Comerce MCQs

Contents
Advanced Accounting Auditing

Principles of Accounting
Financial Accounting -
Cost Accounting
Audit
Law of Contract
Income Tax
Economics - <
9 | Business * & Statistics
10 | Public sease" Lahore Paper 2011,

Advanced Accounting And Auditing
(d) nercases assets and liabilities
(e)None of these -
Advanced Accounting 9. All of the following are forms of busines

organizations except:
And Auditing (a)proprictorship (b)Corporation
l, Books of original entry are called: (c)Retailer. (d)partnership
(a)Ledger (b) Workshccts 10, Economic resources of a business that
(c) Journal Y (d)None of these 2.2 are expected to be of benefit in the
2. For preparing balance shects prepaid future are referred to as 5. -
expenses are shown as part of (a)Liabilities (b)Owners equity

(a)Liability (b)Equitics (d)Assets Y
(c)AsScts V (d) None of these (e)None of these
3. Unpaid and unrecorded cxpenscs are 11. An owner investment of land into the
calcd. ** ***-*Jim W- business would:
prepaid expenses (a) Decrease withdrawals

(b)Accrued cxpenses (blincrease liabil h s -
(c)Additional expenses e OWI 10 - equity

(d) None of thcsc S v
4. Amount, cash or ollicrassets removed (c) : C
from business by owncr is: 12. A : chase of supplies would:

(a)Capital (b) Drawingsv (a) scauty
-
5. (c)Assets
(d) Nonc of thesc
Under the diminishing balanec method, ''Havere:no "
"es total assets *
depreciation amount is:

(b) Receipts
- .C. q)None of these
3. An owner investment of cash into the
-
(a)payment
(c) Expenditurcv (d)None of thcsc business would V
6. Users of accounting information O (a) Increase assets:

include: N (b)Occrease liabilitics
(a)The Tax Authorities (b)ll
's& (c)Increase withdrawals -
(c)Creditors (d)Decrease owner's equity

(d)None of these (c) None of thcsc
7. The business form (s) in which the 14. The paymicnt of rent each month for
owner (s) is (are) pe ly able is (are) office space would:
thc: -
(a) Decrease total assets \
(a)partnership (b)increase liabilitics

(b)proprietorship onlyv (e)Increase owner's cquity
(c)Corporation only (d)None of thesev. -
(d)partnership and proprietorship I5. Which one of the following accounts

(e)None of these would usually have a debu blance?
8. The investment of personal assets by (a)Cash
the owner: (b)Crcditors
(a)Increase total assets and increases (c)Accounts payable
owners equityv. (d)Salaries Expense V
(b)Increases total assets only (e)None of these
} 6. Quick assets include, which of the
(c)Has no cffect on assets but increase
owner's cquity following?
(a)Cash
(b)Accounts Receivable
Advailced Accounting And Auditing 2
sc) Inventories -
(a)May Change is total when such change
{:} \Only (a) and (b) Y. is not related to changes is production.
1 c)None of these (b) Will not change in total because it is
#. Sci income plus operating expenses in not related to changes in production. V
; :#al to: (c) Is constant per unit for each unit of
!: Net Saics change is production.
(bjCost of goods available for sale (d)May change is total, depending on
(e)t 'ost of goods sold production with the relevant range.
(ii)Gross profitv (e)None of these *
; :)None of these 24. Completion of a job is a result in:

| 8.! i.e. maximum number of partners in (a)DR Finished goods CRWIPV
takistan can be fixed at the following: (b)DR Cost of goods CR Finished goods
(d) 20 (b)50V (c)DR WIP CR FOH control
(c)75 (d)None of these (d)DR FOH control CR FOH applied
* {3alance shect is always prepared: (e)None of these
(a) For the year ended 25. Operating cost is often named 3.S.
(b) As on a specific datev (a)Manufacturing cos ths
commercial
(c) None of thesc . expenses **
buring the Audit of Meat packers Ltd. (b)prime cost plus factory overheads.
'o, arc assigned to cover the audit of (c)Direct material plus direct labour.
the payrolls of 800 employees numerate (d)Selling plus administrative expenses V
, he test, you would carry out to ensure (e)None of these -
timat: 26. Expenses such as rent and depreciation of

