UGC NET Solved Question Paper III in Commerce { 2012 June }

1. If Opening Stock is Rs. 10,000, Net Purchases Rs. 70,000, Wages Rs. 2,500, Carriage inward Rs. 500 and closing Stock Rs. 15,000, what is the Manufacturing Cost?

(A) Rs. 65,000

(B) Rs. 83,000

(D) Rs. 73,000

Answers: (C)

2. What does a high payout ratio indicate?

(A) A High Earning Per Share (EPS)

(B) The management is not ploughing back enough profit.

(D) The company is earning high profit.

Answers: (B)

3. Which one of the following statements is true?

(A) Capital expenditure does not affect the profitability of a concern but revenue expenditure does.

(B) Capital expenditure affects the profitability of a concern directly but revenue expenditure does not.

(D) Both capital expenditure and revenue expenditure affect the profitability of a concern directly.

Answers: (C)

4. Identify the true statement of the following:

(i) Balance Sheet is always prepared from the point of view of the business but not from that of the owners.

(ii) The financial relationship of the business to its owners is shown in the Balance Sheet.

(iii) Balance Sheet is always related to a period of time.

Codes:

(A) (i) and (ii)

(B) (ii) and (iii)

(D) (i), (ii) and (iii)

Answers: (A)

5. X and Y are partners in a firm sharing profits in the ratios of 2: 1. Z is admitted with a 1/3 profit sharing. What will be the new profit sharing ratio of X, Y and Z?

(A) 3: 3: 3

(B) 4: 3: 2

(D) 2: 3: 4

Answers: (C)

6. Which one of the following will not affect the working capital?

(A) Realization of cash from debtors.

(B) Sale of plant and machinery in cash.

(D) Redemption of debentures.

Answers: (A)

7. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R):

Assertion (A): When a company earns profit prior to its incorporation, it is called capital profit.

Reason (R): Capital profit cannot be used for distribution as dividend to the shareholders.

In the context of the above statements, which one of the following is correct?

Codes:

(A) (A) is correct, but (R) is wrong.

(B) Both (A) and (R) are correct.

(D) Both (A) and (R) are wrong.

Answers: (B)

8. Reconstruction of a company takes place when

(i) The company is undercapitalized

(ii) Company has incurred heavy losses which must be written off

(iii) The company is overcapitalized

Which one of the following is correct?

(A) (i) and (ii) only

(B) (i) and (iii) only

(D) All the above

Answers: (C)

9. Match the items of List – I with the items of List – II and select the correct answer using the codes given below the lists:

List – I List – II

(a) Leverage Ratio (i) Short-term solvency

(b) Liquidity Ratio (ii) Earning capacity

(d) Profitability Ratio (iv) Efficiency of Asset Management

Codes:

(a) (b) (c) (d)

(A) (ii) (i) (iv) (iii)

(B) (iii) (ii) (i) (iv)

(D) (iii) (i) (iv) (ii)

Answers: (D)

10. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R):

Assertion (A): Sinking fund is a charge against Profit and Loss Account.

Reason (R): Sinking fund is created for repayment of a long term liability.

In the context of the above statements, which one of the following is correct?

Codes:

(A) (A) is correct, but (R) is wrong.

(B) Both (A) and (R) are correct.

(D) Both (A) and (R) are wrong.

Answers: (B)

11. Match List – I with List – II and select the correct answer using the codes given below the lists:

List – I List – II

(a) Goodwill of a company (i) Current liability

(b) Overdraft (ii) Fixed Assets

(d) Premium on Issue of Shares (iv) Fictitious Assets

Codes:

(a) (b) (c) (d)

(A) (ii) (i) (iv) (iii)

(B) (i) (ii) (iv) (iii)

(D) (ii) (i) (iii) (iv)

Answers: (A)

12. In India, which of the following is prepared on the guidelines of AS-3 (Accounting Standard – 3)?

(A) Balance Sheet of a Company

(B) Funds Flow Statement

(D) Consolidated Financial Statement

Answers: (C)

13. What is the correct sequence of the following actions required for the preparation of financial accounts?

(i) Trading accounts

(ii) Making adjusting entries

(iii) Balance Sheet

(iv) Profit and Loss Account

Select the correct answer from the codes given below:

Codes:

(A) (iv), (ii), (i), (iii)

(B) (ii), (iv), (iii), (i)

(D) (iv), (ii), (iii), (i)

Answers: (C)

14. The main effect of inflation on the financial statement is

(A) Profits are understated

(B) Overstatement of Assets

(D) Erosion of capital

Answers: (D)

