Sebi Grade A 2020 - All India Free Mock Test - 1

12/1/2020 All India Mock Test - 1-complete-test
All India Mock Test - 1

SEBI GRADE A 2020 - ALL INDIA FREE MOCK TEST - 1
Q.1) Which of the following is true ?
1. Global depository receipt is a type of bank certi cate that represents shares in a foreign
company, such that a foreign branch of an international bank then holds the shares.
2. The company shall release any public advertisement or to do any marketing, distribution etc.
as per Section 42 (Private placement) of the Companies Act , 2013
[A] Only 2
[B] Only 1
[C] Both 1 and 2
[D] None of the above
Q.2) A company wants to appoint Mr. X aged 20 as its managing director. which of the following
approval will be required as per provisions of the Companies Act, 2013 ?
[A] Board resolution
[B] Special resolution
[C] Prior approval of central government
[D] Mr. X cannot be appointed a managing director
Q.3) G Ltd. acquired assets worth Rs. 75,000 from H Ltd. by issue of share of Rs. 10 at a
premium of Rs. 5. The number of shares to be issued by G Ltd. to settle the purchase
consideration is __________.
[A] 6,000 shares
[B] 7,500 shares
[C] 9,375 shares
[D] 5,000 shares
[E] 8,975 shares
https://courses.edutap.co.in/admin/products/all-questions/150082 1/26
Q.4) These bonds pay an absolute coupon rate over a speci ed period of time. These bonds are
known as _________.
[A] Straight Bonds
[B] Plain-Vanilla Bonds
[C] Fixed-Rate Bonds
[D] Both A and C
[E] All of A, B and C
Q.5) The book-keeper at XYZ & Co has discovered that the following errors have occurred
during the year which a ect the amount of PPE in the balance sheet:
Included in repairs is the sum of Rs 2,300 which should have been capitalised
The purchase of a new food processor costing Rs 237 has been added to PPE twice
Insurance payments of Rs 1,800 in respect of property have been included in the PPE.
The correction of these errors will cause the carrying value of PPE in the balance sheet to
_____________
[A] Decrease by Rs 4,576
[B] Increase by Rs 263
[C] Increase by Rs 26
[D] Decrease by Rs 3,626
[E] None of the above is correct
Q.6) The total variable cost ______ in total proportion to output.
[A] increases
[B] decreases
[C] remains xed
[D] Both A and B
[E] Either A or B
Q.7) Which of these is not a method for upward communication?
[A] Open-door policy
[B] Complaints
[C] Suggestion Boxes
[D] Scolding
[E] None of the above
Q.8) XYZ Ltd. is a public company, having paid up share capital of Rs 25 crores has 3 directors.
As per the provisions of the Companies Act, 2013, what shall be the minimum number of
independent directors in the company?
[A] 10
[B] 4
[C] 2
[D] 1
Q.9) Operational planning is _______________
[A] Short term planning
[B] Medium term planning
[C] Long term planning
[D] Both B and C
Q.10) What is the full form of IASC ?
[A] Institute of Accounting Standards of China
[B] Indian Accounting Standards Committee
[C] International Accounting Standards Group of China
[D] Indian Accounting Standards Corporation
[E] International Accounting Standards Committee
Q.11) The IIPDF is available for the purpose of meeting the project development costs which
may include the expenses incurred in respect of feasibility studies, environment impact studies,
nancial structuring, legal reviews etc. What is the meaning of F in IIPDF ?
[A] Feasibility
[B] Finance
[C] Fund
[D] Frequency
[E] Front
Q.12) Which type of leaders create a vision of what they aspire to be, and communicate this
idea to their followers ?
[A] Delegative
[B] Transformational
[C] Autocratic
[D] Transactional
[E] Participative
Q.13) For the individual employee, MBO provides ________________.
[A] A means to an end
[B] Communication between co-workers
[C] A way to keep the company accountable
[D] Increased monetary compensation
[E] Speci c personal performance objectives
Q.14) Who shall ll the casual vacancy of Key Managerial Personnel as per Section 203 of the
Companies Act , 2013 ?
[A] CAG
[B] Board of directors
[C] Central Government
[D] Either B or C
Q.15) Share Allotment Account is a ___________
[A] Real Account
[B] Nominal Account
[C] Personal Account
[D] Company Account
Q.16) If a director of the company makes any default in complying with the provisions of
Section 191 of the Companies Act, 2013, such director shall be liable to a penalty of
Rs.__________.
[A] Rs. 5 lakhs
[B] Rs. 10 lakhs
[C] Rs. 1 lakh
[D] Rs. 2 lakhs
Q.17) Which of the following correctly de nes 'Net Factor Income from Abroad' ?
[A] Factor income earned from abroad by normal residents of a country + Factor income
earned by non-residents (foreigners) in the domestic territory of that country
[B] Factor income earned from abroad by normal residents of a country - Factor income earned
by non-residents (foreigners) in the domestic territory of that country
[C] Factor income earned by non-residents (foreigners) in the domestic territory of that country
- Factor income earned from abroad by normal residents of a country
[D] Both B and C
[E] None of the Above
Q.18) A company’s share’s face value is 10, book value is 22, Right issue price is 34 and Market
price is 48, while recording the issue of right share, the securities premium will be credited with
_________
[A] Rs 12
[B] Rs 14
[C] Rs 24
[D] Rs 38
[E] Rs 26
Q.19) How many parties are involved in the process of Factoring ?
[A] 1
[B] 2
[C] 3
[D] 5
[E] 7
Q.20) Which factor is the main motivation for companies adopting lean manufacturing ?
[A] Waste elimination
[B] Clean layout
[C] Increasing Competition
[D] Maintaining quality level
Q.21) If the Aggregate Demand curve shifts to the left _____________
[A] the economy moves up and to the left along the short-run Phillips Curve
[B] the economy moves down and to the right on the short-run Phillips Curve
[C] the economy moves up the long-run Phillips Curve
[D] there is no impact on the Phillips Curve
[E] none of the above
Q.22) Just-in-Time was rst successfully implemented by ____________________
[A] Toyota
[B] Honda
[C] Suzuki
[D] Volkswagen
Q.23) In which type of economy, consumers and producers make their choices based on the
market forces of demand and supply ?
[A] Open Economy
[B] Controlled Economy
[C] Command Economy
[D] Market Economy
Q.24) The monetary policy is completely ine ective when the LM curve is __________
[A] Vertical
[B] Horizontal
[C] Upward sloping
[D] Downward sloping
Q.25) A forward contract is not _______________
[A] An agreement to buy a car in the future at a speci ed price
[B] An agreement to buy an airplane ticket at a future date for a speci ed price
[C] An agreement to buy a refrigerator today at the posted price
[D] An agreement to subscribe to a newspaper at a speci ed price at a future date
[E] All of the above
Q.26) When a right of return exists, an entity may recognize revenue from a sale of goods at the
time of sale only if _________________.
[A] The amount of future returns can be reliably estimated
[B] The seller retains the risks and rewards of ownership
[C] The buyer resells the goods
[D] The seller believes returns will not be material
[E] All of the above
Q.27) Fixed cost per unit _________ with rise in output and _______ with fall in output.
[A] increases, decreases
[B] decreases, increases
[C] remains constant, decreases
[D] increases, remains constant
[E] remains constant, remains constant
Q.28) Which of the following is true ?
1. As per Section 155 of the Companies Act, 2013, no individual shall apply for or obtain another
DIN if he/she already has one DIN.
2. Every individual intending to be appointed as director of a company shall make an

