COMMERCE
Paper – III
Note : This paper contains seventy five (75) objective type questions of two (2) marks each. All questions are compulsory.
1. The present regime of subsidies can be improved by focussing on
(i) Reducing the overall scale of subsidies.
(ii) Making subsidies as transparent as possible.
(iii) Giving a specific amount to the Member of Parliament for subsidies.
(iv) Setting clear limits on duration of any new subsidy scheme.
(v) Eliminating system of periodic review of subsidies
(vi) Using subsidies for welldefined economic objectives.
Codes :
(A) (i), (ii), (iii) and (iv)
(B) (ii), (iii), (iv) and (v)
(C) (i), (iii), (iv) and (vi)
(D) (i), (ii), (iv) and (vi)
2. Which of the following is not regulated by The Competition Act, 2002 ?
(A) Abuse of dominant position
(B) Anti-competitive agreements
(C) Medical negligence
(D) Predatory pricing
3. The freedom of private enterprise is the greatest in the free market economy. This is characterized by which of the following assumptions ?
(i) The factors of production (labour, land, capital) are privately owned and production occurs at the initiative of the private enterprise.
(ii) Income is received in monetary form by the sale of services of the factors of production and from the profits of the private enterprise.
(iii) Members of the free market economy have freedom of choice in so far as consumption, occupation, savings and investments are concerned.
(iv) The free market economy is not planned, controlled or regulated by the government.
(v) The free market economy is prone to corrupt practices.
Codes :
(A) (i), (ii) and (iii)
(B) (i), (ii), (iii) and (iv)
(C) (i), (ii), (iii), (iv) and (v)
(D) (ii), (iii), (iv) and (v)
4. The important responsibilities of a business to the customers are
(i) To ensure family welfare of the customers.
(ii) To understand customer needs and to take the necessary measures to satisfy these needs.
(iii) To ensure health condition of the customers.
(iv) To ensure that the product supplied has no adverse effect on the customer.
(v) To provide an opportunity for being heard and to redress genuine grievances.
Codes :
(A) (i), (ii), (iii), (iv) and (v)
(B) (i), (ii), (iii) and (iv)
(C) (ii), (iv) and (v)
(D) (ii), (iii), (iv) and (v)
5. The rationale of expanding role of the public sector stems mainly from which of the following factors ?
(i) The failure of the private sector in certain crucial areas
(ii) The exploitation of the society by the private sector
(iii) The revenue need of the Central Government
(iv) The demand of economic justice
(v) The need for accelerating the pace of economic growth
Codes :
(A) (i), (ii), (iii) and (iv)
(B) (ii), (iii), (iv) and (v)
(C) (i), (iii), (iv) and (v)
(D) (i), (ii), (iv) and (v)
6. Which of the following factors may lead to a sick industrial unit ?
(i) Shortage of funds and faulty financial management
(ii) Investment by the FIIs in Indian industries
(iii) Unauthorized FDI in Indian industries
(iv) Lack of experience on the part of promoters
(v) Technological factors including obsolete or improper technology
Codes :
(A) (i), (ii), (iii) and (iv)
(B) (ii), (iii), (iv) and (v)
(C) (i), (iv) and (v)
(D) (i), (ii) and (iii)
7. Indicate what is not correct in respect of the Consumer Protection Act, 1986.
(A) No complaint can be entertained in respect of a product purchased more than 2 years back.
(B) A complaint against medical negligence can be filed by legal heir or representative of the deceased.
(C) A complaint involving a claim of Rs 15 lakhs is to be filed before the State Commission.
(D) Both (A) and (C)
8. If bonus shares are issued out of preacquisition profit, it will have
(A) Direct effect on the Consolidated Balance Sheet
(B) No effect on the Consolidated Balance Sheet
(C) No effect on Net Profit
(D) None of the above
9. The present value of the future contributions of employees is one of the methods of
(A) HR Accounting
(B) Inflation Accounting
(C) Social Accounting
(D) Responsibility Accounting
10. A standard which can be attained under the most favourable working conditions is called
(A) Attainable Standard
(B) Basic Standard
(C) Current Standard
(D) Ideal Standard
11. Which of the following ratios are taken into consideration by a banker before sanctioning the loan ?
(A) Proprietory Ratio
(B) Stock-Turnover Ratio
(C) Debt-Equity Ratio
(D) All of the above
12. Match the items of the following two lists :
13. Assertion (A) : Dividend paid out of pre-acquisition profit by the subsidiary company to the holding company is deducted
from the cost of investment.