15. Present value of future earnings is a model of Human Resources Accounting suggested by

(A) Brauch Lev & ABA Schwartz

(B) Jaggi & Lau

(D) Eric Flamhaltz

Answers: (A)

16. Which element of the promotion mix do wholesalers generally apply to obtain their promotional objective?

(A) Advertising

(B) Personal Selling

(D) Direct Marketing

Answers: (C)

17. Who has given ‘fourteen Principles of Management’?

(A) Barnard

(B) Henry Fayol

(D) Flemming

Answers: (B)

18. What is M.B.O?

(A) Management by Objective

(B) Multiple Business Organization

(D) Multiplicity of Business Operations

Answers: (A)

19. Match items in List – II with items in List – I:

List – I List – II

I. Mega Marketing 1. Advertising

II. PenetrationPrice 2. Kotler

III. Promotion Mix 3. Low price

IV. Customer Satisfaction 4. Post Purchase Behaviour

Codes:

1 2 3 4

(A) I II III IV

(B) III I II IV

(D) III IV I II

Answers: (B)

20. Statement (A): Sales promotion has a strong impact on consumer behaviour in rural India.

Reason (R): Rural people in India give utmost significance to sales promotion schemes.

Codes:

(A) Statement (A) is correct but Reason (R) is incorrect.

(B) Statement (A) is incorrect, but Reason (R) is correct.

(D) Both Statement (A) and Reason (R) are incorrect.

Answers: (A)

21. Market sub-divided on the basis of behavioural characteristics is called

(A) Segmentation

(B) Aggregation

(D) None of the above

Answers: (A)

22. What is mass marketing?

(A) Offering the same products and marketing mix to all consumers.

(B) Offering variety of products to the entire market.

(D) Following concentrated marketing strategy.

Answers: (A)

23. Which concept of marketing is based on the assumption that superior products sell themselves?

(A) Production

(B) Marketing

(D) Product

Answers: (D)

24. In broader sense, marketing communication includes

(A) Product

(B) Price

(D) All

Answers: (D)

25. Physical distribution provides

(A) Place utility

(B) Time utility

(D) Form utility

Answers: (C)

26. What is relevant to place variable of marketing mix?

(A) Branding

(B) Price penetration

(D) None

Answers: (C)

27. Find incorrect statement:

(A) Marketers arouse emotional motives

(B) Marketers satisfy rational motives

(D) None of the above

Answers: (D)

28. Non-store marketing includes

(A) Home selling

(B) V.P.P.

(D) All of the above

Answers: (D)

29. What is customer delight?

(A) Performance equal to expectation

(B) Performance less than expectation

(D) Expectation more than performance

Answers: (A)

30. Which terms are often used interchangeably in marketing literature?

(A) Concept, method, philosophy

(B) Concept, approach, technique

(D) Philosophy, system, concept

Answers: (C)

31. Which one of the following is not the operative function of HRM?

(A) Development

(B) Controlling

(D) Integration

Answers: (B)

32. Which one of the following is not in sequence of personnel training procedure?

1. Instructor Preparation

2. Present the task

3. Try out performance

4. Training preparation

5. Follow up

(A) 1, 2, 3, 4, 5

(B) 2, 1, 4, 3, 5

(D) 3, 1, 2, 5, 4

Answers: (C)

33. Under which method of performance appraisal one person is compared with all others for the purpose of placing them in a simple order of work?

(A) Grading

(B) Person to Person comparison

(D) None of the above

Answers: (C)

34. Which one of the following is not the fundamental procedure that should be considered for the collective bargaining?

(A) Prenegotiation phase

(B) Selection of Negotiators

(D) None of the above

Answers: (D)

35. Assertion (A): Inevitably the firm must go to the external sources for lower entry jobs.

Reason (R): For positions where required qualification/ experience are not met.

Codes:

(A) Both (A) and (R) are not correct.

(B) (A) is true, but (R) is false.

(D) Both (A) and (R) are correct.

Answers: (D)

36. Match the following items of List – I and List – II:

List – I List – II

1. Asbestos I. Lung Cancer

2. Benzene II. Cancer

3. Ethylene Disbromide III. Leukemia

4. Kerosene IV. Acute Nervous System Depression

Codes:

I II III IV

(A) 4 2 3 1

(B) 4 3 2 1

(D) 3 4 2 1

Answers: (C)

37. Assertion (A): Business Economics is tool centric facilitating decision making in business.

Reason (R): It provides an analytical understanding of economic activities.

Codes:

(A) Both (A) and (R) are not correct.

