Commerce MCQ HUB PDF

IN
COMMERCE
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First release, December,2018
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1. Accounting
1. Land on lease should be shown in

amA. Balance sheet
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Blance sheet contrary to the fact B. Income statement
that the company does not own that C. Cash flow statement
piece of land is the implementation of D. Statement of changes in equity
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which accounting concept?

A. Matchig concept 5. Dismantling and demolition charges
B. Accrual concept is a
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C. Prudence concept A. Deferred Revenue expenditure

D. Substance over form concept B. Capital expenditure
C. Revenue expenditure
2. Bank Reconciliation statement is pre-
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D. None of the above

pared by
A. Accountant of business 6. Profit is a part of
B. Manager of business A. Income
C. Controller of business B. Owner’s capital
D. Accountant of the bank
C. Assets
3. Debit note is the basis for recording a D. All of the above
transaction in which of the following
7. Introduction of capital by owner of
journals?
A. General journal business is recorded on which side of
B. Cash journal a cash book?
C. Purchase journal A. Receipts
D. Purchase return journal B. Payments
C. Incomes
4. Which of the following financial state- D. Expenditures
ments shows the financial position of
a business at a specific date? 8. A recovery of bad debt
6 Chapter 1. Accounting
A. increases net income A. Manufacturing account

B. decreases net income B. Balance sheet
C. increases gross profit C. Trading account
D. increases gross profit and net in- D. Profit and loss account
come
15. Which of the following is the closing
9. The Journal entry in which two or balance of a ledger account?
more account is debited or credited A. Balance c/d
B. Balance b/d
is referred to as
C. Balance e/d
A. Journal entry D. Balance f/c
B. Multi entry
C. Additional entry 16. NRV or net realizable value of inven-
D. Compound entry tory is the expected selling price or
market value less
10. Which of the following is the normal
A. Carry value of the inventory
balance of a rent expense account? B. Expenses necessary to complete
A. Credit balance
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sale
B. Cash balance C. Cost of the stock
C. Overdraft D. Replacement cost
D. Debit balance
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17. If debit balances = credit balances,
11. Which of the following inventory val- trial balance only shows or checks
uation methods show higher profits the and it does not indicate that
during the period of rising prices? no errors were made during recording
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A. FIFO and posting.

B. LIFO A. Arithmetic accuracy
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C. Weighted average cost method B. Errors of commission

D. Simple average method C. Omissions of economic events
D. Understatements of balances
12. What is equity?
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A. Cash from the business 18. A company purchased a vehicle for

B. Liability of a business Rs.6000. It will be used for 5 years
C. Owner’s claim on total assets and its residual value is expected to be
D. Owner’s claim on total liabilities Rs.1000. What is the annual amount
13. Which one of the following account- of depreciation using straight line
ing equations is correct? method of depreciation?
A. Assets = Owner’s equity A. Rs. 1000
B. Assets = Liabilities + Owner’s eq- B. Rs. 2000
C. Rs. 3000
uity D. Rs. 5000
C. Assets = Liabilities-Owner’s eq-
uity 19. The account that records expenses,
D. Assets + Liabilities = Owner’s eq- gains and losses is
uity A. Personal account
B. Real account
14. Suspense account given in the trial C. Nominal account
balance will be entered in the D. None of the above
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20. Real account records 27. Which of the following items of bal-
A. Dealings with creditors or debtors ance sheet are useful in evaluating a
B. Dealings in commodities company’s liquidity?
C. Gains and losses A. Current assets and other assets
D. All of the above B. Current liabilities and current as-
sets
21. Which of the following can be dis- C. Current liabilities and plant and
tributed among the shareholders? equipment
A. Capital reserve D. In current liabilities and other as-
B. General reserve sets
C. Revaluation reserve
D. All of the above 28. The expenses that have fallen due for
payment but not paid are
22. When capital is increased by an A. Outstanding expenses
amount, it is recorded on the: B. Deffered expenses
A. Left or credit side of the account C. Accrues expenses
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B. Right or debit side of the account D. Prepaid expenses
C. Right or credit side of the account
D. Left or debit side of the account 29. Which of the following is a type of
cash receipt journal + cash payment
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23. When one or both aspects of a trans- journal?
action are recorded in the wrong class A. Bank statement
or category of account, it is called B. Statement of cash flow
C. Cash book
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A. Error of principle
B. Error of omission D. Cash documents
C. Error of commission
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D. Error of original entry 30. Prepaid expenses are considered as

A. Asset
24. A decrease in value of a fixed asset B. Liability
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due to age, wear and tear is known as C. Loss

A. Depreciation D. Capital
B. Accumulated depreciation 31. Which of the following is not an item
C. Appreciation of Balance Sheet?
D. Written Down Value (WDV) A. Accounts receivable
B. Accounts payable
25. Bills receivable is a
C. Sales revenue
A. Intangible fixed asset D. Marketable securities
B. Tangible fixed asset
C. Current asset 32. A proforma invoice is sent by
D. Investment A. Consignee to consignor
B. Consignee to debtors
26. Cash Account is C. Debtors to consignee
A. Personal account D. Consignor to consignee
B. Real account
C. Nominal account 33. Provision for cash discount on debtors
D. None of the above is a percentage of
A. Debtors A. Private limited company

B. Net debtors B. Public limited company
C. Net debtors less provision for C. Listed company
doubtful debts D. Non listed company
D. Net sales
40. Petty cash fund is supposed to be re-
34. The assets which have a limited useful plenished
life are termed as A. Every year
A. Limited assets B. Every half year
B. Depreciable assets C. Every year
C. Unlimited assets D. At the end of every accounting pe-
D. None of the above riod
35. days of grace are allowed in 41. Accounting provides information on

case of time bills, for calculating date A. Cost and income for managers
of maturity B. Company’s tax liability for a par-
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A. 2 ticular year
C. Financial conditions of an institu-
B. 4
C. 3 tions
D. All of the above
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D. 5
42. Which of the following is an example
36. Return on Investment Ratio (ROI) =
of business liability?
A. (Gross profit / Net sales) x 100
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A. Land
B. (Gross profit x Sales / Fixed as-
B. Building
sets) x 100 C. Cash
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C. (Net profit / Sales) x 100 D. Creditors

D. (Net profit / Total assets) x 100
43. When it is certain that a debt won’t be
37. In balance sheet, fixed assets are
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recovered. Which of the following is

shown at correct?
A. Cost price A. Provision for bad debt is created
B. Market value B. Account receivable is credited
C. Fair value C. Bad debts is credited
D. Written Down Value (WDV) D. Sales is debited
38. is a separate legal entity whose 44. The matching concept matches which
total capital can be divided into many of the following?
shares A. Asset with liabilities
A. Partnership B. Capital with income
B. Sole Proprietorship C. Revenues with expenses
C. Company D. Expenses with capital
D. Non-profit organization
45. A bill of exchange is called a
39. Which of the following is quoted com- by one who is liable to pay it on the
pany? due date
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A. Bill receivable A. Purchase price of machine

B. Noted bill of exchange B. Import duty
C. Bill payable C. Demmurage charges
D. None of the above D. Refundable tax
46. Which of the following is not re- 52. Which of the following ratios indicate
garded as the fundamental concept the short-term liquidity of a business?
that is identified by IAS-1? A. Inventory turnover ratio
A. The going concern concept B. Debt equity ratio
C. Acid test ratio
B. The separate entity concept
D. Proprietary ratio
C. The prudence concept
D. Correction concept 53. An expenditure whose benefit is
finished or enjoyed immediately is
47. The following is a statement of rev-
called
enues and expenses for a specific pe- A. Expense
riod of time B. Liability
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A. Trading account C. Cost
B. Trial Balance D. Income
C. Profit& Loss statements
D. Balance Sheet 54. Discount received is recorded on
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which of the following side of a cash
48. The value of inventories or stock is book?
figured out at the lower of cost and A. Receipts
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A. Purchase price B. Payments

B. Opportunity cost C. Income
C. Realizable value D. Expenditure
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D. Net realizable value

55. Which one of the following can offer
49. Provision for doubtful debts account its share to public at large?
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is a/an A. Private limited company

A. Asset account B. Listed company
B. Contra asset account C. Partnership firm
C. Nominal account D. Trust
D. Liability account 56. The following error will affect the
Trial Balance
50. Stock of a Trading concern consists
A. Error of partial omission
of B. Error of principle
A. Raw material C. Error of complete omission
B. Work in progress D. All of the above
C. Merchandise inventory
D. All of the above 57. Which of the following is the normal
balance of an accumulated deprecia-
51. XYZ firm has imported a machine tion account?
from abroad. Which of the following A. Debit balance
is NOT the element of the machine’s B. Credit balance
cost? C. Nil balance
58. Errors are mistakes A. Ending inventory

A. Intentional B. Closing stock
B. Undetected C. Cost of goods manufactured
C. Unintentional D. Cost of goods available for sale
65. Current assets are also known as
59. Assets minus liabilities equal to A. Gross working capital
A. Goodwill B. Invested capital
B. Working capital C. Assets
C. Net income D. Cash
D. Capital
66. Which of the following is not an item
60. The closing balance of petty cash of revenue expenditure?
book is considered as A. Interest on deposits accepted
A. Liability B. Annual insurance premium on in-
B. Asset
ventory
C. Expenses
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C. Customs duty paid in connection
D. Income
with the import of equipment
61. Cost of a fixed asset-Accumulated de- D. Repairs and maintenance on ma-
preciation expenses of the fixed asset chinery
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=?
A. Book value of a fixed asset 67. Which of the following is a selling
B. Market value of a fixed asset expense?
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C. Historical cost of a fixed asset A. Any tax/freight is paid on pur-

D. Recoverable amount if a fixed as- chases
set B. General salaries paid to laborers
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C. Tax& freight paid on sale

62. Which of the following is not con- D. Interest on deposits
sidered as Research& Development
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costs? 68. Which of the following foxed assets

A. Testing in search for product alter- is not depreciated in the ordinary cir-
natives cumstances?
B. Legal work on patent application A. Plant& Machinery
C. Modification of design of a pro- B. Building account
cess C. Land
D. Searching for application of new D. Equipment’s
research findings
69. Recovery of bad debt is a
63. The parties to joint venture are called A. Revenue expenditure
A. Friends B. Revenue receipt
B. Principal and agent C. Deferred expenses
C. Partners D. Capital receipt
D. Co-ventures
70. Which of the following account will
64. Opening inventory + Net purchases be credited when a typewriter is sold
=? that has been used in the office?
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A. Office equipment account 76. Joint venture account is a

B. Cash account A. Nominal account
C. Sales account B. Personal account
D. Purchase account C. Real account
D. Dummy account
71. Error which affect only one account
can be 77. What does ’aged debtors analysis’ sig-
A. Error of complete omission nify?
B. Error of posting A. shows how long debts have been
C. Compensatory errors outstanding
D. None of the above B. How old the customers are
C. How long does a business take to
72. Office equipment’s account is classi- repay the bank loans
fied as D. Minimum number of old debtors
A. Nominal accounts
B. Real account 78. The allocation of the cost of a tangible
C. Cash account plant asset to expense in the periods,
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D. Capital account in which services are received from
the asset, is termed as
73. Under which method of depreciation, A. Appreciation
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the amount of depreciation expenses B. Depreciation
remains constant throughout the life C. Fluctuation
of the asset? D. None of the above
A. Reducing balance method
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B. Unit of activity method 79. A cash deposit made by business ap-

C. Straight line method pears on the bank statement as
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D. None of these balance

A. Debit
74. Identify the correct sequence of ac- B. Credit
counting process
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C. Expenses
A. Communicating-> Recording-> D. Liability
Identifying
B. Recording-> Communicating-> 80. Cash book with cash and discount col-
Identifying umn is mostly referred to as
C. Identifying-> Communicating-> A. Simple cash book
Recording B. Two columns cash book
D. Identifying-> Recording-> Com- C. Three columns cash book
D. Petty cash book
municating
81. Which account is the odd one out?
75. A current asset that is convertible to
A. Office furniture and equipment
cash within 3 months can be referred B. Freehold land and building
to as C. Stock of raw materials
A. Cash asset D. Plant and machinery
B. Operating asset
C. Intangible assets 82. A debit balance in the bank statement
D. Cash equivalent indicates
A. Cash at bank 89. Discount for quick repayment of debt

B. Bank overdraft is normally referred to as
C. Over payment to creditors A. Trade discount
D. Cash in hand B. Prompt payment discount
C. Cash discount
83. Depreciable amount + Residual value D. Bulk discount
of a fixed asset =?
A. Depreciation expenses 90. Heavy amount spent for the advertise-
B. Accumulated depreciation ment of new company product is
C. Cost of the fixed asset A. Revenue expenditure
D. Future economic benefits of a B. Deferred Revenue expenditure
fixed asset C. Capital expenditure
D. Either ’a’ or ’c’
84. Which of the following is the most
common cause of bad debt? 91. The process of entering all transac-
A. Debtor refusal to repayment tions from the Journal to Ledger is
B. Debtor left the country called
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C. Debtor committed a crime
A. Posting
D. Debtor declared to be a bankrupt
B. Entry
85. Bills receivable endorsed are debited C. Accounting
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to D. None of the above
A. Bills Payable A/c
92. Which of the following financial state-
B. Debtor’s A/c
C. Endorsee A/c ments show the financial health of an
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D. Bills Receivable A/c organisation at a stated point of time?

A. Balance sheet
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86. Budgeting is difficult to apply in the B. Trading and Profit& Loss account
following cases C. Cash flow statement
A. Products subjected to rapid D. Statement of retained earnings
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changes
B. Job order manufacturing 93. The basic consideration(s) in distinc-
C. Uncertain market condition tion between capital and revenue ex-
D. All of the above penditure is/are
A. Nature of business
87. Petty cash balance is B. Effect on revenue generating ca-
A. Liability pacity of the business
B. Income C. Purpose of expenses
C. Expense D. All of the above
D. Asset
94. Lower the Debt Equity ratio
88. are cheques that are issued by A. Lower the protection to creditors
the business but not yet presented to B. Higher the protection to creditors
bank for payment C. It does not affect the creditors
A. Uncollected cheques D. None of the above
B. Uncredited cheques
C. Outstanding cheques 95. A Trial Balance contains the balances
D. Bounced cheques of
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A. Only Real A/c 102. Revenue and expense accounts are

B. Real A/c and Nominal A/c referred to as
C. Personal A/c A. Nominal accounts
D. Both ’b’ and ’c’ B. Real account
C. Cash account
96. Postage stamps on hand are consid- D. Bank account
ered as
103. Which of the following item will be
A. Bank balance
shown on debit side of debtors ac-
B. Prepaid expenses
count?
C. Accounts receivable
A. Discount received
D. Creditors B. Return inwards
C. Discount allowed
97. Municipal tax Rs.6000 under dispute D. Credit sales
is a
A. Contingent liability 104. will be credited if goods are
B. Revenue expenditure given as charity
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C. Current liability A. Cash
D. Current asset B. Charity
C. Purchases
98. Which of the following is NOT a cash D. Sales
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inflow?
105. The revenue recognition principle
A. Sale of fixed asset
dictates that all types of incomes
B. Issue of debentures
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should be recorded or recognized

C. Cash from business operation
when
D. Purchase of fixed asset
A. Cash is received
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B. At the end of accounting period

99. Rs.5000 spent on maintenance of
C. When they are earned
computer is D. When interest is paid
A. Deferred capital expenditure
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B. Capital expenditure 106. Term ’Credit’ means by the

C. Revenue expenditure business
D. None of the above A. Receiving of benefits
B. It has no effect on business
100. Which of the following is known as C. Providing benefits
the base for preparing trial balance? D. It depends upon items
A. Journal
107. Which of the following documents
B. Cash account
contains rules and regulations for in-
C. Ledger account
ternal management of the business?
D. Balance Sheet A. Memorandum of association
B. Articles of association
101. Balance sheet is a statement of
C. Prospectus
A. Assets D. Statutory Declaration
B. Liabilities
C. Capital 108. What is the basic accounting equa-
D. All of the above tion?
A. Capital + Liabilities = assets A. By Balance b/d

B. Assets + Liabilities = Capital B. To Balance b/d
C. Capital + Assets = Liabilities C. By Balance c/d
D. Liabilities-Capital = Assets D. To Balance c/d
109. An entry which is made on both 115. Which of the following accounting
sides of a cash book is called equation is correct?
A. Cash entry A. Cash + Other assets = Capital-
B. Contra entry Liabilities
C. Payment entry B. Capital + Liabilities = Assets + In-
D. Compound entry come
C. Assets-Liabilities = Capital
110. Bank pass book is also known as D. Assets + Capital = Liabilities
A. Bank book
B. Bank account 116. Which of the following subsidiary
C. Bank column books serves the purpose of ledger
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D. Bank statement too, in addition to the recording of
accounting transaction?
111. The concept of ’separate entity’ is
A. Purchases book
applicable to which of the following
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B. Sales book
types of businesses?
C. Bills receivable book
A. Sole proprietorship
D. Cash Book
B. Corporation
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C. Partnership 117. An asset that is NOT physical in na-

D. All of the above ture is called
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112. What is the next step to Journalizing A. Intangible asset

in accounting cycle? B. Liquid asset
A. Recording C. Current asset
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B. Posting D. Fixed asset

C. Balancing
118. The term is generally used for
D. Analyzing
the depreciation of natural resources
113. Present liability of uncertain amount, A. Amortization
which can be measured reliably by us- B. Depletion
ing a substantial degree of estimation C. Appreciation
is termed as D. Disposal value
A. Contingent liability
119. Purchase of office equipment for
B. Liability
C. Provision cash will be recorded on which side
D. Reserve of a cash book?
A. Receipts
114. In case of opening Credit Balance, B. Payments
the word are written on the C. Incomes
credit side. D. Expenditures
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120. The sales income (Credit and Cash) A. Secret reserve

of a business during a given period is B. General reserve
called C. Capital reserve
A. Transactions D. All of the above
B. Sales Returns
C. Turnover 127. Amortization of unidentified intangi-
D. Purchase Returns ble assets is in terms of
A. Conservatism concept
121. Accounts receivable& inventory are B. Materiality concept
the examples of C. Matching concept
A. Current assets D. Cost concept
B. Liquid asset
128. Accommodation bill is drawn
C. Fixed asset A. To finance actual purchase or sale
D. Capital asset
of goods
122. When the goods are returned to a B. To facilitate trade transmission
supplier C. To cater the fund requirements of
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A. A Debit note is sent to him both the parties
B. An Account sale is sent to him D. None of the above
C. A receipt is sent to him 129. Which of the following is time spann
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D. Either ’b’ or ’c’
into which the total life of a business
123. The assumption underlying the fixed is divided for the purpose of preparing
installment method of depreciation is financial statements?
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that of of the asset over its use- A. Fiscal year

ful life B. Calendar year
C. Accounting period
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A. Equal usage
B. Usage D. Accrual period
C. Charge 130. Which one of the following inven-
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tory costing methods is supposed to

124. Shares for which amount is paid by issue the most recently purchased
public are called shares goods?
A. Authorized A. FIFO
B. Paid up B. LIFO
C. Bonus shares C. AVCO or averrage cost
D. All of the above D. Moving average
125. Salaries paid in advance should be 131. Office equipment is a asset

shown on for a computer manufacturer and the
A. Asset side of the Balance sheet same office equipment is a as-
B. Liability side of the Balance sheet set for a company that deals in these
C. Credit side of the Trading account equipments
D. All of the above A. Current, fixed
B. Fixed, intangible
126. Which reserve is not shown in the C. Tangible, intangible
Balance sheet? D. Fixed, current
132. An overstatement in the value of A. Depreciation

closing stock overstates all of the fol- B. Appreciation
lowing except C. Market capitalization
A. Net income D. Reverse depreciation
B. Current assets
C. Capital of the business 139. Using ’lower of cost and net realis-
D. Cost of goods sold able value’ for the purpose of inven-
tory valuation is the implementation
133. Net income equal to Revenues mi- of which of the following concepts?
nus A. The going concern concept
A. Gains B. The separate entity concept
B. Depreciation C. The prudence concept
C. Expenses D. Matching concept
D. Capital expenditure
140. Which of the following is true about
134. Which of the following is NOT an a trial balance?
example of intangible assets?
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A. It lists down the balances of ac-
A. Franchise rights counts
B. Goodwill B. It lists down the balances of a bal-
C. Patents ance sheet
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D. Land C. It is a kind of financial statement
135. A brief explanation recorded below D. It is not a part of accounting cycle
every entry in General Journal is com-
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monly known as 141. Cash purchases is recorded in which

A. Narration of the following specialized journals?
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B. Explanation A. Purchase Journal

C. Summary B. Sales Journal
D. Other Information C. Purchase return journal
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136. Financial statements mainly help in D. Cash payments journal

A. Assumption of economic events
142. Sales expenditure budget is prepared
B. Anticipation of economic events
C. Recording of economic events by estimating the expense(s) of
D. Communication of economic A. Advertisement
B. Market analysis
events
C. Salesman’s salary
137. If an effect of an error is cancelled D. All of the above
by the effect of some other error, it is
143. The cost of a small calculator is
commonly known as
treated as an expense and not shown
A. Error of principle
B. Compensatory errors as an asset in a financial statement of
C. Error of omission a business entity due to
D. Error of commission A. Materiality concept
B. Matching concept
138. An increase in the value of fixed as- C. Periodicity concept
set is referred to as: D. Conservatism concept
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144. Revenue from sale of product ordi- 150. Money spent to acquire or upgrade
narily is reported as part of earning in physical assets is known as
the period A. Revenue expense
A. The planning takes place B. Capital expense
B. The sale is made C. Administrative expense
C. The product is manufactured D. Operating expense
D. The cash is collected 151. principle requires that the
145. Overriding commission is generally same accounting method should be
calculated on used from one accounting period to
A. Cash sale only the next
B. Total sales exceeding invoice val- A. Conservatism
B. Consistency
ue/cost
C. Business entity
C. Credit sales D. Money measurement
152. Which of the following is true when
am
146. Which of the following accounts can a debtor pays his dues?
be classified as a real account? A. The asset side of the balance sheet
A. Rent expenses account will decrease
B. Rent income account B. The asset side of the balance sheet
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C. Insurance expenses account will increase
D. Cash account C. The liability side of the balance
sheet will increase
147. Which one of the following is IN-
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D. There is no change in total assets

CORRECT about closing stock? or total liabilities
A. It is added into current assets
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B. It is deducted from Material avail- 153. The debts which are to be repaid
able for use within a short period (year or less) are
C. It becomes opening stock of next known as
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year A. Current liabilities

D. It reduces the resources of busi- B. Fixed liabilities
ness C. Contingent liabilities
D. All of the above
148. An alternative term used for accumu-
lated depreciation expenses? 154. Which of the following specialized
A. Provision for depreciation journal records "goods returned by the
B. Cumulative depreciation business"?
C. Targeted depreciation A. Purchase journal
B. Sales journal
D. Depletion
C. Purchase return journal
149. Payment of expenses will the D. Sales return journal
assets 155. Promissory note is prepared by
A. Increase A. Drawer
B. Reduce B. Endorsee
C. Apportion C. Drawee
D. Overstate D. All of the above
156. Carriage inwards refers to the cost A. Registered capital

of transportation for B. Issued capital
A. Purchase of materials C. Paid up capital
B. Sale of products D. Called up capital
C. Returns outward
D. Return of unsold goods 163. Transactions that a business does not
record in any specialized journal are
157. Which of the following event is sub- recorded in which of the following
ject matter of Accounting? books?
A. Death of key executive of the busi- A. Cash payment journal
ness B. Cash receipt journal
B. Strike of workers C. Purchases return journal
C. Payment of Rs.1000 to bank in dis- D. General journal
charge of outstanding loan
D. Marriage of the daughter of the 164. Which of the following account will
MD of the company be credited when the goods are pur-
chased on credit from Mr. Ali?
am
158. Sales on credit is recorded in which A. Purchases account
of the following journal? B. Mr. Ali account
A. Purchase journal C. Cash account
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B. Sales journal D. Sales account
C. Purchase return journal
165. Which of the following enhances the
D. Sales return journal
earning capacity of an asset?
hr
159. X draws a bill on Y. X endorsed the A. Reduction in operating costs

bill to Z. will be the payee of B. Increase in working capacity of an
asset
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the bill.
A. X C. Replacing damage parts of an as-
B. Y set
D. Both ’b’ and ’c’
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C. Z
166. Which of the following account will
160. Capital increases if increases be credited, if business bought goods
A. Expenses are greater than income on credit from Mr. Z?
B. Drawings A. Purchases account
C. Interest on capital B. Mr. Z account
D. Revenue C. Cash account
D. Sales account
161. In Journal, the business transaction
is recorded 167. Under which depreciation method,
A. Same day the amount of depreciation expenses
B. Next day remains same throughtout the life of
C. Once in a week the asset?
D. Once in a month A. Straight line method
B. Reducing balance method
162. Authorized share capital is also C. Number of units produced method
known as D. Machine hours method
19
168. Cash discount is allowed on 174. Which of the following are closed at
repayment of debt the end of an accounting period?
A. Lump sum A. Nominal accounts
B. Prompt B. Personal accounts
C. Actual C. Real accounts
D. None of them D. None of them
169. Which of the following sets of ex- 175. is the first phase of accounting
pense are the direct expense of busi- cycle
ness? A. Identifying an economic event or
A. Wages, Carriage Inward, Octroi transaction
B. Postage, Wages, Carriage Inward B. Preparing Journal
C. Purchases, Wages, Coal Expenses C. Posting entries to Ledger accounts
D. Both ’a’ and ’c’ D. Making decisions about business
170. Transaction between business and 176. No journal entry is required to be
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owner are recorded following passed when there is
concept A. Loss by theft
A. Periodicity B. Normal loss
B. Business entity
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C. Loss of bad debts
C. Prudence D. Abnormal loss of business
D. Going concern
177. Purchase of fixed assets on credit is
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171. Which error cannot be revealed on originally recorded in

the preparation of trial balance? A. Purchases book
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A. Wrong totalling of account B. Ledger

B. Compensatory errors C. Cash book
C. Error of commission D. Journal Proper
D. Wrong balancing of an account
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178. Payment of rent expenses is

172. The following is a statement show- recorded on which side of cash book?
ing the financial status of the coma- A. Receipts
pany at any given time B. Payments
A. Trading account C. Income
B. Profit& Loss statement D. Expense
C. Balance Sheet
D. Cash Book 179. Which of the following financial re-
ports shows the profitability of a busi-
173. The measure of how efficiently the ness?
assets resources are employed by the A. Income statement
firm is called B. Balance sheet
A. Liquidity ratio C. Cash flow statement
B. Leverage ratio D. Statement of changes in equity
C. Activity ratio
D. Profitability ratio 180. Contra-entries are passed only when
A. Double column cash book is pre- A. Future economic benefits for the
pared business
B. Three column cash book is pre- B. All kinds of benefits for the busi-
pared ness
C. Simple cash book is prepared C. Expenses for the business
D. Merits& Demerits for the business
181. Merchandise on hand at either the 186. The process of recording transac-
beginning or end of the accounting tions in different journals is called
period is called A. Posting
A. Raw material B. Entry making
B. Cost of goods sold C. Adjusting
D. Journalising
C. Work in progress
D. Inventory 187. Bookkeeping mainly consists of
which part of accounting process?
am
182. What is depreciation? A. Analysing
A. Cost of a fixed asset B. Preparing financial statements
B. Cost of a fixed asset’s repair C. Recording financial information
C. The residual value of a fixed asset D. Auditing the books of accounts
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D. Portion of a fixed asset’s cost con- 188. Normally the following accounts are
sumed during the current accounting balanced
period A. Real account and Nominal ac-
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count
183. Which of the following is a leverage B. Personal account and Real ac-
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ratio? count
A. Debt equity ratio C. Only Nominal account
B. Current ratio D. All accounts
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C. Quick ratio 189. The estimated value at which an as-

D. Earning power set is expected to be sold after the end
of its useful life is called
184. Which of the following is a double A. Residual value
entry for deprecation expenses? B. Salvage value
A. Accumulated depreciation Debit C. Scrap value
and depreciation expenses Credit D. All of the above
B. Depreciation expenses Debit and 190. The going concern concept assumes
accumulated depreciation Credit that
C. Cash Debit and Depreciation ex- A. The entity continue running for
penses Credit forseeable future
D. Depreciation expenses Debit and B. The entity continue running until
Cash Credit the end of accounting period
C. The entity will close its operation
185. An asset possesses which of the fol- in 10 years
lowing? D. The entity can’t be liquidated
21
191. Which of the following is the inter- 197. is the common base for prepar-
nal user of financial statements? ing a trial balance
A. Creditor of the business A. Ledger accounts
B. Government agency B. General Journal
C. Shareholder of the business C. Specialized journals
D. Manager of the business D. Balance sheet
192. Which of the following is a real ac- 198. Which of the following is used
count? to record financial transactions in
A. Salary account chronological (day-to-day) order?
B. Cash account A. Voucher
C. Outstanding rent account B. General Journal
D. Sundry creditors account C. General Ledger
D. Trial Balance
193. The persons who sign Articles ans
Memorandum of the company and 199. The installation expenses for a new
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contribute in the initial share capital machinery will be debited to
of the company are called A. Cash A/c
A. Subscribers B. Profit& Loss A/c
B. Shareholders C. Machinery A/c
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C. Managers D. Installation expenses A/c
D. Directors
200. Trial Balance is prepared to check
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194. Legal expenses incurred on a suit for accuracy of

breach of contract to supply goods is A. Ledger account balances
B. Balance sheet balances
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a
A. Capital expenditure C. Income statement balances
D. Cash flow statement balances
B. Deferred Revenue expenditure
C. Revenue expenditure
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201. Petty cash is used for payment of

D. Both ’b’ and ’c’ A. Salaries& wages of the staff
B. For purchase of assets
195. In income statement, gross profit is
C. Small expenses relating to
always equal to
postage’s and conveyance etc.
A. Sales-expenses
D. All of the above
B. Income-expenses
C. Sales-cost of goods sold 202. Which of the following is a com-
D. Sales-selling costs monly used base to create the provi-
sion for doubtful debts?
196. Fresh capital introduction will in-
A. Total purchases
crease
B. Total credit sales
A. Assets and Liabilities C. Total current assets
B. Assets and Equity D. Total current liabilities
C. Liabilities and equity and bank
balance 203. Provision for bad debts is made as
D. Capital and Liabilities per the
A. Conservatism concept A. Matching concept

B. Cost concept B. Timeliness concept
C. Consistency concept C. Accrual concept
D. Going concern concept D. Prudence concept
204. Current ratio = 210. Under diminishing balance method,

A. Quick assets/Current liabilities depreciation
B. Current assets/Current liabilities A. Is constant every year
B. Increases every year
C. Debt/Equity
C. Decreases every year
D. Current assets/Equity D. None of the above
205. Which of the following account will 211. A minimum quantity of stock always
be credited when the goods are pur- held as precaution against out of stock
chased on cash? situation is called
A. Stock account A. Zero stock
B. Cash account B. Risk stock
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C. Supplier account C. Base stock
D. Work in progress account D. None of the above
206. Interest on Capital is for the 212. Balance sheets are prepared
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business A. Daily
A. Revenue B. Weekly
B. Expense C. Monthly
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C. Gain D. Annually
D. None of the above 213. A credit balance in cash book indi-
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cates
207. Commercial accounting is based on A. Bank balance
A. Single entry book keeping B. Cash at bank
B. Double entry book keeping
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C. Bank overdraft
C. Both single and double entry book D. Bank underdraft
keeping
D. Cash basis of book keeping 214. The accrual basis of accounting
records revenues when they are
208. Purchase book is maintained to A. Collected
record B. Earned
A. All credit purchases C. Contracted
B. All cash purchases D. Readily available for use
C. Purchases of goods
215. Any return evidence in support of a
business transaction is called
209. Exercising a degree of caution in A. Journal
B. Ledger
the case of judgements needed under
C. Ledger posting
the condition of uncertainity is the as- D. Voucher
sumption of which of the following
accounting concepts? 216. Cash book records
23
A. Cash payments 223. Memorandum Joint Venture account

B. Cash Receipts is a
C. Cash payments and cash receipts A. Personal account
D. Neither cash payments nor cash B. Real account
receipts C. Nominal account
217. Net loss occurs when
A. Expenses are greater than income 224. The process of recording in Journal
B. Expenses are less than income is done
C. Expenses = Income A. Two times in a year
D. Liabilities are greater than income B. Once in a year
C. Frequently during the accounting
period
218. Which of the following is/are fixed D. At the end of an accounting period
asset(s)?
A. Closing inventory
B. Fixed deposit in a bank 225. Revenue earned but not yet received
am
C. Patents by the business is known as
D. Prepaid expenses A. Contra asset revenue
B. Accrued expenses
C. Accrued revenue
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219. Which of the following account with
normal balance is shown at the debit D. Unearned revenue
side of a trial balance? 226. Which of the following specialized
A. Rent income account
hr
journal records "goods returned by

B. Creditors account
customers"?
C. Unearned income account
A. Purchase journal
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D. Cash account B. Sales journal

220. Postdated cheques are considered as C. Purchase return journal
D. Sales return journal
A. Cash
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B. Bank balance 227. Earned but not yet received income

C. Accounts receivable is treated as
D. Cash reserve A. Asset
B. Liability
221. Specialized journals are more ade- C. Loss
quate for which type of businesses? D. Capital
A. Small businesses
B. Big businesses 228. Which of the following is not a fi-
C. Sole proprietorship nancial statement?
D. Partnership A. Profit and loss account
B. Profit and loss appropriation ac-
222. Interest on drawings is for the count
business C. Balance sheet
A. Loss D. Trial Balance
B. Expense
C. Gain 229. The following is (are) the type(s) of
D. None of the above Journal
A. Purchase Journal 235. Transferring entries from journal to

B. Sales Journal ;edger account is commonly known
C. Cash Journal as
D. All of the above A. Recording
B. Transferring
230. When obligation is not probable or C. Posting
the amount expected to be paid to set- D. Entry making
tle the liability cannot be measured
with sufficient reliability, it is called 236. Drawing is a type of
A. Contingent liability A. Expense
B. Withdrawal of capital
B. Provision
C. Income
C. Secured loan
237. The left side of an account is known
231. Difference of total of debit and credit as and the right side as
side of the trial balance is transferred A. Debit, Credit
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to B. Credit, Debit
A. Suspense A/c C. Liability, Asset
B. Difference A/c D. None of the above
C. P& L A/c
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D. Trading A/c 238. The accounting equation is based on
A. Dual aspect
232. General office expenses are charged B. Business entity
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to which of the following head? C. Going concern concept

A. Administrative expenses D. All of the above
B. Marketing expenses
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239. Capital expenditures are recorded in

C. Selling expenses
the
D. Financial expenses A. Trading account
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B. Profit& Loss account

233. Economic life of an enterprise Is
C. Balance sheet
split into periodic interval as per D. All of the above
concept
A. Materiality 240. Which of the following is the exter-
B. Periodicity nal user of financial statements?
C. Accrual A. Manager of the business
D. Conservation B. CEO of the business
C. Creditor of the business
234. Auditing refers to D. Controller of the business
A. Reporting the financial informa-
tion 241. Accounts payable has balance
B. Examination of financial informa- A. Credit
tion B. Debit
C. Unfavorable
C. Preparation of financial state-
D. Favorable
ments
D. Maintaining the ledger accounts 242. Liability for bill discounted is a
25
A. Contingent liability 249. Which of the following are the own-

B. Fixed liability ers of a company?
C. Current liability A. Proprietors
D. None of the above B. Partners
C. Shareholders
243. is the gross inflow of eco- D. Managers
nomic benefits
A. Assets 250. Commission to promote credit sale
B. Liabilities by consignee is known as
C. Income A. Del credere commission
D. Expenses B. Over riding commission
244. Those transactions for which there C. Ordinary commission
D. Special commission
is no separate book, are recorded in
the 251. A low Return on Investment Ratio
A. Cash book (ROI) indicates
B. Bills receivable book A. Improper utilization of resources
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C. Bills payable book B. Over investment in assets
D. Journal Proper C. Both A and B
245. Reserve capital means D. None of the above
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A. Part of subscribed uncalled capital
B. Accumulated profit 252. What is nature of Capital account?
C. Part of Capital Reserve A. Debit
D. Part of Capital Redemption Re- B. Credit
hr
C. Expenses
serve
D. Loss
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246. There must be a gap of at least

253. is the withdrawal of cash and
month between two calls
A. 3 goods by the owner of the business
for his/her personal use
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B. 1
C. 6 A. Depreciation
D. 2 B. Drawings
C. Outflow of cash
247. Under which method of inventory D. Appreciation
costing, a pre-determined cost is as-
signed to all items of inventory? 254. In case of debit balance, the words
A. Replacement cost method are written on the debit side
B. Standard cost method A. To Balance b/d
C. AVCO or average cost B. To Balance c/d
D. FIFO method C. By Balance c/d
D. By Balance b/d
248. The person from whom the goods
are purchased on credit are called 255. Patents accounts are
A. Debtors A. Secured loan account
B. Creditors B. Nominal account
C. Accounts receivable C. Real account
D. None of the above D. Debtors account
256. Which one of the following methods A. Account Payable

of inventory costing produces ending B. Account Receivable
stock cost close to the market value C. Cash account
of the inventory? D. Discount account
A. FIFO
B. LIFO 263. A cash book with cash, bank and dis-
C. AVCO or averrage cost count column is commonly referrred
to as
257. Which one of the following meth- A. Cash book
ods of inventory costing yields high- B. Two columns cash book
est taxable income? C. Three columns cash book
A. FIFO D. Petty cash book
B. LIFO
C. AVCO or averrage cost 264. The trade discount on purchases is
D. Standard cost method recorded
A. When it is received
258. In depreciation calculation, the use- B. When the inventory is purchased
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ful life of a fixed asset is: C. When the inventory is sold
A. a certain figure D. Not at all recorded in the books
B. an estimate
265. Bank Reconciliation statement is the
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C. a predetermined figure for all fixed
assets comparision of a bank statement (sent
by bank) with the
259. Which of the following will be deb- A. Cash receipt journal
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ited if a business purchases goods on B. Cash payment journal

credit? C. Cash book
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A. Cash D. Financial statements

B. Debtor
C. Creditor 266. The real accounts are accounts of
D. Purchases Assets, Liabilities and
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A. Expenses
260. Double entry accounting system in- B. Revenues
cludes C. Capital
A. Accrual accounting only D. Drawing
B. Cash accounting only
C. Both cash and accrual accounting 267. Parties to a bill of exchange are
D. None of the above A. Drawer
B. Drawee
261. General Journal is a book of C. Payee
entries D. All of the above
A. First
B. Original 268. Gross profit is equal to
C. Secondary A. Opening stock + purchases-
D. Generic closing stock
B. Net profit-expenses
262. Discount allowed is a kind of deduc- C. Sales-Closing stock + purchases
tion from D. Sales-Cost of goods sold
27
269. Information about an item is if 275. Goodwill is classified as which one

its ommission or misstatement might of the following assets?
influence the financial decision of the A. Fixed
users taken on the basis of that infor- B. Long term
mation C. Current
A. Concrete D. Intangible
B. Complete
C. Immaterial 276. Dividends are usually paid as a per-
D. Material centage of
A. Net profit
270. Noting charges are paid at the time B. Authorized share capital
of C. Called up capital
A. Renewal of the bill D. Paid up capital
B. Retirement of the bill
C. Dishonor of the bill 277. The long term assets that have no
D. None of the above physical existence but are rights that
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have value is known as
271. Which of the following is non-profit A. Current assets
organization? B. Fixed assets
A. Sole proprietorship C. Intangible assets
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B. Partnership D. Investments
C. Limited company
D. Trust 278. Interest on loan paid by business is
hr
an example of
272. An ‘account’ records the in A. Revenue expense
the balance of an item B. Income
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A. Increase C. Asset
B. Decrease D. Return outward
C. Increase or decrease
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D. Appreciation 279. The document inviting offers from

public to subscribe for the debentures
273. The claims against the company not or shares of a body corporate is a
acknowledged as debts are shown as A. Share certificate
A. Current liabilities B. Debenture
B. Loans and advances C. Fixed deposit receipt
C. Notes to balance sheet D. Prospectus
D. Director’s report
280. Outsider’s claim against the assets
274. In which of the following interim of the business is called
dividend is treated? A. Liability
A. In profit and loss account B. Expense
B. In profit and loss appropriation ac- C. Income
count D. Capital
C. On the asset side of the Balance
sheet 281. Cost incurred for the maintenance of
D. In trading account shop is considered as
A. Deffered expense 288. Purchases + opening stock-closing

B. Capital expenditure stock =?
C. Revenue expenditure A. Amount of sales
D. Preliminary expense B. Gross profit
C. Cost of goods sold
282. Unpresented cheques are also re- D. Net income
ferred to as
A. Uncollected cheques 289. All of the following are the methods
B. Uncredited cheques of inventory costing except
C. Outstanding cheques A. FIFO
D. Bounced cheques B. LIFO
C. AVCO or average cost
283. Discounting of bill by the drawer is D. Stock take
done with 290. The accounting process involves
A. Creditor
recording
B. Drawee A. Quantifiable economic event
C. Bank
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B. Non Quantifiable economic event
D. Notary public C. All of them
D. None of them
284. Identify the asset from the following
A. Cash and cash equivalent
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291. Right shares are the shares
B. Creditors A. Issued by a newly formed com-
C. Notes payable pany
D. Bank loan B. Legally issued to the public at
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large
285. The ratios that refer to the ability of C. Offered to the existing equity
the firm to meet the short term obliga-
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shareholders
tions out of its short term resources D. That have a right of redemption
A. Liquidity ratio
B. Leverage ratio 292. Trial Balance is commonly prepared
Ja
C. Activity ratio A. Frequently during the year

D. Profitability ratio B. At the end of an accounting period
C. At the end of a month
286. The maximum amount with which a D. At the end of a year
company is registered is called
293. The standard format of Journal does
A. Authorized capital
B. Issued capital not include which of the following?
A. Assets column
C. Paid up capital
B. Date column
D. Called up capital C. Description column
287. The charter of a company which de- D. Amount column
fines the limitations and powers of the 294. The following is (are) the current li-
company is called ability (ies)
A. The memorandum of association A. Bills payable
B. Articles of association B. Outstanding expenses
C. Statutory report C. Bank Overdraft
D. Certificate of commencement D. All of the above
29
295. Cash book is prepared by 301. Profit& Loss account is prepared for
A. Bank a period of one year by following
B. Accountant of business A. Periodicity concept
C. Manager of a company B. Business entity concept
D. Bank’s cashier C. Accrual concept
296. Which of the following is the effect
on net income if a business decreases 302. Net Profit = Gross Profit minus
A. Operating expenses
its provision for bad debts? B. Product cost
A. It will increase net income C. Deferred expenses
B. It will decrease net income D. Direct cost
C. No effect
D. It will increase gross profit and net 303. Preliminary expenses are treated as
income A. Fixed asstes
B. Current assets
297. Which of the following is the most C. Intangible assets
D. Miscellaneous expenditure
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important document of the company?
A. Memorandum of association
304. Journals are also referred to as
B. Articles of association A. Book of entries
C. Annual report B. Book of original entries
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D. Prospectus C. T account
D. Book of economic events
298. A cash book that is used to record
the small payments of cash is gener- 305. In the calculation of depreciation, all
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ally referred to as of the following items are actually es-

A. Simple cash book timates except:
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B. Two columns cash book A. Useful life

C. Three columns cash book B. Residual value
D. Petty cash book C. Historical cost
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D. Salvage value
299. Every business transaction affects at
least accounts 306. Which of the following account will
A. One be credited in the books of XYZ Co.
B. Two Ltd, if the business purchases a vehi-
C. Three cle thriugh cheque?
D. Infinite A. Vehicle account
B. Business account
300. Does prudence concept allow a busi- C. Bank account
ness to build substantially higher re- D. Debtors account
serves or provisions than that are ac- 307. The assets that can be converted into
tually required? cash within a short period (i.e. 1 year
A. Yes or less) are known as
B. No A. Current assets
C. To some extent B. Fixed assets
D. It depends on the type of business C. Intangible assets
D. Investments
308. will generally show a debit 315. A promissory note is drawn by

balance in favor of
A. Bank loan A. Drawer, Drawee
B. Bad debts recovered B. Maker, Payee
C. Drawings C. Payer, Payee
D. Salary payable D. Drawer, Payee
309. Debenture is also named as 316. A Master Budget consists of

A. Share A. Sales budget
B. Bond B. Production budget
C. Reserve C. Material budget
D. Equity D. All of the above
310. Opening and closing inventories are 317. Different accounting policies can be
recorded in adopted in the following area(s)
A. Journal proper A. Valuation of inventories
B. Purchase book B. Valuation of Investments
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C. Calculation of depreciation
C. Sales book
D. All of the above
D. Bill receivable book
318. Which of the following is a liability?
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311. Accrued expenses are considered as A. Cash
A. Asset B. Equipment
B. Liability C. Debtors
C. Gain D. Creditors
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D. Income
319. The concept that "an accountant
312. Net profit is computed in which of
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shouldn’t anticipate profit, but must

the following? provide for all losses"
A. Balance sheet A. Conservation concept
B. Income statement B. Consistency concept
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C. Cash flow statement C. Materiality concept

D. Statement of changes in equity D. Reduction concept
313. An asset must be by the busi- 320. Which of the following instruments
ness to be shown as an asset in its is not a negotiable instrument?
balance sheet. A. Bearer cheque
A. Possessed B. Promissory note
B. Owned C. Crossed cheque
C. Controlled D. Bills of exchange
D. Used
321. Goods returned by customer should
314. Revenue expenditures are recorded be debited to which of the following
in the accounts?
A. Manufacturing account A. Sales income account
B. Trading account B. Sales account
C. Profit& loss account C. Return inward account
D. All of the above D. Expenses account
31
322. In case goods are manufactured and A. Increase gross profit and decrease
segregated for specified consumers, net profit
the best method for valuation of in- B. Decrease gross profit as well as
ventory would be net profit
A. FIFO C. Increase value of assets
B. Simple average D. Increase gross profit as well as net
C. Base stock profit
D. Specific identification method
328. Liquid or Quick assets =
323. Which of the following accounts A. Current assets-(Stock + Work in
will be credited if a company pur- progress)
B. Current assets + Stock + Work in
chases building for cash?
progress
A. Capital account
C. (Current assets + Stock) + Work
B. Fixed assets account
in progress
C. Building account D. (Current assets + Work in
am
D. Cash account progress)-Stock
324. Del-credere Commission is allowed 329. Narrations are given at the end of
to cover
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A. Final accounts
A. All types losses B. Trial Balance
B. Abnormal loss C. Each Ledger account
C. Normal loss D. Each journal entry
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330. Which of the following is not a trans-
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325. Documentary evidence, in a specific action?

format used to record the details of a A. Goods are purchased on cash ba-
transaction is known as sis for Rs.1000
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A. Account B. Salaries are paid for the month of

B. Voucher May 2010
C. Journal C. Land is purchased for Rs. 10 lacs
D. An employee dismissed from the
D. Ledger
job
326. Which of the following financial 331. A cheque returned by bank marked
statements shows the movement of "NSF" means that
cash and cash equivalents during an A. Bank can’t verify your identity
accounting period? B. There are not sufficient funds in
A. Income statement your account
B. Balance sheet C. Cheque has been forged
C. Cash flow statement D. Cheque can’t be cashed being ille-
D. Statement of changes in equity gal
327. If the opening inventory of a busi- 332. In accounting, an economic event is

ness is undercast, it will referred to as
A. Cash 339. Endorsement, discounting and col-

B. Bank statement lection of bills of exchange is made
C. Transaction by
D. Exchange of money A. Debtors
B. Creditors
333. The main objective of providing de- C. Drawee
preciation is to D. Drawer
A. Calculate the true net profit
B. Compute the actual cash profit 340. Under cash basis of accounting, rev-
C. Create funds for replacement of enue is recognized when
fixed assets A. Sale is made
D. Reduce tax burden B. Cash is received
C. Goods are delivered
334. Sales and purchase journal doesn’t D. Services are rendered
record
A. Credit sales 341. Loss leads to reduction in
B. Credit purchases A. Capital
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C. Credit sales and purchases B. Income
C. Liabilities
D. Cash sales and purchases
335. Identify the nominal account
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342. What type of expenses are paid out
A. Machinery account
of Gross Profit?
B. Building account
A. General expenses
C. Creditors account
B. Financial expenses
hr
D. Rent expenses account C. Selling expenses

336. Current Assets-Current Liabilities D. All of the above
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=? 343. Based on which of the following

A. Capital + Liabilities = assets concepts, is share capital account
B. Absorbed capital shown on the liability side of a bal-
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C. Net assets
ance sheet?
D. Working capital
A. Business entity concept
337. When a liability is reduced or de- B. Money measurement concept
C. Cost concept
creased, it is recorded on the:
D. Going concern concept
A. Left or credit side of the account
B. Right or debit side of the account 344. Which of the following would NOT
C. Right or credit side of the account be considered as a component of ’cost’
D. Left or debit side of the account of stock?
A. Transportation inward costs
338. The maximum amount beyond
B. Import duties
which a company is not allowed to C. Salaries of selling staff
raise funds by issue of shares is D. Purchase price
A. Issued capital
B. Reserve capital 345. Which is the most important char-
C. Nominal capital acteristic that all assets of a business
D. Subscribed capital have?
33
A. Long life of assets 352. Cash received from debtor is

B. Value of assets recorded in which of the following
C. Intangible nature of assets specialized journals?
D. Future economic benefits A. Purchase Journal
B. Sales Journal
346. Which of the following is a biologi- C. Cash receipts journal
cal asset? D. Cash payments journal
A. Land
B. Building 353. Interest on debentures is calculated
C. Environment on
D. Living plants and animals A. Purchase value of debentures
B. Market value of debentures
347. A higher inventory ratio indicates C. Face value of debentures
A. Better inventory management D. All of the above
B. Quicker turnover 354. Capital of a business decreases if
C. Both A and B there is an increase in
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D. None of the above A. Drawings
B. Income
348. is not required in Promissory C. Gains
Note D. Fresh capital
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A. Acceptance
B. Noting 355. Cost of goods available for sale-
C. Discounting closing inventory =?
D. None of the above A. Opening inventiry
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B. Cost of opening finished goods in-

349. One of the Fundamental accounting ventory
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assumption is C. Work in progress ending inventory

A. Materiality D. Cost of goods sold
B. Going concern
356. In which of the following order, data
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C. Business entity
D. Dual aspect is entered into the Journal?
A. Alphabetical order
350. Credit note is the basis for recording B. Numeric order
a transaction in which of the follow- C. Bullets order
D. Chronological order
ing journals?
A. Purchase Journal 357. A company cannot issue redeemable
B. Sales return journal preference shares for a period exceed-
C. General journal ing
D. Cash receipt journal A. 10 years
B. 20 years
351. The most common imprest system is C. 30 years
the system D. 15 years
A. Petty cash
B. Cash book 358. Which of the following appears in
C. Cash receipts journal the profit and loss appropriation ac-
D. Discount count?
A. Interest on debentures 365. Which one of the following is NOT

B. Dividend true about capital expenditure?
C. Provision for taxation A. Creates future benefits
D. Provision for bad debts B. Incurred to acquire fixed assets
C. Incurred to increase the economic
359. Which of the following will affect life of existing fixed assets
the agreement of a trial balance? D. Reduce the profit of the concern
A. Complete omission of a transac-
tion 366. Which of the following does not ap-
B. Partial omission of a transaction pear in Balance sheet?
C. Error of principle A. Building
D. Compensating errors B. Cash
C. Goodwill
360. A document sent to customer when D. Rent expenses
he returns the goods is called
A. Promissory note 367. Debit balance = Credit balance in a
B. Invoice trial balance indicates that
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C. Credit note A. No error in recording transactions
D. Debit note B. No error in posting entries to
ledger accounts
361. Which of the following is/are kind
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C. Account balances are correct
of depreciation expenses? D. Mathematically Capital + Liabili-
A. Amortization ties = Assets
B. Depletion
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C. Both of them 368. When will the bill mature if the date
of maturity of a bill is a holiday
362. If a transaction is completely omit- A. Holiday itself
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ted from the books of accounts, will it B. Other agreed day

effect the agreement of Trial Balance? C. Preceding working day
A. Yes D. Next working day
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B. No
C. Transactions can 369. In an account, when credit side total
< debit side total, then, the balance is
363. Which of the following account with known as
normal balance is shown at the credit A. Negative balance
side of a trial balance? B. Debit balance
A. Cash account C. Positive balance
B. Bank account D. Credit balance
C. Equipment account
D. Accrued expenses account 370. Double entry implies that
A. Recording entries in Journal
364. The normal balance of capital ac- B. Recording entries in Ledger ac-
count is count
A. Credit balance C. Recording two aspects of every
B. Debit balance transaction
C. Cash balance D. Recording every transaction in
D. Neither debit nor credit balance books
35
371. Which liability is not included in the 377. American companies prepare their fi-
total of Balance Sheet? nancial statement in Dollars whereas
A. Current liabilities Japanese companies produce financial
B. Contingent liabilities statement in Yen. This is an example
C. Fixed liabilities of:
D. All of the above A. Stable monetary unit concept
B. Unit of measurement concept
372. Which one of the following concepts C. Money value concept
states that the publication or presen- D. Current swap concept
tation of financial statements should
378. Which of the following is (are)
not be delayed?
A. Objectivity concept type(s) of Public Limited Companies?
A. Listed companies
B. Timing concept B. Non listed companies
C. Timeliness concept C. Private limited companies
D. Reliability concept D. Both listed and non listed compa-
nies
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373. The normal balance of asset account
is 379. Which of the following is TRUE
A. Credit balance about the treatment of insurance pre-
B. Debit balance mium paid in advance
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C. Cash balance A. Current asset
D. Neither debit nor credit balance B. Current liability
C. Short term liability
374. Which counting concept dictates the D. Fixed asset
hr
inclusion of ’provision for doubtful

debts’ in the financial statements? 380. In which of the following condition,
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A. Accrual concept a company will have positive working

B. Matching concept capital?
C. Going concern concept A. If current assets>current liabilities
B. If current assets
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D. Prudence concept
C. If current assets = current liabili-
375. Patents, Copyrights and Trademarks ties
are 381. Which one of the following state-
A. Current assets
ment is CORRECT about long term
B. Fixed assets
liabilities?
C. Intangible assets
A. These are due within one year
D. Investments B. These consist of all debts, payabke
376. A firm has not recorded the bad after 12 months
C. In working capital, these are de-
debts by mistake. Which of the fol-
ducted from current assets
lowing is the effect of bad debt om- D. All of the above
mission?
A. Net profit would decrease 382. Which of the following accounts
B. Net profit would increase will be debited if the business’s owner
C. Gross profit would overstate withdraws cash from business for per-
D. Gross profit would understate sonal use?
A. Drawings 389. Declared dividend should be classi-

B. Cash fied in the balance sheet as a
C. Business A. Provision
D. Stock B. Current liability
C. Reserve
383. The other name of Journal is D. Current asset
A. Ledger
B. T account 390. Which of the following is a long
C. Day Book term liability?
D. Cash Book A. Outstanding expenses
384. Income includes B. Share capital
A. Income earned C. Debentures
B. Income received D. All of the above
C. Income receivable
D. All of the above 391. A bill of exchange when drawn re-
quires
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385. The allocation of owner’s private A. Noting
expenses to his/her business violates B. Discounting
which of the following? C. Acceptance
A. Accrual concept D. None of the above
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B. Matching concept
C. Separate business entity concept 392. "Treating a revenue expenditure as a
D. Consistency concept capital expenditure" is an example of
hr
A. Compensating error
386. The purchase price of a software that B. Error of principle
will be used for more than 12 months C. Error of omission
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should be regarded as D. Error of commission

A. a revenue expenditure
B. a capital expenditure 393. The owner of consignment stock is
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C. a long term expense A. Consignor

D. an accounting period expense B. Consignee
C. Debtors
387. The three column cash book repre- D. None of the above
sents
A. Real accounts 394. Discount allowed is
B. Nominal accounts A. Expense of business
C. Nominal and personal accounts B. Income of business
D. Real, personal and nominal ac- C. Loss of business
counts D. Abnormal loss of business
388. Expenditure incurred annually on re- 395. The normal balance of liability ac-
newal of patent is a count is
A. Revenue expenditure A. Credit balance
B. Capital expenditure B. Debit balance
C. Financial expenditure C. Cash balance
D. Operating expenditure D. Neither debit nor credit balance
37
396. The portion of the acquisition cost of 402. Which of the following capital is
an asset yet to be allocated is known taken up by the general public?
as A. Issued capital
A. Written down value B. Subscribed capital
B. Accumulated value C. Authorized capital
C. Realizable value D. Reserve capital
D. Salvage value
403. Which of the following assets are
397. Liabilities are which of the follow- shown at written down value in Bal-
ing? ance sheet?
A. Resources A. Current assets
B. Obligations B. Liquid asset
C. Future benefits C. Floating assets
D. Expenses D. Fixed asset
404. An informal accounting statement
398. The expenses related to the main op-
that lists the ledger account balances
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erations of a business are referred to
at a point of time and compares the
as
A. Administration expense total of debit balances with the total
B. Non-administration expense of credit balances is known as
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C. Selling expense A. Income statement
D. Operating expense B. Balance sheet
C. Trial balance
399. Drawings by owner of business are D. Cash Book
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generally recorded on which of the 405. Which of the following statements is

following side of a cash book? incorrect regarding capital account?
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A. Receipts A. Debit increases the capital ac-

B. Payments count balance
C. Incomes B. Credit increases the capital ac-
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D. Expenditures count balance

400. The party who sends the goods for C. Fresh capital increases the capital
sales on fixed commission basis is account balance
D. Net income increases the capital
known as
account balance
A. Drawer
B. Drawee 406. A company’s merchandise, raw ma-
C. Payee terials, finished and unfinished prod-
D. Consignor ucts which have not yet been sold is
401. Depreciation is charged on fixed as- known as
sets to comply with which of the fol- A. Sales
B. Purchases
lowing accounting principle? C. Inventory
A. Matching concept D. Work in progress
B. Prudence concept
C. Timeliness concept 407. Which one of the following is NOT
D. Reliability concept true about revenue expenditure?
A. These are the running expenses of 410. Which of the following capital is re-
the business quired for the registration of the com-
B. They improve the financial posi- pany?
tion of the business A. Issued capital
C. They reduce the profit of the con- B. Subscribed capital
cern C. Authorized capital
D. They do not appear in the balance D. Reserve capital
sheet
411. The unfavorable balance of Profit
408. How trial balance shows the accu- and Loss account should be
mulated depreciation? A. Added to liabilities
B. Subtracted from current assets
A. as a debit item
C. Subtracted from capital
B. as a credit item
D. Subtracted from liabilities
C. It doesn’t show
412. Accounting is the process of match-
409. Favourable balance of cash book im- ing
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plies A. Benefits and costs
A. Credit balance of cash book B. Revenues and costs
B. Debit balance of cash book C. Cash inflows and outflows
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C. Bank overdraft D. Potential and real performance
D. Adjusted balance of cash book
hr
Answers
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1. D 2. A 3. D 4. A 5. C 6. B 7. A 8. A 9. D 10. D 11. A 12. C 13. B

14. B 15. A 16. B 17. A 18. A 19. C 20. B 21. B 22. C 23. A 24. A
Ja
25. C 26. B 27. B 28. A 29. C 30. A 31. C 32. D 33. C 34. B 35. C
36. D 37. D 38. C 39. C 40. D 41. D 42. D 43. B 44. C 45. C 46. D
47. C 48. D 49. B 50. C 51. D 52. C 53. A 54. B 55. B 56. A 57. B
58. C 59. D 60. B 61. A 62. B 63. D 64. D 65. A 66. C 67. C 68. C
69. B 70. A 71. B 72. B 73. C 74. D 75. D 76. A 77. A 78. B 79. B
80. C 81. C 82. B 83. C 84. D 85. C 86. D 87. D 88. C 89. C 90. B
91. A 92. A 93. D 94. B 95. D 96. B 97. A 98. D 99. C 100. C 101. D
102. A 103. D 104. C 105. C 106. A 107. B 108. A 109. B 110. D 111. D
112. B 113. C 114. A 115. C 116. D 117. A 118. B 119. B 120. C 121. A
122. A 123. A 124. B 125. A 126. A 127. C 128. C 129. C 130. B 131. D
132. D 133. C 134. D 135. A 136. D 137. B 138. B 139. C 140. A 141. D
142. D 143. A 144. B 145. B 146. D 147. D 148. A 149. B 150. B 151. B
152. D 153. A 154. C 155. A 156. A 157. C 158. B 159. C 160. D 161. A
162. A 163. D 164. B 165. D 166. B 167. A 168. B 169. D 170. B 171. B
172. C 173. C 174. A 175. A 176. B 177. D 178. B 179. A 180. A 181. D
182. D 183. A 184. B 185. A 186. D 187. C 188. B 189. D 190. A 191. D
39
192. B 193. A 194. C 195. C 196. B 197. A 198. B 199. C 200. A 201. C
202. B 203. A 204. B 205. B 206. B 207. B 208. A 209. D 210. C 211. C
212. D 213. C 214. B 215. D 216. C 217. A 218. C 219. D 220. C 221. B
222. C 223. C 224. C 225. C 226. D 227. A 228. D 229. D 230. A 231. A
232. A 233. B 234. B 235. C 236. B 237. A 238. A 239. C 240. C 241. A
242. A 243. C 244. D 245. A 246. B 247. B 248. B 249. C 250. A 251. C
252. B 253. B 254. A 255. C 256. A 257. A 258. B 259. D 260. C 261. B
262. B 263. C 264. D 265. C 266. C 267. D 268. D 269. D 270. C 271. D
272. C 273. C 274. B 275. D 276. D 277. C 278. A 279. D 280. A 281. C
282. C 283. C 284. A 285. A 286. A 287. B 288. C 289. D 290. A 291. C
292. B 293. A 294. D 295. B 296. A 297. A 298. D 299. B 300. B 301. A
302. A 303. D 304. B 305. C 306. C 307. A 308. C 309. B 310. A 311. B
312. B 313. C 314. D 315. B 316. D 317. D 318. D 319. A 320. C 321. C
322. D 323. D 324. D 325. B 326. C 327. D 328. A 329. D 330. D 331. B
332. C 333. C 334. D 335. D 336. D 337. D 338. C 339. D 340. B 341. A
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342. D 343. A 344. C 345. D 346. D 347. C 348. A 349. B 350. B 351. A
352. C 353. C 354. A 355. D 356. D 357. B 358. B 359. B 360. C 361. C
362. B 363. D 364. A 365. D 366. D 367. D 368. C 369. B 370. C 371. B
372. C 373. B 374. D 375. C 376. B 377. B 378. D 379. A 380. A 381. B
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382. A 383. C 384. D 385. C 386. B 387. D 388. A 389. B 390. C 391. C
392. B 393. A 394. A 395. A 396. A 397. B 398. D 399. B 400. D 401. A
402. A 403. D 404. C 405. A 406. C 407. B 408. B 409. B 410. C 411. C
hr
412. B
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Ja
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hr
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am
2. Buiseness and commerce
1. A Company is called an artificial per-

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A. One who takes no active part in
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son because business
A. It does not have the shape of a nat- B. A working partner
ural person C. Partner for profits
D. Minor partner
hr
B. It cannot be used in the court of

law 5. In which of the following, interest /
C. It is invisible and intangible
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dividend is payable even if the com-

D. It exists only in contemplation of pany does not earn profit?
law A. Equity capital
B. Preference capital
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2. Questionnaire method is used for col- C. Debentures

lecting D. All of above
A. secondary data
B. primary data 6. Speculators who apply for shares in
C. small quantity of data new companies and expect to sell
D. data them at a premium are called as
A. bear
3. In vertical filing system, files or fold- B. bull
ers are kept C. stag
D. lame duck
A. one upon the other
B. in standing upright position 7. The Era of Scientific management is
C. in packets or large envelopes
D. in a cupboard, divided into a num- A. 1880-1930
ber of small compartments B. 1880-1931
C. 1880-1932
4. Who is dormant partner? D. 1880-1933
42 Chapter 2. Buiseness and commerce
8. A member of a co-operative society D. limited up the amount of his capi-

can leave the society by tal and loan to the firm if any
A. transferring his share to another
person without anybodys consent 14. The co-operative societies are
B. transferring his share to another started to help lower and middle class
person with the consent of the manag- people.
ing committee A. Consumers
C. transferring his share to a fellow B. Producers
number C. Marketing
D. withdrawing his capital from the D. Housing
society 15. Security merchants dealing in shares,
independent operators are called
9. A public corporation means
A. Public company
B. Government company A. Brokers
C. Statutory corporation B. Jobber
C. tarawaniwalas
am
D. Department of union government
D. mandiwalas
10. The preference shares which cannot
16. Which type of shareholders does not
be converted into equity shares are
have voting rights?
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preference shares. A. Equity shareholders
A. cumulative B. Preference shareholders
B. non-cumulative C. Deferred shareholders
C. redeemable
hr
D. Ordinary shareholders
D. non-convertible
17. A sleeping partner is one who
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11. The constitution of the IRDA consists A. contributes capital

of not more than members. B. takes active part in the business
A. 10 members C. contributes members
B. 7 members
Ja
D. contributes materials
C. 9 members
D. 8 members 18. The managerial grid consist of how
many possible leadership styles?
12. An open office has the benefit of A. 61
B. 71
A. privacy C. 81
B. economy D. 91
C. efficiency
D. inflexibility 19. A firm which outsources its works re-
quires
13. Liability of partners in respect of the A. more employees
firms debts is B. less employees
A. limited up to the amount of his C. skilled employees
capital in the business D. semi-skilled employees
B. Unlimited
C. limited up to the amount of guar- 20. Which shareholders are the real own-
antee given by the partner ers of the company?
43
A. Equity shareholders A. Equity shares

B. Preference shareholders B. Preference shares
C. Deferred shareholders C. Redeemable preference shares
D. Convertible preference sharehold- D. Debentures
ers
27. The partnership entity is
A. legal entity
21. The liability of partners in a firm is
B. legal entity and accountable entity
C. neither entity nor accountable en-
A. Limited
tity
B. Unlimited D. group of individuals without legal
C. Joint liability status
D. Separate liability
28. Preference shares are those which
22. Office is a place where carry preferential right in respect of
A. office work is done
B. employees are housed A. dividends
am
C. records are kept B. repayment of capital
D. control is situated C. both dividend and repayment of
capital
23. Which index system is used when
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D. right to vote on all important mo-
small information is required about tions in AGM
customers?
A. Vowel index 29. societies are voluntary associ-
hr
B. Book index ations of farmers framed to reap me

C. Strip index benefits of large scale farming an sci-
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D. Card index entific lines.

