Commerce Questions 700

Commerce Questions
1. Who is Father of Scientific Management ?

(A) Henry Fayol (B) Elton Mayo (C) Chester Bernard (D) F. W. Taylor
2. Appointment of a Company Secretary is made by
(A) Promoters (B) Board of Directors (C) Debenture holders (D) Government
3. Bonus Shares are issued to
(A) Equity Shareholders (B) Preference Shareholders (C) Debenture Holders (D) Secured Creditors
4. Liability of a Company Secretary is
(A) Contractual only (B) Statutory only (C) Civil only (D) Both contractual and statutory
5. The Life Insurance in India was nationalised in the year
(A) 1870 (B) 1956 (C) 1960 (D) 1966
6. Memorandum of Association contains
(A) Objective clause (B) Name clause (C) Capital clause (D) All of the above
7. Which is the oldest form of organisation ?
(A) Line (B) Line and staff (C) Functional (D) Matrix
8. In Direction who is given importance ?
(A) To machines (B) To paper work (C) To man (D) To production
9. Standard costing is a technique of
(A) Planning (B) Organising (C) Coordination (D) Control
10. How is profit prior to incorporation treated as ?
(A) Revenue reserve (B) Secret reserve (C) Capital reserve (D) General reserve
1. FEMA stands for

(A) Foreign Exchange Management Act (C) Finance Enhancement Monetary Act
(B) Funds Exchange Management Act (D) Future Exchange Management Act
2. What of the following is false about W.T.O. ?

(A) It is the main organ for implementing the Multilateral Trade Agreement
(B) It is global in its membership (C) It has far wider scope than GATT
(D) Only countries having more than prescribed level of total GDP can become its member
3. Convertibility of the rupee implies
(A) Being able to convert rupees notes into gold
(B) Allowing the value of the rupee to be fixed by marketforces
(C) Freely permitting the conversion of rupee to other major currencies and vice versa
(D) Developing an international market for currencies in India
4. ........ has been founded to act as permanent watchdog on the international trade.
(A) ISRD (B) ADS(C) WTO (D) DIMF
5. Which of the following statement is correct ?
(A) The disinvestment programme has been successfully carried out in India
(B) Privatisation up to 100% has been carried out in all the PSU in India
(C) Under strategic sale method of disinvestment, the government sells a major share to a strategic partner (D)
None of the above
6. Advance Income-tax is shown in the
(A) Debit side of Profit and Loss Account (C) Credit side of Profit and Loss Account
(B) Liability side of the Balance Sheet (D) Assets side of the Balance Sheet
7. A and B were sharing profits of a business in the ratio of 3 : 2. They admit C into partnership, who gets 1/3 of As
share of profit from A, 1/2 of Bs share of profit from B.
The new profit sharing ratio will be
(A) 3 : 2 : 5 (B) 2 : 1 : 2 (C) 3 : 2 : 1 (D) 3 : 2 : 2
8. In the absence of a Partnership Deed, the rate of interest allowed on the partners loan to the firm is
(A) 5% (B) 6% (C) 10% (D) None of the above
9. Interim Dividend is shown
(A) In Profit and Loss Account (C) On Asset side of Balance Sheet
(B) In Profit and Loss Appropriation Account (D) On Liabilities side of Balance Sheet
10. Redeemable Preference shares of Rs. 100000 are redeemed at a premium of 5%. With this object equity shares
of Rs. 40000 are issued at par. What amount should be transferred to Capital Redemption Reserve Account ?
(A) Nil (B) Rs. 105000 (C) Rs. 65000 (D) Rs. 60000
11. Match List-I with List-II and select the correct answer from the codes given below
List-I
(a) Planning (b) Staffing (c) Directing (d) Controlling
List-II
1. Training 2. Forecasting 3. Evaluating 4. Motivating
(A) 2 4 1 3 (B) 1 2 3 4 (C) 2 1 4 3 (D) 3 4 2 1
12. Memorandum of Association contains

(A) Objective clause (B) Name clause (C) Capital clause (D) All of the above
13. Table A is an alternative to

(A) Prospectus (B) Articles of Association(C) Memorandum of Association (D) None
14. The Doctrine of Indoor Management provides protection to the

(A) Board of Directors (B) Shareholders (C) Managing Director (D) Outsiders
15. By which of the following methods a Company Secretary can be removed from his post ?
(A) By passing a resolution in Board Meeting (D) None of the above
(B) By order of Registrar of Companies (C) By passing a resolution in Annual General Meeting
16. Which one of the following statements is correct in respect of Duty Drawback Scheme ?
(A) Relieving export goods of duties paid for components used for manufacturing the export goods
(B) Providing cash incentives to exporters to compensate the duty paid by them in foreign countries
(C) Compensating importers to the extent of import duty paid by them for importing life-saving drugs
(D) Providing a facility for withdrawing the duty paid by exporters if their exports are rejected in foreign countries
17. In foreign trade, what is the price quoted by a supplier which includes all charges incurred up to door delivery of
goods to the buyer, called ?
(A) Loco price (B) C.I.F. price (C) Franco price (D) Landed price
18. Consider the following statements

1. Letter of credit cannot be opened by mail.
2. Contracts of export of goods and services against payment to be secured partly or fully beyond 90 days are treated
as deferred payment exports.
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
19. Under which principle, all the rights of an insured are transferred to insurance company after making payment of
claim ?
(A) Subrogation (B) Utmost good faith (C) Contribution (D) Average clause
20. In a marine insurance, when must the insurable interest exist ?

(A) At the time of making contract(B) At the time of loss of subject matter
(C) Both at the time of making contract and at the time of loss of subject matter (D) At the time of
termination of the policy
1.Henry Fayol is known for
(A) Scientific Management (B) Rationalisation (C) Industrial Psychology (D) Principles of Management
2. Unity of command implies having not more than one

(A) Subordinate (B) Friend (C) Boss (D) Unit
3. x and y theory of Motivation has been propounded by

(A) McGregor (B) Maslow (C) Ouchi (D) Herzberg
4. Coordination has the following features

(A) Continuous (B) Vertical organization (C) Horizontal relationship (D) All of the above
5. Which one of the following is not a barrier in communication ?

(A) Noise (B) Affection (C) Fear and distrust (D) Perception
6. A Company can reissue its forfeited shares

(A) At a premium (B) At a face value (C) At a discount (D) All of the above
7. Which of the following is an example of capital expenditure ?

(A) Insurance Premium (B) Taxes and Legal expenses (C) Depreciation (D) Custom duty on import of machinery
8. Given :
Average profit of a firm Rs. 21,000
Normal Profit Rs. 18,000
Value of goodwill on the basis of 3 years purchases of super profit shall be
(A) Rs. 39,000 (B) Rs. 9,000 (C) Rs. 3,000 (D) Rs. 12,000
9. A co-operative auditor starts his work of audit from

(A) Account Books (B) Payment Books (C) Cash Book (D) None of the above
10. Accounting for research and development relates to

(A) AS-7 (B) AS-8 (C) AS-9 (D) AS-10
11. When does a body corporate become capable forthwith of exercising all the functions of a company ?
(A) On finalizing Memorandum of Association (C) On obtaining certificate of incorporation
(B) On obtaining certificate of commencement of business
(D) On having convened its first Annual General Meeting
12. Pohang Steel Company (POSCO) is a company originally based in

(A) Vietnam (B) South Korea (C) USA (D) Italy
13. Which one of the following is not one of the elements of the 7S McKinsey Model for analyzing and improving
organizational effectiveness ?
(A) Strategy (B) Structure (C) Shared Values (D) Standard

1. Aggregate planning implies operational planning concerned with determining a firm's production requirements
and manufacturing capacity.
2. Behaviour modification is a concept of motivation totally independent of rewards for the employees.
15. What is the correct sequence of the following steps in a strategic planning process ?
1. Inputs 2. Evaluation of alternatives 3. Execution 4. SWOT analysis
(A) 1 - 4 - 2 3 (B) 4 - 1 - 2 3 (C) 1 - 2 - 3 4 (D) 4 - 1 - 3 2
16. Which one among the following is not true for Special Economic Zones?
(A) No routine examination of cargo for export/import by customs authorities
(B) No licence is required for import (C) Manufacturing and service activities are allowed
(D) No permission for subcontracting
17. Which one among the following industries produces the most nonbiodegradable wastes?
(A) Thermal power plants (B) Paper mills (C) Food processing units (D) Textile mills
18. Brent index is associated with

(A) shipping rate index (B) crude oil prices(C) copper future prices (D) gold future prices
19. Which one among the following is not true of the planning Commission?
(A) It indicates the factors which tend to retard economic development
(B) It is an advisory body and makes recommendations to the cabinet
(C) It is responsible for formulation of a plan for the most effective and balanced utilisation of the country's
resources
(D) It is responsible for the execution of development programmes and plans
20. Which one of the following statements about RBI is 'True'?

(A) RBI maintains the foreign exchange reserves of India (C) RBI started functioning from 1870
(B) RBI is the regulator of Banks and Securities market in India (D) None of these
1. Control function of management implies

(A) To bring harmony in various activities (B) To keep the workforce satisfied
(C) To take corrective course of action (D) To dictate the subordinates
2. Coordination function of management aims at

(A) Providing sufficient personnel (B) Bringing harmony in various activities
(C) Taking up corrective course of action (D) All the above
3. Authority flows downwards from top to the bottom whereas accountability flows upwards from bottom to top.
It is found in
(A) Scalar chain (B) Functional organisation(C) Committee structure (D) Multivariate Approach
4. Maslows needs hierarchy theory relates to

(A) Motivation (B) Leadership (C) Communication (D) Directing
5. M.B.O. is a technique of
(A) Planning only (B) Controlling only
(C) Neither planning nor controlling (D) Both planning and controlling
6. Pre-incorporation Profit is transferred to

(A) General Reserve (B) Capital Reserve (C) Profit and Loss A/c (D) Trading A/c
7. Which of the following is shown in Profit Loss Appropriation A/c ?

(A) Provision for Income Tax (B) Provision for Depreciation
(C) Provision for Doubtful Debts (D) Contribution to General Reserve
8. On liquidation of a Company first payment is made in respect of

(A) Liquidators remuneration (B) Legal expenses(C) Preferential creditors (D) None
9. Workmens Compensation Fund is a

(A) Provision (B) Surplus (C) Current liability (D) Loan
10. Debentures of Rs. 4,25,000 are issued against the purchase of assets of Rs. 4,50,000. In this case the amount of
Rs. 25,000 is
(A) Capital Reserve (B) Securities Premium (C) Revenue Profit (D) Goodwill
11. In case of any default made in complying with the provisions relating to the postal ballot, the officer on default
will be punishable with which one of the following fines ?
(A) Rs. twenty thousand in respect of each such default(C) Rs. one lakh in respect of each such default (B) Rs. fifty
thousand in respect of each such default
(D) Rs. two lakh in respect of each such default
12. A listed company opting for buyback of shares under the Companies Act, 1956 has to submit return, after
completion of such buy-back within which one of the following periods ?
(A) 6 months of such completion to the Registrar of Companies only
(B) 45 days of such completion to the SEBI only
(C) 30 days of such completion to the Registrar of Companies and SEBI
(D) 30 days of such completion to the SEBI only
13. Private equity investors invest in a company based mainly on

(A) the creditability and the valuation of the company (C) the location of the company
(B) the age of the company (D) the activity undertaken by the company
14. What is Director Identification Number (DIN) ?

(A) An identification number which the individual company allots to the intending director
(B) A number which the Central Government allots to any individual intending to be appointed as director or to any
existing director of a company
(C) A number which the SEBI allots to any individual intending to be appointed as director or to any existing
director of a company
(D) A number which the Central Government allots to retired directors so as to build data base
15. Disinvestment in Public Sector is called

(A) Privatisation (B) Globlisation (C) Liberalisation (D) Industrialisation
16. Debtors turnover ratio is 4.
What is the average collection period ?
(A) 5 months (B) 4 months (C) 3 months (D) 2 months
17. The net profits of a business after providing for taxation for the past five years are Rs. 80,000, Rs. 85,000, Rs.
92,000, Rs. 1,05,000 and Rs. 1,18,000. Capital employed in the business is Rs. 8,00,000. Normal rate of return is
10%. What is the value of goodwill on the basis of capitalization of super profit method ?
(A) Rs. 1,00,000 (B) Rs. 1,50,000 (C) Rs. 1,60,000 (D) Rs. 1,80,000
18. Given
Purchases Rs.50,000 Sales Rs.90,000 Closing Stock Rs.7,000 Manufacturing Exp. Rs.5,000 Rate of gross
profit Rs.331 - 3% on cost What is the opening stock ?
(A) Rs. 20,000 (B) Rs. 19,500 (C) Rs. 22,500 (D) Rs. 25,000
19. A particular firm provided the following data for a year

Current Ratio 25 : 1 Liquid Ratio 15 : 1 Net Working Capital Rs. 3,00,000
What are the current assets and current liabilities of this firm, respectively ?
(A) Rs. 3,00,000 and Rs. 1,50,000 (C) Rs. 2,00,000 and Rs. 5,00,000
(B) Rs. 5,00,000 and Rs. 2,00,000 (D) Rs. 3,00,000 and Rs. 1,00,000
20. Depreciation is a process of which one of the following ?

(A) Valuation of assets
(B) Allocation of acquisition cost over the estimated useful life of the asset
(C) Allocation of realizable value over the estimated useful life of the asset
(D) Estimating the market value of the asset on the balance sheet
Audit adopted by banking company is

(A) Continuous Audit (B) Periodical Audit (C) Internal Audit (D) Balance Sheet Audit
2. Which of the following have lien of Company Auditor ?

(A) Books of Accounts of the Company (D) All of the above
(B) Vouchers of the Company (C) Auditors working paper
3. To appoint new auditor in place of retiring auditor, to adopt the procedure, which section of Companies Act, 1956
is applicable ?
(A) 223 (B) 224 (C) 225 (D) 226
4. A company has a separate legal existence from its members. This principle was first laid down in case of
(A) Saloman Vs. Saloman & Co. Ltd. (1897) (C) State of U. P. Vs. Renu Sagar Power Co. (1991)
(B) Daimler Co. Ltd. Vs. Continental Tyre & Rubber Co. (1916) (D) Santunu Roy Vs. Union of India (1989)
5. According to ownership, Government Company means share.