(a 'All employees are genuine a Q-building are shared by several
(b)payments are only made for work done departments these are:
(c)Statutory documents are properly @@Indirect expenses
. . ffected in accordance with the law. (b)Direct expenses
Jiproper allocation of wages is made to SQ (c)]oint expenses V
various departments (d)All of the above
i ! he ineasurable value of an :*
wise of resources is referred to as
(e)None of these
27. If under-applied FOH is closed to cost of
(a)An opportunity costv goods sold, the journal entry is:
th)An imputed cost
(c)A diffcrential cost
(d)A sunk CSt S
* (a)DR cost of goods sold CR FOH control
(b) DR FOH control CR cost of goods
soldv
(c) None of these (c)DR FOH control CR profit loss account
2. A cost centcris: (d)None of these
(a) A unit of production in relation to 28. Based on this data Re-order level is:
which costs are ascertained. (a)4500 units, (b)3900 units
(b) A location which is responsible for (c)1200 units (d)400 unit',
controlling direct costs. 29. A credit balance remaining i. 5 OH
: "Irt of the factory overhead system by control is called:
which costs arc gathered.v. (a)Over applied overhead V
. 1) Any location or department which (b)Under-applied ovcrhead
incurs cost, (c)Actual overhad
; :) None of these (d)None of these
* ::::cal cost: 30. Direct material cost plus direct labour
cost is callcd:
(a)prime costv (b)Conversion cost (c)None of these
(c)product cost (d)All of these
(e) None of these 39. Prime cost is calculated as under:
31. Productivity means: (a)Manufacturing Cost+Cost of Goods.
(a)The ability to producev Sold
(b)All units produce (b)Direct material plus factory overheads
(c)Good units produce (c)Direct Labour"Direct Matcrial V
(d)None of these -
(d)None of these
32. Economic resources of a business that 40. Increase in income constitutes:
are expected to be of benefit in the (a)InflowsV (b)Outflows
future are referred to as: (c)None of these
(a)Liabilities (b)Owner's cquity 41. Audit and special audit are the same:
(c)Withdrawals (d)Asscts V (a)In Insurance Company
(e)None of these (b)In Banking Company V
33. Short-Term Loan can be best described as: (c)Nonc of these
(a)If the period is three years 42. Rent of the premises constitutes variable
(b)If the period is less than one yearv expense for cost allocation.
(c)If the period is over one year (a)True ralse
(d)None of these 43. Principal and 'Markup payment within
34. Preparation of final financial reports is one year long term liability for
governed in Pakistan under: disclosur the balance shect of a
(a)No Law company.
(b)Companies Ordinance (a)rise" (b)Falsev
(c)None of thesev. 44. Working Capital finance can be termed
35. Inventory turnover is calculated as as"Running Finance" in a
1.
limited
under:
(a)Cost of Goods sold closing Inventory 2'-'y
(a)True (b)Falsev
Salesv. 45. Conversion cost is calculated as under:
(b)Gross profit Closing Inventory SQ (a)Labour plus materials
(c)Opening Inventory S. (b)Labour plus overheadsv.
(d)None of these (c)None of these -
36, There is a differencebetween Q 46. Current Ratio can be calculatcd as

(a)Worksheet
asv and Balance Sheet
\\ 4.worksheet w
under: -
(b)Worksheet and profftand Loss -
(a)Current Liabilities Current Assets

