COMMERCE
PAPER – III
Note : This paper contains seventy five (75) objective type questions of two (2) marks each. All questions are compulsory.
1. Put the following steps of strategic Management Process in correct sequence :
a. Scanning and Evaluation of Business Environment
b. Formulating strategies
c. Implementation of Corporate Strategy
d. Deciding about the Mission of the organisation
e. Setting Corporate Level Objective
Codes :
(1) a, b, c, d and e
(2) d, a, b, c and e
(3) d, a, e, c and b
(4) d, a, e, b and c
2. Match the items of List-I with those of List-II and indicate the code of correct matching.
3. Identify the correct statement from the following :
(1) The liability of the Karta is limited.
(2) A joint Hindu family business continues to exist on the death of a co-partner.
(3) A joint Hindu family business ceases to exist on the death of the Karta.
(4) A joint Hindu family business comes into existence by Hindu law.
4. Statement I : “Working in harmony with the community and environment around us and not cheating our customers and workers we might not gain anything in the short run but in the long term it means greater profits and shareholders value”.
Statement II : According to Mahatma Gandhi, capitalist class owns wealth or capital as trustees of the society.
Codes :
(1) Statement I is correct, but II is incorrect.
(2) Statement II is correct, but I is incorrect.
(3) Both the statements I and II are incorrect.
(4) Both the statements I and II are correct.
5. Match the items of List-I with items of List-II and indicate the code of correct matching.
6. Which of the following is not true ?
(1) When all the forfeited shares are not reissued, the forfeited shares account will also show as credit balance equal to gain on forfeiture of shares not yet reissued.
(2) Loss on reissue of shares cannot be more than gain on forfeiture of those shares.
(3) At the time of forfeiture of shares, securities premium is debited along with share capital when premium has not been received.
(4) When forfeited shares are issued at premium, the premium amount is credited to Capital Reserve Account.
7. Preparation of consolidated Balance Sheet of Holding Company and its subsidiary company is done as per
(1) AS 11
(2) AS 21
(3) AS 22
(4) AS 23
8. Amount due to outgoing partner is shown in the balance sheet as his
(1) Liability
(2) Asset
(3) Capital
(4) Loan
9. Match the items of List-I with items of List-II and indicate the code of their correct matching.
10. The short-run cost function of a firm is as follows :
TC = 200 + 5Q + 2Q2
Where TC = Total Cost
Q = Physical units of the product of the firm
What would be the level of optimum output ?
(1) 05
(2) 10
(3) 12
(4) 15
11. Short-run demand and total cost functions for a monopoly firm are as under :
Demand function : Q = 100 – 0.2 P
Price function : P = 500 – 5 Q
Cost function : TC = 50 + 20 Q + Q2
Where Q = Total quantity of the product in physical units.
P = Price of the product per unit
TC = Total cost
What is the profit maximizing output of the pure monopoly firm ?
(1) 20
(2) 35
(3) 40
(4) 50
12. In which one of the following market situations, the pricing above the prevailing market price is used as a more common practice ?
(1) Markets where the selling firms face perfect competitive situations.
(2) Markets where the selling firms want to gain popularity of the products having high cross elasticity of their demand.
(3) Markets where sellers rely on their customers’ high propensity to consume a prestigious commodity.
(4) Markets where the selling firms have entered into the stages of maturity and saturation.
13. Which one of the following statements is false regarding normal distribution ?
(1) Mean, Median and Mode always coincide.
(2) Within ± 1.96 σ limits from Mean value, the area under the distribution is 99 percent of the total area.
(3) The area under the normal curve represents probabilities for the normal random variable and the total area for the normal probability distribution is one.
(4) For every pair of values of Mean and Standard deviation, the curve of the distribution is bell-shaped and symmetric.
14. If unexplained variation between variables X and Y is 36%, what is the coefficient of correlation between the variables ?
(1) 0.36
(2) 0.64
(3) 0.60
(4) 0.80
15. Which one of the following is the formula to calculate standard error of mean differences of two sample groups ?
(1) 
(2) 
(3) 
(4) 
16. A researcher wants to test the significance of the difference between the average performance of the two small sized samples when the information of the population standard deviation is not available, which one of the following hypothesis-testing is suitably used ?