A. Co-operative farming
24. Shares traded through stock ex- B. Consumers
changes are called C. Producers
Ja
A. primary market D. Marketing

B. secondary market
30. If a general manager asks the sales
C. money market
manager to recruit some salesman on
D. share market
his behalf, it is an instance of
25. The first stock exchange was set up in A. Division of authority
B. Decentralisation of authority
India in
C. Delegation of authority
A. Calcutta
D. Delegation of responsibility
B. Bombay
C. New Delhi 31. The surplus generated by co-
D. Chennai operatives is distributed in the form
of
26. Which of the following securities A. Cash and kind
proves a burden on finances of the B. Dividend and profit
company, when company is not earn- C. Profit and dividend
ing profits? D. Dividend and bonus
32. The limit for maximum number of 38. The industry which is concerned with
members in a public company is re- the breeding of plants or animals,
stricted to which are used in reproduction is
A. 2000 termed as
B. 5000 A. Construction industry
C. 10000 B. Extractive industry
D. no limit C. Genetic Industry
D. Manufacturing industry
33. Decentralization of authority means
39. Layout is based on the se-
A. giving permission to the subordi- quence of work.
nate to do his work A. Group
B. conveying what the subordinate is B. Process
expected to do C. Open
C. delegating responsibility D. Closed
D. departmentalizing activities
am
40. The first stock exchange in the
34. The interests and rights of customers world
are given top priority. A. Mumbai stock exchange
A. The Vendor Model B. America stock exchange
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B. The Civic Model C. London stock exchange
C. The Austre Model D. France stock exchange
D. The Artistic Model
hr
41. Modular furniture

35. What is called to buying of shares by A. saves costs
taking money from brokers? B. saves time
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A. Margin trading C. saves space

B. Curb dealing D. saves electricity
C. Badla
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D. Forward 42. Bank overdraft is a good source of

finance for
36. The person who deals in shares, A. Short term
debentures as independent operators B. Medium term
are called as C. Long term
A. brokers D. Short and long term
B. jobbers
C. tarawaniwalas 43. When a right to sell a security is ac-
D. manidiwalls quired, it is known as
A. call option
37. The maximum number of members B. put option
in case of private limited company is C. double option
D. single option
A. 10
B. 20 44. The maximum number of partners in
C. 30 a firm carrying on banking business
D. 50 is
45
A. 7 A. The United Kingdom

B. 10 B. The USA
C. 50 C. Canada
D. 20 D. Germany
45. Economic activities are related to 51. When SEBI came into force?
A. 1992
A. Production of wealth B. 1991
B. Satisfy ones urge C. 1990
C. Undertaking social service D. 1993
D. Social service 52. A Piece Rate System written by
A. Harold Koontz
46. A nominal partner is
B. Taylor
A. not entitled to share the profits of C. Louis Allan
the concern D. Hendry Fayol
B. entitled to equal share in the prof-
am
its unless there is an agreement to any 53. Insurance business is based on
other profit sharing ratio A. Parkinson law
C. not liable for the acts of other part- B. Newton law
C. The theory of probability and law
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ners
D. not able to third parties of large numbers
D. Boyle law
47. The return of shares to the company
hr
is known as 54. Promoter is a person who

A. Surrender of shares A. takes part in the incorporation of
a company
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B. Transmission of shares
C. Redeemable shares B. is a director
D. Irredeemable shares C. is a relative of the managing direc-
tor
Ja
48. A partnership firm cannot raise funds D. works to publicity to the company
by
A. bank loan
55. One-man-one-vote-is the principle
B. Partner loan
adopted by
C. debentures
A. Partnership
D. partner capital
B. Joint Stock Companies
49. The liability of shareholders of a pub- C. Co-operative Societies
D. Sole proprietorship
lic company is limited to the
A. nominal value of shares 56. Fixed capital is also called as
B. extent of their private assets A. blocked capital
C. paid up value of shares B. unblocked capital
D. accounts called up C. working capital
D. non-working capital
50. Life insurance in its present form
came to India from 57. layout is not flexible.
A. Product A. the liability of its member is lim-

B. stationary ited
C. functional B. members can conveniently trans-
D. combined fer their shares
C. it offers infinite scope for expan-
58. Indexing is an important sion
A. method of filing D. it mobilizes vast amount of finan-
B. method of maintaining account cial resources
books
C. aid to filing 64. A Bull speculator is also called as
D. method of maintaining statistical
books A. mandiwala
B. tejiwala
59. The authority is decentralized in C. tarawaniwalas
which leadership style? D. vaniwalas
A. positive style
am
65. Except life insurance generally the
B. negative style
maximum term of other insurance is
C. free-rain style
.
D. democratic style
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A. 12 months
60. The price of a share quoted in the B. 24 months
stock exchange is cum, dividend C. 6 months
D. 36 months
hr
when
A. it is inclusive of dividend declared 66. The liability of members of a co-
B. it is exclusive of dividend declared
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operative society is
C. it excludes interest A. limited to the amount of nominal
D. it includes interest value of capital held
Ja
B. limited to the amount of paid up

61. Processing of data through computer value of the capital held
is done by its C. unlimited
A. output unit D. limited or unlimited depending
B. control unit upon what the society has opted for it
C. CPU
D. mouse
67. scale firms enjoy economies of
62. The charter of a company is its scale.
A. prospectus A. Complex
B. statement lieu of prospectus B. Medium
C. memorandum of association C. Large
D. articles of association D. Small
63. The most important advantage of a 68. Which types of files are available in
joint stock company form of business the form of tray that lie flat horizon-
organization is that tally in a cabinet?
47
A. Horizontal files 74. A speculator who expects a rise in

B. Vertical files price of securities in the future are
C. Visible files called as
D. Metal files A. bear
B. bull
69. A certain percentage of the sum as- C. stag
sured is paid periodically according to D. lame duck
the terms of policy is known as
. 75. Business risks can be
A. Term policy A. avoided
B. Endowment policy B. reduced
C. Money-Back Policy C. ignored
D. erased
D. Group insurance policy
76. When an existing company offers its
70. The co-operative societies are
shares for sale to the existing share-
established for the benefit of small
am
holders, it is known as
producers. A. private placing
A. Consumers B. bonus issue
B. Producers C. rights issue
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C. Marketing D. offer for sale
D. Housing
77. The optimum point is an size of
71. Which co-operative societies are help-
hr
a firm.
ful to their members in purchasing A. Ideal
land and constructing houses? B. Average
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A. Consumers C. Over
B. Producers D. Extra
C. Marketing
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D. Housing 78. PBX stands for

A. Private Book Exchange
72. Office is to a business what the main- B. Private Branch Exchange
spring is to watch by C. Private Block Exchange
A. G R Terry D. Private Business Exchange
B. Lawrence S R Dicksee
79. is an instrument which repro-
C. Standing ford
duces sound at a distance by means of
D. Mill
electricity.
A. Typewriter
73. An office routine
B. Telephone
A. is a system
C. FAX
B. is an operation
D. Photocopier
C. stands in between a system and an
operation 80. In case of layout, production
D. stands in between a process and is carried on in special purpose ma-
an operation chine.
A. functional 87. Dividend declared by a company

B. product
C. stationary A. may be paid in kind
D. combined B. must be paid in cash
C. may be paid in cash or in kind
81. Which type of classification is based D. may be paid in cash only
on alphabetical order?
88. Over-capitalization results from
A. Alphabetical classification
B. Numerical classification A. payment of excessive amount for
C. Subject wise classification
goodwill
D. Geographical classification B. underestimating the rate of capi-
82. A representative firm works under talization
C. raising more money than can be
conditions.
profitably used
A. average D. raising only the money
B. ideal
am
C. bad 89. A partner in a firm
D. good A. cannot transfer his share to an out-
sider
83. The agent of brokers who obtain busi- B. can transfer his share to an out-
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ness for them are sider with the consent of majority
A. remesiers partners
B. trade agents C. can transfer his share to an out-
hr
C. middlemen sider without the consent of any other

D. taraniwala partners
D. can transfer his share to an out-
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84. A is an acknowledgement of a sider with the consent of all other part-

debt. ners
A. share
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B. debenture 90. The preference shares holders who

C. equity share have no claim for the arrears of divi-
D. preference share dend are preference shares.
A. Cumulative
85. For synthetic type of production B. Non-cumulative
lay out is preferable. C. Redeemable
A. combined D. Irredeemable
B. line
91. The minimum number of members
C. stationary
for registration of a co-operative soci-
D. process
ety is
86. A private company should have at A. two
B. seven
least C. ten
A. 2 members D. twenty
B. 7 members
C. 10 members 92. The method of evaluating the effi-
D. 50 members ciency of workers is termed as
49
A. merit rating A. direct

B. job evaluation B. indirect
C. filing C. basic
D. indexing D. private
93. When a right to purchase securities is 99. Unsecured debentures are also called
acquired it is know as as
A. call option A. Mortgaged debentures
B. put option B. Simple debentures
C. double option
C. Bearer debentures
D. single option
D. Registered debentures
94. Earning Goodwill is for busi-
ness ethics. 100. Stock Exchanges in India are under
A. Need the control of
B. Uses A. SEBI
B. SEC
am
C. merits
D. None C. RBI
D. financial Institution
95. While delegating, a superior
iR
delegates 101. The transitional period in the life
A. Only authority of an expanding firm is called
B. Authority and responsibility firm.
C. Authority, responsibility and ac-
hr
A. pessimism
countability B. ideal
D. Authority and responsibility but C. average
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not accountability D. good

96. The communication process is made 102. Localized materials are available at
Ja
up of various components. Which of

the following is the actual physical A. all the places
product from the source? B. certain places
A. Feedback C. central places
B. Filter
D. local places
C. Message
D. Channel 103. The building used by the profes-
97. The principle of prevention is better sional is called office.
than cure refers to A. Quiet
A. Reduction of risk B. Sound
B. Avoiding of risk C. Big
C. Transferring of risk D. Small
D. Shifting of risk
104. Preference shares are those which
98. Maintenance of records is the carry preferential right in respect of
functions of an office.
A. dividends A. ordinary shares

B. repayment of capital B. deferred shares
C. both dividend and repayment of C. redeemable shares
capital D. irredeemable shares
D. right to vote on all important mo- 111. Register of member is a
tions in AGM A. statutory book
B. statistical book
105. Which type of classification is based C. official book
on the area of operation? D. registered book
112. In which method of filing, all the let-
B. Numerical classification
ters and documents are passed in the
C. Subject wise classification
book in chorological order?
D. Geographical classification A. Box file
B. Bound book
106. importing goods for the purpose of C. Metal holders
reexport is termed as D. Pillar file
am
A. Entrepot trade
B. Import trade 113. means a method of filing
C. Export trade while indexing.
A. Classification
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D. wholesale trade
B. Trays
107. Members of Bombay stock ex- C. Page Index
D. Visible Books
change are unofficially classified into
hr
114. Which function is regarded as the

A. brokers and jobbers essence of management?
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B. brokers and tarawaniwalas A. Planning

C. jobbers and tarawaniwalas B. Organizing
D. there is no such classification of C. Staffing
D. Co-ordination
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members of stock exchange

115. The OTC Exchange of India is a
108. Franking machine is used in company incorporated under the Com-
A. bank panies Act
B. post office A. 1956
C. school B. 1966
D. colleges C. 1955
D. 1957
109. The first stock exchange in the world
is 116. The term Capitalization is used in
A. Mumbai stock exchange relation to
B. American stock exchange A. Sole-proprietorship
B. Partnership
C. London stock exchange C. Joint stock companies
D. France stock exchange D. Co-operative societies
110. Equity shares were earlier known as 117. The machines produce multiple
copies with help of a
51
A. typewriter A. Top management

B. stencil B. Middle level management
C. roller machine C. Supervisory level management
D. processor D. All of the above
118. Fully paid-up shares are called 125. refers to a smaller area.
A. Securities A. Site
B. Stock B. State
C. Dividends C. District
D. Debentures D. Country
119. LIC of India is an example of 126. Co-operative and public companies

A. department organization of the are similar in respect of
central government A. the liability of members
B. government company B. the minimum number of members
C. public corporation required for registration
D. private corporation C. the maximum number of members
am
D. method of distribution of profit
120. The management of the company is
127. A speculator who applies for new
entrusted to
share is
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A. Promoters
B. Employees A. a stag
C. Share holders B. middle man
C. jobber
D. Board of Directors
hr
D. lame duck
121. Memory unit performs the function
128. The term is concerned with
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of
moral values.
A. calculations at a very high speed
A. Ethics
B. giving out the end product B. Business
C. controlling at the operating units
Ja
C. Profit
D. storing the data D. Loss
122. Profession involves 129. Debentures are not re-
A. Rendering of personal service deemable during life time of the com-
B. Undertaking a business
pany.
C. Undertaking a contract A. Redeemable
D. Profit motive B. Irredeemable
C. Convertible
123. Which machine is used for stamping
D. Non-convertible
outward mail?
A. Franking machine 130. Providing fair returns to investors.
B. Adding machine A. Social objectives
C. Mailing machine B. National objectives
D. Accounting machine C. Economic objectives
D. Human objectives
124. Overall and strategic planning is
done by the 131. Registration of a partnership is
A. compulsory A. Premium
B. voluntary B. Policy
C. statutory C. Insurance
D. mandatory D. Contract
132. The financial market for short term 138. The co-operative societies are
funds is known as formed to give financial help to small
A. capital market farmers and other poor sections of the
B. money market society.
C. bullion market A. Consumers
D. share market B. Producers
C. Credit
133. Secured debentures are also called D. Housing
as
A. Mortgaged debentures 139. Non-economic activities aim at
B. Simple debentures
C. Bearer debentures A. social service
am
D. Registered debentures B. profit maximization
C. consumer satisfaction
134. The agreement of partnership D. wealth
A. Must be oral
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B. Must be in writing 140. Public deposits obtained by a com-
C. Can be either oral or in writing pany means
D. Must be in writing on a stamp pa- A. deposits received from govern-
hr
per ment
B. deposits received from public at
135. Registration of partnership is
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large
A. optional under Indian partnership C. deposits received from stockiest
act and agent as advance
B. compulsory under the Indian part- D. deposit received from share hold-
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nership act ers

C. compulsory under the income tax
act 141. The co-operatives are associ-
D. compulsory under Indian contract ations of producers for selling their
act products at remunerative prices.
A. Consumers
136. The debentures are not given any se- B. Producers
curity on assets are called as C. Marketing
debentures. D. Housing
A. Unsecured
B. Secured 142. IRDA refers to
C. Bearer A. Insurance Regulatory Develop-
D. Registered ment Authority
B. Indian Regulatory Development
137. is a social device for elimi- Authority
nating or reducing the loss of society C. Institute of Regulatory Develop-
from certain risk. ment Authority
53
D. Insurance Regulatory Develop- 149. The most important economic func-

ment Association tion of new issue market is to
A. provide liquidity to securities
143. Which of the following is not an eco- B. provide facilities for converting
nomic activity? saving into investments
A. A doctor practicing C. give proper direction to the flow
B. A lawyer practicing law of capital
C. A professional cricketer playing D. give direction
cricket
D. A student playing cricket 150. Xerography is a process of
A. electrical photography
144. In case of minor acting as a partner, B. blue printing
his personal properties are C. fixing stamps
A. Liable for the debts of the firm D. printing address
B. Not liable for the debts of the firm
C. Partly liable for the debts of the 151. A member of a company is
am
firm A. Promoter
D. Only debts of the firm B. Registered shareholder
C. Director
145. is a substitute for a companys D. Broker
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signature.
A. Director signature 152. Which of the following securities is
B. Manager Signature not redeemable?
hr
C. Common Seal A. Equity shares

D. Managing Director Signature B. Preference shares
C. Cumulative preference shares
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146. Which of the following is an extrac- D. Debentures

tive industry?
A. Cattle breeding 153. The debentures are given a security
Ja
B. Forest cultivation on assets are called as deben-

C. Hunting tures.
D. Flour mills A. Unsecured
B. Secured
147. Which of the following is not a man- C. Bearer
ufacturing industry? D. Registered
A. Iron and steel works
B. Flour Mills 154. The principle of indemnity does not
C. Fruit canning apply to
D. Mining A. Burglary insurance
B. Fire Insurance
148. Book index is also called as C. Marine Insurance
index. D. Life and Personal Accident insur-
A. Vowel ance
B. Abound
C. Loose leaf book 155. is an important consideration
D. Card for setting up an office.
A. Office accommodation A. Commercial banks

B. Office location B. Investors in securities
C. Closed office C. Financial institutions like LFC,
D. Public office IDBI
D. Other financial institutions
156. When at least 51% shares are in the
hands of government, it is called as 162. Machine is used to point ad-
dresses of the customers or clients on
A. public corporation outgoing mail.
B. government company A. Accounting
C. public company B. Addressing
D. private company C. Franking
D. Listing
157. Insurance is based on the principle
of 163. Dividends are payable to the
A. Co-operation A. Share holders
B. Democracy B. Debenture holders
am
C. Equality C. Registrar of the company
D. Welfare D. Board of directors
158. Speculation in stock exchange
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164. Horizontal filing is also called as
means
A. Investment in securities A. box filing
B. Gambling in securities B. flat filing
hr
C. Buying and selling securities in C. open filing

the hope of making profile due to D. pillar filing
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change in prices
D. Creating secret profits 165. means a fraction of the capital
of a company.
159. A bearer of a share warrant of a com- A. Stock
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pany is B. Exchange
A. a creditor of the company C. Bear
B. a member of the company D. Stag
C. a member subject to certain condi-
tions 166. Fish culture should be classified as
D. not a member of the company
A. extractive industry
160. highly flexible type of organi- B. genetic industry
zation. C. manufacturing industry
A. Sole Trading Concern D. construction industry
B. Partnership
C. State Enterprises 167. Which of the following is not an
D. Joint Stock Companies ownership security?
A. Equity shares
161. Which of the following are compo- B. Preference shares
nents of organized sector of stock ex- C. Debentures
change? D. Both B and C
55
168. Memorandum of association of a A. Partnership Deed

firm contains B. Partnership agreement
A. rules regarding the internal man- C. Partnership contract
agement of the company D. Partnership registration
B. rules regarding the constitution
and activities of the company 175. Which of the following methods is
C. rules regarding the external man- not used for raising capital through
agement the sale of new securities?
D. rules regarding the constitution A. By issue of prospectus
B. Rights issue
169. The computations in a computer are C. Stock exchange placing
performed by D. Private placing
A. logical unit
B. memory unit 176. Investment in which of the following
C. output unit is most risky?
D. control unit A. Equity shares
B. Preference shares
am
170. Which of the following is an eco- C. Debentures
nomic activity? D. Land
A. A farmer in the field
177. The moral beliefs held by an individ-
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B. A teacher teaching his son
C. A social worker at a relief camp ual.
D. A social worker A. Values
B. Rights
hr
171. Deals with appointing people C. Duties

and placing them at the appropriate D. Personal
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jobs.
178. The minimum number of members
A. Human resources
B. Recruitment required for registration of a co-
operative society is
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C. Staffing
D. Placement A. 2
B. 7
172. Stationary layout is suitable for man- C. 10
ufacturing D. 20
A. small products
B. light products 179. Business means
C. bulky products A. Commerce
D. technical items B. Industry and commerce
C. Trade and commerce
173. Contango charge is paid by D. Selling and buying of goods
A. bull speculator to bear speculator
B. bear speculator to bull speculator 180. Which type of classification is based
C. lame duck to bull speculator on numerical order?
D. stag to under writer A. Alphabetical classification
B. Alphanumeric classification
174. A written agreement signed by all C. Numerical classification
partners is called D. Geographical classification
181. The most common method used for 187. Control of management of the com-
marketing of new securities is pany mainly vests in
A. sale of existing shareholders A. equity shareholders
B. stock exchange placing B. preference shareholders
C. direct sale to public through C. debenture holders
prospectus D. share holders
D. sale to biometers
188. Which of the following companies
182. Planning and control are func- may issue share warrants?
tions of an office. A. Companies limited by guarantee
A. informative B. Private limited companies
C. Public limited companies
B. administrative
D. Trust
C. public
D. private 189. Which is the first procedure for deal-
ing at stock exchange?
183. The Insurer who grants a guarantee A. Placing an order
am
from the direct insurer is called as B. Selection of broker
C. Contract note
A. Direct Insurer D. Settlement
B. Ceding Insurer
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C. Re-Insurer 190. is the arrangement of furniture
D. Double Insurer and equipment with the available floor
space.
hr
184. Dealings in stock exchanges can be A. Office accommodation

done by public B. Office location
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A. directly C. Office layout

B. directly or through brokers D. Open office
C. only through brokers
D. only by corporate houses 191. Which of the following is an exam-
Ja
ple of a company incorporated by a

185. type of drawer are used to in- special act of parliament?
creased desk top work area. A. Delhi cloth and general mills ltd
A. Letter tray drawer B. Tata iron and steel Co Ltd
B. Vertical file drawer C. Industrial Finance Corporation of
C. Center drawer India Ltd
D. Utility drawer D. Swadesh Cotton Mills Ltd
186. The primary function of an office is 192. Which type of adding machine pro-
vides a printed record?
A. making, using and preserving A. Listing machine
B. Non-listing machine
records
C. Numbering machine
B. remuneration personnel
D. Stamping matching
C. carrying out the management poli-
cies 193. A capital intensive enterprise re-
D. safeguarding of authority means quires
57
A. more employees 200. means a place for purchasing

B. less employees and selling something.
C. male employees A. Exchange
D. female employees B. Stock
C. Stag
194. Office layout aims at D. Bear
A. providing space to all employees 201. Which of the speculator applies for
B. optimum utilization of space
new issues with a view to prompt re-
C. providing larger open space
sale?
D. providing space A. Bull
B. Bear
195. Which method is suitable for large C. Stag
office? D. Lame duck
A. Pigeon-hole system
B. Spike filing 202. Stock exchange deals with the
C. Vertical filing A. second hand securities
am
D. Horizontal filing B. issued of equity shares
C. issue of preference shares
196. Mimeograph is a D. issue of debentures
A. stencil duplicator
iR
203. The minimum number of sharehold-
B. method of photocopying ers in a public limited company is
C. process of electrical photography
D. process of blue printing A. 2
hr
B. 3
197. New issue market is an integral part C. 5
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of the D. 7
A. stock exchange
B. capital market 204. External oral communication is
C. stock exchange and capital market passed on with the help of me-
Ja
D. discount houses chanical device.

A. Typewriter
198. A private company should have at B. Telephone
C. FAX
least members. D. Internet
A. 2
B. 7 205. Small scale firms are flexible
C. 10 in their functioning.
D. 50 A. more
B. not
199. Debentures are to be re- C. less
deemed on the expiry of a certain pe- D. none of the above
riod. 206. Debentures cannot be
A. Redeemable A. irredeemable
B. Irredeemable B. participating
C. Convertible C. registered
D. Non-convertible D. bearer
207. A partnership firm cannot raise 214. Industries are engaged in extracting
funds through and supplying products from earth,air
A. bank loan and water
B. partners loan A. Extractive Industries
C. Debentures B. Manufacturing Industries
D. partners capital C. Genetic Industries
D. Assembly Industries
208. Filing is an important aspect of
215. The office management simply
A. record keeping means to
B. book keeping A. Eliminate
C. house-keeping B. Withdraw
D. time keeping C. Control
D. Decide
209. Which function is basis of control?
A. Planning 216. Co-operative societies have
B. Organizing management.
am
C. Controlling A. Government
D. staffing B. Democratic
C. Autocratic
210. In which method of filing, papers D. Private
iR
and documents are placed in metal
holders in chorological order? 217. The oldest form of business organi-
A. Box file zation is
B. Bound book
hr
A. partnership
C. Metal holders B. sole proprietorship
D. Pillar file C. joint stock company
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D. co-operative undertaking
211. Which of the following speculators
expect fall in the prices of securities 218. An association of 25 people not reg-
Ja
in the near future? istered under the companies act, but

A. Bull carrying on business, is a/an
B. Bear A. partnership
C. Stag B. private company
D. Under inter C. public company
D. illegal association
212. Intercom system is connected with
219. Business includes
A. telephone exchange A. non-economic activities
B. PBX system B. economic activities
C. EBPAX system C. social activities
D. FAX D. production activities
213. Equity shareholders are the 220. Dividend and interest are
A. owners of the company A. synonymous terms
B. creditors of the company B. different from each other
C. debtors of the company C. debited to profit and loss account
D. directors of the company D. divisible profits
59
221. The purpose of an office is to furnish A. only when there are profits
essential services to the B. even if there are no profits
A. public C. only when directors recommend
B. management D. only when share holders recom-
C. clerks mend
D. creditors
228. When a transfer of shares takes place
222. Partnership may come into existence by the operation of law, it is known as
A. by the operation of law A. Surrender of shares

B. by an express agreement only B. Transmission of shares
C. by an express or implied agree- C. Redeemable shares
ment only D. Irredeemable shares
D. by inheritance of property 229. Nature of the product is the vital fac-
tor,which influences the of the
223. are the most important source
units.
of short term capital.
am
A. size
A. Commercial banks B. profit
B. Trade credit C. sales
C. Installment credit D. Demand
iR
D. Advances
230. The primary objective of co-
224. A valid definition of a business pur- operative society is
pose is to A. Service Motive
hr
A. Create a customer B. Profit

B. Maximize profits C. Sales Turnover
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C. Serve the society D. Democratic Management

D. Increase the wealth of the firm
231. Guarantee for employer for the loss
225. Which of the following methods of out of employee’s dishonest is
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filing do you recommend for a large A. Burglary insurance

size undertaking? B. Fidelity insurance
A. Pigeon hole system C. third party insurance
B. Spike files D. medical insurance
C. Box files 232. Ethics is derived from the Greek
D. Vertical filing
word.
226. A project, which may not add to the A. ethos
B. etho
existing profits, should be financed by C. ethic
D. ethical
A. debentures
B. preference share capital 233. Working capital means
C. equity capital A. Current asset plus current liability
D. public deposits B. Current asset minus current liabil-
ity
227. Dividend on preference capital will C. Fixed asset plus current asset
be paid D. Fixed asset minus current asset
234. Shares issued to the existing share A. earning of black money

holders on a pre-emptive basis is B. dividends not claimed by share-
holders
A. bonus shares C. retaining the earnings
B. right issue D. not paying dividends in a particu-
C. new issue lar year
D. secondary market
240. In the co-operative organization, the
235. is a machine which process voting rights of members are
text material on a page when operator A. in proportion to the capital paid by
strikes keys are arranged on the key each member
boards. B. equal, irrespective of amount of
A. Typewriter capital contribution
B. Photocopier C. in proportion to the nominal value
C. Roller copier of capital held by each member
D. Private D. in proportion to the total finance
am
supplied including the amount of loan
236. Deferred shares can be issued by by each member
A. public company 241. Layout based on similarity of

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B. private company work.
C. private company which is deemed A. Group
to be a public B. Process
C. Open
hr
D. government company
D. Closed
237. firm enjoys lowest average
iS
cost of production. 242. SEBI was given statutory status on

A. Representative
B. Optimum A. 3011992
B. 111992
Ja
C. Small-scale
D. Equilibrium C. 431992
D. 441992
238. The liability of a sole proprietor is
243. A building jointly owned is called
office
A. Limited to the extent of his capital
A. layout
invested in the business B. condominium
B. Limited to the extent of the value C. accommodation
of business assets D. location
C. Limited to the extent of the value
of business assets and his all private 244. Which of the following speculative
assets activities is based on disparity in
D. Limited value of the business as- quoted prices in different markets?
sets A. Option dealing
B. Arbitrage
239. Ploughing back of profits means C. Margin trading
D. Blank transfers
61
245. When a partnership is dissolved? 251. A firm would be able to re-

A. In any case of death of any of the duce its risk by diversifying its prod-
partner ucts and markets.
B. By mutual consent A. large scale
C. By insolvency of any of the part- B. small scale
ner C. new
D. All of above D. none of the above
246. Which method of filing is useful for 252. A speculator who expects prices to
those concerns where numbers of let- fall in future and sell securities is
ters are small? called as
A. Pigeon-hole A. bear
B. Card board filing B. bull
C. Spike C. stag
D. Press copy book method D. lame duck
am
247. Sole-trade organization is also called 253. When the name of the transferee is
as not filled in not filled in the transfer
A. Individual proprietorship deed, without filling in the name of
B. Partnership the transferee it is called
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C. Joint stock company A. option dealing
D. Co-operative society B. forward dealing
C. blank transfers
hr
248. Standard typewriter which operates D. carry over

through electricity is
254. SEBI stands for
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A. portable typewriter A. Shares Exchange Board of India

B. electronic typewriter B. Stocks Exchange Board of India
C. mini typewriter C. Securities Exchange Board of In-
D. macro typewriter
Ja
dia
D. Speculators Exchange Board of
249. In which method of filing, a spike is
India
fixed in a wooden or a metal base?
A. Pigeon-hole method 255. A Government company is one in
B. The spike file which
C. Card board filing A. the entire share capital is held by
D. Box filing the central and / or state government
B. 50% of capital is held by central
250. A manager with a share in the profits
government and the remaining 50%
by one or more state governments
A. is only a servant of the firm
C. at least 51% of the capital is held
B. becomes a partner by the opera-
by central and / or state governments
tion of law
D. all of above
C. becomes a partner by implied
agreement 256. The person whose risk is insured is
D. becomes a partner from status called .
A. Insured 263. Which is created for technological

B. Assured purpose?
C. Indemnity A. formal organization
D. both (a)& (b) B. informal organization
C. business organization
257. The primary aim of co-operative is D. strategic organization
to
A. earn more profits 264. Roller machine is also called as
B. serve the members machine.
C. raise production A. rotary
D. raise more money B. copy
C. multiple
258. Membership of a co-operative
D. single
is
A. compulsory 265. Much popular computers are
B. voluntary A. analog
C. not essential
am
B. digital
D. not compulsory C. electronic
259. A bear speculator is also called as D. log
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266. A Joint stock company is governed
A. Manidiwala by
B. Tejiwala
A. Companies Act 2006
C. Tarawaniwalas
B. Companies Act 1936
hr
D. Vaniwala
C. Companies Act 2012
260. The first organized stock exchange D. Companies Act 2013
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was set up in the year

267. OTCEI stands for
A. 1887
A. Over The Counter Exchange Of
B. 1992
Ja
C. 1991 India
D. 1994 B. Over The Country Exchange Of
India
261. In case of dissolution of partnership, C. Over The Comparison Exchange
the business of the firm Of India
A. does not come to an end D. Over The Company Exchange Of
B. comes to an end India
C. will come to an end shortly
D. constitution of the firm remains 268. is a force to drive a person to
unchanged action.
A. Motivation
262. Which of the following sources is B. Co ordination
not use for medium term financing? C. Co-operation
A. Issue of equity shares D. Control
B. Issue of debentures
C. Term loans from banks 269. were the pioneers of the co-
D. Sale of current asset operative movement.
63
A. Blackstone society C. twenty one

B. Rochdale Society of Equitable Pi- D. twenty three
oneers
C. Common Purpose Society 272. Which type of classification is based
D. Mutual Help Society of Pioneers on date and time order?
270. The difference between the actual B. Numerical classification
price and excess price of a share is C. Subject wise classification
called as D. Chronological classification
A. Discount
B. Forfeiture 273. The minimum number of members
C. Premium in a private limited company is
D. Surplus A. 2
B. 3
271. In India there are recognized
C. 7
stock exchanges at present.
D. 10
am
A. fifteen
B. sixteen
2
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Answers
1. C 2. B 3. B 4. A 5. C 6. C 7. C 8. D 9. C 10. D 11. C 12. B 13. D

hr
14. A 15. B 16. B 17. A 18. C 19. B 20. A 21. B 22. A 23. C 24. B
25. B 26. D 27. B 28. C 29. A 30. C 31. D 32. D 33. D 34. A 35. A
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36. B 37. D 38. C 39. B 40. C 41. C 42. A 43. B 44. C 45. A 46. A
47. A 48. C 49. C 50. A 51. A 52. B 53. C 54. A 55. C 56. A 57. A
58. B 59. D 60. A 61. C 62. C 63. B 64. B 65. A 66. D 67. C 68. C
Ja
69. C 70. B 71. D 72. A 73. A 74. B 75. B 76. C 77. A 78. B 79. B
80. B 81. A 82. A 83. A 84. B 85. B 86. A 87. D 88. C 89. A 90. B
91. C 92. A 93. B 94. A 95. A 96. C 97. B 98. C 99. B 100. A 101. B
102. B 103. A 104. C 105. D 106. A 107. B 108. A 109. C 110. A 111. A
112. B 113. A 114. D 115. A 116. C 117. B 118. B 119. C 120. D 121. D
122. A 123. A 124. A 125. A 126. C 127. A 128. A 129. B 130. A 131. B
132. B 133. A 134. D 135. A 136. A 137. C 138. C 139. A 140. B 141. C
142. A 143. D 144. B 145. C 146. C 147. D 148. B 149. B 150. B 151. B
152. A 153. B 154. D 155. B 156. B 157. A 158. C 159. D 160. A 161. B
162. B 163. A 164. B 165. A 166. B 167. C 168. B 169. D 170. A 171. C
172. C 173. A 174. A 175. C 176. A 177. A 178. C 179. B 180. C 181. C
182. B 183. C 184. C 185. A 186. A 187. A 188. C 189. B 190. C 191. C
192. A 193. B 194. B 195. D 196. B 197. B 198. A 199. A 200. A 201. A
202. A 203. D 204. B 205. A 206. C 207. C 208. C 209. A 210. C 211. B
212. C 213. A 214. A 215. C 216. B 217. B 218. D 219. B 220. C 221. B
222. C 223. A 224. A 225. D 226. B 227. C 228. B 229. A 230. A 231. B
232. A 233. B 234. B 235. A 236. B 237. B 238. C 239. C 240. B 241. A
242. A 243. B 244. B 245. D 246. B 247. A 248. B 249. B 250. A 251. A
252. A 253. C 254. C 255. D 256. D 257. B 258. B 259. A 260. A 261. A
262. A 263. A 264. A 265. B 266. D 267. A 268. A 269. B 270. C 271. D
272. D 273. A
am
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hr
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Ja
3. Costing
1. Value of normal loss is charged to

amA. 7600 units
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B. 10,000 units
A. other good product C. 10, 400 units
B. trading a/c D. 12,000 units
hr
C. profit and loss a/c

D. costing profit and loss a/c 5. Overhead cost is the total of
A. all indirect costs
iS
2. Cost of previous department is a part B. all direct costs

of C. indirect and direct costs
D. all specific costs
Ja
A. transferred-in costs
B. transferred-out costs 6. Value of sales considers sales value at
C. FIFO costs split off method is of
D. LIFO costs A. entire direct material of account-
ing period
3. In specification analysis, assumptions B. entire production of accounting
related to linearity states but linearity period
must be within C. portion of production of account-
A. irrelevant range ing period
B. relevant range D. entire indirect material of account-
C. significant range ing period
D. insignificant range
7. If an average inventory is 2000 units,
4. Input is 10,000 units and normal loss annual relevant carrying cost of each
is 20% of input and abnormal loss is unit is$5, then annual relevant carry-
400 units What is actual output? ing cost will be
66 Chapter 3. Costing
A. $5,000 13. "Following information is available of

B. $4,500 XYZ Limited for quarter ended June,
C. $5,500 20XX Fixed cost Rs 5,00,000 Vari-
D. $6,000 able cost Rs 10 per unit Selling price
Rs 15 per unit Output level 1,50,000
8. Balance of abnormal gain a/c is trans- units What will be amount of profit
ferred to earned during the quarter using the
A. balance sheet marginal costing technique?"
B. debit side of profit and loss a/c A. Rs 2,50,000
B. Rs 10,00,000
C. credit side of profit and loss a/c
C. Rs 5,00,000
D. costing profit and loss a/c D. Rs 17,50,000
9. Direct material is a 14. Within relevant range, cost function
A. fixed cost which cost does not change in narrow
B. variable cost ranges of activity is called
am
C. semi variable cost A. fixed cost function
D. semi fixed cost B. variable cost function
C. step variable cost function
D. step fixed cost function
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10. If sales budget variance is$57000
and flexible budget amount is$97000, 15. The type of loss that should not affect
then static budget amount will be cost of inventories is
A. $40,000
hr
A. normal loss
B. $154,000 B. abnormal loss
C. $164,000 C. seasonal loss
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D. $124,000 D. standard loss
16. If actual selling price is$500, actual

11. Idle time is
Ja
result is$250 and actual units sold are

A. time spent by workers in factory 350, then selling price variance will
B. time spent by workers in office be
C. time spent by workers off their A. $87,500
work B. $97,500
D. time spent by workers on their job C. $67,500
D. $57,500
12. Costs of issuing purchase orders, mak- 17. In process costing, a joint product is:
A. a product which is later divided
ing of delivery records for tracking
into many parts
payments and costs of inspection of
B. a product which is produced si-
items are classified as
multaneously with other products and
A. stock-out costs
is of similar value to at least one of
B. ordering costs the other products.
C. carrying costs C. A product which is produced si-
D. purchasing costs multaneously with other products but
67
which is of a greater value than any of A. property tax

the other products. B. rent for building
D. a product produced jointly with C. direct material cost
another organization D. direct wages
23. Inventory of final goods that are not
18. Quantitative expression, of action yet sold is called
plan by management of firm for a A. finished goods inventory
specified period of time is classified B. indirect material inventory
as C. direct materials inventory
A. complexity D. work in process inventory
B. process
24. In an activity based cost system; an
C. budget
activity/unit of work or task with dif-
D. batching
ferentiated purposes will be classified
19. First step in constant gross margin per- as
A. different task
centage NRV method is to allocate
am
B. purpose cost
joint to compute C. an activity
A. Gross margin percentage D. an allocation cost
B. total production cost of each prod-
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uct 25. An inward delivery charges and cus-
C. allocated joint costs tom duties are classified as
D. cost of split off point A. direct labour costs
B. indirect labour costs
hr
C. direct material costs

20. In normal costing, budgeted rate
D. indirect material costs
is multiplied to an actual quantity,
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which have been used as allocation 26. The method in which issue prices of
base to calculate material is computed by dividing to-
A. budget overhead applied tal purchase cost of material in stock
Ja
B. manufacturing overhead applied with total quantity in stock

C. labour overhead applied A. Simple average method
D. none of above B. weighted average method
C. periodical average method
21. Method, which uses specific informa- D. periodic simple average method
tion on products as weights to allocate 27. If beginning work in process equiva-
bundled revenues for each product in lent units are 2500 units, work done
bundle is classified as in current period equivalent units are
A. step down allocation method 3800 units and ending work in pro-
B. stand-alone revenue allocation cess equivalent units are 5000, then
method complete equivalent units in current
C. incremental revenue allocation period are
method A. 1800 units
D. revenue mix allocation method B. 1500 units
C. 1300 units
22. An example of fixed cost D. 1500 units
28. Buying of goods or materials for pro- A. $16,000

duction in a way that they are deliv- B. $200
ered directly on manufacturing facil- C. $400
ity of company is called D. $20,000
A. economic order quantity purchas-
34. LIFO method of pricing of materials
ing
is more suitable when
B. annual purchasing A. material prices are rising
C. just in time purchasing B. material prices are falling
D. both a and b C. material prices are constant
D. material prices are fluctuating
29. Basic objective of cost accounting is
35. Appropriate basis for apportionment
A. tax compliance. of material handling charges is
B. financial audit. A. material purchased
C. cost ascertainment. B. material in stock
D. profit analysis. C. material consumed
am
D. material wasted
30. Most suitable basis for apportioning
insurance of machine would be: 36. Direct labour and salary outlays direct
A. Floor Area material purchases, which are classi-
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B. Value of Machines fied as
C. No of Workers A. price disbursements
D. No of Machines B. cash disbursements
hr
C. budget disbursements
31. If budgeted indirect cost arte is$115 D. goods disbursements
and budgeted cost allocation base
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is$830 per hour, then annual indirect 37. Labour cost is the second element of
cost (budgeted) will be
A. $93,450 A. cost
Ja
B. $94,560 B. profit
C. $96,450 C. sales
D. $95,450 D. task
32. Total cost of producing similar prod- 38. Following information is available of
ucts divided by number of units pro- PQR for year ended March, 20XX:
duced is a technique known as 4,000 units in process, 3,800 units out-
A. sale costing system put, 10% of input is normal wastage,
B. job costing system Rs 2.50 per unit is scrap value and Rs
C. price costing system 46,000 incurred towards total process
D. process costing system cost then amount on account of abnor-
mal gain to be transferred to Costing
33. If difference between costs linked to P&L will be:-
highest and lowest observation of cost A. Rs 2,500
driver is$8000 and observation of cost B. Rs 2,000
driver is 40 machine hours, then slope C. Rs 4,000
coefficient will be D. Rs 3,500
69
39. A helpful technique, for accurate fore- 45. An arrangement of line of authority
casts about costs to be incurred in fu- within company is classified as
ture is a part of A. company structure
A. unit estimation B. organization structure
B. production estimation C. line of authority
C. cost estimation D. line of responsibility
D. price estimation 46. First step in developing an operating
budget is to
40. Which one of following is an example A. identify product
of spoilage? B. identify problem
A. short lengths from wood work C. identify quartiles
B. defective aluminium cans recy- D. identify percentiles
cled by manufacturer
C. detection of defective pieces be- 47. If budgeted cost in indirect cost pool
fore shipment is$139600 and total quantity of cost
D. all of above allocation base is$155600, then bud-
am
geted indirect cost rate would be
41. Depreciation of plant and machinery A. 69.72%
is a part of B. 79.72%
C. 99.75%
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A. factory overhead
D. 89.72%
B. selling overhead
C. distribution overhead 48. Conversion cost includes cost of
D. administration overhead converting into
hr
A. Raw material, WIP

42. Most frequently used methods of B. Raw material, Finished goods
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quantitative analysis include C. WIP, Finished goods

A. variable equation D. Finished goods, Saleable goods
B. high low method
C. low high method 49. Method of estimation of cost func-
Ja
D. constant equation tion, by making opinions and analysis

about cost and cost drivers is classi-
43. Methods used to allocate costs of re- fied as
ciprocal support departments include A. conference method
A. direct method B. inference method
C. pricing method
B. step down
D. manufacturing method
C. reciprocal method
D. all of above 50. In a joint process of production, two
or more products that yield high vol-
44. Vertical dashed line in graphical rep- ume of sales as compared to total
resentation of cost function represents sales of other products are classified
the as
A. cost representation A. split off product
B. irrelevant range B. joint product
C. relevant range C. sunk product
D. graphical representation D. main product
51. Budgeted direct labour hours are mul- 57. Indirect materials can be apportioned
tiplied to direct labour cost rate to cal- on the basis of
culate A. direct material
A. expected total direct labour cost B. prime cost
B. budgeted total direct labour cost C. direct labour hour
C. budgeted total indirect labour cost D. machine hour
D. expected labour hours
58. Continuous stock taking is a part of
52. Process of tracing direct costs and al-
location of indirect costs is known as A. annual stock taking
A. cost assignment B. perpetual inventory
B. direct assignment C. ABC analysis
C. indirect assignment D. VED analysis
D. economic assignment
59. Costing system, which classify cost
53. Non-financial and financial aspects of into cost categories in a way when
am
plan by company management, is clas- an expense is incurred in process is
sified as called
A. complexity A. conversion expense costing sys-
B. process tem
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C. budget B. inventory costing system
D. batching C. process costing system
D. job costing system
hr
54. Merricks multiple piece rate system

has 60. AT Co makes a single product and
is preparing its material usage bud-
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A. two rates
B. three rates get for next year Each unit of product
C. four rates requires 2kg of material, and 5,000
D. five rates units of product are to be produced
Ja
next year Opening inventory of mate-

55. Slope coefficient is 0.75 and differ- rial is budgeted to be 800 kg and AT
ence in machine hours is$65000 then co budgets to increase material inven-
difference in cost would be tory at the end of next year by 20%.
A. $86,667 The material usage budget for next
B. $48,750 year is
C. $85,000 A. 8,000 Kg
D. $55,000 B. 9,840 kg
C. 10,000 Kg
56. For estimation of each cost pool for D. 10,160 Kg
cost function, attention must be paid
to 61. "BDL Ltd. is currently preparing its
A. cost object hierarchy cash budget for the year to 31 March
B. management hierarchy 20XX. An extract from its sales bud-
C. price hierarchy get for the same year shows the fol-
D. cost hierarchy lowing sales values. Rs March 60,000
71
April 70,000 May 55,000 June 65,000 66. In plotting of cost functions, level of
40% of its sales are expected to be for activities according to which charged
cash. Of its credit sales, 70% are ex- cost is represented on
pected to pay in month after sale and A. x-axis
take a 2% discount. 27% are expected B. y-axis
to pay in the second month after the C. unit axis
sale, and the remaining 3% are ex- D. term axis
pected to be bad debts. The value of
67. If static budget is$208000 and flexible
sales budget to be shown in the cash
budget amount is$305000, then sales
budget for May 20XX is"
A. Rs. 60,532 budget variance will be
B. Rs. 61,120 A. $67,000
C. Rs. 66,532 B. $97,000
D. Rs. 86,620 C. $57,000
D. $47,000
62. Which of the following methods of
am
stock control aims at concentrating 68. An ability of an accounting system,
efforts on selected items of material? to point out use of resources in every
A. Perpetual inventory system step of production process is called
B. Material turnover ratio A. back-flush trails
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C. Level setting B. audit trails
D. ABC analysis C. trigger trails
D. lead manufacturing trails
63. Cost which is related to specific cost
hr
object and cannot be economically 69. The type of process loss that should
traceable is classified as not affect the cost of inventory value
iS
A. line cost is
B. staff cost A. abnormal loss
C. direct cost B. normal loss
Ja
D. indirect cost C. seasonal loss

64. An allocation approach, in which all D. standard loss
overhead entries are restated using ac-
70. Average method of pricing the mate-
tual cost rates in place of budgeted
rial issues is useful when
rates is called A. material prices are rising
A. unadjusted budget rate approach
B. material prices are falling
B. adjusted allocation rate approach
C. unadjusted allocation rate ap- C. material prices are constant
D. material prices are fluctuating
proach
D. adjusted budget rate approach 71. Systematic way of linking group of in-
65. Comprehensive machine hour rate indirect cost to a cost object is classified
cludes as
A. machine operators wages A. linked allocation base
B. managing directors salary B. direct allocation base
C. income tax C. indirect allocation base
D. office rent D. cost allocation base
72. If budgeted annual manufacturing in- A. imputed cost

direct cost is$2250000 and cost al- B. historical cost
location base is 2800 labour hour, C. sunk cost
then budgeted manufacturing over- D. shutdown cost
head rate will be 78. In stand-alone revenue-allocation
A. $803.571 per labour hour method, type of weights available for
B. $805 per labour hour this method is
C. $905 per labour hour A. selling prices as weight
D. $802 per labour hour B. unit costs as weights
C. physical units as weights
73. If budget sales units are 2000, an end- D. all of above
ing inventory is 3000 units and begin-
ning inventory is 1000, then budget 79. Number of units are 5000 and per unit
production would be price is$60, then flexible budget vari-
A. 6000 units able would be
A. $5,000,000
am
B. 4000 units
B. $3,000,000
C. no units C. $2,000,000
D. 8000 units D. $1,000,000
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74. Describe the cost unit applicable to 80. "The following information is avail-
the Bicycle industry: able for the W hotel for the latest
A. per part of bicycle thirty day period. Number of rooms
hr
B. per bicycle available per night 40 Percentage oc-

C. per tonne cupancy achieved 65% Room servic-
D. per day ing cost incurred Rs 3900 The room
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servicing cost per occupied room-

75. Situation in which cost object has any night last period, to the nearest Rs,
job, customer or product is known as was:"
Ja
A. cost application base A. Rs 3.25

B. sale application base B. Rs 5.00
C. price application base C. Rs 97.50
D. direct application base D. Rs 150.00
76. Manager who is responsible for in- 81. The basis for determining profit to be
vestments of company, its costs and taken into account on incomplete con-
revenues is known as tract is
A. cost of contract
A. profit center
B. contract price
B. investment center C. percentage of work certified as
C. cost center done
D. revenue center D. uncertified work
77. The cost which is to be incurred even 82. is the value of economic re-
when a business unit is closed is a sources used as a result of producing
or doing the thing costed.
73
A. Cost 88. CG Co manufactures a single prod-

B. Inventory uct T. Budgeted production output of
C. Labour product T during June is 200 units.
D. overhead Each unit of product T requires 6
labour hours for completion and CG
83. Reorder level =
Co anticipates 20 per cent idle time.
A. maximum level-minimum level
B. maximum consumption X maxi- Labour is paid at a rate of Rs7 per
mum reorder period hour. The direct labour cost budget
C. minimum consumption x mini- for March is
mum reorder period A. Rs. 6,720
D. normal consumption X normal re- B. Rs. 8400
order period C. Rs. 10080
D. Rs. 10500
84. Operating cost is usually ascertained
through 89. If credit sales for the year is Rs
5,40,000 and Debtors at the end of
am
A. a ledger account
B. profit and loss a/c year is Rs 90,000 the Average Collec-
C. balance sheet tion Period will be
D. a statement A. 30 days
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B. 61 days
85. A technique for estimating regression C. 90 days
line, which minimizes sum of vertical D. 120 days
deviations squares is classified as
hr
A. variable technique 90. In production, variables such as level

B. least square technique of activity or volume of company ac-
iS
C. indexed technique tivity are known as

D. fixed technique A. cost drivers
B. timed drivers
86. Individual variable coefficient’s mul-
Ja
C. variable drivers
ticollinearity leads to D. fixed drivers
A. decrease in variance
B. increase in variance error 91. Multiple costing is a technique of us-
C. increase in standard error ing two or more costing methods for
D. decrease in standard error ascertainment of cost by
A. the same firm
87. As compared to cumulative average- B. the several firms
time learning model, learning model C. the same industry
which predicts more cumulative total D. the several industries
time to produce more units is known
as 92. Products, divisions and customers are
A. incremental unit time learning examples of
model A. revenue increment
B. incremental price learning model B. reciprocal revenue
C. incremental unit average model C. revenue allocation
D. incremental cost learning model D. revenue object
93. An estimated coefficient, which indi- 98. Difference between attendance time
cates degree by which estimated val- and job time is
ues are affected by random factors is A. job time
known as B. over time
A. standard error of estimated coeffi- C. actual time
cient D. idle time
B. weighted error of estimated coeffi-
99. Costs are classified as fixed or vari-
cient
able on basis of
C. average of estimated coefficient
A. specific activity
D. variance of estimated coefficient B. given time period
C. common activity
94. If beginning work in process inven-
D. both a and b
tory units are 2600, units started are
9000, ending work in process units 100. is a summary of all functional
are 2300 and completed good units budgets in a capsule form.
are 8000 then total spoilage will be
am
A. Functional Budget
A. 1200 units B. Master Budget
B. 990 units C. Long Period Budget
C. 1100 units D. Flexible Budget
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D. 1000 units
101. If coefficients are similar for two ac-
95. In step cost functions, cost is in- counting periods, then single cost re-
lationship is estimated with help of
hr
creased by
A. discrete amounts A. data of fixed cost
B. same amounts B. cost driver of data
iS
C. linear amounts C. pool of data

D. nonlinear amounts D. cost object of data
Ja
102. Production units that do not meet

96. is refers to the verification of
customer specification, but can be
cost accounts and check on the adher-
sold to other customers as finished
ence to the cost accounting plan.
goods are classified as
A. Cost Audit
A. reduced work
B. Costcentre
B. spoilage
C. Costunit C. rework
D. Costprofit D. scrap
97. Gross margin is subtracted from sales 103. Total indirect cost in pool by an ac-
value of all production to yield tual quantity of cost allocation base is
A. labour cost incurred on product used to calculate
B. production cost incurred on prod- A. actual manufacturing overhead
uct rate
C. marketing cost incurred on prod- B. manufacturing overhead costs
uct C. overhead rate
D. all of above D. direct rate
75
104. Costing system, which is a combina- A. heterogeneous relationship

tion of process costing and job costing B. extreme relationship
system is classified as C. no homogeneous relationship
A. weighted costing system D. homogeneous relationship
B. average costing system
C. hybrid costing system 110. Graphical representation of cost
D. double costing system driver data and costs is considered as
A. plotting data
105. The cost per unit of a product man- B. plotting costs
ufactured in a factory amounts to Rs C. plotting cost drivers
160 (75% variable) when the produc- D. plotting curved line
tion is 10,000 units. When production 111. Aspects of accounting for scrap in-
increases by 25%, the cost of produc- cludes
tion will be Rs per unit. A. physical tracking
A. Rs 145 B. non-inventoriable costing
B. Rs 150 C. inventory costing
am
C. Rs 152 D. both a and c
D. Rs 140
112. For slope coefficient b, value of esti-
106. Prime cost is$50000 and direct man- mated coefficient is considered as
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ufacturing labour is$10000, then di- A. d-value
rect material cost will be B. c-value
A. $40,000 C. t-value
B. $60,000 D. b-value
hr
C. $52,000
D. $20,000 113. In cost terms, direct manufacturing
iS
labour cost is included in

107. Net realizable value is added into A. manufacturing costs
separate costs to calculate B. prime costs
A. split off costs C. conversion costs
Ja
B. final cost of direct labour D. both B and C

C. final sales
D. final costs 114. If economic order quantity for one
year is 15000 packages and demand
108. A document which provides for the in units for one year are 1500 units,
detailed cost centre and cost unit is then number of deliveries in a year
will be
A. tender A. 16
B. cost sheet B. 12
C. invoice C. 10
D. profit statement D. 14
109. Considering relationship of vari- 115. Insurance and garage rent is
ables, relationship in which activity A. fixed charges
cost is included in dependent variable, B. maintenance charges
which has similar cost driver is classi- C. operating charges
fied as D. running charges
116. If relevant incremental costs current accounting period, is classi-

are$5000 and relevant opportunity fied as
cost of invested capital is$2500, then A. partial inventory costing method
relevant inventory carrying costs B. current period inventory method
would be C. Last-in, first-out method
D. First-in, first-out method
A. $7,500
B. $7,000 121. Department which provides assist-
C. $6,500 ing services to internal departments is
D. $6,000 classified as
A. supply department
117. "Calculate the labour turnover rate B. support department
according to Separation method from C. production department
the following: No of workers on D. allocation base department
the payroll:-At the beginning of the
122. The basis for the payment of cash by
month: 500-At the end of the month:
contractee under contract is
600 During the month, 5 workers left,
am
A. work certified
20 workers were discharged and 75 B. work uncertified
workers were recruited Ofthese, 10 C. contract cost
workers were recruited in the vacan- D. value of plant used in the contract
iR
cies of those leaving and while the
rest were engaged for an expansion
123. An overtime is considered in cost
scheme"
A. 0.0455 accounting as
hr
A. indirect costs
B. 182 B. overhead costs
C. 6 C. premium costs
iS
D. 3 D. both a and b
118. Costing technique, in which actual 124. Inter process profits are
Ja
direct rates are multiplied to quantity A. credited to each process a/c

of direct cost inputs is classified as B. debited to respective process a/c
A. priced costing C. shown only in the finished stock
B. actual costing a/c
C. direct costing D. shown in the balance sheet
D. indirect costing 125. If flexible budget amount is$27000
and flexible budget variance is$12000,
119. Normal spoilage is subtracted from
then actual result amount would be
total spoilage to calculate A. $27,000
A. abnormal spoilage B. $15,000
B. Gross weighted spoilage C. $39,000
C. inventoriable spoilage D. $49,000
D. partial spoilage
126. In regression analysis, if observed
120. In process costing method, when cost value is 62 and predicted cost
work done in current accounting pe- value is 29, then disturbance term
riod and beginning inventory before would be
77
A. 33 131. Broad’s average use to assign cost of

B. 91 revenue to cost objects will be classi-
C. 81 fied as
D. 43 A. refined costing system
B. refined selling system
127. Indirect material used in production C. undefined costing
is classified as D. defined selling system
A. office overhead
B. selling overhead 132. In adjustment issues of costing,
C. distribution overhead database must contain reliable mea-
D. factory overhead sure of
A. fixed cost driver
128. According to incremental method, B. cost driver and cost
party which receives highest ranking C. cost driver and object
in allocation of common cost is clas- D. mixed cost driver
sified as
133. ABC analysis is an inventory control
am
A. Third incremental party
B. second incremental party technique in which:
C. primary party A. Inventory levels are maintained
B. Inventory is classified into A, B
D. First incremental party
iR
and C category with A being the high-
129. Abnormal cost is the cost: est quantity, lowest value
A. Cost normally incurred at a given C. Inventory is classified into A, B
and C Category with A being the low-
hr
level of output
B. Cost not normally incurred at a est quantity, highest value
given level of output D. Either b or c
iS
C. Cost which is charged to customer

134. Method which ranks cost object in-
D. Cost which is included in the cost
curred by individual users, in rank-
of the product
Ja
ing order of more responsible users is

130. "A ltd is a manufacturing company classified as
that has no production resource limi- A. bundled products allocation
tations for the foreseeable future. The method
Managing Director has asked the com- B. variable cost allocation method
C. stand-alone cost allocation
pany mangers to coordinate the prepa-
method
ration of their budgets for the next fi-
D. incremental cost allocation
nancial year. In what order should the
method
following budgets be prepared? (1)
Sales budget (2) Cash budget (3) Pro- 135. Cost of product failure, error preven-
duction budget (4) Purchase budget tion and appraisals can be classified
(5) Finished goods inventory budget" under
A. (2), (3), (4), (5), (1) A. stocking costs
B. (1), (5), (3), (4), (2) B. stock-out costs
C. (1), (4), (5), (3), (2) C. costs of quality
D. (4), (5), (3), (1), (2) D. shrinkage costs
136. "Which of the following would ex- 141. Direct material cost is$75000 and di-
plain an adverse variable production rect manufacturing labour is$20000,
overhead efficiency variance? 1 Em- then prime cost would be
ployees were of a lower skill level A. $55,000
than specified in the standard 2 Unex- B. $37,500
pected idle time resulted from a series C. $95,000
of machine breakdown 3 Poor Quality D. $26,000
material was difficult to process" 142. Hierarchy which is based on dif-
A. (1), (2) and (3) ferent types of cost allocation and
B. (1) and (2) drivers, is to categorize cost pool ac-
C. (2) and (3) tivity is classified as
D. (1) and (3) A. cost hierarchy
B. price hierarchy
137. Costs incurred in production process C. activity hierarchy
that yield range of products simulta- D. purpose hierarchy
neously are known as
am
A. separable costs 143. Relationship between change in ac-
B. joint costs tivity and change in total costs is con-
C. main costs sidered as
iR
D. split off costs A. fixed relationship
B. cause and effect relationship
138. Balance sheet, in which all costs of C. ineffective relationship
product that must be considered as its D. variable relationship
hr
assets, is said to be
A. factory overhead costs 144. In incremental cost allocation
method, cost object user who is
iS
B. manufacturing overhead costs

C. Inventoriable costs ranked second in ranking order is
D. finished costs known as
A. First incremental user
Ja
139. Labour cost is the second element of B. primary user

C. secondary user
A. cost D. second incremental user
B. profit 145. Fixed cost is a cost:
C. sales A. Which changes in total in propor-
D. task tion to changes in output
B. which is partly fixed and partly
140. Over time is variable in relation to output
A. actual hours being more than nor- C. Which do not change in total dur-
mal time ing a given period despise changes in
B. actual hours being more than stan- output
dard time D. which remains same for each unit
C. standard hours being more than of output
actual hours
D. actual hours being less than stan- 146. Expenditure over and above prime
dard time cost is known as
79
A. overhead 152. An additional cost, incurred for

B. factory cost some specific activity to bring pro-
C. cost of sales cessed product on to next production
D. cost of production stage is
147. Method which allocates joint costs A. partial cost
of joint products, considering physi- B. relevant cost
C. incremental cost
cal measures such as volume or rel-
D. irrelevant cost
ative weight at point of split off is
known as 153. For companies in service sector, cost
A. direct cost measure method which is not considerable is
B. indirect cost measure method A. Inventoriable costs
C. physical-measure method
B. finished costs
D. relative-measure method
C. factory overhead costs
148. In accounting, resources sacrifice for D. manufacturing overhead costs
achieving or fulfil specific objective
am
154. Factor which provides hedge to man-
is known as
A. source cost agers in adverse and unexpected cir-
B. sacrifice cost cumstances is known as
C. treated cost A. budgetary slack
iR
D. cost B. costly slack
C. influential slack
149. Third ranked product in incremental D. target slack
revenue-allocation method is known
hr
as 155. The allotment of whole item of cost

A. primary product to cost centre or cost units is called
iS
B. First incremental product

C. Second incremental product A. cost allocation
D. Third incremental product B. cost apportionment
Ja
150. Manager who is responsible only for C. cost absorption

D. cost disbursement
revenues of company can be catego-
rized under the 156. Which of the following is NOT a
A. profit center selling overhead?
B. investment center
A. Insurance to cover sold goods
C. cost center
D. revenue center while in transit
B. Royalty on sales
151. Stores Ledger is a: C. Legal cost on debt realization
A. Quantitative as well as value wise D. Distribution of samples
records of material received, issued
and balance 157. Strength of relationship between
B. Quantitative record of material re- cost driver and cost is considered as
ceived, issued and balance A. badness of residual
C. Value wise records of material re- B. goodness of residual
ceived, issued and balance C. badness of fit
D. a record of labour attendance D. goodness of fit
158. Direct cost incurred can be identified 164. Partial or completed units of manu-
with factured goods, that do not meet cus-
A. each department tomer specifications and get sold at
B. each unit of output reduced price or simply discarded, are
C. each month called
D. each executive A. spoilage
B. rework
159. A joint cost allocation method is C. scrap
based on relative value of total sales, D. equivalence
at point of split off is classified as
A. sales value at split off method 165. Support department cost allocation
B. joint costs at split off point method method which makes no difference
C. joint products value at split off between variable and fixed costs is
method classified as
D. main product cost at split off A. sales mix allocation method
method B. dual-rate cost-allocation method
am
C. single rate cost allocation method
160. In cost accounting, conference, D. quantity variance allocation
quantitative analysis and account anal- method
ysis methods are considered as
iR
A. cost estimation methods 166. Which method of costing is best
B. price estimation methods suited for interior decoration.
C. unit estimation method A. Contract accounting
B. Operating costing
hr
D. variable estimation method

C. Process costing
161. Total of all direct costs is termed as D. Job costing
iS
167. In accounting, cost incurred in past

A. prime cost
or in historical financial statements is
B. works cost
classified as
Ja
C. cost of sales
A. actual cost
D. cost of production B. budgeted cost
162. If difference in costs is$32000 and C. past cost
D. incurred cost
slope coefficient is 0.40, then differ-
ence in machine hours would be 168. If cost incurred for work in process
A. $80,000 inventory is$350000 and total equiva-
B. $12,800 lent units completed till date are 3500,
C. $70,000 then weighted average cost will be
D. $22,800 A. $10
B. $100
163. In quantitative analysis to estimate C. $1,000
cost function, fourth step is to D. $1,200
A. write a liner function
B. write price function 169. An act of making sure, that all em-
C. write manufacturing function ployees must understand goals is clas-
D. plot data sified as
81
A. coordination 176. Reorder point is divided by number

B. communication of sold units for per unit of time to
C. annual profit plan calculate
D. budgeting A. relevant carrying cost
B. relevant ordering cost
170. is a preventive function. C. purchase order lease time
A. Costreduction D. number of purchase orders
B. Costcontrol
C. Costunit 177. Material requisition is meant for
D. Costcentre
171. Material control involves A. purchase of material

A. consumption of material B. supply of material from stores
B. issue of material C. sale of material
C. purchase of material D. storage of material
D. purchase, storage and issue of ma-
178. ABC analysis is
terial
am
A. At best Control
172. Which of the following item of ex- B. Always better Control
penses will not appear in cost account- C. Average better Control
D. All best control
iR
ing.
A. Direct material cost 179. In activity based costing method im-
B. Factory overheads
plementation, indirect costs are allo-
C. Selling Expenses
hr
D. Loss on sale of fixed assets cated by using the

A. no cost pool
173. Which one of following is main ad- B. One or two cost pools
iS
vantage of quantitative method? C. sustained tracing

A. non expression D. support tracing
B. non constant
Ja
C. objective 180. Difference between job time and at-

D. non objective tendance time is
A. job time
174. In labour oriented manufacturing in- B. actual time
dustry which method of overhead ab- C. over time
sorption is suitable? D. idle time
A. Direct material cost method
B. Prime cost method 181. Abnormal process loss can be trans-
C. Labour hour method ferred to
D. Machine hour method A. costing profit and loss a/c
B. financial profit and loss a/c
175. Factors that accelerate process of re- C. manufacturing
fining a costing system include D. trading
A. increase in product diversity
B. increase in indirect costs 182. If overtime is resorted to at the de-
C. product market competitions sire of the customer, then the overtime
D. all of above premium:
A. should be charged to costing profit A. evaluate variable driver

and loss account; B. evaluate cost driver
B. should not be charged at all C. evaluate price driver
C. should be charged to the job di- D. evaluate demand driver
rectly
D. should be charged to the highest 188. Master budget includes all projec-
profit making department tions of company’s budget and fo-
cuses on
183. An assumption of specification anal- A. serial correlation
ysis, which states all values of resid- B. marketing plan
uals which are uniformly scattered C. financial plan
around regression line is classified as D. both B and C
A. abnormality of residuals
B. normality of regression 189. An expected future revenue, which
C. normality of residuals diverges in unconventional course of
D. abnormality of regression action is classified as
am
A. partial revenue
184. If difference between costs linked B. total revenue
to highest and lowest observation of C. relevant revenues
cost driver is$36000 and observation D. irrelevant revenues
iR
of cost driver is 30 machine hours,
then slope coefficient would be 190. If an unexplained variation is
A. $1,200 456870 and total variation is 955000,
B. $1,400 then coefficient of determination will
hr
C. $1,600 be
D. $1,800 A. 0.4528
iS
B. 0.4783
185. Method which divides support de- C. 0.5216
partment cost into two dimensions D. 0.5425
such as fixed and variable cost pool is
Ja
classified as 191. "After inviting tenders for supply of

A. sales mix allocation method raw materials, two quotations are re-
B. dual-rate cost-allocation method ceived as follows-Supplier P Rs 2.20
C. single rate cost allocation method per unit, Supplier Q Rs 2.10 per unit
D. quantity variance allocation
plus Rs 2,000 fixed charges irrespec-
method
tive of the units ordered. The order
186. In normal costing, manufacturing quantity for which the purchase price
overhead allocated is also called per unit will be the same"
A. manufacturing overhead applied A. 22,000 units
B. labour overhead applied B. 20,000 units
C. cost overhead applied C. 21,000 units
D. budget overhead applied D. None of the above.
187. In quantitative analysis of estimating 192. In case of complete contract, the

cost function, last and foremost step whole amount of profit is transferred
is to to
83
A. contract a/c A. cost center

