PAPER-II
COMMERCE
Note : This paper contains fifty (50) objective type questions, each question carrying two (2)
marks. All questions are compulsory.
1. Government regulation of business is
basically intended to
(A) make sure all business units
have the opportunity to be
successful.
(B) warn consumers against unfair
business practices
(C) make sure business firms are
socially responsible.
(D) protect the public from the
negative consequences of
business behaviour.
Answer:(D)
2. What is not the advantage of SEZ ?
(A) Improvement of infrastructure
in the hinterland.
(B) Diversion of large tracts of
farm land.
(C) Attracting foreign investment.
(D) All of the above.
Answer:(B)
3. Which type of the complaints are not
to be entertained by Consumer
Forums under the Consumer
Protection Act, 1986 ?
(A) A defective product purchased
1½ years back.
(B) Misleading advertisement in a
newspaper.
(C) Services provided free of cost.
(D) Tie in sales.
Answer:(C)
4. Which of the following is a WTO
procedure to promote globalisation ?
(A) Promotion of free trade.
(B) Reduction of budgetary
subsidies.
(C) Reduction in shipping costs.
(D) Promotion of foreign portfolio
investment.
Answer:(A)
5. Match the following regarding
disinvestment in India :
List – I List – II
(a) Disinvestment I. 1999
Policy by the
Chandrashekhar
Government
(b) Rangarajan
Committee on II. 1996
disivestment in
public sector
enterprises
(c) Strategic and III. 1991-92
nonstrategic
classification of
public enterprises
for disinvestment
(d) Formation of IV. 1993
Disinvestment
Commission
Codes :
I II III IV
(A) (c) (d) (a) (b)
(B) (a) (b) (c) (d)
(C) (c) (b) (a) (d)
(D) (a) (d) (c) (b)
Answer:(A)
6. When a partnership is dissolved and
the following claims need to be met
out piece-meal of the cash released,
which is the correct sequence in
which these claims have to be met ?
(a) Any partner’s loan
(b) Capital and Current account
balances
(c) Expenses of dissolution
(d) Outsider’s claim (both payable
and accrued)
Codes :
(A) (c), (d), (a), (b)
(B) (b), (c), (a), (d)
(C) (a), (b), (d), (c)
(D) (a), (b), (c), (d)
Answer:(A)
7. In practice, accountants consider
revenue from sales if a transaction
meets the following condition(s) :
(A) The seller has passed the legal
or economic ownership of the
goods to the buyer.
(B) The seller and the buyer have
agreed on the price of the
goods.
(C) The buyer has paid the price of
the goods or it is certain that he
will pay the price.
(D) All of the above.
Answer:(D)
8. The main difference between
marginal costing and absorption
costing lies in the treatment of
(A) Direct cost
(B) Fixed overhead
(C) Variable overhead
(D) Semi-variable overhead
Answer:(C)
9. Which of the following items is not
an appropriation of profit for a
limited company ?
(A) Corporate tax payable
(B) Ordinary dividend payable
(C) Debenture interest payable
(D) Preference dividend payable
Answer:(C)
10. Which of the following is not
applicable to responsibility
accounting ?
(A) Accounting Centre
(B) Cost Centre
(C) Investment Centre
(D) Profit Centre
Answer:(A)
11. Which one of the following is not the
basic assumption of Cardinal Utility
analysis ?
(A) Rationality of Consumer.
(B) Utility cardinally measurable.
(C) Diminishing marginal utility of
money.
(D) Hypothesis of independent
utilities.
Answer:(C)
12. Which one of the following is not a
property of indifference curve ?
(A) Negatively sloping.
(B) Convex to the point of origin.
(C) Indifference curves necessarily
have to be parallel.
(D) Two indifference curves do not
intersect each other.
Answer:(C)
13. Find the correct matching between
items of List-I and the items of
List-II.
List – I List – II
(a) Increase in (i) Leftward movement along the
demand demand curve.