(1) Z-test
(2) Chi-square test
(3) F-test
(4) t-test
17. Which of the following statements are not correct ? Indicate the correct code.
Statement I : Organizational culture means the general pattern of behaviour, belief and values that organization members have in individuality.
Statement II : As per contingency theory of Leadership, people become leader only because of the demand of group members.
Statement III : The group judgement can only be obtained through the formal committees.
Statement IV : Ombudsperson in communication function is a person assigned to investigate employee concerns and providing valuable upward communication link.
Codes :
(1) Statements I, II and IV
(2) Statements I, III and IV
(3) Statements I, II and III
(4) Statements II, III and IV
18. Assertion (A) : The organization is a closed system that operates within and interacts with the external environment.
Reasoning (R) : The system approach to management includes the outputs from the external environment on the basis of interactions between management and employees.
Codes :
(1) (A) and (R) are correct and (R) is the correct reasoning of (A).
(2) (A) and (R) are correct, but (R) is not the correct explanation of (A).
(3) (A) is incorrect while (R) is a correct statement.
(4) Both (A) and (R) are incorrect.
19. Match List-I with List-II relating to corporate ethics and indicate the code of their correct matching.
20. Find out the correct sequence of planning function of the following elements :
a. Diagnosis of opportunity
b. Establishing objectives
c. Indentifying and comparing alternatives
d. Formulating derivative plans
e. Choosing an alternative
Codes :
(1) a, c, b, e, d
(2) b, e, a, c, d
(3) a, b, c, e, d
(4) a, b, c, d, e
21. Creating the capability of making purchases directly from a firm’s website is known as
(1) Electronic Networking
(2) Electronic Transactions
(3) Electronic Data Interchange
(4) Electronic Information Transfer
22. For the following two statements of Assertion (A) and Reasoning (R) indicate the correct code :
Assertion (A) : The self image could be an individual’s own perceived image and actual image based on how others perceive the individual.
Reasoning (R) : Large number of products like credit cards, automobiles, readymade garments, designer ware, cosmetics and perfumes are bought due to self image and demographic variables like income may not be important in purchase decisions for these products.
Codes :
(1) (A) and (R) both are not correct.
(2) (A) is correct, but (R) is not correct.
(3) (A) is correct and (R) is correct explanation for (A).
(4) (A) is not correct, but (R) is correct.
23. Match the media factors given in List-I with examples given in List-II and indicate the code of current matching.
24. In integrating specialist functions of product management with the line function of sales as major challenge to top management can be achieved by which type of marketing organization ?
(1) Functional organization
(2) Territorial organization
(3) Matrix organization
(4) None of the above
25. Assertion (A) : The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained in the firm.
Reasoning (R) : Dividend policy of the firm has its effect on both the long term financing and the wealth of shareholders.
Codes :
(1) (A) and (R) both are correct and (R) is the correct explanation of (A).
(2) (A) and (R) both are correct, but (R) is not the correct explanation of (A).
(3) (A) is correct, but (R) is wrong.
(4) (R) is correct, but (A) is wrong.
26. Match the items in List-I with items in List-II and indicate the code of correct matching :
27. In certainty-equivalent approach, risk adjusted cash flows are discounted at
(1) Accounting Rate of Return
(2) Internal Rate of Return
(3) Hurdle Rate
(4) Risk-free Rate
28. ‘That personal leverage can replace corporate leverage’ is assumed by
(1) Traditional Approach
(2) M M Model
(3) Net Income Approach
(4) Net Operating Income Approach
29. Match the List-I with List-II relating to Human Resource Planning activities and indicate the code of correct matching.
30. Which council was established in India by Government of India in the year 1966 to promote safety consciousness among workers in industries ?
(1) Factory Advise Council
(2) National Safety Council
(3) National Industrial Council
(4) Safety Regulations Council
31. Assertion (A) : Recruitment is positive while selection is negative in its application.
Reasoning (R) : Recruitment aims at increasing the job seekers while selection rejects a large number of unqualified applicants.