(A) Whose paid-up share capitals 48%, shares are owned by Government
(B) Whose paid-up share capitals 49% shares are owned by Government
(C) Whose paid-up share capitals 50% shares are owned by Government
(D) Whose paid-up share capitals 51% shares are owned by Government
6. Match the following List-I with List-II and select the correct answer from the answer codes given below
List-I
(a) AS-6 (b) AS-10(c) AS-26 (d) AS-20
List-II
1. Accounting for Earning per share 2. Accounting for intangible and fictitious assets
3. Accounting for fixed assets 4. Depreciation Accounting
Codes :
(A) 1 2 3 4 (B) 3 2 1 4 (C) 1 3 2 4 (D) 4 3 2 1
7. Establishment expenses of a new machine will be debited to

(A) Expenses Account (B) Profit and Loss Account (C) Machinery Account (D) None of the above
8. Goodwill is
(A) Floating Asset (B) Wasting Asset(C) Fictitious Asset (D) Intangible Asset
9. A Balance Sheet shows only

(A) Personal Accounts and Nominal Accounts (B) Real Accounts and Nominal Accounts
(C) Personal Accounts and Real Accounts (D) Personal, Real and Nominal Accounts
10. Discount on Issue of Shares A/c is shown at the

(A) Debit side of P & L A/c (B) Assets side of B/S (C) Liabilities side of B/S (D) None of the above
11. Given :
Realised value of assets Rs. 60,000 Profit on Realisation Rs. 3,000 Book value of assets will be
(A) Rs. 63,000 (B) Rs. 57,000(C) Rs. 60,000 (D) Rs. 61,500
12. A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. D is admitted for 1/10 share. The new
ratio will be
(A) 5 : 4 : 3 : 2 (B) 4 : 4 : 3 : 2 (C) 4 : 3 : 2 : 1 (D) None of the above
13. If actual average profit is Rs. 30,000 and normal rate of return is 12%, then capitalization value of the profits
will be
(A) Rs. 3,60,000 (B) Rs. 2,50,000 (C) Rs. 3,05,000 (D) None of the above
14. Under which Section of Companies Act an auditor has a right to participate and to speak in the General Meeting
?
(A) 231 (B) 229 (C) 226 (D) 224
15. New profit sharing ratio is calculated at the time of

(A) Admission of a new partner (B) Retirement of a partner (C) Death of a partner (D) All of the above
16. Consider the followingAmortization refers to writing off the value of

(1) tangible assets (2) intangible assets (3) fictitious assets Which of the above is/are correct ?
(A) 1 and 2 (B) 2 and 3 (C) 1 only (D) 2 only
17. The following information is disclosed by A Rs. Provision for doubtful debts as on 1.1.2012 : 6,000 Bad debts
written off during the year 2012 : 1,200 Total debtors as on
31.12.2012 : 80,000 A provision for Doubtful Debts to be made @ 5% What is the amount to be shown on the credit
side of P/L A/c ?
(A) Rs. 4,800 (B) Rs. 2,400 (C) Rs. 1,200 (D) Rs. 800
18. What is reduction of paid-up share capital called ?

(A) External reconstruction (B) Internal reconstruction (C) Reorganization (D) Redemption of capital:
19. Under which of the following methods of depreciation the amount of an asset is never reduced to zero ?
(A) Straight line method (B) Diminishing balance method (C) Sums of Years Digit method (D) Annuity method
20. An insurance claim of Rs. 300 was accepted in respect of stock (inventory) of Rs. 500, which was destroyed by
fire. Rs. 200 not covered by insurance should be debited to which one of the following ?
(A) Stock account (B) Trading account (C) Profit and loss account (D) Goodwill account
1. Auditor shall be punished with imprisonment for a maximum period of under Section 539 for falsification
in the books of accounts.
(A) 3 years (B) 5 years (C) 7 years (D) 9 years
2. Auditor is not an insurer. In which of the following cases, the decision has been given ?
(A) The Kingston Cotton Mills Co. Ltd. (1986) (B) London & General Bank (1895)
(C) Allen Craig & Co. Ltd. (1934) (D) Irish Woollen Co. Ltd.
3. The Section 80A of the Companies Act is related with the redemption of
(A) Debentures (B) Redeemable preference shares (C) Irredeemable preference shares (D) None of the above
4. Company Auditor is responsible

(A) For directors (B) For shareholders (C) For public (D) For creditors
5. In Balance Sheet, Audit Accounts are audited

(A) Monthly (B) Bi-monthly (C) Annually or half yearly (D) Quarterly
6. The share of new partner in the profits is 1/5 and his capital is Rs. 20,000. The new profit sharing ratio is 3 : 1 : 1.
The share of partners in total capital will be
(A) 60,000 : 20,000 : 20,000 (B) 80,000 : 20,000 : 20,000 (C) 50,000 : 20,000 : 25,000 (D) None of the above
7. At the time of dissolution the loss of the business, will be compensated first of all from
(A) Capital (B) Profits (C) Personal resources of the partners (D) Donations
8. The meaning of written down value is

(A) Original cost Scrap value (B) Book value + Depreciation (C) Book value Depreciation (D) None of these
9. Given :
Depreciation on the basis of Fixed Instalment Method Rs. 2,000 p.a.Establishment expenses Rs. 5,000
Scrap value Rs. 1,000 Span of life 10 years The cost of assets will be
(A) Rs. 20,000 (B) Rs. 16,000 (C) Rs. 12,000 (D) None of these
10. Given :
Cost Rs. 1,00,000 Scrap Value Rs. 10,000 Span of Life 10 years Rate of depreciation 20% p.a.
The amount of depreciation for the first year on the basis of diminishing balance method will be
(A) Rs. 20,000 (B) Rs. 18,000 (C) Rs. 9,000 (D) Rs. 10,000
11. Internal check is a part of

(A) Internal Audit (B) Internal Control (C) Annual Audit (D) Standard Audit
12. Cost Audit Report is to be submitted to

(A) The Company (B) The Central Government with a copy to the Company
(C) The Central Government (D) The Company Secretary
13. A company auditor addresses his report to

(A) Board of Directors (B) Members (C) Managing Director (D) Company Secretary
14. Which of the following Sections of the Companies Act 1956 relates to the maintenance of proper books of
accounts ?
(A) Section-211 (B) Section-217 (C) Section-209 (D) Section-205
15. X and Y are partners sharing profits in the ratio of 4 : 3. They admit a new partner Z and new profit sharing ratio
is 7 : 4 : 3. The sacrificing ratio between X and Y will be
(A) Equal (B) 4 : 3 (C) 2 : 1 (D) 1 : 2
16. BIPA with Sudan comes into effect was the news, it is an agreement for
(A) Investment in a country (B) Peaceful use of atomic power
(C) Allowing students to visit each other's nation (D) Allowing people to come for medical treatment
17. The balance of old provision for doubtful debts on 1-4-2012 was Rs. 10,000. The bad debts written off during
the year 2012-13 amounted to Rs. 12,000, and the new provision requiredon 31-3-2007 was Rs. 15,000. What is the
total amount to be debited to profit and loss account on account of bad debts and the provision for doubtful
debts ?
(A) Rs. 37,000 (B) Rs. 27,000 (C) Rs. 17,000 (D) Rs. 15,000
18. A and B sharing profit in the ratio of 3 : 2 and having capitals of Rs. 30,000 (for A) and Rs. 15,000 (for B),
decided to dissolve their firm. After paying off all liabilities, cash realized from various assets is Rs. 15,000. How
will this amount be distributed to A and B ?
(A) ARs. 9,000 and BRs. 6,000 (B) ARs. 10,000 and BRs. 5,000
(C) ARs. 7,500 and BRs. 7,500 (D) ARs. 12,000 and BRs. 3,000
19. X and Y sharing profits in the ratio of 7 : 3 admit Z on 37th share in the new firm. Z takes 27 th from X and 17th
from Y. What is the new ratio among X, Y and Z ?
(A) 7 : 3 : 3 (B) 4 : 2 : 15 (C) 14 : 6 : 15 (D) 29 : 11 : 30
20. Given
Opening inventory : Rs. 3,500 Closing inventory : Rs. 1,500 Cost of goods sold : Rs. 22,000
What is the amount of purchase ?
(A) Rs. 20,000 (B) Rs. 24,000 (C) Rs. 27,000 (D) Rs. 17,000
1. The following data are provided to you.
Fixed cost - Rs. 20,000; Selling price per unit - Rs. 25, Variable cost per unit - Rs. 20. Find out selling price per unit
if B.E.P. is brought down to 2,000 units.
(A) Rs. 30 (B) Rs. 40 (C) Rs. 50 (D) Rs. 60
2. Among the following which is not an error of commission ?

(A) Wrong totalling (B) Recording with wrong amount (C) Wrong posting (D) Escape from posting
3. Internal check means

(A) Checking of accounts by cashier (B) Managerial control internally over the subordinates
(C) Checking of accounts by the Internal Auditor (D) Checking the work of one person by another automatically
4. Verification includes
(A) Valuation (B) Existence (C) Ownership & Title (D) All of the above
5. By whom from the following, auditor can be reappointed ?

(A) Directors (B) Shareholders(C) Central Government (D) All of the above
6. Liability of partners in respect of the firms debt is

(A) Limited to the amount of his capital in the business (B) Limited to the amount of guarantee given by the partner
(C) Limited to the amount of capital and the loan to the firm, if any(D) Unlimited
7. A Government Company is one in which at least the following percentage of share capital is held by the Central
and/or State Government
(A) 25% (B) 26% (C) 50% (D) 51%
8. Planning function of management is performed by

(A) Top level management (B) Middle level management (C) Lower level management (D) None of the above
9. Special plans made for facing competition are known as

(A) Objectives (B) Strategies (C) Policies (D) Budgets
10. Span of Management means

(A) A good organization should consist of five departments (B) Authority of each person must be clearly defined
(C) Each subordinate should have one superior (D) A manager can supervise a limited number of executives
11. The function of an Auditor is

(A) To examine arithmetical accuracy of accounts (B) To detect and prevent errors
(C) To detect and prevent frauds (D) All of the above
12. Audit is compulsory for

(A) Sole Trader (B) Partnership Firms (C) Joint Stock Companies (D) All of the above
13. Which of the following organisation makes "Doing Business Report" every year?
(A) WTO (B) World Bank (C) UNCTAD (D) IMF
14. In the absence of Articles of Association, an Auditor should keep in mind

(A) Prospectus (B) Table A (C) Memorandum of Association (D) Legal Declaration
15. Who may recommend Special Audit of a Company ?

(A) Directors of the Company (B) Shareholders of the Company
(C) Debentureholders of the Company (D) Central Government
16. Which one of the following statements is correct ?

(A) If an asset is used by a company, it should be owned by the company
(B) Verification of liabilities means that the amounts of current and long-term liabilities shown in the balance sheet
are correct (C) Vouching and verification means the same thing
(D) It is not the duty of an auditor to confirm the physical existence and ownership of an asset
17. Which of t he following terms is normally not seen in the field of International Relations?
(A) Alluvial Soil (B) Exchange Rate (C) OECD (D) Free Trade
18. What does payout ratio mean ?

(A) Ratio of debtors to creditors (B) Ratio of profit distributed to profit retained
(C) Ratio of dividends per share and earnings per share (D) Retained earnings

1. Premium on issue of shares is transferred to General Reserve Account.
2. For declaration of bonus shares out of General Reserve, a resolution in the shareholders' meeting is necessary.
20. How is Calls in arrear shown in the balance sheet on the liability side ?
(A) By deducting the amount from the called up capital (B) Under the heading Reserves and Surplus
(C) By deducting the amount from Capital Reserve
(D) By deducting the amount from the Share Forfeited Account
1. The following figures are presented to you

Year Sales Profit/Loss
1999 Rs. 1,00,000 Rs. 10,000 (Loss) 2000 Rs. 2,50,000 Rs. 20,000 (Profit) Calculate Profit Volume Ratio.
(A) 5% (B) 10% (C) 15% (D) 20%
2. The following particulars relate to manufacturing factory for the month of March 2013. Variable cost per unit Rs.
11; Fixed factory overhead Rs. 5,40,000; Fixed selling overhead Rs. 2,52,000; Variable selling cost Rs. 3; Sales
Price per unit Rs. 20. Find out the Break-Even Point in rupees
(A) Rs. 26,40,000 (B) Rs. 30,80,000 (C) Rs. 25,20,000 (D) Rs. 27,40,000
3. The following information is obtained from the records of K Co. Ltd.

Sales (1,00,000 units) Rs. 1,00,000 Variable cost Rs. 40,000
Fixed cost Rs. 30,000 Find out margin of safety.
(A) Rs. 20,000 (B) Rs. 25,000 (C) Rs. 30,000 (D) Rs. 50,000
4. A manufacturer is operating at 50% of its capacity, due to competition. The following are the details. Raw
materials Rs. 6 per unit, Direct Labour Rs. 4 per unit. variable overhead - Rs. 3 per unit, fixed overhead - Rs. 2 per
unit, output 15,000 units, total cost Rs. 2,25,000, sales value Rs. 2,10,000, loss Rs. 15,000. A foreign customer wants
to buy 6,000 units at Rs. 1350 per unit and the company does not know whether to accept or not as it is suffering
losses at the current level. Advise what he should do ?
(A) Accept the offer (B) Reject the offer (C) Remains indifferent (D) None of the above
5. The liability of a sole proprietor is

(A) Limited to the extent of his capital invested in the business (B) Limited to the extent of the value of business
assets (C) Limited to the extent of the value of business assets and his all private assets (D) None
6. Which of the following documents defines the scope of companys activities ?

(A) Memorandum of Association (B) Articles of Association (C) Prospectus (D) Statutory declaration
7. An indent house is one which

(A) Serves as middleman between importer and exporter of goods for getting orders
(B) Packs and forwards the goods (C) Guarantees the payments for good
(D) Performs custom formalities on behalf of importer
8. A letter of credit (L/C) is produced by

(A) An exporter (B) An importer (C) Custom authorities (D) Shipping company
9. Table A of the Companies Act gives a model of

(A) Minute book (B) Balance Sheet (C) Memorandum of Association (D) Articles of Association
10. First Auditor of a Company is appointed by the

(A) Shareholders (B) Central Government (C) Company Law Board (D) Board of Directors
11. Which of the following is not qualified to be a Company Auditor ?

(A) A body corporate (B) An employee of the company
(C) A person who is indebted to the company for an amount exceeding Rs. 1,000 (D) All of the above
12. Which of the following statement is correct ?

(A) Valuation is a part of verification (B) Verification is a part of valuation
(C) Valuation has nothing to do with verification (D) None of the above
13. Test checking refers to

(A) Testing of accounting records (B) Testing of honesty of employees
(C) Intensive checking of a select number of transactions (D) Checking of all transactions recorded
14. Continuous audit is suitable for

(A) Big institutions (B) Small institutions (C) General institutions (D) None of the above
15. Which of the following statements is/are correct ?

