of 16 Outstanding subscription at the beginning of the year : Rs. 360 Subscription received in advance : Rs. 640 What is the amount of receipt of the club from subscription during the year 200.304? a. Rs. 28,160 b. Rs. 29,000 c. Rs. 27,840 d. Rs. 29,520 36. Consider the following adjusting entries: 1. Outstanding expenses: Expense A/c Dr To outstanding expense A/c 2. Prepaid expenses: Expense A/c Dr To prepaid expenses A/c 3. Income earned and not received: Income A/c Dr To outstanding income A/c 4. Income received in advance: Income A/c Dr To prepaid income A/c Which of the adjusting entries given above is/are correct? a. 1 and 4 b. 2 and 3 c. 1 only d. 1, 2, 3 and.4 37. A steel fabrication firm receives an income for service rendered by its design engineer to a friendly party. How should this be treated in the profit and loss account of the firm?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 261

a. Should be shown as sales income b. Should be shown as miscellaneous income c. Should be shown as non-operating income d. Not an income of the firm 38. The balances in the books of X, a sole proprietor were: Opening stock Rs. 17,000; Purchases Rs. 52,000; Wages Rs. 46,500; Fuel Rs. 15,000; Sales Rs. 1,45,000 and Closing stock on hand Rs. 25,000 whose net realizable value was Rs. 28,000. The Gross Profit calculated would be: a. Rs. 39,500 b. Rs. 42,500 c. Rs. 54,500 d. Rs. 57,000 39. Which one of the following Accounting Standard is not having the correct title? a. AS.22 Accounting for taxes on income b. AS-20 Earning per share c. AS.24 Accounting for borrowings d. AS-18 Related party disclosures 40. A sum of Rs. 50,000 was spent by a factory in overhauling its existing plant and machinery and it enhanced its working life by five years. The aforesaid expenditure is a. Revenue expenditure b. Deferred revenue expenditure c. Capital expenditure d. Partly capital and partly revenue expenditure 41. If a radio seller-proprietor buys a radio for his personal use from out of business funds, the amount paid for the radio will be treated as “drawings” of the proprietor because of the a. Dual Aspect Concept b. Going Concern Concept c. Business Entity Concept d. Matching Concept 42. Which of the following is not the correct symptom of over-capitalization? 1. When a company earns less than what it should have earned as a fair rate of return on its total capital. 2. When book value of shares is lower than their real value.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 262

3. When earnings do not justify the amount of capital invested. Select the correct answer using the codes given below a. 1 only b. 2 only c. 1 and 2 d. 2 and 3 43. Consider the following statements As per section 46AA of the Companies (Second Amendment) Act; 2002, sick industrial company means an industrial company which has 1. the accumulated losses in any financial year equal to fifty percent or more of its average net worth during four years 7 of 16 immediately preceding such financial year 2. failed to repay its debts within any three consecutive quarters on demand made in writing for its repayments. by a creditor or creditors of such company. Which of the statements given above is/are correct? a. 1 only b. 2 only c. Both 1 and 2 d. Neither 1 nor 2 44. Match List I (Accounting Concept) with List II (Principle involved) and select the correct answer using the codes given below: List I A. Consistency B. Comparability C. Conservatism D. Disclosure List II 1. Losses are anticipated and accounted for in advance but profits are not accounted for until realized 2. All the relevant financial information should be summarized and presented in the accounting statements 3. Accounting procedures in an entity should be followed uniformly from period to period 4. Accounting statements of different
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 263

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 statements Codes; ABCD a. 4 5 1 3 b. 1 3 2 5 c. 4 3 1 5 d. 1 5 2 3 45. Consider the following statements about balance sheet of a company 1. It is always prepared from the point of view of the firm, company or business, and not from that of its owners, creditors, directors or employees. 2. The financial relationship of the business to its owners is shown in the amount of capital, reserves and undistributed profits. 3. It always relates to a particular period of time. Which of the statements given above is/are correct? a. 1, 2 and 3 b. 1 and 2 c. 1 only d. 2 only 46. What would be the amount of sales when opening stock is Rs. 50,000; purchases Rs. 1,50,000; wages Rs. 20,000; closing stock Rs. 40,000 and gross profit is 1/7th of sales ? a. Rs. 2,00,000 b. Rs. 1,86,669 c. Rs. 1,80,000 d. Rs. 2,10,000 47. Consider the following statements regarding grey market in the context of security exchange: 1. It is a market wherein trading in a security takes place before it is officially listed. 2. It is legal and a form of private placement business. 3. Securities are sold through prospectus. Which of the statements given above is/are correct?
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 264