Codes :
(1) (A) is correct, but (R) is not correct.
(2) (A) and (R) both are correct, but (R) is not the right explanation of (A).
(3) (A) and (R) both are correct and (R) is the right explanation of (A).
(4) (A) and (R) both are incorrect.
32. Match the List-I with List-II relating to Social Security measures in India and indicate the code of correct matching.
33. Match the following items of List-I with the items of List-II and indicate the code of correct matching.
34. With a view to encourage newer classes of entrepreneurs and bringing about wider dispersal of ownership and control of industrial undertakings, IDBI operates a special scheme for supplementing the equity contribution to projects made by small and new entrepreneurs. This scheme is known as
(1) Bridge Loan Scheme
(2) Soft Loan Scheme for Modernisation
(3) Technical Development Fund Scheme
(4) Seed Capital Assistance Scheme
35. Which one of the following is not the objective of UTI ?
(1) To give everyone a chance to indirectly own shares and securities in a large number of select companies.
(2) To maximise mobilisation of people’s savings by making insurance linked savings adequately attractive.
(3) To channelize the pooled savings into productive outlets.
(4) To mobilise savings of the community by offering savers the triple benefits of safety, liquidity and profitability of investments.
36. Under which of the following schemes, the IFCI procures equipment for an actual-user industrial concern by making payment to the machinery/equipment supplier, and then resells/transfers the equipment to the actual-user-industrial concern at the same cost, subject, however, to any liability arising out of taxes and other levies, being put to the account of the actual user industrial concern ?
(1) Equipment Credit Scheme
(2) Equipment Procurement Scheme
(3) Equipment Finance Scheme
(4) Scheme of Equipment Leasing
37. Match the items of List-I with List-II and denote the code of correct matching.
38. Assertion (A) : International Finance Corporation (IFC) contributes to increase sustainable agriculture opportunities, improve health and education and increase access to financing for micro finance and business client.
Reasoning (R) : The IFC has focused on a set of development goals to ensure that its projects are expected to achieve the target.
Codes :
(1) Both (A) and (R) are correct, but (R) is not the correct explanation of (A).
(2) Both (A) and (R) are correct and (R) is the correct explanation of (A).
(3) (A) is correct but (R) is incorrect.
(4) Both (A) and (R) are incorrect.
39. Under TRIPS Agreement, patent is granted subject to which of the following ?
a. The product or the process is new one.
b. It contains an inventive step.
c. It is capable of industrial application for 15 years from the grant of the patent.
d. It is capable of industrial application for 20 years from the grant of the patent.
Codes :
(1) Only a and b
(2) Only a, b and c
(3) Only a, b and d
(4) Only a and d
40. Statement I : During the period of prosperity, prices of goods fall and income of people go down. These changes in incomes of the people and prices of goods affect exports and imports of goods and thereby influence the balance of payments.
Statement II : Secular disequilibrium in balance of payments occur because of short-run changes in an economy.
Codes :
(1) Statement I is correct, but II is incorrect.
(2) Statement II is correct, but I is incorrect.
(3) Both the statements I and II are correct.
(4) Both the statements I and II are incorrect.
41. Which of the following correctly depicts differences between a merger and an acquisition of stock ?
(1) An acquisition of stock results in the total absorption of a firm whereas a merger does not.
(2) In case of a merger, the firm can deal directly with the shareholders of the acquired firm but not in the case of acquisition of stock.
(3) Shareholders of the acquired or target firm vote by their response to a tender offer in an acquisition of stock but cast a formal vote in a merger situation.
(4) A formal vote by the acquired firm’s shareholders is required for an acquisition of stock but not for a merger.
42. Match the items of List-I with the items of List-II and indicate the correct code :
43. You are given the following information :
X-Security Market-Security
Expected Return (%) 15 12
Standard Deviation of the return (%) 6 4
Coefficient of Correlation between the returns 0.4
What is the Beta-coefficient of security X to measure its systematic risk ?