1. Internal control includes quality control. 2. Internal control is compulsory for all forms of business organizations.
3. Internal control helps external auditor to design suitable audit programme for client's organization.
Select the correct answer using the code given below
(A) 1 only (B) 2 only (C) 3 only (D) 1 and 3
16. Which of the following is not a part of the usual contents of the current file and audit working papers ?
(A) A copy of accounts on which auditors are reporting (B) Audit programme
(C) Minutes of the meetings (D) Memorandum of Association and Articles of Association

Audit working papers are maintained because
1. they act as a guide to subsequent audit.
2. they verify the arithmetical accuracy of the books of accounts.
18. they provide evidence of the work performed by the auditor.
Which of the statements given above are correct ?
(A) 1 and 2 only (B) 2 and 3 only (C) 1 and 3 only (D) 1, 2 and 3
19. The proportion of labour in GNP (Gross National Product) becomes low due to the following reasons
(A) Price lag behind wages (B) Profit lags behind prices (C) Prices lag behind profit (D) Wages lag behind price
20. Consider the following stages an auditor has to undergo before commencing an audit
1. Ascertaining the scope of audit work.
2. Gaining knowledge about business of the client.
3. Going through the agreement with the client.
4. Instructions to and information from the client.
What is the correct sequence of the above stages ?
(A) 2 - 1 - 3 4 (B) 3 - 4 - 2 1 (C) 2 - 4 - 3 1 (D) 3 - 1 - 2 4
1. Yen" is the currency of

(A) China (B) Japan (C) Italy (D) South Korea
2. Social Accounting means

(A) Accounting for social benefits and social costs (B) Accounting for Government Revenue & Govt. Cost
(C) Accounting for private revenue and private cost (D) None of the above
3. It is given that cost of stock is Rs. 100. However, its market price is Rs. 98 (buying) and Rs. 140 (selling). If the
market price is interpreted as the replacement cost, then the stock should be valued at
(A) Rs. 98 (B) Rs. 100 (C) Rs. 140 (D) Rs. 40
4. If the goods purchased are in transit, then the Journal Entry at the end of the period will be
(A) Goods in Transit A/c Dr. To Suppliers A/c (B) Goods in transit A/c Dr. To Purchases A/c
(C) Stock A/c Dr. To Goods in Transit A/c (D) Suppliers A/c Dr. To Goods in Transit
5. Calculate Return on Investment/ Return on Proprietors fund. Gross profit of a firm is Rs. 3,20,000, Operating
expenses Rs. 1,00,000, Taxes Rs. 20,000, Owners fund Rs. 5,00,000, Debenture Interest Rs. 50,000
(A) 20% (B) 30% (C) 40% (D) 50%
6. The technique of Carrot and Stick is used in business organization for

(A) Reducing absenteeism (B) Motivation (C) Effective leadership (D) Rewarding workers
7. The clearing agent is appointed by the

(A) Shipping company (B) Customs Authority (C) Importer (D) Exporter
8. The importer cannot take delivery of goods unless he produces the

(A) Bill of sight (B) Bill of lading (C) Shipping Bill (D) Mates receipt
9. The principle of indemnity is not related to

(A) Life Insurance (B) Fire Insurance (C) Marine Insurance (D) Crop Insurance
10. In Marine Insurance, the existence of insurable interest is necessary

(A) When the loss is caused (B) When the policy is taken
(C) Both when the policy is taken and when the loss is caused(D) Throughout the period of contract
11. The policy of anticipate no profit and provide for all possible losses is followed due to
(A) Convention of consistency (B) Convention of conservation
(C) Convention of disclosure (D) None of the above
12. Receipts and Payments Account is prepared by

(A) Companies (B) Banks (C) Partnership firms (D) Non-trading organizations
13. Examination of documents and vouchers is called

(A) Physical verification (B) Test checking (C) Vouching (D) None of the above
14. Internal Audit is done by

(A) External Auditors (B) Employees of the organization (C) Both (A) and (B) (D) Neither (A) nor (B)
15. Audit Programme is prepared by

(A) The Auditor (B) The Company (C) Internal Auditor (D) Financial Controller

The vouching of remuneration to directors involve the checking of
1. special resolution. 2. statement of accounts.
3. approval note of the Central Government. 4. Minutes Book.
(A) 1 and 2 only (B) 2 and 3 only (C) 1, 2 and 4 (D) 1, 3 and 4
17. Land Development Banks form part of

(A) Commercial Banks (B) IDBI (C) FCI (D) Cooperative Credit Structure
19. Among the following tax revenues of the Union Government, which is the biggest source?
(A) Income Tax (B) Corporation Tax(C) Central Excise (D) Customs Duty
19. Under the head Secured Loans the following are disclosed
1. Loans and Advances from banks.
2. Debentures.
3. Loans and Advances from subsidiaries.
4. Other loans and advances.
What is the correct chronological order of disclosure of the items given above in balance sheet of a company ?
(A) 3 - 1 - 2 4 (B) 2 - 4 - 3 - 1
(C) 3 - 4 - 2 1 (D) 2 - 1 - 3 - 4

Accounting control comprises
1. The plan of organization concerned with decision process.
2. The plan of organization concerned with safeguarding of assets.
3. The procedure concerned with safeguarding of assets.
(A) 1 and 2 only (B) 2 and 3 only
(C) 1 and 3 only (D) 1, 2 and 3 - See more at: http://www.allexamgurublog.com/2013/05/online-commerce-mcq-
quiz.html#sthash.zE3lEsV3.dpuf
1. The Doing Business Report" is prepared by which of the following organizations every year?
(A) World Bank (B) Asian Development Bank (ADB) (C) International Monetary Fund (IMF) (D) (WTO)
2. Accounting for Intangible Assets are related to

(A) AS - 10 (B) AS - 12(C) AS - 24 (D) AS 2
3. Indian Accounting Standard 28 is related to

(A) Accounting for taxes on income (B) Financial Reporting of Interests in Joint Venture
(C) Impairment of Assets (D) Provisions, Contingent Liabilities and Contingent Assets
4. Recording of capital contributed by the owner as liability ensures the adherence of principle of
(A) Consistency (B) Going concern(C) Separate entity (D) Materiality
5. Bad loans in banking terminology are generally known as

(A) BPOs (B) Prime Asset (C) NPAs (D) CBS
6. An association of cement manufacturers is an example of

(A) Diagonal combination (B) Vertical combination (C) Horizontal combination (D) Lateral combination
7. The product range is widest in case of

(A) Chain store (B) Departmental store (C) Speciality shop (D) One price shop
8. A public corporation is set up

(A) By a Special Act of Parliament (B) By a special order of the Government
(C) Under Indian Companies Act, 1956 (D) By none of the above
9. The minimum number of members required for registration of a cooperative society are
(A) Two (B) Seven (C) Ten (D) Twenty
10. Insurable interest must be present at the time of insurance proposal and payment of claims in
(A) Fire Insurance (B) Marine Insurance (C) Life Insurance (D) Motor Insurance
11. A machinery is purchased for Rs. 3,00,000 and Rs. 50,000 is spent on its installation. Rs. 5,000 is spent on fuel.
What will be the amount of capital expenditure ?
(A) Rs. 3,00,000 (B) Rs. 3,50,000 (C) Rs. 3,55,000 (D) None of these
12. Which of the following errors are not disclosed by Trial Balance ?
(A) Compensatory Errors (B) Errors of Principle (C) Errors of Omission (D) All the three
13. A large amount spent on special advertisement is

(A) Capital Expenditure (B) Revenue Expenditure (C) Revenue Loss (D) Deferred Revenue Expenditure
14. Double Entry System was introduced in

(A) America (B) Japan (C) India (D) Italy
15. According to going concern concept a business entity is assumed to have

(A) A long life (B) A small life (C) A very short life (D) A definite life
16. Which of the following companies do not have the obligation to get its Articles of Association registered along
with the Memorandum of Association ?
(A) Public Company limited by shares (B) Unlimited companies
(C) Private companies limited by shares (D) Companies limited by guarantee
17. What does management audit imply ?

(A) Complete audit (B) Detailed audit (C) Efficiency audit (D) Interim audit

(A) Internal audit and Management audit are the same (B) Internal audit and statutory audit are the same
(C) Internal audit is compulsory in all cases (D) Statutory audit of company accounts is compulsory
19. Where does an auditor of a cooperative society submit the audit report ?
(A) To the managing committee of the society only(B) To the Registrar of Cooperative Societies of the State
concerned only (C) To the State Assembly concerned
(D) To the Registrar of Cooperative Societies of the State concerned and a copy to the society

(A) Audit of an educational institution is compulsory if it is run by a charitable trust
(B) A club is treated as a commercial establishment
(C) The accounts of a charitable trust can be audited by any person who belongs to accountancy profession
(D) Audit of a charitable trust is not compulsory under law
1. A company invited application for subscription of 5,000 shares. The application were received for 6,000 shares.
The shares were allotted on pro-rata basis. If X has applied for 180 shares how many shares would be allotted to him
(A) 180 shares (B) 200 shares (C) 150 shares (D) 175 shares
2. Which of the following is not a banking related term?

(A) SME Finance (B) Equinox (C) Overdraft (D) Sanctioning Authority
3. The balance appearing in the books of a company at the end of year were CRR A/c Rs. 50,000, Security Premium
Rs. 5,000, Revaluation Reserve Rs. 20,000, P & L A/c (Dr) Rs. 10,000. Maximum amount available for distribution
of Bonus Share will be (A) Rs. 50,000 (B) Rs. 55,000 (C) Rs. 45,000 (D) Rs. 57,000
4. R. G. Ltd. purchased machinery from K.G. Company for a book value of Rs. 4,00,000. The consideration was
paid by issue of 10%. Debenture of Rs. 100 each at a discount of 20%. The debenture account will be credited by
(A) Rs. 4,00,000 (B) Rs. 5,00,000 (C) Rs. 3,20,000 (D) Rs. 4,80,000
5. Depletion method of depreciation is used in case of

(A) Cattle, Loose Tools, etc. (B) Mines, Quarries, etc. (C) Machinery, Building, etc. (D) Books
6. A special resolution is passed in a company meeting by

(A) Simple majority (B) 2/3 majority (C) 3/4 majority (D) None of the above
7. Articles of Association of a company can be altered by
(A) An ordinary resolution (B) A resolution with a special notice (C) A special resolution (D) None of the above
8. The liability of the shareholders of a public limited company is limited to the extent of (A) Par value of the
share (B) Paid up value of the shares (C) Market price of the shares (D) Intrinsic value of the shares
9. The first directors of a company are appointed by

(A) Promoters (B) Government (C) Shareholders (D) Company Law Board
10. In a public limited company, the minimum number of directors are

(A) 2 (B) 3 (C) 5 (D) None of the above
11. General Insurance Corporation of India was set up in

(A) 1956 (B) 1972 (C) 1980 (D) 2000
12. Salvage Charges is related to

(A) Life Insurance (B) Marine Insurance (C) Fire Insurance (D) None of the above
13. In Life Insurance Contract the insurable interest is examined at the time of
(A) Entering the contract (B) Filing the claim (C) Both (A) and (B) (D) Never
14. In connection with marine insurance the Doctrine of Utmost Good Faith is based on the concept of
(A) Disclosure (B) Concealment (C) Misrepresentation (D) None of the above
15. Which statement is not true in respect of a Balance Sheet ?

(A) It is an account (B) It is prepared every month
(C) It is prepared to check the mathematical accuracy (D) All the above
16. Few items of P/L A/c of a company are

Sales Rs.1,60,000 Closing stock Rs.38,000 Non-operating Expenses Rs.800
Non-operating Income Rs.4,800 Net Profit Rs.28,000 What is the Operating Profit Ratio ?
(A) 18% (B) 20% (C) 15% (D) 57%
17. Net profit after tax of Rs. 2,00,000 is Rs. 4,00,000. Share capital is Rs. 8,00,000 and revenue reserve is Rs.
2,00,000. What is rate of return on equity ?
(A) 40% (B) 50% (C) 60% (D) 75%
18. Members of a company may apply to which one among the following for relief under the Companies Act, 1956
in cases of oppression ?
(A) Central Government (B) High Court of Judicature
(C) National Company Law Tribunal (D) National Company Law Appellate Tribunal
19. A company limited by shares has to call the statutory meeting within a period of not less than one month and not
more than six months. This period is counted with reference to which one of the following ?
(A) The date of incorporation (B) The date at which the company is entitled to commence business
(C) The date of actual receipt of certificate of incorporation (D) The date of actual commencement of business
20. Which among the following is eligible to issue Shelf Prospectus ?

(A) Any company contemplating for public issue of securities (B) Any public financial institution
(C) Only manufacturing companies (D) Only foreign companies engaged in trading in India
1. Current Ratio is 375, Acid Test Ratio is 125 Stock Rs. 3,75,000, calculate working capital.
(A) Rs. 3,00,000 (B) Rs. 4,00,000 (C) Rs. 4,12,500 (D) Rs. 4,25,000
2. From the information given below, calculate Debt service coverage Ratio
Net profit after interest and Tax Rs. 40,000, Depreciation Rs. 5,000, Rate of Income Tax 50%, 10% Mortgage
Debentures Rs. 60,000. Fixed Interest Charges Rs. 6,000, Debenture Redemption Fund Appropriation of
Outstanding Debentures 10%. (A) 406 times (B) 506 times(C) 606 times (D) 706 times
3. Share premium account can be used for

(A) Paying tax liability (B) Meeting the cost of issue of shares or debentures
(C) Paying Dividend on shares (D) Meeting the loss on sale of old asset
4. Ploughing-back of profits means

(A) Dividend declared but not claimed by shareholders (B) Non-declaration of dividend in any year
(C) Profits earned from illegal sources and employed in business (D) Retaining the earnings of business for future
expansion programme
5. As per Schedule VI of the Companies Act, 1956, Forfeited Share Account will be
(A) Added to paid up capital (B) Deducted from called up capital (C) Added to capital reserve (D) Shown as a
revenue reserve
6. Profit objective is of least priority in case of

(A) Private enterprise (B) Public enterprise (C) Department undertaking (D) Cooperative society
7. Partnership may come into existence by

(A) The operation of law (B) An express agreement only
(C) An express or implied agreement only (D) Inheritance of property
8. A public company can start business

(A) After incorporation(B) After promotion
(C) After registration (D) After getting certificate of commencement of business
9. Consumers cooperative store is set up by the

(A) Central Government (B) State Government (C) Registrar of Cooperative Societies (D) Members
10. Object Clause of a Memorandum of Association can be altered by

(A) Ordinary resolution (C) Special resolution and confirmation by Company Law Board
(B) Special resolution (D) Special resolution and confirmation by Registrar of Companies
11. Letter of Credit is presented by

(A) Exporter (B) Importer (C) Custom Officer (D) Shipping Company
12. The Agreement of Partnership