a. 1 only b. 2 and 3 c. 3 only d. 1, 2 and 3 48. How is a speculator, who buys the shares of a new company with a view to selling them at a premium to genuine investors before allotment, known? a. As a Stag b. As a Lame Duck c. As a Bull d. As a Bear 49. In India, what is the term used to describe a company which actually deals with the corpus of the mutual fund? a. Sponsor company 8 of 16 b. Trustee company c. Asset management company d. Mutual fund company 50. In order to tackle with the grievances of the investors on priority basis, regulatory bodies of capital market have categorized the complaints of the investors in different types: 1. Type I — Non-receipt of Annual Report, right forms/interest on delayed receipt of refund orders/dividend. 2. Type — II Non-receipt of dividend. 3. Type — III Non-receipt of share certificates/bonus shares. 4. Type — IV Non-receipt of refund orders/allotment letters/stock invests. Which of the above is/are trot correctly matched? a. 1 only b. 2 and 3 c. 2 only d. 1 and 4 51. Which of the following is an important advantage of vertical combination? a. It helps in avoiding competition b. It helps in coordinating the sequential operations c. It helps in controlling quality d. It helps in capturing the market 52. In the context of social responsibility of business, the enlightened self interest concept refers to which of the following? 1. Treating natural resources as the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 265

property of future generations. 2. Considering long term survival interests of business. 3. Contributing to community development. 4. Enhancing profit prospects of business. Select the correct answer using the codes given below a. 1 and 2 b. 4 only c. 1, 2 and 3 d. 3 and 4 53. Which one of the following best explains the term “Duty Draw Back”? a. Duty free import of raw materials and refund of excise duty on other indigenous purchases b. Refund of excise duty for manufacture of goods exported out of the country c. Payment of duties in rupees and not in foreign currency d. Refund of customs duty paid on imports and excise duty on indigenous purchases 54. Which one of the following is not a feature of a confirmed letter of credit? a. The negotiating bank adds its own confirmation to the credit b. The negotiating bank entails a definite commitment on its part to carry out the provisions of payment c. The opening and negotiating banks carry confirmed guarantee for payment d. The opening bank cannot modify the letter of credit once it is opened 55. Consider the steps in Risk Management 1. Risk Evaluation 2. Risk Avoidance 3. Risk Identification 4. Risk Elimination 5. Risk Reduction 6. Risk Financing The correct sequence of these steps are a. 2—4—5—1—6—3 b. 3—1—2—4—5—6 c. 3—4—2—5—6—1 d. 4—1—2—3—5—6 56. Match List I (Table Containing Forms of Memorandum of Association) with List II (Type of Company) and select the correct answer using the codes given below:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 266

List I A. Table B B. Table C C. Table D D. Table E List II 1. Company limited by guarantee not having share capital 2. Company limited by guarantee having a share capital 3. Unlimited liability company 4. Company limited by shares Codes; 9 of 16 ABCD a. 4 3 2 1 b. 2 3 4 1 c. 2 1 4 3 d. 4 1 2 3 57. When a statement in lieu of prospectus is to be filed with the Registrar of Companies, it must be drafted in accordance with the particulars set out in which of the following? a. Table E b. Schedule II c. Schedule HI d. Rule 4—CCCA 58. Consider the following conditions to be fulfilled by a company regarding issue of sweat equity shares 1. The issue of sweat equity shares is authorized by an ordinary resolution passed by the company in the general meeting. 2. Not less than 6 months should have, at the date of the issue elapsed since the date on which’ the company was entitled to commence business. 3. All the limitations, restrictions and provisions relating to equity shares shall be applicable to such sweat equity shares. Which of the conditions given above is/are applicable? a. 1 only b. 1 and 2 c. 3 only d. 1, 2 and 3 59. Consider the following cases regarding
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 267