B. work in progress a/c B. revenue center
C. profit and loss a/c C. profit center
D. contractee a/c D. investment center
199. An actual selling price is subtracted
193. Prime cost plus variable overheads
from budgeted selling price, and then
is known as
A. Cost of sales multiplied to actual sold units to cal-
B. Production Cost culate
A. profit variance
C. Total Cost
B. investment variance
D. Marginal cost C. cost variance
D. selling price variance
194. is also known as working cap-
ital ratio. 200. In activity based costing method im-
A. Current ratio plementation, an output unit level
B. Quick ratio costs are classified as
am
C. Liquid ratio A. indirect costs
D. Debt-equity ratio B. direct cost
C. labour cost
195. If purchase order lead time is 35 min- D. raw material cost
iR
utes and number of units sold per time
201. When standard output is 10 units per
is 400 units, then reorder point will be
A. 14000 units hour and actual output is 12 units per
B. 14500 units hour, the efficiency is
hr
A. 75%
C. 15000 units
B. 80%
D. 15500 units C. 90%
iS
D. 120%
196. Systematic flow of services, goods
or information from buying material 202. Cost unit of a sugar industry can be
Ja
for product delivery to customers is

known as A. per litre
A. supply chain B. per tonne
B. value chain C. per acre
C. material flow chain D. per metre
D. manufacturing flow chain 203. Process in which earned revenue
is related to specific revenue object,
197. If value of final sales is$48000 and
which can cannot trace it in cost effec-
net realizable value is$35000, then
tive way is known as
value of sales costs would be A. revenue allocation
A. $35,000 B. revenue object
B. $13,000 C. revenue increment
C. $83,000 D. reciprocal revenue
D. $48,000
204. An expected future cost which di-
198. A manager who is responsible for verges in unconventional course of ac-
only cost of company belongs to tion is known’s as
A. partial cost A. unadjusted allocation rate ap-

B. total cost proach
C. irrelevant cost B. adjusted budget rate approach
D. relevant cost C. unadjusted budget rate approach
D. adjusted allocation rate approach
205. Cost accounting differs from finan-
cial accounting in respect of 210. The physical distance covered by a
A. reporting of cost vehicle is measured in terms of
B. ascertainment of cost A. ton kilometers
C. control of cost B. passenger kilometers
D. recording of cost C. vehicle days
D. running kilometers or miles
206. Cost accounting concepts include all
the following except 211. In incremental cost allocation
A. planning method, cost object user who is
B. controlling ranked third in ranking order is classi-
am
C. profit sharing fied as
A. First incremental user
D. product costing
B. primary user
C. secondary user
iR
207. "For the financial year ended as on
March 31, 20XX the figures extracted D. second incremental user
from the balance sheet of Xerox Lim- 212. In assumptions testing, violation of
ited as under: Opening Stock Rs
hr
constant variance is/ is called

29,000; Purchases Rs 2,42,000; Sales A. heteroscedasticity
Rs 3,20,000; Gross Profit 25% of B. heterogeneous
iS
Sales. Stock Turnover Ratio will be" C. homogenous

:- D. homoscedasticity
A. 8 times
Ja
B. 6 times 213. In an income statement, when costs

C. 9 times become cost of sold goods and manu-
D. 10 times factured products are sold, such costs
are
208. Estimation of cost functions, an ig- A. inventoriable costs
noring information from all points but B. finished costs
considering two observation points C. factory overhead costs
can be classified as D. manufacturing overhead costs
A. disadvantage of low high method
B. disadvantage of high low method 214. period cost, which consists income
C. advantage of high low method statement of manufacturing compa-
D. advantage of low high method nies belongs to
A. inventory costs
209. An approach which yields benefits B. product costs
of normal costing and actual manufac- C. non-manufacturing costs
turing overhead is classified as D. manufacturing costs
85
215. Model, in which produced unit dou- A. incoming freight

bles every time as cumulative average B. storage costs
time per unit decreases, by a constant C. insurance
percentage can be classified as D. clerical errors
A. cumulative average time learning 221. Direct material costs are added into
model direct manufacturing costs to calcu-
B. cumulative mean learning model late
C. cumulative weighted learning A. discuss costs
model B. prime costs
D. cumulative average pricing model C. resale cost
D. merchandise costs
222. Budget plan in many companies is
216. Type of spoilage, which is con-
also referred as
sidered as controllable and can be A. profit plan
avoided is called B. sales plan
A. abnormal spoilage C. cost plan
am
B. normal spoilage D. marketing plan
C. transferred-in spoilage
D. transferred-out spoilage 223. Work measurement method of cost
estimation is also called
iR
217. Under which plan efficiency is A. price engineering method
shared by employee and employer B. industrial engineering method
C. measuring engineering method
equally?
hr
D. unit engineering method

A. Time rate
B. Gantts task and bonus plan 224. In linear cost function, fixed cost is
iS
C. Halsey plan considered as

D. Rowan plan A. constant
B. variable
C. exponent
Ja
218. How many rate are used to calcu-

late wages under Taylorss differential D. base
piece rate system? 225. When two products are simultane-
A. two ously produced in a process and one
B. three of them has comparatively high value
C. four and other is of low value, the low
D. five value product is called
A. joint products
219. Costs of undertaken activities is B. by products
to support individual products are C. seasonal products
known as D. economic products
A. expected sustaining
B. input sustaining 226. If budgeted annual indirect cost
C. output sustaining is$85000 and budgeted annual quan-
D. product sustaining costs tity of cost allocation base is$7500,
then budgeted indirect cost rate would
220. An example of shrinkage costs is be
A. 112.34 per piece A. production overhead

B. 113.34 per piece B. administrative overhead
C. 111.34 per piece C. selling overhead
D. 110.34 per piece D. distribution overhead
227. In a given scenario, if cost is consid- 233. An assumption of specification anal-

ered as indirect cost then independent ysis states: any observation does
variable will be considered as not belong to any other observation’s
A. demand allocation base residual value, is classified as
B. supply allocation base A. independence of residuals
C. cost allocation base B. dependence of residuals
D. price allocation base C. independence of correlation
D. dependence of residuals
228. Activities related to coordinating,
controlling and planning flow of in- 234. Joint cost allocation method for joint
ventory are classified as products, which is based on achiev-
able value is known as
am
A. decisional management
B. throughput management A. joint products value at split off
C. inventory management method
D. manufacturing management B. main product cost at split off
iR
method
229. In adjustment issues and data collec- C. Gross realizable value method
tion, inflation affects the D. net realizable value method
hr
A. cost driver and cost

B. cost object and cost 235. The stores keeper should initiate
C. heterogeneous cost a purchase requisition when stock
iS
D. homogenous cost reaches

A. Average stock level
230. Point in joint production process, in B. Minimum stock level
Ja
which two or more products are sepa- C. Maximum stock level

rately identifiable is termed as D. Re-order level
A. step down point 236. Overhead refers to:
B. incremental point A. Direct or Prime Cost
C. split off point B. All Indirect costs
D. inseparability point C. only Factory indirect costs
D. Only indirect expenses
231. Weak relationship between cost and
cost driver is indicated on a regression 237. Which of following is an example of
line, which is purchasing costs?
A. curved A. incoming freight
B. slightly sloped B. storage costs
C. completely sloped C. insurance
D. dotted D. spoilage
232. Directors remuneration and ex- 238. Factory overhead is also called as
penses form part of
87
A. sundry overhead 244. In Regression Analysis, testing of as-

B. extra overhead sumptions if these are true or not is
C. works overhead classified as
D. total overhead A. weighted analysis
B. average analysis
239. If final sales are$50000 and separa- C. significance analysis
ble costs are$35000, then net realiz- D. specification analysis
able value will be
A. $15,000 245. Which one of the following is not
B. $85,000 considered for preparation of cost
C. $35,000 sheet?
D. $50,000 A. Factory cost
B. Goodwill written off
240. In assumptions of specific analysis,
C. Labour cost
normality of residuals is satisfied with D. Selling cost
use of
am
A. real price data 246. Capital gearing ratio is
B. real cost data A. Market test ratio
C. multiplier data B. Long-term solvency ratio
D. divisional data C. Liquid ratio
iR
D. Turnover ratio
241. If budgeted total direct labour hours
are 3800 and budgeted direct labour 247. Cause and effect relationship be-
cost is$480000, then budgeted direct
hr
tween activity and costs is result of

labour cost rate will be A. contractual agreement
A. $126.32 per labour hour B. knowledge of operations
iS
B. $128.32 per labour hour C. measureable unit relationship

C. $130 per labour hour D. all of above
D. $132 per labour hour
Ja
248. Scrap is
242. Cost pattern, when production in- A. residue of material
puts are to be used in discrete func- B. wastage of material
tions, but quantities are fractional, C. surplus material
will be categorized as D. abnormal loss of material
A. continuously variable cost func-
tion 249. Costs, which consist of interdepart-
B. fixed cost function mental cost allocations plus cost of
C. mixed cost function support department are classified as
D. semi variable cost function A. complete reciprocal costs
B. artificial costs
243. Increase in total variable cost is due C. operating costs
to D. flexible operating costs
A. increase in fixed cost
B. increase in sales 250. If direct material cost is$5500 and
C. increase in production prime cost is$25000, then direct man-
D. increase in efficiency ufacturing labour would be
A. $19,500 256. If static budget amount is$6000

B. $30,500 and flexible budget amount is$15000,
C. $45,500 then sales volume variance will be
D. $22,500 A. $9,000
B. $8,000
251. An assumption, which states that C. $12,000
there must be linear relationship be- D. $21,000
tween independent variable and de-
257. Subtracted flexible budget amount
pendent variable is
can form an actual result to calculate
A. irrelevant range of linearity A. unstated budget variance
B. relevant range of linearity B. flexible budget variance
C. significant range C. constant budget variance
D. insignificant range D. static budget variance
252. In specification analysis, assump- 258. In regression equation Y =$6000

tions related to variance states that: + (per unit cost x number of units),
am
A. variance of residuals is constant ’$6000’ is a
B. variance of goodness is constant A. constant
C. goodness of fit is constant B. variable
iR
D. standard error is constant C. expression
D. base and exponent
253. If budgeted cost in indirect cost pool 259. The actual output of 162,500 units
is$144500 and total quantity of cost
hr
and actual fixed costs of Rs 87000

allocation base is$165500, then bud- were exactly as budgeted. However,
geted indirect cost rate will be the actual expenditure of Rs 300,000
iS
A. 67.30% was Rs 18,000 over budget. What was

B. 87.31%
the budget variable cost per unit?
C. 55.50% A. Rs 1.20
Ja
D. 45.50% B. Rs 1.31
C. Rs1.42
254. Time and motion study is conducted D. Rs 1.50
by
A. time keeping department 260. Process of assigning indirect costs to
B. personnel department any specific cost object is known as
C. payroll department A. economic cost
D. engineering department B. cost tracing
C. cost allocation
255. According to which method of pric- D. non-economic costs
ing issues is close to current economic 261. A group of individual indirect cost
values? item is defined as
A. Last In First Out A. direct pool
B. First In First Out B. cost pool
C. Highest In First Out C. indirect pool
D. weighted average price D. item pool
89
262. Discarded material substances hav- A. waste

ing some value is B. scrap
A. waste C. defectives
B. scrap D. spoilage
C. defective
268. A Local Authority is preparing cash
D. spoilage
Budget for its refuse disposal depart-
263. Last step in developing operating ment. Which of the following items
budget is would not be included in the cash bud-
A. implementing income get?
B. implementing decision A. Capital cost of a new collection
C. efficient implementation vehicle
D. effective implementation B. Depreciation of the machinery
C. Operatives wages
264. "Calculate the most appropriate unit D. Fuel for the collection Vehicles
cost for a distribution division of a
am
269. Number of methods available for cal-
multinational company using the fol-
culation of Labour turnover is
lowing information. Miles travelled A. two
636,500 Tonnes carried 2,479 Num- B. three
iR
ber of drivers 20 Hours worked by C. four
drivers 35,520 Tonnes miles carried D. five
375,200 Cost incurred 562,800"
hr
A. Rs .88 270. Fire insurance of stock can be appor-

B. Rs 1.50 tioned on the basis of
C. Rs 15.84 A. value of stock
iS
D. Rs28, 140 B. volume of stock

C. number of stores requisition
265. Standard error of regression analysis D. material used
Ja
is known as
A. average of coefficient 271. An implementation of activity based
B. variance of residual costing would be possible only if ac-
C. mean of residual countants find
A. goodness of each activity
D. average of residual
B. handling of each activity
266. An average unit cost, applicable to C. cost driver for each activity
each similar produced units is classi- D. cost object for each activity
fied as 272. Warehouse rent is a part of
A. per unit cost A. prime cost
B. per post cost B. factory cost
C. per price cost C. distribution cost
D. application cost D. production cost
267. Discarded material substances hav- 273. Residual material which results from
ing no value is called manufacturing products is called
A. reduced work 279. "Process B had no opening inven-

B. spoilage tory. 13,500 units of raw material
C. rework were transferred in at Rs 4.50 per
D. scrap unit. Additional material at Rs1.25per
unit was added in process. Labour
274. In specification analysis, assump- and overheads were Rs 6.25 per com-
tions related to residuals states must pleted unit and Rs 2.50 per unit in-
be complete. If 11,750completed units
A. worst were transferred out, what was the
B. independent closing inventory in Process B?"
C. dependent A. Rs 6562.50
D. good B. Rs 12,250.00
275. Re-order level is calculated as: C. Rs 14,437.50
A. Maximum consumption x Maxi- D. Rs 25,375.00
mum re-order period 280. Bin card is maintained by
am
B. Minimum consumption x Mini- A. costing department
mum re-order period B. stores department
C. 1/2 of (Minimum + Maximum C. finance department
consumption)
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D. accounting department
D. Maximum level-Minimum level
281. Material is issued by store keeper
276. An amount by which total cost against
hr
changes with respect to change in A. material requisition

level of activity is classified as B. material order
iS
A. activity coefficient C. goods received note

B. cost coefficient D. purchase requisition
C. change coefficient
D. slope coefficient
Ja
282. In accounting, cost which is pre-

dicted to be incurred or future cost
277. Balancing of all aspects of products is known as
or services and all departments in A. past cost
company are classified as B. incurred cost
A. annual profit plan C. actual cost
B. budgeting D. budgeted cost
C. coordination
D. complex plan 283. Financial statements and budget
plans of some companies are also
278. Classification and accumulation of called
costs by fixed and variable costs is of A. cost statement
special importance in B. preformed statement
A. process costing C. sales statement
B. unit costing D. market statement
C. operation costing
D. operating costing 284. FIFO is
91
A. Fast Investment in Future Order 289. A worker is allowed 60 hours to com-

B. First In First Out plete the job on a guaranteed wage
C. Fast In Fast Out of Rs 10 per hour Under the Rowan
D. Fast Issue Of Fast Order Plan, he gets an hourly wage of Rs
12 per hour For the same saving in
285. Differential piece wages means time, how much he will get under the
Halsey Plan?
A. different wages for different level A. Rs. 720
of performance B. Rs. 540
B. different wages for different time C. Rs. 600
consumed D. Rs. 900
C. different wages for different level
of output 290. "Calculate the value of closing stock
D. different wages for different types from the following according to FIFO
of industries method: 1st January, 20XX: Opening
am
balance: 50 units @ Rs 4 Receipts:
286. Sum of beginning work in process 5th January, 20XX: 100 units @ Rs 5
inventory units and started units, is 12th January, 20XX: 200 units @ Rs
subtracted from sum of ending work 450 Issues: 2nd January, 20XX: 30
iR
in process inventory units and trans- units 18th January, 20XX: 150 units"
ferred out units of goods to calculate A. Rs. 765
A. Gross weighted spoilage B. Rs. 805
hr
B. inventoriable spoilage C. Rs. 786

C. partial spoilage D. Rs. 700
iS
D. total spoilage
291. Success of cost reduction initiatives
287. Time keeping refers to are evaluated by accurate
Ja
A. time spent by worker on their job A. cyclical factors

B. time spent by workers in the fac- B. indexed technique
tory C. price estimation
C. time spent by workers without D. cost estimation
work
D. time spent by workers off their job 292. Budgeted sales of X for March are
18000 units. At the end of the produc-
tion process for X, 10% of production
288. Learning curve models include units are scrapped as defective. Open-
A. cumulative average time learning ing inventories of X for March are
model budgeted to be 15000 units and clos-
B. incremental unit time learning ing inventories will be 11,400 units.
model All inventories of finished goods must
C. incremental production learning have successfully passed the quality
model control check. The production budget
D. both a and b for X for March, in units is:
A. 12960 A. coordinating company effort

B. 14400 B. action plan
C. 15840 C. action accountability
D. 16000 D. project accountability
298. Sunk costs are:
293. Considering dual rate method, if em- A. relevant for decision making
ployees work for 8500 budgeted hours B. Not relevant for decision making
at$120 per hour and work for 9500 ac- C. cost to be incurred in future
tual hours at$110 per hour, then total D. future costs
cost would be
A. $2,078,000 299. Budget, which predicts effect of
B. $3,078,000 given level of operations on a cash
C. $2,065,000 position is classified as
A. market budget
D. $3,065,000 B. price schedule
C. planned schedule
294. Document, which contains informa-
am
D. cash budget
tion about used material sequence, de-
tail and quantity of raw material is 300. Forth step in process costing system
classified as is to
iR
A. bill of materials A. summarize total costs
B. bill of sequence B. compute cost for each equivalent
C. bill of detail unit
C. summarize flow of output
hr
D. bill of raw materials

D. compute output in units
295. Significant feature of Kaizen Bud- 301. Planning of financial aid to coordi-
iS
geting is nate; what is to be done for implemen-

A. employee suggestion tation of plan is classified as
B. customer suggestion A. budget
Ja
C. cost suggestion B. batching

D. price suggestion C. complexity
D. process
296. Cost analysis method, which uses
mathematical method to use fit be- 302. An analysis and estimation method
tween past data observations and cost of cost, by classifying cost accounts
functions is termed as as fixed or variable with respect for
A. quantitative analysis method specific output level is considered as
A. manufacturing analysis method
B. qualitative analysis method
B. price analysis method
C. account analysis method C. unit analysis method
D. conference analysis method D. account analysis method
297. An assignment of task for managers, 303. Method which determines weights
who are accountable for their actions of cost allocation by considering cost
in controlling and budgeting of re- of each user as separate entity is
sources is classified as known as
93
A. bundled products allocation 308. Static budget amount is subtracted

method from flexible budget amount to calcu-
B. variable cost allocation method late the
C. stand-alone cost allocation A. sales budget variance
method B. cost budget variance
D. incremental cost allocation C. resultant budget variance
method D. static budget variance
304. Costing, which explains how and 309. In case of rising prices (inflation),
when scrap affects operating income FIFO method will:
of company is classified as A. provide lowest value of closing
A. inventory costing stock and profit
B. conversion costing B. provide highest value of closing
C. normal scrap costing stock and profit
D. abnormal scrap costing C. provide highest value of closing
stock but lowest value of profit
am
305. Terms used in manufacturing cost
D. provide highest value of profit but
systems are
A. manufacturing costs lowest value of closing stock
B. prime costs
iR
310. The process of allocating and appor-
C. conversion costs
tioning the costs on suitable basis to
D. both B and C
all the departments is
hr
306. "Calculate re-order level from the A. departmentalization

following: Safety stock: 1000 units B. primary distribution
Consumption per week: 500 units It C. secondary distribution
iS
takes 12 weeks to reach material from D. classification

the date of ordering"
A. 1000 units 311. If all conditions or assumptions of
Ja
B. 6000 units regression analysis simple regression

C. 3000 units can give
D. 7000 units A. dependent estimation
B. independent estimation
307. "A company manufactures a single C. reliable estimates
product for which cost and selling D. unreliable estimates
price data are as follows: Selling price
per unit-Rs 12 Variable cost per unit- 312. 50 units are processed at a cost of Rs
Rs 8 Fixed cost for a period-Rs 98,000 80, normal loss is 10%, each unit car-
Budgeted sales for a period-30,000 ries a scrap value of 25 paise If output
units The margin of safety, expressed is 40 units, the value of abnormal loss
as a percentage of budgeted sales,is:" will be
A. 0.2 A. Rs. 1.25
B. 0.25 B. Rs. 800
C. 0.73 C. Rs. 875
D. 1.25 D. Rs. 888
313. If an actual selling price is$400, an A. conversion costs

actual result is$250 and an actual B. sunk costs
units sold are 500, then selling price C. inventoriable costs
variance will be D. non inventoriable costs
A. $45,000 318. In dependent variable cost pool, re-
B. $55,000 lationship between individual cost
C. $75,000 items and cost drivers can be classi-
D. $65,000
fied as
314. Relevant incremental costs are A. no homogeneous relationship
B. homogeneous relationship
added into relevant opportunity cost
C. heterogeneous relationship
of capital to calculate D. an extreme relationship
A. purchase order costs
B. relevant inventory carrying costs 319. Process of assigning direct or indi-
C. irrelevant inventory carrying costs rect cost to any cost object is known
D. relevant ordering costs as
am
A. cost assignment
315. "Calculate the labour turnover rate B. cost expectation
according to replacement method C. event assignment
from the following: No of workers on D. probability assignment
iR
the payroll:-At the beginning of the
320. If employees of division A work for
month: 500-At the end of the month:
8000 hours for$90 per hour, then rate
600 During the month, 5 workers left,
must be paid in division B in accor-
hr
20 workers were discharged and 75

dance of single rate method will be
workers were recruited Ofthese, 10
A. $90 per hour
workers were recruited in the vacan-
iS
B. less than$90 per hour

cies of those leaving and while the C. greater than$90 per hour
rest were engaged for an expansion D. none of above
scheme"
Ja
A. 0.0455 321. An error term, disturbance term or

B. 182 residual term is calculated as
C. 6 A. U=A-b
D. 3 B. u=A-a
C. u=Y-y
316. Overhead can be classified accord- D. u=X-x
ing to function-wise as 322. "It is now expected that the variable
A. fixed o/h, variable o/h and semi- production cost per unit and the sell-
variable o/h ing price per unit will each increase by
B. controllable o/h and uncontrol-
10%, and fixed production cost will
lable o/h
rise by 25%. What will be the new
C. manufacturing o/h, administration
break even point? Selling price-Rs 6
o/h and selling& distribution o/h
D. past cost and future cost per unit Variable production cost-Rs
1.20 per unit Variable selling cost-Rs
317. Cost of abnormal spoilage is not 0.40 per unit Fixed production cost-
treated as Rs 4 per unit Fixed selling cost-Rs
95
0.80 per unit Budgeted production A. No saving

and sales for the year are 10,000 units. B. Rs. 2,00,000
" C. Rs. 2,22,010
A. 8,788 units D. Rs. 2,990
B. 11,600 units 327. When the actual overhead is less
C. 11,885 units than the absorbed overhead it is
D. 12,397 units A. over absorption
B. under absorption
323. When cash is received from con- C. equal absorption
tractee which a/c should be credited. D. major absorption
A. Cash a/c
B. Contract a/c 328. The purpose of financial accounting
C. Contractor a/c is to provide information for
A. fixing prices
D. Contractee a/c
B. controlling cost
C. locating factors leading to
am
324. Second ranked product in incre-
wastages and losses
mental revenue allocation method is D. assessing the profitability and fi-
termed as nancial position of the firm
A. primary product
iR
B. First incremental product 329. A push through system, according
C. Second incremental product to which goods are manufactured for
D. Third incremental product finished inventory solely, on basis of
hr
forecasted demand can be classified

325. Method of costing that supports cre- as
iS
ation of value for customer by ac- A. in-time production

counting whole value stream, rather B. materials requirement planning
than individual departments or prod- C. on-time production
D. pull strategy of production
Ja
ucts is classified as
A. economic accounting 330. Continuous budget is also known as
B. back-flush accounting A. rolling budget
C. lean accounting B. pin budget
D. lead accounting C. specific budget
D. past budget
326. "From the following information,
calculate the extra cost of material by 331. Flexible budget variance for rev-
following EOQ: Annual consumption enues of company is classified as
A. selling price variance
= 45000 units Ordering cost per order
B. investment variance
= Rs 10 Carrying cost per unit per an- C. profit variance
num = Rs 10 Purchase price per unit = D. primary variance
Rs 50 Re-order quantity at present =
45000 units There is discount of 10% 332. Under which method of wage pay-
per unit in case of purchase of 45000 ment, wages are influenced by idle
units in bulk" time?
A. Straight piece rate A. anticipated budgeting

B. Differential piece rate B. number budgeting
C. Premium and bonus plan C. predict budgeting
D. Time wage rate D. kaizen budgeting
333. All costs, which are assigned to man- 338. Responsibility Centre can be cate-
ufactured products for specific calcu- gorised into:
lations are classified as A. Cost Centres only
A. contracting costs B. Profit Centres only
B. product cost C. Investment Centres only
C. government costs D. Cost Centres, Profit Centres and
D. marketing costs Investment Centres
334. Process cost is ascertained and 339. Toy manufacturing industry should
recorded in use
A. balance sheet A. unit costing
B. profit and loss a/c B. process costing
am
C. separate statement C. batch costing
D. separate ledger a/c D. multiple costing
335. Joint cost allocation method, in 340. A transport company is running five
iR
which individual product from joint buses between two towns, which are
products must gain a gross margin per- 50 kms apart. Seating capacity of
centage is classified as each bus is 50 passengeRs Actually
hr
A. sales value at split off method passengers carried by each bus were
B. joint products value at split off 75% of seating capacity. All buses
method ran on all days of the month. Each
iS
C. constant gross margin percentage bus made one round trip per day. Pas-
NRV method senger kms are:
D. Gross realizable value method A. 281250
Ja
B. 187500
336. Percentage of overall gross margin
C. 562500
is multiplied to final sales value of D. None of the above
products total production is used to
calculate 341. Wages and other benefits, provided
A. Gross margin in terms of amount to assembly line workers and opera-
of money tors of machine are classified under
B. Gross margin in terms of separa- A. work in process costs
ble costs B. finished costs
C. Gross margin in terms of total cost C. direct manufacturing labour costs
D. Gross margin in terms of labour D. indirect manufacturing labour
cost costs
337. Budgeting method, which incorpo- 342. In normal costing, situation in which
rates an improvement anticipated in allocated amount of indirect cost is
budgeting period into budget numbers greater than incurred cost, is consid-
can be classified as ered as
97
A. incurred indirect cost 347. Mathematical relationships exist be-

B. over allocated indirect cost tween operating and financing activ-
C. applied indirect cost ities that affect master budget are
D. applied direct cost called
A. math plan model
343. An amount of spoilage that is not B. financial planning models
natural in a specific production pro- C. operating plan models
cess is categorized as D. master plan models
A. normal scrap
B. normal spoilage 348. The process of redistribution of ser-
C. abnormal spoilage vice department costs to production
D. weighted spoilage departments is
A. departmentalization
344. "What is the company’s breakeven B. primary distribution
point: Selling price-Rs 6 per unit Vari- C. secondary distribution
D. classification
am
able production cost-Rs 1.20 per unit
Variable selling cost-Rs 0.40 per unit
Fixed production cost-Rs 4 per unit 349. Package which consists of two or
Fixed selling cost-Rs 0.80 per unit more products to be sold for single
iR
Budgeted production and sales for the price, but components of products
year are 10,000 units. " in package have separate stand-alone
A. 8,000 units price is called
hr
B. 8,333 units A. step down product

B. dual mix product
C. 10,000 units
C. bundled product
iS
D. 10,909 units
D. reciprocal product
345. Method, which considers cost and
350. The costing method which can be
Ja
cost drivers of departments such as

used in industry where the product
employee relations and process engi-
pass through different processes is
neering is termed as
known as
A. pricing method
A. job costing
B. manufacturing method
B. operating costing
C. conference method C. batch costing
D. inference method D. process costing
346. If budgeted annual indirect cost 351. A unit cost calculated in costing sys-
is$60000, budgeted annual quantity tem, by assigning total costs incurred
of cost allocation base is$3600, then to many similar units is categorized
budgeted indirect cost rate will be as
A. 15.67 per piece A. accounting period costing system
B. 16.67 per piece B. process costing system
C. 14.67 per piece C. job costing system
D. 13.67 per piece D. none of above
352. Actual loss is less than the predeter- A. FIFO

mined normal loss, it is B. LIFO
A. normal loss C. Weighted Average
B. abnormal loss D. EOQ
C. seasonal loss
D. abnormal gain 359. Method of revenue allocation, which
ranks products included in bundle ac-
353. Fifth step in process costing system cording to predetermined criteria of
is to management is known as
A. allocate separable costs A. step down allocation method
B. allocate joint costs B. stand-alone revenue allocation
C. compute gross margin method
D. assign total cost to completed C. incremental revenue allocation
units method
D. revenue mix allocation method
354. Difference between flexible budget
am
amount and corresponding static bud- 360. If budget sales units are 5000, end-
get amount is classified as ing inventory is 4000 units and begin-
A. sales revenue variance ning inventory is 1000, then budget
B. cost profit variance production will be
iR
C. profit volume variance A. 4000 units
D. sales volume variance B. 5000 units
C. 8000 units
hr
355. Which of the following is not a D. 10000 units

method of cost absorption?
A. Percentage of direct material cost 361. Cost of operating activity, facility or
iS
B. Machine hour rate any cost object which usually shares

C. Labour hour rate by two or more than two users is clas-
D. Repeated distribution method sified as
Ja
A. bundled cost
356. Job costing method is the most suit- B. common cost
able method for C. stand-alone cost
A. oil process units D. incremental cost
B. transport companies
C. sugar industries 362. Third step in process costing system
D. repair shops is to
A. summarize flow of output
357. Generally types of stores are classi- B. compute output in units
fied into C. summarize total costs
A. two types D. compute cost for each equivalent
B. three types unit
C. four types
D. five types 363. Budget sales, plus target ending fin-
ished goods inventory, minus begin-
358. Which one out of the following is ning finished goods inventory is equal
not an inventory valuation method? to
99
A. budget production 369. First ranked product, in incremental

B. planned production revenue allocation method, is classi-
C. setup production fied as
D. stand by production A. primary product
B. First incremental product
364. Fourth step in development of oper- C. Second incremental product
ating budget is to D. Third incremental product
A. choose alternatives
B. evaluate alternatives 370. This is a level at which normal issue
C. efficiency improvements of material are stopped, but issued un-
D. predicted improvements der special condition It is
A. maximum stock level
365. Slope coefficient of linear cost func- B. minimum stock level
tion is C. danger level
A. zero D. average stock level
B. one 371. constant variance is classified in as-
am
C. two sumptions testing as
D. three A. homogenous
B. homoscedasticity
366. Comparing Rowan plan and Halsey
iR
C. heteroscedasticity
plan, it is seen that when the time D. heterogeneous
saved is less than 50% of the standard
time 372. Department which directly adds
hr
A. Rowan plan allows more wages to value to product or service is known

a worker than Halsey plan as
B. Rowan plan allows less wages to A. production department
iS
a worker than Halsey plan B. operating department

C. Rowan and Halsey plan allow C. allocation base department
equal wages to a worker D. both a and b
Ja
D. Rowan plan and Halsey plan are 373. Which of the following method of
equal to ordinary time wage wage payment is most suitable where
the speed of production is beyond the
367. Cash sales, accounts receivables and
control of worker?
rental receipts all are known as
A. Time rate system
A. cash receipts
B. Piece rate system
B. budget receipts C. Halsey premium system
C. goods manufactured D. Rowan premium plan
D. total goods sold
374. Labour productivity can NOT be
368. In estimation of cost function, an ex- measured by comparing
ample of independent variable is A. actual time with standard time
A. level of activity B. total output with total man hours
B. quantity stored C. added value for the product with
C. quantity manufactured total wage cost
D. quality of product D. total wage and total output
375. Direct labour means A. rent

A. labour which can be conveniently B. canteen expenses
associated with aparticular cost unit C. PF contribution
B. labour which completes the work D. rate and tax
manually 381. Economic order quantity is that
C. permanent labour in the produc- quantity at which cost of holding and
tion department carrying inventory is:
D. labour which is recruited directly A. Maximum and equal
and not through contractors B. Minimum and equal
C. It can be maximum or minimum
376. Types of spoilage include depending upon case to case
A. normal spoilage D. Minimum and unequal
B. abnormal spoilage 382. Cost classification can be done in
C. weighted spoilage
D. both a and b A. two ways
am
B. three ways
377. 100 units are introduced in a process C. four ways
in which normal loss is 5% of input If D. several ways
actual output is 97 then there is
383. Which of these is not an objective of
iR
A. no abnormal loss and normal gain
Cost Accounting?
B. 2 units of abnormal gain A. Ascertainment of Cost
C. 3 units of abnormal gain B. Determination of Selling Price
hr
D. 3 units of normal loss C. Cost Control and Cost reduction

D. Assisting Shareholders in deci-
378. Supplies, plant maintenance, plant sion making
iS
rent, plant insurance and cleaning

labour comes under which type of 384. Profit forgone by capital investment
costs? in inventory rather than investment of
Ja
A. labour costs capital to somewhere else is classified

B. factory overhead costs as
A. relevant purchase order costs
C. finished costs B. relevant inventory carrying costs
D. manufacturing costs C. irrelevant inventory carrying costs
D. relevant opportunity cost of capi-
379. Product which requires large amount tal
of resources, but incur low per unit
cost is classified as 385. In goods transport service the cost
A. product under costing unit is
B. product over costing A. cost per ton
B. cost per hour
C. expected under cost
C. cost per ton kilo meters
D. expected over cost D. cost per vehicle
380. Number of worker employed is used 386. Cost of contract and profit or loss
as basis for the apportionment of thereon are determined by preparing
101
A. cost sheet 392. The amount paid to sub-contractor

B. profit and loss a/c is
C. trading a/c A. subtracted from the contract price
D. separate ledger a/c B. debited to contract a/c
C. credited to contract a/c
387. In regression analysis, if observed D. added with the contract price
cost value is 50 and predicted cost
393. Function which is used to measure
value is 7, then disturbance term will
decline in per unit cost of different
be
business functions is classified as
A. 57
A. mixed curve
B. 43 B. experience curve
C. 67 C. discrete curve
D. 47 D. fixed curve
388. Perpetual inventory system involves 394. Which of the following is an exam-
ple of semi-variable cost?
am
A. bincard and stores ledger A. Salary
B. bill of material and material requi- B. Tax
sition C. Telephone expenses
D. Office expenses
iR
C. purchase requisition and purchase
order 395. In Kaizen budgeting, costs are based
D. inward and outward invoices on all improvements which is
A. to be implemented
hr
389. If an actual indirect cost incurred B. based on current practice

is$25000 and indirect cost allocated C. based on past prices
iS
is$23000, then over allocated indirect D. based on sold quantity

cost would be
A. $48,000 396. Practice, which makes target more
achievable by underestimating rev-
Ja
B. -$2000
C. $2,000 enues or overestimating cost is called
D. -$48000 A. cost slack
B. target slack
390. Formula of 1-unexplained variation C. budgetary slack
/ total variation is used to calculate D. revenue slack
A. coefficient of determination 397. Under which method the rate of
B. coefficient of index wages are linked with the cost of liv-
C. coefficient of residual
ing index?
D. coefficient of prediction A. Flat time rate
B. High day rate
391. Relationship between cost and cost C. Measured day rate
drivers is D. Graduated time rate
A. stationary
B. not stationary 398. System which measures budget, ac-
C. intrinsic tion and plan of each responsibility
D. extrinsic center is known as
A. budgeted accounting 404. Manufacturing overhead cost allo-

B. action accounting cated to individual jobs is classified
C. planned accounting as
D. responsibility accounting A. manufacturing overhead allocated
B. cost overhead applied
399. High-low method is used for estima- C. manufacturing overhead applied
tion of D. both A and C
A. linear coefficient
405. In process and job costing system,
B. cost coefficient
normal spoilage cost is considered as
C. slope coefficient
A. conversion costs
D. price coefficient B. sunk costs
C. inventoriable costs
400. Factory overhead is Rs 3,00,000 and D. non inventoriable costs
direct material cost is Rs 5,00,000
What is the overhead rate under direct 406. Lower level of production leads to
material cost method? A. higher setup cost
am
A. 25% B. lower repair cost
B. 30% C. higher setup cost
C. 60% D. higher repair cost
iR
D. 75%
407. If slope coefficient is 0.60 and differ-
401. operating costing is a ence in machine hours is$50000, then
A. method of costing difference in cost can be
hr
A. $68,700
B. technique of costing
B. $58,700
C. norm of costing
iS
C. $30,000
D. procedure of costing D. $83,333.34
402. Conversion cost is$20000 and manu- 408. Focus on budget cost of all activities
Ja
facturing overhead cost is$7000, then necessary to sell and produce market
direct manufacturing labour cost will offerings is known as
be A. cost based budgeting
A. $27,000 B. activity based budgeting
B. $13,000 C. production based budgeting
C. $130,000 D. raw material budgeting
D. $29,500
409. Charging output with overhead at
403. If an unexplained variation is reasonable rate is called
A. allocation
350050 and total variation is 700505,
B. appropriation
then coefficient of determination
C. apportionment
would be D. absorption
A. 3
B. 0.5003 410. Method, which allocates cost of sup-
C. 0.7003 port department to operating and sup-
D. 2 port departments is known as
103
A. indirect method A. total cost

B. direct method B. infeasible cost
C. step down method C. fixed cost
D. reciprocal method D. variable cost
411. In process costing, if an abnormal 416. Costing system, which omits some
loss arises, the process account is gen- of journal entries in accounting sys-
erally. tem is known as
A. in-time costing
A. Debited with the scrap value of
B. trigger costing
the abnormal loss units C. back flush costing
B. Debited with the full production D. lead time costing
cost of the abnormal loss units
C. Credited with the scrap value of 417. Cost of abnormal wastage is:
the abnormal loss units A. Charged to the product cost
D. Credited with the full production B. Charged to the profit& loss ac-
cost of the abnormal loss units count
C. charged partly to the product and
am
412. If beginning work in process equiva- partly profit& loss account
lent units is 2500 units, work done in D. not charged at all
current period equivalent units is 3800 418. The summarized balance sheet of
iR
units and units completed in current Autolight Limited shows the balances
period are 4000, then ending work in of previous and current year of re-
process equivalent units will be tained earnings Rs 25,000 and Rs
hr
A. 1800 units 35,000. If dividend paid during the

B. 2300 units current year amounted to Rs 5,000
C. 10300 units
iS
then profit earned during the year will

D. 1500 units
be:
413. Percentage of variation in Y ex- A. Rs 5,000
Ja
B. Rs 55,000
plained by X is measured by C. Rs 15,000
A. coefficient of residual D. Rs 65,000
B. coefficient of prediction
C. coefficient of determination 419. Bad debt is an example of
D. coefficient of index A. production overhead
B. administrative overhead
414. Under ABC method of material con- C. selling overhead
trol, the material are classified accord- D. distribution overhead
ing to
420. Departmentalization of overhead is
A. its value
known as
B. its usage A. primary distribution
C. its nature B. secondary distribution
D. its availability C. absorption
D. allocation
415. Cost which remains unchanged, in
proportion to level total volume of 421. Describe the method of costing to be
production is classified as applied in case of Nursing Home:
A. Operating Costing C. Value wise records of material re-

B. Process Costing ceived, issued and balance
C. Contract Costing D. a record of labour attendance
D. Job Costing
427. Costs of all activities for individual
422. If percentage of overall gross margin products or services can be called
is 15 and final sales value of whole A. purpose level costs
production is$20000, then gross mar- B. output-unit level costs
gin (in dollars) will be C. input-unit level costs
A. $30,000 D. activity level costs
B. $300,000
C. $40,000 428. Costs associated with the labour
D. $400,000 turnover can be categorised into:
A. Preventive Costs only
423. Costs of all activities for a group of B. Replacement costs only
products, rather than individual prod- C. Both of the above
uct can be classified as D. Machine costs
am
A. activity level costs
B. input level costs 429. Costing and allocating situation, in
C. batch level costs which indirect cost allocated amount
iR
D. output level costs is less than actually incurred amount
is known as
424. Costs of goods acquired from suppli- A. over allocated budget
ers is classified as B. under allocated budget
hr
A. stock-out costs C. under allocated indirect cost

B. ordering costs D. over allocated direct cost
C. carrying costs
iS
D. purchasing costs 430. Total cost related to work in process

inventory is divided by total units of
425. "Calculate workers left and dis- work done is used to calculate
Ja
charged from the following: Labour A. Gross weighted margin

turnover rates are 20%, 10% and B. weighted average revenue
6% respectively under Flux method, C. weighted average cost
Replacement method and Separation D. weighted average conversion cost
method No of workers replaced dur-
431. Spread of over allocated overhead
ing the quarter is 80"
A. 112 and under allocated overhead among
B. 80 work in process, finished goods and
C. 48 goods sold cost is classified as
D. 64 A. proration approach
B. appreciation approach
426. Bin Card is a? C. depreciation approach
A. Quantitative as well as value wise D. adjusted approach
records of material received, issued
and balance 432. Manufacturing, distribution and mar-
B. Quantitative record of material re- keting costs incur after split off point
ceived, issued and balance is classified under
105
A. separable costs A. carrying costs

B. joint costs B. purchasing costs
C. main costs C. stock-out costs
D. split off costs D. ordering costs
433. Budgeted income statement and sup- 439. Budgeted total direct labour cost
porting budget schedules are catego- is divided with budgeted total direct
rized under labour to calculate
A. focused statement A. budgeted indirect labour cost rate
B. slack statement B. expected direct labour cost rate
C. budgeted income statement C. budgeted direct labour cost rate
D. operating budget D. expected indirect labour cost rate
434. Type of budget, which is always 440. In accounting system, a document

available for specified period of fu- which consists of all assigned cost for
ture is called specific job is classified as
A. period budget A. job cost record
am
B. batch budget B. job cost sheet
C. discontinued budget C. source document
D. both a and b
D. continuous budget
iR
441. Direct service labour is$5000, idle
435. Higher and accurate budgeted profit
time wages are$1000 and overtime
forecast of managers lead to
A. high incentive bonus premium is$450, then total figure
hr
B. low incentive bonus would be

C. influence bonus A. $4,450
D. revenue bonus B. $6,450
iS
C. $21,500
436. Chances of cost to be considered as D. $14,300
variable are more, if the 442. Second step in developing operating
Ja
A. time horizons are long

budget is to
B. time horizons are short A. plan coordination
C. time horizons are irrelevant B. plan accounts
D. time horizons are relevant C. obtain information
D. coverage information
437. Defectives
A. cannot be rectified and made into 443. Better fit between estimated cost and
good units actual observations is represented by
B. can be rectified and mad made into A. variable residual terms
good units B. smaller residual terms
C. can be a part of finished product C. larger residual terms
D. can be termed as spoilage D. zero residual terms
438. Costs associated with storage of fin- 444. An analysis of data over succes-
ished goods such as spoilage, obso- sive past periods, which pertain to
lescence and insurance of goods are some plant, activity and organization
classified as is called
A. economic series A. profit

B. financial series B. Services
C. time series C. Profit and service
D. analytical series D. government organisation
445. In case of joint products, the main 449. Overvaluation of opening stock in
objective of accounting of the cost is financial accounting results
to apportion the joint costs incurred A. decreases costing profit
up to the split off point. For cost ap- B. decreases financial accounts profit
portionment one company has cho- C. increases costing profit
D. increases financial accounts profit
sen Physical Quantity Method. Three
joint products ‘A’, ‘B’ and ‘C’ are
produced in the same process. Up 450. Goodness of fit is used to measure
to the point of split off the total pro- wellness of
duction of A, B and C is 60,000 kg, A. actual values
out of which ‘A’ produces 30,000 kg B. predicted values
am
and joint costs are Rs 3,60,000. Joint C. residual values
costs allocated to product A is. D. indexed values
A. Rs 1,20,000
451. If actual result is$25000 and flexible
iR
B. Rs 60,000
C. Rs 1,80,000 budget amount is$11000, then flexi-
D. None of the these ble budget amount is
A. $36,000
hr
446. Sundry overhead expenses may be B. $46,000

apportioned in the ratio of C. $56,000
D. $14,000
iS
A. material consumed
B. number of employees
452. Slope coefficient of cost function is
C. labour hours
zero because it intersects the
Ja
D. machine hours
A. x-axis at one
447. "Calculate the value of closing stock B. y-axis at constant
from the following according to LIFO C. x-axis at constant
D. y-axis at one
method: 1st January, 20XX: Opening
balance: 50 units @ Rs 4 Receipts: 453. If relevant opportunity cost of capi-
5th January, 20XX: 100 units @ Rs 5 tal is$2950 and relevant carrying cost
12th January, 20XX: 200 units @ Rs of inventory is$6700, then relevant in-
450 Issues: 2nd January, 20XX: 30 cremental cost will be
units 18th January, 20XX: 150 units" A. $9,650
A. Rs. 765 B. $2,350
B. Rs. 805 C. $3,750
C. Rs. 786 D. $2,750
D. Rs. 700
454. Which method of costing can be
448. Operating costing is more suitable used in furniture manufacture indus-
for industries try?
107
A. Job costing 460. Type of accounting, which focuses

B. Contract costing on whom should be asked for informa-
C. Process costing tion and whom not will be categorized
D. Specific order costing as
A. focused accounting
455. An estimation of relationship be- B. responsibility accounting
tween two or more independent vari- C. information accounting
ables and dependent variable is classi- D. blame accounting
fied as 461. The loss which arise in manufactur-
A. One variable series ing activity on account of inherent na-
B. multiple regression ture of the product is
C. simple regression A. normal loss
D. Two way regression B. abnormal loss
C. net loss
456. Wage sheet is prepared by D. gross loss
am
A. time keeping department
B. personnel department 462. In case of rising prices (inflation),
C. payroll department LIFO will:
D. cost accounting department A. provide lowest value of closing
iR
stock and profit
457. Conversion cost is subtracted from B. provide highest value of closing
manufacturing overhead cost is to cal- stock and profit
C. provide highest value of closing
hr
culate the
stock but lowest value of profit
A. manufacturing labour costs
D. provide highest value of profit but
iS
B. direct labour costs

lowest value of closing stock
C. direct manufacturing labour costs
D. indirect manufacturing labour 463. Part of master budget, which covers
Ja
costs capital expenditures, budgeted state-

ment of cash flows and balance sheet
458. Approaches to allocate costs of sup- is classified as
port department do not include A. financial budget
A. sales mix allocation method B. capital budget
B. dual-rate cost-allocation method C. cash flows budget
C. single rate cost allocation method D. balanced budget
D. both b and c
464. Given that for a job standard time
is 8 hrs, actual time taken is 6 hrs
459. Term which describes assigning of
and the time rate is Rs 2 per hr What
indirect cost to any cost abject is clas-
is the total wages under Halsey pre-
sified as
mium plan?
A. cost allocation
A. Rs. 12
B. sales tracing B. Rs. 14
C. sales allocation C. Rs. 16
D. cost tracing D. Rs. 18
465. "State which of the following are the 470. If total incurred cost in a production
characteristics of service costing. 1. process are$30000 and number of out-
High levels of indirect costs as a pro- put units are 5000 units, then units
portion of total costs 2. Use of com- cost will be
posite cost units 3. Use of equivalent A. $16
units" B. $60
A. (1) only C. $6
D. $26
B. (1) and (2) only
C. (2) only 471. If an actual indirect cost incur
D. (2) and (3) only is$35000 and indirect cost allocated
is$43000, then under allocated indi-
466. Sale of defectives is reduced from rect cost will be
A. $78,000
A. prime cost B. -$78000
B. works cost C. -$8000
am
C. cost of production D. $8,000
D. cost of sales 472. Actual loss is more than the prede-
termined normal loss, it is
467. If demand of one year is 25000 units,
iR
A. normal loss
relevant ordering cost for each pur- B. abnormal loss
chase order is$210, carrying cost of C. seasonal loss
one unit of stock is$25 then economic D. standard loss
hr
order quantity will be

A. 678 packages 473. A company calculates the prices of
jobs by adding overheads to the prime
iS
B. 648 packages
C. 658 packages cost and adding 30% to total costs as a
profit margin. Job number Y256 was
D. 668 packages
sold for Rs1690 and incurred over-
Ja
468. Third step in developing operating heads of Rs 694. What was the prime
budget is cost of the job?
A. Rs 489
A. analysis of batches
B. Rs 606
B. analysis of batches C. Rs 996
C. analysis of products D. Rs 1300
D. making predictions about future
474. Audit fess is a part of
469. Third step in estimation of cost func- A. works on cost
tion, by using quantitative analysis is B. selling overhead
collection of data for C. distribution overhead
D. administration overhead
A. cost and cost object
B. price and cost driver 475. The P/v ratio of a company is 50%
C. dependent variable and cost driver and margin of safety is 40%. If
D. independent variable and cost present sales is Rs 30,00,000 then
driver Break Even Point in Rs will be
109
A. Rs 9,00,000 481. Cost which is changed in proportion

B. Rs 18,00,000 to level total volume is
C. Rs 5,00,000 A. fixed cost
D. None of the above B. variable cost
C. total cost
476. Type of costs that cannot be traced D. infeasible cost
for individual products but help in
supporting an organization are clas- 482. Direct manufacturing labour costs
sified as is$40000 and manufacturing over-
A. individual sustaining costs head cost is$7000, then conversion
B. facility sustaining costs cost would be
C. sustained tracing A. $47,000
D. support tracing B. $33,000
C. $57,000
477. This is a point at which the store D. $18,000
keeper should initiate purchase requi-
am
483. Number of units are multiplied to
sition for fresh supply It is
A. maximum stock level per unit price, to calculate
A. multiple budget variable
B. minimum stock level
B. fixed budget variable
iR
C. reorder level
C. flexible budget variable
D. average stock level
D. constant budget
478. Under Gantts task and bonus plan 484. Cost influences by responsibility
hr
no bonus is payable to a worker if his center manager who is considered as

efficiency is less than A. manager cost
iS
A. 50% B. influential cost

B. 60% C. center cost
C. 835% D. controllable cost
Ja
D. 100%
485. If required rate of return is 12% and
479. Relationship between cost and cost per unit cost of units purchased is$35,
driver is economically plausible if then relevant opportunity cost of capi-
goodness of fit tal will be
A. has meaning A. $6.20
B. has no meaning B. $7.20
C. has index values C. $4.20
D. has no index values D. $5.20
480. An example of rework is 486. Plan of action; how an organization

A. short lengths from wood work meets its opportunities and capabili-
B. defective aluminium cans recy- ties is classified as
cled by manufacturer A. action plan
C. detection of defective pieces be- B. strategy
fore shipment C. step wise plan
D. none of above D. complex plan
487. Sales budget variance is subtracted 493. Procedure of assigning direct cost to
from flexible budget amount to calcu- any cost abject is classified as
late A. sales allocation
A. static budget amount B. cost tracing
B. unstated amount C. cost allocation
C. constant amount D. sales tracing
D. variable amount
494. If actual result is$26000, flexible
488. Collection of cost data, according budget amount is$13000, then flex-
to accounting system in an organized ible budget amount will be
way is classified as A. $39,000
A. system accumulation B. $49,000
B. accumulated data C. $13,000
C. cost accumulation
D. $15,000
D. organized accumulation
489. First step in process costing system 495. "Calculate the value of closing
am
is to stock from the following according to
A. summarize flow of output Weighted Average method: 1st Jan-
B. compute output in units uary, 20XX: Opening balance: 50
iR
C. summarize total costs units @ Rs 4 Receipts: 5th January,
D. compute cost for each equivalent 20XX: 100 units @ Rs 5 12th Jan-
unit uary, 20XX: 200 units @ Rs 450 Is-
sues: 2nd January, 20XX: 30 units
hr
490. If units of normal spoilage are 150 18th January, 20XX: 150 units"
and total good units manufactured are A. Rs. 765
iS
1500, then normal spoilage rate would B. Rs. 805

be C. Rs. 786
A. 14.00% D. Rs. 700
B. 15.00%
Ja
C. 10.00% 496. The most important element of cost

D. 12.00% in manufacturing industries is
491. Costing refers to the techniques and A. material
processes of B. labour
A. ascertainment of costs C. direct costs
B. allocation of costs D. indirect costs
C. apportion of costs
D. distribution of costs 497. Absorption means
A. charging overheads to cost centres
492. Model which refers possibility for B. charging of overheads to cost units
management to conduct sensitivity C. charging of overheads to cost cen-
analysis can be categorized under tres or cost units
A. investment planning models D. allotment of overheads to differ-
B. financial planning models ent departments
C. cost planning models
D. revenues forecast models 498. Prime cost includes
111
A. direct materials, direct wages and A. budget

indirect expenses B. batching
B. indirect materials and indirect C. complexity
labour and indirect expenses D. process
C. direct materials, direct wages and
direct expenses 504. GRN number refers to
D. direct materials, indirect wages A. goods received note number
B. goods returned note number
and indirect expenses
C. goods shortage note number
499. If direct service labour is$7000, idle D. goods requisition note number
time wages are$2000 and overtime
505. Overhead is also known as
premium is$950, then total figure A. ongoing cost
would be B. basic cost
A. $5,850 C. extra cost
B. $5,950 D. chargeable expenses
C. $9,950
am
D. $10,050 506. Bonus under Rowan scheme is paid
500. Factory overhead can be charged on A. as a proportion of standard time to

iR
the basis of actual time
A. material cost B. as a proportion of actual time to
B. labour cost standard time
C. prime cost C. as a proportion of time saved to
hr
D. direct expenses standard time

D. as a proportion of standard time
iS
501. Approaches used to allocate joint

to time saved
costs include
A. sales value at split off method 507. If conversion cost is$25000 and
Ja
B. net realizable value method direct manufacturing labour cost

C. constant gross margin percentage is$17000, then manufacturing over-
NRV method head cost would be
D. all of above A. $14,700
B. $68,000
502. If difference in costs is$7000 and dif-
C. $8,000
ference in machine hours of is$18000, D. $42,000
then slope coefficient would be
A. 2.571 508. Use of variables to signal whether
B. 0.39 strategies are effective or ineffective
C. 0.2571 is classified as
D. 3.39 A. evaluating strategy
B. performing strategy
503. Type of plan of a company, which C. warned strategy
quantities expectations of cash flows, D. weighted strategy
income and financial position is
known as 509. The term cost refers to
A. the present value of future benefits A. 600 units

B. the value of sacrifice made to ac- B. 750 units
quire goods or services C. 1200 units
D. 1250 units
C. an asset that has given benefit but
now expired 514. Situation in which two or more in-
D. the price of products sold or ser- dependent variables are highly corre-
vices rendered lated is known as
A. price linearity
510. In element-wise classification of B. cost linearity
overheads, which one of the following C. division linearity
D. multi-collinearity
is not included-
A. Fixed overheads 515. Under absorption of overhead ex-
B. Indirect labour penses in cost accounting results in
C. Indirect materials
D. Indirect expenditure A. decrease in costing profit
am
B. decrease in financial accounts
511. Variable cost per unit profit
A. varies when output varies C. increase in costing profit
D. increase in financial accounts
B. remains constant
iR
profit
C. increase when output increases
D. decreases when output decreases 516. Purchase order lead time is multi-
plied to number of units is sold per
hr
512. "Which of the following statements unit of time to calculate

is/are correct? 1. A materials requi- A. carrying costs
iS
sition note is used to record the issue B. relevant total costs

of direct material to a specific job. 2. C. economic order quantity
D. reorder point
A typical job cost will contain actual
Ja
costs for material, labour and produc- 517. In order to avoid the stoppage of pro-
tion overheads, and non-production duction due to shortage of material
overheads are often added as a per-
centage of total production cost. 3. A. maximum stock level is main-
The job costing method can be ap- tained
plied in costing batches" B. minimum stock level is main-
A. (1) only tained
C. re-order level is maintained
B. (1) and (2) only
D. average stock level is maintained
C. (1) and (3) only
D. (2) and (3) only 518. Classification of cost is useful
A. to find gross profit
513. Annual usage is 6000 units @ Rs 20 B. to find net profit
C. to identify costs
per unit Cost of placing an order is
D. to identify efficiency
Rs 60 and annual carrying cost of one
unit is 10% of inventory value EOQ 519. Any output that has total positive
= sales is a
113
A. joint product A. Rs. 2,500

B. main product B. Rs. 3,000
C. product C. Rs. 3,333
D. all of above D. Rs. 2,000
520. Difference between budgeted 526. If residual error is 25 and predicted

amounts and actual results is clas- cost value is 50, then observed cost
sified as value would be
A. standard deviation A. 100
B. variances B. 25
C. mean average C. 50
D. weighted average D. 75
521. Value, which measures that how 527. Those cost which is incurred to pre-
large is value of standard error in rele- vent the labour turnover
vance to value of estimated coefficient A. management cost
am
is termed as B. replacement cost
A. t-value C. preventive cost
B. b-value D. compensation cost
iR
C. d-value
D. c-value 528. Which of the following is a service
department?
522. is a detailed budget of cash re- A. Refining department
hr
ceipts and cash expenditure incorpo- B. Machining department

rating both revenue and capital items. C. Receiving department
iS
A. Cash Budget
D. Finishing department
B. Capital Expenditure Budget
C. Sales Budget 529. Segment of subunit of company,
Ja
D. Overhead Budget whose manager is responsible for spe-

cific set of instructions and activities
523. Job costing used in
perform is classified as
A. paper mills
B. chemical works A. subunit center
C. printing works B. instruction center
D. textile mill C. responsibility center
D. activity segment
524. The ascertainment of costs after they
have been incurred is known as 530. Cause and effect relationship that ex-
A. marginal costing ists between change in total cost level
B. historical costing and change in level of activity, is mea-
C. sunk cost sured with help of
D. notional cost A. production driver
B. cost driver
525. "Total cost of a product: Rs 10,000. C. price driver
Profit: 25% on Selling Price Profit is:" D. estimation driver
531. Function used to measure decline in 537. Cost, which is related to specific
labour hours per unit as units of pro- cost object and economically trace-
duction increases is called able, will be classified as
A. fixed curve A. direct cost
B. learning curve B. indirect cost
C. linear curve C. line cost
D. mixed curve D. staff cost
532. Fixed cost per unit increases when 538. The summarized balance sheet of
Rakesh udyog Limited shows the bal-
A. variable cost per unit increases ances of previous and current year of
B. variable cost per unit decreases provision for taxation Rs 50,000 and
C. production volume increases Rs 65,000. If taxed paid during the
D. production volume decreases
current year amounted to Rs 70,000
533. Statutory cost audit are applicable then amount charge from Profit and
only to: Loss Account will be:
am
A. Firm A. Rs 55,000
B. Company B. Rs 85,000
C. Individual C. Rs 45,000
D. Rs 1,85,000
iR
D. Society
534. Normal loss in the manufacturing 539. First step in estimation of cost func-
process leads to tion by using quantitative analysis is
hr
A. reduction in unit price of other to

good units A. choose price estimation method
B. increase in unit price of other good B. choose dependent variable
iS
units C. choose independent variable

C. reduction in costing profit D. choose cost estimation method
D. increase in costing profit
Ja
540. An amount of spoilage that is natural

535. Range, in which relationship exists in any particular production process
between level of activity or total cost is classified as
is called A. normal scrap
A. functional range B. normal spoilage
B. relevant range C. abnormal spoilage
C. unit range D. weighted spoilage
D. related range
541. Cost of sales plus profit is
536. "Calculate Re-order level from the A. selling price
following: Consumption per week: B. value of finished product
100-200 units Delivery period: 14-28 C. value of goods produced
days" D. value of stocks
A. 5600 units
B. 800 units 542. If flexible budget amount is$82000
C. 1400 units and actual result is$45000 then flexi-
D. 200 units ble budget amount will be
115
A. $97,000 A. cost function

B. $87,000 B. revenue function
C. $27,000 C. unit function
D. $37,000 D. relative function
543. Second step in processing costing 549. What-if technique, which examines
system is to changes in results if original predic-
A. summarize total costs tion would not be achieved is called
B. compute cost for each equivalent A. change analysis
unit B. original analysis
C. summarize flow of output C. sensitivity analysis
D. compute output in units D. predicted analysis
544. If any by-product is produced and 550. Cost accounting was developed be-
sold it is credited to cause of the
A. profit and loss a/c A. limitations of the financial ac-
B. by-product a/c counting
am
C. process a/c B. limitations of the management ac-
D. abnormal gain a/c counting
C. limitations of the human resource
545. Most appropriate basis for the appor- accounting
iR
tionment of power is D. limitations of the double entry ac-
A. no of labour counting
B. no of output
C. no of machines 551. Difference between flexible budget
hr
D. horse power of machines amount and corresponding actual re-

sult is called
546. If an overhead cost of operating a
iS
A. corresponding variance
machine is$500000 for 1000 hours, B. resultant variance
then cost allocation rate will be C. flexible budget variance
A. $1500 per machine hour
Ja
D. static budget variance

B. $250 per machine hour
C. $500 per machine hour 552. Cost function, in which graph of to-
D. $1000 per machine hour tal cost would not result in straight
line is classified as
547. In Regression Analysis, if an ob- A. nonlinear cost function
served cost value is 85 and distur- B. linear cost function
bance error is 25 then predicted cost C. linear price function
value will be D. nonlinear price function
A. 110
B. 125 553. In a normal accounting period, an al-
C. 60 located amount of indirect cost is$700
D. 70 and an actual amount is$800, then this
can be classified as
548. Description in mathematical form to A. under allocated indirect cost
represent changes in cost, with level B. over allocated direct cost
of activity related to that cost is clas- C. over allocated budget
sified as D. under allocated budget
554. Model which states decline in extra 560. Decision model to calculate optimal
time needed to produce last unit, ev- quantity of inventory to be ordered is
ery time for cumulative quantity of called
doubled units produced is classified A. efficient order quantity
as B. economic order quantity
A. incremental unit average model C. rational order quantity
B. incremental cost learning model D. optimized order quantity
C. incremental unit time learning
561. better administration of budget in
model
D. incremental price learning model budgeting plans require
A. intelligent interpretations
555. Halsey premium plan is B. participation
A. individual incentive scheme C. persuasion
B. group incentive scheme D. all of above
C. time and piece wage system
562. A budget which is prepared in a man-
D. differential piece wage system
ner so as to give the budgeted cost for
am
556. Which of the following is not an any level of activity is known as:
avoidable cause of labour turnover: A. Master budget
A. Dissatisfaction with Job B. Zero base budget
iR
B. Lack of training facilities C. (Functional budget
C. Low wages and allowances D. Flexible budget
D. Disability, making a worker unfit
563. Difference between final sales value
hr
for work
and separable costs is equal to
557. Goodness of fit predicted values is A. net income
iS
B. net realizable value

also known as
C. Gross margin
A. coefficient of determination
D. Gross realizable value
B. coefficient of index
Ja
C. coefficient of residual 564. Time wages are paid on the basis of

D. coefficient of prediction
A. actual time
558. If direct material cost is$85000 and
B. standard time
direct manufacturing labour is$25000,
C. time saved
then prime cost would be D. overtime
A. $13,500
B. $55,600 565. Contract costing is most appropriate
C. $60,000 method of costing for
D. $110,000 A. construction industry
B. banking industry
559. Wages paid to workers of factory are C. textile mills
termed as D. cement industry
A. workers premium
B. overtime premium 566. Hybrid costing system, which is ap-
C. factory premium plied to batches of similar products,
D. wage premium but are not identical is classified as
117
A. incremental costing system 572. Number of observations in regres-

B. split off costing system sion analysis is considered as
C. inventoriable costing system A. degree of possibility
D. operation costing system B. degree of average
C. degree of variance
567. If transferred out total cost D. degree of freedom
is$1850000 and number of good units
(produced), then cost per good unit 573. Idle capacity of a plant refers to the
transferred out and completed can be difference between
A. 245.1724 A. maximum capacity and practical
B. 255.1724 capacity
C. 278.1724 B. practical capacity and normal ca-
D. 268.1724 pacity
C. practical capacity and capacity
568. Allotment of overhead incurred for based on sales expectancy
a particular cost centre to that specific D. maximum capacity and actual ca-
am
cost centre is pacity
A. allocation
B. allotment 574. Small residual terms and positive
slope of line indicate
iR
C. primary distribution
D. secondary distribution A. badness proportions
B. goodness proportion
569. As compared to sale value of main C. inversely proportion
hr
products, by-products have D. directly proportion

A. low sale value 575. Bonus under Halsey plan is paid
iS
B. high sale value

C. unstable sale value A. at 50% of time saved
D. relevant sale value B. at 75% of time saved
Ja
C. at 80% of time saved

570. Deviations between estimated re-
D. at 90% of time saved
gression line and vertical deviations
are classified as 576. Industrial engineering method is
A. fixed terms used to analyze relationship between
B. indexed terms A. marketing and financing
C. variable terms B. price and costs
D. residual terms C. input and output
D. units and batches
571. In a normal accounting period, allo-
cated amount of indirect cost is$2000 577. An average inventory in units is mul-
and actual amount is$2200, then this tiplied with annual relevant carrying
is classified as cost of each unit to calculate
A. over allocated budget A. annual irrelevant ordering costs
B. under allocated budget B. annual relevant carrying costs
C. under allocated indirect cost C. annual relevant ordering costs
D. over allocated direct cost D. annual irrelevant carrying costs
578. If an actual manufacturing over- to direct labour hours of active work-

head costs is$485000 and actual to- ing. What was the standard cost per
tal quantity of cost allocation base is labour hour?"
4500 labour hours, then overhead rate A. Rs. 14
would be B. Rs. 1650
A. 109.87 C. Rs. 1750
B. $107.78 D. Rs. 18
C. $106.56
584. "Calculate workers recruited and
D. $104.34
joined from the following: Labour
579. A company’s break even point is turnover rates are 20%, 10% and
6,000 units per annum. The selling 6% respectively under Flux method,
price is Rs 90 per unit and the vari- Replacement method andSeparation
able cost is Rs 40 per unit. What are method No of workers replaced dur-
the company’s annual fixed costs? ing the quarter is 80"
A. Rs 120 A. 112
am
B. Rs 2,40,000 B. 80
C. Rs 3,00,000 C. 48
D. Rs 5,40,000 D. 64
iR
580. Line which uses to join observations 585. In linear cost function, which is y =
with lower and highest values of cost a + bx, y is classified as
A. predicted fixed cost
driver is called
hr
B. predicted variable cost

A. straight line
C. predicted cost
B. curved line D. predicted price
iS
C. horizontal line
D. vertical line 586. Relevant ordering costs are added
into relevant carrying costs to calcu-
Ja
581. starting point in operating budget is late

A. cost budget A. relevant total costs
B. material list B. contribution costs
C. revenue budget C. throughput costs
D. list of investors D. optimized costs
582. Higher level of production leads to 587. When the sales increase from Rs
A. higher repair cost 40,000 to Rs 60,000 and profit in-
B. higher setup cost creases by Rs 5,000, the P/V ratio is-
C. lower repair cost A. 0.2
D. higher setup cost B. 0.3
C. 0.25
583. "During September, 300 labour D. 40%
hours were worked for a total cost of
Rs. 4800 The variable overhead ex- 588. If flexible budget amount is$62000
penditure variance was Rs. 600 (A) and an actual result is$35000, then
Overheads are assumed to be related flexible budget amount would be
119
A. $27,000 594. A job is budgeted to require 3,300