application for allotment of DIN to Central government using Form DIR-3 as per Section 153 of
the Companies Act, 2013.
[A] Only 1
[B] Only 2
[C] Both 1 and 2
[D] None of the above
Q.29) Signi cant feature of Kaizen Budgeting is ______________________
[A] employee suggestion
[B] customer suggestion
[C] cost suggestion
[D] price suggestion
Q.30) The ordinary trading account is a locked storehouse of most valuable information to
which cost system is the _________
[A] house
[B] lock
[C] key
[D] Either B or C
[E] Both A and C
Q.31) The minimum credit rating required by corporates and other issuer to issue commercial
papers is __________
[A] A-1
[B] A-4
[C] A-2
[D] A-3
Q.32) What will be the e ect on option value due of put option due to higher market price ?
[A] higher option price
[B] lower option price
[C] no change in price
[D] cannot be determined
[E] none of the above
Q.33) According to Keynes, which of the following component determines induced investment?
[A] Level of Income
[B] Rate of Interest
[C] Level of Autonomous Investment
[D] Level of Savings
Q.34) A plant manager in a small factory wishes to raise morale in his workforce. The manager
notes that the working conditions at the plant are safe, clean, and pleasant, and that recent
expansion of the workforce has assured the employees that their jobs are secure. Which of the
following actions should the manager take to ensure that the 'belongingness' needs in Maslow's
hierarchy are satis ed ?
[A] pay bonuses to workers who achieve speci ed goals
[B] publicly praise those workers who have been most productive
[C] set up after work clubs, such as a softball team, to allow more social interaction
[D] foster the development of skills in workers who show talent in a particular area
[E] Both A and B
Q.35) ________ is the value of a bene t where no actual cost is incurred.
[A] Out of pocket cost
[B] Imputed cost
[C] Abnormal cost
[D] Sunk costs
Q.36) Material control aims at achieving e ective _____________.
[A] Material Management
[B] Quality Control
[C] Accounting of Material
[D] Material Supply
Q.37) ABC Ltd borrowed in US $700,000 on 01/01/2020 to be repaid on 31/07/2020. ABC Ltd