Reason (R) : Dividend paid out of pre-acquisition profit by the subsidiary company should be treated as a return of capital to
the holding company.
Which one of the following is correct ?
(A) Both (A) and (R) are correct.
(B) (A) is correct, but (R) is wrong.
(C) (A) is wrong, but (R) is correct.
(D) Both (A) and (R) are wrong.
14. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R) :
Assertion (A) : Increasing the value of closing inventory increases profit.
Reason (R) : Increasing the value of closing inventory reduces cost of goods sold.
In the context of the above two statements, which of the following is correct ?
Codes :
(A) Both (A) and (R) are correct.
(B) Only (A) is correct.
(C) Only (R) is correct.
(D) Both (A) and (R) are wrong.
15. Match the items of List – I with the items of List – II and select the correct code for the answer :
16. A measure of the responsiveness of quantity demanded to changes in the price of a related good is known as
(A) Cross Elasticity of Demand
(B) Substitution Elasticity of Demand
(C) Complementary Elasticity of Demand
(D) Price Elasticity of Demand
17. If the total cost is Rs 260 and the total variable cost is Rs 60, what will be total fixed cost if output is (a) 100 units and (b) 200 units ?
(A) Rs 200 and Rs 200
(B) Rs 100 and Rs 200
(C) Rs 260 and Rs 100
(D) Rs 160 and Rs 100
18. Optimal input combination to minimize the cost for a given output will be at the point where :
(A) Isocost is tangent to Isoquant
(B) MRTS between inputs is equal
(C) Any movement from optimum point will lead to low level of output
(D) All the above conditions are fulfilled.
19. What kinds of actions can be taken to put the rivals at a disadvantageous position under oligopoly market ?
(A) Commitments
(B) Threats
(C) Promises
(D) All the above
20. There is no exceptions to the law of demand in the case of
(A) Giffen goods
(B) Normal goods
(C) Articles of conspicuous consumption
(D) Ignorance of the buyer
21. What is the degree of elasticity of demand in case the demand is represented by a straight line parallel to the x-axis ?
(A) e > 1
(B) e = 0
(C) e = ∝
(D) e < 1
22. If a chi-square test is to be performed on a contingency table with 3 rows and 4 columns, how many degrees of freedom should be used ?
(A) 6
(B) 12
(C) 8
(D) 9
23. Assertion (A) : If regression coefficient of X on Y is greater than one, regression coefficient of Y on X must be less
than one.
Reason (R) : The geometric mean between two regression coefficients is the co-efficient of correlation.
On the basis of the above, choose the appropriate answer :
(A) (A) and (R) are correct.
(B) (A) is correct, but (R) is not correct.
(C) (A) is not correct, but (R) is correct.
(D) Both (A) and (R) are not correct.
24. If the sum of squares of deviations within samples is 140 with 12 degrees of freedom and the sum of squares of deviations between samples is 190 with 2 degrees of freedom, the test statistic will be
(A) 81.4
(B) 12.28
(C) 8.14
(D) 1.22
25. The regression equation of profits (X) on sales (Y) of a firm is given as : 3Y – 5X + 110 = 0. If the sales of the firm is Rs 4,000, the profit will be
(A) Rs 23,370
(B) Rs 26,422
(C) Rs 24,422
(D) Rs 21,370
26. Cricketer ‘A’ scores on an average 40 runs with a standard deviation of 5. Scores of players ‘B’ and ‘C’, on an average, are 75 and 90 with standard deviations 10 and 18 respectively. Arrange the players in the descending order of consistency :
(A) A, B and C
(B) C, B and A
(C) B, A and C
(D) C, A and B
27. Among the following, choose the most suitable ‘test’ that can be applied to examine the influence of one factor on different groups :
(A) ‘t’ test
(B) ‘F’ test
(C) ‘Chi-square’ test
(D) None of the above
28. A machine produced 20 defective articles in a batch of 400. After overhauling, it produced 10% defectives in a batch of 300. Which test of hypothesis can be applied to the above situation to examine whether the machine has improved ?