(b)Current Assets Current Liabilitiesv.
Account ~ \\ (c)None of these
(c)Combination results of profits and 47. The need for keeping a record of income
financial position and expenditures in a clear and
(d)None of these -
systematic manner has given rise to the
37. Preparation of annual report of a firm is subject of:
governed under: (a)Book keeping (b)Accounting Cyclev
(a)Partnership Act 1932 (c)Manufacturing (d) None of these
(b)Under partnership Deed 48. If proper books of accounts are not
(c) None of thesev. kept in a business, the annount of profit:
38, Return of Equity will be calculated as (a)Can be ascertained
under: (b)Cannot be ascertained V
(a)Operating profit x 100 Equity (c)Easily ascertained
(b)Net profit x 100 paid up Capital onlyv (d)None of these
#!). The state under which transactions are (b)Profit and Loss Account
recorded chronologically in the books of (c)Trading Accounty
accounts is called: (d)None of these
(a)Summarizing (b)Classifying 57. Those liabilities which arise only on the
(c)Recording (d) None of thesev. happening of some event, are called:
.5(). Book-Kecping is mainly concerned (a)Current Liabilities
with: -
(b)Contingent Liabilities V
(a)recording of a financial data-relating to (c)Outstanding Liabilities
business transaction. Y
(d)None of these
(b)designing the system in recording, 58. Marshalling of balance sheet means:
classifying, summarizing the recorded (a)the ordering of its assets and
data. liabilities* -
(c)intcrpreting the data for internal and (b)the totaling of its assets and liabilities
external users. -
(c)exccss of assets over liabilities
(d) None of these (d)none of these -
51. The terms expense and expenditure 59. Commission received in advance is to be
all C. - considered as:
(a)Same in Nature (a)Outstanding #:
(b)!)ifferent in NatureV
(c)Opposite in Nature
(d)None of these
When goods are given away as charity or
frce samples, the purchascs account 60. for discount on creditors is
should be: *
often not of:
provided in keeping with
the principle s
(a)!)cbited (b)Credited v
(c) Accorded in Balance Shect (a) Materilality (b)Consistency
(d) None of these (c) Conservatsimv. (d)Realization
53. The Sale of a busincss asset on *@ \ (e)None of these
recorded in: -
Which one of the following in not

(a)Sales Journal S. considered the permanent part of the
(8)Gencral Journal V S accounting record:
(c)Cash Receipt Journal (a)Journal (b)Trial Balance
(d) None of these (c)Balance Sheet (d)Final Accounts
54.The discount 's (e)None of thesev.
(a)personal Accoun - . A working paper which is prepared by
(b)Nominal Acc the accountant for his own convenience is
(c)Real Account Y called:
(d)Asset Account (a)Work Sheetv
()Notic of these (b)Cash Flows Statement
55. The payments side of the cash book is (c) Balance Sheet
under cost by Rs 200 when overdraft as (d)Final Accounts
per bank Statement is the starting point: (e)None of these
(a)Rs 200 will be deductedv . Any expenditure incurred to increase
(b)Rs 200 will be added the profit earning capacity of the concern
1S al.
(c)Rs 400 will be added -
(d)Nonc of these -
(a) Revenue ExpenditureV.
56. All the direct expenses are charged to: (b)Current Expenditure
(a)Balance Sheet (c)Capital Receipt
(d)Capital Expenditure (c)2325 Kgs (d)2425 Kgs
(e)None of these 70, Premium on issue of shares can be
64. Depreciation on fixed assets is an used for:
example of (a)Payment of Dividends
(a)Revenue ExpenditureV (b)Writing off preliminary Expenses'
(b)Capital Expenditure (c)Paying Fees to Director
(c)Deferred Revenue Expenditure (d)Redemption of debentures
(d)None of these (e)None of these
65. The capital receipts are shown in the 71. Right shares mean the shares which
balance sheet on the: 3r! *
(a)Liability Sidew (b)Asset Side (a)issued to promoters for their services

(c)Debit Side (b)issued to holders of convertible
(d)None of these -
debentures
66. Error due to wrong allocation as (c)issued to directors of the company
expenditure between capital and revenue (d)offered to the existing shareholders V
is regarded as: (e)None of these
(a)Error of Omission 72. "go" to be
:
credited
(b)Error of principlev to:
(c)Compensation Errors
(d)Error of Commission
(a)Capital
(b)profit
:account above the line
-
(e)None of these (c)profit and loss account below the line

67. The heat treatment department at Noori @Geng" premium
pipe is the third department in a sequential (e)N one of these
process. The work in process account
for the department would consist of:
:et (
excess of purchase price over the
assets is:
(a)Cost transferred in from the prior
-
2% Goodwillv.
department (b)Capital Reserve .
(b)materials, costs added in the heat