(A) Must be oral (B) Must be in writing (C) Can be either oral or in writing (D) Must be in writing on a stamp paper
13. Export procedure begins with

(A) Indent (B) Shipping order (C) Marine insurance (D) None of these
14. Self-help by mutual help is a feature of

(A) Public enterprise (B) Public corporation (C) Co-operative society (D) All of the above
15. In India private sector entered into the Life Insurance business in the year
(A) 1995 (B) 1998 (C) 2000 (D) 2001
16. A company has issued a 20-year bond at Rs. 1000 par value with a coupon rate of 10 per cent. The required rate
of return on similar bonds is 12 per cent. What is the current value of the bond ?
(A) Rs. 90533 (B) Rs. 85045 (C) Rs. 83333 (D) Rs. 82020
17. Consider the following statements Current ratio is increased by
1. issue of redeemable preference shares. 2. selling of old furniture for cash. 3. cash realized from debtors.
(A) 1 and 2 only (B) 2 and 3 only (C) 1 and 3 only (D) 1, 2 and 3

When creditors' velocity or creditors' turnover is higher as compared to debtors' velocity, it would
(A) improve liquidity (B) reduce liquidity (C) have no effect on liquidity (D) improve financial position
19. Sundry Debtors Rs.15,000 Bills Receivable (B/R) Rs.12,500

Cash at Bank Rs.17,500 Stock Rs.15,000 Profit Rs.20,000 Creditors Rs.25,000
Bills Payable (B/P) Rs.15,000 Sales Rs.1,00,000 What is the Acid Test Ratio ?
(A) 15 : 1 (B) 1125 : 1 (C) 16 2/3% (D) 50%
20. Which one of the following transactions changes the current ratio ?
(A) Purchase of goods for cash (B) Plant acquired on account
(C) Sold goods on credit (D) Debentures converted into equity capital
1. Total sales is Rs. 7,60,000, cash sales Rs. 30,000 collection period is 25 days, debtors at Balance Sheet date will
be (A) Rs. 80,000 (B) Rs. 70,000 (C) Rs. 60,000 (D) Rs. 50,000
2. Price earning ratio is 8333% and E.P.S. is Rs. 30. The market price of equity share will be
(A) Rs. 3333 (B) Rs. 6667 (C) Rs. 20 (D) Rs. 25
3. If the current ratio is 2, current assests are worth Rs. 1,600, if current ratio is not allowed to fall below 15, how
much additional can be borrowed by the company on the short term basis ?
(A) Rs. 400 (B) Rs. 600 (C) Rs. 2,733 (D) Rs. 800
4. Rate of Gross Profit on cost is 25%. Total sales is Rs. 1,00,000 and Average Stock is Rs. 1,60,000. Stock Turnover
Ratio will be
(A) 05 times (B) 08 times (C) 010 times (D) 04 times
5. Average stock of firm is Rs. 80,000, the opening stock is Rs. 10,000 less than closing stock. Find opening stock.
(A) Rs. 95,000 (B) Rs. 85,000 (C) Rs. 90,000 (D) Rs. 75,000
6. Auditing of accounts is compulsory for

(A) Sole proprietary business (B) Partnership firms (C) Joint Stock Companies (D) None of the above
7. Under vouching, checking is done of

(A) Journal and Ledger (B) Profit and Loss Account (C) Balance Sheet (D) All of the above
8. The goods taken by the proprietor from the shop is debited to

(A) Shop account (B) Goods account (C) Capital account (D) Drawings accounts
9. Which of the following types of business organisation has a separate legal entity ?
(A) Joint Hindu family business (B) Partnership (C) Joint Stock Company (D) None of the above
10. The organisation in which power of authority runs in straight line is called
(A) Line organization (B) Functional organization (C) Committee organization (D) None of the above
11. Indian Partnership Act was passed in the year

(A) 1956 (B) 1936 (C) 1932 (D) 1930
12. According to the Partnership Act, the maximum number of partners in a banking firm may be
(A) 10 (B) 12 (C) 4 (D) 20
13. Dissolution of Partnership takes place when
(A) A partner misbehaves (B) A partner becomes of unsound mind
(C) Business is running at a loss (D) A partner dies
14. The existence of a Partnership Firm is

(A) Separate from partners (B) Not separate from partners (C) Both (A) and (B) (D) None of the above
15. In which State the Mitakshara form of H.U.F. business does not apply ?
(A) Rajasthan (B) Gujarat (C) West Bengal (D) Kerala
16. What is outsourcing of production and concentrating on marketing operations in international business, known
as ?
(A) Licensing (B) Franchising (C) Contract manufacturing (D) Joint venture
17. Which of the following is not a feature of bonds ?

(A) Par value (B) Yield to maturity (C) Coupon rate (D) Maturity
18. On 1st April, 2013, Y Ltd. Issued 1000, 12% debentures of Rs. 100 each at a discount of 6%. These debentures
are redeemable in five equal annual instalments at the end of each year. What is the amount of discount to be written
off in the first year i.e. on 31st March, 2007, through P & L A/c ?
(A) Rs. 2000 (B) Rs. 1800 (C) Rs. 1200 (D) Rs. 600
19. XYZ Ltd. issued 10,000 shares of Rs. 100 each at Rs. 120 per share with Rs. 25 on application, Rs. 45 on
allotment including premium, Rs. 20 on first call and Rs. 30 on final call. Govind who held 200 shares did not pay
any call money and his shares were forfeited. What is the amount to be credited to Share Forfeiture Account on
forfeiture ?
(A) Rs. 14,000 (B) Rs. 10,000 (C) Rs. 9,000 (D) Rs. 4,000
20. X Ltd. purchased a car from Maruti Udyog Ltd. for Rs. 5,00,000. As per agreement Rs. 80,000 was to be paid in
cash and the balance by issue of shares of Rs. 10 each at a premium of Rs. 5 per share. How many shares should X
Ltd. issue to Maruti Udyog Ltd. for the car ?
(A) 30,000 shares (B) 29,000 shares (C) 28,500 shares (D) 28,000 shares
1. According to Balance Sheet equation concept, the capital will be

(A) Capital = Liabilities Assets (B) Capital = Fixed Assets Current Assests
(C) Capital = Assets Liabilities (D) Capital = Assets + Liabilities
2. In common size Balance Sheet analysis we evaluate

(A) Increase or decrease over two years is analysed (B) Only increase over two years is analysed
(C) Only decrease over two years is analysed
(D) All assets and liabilities are expressed in terms of percentage of total
3. Increase in fixed asset due to purchase is

(A) Source of fund (B) Fund from operation (C) Use of fund (D) None of the above
4. For the purpose of preparation of fund flow statement, fund means

(A) Total resources (B) Cash/bank balances (C) Current Assets (D) Working capital
5. The following data, relates to manufacturing company for the year 2006-07
Net Profit as per P & L A/cRs. 2,40,000; DepreciationRs. 80,000; Goodwill written-offRs. 40,000, Profit on Sale
of Fixed AssetsRs. 16,000, Proposed DividendRs. 96,000. The fund from operation would be
(A) Rs. 4,40,000 (B) Rs. 4,00,000 (C) Rs. 6,40,000 (D) None of the above
6. A vacancy caused by the resignation of the auditor is filled only by the

(A) Board of Directors of the Company (B) Central Government
(C) General Meeting of the shareholders (D) Managing Director of the company
7. The first auditor of a company appointed, holds office
(A) For a period of one year (B) For that period till new auditor is appointed
(C) Till the conclusion of first Annual General Meeting
(D) Till the holding of statutory meeting of the company
8. Internal Auditor is appointed by the

(A) Management (B) Shareholders (C) Government (D) Statutory Auditor
9. Auditor is a watchdog and not a blood hound was a remark made in the case of
(A) The London Oil Storage Co. Ltd. 1904 (B) Kingston Cotton Mills Ltd. 1896
(C) London and General Bank 1895 (D) Delightful Cigarette Co. Ltd. 1943
10. The auditor is generally expected to carryout the following in a particular sequence
1. Verification of Assets and Liabilities. 2. Vouching of transactions.
3. Checking of valuation of Assets and Liabilities.
(A) 1, 3 and 2 (B) 3, 2 and 1 (C) 2, 1 and 3 (D) 3, 1 and 2
11. What is the quorum of General Meetings in the case of a Private Company ?
(A) 2 members (B) 3 members (C) 4 members (D) 5 members
12. Which of these must hold a Statutory Meeting ?

(A) Public Limited Company (B) Private Company (C) Unlimited Company (D) All of these
13. When three sugar mills combine, it is an example of

(A) Vertical combination (B) Horizontal combination (C) Diagonal combination (D) None of the above
14. The first electronic computer system was developed in

(A) 1920 (B) 1940 (C) 1930 (D) 1950
15. An Index is
(A) A filing system (B) A photostat procedure (C) The procedure to collect data (D) An important help in filing
16. Consider the following statements in respect of PERT

1. PERT is a variation of milestone budgeting.
2. PERT employs probabilistic estimate of time required for completion of an activity.
3. PERT also includes the transfer of resources for reduction of duration of completion of a project.
(A) 1, 2 and 3 (B) 1 and 2 only (C) 2 and 3 only (D) 1 and 3 only
17. Some organizations have escalator clause in their labour agreements.

What does this clause provide for ?
(A) Automatic increase in wage/salary depending on seniority
(B) Wage increase depending on output per day by the worker
(C) Automatic increase in wage/salary depending upon increase in price index
(D) Automatic increase in wage/salary depending on increase in profits of the firm
18. What is an organization structure in which each employee reports to both a functional (or division) manager and
to a project (or group) manager, known as ?
(A) Strategic business unit (B) Departmentation by customer (C) Matrix structure (D) Departmentation by territory
19. According to force-field theory, every behaviour is the result of equilibrium between which of the following ?
(A) Push and pull effect (B) Strong and weak forces
(C) Positive and negative forces (D) Driving and restraining forces
20. Life insurance is a contract of which one of the following ?
(A) Indemnity (B) Guarantee(C) Contribution (D) Subrogation
1. In order to reduce the risk of heavy insurance the insurer passes on some business to the other company, it is
called
(A) Reinsurance (B) Double Insurance (C) Joint Insurance Policy (D) Separate Insurance
2. Contents of Marine Insurance include

(A) Insurance of Cargo only (B) Insurance of Freight only
(C) Insurance of Hull only (D) Insurance of Cargo, Freight & Hull
3. The object of Agenda is to inform

(A) About the profitability and activity (B) About the progress of company
(C) About the matter in sequence to be discussed in the meeting (D) About the routine matters
4. The Branch of Accounting which is concerned with the processing and presenting data for decision making is
known as
(A) Common Dollar Accounting (B) Social Accounting (C) Cost Accounting (D) Management Accounting
5. Final accounts prepared in narrative style are in

(A) Horizontal form (B) Accounts form n (C) Vertical form (D) None of the above
6. If super profit is Rs. 4000 and normal rate of return is 8 per cent, the amount of goodwill will be
(A) Rs. 40000 (B) Rs. 50000 (C) Rs. 400000 (D) Rs. 5000
7. Goodwill, Copyright and Trademarks should be classified as

(A) Tangible assets (B) Intangible assets (C) Current assets (D) Fictitious assets
8. The portion of share capital which can be called up only on the winding up of a company is known as
(A) Called up capital (B) Paid up capital (C) Authorised capital (D) Reserve capital
9. Which one of the following is called backbone of auditing ?

(A) Routine checking (B) Vouching (C) Internal check (D) Internal control
10. Internal Audit is provided for in the

(A) Companies Act (B) Partnership Act(C) Both (A) and (B) (D) Neither (A) or (B)
11. What is the maximum limit of remuneration for a whole time manager in a company ?
(A) 3% of net annual profit (B) 5% of net annual profit (C) 7% of net annual profit (D) None of the above
12. Which among the following documents defines the relationship between a company and outsiders ?
(A) Memorandum of Association (B) Articles of Association (C) Prospectus (D) None of the above
13. Registration is not essential in case of a

(A) Company (B) Co-operative organization (C) Co-operative Societies (D) Business of Joint Hindu Family
14. The Meeting of Board of Directors must be called at least once

(A) In four months (B) In three months (C) In two months (D) In one month
15. The Secretary of a Company should file copies of Special Resolution passed at Extraordinary General Meeting
to the Registrar of Companies within (A) 7 days (B) 14 days (C) 21 days (D) 30 days
16. To which one of the following aspects does an established pattern of relationships among the components of an
organization refer ?
(A) Organization strategy (B) Organization structure (C) Organization process (D) Organization policy
1. Authority in an organization is the formal or institutional right to command stemming from official delegation of
position.
2. Legitimate power is the right to manage derived from delegation based on ownership or property rights.
18. Which one of the following is not correct in respect of the Theory X?
(A) It emphasizes that most average human beings avoid to be led, want to lead
(B) According to the theory X, the Managers tend to be autocratic
(C) The theory X assumes that most human beings must be directly controlled in order to achieve organizational
goals D) The theory X assumes that most individuals have little ambition and want security
19. When Maslow's need hierarchy is compared with Herzberg's two-factor theory of motivation, which of the
following statements are correct ?
1. Maslow's psychological needs; security, safety and affiliation or acceptance represent almost the same meanings
as Herzberg's maintenance factor.
2. Esteem or status is also a part of maintenance factor.
3. Self-actualization can be compared as a component of motivators as in Herzberg's theory.
(A) 1, 2 and 3 (B) 1 and 2 only (C) 2 and 3 only (D) 1 and 3 only
20. Which one of the following is not an element of direction ?

(A) Planning and organizing various resources for doing work
(B) Continuous training activity in which subordinates are instructed to carry out a particular assignment
(C) Motivation of subordinates to try to meet the expectations of manager
(D) Maintaining discipline and rewarding those who perform properly
1. The present World Economic Depression first of all, started from which country ?
(A) U.S.A. (B) U.K. (C) France (D) India
2. Which, institution is known as the Soft Loan Window of World Bank ?

(A) I.F.C. (International Financial Corporation) (B) I.D.A. (International Development Association)
(C) I.M.F. (International Monetary Fund) (D) Indian Development Forum
3. Which is not a insurable risk ?