(b) Contraction (ii) Rightward shift of the
of demand demand curve.
(c) Cross (iii) Demand of more than one
demand commodity to satisfy one specific want.
(d) Joint (iv) Demand of one commodity with changes in
demand the prices of another related commodity
Codes :
(i) (ii) (iii) (iv)
(A) (b) (a) (d) (c)
(B) (a) (b) (c) (d)
(C) (b) (a) (c) (d)
(D) (a) (b) (d) (c)
Answer:(A)
14. According to the Law of Variable
Proportions, the second stage of
production ends when
(A) Marginal productivity of the
variable input becomes
maximum.
(B) Both marginal productivity and
average productivity of the
variable input are equal.
(C) Marginal productivity of the
variable input becomes zero
and average productivity is
positive.
(D) Marginal productivity of the
variable input is negative but
average productivity is
positive.
Answer:(C)
15.
(A) 60
(B) 15
(C) 50
(D) None of the above
Answer:(B)
16. From a population with mean of 220
and standard deviation of 30, a
sample of 36 was drawn at random.
Calculate the standard error of the
sampling distribution and choose the
correct answer from the following
options.
(A) 7.3 (B) 6.2
(C) 6.0 (D) 5.0
Answer:(D)
17. A committee of six people is to be
formed from a group of seven men
and four women. What is the
probability that the committee will
have exactly two women ?
(A) 0.456
(B) 0.803
(C) 0.962
(D) None of the above
Answer:(D)
18. From the following Anova table,
calculate the ‘F’ value and select the
correct answer from the options
given below
(A) 22.2 (B) 31.5
(C) 33.3 (D) 36.2
Answer:(A)
19. For a hypothesis test, alpha (α) is
0.05 and beta (β) is 0.10. The power
of this test is
(A) 0.95
(B) 0.90
(C) 0.80
(D) 0.15
Answer:(B)
20. Which one(s) of the following
statements is (are) correct with
respect to Decision Support System
(DSS) ?
(i) It (DSS) is used by middle
level management.
(ii) DSS applies to mostly
structured problems.
(iii) DSS relies on mathematical
models for analysis.
(iv) DSS is largely heuristics based.
Codes :
(A) (i) and (ii) are correct.
(B) (i) and (iii) are correct.
(C) (i), (ii) and (iii) are correct.
(D) All the four are correct.
Answer:(C)
21. Given below are two statements, one
labelled as Assertion (A), and the
other labelled as Reason (R). Select
the correct answer using the code
given below :
Assertion (A) : Strategies necessarily
need to be changed over time
to suit environmental changes.
Reason (R) : To remain competitive,
organisations develop those
strategies that create value for
customers.
Codes :
(A) (A) is correct, but (R) is
incorrect.
(B) Both (A) and (R) are correct.
(C) (A) is incorrect, but (R) is correct.
(D) Both (A) and (R) are incorrect.
Answer:(B)
22. Which of the following is not true
about proactive planning ?
(A) Way of thinking about
managing the future risks.
(B) Anticipating future
contingencies.
(C) Reacting to external events.
(D) Getting ready with alternative
routes for unforseen situations.
Answer:(C)
23. Which of the following is not a
characteristic of non-programmed
decisions ?
(A) Problems are unique and novel.
(B) There are no pre--established
policies or procedures to rely on.
(C) The conditions for non programmed decisions are
highly certain.
(D) These are the responsibility of
top-management.
Answer:(C)
24. Which of the following is an ethical
behaviour of a manager ?
(A) Trading stocks on the basis of
inside information.
(B) Padding expense accounts.
(C) Not divulging trade secrets to
competitors.
(D) Being severely critical of
competitors.
Answer:(C)
25. Which of the following is suggested
by Blake and Mouton as the best
leadership behaviour ?
(A) Low concern for people but
high concern for production.
(B) Low concern for both people
and production.
(C) High concern for both people
and production.
(D) High concern for people and
low concern for production.