B. $37,000 productive hours after incurring 25%
C. $97,000 idle time. If the total labour cost bud-
D. $87,000 geted for the job is Rs 36,300. What
589. "Calculate the prime cost from the is the labour cost per hour( to the near-
following information: Direct mate- est cent)?
A. Rs 8.25
rial purchased: Rs. 1,00,000. Direct
B. Rs 8.80
material consumed: Rs. 90,000. Di- C. Rs 11.00
rect labour: Rs. 60,000. Direct ex- D. Rs 14.67
penses: Rs. 20,000. Manufacturing
overheads: Rs. 30,000." 595. Direct expenses are also called
A. Rs. 1,80,000 A. major expenses
B. Rs. 2,00,000 B. chargeable expenses
C. Rs. 1,70,000 C. overhead expenses
D. Rs. 2,10,000 D. sundry expenses
am
590. Direct cost assignment for specific 596. Costing method, which calculates
cost object is classified as per equivalent unit cost of all produc-
A. cost object line cost tion related work done till calculate
iR
B. cost tracing date is termed as
C. cost object indirect cost A. weighted average method
D. cost object staff cost B. net present value method
C. Gross production method
hr
591. Recreation expenses in factory are D. net present value method

apportioned on the basis of
A. material cost 597. In the workers are paid on the
iS
B. wages basis of hourly daily,weekly rate

C. prime cost A. time rate system
D. number of employees B. piece rate system
Ja
C. premium bonus system

592. To decide whether cost is variable D. emerson efficiency plan
cost or fixed cost with respect to some
specific activity depends upon 598. Costs which are considered as ex-
A. units of labour penses in accounting period are also
B. unit of production known as
C. time horizon A. inventory costs
D. units of inventory B. period costs
C. timed costs
593. If budgeted indirect cost arte is$225 D. labour overheads
and budgeted cost allocation base
is$750 per hour, then annual indirect 599. Variance, if used to alert managers
cost (budgeted) would be before time of problem is called
A. $168,750 A. varied warning
B. $148,570 B. times warning
C. $186,750 C. managers warning
D. $125,680 D. early warning
600. In cause and effect relationship be- and sales level of 25,000 units for the
tween cost level and cost driver, infla- next period. Due to market changes
tionary price effects are removed by both the selling price and the variable
dividing cost through cost are expected to increase above
A. price index the budgeted level in the next period.
B. cost index If the selling price and variable cost
C. profit index per unit increase by 10% and 8% re-
D. cost driver index spectively, by how much must sales
volume change, compared with the
601. A particular term for which specific
original budgeted level, in order to
revenue measurement is required is
achieve the original budgeted profit
known as
A. revenue allocation for the period?"
B. revenue object A. 10.1% decrease
C. revenue increment B. 11.2% decrease
D. reciprocal revenue C. 13.3% decrease
am
D. 16.0% decrease
602. If the actual loss is more than the
estimated normal loss, then it is 606. When output of earlier process is
A. abnormal loss transferred at a profit to the subse-
iR
B. normal loss quent process, it is
C. seasonal loss A. inter departmental profit
D. abnormal gain
B. abnormal gain
hr
603. If residual error is 51 and predicted C. inter process profit

cost value is 37, then observed cost D. manufacturing profit
iS
value will be
A. 14 607. In regression analysis, if predicted
B. 88 cost value is 65 and observed cost
Ja
C. 24 value is 19 then disturbance term will

D. 68 be
A. 46
604. Budgeted total cost in indirect cost B. 56
pool is divided by budgeted total
C. 36
quantity of cost allocation base is to
D. 76
calculate by
A. budgeted direct cost rate
608. Flexible budget amount is added to
B. budgeted indirect cost rate
flexible budget variance to calculate
C. expected indirect cost rate
D. direct budget percentage A. static result
B. actual result
605. "S produces and sells one product, C. secondary result
P, for which the data are as follows: D. primary result
Selling price Rs 28 Variable cost Rs
16 Fixed cost Rs 4 The fixed costs 609. Abnormal loss and its value are
are based on a budgeted production
121
A. debited to process a/c A. Where the manager has the re-

B. credited to process a/c sponsibility of generating and max-
C. debited to costing profit and loss imising profits
a/c B. Which is concerned with earning
D. debited to profit and loss a/c an adequate Return on Investment
C. Both of the above
610. Schedule of expected disbursements D. Which manages cost
and cash receipts is considered as
A. planned schedule 616. Relationship between independent
B. cash budget variable and dependent variable must
C. market budget be
D. price schedule A. general ledger
B. non-achievable
611. Health care premium for workers C. non measureable
and pension costs are included in D. economically plausible
A. payroll fringe costs
am
B. health costs 617. An estimation of relationship be-
C. premium costs tween one independent variable and
D. workers costs dependent variable is known as
iR
A. simple regression
612. Packing cost is B. Two way regression
A. production cost C. One variable series
B. selling cost D. multiple regression
hr
C. administration cost
D. distribution cost 618. Cost of idle time arising due to non
iS
availability of raw material is

613. Material or anything for which cost A. charged to costing profit and loss
is to be measured is known as account
A. measurement object
Ja
B. charged to financial profit and loss

B. cost object account
C. accounting object C. charged to factory overhead
D. budget object D. recovered by inflating the wage
rate
614. A company makes a single product
and incurs fixed costs of Rs 30,000 619. In income statement of merchandis-
per annum. Variable cost per unit is ing costs, period cost includes all
Rs 5 and each unit sells for Rs 15. An- costs which are not related to
nual sales demand is 7,000 units. The A. cost of resale goods
breakeven point is: B. cost of manufacturing goods
A. 2,000 units C. timed resale of goods
B. 3,000 units D. cost of purchased goods
C. 4,000 units
D. 6,000 units 620. If number of units are 3000 and per
unit price is$500, then flexible budget
615. A profit centre is a centre variable will be
A. $1,500,000 A. choose independent variable

B. $2,500,000 B. choose cost estimation method
C. $3,500,000 C. choose price estimation method
D. $4,500,000 D. choose dependent variable
621. Budget which calculates expected 627. If sales budget variance for operat-
revenues and expected costs, based ing income is$68000 and static bud-
on actual output quantity is named as get amount is$19000, then flexible
A. flexible budget budget amount will be
B. fixed budget A. $47,000
C. variable budget B. $57,000
C. $87,000
D. multiplied budget
D. $97,000
622. A problem which arises because 628. Profit to be transferred to profit and
of presence of systematic pattern in loss a/c, if the contract is complete to
residual value sequence is considered the extent of only 20% is
am
as A. nil
A. parallel correlation B. 20%
B. serial correlation C. 25%
iR
C. auto correlation D. 75%
D. both B and C
629. Single or multiple units of distinct
623. Regression Analysis Method of services or products are classified as
hr
quantitative analysis of cost function A. cost

considers B. job
iS
A. all data points C. post

B. One data point D. price
C. Two data points
630. Units of normal spoilage are divided
Ja
D. Four data points

to total completed units, rather than
624. Tender is an total actual produced units to calcu-
A. estimation of profit late
B. estimation of cost A. normal spoilage rates
C. estimation of selling price B. abnormal spoilage rates
C. normal scrap rates
D. estimation of units
D. abnormal scrap rates
625. Process a/c is 631. Labour which works as forklift truck,
A. nominal a/c plant guards and rework labour is clas-
B. a real a/c sified as
C. personal a/c A. prime overhead
D. either nominal or real a/c B. conversion overhead
C. factory overhead
626. Second step for estimation of cost D. manufacturing overhead
function by using quantitative analy-
sis is to 632. Residual term is also considered as
123
A. error term A. discrete curve

B. disturbance term B. fixed curve
C. relevant term C. mixed curve
D. both a and b D. experience curve
633. Work uncertified is 639. A document which contains informa-

A. debited to contract a/c tion about materials of specific prod-
B. credited to contract a/c uct, in specific department comes un-
C. debited to contractor a/c der
D. debited to profit and loss a/c A. costing method
B. selling method
634. Variance used by managers to check C. material acquisition method
whether company has performed well D. none of above
and properly implemented strategies
640. Total transferred-out cost plus nor-
is considered as
mal spoilage is divided by number of
A. strategic implementation
B. proper implementation goods units produced to calculate
am
C. performance evaluation A. cost per good units transferred out
B. cost per good units transferred in
D. well evaluated
C. revenue per good units transferred
635. Larger number of manager subordi- out
iR
nates and higher level manager are D. revenue per good units transferred
termed as in
A. activity subordinates 641. Direct manufacturing labour costs is
hr
B. broader responsibility center added into manufacturing overhead

C. broader subordinates
cost to calculate
D. activity ordinates
iS
A. transaction costs
636. Number of purchase orders for each B. conversion costs
C. resale costs
year is multiplied to relevant ordering
Ja
D. merchandise costs
cost for each purchase order to calcu-
late 642. If an allocated indirect cost is$1500
A. annual irrelevant ordering costs and actual incurred indirect cost
B. annual relevant carrying costs is$1200, then this is classified as
C. annual relevant ordering costs A. applied indirect cost
D. annual irrelevant carrying costs B. applied direct cost
C. incurred indirect cost
637. A manager, who is responsible for D. over allocated indirect cost
both cost and revenues belongs to de-
partment of 643. If budgeted total direct labour hours
A. cost center are 5500 and budgeted direct labour
B. revenue center cost is$755000, then budgeted direct
C. profit center labour cost rate is
D. investment center A. $138 per labour hour
B. $137.27 per hour
638. A concept used to define learning C. $140 per labour hour
curve in broader application is called D. $142 per labour hour
644. Depreciation of plant can be appor- A. conversion process

tioned on the basis of B. operation
A. plant value C. hybridization
B. plant size D. both a and b
C. working days
D. output produced 650. Wages paid to a labour who was en-
gaged in production activities can be
645. Method, which allocates cost of sup- termed as
port department for operating depart- A. direct cost
ments by recognizing all mutual ser- B. indirect cost
vices provided is classified as C. sunk cost
A. indirect method D. imputed cost
B. direct method
651. Component of total cost, which
C. step down method
D. reciprocal method never changes with change in level
of production is classified as
646. Allotment of whole item of cost to a A. fixed cost
am
cost centre or cost unit is known as: B. constant
A. Cost Apportionment C. variable
B. Cost Allocation D. both a and b
C. Cost Absorption
iR
652. If static budget amount is$9000, flex-
D. Machine hour rate
ible budget amount is$20000, then
647. Which of the following is an abnor- sales volume variance will be
hr
mal cause of Idle time: A. $29,000

A. Time taken by workers to travel B. $11,000
the distance between the main gate of C. $15,000
iS
factory and place of their work D. $10,000

B. Time lost between the finish of 653. In multicollinearity, correlation coef-
one job and starting of next job ficient between two independent vari-
Ja
C. Time spent to meet their personal ables must be greater than

needs like taking lunch, tea etc A. 0.7
D. Machine break downs B. 0.6
C. 0.5
648. If demand in units is 18000, relevant
D. 0.4
ordering cost for each year is$150 and
an order quantity is 1500, then annual 654. In a joint process of production,
relevant ordering cost would be product which yields low volume of
A. $200 sales as compared to total sales of
B. $190 other products is known as
C. $160 A. Second incremental product
D. $180 B. First incremental product
C. step down product
649. Standardized technique that is per- D. by-product
formed repetitively on different kind
of materials to convert them into dif- 655. In regression equation, an evaluation
ferent finished products is known as criteria considers significance of
125
A. independent variable 661. Operating costing is suitable for

B. dependent variable
C. significance plotting A. job order business
D. insignificance plotting B. contractors
C. sugar industries
656. Cost of process Rs1,60,000 and D. service industries
profit to be charged on the transfer
price is 20% What is the inter process 662. Uncontrollable costs are the costs
profit? which be influenced by the action of a
A. Rs 32,000 specified member of an undertaking.
B. Rs 40,000 A. can not
C. Rs 48,000 B. can
D. Rs 54,000 C. may or may not
D. must
657. "Calculate EOQ (approx) from the
following details: Annual Consump- 663. cost object user, who is ranked first
am
tion: 24000 units Ordering cost: Rs in incremental cost allocation method
10 per order Purchase price: Rs 100 is known as
per unit Carrying cost: 5%" A. First incremental user
A. 310 B. primary user
iR
B. 400 C. secondary user
C. 290 D. second incremental user
D. 300
hr
664. If net realizable value is$20000 and

658. In costing of project, wages paid to separable costs are$18000, then final
workers for unproductive work at time sales will be
iS
of material shortage is termed as A. $20,000

A. indirect wages B. $18,000
B. health wages C. $2,000
Ja
C. idle time wages D. $38,000

D. shortage time wages
665. Direct material is a
659. Indirect material scrap is adjusted A. manufacturing cost
along with B. administrative cost
A. prime cost C. selling cost
B. factory cost D. distribution cost
C. labour cost
D. cost of goods sold 666. Evaluation criteria of regression
equation must be considered as
660. A cost unit is A. goodness of fit
A. the cost per machine hour B. economic plausibility
B. the cost per labour hour C. significance of independent vari-
C. a unit of production or service in able
relation to which costs are ascertained D. all of above
D. a measure of work output in a stan-
dard hour 667. Element/s of Cost of a product are:
A. Material only 673. A document which consists informa-

B. Labour only tion about labour time usage, for spe-
C. Expenses only cific job in a specific department, is
D. Material, Labour and expenses known as
A. selling time record
668. Stage in manufacturing cycle at B. labour time record
which journal entries are made in sys- C. buying time record
D. direct time record
tem of accountancy is known as
A. chaining point 674. Contract a/c is
B. recording point A. a nominal a/c
C. lead point B. a real a/c
D. trigger point C. a personal a/c
D. either nominal or real a/c
669. EOQ stands for 675. Budget which specifies an operating
A. Economic Order Quantity and financial plan, usually for a fiscal
am
B. Essential Order Quantity year or any specific period of time is
C. Economic Output Quantity classified as
D. Essential Output Quantity A. annual budget
B. operating budget
iR
670. In an accounting system, document C. specific budget
which supports journal entries is clas- D. master budget
sified as
676. Piece workers are paid on the basis
hr
A. cost document of
B. priced document A. output sold
iS
C. source document B. output produced

D. direct document C. output in stock
D. input received
Ja
671. An approach in which company

677. Relationship based on unrelated
under-costs it’s one product and over-
level of activity and past data of cost
costs at least one product is classified
is measured with help of
as
A. cost estimation
A. service-cost across subsidizing B. price estimation
B. product-price cross subsidizing C. unit estimation
C. product-cost cross subsidizing D. production estimation
D. product cross subsidizing
678. If an actual manufacturing overhead
672. Product which requires low amount costs is$225000 and actual total quan-
of resources, but incur high per unit tity of cost allocation base is 2500
cost is classified as labour hours, then overhead rate will
A. expected under cost be
A. $60
B. expected over cost B. $90
C. product under costing C. $80
D. product over costing D. $70
127
679. Cost pool category, which have simi- 685. In an activity based costing imple-
lar cause and effect relationship, with mentation, product’s diverse demand
each cost driver uses as an allocation is based on
base is classified as A. batch size
A. heterogeneous price pool B. complexity
B. homogenous cost pool C. process steps
C. heterogeneous cost pool D. all of above
D. homogenous price pool
686. Stage in production process, where
680. Examples of nonlinear cost func-
manufactured goods are checked;
tions are
whether units are acceptable or not
A. step constant functions
B. step cost functions is classified as
C. step price functions A. rework point
D. step object functions B. inspection point
C. spoilage point
681. Which of following is an example of D. scrap point
am
revenue center?
A. sales department 687. Cost Unit is defined as:
B. investing center A. Unit of quantity of product, ser-
iR
C. marketing department vice or time in relation to which costs
D. segment department may be ascertained or expressed
682. Individual activities such as machine B. A location, person or an item of
equipment or a group of these for
hr
setups, material handling, customer

service and distribution of products which costs are ascertained and used
are a part of for cost control
iS
A. activity based costing C. Centres having the responsibility

B. margin based costing of generating and maximising profits
C. goodness of costing D. Centres concerned with earning
Ja
D. handling based costing an adequate return on investment

683. Labour turnover means: 688. The expenses relating to a particular
A. Turnover generated by labour process is
B. Rate of change in composition of A. debited to that process a/c
labour force during a specified period B. credited to that process a/c
C. Either of the above
C. debited to costing profit and loss
D. Both of the above
a/c
684. Third step in constant gross margin D. debited to profit and loss a/c
percentage NRV Method to allocate
joint cost is to compute 689. Batch costing is useful to determine
A. Gross margin percentage
B. total production cost of each prod- A. maximum quantity of output
uct B. minimum quantity of output
C. allocated joint costs C. economic batch quantity
D. cost of split off point D. profit of batches
690. Statistical method used to measure A. expected indirect cost rate

average change in dependent variable, B. expected direct cost rate
with respect to change of one unit in C. budgeted indirect cost rate
independent variable is called D. budgeted direct cost rate
A. times series method 696. Degree of influence that a manager
B. time horizon method would have on revenues, cost, profit
C. aggression method and investment is known as
D. regression method A. controllability
B. influential power
691. Which of the following organisa- C. responsibility
tions should not be advised to use ser- D. all of above
vice costing?
A. Distribution service 697. Cost function, in which cost does
B. Hospital not change with any change in level
C. Maintenance division of a manu- of activity is a part of
A. step price functions
am
facturing company B. step object functions
D. A light engineering company C. step constant functions
D. step cost functions
692. Which of the following will be af-
iR
fected by normal loss? 698. In a joint process of production, a
A. Costing profit product which yields high volume of
B. Financial profit sales as compared to total sales vol-
hr
C. Process profit ume of other products is known as

D. cost of Good units A. incremental product
B. sunk product
iS
693. Total costs incur in a production pro- C. main product

cess, is divided by total number of D. split off product
output units to calculate the 699. Out of the following, what is not the
Ja
A. cost of indirect labour work of purchase department:

B. cost of direct labour A. Receiving purchase requisition
C. cost of direct material B. Exploring the sources of material
D. unit costs supply
C. Preparation and execution of pur-
694. Method which allocates cost of sup- chase orders
port department to only operating de- D. Accounting for material received
partments is called
A. indirect method 700. Final sales is subtracted from net re-
B. direct method alizable value is used to calculate
A. separable costs
C. step down method
B. inseparable costs
D. reciprocal method C. joint costs
D. floating costs
695. Budgeted annual indirect costs are
divided to budgeted annual quantity 701. Service departments costs should be
of cost allocation base to calculate allocated to:
129
A. Only Service departments 707. Cost that has elements of variable

B. Only Production departments and fixed costs at same time is
C. Both Production and service de- A. variable cost
partments B. mixed cost
D. None of the production and ser- C. semi variable cost
vice departments D. Both B and C
702. Blanket overhead rate is: 708. Labour related to manufacturing of

A. One single overhead absorption product can be classified under
rate for the whole factory A. direct manufacturing labour costs
B. Rate which is blank or nil rate B. indirect manufacturing labour
C. rate in which multiple overhead costs
rates are calculated for each produc- C. work in process cost
D. finished costs
tion department, service department
etc 709. Costing system, in which individual
D. Always a machine hour rate activities are identified as cost object
am
is considered as
703. Factor used to predict dependent
A. manufactured costing
variable is named as B. activity based costing
A. independent variable
iR
C. allocation costing
B. function variable D. base costing
C. evaluation variable
D. estimation variable 710. In a machine dominated industry
hr
which method of overhead absorption

704. Labour turnover is is suitable?
A. productivity of labour A. Direct material cost method
iS
B. efficiency of the labour B. Prime cost method

C. change in labour force C. Labour hour method
D. total cost of the labour D. Machine hour method
Ja
705. Type of relationship stating "how 711. Second step, in constant gross mar-
changes in cost driver drives cause gin percentage NRV method, to allo-
changes in cost" will be termed as cate joint cost is to compute
A. marginal plausibility A. allocated joint costs
B. economic plausibility B. cost of split off point
C. financial plausibility C. Gross margin percentage
D. market plausibility D. total production cost of each prod-
uct
706. If budgeted direct labour hours are
4550 and direct labour cost rate 712. In estimation of cost functions, vari-
is$600 per labour hour then, total di- ations in a single activity level repre-
rect labour cost would be sents the
A. $4,730,000 A. related total costs
B. $3,730,000 B. related fixed cost
C. $2,730,000 C. related variable cost
D. $1,730,000 D. related per unit cost
713. If budget sales units are 8000, end- A. ABC Analysis

ing inventory is 2000 units and begin- B. Fixation of raw material levels
ning inventory is 3000, then budget C. Maintaining stores ledger
production would be D. Control over slow moving and
A. 11000 units non moving items
B. 13000 units
719. The process of grouping of costs ac-
C. 10000 units
cording to some common characteris-
D. 7000 units
tics
714. Required rate of return, is multiplied A. absorption
B. primary distribution
per unit cost of purchased units to cal-
C. secondary distribution
culate
D. classification
A. irrelevant inventory carrying costs
B. relevant opportunity cost of capi- 720. Gross margin percentage in con-
tal stant gross-margin percentage NRV
am
C. relevant purchase order costs method is based on
D. relevant inventory carrying costs A. total labour costs
B. total production
715. In master budgeting, cost drivers for C. total revenues
iR
manufacturing overhead costs are D. total costs
A. direct manufacturing labour-hours
B. setup labour-hours 721. In activity based costing system, de-
hr
C. budgeted labour-hours scription of activity can be classified

D. both a and b as
iS
A. activity list
716. Cash receipts is added in to begin- B. activity dictionary
ning cash balance to calculate C. active purpose
D. both a and b
Ja
A. total goods manufactured

B. total cash available 722. In linear cost function which is y=a
C. total revenue + bx, objective is to find the
D. total goods sold A. values of a and b
B. values of x and y
717. A technique which minimizes sum C. values of a and x
of squared vertical difference, to de- D. values of b and y
termine regression line is considered
as 723. A process costing system for J Co
A. negative square technique used an input of 3,500Kg of materi-
B. positive square technique als at Rs20 per Kg and labour hours
C. least square technique of 2,750 at Rs 25 per hour. Normal
D. most square technique loss is 20% and losses can be sold at
a scrap value of Rs5 per Kg. Output
718. Which of these is not a Material con- was 2,950 Kg. What is the value of
trol technique: the output?
131
A. Rs 142,485 A. Rs. 2 per hour

B. Rs 146,183 B. Rs. 3 per hour
C. Rs 149,746 C. Rs. 4 per hour
D. Rs 152,986 D. Rs. 5 per hour
724. Calculation of product cost, gather- 730. Compelling strategic plan, promot-
ing information for planning and ana- ing coordination and providing frame-
lyzing information for decisions mak- work of performance are
ing are features of A. advantages of budget
A. information accounting
B. disadvantages of budget
B. cost accounting
C. analyzing accounts C. advantages of costing method
D. marketing costs D. disadvantages of costing method
725. Process costing is suitable for 731. "How many units must be sold if
A. hospitals company wants to achieve a profit
B. oil reefing firms of Rs 11,000 for the year? Selling
am
C. transport firms price-Rs 6 per unit Variable produc-
D. brick laying firms tion cost-Rs 1.20 per unit Variable
726. If indirect manufacturing labour selling cost-Rs 0.40 per unit Fixed
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is$20000, power cost is$5000, main- production cost-Rs 4 per unit Fixed
tenance and supplies are of$10000 selling cost-Rs 0.80 per unit Budgeted
then manufacturing budget will be production and sales for the year are
10,000 units."
hr
A. $5,000
B. $35,000 A. 2,500 units
C. $15,000 B. 9,833 units
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D. $45,000 C. 10,625 units

D. 13,409 units
727. Method which considers lowest and
highest values of cost driver and cost
Ja
732. In plotting cost functions, number of

within relevant range is called machine hours and batches are repre-
A. low high method sented on
B. constant equation A. unit axis
C. variable equation B. term axis
D. high low method
C. x-axis
728. Fifth step in quantitative analysis of D. y-axis
estimating cost function is to
A. estimate cost function 733. Normal idle time
B. estimate price function A. can be avoided
C. estimate supply function B. can be minimized
D. estimate demand function C. cannot be avoided
D. can be controlled
729. Works overhead is Rs 40,000, total
machine hours is 8500 hours and time 734. Flexible budget amount is$57000
allowed for machine setting is 500 and flexible budget variance is$14000,
houRs What is the machine rate? then actual result amount will be
A. $61,000 A. larger residual terms

B. $71,000 B. zero residual terms
C. $43,000 C. variable residual terms
D. $24,000 D. smaller residual terms
735. An under allocated indirect cost is 741. The process of setting standards and
also called comparing actual performance with
A. under applied indirect cost standards with a view to control the
B. under absorbed indirect cost cost is
C. absorbed indirect cost A. cost reduction
D. both a and b B. cost control
C. cost allocation
736. In ‘make or buy’ decision, it is prof- D. cost ascertainment
itable to buy from outside only when 742. Conversion cost is subtracted from
the supplier’s price is below the firm’s direct manufacturing labour cost is to
own calculate the
am
A. Fixed Cost A. direct overheads
B. Variable Cost B. overhead costs
C. Total Cost C. factory overhead
D. Prime Cost D. manufacturing overhead cost
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737. An inventory, which consists of 743. Costs that are incurred in last depart-
partially worked goods or work in ment, where product has been pro-
cessed and will be carried to next de-
hr
progress is called
A. direct materials inventory partment for further processing are
B. work in process inventory called
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C. finished goods inventory A. partial work costs

D. indirect material inventory B. transferred-in costs
C. transferred-out costs
Ja
738. Centers such as revenue, cost, invest- D. weighted average costs

ment and profit all are known as 744. In adjustment issues of costing,
A. marketing center
database must consider wide range
B. financial center
values of
C. responsibility center
A. fixed object
D. planning center B. cost driver
C. cost object
739. Large residual term and negative D. mixed object
slope of line indicate
A. inverse proportion 745. An acquisition cost of raw material
B. direct proportion is to be used in manufacturing, and
C. badness proportions becoming a component of cost object
D. goodness proportion is classified as
A. direct material costs
740. Worse fit between estimated cost and B. indirect material costs
actual observations is shown on re- C. direct labour costs
gression line with D. indirect labour costs
133
746. Office and administrative expenses distance between estimated and ac-
can be charged on the basis of tual cost for every single observation
A. material cost is classified as
B. labour cost A. residual term
C. prime cost B. positive term
D. factory cost C. negative term
D. squared term
747. Vertical difference, which measures
Answers
1. A 2. A 3. B 4. A 5. A 6. B 7. A 8. D 9. B 10. A 11. C 12. B 13. A

14. C 15. A 16. A 17. B 18. C 19. A 20. B 21. B 22. B 23. A 24. C
25. C 26. B 27. C 28. C 29. C 30. B 31. D 32. D 33. B 34. A 35. C
am
36. B 37. A 38. A 39. C 40. B 41. A 42. B 43. D 44. C 45. B 46. B
47. D 48. B 49. A 50. B 51. B 52. A 53. C 54. B 55. A 56. D 57. A
58. B 59. C 60. C 61. A 62. D 63. D 64. B 65. A 66. A 67. B 68. B
69. A 70. D 71. D 72. A 73. B 74. B 75. A 76. B 77. D 78. D 79. B
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80. B 81. C 82. A 83. B 84. D 85. B 86. C 87. A 88. D 89. B 90. A
91. A 92. D 93. A 94. C 95. A 96. A 97. B 98. D 99. D 100. B 101. C
102. C 103. A 104. C 105. C 106. A 107. C 108. B 109. D 110. A 111. D
hr
112. C 113. D 114. C 115. A 116. A 117. A 118. B 119. A 120. D 121. B
122. A 123. D 124. B 125. C 126. A 127. D 128. C 129. B 130. B 131. A
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132. B 133. C 134. D 135. C 136. D 137. B 138. C 139. A 140. A 141. C
142. A 143. B 144. A 145. C 146. A 147. C 148. D 149. D 150. D 151. A
152. C 153. A 154. A 155. A 156. C 157. D 158. B 159. A 160. A 161. A
Ja
162. A 163. D 164. A 165. C 166. D 167. A 168. B 169. B 170. B 171. D
172. D 173. C 174. C 175. D 176. C 177. B 178. B 179. B 180. D 181. A
182. C 183. C 184. A 185. B 186. A 187. B 188. D 189. C 190. C 191. B
192. C 193. D 194. A 195. A 196. A 197. B 198. A 199. D 200. A 201. D
202. B 203. A 204. D 205. B 206. C 207. A 208. B 209. D 210. D 211. D
212. A 213. A 214. C 215. A 216. A 217. C 218. A 219. D 220. D 221. B
222. A 223. B 224. A 225. B 226. B 227. C 228. C 229. A 230. C 231. B
232. B 233. A 234. D 235. D 236. B 237. C 238. C 239. A 240. B 241. A
242. A 243. C 244. D 245. B 246. B 247. D 248. A 249. A 250. A 251. B
252. A 253. B 254. D 255. A 256. A 257. B 258. A 259. A 260. C 261. B
262. B 263. B 264. B 265. B 266. A 267. A 268. B 269. B 270. A 271. C
272. C 273. D 274. B 275. A 276. D 277. C 278. D 279. C 280. B 281. A
282. D 283. B 284. B 285. A 286. D 287. B 288. D 289. B 290. A 291. D
292. D 293. C 294. A 295. A 296. A 297. A 298. B 299. D 300. B 301. A
302. D 303. C 304. A 305. D 306. D 307. A 308. A 309. B 310. B 311. C
312. C 313. C 314. B 315. B 316. C 317. D 318. A 319. A 320. A 321. C
322. C 323. D 324. B 325. C 326. D 327. A 328. D 329. B 330. A 331. A
332. D 333. B 334. D 335. C 336. A 337. D 338. D 339. C 340. C 341. D
342. B 343. C 344. D 345. C 346. B 347. B 348. C 349. C 350. D 351. B
352. D 353. D 354. D 355. D 356. D 357. B 358. D 359. C 360. C 361. B
362. C 363. A 364. A 365. A 366. A 367. A 368. A 369. A 370. C 371. B
372. D 373. A 374. D 375. A 376. D 377. B 378. B 379. A 380. B 381. B
382. D 383. D 384. D 385. C 386. D 387. B 388. A 389. C 390. A 391. B
392. B 393. B 394. C 395. A 396. C 397. D 398. D 399. C 400. C 401. A
402. B 403. B 404. D 405. C 406. B 407. C 408. B 409. C 410. C 411. D
412. B 413. C 414. A 415. C 416. C 417. B 418. C 419. C 420. A 421. A
422. B 423. C 424. D 425. C 426. B 427. B 428. C 429. C 430. C 431. A
432. A 433. D 434. D 435. A 436. A 437. B 438. A 439. C 440. D 441. B
442. C 443. B 444. C 445. C 446. C 447. B 448. B 449. B 450. B 451. D
452. B 453. C 454. A 455. B 456. C 457. C 458. D 459. A 460. B 461. A
462. A 463. A 464. B 465. B 466. C 467. B 468. D 469. C 470. C 471. C
am
472. B 473. B 474. D 475. B 476. B 477. C 478. D 479. A 480. C 481. B
482. A 483. C 484. D 485. C 486. B 487. A 488. C 489. A 490. C 491. A
492. B 493. C 494. C 495. C 496. A 497. B 498. C 499. C 500. A 501. D
502. B 503. A 504. A 505. A 506. C 507. C 508. A 509. B 510. A 511. B
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512. C 513. A 514. D 515. C 516. D 517. B 518. C 519. D 520. B 521. A
522. A 523. C 524. B 525. C 526. D 527. C 528. C 529. C 530. B 531. B
532. D 533. B 534. B 535. B 536. B 537. A 538. B 539. B 540. B 541. A
hr
542. D 543. D 544. C 545. D 546. C 547. C 548. A 549. C 550. A 551. C
552. A 553. A 554. C 555. A 556. D 557. A 558. D 559. B 560. B 561. D
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562. D 563. B 564. A 565. A 566. D 567. B 568. A 569. A 570. D 571. A
572. D 573. D 574. D 575. A 576. C 577. B 578. B 579. C 580. A 581. C
582. A 583. A 584. A 585. C 586. A 587. C 588. A 589. C 590. B 591. D
Ja
592. C 593. A 594. A 595. B 596. A 597. A 598. B 599. D 600. A 601. B
602. A 603. B 604. B 605. B 606. C 607. A 608. B 609. B 610. B 611. A
612. D 613. B 614. B 615. A 616. D 617. A 618. A 619. D 620. A 621. A
622. D 623. A 624. C 625. A 626. A 627. C 628. A 629. B 630. A 631. D
632. D 633. B 634. C 635. B 636. C 637. C 638. D 639. C 640. A 641. B
642. D 643. B 644. A 645. D 646. B 647. D 648. D 649. B 650. A 651. A
652. B 653. A 654. D 655. A 656. B 657. A 658. C 659. B 660. C 661. D
662. A 663. B 664. D 665. A 666. D 667. D 668. D 669. A 670. C 671. C
672. D 673. B 674. A 675. D 676. B 677. A 678. B 679. B 680. B 681. A
682. A 683. B 684. C 685. D 686. B 687. A 688. A 689. C 690. D 691. D
692. D 693. D 694. B 695. C 696. A 697. D 698. C 699. D 700. A 701. C
702. A 703. A 704. C 705. B 706. C 707. D 708. A 709. B 710. D 711. D
712. A 713. D 714. B 715. D 716. B 717. C 718. C 719. D 720. B 721. D
722. A 723. A 724. B 725. B 726. B 727. D 728. A 729. D 730. A 731. D
732. D 733. C 734. B 735. D 736. B 737. B 738. C 739. A 740. A 741. B
742. D 743. B 744. B 745. A 746. C 747. A
4. E commerce
1. What is an internal organizational In-

amA. Your keyboard
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ternet that is guarded against outside B. Your monitor
access by a special security feature C. Your processor
called a firewall (which can be soft- D. Viruses do not harm any of the
above
hr
ware, hardware, or a combination of

the two)? 5. A is a B2B trading network that
A. Client/server network
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links a particular seller with its own

B. Intranet
trading partners.
C. Extranet
A. bitstream
D. Thin client
B. virtual network
Ja
2. A technique used to gain personal in- C. web community

D. private trading network
formation for the purpose of identity
theft, often by e-mail, is called? 6. Which of the following is part of the
A. Phishing four main types for e-commerce?
B. Carding A. B2B
C. Brand spoofing B. B2C
D. All of the above C. C2B
D. All of the above
3. How the transactions occur in e-
commerce? 7. Which is a function of ERP?
A. Using e-medias A. Warehousing
B. Using computers only B. sales
C. Using mobile phones only C. scheduling
D. None of the above D. all of the above
4. Which of the following to viruses 8. Which one is not an encryption tech-
harm? nique?
136 Chapter 4. E commerce
A. RSA A. Hurt your hardware

B. DES B. Hurt any files they weren’t de-
C. AES signed to attack
D. FTP C. Infect files on write-protected
disks
9. What scrambles the contents of a file D. None of the above
so you can’t read it without having
15. All of the following are factors in op-
the right decryption key?
timizing Web site performance except
A. Encryption
B. Intrusion-detection software
A. page retrieval
C. Security-auditing software B. page generation
D. All of the above C. page delivery
D. page content
10. All of the following are considered
biometrics, except: 16. Which will notarmomputer re-
A. Fingerprint sources?
am
B. Retina A. firewall
C. Password B. Virus
D. Voice C. Trojan horse
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11. A website offering content created by
17. Which one is also known as plastic
third party transparently to customers
money?
hr
is an example of
A. Credit card
A. Reintermediation B. Debit card
B. Syndication
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C. Paper cash
C. Virtual Manufacturing D. All of the above
D. Build-to-order
18. All of the following are steps in the
Ja
12. Which one is not layer of E- systems development life cycle except
commerce infrastructure?
A. Physical layer A. Systems Design
B. Product layer B. Testing
C. Service layer C. Implementation
D. None D. Debugging
19. What checks out your computer or

13. All of the following are metrics for
network for potential weaknesses?
e-mail campaigns except
A. Encryption
A. open rate B. Public key encryption
B. delivery rate C. Security-auditing software
C. bounce-back rate D. None of the above
D. cart conversion rate
20. Which service encompasses all tech-
14. Which of the following can a virus nologies used to transmit and process
do? information on an across a network?
137
A. Interoperability 26. Which, if any, of the following types

B. Scalability of ads are people most willing to tol-
C. Benchmarking erate?
D. Web services A. pop-under ad
B. pop-up ad
21. A situation where there are no dif- C. banner ad
ferences among products or services, D. none of the above
and the only basis of choosing prod-
27. E-cheques are
ucts is price is known as A. Prepaid
A. a value web B. Postpaid
B. value chain C. Both prepaid and postpaid
C. profit D. None of these
D. commoditization
28. The ability of consumers to review
22. Which of the following is a privacy and contest the accuracy and com-
advocacy group that is a foundation- pleteness of data collected about them
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and business-supported group with a involves which of the following FTC
legislative focus? fair information practice principles?
A. Cdt.org A. Security
B. PrivacyInternational.org B. Enforcement
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C. Epic.org C. choice /Consent
D. Privacy.org D. Access/Participation
23. Which e-government arena is being 29. Which one is the component of cyber-
hr
used when governmental agencies cash payment system?

send out and accept bids for work? A. CC user software
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B. CC merachant software
A. G2G C. CC Server Software
B. G2B D. All of the above
C. G2C
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D. G2G 30. Which of the following represents a

limiting factor for the growth of e-
24. Which one is an offline payment commerce?
mode? A. Persistent cultural attraction of
A. Cash on delivery physical markets and traditional shop-
B. Cash before delivery ping experiences
C. Credit card B. Inadequate selection of goods
D. Both a and b compared to physical marketplaces
C. E-commerce lacks the conve-
25. During which period of Internet gov-
nience of other methods of transacting
ernance was Network Solutions given
business
a monopoly to assign and track high- D. The potential audience for e-
level domains? commerce is too low to support it as
A. Government Control Period
a widespread method of commerce
B. Privatization
C. Self-Regulation 31. Which one is not a encryption tech-
D. Governmental Regulation nique?
A. RSA 37. Creating multiple versions of infor-

B. DES mation goods and selling essentially
C. AES the same product to different mar-
D. NONE OF THE ABOVE ket segments at different prices is
called
32. Which of the following is not one A. versioning
of the top three online career service B. bundling
providers? C. transactive content
A. CareerBuilder D. price discrimination
B. Monster 38. Which of the following is an in-
C. HotJobs dustry strategic factor that relates to
D. USAJobs whether new entrants face a disadvan-
tage when attempting to enter an in-
33. The most widely used encryption stan- dustry?
dard is A. barriers to entry
A. Advanced Encryption Standard B. power of suppliers
am
(AES) C. power of consumers
B. Data Encryption Standard (DES) D. industry value chain
C. Universal Encryption Standard 39. During E-commerce transaction we
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(UES) should ensure
D. Optimal Encryption Standard A. Integrity
(OES) B. Security
hr
C. Confidentiality
34. The most common and easily un- D. All the above
derstood type of Net marketplace is
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40. Which one is not a threat for E-

A. e-procurement marketplace commerce?
A. Trojan horse
B. e-distributors
Ja
B. Viruses
C. industry consortia C. Worm
D. independent exchanges D. None
35. Which of the following was the first 41. Which form of e-marketplace brings
commercial Web browser? together buyers and sellers from mul-
A. Mosaic tiple industries, often for MRO mate-
B. Mozilla rials?
C. Netscape Navigator A. horizontal
B. Vertical
D. Internet Explorer
C. Integrated
D. Inclined
36. Which of the following is not an enter-
tainment industry value chain model? 42. What harnesses far-flung computers
A. content owner direct model together by way of the Internet or a
B. user distribution model virtual private network to share CPU
C. aggregator model power, databases, and database stor-
D. Internet innovator model age?
139
A. Computer virus A. Decryption

B. Worm B. Cryptography
C. Denial-of-service attack C. Firewall
D. None of the above D. All the above
43. Trust card is introduced by. 49. Which of the following market entry
A. BSNL and itzcash strategies are the most common for
B. BSNL and oxicash existing firms?
C. BSNL only A. first mover
D. None B. fast follower
C. brand extender
44. Secret key is used for. D. alliances
A. Public key cryptography 50. Which type of add appears on a web
B. Private key cryptography page?
C. Asymmetric key cryptography A. pop-under ad
D. None of these B. Pop-up ad
am
C. Banner ad
45. A describes the flow of infor- D. Discount ad
mation at your e-commerce site and
the infrastructure that will be used in 51. What Web server functionality allows
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the system. it verify usernames and passwords
A. system design and process certificates and encryp-
B. logical design tion information?
hr
C. tactical design A. Processing of HTTP requests

D. physical design B. File Transfer Protocol
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C. Data capture
46. What describes a process of continu- D. Security services
ously measuring results and compar-
ing those results to optimal perfor- 52. What is an electronic representation
Ja
mance so that actual performance may of cash?

be improved? A. Digital cash
B. Electronic cash
A. Performance
C. E-cash
B. Capacity planning
D. All of the above
C. Benchmarking
D. Data cleansing 53. Which of the following an accurate
statement about internet phone calls?
47. The smart card which use antenna for A. They are possible but not yet free
reading and writing data. B. They are not possible
A. Contact smart card C. They are currently standard prac-
B. Contactless smart card tice
C. Proximity smart card D. None of the above is an accurate
D. Both B and C statement about internet phone calls
48. The study of encryption is called 54. The most prevalent online payment
method is
A. PayPal 60. When hackers flood a Web site with

B. checks useless traffic to overwhelm the net-
C. credit cards work, it is called
D. debit A. phishing
B. pharming
55. Which one is communication channel C. a Denial of Service (DoS) attack
threat? D. spoofing
A. Sniffer programs
B. Cyber vandalism 61. What is the name given to an interac-
C. Integrity threats tive business providing a centralized
D. All of the above market where many buyers and suppli-
ers can come together for e-commerce
56. What is the unauthorized use, dupli- or commerce-related activities?
cation, distribution or sale of copy- A. Direct marketplace
righted software? B. B2B
A. Fair Use Doctrine C. B2C
D. Electronic marketplace
am
B. Pirated software
C. Counterfeit software 62. Which segment is eBay an example?
D. Privacy A. B2B
B. C2B
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57. Which of the following best describes C. C2C
predicted growth in C2C and B2C D. None of the above
auction spending?
A. B2C spending will overtake C2C 63. What is a technology-enabled mi-
hr
spending crochip implanted into the human

B. Both types of spending will in- body?
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crease A. Wearable computer

B. GPS
C. C2C spending will decrease while C. Implant chip
B2C increases D. None of the above
Ja
D. Both types of spending will de-

cline at similar rates 64. An electronic check is one form of
what?
58. Which factor ensures your IT systems A. e-commerce
are functioning correctly and provid- B. online banking
ing accurate information? C. e-cash
A. Availability D. check
B. Accessibility 65. Complete price transparency in a per-
C. Reliability fect information marketplace is neces-
D. Scalability
sary for to take effect.
59. What is hardware and/or software that A. Bertrand’s Law
B. the Law of Universal Prices
protects computers from intruders? C. the Law of One Price
A. Backup D. the Law of Perfect Commerce
B. Anti-virus
C. Firewall 66. Cyber slacking consists of what activ-
D. Biometrics ities?
141
A. Visiting “inappropriate” web sites A. selective data mining

B. Visiting news sites B. query-driven data mining
C. Chatting online with others about C. model-driven data mining
non-work topics D. rule-based data mining
D. All of the above 73. If the threat of substitute products or
67. Which factor determines who has the services is low it is a(n):
A. Disadvantage to the supplier
right to access different types of IT B. Advantage to the buyer
systems and information? C. Advantage to the supplier
A. Availability D. None of the above
B. Accessibility
C. Reliability 74. As consumers become more accus-
D. Scalability tomed to new online advertising for-
mats, click-through rates tend to
68. The most common form of securing
channels is through A. remain constant
am
A. S-HTTP B. decrease
B. VPNs C. increase
C. SSL D. rapidly increase
D. PPTP
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75. The viruses spreads through
A. Mails
69. The basic elements of website is.
B. Pen drives and cds
A. Home page C. Websites
B. Web pages
hr
D. All the above

C. Links and banners
D. All the above 76. The ability to change the product to
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better fit the needs of the customer is

70. All of the following are characteris- called
tics of a social network except A. customization
Ja
A. involves a group of people B. personalization

B. features shared social interaction C. privacy
C. always feature shared goals and D. accessibility
purposes
77. In simple terms, what does risk assess-
D. common ties among members
ment ask?
71. Technologies that help enhance res- A. What can go wrong?
B. How likely is it to go wrong?
olution of e-book reader display C. What are the possible conse-
screens are known as quences if it does go wrong?
A. high-res pixel formatting D. All of the above
B. screen resolution technologies
C. sub-screen smoothing technolo- 78. All of the following are types of social
gies marketing except
D. sub-pixel display technologies A. affiliate marketing
B. blog advertising
72. All of the following are types of data C. social network advertising
mining except D. game advertising
79. Which item can a password be used A. Technology has caused buyer
to protect? power to increase
A. Network B. Technology has lessened the entry
B. File barriers for many industries
C. Folder C. Technology has increased the
D. All of the above threat of substitute products and ser-
vices
80. Secure Sockets Layers does which of D. all of the above
the following?
A. creates a secure, private connec- 85. When you purchase copyrighted soft-
tion to a web server ware, what actually are you paying
for?
B. encrypts information
A. The cost of the CDs, manuals, and
C. sends information over the inter-
development of the software
net
B. The cost of the CDs, manuals, and
D. all of the above
a share of the cost of the software de-
am
velopment
81. Which form of e-commerce currently
C. A share of the cost of software de-
accounts for about 97% of all e-
velopment
commerce revenues?
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D. All of the above
A. B2B
B. B2C 86. Secure communication means.
C. C2B A. Protect transmission of credit card
hr
D. C2C number
B. Guarantee privacy of customer
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82. Which of the following is not consid- C. Unauthorized access of payment

ered to be one of the three phases of details
e-commerce? D. All the above
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A. Innovation
B. Consolidation 87. Most individuals are familiar with
C. Preservation which form of e-commerce?
D. Reinvention A. B2B
B. B2C
83. The number of business methods C. C2B
patents granted is compared to D. C2C
the number of patents applied for. 88. marketing is the Internet ver-
A. substantially smaller sion of word-of-mouth marketing.
B. slightly smaller A. Visceral
C. close to equal B. Virile
D. equal C. Viral
D. Virtual
84. Which of the following statements ac-
curately reflect the impact of technol- 89. Public key cryptography is also
ogy? known as cryptography.
143
A. Private key 95. ERP stands for.

B. Symmetric A. Enterprise resolution planning
C. Asymmetric B. Enterprise reverse planning
D. None C. Enterprise resource planning
90. What is an intranet that is restricted to
an organization and certain outsiders, 96. What is an arrangement made be-
such as customers and suppliers? tween e-commerce sites that direct
A. Client/server network users from one site to the other?
B. Intranet A. Spam
C. Extranet B. Viral marketing
D. Thin client C. Affiliate programs
91. Which is not a component of ERP?
A. Legacy systems 97. All of the following are tools for opti-
B. Bolt on applications mizing a Web site’s location in search
C. Operational database engine listings except
am
D. Cybersoft A. keywords and page titles
B. identifying market niches
92. The E-commerce domain that in- C. buying ads
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volves business activity initiated by D. benchmarking
the consumer and targeted to busi-
nesses is known as 98. The solution for all business needs is.
A. Business to Business (B2B) A. EDI
hr
B. Consumer to Consumer (C2C) B. ERP

C. Consumer to Business (C2B) C. SCM
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D. Business to Consumer (B2C) D. None of the above
93. What is an encryption system that 99. Which one is threat for E-commerce?
uses two keys: a public key that ev- A. Trojan horse
Ja
eryone can have and a private key for B. firewall

only the recipient? C. encryption
A. Encryption D. None
B. Public key encryption 100. What might identity thieves do with
C. Intrusion-detection software
your identity?
D. Security-auditing software A. Apply for and use credit cards
94. E-business can be defined as B. Apply for a loan
A. the uninhibited flow of informa- C. Change their identity
D. All of the above
tion and goods on the Web
B. the use of the Internet and the Web 101. Which is not a feature of eCom-
to transact business merce?
C. digitally enabled transactions and A. SCM
processes within an organization B. EDI
D. commercial transactions involv- C. WWW
ing electronic goods D. BPR
102. Which of the following connections 108. Which process can preventata from
allows the fastest download speeds? lose due to computer problems or hu-
A. DSL man errors?
B. cable modem A. backup
C. T1 B. recovery
D. T3 C. benchmarking
D. data cleansing
103. All of the following are techniques
B2C e-commerce companies use to 109. What is the process in which a buyer
attract customers, except: posts its interest in buying a certain
A. Registering with search engines quantity of items, and sellers compete
B. Viral marketing for the business by submitting succes-
C. Online ads sively lower bids until there is only
D. Virtual marketing one seller left?
A. B2B marketplace
104. The virus that are attached with vb B. Intranet
am
and java files are called. C. Reverse auction
D. Internet
A. Macro
B. Trojan horse 110. Who protects system from external
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C. Script virus threats?
D. None of the above A. firewall
B. EDI
105. The business model involves
hr
C. ERP
an independently owned vertical digi- D. Script kiddies
tal marketplace for direct inputs.
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A. e-distributor 111. which one is not an E-payment

B. exchange method used in India?
C. e-procurement A. Debit card
Ja
D. private industrial network B. Credit card

C. e-cheque
106. The redirection of traffic from a le- D. none
gitimate site to an infringing site is
called 112. Which of the following describes e-
commerce?
A. cyber squatting
A. Doing business electronically
B. cyber piracy
B. Doing business
C. meta tagging C. Sale of goods
D. key wording D. All of the above
107. Which one is not a server level 113. E-mail messages may be stored on
threat? which of the following computers?
A. Malicious code A. Sender’s computer
B. CGI threats B. Sender’s server
C. Database threats C. Recipient’s server
D. Buffer overflows D. All of the above
145
114. What is a separate and fully A. SSL

equipped facility where the company B. S-HTTP
can move immediately after the disas- C. SET
ter and resume business? D. ALL OF THE ABOVE
A. Disaster recovery plan
B. Hot site 120. Which of the following is not con-
C. Cold site sidered to be a drawback of Internet
D. Disaster recovery cost curve auctions?
A. market inefficiency
115. What is a type of virus that spreads B. trust risks
itself, not just from file to file, but C. fulfillment costs
from computer to computer via e-mail D. delayed consumption costs
and other Internet traffic?
121. Digital products are best suited for
A. Computer virus
B2C e-commerce because they:
B. Worm A. Are commodity like products
am
C. Denial-of-service attack B. Can be mass-customized and per-
D. None of the above sonalized
C. Can be delivered at the time of
116. Which type of technology will in-
purchase
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crease portability and mobility?
D. All of the above
A. Implant chips
B. Micro-payments 122. E-Banking is also known as.
hr
C. Internet phone calls A. ATMs

D. All of the above B. Net banking
C. Traditional banking
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117. Why would a merchant want to cus- D. None of these

tomize products?
A. To charge a higher price 123. What consists of the identification of
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B. To decrease costs risks or threats, the implementation of

C. It is required in EC security measures, and the monitoring
D. Customers will only accept cus- of those measures for effectiveness?
tomized products A. Risk management
B. Risk assessment
118. A combination of software and infor- C. Security
mation designed to provide security D. None of the above
and information for payment is called
a what? 124. What is a separate facility that does
A. digital wallet not have any computer equipment but
B. pop up ad is a place where the knowledge work-
C. shopping cart ers can move after the disaster?
D. encryption A. Disaster recovery plan
B. Hot site
119. Which one is communication chan- C. Cold site
nel security protocol? D. Disaster recovery cost curve
125. The E-payment mechanism widely 131. What is a fully-equipped computer

used in B2B is. that you wear as a piece of clothing or
A. Credit card attached to a piece of clothing similar
B. Debit card to the way you would carry your cell
C. Master card phone on your belt?
D. E-cheque A. Wearable computer
B. GPS
126. Companies can gather information C. Implant chip
about employees and potential em- D. None of the above
ployees from which of the following
places? 132. Auction sites like eBay tend to use
A. Job applications pricing.
B. Credit reports A. dynamic
C. Companies that track Web surfers B. fixed
D. All of the above C. trigger
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D. utilization
127. Which of the following examines in-
formation passing through switches, 133. A good or service for which there
hubs, or routers? are many dealers supplying the same
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A. Key logger product, and all products in the
B. Packet sniffer segment are essentially identical is
C. Log analysis tools known as
hr
D. Screen captures A. commodity

B. core product
128. Which of the following is not a type C. actual product
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of media convergence? D. augmented product

A. technological convergence
B. content convergence 134. Goods directly involved in the pro-
Ja
C. industry convergence duction process are known as

D. community convergence A. MRO goods
B. procured goods
129. Malicious hackers who act with the C. indirect goods
intention of causing harm are D. direct goods
A. White hats
B. Black hats 135. Cookies are used to do which of the
C. Grey hats following?
D. Brown hats A. Store your ID and password for
subsequent logons to the site
130. Which factor represents a system’s B. Store contents of electronic shop-
ability to change quickly? ping carts
A. Flexibility C. To track web activity
B. Performance D. All of the above and more
C. Capacity planning
D. Benchmark 136. Paisapay is facilitated in.
147
A. eBay.co.in A. Database-based enterprise infor-

B. amazon.com mation portal
C. flipkart.com B. Messaging-based enterprise infor-
D. none of the above mation portal
C. Database-based workflow system
137. Which one is not an offline payment D. Messaging-based workflow sys-
mode? tem
A. Cash on delivery
B. Cash before delivery 143. Public key encryption uses multi-
C. Demand drafts ple keys.ne key is used to encrypt
D. e-cheque data, while another is used to decrypt
data.he key used to encrypt data is
138. The set of applications and technolo-
called the key, while the key
gies that allow users to create, edit,
used to decrypt data is called the
and distribute content online is known
key.
as A. encryption, decryption
A. Internet
am
B. private, public
B. social networking C. encryption, public
C. virtual life D. public, private
D. Web 2.0
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144. The component of TCP/IP that
139. The set of standards for communi- provides the Internet’s addressing
cation between a browser and a pro- scheme and is responsible for the ac-
gram running on a server that allows tual delivery of packets is
hr
for interaction between the user and A. TCP

the server is known as B. IP
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A. Active Server Pages (ASP) C. the Network Layer

B. Java Server Pages (JSP) D. the Application Layer
C. Common Gateway Interface
145. Redundant navigation refers to
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(CGI)
D. VBScript
A. pages that work, load quickly, and
140. Which is the most important compo- point the customer toward your prod-
nent of IT? uct offerings
A. Information B. simple, fool-proof navigation
B. People C. a site working with the most pop-
C. Information technology ular browsers
D. Computers D. alternative navigation to the same
content
141. Which is not a function of ERP?
A. Human resource management 146. Which of the following is a method
B. financial of transferring money from one per-
C. warehousing son’s account to another?
D. None of the above A. electronic check
B. credit card
142. What sends work assignments C. e-transfer
through an e-mail system? D. none of the above
147. What defines all of the steps or busi- 152. What is the process of making a copy
ness rules, from beginning to end, re- of the information stored on a com-
quired for a process to run correctly? puter?
A. Workflow A. Backup
B. EIP B. Anti-virus
C. Workflow system C. Firewall
D. Biometrics
D. SLA
153. A(n) represents data as two-
148. The threat of new entrants is high dimensional tables with records or-
when it is: ganized in rows and attributes in
A. Hard for customers to enter the columns.
market A. database management system
B. Hard for competitors to enter the B. data warehouse
market C. SQL query
C. Easy for competitors to enter the D. relational database
market
am
154. Which of the following can be used
D. Easy for customers to enter the
to help identify people in a crowd?
market A. Biochip
B. Implant chip
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149. Which of the following is the pri- C. Facial recognition software
mary characteristic of an intranet? D. Vision chip
A. People outside the organization
can access it 155. Unsolicited e-mail is called what?
hr
B. People inside the organization A. Junk mail

B. Spam
can’t access it
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C. Extra mail
C. People outside the organization D. None of the above
can’t access it
D. None of the above 156. A materials requirements planning
Ja
(MRP) system is an example of

150. The per-product price consumers are A. spot purchasing
willing to pay for a bundle as B. a multi-tier supply chain
the number of goods in the bundle in- C. a legacy computer system
creases. D. electronic data interchange
A. decreases 157. What is C stands in CIA of smart
B. increases card?
C. varies from product to product A. confidentiality
D. stays the same B. conference
C. congress
151. Which one is not used as a security D. None of the above
mechanism?
A. Encryption 158. OTP stands for.
A. On Time Password
B. Cryptography B. On Time processing
C. Wallets C. One time processor
D. Digital signature D. None
149
159. When a transaction is processed on- A. patents

line, how can the merchant verify the B. trademarks
customer’s identity? C. governance
A. use secure sockets layers D. copyrights
B. use secure electronic transactions
164. The dimension of e-commerce that
C. use electronic data interchange
enables commerce across national
D. use financial electronic data inter-
boundaries is called
change A. interactivity
B. global reach
160. What is the most commonly offered C. richness
interactive feature of newspaper Web D. ubiquity
sites?
A. video 165. The underlying computing equip-
B. comments on blogs ment that the system uses to achieve
C. RSS feeds its e-commerce functionality is called
am
D. podcasts a
A. hardware platform
161. Which of the following captures B. content platform
screen images? C. transaction platform
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A. Key logger D. scalability platform
B. Packet sniffer
166. Which of the following is not a di-
C. Log analysis tools
hr
mension of e-commerce security pro-

D. Screen capture software vided by encryption?
A. availability
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162. A perfect market is one in which B. message integrity

C. nonrepudiation
A. One firm develops an advantage D. confidentiality
Ja
based on a factor of production that

other firms cannot purchase 167. What type of ad appears on top of a
B. One participant in the market has web page?
more resources than the others A. pop-under ad
C. there are no competitive advan- B. pop-up ad
tages or asymmetries because all C. banner ad
firms have equal access to all the fac- D. discount ad
tors to production 168. The most common type of Internet
D. competition is at a minimum, as crime according to the IC3 is
each niche market within an indus- A. Credit card fraud
try is served by the company with the B. Check fraud
greatest competitive advantage C. Non-delivery
D. Auction fraud
163. All of the following are types
of intellectual property protection 169. Social networking sites primarily
except earn their revenue through
A. advertising A. E-commerce offers greater flexi-

B. subscriptions bility in meeting customer needs
C. donations B. E-commerce is a powerful tool for
D. service fees customer relationship building
C. E-commerce can help to reduce
170. What is a program, when in- costs
stalled on a computer, records every D. E-commerce increases the net cost
keystroke and mouse click? per contact
A. Key logger software
176. What are the most commonly used
B. Hardware key logger
input devices today?
C. Cookie A. Keyboard
D. Adware B. Mouse
C. All of the above
171. Which is not a function of ERP? D. None of the above
A. Warehousing
am
B. sales 177. What is a set of conditions used to
C. scheduling measure how well a product or system
D. None of the above functions?
A. Flexibility
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172. What software detects and removes B. Performance
or quarantines computer viruses? C. Capacity planning
D. Benchmark
A. Backup
hr
B. Anti-virus 178. What charts (1) the cost to your or-

C. Firewall ganization of the unavailability of in-
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D. Biometrics formation and technology and (2) the

cost to your organization of recover-
173. Which process is used to reinstall ing from a disaster over time?
Ja
data from a copy when the original A. Disaster recovery plan

data has been lost? B. Hot site
A. backup C. Cold site
B. recovery D. Disaster recovery cost curve
C. benchmarking
179. What are materials that are neces-
D. data cleansing
sary for running a modern corpora-
174. Which of the following are ways to tion, but do not relate to the com-
prove access rights? pany’s primary business activities?
A. Direct materials
A. What you know, like a password
B. Indirect materials
B. What you have, like an ATM card C. EDI
C. What you look like D. None of the above
D. All of the above
180. The primary source of financing dur-
175. Which of the following is not one of ing the early years of e-commerce was
the benefits of e-commerce to sellers?
151
A. bank loans 187. Which type of e-commerce focuses

B. large retail firms on consumers dealing with each
C. venture capital funds other?
D. initial public offerings A. B2B
B. B2C
181. Who breaks into other people’s com-
C. C2B
puter systems and steals and destroys
D. C2C
information?
A. Hackers 188. The only payment system that is in-
B. softwares stantly convertible without intermedi-
C. Hacktivists
ation is
D. Script kiddies
A. Credit card
182. Which factor represents how well B. Accumulating balance
your system can adapt to increased C. Stored value
demands? D. Cash
A. Availability
am
189. Materials used in the normal oper-
B. Accessibility
C. Reliability ation of a business but not related to
D. Scalability primary business operations are called
what?
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183. Which of the following is not a hori- A. Supplies
zontal portal? B. Direct materials
A. AOL C. Indirect materials
hr
B. Yahoo D. Daily stuff

C. Sailnet
D. MSN/Windows Live 190. Which of the following is not a key
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element of a business model?

184. Which one is a client level threat? A. value proposition
A. Malicious code B. competitive advantage
Ja
B. Viruses C. market strategy

C. Active contents
D. universal standards
D. All the above
185. is an act that poses danger to 191. Which of the following is a measure
computer assets. of the percentage of purchasers who
A. Threat return to a Web site within a year?
B. Danger A. loyalty
C. Error B. reach
D. None of the above C. recency
D. unique visitors
186. Which of the following refers to cre-
ating products tailored to individual 192. Unique value auction is mainly ap-
customers? plies to?
A. customization A. New products
B. aggregation B. Second hand products
C. Direct materials C. Engineering products
D. Reverse auction D. None of the above
193. What are plastic cards the size of a A. The Golden Rule
credit card that contains an embedded B. Slippery Slope
chip on which digital information can C. No Free Lunch
be stored? D. Universalism
A. Customer relationship manage- 199. All of the following are wireless In-
ment systems cards ternet access network technologies ex-
B. E-government identity cards
cept
C. FEDI cards A. Wi-Fi
D. Smart cards B. Bluetooth
C. Zigbee
194. Which one of the following is
D. GigaPoP
not one of the major types of e-
commerce? 200. A patent grants the owner an exclu-
A. C2B sive monopoly on the ideas behind the
B. B2C invention for years.
C. B2B A. 10
am
D. C2C B. 20
C. 30
195. A product or service that customers D. 40
have come to expect from an indus-
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try, which must be offered by new en- 201. What is I stands in CIA of smart
trants if they wish to compete and sur- card?
vive, is known as a(n)? A. International
B. Integrity
hr
A. Switching costs
C. Identity
B. Loyalty programs
C. Entry barriers
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D. Affiliate programs 202. What is the legal protection afforded

an expression of an idea, such as a
196. All of the following are major cat-
song, video game, and some types of
Ja
egories of computer viruses except

proprietary documents?
A. Ethics
A. Macro viruses B. Intellectual property
B. File-infecting viruses C. Copyright
C. Script viruses D. Fair Use Doctrine
D. Trojan viruses
203. In 1961, published a paper on
197. Which will harmomputer resources "packet switching" networks.
A. Worm A. Leonard Kleinrock
B. Virus B. Ray Tomlinson
C. Trojan horse C. Bob Metcalfe
D. All the above D. Vint Cerf
198. The ethical principle which states 204. Which term represents a count of the
that if an action is not right for all number of people who visit one site,
situations, then it is not right for any click on an ad, and are taken to the
situation is known as site of the advertiser?
153
A. Affiliate programs A. Creating a leading-edge very high-

B. Click-through speed network capability for the na-
C. Spam tional research community
D. All of the above B. Eliminating censorship from the
Internet
205. A business competing in a commod- C. Enabling revolutionary Internet
ity like environment must focus on applications
which of the following? D. Ensuring the rapid transfer of new
A. Price network services and applications to
B. Ease / speed of delivery the broader Internet community
C. Ease of ordering
D. all of the above 211. Which of the following is an exam-
ple of a portal?
206. Which segment do eBay, Ama- A. Amazon
zon.com belong? B. eBay
A. B2Bs C. Yahoo
am
B. B2Cs D. Face book
C. C2Bs 212. Which factor determines when your
D. C2Cs IT system will be available for knowl-
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edge workers to access?
207. After television, the next largest ma-
A. Availability
jor player in the commercial entertain- B. Accessibility
ment industry is C. Reliability
hr
A. video games D. None of the above

B. music
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C. radio 213. A strategy designed to compete in

D. film all markets around the globe is called
a strategy.
208. Smart card is better protected than
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A. scope
other cards using. B. differentiation
A. Encryption C. cost
B. Firewall D. focus
C. Hub
214. Which is used to identify mobile
D. All the above
money?
209. If it is easy for competitors to enter A. MCID
B. MMID
the market, the threat of new entrants
C. RSID
is considered: D. NONE OF THE ABOVE
A. High
B. Low 215. Which of the following is not a pri-
C. More mary function of a portal?
D. Less A. navigation of the Web
B. social networking
210. All of the following are goals of In- C. commerce
ternet 2 except D. content
216. In which website Global Easy Buy 221. What is a detailed process for recov-
is facilitated? ering information or an IT system in
A. Ebay.com the event of a catastrophic disaster
B. Amazon.com such as a fire or flood?
C. Yepme.com A. Disaster recovery plan
D. None of these B. Hot site
C. Cold site
217. Private Key cryptography is also D. Disaster recovery cost curve
known as cryptography.
222. Which of the following permits the
A. Public key transmission of a bill, along with pay-
B. Symmetric ment of that bill, to be conducted over
C. Asymmetric the Internet?
D. None A. financial cybermediary
B. electronic check
218. Which of the following is an C. electronic bill presentment and
am
Internet-based company that makes payment
it easy for one person to pay another D. all of the above
over the Internet?
A. electronic check 223. All of the following are major B2C
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B. electronic bill presentment and business models except
payment A. content provider
C. conversion rates B. industry consortium
hr
C. transaction broker
D. financial cybermediary
D. service provider
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219. The combination of technical and 224. Products are made to prior to orders
legal means for protecting digital received based on estimated demand
content from unlimited reproduction under a
Ja
without permission is known as A. supply-push model

A. Digital rights management B. demand-push model
B. Digital protection schemes C. supply-pull model
C. Digital distribution regulation D. demand-pull model
D. Digital rights protection
225. Which one is not an online payment
220. The is the first major effort to mode?
adjust the copyright laws to the Inter- A. Cash on delivery
B. Debit card
net age.
C. Credit card
A. Platform for Privacy Preferences D. e-cheque
(P3P)
B. Center for Democracy and Tech- 226. What is the process of evaluating IT
nology assets, their importance to the orga-
C. Digital Millennium Copyright Act nization, and their susceptibility to
(DMCA) threats, to measure the risk exposure
D. E-Government Act of 2002 of these assets?
155
A. Risk management A. insufficient capacity throughout

B. Risk assessment the backbone
C. Security B. network architecture limitations
D. None of the above C. insufficient reach
D. best-efforts QOS
227. Which one is an encryption tech-
nique? 233. Which of the following records lo-
A. RSA gons and deletions?
B. DES A. Key logger
C. AES B. Packet sniffer
D. All of the above C. Log analysis tools
228. A security plan begins with a(n) is D. Screen captures
234. What is the percentage of customers

A. security policy who visit a Web site and actually buy
B. risk assessment
something called?
C. implementation plan
am
D. security organization A. Affiliate programs
B. Click-through
229. All of the following are poten- C. Spam
tial benefits of B2B e-commerce D. Conversion rate
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except
235. In the e-commerce security environ-
A. reduced amount of ’first-mover’
ment, which of the following consti-
advantages
hr
B. decreased product cycle time tutes the inner-most layer?