doctrine of indoor management 1. Where the outsider had actual or constructive notice of the internal irregularity. 2. Where the outsider had not made proper enquiries which would have revealed the irregularities, despite so suspicious circumstances as to invite further enquiries. 3. Where the outsider is found to have relied upon a document which is forged one, for a forgery is a nullity 4. Where the outsider had relied on a resolution of a company meeting which was not properly passed. Protection under the doctrine of indoor management cannot be claimed in which of the above circumstances? a. 1 and 2 b. 2 and 4 c. 4 only d. 1, 2 and 3 60. Who among the following is an insider/are insiders as per provisions of the SEBI (Insider Trading) Regulations 1992? 1. A broker who trades in the company’s share. 2. A lender who has provided term loans to the company. 3. A person who is or was connected with the company and is expected to have access to unpublished price— sensitive information with respect to the securities of the company. 4. An underwriter who regularly underwrites the securities of the company. Select the correct answer using the code given below a. 1 and 2 b. 1, 3 and 4 c. 3 only d. 1, 2, 3 and 4 IAS Prelims Commerce 2005 61. First Auditors of a company are appointed by Board of Directors a. Within gestation period b. After commencement of the production c. Within one month of the date of
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 268

registration of the company d. Within six months of the date of registration of the. company 62. Consider the following statements: The books of accounts and other books and papers of every company shall be open to inspection during business hours by the following: 1. The Registrar of Companies 2. Such officers of the government as may be authorized by the Central Government in this behalf. 3. Such officers of the Securities and Exchange Board of India as may be authorized by it. Which of the above is/are correct when such inspection is made without giving any previous notice to the company? a. 1 only b. 1 and 2 c. 2 and 3 d. 1, 2 and 3 63. Consider the. following statements: The National Advisory Committee on Accounting Standards shall consist of 1. One member each to be nominated by ICAI, ICWAI and ICSI’ 2. One representative each of the Central Government, RBI and Comptroller and Auditor General of India. 3. A professor of Accountancy, Finance or Business Management from any university or a deemed university. Which of the statements given above is/are correct? a. 1 only b. 1 and 2 c. 1, 2 and 3 d. 2 and 3 64. Section 161(1) of the Companies Act requires the Annual Report of the companies to be signed by which of the following? a. Auditor and Company Secretary b. Chairman and Company Secretary c. Managing Director and Company Secretary d. General Manager and Company Secretary 65. Assertion (A): Improvement in the social
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 269

environment benefits both society and business. Reason (R): Society must pay for the social environment of business through higher prices. 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 66. Assertion (A): The companies prefer to issue debt securities in their private placements. Reason (R): It helps them to go for trading on equity. 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 67. Assertion (A): Internal check is a system of organizing accounting function whereby duties of different clerks are arranged in such a way that work of one person is automatically checked by another. Reason (R): Fraud is not possible without collusion between two or more persons, and at the same time possibilities of errors are reduced to a minimum by internal check. 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 68. Assertion (A): Vouching is an inspection by auditor of documentary evidence supporting and substantiating transactions in the books of accounts. Reason (R): A thorough vouching system reduces the need for verification of assets & liabilities. 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
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 270

d. A is false but R is true 69. Assertion (A): Accounting information refers to only those events which are concerned with entity. Reason (R): Accounting information is presented in the form of financial statements. 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 11 of 16 c. A is true but R is false d. A is false but R is true 70. Assertion (A): An agreement of a trial balance is not a conclusive evidence of accuracy of ledger posting. Reason (R): A ledger may contain mistakes relating to errors of commission. 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 71. Assertion (A): In a fund flow statement, an issue of shares for an asset is to be disclosed on its both sides. Reason (R): The fund flow statement discloses what is not disclosed by the balance sheet. 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 72. Assertion (A): Matters which cannot be decided because of limitation of authority may be referred to superiors. Reason (R): Maintenance of intended delegation requires that decisions without authority of individual be made by them. 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 73. Consider the following statements:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 271