Answer:(C)
26. Which segmentation approach is the
most compatible with the spirit of the
marketing concept ?
(A) Benefit sought
(B) Income
(C) Social class
(D) Family size
Answer:(A)
27. Which of the stages of new product
development process can be
skipped ?
(A) Business analysis
(B) Idea screening
(C) Product testing
(D) Test marketing
Answer:(D)
28. The price-setting method which most
closely corresponds to the concept of
product positioning is
(A) cost-plus pricing
(B) going-rate pricing
(C) perceived value pricing
(D) psychological pricing
Answer:(C)
29. The most important retail marketing
decision a retailer has to make is to
(A) select the product assortment.
(B) identify its target market.
(C) choose the desired service
level.
(D) develop an effective store
atmosphere.
Answer:(B)
30. Which element of the promotion mix
do wholesalers primarily use ?
(A) Advertising
(B) Personal selling
(C) Public relations
(D) Trade show
Answer:(B)
31. Out of the following alternative
methods of project evaluation and
selection used in capital budgeting,
which one of the combinations in the
code corresponds to discounted cash
flow methods ?
(i) Internal Rate of Return
(ii) Pay Back Period
(iii) Profitability Index
(iv) Net Present Value
Codes :
(A) (i), (ii), (iii)
(B) (i), (iii), (iv)
(C) (ii), (iii), (iv)
(D) (i), (ii), (iii), (iv)
Answer:(B)
32. When the expected level of EBIT
exceeds the indifferent point for two
alternative financial plans, (Equity-
financing and Debt-financing), then
(A) The use of debt financing
would be advantageous to
increase EPS.
(B) the use of equity financing
would be advantageous to
maximize EPS.
(C) the use of debt-financing would
reduce EPS.
(D) the use of equity financing
would keep the EPS constant.
Answer:(A)
33. Which one of the following is not the
assumption of the Modigliani-Miller
Irrelevance Theory of Dividend
Policy ?
(A) No personal or corporate
income taxes.
(B) Dividend policy has its effect
on firm’s cost of equity.
(C) Capital investment policy is
independent of its dividend
policy.
(D) Stock floatation or transaction
cost does not exist.
Answer:(B)
34. Match the items of List-I with the
items of List-II.
List – I List – II
(i) Financial (a) Rate of discount at
Break-even point which NPV is zero
(ii)Cost volume profit (b) Cost of capital remains the
analysis same for different degrees of
financial leverage.
(iii) Internal (c) Analysis to study relationship
Rate of among fixed costs, variable costs, sales
Return volume and profits.
(iv) Net (d) The minimum level of EBIT needed to
Operating satisfy all fixed financial charges.
Income
Approach
Codes :
(a) (b) (c) (d)
(A) (iii) (iv) (ii) (i)
(B) (i) (ii) (iii) (iv)
(C) (iv) (iii) (i) (ii)
(D) (i) (ii) (iv) (iii)
Answer:(A)
35. Assertion (A) : The focus of
working capital management
revolves around managing the
operating cycle of the working
capital.
Reason (R) : It is because the
concept is useful to ascertain
the requirements of cash to
meet the operating expenses of
a going concern.
Codes :
(A) Both (A) and (R) are true, but
(R) is not the explanation of
working capital management.
(B) Both(A) and (R) are false.
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.
Answer:(A)
36. Which of the following terms,
includes the task, duties and
responsibilities of a particular job ?
(A) Job Evaluation
(B) Job Enrichment
(C) Job Analysis
(D) Job Enlargement
Answer:(C)
37. Match the following lists and
indicate the correct pairing :
List – I List – II
1. Simple a Evaluation by Superiors,
Ranking Peers and Subordinates.
2. Paired b Order of rating from best to
Comparison worst.
3. 360-Degree c Standardised quantitative rating.