(B) Both (A) and (R) are correct.

(D) (R) is true, but (A) is false.

Answers: (B)

38. Demand has the following elements:

(A) Quantity

(B) Price

(D) All the above

Answers: (D)

39. A perfectly competitive firm attains equilibrium when

(A) AC = AR

(B) MR = MC

(D) TC = TR

Answers: (B)

40. The purpose of job evaluation is

(A) Fixation of Responsibility

(B) Promotion

(D) Transfer to a better job

Answers: (C)

41. For testing of hypothesis H0: M1 = M2 and H1: M1 < M2, the critical value of Z at 5% level of significance when size of sample is more than 30 is

(A) 1.96

(B) 2.32

(D) 2.5758

Answers: (C)

42. Which of the following is the nonrandom method of selecting samples from a population?

(A) Stratified Sampling

(B) Quota Sampling

(D) Cluster Sampling

Answers: (B)

43. If the two regression coefficients are 0.8 and 0.2, then the value of coefficient of correlation is

(A) + 0.16

(B) – 0.40

(D) + 0.40

Answers: (D)

44. Which one of the following is a relative measure of dispersion?

(A) Standard deviation

(B) Variance

(D) None of the above

Answers: (C)

45. Assertion (A): Internal factors of business environment are controllable factors.

Reason (R): The Company can alter or modify such factors to suit the environment.

Codes:

(A) Both (A) and (R) are correct.

(B) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect.

Answers: (A)

46. The concept of ‘Rolling Plan’ in India was introduced by the

(A) BJP Government

(B) Janta Government

(D) All of the above

Answers: (B)

47. Which one of the following is an obstacle to globalization?

(A) Wide base

(B) Niche markets

(D) Competition

Answers: (C)

48. ‘VSAT’ technology is first followed for on-line trading by

(A) BSE

(B) OTCEI

(D) ISE

Answers: (C)

49. Match the following:

List – I List – II

Years Act

(a) 1956 (i) Consumer Protection Act

(b) 1986 (ii) Indian Companies Act

(d) 2002 (iv) Securitization Act

Codes:

(a) (b) (c) (d)

(A) (ii) (i) (iii) (iv)

(B) (i) (ii) (iii) (iv)

(D) (i) (iv) (iii) (ii)

Answers: (A)

50. The flagship project of Government of India launched for generating guaranteed employment in rural areas is known as

(A) PMRY

(B) MNREGA

(D) NREP

Answers: (B)

51. The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of

(A) Size disparity

(B) Time disparity

(D) All the above

Answers: (D)

52. The degree of financial leverage reflects the responsiveness of

(A) Operating income to changes in total revenue

(B) EPS to changes in EBIT

(D) None of the above

Answers: (B)

53. The overall capitalization rate and the cost of debt remain constant for all degrees of financial leverage is advocated by

(A) Traditional Approach

(B) Net Income Approach

(D) M-M-Approach

Answers: (C)

54. Which of the following is not included in the assumptions on which Myron Gordon proposed a model on stock valuation?

(A) Retained earnings, the only source of financing

(B) Finite life of the firm

(D) Constant rate of return on firm’s investment

Answers: (B)

55. Match the following:

List – I List – II

(i) Factoring services (a) Cash Management

(ii) Economic Order Quantity (b) Receivable Management

(iii) Commercial paper (c) Inventory Management

(d) Working Capital Financing

Codes:

(i) (ii) (iii)

(A) (a) (c) (b)

(B) (c) (b) (a)

(D) (b) (a) (c)

Answers: (C)

56. Assertion (A): International business focuses on global resources, opportunities to buy/sell worldwide.

Reason (R): The efforts of IMF, World Bank and WTO to liberalise their economies led to globalisation.

Codes:

(A) Both (A) and (R) are true.

(B) Both (A) and (R) are false.

(D) (A) is false, but (R) is true.

Answers: (A)

57. Match the items of List – I with items of List – II:

List – I List – II

(i) Wider Market 1. Modes of Entry

(ii) Turn key Projects 2. Goal of International Business

(iii) Expanding theproductioncapacities 3. AdvantagesofInternationalBusiness

(iv) Geocentric approach 4. Stage of Globalisation

Codes:

i ii iii iv

(A) 4 2 3 1

(B) 3 1 2 4

(D) 4 3 2 1

Answers: (B)

58. BRICS includes

(A) Bhutan, Romania, Indonesia, Chile and South Korea

(B) Brazil, Russia, Indonesia, Chile and Sudan

(D) Britain, Russia, India, Czechoslovakia, Sri Lanka

Answers: (C)

59. Out of the following, one is not related with WTO:

(A) TRIPS

(B) Ministerial Conference

(D) TRAI

Answers: (D)

60. Balance of Payment includes components

(A) Current Account, Capital Account, Unilateral Payments Accounts, Official Settlement Account

(B) Revenue Account, P & L Account, Capital Account, Official Account

(D) Forex Account, Trade Account, Funds Account

Answers: (A)

61. Assertion (A): International Monetary Fund was set up in 1944.

Reason (R): To promote international monetary cooperation through a permanent institution this provides machinery for consultation and collaboration on international monetary problems.