Codes :
(1) 1
(2) 1.5
(3) 0.6
(4) 0.4
44. Lease which includes a third party (a lender) is known as
(1) Direct lease
(2) Sales and lease-back
(3) Leveraged lease
(4) Inverse lease
45. Which of the following activities should be shown separately in the cash flow statement prepared as per Accounting Standard-3 ?
a. Cash flow from borrowing activities.
b. Cash flow from operating activities.
c. Cash flow from financing activities.
d. Cash flow from investing activities.
e. Cash flow from miscellaneous activities.
Codes :
(1) a, b, c
(2) a, c, e
(3) b, c, d
(4) a, b, e
46. Which of the following statements is correct ?
(1) The oldest stock exchange of India is OTCEI.
(2) Sensex is an index number of 30 scrips.
(3) In book-building process, the price of the security is announced by the company.
(4) Futures and options in shares are traded at all stock exchanges of India.
47. Match the items of List-I (Developers) with the items of List-II (Methods of measuring human assets) and indicate the correct code :
48. The concept of achieving maximum profits through increased consumer satisfaction for raised market share focuses on
(1) Product
(2) Selling
(3) Customer
(4) Production
49. Which of the following is not a measure for quality of service for consumer ?
(1) Responsiveness
(2) Competition
(3) Empathy
(4) Tangibility
50. Which of the following is not a targeting strategy ?
(1) Standardization
(2) Differentiation
(3) Focus
(4) All of the above
51. Match the items of List-I with items of List-II and indicate the code of correct matching.
52. Statement I : The firm should “stick to its niching” but not necessarily to its niche.
Statement II : Multiple niching is not preferable to single niching.
Codes :
(1) Both the Statements are true.
(2) Both the Statements are false.
(3) Statement I is true, but Statement II is false.
(4) Statement II is true, but Statement I is false.
53. A descriptive thought that a person holds about something is called
(1) Belief
(2) Learning
(3) Attitude
(4) Perception
54. Deferment, Autonomy of object, use of the common place, involvement/detachment and use of metaphor are description of which of the following technique ?
(1) Brainstorming
(2) Synectics
(3) Forced Relationship
(4) Attribute listing
55. Which of the following statements are correct ? Indicate the correct combination :
a. A well motivated individual tends to experience a low degree of morale.
b. A group characterized by a high state of morale may or may not have a high degree of motivation to perform.
c. Morale can always be built up by a combination of rewards and penalties.
d. Organizations, in general, devote more direct attention towards motivational aspects of people’s behaviour than the aspects of morale.
Codes :
(1) a, b and d
(2) c and d only
(3) a, c and d
(4) b and d only
56. Assertion (A) : Organizations are increasingly getting de-jobbed.
Reasoning (R) : Jobs are becoming more amorphous and more difficult to define.
Codes :
(1) (A) and (R) both are correct but (R) is not the right explanation of (A).
(2) (A) and (R) both are not correct.
(3) (A) is correct, but (R) is incorrect.
(4) (A) is correct and (R) is right explanation of (A).
57. Which of the following statements relating to incentive payments is correct ?
(1) In Halsey incentive plan, bonus paid to a worker is equal to 50 percent of time saved divided by rate per hour.
(2) In Rowan incentive plan, bonus paid to employee is equal to the proportion of the time saved to the standard time.
(3) In Taylor’s differential piece rate system, a worker whose output exceeds standard output is paid 100 per cent of piece rate and a worker whose output falls short of standard is paid only 50 percent of piece rate.
(4) The Rowan incentive plan is the base of all other incentive, payment plans.
58. Match the most common rating errors made during performance appraisal with their right explanations. Indicate the code of correct matching.
59. Which one of the following industrial relations approach believes in state intervention via legislation and the creation of industrial tribunals as supporting management’s interest rather than ensuring a balance between the competing groups ?
(1) Unitary approach
(2) Pluralistic approach
(3) Marxist approach
(4) Judiciary approach
60. What is the term coined for the system of communication and consultation, either formal or informal, by which workers of an organization are kept informed, as and when required, about the affairs of the undertaking and through which they express their opinion and contribute to decision-making process of management ?