(c)Preliminary Expenses
treatment departnent (d)Share premium
(c)Conversion costs added in the h (e)None of these
treatment department
(d)all of the aboveY
s -
-
74. Statutory report in necessary in the

case of
(e)none of these *\ <> (a)All companies
68. Costs in the beginning Work in process (b)Public Limited Companies
inventory are added Ste the cost of the (c) Forigen Limited Companies
current period when making units cost (d)Private Limited Companies
calculations by: * (e)None of these
(a)The FIFO cost method V 75. Dividends are usually paid on:
(b)The weighted average method (a)Called up Capital
(c) The quantity schedule method (b)Paid up Capital'
(d)LIFO method (c)Paid up capital eall in advance
(e)None of these (d)Subscribed Capital
69. A chemical process has normal wastage of (e)None of these
10% of input. In a period, 2500 kgs of 76. Provision for taxation of a previous
material was input and there was an year was Rs. 100,000 and tax assessed for
abnormal loss of 75 kgs. What quantity of that year Rs. 80,000, The adjustment for
good production was achieved? this is; , w
(a)2175 Kgs: . (b)2250 Kgs (a)a debit of Rs. 100,000 above the line
Advanced Accounting And Auditing 6
(b)a credit of Rs. 80,000 below the line (c)Increase an asset and increase liabilityV.
(c)a credit of Rs. 20,000 above the line (d)Decrease an asset and increase liability
(d)a credit of Rs. 20,000 bclow the linev 85. In general, the accounts in the Incoms
(e)none of these Statement are known as:
77. Amount set apart to meet losses to bad (a)Real Account
debt is a: (b)Contra Asset
(a) Provisionv. (b)Reserve (c)Nominal Accountv/
(c)Liability (d)Contingent Liability (d)Unrccordcq rever accout
(e)None of these 86. In general terms, financial assets appear in
78. Advance payment of tax is in the nature of: the Balance Sheet an:
(a)Asset (b)Revenue Expense (a)Face Value V
(c)Liability (d)prepaid Expense V. (b)Current Cash Value
(e)None of these - (c)Cash
79, Evaluative-positive or negative (d)Estimatcd future sales value
concerning people, objects, or eVents 87. Which of the following is least important
are called: -
as a measure of short-term liquidity.
(a)perceptions
(c)Beliefs
(b)Attitudes v.
(d)Values
(a) Debtor Ratio &Q
(3)Current Rati -
(e)None of these (c)Cash flow operating acticititesv.

80. The auditor is required to report that (d)Ouick Ratio * -
Financial Statements are: 88. Uzmai icome was Rs 4,00,000 in

(a) True & Correct 2003 and Rs 1,60,000 in 2004 what
(b)Complete & Correct p increase in net incoine r u
(c)True & Fairv
(d)Covering all required records.

@: 04?
off let the decline in profits in
- -
(e)None of these a).50% (b)150%v/

81. The auditors are appointed by the
(d)70%
following authorities: 3 &
89. Extermal ises of financial accounting
(a)Creditors (b)[Debtors SQ information in cude I of u e following
(c)Share Holdersv. (d)Direc except. - -
(c)None of these (a)Investors (b)Labour Unions

82. Hmterim audit is conducted for (c) Line Manager (d)General Public
examining the account for:- " . - 90. A fixed budget is:
(a)Full One Year -
(a)A budget for single level of activity .
(b)Next One Year (b)A budget which ignored inflation
(c)Previous One Year (c)(ised only for fixed costv
(d)For a part of current yearv (d)An overhead cost budget
(e)None of these -
91. Heavy expenditure on advertisement of
83. through:
Payment should be made preferabiy
a new product is a:
(b)Bank Draft (a)Capital expenditure
(a)Cross Chequev (b)Revenue expenditure'
(c)pay Order (d)Cash Basis (c) Deferred Revenue expenditure
(e)None of these s'
(d)None of the above
84. The purchase of machinery on account 92. Subscriptions received in advance is:
World: . (a)An Income, (b)An Asset
(a)increase an asset and decrease anotney (c)A Liabilityv (d)A Loss
SSt. -
(b)increase an asset and decrease liability.