C. increased opportunities for collab- A. people
B. data
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orating with suppliers and distributors

D. increased production flexibility C. technology solutions
D. organizational policies and proce-
230. After sending e-mail, which of the dures
Ja
following activities is most common

among Internet users? 236. The communication standard for
A. sending instant messages sharing business documents and set-
B. reading someone else’s blog tlement information that emerged in
C. using a search engine to find infor- the 1970s is called
mation A. ECD
D. getting news B. EDI
C. IDE
231. The top U.S online video site is D. BCB
A. MySpace 237. Which of the following is a charac-

B. YouTube teristic of a firewall?
C. AOL A. Examines each message as it
D. Google Video seeks entrance to the network
B. Blocks messages without the cor-
232. Which of the following is not a limi- rect markings from entering the net-
tation of the current Internet? work
C. Detects computers communicat- A. spy ware

ing with the Internet without approval B. cookies
D. All of the above C. Gmail
D. anonymizers
238. Which form of e-marketplace brings
together buyers and sellers from the 244. What is the use of physical
same industry? characteristics-such as your finger-
A. horizontal print, the blood vessels in the retina
B. Vertical of your eye, the sound of your voice,
C. Integrated or perhaps even your breath-to pro-
D. Inclined vide identification?
A. Backup
239. What is the name of the division of B. Anti-virus
the U.S. Department of Homeland Se- C. Firewall
curity that coordinates cyber incident D. Biometrics
warnings and responses across gov-
245. The marketplace for auction sites is
am
ernment and private sectors?
A. US-CERT best described as
A. many sites attaining similar levels
B. OECD
C. IC3 of profitability
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D. P3P B. easy to enter due to minimal barri-
ers
240. A worm is designed to spread C. populated mostly with small,
thriving specialty sites
hr
A. from computer to computer

B. from file to file on a computer D. dominated by a handful of sites
C. from Web site to Web site with established networks
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D. from Web site to computer

246. Which of the following is an advan-
241. All of the following are among the tage of e-books?
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most common categories of spam ex- A. reduced transaction costs for the
cept user
A. fraud B. requirement of expensive devices
B. commercial products to use
C. finance C. portability compared to print
D. health (drugs) books
D. copyright management
242. The presence of make the
smart card smart. 247. The type of website that is designed
A. Memory to build customer goodwill and to sup-
B. Microchip plement other sales channels rather
C. E-cash then sell the company’s products di-
D. None of the above rectly is known as a website.
A. marketing
243. All of the following are technologies B. click-and-mortar
used to gather information about you C. customer service
online except D. corporate
157
248. Which of the following is not a di- 253. What is A stands in CIA of smart
mension of privacy? card?
A. Need for personal space A. auditing
B. Need to feel in control of our pos- B. authenticity
sessions C. authorized
C. Need to feel in control of our per- D. None of the above
sonal information 254. Which of the following applies to
D. All of the above are dimensions the implementation of an idea?
of privacy A. Copyright
B. Intellectual property
249. All of the following are examples of C. Patent
2G wireless phone technologies ex- D. Denial-of-service attack
cept
A. CDMA 255. What is software you don’t want hid-
B. W-CDMA den inside software you do want?
C. TDMA A. Adware
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D. GSM B. Trojan-horse software
C. Spyware
250. Which of the following describes D. All of the above
paid content’s relation to free user-
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256. Which of the following are advan-
generated content?
tages normally associated with B2B
A. Free content jeopardizes paid con-
e-commerce?
tent A. Shorter cycle times
hr
B. Paid content jeopardizes free con- B. Reduction in costs

tent C. Reaches wider audiences
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C. Free content and paid content can D. all of the above

both work in tandem cooperatively
D. Paid content is viable now but will 257. Which portal business model best
describes Yahoo?
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not be in the future

A. general purpose portal
251. All of the following are acts B. affinity group based vertical mar-
Congress has passed or attempted to ket
pass to protect children online except C. focused content based vertical
market
A. Video Privacy Protection Act D. none of the above
B. Children’s Online Protection Act 258. Which of the following is not a
C. Communications Decency Act widely used midrange or high-end e-
D. Children’s Internet Protection Act commerce suite?
A. Microsoft Commerce Server
B. WebTrends Marketing Lab2
252. Which one is not a physical threat? C. IBM WebSphere Commerce
A. Hacking D. Broadvision Commerce
B. Storm
C. Phishing 259. Firewalls perform all of the follow-
D. None of the above ing functions except
A. Forbids communications from un- A. HTTP

trustworthy sources B. SMTP
B. Allows communications from C. IMAP
trustworthy sources D. FTP
C. Eliminates viruses and other mali-
cious attacks 264. The most popular type of auction on
D. Filters traffic based on packet at- eBay is the
tributes A. Dutch Internet auction
B. Name Your Own Price auction
260. Which of the following is not a com- C. English auction
mon approach to phishing? D. Professional service auction
A. Send an official-looking e-mail
asking for confidential information 265. Which type of products is lesser pur-
chased using eCommerce?
B. Ask people to fill out and return a
A. automobiles
fake letter using postal mail
B. books
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C. Ask people to click a link in an
C. softwares
e-mail to open a submission form on
D. none
a web page
D. All of the above are uncommon
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266. The source of revenue in a subscrip-
approaches to phishing tion revenue model is
A. Fees from advertisers in exchange
261. What is the first step in a P3P-
for advertisements
hr
enabled transaction?
B. Fees for business referrals
A. send Web page C. Fees from subscribers in exchange
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B. http GET request Web page for access to content or services

C. Send P3P policy files D. Fees for enabling or execution a
D. http GET request P3P policy files transaction
Ja
262. All of the following are challenges 267. The two main types of Internet-
to online retail except based B2B commerce are
A. Consumer concerns about the se- A. Net marketplaces and private in-
curity of transactions dustrial networks
B. Consumer concerns about the pri- B. EDI and collaborative commerce
vacy of personal information given to C. Net marketplaces and collabora-
Web sites tive commerce
C. Delays in delivery of goods when D. EDI and private industrial net-
compared to store shopping works
D. Inability to change prices nearly
instantly 268. is a program that you can run
from the DOS prompt in the Windows
263. Which protocol permits users to operating system in order to check the
transfer files from the server to their connection between your client and
client computer, and vice versa? the server.
159
A. Ping 274. Which of the following portal rev-

B. Telnet enue models involves charging for
C. Tracert premium content?
D. SSL A. ISP services
B. General advertising
269. Which of the following is not one of C. Subscription fees
the stages of the development of the D. Tenancy deals
Internet? 275. A is the set of planned activi-
A. Innovation ties designed to result in a profit in a
B. Institutionalization marketplace.
C. Globalization A. business model
D. Commercialization B. profit model
C. business plan
270. What is the name for direct D. revenue model
computer-to-computer transfer of
transaction information contained in 276. The foundation for contemporary
am
standard business documents? supply chain management systems
A. internet commerce includes all of the following except
B. e-commerce
A. supply chain simplification
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C. transaction information transfer
B. continuous inventory replenish-
D. electronic data interchange
ment
C. ERP systems
271. What type of ad appears under a web
hr
D. B2B electronic storefronts

page?
A. pop-under ad 277. The process of getting customers to
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B. pop-up ad pass along a company’s marketing

C. banner ad message to friends, family, and col-
D. discount ad leagues is known as
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A. affiliate marketing
272. Which of the following measures B. viral marketing
the percentage of people exposed to C. permission marketing
an online advertisement who actually D. blog marketing
click on the banner? 278. Compared to Internet users, the num-
A. impression rate ber of cell phone subscribers is
B. view-through rate A. about the same
C. click-through rate B. slightly fewer
D. stickiness ratio C. much fewer
D. much larger
273. The dominant Web server software
is 279. The protocol which allows the file
A. Zeus transfer between computers is.
A. TCP/IP
B. Apache B. FTP
C. Microsoft IIS C. HTTP
D. Google D. SOA
280. If you need to transfer money to an- 285. Which of the following is used in
other person via the internet, which B2B to pay for purchases?
of the following methods could you A. e-commerce
use? B. financial electronic data inter-
A. financial cybermediary change
B. electronic check C. electronic data exchange
C. electronic bill presentment and D. electronic checks
payment 286. All of the following are examples
D. all of the above of intelligent agent technology except
281. Industry structure is defined as
A. automated response systems
A. the nature of the players in an in- B. automatic shipping confirmation
dustry and their relative bargaining C. order status reports
power D. online web bugs
B. a set of plans for achieving long
term returns on the capital invested in 287. The most popular type of media in
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a business firm terms of total hours of consumption
C. set of planned activities designed per year is
to result in a profit in a marketplace A. television
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D. how a company’s product or ser- B. radio
C. Internet
vice fulfills the needs of customers
D. newspaper
hr
282. The practice of forging a return ad- 288. Which one is the third party payment
dress on an e-mail so that the recipient providers who offer digital wallets for
is fooled into revealing private infor-
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E-merchants?
mation is termed? A. Oxicash
A. hacking B. PayMate
B. cracking C. PayPass
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C. dumpster diving D. All the above

D. spoofing
289. influence the behavior of oth-
283. is backbone of all E-payments ers through their personality, skills, or
in E-commerce. other factors.
A. EFT A. Opinion leaders
B. EPS B. Direct reference groups
C. Indirect reference groups
C. PayPal
D. Lifestyle groups
D. None of these
290. Which products are people most
284. Which of the following is a new and likely to be more uncomfortable buy-
disruptive Web feature or service? ing on the Internet?
A. XML A. Books
B. diffserv B. Furniture
C. blogs C. Movies
D. CDMA D. All of the above
161
291. What is software that comes hidden A. It is a moral right to be left alone
in free downloadable software and B. Only corporations and govern-
tracks your online movements, mines ment need to be concerned about it
the information stored on your com- C. It has only just recently become a
puter, or uses your computer’s CPU concern
and storage for some task you know D. It is most easily obtained on the
nothing about? Internet
A. Web log 297. What floods a Web site with so many
B. Clickstream requests for service that it slows down
C. Anonymous Web browsing ser- or crashes?
vice A. Computer virus
D. None of the above B. Worm
C. Denial-of-service attack
292. The online content revenue model D. None of the above
in which free content drives offline
revenues is called the 298. A dynamically priced market that
am
A. marketing model features few buyers and many sellers
B. advertising model is a market that exhibits
C. pay-per-view model A. market neutrality
D. subscription model B. buyer bias
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C. seller bias
293. Which of the following is the largest D. owner bias
online travel service? 299. Which one is a physical threat?
hr
A. Travelocity A. Phishing
B. Orbitz B. Storm
C. Priceline C. Earthquake
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D. Expedia D. All the above
294. What looks for people on the net- 300. An auction that has multiple winners
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work who shouldn’t be there or who that all pay the same price is an exam-
are acting suspiciously? ple of
A. Encryption A. uniform pricing
B. Public key encryption B. discriminatory pricing
C. Intrusion-detection software C. bid rigging
D. price matching
D. Security-auditing software
301. The type of Net marketplace char-
295. Digital signature is a.
acterized by indirect inputs and spot
A. Digital id,send as an attachment
purchasing is called an
to a web page/e-mail/message A. industry consortium
B. Is used for verifying the attach- B. independent exchange
ments send using web C. e-distributor
C. Both a and b D. e-procurement marketplace
D. None of these
302. Which products are people most
296. Which of the following statements likely to be comfortable buying on
about privacy is true? the Internet?
A. Books 308. What automates business processes?

B. PCs A. Workflow
C. CDs B. ASP
D. All of the above C. Workflow system
D. EIP
303. The area of actual or potential com-
mercial value in which a company in- 309. Amazon.com is well-known for
tends to operate is a which e-commerce marketing tech-
A. market space
nique?
B. marketplace
A. Banner ads
C. perfect market
D. Bertrand market B. Pop-up ads
C. Affiliate programs
304. What determines the future IT infras- D. Viral marketing
tructure requirements for new equip-
ment and additional network capac- 310. PaisaPay is offered only by.
A. Homeshop18.com
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ity?
A. Flexibility B. eBay.in
B. Performance C. amazon.com
C. Capacity planning D. none
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D. Benchmark
311. The virus that are commonly found
305. What is a model of a proposed prod- in word documents are called
uct, service, or system?
hr
A. Macro
A. Prototyping B. Trojan horse
B. Prototype C. Script virus
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C. Proof-of-concept prototype
D. Selling prototype
306. The fastest growing form of online 312. Internet users account for about
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advertising is of the world’s population.

A. banner ads A. 0.07
B. pop-up ads B. 0.17
C. rich media/video ads C. 0.27
D. pop-under ads D. 0.47
307. All of the following are objectives 313. The majority of job seekers rely on
of private industrial networks except which of the following?
A. Word-of-mouth leads
A. developing efficient purchas- B. Employment agencies
ing and selling business processes C. Internet and newspapers equally
industry-wide D. Internet only
B. operating on a local scale
C. creating increased supply chain 314. Which of the following is not a rea-
visibility son why digital cash has turned out to
D. reducing industry risk be extremely difficult?
163
A. If your system crashes you lose A. encryption

your money B. decryption
B. There is only one standard C. e-cash
C. Digital cash makes money laun- D. all the above
dering easy 320. The best products to sell in B2C e-
D. Digital cash travels across the vast commerce are:
Internet and is susceptible to begin A. Small products
stolen B. Digital products
C. Specialty products
315. The major impact of Internet real es- D. Fresh products
tate sites is in
A. completing property transactions 321. What is the name of the new anti-
online Spam bill?
B. influencing offline decisions A. No-Spam
C. reducing commissions B. CAN-Spam
D. e-mail marketing to consumers C. Spam-Away
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D. Stop Spam
316. Which of the following is a useful se- 322. Which of the smart card uses a sim
curity mechanism when considering like structure for reading and writing
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business strategy and IT? data?
A. encryption A. Contact smart card
B. decryption B. Contactless smart card
C. firewall C. Proximity smart card
hr
D. all the above D. Both B and C

323. The idealistic market envisioned at
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317. Which concept suggests that differ-

ent applications and computer sys- the outset of the development of e-
tems should be able to communicate commerce is called a
A. Bailey market
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with one another?

A. Integration B. Baxter market
B. Web services C. Bergman market
D. Bertrand market
C. Scalability
D. Interoperability 324. The type of social network described
as a community built around a com-
318. What are materials used in produc-
mon interest such as games, sports,
tion in a manufacturing company or
music, and so on is called
are placed on the shelf for sale in a A. general community
retail environment? B. practice network
A. Direct materials C. affinity community
B. Indirect materials D. interest-based social network
C. EDI
D. None of the above 325. Broadband is generally considered
to be any communication technology
319. Which of the following is not related allowing streaming audio and video
to security mechanism? at or above
A. 100 Kbps A. General job recruitment

B. 56.6 Kbps B. Executive search
C. 30 Kbps C. Specialized job placement ser-
D. 10 Kbps vices
D. Managerial recruitment
326. card is read only.
328. A business cannot be all things to all
A. Contact smart card people. Instead, a business must:
B. Contactless smart card A. Identify target customers
C. Proximity smart card B. Identify the value of products/ser-
D. Both B and C vices as perceived by customers
C. all of the above
327. The largest segment in the recruit- D. None of the above
ment business is
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Answers
1. B 2. D 3. A 4. D 5. D 6. D 7. D 8. D 9. A 10. C 11. B 12. D 13. D
14. D 15. A 16. A 17. A 18. D 19. C 20. D 21. D 22. A 23. B 24. D
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25. B 26. D 27. A 28. D 29. D 30. A 31. D 32. D 33. A 34. B 35. C
36. B 37. A 38. A 39. D 40. D 41. A 42. D 43. A 44. B 45. B 46. C
47. D 48. B 49. C 50. C 51. D 52. D 53. A 54. C 55. D 56. B 57. B
hr
58. C 59. C 60. C 61. D 62. D 63. C 64. B 65. C 66. D 67. B 68. C
69. D 70. C 71. D 72. A 73. C 74. B 75. D 76. A 77. D 78. A 79. D
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80. D 81. A 82. C 83. A 84. D 85. D 86. D 87. B 88. C 89. C 90. C
91. D 92. C 93. B 94. C 95. C 96. C 97. D 98. B 99. A 100. D 101. D
102. D 103. D 104. C 105. B 106. B 107. A 108. A 109. C 110. A 111. D
Ja
112. A 113. D 114. B 115. B 116. D 117. A 118. A 119. D 120. A 121. D
122. B 123. A 124. C 125. D 126. D 127. B 128. D 129. B 130. A 131. A
132. A 133. A 134. D 135. D 136. A 137. D 138. D 139. C 140. B 141. D
142. D 143. D 144. B 145. D 146. A 147. A 148. C 149. C 150. B 151. C
152. A 153. D 154. C 155. B 156. C 157. A 158. A 159. B 160. C 161. D
162. C 163. C 164. B 165. A 166. A 167. B 168. D 169. A 170. A 171. D
172. B 173. B 174. D 175. D 176. C 177. D 178. D 179. B 180. C 181. A
182. D 183. C 184. D 185. A 186. A 187. D 188. D 189. C 190. D 191. A
192. B 193. D 194. A 195. C 196. D 197. D 198. D 199. D 200. B 201. B
202. C 203. A 204. B 205. D 206. B 207. D 208. A 209. A 210. B 211. C
212. A 213. A 214. B 215. B 216. A 217. B 218. D 219. A 220. C 221. A
222. C 223. B 224. A 225. A 226. B 227. D 228. B 229. A 230. C 231. B
232. C 233. C 234. D 235. B 236. B 237. D 238. B 239. A 240. A 241. A
242. B 243. D 244. D 245. D 246. A 247. D 248. D 249. B 250. C 251. A
252. A 253. B 254. C 255. D 256. D 257. A 258. A 259. C 260. B 261. B
262. D 263. D 264. C 265. A 266. C 267. D 268. A 269. C 270. D 271. A
165
272. C 273. B 274. C 275. A 276. D 277. B 278. D 279. B 280. D 281. A
282. D 283. B 284. C 285. B 286. D 287. A 288. D 289. A 290. B 291. D
292. A 293. D 294. C 295. C 296. A 297. C 298. B 299. D 300. A 301. C
302. D 303. A 304. C 305. B 306. C 307. B 308. C 309. C 310. B 311. A
312. B 313. C 314. B 315. B 316. D 317. D 318. A 319. C 320. B 321. B
322. A 323. D 324. D 325. A 326. C 327. A 328. C
am
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Ja
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am
5. Economics
1. The degree of monopoly power is

am
cause the total expenditure of the con-
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measured in terms of difference be- sumers of the commodity to
tween A. Remain the same
A. Marginal cost and the price B. Increase
C. Decrease
hr
B. Marginal cost and average rev-

enue D. Any of the above
C. Marginal cost and average cost
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D. Marginal revenue and average 5. In short run, a firm in monopolistic

cost competition
A. Always earns profits
Ja
2. Marginal revenue will be negative if B. Incurs losses

elasticity of demand is C. Earns normal profit only
A. Less than unity D. May earn normal profit, super nor-
B. More than 1 mal profit or incur losses
C. Equal to 1
D. Equal to zero 6. In a typical demand schedule, quan-
tity demanded
3. The major difference between perfect A. Varies directly with price
competition and monopolistic compe- B. Varies proportionately with price
tition is C. Varies inversely with price
A. Number of firms D. Is independent of price
B. Differentiated product
C. Rate of profit 7. Under law of demand
D. Free exit and entry A. Price of commodity is an indepen-
dent variable
4. If the demand for a commodity is in- B. Quantity demanded is a dependent
elastic, an increase in its pice will variable
168 Chapter 5. Economics
C. Reciprocal relationship is found 14. In the case of two perfect substitutes,

between price and quantity demanded the indifference curve will be
D. All of the above A. Straight line
B. L-shaped
8. is an implicit cost of production C. U-shaped
A. Wages of the labour D. C-shaped
B. Charges for electricity
C. Interest on owned money capital 15. The second glass of lemonade gives
D. Payment for raw material lesser satisfaction to a thirsty biy, this
is a clear case of
9. Income elasticity of demand is de- A. Law of demand
fined as the responsiveness of B. Law of diminishing returns
A. Quantity demanded to a change in C. Law of diminishing marginal util-
income ity
B. Quantity demanded to a change in D. Law of supply
price
16. The supply of a good refers to
am
C. Price to a change in income A. Stock available for sale
D. Income to a change in quantity de- B. Total stock in the warehouse
manded C. Actual production of the good
D. Quantity of the good offered for
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10. The following are causes of shift in
sale at a particular price per unit of
demand EXCEPT
time
A. Change in income
hr
B. Change in price 17. In long-run, all firms in monopolistic

C. Change in fashion competition
D. Change in prices of substitutes A. Earn supernormal profits
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B. Earn normal profits

11. Law of demand shows relation be- C. Incur losses
tween D. May earn normal profit, super nor-
Ja
A. Income and price of commodity mal profit or incur losses

B. Price and quantity of commodity
C. Income and quantity demanded 18. Indifference curves are convex to the
D. Quantity demanded and quantity origin because
supplied A. Two goods are perfect substitutes
B. Two goods are imperfect substi-
12. It describes the law of supply tutes
A. Supply curve C. Two goods are perfect comple-
B. Supply schedule mentary goods
C. Supply equation D. None of the above
D. All of the above
19. Professor Knight is famous for his the-
13. Profit is maximum when ory of
A. Slope of MC and Mr is the same A. Rent
B. Slope of TC and TR is the same B. Profit
C. Slope of AC and AR is the same C. Population
D. None of the above D. Wages
169
20. In monopoly, the relationship be- A. Increase

tween average and marginal revenue B. Decrease
curves is as follows C. Remain the same
A. AR curve lies above the MR curve D. Become zero
B. AR curve coincides with the MR 26. Under Marginal utility analysis, util-
curve ity is assumed to be a
C. AR curve lies below the MR curve A. Cardinal concept
D. AR curve is parallel to the MR B. Ordinal concept
curve C. Indeterminate concept
21. Union leaders are in better position to
bargain for higher wages if demand 27. Demand for final consumption arises
for labour is in
A. Elastic A. Household sector only
B. Inelastic B. Government sector only
C. Very large C. Both household and government
am
D. Permanent sector
D. Neither household nor govern-
22. The ’substitution effect’ takes place ment sector
due to change in
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A. Income of the consumers 28. When two goods are perfect substi-
B. Prices of the commodity tutes of each other, then
C. Relative prices of the commodi- A. MRS is falling
ties B. MRS is rising
hr
D. All of the above C. MRS is constant

23. In the long run, normal profits are in-
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cluded in the curve 29. According to Keynes, interest is a pay-

A. LAC ment for
B. LMC A. Consumer’s preference
Ja
C. AFC B. Producer’s preference

D. SAC C. Liquidity preference
D. State Bank’s preference
24. Which of the following is NOT a char-
30. Which of the following is one of the
acteristic of perfect competition?
A. Free entry and exit of the firms assumptions of perfect competition?
A. Few buyers and few sellers
B. The demand curve of firm is hori-
B. Many buyers and few sellers
zontal C. Many buyers and many sellers
C. The marginal revenue curve is hor- D. All sellers and buyers are honest
izontal
D. An individual firm can influence 31. If the price of Pepsi decreases relative
the price to the price of Coke and 7-Up, the
demand for
25. If the demand for a good is inelastic, A. Coke will rise
an increase in its price will cause the B. 7-Up will decrease
total expenditure of the consumers of C. Coke and 7-Up will increase
the good to D. Coke and 7-Up will decrease
32. Which of the following is Microeco- A. Repo rate

nomics concerned with? B. Bank rate
A. The size of national output C. Prime lending rate
B. The level of employment D. Reverse repo rate
C. Changes in general level of prices
D. None of the above 38. Microeconomics deals with the
A. Allocation of resources of the
33. Law of return applies to firms work- economy as between production of
ing in different goods and services
A. Perfect competition B. Determination of prices of goods
B. Monopoly and services
C. Small firm C. Behavior of industrial decision
D. All kinds of market situations makers
D. All of the above
34. A horizontal supply curve parallel to
the quantity axis implies that the elas- 39. With which of the theories of wages,
am
ticity of supply is is the name of John Stuart Mill asso-
A. Zero ciated?
B. Infinite A. Marginal productivity theory of
C. Equal to 1 wages
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D. Greater than 0 but less than 1 B. Wages-fund theory
35. Under which market structure, aver- C. Subsistence theory of wages
D. Iron aw of wages
age revenue of a firm is equal to its
hr
marginal revenue 40. Excise tax is a part of

A. Oligopoly A. Fixed cost
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B. Monopoly B. Variable cost

C. Perfect competition C. Implicit cost
D. Monopolistic competition D. Is not a part of cost
Ja
36. When equilibrium price rises but equi- 41. As output increases
librium quantity remains unchanged, A. MC curve initially falls and then
the cause is rises
A. Supply and demand both increase B. MC initially rises and then falls
equally C. MC continuously rises
B. Supply and demand both decrease D. None of the above
equally
C. Supply decreases and demand in- 42. Which of the following is NOT an in-
creases put?
D. Supply increases and demand de- A. Labour
creases B. Entrepreneurship
C. Natural resources
37. is the official minimum rate at D. Production
which the Central Bank of a country is
prepared to rediscount approved bills 43. Discriminating monopoly is possible
held by the commercial banks if two markets have
171
A. Rising cost curves A. David Ricardo

B. Rising and declining cost curves B. Adam Smith
C. Different elasticity of demand C. V.F.D. Pareto
D. Equal elasticity of demand D.
E. A. Cournot
44. An increase in the supply of a com- 49. According to Keynes, interest is a pay-
modity is caused by ment for
A. Improvements in technology A. Consumer’s preference
B. Fall in the prices of other com- B. Producer’s preference
modities C. Liquidity preference
C. Fall in the prices of factors of pro- D. State Bank’s preference
duction
50. A competitive firm maximizes profit
D. All of the above
at the output level where
45. In the long run, any firm will eventu- A. Price equals marginal cost
B. The slope of the firm’s profit func-
ally leave the industry if
tion is equal to zero
am
A. Price does not at least cover aver- C. Marginal revenue equals marginal
age total cost cost
B. Price does not equal marginal cost D. All of the above
C. Economies of sale are being
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reaped 51. If there are implicit costs of produc-
D. Price is greater than long run aver- tion
age cost A. Economic profit will be equal to
hr
accounting profit
46. If a firm shuts down temporarily, it B. Economic profit will be less than
accounting profit
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will incur loss equal to

A. AFC C. Economic profits will be zero
B. AVC D. Economic profit will be more than
C. TFC accounting profit.
Ja
D. TVC 52. Which statistical measure helps in

measuring the purchasing power of
47. Suppose the demand for meals at a
money?
medium-priced restaurant is elastic.
A. Arithmetic average
If the management of the restaurant B. Index numbers
is considering rasiing prices, it can C. Harmonic mean
expect a relatively D. Time series
A. Large fall in quantity demanded
B. Large fall in demand 53. At the point of inflexion, the marginal
C. Small fall in quantity demanded product is
D. Small fall in demand A. Increasing
B. Decreasing
C. Maximum
48. Identify the economist who had little
D. Negative
formal education and started working
in the money market at an early age 54. A mixed economy is characterized by
of fourteen. the co-existence of
A. Modern and traditional industries 60. According to M. Kalecki, the true

B. Public and private sectors measure of the degree of monopoly
C. Foreign and domestic investments power is the
D. Commercial and subsistence farm- A. Ratio between price and marginal
ing cost
B. Extent of monopolistic profit en-
55. Price discrimination will be profitable joyed by the monopolist
only if the elasticity of demand in dif- C. Cross-elasticity of demand for the
ferent markets into which the total product of the monopolist
market has been divided is D. Price charged by the monopolist
A. Uniform minus marginal cost of production
B. Different
C. Less 61. Which among the following is a func-
D. Zero tion of the Reserve Bank of India?
A. Bank issues the letters of credit to
56. Which of the following input factor
their customers certifying their credi-
am
takes risk, innovates and coordinates
bility
A. Capital
B. Collecting and compilation of sta-
B. Labour
C. Productivity tistical information relating to bank-
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D. Entrepreneur ing& other financial sector
C. Banks underwrite the securities is-
57. Identify the factor which generally sued by public or private organiza-
keeps the price-elasticity of demand tions
hr
for a good high. D. Accepting deposits from the pub-

A. Its very high price lic
iS
B. Its very low price

C. Large number of substitutes 62. When price elasticity of demand for
D. None of the above normal goods is calculated, the value
Ja
is always
58. If all inputs are trebled and the resul- A. Positive
tant output is doubled, this is a case B. Negative
of C. Constant
A. Constant returns to scale D. Greater than 1
B. Increasing returns to scale
C. Diminishing returns to scale 63. The Revealed Preference Theory de-
D. Negative returns to scale duces the inverse price-quantity rela-
tionship from
59. If a firm’s average variable cost curve A. Assumption of indifference
is rising, its marginal cost curve must B. Postulate of utility maximization
be C. Observed behavior of the con-
A. Constant sumer
B. Above the total cost curve D. Introspection
C. Above the average variable cost
curve 64. Price and demand are positively cor-
D. All of the above related in case of
173
A. Normal goods 71. An ISO-product slopes

B. Comforts A. Downward to the left
C. Giffen goods B. Downward to the right
D. Luxuries C. Upward to the left
D. Upward to the right
65. Who is the ’father of economics’?
A. Max Muller 72. "Rent is a creation of value, not of
B. Adam Smith wealth". Who made this observation?
C. Karl Marx A. Adam Smith
D. None of the above B. David Ricardo
C. Alfred Marshall
66. Elinor Ostrom and Oliver Williamson D.
are the Nobel Prize Laureates in Eco- E. C.Pigou
nomics in 2009. Do you know in 73. Ceteris Paribus means
which year was Francois Quesnay’s A. Other things remaining same
Tableu Economique published? B. All variables are independent
A. 1767
am
C. Enable economists to simplify re-
B. 1764 ality
C. 1761 D. That no other assumptions are
D. 1758 made
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67. The cost of one thing in terms of the 74. In long run equilibrium, the pure mo-
alternative given up is called nopolist can make pure profits be-
A. Real cost cause of
hr
B. Production cost A. Blocked entry

C. Physical cost B. The high price he charges
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D. Opportunity cost C. The low LAC costs

D. Advertising
68. An isoquant slopes
A. Downward to the left 75. When supply of a commodity in-
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B. Downward to the right creases without change in price, it is

C. Upward to the right called
D. Upward to the left A. Fall in supply
B. Expansion in supply
69. At the point of satiety, marginal utility C. Contraction in supply
is D. Rise in supply
A. Zero
B. Positive 76. In monopolistic competition, a firm is
C. Maximum in long run equilibrium
D. Negative A. At the minimum point of the LAC
curve
70. When the price of a substitute of X B. In the declining segment of the
commodity falls, the demand for X LAC curve
A. Rises C. In the rising segment of the LAC
B. Falls curve
C. Remains unchanged D. When price is equal to marginal
D. Any of the above cost
77. Price of a product falls by 10% and its A. 380

demand rises by 30%. The elasticity B. 280
of demand is C. 60
A. 10% D. 400
B. 30%
C. 3 84. The other name of Budget line is
D. 1
A. Demand line
78. In economics, what a consumer is B. Price line
ready to pay minus what he actually C. Supply line
pays, is termed as D. None of the above
A. Consumer’s equilibrium
B. Consumer’s surplus 85. Giffen goods are those goods
C. Consumer’s expenditure A. For which demand increases as
D. None of the above price increases
79. For inferior commodities, income ef- B. That have a high income elasticity
am
fect is of demand
A. Zero C. That are in short supply
B. Negative D. None of the above
C. Infinite
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D. Positive 86. Consumer’s surplus left with the con-
sumer under price discrimination is
80. Which of the following bodies final-
A. Maximum
hr
izes the Five Year Plan Proposals?

A. Planning Commission B. Minimum
B. Union Cabinet C. Zero
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C. National Development Council D. Not predictable

D. Ministry of Planning
87. If the marginal (additional) opportu-
81. Which is not a central problem of an
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nity cost is a constant then the PPC

economy? would be
A. What to produce
A. Straight line
B. How to produce
C. How to maximize private profit B. Convex
D. For whom to produce C. Backward leading
D. Concave
82. Consumer surplus is highest in case
of 88. Demand for factors of production is
A. Necessities A. Derived demand
B. Luxuries
B. Joint demand
C. Comforts
D. Conventional necessities C. Composite demand
83. A frim has variable cost of Rs.1000
at 5 units of output. If fixed costs are 89. Which one is not a assumption of the
Rs.400, what will be the average total theory of demand based on analysis
cost at 5 units of output? of indifference curves?
175
A. Given scale of preferences as be- A. Monopoly in international trade

tween different combinations of two B. Imposition of restrictions in inter-
goods national trade
B. Diminishing marginal rate of sub- C. Removal of all restrictions from
stitution international trade
D. The idea of self sufficiency and no
C. Constant marginal utility of
international trade by a country
money
D. Consumers would always prefer 95. If the goods are complementary like
more of a particular good to less of it, car and petrol, their cross elasticity is
other things remaining the same A. Negative
B. Positive
90. When , we know that the firms C. Zero
are earning just normal profits. D. Infinite
A. AC = AR 96. Risks in the business arise because of
B. MC = MR A. Introduction of the new products
am
C. MC = AC B. Uncertain policy of rival firms
D. AR = MR C. Changes in tastes
D. All of the above
91. The cost which a firm incurs for pur-
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97. If price changes by 1% and supply
chasing or hiring factors is called changes by 2%, then supply is
A. Implicit A. Elastic
B. Explicit B. Inelastic
hr
C. Real C. Indeterminate
D. Nominal D. Static
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98. A firm’s average fixed cost is Rs.20 at

92. The shape of PPC is concave due to 6 units of output. What will it be at 4
A. Falling opportunity cost between units of output?
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two goods A. Rs.60

B. Rising opportunity cost between B. Rs.30
two goods C. Rs.40
C. Constant opportunity cost be- D. Rs.20
tween two goods 99. Which is the other name that is given
D. None of the above to the average revenue curve?
A. Profit curve
93. All the following curves are U-shaped B. Demand curve
except C. Average cost curve
A. AVC D. Indifference curve
B. AFC 100. Who first raised the fear of a world
C. AC food shortage?
D. MC A. David Ricardo
B. T.R.Malthus
94. What is meant by Autarky in interna- C. J.S.Mill
tional trade? D. J.B.Say
101. A factor of production, whose sup- A. AC=AVC

ply is fixed in the short tun, may get B. AR=AC
additional earnings. These earnings C. AR=MC
are generally referred to as D. AR=MR
A. Surplus value
107. The kinked demand curve model of
B. Quasi-rent
oligopoly assumes that
C. Transfer earnings A. Response to a price increase is
D. Super normal profits less than the response to a price de-
crease
102. What does price elasticity of demand
B. Response to a price increase is
measure?
more than the response to a price de-
A. Change in price caused by
crease
changes in demand C. Elassticity of demand is constant
B. The rate of change of sales regardless of whether price increases
C. The responsiveness of demand to or decreases
am
price changes D. Elasticity of demand is perfectly
D. The value of sales at a given price elastic if price increases and perfectly
inelastic if price decreases
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103. If the price of ’X’ rises by 10 percent 108. Under market condition, firms
and the quantity demanded falls by 10 make normal profits in the long run.
percent, ’X’ has A. Perfect competition
hr
A. Inelastic demand B. Monopoly

B. Unitarily elastic demand C. Oligopoly
C. Zero elastic demand D. None of the above
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D. Elastic demand
109. Identify the author of "The princi-
104. The human effort applied to the pro- ples of Political Economy and Taxa-
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duction of goods is called in eco- tion"

nomics A. Alfred Marshall
B. J.S.Mill
A. Labour
C. David Ricardo
B. Skill D.
C. Experience E. Turgot
D. Service
110. Contraction of demand is the result
105. The Purchasing Power Parity The- of
ory’ came into prominence in 1916 A. Decrease in the number of con-
through the writings of sumers
A. J.M.Keynes B. Increase in the price of the com-
B. L.E.Von Miser modity concerned
C. Gustav Cassel C. Increase in the prices of other
D. F.A.von Hayek goods
D. Decrease in the income of pur-
106. Under perfect competition chasers
177
111. According to Malthus, population in- A. More inelastic

creases by progression of which kind? B. More elastic
A. Systematic C. Less elastic
B. Arithmetic D. Inelastic
C. Geometric
D. Automatic 118. Normal goods have
A. Positive income elasticity
112. Which of the following is a producer B. Negative income elasticity
good? C. Fluctuating income elasticity
A. Pen D. Zero income elasticity
B. Cycle 119. Rational decision making requires
C. Mobile phone that
D. Hammer A. One’s choice s be arrived at logi-
113. Ten rupees is the equilibrium price cally and without errors
B. One’s choice s be consistent with
for good X. If government fixes the
one’s goals
am
price at Rs.5, there is
C. One’s choice s never vary
A. A shortage
D. One makes choice s that do not
B. A surplus
involve trade offs
C. Excess supply
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D. Loss 120. Calculate income elasticity for the
household when the income of a
114. All of the following are determinants
household rises by 10% and the de-
hr
of demand except
A. Tastes and preferences mand for Rice rises by 5%.
A. -0.5
B. Quantity supplied
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B. 0.5
C. Income
C. -2
D. Price of related goods
D. 2
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115. The necessary condition for equilib- 121. According to Marshall, the basis of
rium position of a firm is consumer surplus is
A. MR>MC A. Law of diminishing MU
B. MC>Price B. Law of Equi-MU
C. MC=MR C. Law of proportions
D. MC=AC D. All of the above
116. The producer’s demand for a fac- 122. The IC curve approach assumes
tor of production is governed by the A. Rationality
of the factor. B. Consistency
A. Price will decrease C. Transitivity
B. Marginal productivity D. All of the above
C. Availability
D. Profitability 123. A factor of production, whose sup-
ply is fixed in the short tun, may get
117. The upper portion of the kinked de- additional earnings. These earnings
mand curve is relatively are generally referred to as
A. Surplus value A. State bank of India

B. Quasi-rent B. Reserve bank of India
C. Transfer earnings C. EXIM bank of India
D. Super normal profits D. Union bank of India
124. If firm’s average cost curve is falling 130. In which of the following market
then marginal curve must be structure is the degree of control over
A. Falling the price of its product by a firm very
B. Rising large?
C. Below average cost curve A. Imperfect competition
D. None of the above B. Perfect competition
C. Monopoly
125. In perfect competition, in the long D. In A and B both
run, there will be 131. Which of the following cost curves
A. Normal profits
is never U-shaped?
B. Super normal profits A. Average cost curve
am
C. Less production B. Marginal cost curve
D. Cost will be falling C. Average variable cost curve
D. Average fixed cost curve
126. Standard of living of a country can
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be raised if it increases 132. When marginal revenue is zero, total
A. Labour force revenue is
B. Production A. Maximum
C. Money supply B. Minimum
hr
D. Exports C. Zero
D. Decreasing
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127. A firm encounters its ’shutdown

point’ when 133. Which of the following is not a fea-
A. Average total cost equals price at ture of perfect competition?
A. Large number of buyers and sell-
Ja
the profit-maximizing level of output

B. Average variable cost equals price ers
B. Small number of buyers and sell-
at the profit-maximizing level of out-
ers
put
C. Free entry and exit
C. Average fixed cost equals price at D. Goods is homogeneous
the profit-maximizing level of output
D. Marginal cost equals price at the 134. Credit creation power of the com-
profit-maximizing level of output mercial banks gets limited by which
of the following?
128. Demand curve can be derived from A. Banking habits of the people
A. MU curve B. Cash Reserve Ratio
B. PCC C. Credit policy of the central bank
C. Both ’a’ and ’b’ D. All of the above
D. None
135. In the short run if a perfectly com-
129. Who is the ’lender of the last resort’ petitive firm finds itself operating at a
in the banking structure of India? loss, it will
179
A. Reduce the size of its plant to A. Less than unity

lower fixed costs B. Unity
B. Raise the price of its product C. Zero
C. Shut down D. Greater than Unity
D. Continue to operate as long as it 142. Who stated explicitly for the first
covers its variable cost time, the Law of Comparative Costs?
A. David Ricardo
136. Which one is increasing function of B. Adam Smith
price? C. James Mill
A. Demand D. Thomas Mun
B. Utility
C. Supply 143. The cost on one thing in terms of the
D. Consumption alternative given up is known as
A. Production cost
137. Diminishing marginal utility is the B. Physical cost
C. Real cost
basis of
am
D. Opportunity cost
A. Law of supply
B. Law of demand 144. Standard of living of a country can
C. Law of returns be raised if it increases
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D. None of the above A. Labour force
B. Production
138. The standard of living of workers C. Money supply
depends upon their D. Exports
hr
A. Nominal wages
145. Zubair has a special taste for col-
B. Real wages
lege canteen’s hotdogs. The owner
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C. Average product
of the canteen doubles the prices of
D. Government policy
hotdogs. Zubair did not respond to
139. Unit cost is another name for the increase in prices and kept on de-
Ja
A. MC manding the same quantity of hotdogs.

B. AVC His demand for hotdogs is
C. ATC A. Perfectly elastic
D. AFC B. Perfectly inelastic
C. Elastic
D. Less elastic
140. The AR curve and industry demand
curve are same in case of 146. Suppose the total cost of producing
A. Monopoly commodity X is Rs.125000. Out of
B. Oligopoly this cost, implicit cost is Rs.35000
C. Perfect competition and normal profit is Rs.25000. What
D. None of the above will be the explicit cost of commodity
X?
141. When as a result of decrease in price A. Rs.90000
of good, the total expenditure made B. Rs.65000
on it decreases we say that price elas- C. Rs.60000
ticity of demand is D. Rs.100000
147. If the price of good A increases rela- 153. Utility means

tive to the price of substitutes B and A. Power to satisfy a want
C, the demand for B. Usefulness
A. B will increase C. Willingness of a person
B. C will increase D. Harmfulness
C. Both B and C will increase
D. B and C will decrease 154. A firm decides to exit the industry
148. Which one of the following pairs of when
commodities is an example of substi- A. AC starts rising
tutes? B. MC starts rising
A. Tea and sugar C. Price is less than LAC
B. Tea and coffee D. TC starts rising
C. Pen and ink
D. Shirt and trousers 155. These are kinds of rent EXCEPT
A. Differential rent
149. Supply of a commodity is a B. Scarcity rent
am
A. Stock concept
C. Mobility rent
B. Flow concept
C. Both stock and flow concept D. Location rent
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156. If demand is inelastic, a change in
150. Unemployment of labour means that the price
A. A worker does not get full time A. Will change the quantity in same
job direction
hr
B. A worker is not happy with his B. Will change total revenue in same
present job direction
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C. A person does not get job accord- C. Will change total revenue in the
ing to his qualification opposite direction
D. a’ and ’c’ both
D. Will not change total revenue
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151. At the point of equilibrium of firm

(under perfect competition) 157. Law of substitution is another name
A. MC curve must be rising for law of
B. MC curve must be falling A. Law of diminishing MU
C. MR cure must be rising B. Law of Equi-MU
D. None of the above C. Law of demand
D. Satisfaction
152. What best explains a shift in market
supply curve to the right? 158. Discriminating monopoly implies
A. An advertising campaign is suc-
that the monopolist charges different
cessful in promoting the good
B. A new technique makes it cheaper prices for its commodity
to produce the good A. From different groups of con-
C. The government introduces a tax sumers
on the good B. For different uses
D. The price of raw materials in- C. At different places
creases D. Any of the above
181
159. Other things equal, if a good has 165. The three broad types of productive
more substitutes, its price elasticity resources are
of demand is A. Money, profit and interest
A. Larger B. Capital, labour and natural re-
B. Smaller sources
C. Zero C. Bond, stock shares and deposits
D. Unity D. Technology, human capital and
markets
160. Mr. Raees Ahamd bought 50 litres
of petrol when his monthly income 166. When price is below equilibrium
was Rs.25000. Now his monthly in- level, there will be
come has risen to Rs.50,000 and he A. Surplus commodity in the market
B. Shortage of commodity in the mar-
purchases 100 litres of petrol. His in-
ket
come elasticity of demand for petrol
C. Supply curve will shift
is D. Demand curve will shift
A. 1
am
B. 100% 167. The Communist Manifesto, written
C. Less than 1 jointly by Marx and Engels’s was pub-
D. More than 1 lished in
A. 1843
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161. Unemployment due to mechaniza- B. 1848
tion of agriculture is C. 1853
A. Seasonal D. 1859
B. Structural
hr
C. Industrial 168. The total effect of a price change of

D. Personal a commodity is
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A. Sustitution effect plus price effect

162. The MC curve cuts the AVC and B. Substitution effect plus income ef-
ATC curves at fect
A. The falling part of each
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C. Substitution effect plus demonstra-

B. Different points tion effect
C. Their respective minimas D. Substitution effect minus income
D. The rising part of each effect
163. In the case of a Giffen good, the de- 169. Who propounded the opportunity
mand curve will be cost theory of international trade?
A. Horizontal A. Ricardo
B. Downward to the right B. Marshall
C. Upward to the right C. Heckscher& Ohlin
D. Vertical D. Haberler
164. In monopoly and perfect competi- 170. A consumer is in equilibrium when
tion, the cost curves are marginal utilities are
A. Same A. Minimum
B. Different B. Highest
C. Opposite C. Equal
D. None of the above D. Increasing
171. Effective demand depends upon A. Homogenity of a factor

A. Desire for the commodity B. Perfect competition in the factor
B. Means to purchase market
C. Willingness to use those means for C. All factors, except one, are vari-
that purchase able
D. All of the above D. Given stock of each factor and full
employment
172. Which among the following state-
ment is INCORRECT? 177. The ’Diamond water’ controversy is
A. Welfare economics is based on explained by
value judgements A. Total utility
B. Welfare economics is also called B. Marginal utility
’economics with a heart’ C. Price offered
D. Quantity supplied
C. Welfare economics focuses on
questions about equity as well as effi- 178. The situation of monopolistic com-
am
ciency petition is created by
D. The founder of Welfare eco- A. Small number of producers of a
nomics was Alfred Marshall commodity
B. Lack of homogeneity of the prod-
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173. The short run uct produced by different firms
A. Is less than one year C. Imperfection of the market for that
B. Requires that at least one input is product
hr
fixed D. All of the above

C. Requires that all inputs are fixed
D. Is just long enough to permit entry 179. An indifference curve slopes down
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and exit towards right since more of one com-

modity and less of another result in
174. For goods, increase in income A. Same satisfaction
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leads to increase in demand. B. Greater satisfaction

A. Abnormal C. Maximum satisfaction
B. Normal D. Decreasing expenditure
C. Inferior
D. Superior 180. When a market is in equilibrium
A. No shortage exists
175. In which form, the largest percent- B. Quantity demanded equals quan-
age of national income is earned? tity supplied
A. Interest income C. A price is established that clears
B. Proprietor’s income the market
C. Employee’ wages D. All of the above are correct
D. Rental income 181. Economics is the study of
A. how society manages its unlimited
176. Which of the following is NOT the
resources
assumption of the Marginal Produc- B. how to reduce our wants until we
tivity Theory of Distribution? are satisfied
183
C. how society manages its scarce re- 187. If lowering of fares reduces rail-
sources way’s revenues and increasing of fares
D. how to fully satisfy our unlimited increases, then the demand for rail
wants travel has a price elasticity of
A. Zero
182. A significant property of the Cobb- B. Greater than Zero but less than
Douglas production function is that One
the elasticity of substitution between C. One
inputs is D. Greater than One
A. Equal to 1
B. More than 1 188. The economic analysis expects the
C. Less than 1 consumer to behave in a manner
D. 0
which is
183. In the case of a straight-line demand A. Rational
curve meeting the two axes, the price- B. Irrational
elasticity of demand at the mid-point C. Emotional
am
of the line would be D. Indifferent
A. 0
B. 1 189. The cost that a firm incurs in hiring
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C. 1.5 or purchasing any factor of produc-
D. 2 tion is referred to as
A. Explicit cost
184. A decrease in demand causes the B. Implicit cost
hr
equilibrium price to C. Variable cost

A. Rise D. Fixed cost
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B. Fall
C. Remain constant 190. In which form of the market struc-
D. Indeterminate ture is the degree of control over the
Ja
185. What is the shape of the demand price of its product by a firm very
curve faced by a firm under perfect large?
A. Monopoly
competition?
A. Horizontal B. Imperfect condition
B. Vertical C. Oligopoly
C. Positively sloped D. Perfect competition
D. Negatively sloped
191. Who expressed the view that ’Eco-
186. "The real price of everything, what nomics should be neutral between
every thing really costs to the man ends’?
who wants to require it, is the toil and A. Robbins
trouble of acquiring it. Who made B. Marshall
this statement? C. Pigou
A. Karl Marx D. Adam Smith
B. Adam Smith
C. David Ricardo 192. The shape of rectangular hyperbola
D. J.S.Mill is made by
A. MC A. Monopoly
B. AFC B. Monopolistic competition
C. AVC C. Perfect competition
D. Oligopoly
198. Which of the following is example
193. Profit is maximum when of external economies of scale?
A. Distance between TR and TC is A. Discount on purchases of raw ma-
maximum terials
B. Distance between AR and AC is B. Technical progress leads to devel-
maximum opment of machine at low price
C. Distance between MR and MC is C. Hiring of specialized staff due to
maximum increase in scale of production
D. None of the above D. A firm starts producing by-
products
194. Demand for a commodity refers to a
199. The transformation of resources into
A. Desire for the commodity
am
economic goods and services is called
B. Need for the commodity A. Technical efficiency
C. Quantity demanded of that com- B. Input
modity C. Production
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D. Quantity of the commodity de- D. Increasing returns
manded at a certain price during any
200. The various combination of goods
particular period of time
that can be produced in any econ-
hr
195. Normal profit is called normal be- omy when it uses its available re-
cause sources and technology efficiency are
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A. It is neither very high nor very low depicted by

A. Demand curve
B. It is minimum acceptable to the B. Production curve
producer C. Supply curve
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C. It is minimum which buyer wants D. Production possibility curve

to pay
D. It is the maximum allowed by gov- 201. When Marginal Utility is positive,
ernment Total Utility
A. Increases
B. Decreases
196. Which of the following is also C. Remains constant
known as plant curves? D. Is highest
A. Long-run average cost (LAC)
curves 202. If income elasticity for a good is 2,
B. Short-run average cost (SAC) then it is a
curves A. Necessity item
B. Inferior good
C. Average variable cost (AVC)
C. Luxury item
curves D. Comfortable item
D. Average total cost (ATC) curves
203. The total area under the demand
197. Excess capacity is not found under curve of good measures
185
A. Marginal utility 209. Passive factor of production is

B. Total utility A. Only Land
C. Consumers surplus B. Only Capital
D. Producer surplus C. Both Land& Capital
D. Neither Land nor Capital
204. Fisher’s ideal index number is
A. Arithmetic mean of Laspeyre’s 210. Normally a demand curve will have
and Paasche’s index the shape
B. Harmonic mean of Laspeyre’s and A. Horizontal
Paasche’s index B. Vertical
C. Geometric mean of Laspeyre’s C. Downward sloping
and Paasche’s index D. Upward sloping
211. Which of the following are sources
205. When demand is perfectly inelastic, of growth?
an increase in price will result in A. Natural resources
am
A. A decrease in total revenue B. Human capital
B. An increase in total revenue C. Physical capital
C. No change in total revenue D. All of the above
D. A decrease in quantity demanded
iR
212. Profits
206. Normal profit is A. Are lower in the long run than in
A. Part of total cost the short run
B. Part of economic profit B. Can be negative
hr
C. Total revenue minus total cost C. Are less in perfect competition

D. Total revenue minus implicit cost than in monopoly
iS
D. All of the above

207. Which among the following state-
ment is INCORRECT? 213. Scarcity means
Ja
A. Floating exchange rate system A. Non-availibility of goods

works on the market mechanism B. High price of goods
B. Floating exchange rate breeds un- C. Less supply than demand
certainties and speculation D. High profit of the firms
C. Economic and political factors
and value judgement influence the 214. A vertical supply curve parallel to
choice of the exchange rate system the price axis implies that the elastic-
D. The system of floating exchange ity of supply is
rate requires comprehensive govern- A. Zero
ment intervention B. Infinity
C. Equal to one
208. When Marginal Utility is zero, Total D. Greater than zero but less than in-
Utility is finity
A. Minimum
B. Maximum 215. In which year, was the first volume
C. Law of return of Das Capital by Karl Marx pub-
D. None of the above lished?
A. 1848 A. Wants are unlimited

B. 1859 B. Resources are scarce
C. 1867 C. Scare resources have alternative
D. 1873 uses
D. All of the above
216. A monopolist is able to maximize
his profits when 222. In case of perfect competition in the
A. His output is maximum market
B. He charges high price A. Marginal revenue curve always
C. His average cost is minimum slopes upward
D. His marginal cost is equal to B. Marginal revenue curve always
marginal revenue slopes downwards
C. Marginal revenue is always equal
217. The supply of a commodity refers to to average revenue
A. Actual production of the commod- D. Marginal revenue is always less
ity than average revenue
B. Total existing stock of the com-
am
223. Which is the first-order condition for
modity
C. Stock available for sale the profit of a firm to be maximum?
A. AC=MR
D. Amount of the commodity offered B. MC=MR
iR
for sale at a particular price per unit C. MR=AR
of time D. AC=AR
218. If the income elasticity is greater 224. Which of the following markets
hr
than one, the commodity is comes closest to perfect market?

A. Necessity item A. Wheat market
iS
B. Luxury item B. Cigarette market

C. Inferior good C. Cold drinks market
D. None D. Stock market
Ja
219. Which one of the following is the 225. Total utility of a commodity is mea-
task of the Planning Commission? sured by which price of that commod-
A. Preparation of the plan ity?
B. Implementation of the plan A. Value in use
C. Financing of the plan B. Value in exchange
D. None of the above C. Both of above
D. None of above
220. The offer curves introduced by Al- 226. As for the cost of production of an in-
fred Marshall, helps us to understand dividual farmer, the rent paid by him
how the is established in inter- A. Enters into the price of his product
national trade. B. Does not enter into price of his
A. Terms of trade product
B. Equilibrium price ratio C. Is unjustified
C. Exchange rate D. None of the above
D. Satisfaction level
227. Which of the following is not the
221. Economic problems arise because name of LAC curve?
187
A. Planning curve 234. The horizontal demand curve paral-

B. Enveloping curve lel to x-axis implies that the elasticity
C. Round curve of demand is
D. None of the above A. Zero
B. Infinite
228. According to Keynes, interest is a C. Equal to 1
payment for D. Greater than zero but less than in-
A. Use of durable goods finity
B. Use of capital
C. Use of money 235. Who defined Economics as a ’sci-
D. Use of land ence which studies human behaviour
as a relationship betweeen ends and
229. Supply curve is means which have alternative uses’?
A. Vertical in long run A. L. Robbins
B. Flatter in ling run B. Alfred Marshall
C. Same in long and short run C. Joan Robinson
D. Paul A. Samuelson
am
D. Horizontal in both short and long
run 236. Identify the work of Irving Fisher
A. A Treatese on Money
230. The capital that is consumed by an B. Policy against Inflation
iR
economy or a firm in the production C. The Making of Index numbers
process is known as D. Monetary Theory
A. Capital loss
B. Production cost 237. Which statement is true
hr
C. Dead-weight loss A. ATC + AVC = AFC

D. Depreciation B. ATC + MC = AFC
iS
C. ATC + AFC = AVC

231. Supply curve will shift when D. AFC + AVC = ATC
A. Price falls 238. The labour force participation rate is
Ja
B. Price rises
the
C. Demand shots A. Proportion of population that is
D. Technology changes
working
232. The LAC curve B. Proportion of population working
A. Falls when the LMC curve falls or looking for work
C. Proportion of skilled workers pop-
B. Rises when the LMC curve rises
C. Goes through the lowest point of ulation
D. Proportion of female workers to
the LMC curve
male workers
D. Falls when LMCLAC
239. Marginal utility is equal to average
233. Which one of the following is true
utility at that time when average util-
about Planning Commission?
ity is
A. It is a Ministry A. Increasing
B. It is a Government Department B. Maximum
C. It is an Advisory Body C. Falling
D. It is an Autonomous Corporation D. Minimum
240. Which one of the following is the D. An indifference curve relating the
condition of equilibrium for the mo- two goods will be convex to the origin
nopolist?
A. MR=MC
B. MC=AR 246. Agricultural goods market depicts
C. MR=MC=Price characteristics close to
D. AC=AR A. Perfect competition
B. Oligopoly
241. Some economists refer to iso- C. Monopoly
product curves as D. Monopolistic competition
A. Engels curve
B. Production indifference curve 247. When was Adam Smith’s major
C. Budget line work "An enquiry into the Nature and
D. Ridge line Causes of Wealth of Nations" pub-
lished?
242. Suppose the short run cost function A. 1756
am
can be written as TC=250 + 10Q. Av- B. 1766
erage fixed cost equals C. 1776
A. 250/Q D. 1786
B. 250
iR
C. 10 248. If elasticity of demand is very low, it
D. 250/Q + 10 shows that the commodity is
A. A necessity
hr
243. The consumer is in equilibrium at a

B. A luxury
point where the budget line
C. Has little importance in total bud-
A. Is above an indifference curve
iS
B. Is below an indifference curve get

C. Is tangent to an indifference curve D. a’ and ’c’ above
D. Cuts an indifference curve
249. An inferior commodity is one which
Ja
244. As output increases, AC curve is consumed in smaller quantities

A. Falls when the income of consumer
B. Rises A. Becomes nil
C. Remains constant B. Remains the same
D. All of the above C. Falls
D. Rises
245. If two goods were perfect substitutes
of each other, it necessarily follows 250. Land only
that A. Is a free gift of nature
A. An indifference curve relating the B. Lacks geographical mobility
two goods will be curvilinear C. Is not hirable
B. An indifference curve relating the D. a’ and ’b’ both
two goods will be linear
C. An indifference curve relating the 251. If two goods are complements, this
two goods will be divided into two means that a rise in the price of one
segments which meet at a right angle commodity will induce
189
A. An upward shift in demand for the 257. Marginal revenue is always less than
other commodity price at all levels of output in
B. A rise in the price of the other A. Perfect competition
commodity B. Monopoly
C. A downward shift in demand for C. Both ’a’ and ’b’
the other commodity D. None of the above
D. No shift in the demand for the
other commodity 258. One characteristic not typical of
oligopolistic industry is
252. Identify the aspect of taxation which A. Too much importance to non-price
is related to normative economics competition
A. Incidence of tax B. Price leadership
B. Effect of tax on the capacity will- C. Horizontal demand curve
ingness to work D. A small number of firms in the
C. Equity of tax industry
am
259. Calculate the income elasticity for a
253. When cross elasticity of demand is household when the income of this
a large positive number, one can con- household rises by 5% and the de-
clude that mand for buttons does not change at
iR
A. The good is normal all.
B. The good is inferior A. Infinity
C. The good is a substitute B. 1
D. The good is complement
hr
C. Zero
254. Larger production of goods D. 5
iS
would lead to higher production in 260. Quality of a commodity that satisfies

future some human want or need is called
A. Consumer goods
A. Service
B. Capital goods
Ja
B. Demand
C. Agricultural goods
C. Utility
D. Public goods
D. Efficiency
255. Under which of the following forms
261. Price of a product is determined in a
of market structure does a firm have
free market by
no control over the price of its prod-
A. Demand for the product
uct?
B. Supply of the product
A. Monopoly
C. Both demand and supply
B. Monopolistic competition
D. The government
C. Oligopoly
D. Perfect competition 262. The term ’marginal’ in economics
256. Productivity of land can be raised by means
A. Extensive cultivation A. Unimportant
B. Intensive cultivation B. Additional
C. Better marketing C. The minimum unit
D. a’ and ’b’ both D. Just barely passing
263. Human wants are A. Large number of buyers and sell-

A. One thousand ers
B. Few B. Homogeneous product
C. Few Innumerable C. Freedom of entry
D. Countable D. Absence of transport cost
264. In the case of an inferior good, the 270. Which among the following state-
income elasticity of demand is ment is INCORRECT?
A. Positive A. On a linear demand curve, all the
B. Zero five forms of elasticity can be de-
C. Negative picted
D. Infinite B. If two demand curves are linear
and intersecting each other, then, coef-
265. Who is generally regarded as the ficient of elasticity would be same on
founder of the ’Classical School’? different demand curves at the point
A. David Ricardo of intersection.
am
B. Adam Smith C. If two demand curves are linear
C. T.R.Malthus and parallel to each other, then, at a
D. J.S.Mill particular price, the coefficient of elas-
ticity would be different on different
iR
266. If marginal opportunity cost is demand curves.
falling, the PPF would be D. The price elasticity of demand is
A. Straight line expressed in terms of relaive not ab-
B. Concave
hr
solute changes in Price and Quantity

C. Backward leading demanded.
D. Convex
iS
271. If quantity demanded is completely

267. Lesser production of would unresponsive to changes in price, de-
lead to lesser production in future. mand is
Ja
A. Public goods A. Inelastic

B. Consumer goods B. Unit elastic
C. Capital goods C. Elastic
D. Agricultural goods D. Perfectly inelastic
268. Total costs in the short-term are clas- 272. When indifference curve is L shaped,
sified into fixed costs and variable then two goods will be
costs. Which one of the following A. Perfect substitute goods
is a variable cost? B. Substitute goods
C. Perfect complementary goods
A. Cost of raw material
D. Complementary goods
B. Cost of equipment
C. Interest payment on past borrow- 273. Economic development of a country
ing requires
D. Payment of rent on buildings A. Skilled labour
B. Diplomacy
269. Which of the following is not an es- C. Abundant natural resources
sential condition of pure competition? D. a’ and ’c’ both
191
274. Economic survey is published by 280. What is the shape of the average
A. Ministry of Finance fixed cost (AFC) curve?
B. Planning Commission A. U-shape
C. Government of India B. Horizontal up to a point and then
D. Indian Statistical Institute rising
275. Which of the following is NOT a fea- C. Sloping down towards the right
D. Rectangular hyperbola
ture of iso-product curve? Iso-product
curves 281. Which statement relates to macroe-
A. Are downward sloping to the right
conomics?
B. Show different input combination
A. Oil prices are rising in Pakistan
producing the same output
B. Profit rate is high on textile indus-
C. Intersect each other
D. Are convex to the origin try
C. The firms try to make huge profits
276. If regardless of changes in its price, D. The government has failed to con-
the quantity demanded of a commod- trol inflation
am
ity remains unchanged, then the de-
mand curve for the commodity will 282. The average profit is the difference
be between
iR
A. Horizontal A. AC and TC
B. Vertical B. AC and VC
C. Positively sloped C. AC and AR
D. Negatively sloped D. AC and TR
hr
277. The exception to law of demand is 283. If rate of interest is 10%, the PV
A. Veblen goods
iS
(present value) of Rs.100 received in

B. Giffen goods 1 year’s time is
C. Both ’a’ and ’b’ A. 90
D. None
Ja
B. 90.9
278. All but one of the following are as- C. 95
D. 110
sumed to remain the same while draw-
ing an individual’s demand curve for 284. If the demand for a good is inelastic,
a commodity. Which one is it? an increase in the price of the good
A. The preferences of the individual
will cause the total expenditure of the
B. His monetary income
C. The price of the commodity under consumers of the good to
A. Remain the same
consideration
D. The prices of other goods B. Increase
C. Decrease
279. In case of inferior goods, the income D. Any of the above
elasticity is
A. Zero 285. During a particular year, farmers ex-
B. Positive perienced a dry weather. If all the oth-
C. Negative err factors remain constant, farmers
D. None supply curve for wheat will shift
A. Rightward 292. According to Joseph Schumpeter,

B. Leftward profit is the reward for
C. Upward A. Innovation
D. None of the above B. Uncertainty-bearing
C. Risk-taking
286. Product differentiation is the most D. Management
important feature of
A. Monopolistic competition 293. Income elasticity of demand for nor-
B. Monopoly mal goods is always
C. Oligopoly A. 1
B. Negative
D. Perfect competition
C. More than 1
287. Some economists say that profit D. Positive
earner is a kind of 294. The law of consumer surplus is
A. Rent receiver based on
B. Interest receiver A. Indifference curve analysis
am
C. Wage earner B. Revealed preference theory
D. Government officer C. Law of substitution
D. The law of diminishing marginal
288. Economic profit is
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utility
A. Part of total cost
B. Total revenue minus total cost 295. Quantity demanded is a
C. Total revenue minus explicit cost A. Flow concept
hr
D. Total variable cost minus total B. Stock concept

fixed cost C. Both ’a’ and ’b’
iS
289. Price discrimination is not possible

in case of 296. The elasticity of substitution be-
A. Perfect competition tween two perfect substitutions is
Ja
A. Zero
B. Monopoly
B. Greater than zero
C. Monopolistic competition
C. Less than infinity
D. Oligopoly D. Infinity
290. All inputs can be varied in 297. He described economics as a science
A. Short run of material welfare
B. Long run A. Robbins
C. Both periods B. Marshall
D. None of the period C. Ricardo
D. Keynes
291. MC curve cuts curves at their
minimum points 298. Assume that consumer’s income and
A. AVC and AC the number of sellers in the market
B. AFC and AVC for good X both falls. Based on this
C. AC and AFC information, we can conclude with
D. All of the above certaintty that the equilibrium
193
A. Price will decrease 305. When a competitive firm achieves

B. Price will increase long run equilibrium, then,
C. Quantity will decrease A. P=MC
D. Quantity will increase B. MR=MC
C. P=ATC
299. In the short run, when the output of D. All of the above
a firm increases, its average fixed cost
A. Increases 306. The long run is a
B. Decreases A. Period of three years or longer
C. Remains constant B. Period long enough to allow firms
D. First declines and then rises to change plant size and capacity
C. Period long enough to allow firm
300. Which is a condition for existence to make economic decisions
of monopoly? D. A period which affects larger than
A. Big size smaller firms
B. Identical product
307. The Critique of Political Economy,
am
C. Absence of government taxes
the first fruits of Karl Marx’s long
D. No close substitute
painstaking research at the British
301. If a good is a luxury, its income elas- Museum, appeared in
iR
ticity of demand is A. 1859
A. Positive and less than 1 B. 1857
B. Negative but greater than 1 C. 1855
D. 1853
hr
C. Positive and greater than 1