(A) Accident Risk (B) Loss of Crops Risk(C) The Risk of Trading in New Market (D) The Risk of Sinking of a Ship
4. The Life Insurance in India was nationalised in the year (A) 1870 (B) 1956 (C) 1960 (D) 1966
5. Fire Insurance is based on the principle of

(A) Utmost Good faith (B) Insurable Interest C) Indemnity (D) Cooperation
6. X Limited forfeited Rams 20 shares of Rs. 10 each on which Rs. 7 is called up. Ram had paid application and
allotment money of Rs. 5 per share. Of these forfeited shares 15 shares were reissued to Hari as fully paid up for Rs.
6 per share. What amount should be transferred to Capital Reserve account ?
(A) Rs. 15 (B) Rs. 20 (C) Rs. 75 (D) Rs. 100
7. In case of a company, Buy Back is related to (A) Prospectus (B) Shares (C) Debentures (D) Cheques
8. The profit of a company (whose capital is divided into 25000 shares of Rs. 10 each) for the last three years are :
Rs. 50000; Rs. 60000 and Rs. 40000. The fair return on investment is taken at 10% p.a. The value of companys
share will be (A) Rs. 10 (B) Rs. 20 (C) Rs. 30 (D) Rs. 40
9. The amount deposited in Securities Premium Account can be used for

(A) Distributing profits (B) Issue of Bonus Shares (C) Paying the amount to director (D) None of the above
10. Profit prior to incorporation is transferred to (A) Capital reserve (B) General reserve [c] p/l a/c d.trading ac
11. Dividend paid between two Annual General Meetings is known as
(A) Final dividend (B) Interim dividend
(C) Special dividend (D) None of the above
12. In a Private Company there are restrictions regarding

(A) Transfer of shares (B) Issue of prospectus
(C) Number of members (D) All of the above
13. The gap between two General Meetings of the Company should not be more than
(A) 12 months (B) 18 months
(C) 15 months (D) 20 months
14. Statement containing details of items to be considered in a meeting is called

(A) Agenda (B) Minutes
(C) Resolution (D) Notice
15. The minimum and maximum number of members in a Private Company is

(A) 2 and 50 (B) 2 and 20
(C) 2 and 10 (D) None of the above
16. What is/are the consequence(s) of non-registration of partnership firm ?

1. It cannot sue any of its partners.
2. Partners of an unregistered firm can file suits against each other.
3. Partners can sue the firm to enforce their claims.
(A) 1 (B) 2
(C) 3 (D) None of the above
17. Which of the following apex body and regulators has asked banks to swap customer related information so that
the frauds and defaults may be prevented in future?
(A) Bombay Stock Exchange (BSE) (B) Indian Banks Association (IBA)
(C) Securities Exchange Board of India (SEBI) (D) Reserve Bank of India (RBI)
18. Which of the following committees is associated with reforms in small industries?
(A) K. L. Rekhi Committee (B) R. Chelliah Committee
(C) Abid Hussain Committee (D) None of the above
19. Consider the following statements in respect of the Duty Free Import Authorization Scheme.
1. The scheme offers the facility to import the required inputs before exports.
2. The scheme allows the transfer of scrip once the export obligation is complete.
(A) 1 only (B) 2 only
(C) Both 1 and 2 (D) Neither 1 nor 2
20. Under which one of the following is the term Dominant Undertaking defined ?
(A) MRTP Act (B) FEMA
(C) Companies Act (D) SEBI - See more at: http://www.allexamgurublog.com/2013/05/online-commerce-
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1. 1. A meeting of the shareholders held only once during the life time of the company is known as
(A) Meeting of the Directors (B) Meeting of the Creditors
(C) Extraordinary General Meeting (D) Statutory Meeting
2. For calling the Extraordinary General Meeting a clear notice of days must be given to all the
members.
(A) 7 (B) 15
(C) 21 (D) 30
3. Appointment of a person who is a Director, as a Secretary in the Company would require approval of the
company by
(A) Special Resolution (B) Ordinary Resolution
(C) Resolution by circulation (D) None of the above
4. The first Stock Exchange in India was established in

(A) Kolkata (B) Delhi
(C) Mumbai (D) Chennai
5. Blue Chips Shares mean

(A) Those shares which are listed in Stock Exchange
(B) Those shares whose guarantee is given by Government
(C) Those shares on whom dividend is paid at higher rate regularly
(D) Those shares which are issued at first time
6. The profit ratio of A, B and C, who are partners in a firm, is 4 : 3 : 2. After D is admitted, their sacrificing
ratio will be
(A) 4 : 3 : 2 (B) 1 : 3 : 2
(C) Equal (D) 5 : 3 : 2
7. X and Y are sharing profits in the ratio of 4 : 3. Z joins and new profit sharing ratio of X, Y and Z is 7 :
4 : 3. The sacrificing ratio of X and Y will be
(A) Equal (B) 4 : 3
(C) 2 : 1 (D) 1 : 2
8. A and B were partners in a business and were sharing profit and loss in the ratio of 3 : 2. They admitted C
as a partner for 15 th share. The new profit sharing ratio shall be
(A) 3 : 2 : 1 (B) 6 : 4 : 1
(C) 12 : 8 : 5 (D) 12 : 6 : 2
9. At the time of admission of a new partner, general reserve is transferred to

(A) Old partners Capital Account
(B) Profit and Loss Adjustment Account
(C) Balance Sheet
(D) None of these
10. A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. D is admitted in the first as a
partner for 1/5th share. The sacrificing ratio of A, B and C will be
(A) 3 : 2 : 5 (B) 5 : 3 : 2
(C) 5 : 2 : 3 (D) 2 : 3 : 5
11. Grapevine communication is a type of

(A) Formal communication (B) Informal communication
(C) Horizontal communication (D) Vertical communication
12. The Principle of Exception states that management should

(A) Check everything without exception
(B) Invariably take corrective action without exception
(C) Accept exceptions in emergencies
(D) Concentrate their attention on exceptions
13. Which of the following is not a component of SWOT Analysis ?

(A) Threats (B) Strengths
(C) Weaknesses (D) Options
14. Organisational change is necessitated by

(A) External environmental pressure (B) Internal strengths and weaknesses
(C) Sequential changes (D) All the above
15. Which management functions are closely related to ?

(A) Planning and Organising (B) Organising and Staffing
(C) Staffing and Control (D) Planning and Control
16. Which one of the following statements is not correct ?

(A) Business firms combine to avoid wasteful competition
(B) Business combination is possible only among joint stock companies
(C) Business firms may combine to take advantage of patent rights of individual firms
(D) During economic depression, small firms are absorbed by financially sound large firms
17. What is the theory of social responsibility that focuses on how companies respond to issues, rather than
trying to determine their ultimate social responsibility, called ?
(A) Corporate social performance (B) Corporate social responsiveness
(C) Stewardship principle (D) Enlightened self-interest
18. What is a systematic evaluation of a company's activities in a given area of social interest such as
environmental protection, workplace safety or community involvement, called ?
(A) Social responsibility (B) Social accounting
(C) Social audit (D) Social forecasting
19. What is cross rate ?

(A) A rate of exchange derived from central bank
(B) A rate of exchange between two currencies, other than those that form a market's principal rates
(C) A rate of exchange derived from the quotations for buying currencies
(D) A rate of exchange quoted by a dealer in foreign exchange for selling currencies
20. Which one of the following statements is not correct ?

(A) Working capital is made available by the banks to the export sector at subsidized rates of interest
(B) Market Development Fund provides the necessary financial assistance for market promotion
(C) Export Houses/Star Trading houses are granted additional license against exports made during the
preceding year
(D) Export profits enjoy a variety of tax concessions in India
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2. 1. The Essence of Control is
(A) To take decision (B) To take corrective action
(C) To make enquiry (D) To motivate
2. An annual general meeting may be called after giving shorter notice instead of 21 clear days, if consent is
accorded by
(A) All the directors of company (B) All the members entitled to vote there at
(C) Majority of members entitled to vote there all (D) None of the above
3. The position of a Company Secretary is like that of a hub in a bicycle wheel. This statement shows
the
(A) Importance of Company Secretary (B) Rights of Company Secretary
(C) Duties of Company Secretary (D) Liabilities of Company Secretary
4. The first Secretary of the company is appointed by

(A) Shareholders (B) Promoters
(C) Government (D) Directors
5. Appointment of full time Company Secretary is compulsory in all those companies, whose paidup share
capital is
(A) Rs. 50 lakhs or more (B) Rs. 1 crore or more
(C) Rs. 2 crores or more (D) Rs. 3 crores of more
6. Stock should include

(A) Goods held as security
(B) Goods held as consignee
(C) Goods with customers for approval on sale or return basis
(D) Goods sold but not delivered
7. Receipts and Payments Account is an abbreviated form of

(A) Cash Book (B) Pass Book
(C) Both Cash Book and Pass Book (D) None of the above
8. At what price the stock is valued under conventional method ?

(A) At cost price
(B) At market price
(C) At cost price or market price whichever is lower
(D) At cost price or market price whichever is higher
9. Which of the following is a personal account ?

(A) Outstanding Expense (B) Investment
(C) Share premium (D) Salary
10. On the admission of a partner, fictitious assets are

(A) Transferred to Revaluation Account (B) Transferred to Capital Account
(C) Transferred to Reserves (D) Shown in the new Balance Sheet
11. Strategy is used in

(A) Military (B) Business
(C) Industry (D) All of the above
12. 3-D Model of leadership is propounded by

(A) Likert Reinsis (B) Kurt Levis
(C) William Ridin (D) Henry Fayol
13. Personal selling includes

(A) Selling (B) Services to the customers
(C) Developing goodwill of the firm (D) All of the above
14. The process of evaluating employees is called

(A) Performance appraisal (B) Recruitment
(C) Induction (D) Job evaluation
15. Franking machine is used for

(A) Specimen signature (B) Postage stamps
(C) Arrival and departure timings (D) None of the above
16. Which one of the following statements about preparation of financial statements of a limited liability
company is correct ?
(A) Financial statements should
be prepared according to the cash basis of accounting only
(B) Financial statements should be prepared according to the accrual basis of accounting only
(C) Financial statements should be prepared according to either the cash basis or accrual basis of
accounting
(D) Financial statements should be prepared according to both the accrual and cash basis of accounting
17. Expenses need to be recorded in the period in which the associated revenues are recognised. This is to
be ensured as per which one of the following accounting principles ?
(A) Revenue recognition (B) Cost benefit
(C) Matching (D) Periodicity
18. How is profit prior to incorporation treated as ?

(A) Revenue reserve (B) Secret reserve
(C) Capital reserve (D) General reserve
19. Which one of the following has replaced the Budla system in India ?
(A) Rolling settlement (B) Trading in equity derivatives
(C) Depository system (D) Online trading
20. Which one of the following is not correct ?

(A) Mutual Fund ensures its participants a professional management of portfolio selection
(B) Mutual Fund schemes can be open-ended and/or closeended
(C) Balanced Mutual Fund aims at earning current income and capital appreciation
(D) Mutual Fund is an investment company and a merchant banker - See more at:
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3. 1. Organisation is a Management Process by which people, functions and physical factors are brought
together to form a controllable unit. This definition is given by
(A) Haney (B) Kelling B. Lewis
(C) Oliver Sheldon (D) Cornell
2. Out of the following forms, which form of organisation is the oldest one ?
(A) Line and staff organisation (B) Functional organisation
(C) Committee organisation (D) Line organisation
3. A body of persons elected or appointed to meet on an organised basis for the discussion and dealing of
matters brought before it. It is called
(A) Functional organisation (B) Formal organisation
(C) Committee organisation (D) Informal organisation
4. Due to coordination
(A) There is a unity of order (B) There is a unity of direction
(C) There is a leadership (D) Employees are motivated
5. In Direction who is given importance ?

(A) To machines (B) To paper work
(C) To man (D) To production
6. Closing stock appearing in the Trial Balance is shown in

(A) Balance Sheet only (B) Trading Account only
(C) Trading Account and Balance Sheet both (D) None of the above
7. The rate of gross profit is 20% on sales and the cost of goods sold is Rs. 100000, the amount of gross
profit will be
(A) Rs. 30000 (B) Rs. 25000
(C) Rs. 20000 (D) Rs. 16667
8. The policy anticipate no profit and provide for all possible losses arises due to
(A) Convention of consistency (B) Convention of conservatism
(C) Convention of Disclosure (D) None of the above
9. Donations received for the special purpose will be taken to the
(A) Income and Expenditure Account (B) Assets side of the Balance Sheet
(C) Liabilities side of the Balance Sheet (D) Receipts and Payments Account
10. A sports club receives admission fees. It is a

(A) Revenue receipt (B) Capital receipt
(C) Deferred receipt (D) None of these
11. Which of the following is not an element of marketing mix ?

(A) Product (B) Price
(C) Promotion (D) Product life cycle
12. Market segmentation means

(A) Grouping of buyers (B) Grouping of sellers
(C) Grouping of middle men (D) Grouping of producers
13. Standard costing is a technique of

(A) Planning (B) Organising
(C) Coordination (D) Control
14. The principle of Unity of Command was introduced by

(A) Elton Mayo (B) Henry Fayol
(C) F. W. Taylor (D) Urwick
15. The last step of communication process is

(A) Controlling (B) Implementation
(C) Correction (D) Reaction
16. Match List-I with List-II and select the correct answer using the code given below the Lists
List-I (Nature of Expenditures/Receipts)
(a) Capital receipts (b) Capital expenditure
(c) Revenue expenditure (d) Revenue receipt
List II (Example)
1. Sale of fixed assets 2. Improvement of fixed assets
3. Income received as interest 4. Interest on loan for business
Codes :
(a) (b) (c) (d)
(A) 1 2 4 3
(B) 3 4 2 1
(C) 1 4 2 3
(D) 3 2 4 1
17. Which of the following is affected by treatment of an accrued item in accounting ?