Appraisal
4. Graphic d Comparing ratings to one another.
Rating
The correct pairing is
1 2 3 4
(A) b d a c
(B) a b c d
(C) c d a b
(D) d a b c
Answer:(A)
38. In which method of performance
appraisal, the evaluator keeps a
written record of significant events
and how difficult employees behaved
during such events ?
(A) Field Review Method
(B) BARS Method
(C) Critical Incidents Method
(D) Assessment Centre Method
Answer:(C)
39. In connection with HRD, what is
incorrect ?
(A) It is a reactive function.
(B) It develops total organisation.
(C) It focuses on autonomous work
groups.
(D) It is an integrated system.
Answer:(D)
40. In which method of training, job
conditions are duplicated with
equipments and machines which are
identical with those used at the work
place ?
(A) On the job training
(B) Apprenticeship training
(C) Vestibule training
(D) Internship training
Answer:(C)
41. Which one of the following
techniques is used by the
Commercial Banks in India to
measure the risk arising from trading
activity ?
(A) Network Analysis
(B) Sensitivity Analysis
(C) Value at risk methodology
(D) E.V.A.
Answer:(C)
42. Which of the following schemes
introduced by NABARD is intended
to provide credit to farmers ?
(A) Rural Infrastructure
Development Fund
(B) Kisan Credit Card
(C) Micro-Finance
(D) Co-Operative Development
Fund
Answer:(B)
43. Which one of the following is a
recent E-Banking initiative in
Commercial Banks in India ?
(A) RTGS
(B) NEFT
(C) NECS
(D) NET Banking
Answer:(C)
44. Which of the following fee-based
services are provided by IDBI ?
(i) Credit syndication
(ii) Corporate trustee services
(iii) Custodial services
(iv) Foreign services
Identify the correct code :
Codes :
(A) (i), (ii) and (iv)
(B) (i) and (ii)
(C) (ii), (iii) and (iv)
(D) (iii) and (iv)
Answer:(A)
45. SIDBI provides financial assistance
in the following forms :
(i) Bills financing
(ii) Project financing
(iii) Re-finance assistance
(iv) Resource support to institutions
Which of the following sequence is
correct ?
(A) (i), (iii), (iv) and (ii)
(B) (ii), (iv), (i) and (iii)
(C) (iii), (i), (iv) and (ii)
(D) (iv), (i), (iii) and (ii)
Answer:(C)
46. BOP problems in India cannot be
attributed only to
(A) Large trade deficit
(B) Increase in invisible surplus
(C) Sensitive behaviour of foreign
creditors, including NRI
foreign-currency depositors.
(D) The declining role of
concessional external finance.
Answer:(B)
47. Arrange the stages in anti-dumping
investigation process in right
sequence.
(i) Initiation
(ii) Preliminary screening
(iii) Rejection of unsubstantiated
information
(iv) Provisional findings
(v) Final findings and measures
(vi) Permitting the exporting
country to modify the practices
Codes :
(A) (i), (ii), (iii), (iv), (vi), (v)
(B) (i), (ii), (iv), (iii), (vi), (v)
(C) (ii), (iv), (iii), (i), (vi), (v)
(D) (ii), (iii), (i), (vi), (iv), (v)
Answer:(D)
48. A situation where any advantage
given by one member of the WTO to
another member is extended to all
WTO members is referred to as
(A) Trade Diversion
(B) Inter Regional Principle
(C) Most Favoured Nation
(D) Least Traded Nation
Answer:(C)
49. The collapse of which of the
following systems is related to the
Triffin Paradox ?
(A) Gold Standard
(B) Exchange rate mechanism (in
1992)
(C) Bretton Woods
(D) None of the above
Answer:(C)
50. Which of the following is/are the
assumptions of the Law of One
Price ?
(i) Restriction on the movement of
goods between countries.
(ii) No transportation costs.
(iii) No tariffs
(A) Both (i) and (ii)
(B) Only (i)
(C) Both (ii) and (iii)
(D) (i), (ii) and (iii)
Answer:(C)