prepares nancial statements ending on 31/03/2020. The exchange rate on the di erent dates
are as follows :-
01/01/2020 - $1 = Rs 72.50 (assumed)
31/03/2020 - $1 = Rs 74.30 (assumed)
31/07/2020 - $1 = Rs 73.40 (assumed)
What will be the amount of subsequent recognition on 31/07/2020 ?
[A] Rs 5,13,80,000
[B] Rs 12,60,000
[C] Rs 5,20,10,000
[D] Rs 6,30,000
[E] Rs 5,07,50,000
Q.38) What is the meaning of L in NCLT ?
[A] Legal
[B] Legend
[C] Law
[D] Label
Q.39) A person having BSBDA in a bank can have which of the following accounts in the same
bank ?
I. Savings Bank Account
II. Fixed Deposit Account
III. Recurring Deposit Account
[A] Only I
[B] Both II and III
[C] Both I and III
[D] All I II and III
[E] None of I II and III
Q.40) What is the full form of CDSL ?
[A] Central Domestic Stock Limited
[B] Commodities and Derivative Services Limited
[C] Central Depository Services Limited
[D] Centre for Derivatives and Securities Lending
[E] Common Domestic Stock Lending
Q.41) Which of the following economist had the view that uctuations in economic activities are
because of uctuations in aggregate e ective demand ?
[A] Schumpeter
[B] Keynes
[C] Karl Marx
[D] Kaldor
Q.42) An example of a communication channel is _____________
[A] face-to-face conversation
[B] context
[C] noise
[D] Both A and B
[E] Both B and C
Q.43) Last-in rst-out method is suitable in times of __________ as it helps you to save tax
[A] Rising prices
[B] Falling prices
[C] Fluctuating prices
[D] Constant Prices
Q.44) Which of the following method is suitable for calculating the cost of inventory when actual
costs of individual units of merchandise can be determined from the accounting records?
[A] FIFO Method
[B] LIFO Method
[C] Speci c Identi cation Method
[D] Average Method
Q.45) On 1.4.2019, Mr. Manoj purchased 1,000 equity shares at 130 each from a Broker. He
paid brokerage of 2%. He purchased 1000 shares more on 30th September 2019 at a price of
110 each and paid brokerage of 2%. Then on 20th march 2020 he sold 500 shares at a price of
160 and paid a brokerage of 2%. Calculate the Pro t. Assume FIFO method to nd cost of
shares sold.
[A] 12,100
[B] 13,200
[C] 17,200
[D] 18,600
[E] 15,400
Q.46) In the event of inadequacy or absence of pro ts in any year, a company may declare
dividend out of free reserves. As per Section 123 of the Companies Act, 2013, the balance of
reserves after withdrawal shall not fall below _______ of its paid up share capital as appearing in
the latest audited nancial statement.
[A] 7%
[B] 15%
[C] 10%
[D] 20%
Q.47) In which type of leadership the goals of the sta are set by themselves ?
[A] Delegative
[B] Autocratic
[C] Participative
[D] Both B and C
Q.48) According to the Keynesian theory of employment, which of the following statements
is/are correct?
[A] A general fall in wages will bring an increase in employment
[B] The prices and wages are in exible downwards
[C] Level of employment in an economy depends upon the level of money wages
[D] All of the above
[E] Both A and B
Q.49) With reference to the di erence between Banks and Non-Banking Financial Company
(NBFC), which of the following options is/are not correct?
[A] NBFC cannot accept demand deposits
[B] NBFCs do not form part of the payment and settlement system and cannot issue cheques
drawn on itself
[C] Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is
available to depositors of NBFCs
[D] All of the above
[E] Both B and C
Q.50) Which one of the following is NOT the advantage of Workforce Diversity?
[A] Increased creativity and exibility
[B] Decreased problem-solving skills
[C] Multiple perspectives
[D] Greater openness to new ideas
[E] Both C and D