(1) Collective Bargaining
(2) Empowerment
(3) Workers’ participation in management
(4) Welfare state
61. Match the items of List-I with those of List-II with regard to operative functions of HRM and indicate the code of correct matching.
62. What is the popular term used for that type of option in Foreign Exchange Market which provides the holder the right to purchase or sell foreign currency at the most favorable exchange rate realized over the life of the option ?
(1) Forward reversing option
(2) Preference option
(3) Look back option
(4) Basket option
63. What is the term used popularly for the situation when a speculator, being dominant in the market, expects a drop in the value of a particular currency and he begins selling it forward ?
(1) International Fisher Effect
(2) Bandwagon Effect
(3) Interest Rate Parity Effect
(4) Relative Version Effect
64. Identify the correct statement.
(1) The Maastricht Treaty signed in February 1992 renamed European Community (EC) as European Economic Community (EEC).
(2) The main objective of the formation of ASEAN Free Trade Area in 1993 was to soften the restrictions on the movement of professionals in the region and helping poorer countries.
(3) The SAARC is a regional grouping scheme among Six South Asian Countries.
(4) The European Union, including European Monetary Union, was the biggest and most important regional integrative scheme.
65. Match List-I with List-II relating to benefits and cost of economic integration and identify the code representing correct matching.
66. What is the situation referred to as, amongst the following, when intra-region trade is duty free but there is variation in tariff structure for import from a third country ?
(1) Customs Union
(2) Common Market
(3) Free Trade Area
(4) Economic Union
67. Which of the following statements is not correct relating to comparison of FDI with trade ?
(1) Only one market can better be served with differentiated products.
(2) FDI overcomes tariff and transport cost involved in trade.
(3) It reduces financial risk through greater diversification.
(4) It creates harmonious political relations.
68. Match List-I with List-II regarding the grouping of Multi-national Corporations and identify the code representing correct matching.
69. An equipment was acquired at a cost of Rs. 10 lacs and was put to use in Scientific Research. After one year of research the equipment was brought into another business of the assessee. For charging depreciation, Block of Assets shall be increased by
(1) Rs. 10 lacs.
(2) Market value of the equipment on the date it was brought into another business.
(3) Cost or market value of the equipment, whichever is less.
(4) NIL.
70. If an assessee is engaged in the business of growing and manufacturing tea in India, the portion of agricultural income in that case shall be
(1) 100%
(2) 60%
(3) 50%
(4) 40%
71. Which of the following statements is not correct ?
(1) X is an individual assessee. He pays a monthly rent of ` 10,000 pm. He cannot deduct tax at source.
(2) On salaries, tax is deducted at source according to provisions of Sec. 192.
(3) No tax is deducted at source in respect of interest on securities issued by a domestic company.
(4) Bank will deduct tax at source @ 10% if bank fixed deposit’s interest credit is more than Rs. 10,000 in a year.
72. X donated ` 20,000 to a charitable institution, which is eligible for deduction u/s 80 G, during the financial year 2015-16. His total income during the period was Rs. 1,50,000. How much deduction he can claims u/s 80 G ?
(1) Rs. 7,500
(2) Rs. 10,000
(3) Rs. 15,000
(4) Rs. 20,000
73. X is employed in a private company at a salary of Rs. 70,000 per month and Rs. 10,000 per month as dearness pay. He received Rs. 2,000 per month as house rent allowance. He paid Rs. 2,500 per month as house rent. What is the exempted portion of house rent allowance ?
(1) Rs. 2,500
(2) Rs. 2,000
(3) Rs. 1,000
(4) NIL
74. Surcharge is payable by an individual where the total income exceeds
(1) Rs. 10 lacs
(2) Rs. 25 lacs
(3) Rs. 50 lacs
(4) Rs. 1 crore
75. Which one of the following statements is not correct ?
(1) A person may not have assessable income but still be an assessee.
(2) In some cases, the assessment year and the previous year can be same.
(3) An Indian company is always resident assessee.
(4) Surcharge is additional tax calculated on total income.
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