Redeemable Preference Shares can be redeemed 1. out of the proceeds of new issue of shares for the purpose. 2. out of profits available for dividend. 3. out of sale proceeds of the assets. 4. out of the grants received from the government. Which of the statements given above are correct? a. 1 and 2 b. 3 and 4 c. 1 and 3 d. 1, 2, 3 and 4 74. On 1.4.2002, the position o X Company Ltd. was as follows On 31.3.2003, the company’s ship sank and all records and the cash were sunk. However, it was revealed that creditors and debtors were 20% more than at 1.4.2002 position. Stock and Bank was at the same level. The current ratio -had always been 2. What was the amount of cash sunk on 31.3.2003? a. Rs. 5,000 b. Rs. 15,000 c. Rs. 10,000 d. Rs. 20,000 75. The following is the Balance Sheet of Z company: What is the absolute liquidity ratio of the company? a. 2 : 1 b. 1.06 : 1 c. 0.92 : 1 d. 1.90 : 1 76. When net profit is Rs 2,25,000; taxes Rs. 25,000; and net worth Rs. 10,00,000, what is the rate of return on shareholders equity? a. 22.5% b. 20% c. 25% d. Cannot be calculated 77. Which one of the following is not indicated by an increase in the gross profit ratio as compared to that for the previous period? a. An increase in the sale price of the goods sold without corresponding
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 272

increase in costs b. Stock omitted from the inventory at the end of the period c. Invoices for purchases omitted from the account d. Stock in trade at the beginning valued at a figure lower than it should have been 78. The following information relates to an organization: Equity share capital Rs. 10,00,000; 18% debentures Rs. 8,00,000; 10% preference share capital Rs. 5,00,000; Current liabilities Rs. 3,00,000; Loan at 15% (Long term) Rs. 1,40,000; General Reserve Rs. 8,00,000; Current Assets Rs. 3,50,000. What is the Capital gearing ratio of the organization? a. 1.6 b. 0.8 c. 1.2 d. 0.5 79. By adopting which of the following tactics, return on investment of a company can be enhanced? 1. Postponing the replacement. 2. Valuing closing stock on LIFO basis during rising prices. 3. Providing less depreciation. 4. Making higher provisions. Select the correct answer using the code given below: a. 1 and 3 b. 2 and 4 c. 1, 3 and 4 d. 1, 2, 3 and 4 80. XYZ Ltd. provides the following information: Net Profit Rs. 1,600 Profit on sale of investments Rs. 480 Depreciation Rs. 5,200 Loss on sale of machinery Rs. 200 Increase in stock Rs. 1,000 Increase in creditors Rs. 1,000 What is the amount of funds from operations of the company? a. Rs. 7000 b. Rs. 7520 c. Rs. 8520
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 273

d. Rs. 6520 81. In corporate sector, the expenses on account of social obligation are a. Compulsory b. Legitimate c. Optional d. None of the above 82. Consider the following functions 1. Compare the lists of debtors and creditors. 2. Check the total of cash book. 3. Ensure that no entry remained unspotted. 4. Check the trial balance. What is the correct balance of these functions to be performed by an auditor to locate errors? a. 4—2—1—3 b. 1—3—4—2 c. 4—3—1—2 d. 1—2—4—3 83. Which one of the following is not an advantage of Interim Audit? a. Audit staff will prepare notes when they finish the interim audit b. The final audit can be completed soon c. It is good where publication of figures is necessary d. There is moral check on the staff 84. Which one of the following is applicable to vouching and Post audit? a. Procedural tests are applied b. Important items from the balance sheet are taken c. Examination of profit & loss account, and balance sheet for present and past years d. Investigation into the items of nonrecurring nature 85. Which one of the following statements is correct? 13 of 16 While conducting audit, the auditor should ensure that the stock is valued at a. cost price b. market price c. cost or market price whichever is lower d. cost or market price whichever is higher
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 274