(A) Profit and Loss A/c only
(B) Profit and Loss Appropriation A/c
(C) Balance Sheet only
(D) Profit and Loss A/c and Balance Sheet
18. Income and expenses for the year 2012 are
Fee Received in Cash Rs.24,000
Accrued Fee Rs.6,000
Rent for Chamber Paid Rs.6,000
Outstanding Rent Rs.2,000
Salary Paid to Staff Rs.6,000
Miscellaneous Expenses Paid Rs.200
Salary paid in advance to staff included in the above : Rs. 1,000.
What is the income under accrual basis ?
(A) Rs. 11,800 (B) Rs. 13,200
(C) Rs. 16,800 (D) Rs. 30,000
19.
If Opening Stock Rs.15,000
Purchases Rs.37,500
Direct Expenses Rs.1,500
Closing Stock Rs.7,500
Operating Expenses Rs.3,000
Sales are Rs. 60,000 during the year, what is the net profit ?
(A) Rs. 12,000 (B) Rs. 10,500
(C) Rs. 7,500 (D) Rs. 3,000
20. On 1.4.2007, a firm's capital was Rs. 2,00,000, Assets Rs. 2,40,000 and Liabilities Rs. 40,000. It sold
goods costing Rs. 10,000 for Rs. 12,000. What will be the position of accounting equation after this
transaction has been recorded in accounts ?
Assets = Capital + Liabilities
(A) 2,42,000 = 2,02,000 + 40,000
(B) 2,52,000 = 2,12,000 + 40,000
(C) 2,30,000 = 2,00,000 + 30,000
(D) 2,22,000 = 1,82,000 + 40,000 - See more at: http://www.allexamgurublog.com/2013/05/commerce-
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4. 1. Organisation is the foundation of management. This statement is given by
(A) Henry Ford (B) Haney
(C) Keeling (D) Lansberry Fish
2. The number of subordinates a superior can effectively handle is called

(A) Cooperation (B) Coordination
(C) Supervision (D) Span of control
3. In Need Hierarchy Theory of Abraham H. Maslow, Self Actualisation needs are at level
(A) Lower level needs (B) Middle level needs
(C) Higher level needs (D) Highest level needs
4. Motivation - Hygiene Theory was propounded by

(A) Abraham H. Maslow (B) Fredrick Herzberg
(C) Peter F. Druker (D) Argyris Chris
5. Carrot and Stick principle is given in Theory

(A) McGregor Theory X (B) McGregor Theory Y
(C) William Ouchi Theory Z (D) None of the above
6. Match the following

List-I
(a) Principle of subrogation (b) Principle of ultra vires
(c) Holding company (d) SEBI
List-II
1. Business combination 2. Insurance
3. Company Law 4. Stock Exchange
Codes :
(a) (b) (c) (d)
(A) 2 3 1 4
(B) 1 3 2 4
(C) 4 2 1 3
(D) 1 2 3 4
7. Reserve Bank of India is a

(A) Government Company (B) Departmental Organisation
(C) Statutory Corporation (D) None of the above
8. Application of Theory X implies practising of

(A) Free leadership (B) Democratic leadership
(C) Autocratic leadership (D) None of the above
9. Which of the following is the Accounting equation ?

(A) Capital = Assets Liabilities
(B) Capital = Assets + Liabilities
(C) Assets = Liabilities Capital
(D) Liabilities = Assets Capital
10. Expenditure on installation of a plant should be debited to

(A) Installation Expenses account (B) Sundry expenses account
(C) Plant account (D) Maintenance of Assets A/c
11 Which is the oldest form of organisation ?

(A) Line (B) Line and staff
(C) Functional (D) Matrix
12. Decentralisation
(A) Reduces burden of chief executives (B) Increases burden of chief executives
(C) Does not effect burden (D) None of the above
13. Planning is a
(A) Primary function (B) Secondary function
(C) Supplementary function (D) None of the above
14. Planning function of management is performed by
(A) Top management (B) Middle management
(C) Lower management (D) All of the above
15. MBO approach in management was introduced by

(A) M. P. Follet (B) Keith Davis
(C) Peter Drucker (D) Oliver Sheldon
16. What is Capital Redemption Reserve Account available for ?

(A) Redemption of redeemable preference shares
(B) Redemption of redeemable debentures
(C) Reorganization of share capital
(D) Issue of fully paid bonus shares
List I (Item)
(a) Earnings per share (b) Cash flow statement
(c) Inventory valuation (d) Disclosure of accounting policies
List-II (Accounting Standard)
1. AS-3 2. AS-20
3. AS-1 4. AS-2
Codes :
(a) (b) (c) (d)
(A) 3 1 4 2
(B) 2 4 1 3
(C) 3 4 1 2
(D) 2 1 4 3
18. Government grants related to income as per the Accounting Standard (AS)-12 should be
(A) Presented as a credit in the statement of Profit and Loss
(B) Presented as a deferred income on the asset side of the balance sheet
(C) Presented as a capital grant on the liability side of balance sheet
(D) Presented both in the Profit and Loss statement and in the balance sheet
19. What is the renewal fees paid for a patent right ?

(A) Capital expenditure (B) Revenue expenditure
(C) Deferred revenue expenditure (D) Development expenditure
20. According to the Accounting Standard (AS)-2, the inventory is to be valued at which one of the
following ?
(A) Actual cost or sales value, whichever is lower
(B) Historical cost
(C) Net realizable value
(D) Historical cost or net realizable value, whichever is lower - See more at:
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5. 1. Bombay Stock Exchange Sensex consists of script as on 31st March, 2005.
(A) 10 (B) 20
(C) 30 (D) 40
2. The basic aim of Securities and Exchange Board of India (SEBI) is to
(A) Develop an effective and efficient monitoring and control system for the Indian Capital Market
(B) To help Bombay Stock Exchange only
(C) To help National Stock Exchange of India Ltd. only
(D) To help OTC Exchange of India only
3. A public company can start its business operations after getting

(A) Certificate of Incorporation (B) Minimum Subscription
(C) Certificate of Commencement of Business (D) Permission of the Controller of Capital Issue
4. Principle of Unity of Command means

(A) Unity of directions (B) To receive orders from one officer only
(C) A fixed place for every person (D) Proper delegation to subordinates
5. Managerial Planning is a
(A) Middle Level Function (B) Lower Level Function
(C) Top Level Function (D) All Level Function
6. Paperless office calls for

(A) Minimum record keeping (B) Maximum use of telephone
(C) Maximum use of computers (D) Elimination of reporting
7. Delegation of authority signifies the delegation of

(A) Authority (B) Responsibility
(C) Both of the above (D) None of the above
8. Management by exception implies focussing attention on

(A) All variations (B) Normal variations
(C) Abnormal variations (D) Randomly selected variations
9. The most recent form of retail distribution is

(A) Mail order business (B) Chain stores
(C) Departmental stores (D) Sky shopping
10. Decentralisation
(A) Increases the importance of supervisors
(B) Decreases the importance of supervisors
(C) Increases the importance of subordinates
(D) Decreases the importance of subordinates
11. Hawthorne Experiments were conducted by

(C) F. W. Taylor (D) Peter F. Drucker
12. Who is called The Father of Scientific Management ?

(C) E. F. L. Breach (D) F. W. Taylor
13. A plan when expressed in quantitative terms is called

(A) Policy (B) Procedure
(C) Objective (D) Budget
14. Theory X and Theory Y of Motivation was propounded by

(A) Herzberg (B) Maslow
(C) Elton Mayo (D) McGregor
15. Direction involves

(A) Physical factors (B) Financial factors
(C) Human factors (D) None of the above
16. Consider the following categories of documentary evidence from the point of view of the degree of
their reliability.
1. Documentary evidence originating from and held by the entity.
2. Documentary evidence originating from third parties and held by the entity.
3. Documentary evidence originating from and held by the third party.
4. Documentary evidence originating from entity and held by the third party.
Which one of the following is the correct order (high to low) of their degree of reliability ?
(A) 4 - 1 - 3 2 (B) 3 - 2 - 4 - 1
(C) 4 - 2 - 3 1 (D) 3 - 1 - 4 - 2
17. Which one of the following is not included in the internal check as regards purchases ?
(A) Assessment of requirements (B) Placing orders
(C) Despatch of goods (D) Recording and making payments

1. It is mandatory for all business enterprises to conduct audit of accounts.
2. Audit Note Book is a tool in the conduct of audit.
3. Internal check system is an inbuilt mechanism within an organization to check frauds and errors.
(A) 1 only (B) 2 and 3 only
(C) 3 only (D) 1, 2 and 3
List-I (Type of Books)
(a) Minutes Book (b) Subsidiary Ledger
(c) Stores Ledger (d) Log Book
List-II (Content)
1. Records of issue of packing materials
2. Records of running hours of machine
3. Records of decisions at a meeting
4. Records entry of receipt from debtors
Codes :
(a) (b) (c) (d)
(A) 3 2 1 4
(B) 1 4 3 2
(C) 3 4 1 2
(D) 1 2 3 4
20. What is the method in which an amount equal to the amount written off as depreciation is invested in
outside securities in order to facilitate replacement of an asset at the expiry of its life period, called ?
(A) Annuity Method (B) Sinking Fund Method
(C) Replacement Method (D) Depletion Method
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6. 1. In case of Board Meetings the Quorum must be present
(A) At the commencement of the meeting
(B) At the termination of the meeting
(C) Throughout the meeting
(D) At the commencement and termination both
2. In a public company the minimum number for having a Quorum in a meeting is

(A) 2 (B) 3
(C) 5 (D) 7
3. The capital issues of public limited companies are subject to guidelines issued by
(A) Reserve Bank of India (B) Central Government
(C) Central Bank of India (D) Securities & Exchange Board of India (SEBI)
4. Disinvestment of shares means

(A) To sale the shares of private company to public
(B) To sale the shares of public company to the public
(C) To sale the shares of Government company to the public
(D) To sale of shares by holding company to its subsidiary company
5. When the existing companies raise additional funds by issue of shares to the existing shareholders in
proportion to their existing shareholdings, it is called
(A) Buyback of shares (B) Issue of shares at premium
(C) Issue of shares at discount (D) Right shares issue
6. Liability of a Company Secretary is

(A) Contractual only (B) Statutory only
(C) Civil only (D) Both contractual and statutory
7. The primary function of an office is

(A) Making, using and preserving records (B) Remunerating personnel
(C) Carrying out management policies (D) Safeguarding organizations assets
8. In an office, Franking machine is used for

(A) Punching card (B) Accounting work
(C) Duplicating (D) Postal stamp fixing
9. Fax is used for

(A) Sending telephonic message (B) Sending copies of documents
(C) Exercising control (D) Decision making
10. Keyboard of a computer is

(A) An input device (B) An output device
(C) A processing device (D) A storage device
11. Share Premium received by a Company may be used for

(A) Payment of dividend (B) Payment of remuneration to management
(C) Issue of Bonus shares (D) None of these
12. Garner Vs. Murray rule applies in case of

(A) Admission of a partner (B) Dissolution of a firm
(C) Retirement of a partner (D) Death of a partner
13. 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
14. Balance of Debenture Redemption Fund Account is transferred to

(A) Capital Reserve A/c (B) Profit and Loss A/c
(C) General Reserve A/c (D) None of these
15. Planning includes

(A) Objectives (B) Policy
(C) Strategy (D) All of the above
16. Sometimes an auditor is called upon to review the operations of an enterprise for evaluating their cost-
effectiveness. What is this kind of audit generally known as ?
(A) Cost Audit (B) Operations Audit
(C) Tax Audit (D) Independent Financial Audit
List-I (Assets and Liabilities)
(a) Current assets (b) Fixed assets
(c) Deferred revenue expenditure (d) Current liabilities
List II (Accepted Principles of Valuation)
1. To be valued at cost less depreciation
2. To be valued at cost or market price whichever is lower
3. To be valued at the maximum figure which might be incurred
4. To be written off within a reasonable period of time
Codes :
(a) (b) (c) (d)
(A) 2 1 4 3
(B) 3 4 1 2
(C) 2 4 1 3
(D) 3 1 4 2
List I (Type of Audit)
(a) Statutory Audit (b) Management Audit
(c) Cost Audit (d) Financial Audit
List II (Explanation)
1. Judge the correctness of the financial statements and establish their reliability
2. Appraisal of performance of executives
3. Examination of past records
4. Verification of cost records
Codes :
(a) (b) (c) (d)
(A) 3 4 2 1
(B) 1 2 4 3
(C) 3 2 4 1
(D) 1 4 2 3
List-I (Technique of Auditing)
(a) Vouching (b) Verification
(c) Investigation (d) Valuation
List-II (Explanation)
1. It is an enquiry into the value, ownership and title of assets
2. It is testing of the exact value of an asset on the basis of its utility
3. It is the verification of authority and authenticity of transactions as recorded in the books of accounts
4. It is an examination of accounts and records of a business concern with some special purpose
Codes :
(a) (b) (c) (d)
(A) 3 2 4 1
(B) 4 1 3 2
(C) 3 1 4 2
(D) 4 2 3 1

Internal check relates to
1. arrangement of duties of employees.
2. distribution of work in such a way that work of one employee is checked by other employee.
3. review of operations.
(C) 3 only (D) 1, 2 and 3
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7. 1. The minimum paid-up share capital for a public company shall be
(A) Rs. 1 lakh (B) Rs. 2 lakhs
(C) Rs. 3 lakhs (D) Rs. 5 lakhs
2. Internal activity of a company is going to be performed according to established regulations. This

assumption is provided as a right by
(A) Doctrine of Indoor Management (B) Doctrine of Constructive Notice
(C) Doctrine of Ultravires (D) Doctrine of Intravires
3. Who is Father of Scientific Management ?
(A) Henry Fayol (B) Elton Mayo
(C) Chester Bernard (D) F. W. Taylor
4. Under Section 275 of the Companies Act, 1956 a person can become director in public company of not
more than
(A) 5 companies (B) 10 companies
(C) 15 companies (D) 20 companies
5. Articles of Association can be altered by passing

(A) An ordinary resolution in Annual General Meeting
(B) A special resolution in Annual General Meeting
(C) A resolution with special notice
(D) Without any resolution
6. Who can be appointed as a Company Secretary under the Companies Act, 1956 ?
(A) An individual (B) A partnership firm
(C) A company (D) None of the above
7. Appointment of a Company Secretary is made by

(A) Promoters (B) Board of Directors
(C) Debenture holders (D) Government
8. Convening meetings of a company is the responsibility of the

(A) Chairman, Board of Directors (B) Managing Director
(C) Company Secretary (D) General Manager
9. What is the quorum of general meetings in the case of private limited company and public limited
company ?
(A) 2 members and 5 members respectively
(B) 3 members and 5 members respectively
(C) 5 members in each type of company
(D) 5 members and 7 members respectively
10. Minutes of the annual general meeting must be prepared and signed by the chairman within
(A) 14 days of the meeting (B) 21 days of the meeting
(C) 30 days of the meeting (D) 45 days of the meeting
11. Goods worth Rs. 2,000 were distributed to employees free of charge. The account to be debited is
(A) Profit and Loss A/c (B) Advertisement A/c
(C) Labour Welfare A/c (D) Goods A/c
12. The maximum rate of underwriting commission on debentures is

(A) 10% (B) 25%
(C) 125% (D) 5%
13. X Ltd. forfeited 20 shares of Rs. 10 each on which Rs. 6 per share were paid. If out of these shares, 8
shares were reissued to Ram as fully paid up on payment of Rs. 550 per share, the amount that will remain
standing to the credit of Share Forfeited A/c will be
(A) Rs. 48 (B) Rs. 72
(C) Rs. 84 (D) Rs. 120
14. Bonus Shares are issued to

(A) Equity Shareholders (B) Preference Shareholders
(C) Debenture Holders (D) Secured Creditors
15. On an equity share of Rs. 100, the minimum amount payable on application under the law should be
(A) Rs. 20 (B) Rs. 15
(C) Rs. 10 (D) Rs. 5

1. Managerial grid is an organizational concept that brings together teams of individuals from specialized
jobs and departments for achieving specific results in defined periods of time.
2. The matrix management model is based on a matrix of values between 0 and 9 for two primary variables.
(A) 1 only (B) 2 only
(C) Both 1 and 2 (D) Neither 1 nor 2
17. A limited company makes a net profit of Rs. 2,00,000 after writing off preliminary expenses amounting
to Rs. 20,000 and providing for depreciation on assets amounting to Rs. 40,000 and gain of Rs. 10,000 on
sale of a piece of machinery. What are the funds from operation ?
(A) Rs. 2,00,000 (B) Rs. 2,40,000
(C) Rs. 2,50,000 (D) Rs. 2,60,000
18. Consider the following items that are disclosed in a statement of cash flows
1. Cash flow from operating activities.
2. Cash flow from financing activities.
3. Closing cash and cash equivalents.
4. Cash from investing activities What is the correct chronological order of their disclosure of the above
cash flows ?
(A) 2 - 3 - 1 4 (B) 1 - 4 - 2 - 3
(C) 2 - 4 - 1 3 (D) 1 - 3 - 2 - 4

A cash flow statement is generally prepared for
1. Ascertaining the net cash flows between two accounting periods.
2. Understanding the trends of cash flows between two accounting periods.
3. Short term cash planning of the business.
(C) 1 and 3 only (D) 1, 2 and 3
20. Which of the following represents corporate sustainable reporting ?