D. Zero 308. Which of the following is COR-
RECT with respect to resources?
iS
302. Positive income elasticity implies

A. Money is a capital good
that as income rises, demand for the B. Human skills are a labour input
commodity C. Entrepreneur is part of the labour
Ja
A. Rises input
B. Falls D. Natural resources include human
C. Remains unchanged input
D. Becomes Zero
309. Mobility of labour
303. A firm under perfect competition is A. Increases efficiency of labour
A. Price maker B. Spoils labour
B. Price breaker C. Increases division of labour
C. Price taker D. a’ and ’c’ both
D. Price shaker
310. In market equilibrium, supply is ver-
304. A firm earns economic profit when tical line. The downward sloping de-
total profit exceeds mand curve shifts to the right. Then
A. Normal profit A. Price will fall
B. Implicit costs B. Price remains same
C. Explicit costs C. Price will rise
D. Variable costs D. Quantity rises
311. Economic rent can accrue to A. Oligopoly

A. Land only B. Perfect competition
B. Capital only C. Imperfect competition
C. Specialized technical personnel D. None of the above
only
318. Under conditions of perfect compe-
D. Any of the factors of production
tition in the product market
312. Utility is more closely related to the A. MRP = VMP
term B. MRP > VMP
C. VMP > MRP
A. Useful
B. Useless
C. Necessary 319. In May 2013, firm was supplying
D. Satisfaction 500kg of sugar at market price of
313. In Monopoly at various output levels Rs.30/-per kg. During June 2013,
A. AR=MR firm’s supply of sugar had decreased
B. AR to 450kg at price of Rs.20/-per kg.
am
C. AR>MR These changes show that supply of
D. None of the above sugar is
A. Oerfectly elastic
314. In imperfect competition B. Perfectly inelastic
iR
A. Excess capacity always exists C. Less elastic
B. Excess capacity never exists D. More elastic
C. Excess capacity may or may not
320. The structure of the cold drink indus-
hr
exist
D. None of the above try in India is best described as
A. Perfectly competitive
iS
315. If price and total revenue move in B. Monopoly

the same direction, then demand is C. Oligopoly
D. Monopolistically competitive
A. Inelastic
Ja
B. Elastic 321. Which one is the assumption of law

C. Unrelated of demand
D. Perfectly elastic A. Price of the commodity should not
316. This is an assumption of law of de- change
B. Quantity demanded should not
mand
change
A. Price of the commodity should not
C. Prices of substitutes should not
change
change
B. Quantity should not change D. Demand curve must be linear
C. Supply should not change
D. Income of consumer should not 322. In perfect competition, the firm’s
change above AVC has the identical
shape of the firm’s supply curve
317. Which form of market structure is A. Marginal revenue curve
characterised by interdependence in B. Marginal cost curve
decision-making as between the dif- C. Average cost curve
ferent competing firms? D. None of the above
195
323. TC curve 329. Interest is paid because

A. Starts from origin A. Capital is scarce
B. Does not start from origin B. Capital is productive
C. Is parallel to Y-axis C. Capital is attractive
D. None of the above D. Capital is surplus
324. A firm under perfect competition
330. The economist’s objections to
will be making minimum losses (in
monopoly rest on which of the follow-
the short run) at a point where
A. MC>MR ing grounds?
B. MR>MC A. There is a transfer of income from
C. MC=MR consumers to the monopolist
D. AC=AR B. There is welfare loss as re-
sources tend to be misallocated under
325. The budget line is also known as the monopoly
A. Iso-utility curve C. Both A and B are incorrect
B. Production possibility line
D. Both A and B are correct
am
C. Isoquant
D. Consumption possibility line
331. A firm’s average total cost of pro-
326. Identify the coefficient of price- duction is Rs.300 at 5 units of out-
iR
elasticity of demand when the percent- put and Rs.320 at 6 units of output.
age increase in the quantity of a com- The marginal cost of producing the
modity demanded is smaller than the 6th unit is
percentage fall in its price A. Rs.20
hr
A. Equal to one B. Rs.120

B. Greater than one C. Rs.320
iS
C. Small than one D. Rs.420

D. Zero
332. If demand is unitary elastic, a 25%
327. The following are some of the costs
Ja
increase in price will result in

of a clothing manufacturer. State A. 25% change in total revenue
which among them will you consider B. No change in quantity demanded
as fixed cost? C. 1% decrease in quantity de-
A. Cost of cloth
manded
B. Piece wages paid to workers
C. Depreciation on machines owing D. 25% decrease in quantity de-
to time manded
D. Cost of electricity for running ma-
333. MC is given by
chines
A. Slope of TFC
328. In a perfectly competitive market B. Slope of TC
A. Firm is the price giver and indus- C. Slope of AC
try the price taker D. None of the above
B. Firm is the price taker and indus-
try the price giver 334. A market structure in which many
C. Both are price takers firms sell products that are similar but
D. None of the above not identical is known as
A. Monopolistic competition A. Rs.10

B. Monopoly B. Rs.30
C. Perfect competition C. Rs.20
D. Oligopoly D. Rs.5
335. Total utility is maximum when 341. During short period, diminishing re-
A. Marginal utility is zero turns may follow because
B. Marginal utility is at its highest A. Quantity of labour is fixed
point B. Quantity of output is fixed
C. Quantity of capital is fixed
C. Marginal utility is equal to aver-
D. Quantity of any one factor is fixed
age
D. Average utility is maximum
342. The elasticity of demand of durable
336. In market equilibrium, supply is ver- goods is
tical line. The downward sloping de- A. Less than unity
mand curve shifts to the right. Then B. Greater than unity
am
A. Price will fall C. Equal to unity
B. Price remains same D. Zero
C. Price will rise
343. Demand is a function of
iR
D. Quantity rises
A. Price
337. When marginal is negative, it must B. Quantity
be true that C. Supply
hr
A. The average is negative D. None of the above

B. The average is decreasing
344. A necessity is defined as a good hav-
iS
C. The total is negative

ing
D. The total is decreasing A. A positive income elasticity of de-
338. Which cost increases continuously mand
Ja
B. A negative income elasticity of de-

with the increase in production?
mand
A. Avearge cost
C. An income elasticity of demand
B. Marginal cost
between zero and 1
C. Fixed cost
D. An income elasticity of more than
D. Variable cost
1
339. All labour is 345. Elasticity of supply refers to the de-
A. Homogeneous gree of responsiveness of supply of a
B. Heterogeneous commodity to changes in its
C. Lazy A. Demand
D. Intelligent B. Price
C. Cost of production
340. The average total cost pf producing D. State of technology
50 units is Rs.250 and total fixed cost
is Rs.1000. What is the average fixed 346. Demand curve slopes downward be-
cost of producing 100 units? cause of the law of
197
A. Consumer equilibrium A. Scarcity of resources

B. Utility maximization B. Alternative uses
C. Utility minimization C. Unlimited wants
D. Diminishing marginal utility D. All of the above
347. The slope of indifference curve indi-
cates 352. The minimum wage is an example
A. Price ratio between two commodi- of
ties A. Price floor
B. Marginal rate of substitution B. Price ceiling
C. Factor substitution C. Equilibrium wage
D. Level of indifference D. Efficiency of labour
348. At shut down point
353. The vertical difference between
A. Price is equal to AVC
TVC and TC is equal to
B. Total revenue is equal to TVC
C. Total loss of the firm is equal to A. MC
am
TFC B. AVC
D. All of the above C. TFC
iR
349. When the perfectly competitive firm
and industry are in long run equilib- 354. When total utility becomes maxi-
rium, then mum, then marginal utility will be
A. P = MR = SAC = LAC
hr
A. Minimum
B. D = MR = SMC = LMC
B. Average
C. P = MR = Lowest point on the
C. Zero
iS
LAC curve
D. All of the above D. Negative
350. Price-taking firms i.e., firms that op- 355. Which of the following oligopoly
Ja
erate in a perfectly competitive mar- models is concerned with the maxi-

ket, are said to be ’small’ relative to mization of joint profits?
the market. Which of the following A. Price leadership model
best describes this smallness? B. Bertrand’s model
A. The individual firm must have C. Collusive model
fewer than 10 employees D. Edgeworth’s model
B. The individual firm faces a
downward-sloping demand curve 356. Economies of scale are of two kinds
C. The individual firm has assets less
A. Temporary and permanent
than Rs. 20 lakhs
D. The individual firm is unable to B. Internal and external
affect market price through its output C. Managerial and industrial
decisions D. Natural and artificial
351. Which of the following is a cause of 357. Mixed economy means an economy
an economic problem? where
A. Both agriculture and industry are 363. All labour is

equally promoted by the state A. Homogeneous
B. There is co-existence of public B. Heterogeneous
sector along with private sector C. Lazy
C. There is importance of small scale D. Intelligent
industries along with heavy industries
D. Economy is controlled by military 364. In order to control credit, Reserve
as well as civilian rulers Bank of India should
A. Increase CRR and decrease Bank
358. An economic theory is rate
A. An axiom B. Decrease CRR and reduce Bank
B. A proposition rate
C. A hypothesis C. Increase CRR and increase Bank
D. A tested hypothesis rate
D. Reduce CRR and increase Bank
359. The classical theory explained inter- rate
am
est as a reward for
A. Parting with liquidity 365. TVC curve
B. Abstinence A. Starts from origin
C. Saving B. Does not start from origin
iR
D. Inconvenience C. Is parallel to Y-axis
360. Which of the following is not a char-
acteristic of a ’price taker’?
hr
366. In the context of oligopoly, the

A. TR = P x Q kinked demand curve hypothesis is
B. AR = Price designed to explain
iS
C. Negatively sloped demand A. Price and output determination

D. Marginal Revenue = Price B. Price rigidity
C. Price leadership
Ja
361. When , we know that the firms

D. Collusion among rivals
must be producing at the minimum
point of the average cost curve and so 367. The producer is in equilibrium at a
there will be productive efficiency. point where the cost line is
A. AC = AR A. Above the isoquant
B. MC = AC B. Below the isoquant
C. MC = MR C. Cutting the isoquant
D. AR = MR D. Tangent to isoquant
362. An individual demand curve slopes 368. TC curve
downward to the right because of the A. Rises continously
A. Working of the law of diminishing B. Falls after reaching a maximum
marginal utility C. Is horizontal
B. Substitution effect of decrease in D. None of the above
price
C. Income effect of fall in price 369. Every factor of production gets re-
D. All of the above warded equal to its
199
A. Cost 376. In case of monopoly

B. Marginal product A. Marginal revenue curve always
C. Price slopes upward
D. Increasing return
B. Total revenue curve always slopes
370. The law of variable proportions upward
come into being when C. Marginal revenue is always equal
A. There are only two variable fac- to average revenue
tors D. Marginal revenue is always less
B. There is a fixed factor and a vari- than average revenue
able factor
C. All factors are variable 377. What implication does resource
D. Variable factors yield less scarcity have for the satisfaction of
371. The most efficient scale of produc- wants?
tion of a firm is where A. Not all wants can be satisfied
A. LAC is minimum B. We will never be faced with the
am
B. SAC is minimum need to make choice s
C. LMC is minimum C. We must develop ways to decrease
D. SMC is minimum our individual wants
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372. A higher indifference curve shows D. The discovery of new natural re-
A. A higher level of satisfaction sources is necessary to increase our
B. A higher level of production ability to satisfy wants
C. A higher level of income
hr
D. None of the above 378. Demand for intermediate consump-

tion arises in
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373. Which is NOT a cause of shift in

cost curves of a firm? A. Household sector only
A. Excise tax B. Government sector only
B. Prices of inputs C. Corporate sector only
Ja
C. Increase in productivity D. All producing sectors of the econ-

D. Price of product omy
374. A firm should shut down in the short
run if it is not covering its 379. A rise in supply and demand in equal
A. Variable cost proportion will result in
B. Fixed cost A. Increase in equilibrium price and
C. Total cost equilibrium quantity
D. Explicit cost (money outlays) B. Decrease in equilibrium price and
375. Number of times a unit of money increase in equilibrium quantity
changes hands in the course of a year C. No change in equilibrium price
is called and increase in equilibrium quantity
A. Supply of money D. Increase in equilibrium price and
B. Purchasing power of money no change in equilibrium quantity
C. Velocity of money
D. Value of money 380. Profit is maximum when
A. TC and TR curves are parallel 381. Profits are

B. MC and MR curves are parallel A. Residual payment
C. TC and TR curves cross each B. Pre-determined
other C. Fixed contract
D. AC and AR curves cross each D. Always higher than wages
other
Answers
1. A 2. A 3. B 4. B 5. D 6. C 7. D 8. C 9. A 10. B 11. B 12. D 13. B

14. A 15. C 16. D 17. B 18. B 19. B 20. A 21. B 22. C 23. A 24. D
25. A 26. A 27. C 28. C 29. C 30. C 31. D 32. D 33. D 34. B 35. C
36. C 37. B 38. D 39. B 40. B 41. A 42. D 43. C 44. D 45. A 46. C
47. A 48. A 49. C 50. D 51. B 52. B 53. C 54. B 55. B 56. D 57. C
am
58. C 59. C 60. A 61. B 62. B 63. C 64. C 65. B 66. D 67. D 68. B
69. B 70. B 71. B 72. B 73. A 74. A 75. D 76. B 77. C 78. B 79. B
80. C 81. C 82. A 83. B 84. B 85. A 86. C 87. A 88. A 89. C 90. A
91. B 92. B 93. B 94. D 95. A 96. D 97. A 98. B 99. B 100. B 101. B
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102. C 103. B 104. A 105. C 106. D 107. A 108. A 109. C 110. B 111. C
112. D 113. A 114. B 115. C 116. B 117. B 118. A 119. B 120. B 121. A
122. D 123. B 124. C 125. A 126. B 127. B 128. C 129. B 130. C 131. D
hr
132. A 133. B 134. D 135. D 136. C 137. B 138. B 139. C 140. A 141. A
142. A 143. D 144. B 145. B 146. B 147. C 148. B 149. B 150. D 151. A
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152. B 153. A 154. C 155. C 156. B 157. B 158. D 159. A 160. A 161. B
162. C 163. C 164. A 165. B 166. B 167. B 168. B 169. D 170. C 171. D
172. D 173. B 174. B 175. C 176. C 177. B 178. D 179. A 180. D 181. C
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182. A 183. B 184. B 185. A 186. C 187. B 188. A 189. A 190. A 191. A
192. B 193. A 194. D 195. B 196. B 197. C 198. B 199. C 200. D 201. A
202. C 203. B 204. C 205. B 206. A 207. D 208. B 209. C 210. C 211. D
212. D 213. C 214. A 215. C 216. D 217. D 218. B 219. A 220. A 221. D
222. C 223. B 224. A 225. A 226. A 227. C 228. C 229. B 230. D 231. D
232. D 233. C 234. B 235. A 236. C 237. D 238. C 239. B 240. A 241. B
242. A 243. C 244. D 245. B 246. A 247. C 248. D 249. D 250. D 251. C
252. C 253. C 254. B 255. D 256. B 257. B 258. C 259. C 260. C 261. C
262. B 263. C 264. C 265. B 266. D 267. C 268. A 269. D 270. B 271. D
272. C 273. D 274. A 275. C 276. B 277. C 278. C 279. C 280. D 281. D
282. C 283. B 284. B 285. B 286. A 287. C 288. B 289. A 290. B 291. A
292. A 293. D 294. D 295. A 296. D 297. B 298. C 299. B 300. D 301. C
302. A 303. C 304. A 305. D 306. B 307. A 308. B 309. D 310. C 311. D
312. D 313. A 314. A 315. A 316. D 317. A 318. A 319. C 320. D 321. C
322. B 323. B 324. C 325. D 326. C 327. C 328. B 329. A 330. D 331. D
332. D 333. B 334. A 335. A 336. C 337. D 338. D 339. B 340. A 341. D
201
342. B 343. A 344. C 345. B 346. D 347. B 348. D 349. D 350. D 351. D
352. A 353. C 354. C 355. C 356. B 357. B 358. D 359. C 360. C 361. B
362. D 363. B 364. C 365. A 366. B 367. D 368. A 369. B 370. B 371. A
372. A 373. D 374. A 375. C 376. D 377. A 378. D 379. C 380. A 381. A
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6. Financial management
1. If NAV > market price of a fund, then

am
4. The return after the pay off period is
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the fund not considered in case of
A. is selling at a discount A. Payback period method
B. is selling at a premium B. Interest rate method
hr
C. is an index fund C. Present value method

D. is an exchange traded fund. D. Discounted cash flow method
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2. Rate of interest which is usually dis- 5. Securities future value is Rs

cussed by investors whenever rate of 1,000,000 and present value of se-
return is discussed is classified as curities is Rs 500,000 with an interest
Ja
A. yield to maturity rate of 4.5%, ’N’ will be

B. yield to return A. 16.7473 years
C. yield to earning B. 0.0304 months
D. yield to investors C. 15.7473 years
D. 0.7575 years
3. Most investors are risk averse which
means 6. A modified internal rate of return is
A. they will assume more risk only considered as present value of costs
if they are compensated by higher ex- and is equal to
pected return A. PV of hurdle rate
B. they will always invest in the in- B. FV of hurdle rate
vestment with the lowest possible risk C. PV of terminal value
C. they will always invest in the in- D. FV of terminal value
vestment with the lowest possible risk
D. they avoid the stock market due to 7. According to Markowitz, an efficient
the high degree of risk portfolio is one that has the
204 Chapter 6. Financial management
A. largest expected return for the A. lowest risk

smallest level of risk B. highest risk
B. largest expected return and zero C. highest utility
risk D. least investment
C. largest expected return for a given 13. The volume of sales is influenced by
level of risk of a firm.
D. smallest level of risk A. finance policy
B. credit policy
8. Legal document in which rights of is- C. profit policy
suing corporation and bondholder’s D. fund policy
state is classified as 14. Lottery payoffs and payment for
A. legal rights classification rental apartments are examples of
B. indenture A. lump sum amount
C. ownership statement B. deferred annuity
D. guarantee statement C. annuity due
D. payment fixed series
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9. The amount of current assets that
15. I modern investment analysis, the risk
varies with seasonal requirements is
for a stock is related to its
referred to as working capital. A. leverage factor
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A. Permanent B. standard deviation
B. Net C. beta coefficient
C. Temporary D. coefficient of variation
hr
D. Gross
16. An option which can be exercised any
10. If coupon rate is more than going rate desired time before an expiry date is
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of interest then bond will be sold classified as

A. Australian option
A. more than its par value B. money option
B. seasoned par value C. European option
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C. at par value D. American option

D. below its par value
17. Value of stock is Rs 250 and call op-
11. Which of the following factors influ- tion obligation is Rs 100 then current
ence(s) the capital structure of a busi- value of portfolio would be
ness entity? A. Rs 125.00
B. Rs 150.00
A. Bargaining power with the suppli- C. Rs 350.00
ers D. Rs 2.50
B. Demand for the product of the
company 18. Price for debt is called
C. Technology adopted A. debt rate
B. investment return
D. Adequate of the assets to meet any C. discount rate
sudden spurt in demand D. interest rate
12. The optimal portfolio is the efficient 19. If two independent projects having
portfolio with the hurdle rate then both projects should
205
A. be accepted 25. In regression of capital asset pricing

B. not be accepted model, an intercept of excess returns
C. have capital acceptance is classified as
D. have return rate acceptance A. Sharpe’s reward to variability ra-
tio
20. Type of options that permit bond B. tenor’s reward to volatility ratio
holder to buy stocks at stated price C. Jensen’s alpha
are classified as D. tenor’s variance to volatility ratio
A. provision
26. Required return is 11% and premium
B. guarantee
for risk is 8% then risk free return will
C. warrants
be
D. convertibles A. 3.00%
B. 19.00%
21. A computerized trading network that C. 0.72%
matches buy and sell orders electroni- D. 1.38%
cally entered by customers is a
am
A. national markets system 27. Subset of primary market where firms
B. electronic communications net- go publicly by issuing stocks in finan-
works cial markets is considered as
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C. internet investment service A. initial public offering market
D. global investment network. B. stock market
C. issuance market
22. Type of basic financial statements D. First stock market
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consist of 28. A model for optimizing the selection

A. balance sheet and income state-
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of securities is the model.

ment A. Miller-Orr
B. statement of retained earning B. Black-Sholes
C. statement of cash flows C. Markowitz
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D. all of above D. Gordon
23. Second factor in Fama French three 29. Dividend per share is Rs 15 and sell
factor model is the it for Rs 120 and floatation cost is Rs
A. size of industry 3.0 then component cost of preferred
B. size of market stock will be
C. size of company A. 12.82 times
D. size of portfolio B. 0.1282 times
C. 12.82%
24. The expected return on an investment D. Rs 12.82
in stock is 30. An opposite of perfect positive corre-
A. the expected dividend payments lation + 1.0 is called
B. the anticipated capital gains A. negative correlation
C. the sum of expected dividends and B. multiple correlation
capital gains C. divisor correlation
D. less than the realized return D. none of above
31. Stock selling price is Rs 35, expected C. The average rate of return it must
dividend is Rs 5 and expected growth earn on its investments to satisfy the
rate is 8% then cost of common stock various investors
would be D. The minimum rate of return it
A. 40.00% must earn on its investments to keep
B. 22.29% its investors satisfied
C. 14.28%
D. 80.00% 37. Value of stock is Rs 1000 and current
value of portfolio is Rs 1500 then obli-
32. Constant growth rate is 7.2% and an gation to cover call option will be
expected rate of return is 12.5% then A. Rs 6,667.00
expected dividend yield will be B. Rs 2,500.00
C. Rs 2,000.00
A. 5.30% D. Rs 500.00
B. 19.70%
C. -5.30% 38. A formula such as net income avail-
D. 17.36% able to common stockholders divided
am
by common equity is used to calculate
33. Beta coefficient is used to measure A. return on earning power
market risk which is an index of B. return on investment
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A. coefficient risk volatility C. return on common equity
B. market risk volatility D. return on interest
C. stock market volatility
39. Until word of preferred is used, an
D. portfolio market portfolio
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equity in balance sheet is treated as

34. Bonds that can be converted into A. common equity
B. preferred equity
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shares of common stock are classified

C. due equity
as D. common perpetuity
A. convertible bonds
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B. stock bonds 40. Bond call provision that is not prac-

C. shared bonds ticed even after several years of is-
D. common bonds suance is classified as
A. original provision
35. If the dispersion around a security’s B. deferred call
return is larger C. deferred provision
A. the expected return is smaller D. permanent provision
B. the standard deviation is smaller
41. Non cash revenues are Rs 500,000
C. the stock’s price is higher
and net income is Rs 950,000 then
D. the security’s risk is higher
net cash flow would be
36. The cost of capital of a firm is A. Rs 475,000.00
A. The dividend paid on the equity B. Rs 485,000.00
C. Rs 1,450,000.00
capital D. Rs 450,000.00
B. The weighted average of the cost
of various long-term and short-term 42. A formula of after-tax component
sources of finance cost of debt is
207
A. interest rate-tax savings 48. Rate of return that an investment pro-

B. marginal tax-required return vides its investor is classified as
C. interest rate + tax savings A. investment return rate
D. borrowing cost + embedded cost B. internal rate of return
C. international rate of return
43. In financial planning, a higher strike D. intrinsic rate of return
price leads to call option
49. An initial cost is Rs 6000 and proba-
A. price is higher
bility index is 5.6 then present value
B. rate is lower
of cash flows will be
C. price is lower
A. Rs 25,000.00
D. rate is higher B. Rs 28,000.00
C. Rs 33,600.00
44. Case in which average investors risk D. Rs 30,000.00
aversion is greater than slope of line
and risk premium respectively is 50. Value of payment is Rs 25 and an in-
A. steeper, greater terest rate is 2%, then present value
am
B. steeper, smaller will be
C. steeper, zero A. Rs 12.54
D. Both A and B B. Rs 12,500.00
C. Rs 12,504.00
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45. Size of firm and market or book ratio D. Rs 8,400.00
are variables which are related to 51. Financial securities that can be con-
A. premium returns
verted into cash at closing to their
hr
B. unquoted returns
book value price are classified as
C. quoted returns A. inventories
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D. stock returns B. short-term investments

C. cash equivalents
46. Calculation of formula in common D. long-term investments
stock valuation does not include
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A. intrinsic value 52. Payment of security if it is made at

B. dividend of stockholder end of each period such as beginning
C. number of stock issued of year is classified as
D. expected growth rate A. annuity due
B. payment fixed series
47. Which of the following is / are as- C. ordinary annuity
sumption behind the realized yield ap- D. deferred annuity
proach? 53. Which of the following statement is
A. The yield earned by investors has true if the Net Present Value (NPV)
been, on average, in conformity with of a positive?
their expectations A. The IRR must be greater than 0.
B. The dividends will continue grow- B. The discount rate exceeds the cost
ing at a constant rate forever of capital.
C. The market price will continue C. The profitability index equals 1
growing at a constant rate forever D. Accepting the project has an inde-
D. Both a and b terminate effect on shareholders
54. Growth in earnings per share is pri- C. A portfolio with securities all hav-
marily resultant of growth in ing negative correlation with each
A. dividends other
B. asset value D. A portfolio with securities all has
C. fundamental value skewed correlation with each other
D. yearly value
60. Statement of cash flows are included
55. Market value of the shares are decided A. operating activities
by B. investing activities
A. the respective companies C. financing activities
B. the investment market D. all of above
C. the government
D. shareholders 61. An actual rate of return is subtracted
from expected growth rate then it is
56. Realized and required return for indi-
divided from dividend stockholders
vidual stocks are classified as function
expects use for calculating
of fundamental
am
A. dividend growth model
A. arbitrage factors
B. actual growth model
B. economic factors
C. constant growth model
C. portfolio factors
D. variable growth model
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D. realized theory factors
57. Mr. A is a daring portfolio manager. 62. In arbitrage pricing theory, higher re-
He wants to increase the return in his quired rate of return is usually paid on
hr
portfolio. He should choose stocks stock

A. higher market risk
from
B. higher dividend
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A. defensive industry
B. industry at a growth stage C. lower dividend
C. industry in the maturity period D. lower market risk
D. industry with more export poten-
Ja
63. A schedule which shows interest con-

tial
stitutes reduced principal and unpaid
58. A point where profile of net present balance is considered as
value crosses horizontal axis at plot- A. repaid schedule
ted graph indicates project B. depreciated schedule
A. costs C. amortization schedule
B. cash flows D. appreciated schedule
C. internal rate of return
D. external rate of return 64. High price to earning ratio shows
company’s
59. Which of the following portfolios has A. low dividends paid
the least reduction of risk? B. high risk prospect
A. A portfolio with securities all hav- C. high growth prospect
ing positive correlation with each D. high marginal rate
other
B. A portfolio with securities all has 65. The Debt-Equity ratio of a
zero correlation with each other Company
209
A. Measure its financial leverage A. special stockholders

B. Does not affect the Earnings per B. common stockholders
share C. public stocks
C. Affects the dividend decision of D. enactive stocks
the company
D. None of the above. 72. Cost of capital is equal to required re-
turn rate on equity in case if investors
66. Risk which is caused by events such are only
as strikes, unsuccessful marketing A. valuation manager
programs and other lawsuits is classi- B. common stockholders
fied as C. asset seller
A. stock risk D. equity dealer
B. portfolio risk
C. diversifiable risk 73. When a company uses increased fixed
D. market risk cost for production, this is an example
of what type of leverage.
67. Second step in binomial approach of A. operating leverage
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option pricing is to define range of B. financial leverage
values C. variable cost leverage
A. at expiration D. combined leverage
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B. at buying date
C. at exchange closing time 74. Free cash flow is Rs 15000 and net
D. at exchange opening time investment in operating capital is Rs
9000 then net operating profit after
hr
68. EBIT means taxes will be

A. Operating Income A. Rs 24,000.00
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B. Operating Profit B. Rs 6,000.00

C. Earnings before interest and tax C. -Rs 6,000.00
D. All of the above D. -Rs 24,000.00
Ja
69. Price of an outstanding bond de- 75. Risk lover’s utility curves have
creases when market rate is A. Positive slope
A. increased B. Negative slope
B. decreased C. Convex to the origin
C. earned D. Negative slope and convex to the
D. never changed origin
70. A project which have one series of 76. In calculation of betas, an adjusted be-
cash inflows and results in one or tas are highly dependent on historical
more cash outflows is classified as A. unadjusted betas
A. abnormal costs B. adjusted historical betas
B. normal cash flows C. fundamental historical betas
C. abnormal cash flow D. fundamental varied betas
D. normal costs
77. Financial security issues by major
71. Owners of corporation having certain banks and risk depends on strength
rights and privileges are considered as of issuer is classified as
A. negotiable certificate of deposit 83. Second step in calculating value of

B. mutual funds stock with non-constant growth rate
C. U.S treasury bills is to find out an
D. commercial paper A. expected intrinsic stock
B. extrinsic stock
78. The relationship between potential un- C. expected price of stock
systematic risk and reward is given by D. intrinsic stock
A. Excess return to beta ratio 84. The Degree of Financial Leverage
B. Excess return to security (DFL)
C. Excess return to security A. Measures financial risk of the firm
D. Excess return to beta square ratio B. Is zero at financial break-even
79. Difference between actual return on point
stock and predicted return is consid- C. Increases as EBIT increases
D. Both a and b
ered as
am
A. probability error 85. Traditional theorists believe that.
B. actual error
A. there exists an optimal capital
C. prediction error
structure
D. random error
B. no optimal capital structure
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80. Offering cash discount to customers C. equal optimal capital structure
result in D. 100% debt financial organizations
A. reducing the average collection pe-
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riod
B. increasing the average collection 86. If market interest rates are expected
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period to rise, you would expect

C. increasing sales A. bond prices to fall more than stock
D. decreasing sales prices
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B. bond prices to rise more than stock

81. Money market funds were a financial prices
innovation partly inspired to circum- C. stock prices to fall more than bond
vent prices
A. Regulation Q, which is no longer D. stock prices to rise and bond
in existence prices to fall.
B. Regulation M
C. Regulation D 87. Process of calculating future value of
D. Regulation B, which is still in ex- money from present value is classified
istence as
A. compounding
82. Traditional approach confines finance B. discounting
function only to funds C. money value
A. raising D. stock value
B. mobilizing
C. utilizing 88. A market interest rate for specific type
D. financing of bond is classified as bonds
211
A. required rate of return 94. In alternative investments, constant

B. required option cash flow stream is equal to initial
C. required rate of redemption cash flow stream in approach which
D. required rate of earning is classified as
A. greater annual annuity method
89. Financial security kept by non- B. equivalent annual annuity
financial corporations is C. lesser annual annuity method
A. deposit cheque D. zero annual annuity method
B. distribution cost
C. short term treasury bills 95. If a preferred stock issue is cumula-
D. short term capital cost tive, this means
A. dividends are paid at the end of
90. Beginning price is Rs 25 and capital the year
gains yield is 5% then capital gain B. dividends is legally binding on the
would be corporation
A. Rs 50.00 C. unpaid dividends will be paid in
am
B. Rs 1.25 the future
C. 50 times D. unpaid dividends are never repaid
D. Rs 23.75
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91. Shares or stocks which are protected 96. Purchase cost of assets over its useful
against withdrawals of funds by an life is classified as
original stock owners are classified as A. appreciation
hr
A. protected shares B. depreciation

B. founders shares C. appreciated assets
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C. withdrawal shares D. appreciated liabilities

D. original shares 97. Modified rate of return and modified
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internal rate of return with exceed cost

92. Prices of bonds will be decreased if
of capital if net present value is
an interest rates
A. positive
A. rises
B. negative
B. declines
C. zero
C. equals
D. one
D. none of above
98. An original investment is Rs 30 and
93. Which of the following is not an as- an expected capital gain is Rs 10 then
sumption in the Miller& Modigliani an expected final stock price will be
approach? A. Rs 20.00
A. There are no transaction costs B. Rs 40.00
B. Securities are infinitely divisible C. -Rs 40.00
C. Investors have homogeneous ex- D. -Rs 20.00
pectations
D. All the firms pay tax on their in- 99. The risk that arises due to change in
come at the same rate the purchasing power is called?
A. Financial risk A. Rs 20.00

B. Interest rate risk B. Rs 125.00
C. Business risk C. Rs 2,000.00
D. Inflation risk D. Rs 52.50
100. An equity multiplier is multiplied to 106. Constant growth rate is 9.5% and an
return on assets to calculate expected rate of return is 13.5% then
A. return on assets expected dividend yield would be
B. return on multiplier A. 23.00%
C. return on turnover B. 1.42%
D. return on stock C. 4.00%
D. 14.50%
101. Forecast by analysts, retention 107. Tendency of measuring correlation
growth model and historical growth of two variables is classified as
rates are methods used for an A. tendency coefficient
A. estimate future growth B. variable coefficient
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B. estimate option future value C. correlation coefficient
C. estimate option present value D. double coefficient
D. estimate growth ratio
108. A major difference between individ-
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102. An indication in a way that vari- ual and institutional investors is their
ance of y-variable is explained by x- very different
variable which is shown as A. approaches to market analysis
B. evaluations of return
hr
A. degree of dispersion is one

B. degree of dispersion is two C. time horizons
C. degree of dispersion is three D. types of securities held in their
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D. degree of dispersion is four portfolios
103. If an investor is attempting to buy a 109. Set of rules made by corporation

founders such as directors election
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stock that is very volatile, it would be

best to use procedure are classified as
A. market order A. stock laws
B. by laws
B. limit order
C. liability laws
C. stop-loss order D. corporate laws
D. contingency order.
110. The decision to invest a substantial
104. Stock which has higher correlation sum in any business venture expect-
with market tend to have ing to earn a minimum return is called
A. high beta, less risky
B. low beta, more risky A. working capital decision
C. high beta, more risky B. an investment decision
D. low beta, less risky C. a production decision
D. a sales decision
105. Preferred dividend is Rs 50 and re-
quired rate of return is 2.5% then 111. A range of probability distribution
value of preferred stock would be with 95.46% lies within
213
A. (+ 1σ and-1σ ) A. equalize domain of payoff

B. (+ 2σ and-2σ ) B. equalize ending price
C. (+ 3σ and-3σ ) C. riskless investment
D. (+ 4σ and-4σ ) D. high risky investment
112. Stock which has fixed payments and 118. Financial corporations which serve
failure of payments which do not lead individual savers and commercial
to bankruptcy is classified as mortgage borrowers are classified as
A. common stock A. savings associations
B. preferred stock B. loans associations
C. preferred and common associa-
C. bonds equity
D. common shares tions
D. savings and loans associations
113. An investor who writes stock call op- 119. Payment divided by par value is clas-
tions in his own portfolio is classified sified as
as A. divisible payment
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A. due option B. coupon payment
B. covered option C. par payment
C. undue option D. per period payment
D. uncovered option
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120. One way to obtain earnings forecasts
114. Price per share divided by earnings is the mechanical procedure known
per share is formula for calculating as
hr
A. price earning ratio A. cross-reference analysis

B. earning price ratio B. exponential trending
C. pricing ratio C. time series analysis
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D. earning ratio D. data mining
115. According to put call parity relation- 121. Situation in financial options in
which strike price is less than current
Ja
ship, call option plus present value of

exercise price minus stock is to calcu- price of stock is classified as
A. in-the-money
late
B. out-of-the-money
A. present value of option
C. out-of-the-portfolio
B. call option D. in-the-portfolio
C. put option
D. future value of option 122. Third step in calculating value of
stock with non-constant growth rate
116. Stock option is considered more is to find
valuable in situation when stock have A. PV of expected dividends
A. price hike in market B. FV of expected dividends
B. market stability C. PV of intrinsic rate
C. not volatile D. FV of intrinsic rate
D. highly volatile
123. An inflation rate includes in bond’s
117. In binomial approach of option pric- interest rates is one which is inflation
ing model, fourth step is to create rate
A. at bond issuance A. expansion

B. expected in future B. salvages
C. expected at time of maturity C. taxation
D. expected at deferred call D. discounts
124. Formula such as net income avail- 130. A company may raise capital from
able for common stockholders di- the primary market through
vided by total assets is used to cal- A. Public issue
B. Rights issue
culate C. Bought out deals
A. return on total assets D. All of the above
B. return on total equity
C. return on debt 131. According to traditional approach,
D. return on sales the average cost of capital
A. Remains constant up to a degree
125. Stated value of bonds or face value of leverage and rises sharply there-
is considered as after with every increase in leverage
A. state value
am
B. Rises constantly with increase in
B. par value leverage
C. bond value C. Decrease up to certain point, re-
D. per value
mains unchanged for moderate in-
iR
126. In expected rate of return for con- crease in leverage and rises beyond
stant growth, an expected yield on a certain point
capital must be D. Decrease at an increasing rate
hr
A. equal to zero with increase in leverage

B. greater than expected growth rate 132. Procedure of finding present values
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C. less than expected growth rate

in time value of money is classified as
D. equal to expected growth rate A. compounding
127. In the weekly efficient market, the B. discounting
Ja
C. money value
stock price reflects. D. stock value
A. the company’s financial perfor-
mance 133. Net operating profit after taxes is Rs
B. the past price of the scrip 4500, net investment in operating cap-
C. the demand for the scrip ital is Rs 8500 and then free cash flow
D. the past price and traded volumes would be
A. -Rs 4,000.00
128. In cash flow estimation and risk anal- B. Rs 4,000.00
ysis, real rate will be equal to nominal C. -Rs 18,000.00
rate if there is D. Rs 18,000.00
A. no inflation
B. high inflation 134. Reinvestment risk of bonds is higher
C. no transactions on
D. no acceleration A. short maturity bonds
B. high maturity bonds
129. In cash flow estimation, depreciation C. high premium bonds
shelters company’s income from D. high inflated bonds
215
135. The company’s average cost of capi- 140. Real risk-free interest rate in ad-
tal is dition with an inflation premium is
A. the average cost of equity shares equal to
and debentures A. required interest rate
B. the average cost of equity prefer- B. quoted risk-free interest rate
ence shares C. liquidity risk-free interest rate
C. the average cost of shares and all D. premium risk-free interest rate
sources of long-term funds
D. the average cost of short term 141. If bond’s call provision is practiced
funds in first year of issuance then an addi-
tional payment is classified as
136. An effect of interest rate risk and A. issuance provision
investment risk on a bond’s yield is B. bond provision
classified as C. call provision
A. reinvestment premium D. First provision
B. investment risk premium
am
142. In cash flow analysis, two projects
C. maturity risk premium
are compared by using common life
D. defaulter’s premium
is classified as
137. In finance, "working capital" means A. transaction approach
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the same thing as B. replacement chain approach
A. total assets C. common life approach
B. fixed assets D. Both B and C
hr
C. current assets 143. Good inventory management is good

D. current assets minus current liabil-
management.
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ities. A. financial
B. Marketing
138. A situation in which an outside
C. stock
group solicit proxies to take control
Ja
D. purchasing
of business is classified as
A. outside group 144. According to probability distribution
B. solicit process of rates of return, a close outcome to
C. proxy fight an expected value is shown by
D. controlled management A. value distribution
B. expected distribution
139. Markowitz’s main contribution to
C. more peaked distribution
portfolio theory is D. less peaked distribution
A. that risk is the same for each type
of financial asset 145. An average inflation rate which is
B. that risk is a function of credit, liq- expected over life of security is clas-
uidity and market factors sified as
C. risk is not quantifiable A. inflation premium
D. insight about the relative impor- B. off season premium
tance of variances and co variances in C. nominal premium
determining portfolio risk D. required premium
146. Formula written as market risk pre- 152. Finance company providing loans at
mium divided by standard deviations 12% with 2 compounding periods per
of returns on market portfolio is used year, periodic rate is classified as
to calculate A. 3% per quarter
A. capital market line B. 6% per quarter
B. security market line C. 6% per year
C. fixed market line D. 0.1667% per year
D. variable market line
153. Merrill Lynch, Morgan Stanley and
147. limited partners in partnership busi- Credit Suisse Group plan for raising
ness have capital is classified as
A. no control A. investment banking houses
B. whole control B. exchange houses
C. corporate authority C. transfer houses
D. general authority D. foreign exchange houses
am
148. Bond risk premium is added in to 154. A major difference between real and
bond yield to calculate the nominal returns is that
A. cost of American option A. real returns adjust for inflation and
B. cost of European option nominal returns do not
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C. cost of common stock B. real returns use actual cash flows
D. cost of preferred stock and nominal returns use expected
cash flows
149. A right which controls and prevents
hr
C. real returns adjust for commis-

transfer from current stockholders to sions and nominal returns do not
other new stockholders is considered D. real returns show the highest pos-
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as sible return and nominal returns show

A. corporate charter the lowest possible return
B. selling charter
Ja
C. laws 155. Difference between bond’s yield and

D. purchase chart any other security yield having same
maturities is considered as
150. If stock has a great risk related to it
A. maturity spread
than a required return is B. bond spread
A. higher C. yield spread
B. lower D. interest spread
C. zero
D. all of above 156. Non-systematic risk is also known
as
151. A curve which shows attitude to-
A. riskless
wards risk just way reflected in return B. market risk
trade-off function is classified as C. random risk
A. difference curve D. company-specific risk
B. indifference curve
C. efficiency curve 157. Insufficient working capital results
D. affectivity curve in
217
A. Block of cash 163. If an investor searches for patterns

B. Loosing interests in security returns by examining vari-
C. Lack of production ous techniques applied to a set of data,
D. Lack of smooth flow of produc- this is known as
tion A. fundamental analysis
B. technical analysis
158. In financial markets, period of ma- C. data mining
turity less than one year of financial D. random-walk theory
instruments is classified as
A. short-term 164. Financial leverage helps one to esti-
B. long-term mate
C. intermediate term A. business risk
D. capital term B. financial risk
C. both risks
159. Financial Management is mainly D. production risk
concerned with
165. Current option is Rs 700 and current
am
A. All aspects of acquiring and utiliz-
value of stock in portfolio is Rs 1400
ing financial resources for firms activ-
then present value of portfolio will be
ities A. -Rs 700.00
B. Arrangement of funds
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B. Rs 2,100.00
C. Efficient Management of every C. Rs 700.00
business D. Rs 2,000.00
D. Profit maximization
hr
166. Low price for earning ratio is result

160. Corner portfolio are calculated of
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where a A. low risky firms

A. Security enters B. high risky firms
B. Security leaves C. low dividends paid
C. Security enters or leave D. high marginal rate
Ja
D. Security with high extreme value

enters 167. The material wealth of a society is
equal to the sum of
161. Movement of price or rise or fall of A. all financial assets
prices of options is classified as B. all real assets
A. option lattice C. all financial and real assets
B. pricing movement D. all physical assets
C. price change 168. If payout ratio is 0.45 then retention
D. binomial lattice
ratio will be
162. The price to book value ratio tends A. 0.55
B. 1.45
to be close for
C. 1.82
A. high-tech companies D. 0.45
B. banks
C. utilities 169. Paid dividend with dividend yield
D. service companies 25% is Rs 5 then cost price would be
A. 30.00% 175. In option pricing, an increasing in

B. Rs 30.00 option price due to
C. 20.00% A. time of expiry increases
D. Rs 20.00 B. time of expiry decreases
C. exchange time increases
170. If net present value is positive then D. exchange time decreases
profitability index will be
A. greater than two 176. Under which of the following ap-
B. equal to proaches cost of equity capital is as-
C. less than one sumed to be constant with the change
D. greater than one in leverage?
A. Net income approach
171. Risk in average individual stock can
B. Modigliani and Miller approach
be reduced by placing an individual C. Net operating income approach
stock in D. Traditional approach
A. low risk portfolio
B. diversified portfolio
am
177. In weighted average cost of capital,
C. undiversified portfolio rising in interest rate leads to
D. high risk portfolio A. increase in cost of debt
B. increase capital structure
iR
172. Payment if it is divided with interest C. decrease in cost of debt
rate will be formula of D. decrease capital structure
A. future value of perpetuity
B. present value of perpetuity 178. Expected capital gain is Rs 20 and
hr
C. due perpetuity expected final price is Rs 50 then orig-

D. deferred perpetuity inal investment will be
iS
A. Rs 30.00
173. For which of the following factors
B. -Rs 30.00
are the debentures more attractive to
C. Rs 70.00
the investors?
Ja
D. -Rs 70.00
A. The principal is redeemable at ma-
turity 179. Special situation in which large
B. A debenture-holder enjoys prior projects are financed by with and se-
claim on the assets of the company curities claims on project’s cash flow
over its shareholders in the event of is classified as
liquidation A. claimed securities
C. trustee is appointed to preserve the B. project financing
interest of the debenture holders C. stock financing
D. All the above. D. interest cost
174. The gross working capital is a 180. Effective cost of debentures is
concern concept. as compared to shares.
A. Going concern A. higher
B. money measurement B. lower
C. revenue concept C. equal
D. cost concept D. medium
219
181. Dividend per share is Rs 18 and sell 187. Investment bankers perform the fol-
it for Rs 122 and floatation cost is Rs lowing role
4 then component cost of preferred A. market new stock and bond issues
stock will be for firms
A. 15.25% B. provide advice to the firms as to
B. 0.1525 times market conditions, price, etc
C. 15.25 C. design securities with desirable
D. 0.15% properties
D. all of the above
182. First step in binomial approach of
option pricing is to 188. Total common equity divided by
A. define ending price of stock common shares outstanding which is
B. define beginning price of stock used to calculate
C. define range of values A. book value of share
D. define domain of values B. market value of shares
C. earning per share
am
183. Capital budgeting decisions are ana- D. dividends per share
lyzed with help of weighted average
and for this purpose 189. Another name for stock brokers
A. component cost is used is
iR
B. common stock value is used A. specialists
B. registered representatives
C. cost of capital is used
C. security analysts
D. asset valuation is used
D. portfolio managers
hr
184. Value of stock is Rs 300 and pre- 190. Risk on a stock portfolio which can
ferred dividend is Rs 60 then required be reduced by placing it in diversified
iS
rate of return would be portfolio is classified as

A. 18% A. stock risk
B. 20% B. portfolio risk
Ja
C. 22% C. diversifiable risk

D. 24% D. market risk
185. Stock in small companies, owned by 191. is example of financial inter-
few people but not actively traded is mediaries.
classified as A. Commercial banks
A. closely held stock B. Investment bank
B. largely held stock C. Insurance companies
C. attributed stock D. All of the above
D. successful stock
192. In Corporation characteristics,
186. Rate of required return by debt hold- losses are subject to funds invested
ers is used for estimation the actually is considered as
A. cost of debt A. limited liability
B. cost of equity B. unlimited liability
C. cost of internal capital C. general liability
D. cost of reserve assets D. controlled ownership liability
193. Portfolio which consists of perfectly 199. Which of the following is true re-
positive correlated assets having no garding the expected return of a port-
effect of folio?
A. negativity A. It is a weighted average only for
B. positivity stock portfolios
C. correlation B. It can only be positive
D. diversification C. It can never be above the highest
individual return
194. First factor in Fama French three fac- D. All of the above are true
tor model is
A. CAPM stock beta 200. Which of the following approaches
B. economic stock beta advocates that the costs of equity cap-
C. CAPM portfolio beta ital and debt capital remain unaltered
D. CAPM realized beta when the degree of leverage varies?
A. Net Income Approach
195. Arbitrage is the level processing B. Traditional Approach
am
technique introduced in C. Modigliani-Miller Approach
A. Net income approach D. Net operating Income
B. MM approach
C. Operating approach
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201. Type of partnership in which liabili-
D. Traditional approach ties are limited for business owners is
classified as
196. The is a window through A. unlimited partnership
hr
which the investor can see the com- B. limited partnership

pany. C. joint corporate
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A. Syndicate offer D. joint venture

B. IPO
C. Prospectus 202. In mutually exclusive projects,
D. Shelf rule.
Ja
project which is selected for compari-

son with others must have
197. Which of the following is/are the A. higher net present value
problem(s) encountered in financial B. lower net present value
statement analysis? C. zero net present value
A. Development of benchmarks D. all of above
B. Window dressing
C. Interpretation of results 203. Banks such as Bank of America
D. All of the above serves a range of savers and borrow-
ers are classified as
198. When two portfolios have identical A. transfer banks
values and payoffs then it is classified B. commercial banks
as C. serving banks
A. binomial parity relationship D. nation’s banks
B. put parity relationship
C. put option parity relationship 204. A high portfolio return is subtracted
D. put call parity relationship from low portfolio return to calculate
221
A. HML portfolio A. 4.14%

B. R portfolio B. 0.59%
C. subtracted portfolio C. 0.69%
D. ML portfolio D. 0.79%
205. Rate charged by bank 12.5% on 211. In capital budgeting, term of bond
credit loans and 3% semi-annually on which has great sensitivity to interest
instalment loans is considered as rates is
A. periodic rate A. long-term bonds
B. perpetuity rate of return B. short-term bonds
C. internal term bonds
C. annual rate
D. external term bonds
D. annuity rate of return
212. Cash flows that could be generated
206. An investment outlay cash flow is from an owned asset by company but
Rs 2000, an operating cash flow is Rs not use in project are classified as
1500 and salvage cash flow is Rs 3000 A. occurred cost
am
then free cash flow would be B. mean cost
A. Rs 500.00 C. opportunity costs
B. Rs 2,500.00 D. weighted cost
C. Rs 650.00
iR
D. Rs 6,500.00 213. Project whose cash flows are suffi-
cient to repay capital invested for rate
207. Which of the following is not a of return then net present value will
hr
source of long-term finance? be

A. Equity shares A. negative
B. Preference shares B. zero
iS
C. Commercial papers C. positive

D. Reserves and surplus D. independent
214. Trading place where traders meet
Ja
208. Other factors held constant, greater

project liquidity is because of one another to communicate is classi-
A. less project return fied as
B. greater project return A. outcry auction system
C. shorter payback period B. outcry system
C. face to face communication
D. greater payback period
D. money communication
209. Project which is started by firm for 215. A loan that is repaid on monthly,
increasing sales is classified as quarterly and annual basis in equal
A. new expansion project payments is classified as
B. old expanded project A. amortized loan
C. firm borrowing project B. depreciated loan
D. product line selection C. appreciated loan
D. repaid payments
210. Security present value is Rs 100 and
future value is Rs 150 after 10 years 216. Cash flow which is available for all
and value of ’I = interest rate’ will be investors of company is classified as
A. extrinsic stock A. expected dividend yield

B. intrinsic stock B. capital earning
C. investing cash C. casual growth
D. free cash flow D. specialized growth rate
217. A risk associated with project and 223. Corporate governance charter of
way considered by well diversified rules of behaving is applicable on
stockholder is classified as A. competitors
A. expected risk B. shareholders
B. beta risk C. directors
C. industry risk D. all of above
D. returning risk
224. If retention rate is 0.68 then payout
218. Noncash revenues and noncash rate will be
charges if it subtracted from net in- A. 1.47
come is equal to B. 1.68
A. free cash flow
am
C. 0.32
B. retained cash flow D. 0.68
C. net cash flow
D. financing cash flow 225. Present value of dividends which is
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expected to be provided in future is
219. Capital gain is Rs 3 and capital gains
classified as an
yield is 6% then beginning price will
A. intrinsic value of stock
be B. extrinsic value of stock
hr
A. Rs 18.00
C. intrinsic bonds
B. Rs 36.00
D. extrinsic bonds
iS
C. Rs 50.00
D. Rs 55.00 226. The bonus issue is made to make the
220. The cost of capital of a long term nominal value and the value of
Ja
debt is generally. the shares of the company.

A. Lower than the owned funds A. Face
B. Equal to that of owned funds B. Market
C. More or less than owned funds C. Stock
D. Higher than that of owned funds D. Real
221. Profit margin multiply assets 227. An internal rate of return in capital
turnover multiply equity multiplier budgeting can be modified to make it
is used to calculate representative of
A. return on turnover A. relative outflow
B. return on stock B. relative inflow
C. return on assets C. relative cost
D. return on equity D. relative profitability
222. An expected rate of return is sub- 228. Price at which European and Ameri-
tracted from capital gains yield to cal- can options can be exercised is classi-
culate fied as
223
A. exercise price A. Rs 1,100.00

B. strike price B. Rs 3,400.00
C. horizon price C. Rs 2,200.00
D. Both A and B D. Rs 3,500.00
229. The return component that gives pe- 235. Constant growth rate is 6.5% and an
riodic cash flows to the investor is expected dividend yield is 3.4% then
known as the an expected rate of return would be
A. capital gain A. 9.90%
B. interest rate B. 10.00%
C. yield C. 3.10%
D. unrealized gain. D. 19.12%
230. Protective covenant devised in mar- 236. Real rate of return, risk and expected
ket to reduce event risk and to control inflation are primary determinants of
debt cost is classified as A. minimum rate of return
am
A. super poison covenant B. accepted return
C. expected return
B. super poison put
D. real risk free rate
C. super poison call
iR
D. super poison redemption 237. The most popular type of Investment
Company is a
231. The formula of EBIT =
A. unit investment trust
A. Sales-Variable cost
B. mutual fund
hr
B. Contribution-Fixed cost C. closed-end investment company

C. Sales-Fixed cost D. real estate investment trust
iS
D. All the above

238. In financial planning, formula MAX
232. Value of option which is considered [current price of stock-strike price, 0]
as its worth as soon as it is expired is
Ja
is used to calculate
classified as A. option return rate
A. minimum option value B. exercise value
B. minimum value C. option value
C. maximum value D. stock value
D. exercise value
239. A higher accounts receivable
233. An estimation by marginal investor, turnover ratio means
a higher expected return is earned on A. lower debt collection period
A. more risky securities B. higher debt collection period
B. less risky securities C. lower sales
C. less premium D. higher sales
D. high premium
240. Present value of portfolio is Rs 500
234. Net income is Rs 2250 and noncash and current option price is Rs 1200
charges are Rs 1150 then net cash then value of stock included in portfo-
flow would be lio will be
A. Rs 1,700.00 246. An option that gives investors right

B. -Rs 1,700.00 to sell a stock at predefined price is
C. Rs 700.00 classified as
D. -Rs 700.00 A. put option
B. call option
241. Current value of stock including in C. money back options
portfolio is subtracted from present D. out of money options
value of portfolio to calculate
A. last month option price 247. In estimating value of cash flows,
B. last year option price compounded future value is classified
C. current option price as its
D. future option price A. terminal value
242. Net working capital is the excess of B. existed value
C. quit value
current asset over
A. Current liability D. relative value
am
B. Net liability
248. In calculation of time value of
C. Total payable
money, ’PMT’ represents
D. Total liability
A. present money tracking
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243. Payments if it is made at end of each B. payment
period such as an end of year is clas- C. payment money tracking
sified as D. future money payment
A. ordinary annuity
hr
B. deferred annuity 249. Market in which bonds are traded

C. annuity due over-the-counter than in an organized
iS
D. Both A and B exchange is classified as

A. organized markets
244. Net asset value takes into B. trade markets
Ja
account C. counter markets

A. both realized and unrealized capi- D. bond markets
tal gains
B. only realized capital gains 250. Negative minimum risk portfolio of
C. only unrealized capital gains any security shows that market secu-
D. neither realized nor unrealized rity sold
capital gains. A. less than original price
B. greater than original price
245. Which of the following is not an ob- C. equal to original price
jective of financial management? D. equal to sum of stocks
A. Maximization of wealth of share-
holders 251. The factor(s) which affect(s) P/E ra-
B. Maximization of profits tio is/are
C. Mobilization of funds at an accept- A. Growth rate
able cost B. Debt proportion
D. Ensuring discipline in the organi- C. Retention ratio
zation. D. All of the above
225
252. Bonds that do not pay original 258. Cost of common stock is 13% and
coupon payment but payment is made bond risk premium is 5% then bond
from additional bonds are classified yield would be
as A. 20.00%
A. payment in-kind bonds B. 2.60%
B. payment off-kind bonds C. 8.00%
C. kind payment D. 18.00%
D. additional bond
259. A technique of lowering risk for
253. What is the most appropriate goal of multinational companies and globally
the firm? designed portfolios is classified as
A. Shareholder wealth maximization A. national diversification
B. Profit maximization B. behavioral diversification
C. Stakeholder maximization C. global diversification
D. EPS maximization D. behavioral finance
254. Call provision practiced by company
am
260. Type of risk in which beta is equal
which states that call price will be
to one is classified as
paid is classified as A. multiple risk stock
A. super refund provision
B. varied risk stock
iR
B. super put redemption
C. total risk stock
C. make-whole call provision
D. super call provision D. average risk stock
hr
255. If future return on common stock is 261. dividend promises to pay

19% and rate on T-bonds is 11% then shareholders at future date
A. Scrip
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current market risk premium will be

A. Rs 30.00 B. Cash
B. 30.00% C. Stock
C. 8.00% D. Property
Ja
D. Rs 8.00
262. Required rate of return in calculating
256. Government spending, if it exceeds bond’s cash flow is also classified as
federal government tax revenues then A. going rate of return
it is classified as B. yield
A. Federal Reserve C. earning rate
B. federal budget D. Both A and B
C. budget surplus
D. budget deficit 263. An analysis of decision making of
investors and managers is classified
257. Bond which is issued in market and as
few days are passed of its issuance is A. risky finance
classified as B. behavioral finance
A. instable bond C. premium finance
B. outstanding bond D. buying finance
C. standing bond
D. stable bond 264. All partners have limited liability in
A. unlimited liability partnership A. greater than dividend paid

B. limited liability partnership B. equal to realized rate of return
C. controlled partnership C. less than realized rate of return
D. uncontrolled partnership D. greater than realized rate of return
265. Which exchange member is assigned

to a specific trading post? 271. The constant growth model of equity
A. Commission broker valuation assumes that
B. Floor trader A. the dividends paid by the company
C. Specialist remain constant
D. Dealer B. the dividends paid by the company
grow at a constant rate of growth
266. Free cash flow is Rs 12000, an oper- C. the cost of equity may be less than
ating cash flow is Rs 4000, an invest- or equal to the growth rate
ment outlay cash flow is Rs 5000 then D. the growth rate is less than the cost
salvage cash flow would be of equity.
am
A. -Rs 21,000.00 272. The measure of business risk is
B. Rs 21,000.00
C. -Rs 3,000.00 A. operating leverage
iR
D. Rs 3,000.00 B. financial leverage
C. total leverage
267. In capital budgeting, an internal rate D. working capital leverage
of return of project is classified as its
hr
A. external rate of return 273. Factoring is a form of financing.

B. internal rate of return A. payable
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C. positive rate of return B. receivables

D. negative rate of return C. borrowings
D. debts
268. Type of stock in which dividends are
Ja
tied to any particular part of a firm is 274. The growth in book value per share
classified as shows the
A. dividend stock A. rise in share price
B. increase in physical asset of the
B. firm part stock
C. tied stock firm
C. increase in net worth
D. tracking stock
D. growth in reserves
269. The Accounting period cycle of NSE 275. Bond which is offered below its face
is value is classified as
A. Wednesday to next Tuesday A. present value bond
B. Tuesday to next Wednesday B. original issue discount bond
C. Monday to next Friday C. coupon issued bond
D. Wednesday to next Wednesday D. discounted bond
270. Constant growth model would not 276. Values recorded as determined in
be used in condition if growth rate is marketplace are considered as
227
A. market values 282. Type of options that do not have

B. book values stock in portfolio to back up options
C. appreciated values is classified as
D. depreciated values A. undue options
B. due options
277. Capital gain is Rs 2 and beginning C. naked options
price is Rs 24 then capital gains yield D. total options
will be 283. Which of the following characteris-
A. 22.00% tics are true, with reference to prefer-
B. 24.00% ence capital?
C. 14.00% A. Preference dividend is not tax de-
D. 12.00% ductible
B. The claim of preference sharehold-
278. Bond yield is 12% and bond risk pre- ers is prior to the claim of equity
mium is 4.5% then cost of common shareholders
stock would be C. Preference shareholders are not
am
A. 37.50% the owners of the concern
B. 7.50% D. All of the above
C. 15.50%
284. A type of security payment in which
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D. 2.67%
payments are made at equal intervals
279. The available capital funds are to be of time and each payment amount is
carefully allocated among competing same is classified as
hr
A. fixed interval investment

projects by careful prioritization. This B. fixed payment investment
is called C. annuity
iS
A. capital positioning D. lump sum amount

B. capital structuring
C. capital rationing 285. According to investors point of view,
Ja
D. capital budgeting an expected rate of return is rate on

stocks which they
280. Markets where assets are bought or A. receive in future
sold within a few days or at some fu- B. received in past
C. yearly growth
ture dates are classified as D. semi-annual growth
A. spot markets
B. future markets 286. Which of the following techniques
C. Both A and B of project appraisal does not consider
D. financial instruments the time value of money?
A. Benefit cost ratio
281. In calculation of net cash flow, depre- B. Net present value
ciation and amortization are treated as C. Internal rate of return
A. current liabilities D. Accounting Rate of Return
B. income expenses 287. Constant growth rate is 8% and an
C. non-cash revenues expected dividend yield is 5.4% then
D. non-cash charges expected rate of return would be
A. -3.40% A. inflated trading

B. 3.40% B. default free trading
C. 13.40% C. less frequently traded
D. -13.40% D. frequently traded
288. Bonds issued by government and 294. Earnings Per Share (EPS) is equal to
backed by U.S government are classi-
fied as A. Profit before tax/No of outstand-
A. issued security ing shares
B. treasury bonds B. Profit after tax/No of outstanding
C. U.S bonds shares
D. return security C. Profit after tax/Amount of equity
share capital
289. An attitude of investor towards deal- D. Profit after tax less equity divi-
ing with risk determines the dends/No of outstanding shares
A. rate of return
B. rate of exchange 295. Bonds issued by corporations and
am
C. rate of intrinsic stock exposed to default risk are classified
D. rate of extrinsic stock as
A. corporation bonds
290. Type of financial security in which
iR
B. default bonds
firms do not borrow money rather C. risk bonds
lease their assets is classified as D. zero risk bonds
A. leases
hr
B. preferred stocks 296. Claim against assets are represented

C. common stocks by
D. corporate stocks A. saved earning
iS
B. retained earnings
291. Net income and depreciation is Rs C. maintained earnings
313,650,000 and common shares out- D. saving account earning
Ja
standing are 55,000,000 then cash

flow per share would be 297. In arbitrage pricing theory, required
A. Rs 5.70 returns are functioned of two factors
B. Rs 6.70 which have
C. Rs 7.70 A. dividend policy
D. Rs 8.70 B. market risk
C. historical policy
292. Type of premium asked by investors D. Both A and B
for bearing risk on average stock is
298. Variable cost per unit.
classified as
A. varies with the level of output
A. average premium
B. remains constant irrespective of
B. market risk premium
C. stock premium the level of output
C. changes with the growth of the
D. buying discount
firm
293. Bonds that have high liquidity pre- D. does not change with volume of
mium are usually have production
229
299. Risk of doing business in particular A. dashed line

country and arises from foreign invest- B. straight line
ments is classified as C. market line
A. country risk D. risk line
B. foreign risk
306. In calculation of net cash flow, de-
C. proffered risk
D. common risk ferred tax payments are classified as
A. non-cash revenues
300. Specific day at which bond value is B. non-cash charges
repaid can be considered as C. current liabilities
D. income expense
A. valued date
B. repayment date 307. Process in which stockholders trans-
C. payment date fer right to vote to any other person is
D. maturity date classified as
301. Stock selling price is Rs 65, ex- A. proxy
B. transfer process
pected dividend is Rs 20 and cost of
am
C. voting process
common stock is 42% then expected D. assigning right process
growth rate will be
A. 0.1123 times 308. Type of cost which is used to raise
iR
B. 11.23% common equity by reinvesting inter-
C. 11.23 times nal earnings is classified as
D. Rs 11.23 A. cost of mortgage
B. cost of common equity
hr
302. Process of selling company stock at C. cost of stocks

large to general public and get lending D. cost of reserve assets
iS
from banks is classified as an

A. initial public offering 309. Net income available to stockholders
B. external public offering is Rs 150 and total assets are Rs 2,100
then return on total assets would be
Ja
C. internal public offering

D. unprofessional offering A. 0.07%
B. 7.14%
303. The highest level of market effi- C. 0.05 times
ciency is D. 7.15 times
A. weak form efficiency
B. semi-strong form efficiency 310. In order to determine the compound
C. random walk efficiency growth rate of an investment over
D. strong form efficiency some period, an investor would cal-
culate the
304. In BSE shares are divided into A. arithmetic mean
A. two categories B. geometric mean
B. three categories C. calculus mean
C. four categories D. arithmetic median
D. five categories
311. Unsecured bonds which is desig-
305. Stocks in market portfolio are graph- nated for only notes payable or all
ically represented with other debts are classified as
A. designated bonds 318. A usage of proceeds of new issue to

B. payable bonds retire issue with high-rate is classified
C. ordinate bonds as
D. subordinated bonds A. refunding operation
B. funding operation
312. According to Black Scholes model,
C. proceeds operation
rate which is constant and known is D. deferred operation
classified as
A. short term return rate 319. A bond whose price will rise above
B. long term return rate its face value is classified as
C. risk free interest rate A. premium face value
D. risky rate of return B. premium bond
313. Savings accounts are but are C. premium stock
not D. premium warrants
A. negotiable; liquid
320. An individual stock required return
B. marketable; liquid
am
C. liquid; personal is equal to risk free rate plus bearing
D. liquid; marketable risk premium is an explanation of
A. security market line
B. capital market line
iR
314. If default probability is zero and
bond is not called then yield to ma- C. aggregate market line
turity is D. beta market line
A. mature expected return rate
hr
B. lower than expected return rate 321. According to top rating agencies
C. higher than expected return rate S&P triple-A and double-A rating
iS
D. equal to expected return rate bonds are classified as an

A. extremely discounted
315. Under the P/E model, stock price is B. extremely safe
a product of C. extremely risky
Ja
A. EPS and DPS D. extremely inflated

B. P/E ratio and EPS
C. EPS and required return 322. Cash flows occurring with more than
D. P/E ratio and required return one change in sign of cash flow are
classified as
316. Net worth is also called A. non-normal cash flow
A. asset net of liabilities
B. normal cash flow
B. liabilities net of assets
C. normal costs
C. earnings net on assets
D. liabilities net of earnings D. non-normal costs
317. Ownership securities are represented 323. Long period of bond maturity leads
by to
A. stock A. more price change
B. loan B. stable prices
C. debt C. standing prices
D. debentures D. mature prices
231
324. Return on assets = 6.7% and equity 330. Initial cost is Rs 5000 and probabil-
multiplier = 2.5% then return on eq- ity index is 3.2 then present value of
uity will be cash flows is
A. 16.75% A. Rs 8,200.00
B. 2.68% B. Rs 16,000.00
C. 0.37% C. Rs 10,000.00
D. 9.20% D. Rs 1,562.50
325. According to the model, the 331. In weighted average capital, capital
dividend decision is irrelevant. structure weights estimation does not
A. MM
rely on value of
B. Garden
C. Walter A. investor’s equity
D. XY B. market value of equity
C. book value of equity
326. High portfolio return is 6.5% and D. stock equity
low portfolio return is 3.0% then
am
HML portfolio will be 332. Intangible assets such as copyrights,
A. 2.16% trademarks and patents are applicable
B. 9.50% for
iR
C. 3.50% A. depreciation
D. 0.4615 times B. amortization
C. stock amortization
327. An attempt to make correction by D. perishable assets
hr
adjusting historical beta to make it

closer to an average beta is classified 333. Mumbai stock exchange was recog-
as
iS
nized on a permanent basis in

A. adjusted stock A. 1950
B. adjusted beta B. 1956
C. adjusted coefficient C. 1957
Ja
D. adjusted risk D. 1965

328. An excess of actual price of option
334. Financial assets
over an exercise value of option is
A. directly contribute to the country’s
classified as
productive capacity
A. time value options
B. indirectly to the country’s produc-
B. actual options
C. estimated options tive capacity
D. optional pricing C. contribute to the country’s produc-
tive capacity both directly and indi-
329. According to Fama French Three- rectly
Factor model, market value of com- D. do not contribute to the country’s
pany equity is used to calculate productive capacity either directly or
A. size of portfolio indirectly
B. size of industry
C. size of market 335. Treasury bonds are exposed to addi-
D. size of company tional risks that are included
A. reinvestment risk 341. Risk on a stock portfolio which can-

B. interest rate risk not be eliminated or reduced by plac-
C. investment risk ing it in diversified portfolio is classi-
D. Both A and B fied as
A. diversifiable risk
336. According to exercise value and op-
B. market risk
tion price, market value of option will
C. stock risk
be zero when D. portfolio risk
A. stock price is maximum
B. option price is zero 342. In portfolio, beta of individual secu-
C. stock price is zero rity in portfolio represented as their
D. stock price is minimum
weighted average is classified as
337. Which of the following has helped A. average of portfolio
to eliminate the use of stock certifi- B. beta of portfolio
cates by placing stock transactions on C. weighted portfolio
D. collective stocks
computers?
am
A. Demat account 343. Portfolio weights are found by
B. Securities Exchange Commission A. dividing standard deviation by ex-
C. Depository Trust Company
pected value
iR
D. Federal Depository Insurance Cor-
B. calculating the percentage each as-
poration.
set is to the total portfolio value
338. shifts the weights of securities C. calculating the return of each asset
hr
in the portfolio to take advantage of to total portfolio return

areas that is expected to do relatively D. dividing expected value by the
standard deviation
iS
better than other areas.