Answers
Q.1)B Q.2)D Q.3)D Q.4)E Q.5)B Q.6)E Q.7)D Q.8)C Q.9)A Q.10)E Q.11)C
Q.12)B Q.13)E Q.14)B Q.15)C Q.16)C Q.17)B Q.18)C Q.19)C Q.20)C Q.21)B
Q.22)A Q.23)D Q.24)B Q.25)C Q.26)A Q.27)B Q.28)C Q.29)A Q.30)C Q.31)D
Q.32)B Q.33)B Q.34)C Q.35)B Q.36)A Q.37)D Q.38)C Q.39)B Q.40)C Q.41)B
Q.42)A Q.43)A Q.44)C Q.45)A Q.46)B Q.47)C Q.48)B Q.49)C Q.50)B

Explanations
Q.1) Explanation:
Only option 1 is true. Option 2 is incorrect
According to Section 42 of the Companies Act, 2013 - " No company o ering securities under
this section shall release any public advertisements or utilize any media, marketing or
distribution channels or agents to inform the public at large about such an o er " (Private
Placement)
Q.2) Explanation:
Option D is the correct answer
As per Section 196 of the Companies Act, 2013, Company shall not appoint or continue the
employment of any person as managing director, whole-time director or manager who —
(a) is below the age of twenty-one years or has attained the age of seventy years.
(b) is an undischarged insolvent or has at any time been adjudged as an insolvent
(c) has at any time been convicted by a court of an o ence and sentenced for a period of more
than six months
(d) has at any time suspended payment to his creditors or has at any time made a composition
with them
Q.3) Explanation:
When we acquire the assets worth of Rs 75000. and per share costing is given 10 + 5,( which is
for premium) so that per share costing is Rs 15
so the assets is acquired from him for (75000/Rs15) = 5000 shares.
Q.4) Explanation:
The correct answer is option E.
Straight, plain vanilla or xed-rate bonds pay an absolute coupon rate over a speci ed period of
time. Upon maturity, the last coupon payment is made along with the par value of the bond.
Q.5) Explanation:
Included in repairs is the sum of Rs 2,300 which should have been capitalised - should be added
to the PPE
The purchase of a new food processor costing Rs 237 has been added to PPE twice - Rs 237
should be subtracted from the PPE
Insurance payments of Rs 1,800 in respect of property have been included in the PPE - should
be subtracted from PPE
The above operations will show Increase by Rs 263
Q.6) Explanation:
Cost can be segregated in two parts i.e. variable cost and xed cost. Variable cost is the cost
which is xed per unit. A variable cost is a corporate expense that changes in proportion to
production output. Variable costs increase or decrease depending on a company's production
volume; they rise as production increases and fall as production decreases.
Q.7) Explanation:
Upward communication is the process by which lower-level company employees can directly
communicate with upper management to provide feedback, complaints or suggestions
regarding the day-to-day operations of the company.
There are six methods for upward communication. They are: open-door policy, complaints and
suggestions boxes, social gatherings, direct correspondence, reports and counselling.
Scolding is not a method of upward communication
Q.8) Explanation:
As per section 149(4) of the Companies Act, 2013, each company shall have at least 1/3rd of its
directors as independent directors.
According to the Companies (Appointment and Quali cations of Directors) Rules, 2014,
following class or classes of companies shall have at least 2 directors as independent directors;-
Public companies as per last date of latest audited nancial statements having
1. Paid up share capital >= Rs 10 Crores or
2. Turnover >= Rs 100 Crores or
3. Outstanding loans, debentures and deposits >= Rs 50 Crores.
Q.9) Explanation:
When operational planning takes place, the short-term objectives are considered. The function
of this process is performed by middle-level management and includes operations and
business activities over a short-term period. It typically looks at goals or milestones of one to 12
months in the future.
Q.10) Explanation:
IASC - International Accounting Standards Committee. It is based in london. The IASC comprises
the professional accountancy bodies of over 75 countries (including the Institute of Chartered
Accountants of India)
Q.11) Explanation:
IIPDF - India Infrastructure Project Development Fund
The India Infrastructure Project Development Fund (IIPDF) provides nancial support for quality
project development activities. The Sponsoring Authority will, thus, be able to source funding to
cover a portion of the PPP transaction costs, thereby reducing the impact of costs related to
procurement on their budgets.
Q.12) Explanation:
Transformational leadership is a theory of leadership where a leader works with teams to