(A) Publishing annual financial statement only
(B) Publishing annual financial statements and social accounts
(C) Publishing social and environmental accounts annually
(D) Publishing annual financial statements incorporating economic, social and environmental performances
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8. 1. The most suitable method of filing for a transactional corporation is
(A) Numerical (B) AlphabeticalNumerical
(C) NumericalTerritorial (D) Territorial
2. Which one of the following correctly signifies the purpose of an Organization Chart ?
(A) Office Dcor (B) Indication of available Office services
(C) Flow of Authority (D) High Morale
3. 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
4. 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
5. 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
6. 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
7. 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 the sense that ROI = Profit margin Asset turnover
(C) It is a superior measure compared to the cash flow generated per share
(D) It was first developed by Dupont, USA
8. Alfa Company Limited acquired the business of M/s Bharat Traders. The valuation of the items acquired
was-building Rs. 1,20,000; machinery Rs. 80,000 and stock-in-trade Rs. 30,000. The company issued in
lieu of the above items 800, 10% debentures of Rs. 100 each at par and 15,000 equity shares of Rs. 10 each.
How much was the flow of funds in the above transaction ?
(A) Rs. 2,30,000 (B) Rs. 1,00,000
(C) Rs. 50,000 (D) Rs. 30,000
9. 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 organisation
(C) To establish effective organizational control
(D) To be helpful in correct tax assessment
10. Which 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
11. Which one of the following is the most appropriate management control technique for timely
completion of a project ?
(A) Organisation chart (B) Management by Objectives
(C) PERT (D) Span of control
12. 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.
13. Which of the following is called Backbone of auditing ?

(A) Routine checking (B) Vouching
(C) Internal checks (D) Internal control
14. Burns and Stalker model for categorising organisations by structural design uses the terms
(A) Functional and geographic (B) Functional and organic
(C) Geographic and mechanistic (D) Mechanistic and organic.
15. While auditing the financial statements of non-corporate enterprises, the auditors duties and scope of
work would be governed by
(A) the statute passed by the Parliament
(B) the Companies Act, 1956, and the client concerned jointly
(C) the agreement with his client.
(D) the provisions of the Income Tax Act, 1961
16. Retain trading in government securities at select stock exchanges commercial in

(A) Jan. 2001 (B) Jan. 2002
(C) Jan. 2003 (D) Jan. 2004
17. Which one of the following statements is false ?

(A) A Demat Share is held by the depository on behalf of the investor whereas a Physical Share is held
by the investor himself
(B) There is no stamp duty on the transfer of Demat Shares from one account to another
(C) The Demat Share does not have a folio number, distinctive number or certificate number like a
Physical Share
(D) The Demat Share cannot be converted into a Physical Share
18. The Buy Back of Shares was prohibited in India until

(A) October 31, 1998 (B) October 31, 2000
(C) October 31, 2001 (D) October 31, 2002
19. Which term is used in the field of Banking?

(A) Current Account (B) Plasma
(C) Follow on (D) Cold chain
20. Who propounded the Innovation theory of profits?

(A) P. A. Samuelson (B) Alfred Marshall
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9. 1. Management by Exception is to improve
(A) control over personnel (B) strategic management
(C) steady flow of information (D) high morale
2. 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
3. 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
4. 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
5. 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) Rationalisation of office work
6. Dividend can be paid generally out of

(A) share premium account (B) capital redemption reserve account
(C) current years profits (D) All of these
7. 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
8. A company forfeited 30 equity shares of Rs. 10 each fully called-up, for non-payment 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
9. 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
10. Which one of the following ratios is likely to be 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
11. 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 (D) Department of Companies Affairs within 60 days
12. 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
13. 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
14. 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.
15. 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.
16. Which one of the following is not an objective of the introduction of Primary Dealer System ?
(A) To encourage a voluntary holding of govt. securities amongst a wider investor base
(B) To make Primary Dealer System an effective conduct of open market operations
(C) To strengthen the private equity infrastructure
(D) To strengthen the govt. securities infrastructure
17. The Open Market Operations [OMOs] is an important tool of

(A) Forex management (B) Liquidity management
(C) Inventory management (D) Marketing management
(A) The Open Market Operations involve the sale or purchase of govt. securities by the Central Bank
(B) The RBI manages longterm liquidity through rapos
(C) The RBI manages longterm liquidity through Open Market Operations
(D) Open Market Operations do not alter the total stock of govt. securities but change the proportion of
govt. securities held by the RBI, Commercial Banks and Co-operative Banks
19. Which Stock Exchange was the first to introduce a transparent, screen-based trading system in the
wholesale debt market including govt. securities in 1994 ?
(A) Bombay Stock Exchange (B) Delhi Stock Exchange
(C) National Stock Exchange (D) Jaipur Stock Exchange
20. The Government Securities are not issued through

(A) Auction (B) Contract
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10. 1. 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
2. The degree of decentralization in an organization depends most on

(A) technology (B) size of workforce
(C) volume of transactions (D) competence of subordinates
3. 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
4. Wider span of control is effective in organization where

(A) authority delegation is inadequate (B) tasks are complex
(C) thorough subordinate training scheme exists (D) the leadership style is authoritarian
5. Maintenance of intended delegation requires that decisions lying within the individual managers
authority should be made by them and not referred upwards in the organizational hierarchy. This is known
as
(A) principle of unity of command (B) scalar principle
(C) authority level principle (D) principle of absoluteness of responsibility
6. The loss on the sale of old furniture is debited to

(A) profit & loss account (B) furniture account
(C) trading account (D) depreciation account
7. 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 profit on sales was 1/5th,
when 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
8. A and B are sharing profits in the ratio of 2 1. They admit C into the firm 1/4th share in profits for
which he brings Rs. 12,000 as his share of capital. Therefore, the adjusts capital of B will be
(A) Rs. 48,000 (B) Rs. 12,000
(C) Rs. 16,000 (D) Rs. 24,000
9. 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
10. A and B are partners sharing profits and losses in proportion 2 1. They admit 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
11. The process of determining how to pursue long-term goals with the expected resources available to the
orgnisation is called
(A) Operational planning (B) Strategic planning
(C) Intermediate planning (D) Tactical planning
12. 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 be its yield ?
(A) 20 per cent (B) 125 per cent
(C) 8 per cent (D) 25 per cent
13. 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.
14. When can an Annual General Meeting 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
15. Under which one of the following circumstances the Central Government is empowered to direct
special audit of the companies ?
(A) Where any director has misappropriated the companys 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 debentureholders
(D) Where the conduct of management is in the manner which is injurious to trade industry or business to
which it pertains.
16. Disinvestment Commission was set-up in

(A) 1995 (B) 1996
(C) 1997 (D) 1998
17. Auction Rated Debentures (ARDs) are a hybrid of

(A) Shares and Debentures
(B) Shares and Commercial Papers
(C) Commercial Papers and Debentures
(D) Zero Interest Bonds and Deep Discount Bonds
18. In India, which Bank was the first to introduce Bonds with Floating Rates for retail investors ?
(A) Bank of Baroda (B) United Commercial Bank
(C) Punjab National Bank (D) State Bank of India

(A) Floating Rate Bonds help the issuer to hedge the loss arising due to interest rate fluctuations
(B) The capital market is an important source of meeting the growing long-term financial requirements of
corporates
(C) The Clearing Corporation of India Limited [CCIL] was registered on April 30, 2001
(D) The IDBI is the Chief promoter of CCIL
20. Which one of the following is not eligible to be Satellite Dealers (SDs) ?
(A) Subsidiaries of Scheduled Commercial Banks
(B) All-India Financial Institutions (AIFIs)
(C) Partnersip Firms with minimum net owned funds of Rs. 5 crore
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11. 1. 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
2. In a consequential loss policy which one of the following losses in 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
3. 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
4. David C. Macllands motivating 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
5. 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
6. 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
7. Secretarial Compliance Report is

(A) optional for a company
(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
8. Which one of the following types of information, a creditor would be interested to gather while reading
Annual Reports of an enterprises ?
(A) Profitability (B) Liquidity
(C) Continuity (D) Solvency
9. Which one of the following pairs is not correctly matched ?

(A) Accounting equation Assets-Liabilities-Capital
(B) Accounting year 1st April to 31st March
(C) Accrual concept Recgonising revenue on receipt of cash
(D) Cost concept Recognising transactions at historical cost
10. 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.
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
11. 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.
12. 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
13. Export promotion is indispensable for overcoming disequilibrium in

(A) Balance of payments (B) Balance of trade
(C) Terms of trade (D) All of these.
14. 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
15. Which of the following does not mean the Qualified Institutional Buyer (QIB) under the SEBI
(Disclosure and Investor Protection guidelines as amended by the recent DIP Circular ?
(A) Mutual Funds
(B) Pension Funds with a corpus below Rs. 20 crore
(C) Pension Funds with minimum corpus of Rs. 25 crore
(D) Provident Funds with minimum corpus of Rs. 25 crore.
16. Which Sections of the Companies Act, 1956 shall apply to all foreign comapnies ?
(A) Sections 660 to 670 (B) Sections 592 to 602
(C) Sections 442 to 408 (D) None of the above
17. The General Insurance Corporation (GIC) of India was incorporated in

(A) Jan. 1972 (B) July 1972
(C) Nov. 1972 (D) Jan. 1973
18. The Life Insurance Corporation (LIC) of India came into existence on
(A) Sept. 1, 1956 (B) July 1, 1956
(C) March 1, 1956 (D) Jan. 1, 1956
19. The LIC Mutual Fund was set up in

(A) Jan. 1985 (B) March 1987
(C) June 1989 (D) Nov. 1991
20. On which date the Govt. lifted the three-decade old prohibition on forward trading in securities by
rescinding the 1969 notification ?
(A) Jan. 10, 2000 (B) March 1, 2000
(C) April 20, 2000 (D) July 25, 2000 - See more at: http://www.allexamgurublog.com/2013/05/commerce-
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12. 1. Merchant Banker does not offer services in regard to
(A) project appraisal (B) capital issue
(C) project preparation (D) subscription to Equity shares
2. Combination of Printing and Dyeing in a textile company is called

(A) circular combination (B) vertical combination
(C) allied combination (D) horizontal combination
3. 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) Bankers Union
4. Dumping is an example of
(A) monopolistic practice in international trade (B) monopoly in international trade
(C) oligopoly in international trade (D) perfect competition in international trade
5. 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
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. 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
8. Audit Committee shall act in accordance with the terms of reference to be specified by
(A) Statutory Auditors (B) SEBI
(C) Board of Directors (D) Central Government
9. 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
10. 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
(D) Company Law Board
11. 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 these.
12. A limited company has to redeem redeemable preference shares of the value of Rs. 1,00,000 for the
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
13. In management principle, grid refers to

(A) Diverse managerial styles (B) Co-ordination
(C) Communication (D) Motivation.
14. Who among the following is a bear 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.
15. 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
16. Which of the following is known as Smart Money ?

(A) Amount deposited into post office Saving Bank account
(B) Amount deposited into Saving Bank account
(C) Credit card
(D) Cash in hand
17. The biggest Labour Union of India is

(A) BMS (B) AITUC
(C) INTUC (D) CITU
18. What is the maximum limit of F.D.I. in insurance sector of India ?

(A) 26% (B) 49%
(C) 51% (D) 74%
19. Maximum limit of FDI in Stock Exchanges of India is

(A) 49% (B) 26%
(C) 23% (D) 10%
20. India Investment Corporation is related with

(A) Forex (B) Post office
(C) Marketing (D) Agriculture
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13. 1. 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
2. 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
3. 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
4. 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
5. 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
6. Contingency School of Management

(A) practice-oriented (B) principle-oriented
(C) result-oriented (D) profit and loss-oriented
7. Which among the following is the oldest and simplest device for achieving co ordination ?
(A) Hierarchy (B) Planning
(C) Incentives (D) Rules
8. Which one among the following is an instance of Participative Management ?

(A) Board of Directors (B) Trade Unions
(C) Work Committees (D) Task Force
9. Which one of the following is the correct sequence in terms of the four management functions, first
identified by Henry Fayol ?
(A) Planning, Organising, Leading and Controlling
(B) Planning, Organising, Staffing and Co-ordinating
(C) Planning, Motivating, Directing and Reporting
(D) Planning, Staffing, Communicating and Leading
10. According to behavioural scientists, organisation means the structure of

(A) physical facilities
(B) tasks and relationship
(C) behaviour of the management with the working force
(D) attitude of workers with the management
11. 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
12. A statutory corporation is one, which comes into being by

(A) registration under Companies Act, 1956
(B) virtue of enactment of a special Act
(C) registration under any enforceable Act operating in India
(D) the entrepreneurial effort of the government
13. 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.
14. 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
15. Which one of the following reflects the overall efficiency with which capital is used ?
(A) Return on shareholders funds (B) Investment turnover ratio
(C) Operating ratio (D) Earning per ratio
16. 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
17. Secret reserves are created by means of

(A) Transfer to general reserve (B) Providing excessive depreciation
(C) Overvaluation of inventories (D) Undervaluation of liabilities.
18. Which of the following is not audit technique ?

(A) Audit Note Book (B) Vouching
(C) Verification (D) Test Checking
19. The registering authority of L.L.P. will be

(A) Registrar of firms (B) Registrar of Companies
(C) Registrar of Universities (D) None of the above
20. Which of the following statement is true ?