(A) Test of significance of a sample proportion (two-tail test)
(B) Test of significance of a sample proportion (one-tail test)
(C) Test of significance of difference between two sample proportion (two-tail test)
(D) Test of significance of difference between two sample proportion (one-tail test)
29. Strategies and policies
(A) are not closely related
(B) give direction
(C) are the framework for performance appraisal
(D) both (A) and (B)
30. According to Vroom’s Expectancy Theory of Motivation,
(A) Force = valence divided by expectancy
(B) Force = valence × expectancy
(C) Force = strength of an individual preference for an outcome
(D) Valence = probability that a particular action shall lead to a desired outcome
31. In the managerial grid, the managers who have little or no concern for production but are concerned only for people are known as what type of managers ?
(A) 1.1 Management
(B) 5.5 Management
(C) 9.1 Management
(D) 1.9 Management
32. According to the Boston Consulting group, a business, which has a strong market share in a low growth industry is referred to as a
(A) Dog
(B) Cash Cow
(C) Star
(D) Question mark
33. Which of the following are major principles of leading ?
(i) Principle of motivation
(ii) Principle of continuous development
(iii) Principle of harmony of objectives
(iv) Principle of open competition
(v) Principle of communication clarity
Select the correct answer from the codes given below :
Codes :
(A) (i), (ii), (iii), (v)
(B) (i), (ii), (iii), (iv), (v)
(C) (i), (iii), (iv), (v)
(D) (i), (iii), (v)
34. The following are the steps of management control process :
(i) Taking corrective action from standards
(ii) Establishing standards
(iii) Measuring actual performance
(iv) Comparing performance against standard
Select the correct sequence of these steps from the codes given below :
Codes :
(A) (i), (ii), (iii), (iv)
(B) (ii), (iii), (iv), (i)
(C) (iii), (iv), (i), (ii)
(D) (ii), (iv), (i), (iii)
35. Consider the following :
(i) Planning is today’s action for tomorrow’s decision.
(ii) Planning is forward looking while controlling is looking back.
(iii) Motivation is about getting voluntary willingness of subordinates for action.
(iv) Line and staff organisation is the oldest form of organisation.
Select the correct statements from the codes given below :
Codes :
(A) (ii) and (iii) are correct.
(B) (i), (ii) and (iv) are correct.
(C) (i), (iii) and (iv) are correct
(D) All are correct.
36. Which is not one of the stages in the consumer buying-decision process ?
(A) Purchase decision
(B) Post-purchase behaviour
(C) Problem recognition
(D) Cultural factors
37. At which stage of product-life-cycle are the pricing decisions most complex ?
(A) Decline
(B) Growth
(C) Introduction
(D) Maturity
38. Which one is not an element of market logistics ?
(A) Inventory
(B) Order-processing
(C) Warehousing
(D) Supply chain management
39. Under which legislation, the manufacturers and distributors are required to declare Maximum Retail Price (MRP) on packaged commodities ?
(A) The Bureau of Indian Standards Act, 1986
(B) The Consumer Protection Act, 1986
(C) The Standards of Weights and Measures Act, 1976
(D) The Essential Commodities Act, 1955
40. In modern marketing, which of the following functions of a distribution middleman is gaining maximum importance ?
(A) Making persuasive communication
(B) Price negotiation
(C) Keeping adequate inventory
(D) Gathering market information
41. Which method of setting the advertising budget of a company is considered to be the most scientific ?
(A) All-you-can-afford method
(B) Percentage of sales method
(C) Competitive-parity method
(D) Objectives and tasks method
42. Match the items of List – I with those of List – II and indicate the correct combination from the codes given below :
43. Inability of the firm to meet its obligations results in financial distress which may lead to bankruptcy resulting into the
following :
1. Distress sale of assets at lower price.
2. Legal and administrative costs for bankruptcy.
3. Dilution of stakeholders’ commitment to the firm.
4. Stretching of payments to suppliers and creditors.
The direct costs of such financial distress may be
(A) 1 and 4
(B) 2 and 3
(C) 1 and 2
(D) 3 and 4
44. Mutually exclusive projects can be more accurately ranked as per
(A) Internal rate of return method
(B) Net Present Value Method
(C) Modified Internal Rate of Returns Method
(D) Accounting or Average Rate of Return Method
45. Which one of the following does not constitute a Standalone Risk Analysis ?
(A) Simulation Analysis
(B) Break-even Analysis
(C) Corporate Risk Analysis
(D) Scenario Analysis
46. Financial leverage in a firm is positively affected by
(A) Intensity of tangible assets
(B) Operating leverage
(C) Profitability
(D) Tax Rate
47. Which combination of the following two statements (A) and (R) is correct ?
Assertion (A) : The IRR of a project is the discount rate which reduces its NPV to zero.