identify needed change, creating a vision to guide the change through inspiration, and
executing the change in tandem with committed members of a group; it is an integral part of
the Full Range Leadership Model.
A transformational leader is a type of person in which the leader is not limited by his or her
followers' perception. The main objective is to work to change or transform his or her
followers' needs and redirect their thinking. Leaders that follow the transformation style of
leading, challenge and inspire their followers with a sense of purpose and excitement.
Transformational leaders also create a vision of what they aspire to be, and communicate this
idea to others (their followers)
Q.13) Explanation:
In an MBO programme the organisations overall objectives are translated into speci c
objectives for each succeeding level in the organisation. But because lower-unit managers
jointly participate in setting their own, MBO works from the 'bottom up' as well as from the 'top
down'.
The result is a hierarchy that links objectives at one level to those at the next level. And for the
individual employee, MBO provides speci c personal performance objectives.
Q.14) Explanation:
According to Section 203 of the Companies Act, 2013, If the o ce of any whole-time key
managerial personnel is vacated, the resulting vacancy shall be lled-up by the Board at a
meeting of the Board within a period of six months from the date of such vacancy.
Q.15) Explanation:
Share allotment account is a personal account
Ledger accounts that contain transactions related to individuals or other organizations with
whom your business has direct transactions are known as personal accounts. Some examples
of personal accounts are customers, vendors, salary accounts of employees, drawings and
capital accounts of owners, etc.
Q.16) Explanation:
Section 191 of the Companies Act, 2013 deals with Payment to director for loss of o ce, etc., in
connection with transfer of undertaking, property or shares
If a director of the company makes any default in complying with the provisions of this section,
such director shall be liable to a penalty of one lakh rupees
Q.17) Explanation:
Net Factor Income from Abroad = Factor income earned from abroad by normal residents of a
country - Factor income earned by non-residents (foreigners) in the domestic territory of that
country
Q.18) Explanation:
Premium is always calculated on the face value
Hence premium = Rs 34 - Rs 10 = Rs 24
Q.19) Explanation:
There are three parties directly involved in factoring: the factor who purchases the receivable,
the one who sells the receivable, and the debtor who has a nancial liability that requires him
or her to make a payment to the owner of the invoice.
Q.20) Explanation:
Increasing competition is the main motivation for companies adopting lean manufacturing.
Lean manufacturing can be understood as an integrated manufacturing system that aims to
maximize the capacity of industry utilization and minimize the level of inventory that can
become overloaded.
Q.21) Explanation:
If the Aggregate Demand curve shifts to the left, the economy moves down and to the right on
the short-run Phillips Curve. A leftward shift of the Aggregate Demand curve results in a lower
price level and lower output. These changes to lower in ation and higher unemployment on the
Phillips curve, which results from a movement down and to the right on the Phillips Curve.
Q.22) Explanation:
JIT is a Japanese management philosophy which has been applied in practice since the early
1970s in many Japanese manufacturing organisations. It was rst developed and perfected
within the Toyota manufacturing plants by Taiichi Ohno as a means of meeting consumer
demands with minimum delays .
Q.23) Explanation:
A Market economy is an economic system in which the decisions regarding investment,

production, and distribution are guided by the forces of supply and demand.
Open Economy is an economy which has economic relations with the rest of the world.
Command Economy or Controlled Economy is an economic system in which the government