A. portfolio management
B. market timing 344. Yield on Treasury bill with a matu-
C. momentum strategy rity is classified as a risk free rate but
Ja
D. sector rotation must be equal to an

A. option closing price
339. A retirement plans funded for work- B. option beginning price
ers by corporations, administered and C. option expiration
commercial banks are classified as D. option model
A. retirement funds
B. pension funds 345. Type of relationship exists between
C. future funds an expected return and risk of portfo-
D. workers funds lio is classified as
A. non-linear
340. An operating cash flows is Rs 12000 B. linear
and gross fixed asset expenditure is C. fixed and aggregate
Rs 5000 then free cash flow will be D. non-fixed and non-aggregate
A. -Rs 7,000.00
B. Rs 7,000.00 346. Which of the following is / are as-
C. Rs 17,000.00 sumption(s) underlying the Miller and
D. -Rs 17,000.00 Modigliani analysis?
233
A. Capital markets are perfect 352. Net investment in operating capital

B. Investors are assumed to be ratio- is Rs 5000 and net operating profit
nal and behave accordingly after taxes is Rs 8000 then free cash
C. There is no corporate or personal flow would be
income tax A. Rs 13,000.00
D. All of the above. B. -Rs 3,000.00
C. Rs 3,000.00
347. Underlying all investments is the D. -Rs 13,000.00
trade-off between 353. Cost of common stock is 15% and
A. expected return and actual return bond yield is 10.5% then bond risk
B. low risk and high risk premium will be
C. actual return and high risk A. 1.43%
D. expected return and risk B. 8.50%
C. 25.50%
348. Value of stock is Rs 900 and required D. 4.50%
rate of return is 30% then preferred
am
354. The decision function of financial
dividend will be
management can be broken down into
A. Rs 270.00
the decisions.
B. Rs 27,000.00 A. financing and investment
iR
C. Rs 90.00 B. investment, financing, and asset
D. Rs 90.00 management
C. financing and dividend
349. Net investment in operating capital
hr
D. capital budgeting, cash manage-

is Rs 7000 and net operating profit af- ment, and credit management
ter taxes is Rs 11,000 then free cash
iS
flow will be 355. A bond issue is broken up so that

A. -Rs 18,000.00 some investors will receive only inter-
B. Rs 18,000.00 est payments while others will receive
Ja
C. -Rs 4,000.00 only principal payments, which is an

D. Rs 4,000.00 example of
A. bundling
350. Short term sources are B. un-bundling
C. financial engineering
A. Bank credit D. credit enhancement
B. Public deposit E. B& C
C. Commercial papers
D. All of the above 356. Historical growth rates, analysis
forecasts and retention growth model
351. Tendency of people to blame failure are approaches to estimate
on bad luck but given tribute of suc- A. present value of gain
cess to themselves is classified as B. growth rate
C. growth gain
A. self-attribution bias
D. discounted gain
B. self-success bias
C. self-failure bias 357. Rational traders immediately buy
D. self-condition bias stock when price is
A. too low A. stock’s risk

B. too high B. portfolio risk
C. conditional C. expected return
D. inefficient portfolio D. stock return
358. Most financial advisors are regis- 364. An expected final stock price is Rs
tered with the Securities and Ex- 70 and an expected capital gain is Rs
change Commission as 25 then an original investment would
A. registered representatives be
B. registered investor advisors A. Rs 45.00
C. registered financial planners B. -Rs 45.00
D. registered securities consultants C. Rs 95.00
D. -Rs 95.00
359. is concerned with the interrela-
365. Which of the following generally
tionships between security returns.
A. random diversification traded on stock exchanges?
A. Unit investment trusts
B. correlating diversification
am
B. Closed-end investment companies
C. Friedman diversification C. Open-end investment companies
D. Markowitz diversification D. All trade on stock exchanges
360. Pricing model approach in which it
iR
366. A portfolio consists of all stocks in
is assumed that stock price can have a market is classified as
one of two values of stock is classified A. market portfolio
as B. return portfolio
hr
A. valued approach C. correlated portfolio

B. marketability approach D. diversified portfolio
iS
C. stock approach
D. binomial approach 367. In capital budgeting, two projects
who have cost of capital as 12% is
361. Mutual fund allows investors to sale classified as
Ja
out their share during any normal trad- A. hurdle rate

ing hours is classified as B. capital rate
A. exchange traded fund C. return rate
B. management expense D. budgeting rate
C. money trade fund 368. Present value takes
D. capital trade fund A. Discounting rate
B. Compounding rate
362. Condition in which company’s im- C. Inflation rate
ports are more than its exports is clas- D. Deflation rate
sified as
A. foreign trade 369. Periodic rate if it is multiplied with
B. foreign trade deficits per year number of compounding pe-
C. foreign trade surplus riods is called
D. trade surplus A. extrinsic rate of return
B. intrinsic rate of return
363. Market risk and diversifiable risk are C. annual rate of return
two components of D. nominal annual rate
235
370. Financial intermediaries exist be- 376. According to capital asset pricing
cause small investors cannot effi- model assumptions, quantities of all
ciently assets are
A. diversify their portfolios A. given and fixed
B. gather all relevant information B. not given and fixed
C. assess credit risk of borrowers C. not given and variable
D. advertise for needed investments D. given and variable
E. all of above
377. An increase in marginal cost of capi-
371. Which of the following is not a fea- tal and capital rationing are two aris-
ture of an optimal capital structure? ing complications of
A. Safety A. maximum capital budget
B. greater capital budget
B. Flexibility
C. optimal capital budget
C. Control D. minimum capital budget
D. Solvency
378. A type of beta which incorporates
am
372. In pure play method, a company can about company such as changes in
calculate its own cost of capital with capital structure is classified as
help of averaging an A. industry beta
iR
A. other company capital policy B. market beta
B. other company beta C. subtracted beta
C. other company cost D. fundamental beta
D. other division cost
hr
379. Free cash flow is Rs 17000 and net

373. In time value of money, nominal rate investment in operating capital is Rs
iS
is 10000 then net operating profit after

A. not shown on timeline taxes would be
B. shown on timeline A. Rs 7,000.00
B. Rs 27,000.00
Ja
C. multiplied on timeline
D. divided on timeline C. -Rs 27,000.00
D. -Rs 7,000.00
374. Cost of equity which is raised by
reinvesting earnings internally must 380. An unmanaged fixed income secu-
be higher than the rity portfolio handled by an indepen-
A. cost of initial offering dent trustee is known as a
A. junk bond fund
B. cost of new common equity
B. closed-end investment company
C. cost of preferred equity
C. unit investment trust
D. cost of floatation D. hedge fund
375. Formula written as 0.67(Historical 381. Value of future dividends after hori-
Beta) + 0.35(1.0) is used to calculate zon date is classified as
A. historical betas A. hypothesis value
B. adjusted betas B. horizon value
C. standard betas C. terminal value
D. varied betas D. Both B and C
382. Economists consider effects of A. capital gain

started project on other parts of com- B. growth gain
pany or on environment of company C. regular yield
is called D. variable yield
A. externalities
B. foreign effects 388. New York Stock Exchange’ is an ex-
C. weighted effects ample of
D. opportunity effects A. capital markets
B. money markets
383. An interest rate is 5%, number of C. liquid markets
period are 3, and present value is Rs D. short-term markets
100,and then future value will be
A. 115.76 389. An unsecured bond that provides no
B. 105.00 lien against property as security for
C. 110.25 bond obligation is classified as
am
D. 113.56 A. secured bond
B. debenture
384. Required increasing in current assets C. obligation bond
and an increasing in current liabilities D. specific bond
iR
is subtracted to calculate
A. change in net working capital 390. A risk which is classified as its con-
B. change in current assets tribution to risk of portfolio is classi-
hr
C. change in current liabilities fied as

D. change in depreciation A. classified risk
iS
B. contributed risk
385. In financial markets, period of matu-
C. irrelevant risk
rity more than five years of financial
D. relevant risk
instruments is classified as
Ja
A. intermediate term 391. Book value is

B. capital term
A. the same as market value
C. short-term
B. a more accurate valuation tech-
D. long-term
nique than the dividend models
386. An uncovered cost at start of year is C. the accounting value of the firm as
Rs 300, full cash flow during recovery reflected in the financial statements
year is Rs 650 and prior years to full D. the same as liquidation value
recovery is 4 then payback would be
392. Conglomerates that combine many
A. 3.46 years
financial institutions within a single
B. 2.46 years
corporation are classified as
C. 5.46 years
A. preferred service corporations
D. 4.46 years
B. commercial service corporations
387. Capital gains yield is multiplied for C. financial services corporations
beginning price to calculate D. common service corporations
237
393. Current value of portfolio is Rs 550 A. They enjoy a high order of priority
and to cover an obligation of call op- in the event of liquidation
tion is Rs 200 then value of stock B. Stable rate of return
would be C. No risk
A. Rs 350.00 D. All of the above
B. Rs 275.00
399. Re-order level is than safety
C. Rs 750.00
level.
D. Rs 1,000.00
A. higher
394. Shareholder wealth in a firm is rep- B. lower
C. medium
resented by
D. fixed
A. the number of people employed in
the firm 400. A model which regresses return of
B. the book value of the firm’s assets stock against return of market is clas-
less the book value of its liabilities sified as
C. the amount of salary paid to its A. regression model
am
employees B. market model
D. the market price per share of the C. error model
firms common stock D. risk free model
iR
395. A technique uses in comparative 401. Cost which is used to calculate
analysis of financial statement is weighted average cost of capital is
A. graphical analysis classified as
hr
B. preference analysis A. weighted cost of capital

C. common size analysis B. component cost of preferred stock
iS
D. returning analysis C. transaction cost of preferred stock

D. financing of preferred stock
396. Third factor in Fama French three
402. The weak form of the EMH is sup-
Ja
factor model is ratio which is classi-

ported if successive price changes
fied as
A. book to market ratio over time are
A. independent of each other
B. market to book ratio
B. negative
C. company to industry ratio
C. positive
D. stock to portfolio ratio D. lagged
397. Chance of happening any un- 403. An analysis and estimation of cash
favourable event in near future is clas- flows include
sified as A. input data and key output
A. chance B. depreciation schedule
B. event happening C. net salvage values
C. probability D. all of above
D. risk
404. If book value is greater than market
398. What are the factors which make value comparison with investors for
debentures attractive to investors? future stock are considered as
A. pessimistic 410. In independent projects evaluation,

B. optimistic results of internal rate of return and
C. experienced net present value lead to
D. inexperienced A. cash flow decision
B. cost decision
405. Method in which company finds C. same decisions
other companies considered in same D. different decisions
line of business to evaluate divisions
411. Speculators in the futures
is classified as
markets
A. pure play method
A. make the market more volatile
B. same play method B. contribute liquidity to the market
C. division line method C. engage mainly in short sales
D. single product method D. serve no real economic function
406. Market risk is best measured by 412. Characteristic of corporation that it
the can continue its work even owners are
am
A. alpha decreased can be classified as
B. beta A. limited life
C. standard deviation B. unlimited life
D. coefficient of variation C. corporate life
iR
D. deceased partnership
407. Mutual funds may be affiliated with
an underwriter. This means 413. Value of net income is Rs
A. the underwriter has an exclusive 124,500,000 and common shares out-
hr
right to distribute shares standing are Rs 60,000,000 then earn-

B. the underwriter selects the securi- ing per share will be
iS
ties in the portfolio A. Rs 2.75

B. Rs 0.48
C. there is no risk to the issuer of the C. Rs 2.08
mutual fund D. Rs 2.80
Ja
D. there is no risk to the investor of

the mutual fund. 414. Past realized rate of return in period
t is denoted by
408. Price of an outstanding bond in- A. t bar r
creases when market rate B. t hat r
A. never changes C. r hat t
B. increases D. r bar t
C. decreases 415. Relationship between risk and re-
D. earned
quired return is classified as
409. Degree of financial leverage is A. security market line
B. required return line
a measure of relationship between C. market risk line
D. risky return line
A. EPS and EBIT
B. EBIT and quantity produced 416. An increase in value of option leads
C. EPS and quantity produced to low present value of exercise cost
D. EPS and sales only if it has
239
A. low volatility 423. In a statement of cash flows, a com-

B. interest rates are high pany investing in short-term financial
C. interest rates are low investments and in fixed assets results
D. high volatility in
A. increased cash
417. Retention ratio is 0.60 and return on B. decreased cash
equity is 15.5% then growth retention C. increased liabilities
model would be D. increased equity
A. 14.90%
B. 25.84% 424. An investment outlay cash flow is Rs
C. 16.10% 4000, operating cash flow is Rs 1000
D. 9.30% and salvage cash flow is Rs 5000 then
free cash flow would be
418. An increasing in interest rate leads
A. Rs 10,000.00
to decline in value of
B. Rs 8,000.00
A. junk bonds
C. Rs 0.00
B. outstanding bonds
am
D. none of above
C. standing bonds
D. premium bonds 425. One reason for the declining impor-
tance of pension funds is the
iR
419. Discounted cash flow analysis is also
A. decrease in pension benefits for
classified as
A. time value of stock workers
B. time value of money B. downsizing of US companies
hr
C. time value of bonds C. large number of conversions into

D. time value of treasury bonds self-directed plans
D. increasing number of federal regu-
iS
420. According to Black Scholes model, lations that restrict pension fund port-
call option is well exercised on its folios
A. mid buying date
Ja
B. expiry date 426. Beta reflects stock risk for investors

C. buying date which is usually
D. mid selling date A. individual
B. collective
421. Financial security issued by banks C. weighted
operating outside U.S is classified as D. linear
A. dollar bonds
B. euro deposits 427. A discount rate which equals to
C. Eurodollar market deposits present value of TV to project cost
D. euro bonds present value is classified as
A. negative internal rate of return
422. Depreciation is include in costs in B. modified internal rate of return
case of C. existed internal rate of return
A. Pay back method D. relative rate of return
B. Accounting rate
C. Discounted cash flow 428. Stock issued by company have
D. Present value method higher rate of return because of
A. low market to book ratio A. earning per share

B. high book to market ratio B. dividends per share
C. high market to book ratio C. book value of share
D. low book to market ratio D. market value of shares
429. This type of risk is avoidable 435. Long term fund sources are
A. Retained earnings
through proper diversification. B. Debentures
A. portfolio risk C. Share capital
B. systematic risk D. All of the above
C. unsystematic risk
D. total risk 436. Markets dealing loans of autos, ed-
ucation, vacations and appliances are
430. Cost of capital is the rate of considered as
return expected by the investor. A. consumer credit loans
A. minimum B. commercial markets
B. maximum C. residential markets
am
C. expected D. mortgage markets
D. marginal
437. An outstanding bonds are also clas-
431. Investment bankers operate in sified as
iR
A. standing bonds
the
B. outdated bonds
A. primary market C. dated bonds
B. secondary market D. seasoned bonds
hr
C. A and B both
D. None of above 438. Bonds with deferred call have pro-
iS
tection which is classified as

432. If an investor states that Intel is over- A. provision protection
valued at 65 times, he is referring B. provision protection
to C. deferred protection
Ja
A. earnings per share D. call protection

B. dividend yield
439. In expected rate of return for con-
C. book value
stant growth, expected total rate of
D. P/E ratio
return is equal to
433. Relevant information about stock A. buying pricing
B. dividend yield
market price if it is given, then this C. rate of return
price is called D. selling pricing
A. market price
B. intrinsic price 440. In large expansion programs, in-
C. extrinsic price creased riskiness and floatation cost
D. unstable price associated with project can cause
A. rise in marginal cost of capital
434. Number of shares outstanding if it B. fall in marginal cost of capital
is divided by net income for using to C. rise in transaction cost of capital
calculate D. rise in transaction cost of capital
241
441. Preferred stock dividends must be 447. Corporate associations who have
paid on common stock and must have common bonds being employees of
A. fixed amount of dividends same firm are classified as
B. fixed amount of shares A. credit unions
C. variable amount of dividends B. debit unions
D. variable amount of shares C. preferred unions
D. solving unions
442. When price of bond is calculated be-
448. The Markowitz model assumes most
low its par value, it is classified as
A. classified bond investors are
A. risk averse
B. discount bond
B. risk neutral
C. compound bond C. risk seekers
D. consideration earning D. risk moderators
443. A premium charged by lenders for 449. The market value of the firm is the
securities that cannot be converted result of
am
into cash is classified as A. dividend decisions
A. required premium B. working capital decisions
B. liquidity premium C. capital budgeting decisions
C. marketability premium D. trade-off between cost and risk
iR
D. Both B and C
450. Complex statistical and mathemat-
444. Present value of portfolio Rs 850 ical theory is an approach, which is
hr
and current option price Rs 1620 then classified as

value of stock included in portfolio A. arbitrage pricing theory
B. arbitrage risk theory
iS
would be C. arbitrage dividend theory

A. Rs 190.00 D. arbitrage market theory
B. Rs 880.00
C. Rs 770.00 451. Stockholders having right to elect di-
Ja
D. Rs 2,470.00 rectors and in smaller firms have high

post are classified as
445. If market interest rate rises above A. public stocks
coupon rate then bond will be sold B. inactive stocks
A. equal to return rate C. special stockholders
B. seasoned price D. common stockholders
C. below its par value
D. above its par value 452. Future value interest factor takes
446. Method and model used to analyze A. Compounding rate

relationship between rates of return B. Discounting rate
C. Inflation rate
and risk is classified as
D. Deflation rate
A. capital asset pricing model
B. portfolio asset pricing model 453. An equation in which total assets are
C. asset market pricing model multiplied to profit margin is classi-
D. portfolio pricing model fied as
A. du DuPont equation A. optimal rationing

B. turnover equation B. capital rationing
C. preference equation C. marginal rationing
D. common equation D. transaction rationing
454. Type of financial securities that ma- 460. Information which is reflected in cur-
tures in less than a year are classified rent market prices with help of past
as price movements is classified as
A. money market securities A. market efficiency
B. capital market securities B. semi strong efficiency
C. saving intermediaries C. weak form efficiency
D. discounted intermediaries D. strong form efficiency
455. Interest rate is 12% and tax sav- 461. To whom does the Treasurer most
ings (1-0.40) then after-tax compo- likely report?
nent cost of debt will be A. Chief Financial Officer
A. 7.20%
am
B. Vice President of Operations
B. 7.40% C. Chief Executive Officer
C. 17.14% D. Board of Directors
D. 17.24%
iR
462. Investment professionals whose jobs
456. A stock which is hybrid and works
may depend on their performance rel-
as a cross between debt and common
ative to the market are the
stock is considered as
hr
A. registered representatives
A. hybrid stock
B. security analysts
B. common liabilities
C. investment bankers
iS
C. debt liabilities
D. preferred stock D. portfolio managers
457. According to Black Scholes model, 463. Process in which managers of com-
Ja
trading of securities and stock prices pany identify projects to add value is
moves respectively classified as
A. constant and randomly A. capital budgeting
B. randomly and constant B. cost budgeting
C. randomly and continuously C. book value budgeting
D. continuously and randomly D. equity budgeting
458. A line which shows relationship be- 464. According to the traditional ap-
tween an expected return and risk on proach cost of capital affected by?
efficient portfolio is considered as A. debt-equity mix
A. efficient market line B. debt-capital mix
B. attributable market line C. equity expenses mix
C. capital market line D. debt-interest mix
D. security market line
465. Which of the following is not an as-
459. Situation in which firm limits expen- sumption in Miller and Modigliani ap-
ditures on capital is classified as proach?
243
A. There are no corporate or personal A. venture partners

income tax B. corporate partners
B. Investors are assumed to be ratio- C. limited partners
nal and behave accordingly D. general partners
C. There is no corporate tax though
there are personal income tax 471. Stock issued by company have lower
D. Capital markets are perfect rate of return because of
A. high market to book ratio
466. Operating leverage x financial lever- B. low book to market ratio
age= C. low market to book ratio
A. Combined Leverage D. high book to market ratio
B. Financial Combined Leverage
472. In his traditional role the finance
C. Operating Combined Leverage
manager is responsible for
D. Fixed leverage
A. proper utilisation of funds
467. An investor who buys shares and B. arrangement of financial resources
am
C. acquiring capital assets of the or-
writes a call option on stock is classi-
ganization
fied as
D. Efficient management of capital
A. put investor
iR
B. call investor 473. Default free financial security sells
C. hedger by U.S treasury is classified as
D. volatile hedge A. U.S treasury bills
hr
B. commercial paper
468. International investing is C. certificate of deposit
A. is only practical for institutional
iS
D. mutual funds
investors
B. increases the overall risk of a stock 474. If the Dow Jones Industrials had a
portfolio price appreciation of 6 percent one
Ja
C. always leads to higher returns than year and yet Total return for the year
a domestic portfolio was 11 percent; the difference would
D. can reduce risk due to increased be due to
diversification A. the tax treatment of capital gains
B. the cumulative wealth effect
469. Method of inventory recording gives C. dividends
lower cost of goods sold in income D. profits
statement is classified as
A. last in first out 475. Variable cost in an organization
B. last out receivable A. be fixed according to the rate of
C. First out receivable growth
D. First in first out B. changes with the volume of pro-
duction
470. Partners who are only liable for their C. does not change with volume of
own part of investment are considered production
as D. remains constant
476. If an expected final stock price is Rs 482. An interest yield = 7.9% and capital
85 and an original investment is Rs gains yield = 2.5% then total rate of
70 then value of expected capital gain return is
would be A. 10.00%
A. Rs 15.00 B. 3.16%
B. -Rs 15.00 C. 0.31%
C. Rs 155.00 D. 5.40%
D. -Rs 155.00
483. Cost of money is affected by factors
477. is the most important invest- which includes
ment decision because it determines A. production opportunities
the risk-return characteristics of the B. risk
portfolio. C. all of above
A. Hedging D. inflation
B. Market timing
C. Performance measurement 484. Prices of bonds will be increased if
am
D. Asset allocation interest rates
478. is equal to (common share- A. equals
holders’ equity/common shares out- B. lump sum declines
C. rises
iR
standing).
A. book value per share D. declines
B. liquidation value per share
C. market value per share 485. A model in which behavior of asset
hr
D. Tobin’s Q returns is measured for set of risk fac-

tors and market risk is classified as
479. Which of the following is the expres-
iS
A. factorization model
sion for operating leverage? B. Two factor model
A. Contribution/EBIT C. multifactor model
B. EBT/Contribution D. quoted factor model
Ja
C. Contribution/EAT
D. Contribution/Quantity 486. Rate of return which is required to
satisfy stockholders and debt holders
480. A type of contract in which contract is classified as
holder has right to sell an asset at spe- A. weighted average cost of interest
cific period for predetermining price B. weighted average cost of capital
is classified as C. weighted average salvage value
A. option D. mean cost of capital
B. written contract
C. determined contract 487. decision relates to the determi-
D. featured contract nation of total amount of assets to be
481. EBIT is usually the same thing as. held in the firm.
A. funds provided by operations A. Financing
B. earnings before taxes B. Investment
C. net income C. Dividend
D. operating profit D. Controlling
245
488. In cash flow estimation, depreciation A. taking sound financial decisions

is considered as B. proper use and allocation
A. cash charge C. improving the profitability of
B. noncash charge funds
C. cash flow discounts D. all the above
D. net salvage discount
495. In capital budgeting, positive net
489. Dividend will grow at non-constant present value results in
rate for N periods and periods such as A. negative economic value added
N is classified as B. positive economic value added
A. growth date C. zero economic value added
B. terminal date D. percent economic value added
C. horizon date
D. Both B and C 496. The major problem with the
Markowitz model is its
490. Variability for expected returns for A. lack of accuracy
B. predictability flaws
am
projects is classified as
A. expected risk C. complexity
B. stand-alone risk D. inability to handle large number
C. variable risk of inputs
iR
D. returning risk
497. Profit margin = 4.5%, assets turnover
491. Diversification reduces - = 2.2 times, equity multiplier = 2.7
times then return on equity will be
hr
A. Interest rate risk

B. Market risk A. 26.73%
C. Unique risk B. 25.73%
iS
D. Inflation risk C. 9.40%

D. 9.00%
492. Coefficient of beta is used to mea-
498. Payback period in which an ex-
Ja
sure stock volatility

A. coefficient of market pected cash flows are discounted with
B. relative to market help of project cost of capital is clas-
C. irrelative to market sified as
D. same with market A. discounted payback period
B. discounted rate of return
493. Which of the following is an argu- C. discounted cash flows
ment for the relevance of dividends? D. discounted project cost
A. Informational content
B. Reduction of uncertainty 499. An efficient market hypothesis states
C. Some investors’ preference for in which all public or private infor-
current income mation is reflected in current market
D. All of the above. prices is classified as
A. market efficiency
494. Financial management is indispens- B. semi strong efficiency
able in any organization as it helps C. weak form efficiency
in D. strong form efficiency
500. In expected rate of return for con- 506. A measure which is not included in
stant growth, capital gains is divided Fama French Three-Factor model is
by beginning price to calculate A. realized risk free rate
A. yield of loan return B. rate of return on market
B. yield of mortgage return C. random error
C. yield of capital gains D. risk premium
D. yield of fixed cost
507. Stock portfolio with lowest book for
501. The value of EBIT at which EPS is market ratios is considered as
equal to zero is known as A. S portfolio
A. Break-even point B. B to M portfolio
B. Financial break-even point C. H portfolio
C. Operating break-even point D. L portfolio
D. Overall break-even point
508. factors lead to activity of stock
502. Stock selling price is Rs 45, an ex- market.
A. Money supply
am
pected dividend is Rs 10 and an ex-
pected growth rate is 8% then cost of B. Per capita income
common stock would be C. Unemployment rate
D. Manufacturing and Trade
A. 55.00%
iR
B. 35.00% 509. In financial planning, most high op-
C. 30.00% tion price will lead to
D. 30.22% A. longer option period
hr
B. smaller option period

503. The formula for cost of debt is
C. lesser price
A. I x ( 1-t)
D. higher price
iS
B. I+p
C. I-P 510. Correct measure of risk of stock is
D. Ixp called
Ja
A. alpha
504. According to Black Scholes model,
B. beta
short term seller receives today price
C. variance
which D. market relevance
A. short term cash proceeds
B. proceeds in cheques 511. In stock option, a little chance exists
C. full cash proceeds for large gain on stock when price of
D. zero proceeds stock
A. have volatile movement
505. Set of rules consisting of behavior B. moves freely
towards its directors, creditors, share- C. rarely moves
holders, competitors and community D. stays same
is considered as
A. agency governance 512. Total common equity Rs
B. hiring governance 996,000,000 and shares outstanding
C. corporate governance 50,000,000 then book value per share
D. external governance would be
247
A. Rs 0.05 A. expected over security life

B. Rs 15.00 B. expected at deferred call
C. Rs 19.92 C. at bond issuance
D. Rs 14.00 D. expected at time of maturity
513. is concerned with the acqui- 519. Which of the following is a function
sition, financing, and management of of the finance manager?
assets with some overall goal in mind. A. Mobilizing funds
A. Financial management B. Risk returns trade off
B. Profit maximization C. Deployment of funds
C. Agency theory D. Control over the uses of funds
D. Social responsibility E. All of above
514. If coupon rate is less than going rate 520. Rate of return which is asked by in-
of interest then bond will be sold vestors is classified as
A. seasoned par value A. average cost of capital
am
B. more than its par value B. mean cost of capital
C. seasoned par value C. weighted cost of capital
D. at par value D. weighted average cost of capital
iR
515. Betas that are constantly adjusted to 521. A stock which is issued to meet spe-
reflect changes in capital structure and cific needs of company is considered
firms operations are classified as as
hr
A. fundamental structure A. classified stock

B. fundamental adjustment B. specific stock
C. fundamental betas C. needed stock
iS
D. fundamental operations D. meeting stock
516. If deposited money Rs 10,000 in 522. Cost which has occurred already and
Ja
bank pays interest 10% annually, an not affected by decisions is classified

amount after five years will be as
A. Rs 16,105.14 A. sunk cost
B. Rs 16,110.14 B. occurred cost
C. Rs 16,115.14 C. weighted cost
D. Rs 16,505.14 D. mean cost
517. Interest rates, tax rates and market 523. Greater chance of lower actual re-
risk premium are factors which an/a turn than expected return and greater
A. industry cannot control variation is indicated by
B. industry cannot control A. smaller standard deviation
C. firm must control B. larger standard deviation
D. firm cannot control C. smaller variance
D. larger variance
518. An inflation rate including in quoted
interest rate on security, is inflation 524. Real interest rate and real cash flows
rate do not include
A. equity effects A. the risk associated with move-

B. debt effects ments in security prices
C. inflation effects B. reduced through diversification
D. opportunity effects C. higher when interest rates rise
D. the risk of loss of purchasing
525. Bond that has been issued in very power
recent timing is classified as
A. mature issue 531. Type of variability in which a project
B. earning issue contributes in return of company is
considered as
C. new issue
A. variable risk
D. recent issue
B. within firm risk
C. corporate risk
526. Expected dividends in each year and
D. Both B and C
price investor expecting to get at sell-
ing of stock are two components of 532. A fixed rate of is payable on
am
A. dividend cash flow debentures
B. expected cash flows A. dividend
C. price cash flows B. Commission
D. investing cash
iR
C. Interest
D. Brokerage
527. Stock portfolio with highest book to
market ratios is considered as 533. An efficient market hypothesis states
hr
A. H portfolio all public information which is re-

B. L portfolio flected in current market prices is clas-
iS
C. S portfolio sified as
D. B to M portfolio A. weak form efficiency
B. strong form efficiency
Ja
528. Earnings that are not paid as divi- C. market efficiency

dends to stockholders and have cumu- D. semi strong efficiency
lative amount are classified as
534. Tracking stock of company is also
A. non-paid earnings
classified as
B. common earnings
A. target stock
C. retained earnings B. dividend stock
D. preferred earnings C. firm part stock
D. tied stock
529. According to Black Schools model,
stocks with call option pays the 535. Standard deviation is 18% and ex-
A. dividends pected return is 15.5% then coeffi-
B. no dividends cient of variation would be
C. current price A. 0.86%
D. past price B. 1.16%
C. 2.50%
530. Unsystematic risk is D. -2.50%
249
536. All points lie on line if degree of dis- 542. Input call parity relationship, put op-
persion is tion minus call option in addition with
A. four stock is equal to
B. one A. exercise price present value
C. Two B. exercise price future value
D. five C. time line value
D. time value of bond
537. If current price increases from lower
to higher then an 543. A firm will have favourable leverage
A. option value equal to one if its are more than the debt cost
B. option value will increase A. debt
B. interest
C. option value will decrease
C. equity
D. option value equal to zero D. earnings
538. In asset portfolio, number of stocks 544. The objective of financial manage-
are increased to ment is to
am
A. reduce return A. generate the maximum net profit
B. reduce average B. generate the maximum retained
C. reduce risk earnings
D. increase prices C. generate the maximum wealth for
iR
its shareholders
539. Required return is 15% and premium D. generate maximum funds for the
for risk is 11% then risk free return firm at the least cost.
would be
hr
A. 26.00% 545. Coupon payment is calculated with

B. 4.00% help of interest rate, then this rate con-
iS
C. 16.50% siders as
D. 1.36% A. payment interest
B. par interest
Ja
540. Walters model on dividend policy as- C. coupon interest

sumes that. D. yearly interest rate
A. the firm offers an increasing
amount of dividend per share at a 546. Market required return is subtracted
given level of price per share from risk free rate which is used to
B. the firm has a finite life calculate
C. the cost of capital of the firm is A. quoted risk premium
B. market risk premium
variable C. portfolio risk premium
D. equal to current assets plus current D. unquoted risk premium
liabilities including bank borrowings
547. Real rate expected cash flows and
541. The central issue of efficient markets nominal rate expected cash flows
concerns must be
A. regulations A. accelerated
B. information B. equal
C. participants C. different
D. structure D. inflated
548. Relationship between Economic 554. Company who sells products to cus-
Value Added (EVA) and Net Present tomer without demanding immediate
Value (NPV) is considered as payment but record it in balance sheet
A. valued relationship as
B. economic relationship A. account payable
C. direct relationship B. account receivable
D. inverse relationship C. account equivalent
D. account investment
549. Company specific risk is also known
as 555. Situation in which new business re-
A. market risk duces an existing business of firm is
B. systematic risk classified as
C. non-diversifiable risk A. non-cannibalization effect
D. idiosyncratic risk B. cannibalization effect
C. external effect
550. Which of the following represents D. internal effect
am
the rate at which a company can grow
from internal sources? 556. Two alternative expected returns are
A. return on assets compared with help of
B. sustainable growth rate A. coefficient of variation
iR
C. adjusted EPS B. coefficient of deviation
D. return on equity C. coefficient of standard
D. coefficient of return
551. Expected returns weighted average
hr
557. Having defined working capital as

on assets in portfolio is considered as
current assets, it can be further classi-
A. weighted portfolio
iS
fied according to
B. expected return on portfolio
A. Financing method and time
C. coefficient of portfolio
B. rate of return and financing
D. expected assets
method
Ja
552. Retention ratio is 0.55 and return on C. time and rate of return
equity is 12.5% then growth retention D. components and time
model would be 558. First step in calculation of net
A. 11.95% present value is to find out
B. 6.88% A. present value of equity
C. 13.05% B. future value of equity
D. 22.72% C. present value cash flow
D. future value of cash flow
553. Paid dividends to common stock-
holders Rs 67,600,000 and common 559. Dividend policy of a firm affects
shares outstanding 55,000,000 then both the long-time financing and
dividend per share will be wealth.
A. Rs 1.23 A. Owners
B. Rs 0.81 B. Creditors
C. Rs 2.12 C. Debtor
D. Rs 2.78 D. Shareholders
251
560. Dividend present value for period of A. historical beta

non-constant growth in addition with B. market beta
horizon value is used to calculate C. coefficient beta
A. stock extrinsic value D. risky beta
B. stock intrinsic value 567. Weighted average cost of debt, pre-
C. dividend intrinsic value
ferred stock and common equity is
D. stock intrinsic value
classified as
561. Financial analysts, working capital A. cost of salvage
B. cost of interest
means the same thing as
C. cost of taxation
A. total assets D. cost of capital
B. fixed assets
C. current assets 568. Current option is Rs 800 and current
D. current assets minus current Lia- value of stock in portfolio is Rs 1900
bilities then present value of portfolio would
be
562. Which of the following is not a char-
am
A. -Rs 1,100.00
acteristic of investments companies? B. Rs 2,700.00
A. pooled investing C. Rs 1,100.00
B. diversification D. -Rs 2,700.00
iR
C. managed portfolios
D. reduced expenses 569. The expansion of EAR is?
A. equivalent annual rate
563. The use of preference share capital B. equivalent annuity rate
hr
as against debt finance. C. equally applied rate

A. Reduces DFL D. equal advance rate
iS
B. Increases DFL
570. Coupon payment of bond which is
C. Increases financial risk
D. Both a and b fixed at time of issuance
A. remains same
Ja
564. An income available for sharehold- B. becomes stable

C. becomes change
ers after deducting expenses and taxes
D. becomes low
from revenues is classified as
A. net income 571. Cash and equivalents, inventories
B. net earnings and accounts receivables are classi-
C. net expenses fied as
D. net revenues A. assets on balance sheet
B. liabilities on balance sheet
565. Net working capital refers to. C. earnings on income statement
A. total assets minus fixed assets D. payments on income statement
B. current assets minus current liabil-
ities 572. New York Stock Exchange and Nada
C. current assets minus inventories stock market are classified as types of
D. current assets. A. primary stock market
B. equity market
566. Beta which is estimated as regres- C. secondary stock market
sion slope coefficient is classified as D. public offering market
573. Price per share is Rs 30 and an earn- 579. Bonds issued by small companies
ing per share is Rs 3.5 then price for tend to have
earning ratio would be A. high liquidity premium
A. 8.57 times B. high inflation premium
B. 8.57% C. high default premium
C. 0.11 times D. high yield premium
D. 11.00%
580. Fixed cost per unit
574. If common shares outstanding are A. does not change with volume of
50,000,000 and book value per share production
is Rs 19.92 then total common equity B. be flexible according to the rate of
will be interest
A. Rs 996,000,000.00 C. changes according to volume of
B. Rs 995,000,000.00 production
C. Rs 992,000,000.00 D. not remains constant
D. Rs 991,000,000.00
am
581. Which of the following is not related
575. Relationship between total risk of to overall market variability?
A. Financial risk
stock, diversifiable risk and market
B. Interest rate risk
iR
risk is classified as
C. Purchasing power risk
A. total risk D. Market risk
B. standard deviation
C. standard alpha 582. Which of the following is a basic
hr
D. treynor alpha principle of finance as it relates to the

management of working capital?
iS
576. Right side of balance sheet states the A. Profitability varies inversely with
A. appreciated earnings risk
B. liabilities B. Liquidity moves together with risk
C. assets
Ja
C. Profitability moves together with

D. stocks earnings risk
D. Profitability moves together with
577. Weighted average of probabilities is
liquidity
classified as
A. average rate of return 583. Current value of stock in portfolio
B. expected rate of return with current option price Rs 20 is Rs
C. past rate of return 50, then present value of portfolio
D. weighted rate of return would be
A. Rs 30.00
578. Current value of stock included in
B. Rs 70.00
portfolio is subtracted from current
C. Rs 40.00
option price to calculate D. Rs 80.00
A. future value of stock
B. present value of portfolio 584. Accounts payable, accruals and
C. future value of portfolio notes payables are listed on balance
D. present value of stock sheet as
253
A. accrued liabilities A. maximize earnings per share

B. current liabilities B. maximize the value of the firm’s
C. accumulated liabilities common stock
D. non-current liabilities C. maximize return on investment
D. maximize market share
585. Which of the following short term
securities is inappropriate for an in- 590. Total return is equal to
dividual, desiring funds for financial A. capital gain and yield
emergencies? B. yield and interest
A. treasury bills C. capital gain
B. certificates of deposit D. yield
C. financial futures
591. An amount invested is Rs 2500 and
D. savings accounts
an amount received is Rs 1500 then
586. Markets dealing with residential return will be
loans, industry real estate loans, agri- A. -Rs 4,000.00
am
cultural loans and commercial loans B. Rs 4,000.00
are called C. -Rs 1,000.00
A. residential markets D. Rs 1,000.00
iR
B. mortgage markets
592. Set of projects or set of investments
C. agriculture markets
usually maximize firm value is classi-
D. commercial markets
fied as
hr
A. optimal capital budget

587. Dividend changes are perceived im-
B. minimum capital budget
portant than the absolute level of divi-
iS
C. maximum capital budget

dends because.
D. greater capital budget
A. management change dividends to
protect their seats 593. Standard deviation of tighter proba-
Ja
B. dividend changes are thought to bility distribution is

signal future expectations A. long-termed
C. MM state that absolute level of B. short-termed
dividends is irrelevant C. risky
D. changes determine the level of D. smaller
borrowing
594. According to put call parity relation-
588. All of the following influence capital ship, a call option minus put option
budgeting cash flows EXCEPT. in addition with present value of exer-
A. accelerated depreciation cise is equal to
B. salvage value A. binomial property
C. tax rate changes B. constant property
D. method of project financing used C. constant and variable property
D. stock
589. The long-run objective of financial
management is to 595. The underwriter has to take up
A. the fixed portions of the issue cap- 601. The difference between the cash
ital price and the futures price on the
B. the unsubscribed part of the same asset or commodity is known
agreed portion as the
C. the agreed portion or can refuse if A. basis
D. the unfixed portions of the issue B. spread
capital C. yield spread
D. premium
596. Dollar return is divided by invested
amount which is used for calculating 602. In an option pricing, a rises in risk
the free rate results in option’s value
A. rate of return A. slight time decreases
B. return amount B. slight increases
C. investment rate C. slight decreases
D. received amount D. slight time increases
603. In balance sheet, sum of retained
597. When changes in patents and indus-
am
earnings and common stock are con-
try competition occur, required rate of
sidered as
return
A. preferred equity
A. changes B. due equity
iR
B. does not change C. common perpetuity
C. becomes zero D. common equity
D. becomes one
604. In capital asset pricing model, stock
hr
598. An average return of portfolio di- with high standard deviation tend to
vided by its standard deviation is clas- have
iS
sified as A. low variation

A. Jensen’s alpha B. low beta
B. Treynor’s variance to volatility ra- C. high beta
tio
Ja
D. high variation
C. Sharpe’s reward to variability ra-
tio 605. Paid dividend is Rs 20 and dividend
D. Treynor’s reward to volatility ratio yield is 40% then current price would
be
A. 60.00%
599. Treasury bills are traded in the B. Rs 60.00
A. money market C. Rs 50.00
B. capital market D. 2.00%
C. government market
D. regulated market 606. Value of free cash flows Rs55000,
operating cost and taxes Rs30000,
600. Rate on debt that increases as soon then value of sales revenues (in Rs)
market rises is classified as will be
A. rising bet rate A. Rs 25,000.00
B. floating rate debt B. Rs 85,000.00
C. market rate debt C. Rs 35,000.00
D. stable debt rate D. Rs 45,000.00
255
607. Which of the following is/are false A. efficient portfolio

regarding capital structure theory as B. inefficient portfolio
stated by Miller and Modigliani? 1) C. attributable portfolio
If agency costs are considered, the ex- D. non-attributable portfolio
pected agency costs increases as the
612. Types of option markets do not in-
debt-equity ratio decreases. 2) With
clude
the given assumptions, there is no op-
A. European option
timal capital structure. 3) In the pres-
B. American option
ence of taxes, the market value of the
C. expiry option
firm decreases by the tax shield of D. covered options
debt
A. Only 1st statement 613. A type of project whose cash flows
B. Only 2nd statement would not depend on each other is
C. Both 1st and 3rd statements classified as
D. All the three statements. A. project net gain
am
608. The dividend-payout ratio is equal B. independent projects
to C. dependent projects
A. the dividend yield plus the capital D. net value projects
gains yield
iR
614. Cash flow which starts negative then
B. dividends per share divided by
positive than again positive cash flow
earnings per share
C. dividends per share divided by par is classified as
hr
A. normal costs
value per share
B. non-normal costs
D. dividends per share divided by cur-
C. non-normal cash flow
iS
rent price per share.

D. normal cash flow
609. Preferred dividend is divided for re-
615. Marketable securities are
quired rate of return to calculate
Ja
A. value of number of shares primarily

B. value of equity A. short-term debt instruments
C. value of preferred stock B. short-term equity securities
D. value of common stock C. long-term debt instruments
D. long-term equity securities
610. If security pays Rs 5,000 in 20 years
with 7% annual interest rate, PV of 616. Stock with large amount of contribu-
security by using formula is tion of risk in a diversified portfolio
A. Rs 1,290.10 is represented by
B. Rs 1,292.10 A. high beta and standard deviation
C. Rs 1,295.10 B. high beta, low standard deviation
D. Rs 1,297.10 C. low beta, low standard deviation
D. low beta, low variance
611. Riskless rate in addition with risk
premium is multiplied by standard de- 617. Number of years forecasted to re-
viation of portfolio for using to calcu- cover an original investment is classi-
late expected return rate on fied as
A. payback period A. evaluate cash flow

B. forecasted period B. evaluate projects
C. original period C. evaluate budgeting
D. investment period D. evaluate equity
618. Gross domestic product, world econ- 624. Risk affects any firm with factors
omy strength and level of inflation are such as war, recessions, inflation and
factors which is used to determine high interest rates is classified as
A. market realized return A. diversifiable risk
B. portfolio realized return B. market risk
C. portfolio arbitrage risk C. stock risk
D. arbitrage theory of return D. portfolio risk
619. A company having easy access to 625. According to Black Scholes model,
the capital markets can follow a purchaser can borrow fraction of se-
dividend policy curity at risk free interest rate which
A. liberal is
am
B. formal A. short term
C. strict B. long term
D. Varying C. transaction cost
iR
D. no transaction cost
620. In calculation of internal rate of re-
turn, an assumption states that re- 626. Land, buildings, and factory fixed
ceived cash flow from project must equipment are classified as
hr
A. be reinvested A. tangible asset

B. not be reinvested B. non-tangible assets
iS
C. be earned C. financial asset

D. not be earned D. financial liability
621. Cost of retained earnings is equal to 627. is the distribution of the profits
Ja
of a company among its shareholders.

A. Cost of equity A. Shares
B. Cost of debt B. Interest
C. Cost of bank loan C. Dividend
D. Cost of term loans D. Commission
622. In capital asset pricing model, as- 628. uses a computer program in
sumptions must be followed includ- an attempt to imitate the brain in
ing analysing securities.
A. no taxes A. Decision trees
B. no transaction costs B. Program trading
C. fixed quantities of assets C. Day traders
D. all of above D. Neural networks
623. Net present value, profitability index, 629. Notes, mortgages, bonds, stocks,
payback and discounted payback are treasury bills and consumer loans are
methods to classified as
257
A. financial instruments A. median

B. capital assets B. arithmetic mean
C. primary assets C. geometric mean
D. competitive instruments D. cumulative mean
630. Current price is Rs 40 and dividend 636. Type of provision which allows an
paid is Rs 10 then dividend yield will orderly retirement of an issued bond
be which is classified as
A. Rs 25.00 A. whole call provision
B. 25.00% B. super fund provision
C. floating fund provision
C. Rs 4.00 D. sinking fund provision
D. 4.00%
637. Premium which is considered as dif-
631. Cost of common stock is 14% and ference of expected return on com-
bond risk premium is 9% then bond mon stock and current yield on Trea-
yield will be sury bonds is called
A. 1.56%
am
A. current risk premium
B. 5.00% B. past risk premium
C. 23.00% C. beta premium
D. 64.28% D. expected premium
iR
632. Rate of return (in percentages) is 638. An earning before interest, taxes, de-
consists of preciation and amortization average
A. capital gain yield interest yield multiple for publicly traded compa-
hr
B. return yield + stable yield nies is classified as

C. return yield + instable yield A. entity multiple
D. par value + market value
iS
B. depreciation multiple
C. earning multiple
633. An efficient set of portfolios repre- D. amortization multiple
sented through graph is classified as
Ja
an 639. Reduced consumer demand for

A. attained frontier loans, homes and new automobiles
B. efficient frontier is result of
C. inefficient frontier A. less disposable income
D. unattained frontier B. high disposable income
C. federal disposable income
634. In capital asset pricing model, co- D. discount disposable income
variance between stock and market is 640. An expected dividend yield is 5.5%
divided by variance of market returns and expected rate of return is 11.5%
is used to calculate then constant growth rate would be
A. sales turnover of company A. 2.09%
B. risk rate of company B. -6.00%
C. beta coefficient of company C. 17.50%
D. weighted mean of company D. 6.00%
635. When most people refer to the mean, 641. Market value of option which is out-
they are referring to the of-money is
A. greater than zero A. 40.00%

B. equal to zero B. 20.00%
C. lesser than zero C. 30.00%
D. equal to one D. 50.00%
642. Liquidity risk 648. In investment returns, a received

A. is the risk that investment bankers amount is subtracted from an invested
normally face amount which is used to calculate
B. is lower for small OTCEI stocks A. dollar received
than for large NSE stocks B. dollar return
C. is the risk associated with sec- C. dollar invested
ondary market transactions D. return percentage
D. increases whenever interest rates 649. Firm’s which helps in indirect trans-
increase. fer such as Merrill Lynch is classified
643. Capital budgeting is related to as
A. long terms assets A. investment banking house
am
B. short term assets B. investment bank
C. long terms and short terms assets C. saving house
D. saving bank
D. fixed assets
iR
650. After-the-fact rate of return often
644. If interest rates rose, you would ex-
consider as realized or actual can be
pect to also rise.
A. business risk denoted
hr
A. s hat r
B. financial risk
B. r bar s
C. liquidity risk
C. r hat s
D. inflation risk
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D. s bar r
645. An information uses by investors 651. Firms that specialize in helping com-
for expecting future earnings is all panies raise capital by selling securi-
Ja
recorded in ties are called

A. five years report A. commercial banks
B. annual report B. investment banks
C. stock report C. savings banks
D. exchange report D. credit unions
646. Average rate of return which is re- 652. Legal entity separation from its le-
quired by all investors of company is gal owners and managers with help of
classified as state laws is classified as
A. extrinsic cost of capital A. controlled corporate business
B. weighted average cost of capital B. Corporation
C. mean cost of capital C. limited corporate business
D. standard cost of cash D. unlimited corporate business
647. Paid dividend is Rs 20 and current 653. In expected future returns, tighter
price is Rs 50 then dividend yield will probability distribution shows risk on
be given investment which is
259
A. smaller A. attainable portfolios

B. greater B. unattainable portfolios
C. less risky C. attributable portfolios
D. highly risky D. non-attributable portfolio
654. Projects which are mutually exclu- 660. A formula such as an original invest-
sive but different on scale of produc- ment plus an expected capital gain is
tion or time of completion then the used to calculate
A. external return method A. final stock
B. net present value of method B. expected stock
C. net future value method C. expected final stock price
D. internal return method D. final stock price
655. Positive minimum risk portfolio of 661. For any or lower degree of risk, high-
any security shows that market secu- est or any expected return are con-
rity sold cepts use in
A. equal to original price A. risky portfolios
am
B. equal to sum of stocks B. behavior portfolios
C. less than original price C. inefficient portfolios
D. greater than original price D. efficient portfolios
iR
656. Standard deviation is 18% and coeffi- 662. In weighted average cost of capital,
cient of variation is 1.5% an expected a company can affect its capital cost
rate of return will be through
hr
A. 27.00% A. policy of capital structure

B. 12.00% B. policy of dividends
iS
C. 19.50% C. policy of investment

D. none of above D. all of above
657. Bonus share are not permitted un- 663. An expected final stock price is Rs
Ja
less the shares, if any, are made 45 and an original investment is Rs 25

fully-paid. then an expected capital gain will be
A. partly paid A. Rs 75.00
B. semi paid B. -Rs 75.00
C. fully paid C. -Rs 20.00
D. unpaid D. Rs 20.00
658. Cash inflows are revenues of project 664. An official entity that represents
and are represented by bondholders and ensures stated rules
A. hurdle number in indenture is classified as
B. relative number A. trustee
C. negative numbers B. trust
D. positive numbers C. stated entity
D. owner entity
659. Second step in determining efficient
portfolios is to consider efficient sub- 665. Range of probability distribution
set from set of with 68.26% lies within
A. (+ 3σ and-3σ ) 671. Indexed bonds that are issued by

B. (+ 4σ and-4σ ) linking payments to inflation are clas-
C. (+ 1σ and-1σ ) sified as
D. (+ 2σ and-2σ ) A. treasury inflation protected securi-
ties
666. Present value of portfolio is Rs 900 B. premium protected securities
and current value of stock in portfolio C. risk protected securities
is Rs 1500 then current option price D. liquidity protected securities
would be
672. Return on assets = 5.5%, Total as-
A. Rs 2,400.00
sets Rs 3,000 and common equity Rs
B. -Rs 600.00
1,050 then return on equity would be
C. -Rs 2,400.00
A. Rs 22,275.00
D. Rs 600.00 B. 15.71%
C. 1.93%
667. If market value is greater than book D. 1.925 times
value then investors for future stock
am
are considered as 673. Which of the following is not nor-
A. experienced mally one of the reasons for a change
B. inexperienced in an investor’s circumstances?
A. Change in market conditions
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C. pessimistic
D. optimistic B. Change in legal considerations
C. Change in time horizon
668. rate which is divided by compound- D. Change in tax circumstances
hr
ing periods to calculate periodic rate 674. Relevant cash flow which company
must be expects when its will implement
iS
A. annuity return
project is classified as
B. deferred annuity return A. irrelevant cash flow
C. nominal rate B. relevant cash flow
Ja
D. semi-annual discount rate C. incremental cash flow

D. decrease cash flow
669. Treasury yielded by bond is 7% and
market required return is 13% then 675. Type of bond which pays interest
market risk premium will be payment only when it earns is clas-
A. 2.16% sified as
B. 20.00% A. income bond
C. 6.00% B. interest bond
D. 0.53% C. payment bond
D. earning bond
670. An example of a derivative security 676. Portfolios lying on the upper right
is portion of the efficient frontier are
A. a common share of General Mo- likely to be chosen by
tors A. aggressive investors
B. a call option on Mobil stock B. conservative investors
C. a commodity futures contract C. risk-averse investors
D. B and C D. defensive investors
261
677. Type of bond in which payments are 683. An additional desired compensation
made on basis of inflation index is by investors for assuming an addi-
classified as tional risk on investment is classified
A. borrowed bond as
B. purchasing power bond A. risk premium
C. surplus bond B. investor premium
D. deficit bond C. additional premium
D. assumed premium
678. In capital asset pricing model, in-
vestors assume that buying and selling 684. A company sells its stock shares for
activity will raising more equity capital is classi-
A. affect stock prices fied as
B. not affect stock prices A. dealer communication offering
C. have high taxes B. seasoned equity offering
D. high transaction cost C. electronic equity offering
D. electronic order offering
679. Net investment in operating capital
am
is subtracted from net operating profit 685. Second mortgages pledged against
after taxes to calculate bond’s security are referred as
A. relevant inflows A. loan mortgages
B. medium mortgages
iR
B. free cash flow
C. relevant outflows C. senior mortgages
D. cash outlay D. junior mortgages
hr
680. Excess working capital results in 686. Risk per unit of return or stand alone
risk is represented by
A. Block of cash A. coefficient of standard
iS
B. Loosing interests B. coefficient of return

C. Lack of production C. coefficient of variation
D. Lack of smooth flow of produc- D. coefficient of deviation
Ja
tion 687. Price per share is Rs 25 and cash

681. The random walk hypothesis is most flow per share is Rs 6 then price to
related to the cash flow ratio would be
A. weak-form EMH A. 0.24 times
B. semi strong-form EMH B. 4.16 times
C. semi weak-form EMH C. 4.16%
D. strong-form EMH D. 24.00%
682. An uncovered cost at start of year is 688. A techniques uses to identify finan-
Rs 200, full cash flow during recovery cial statements trends are included
A. common size analysis
year is Rs 400 and prior years to full B. percent change analysis
recovery is 3 then payback would be C. returning ratios analysis
A. 5 years D. Both A and B
B. 3.5 years
C. 4 years 689. If stock market price is higher than
D. 4.5 years strike price so call option
A. price will be lower 695. An amount of company retain earn-

B. rate will be higher ing, return on equity and inflation are
C. price will be higher factors which effect
D. rate will be lower A. earning growth
B. return on assets
690. Investment is the C. return on sales
A. net additions made to the nation’s D. return on value
capital stocks
B. person’s commitment to buy a flat 696. Bond risk premium is 3% and bond
or house yield is 10.2% then cost of common
C. employment of funds on assets to stock will be
earn returns A. 3.40%
D. employment of funds on goods B. 13.20%
and services that are used in produc- C. 7.20%
tion process D. 30.60%
691. The relevant risk for a well- 697. Student loans, mortgages and car
am
diversified portfolio is loans are examples of
A. interest rate risk A. lump sum amount
B. inflation risk B. deferred annuity
C. annuity due
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C. business risk
D. market risk D. payment fixed series
692. All assets are perfectly divisible and 698. Rate denoted as r* is best classified
hr
liquid in as
A. tax free pricing model A. real risk-free interest rate
B. cost free pricing model B. real-risk free nominal rate
iS
C. capital asset pricing model C. real-risk free quoted rate

D. real-risk free nominal premium
D. stock pricing model
699. Chance of occurrence of any event
Ja
693. The rate of return on investment

is classified as
with the shortage of working
A. probability
capital. B. risk
A. falls C. chance
B. going D. event happening
C. constant
D. change 700. Preferred dividend is divided by pre-
ferred stock price multiply by (1-
694. Which of the following statement
floatation cost) is used to calculate
are true in respect of working capital? A. transaction cost of preferred stock
A. Gross Working Capital is the sum B. financing of preferred stock
of the total current assets C. weighted cost of capital
B. Net working capital represents D. component cost of preferred stock
current assets-current liablities
C. Net working capital can be nega-
tive 701. Which one of the following is not a
D. All the above money market securities?
263
A. Treasury bills 707. Future value of annuity

B. National savings certificate FVA(ordinary) is, if deposited value
C. Certificate of deposit is Rs 100 and earn 5% every year of
D. Commercial paper total three years will be
A. Rs 315.25
702. Over the Counter Exchange of In- B. Rs 331.01
dia was started after the role model C. Rs 99.49
of D. Rs 318.25
A. NASAQ
B. JASAQ 708. An amount invested is Rs 1500 and
C. NASDAQ& JASDAQ an amount received is Rs 2000 then
D. NSE return would be
A. Rs 500.00
703. Operating leverage measures B. -Rs 500.00
A. business risk C. Rs 3,500.00
D. -Rs 3,500.00
am
B. financial risk
C. both risks
709. Value generally promises to pay at
D. production risk
maturity date and a firm borrows is
iR
704. Retained earnings are? considered as bonds
A. an indication of a company’s liq- A. bond value
uidity B. per value
hr
B. the same as cash in the bank C. state value

D. par value
C. not important when determining
iS
dividends 710. The Markowitz model identifies the

D. the cumulative earnings of the efficient set of portfolios, which offers
company after dividends. the
Ja
A. highest return for any given level

705. Term structure premium, an inflation
of risk or the lowest risk for any given
of bond and bond default premium are
level of return
included in
B. least-risk portfolio for a conserva-
A. risk factors
tive, middle-aged investor
B. premium factors
C. long-run approach to wealth accu-
C. bond buying factors mulation for a young investor
D. multi model D. risk-free alternative for risk-
averse investors
706. Type of stock which have character-
istics of bonds and common stock is 711. Trading procedures dimensions in-
classified as clude
A. bonds equity A. location dimension
B. common shares B. method of matching orders
C. common stock C. price dimension
D. preferred stock D. Both A and B
712. The overall capitalization rate and 718. In capital budgeting, cost of capital
the cost of debt remain constant for is used as discount rate and is based
all degrees of leverage. This is pro- on pre-determines
nounced by A. cost of inflation
A. Traditional approach B. cost of debt and equity
B. Net operating income approach C. cost of opportunity
C. Net income approach D. cost of transaction
D. MM approach 719. Dividend expected on stock during
coming year is classified as
713. Stocks which has high book for mar- A. current dividend yield
ket ratio are considered as B. expected dividend yield
A. more risky C. yearly dividend
B. less risky D. past yield
C. pessimistic
D. optimistic 720. The largest single institutional
owner of common stocks is
am
714. Wages and salaries of employees A. mutual funds
which company owns in this accounts B. insurance companies
are called C. pension funds
D. commercial banks
iR
A. accrued expenses
B. accruals accounts 721. The focal point of financial manage-
C. Both A and B ment in a firm is
D. zero liabilities A. the number and types of products
hr
or services provided by the firm

715. The coupon rate is another name for B. the minimization of the amount of
iS
the taxes paid by the firm

A. market interest rate C. the creation of value for sharehold-
B. current yield ers
C. stated interest rate
Ja
D. the dollars profits earned by the

D. yield to maturity firm
716. According to Black Scholes model, 722. In time value of money, periodic rate
selling and buying of stock have is
A. discount rate A. not shown on timeline
B. transaction costs B. shown on timeline
C. no transaction costs C. multiplied on timeline
D. no discounts D. divided on timeline
723. In market analysis, market multiple
717. Under trading means.
is multiplied by firm earning before
A. Having low amount of working
interest, taxes, depreciation and amor-
capital
tization to calculate
B. High turnover of working capital
A. market total value
C. Sales are less compared to assets B. firm total value
employed C. industry value
D. Low turnover of working capital D. taxes value
265
724. In expected rate of return for con- 730. are financial assets.
stant growth, an expected total rate of A. Bonds
return must be B. Machines
A. less than expected yield on divi- C. Stocks
dend D. A and C
B. greater than expected yield on div- 731. A project whose cash flows are more
idend than capital invested for rate of return
C. equal to expected yield on divi- then net present value will be
dend A. positive
D. equal to one B. independent
C. negative
725. Mostly in financials, risk of portfolio D. zero
is smaller than that of assets
A. mean 732. Markets in which corporations raise
B. weighted average capital for creating market transaction
C. mean correlation which are classified as
am
D. negative correlation A. commercial markets
B. residential markets
726. Graph which is plotted for projected C. primary markets
net present value and capital rates is D. consumer credit loans
iR
called
A. net loss profile 733. Long-term solvency is indicated by
B. net gain profile A. Liquidity ratio
C. net future value profile B. Debt-equity ratio
hr
D. net present value profile C. Return coverage ratio

D. Both a and b
727. Stocks which has lower book for
iS
market ratio are considered as 734. Profitability index in capital budget-

A. optimistic ing is used for
B. more risky A. negative projects
Ja
C. less risky B. relative projects

D. pessimistic C. evaluate projects
D. earned projects
728. Variability of stock price, option
735. Yield on bond is 7% and market re-
term to maturity and risk free rate are
quired return is 14% then market risk
dependents of
premium would be
A. price of an option
A. 2.00%
B. expiry of an option B. 21.00%
C. exercise of an option C. 0.50%
D. estimation of an option D. 7.00%
729. Other factors held constant, but 736. The key item for investors on the in-
lesser project liquidity is because of come statement is
A. shorter payback period A. sales
B. greater payback period B. gross profit
C. less project return C. operating expenses
D. greater project return D. after-tax net income
737. An amount invested is Rs 2000 and 743. Method uses for an estimation of
return is Rs 200 then rate of return cost of equity is classified as
would be A. market cash flow
A. 0.10% B. future cash flow method
B. 10.00% C. discounted cash flow method
C. Rs 1,800.00 D. present cash flow method
D. Rs 2,200.00 744. If coupon rate is equal to going rate
of interest then bond will be sold
738. Relationship between risk free asset A. at par value
and a single risky asset are always B. below its par value
A. linear C. more than its par value
B. non-linear D. seasoned par value
C. efficient
D. effective 745. An inexpensive and easy business
formation and few government regu-
739. While calculating weighted average lations are advantages of
am
cost of capital A. Private Corporation
A. Preference shares are given more B. personal ownership
weight age C. proprietorship
B. Cost of issue is considered D. personal business
iR
C. Tax factor is ignored 746. A regulatory body which licenses
D. Risk factor is ignored brokers and oversees traders is classi-
fied as
hr
740. Greater value of option, larger span A. international firm of auction sys-
of time value is usually results in tem
iS
A. shorter call option B. international association of net-

B. longer call option work dealers
C. longer put option C. national firm of equity dealers
D. shorter put option
Ja
D. national association of securities

dealers
741. Tax free bonds issue for welfare by
industrial agencies or pollution con- 747. Standard deviation is divided by ex-
trol agencies are classified as pected rate of return is used to calcu-
A. agent bonds late
B. development bonds A. coefficient of variation
C. pollution control bonds B. coefficient of deviation
D. Both B and C C. coefficient of standard
D. coefficient of return
742. Type of option which cannot be ex-
748. A company who issues bonds or
ercised before an expiry date which is
stocks in result raised funds which
classified as
finally
A. European option
A. increases liabilities
B. American option B. increases equity
C. Australian option C. increases cash
D. money option D. decreases cash
267
749. Type of bonds that pays no coupon 755. Free cash flow is Rs 15000, operat-
payment but provides little apprecia- ing cash flow is Rs 3000, investment
tion are classified as outlay cash flow is Rs 5000 then sal-
A. depreciated bond vage cash flow will be
B. interest bond A. Rs 17,000.00
C. zero coupon bond B. -Rs 17,000.00
D. appreciation bond C. Rs 7,000.00
D. -Rs 7,000.00
750. According to capital asset pricing
model assumptions, variances, ex- 756. Markets which bring closer institu-
pected returns and covariance of all tions needing funds and with surplus
assets are funds are classified as
A. identical A. financial markets
B. not identical B. corporate institutions
C. fixed C. hedge firms
D. variable D. retirement planners
am
751. Nominal rate which is quoted to con- 757. values of assets purchased or liabil-
sumers on loans is considered as ities recorded as recorded by book-
A. annual percentage rate
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keepers are considered as
B. annual rate of return
A. appreciated values
C. loan rate of return
B. depreciated values
D. local rate of return
C. market values
hr
752. In calculation of time, value of D. book values

money, ”N ”represents
iS
A. number of payment periods 758. Markets which deal with buying and
B. number of investment selling of bonds, mortgages, notes and
C. number of instalments stocks are considered as
Ja
D. number of premium received A. financial instruments