86. Match List I (Matter for Audit Examination) with List II (Audit Technique Adopted) and select the correct answer using the codes given below List I A. Cash payments B. Plant and machinery C. Bank O.D. balance D. Disagreement between the bank balance shown by cash book and bank pass book List II 1. Direct confirmation 2. Physical verification 3. Vouching 4. Reconciliation review 5. Test checking Codes; ABCD a. 3 1 2 4 b. 4 2 1 5 c. 3 2 1 4 d. 4 1 2 5 87. Consider the following statements “Teaming and lapping” method of fraud is committed by 1. Concealment of a shortage by delaying the recording of cash receipts. 2. When a cheque is received, it is not credited to customers but misappropriated. 3. When another customer sends a cheque, it is credited to first customer’s account. 4. inflating the payment vouchers’ Which of the statements given above are correct? a. 1 and 4 b. 1, 2 and 3 c. 2 and 4 d. 3 and 4 88. The steps used to derive the deduction approach in accounting are as under 1. Developing the techniques of accounting. 2. Selecting the postulates — the basic accounting propositions or premises. 3. Specifying the objectives of financial statements. 4. Deriving the principles of accounting.
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 275

Which one of the following is the correct sequence of the above steps? a. 4 —1—3—2 b. 3—2—4—1 c. 4—2—3—1 d. 3—1—4—2 89. Consider the following statements related to non— corporate audit 1. The auditor is to ascertain the nature of revenue expenses. 2. The auditor is to ascertain the weakness of internal control system. 3. The auditor is not to ascertain the type of internal control system applicable for sensitive items in organization. 4. The auditor is not to ascertain the appropriateness of books of accounts. Which of the statements given above are correct? a. 1 and 2 b. 1, 2 and 3 c. 3 and 4 d. 1, 2 and 4 90. To whom, is the auditor’s report pursuant to a special audit of a company furnished? a. Shareholders of the company b. Board of directors of the company c. Central Government d. Concerned State Government(s) 91. Which one of the following is not a specific duty of an Internal Auditor? a. Examination of organizational structure b. Assessment of plans and targets c. Testing the adequacy of internal, control system d. Carrying out investigations, suo moto 92. What do Testing and Test checking in relation to auditing mean? a. To select and examine a representative sample from a large number of similar items b. To select and examine total universe from a large number of similar items c. To select and examine a representative sample even when discrepancies are found d. To select and examine a representative small item from among a small universe
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 276

93. Match List I (System) with List II (Event) and select the correct answer using the codes given below: List I A. Procedural Test B. Stratified Random Sampling C. Substantive Test D. Depth Test List II 1. PopuIatio is divided into two or more than two groups 2. Verification of procedures and their implementation 3. Tracing through the system all aspects of a transaction 4. Obtaining an evidence as to the completeness and accuracy of data Codes; ABCD a. 2 1 4 3 b. 4 3 2 1 c. 2 3 4 1 d. 4 1 2 3 94. While evaluating the internal control system which one of the following stages is not required? a. Ascertaining the system b. Evaluating the system c. Formulating the internal control schemes d. Formulating the inter control questionnaire 95. Match List I (Function) with List II (Type) and select the correct answer using the codes given below: List I A. Audit work is carried on almost simultaneously with the recording of transactions B. Auditor starts his work when the final accounts have been prepared C. Audit conducted in between two annual audits D. Some of the books and records of the whole period or specific period are audited List II 1. Balance Sheet Audit 2. Continuous Audit 3. Interim Audit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 277

4. Partial Audit Codes; ABCD a. 2 1 3 4 b. 4 1 3 2 c. 2 3 1 4 d. 4 3 1 2 96. While auditing, the auditor finds a balance of Rs. 10,000 in Goodwill account and ascertains that the amount has not been written off for a long period. What may be the course of action for the auditor? a. He may advise the concern to write off the goodwill b. He may insist the: concern to write off the goodwill in the same year c. He may recommend the concern to write off goodwill over a period of 5 years d. He may allow goodwill to appear forever 97. What does third party confirmation in auditing mean? a. Confirmation of balances of sundry debtors or creditors b. Confirmation of bank balances c. Confirmation of contingent Liabilities d. Confirmation of security deposits 98. Working papers should not record a. The audit plan b. The nature, timing and extent of audit procedures performed c. The conclusions drawn from the evidence obtained d. The audit programmes 99. Which one of the following is not the primary purpose of audit working papers? a. Basis for planning an audit b. Record of the evidence accumulated and results of the tests c. Basis for preparing tax return and filings with SEBI d. Data for determining the proper type of audit report 100. Audit notebook is a a. Personal notebook of an auditor b. Record of work performed by an auditor c. Record of important points and enquiries which an auditor has to refer
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 278