controls a country's economy.
Q.24) Explanation:
If the LM curve is horizontal, monetary policy is completely ine ective because the demand for
money is perfectly interest elastic.
This is the case of the “liquidity trap”, where the increase in the money supply has no e ect on
the interest rate OR and the income level.
On the other hand, if the LM curve is vertical, monetary policy is highly e ective because the
demand for money is perfectly interest inelastic.
Q.25) Explanation:
A Forward contract is an agreement between two parties in which the buyer agrees to buy an
underlying asset from the seller, at a future date at a price that is agreed upon today.
Therefore, Option C is the incorrect answer
Q.26) Explanation:
Answer (A) is correct.
One condition for recognition of revenue from the sale of goods is the transfer of the signi cant
risks and rewards of ownership. Retention of signi cant risk may occur when, for example, the
buyer may rescind the purchase for a reason stipulated in the contract, and the buyer is
uncertain about the probability of return. However, if the entity can reliably estimate future
returns and recognizes a liability for returns based on experience and other pertinent
information, revenue may be recognized at the time of sale if the other conditions for revenue
recognition also are met.
Q.27) Explanation:
Fixed cost remains constant in term of total value but is variable per unit. As output increase,
xed cost per unit decreases and vice versa. For example, Rent Rs.5000 is a xed cost.If the
output is 100 units, xed cost per unit will be Rs.50. If output is 200 units, xed cost per unit will
reduced to Rs.25 per unit.
Q.28) Explanation:
Both 1 and 2 are true :
1. As per Section 155 of the Companies Act,2013, no individual shall apply for or obtain another
DIN if he/she already has one DIN.
2. Every individual intending to be appointed as director of a company shall make an