Reason (R) : A project is worth accepting if the IRR exceeds the cost of capital.
Codes :
(A) (A) is right, but (R) is wrong.
(B) Both (A) and (R) are correct.
(C) (A) is wrong, but (R) is correct.
(D) Both (A) and (R) are wrong.
48. Assertion (A) : A company should pay minimum dividend to its shareholders.
Reason (R) : Dividends are heavily taxed than capital gains.
Codes :
(A) Both (A) and (R) are correct.
(B) Both (A) and (R) are incorrect.
(C) (A) is not correct, but (R) is correct.
(D) (A) is correct, but (R) is wrong.
49. Dividend irrelevance hypothesis is implied in the
(A) Traditional Model
(B) Walter Model
(C) Gordon Model
(D) M.M. Model
50. Which one of the following does not serve the main objective of performance appraisal ?
(A) Developmental uses
(B) Administrative uses
(C) Ethical and moral values
(D) Organisational objectives
51. Statement (I) : Job evaluation is a technique of assessing the worth of each job in comparison with others throughout an organization.
Statement (II) : Job evaluation and job rating are one and the same for employees’ appraisal purposes.
Codes :
(A) Statement (I) is correct, but Statement (II) is incorrect.
(B) Statement (II) is correct, but Statement (I) is incorrect.
(C) Both the Statements (I) and (II) are correct.
(D) Both the Statements (I) and (II) are incorrect.
52. Match the items of List – I with the items of List – II and select the correct answer :
53. Assertion (A) : Merit rating of an employee is the process of evaluating the employees performance on the job in terms
of the requirements of the job.
Reason (R) : Employees’ merit rating is a technique for fair and systematic evaluation of an employee’s capacities and abilities and performance on the specific job.
Codes :
(A) Both (A) and (R) are correct, and (R) is the right explanation of (A).
(B) Both (A) and (R) are correct, but (R) is not the right explanation of (A).
(C) Both (A) and (R) are incorrect.
(D) (R) is correct, but (A) is incorrect.
54. The major provisions for employees’ health and safety are contained in
(A) The Industrial Disputes Act, 1947
(B) The Factories Act, 1948
(C) The Industrial Employment (Standing Orders) Act, 1946
(D) The Employees’ Compensation Act, 1923
55. Indicate your choice through the codes given below :
1. A club is an industry under the Industrial Disputes Act, 1947
2. Factory as defined under the Factories Act, 1948 includes a mine.
3. For purpose of the payment of bonus to employees, the gross profits earned by a bank is to be calculated in the manner specified in Schedule – I of the Payment of the Bonus Act, 1965.
4. Various labour laws do not apply to public sector undertakings.
Codes :
(A) While 1 and 2 are correct, others are not.
(B) All the statements are correct.
(C) Only 1 is correct, others are incorrect.
(D) Only 1 is incorrect, all others are correct.
56. Match the items of List – I with the items of List – II and select the correct answer :
57. Assertion (A) : The Central Bank of the country is responsible to maintain stability of the monetary standard which
involves currency circulation
Reason (R) : The Central Bank is the only authorized entity to do so.
Codes :
(A) (A) and (R) both are correct.
(B) (A) and (R) both are incorrect.
(C) (A) is correct, but (R) is incorrect.
(D) (R) is correct, but (A) is incorrect.
58. Identify the quantitative credit control methods among the following :
(i) Bank Rate
(ii) Credit Rationing
(iii) Open Market Operations
(iv) Variable Reserve Ratio
(v) Selective Credit Control
(vi) Liquidity Ratio
Codes :
(A) (i), (ii), (iii) and (iv)
(B) (ii), (iii), (iv) and (v)
(C) (i), (ii), (v) and (vi)
(D) (i), (iii), (iv) and (vi)
59. The following activities are mainly related to which organization ?
(i) Micro Finance
(ii) Rural Finance
(iii) Self Help Groups
(iv) Cooperative Banks Finance
(A) Industrial Finance Corporation of India
(B) Ministry of Finance
(C) Reserve Bank of India
(D) National Bank for Agriculture and Rural Development
60. PIN in banking transaction is known as
(A) Postal Index Number
(B) Permanent Identification Number
(C) Personal Identification Number
(D) Public Interlocking Numeric
61. Reserve Bank of India was nationalized on
(A) January 26, 1948
(B) January 01, 1949
(C) January 26, 1950
(D) January 01, 1956
62. When a banking company is placed under moratorium under Section 45 of the Banking (Regulation) Act, 1949, the RBI must prepare a scheme of
(A) VRS for staff
(B) Capital Buy-Back
(C) Reconstruction of the company or amalgamation with any other bank
(D) IPO of the bank
63. Match the following items of List – I with List – II :
64. The main features of TRIMS are :
(i) All restrictions on foreign capital are imposed.