to his clients d. Record of mistakes and errors detected during the course of auditing accounts books 101. A file which contains rules governing the organization under audit is known as a. Current file b. Permanent file c. Routine file d. Precedence file 102. Which one of the following statements is correct? Civil liability of an auditor implies liability for a. misappropriation of cash b. misappropriation of goods c. fraud d. misfeasance 103. Any organization that employs a multiple command structure but also related support. mechanisms and an associated Organizational culture and behaviour pattern, is known as a. Project organization b. Tall structure c. Matrix organization d. Flat structure 104. A process of combining a series of tasks into a new, broader job that provides the worker with greater work variety and a greater sense of responsibility is known as a. Job enlargement b. Job enrichment c. Job analysis d. Job simplification 105. The strategic approach to total compensation involved splitting the total compensation. into three parts as under 1. Variable pay 2. Indirect pay 3. Base pay Which of the above components is/are linked to the organization’s success? Select the correct answer using the codes given below: a. 1 only b. 1 and 2 c. 1, 2 and 3 d. 2 and 3
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 279

106. When the output of one depart nit becomes the input for the other department, the relationship between the two departments is called a. Pooled interdependence b. Reciprocal interdependence c. Sequential interdependence d. Mutual interdependence 107. Scalar principle in management is also known as a. Unity. of command b. Chain of command c. Management by exception d. Esprit de corps 108. Which one of the following defines coordination? a. Actuating force which inspires a person to put his best for the fulfillment of a task b. Orderly arrangement of group effort to provide unity of action in the pursuit of a common goal c. Process of transmitting information from one person to another or from one unit to another d. Process of determining what is to be accomplished and what has been accomplished 109. The formal procedure for obtaining consensus of a number of expert through a series of questionnaires is a. Delphi technique b. Brainstorming c. Nominal group technique d. Synectics 110. In Vroom’s theory, motivation results from a. Valence × Expectancy b. Valence + Expectancy c. Valence — Expectancy d. Valence/Expectancy 111. Which of the following motivational theories states .that the average human being avoids responsibility and needs to be controlled and directed by his superiors? a. Maslow’s Theory b. Theory X c. Theory Y d. Herzberg’s Theory 112. Communication between departments of an organization that generally follows the
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 280

work flow rather, than the chain of command is termed as. a. Informal communication b. Grapevine chains c. Lateral communication d. Vertical communication 113. Which one of the following is not related to the trait theory of leadership? a. Physical factors such as height b. Intelligence and extroversion c. Self confidence and ambition d. Training and experience of employees 114. Match List I (Likert’s Management System) with List II (Managerial Grid) and select the correct answer using the codes given below: List I A. High consideration and low structure B. Low structure and low consideration C. High structure and high consideration D. High structure and low consideration List II 1. Team 2. Task 3. Impoverished 4. Country club Codes; ABCD a. 4 2 1 3 b. 1 3 4 2 c. 4 3 1 2 d. 1 2 4 3 115. Leaders who guide their followers in the direction of established goals by clarifying role and task requirements are known as a. Transactional. leaders b. Transformational leaders c. Charismatic leaders d. Autocratic leaders 116. In Taylor’s functional organization, what does the gangboss perform? a. He inspects the quality of work done b. He issues instructions to workers c. He sets up tools and machines for the workers d. He compiles cost of production 117. Broad organizational goals, based on planning premises, which justifies an organization’s existence, is called a. Vision statement
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 281

b. Strategic plan c. Operational Plan d. Mission statement 118. The plans that establish a required method of handling future activities are called a. Programs b. Procedures c. Objectives d. Mission 119. Insurance to cover risks arising out of professional negligence is known as a. Business insurance b. Professional insurance c. Liability insurance d. Risk insurance 120. Risk of loss against strikes and riots is covered in which of the following fire insurance policies? a. Comprehensive b. Floating c. Average d. Denary

KAVITHA TUTORIALS, TIRUVURU[Type text]

Page 282

Sign up to vote on this title
UsefulNot useful