application for allotment of DIN to Central government using Form DIR-3 as per Section 153 of
the Companies Act, 2013.
Q.29) Explanation:
Signi cant feature of Kaizen Budgeting is employee suggestion. Kaizen budgeting takes the
concept of continual improvement and applies it to budgets and budget forecasting.
Q.30) Explanation:
Trading account involved the information which are primarily related to trading activity of the
organization. This includes cost of raw material, direct labour and direct expenses. To nd out
the value of each of these item, cost system is the key.
Q.31) Explanation:
All eligible participants shall obtain the credit rating for issuance of Commercial Paper either
from Credit Rating Information Services of India Ltd. (CRISIL) or the Investment Information and
Credit Rating Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd. (CARE) or the
FITCH Ratings India Pvt. Ltd. or such other credit rating agency (CRA) as may be speci ed by the
Reserve Bank of India from time to time, for the purpose.
The minimum credit rating shall be A-3 [As per rating symbol and de nition prescribed by
Securities and Exchange Board of India (SEBI)].
The issuers shall ensure at the time of issuance of CP that the rating so obtained is current and
has not fallen due for review.
Q.32) Explanation:
According to the Black Scholes model, there are 5 key factors that impact the price of an option
as under:
Market Price of the Stock: An increase in the stock price positively impacts the call option value
but negatively impacts the put option value
Strike Price of the Stock: A shift to higher strike prices reduces the value of a call option but
increases the value of a put option
Interest rates: An increase in the interest rates reduces the present value of the strike price and
makes the call option more valuable and the put option less valuable
An reduction in the time to maturity or time to expiry reduces the value of a call option and also
the put option
An increase in the volatility of the stock increases the value of the call options and also of the
put option.
Q.33) Explanation:
Keynes regarded 'rate of interest' as a factor determining induced investment.
But the empirical evidence gathered so far suggests that induced investment depends more on
income than on the rate of interest. With the increase in national income, induced investment is
increases. Increase in national income implies that demand for output of goods and services
increases. To produce greater output, more capital goods are required to produce them. To
have more capital goods more investment has to be undertaken.
Q.34) Explanation:
An individual wants a sense of belonging to someone or a group. He wants love, a ection and
friendship from his fellow beings.
So the manager can set up after work clubs, such as a softball team, to allow more social
interaction, to ensure that the belongingness needs in Maslow's hierarchy are satis ed
Q.35) Explanation:
An imputed cost is an invisible cost which actually not incurred directly. Examples of imputed
cost: Suppose a company owns an o ce building in the central business district of a city where
managerial and administrative sta work. The company's manufacturing site is located outside
the city. The company could decide to relocate the workers to the manufacturing location and
sell or rent the downtown o ce building. The imputed costs, in this case, are the proceeds from
the sale of the building or amount of rental income the company could earn from leasing it to
another party. The sta stays put, and only explicit costs associated with using the building,
such as maintenance, utilities, and depreciation, are booked on the income statement.
Q.36) Explanation:
Material control refers to the various measure taken to reduce the loss of material at the time
of receiving, storing and issue of material. So it helps in overall material management
Q.37) Explanation:
Only the foreign exchange di erence will be recorded as subsequent recognition on the date of
settlement of loan
Hence, 700,000 * ( ₹ 74.30 - ₹ 73.40) = Gain of ₹ 6,30,000 will be the subsequent recognition on
31/07/2020
NOTE: As per the provisions of AS-11, Only the foreign exchange di erence between the date of
settlement and date of preparation of nancial statements of the previous year will be
recorded as subsequent recognition here.
Q.38) Explanation:
NCLT - National Company Law Tribunal
The National Company Law Tribunal is a quasi-judicial body in India that adjudicates issues
relating to Indian companies. The tribunal was established under the Companies Act 2013 and
was constituted on 1 June 2016 by the government of India and is based on the
recommendation of the V. Balakrishna Eradi committee on law relating to the insolvency and
the winding up of companies.
All proceedings under the Companies Act, including proceedings relating to arbitration,
compromise, arrangements, reconstructions and the winding up of companies shall be
disposed o by the National Company Law Tribunal. The NCLT bench is chaired by a Judicial
member who is supposed to be a retired or a serving High Court Judge and a Technical member
who must be from the Indian Corporate Law Service, ICLS Cadre.
Q.39) Explanation:
A person having BSBDA in a bank cannot have a Savings Account in the same bank. But he can
have other accounts such as xed deposit and recurring deposit accounts, etc.
Q.40) Explanation:
CDSL - Central Depository Services Limited
The main function of CDSL is to facilitate holding of dematerialised securities enables securities
transactions to be processed by book entry.
CDSL facilitates holding and transacting in securities in the electronic form and facilitates
settlement of trades on stock exchanges. These securities include equities, debentures, bonds,
Exchange traded Funds (ETFs), units of mutual funds, units of Alternate Investment Funds (AIFs),
Certi cates of deposit (CDs), commercial papers (CPs), Government Securities (GSecs) and
Treasury Bills (TBills).
Q.41) Explanation:
According to Keynes, the uctuations in economic activity are due to the uctuations in
aggregate e ective demand:
Fall in aggregate e ective demand --> Recession or Depression.
Increase in aggregate demand --> Economic expansion
Q.42) Explanation:
An example of a communication channel is face-to-face conversation. When one person

discusses his views, opinion to another person and exchanges their views in the presence of
both then it is called face to face conversation.
Q.43) Explanation:
Last-in, rst-out, or LIFO, uses the most recent costs rst. When prices are rising, we prefer LIFO
because it gives you the highest cost of goods sold and the lowest taxable income.
Q.44) Explanation:
Speci c identi cation is a method of nding out ending inventory cost. It requires a detailed
physical count, so that the company knows exactly how many of each goods brought on speci c
dates remained at year end inventory.
Q.45) Explanation:
When an investment is disposed of, the di erence between the carrying amount and net sale
proceeds (gross sale less expenses) is recognized in the pro t and loss account.
Cost of Shares bought on 1.4.2019 = 130 * 1000 = 1,30,000 * 102% = 1,32,600
Cost of Shares bought on 1.9.2019 = 110 * 1000 = 1,10,000 * 102% = 1,12,200
Cost as per FIFO method = 1,32,600 / 1000 = 132.6
Sales Proceeds = 160 * 500 = 80000 * 98% = 78,400
Pro t on 500 shares = Sales - FIFO Cost= 78,400 - (500*132.60)= 78,400 - 66,300
Pro t = 12,100
Q.46) Explanation:
As per Second proviso of sub-section (1) of section 123 of Companies Act, 2013, where, owing to
inadequacy or absence of pro ts in any nancial year, any company proposes to declare
dividend out of the accumulated pro ts earned by it in previous years and transferred by the
company to the free reserves, such declaration of dividend shall not be made except in
accordance with such rules as may be prescribed in this behalf.
In the event of inadequacy or absence of pro ts in any year, a company may declare dividend
out of free reserves subject to the ful llment of following conditions, namely –
(1) The rate of dividend declared shall not exceed the average of the rates at which dividend
was declared by it in the three years immediately preceding that year
Provided that this sub-rule shall not apply to a company, which has not declared any dividend
in each of the three immediately nancial year.
(2) The total amount to be drawn from such accumulated pro ts shall not exceed one-tenth of
the sum of its paid up share capital and free reserves as appearing in the latest audited
nancial statement.
(3) The amount so drawn shall rst be utilized to set o the losses incurred in the nancial year
in which dividend is declared before any dividend in respect of equity shares is
(4) The balance of reserves after such withdrawal shall not fall below fteen per cent of its paid
up share capital as appearing in the latest audited nancial statement.
Q.47) Explanation:
Democratic leadership, also known as participative leadership or shared leadership, is a type of