93. At the time of admission of a new (c)Contain both income Statement and
partner good will raised should bc balance sheet accountsv
written offin: (d)Be prepared before closing entries are
(a)New profit sharing ratio posted to the ledger.
(b)Old profit sharing ratioV 101.The cost of goods and service used up in
(c)Sacrificing ratio the process of obtaining revenue are
(d)Gaining ratio called:
94. A and B arc partners in the ratio of 2:1 (a)Net Income (b)Revcnuc
They admit C for 1/4 share who (c)Expenses" (d)Liabilitics
contributcs Rs 3000 for his share of 102.State which of the foliowing are
goodwill. The total value of the goodwill characteristics of job costing.
of the firm is: (i)Homogeneous products
(a)Rs 3,000 (b)Rs.9,000 (ii)Customer driven production
(c)Rs 12,000V (d)Rs 15,000 (iii)Complete production possible
95. Sales is Mustafa of Rs 10,000 not within a single accounting period.
recorded in the books would affect: (a)(i) only &
(a)Sales Account (b)(i) and (ii *
(b)Mustafa Account (c)(ii) and

(c)Sales Account and Mustafa Accountv/ (d) (i) and (iii) only
(d)None of the above .
(e)Nojibf above
96. Depreciation is a process of: 103.State" which of the following arc
(a)Valuation v (b)Allocation charactcristics of contract costing:
(c) Both a & b (d)None of these Somo: production
97. Loss on sale of an asset should be (ii)Customer driven production
written off against: (iii)Short time scale from commencement
(a)Share premium account
(b)Sales account
GS to completion of the cost unit.
(a)(i) and (ii) only
(c)Depreciation fund account (b)(i) and (iii) only
(d)None of the abovev (c)(ii) and (iii) only'
98. Income and expenditure ac
(a)Cash in hand
e. (d) (ii) only
(e)None of above
(b)Surrplus or'* 104.The budget cost allowance for an
(c)Capital '' activity level of 4,000 units is.
(d) None of the a (a)Rs 7.200 (b) Rs 14,700
99. Which of the ing is true regarding (c)Rs 17,200 (d)Rs.22,200*
the work sheet, (c)Nonc of these values
(a)It is the form, which an accountant uscs 105. Direct costs arc:
for his own aid and convenience. (a)Costs which can be identified with a
(b)It assists in the orderly preparation of cost center but not identified to a single
the adjustments and financial statements at cost unit.
the end of the account periods. (b)Costs which can be identified with a
(c)It can substitute for Journal and Lcdger. single cost unit. Y
(d)Only a & b are trueV. (c)Costs incurred as a dircct result of a
I00.The post closing trial balance will: particular decision. g
(a)Contain only income statement (d)Costs incurred which can be attributed

3CCOuntS to a particular accounting period.
(b)Contain both balance sheet accounts (e)None of above
100. A master budget comprises: (e)None of the above .
(a) The budgeted profit and loss account 1 12, Average relief is available on the
(b) The budgeted cash flow, budgeted following except: -
pro Hit and loss account and budgctcd (a)Donation for Charitable purpose
balance shcet. -
(b)Investment in Sharcs
(c) I he budgeted cash flow. (c)Retirement Annuity schemev
(d) The entire set of budgets prepared (d)Mark up on Housing Finance Schcmc
(c)Nne of above (e)Donation of Baitul-MalPund
107. The best description of a by-product is a (f)None of above
Joint product which: - 113. Special tax relief is granted to a senior
(a)Has no economics value citizen if his age is:
(h)Accounts for a relatively small (a)50 years or above
proportion of the total sales value of the , (b)60 years or aboveY
production process, (c)65 years or above
(c)Accounts for a relativcly small (d)None of the above
proportion of the total value of the 114.When preparing (balance sheet of a
production process. V company. Goodwill, patents, Trade
(d)Will hecd to be disposed off at a cost. Mark and designs come under the head of:
(e) None of above (a)Fix.cd". ets/
108. What type of budget is designed to: Assets
take into account forecast changes in t ASScts
costs, prices etc. iscellaneous Expenditure
(a)Rolling budget one of above
(b)functional Budget -In comparison to the excernal auditor, an
(c)Flexible Budget
(d)Master Budget.*
(c)None of them
*
SQ
internal auditor is more likely to be
concerned with:
(a)lnternal Administrative Control
109. Working capital is the:
(b)Cost Accounting procedures

