(Paper) Commerce Practice Paper For Civil Service Examination (UPSC): SOLVED | Part - 2

Commerce Practice Paper For Civil Service Examination (UPSC): SOLVED | PART - 2

31. Match List-I with List-II and select the correct answer using the code given below the Lists—
List-I (Nature of Expenditures/Receipts)
(a) Capital receipts
(b) Capital expenditure
(c) Revenue expenditure
(d) Revenue receipt
List II (Example)
1. Sale of fixed assets
2. Improvement of fixed assets
3. Income received as interest
4. Interest on loan for business
Codes :
(a) (b) (c) (d)
(A) 1 2 4 3
(B) 3 4 2 1
(C) 1 4 2 3
(D) 3 2 4 1

32. Which of the following is affected by treatment of an accrued item in accounting ?
(A) Profit and Loss A/c only
(B) Profit and Loss Appropriation A/c
(C) Balance Sheet only
(D) Profit and Loss A/c and Balance Sheet

33. Income and expenses for the year 2006 are—
Fee Received in Cash — Rs.24,000
Accrued Fee — Rs.6,000
Rent for Chamber Paid — Rs.6,000
Outstanding Rent — Rs.2,000
Salary Paid to Staff — Rs.6,000
Miscellaneous Expenses Paid — Rs.200
Salary paid in advance to staff included in the above : Rs. 1,000.
What is the income under accrual basis ?
(A) Rs. 11,800
(B) Rs. 13,200
(C) Rs. 16,800
(D) Rs. 30,000

34.
If Opening Stock — Rs.15,000
Purchases — Rs.37,500
Direct Expenses — Rs.1,500
Closing Stock — Rs.7,500
Operating Expenses — Rs.3,000
Sales are Rs. 60,000 during the year, what is the net profit ?
(A) Rs. 12,000
(B) Rs. 10,500
(C) Rs. 7,500
(D) Rs. 3,000

35. On 1.4.2007, a firm’s capital was Rs. 2,00,000, Assets Rs. 2,40,000 and Liabilities Rs. 40,000. It sold goods costing Rs. 10,000 for Rs. 12,000. What will be the position of accounting equation after this transaction has been recorded in accounts ?
Assets = Capital + Liabilities
(A) 2,42,000 = 2,02,000 + 40,000
(B) 2,52,000 = 2,12,000 + 40,000
(C) 2,30,000 = 2,00,000 + 30,000
(D) 2,22,000 = 1,82,000 + 40,000

36. Which one of the following statements about preparation of financial statements of a limited liability company is correct ?
(A) Financial statements should
be prepared according to the cash basis of accounting only
(B) Financial statements should be prepared according to the accrual basis of accounting only
(C) Financial statements should be prepared according to either the cash basis or accrual basis of accounting
(D) Financial statements should be prepared according to both the accrual and cash basis of accounting

37. Expenses need to be recorded in the period in which the associated revenues are recognised. This is to be ensured as per which one of the following accounting principles ?
(A) Revenue recognition
(B) Cost benefit
(C) Matching
(D) Periodicity

38. How is profit prior to incorporation treated as ?
(A) Revenue reserve
(B) Secret reserve
(C) Capital reserve
(D) General reserve

39. Which one of the following has replaced the Budla system in India ?
(A) Rolling settlement
(B) Trading in equity derivatives
(C) Depository system
(D) Online trading

40. Which one of the following is not correct ?
(A) Mutual Fund ensures its participants a professional management of portfolio selection
(B) Mutual Fund schemes can be open-ended and/or closeended
(C) Balanced Mutual Fund aims at earning current income and capital appreciation
(D) Mutual Fund is an investment company and a merchant banker

41. Which one of the following statements is not correct ?
(A) Business firms combine to avoid wasteful competition
(B) Business combination is possible only among joint stock companies
(C) Business firms may combine to take advantage of patent rights of individual firms
(D) During economic depression, small firms are absorbed by financially sound large firms

42. What is the theory of social responsibility that focuses on how companies respond to issues, rather than trying to determine their ultimate social responsibility, called ?
(A) Corporate social performance
(B) Corporate social responsiveness
(C) Stewardship principle
(D) Enlightened self-interest

43. What is a systematic evaluation of a company’s activities in a given area of social interest such as environmental protection, workplace safety or community involvement, called ?
(A) Social responsibility
(B) Social accounting
(C) Social audit
(D) Social forecasting

44. What is cross rate ?
(A) A rate of exchange derived from central bank
(B) A rate of exchange between two currencies, other than those that form a market’s principal rates
(C) A rate of exchange derived from the quotations for buying currencies
(D) A rate of exchange quoted by a dealer in foreign exchange for selling currencies