leadership style in which members of the group take a more participative role in the decision-
making process.This type of leadership can apply to any organization, from private businesses
to schools to government.
Everyone is given the opportunity to participate, ideas are exchanged freely, and discussion is
encouraged. While the democratic process tends to focus on group equality and the free ow
of ideas, the leader of the group is still there to o er guidance and control.
In this type of leadership, the goals of the sta are set by themselves
Q.48) Explanation:
According to the Keynesian theory of employment-
A general fall in wages will not bring increase in employment because reduction in wages will
reduce the aggregate demand for goods.
As a result of decline in aggregate demand, level of production will have to be reduced and less
labour will be employed than before.
Keynes thought that the level of employment depends upon the aggregate demand.
According to Keynes, prices and wages are sticky and in exible downwards.
Q.49) Explanation:
NBFCs lend and make investments and hence their activities are akin to that of banks; however
there are a few di erences as given below:
i. NBFC cannot accept demand deposits;
ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques
drawn on itself;
iii. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not
available to depositors of NBFCs, unlike in case of banks.
Q.50) Explanation:
Decreased problem-solving skills is NOT the advantage of Workforce Diversity.
Workforce diversity can bring about an increase in productivity and competitive advantages.
Workplace diversity also increases employee morale and causes employees to desire to work
more e ectively and e ciently.

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[C] Both 1 and 2

[D] None of the above

[A] Board resolution

[B] Special resolution

[C] Prior approval of central government

[D] Mr. X cannot be appointed a managing director

[A] 6,000 shares

[B] 7,500 shares

[C] 9,375 shares

[D] 5,000 shares

[E] 8,975 shares

[A] Straight Bonds

[B] Plain-Vanilla Bonds

[C] Fixed-Rate Bonds

[D] Both A and C

[E] All of A, B and C

[A] Decrease by Rs 4,576

[B] Increase by Rs 263

[D] Decrease by Rs 3,626

[E] None of the above is correct

Q.6) The total variable cost ______ in total proportion to output.

[C] remains xed

[D] Both A and B

Q.7) Which of these is not a method for upward communication?

[A] Open-door policy

[C] Suggestion Boxes

[E] None of the above

Q.9) Operational planning is _______________

[A] Short term planning

[B] Medium term planning

[C] Long term planning

[D] Both B and C

[E] None of the above

Q.10) What is the full form of IASC ?

[A] Institute of Accounting Standards of China

[B] Indian Accounting Standards Committee

[C] International Accounting Standards Group of China

[D] Indian Accounting Standards Corporation

[E] International Accounting Standards Committee

Q.13) For the individual employee, MBO provides ________________.

[A] A means to an end

[B] Communication between co-workers

[C] A way to keep the company accountable

[D] Increased monetary compensation

[E] Speci c personal performance objectives

[B] Board of directors

[C] Central Government

Q.15) Share Allotment Account is a ___________

[A] Real Account

[B] Nominal Account

[C] Personal Account

[D] Company Account

[E] None of the above

[A] Rs. 5 lakhs

[B] Rs. 10 lakhs

[C] Rs. 1 lakh

[D] Rs. 2 lakhs

[D] Both B and C

[E] None of the Above

Q.19) How many parties are involved in the process of Factoring ?

[A] Waste elimination