(ii) No restriction is imposed on any area of investment.
(iii) Restrictions on repatriation of dividend is eliminated.
(iv) Imports of raw material is allowed freely.
(v) No limit on the extent of foreign investment.
Indicate the correct combination
(A) (i), (ii), (iii) and (v)
(B) (ii), (iii), (iv) and (v)
(C) (iii), (iv) and (v)
(D) (iv) and (v)
65. Assertion (A) : TRIPS requires an understanding about the scope of the new patent regime.
Reason (R) : Patent protection will be extended to micro organisms, non-biological and micro-biological processes and plant varieties.
Codes :
(A) (A) and (R) are not related with each other.
(B) (R) is related with (A).
(C) (A) is independent of (R).
(D) While (R) is related with TRIMS, (A) is related with TRIPS.
66. Possible impact of WTO on various aspects of the Indian economy :
(i) Quantitative restriction will be allowed.
(ii) Second hand cars will be imported.
(iii) There will be dumping of Chinese goods.
(iv) Increase in population.
(v) Child labour exploitation
(vi) Unemployment will increase
Which combination is appropriate ?
(A) (i), (ii), (iii)
(B) (iii), (iv), (v)
(C) (ii), (iii) & (vi)
(D) (iv), (v) & (vi)
67. Assertion (A) : Economic integration abolishes crossnational economic discrimination.
Reason (R) : Geographical proximity is an important reason for economic integration.
Codes :
(A) (R) does explain (A).
(B) Both (A) and (R) are correct.
(C) Both (A) and (R) are not correct.
(D) (A) is correct, but (R) is not correct.
68. Match the items of List – I and items of List – II and select the correct answer :
69. Assertion (A) : A futures contract specifies in advance the exchange rate to be used, but it is not as flexible as a forward
contract.
Reason (R) : A futures contract is for specific currency amount and a specific maturity date.
Codes :
(A) (R) is a correct explanation of (A).
(B) (R) is not a correct explanation of (A).
(C) (A) and (R) are not related with each other.
(D) (R) is irrelevant for (A).
70. Out of the following, which are the important objectives of IMF ?
(i) To promote exchange rate stability
(ii) To create standby reserves
(iii) To print International currency notes
(iv) To establish a multilateral system of payments.
(v) To maintain orderly exchange rate stability
(vi) To create employment
Codes :
(A) (ii), (iv), (v), (vi)
(B) (iii), (v), (vi)
(C) (i), (ii), (iv), (v)
(D) (i), (ii), (v), (vi)
71. Given that :
Fair rent of a let out house property is Rs 75,000. Its Municipal value is Rs 60,000, standard rent is Rs 72,000 and actual rent received is Rs 63,000. What is the Gross Annual Value of this house property ?
(A) Rs 60,000
(B) Rs 63,000
(C) Rs 72,000
(D) Rs 75,000
72. Match the items of List – I with the items of List – II
73. Which of the following deductions will not come under Sec. 80 of the Income Tax Act ?
(A) Deduction in the case of a person with disability
(B) Deduction for interest paid on loan taken for pursuing higher education
(C) Deduction for interest on loan taken for the construction /purchase of house property
(D) Deduction for repayment of any instalment of principal amount borrowed for the purchase / construction of house property
74. X purchased a land in the P.Y. 1997- 98 for Rs 50,000. This land was sold by him during the P.Y. 2009-10 for Rs 8,00,000. The fair market value of this land on 1-4-81 was Rs 1,20,000. If the Cost Inflation Index for the A.Y. 2010-11 is 632, his capital gain for the A.Y. 2010-11 will be
(A) Rs 4,84,000
(B) Rs 7,50,000
(C) Rs 6,80,000
(D) Rs 41,600
75. Any amount of money received in excess of Rs 50,000 without consideration is fully taxable in the hands of
(A) Individuals
(B) Individuals and HUF
(C) Individuals, HUF and Company
(D) All assessees
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