(a) Effective capital of the compa & (c)Operational Auditing
the business is in full swing.
(b)Capital borrowed form the ban
w
(d) Internal Accounting control V.
(e)None of above
(c) Difference between th UFTCI]t SSCIS 116.An auditor's unqualified short form
and current liabilitics report,
(d)None of them (a)Implics only, that items disclosed in the
l i (). The most method of measuring financial statement and foot notes are
income is: properly presented and takes no position on
(a) i o match the costs with revenue the adequacy of disclosure.
(b) To find out this difference in networth (b)Implies that disclosure is adequate in
as on two dates.' the financial Statements and foot notes.
(c) o apply normal rate of return on (c)Explicitly states that disclosure is
capital invested, adequate in the financial statements and
(d)None of above foot notes.
! 11. Up what level Agriculture income is (d)Explicitly states that all material items
exempt from tax? have been disclosed in conformity with
(a)Rs 80,000 generally accepted accounting
(b)Rs 100,000 principles. Y
(c)Futally exemptv. (e)None of above
(d) iotally taxable
117. The role of finance function in the !23. The preparation of work sheet:
future will be: (a)Constitutes creatio 1 of a for lia,
(a)Tactical financial statemeni,
(b)Professional Advisory (b)Eliminates the acco for elit.:1.g
(c)Stewards adjusting enti ics i.1 : JGu:4.
(d)Specialist tern member (c)provides the in for:line; lice clusi ior
(c)Nonc of above -
journalizing adjusting anti cosing
118.In principle current Assets are financed cntries. Y
from: (d)None of these
(a)Retained Earning 124. Assets would be overstated : 1 necessary
(b)Long term debts adjusting entry was onlitted , Qi
(c)issue of fresh Capital V (a)Expired InsuranceX

(d)Current Liabilities (b)Accrued Salaries
(e)None of above (c)Accrued Interest arned
119. A non-banking asset is: (d) Nonc of these
(a)Item of officc cquipment 125.The book '. of the u2pr:ctable:
(b)Bank premises -
asset is best defji & *S.
(c)Secured property acquired from (a)The un-dept&aled cost of the asset Y
defaulting borrower (b)The price that the asset would fetch if
(d)All of thc above offered for sale.
(c)None of the aboveY (c) depreciation of tile asset
120. When preparing a production budget,
the quantity to be produced cquals.

(a): one of these
* - w - - - -
(a)Sales quantity+Opening Stock+Closing which of the following is not an intang bic

Stock asset?
(b)Sales quantity-Opening stock+Closing (a)A patent (b)A tradicmark

Slock
(c)Sales quantity-Opening
stock
* (c)An investincri if "arketable sectar,ics
(d)None of thesex'
132A company has current raio cf 2 to
(d)Sales quantityV
at the end of year I. Which ouc of the

(c)None of the above . following transaction: wili increase (f.is
121.Which of the following best describes ratio?
thc nature of an asset? -
(a)Saics of bonds payao'e at a discount Y

(a)Something with : y market value (b) Declaration of a 20% cash divitied
(b)An economic which will (c)Collection of a jarge account receivable
provide some future benefits, owned by a (d) None of thcse
business. Y 127. If sales increase by 19% from year 1 to
(c)The amount of the owner's investment 2 and cost of goods sold increaes only
in a business. 6%, the gross profit on sales will increase
(d)None of these by.
i22-A balance sheet is prepared to find (a)4% V (b)] ()%
out financial position of a firm: (c)6% (d)None of these
(a)For a specified period 128. Which of the following amounts appears
(b)On a particular datev in both the income statement and balance
(c)At the time of sale of business sheet?
(d)None of these (a)Net Incomew
(b)Accuulated dep, Cciation
(c)Dividends
Advanced Accounting And Auditing 1()
(d) Notic of these (c)Capital Fund

129. Both the accounts for depreciation (d)None of these
expense and accumulatcd depreciation. 135.On April 1, Hassan & Company received
(a)Are closed at the cnd of the periodv and paid a Rs. 700 bill for the
(b)Appear in the Adjusted Trial Balance advertising done in March. In addition to
Columns of the worksheet -
this bill the company paid Rs. 6,100
(c)Appear in the Trial Balance Columns of during April for expenses incurred in
the worksheet -
that month. Hassan & Company paid.