B. financial asset markets
753. In call provision, it is stated that C. physical asset markets
company will pay to issue an amount D. easy markets
A. higher than par value
B. lower than par value 759. Cost of common stock is 16% and
C. equal to par value bond yield is 9% then bond risk pre-
D. zero to par value mium would be
A. 7.00%
754. Financial leverage measures B. 9.00%
A. sensitivity of EBIT with respect C. 1.78%
of% change with respect to output D. 25.00%
B. % variation in the level of produc-
tion 760. Future value of annuity FVA(due) is,
C. sensitivity of EPS with respect if deposited value is Rs 100 and earn
to% change in level of EBIT 5% every year of total three years will
D. no change with EBIT and EPS be
A. Rs 99.49 767. Greater the size of a business unit

B. Rs 318.25 will be the requirements of
C. Rs 315.25 working capital.
D. Rs 331.01 A. larger
761. Stockholders that do not get benefits B. lower
even if company’s earnings grow are C. no change
classified as D. fixed
A. preferred stockholders
B. common stockholders 768. When a company uses debt fund in
C. hybrid stockholders its financial structure, it will lead to a
D. debt holders change in
A. Financial leverage
762. Operating Leverage is the response B. Operating leverage
of changes in C. Money market leverage
A. EBIT to the changes in sales D. Stock market leverage
B. EPS to the changes in EBIT
am
C. Production to the changes in sales 769. Bonds issued to individuals by cor-
porations are classified as
763. In expected rate of return for con- A. municipal bonds
iR
stant growth, dividends are expected B. corporate bonds
to grow but with the C. U.S treasury bonds
A. constant rate D. mortgages
hr
B. variable rate
C. yielding rate 770. Future value of interest if it is calcu-
D. returning yield lated two times a year can be a classi-
iS
fied as
764. In capital market line, risk of effi-
A. semi-annual discounting
cient portfolio is measured by its
B. annual discounting
Ja
A. standard deviation
B. variance C. annual compounding
C. aggregate risk D. semi-annual compounding
D. ineffective risk
771. Political stability is the major factor
765. An unsystematic risk which can be concerning
eliminated but market risk is the A. exchange risk
A. aggregate risk B. systematic risk
B. remaining risk C. non-systematic risk
C. effective risk D. country risk
D. ineffective risk
766. For each component of capital, a re- 772. Companies that help to set bench-
quired rate of return is considered as marks are classified as
A. component cost A. competitive companies
B. evaluating cost B. benchmark companies
C. asset cost C. analytical companies
D. asset depreciation value D. return companies
269
773. Process of comparing company re- A. below its par value

sults with other leading firms is con- B. above its par value
sidered as C. equal to return rate
A. comparison D. seasoned price
B. analysis 780. If future return on common stock is
C. benchmarking
14% and rate on T-bonds is 5% then
D. return analysis
current market risk premium will be
774. Bonds issued by local and state gov- A. 19.00%
B. 9.00%
ernments with default risk are
C. Rs 9
A. municipal bonds D. Rs 19
B. corporation bonds
C. default bonds 781. The market price of a share of com-
D. zero bonds mon stock is determined by
A. the board of directors of the firm
775. Future beta is needed to calculate in B. the stock exchange on which the
am
most situations is classified as stock is listed
A. historical betas C. the president of the company
B. adjusted betas D. individuals buying and selling the
C. standard betas stock
iR
D. varied betas
782. Probability distribution is classified
776. Bonds having zero default risk are as normal if expected return lies be-
hr
classified as tween
A. U.S bonds A. ( + 1 and-1)
B. return security B. ( + 2 and-2)
iS
C. issued security C. ( + 3 and-3)

D. treasury bonds D. ( + 4 and-4)
783. The fixed proportion of working cap-
Ja
777. In uneven cash flow, ’IRR’ is an ab-

breviation of an ital should be generally financed from
A. internal rate of return the capital sources.
B. international rate of return A. fixed
C. intrinsic rate of return B. variable
C. semi-variable
D. investment return rate
D. borrowed
778. Value of stock is Rs 400 and required 784. Falling interest rate leads change to
rate of return is 20% then preferred bondholder income which is
dividend would be A. reduction in income
A. Rs 80.00 B. increment in income
B. Rs 8,000.00 C. matured income
C. Rs 20.00 D. frequent income
D. Rs 50.00
785. According to market risk premium,
779. If market interest rate fall below an amount of risk premium depends
coupon rate then bond will be sold upon investor
A. risk taking A. debt liabilities

B. risk aversion B. preferred stock
C. market aversion C. hybrid stock
D. portfolio aversion D. common liabilities
786. Right held with corporations to call 792. In capital asset pricing model, an
issued bonds for redemption is con- amount of risk that stock contributes
sidered as to portfolio of market is classified as
A. artificial provision A. stand-alone coefficient
B. call provision B. relevant coefficient
C. redeem provision C. alpha coefficient
D. original provision D. beta coefficient
787. Stock in large companies and own 793. In binomial approach of option pric-
by people who are not active in man- ing model, value of stock is subtracted
agement is classified as from call option obligation value to
am
A. self-held stock calculate
B. privately held stock A. current value of portfolio
C. publicly held stock B. future value of portfolio
D. enactive held stock C. put option value
iR
D. call option value
788. The expansion of CAPM is
A. Capital amount pricing model. 794. Risk of fall in income due to fall in
B. Capital asset pricing model.
hr
interest rates in future is classified as

C. Capital asset printing model. A. income risk
D. Capital amount printing model. B. investment risk
iS
C. reinvestment risk
789. Which of the following factors does D. mature risk
not affect the capital structure of a
Ja
company? 795. Stock option is more worthwhile if

A. Cost of capital it is
B. Composition of the current assets A. extremely volatile
C. Size of the company B. less volatile
D. Expected nature of cash flows C. stable stock
D. unstable price stock
790. Present value of future cash flows is
Rs 4150 and an initial cost is Rs 1300 796. Preferred stocks are also classified
then profitability index will be as
A. 3.00% A. intrinsic preference
B. Rs 3.19 B. perpetuities
C. 0.31 times C. extrinsic preference
D. Rs 5,450.00 D. weak preference
791. In situation of bankruptcy, stock 797. Value of stock is Rs 1200 and pre-
which is recorded above common ferred dividend is Rs 120 then re-
stock and below debt account is quired rate of return would be
271
A. Rs 144,000.00 A. preferred stock account

B. 10.00% B. common stock account
C. Rs 10.00 C. due stock account
D. 0.2 times D. preceded stock account
798. Operating leverage = 804. The value of bond depends on

A. contribution / EBIT A. the coupon rate
B. contribution / EBT B. years to maturity
C. contribution / total expenses C. expected yield to maturity
D. all the above
D. contribution / operating PBT
805. An expected dividend yield is sub-
799. Financial security which is tax ex-
tracted from an expected rate of return
empted and issues by state govern-
which is used to calculate
ments to individuals is classified as A. specialized growth rate
A. U.S treasury bonds B. capital gains yield
B. mortgages C. casual growth yield
am
C. municipal bonds D. past growth rate
D. corporate bonds
806. An interest rate which is quoted by
800. An expected dividend yield is 7.5% brokers, banks and other financial in-
iR
and an expected rate of return is stitutions is classified as
15.5% then constant growth rate will A. annuity rate
be B. perpetuity rate
C. nominal rate
hr
A. 22.00%
B. 8.00% D. external rate of return
C. 23.00%
iS
807. In internal rate of returns, discount

D. 2.06%
rate which forces net present values
801. Federal government tax revenues if to become zero is classified as
Ja
it exceeds government spending then A. positive rate of return

it is classified as B. negative rate of return
C. external rate of return
A. budget surplus
D. internal rate of return
B. budget deficit
C. Federal Reserve 808. An annual estimated costs of assets
D. federal budget uses up every year are included
A. depreciation and amortization
802. Step in initial public offering in B. net sales
which hired agents act on behalf of C. net profit
owners is classified as D. net income
A. hiring problems
B. agency problems 809. The primary goal of the financial
C. corporation internal problems management is
D. corporation external problems A. to maximize the return
B. to minimize the risk
803. Proceeds of company shares of sold C. to maximize the wealth of owners
stock is recorded in D. to maximize profit
810. First step in determining an efficient D. of the same category, eg blue

portfolio is to consider chips
A. set of attainable portfolios
B. set of unattainable portfolios 816. An interest rate which is paid by
C. set of attributable portfolios money borrower and charged by
D. set of attributable portfolios lender is considered as
A. annual rate
811. A method of inventory recording B. periodic rate
which produces high inventories in C. perpetuity rate of return
balance sheet is classified as D. annuity rate of return
A. First out receivable
B. First in first out 817. Which of the following ratios is not
C. Last in first out affected by the financial structure and
D. last out receivable the tax rate of a company?
A. Net profit margin
812. Bond’s promised rate of return is B. Earning power
also considered as C. Earnings per share
am
A. yield to earning D. Capitalization rate
B. yield to investors
C. yield to maturity 818. Sum of discounted cash flows is best
iR
D. yield to return defined as
A. technical equity
813. Which of the following is the as- B. defined future value
sumption of the MM model on div- C. project net present value
hr
idend policy? D. equity net present value

A. The firm is an all-equity firm
819. Company low earning power and
iS
B. The investments of the firm are

financed solely by retained earnings high interest cost cause financial
C. The firm has an infinite life changes which have
D. None of the above A. high return on equity
Ja
B. high return on assets

814. Betas tend to move towards 1.0 with C. low return on assets
passage of time are classified as D. low return on equity
A. standard betas
B. varied betas 820. In retention growth model, payout
C. historical betas ratio is subtracted from one to calcu-
D. adjusted betas late
A. present value ratio
815. Owning two securities instead of one B. future value ratio
will not reduce the risk taken by an C. retention ratio
investor if the two securities are D. growth ratio
A. perfectly positively correlated
with each other 821. Coupon rate of convertible bond is
B. perfectly independent of each A. higher
other B. lower
C. perfectly negatively correlated C. variable
with each other D. stable
273
822. Left side of balance sheet states the A. Rs 50.00

A. appreciated earnings B. Rs 10.00
B. liabilities C. Rs 65.00
C. assets D. Rs 15.00
D. stocks earnings
829. Ratios which relate firm’s stock to its
823. Asset allocation affects the in- book value per share, cash flow and
vestor’s return by earnings are classified as
A. altering the returns on individual A. return ratios
assets B. market value ratios
B. weighting the portfolio return by C. marginal ratios
the allocation D. equity ratios
C. assuring diversification 830. In binomial approach of option pric-
D. increasing the investor’s use of
ing model, last step for finding an op-
mutual funds
tion is
A. price hike
am
824. An annuity with an extended life is
B. price value
classified as
C. put price
A. extended life
D. call price
B. perpetuity
iR
C. deferred perpetuity 831. Total assets divided common equity
D. due perpetuity is a formula uses for calculating
A. equity multiplier
hr
825. Dividends are paid B. graphical multiplier

A. monthly C. turnover multiplier
B. quarterly D. stock multiplier
iS
C. semi-annually
D. yearly 832. Operating incomes and the discount
rate of a particular risk class are the 2
Ja
826. Setup cost is a type of cost. factors determining

A. fixed A. Dependence hypothesis
B. variable B. Traditional view
C. semi variable C. Modern view
D. carrying D. Independence hypothesis
827. Slope coefficient of beta is classified 833. Altering the leverage ratio does not
statistically significant if its probabil- influence the market value of the firm.
ity is This is the basic premise of
A. greater than 5% A. net income approach
B. equal to 5% B. traditional approach
C. less than 5% C. modern approach
D. less than 2% D. net operating income approach
828. Dividend yield is 25% and current 834. Call options situation in which strike
price is Rs 40 then dividend yield will price is greater than current price of
be stock is classified as
A. out-of-the-portfolio 840. In order to determine the expected

B. in-the-portfolio return of a portfolio, all of the follow-
C. in-the-money ing must be known except
D. out-of-the-money A. probabilities of expected returns
of individual assets
835. Type of bonds that are issued by for- B. weight of each individual asset to
eign governments or foreign corpora- total portfolio value
tions are classified as C. expected return of each individual
A. zero risk bonds asset
B. zero bonds D. all of the above must be known in
C. foreign bonds order to determine the expected return
D. government bonds of a portfolio
836. Preferred dividend is Rs 60 and re- 841. are a way U. S. investors can
quired rate of return is 20% then value invest in foreign companies.
of preferred stock will be A. ADRs
am
A. Rs 40.00 B. IRAs
B. Rs 120.00 C. SDRs
C. Rs 12.00 D. GNMAs
iR
D. Rs 300.00
842. Situation in which company replaces
837. Input call parity relationship, present existing assets with new assets is clas-
value of exercise price is added to call sified as
hr
option which is equal to A. replacement projects

A. put option stock B. new projects
iS
B. call option + stock C. existing projects

C. call option + market price D. internal projects
D. put option + market price
Ja
843. Total amount of depreciation

838. One of the statements given be- charged on long term assets is classi-
low provides evidence for the semi- fied as
strongly efficient form. A. accumulated depreciation
A. Low P/E ratio effect B. depleted depreciation
B. The size effect C. accumulated appreciation
C. Effect on the stock split D. accumulated appreciation sched-
D. Weekend effect ule
839. If payment of security is paid as Rs 844. An interest rate which is used in

100 at end of year for three years, it is calculation of cash flows of bonds is
an example of called
A. fixed payment investment A. required rate of redemption
B. lump sum amount B. required rate of earning
C. fixed interval investment C. required rate of return
D. annuity D. required option
275
845. An unlimited liability is classified as 851. In which of the following sections

liabilities of the of a balance sheet are "Inventories"
A. limited partners listed?
B. general partners A. Current assets
C. venture partners B. Property, plant and equipment, at
D. corporate partners cost
C. Current liabilities
846. Securities with less predictable D. Shareholders’ Equity
prices and have longer maturity time 852. Hewlett-Packard and Microsoft are
is considered as examples of
A. cash equivalents A. limited corporate business
B. long-term investments B. unlimited corporate business
C. inventories C. controlled corporate business
D. short-term investments D. corporation
853. Yield of interest rate which is below
847. Cash outflows are costs of project
am
than coupon rate, this yield is classi-
and are represented by fied as
A. negative numbers A. yield to maturity
B. positive numbers B. yield to call
iR
C. hurdle number C. yield to earning
D. relative number D. yield to investors
848. Sum of market risk and diversifiable 854. Net present value is a popular
hr
risk are classified as total risk which method which falls

A. With in non-discount cash flow
is equivalent to
iS
method
A. Sharpe’s alpha B. With in discount cash flow method
B. standard alphas C. Equal With in non-discount cash
C. alpha’s variance flow method
Ja
D. variance D. No discount cash flow
849. is concerned with the maxi- 855. Risk free rate is subtracted from ex-
mization of a firm’s stock price. pected market return is considered as
A. Shareholder wealth maximization A. country risk
B. diversifiable risk
B. Profit maximization C. equity risk premium
C. Stakeholder welfare maximization D. market risk premium
D. EPS maximization
856. Working capital management is man-
850. Corporations that buy financial in- aging
struments with money accepted from A. short term assets and liabilities
savers are classified as B. long term assets
C. long terms liabilities
A. debit funds
D. only short term assets
B. credit funds
C. mutual funds 857. The value of a derivative security
D. insurance funds
A. depends on the value of the related 863. Project whose cash flows are less
primitive security than capital invested for required rate
B. can only cause increased risk of return then net present value will
C. is unrelated to the value of the re- be
lated primitive security A. negative
D. is worthless today B. zero
C. positive
858. Price per ratio is divided by cash D. independent
flow per share ratio which is used for
calculating 864. Pre-emptive right of common stock-
A. dividend to stock ratio holders are necessarily included in
B. sales to growth ratio company
C. cash flow to price ratio A. laws
D. price to cash flow ratio B. purchase chart
C. corporate charter
859. A company purchases goods but D. selling charter
am
does not pay payments to suppliers
865. In capital budgeting, a technique
immediately and record them as
A. account payable which is based upon discounted cash
B. account receivable flow is classified as
iR
C. current liabilities A. net present value method
D. accumulated liabilities B. net future value method
C. net capital budgeting method
860. In expected rate of return for con- D. net equity budgeting method
hr
stant growth, stock price must grow 866. The last step in fundamental analysis
according to an expected rate and is
iS
A. at same price A. economic analysis

B. at different price B. industry analysis
C. at yielded price C. company analysis
Ja
D. at buying price D. technical analysis

861. Type of financial security in which 867. First step in calculating value of
loans are secured by borrower’s prop- stock with non-constant growth rate
erty is classified as is to
A. municipal bonds A. estimate expected dividend
B. corporate bonds B. actual expected dividend
C. U.S treasury bonds C. estimate number of share
D. mortgages D. estimate intrinsic shares
862. An interest rate which is paid by firm 868. Capital market line reflects an atti-
as soon as it issues debt is classified tude of investors towards risk which
as pre-tax is considered as an/a
A. term structure A. non-aggregate
B. market premium B. effective
C. risk premium C. ineffective
D. cost of debt D. aggregate
277
869. An inventory recording in balance A. identical and fixed returns

sheet includes B. risk free rate of interest
A. First in first out C. fixed rate of interest
B. Last in first out D. risk free expected return
C. last in last out
874. Real risk-free rate is applicable
D. Both A and B
when it is expected that there will be
A. high inflation
870. The return relative solves the prob-
B. low inflation
lem of C. no inflation
A. inflation D. none of above
B. negative returns
C. interest rates 875. Right of common stockholders to
D. tax differences purchase additional stock issued by
company is classified as
871. Shares having no face value are A. common right
known as B. pre-emptive right
am
A. no par stock C. purchase right
B. at par stock D. selling right
C. equal stock
876. In retention growth model, percent
iR
D. debt equity stock
of net income firms usually pay out as
872. The rational expectations model of shareholders dividends is classified as
dividend policy says that A. payout ratio
hr
B. payback ratio
A. Since the expectations of the in-
C. growth retention ratio
vestors are always rational, there will
D. present value of ratio
iS
be no effect of dividend policy on the

valuation of the firm 877. In proper capital budgeting analysis
B. If the investors have rational ex- we evaluate incremental
Ja
pectations, they will value a divi- A. accounting income

dend paying firm higher than a non- B. cash flow
dividend paying firm C. earnings
C. If the declared dividend is in line D. operating profit
with expectations of the investors,
878. Net income available to stockhold-
there will be no effect on the valuation
ers is Rs 125 and total assets are Rs
of the firm
1,096 then return on common equity
D. If the declared dividend is in ac-
would be
cordance with the expectations, the A. 0.11%
change in the firms value will be min- B. 11.40%
imal C. 0.12 times
D. 12.00%
873. According to capital asset pricing
model assumptions, investors will bor- 879. In options pricing, an exercise price
row unlimited amount of capital at rises from lower to higher which leads
any given to
A. volatile options A. free reserves

B. option value increases B. free interest
C. option value decreases C. free bonus
D. option value stable D. free cash dividend
880. Type of options in which buyer of 886. An average return of portfolio di-
options has call on 200 shares in stock vided by its coefficient of beta is clas-
is classified as sified as
A. call option A. Sharpe’s reward to variability ra-
B. stated option tio
C. unstated option B. treynor’s reward to volatility ratio
D. contractual option C. Jensen’s alpha
D. treynor’s variance to volatility ra-
881. Companies take savings as premium, tio
invest in bonds and make payments to 887. Third step in binomial approach of
beneficiaries are classified as option pricing is to
A. debit unions
am
A. equalize beginning price
B. life insurance companies B. equalize range of payoffs
C. credit unions C. equalize domain of payoff
D. auto purchases D. equalize ending price
iR
882. A group of mutual funds with a com- 888. Redemption option which protects
mon management are known as investors against rise in interest rate
A. fund syndicates is considered as
hr
B. fund conglomerates A. redeemable at deferred

C. fund families B. redeemable at par
D. fund complexes C. redeemable at refund
iS
D. redeemable at finding
883. A premium which reflects possibility
of issuer who does not pay principal 889. The sustainable growth rate of a firm
Ja
amount of bonds is called can be calculated as the product of

A. seasoned risk premium the
B. nominal risk premium A. return on assets and the return on
C. default risk premium equity
D. quoted risk premium B. dividend payout ratio and leverage
C. retention rate and the return on eq-
884. In weighted average cost of capital, uity
capital components are funds that usu- D. net profit margin and total sales
ally offer by 890. A portfolio which lies below the ef-
A. stock market
ficient frontier is described as
B. investors A. optimal
C. capitalist B. unattainable
D. exchange index C. dominant
D. dominated
885. The bonus issue is permitted to be
made out of and premium col- 891. Rational traders immediately sell
lected in cash. stock when price is
279
A. conditional 897. Price earning ratio and price by cash

B. inefficient portfolio flow ratio are classified as
C. too low A. marginal ratios
D. too high B. equity ratios
C. return ratios
892. Nominal interest rates and nominal D. market value ratios
cash flows are usually reflected the 898. Sellers of options in financial mar-
A. inflation effects kets are classified as
B. opportunity effects A. expiry writer
C. equity effects B. option writer
D. debt effects C. contract writer
D. bond writer
893. Method of stock valuation which is
multiple of earning per share, book 899. A type of business ownership in
value and net income is classified as which two or more entities join to-
A. stock multiple analysis gether for profit purpose is classified
am
B. dividend multiple analysis as
C. market multiple analysis A. partnership
D. stock and multiple analysis B. joint business
C. joint profit
iR
894. A tighter probability distribution D. corporate business
shows the 900. Portfolio risk is best measured by
A. higher risk the
hr
B. lower risk A. expected value

C. expected risk B. portfolio beta
D. peaked risk C. weighted average of individual
iS
risk
895. Degree of total leverage can be ap- D. standard deviation
plied in measuring change in
Ja
A. EBIT to a percentage change in 901. An expected rate of return is denoted

quantity by
A. e-bar
B. EPS to a percentage change in B. r-bar
EBIT C. r-hat
C. EPS to a percentage change in D. e-hat
quantity
D. Quantity to a percentage change 902. Gross fixed asset expenditures is Rs
in EBIT 6000 and free cash flow is Rs 8000
then operating cash flows will be
896. Current option price is added to A. -Rs 14,000.00
present value of portfolio for calcu- B. Rs 2,000.00
lating C. Rs 14,000.00
D. -Rs 2,000.00
A. future value of portfolio
B. current value of stock 903. At last day when European and
C. future value of stock American option can be exercised is
D. present value of portfolio classified as
A. European date A. Share splitting

B. American date B. Declaring bonus shares
C. expiration date C. Rights issue
D. money date D. New issue
910. Operating leverage examines.
904. In capital budgeting, number of non-
A. The effect of the change in the
normal cash flows have internal rate
quantity on EBIT
of returns are B. The effect of the change in EBIT
A. one on the EPS of the company
B. multiple C. The effect of the change in output
C. accepted to the EPS of the company
D. non-accepted D. The effect of change in EPS on
the output of the company
905. Investors can normally afford to as-
sume larger risks in the phase 911. An annual rate of 16% if quoted by
of the life-cycle. credit card issuer usually a bank is
am
A. accumulation classified as
B. consolidation A. loan rate of return
C. spending B. local rate of return
D. gifting C. annual percentage rate
iR
D. annual rate of return
906. The arbitrary process is the behav-
912. Life that maximizes net present
ioral foundation for the
value of an asset is classified as
hr
A. MM approach
A. minimum life
B. XX approach B. present value life
C. Gorder approach C. economic life
iS
D. Miller approach D. transaction life

907. The time required to process and ex- 913. In weighted average cost of capital,
Ja
ecute an order is called cost of capital which is risk adjusted

A. allowed time and developed for each category of
B. lead time A. long-term projects
C. accepted time B. industry [industrial] projects
D. fixed time C. divisional projects
D. short-term projects
908. Market risk premium is 8% and risk
914. In capital asset pricing model, char-
free return is 7% then market required
acteristic line is classified as
return would be A. regression line
A. 15.00% B. probability line
B. 1.00% C. scattered points
C. 5.60% D. weighted line
D. 1.14%
915. Sales revenue Rs 90,000, operating
909. Which of the following methods taxes Rs 30,000 and operating capi-
does a firm resort to avoid dividend tal Rs 15,000 then value of free cash
payments? flows (in USD) will be
281
A. Rs 45,000.00 A. cash flow of financing activities

B. Rs 13,500.00 B. cash flow per share
C. Rs 65,000.00 C. cash flow of investment
D. Rs 75,000.00 D. cash flow of operations
916. Financial leverage is also known as. 922. If profit margin = 4.5% and total as-
A. Trading on equity sets turnover = 1.8% then return on
B. Trading on debt assets DuPont equation would be
C. Interest on equity A. 2.50%
B. 8.10%
D. Interest on debt
C. 0.40%
917. The company’s cost of capital is D. 4.00%
called 923. Financial security in which there is
A. Leverage no default risk and issues by U.S gov-
B. Hurdle rate ernments is classified as
C. Risk rate A. U.S treasury bonds
am
D. Return rate B. mortgages
C. municipal bonds
918. A theory which states that assets are D. corporate bonds
traded at price equal to its intrinsic
iR
value is classified as 924. Situation in which one project is ac-
A. efficient money hypothesis cepted while rejecting another project
B. efficient market hypothesis in comparison is classified as
hr
C. inefficient market hypothesis A. present value consent

D. inefficient money hypothesis B. mutually exclusive
C. mutual project
iS
919. Long-term equity anticipation secu- D. mutual consent

rity is usually classified as
925. * In expected rate of return for con-
A. short-term options
Ja
stant growth, capital gains is divided

B. long-term options
by capital gains yield to calculate
C. short money options
A. returning price
D. yearly call B. ending price
C. beginning price
920. Dividends paid to common share- D. regular price
holders and divided by common
shares outstanding are equals to 926. If a market is inefficient, as new
A. earning per share information is received about a
B. dividends per share security
C. book value of share A. nothing will happen
D. market value of shares B. the stock price will fall at first and
then later rise
921. Collection of net income, amortiza- C. there will be a lag in the adjust-
tion and depreciation is divided by ment of the stock price
common shares outstanding to calcu- D. there will be negative demand for
late the stock
927. Range of probability distribution 933. Rate of return which considers risk-
with 99.74% lies within iness and an available returns on in-
A. (+ 3σ and-3σ ) vestments is classified as
B. (+ 4σ and-4σ ) A. constant dividend
C. (+ 1σ and-1σ ) B. constant rate
D. (+ 2σ and-2σ ) C. maximum rate of return
D. minimum acceptable rate of return
928. An uncovered cost at start of year is
divided by full cash flow during re-
934. If risk can be eliminated with help
covery year then added in prior years
of diversification, then relevant risk is
to full recovery for calculating A. smaller than stand-alone risk
A. original period B. larger than stand-alone risk
B. investment period C. smaller than diverse risk
C. payback period D. larger than diverse risk
D. forecasted period
935. In an individual stock, relevant risk
am
929. Cost of new debt or marginal debt is is classified as
also classified as A. alpha coefficient
A. historical rate B. beta coefficient
B. embedded rate C. stand-alone coefficient
iR
C. marginal rate D. relevant coefficient
D. Both A and B 936. Coefficient of variation is used to
identify an effect of
hr
930. Present value of portfolio is Rs 1300 A. risk

and current value of stock in portfolio B. return
iS
is Rs 2300 then current option price C. deviation

will be D. Both A and B
A. Rs 3,600.00
B. Rs 1,000.00 937. Which, among the following, are
Ja
C. Rs 1,250.00 common misconceptions about cost

D. Rs 1,500.00 of capital?
A. Depreciation-generated funds
931. Of all stocks in a portfolio, required have no cost
rate of return is classified as B. Cost of capital is low if a project
A. return portfolio is heavily debt-financed
B. in volatile portfolio C. Cost of equity is equal to the divi-
C. volatile portfolio dend rate
D. market portfolio D. All of the above
938. According to top rating agencies
932. Which of the following would be
S&P double-B and other lower grade
considered a risk-free investment?
bonds are classified as
A. Gold
A. development bonds
B. Equity in a house B. junk bonds
C. High-grade corporate bonds C. compounded bonds
D. Treasury bills D. discounted bonds
283
939. An amount invested is Rs 4000 and 945. Present value of future cash flows is
return is Rs 300 then rate of return divided by an initial cost of project to
will be calculate
A. 4.30% A. negative index
B. 3.70% B. exchange index
C. 7.50% C. project index
D. 0.08% D. profitability index
940. In capital budgeting, a negative net 946. The cash management refers to man-
present value results in agement of
A. zero economic value added A. cash only
B. percent economic value added B. cash and bank balances
C. cash and near cash assets
C. negative economic value added
D. fixed assets
D. positive economic value added
947. Future value of interest if it is calcu-
941. Reinvestment risk of bonds is usu- lated once a year is classified as
am
ally higher on A. One time compounding
A. income bonds B. annual compounding
B. callable bonds C. semi-annual compounding
iR
C. premium bonds D. monthly compounding
D. default free bonds
948. Type of interest rates consist of
942. A markets which deals with long- A. nominal rates
hr
term corporate stocks are classified B. periodic rates

as C. effective annual rates
D. all of above
iS
A. liquid markets
B. short-term markets
949. Coupon rate of bond is also called
C. capital markets
A. nominal rate
Ja
D. money markets
B. premium rate
943. Maturity date decides at time of is- C. quoted rate
D. both a and c
suance of bond and legally permissi-
ble is classified as 950. The amount of the temporary work-
A. original maturity ing capital
B. permanent maturity A. keeps on fluctuating from time to
C. artificial maturity time
D. valued maturity B. remains constant for all times
C. financed through long term ser-
944. During planning period, a marginal vices
cost for raising a new debt is classified D. none of the above.
as
A. debt cost 951. Stock market theory which states
B. relevant cost that stocks are in equilibrium and im-
C. borrowing cost possible for investors to beat market
D. embedded cost is classified as an
A. inefficient market hypothesis 956. Miller-Orr Model is suitable in those

B. efficient market hypothesis circumstances when the
C. efficient stock hypothesis A. demand for cash is steady
D. inefficient stock hypothesis B. demand for cash is not steady
C. carry cost and transaction cost are
952. Present value of future cash flows is to be kept at minimum
Rs 2000 and an initial cost is Rs 1100 D. demand for cash is variable
then profitability index will be
A. 55.00% 957. Value of stock as concluded with
B. 1.82 help of analysis by particular investor
C. 0.55 is classified as
D. 1.82% A. particular value
B. intrinsic value
953. Financial risk is most associated C. fundamental value
with D. Both B and C
A. the use of equity financing by cor-
am
porations 958. Growth rate which is predicted by
B. the use of debt financing by corpo- marginal investors for dividends is
rations classified as
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C. Equity investments held by corpo- A. expected growth rate
rations B. annual growth rate
D. Debt investments held by corpora- C. past growth rate
tions. D. unexpected growth rate
hr
954. The probability of bankrupt is 959. Beta measures the

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A. Investment risk rate

higher.
B. Financial risk
A. for a levered firm than an unlev-
C. Market risk
ered firm
D. Market and finance risk
Ja
B. for an unlevered firm than a lev-

ered firm 960. In expected rate of return for con-
C. only levered firm stant growth, an expected dividend
D. only unlevered firm yield must be
A. functional decreasing
955. A growth industry is defined as B. constant
C. continuously growing
A. an industry with 15% rate of D. functional increasing
growth per annum
B. an industry where demand for its 961. An exercise of option in future and
product is growing part of option call value depends
C. an industry with high capital in- specifically on
vestment A. PV of exercising cost
D. an industry with average growth B. FV of exercising cost
higher than the growth of the econ- C. PV of cost volatility
omy D. FV of cost volatility
285
962. Finance company providing loans at 968. Capital gain expected by stockhold-
3% with five compounding periods ers and dividends are included in
per year, nominal annual rate is clas- A. debt rate
sified as B. investment return
A. 15.00% C. interest rate
B. 0.60% D. cost of equity
C. 10.00% 969. External factors such as expiration
D. 1.67%
of basic patents and industry competi-
963. An inflation free rate of return and in- tion effect
flation premium are two components A. patents premium
B. competition premium
of
C. company’s beta
A. quoted rate D. expiry premium
B. unquoted rate
C. steeper rate 970. Investors seeking to avoid actively
D. portfolio rate managing their portfolios will prefer
am
which of the following assets?
964. Cash flows that should be considered A. Common stock
for decision in hand are classified as B. Commercial bank deposits
A. relevant cash flows C. Financial futures
iR
B. irrelevant cash flows D. Real estate
C. marginal cash flows
D. transaction cash flows 971. Tendency of moving together of two
hr
variables is classified as
965. In corporation characteristics, an A. correlation
easy transferring and division of stock B. move tendency
iS
of shares is classified as C. variables tendency

A. ownership interest transferability D. double tendency
B. deceased transferability
972. Financial security with low degree
Ja
C. shared division
D. deceased division risk and investment held by busi-
nesses is classified as
966. Corporations such as Citigroup, A. treasury bills
American Express and Fidelity are B. commercial paper
classified as C. negotiable certificate of deposit
A. financial services corporations D. money market mutual funds
B. common service corporations 973. Double declining balance method
C. preferred service corporations and sum of years digits are included
D. commercial service corporations
in
967. An expected dividend yield is added A. yearly method
B. single methods
into expected growth rate to calculate
C. double methods
A. dividend return D. accelerated methods
B. expected rate of return
C. expected capital 974. Which of the following would not be
D. invested capita considered as capital market security?
A. A corporate bond A. subtracting operating cost from

B. A common stock net sales
C. A 6-month Treasury bill B. subtracting net sales from operat-
D. A mutual fund share ing costs
C. adding operating cost and net
975. The method of raising equity capital
sales
from existing members by offering se- D. adding interest and taxes
curities on pro rata basis is referred to
as 979. While calculating the weighted av-
A. Public issue erage cost of capital, market value
B. Right Issue weights are preferred because
C. Private placement A. Book value weights are historical
D. Bought-Out-Deal in nature
B. This is in conformity with the def-
976. An annual interest payment divided
inition of cost of capital as the in-
by current price of bond is considered
vestors minimum required rate of re-
as
am
A. current yield turn
B. maturity yield C. Book value weights fluctuate vio-
C. return yield lently
D. Market value weights are fairly
iR
D. earning yield
consistent over a period of time.
977. For investors, steeper slope of indif-
ference curve shows more 980. Formula Sales revenue minus oper-
hr
A. risk averse investor ating cost and taxes minus operating

B. risk taker investor capital investments is used to calcu-
iS
C. in differential investor late

D. ineffective investment A. available income
B. cash income
978. An earning before interest, taxes, de- C. free cash flows
Ja
preciation and amortization are calcu- D. free distribution

lated by
Answers
1. B 2. A 3. D 4. A 5. C 6. C 7. C 8. B 9. C 10. D 11. C 12. C 13. B

14. C 15. C 16. D 17. B 18. D 19. A 20. C 21. B 22. D 23. C 24. C
25. C 26. A 27. A 28. C 29. C 30. A 31. B 32. A 33. C 34. A 35. D
36. D 37. D 38. C 39. A 40. B 41. D 42. A 43. C 44. A 45. D 46. C
47. D 48. B 49. C 50. C 51. C 52. A 53. A 54. A 55. B 56. B 57. B
58. C 59. A 60. D 61. C 62. B 63. C 64. C 65. A 66. C 67. A 68. D
69. A 70. B 71. B 72. B 73. A 74. A 75. C 76. A 77. A 78. A 79. D
80. A 81. A 82. A 83. C 84. A 85. A 86. A 87. A 88. A 89. C 90. B
91. B 92. A 93. D 94. B 95. C 96. B 97. A 98. B 99. D 100. A 101. A
287
102. A 103. B 104. C 105. C 106. C 107. C 108. C 109. B 110. B 111. B
112. B 113. B 114. A 115. C 116. D 117. C 118. D 119. B 120. C 121. A
122. A 123. B 124. A 125. B 126. D 127. D 128. A 129. C 130. D 131. C
132. B 133. A 134. A 135. C 136. C 137. D 138. C 139. D 140. B 141. C
142. D 143. D 144. C 145. A 146. A 147. A 148. C 149. A 150. A 151. B
152. C 153. A 154. A 155. B 156. D 157. D 158. A 159. A 160. C 161. D
162. B 163. B 164. B 165. C 166. A 167. C 168. A 169. D 170. D 171. B
172. B 173. D 174. A 175. A 176. A 177. A 178. A 179. B 180. B 181. A
182. A 183. C 184. B 185. A 186. A 187. D 188. A 189. B 190. C 191. D
192. A 193. D 194. A 195. B 196. C 197. D 198. D 199. C 200. A 201. B
202. A 203. B 204. A 205. A 206. D 207. C 208. C 209. A 210. A 211. A
212. C 213. B 214. A 215. A 216. D 217. B 218. C 219. C 220. D 221. D
222. A 223. D 224. C 225. A 226. B 227. D 228. D 229. C 230. B 231. B
232. D 233. A 234. A 235. A 236. A 237. B 238. B 239. B 240. A 241. C
242. A 243. D 244. A 245. D 246. A 247. A 248. B 249. D 250. A 251. D
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252. A 253. A 254. C 255. C 256. D 257. B 258. C 259. C 260. D 261. A
262. D 263. B 264. B 265. C 266. D 267. B 268. D 269. A 270. D 271. B
272. A 273. B 274. D 275. B 276. A 277. D 278. C 279. D 280. C 281. D
282. C 283. D 284. C 285. A 286. D 287. C 288. B 289. A 290. A 291. A
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292. B 293. C 294. B 295. A 296. B 297. D 298. A 299. A 300. D 301. B
302. A 303. D 304. B 305. A 306. B 307. A 308. B 309. B 310. B 311. D
312. C 313. D 314. D 315. B 316. A 317. A 318. A 319. B 320. A 321. B
hr
322. A 323. A 324. A 325. A 326. C 327. B 328. A 329. D 330. B 331. C
332. B 333. C 334. A 335. D 336. C 337. A 338. D 339. B 340. B 341. B
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342. B 343. B 344. C 345. B 346. D 347. D 348. A 349. D 350. C 351. A
352. C 353. D 354. B 355. E 356. B 357. A 358. C 359. D 360. D 361. A
362. B 363. A 364. C 365. D 366. A 367. A 368. A 369. D 370. E 371. B
Ja
372. B 373. A 374. B 375. B 376. A 377. C 378. D 379. B 380. D 381. D
382. A 383. A 384. A 385. D 386. D 387. A 388. A 389. B 390. D 391. C
392. C 393. C 394. D 395. C 396. B 397. D 398. D 399. A 400. B 401. B
402. A 403. D 404. A 405. A 406. B 407. A 408. C 409. A 410. C 411. C
412. B 413. C 414. D 415. A 416. B 417. D 418. B 419. B 420. B 421. C
422. B 423. B 424. A 425. B 426. A 427. B 428. B 429. C 430. C 431. A
432. D 433. B 434. A 435. D 436. A 437. D 438. D 439. B 440. A 441. A
442. B 443. D 444. C 445. C 446. A 447. A 448. A 449. D 450. A 451. D
452. A 453. A 454. A 455. A 456. D 457. D 458. C 459. B 460. C 461. A
462. A 463. A 464. A 465. D 466. C 467. C 468. C 469. D 470. C 471. B
472. D 473. A 474. C 475. B 476. A 477. D 478. A 479. A 480. A 481. D
482. A 483. D 484. D 485. C 486. B 487. D 488. B 489. D 490. B 491. C
492. B 493. D 494. D 495. B 496. C 497. A 498. A 499. D 500. C 501. B
502. D 503. A 504. C 505. C 506. D 507. D 508. A 509. A 510. B 511. C
512. C 513. A 514. B 515. C 516. A 517. D 518. A 519. E 520. D 521. A
522. A 523. B 524. C 525. C 526. B 527. A 528. C 529. B 530. B 531. D
532. C 533. D 534. A 535. B 536. B 537. B 538. C 539. B 540. D 541. B
542. A 543. D 544. C 545. C 546. B 547. B 548. C 549. C 550. B 551. B
552. B 553. A 554. B 555. B 556. A 557. D 558. C 559. D 560. B 561. D
562. D 563. A 564. A 565. B 566. A 567. D 568. C 569. A 570. A 571. A
572. C 573. A 574. A 575. A 576. C 577. B 578. B 579. A 580. A 581. A
582. C 583. A 584. B 585. C 586. B 587. B 588. D 589. B 590. A 591. C
592. A 593. D 594. D 595. B 596. A 597. B 598. C 599. A 600. B 601. A
602. B 603. D 604. B 605. C 606. B 607. D 608. B 609. C 610. B 611. A
612. C 613. B 614. C 615. A 616. A 617. A 618. A 619. A 620. A 621. A
622. D 623. B 624. B 625. A 626. A 627. C 628. D 629. A 630. B 631. B
632. A 633. B 634. C 635. B 636. D 637. A 638. A 639. A 640. D 641. A
642. D 643. A 644. C 645. B 646. B 647. A 648. B 649. A 650. B 651. B
652. B 653. A 654. B 655. D 656. C 657. A 658. D 659. A 660. C 661. D
662. D 663. D 664. A 665. C 666. D 667. D 668. C 669. C 670. D 671. A
672. B 673. B 674. C 675. A 676. A 677. B 678. B 679. B 680. A 681. A
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682. B 683. A 684. B 685. D 686. C 687. B 688. D 689. C 690. C 691. D
692. C 693. A 694. D 695. A 696. B 697. B 698. A 699. A 700. D 701. B
702. C 703. A 704. D 705. A 706. D 707. A 708. A 709. D 710. A 711. D
712. C 713. A 714. C 715. C 716. B 717. D 718. B 719. B 720. A 721. C
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722. B 723. B 724. C 725. B 726. D 727. C 728. A 729. B 730. D 731. A
732. C 733. B 734. C 735. D 736. D 737. B 738. A 739. B 740. B 741. D
742. A 743. C 744. A 745. C 746. D 747. A 748. C 749. C 750. A 751. A
hr
752. A 753. A 754. C 755. C 756. A 757. D 758. B 759. A 760. D 761. A
762. A 763. A 764. A 765. B 766. A 767. A 768. A 769. B 770. D 771. D
iS
772. B 773. C 774. A 775. A 776. D 777. A 778. A 779. B 780. B 781. D
782. A 783. D 784. A 785. B 786. B 787. C 788. B 789. B 790. A 791. B
792. D 793. A 794. C 795. A 796. B 797. B 798. A 799. C 800. B 801. A
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802. B 803. B 804. D 805. B 806. C 807. D 808. A 809. D 810. A 811. B
812. C 813. C 814. D 815. A 816. B 817. C 818. C 819. B 820. C 821. B
822. B 823. B 824. B 825. D 826. A 827. C 828. B 829. B 830. D 831. A
832. D 833. D 834. D 835. C 836. D 837. A 838. C 839. D 840. D 841. A
842. A 843. A 844. C 845. B 846. D 847. A 848. D 849. A 850. C 851. A
852. D 853. B 854. B 855. C 856. A 857. A 858. D 859. A 860. A 861. D
862. D 863. A 864. C 865. A 866. D 867. A 868. D 869. D 870. B 871. A
872. D 873. B 874. D 875. B 876. A 877. B 878. B 879. C 880. A 881. B
882. C 883. C 884. B 885. A 886. B 887. B 888. B 889. C 890. D 891. D
892. A 893. C 894. B 895. C 896. B 897. D 898. B 899. A 900. C 901. C
902. B 903. C 904. B 905. B 906. A 907. B 908. A 909. B 910. A 911. C
912. C 913. B 914. A 915. A 916. A 917. B 918. B 919. B 920. B 921. B
922. B 923. A 924. B 925. C 926. C 927. A 928. C 929. D 930. B 931. D
932. D 933. D 934. A 935. B 936. D 937. D 938. B 939. C 940. C 941. B
942. C 943. A 944. B 945. D 946. B 947. B 948. D 949. D 950. A 951. B
952. B 953. B 954. C 955. D 956. A 957. D 958. A 959. C 960. B 961. A
289
962. A 963. A 964. A 965. A 966. A 967. B 968. D 969. C 970. B 971. A
972. D 973. D 974. C 975. B 976. A 977. A 978. A 979. A 980. C
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hr
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Ja
Ja
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hr
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am
7. GST
1. In India GST became effective from

amD. Earliest of the above dates.
iR
A. 1st April, 2017
B. 1st January, 2017 4. Input Tax credit as credited in Elec-
C. 1st July, 2017 tronic Credit ledger can be utilized
D. 1st March, 2017 for
hr
A. Payment of Interest
2. How a person can apply for registra- B. Payment of penalty
iS
tion? C. Payment of Fine

A. Filing FORM GST REG-01 along D. Payment of Taxes
with necessary documents with the ju- 5. A bill of supply can be issued in case
Ja
risdictional proper officer. of inter-State and intra-State:

B. Filing FORM GST REG-01 elec- A. Exempted supplies
tronically in the common portal and B. Supplies by composition suppli-
uploading the required documents ers;
along with the application. C. Supplies to unregistered persons;
C. Uploading necessary documents D. None of the above.
electronically in the common portal
and also submitting manually to the 6. Which one of the following is true?
A. A person can collect tax only he
jurisdictional proper officer.
D. None of the above is registered
B. Registered person not liable to col-
3. An invoice must be issued: lect tax till his aggregate turnover ex-
A. At the time of removal of goods. ceeds threshold limit
B. On transfer of risks and rewards C. A person can collect the tax during
of the goods to the recipient; the period of his provisional registra-
C. On receipt of payment for the sup- tion
ply; D. None of the above
292 Chapter 7. GST
7. Maximum rate prescribed under UT- 13. What is date of receipt of payment?
GST/SGST? A. Date of entry in the books
A. 14% B. Date of payment credited into
B. 20% bank account
C. 28% C. Earlier of (a) and (b)
D. 30% D. Date of filing of return
8. Which of the following requires 14. What is the rate applicable under
amendment in the registration certifi- CGST to a registered person being
cate? a hotelier opting to pay taxes under
A. Change of name of the registered
composition scheme?
person A. 1%
B. Change in constitution of the reg-
B. 0.5%
istered person C. 2.5%
C. Switching over form composition
scheme to normal scheme or vice
versa.
am
15. Who is the chairman of GST council?
D. All of the above A. President of India
B. Prime Minister
9. SAC Code Stands for
A. Services Accounting Code C. Finance Minister
iR
B. Software Accounting Code D. RBI Governor
C. System Accounting Code
D. Service Application Code 16. What are the taxes levied on an Intra-
State Supply?
hr
10. GST threshold limit of North Eastern A. CGST

States is lakhs B. SGST
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A. 5 C. CGST and SGST

B. 10 D. IGST
C. 12
Ja
D. 15 17. Which of the following taxes will be

levied on Imports of goods and ser-
11. What is the threshold limit of turnover vices?
in the preceding financial year for A. CGST
opting to pay tax under composition B. SGST
scheme? C. IGST
A. Rs.20 lacs D. Exempt
B. Rs.50 lacs
C. Rs.75 lacs 18. What deductions are allowed from the
D. None of the above transaction value
12. How many countries have dual-GST A. Discounts mention on invoice
B. Packing Charges mention on in-
model?
A. 5 voice
B. 8 C. Any amount paid by customer on
C. 10 behalf of the supplier
D. 14 D. Freight charges mention on in-
E. None of these voice
293
19. What is location of supply in case of 25. Balance in electronic credit ledger un-
importation of goods? der IGST can be used against which
A. Customs port where the goods are liability?
cleared A. IGST Liability only
B. Location of the importer B. IGST and CGST liability
C. Place where the goods are deliv- C. IGST, CGST and SGST liability
ered after clearance from customs D. None of them
port
26. Indian GST model has rate
D. Owner of the goods
structure.
20. Which of the following tax is not sub- A. 3
B. 4
sumed in GST
C. 5
A. VAT
D. 6
B. Stamp Duty
C. Entry Tax 27. GST threshold limit of Normal States
D. Entertainment Tax is lakh
am
A. 12
21. When can a registered person avail B. 15
credit on inputs? C. 20
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A. on receipt of goods D. 25
B. on receipt of documents
C. Both 28. Banking company or Financial Insti-
D. None of the above tution have an option of claiming ITC:
hr
A. Actual Credit or 50% credit

22. Under which Act GST was intro- B. Only 50% Credit
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duced? C. Only cctual credit

A. 100 D. Actual credit and 50% credit
B. 101
29. Which of the following country has
Ja
C. 102
the second highest tax slab?
D. 103
A. Australia
23. What is the validity of the registration B. Netherland
C. Argentina
certificate?
D. Ireland
A. Five years
B. Ten years 30. Whether credit on capital goods can
C. No validity be taken immediately on receipt of the
D. Valid till it is cancelled goods?
A. Yes
24. Which of the following country has B. After usage of such capital goods
the maximum GST tax slab? C. After capitalizing in books of Ac-
A. Greece counts
B. China D. None of the above
C. USA
D. Australia 31. What is the due date for payment of
E. India tax?
294 Chapter 7. GST
A. Last day of the month to which A. 90 days

payment relates B. 6 months
B. Within 10 days of the subsequent C. 180 days
month D. 365 dyas
C. Within 20 days of the subsequent
month 38. Is Input tax to be reversed in case of
D. Within 15 days of the subsequent supply of capital goods
month A. Yes fully
B. No
32. Tax invoice must be issued by C. Yes, to extent of credit taken as
A. Every supplier
reduced by prescribed percentage or
B. Every taxable person
tax on transaction value whichever is
C. Registered persons not paying tax
higher
under composition scheme
D. Yes to the extent of transaction
D. All the above
value of such goods
am
33. is the first state to ratify GST
bill. 39. In India GST was first proposed in
A. Andhra Pradesh
A. 1993
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B. Assam
C. Arunachal Pradesh B. 1996
D. Bihar C. 1999
D. 2000
hr
34. Which of the following country is the

first one to implement GST? 40. A continuous supply of goods re-
iS
A. USA quires one of the following as a must:

B. France A. The goods must be notified by the
C. China Commissioner in this behalf;
Ja
D. Switzerland B. The contract for supply lasts for a

minimum period of 3 months;
35. For an E-commerce operator registra- C. The supply is made by means of a
tion threshold limit is? wire, cable, pipeline or other conduit;
A. Rs.20 lacs
D. Supplier invoices the recipient on
B. Rs.50 lacs
a regular or periodic basis.
C. Rs.75 lacs
D. None of above
41. Is there any ceiling limit prescribed
36. What is the rate of TDS? on the rate under IGST?
A. 1% A. 12%
B. 4% B. 18%
C. 5% C. 28%
D. 18% D. 40%
37. The time limit to pay the value of sup- 42. For capital goods, proportionate
ply with taxes credit is allowed
295
A. for business and non-business pur- 48. A person is entitled to take credit of
pose input tax as self-assessed in the re-
B. for business or non-business pur- turn and credited to Electronic credit
pose ledger on
C. both of the above A. Final basis
D. none of the above B. Provisional basis
C. Partly Provisional and partly final
43. Is definition of Inputs includes capital basis
goods
A. Yes 49. In India GST came effective from
B. No July 1st, 2017 India has chosen
model of dual-GST.
44. Provisional Input tax credit can be uti- A. USA
lized against B. UK
A. Any Tax liability C. Canadian
D. China
am
B. Self Assessed output Tax liability
C. Interest and Penalty 50. Can all the records be maintained in
D. Fine an electronic form?
A. Yes
iR
45. Place of supply in case of installation B. Only if authenticated by digital
of elevator is signature
A. Where the movement of elevator C. Few records
hr
D. No
commences from the supplier’s place.
B. Where the delivery of elevator is 51. The registered recipient must issue an
iS
taken. invoice in the following cases:

C. Where the installation of elevator A. The supplier fails to issue an in-
is made. voice;
Ja
D. Where address of the recipient is B. The supplier is unregistered.

mentioned in the invoice. C. The goods or services received no-
tified for tax on reverse charge basis;
D. All of the above.
46. When does liability to pay GST arise
in case of supply of goods? 52. Any registered taxable person who
A. On raising of invoice fails to furnish the details and file the
B. At the time of supply of goods return within the due date prescribed
C. On receipt of payment shall be liable to
D. Earliest of any of above A. Interest at the rate of 1% per
month
47. Input tax credit on capital goods and B. Late fee of Rs. 100 for every day
Inputs can be availed in up to Rs. 5000
A. In thirty six installments C. Both (a) and (b)
B. In twelve installments
C. In one installment 53. The Tourist can claim Refund of fol-
D. In six installments lowing taxes paid
296 Chapter 7. GST
A. CGST and SGST/UTGST on sup- C. If certificate of registration is ob-

ply of Goods and services tained on misrepresentation of facts.
B. IGST on supply of goods con- D. If photograph of the business
sumed in Jammu& Kashmir premise is not uploaded in the com-
C. Tax paid on the supply of scotch mon portal within specified time.
to be taken out of India
D. None of the above 59. Whether credit can be availed without
actual receipt of goods where goods
54. Can Mr. A avail credit on Input ser- are transferred through transfer of
vices or capital goods held in stock, document of title before or during the
in case of new registration/voluntary movement of goods?
Registration A. Yes
A. Yes B. No
B. No C. Yes, in specific instances
C. Yes on Input services only D. Can be availed only after transfer
D. Yes on capital goods only of document of title after movement
am
of goods
55. GST Stands for
A. Goods and Supply Tax 60. The details of outward supplies of
B. Government Sales Tax goods or services shall be submitted
iR
C. Goods and Services Tax by
D. General Sales Tax A. 10th of the succeeding month
B. 18th of the succeeding month
56. GST comes under which amendment C. 15th of the succeeding month
hr
bill? D. 20th of the succeeding month

A. 118
iS
B. 120 61. Any input tax paid on purchase of

C. 122 goods or services by an assessee for
D. 115 employees is eligible for ITC?
A. No
Ja
57. is the first state that passed GST B. Yes

bill. C. Yes, on the services notified which
A. Andhra Pradesh are obligatory for an employer to pro-
B. Gujarat vide to its employees under any law
C. Uttar Pradesh for the time being in force
D. Bihar D. Not applicable
E. Telangana
62. What is the maximum rate prescribed
58. Under what circumstances physical
under CGST?
verification of business premises is A. 12%
mandatory? B. 20%
A. Physical verification of business C. 28%
premises is a discretionary power of D. 18%
proper officer.
B. If additional information for regis- 63. Matching of Input Tax credit on in-
tration asked by the proper officer is ward supply by recipient is under-
not submitted within specified time. taken with
297
A. Monthly return filed by the sup- 68. Balance in electronic credit ledger can
plier be utilized against which liability?
B. Outward supply filed by the sup- A. Output tax payable
plier B. Interest payable
C. Invoices maintained by the sup- C. Penalty
plier D. All of above
64. Who is considered as an e-commerce 69. Under GST, Insurance is taxed
operator, who digital or elec- percent.
tronic facility or platform for elec- A. 0%
tronic commerce B. 5%
A. Owns C. 12%
B. Operates D. 18%
C. Manages
D. Any of the above 70. First announcement to introduce GST
am
65. Payment made through challan by 2010, is made in Year
will be credited to which register- A. 2000
s/ledgers? B. 2004
C. 2006
iR
A. Electronic Tax liability register
B. Electronic Credit ledger D. 2008
C. Electronic Cash ledger
D. All of them 71. When an e-commerce operator is re-
hr
quired to register under GST?

66. Can a registered person opt for com-
A. When he is required to collect tax
position scheme only for one out of
iS
at source u/s 52
his 5 business different units having
same Permanent Account Number? B. When his aggregate turnover ex-
A. Yes ceeds the threshold limit
Ja
B. No C. When he is required to discharge

C. Yes, with prior approval of the tax on the taxable supply or services
Central Government made by the supplier through him u/s
D. Yes, subject to prior approval of 9(5)
the GST Council D. It is mandatory to register irrespec-
tive of the threshold limit.
67. Business which has centralized regis-
tration under existing Acts 72. An acknowledgement must be given
A. Shall obtain a centralized registra-
on receipt of advance payment in re-
tion under GST Law.
B. Shall obtain separate registration spect of supply of goods or services:
in each state from where it is making A. Yes, in the form of a proforma in-
taxable supplies. voice;
C. Shall obtain registration on tempo- B. Yes, as a receipt voucher.
rary basis. C. Yes, the invoice must be raised to
D. No need to apply for registration that extent;
under GST. D. None of the above
298 Chapter 7. GST
73. Mr. A obtains new registration, vol- 78. How will the goods and services be
untary registration, change of scheme classified under GST regime?
from composition to regular scheme A. SAC/HSN Code
and from exempted goods/services to B. HSN Code
taxable goods/services. He can avail C. SAC Code
credit on inputs lying in stock. What D. GST Code
is the time limit for taking said credit 79. When can the transaction value be re-
A. 1 year from the date of invoice
jected for computation of value of sup-
B. 3 year from the date of invoice
ply
C. 5 year from the date of invoice
A. When the buyer and seller are not
related and price is not the sole con-
74. Balance in electronic credit ledger un- sideration
der CGST can be used against which B. When the buyer and seller are re-
liability? lated or price is not the sole consider-
A. CGST Liability only ation
am
B. CGST and IGST liability C. It can never be rejected
C. CGST, IGST and SGST liability D. When the goods are sold at very
D. None of them low margins
iR
80. Can a registered person under Compo-
75. The Central Board of Excise and Cus-
sition Scheme claim input tax credit?
toms (CBEC) announced that every
A. Yes
year will be considered as GST
hr
B. No
Day. C. Input tax credit on inward supply
A. 1st April of goods only can be claimed
iS
B. 1st March D. Input tax credit on inward supply

C. 1st June of services only can be claimed
D. 1st July
Ja
81. Whether depreciation on tax com-

76. Refunds will not be allowed in cases ponent of capital goods and Plant
of:- and Machinery and whether input tax
A. Exports made on payment of tax credit (ITC) is Permissible?
B. Exports made without payment of A. Yes
tax B. No
C. Where tax on inputs are higher C. Input tax credit is eligible if de-
than tax on outputs preciation on tax component is not
D. All of the above availed
77. Balance in electronic credit ledger un-
der SGST can be used against which 82. The value of supply of goods and ser-
liability? vices shall be the
A. SGST Liability only A. Transaction value
B. SGST and IGST liability B. MRP
C. SGST, IGST and CGST liability C. Market Value
D. None of them D. None of above
299
83. Accounts are required to be main- 88. In case supplier has deposited the
tained in taxes but the receiver has not received
A. Manual form the goods, is receiver entitled to avail
B. Electronic form credit?
C. Manual and electronic form A. Yes, it will be automatically show
D. Manual or electronic form in recipient monthly returns.
B. No, as one of the conditions of
84. PAN issued under the Income Tax Act section 16(2) is not fulfilled.
C. Yes if the receiver can prove later
is mandatory for grant of registration.
that goods are received subsequently
A. It is one of the document listed.
B. Yes, but non-resident taxable per-
son may be granted registration on the 89. The tax IGST charged by
basis of any other document. Government.
C. No, for persons who are required A. Central
to deduct tax at source u/s 51 shall B. State
C. Concerned department
am
have TAN in lieu of PAN. D. Both a and b
D. Both (b) and (c)
90. What does “I” stands for in IGST?
85. Is the principal entitled for credit of A. International
iR
goods though he has not received the B. Internal
goods and has been sent to job worker C. Integrated
D. Intra
directly by vendor
hr
A. Yes 91. HSN Code Stands for

B. No A. Home Shopping Network
B. Harmonised System of Nomencla-
iS
C. Yes vendor should be located in

same place ture
C. Harmonised System Number
D. None of the above D. Home State Number
Ja
86. The time limit beyond which if goods 92. Every registered taxable person shall
are not returned, the capital goods be entitled to take credit of input tax
sent for job work shall be treated as in his return and such input tax credit
supply shall be credited to
A. One year A. Personal Ledger Account
B. Three Years B. Refund account
C. Six months C. Electronic Cash Ledger
D. Electronic Credit Ledger
D. Five years
93. First Return filed under GST is
87. Which form is to be used for registra- A. GSTR-1
tion? B. GSTR-3A
A. Form GSTR-1A C. GSTR-2
D. GSTR-3B
B. Form GSTR-2
C. Form GST REG-01 94. is GST Finance Ministers First
D. Form GST REG Panel Chairman.
300 Chapter 7. GST
A. Amit Mitra 100. Can a person apply for registration

B. Amit Malhodra without PAN
C. Amit Chandresekar A. No
D. Amit Sastri B. Yes
95. In case of goods sent on sale on ap-
proval basis, invoice has to be issued: 101. Which of these registers/ledgers are
A. while sending the goods; another maintained online?
Invoice has to be issued by the recipi- A. Tax liability register
ent while rejecting the goods; B. Credit ledger
B. while sending the goods but the C. Cash ledger
recipient can take credit only when D. All of them
the goods are accepted by him;
C. when the recipient accepts the 102. Which of the following is an in-
goods or six months from the date of trastate supply?
supply whichever isearlier. A. Supplier of goods located in Nag-
am
D. when the recipient accepts the pur and place of supply of goods SEZ
goods or three months from the date located in Mumbai
of supply whichever is earlier. B. Supplier of goods located in
Kolkata and place of supply of goods
iR
96. The headquarters of GST council is
in Bangalore
C. Supplier of goods located in Goa
A. Mumbai
B. New Delhi and place of supply of goods in Goa
hr
C. Ahmadabad D. All the above

D. Hyderabad
iS
103. The time limit beyond which if

97. How many types of taxes will be in goods are not returned, the input sent
Indian GST? for job work shall be treated as supply
Ja
A. 2 A. One year
B. 3 B. Three years
C. 4
D. 5 C. Six months
D. Five years
98. GST council formation based on Arti-
cle number 104. Smart Phones will be taxed at
A. 279A under GST.
B. 289A A. 0%
C. 266A B. 5%
D. 255A C. 12%
99. The maximum rate prescribed under D. 18%
IGST now is
A. 5% 105. If there is Mis-match of supplier’s
B. 12% outward supply and recipient’s claim
C. 18% for Input Tax credit on the same trans-
D. 28% action
301
A. It shall be added as output tax lia- A. Yes

bility in the hands of receiver. B. No
B. It shall be reduced as output tax
liability in the hands of receiver. 108. GST is a based tax on con-
C. It shall be increased as input tax sumption of goods and services.
credit in the hands of receiver. A. Duration
D. It shall be deceased as input tax B. Destination
C. Dividend
credit in the hands of supplier.
D. Development
106. Who are mandatorily required to ob-
109. The books and other records U/S 35
tain registration?
are to be maintained at
A. Every Person
A. Place where the books and ac-
B. For an agriculturist or exclusively
counts are maintained
engaged in supplying exempt goods
B. Place of address of the Proprietor/
or services is not required and for oth-
Partner/Director/Principal Officer
ers if specified threshold limit exceeds C. Principal place of business men-
am
in a financial year tioned in the Certificate of Registra-
C. Not required for an agriculturist
tion
or person exclusively engaged in sup- D. Any of the above
iR
plying exempt goods or services
D. No, only if specified threshold ex- 110. Who will notify the rate of tax to be
ceeds in a financial year then only levied under CGST?
need to obtain A. GST Council suo moto
hr
B. Central Government suo moto

107. Can Banking Company or Finan- C. State Government suo moto
iS
cial Institution withdraw the option D. Central Government as per the rec-
of availing actual credit or 50% credit ommendations of the GST Council
anytime in the financial year?
Ja
Answers
1. C 2. B 3. A 4. D 5. A 6. A 7. B 8. D 9. A 10. B 11. C 12. E 13. C

14. C 15. C 16. C 17. C 18. A 19. B 20. B 21. C 22. B 23. D 24. E 25. C
26. B 27. C 28. A 29. C 30. A 31. C 32. C 33. B 34. B 35. D 36. A
37. C 38. C 39. D 40. D 41. D 42. A 43. B 44. B 45. C 46. D 47. C
48. B 49. C 50. B 51. B 52. B 53. D 54. B 55. C 56. C 57. E 58. A 59. C
60. A 61. C 62. B 63. B 64. D 65. C 66. B 67. B 68. A 69. D 70. C
71. D 72. B 73. A 74. B 75. D 76. A 77. B 78. A 79. B 80. B 81. C
82. A 83. D 84. D 85. A 86. B 87. C 88. B 89. A 90. C 91. B 92. D
93. D 94. A 95. C 96. B 97. B 98. A 99. D 100. A 101. D 102. C 103. A
104. C 105. A 106. B 107. B 108. B 109. C 110. D

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IN

A N INITIATIVE TO HELP NEEDY STUDENTS

7. All studymaterials https://www.gatecseit.in

1. Land on lease should be shown in

which accounting concept?

C. Prudence concept A. Deferred Revenue expenditure

D. None of the above

A. increases net income A. Manufacturing account

A. FIFO and posting.

C. Weighted average cost method B. Errors of commission

A. Cash from the business 18. A company purchased a vehicle for

D. Error of original entry 30. Prepaid expenses are considered as

due to age, wear and tear is known as C. Loss

A. Debtors A. Private limited company

35. days of grace are allowed in 41. Accounting provides information on

C. (Net profit / Sales) x 100 D. Creditors

recovered. Which of the following is

A. Bill receivable A. Purchase price of machine

A. Purchase price B. Payments

D. Net realizable value

is a/an A. Private limited company

58. Errors are mistakes A. Ending inventory

C. Historical cost of a fixed asset A. Any tax/freight is paid on pur-

C. Tax& freight paid on sale

costs? 68. Which of the following foxed assets

A. Office equipment account 76. Joint venture account is a

B. Unit of activity method 79. A cash deposit made by business ap-

D. None of these balance

A. Cash at bank 89. Discount for quick repayment of debt

D. Bills Receivable A/c organisation at a stated point of time?

A. Only Real A/c 102. Revenue and expense accounts are

should be recorded or recognized

B. At the end of accounting period

B. Capital expenditure 106. Term ’Credit’ means by the

A. Capital + Liabilities = assets A. By Balance b/d

C. Partnership 117. An asset that is NOT physical in na-

112. What is the next step to Journalizing A. Intangible asset

B. Posting D. Fixed asset

120. The sales income (Credit and Cash) A. Secret reserve

that of of the asset over its use- A. Fiscal year

tory costing methods is supposed to

125. Salaries paid in advance should be 131. Office equipment is a asset

132. An overstatement in the value of A. Depreciation

monly known as 141. Cash purchases is recorded in which

B. Explanation A. Purchase Journal

136. Financial statements mainly help in D. Cash payments journal

D. There is no change in total assets

year A. Current liabilities

156. Carriage inwards refers to the cost A. Registered capital

159. X draws a bill on Y. X endorsed the A. Reduction in operating costs

171. Which error cannot be revealed on originally recorded in

A. Wrong totalling of account B. Ledger

178. Payment of rent expenses is

C. Quick ratio 189. The estimated value at which an as-

194. Legal expenses incurred on a suit for accuracy of

201. Petty cash is used for payment of

A. Conservatism concept A. Matching concept

204. Current ratio = 210. Under diminishing balance method,

A. Cash payments 223. Memorandum Joint Venture account

journal records "goods returned by

D. Cash account B. Sales journal

B. Bank balance 227. Earned but not yet received income

A. Purchase Journal 235. Transferring entries from journal to