Codes:

(A) Both (A) and (R) are false.

(B) Both (A) and (R) are true.

(D) (R) is true, but (A) is false.

Answers: (B)

62. The commercial banks do not perform one function out of the following:

(A) Mobilisation of savings

(B) Giving Loans and Advances

(D) Financing Priority Sectors

Answers: (C)

63. There are two lists of items, match the items of List – I with items of List – II:

List – I List – II

I. Reserve Bank of India 1. NPA

II. EXIM Bank 2. Facilitating Small Scale Industries

III. SIDBI 3. Credit Control

IV. Capital Adequacy 4. Export/Import Financing

Codes:

I II III IV

(A) 1 2 3 4

(B) 4 3 2 1

(D) 3 4 2 1

Answers: (D)

64. One of the items is not related with e-banking:

(A) Demand Draft

(B) SPNS

(D) ATM

Answers: (A)

65. Assertion (A): The Treasury Manager uses the derivatives in the Bond market as well as in Forex market.

Reason (R): It helps risk coverage.

Codes:

(A) Both (A) and (R) are false.

(B) Both (A) and (R) are true.

(D) (R) is true, but (A) is false.

Answers: (B)

66. Factoring and forfeiting have not taken off in the Indian economy due to lack of expertise and experience. One is not included in the factoring services rendered.

(A) Purchase of book debts and receivables.

(B) Prepayment of debts partially or fully

(D) Covering the credit risk of the suppliers

Answers: (C)

67. Which one is not the form of FDI?

(A) Purchase of existing assets in foreign currency

(B) New Investment in property, plant, equipment

(D) Transfer of many types ofassets

Answers: (C)

68. Match the items of List – I with items of List – II:

List – I List – II

1. Measures towards globalization I. Globalisation

2. Off-shoring II. FEMA

3. FERA III. Liberalise the inflow of FDI

4. Mr. AruthurDunkel IV. Uruguay Round

Codes:

1 2 3 4

(A) III I II IV

(B) II I III IV

(D) I II IV III

Answers: (A)

69. Which one of the following is not the advantage of MNCs to the host country?

(A) Increase in social activity

(B) Increase in economic activity

(D) R & D efforts enhanced

Answers: (A)

70. India suffered from deficit balance both in trade balance and net invisibles, hence, took up a number of steps to manage this problem. Which one is not appropriate for this?

(A) Export control

(B) Current Account Convertibility

(D) Unified Exchange Rate

Answers: (A)

71. Mr. James, a citizen of U.S., arrived in India for the first time on 1st July, 2010 and left for Nepal on 15thDecember 2010. He arrived to India again on 1st January 2011 and stayed till the end of the financial year 2010-11. His residential status for the assessment year 2011-12 is

(A) Resident (ordinarily resident)

(B) Not ordinarily resident

(D) None of the above

Answers: (B)

72. The value of free accommodation in Delhi provided by employer in the private sector is

(A) 10% of salary

(B) 15% of salary

(D) 25% of salary

Answers: (B)

73. Which of the following is not a capital asset under capital gains head of income?

(A) Stock in trade

(B) Goodwill of business

(D) Jewellery

Answers: (A)

74. Match the items of List – I with List – II:

List – I List – II

I. Tax Planning 1. Making suitable arrangement of TDS

II. Tax Avoidance 2. Understatement of Income

III. Tax Evasion 3. Availing deduction under Section 10A of IT Act.

IV. Tax Administration 4. Misinterpreting the provisions of the IT Act

Codes:

I II III IV

(A) 2 1 4 3

(B) 1 4 3 2

(D) 4 1 3 2

Answers: (C)

75. Under the Income Tax Act, 1961 unabsorbed depreciation can be carried forward for set-off purpose:

(A) For 4 years

(B) For 5 years

(D) For unspecified period

Answers: (D)

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UGC NET Solved Question Paper III in Commerce { 2012 June }

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