45. Which one of the following statements is not correct ?
(A) Working capital is made available by the banks to the export sector at subsidized rates of interest
(B) Market Development Fund provides the necessary financial assistance for market promotion
(C) Export Houses/Star Trading houses are granted additional license against exports made during the preceding year
(D) Export profits enjoy a variety of tax concessions in India

46. Which one of the following statements is correct in respect of Duty Drawback Scheme ?
(A) Relieving export goods of duties paid for components used for manufacturing the export goods
(B) Providing cash incentives to exporters to compensate the duty paid by them in foreign countries
(C) Compensating importers to the extent of import duty paid by them for importing life-saving drugs
(D) Providing a facility for withdrawing the duty paid by exporters if their exports are rejected in foreign countries

47. In foreign trade, what is the price quoted by a supplier which includes all charges incurred up to door delivery of goods to the buyer, called ?
(A) Loco price
(B) C.I.F. price
(C) Franco price
(D) Landed price

48. Consider the following statements—
1. Letter of credit cannot be opened by mail.
2. Contracts of export of goods and services against payment to be secured partly or fully beyond 90 days are treated as deferred payment exports.
Which of the statements given above is/are correct ?
(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

49. Under which principle, all the rights of an insured are transferred to insurance company after making payment of claim ?
(A) Subrogation
(B) Utmost good faith
(C) Contribution
(D) Average clause

50. In a marine insurance, when must the insurable interest exist ?
(A) At the time of making contract
(B) At the time of loss of subject matter
(C) Both at the time of making contract and at the time of loss of subject matter
(D) At the time of termination of the policy

51. What is/are the consequence(s) of non-registration of partnership firm ?
1. It cannot sue any of its partners.
2. Partners of an unregistered firm can file suits against each other.
3. Partners can sue the firm to enforce their claims.
Select the correct answer using the code given below—
(A) 1
(B) 2
(C) 3
(D) None of the above

52. Consider the following statements—
In the absence of an agreement, a partner of a firm has the right to
1. claim remuneration for taking part in the management.
2. take part in the conduct and management of business.
3. share the profits of the firm equally with other partners.
4. pledge partnership property as a security for his own private debts.
Which of the statements given above is/are correct ?
(A) 1 and 4
(B) 2 and 3
(C) 1 only
(D) 4 only

53. Match List-I with List-II and select the correct answer using the code given below the Lists—
List-I (Type of Company)
(a) Statutory company
(b) Registered company
(c) Company limited by shares
(d) Company limited by guarantee
List-II (Feature)
1. Member’s liability is limited to the face value of shares
2. Regulated by the provisions of the Companies Act
3. Generally formed for promotion of culture, art, science, religion etc.
4. Formed under Special Act
Codes :
(a) (b) (c) (d)
(A) 4 1 2 3
(B) 3 2 1 4
(C) 3 1 2 4
(D) 4 2 1 3

54. Consider the following statements in respect of the “Duty Free Import Authorization Scheme”.
1. The scheme offers the facility to import the required inputs before exports.
2. The scheme allows the transfer of scrip once the export obligation is complete.
Which of the statements given above is/are correct ?
(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

55. Under which one of the following is the term ‘Dominant Undertaking’ defined ?
(A) MRTP Act
(B) FEMA
(C) Companies Act
(D) SEBI

Directions—(Q. 56–60) Each of the next five items consists of two statements, one labelled as the ‘Assertion’ (A) and the other as ‘Reason’ (R). You are to examine these two statements carefully and select the answers to these items using the codes given below—
Codes :
(A) Both (A) and (R) are individually true and (R) is the correct explanation of (A).
(B) Both (A) and (R) are individually true but (R) is not the correct explanation of (A).
(C) (A) is true but (R) is false.
(D) (A) is false but (R) is true.

56. Assertion (A)—A company is accountable to the society since it makes use of community-owned assets and other infrastructural facilities and enjoys concessions provided by State from taxpayers’ money.
Reason (R)—The best way of social responsibility reporting is to prepare a value-added statement which shows the income earned by all the stake-holders.

57. Assertion (A)—Income tax paid is not shown on the debit side of the sole proprietor’s Profit and Loss account.
Reason (R)—It is an appropriation of profit and thus goes to Profit and Loss Appropriation Account.

58. Assertion (A)—The scope of audit of accounts of a limited company may be restricted by the Board of Directors.
Reason (R)—The Board of Directors is responsible for adherence to Accounting Standards in preparation of financial statements.

59. Assertion (A)—Analytical review procedures are useful only at the time of planning of an audit.
Reason (R)—Analytical reviews are the test of financial information conducted through a study and review of relationship among financial data.

60. Assertion (A)—In dividend stripping or bond washing which is resorted to in some countries, fixed-interest securities are bought when they have gone exdividend and sold before the next dividend is paid.
Reason (R)—In such countries, dividends are taxed at a higher rate than capital gains.
 



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