(A) Every partner of LLP is the agent of LLP, but not of other partners
(B) LLP is not required to file an annual return with the registrar
(C) LLP is bound by anything done by a partner in dealing with a person
(D) Every partner of LLP has fiduciary relationship with LLP - See more at:
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14. 1. 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

(A) Internal check Staff of the concern
(B) Internal Audit Chartered Accountant
(C) Cost Audit Cost Account or Chartered Accountant
(D) Propriety Audit Comptroller and Auditor General of India
3. The accounts 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) finalise branch office accounts (D) declare interim dividend
4. 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
5. The most suitable form of business organisation for the people of weaker section is
(A) partnership firm (B) co-operative society
(C) sole-trading business (D) joint stock company
6. 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.
7. 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
8. Which one of the following risks is not insured by the Export Credit and Guarantee Corporation ?
(A) The risk of non-payment by the foreign buyer
(B) The risk that the importer may return the goods on the ground of lower quality
(C) The political risk that the import licence may be revoked
(D) The risk of war, revolution, etc., in the buyers country
9. Social responsibility of business assumes considerable importance towards

(A) owners and workers (B) consumers and community
(C) government and nation (D) All the above
10. 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
11. Power to use official seal of a company outside India is to be authorised by

(A) Articles of Association (B) Memorandum of Association
(C) Both Memorandum and Articles of Association (D) Central Government
12. The approval of which one of the following authorities is required to shift registered office of the
company from the jurisdiction of one Registrar of Companies to another Registrar of Companies within a
State ?
(A) Company Law Board (B) Central Government
(C) Regional Director (D) Registrar of Companies
13. Body corporate under the Companies Act, 1956 includes

(A) co-operative society
(B) company incorporated outside India
(C) corporation sole
(D) any other body corporate, not being a company, which the Central Government may specify
14. Which one of the following is the correct statement ?

(A) One can be a shareholder without voting right
(B) A preference shareholder can excercise voting right from the date of allotment
(C) An equity shareholder has no voting right
(D) A debentureholder can vote at annual general meeting
15. A person shall not be 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
16. Preliminary expenses are an example of

(A) Revenue expenditure (B) Capital expenditure
(C) Deferred revenue expenditure (D) All of these.
17. Accounting Statement AS-2 provides that inventories should be valued at

(A) lower of historical cost and net realisable value
(B) lower of historical cost and market value
(C) only estimated selling price
(D) All of these
18. While making an adjustment entry respect of interest on capital, credit is made to
(A) Capital Account (B) Interest on Capital Account
(C) Profit & Loss Account (D) Interest Account
19. 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 Company
(C) By a resolution passed in the Annual General Meeting
(D) None of these.
20. 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 - See more at:
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15. 1. If earnings per share of a company is Rs. 5 and the price earning ratio of other similar companies is 4,
then the market value of the share of the company would be
(A) Re. 080 (B) Rs. 125
(C) Rs. 9 (D) Rs. 20
2. 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 Time
3. EPS is calculated as
(A) EBIT / Equity shares (B) EBIT Preference Dividend / Equity shares
(C) EAT / Equity shares (D) EAT Preference Dividend / Equity shares
4. 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
5. 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 vertifying the financial state of affairs of the
company
(D) He examines both financial and non-financial records of the organisation
6. 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
(D) short-term corporate security meant for large-scale investors
7. 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
8. 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) leveraged buy-out (D) management buy-out
9. One of the major difficulties improving the industrial efficiency in enterprises is

(A) low investment (B) low productivity
(C) ineffective marketing (D) poor inventory control
10. 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
11. Impact of O & M is that

(A) promotion possibility becomes restricted
(B) it leads to less scope for high salary and wages
(C) entire organization is streamlined
(D) work measurement is costly
12. The term Organisational climate best represents

(A) human environment prevailing in an organisation
(B) union-management relations within an organisation
(C) problems introduced by faulty organisational structure
(D) socio-cultural environment in an organisation
13. The Memorandum of Association shall be signed by each

(A) director (B) shareholder
(C) subscriber (D) promoter and director
14. 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
15. Registration of Articles of Association is optional in the case of

(A) unlimited company (B) private company limited by shares
(C) company limited by guarantee (D) public company limited by shares
16. 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.
17. A company purchased 8% bonds at a cost of Rs. 12,00,000 (Face value Rs. 10,00,000) on January 1,
2013. Half yearly interest is payable on this investment on June 30 and December 31st each year. The
Company closes its accounts on 31.3.2013. The amount of accrued 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
18. Goods worth Rs. 24,000 were returned by X. The accountant however credited the sales returns account
by Rs. 42,000. In order to rectify this error, what should be done ?
(A) Debit the sale return by Rs.42,000
(B) Credit the sales 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
19. 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 Reserve
(D) Capital receipt and profit involved should be transferred to Profit and Loss A/c
20. 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
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16. 1. 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 arbitration
2. 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, 2012. 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, 2012 were Rs. 23,700 and his creditors were Rs. 3,000 on the same date.
Outstanding expenses on 31st December 2012 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
3. X, who holds 100 shares of Rs. 10 each, fails to pay a final call of Rs. 2. The directors forfeited all the
shares and subsequently reissued 50 shares of Rs. 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
4. A Ltd. Company issues 3,000, 15% debentures of Rs. 100 each at a discount of 75% 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
5. X Ltd. has current ratio of 2 1 and quick ratio of 15 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
6. Test checking of entries in the audit work refers to

(A) the internal checks
(B) the inernal controls
(C) checking some sample items from a large number of similar items
(D) checking the cash flow of business
7. 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
8. While establishing the statistical sampling plan, the degree of precision required is determined by
(A) keenness of the management
(B) suitability of accounting systems and procedures
(C) allowable margin of error the auditors are willing to accept
(D) random number table used for the purpose
9. The distinctive characteristic of perpetual succession of a joint stock company refers to

(A) uniterrupted business in spite of continuous losses
(B) immunity from government direction for the closure of the company
(C) immunity from resolution passed in 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
10. 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
11. Among the 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
12. In a group process, there are some forces favouring and some other forces opposing changes. As a
result, an equilibrium is maintained. This is described by Kurt Lwein as
(A) field of force (B) field of disputes
(C) field of conflicts (D) cognitive dissonance
13. People resist change in organization because of

(A) fear of unemployment (B) increase in responsibility
(C) need for new social adjustments (D) All the above
14. Centralising the office work is desirable mostly because it

(A) fixes responsibility (B) avoids duplication
(C) permits better supervision (D) permits better delegation
15. Which one of the following indicates the correct chronological order of the system designed for
purchasing office supplies ?
(A) Select sources of supply, initiate requisition, order supplies, receive supplies and pay vendor
(B) Initiate requisition, order supplies, select sources of supply, receive supplies and pay vendor
(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
16. The first step of the control process actually gets initiated in the managerial function of
(A) Staffing (B) Planning
(C) Communication (D) Co-ordination

(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.
18. What is indent in foreign trade ?

(A) Shipping documents in duplicate
(B) A certificate indicating that the foods 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.
19. 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 conservation (D) Convention of disclosure and consistency
20. 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 (D) Supplier of raw material
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17. 1. Preparation of Trial Balance helps, mainly, in
(A) summarising business transactions
(B) verifying that generally accepted accounting principles have been observed
(C) finalising the sources and uses of funds statement
(D) locating errors, if any, in books of accounts.
2. 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
3. The basis adopted for piecemeal distribution of cash among the partners should be such that amounts
finally left unpaid are in the ration 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
(D) private assets appear on the date of dissolution
4. The capital of a firm is Rs. 80,000. The reasonable return in the industry is 75 per cent. 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
5. 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 Cs 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
6. 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
7. 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
8. 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
9. 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) It simplifies the allocation of work amongst the audit staff
10. 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
11. Which one of the following traits describes properly organic or behavioural structure of an
organisation ?
(A) Wider spans of control (B) More centralisation
(C) Higher degree of specialization (D) Taller hierarchy
12. 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
13. A systematic and orderly process of determining the worth of a job in relation to other jobs is known
as
(A) job analysis (B) job evaluation
(C) job specification (D) job description
14. 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
15. Which among the following is a direct advantage of incentive compensation ?

(A) Mutual co-operation among the workers (B) Decrease in absenteeism
(C) Increase in productivity (D) Better industrial relations
16. Consistency with reference to application of accounting principles refers 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 utilised.
17. 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
18. 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 (B) Cost audit
(C) Financial audit (D) Periodical audit
19. 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
20. 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 - See more at:
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18. 1. Consider the following The investment portfolio of a business as on 31-12-2012 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. 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
2. 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
3. Which one of the following will lead to understatement of net profit ?

(A) Amortization of Fictitious Assets
(B) Treating capital expenditures revenue expenditure
(C) Treating revenue expenditure as capital expenditure
(D) Creation of general reserve
4. Which one of the following items is considered revenue expenditure ?

(A) Expenditure by way of maintenance that has increased productivity
(B) Repair of a 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
5. After the construction of their new factory building M/s XYZ Co. shifted to it. During this process Rs.
20,000 were spent 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
6. Which one of the following reports should have responsibility statement under the Companies Act,
1956 ?
(A) Auditors report (B) Board of Directors report
(C) Company Secretarys report (D) Audit Committees report
7. Which one of the following reports deals with Corporate governance ?

(A) Sabhanayagam Report (B) Kumaramangalam Birla Report
(C) Narasimhan Report (D) L.C. Gupta Report
8. 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
9. 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
(D) Directors who are not whole-time and Managing Director
10. Internal audit report is submitted to

(A) Government (B) Shareholders
(C) Creditors (D) Board of Directors
11. The managerial function of organizing involves

(A) reviewing and adjusting plan in the light of changing conditions
(B) establishing programme for the accomplishment of objectives
(C) creating a structure of functions and duties to be performed by a group
(D) getting things done through others
12. Which one of the following is the most important function of a manager ?
(A) Communication (B) Directing
(C) Supervising (D) Decision-making
13. 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 organisation structure should be
(A) project organization (B) functional organisation
(C) matrix organization (D) divisional organisation
14. Which one of the following is the major consideration for decentralization ?
(A) Organizations environment (B) Nature of management function
(C) Size of the organization (D) Ability of higher-level managers
15. Organisations 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
16. Section 210A concerning the Constitution of National Advisory Committee in 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) General Rules and Forms, 1956
(D) None of these.
17. 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. 1,000 or a guarantor for more
that Rs. 1,000
18. 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.
19. Any casual 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.
20. In verification of assets the duty of the auditor is

(A) to ensure that asset have actually been acquired
(B) to ensure that they are clearly stated in 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. - See more at:
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19. 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 affairs of the owner, hence no accounting is required
2. Which one of the following accounting equations is correct ?

(A) Assets = Owners Equity
(B) Assets = Liabilities + Owners Equity
(C) Assets = Liabilities Owners Equity
(D) Assets + Liabilities = Owners 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) Conservation.
4. Which one of the following is not related to the convention of conservatism ?
(A) Making provision for doubtful debts and discount on debts in anticipation of actual bad debtors and
discount
(B) Valuation of stock at Market Price or Cost Price whichever is higher
(C) Charging of small capital items as Revenue
(D) Adopting Written-down Value Method of depreciation as against Straight-line Method
5. On 31st March, 2013, the closing stock of X Ltd. was Rs. 3,45,000. On April 1, 2013, 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, 2013 was finalized on 25th April, 2013, 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
6. 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
7. O & M can be strengthened chiefly through

(A) wage incentive plans (B) good store-keeping
(C) improved office layout (D) better work measurement
8. 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 making
(D) fulfils separate goals and standards
9. 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
10. 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
11. 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

(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
13. The main purpose of auditing is to

(A) detect accounting offences and to punish the offender
(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
14. Statements on Standard Auditing Practices (SAPs) are important while discharging the auditing
function by a member of the ICAI in case of a company, because SAPs are
(A) prescribed by the ICAI
(B) contained in the Companies Act, 1956
(C) approved by the Department of Company Affairs
(D) approved by the Central Government in consultation with Comptroller and Auditor-General
15. 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) judgement sampling
16. Under Section 25 of the Companies Act, 1956 there is a power to dispense with the word Limited in
name to certain associated 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.
17. 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.
18. The auditor must ensure that the amount of premium on the issue of shares is not utilised for
(A) issue of bonus shares
(B) writing off commission paid on the issue of shares
(C) providing for premium payable on redemption of preference shares
(D) transfer to capital redemption reserve
19. 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 Registrar 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
(C) Profit and Loss Account Balance Sheet and Cash Flow statement
(D) Profit and Loss Account and Balance Sheet.
20. 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 employ is automatically checked by another employee
(D) work performed by one employee is checked by internal audit staff - See more at:
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Commerce Questions

1. Who is Father of Scientific Management ?

1. FEMA stands for

2. What of the following is false about W.T.O. ?

12. Memorandum of Association contains

13. Table A is an alternative to

14. The Doctrine of Indoor Management provides protection to the

18. Consider the following statements

20. In a marine insurance, when must the insurable interest exist ?

2. Unity of command implies having not more than one

3. x and y theory of Motivation has been propounded by

4. Coordination has the following features

5. Which one of the following is not a barrier in communication ?

6. A Company can reissue its forfeited shares

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

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

10. Accounting for research and development relates to

12. Pohang Steel Company (POSCO) is a company originally based in

14. Consider the following statements

18. Brent index is associated with

20. Which one of the following statements about RBI is 'True'?

1. Control function of management implies

2. Coordination function of management aims at

4. Maslows needs hierarchy theory relates to

6. Pre-incorporation Profit is transferred to

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

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

9. Workmens Compensation Fund is a

13. Private equity investors invest in a company based mainly on

14. What is Director Identification Number (DIN) ?

15. Disinvestment in Public Sector is called

19. A particular firm provided the following data for a year

20. Depreciation is a process of which one of the following ?

Audit adopted by banking company is

2. Which of the following have lien of Company Auditor ?

5. According to ownership, Government Company means share.

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

9. A Balance Sheet shows only

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

15. New profit sharing ratio is calculated at the time of

16. Consider the followingAmortization refers to writing off the value of

18. What is reduction of paid-up share capital called ?

4. Company Auditor is responsible

5. In Balance Sheet, Audit Accounts are audited

8. The meaning of written down value is

11. Internal check is a part of

12. Cost Audit Report is to be submitted to

13. A company auditor addresses his report to

2. Among the following which is not an error of commission ?

3. Internal check means

5. By whom from the following, auditor can be reappointed ?

6. Liability of partners in respect of the firms debt is

8. Planning function of management is performed by

9. Special plans made for facing competition are known as

10. Span of Management means

11. The function of an Auditor is

12. Audit is compulsory for

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

15. Who may recommend Special Audit of a Company ?

16. Which one of the following statements is correct ?

18. What does payout ratio mean ?

19. Consider the following statements

1. The following figures are presented to you