(d) None of thesc Rs. 3,600 as salary to employees for
130. When a partnership in liquidated: work done in April. Based on these
(a)Any cash distribution to partners is facts, total expenses for the month of
allocatcd according to the profit and loss April were: -
sharing ratio. (a)Rs. 6,100 (b)Rs. 6,800

(b)Cash is distributed to each partner (c)Rs. 10,700 (d)None of thesev.
according to his or her capital account 136. A retail store had current assets of Rs.
balance before the sale of partnership 72,000 and a current ratio of 2 to 1. The
assets, V. amount of working capital must have
(c)Any gain or loss on disposal of been: *
partnership assets is divided among the (a)Rs. 144,000V
partners according to their relative
account balances.
(d)None of these
:
(

,000
ne of these
131. In projecting the future profitability of a ond holders would be most interested
trading company, investors will be least
concerned with changes in:
2." in which of the following?
(a)Guick ratiov
(a) The gross profit ratew (b)Inventory turnover
(b) The quick ratio
(c)Sales volume
(d)None of thcse NO
* (c)Times interest earned
(d)None of these
138.The amount of overtime premium
132. Revenue is most
the time when:
com's ized at contained in direct wages would normally
be classified as:
(a)Cash is collected
(b)The order is recei
o FOn CuSiOmIS
(a)Part of prime costv
(b)Factory overhead
(c)The sale in m (c)Direct labour cost
(d)None of ' -
(d)Administrative overhead
139.Which one of the following statements is
133.Which of thc following list of accounts is
used to compute the cost of goods incorrect with respect of external auditors:
sold? (a) External auditors are independent of
(a)purchases, inventory, and sales returns. organization
(b)Gross profit, purchase returns and (b)The responsibility of external auditor is
carriage inward. fixed by statue
(c)inventory, net sales and purchasesv (c)External auditors report to the members
(d)None of these (d) External auditors work many range
134.Which of the following is ascertained by over many areas of activities as .
drawing up an income and expenditure determined by the managementv.
account? 140.The first auditor of a public Limited
(a)Cash is hand Company is appointed by the directors
(b)Surplus or Deficiency V with in: -
(a)30 days of incorporationv (b) Investment in Shares
(b)60 days of incorporation (c)Mark-up on housing finance
(c)90 days of incorporation (d)Contribution to enmployees Children
(d) 120 days of incorporation education fund
141. Audit working papers arc the property of: 149. The most important reason for having an
(a)Client annual audit is to:
(b)Accountant (a) Provide assurance to investors &
(c)Auditorv/ others stake holders that financial
(d)Registrar of Companies statements are dependable.
142. Which of the following would be least (b)Enable Directors to avoid personal
likely to be considered an objective of a responsibility for any deficiency in the
system of internal control: financial statement
(a)Checking the accuracy and reliability of (c)Meet the requirement of government
accounting data agency.
(b)Detecting management fraud (d)provide assurance that fraud, if any
(c)Encouraging adherence of managerial exists, will be brought to light, Y
policies | 5 (). A ting Systein is most
(d)Safeguarding assets V appropriate ' 'hich of the following
143. Dividend income is subject to tax at typesof manufacturing?
SOLlfCe di.
(a)0% (b)5%
(a flow hilling
(b)' manufacturer V
(c)] ()%v/ (d) 15% (c)Automobile manufacturer
144. Tax deducted at source will be treated as: hipbuilders
(a)Taxable (5). he predetermined overhead rate is:
(b)Exempt (a)Determined at the end of the
(c) Deductible from net taxY accounting periody
145. One of the basic purposes of
combination is:
(b)Determined by dividing the allocation
base by the estimated overhead
(a)To provide better services to
community
r
'S (c)Used in a normal cost system
(d)Never applied to the work in process at
(b)To sell the goods at competitive prices
l
the end of the period
(c)To reap profit by climinating 152. Actual overhead costs appear:
competitionv. '
(d) To increase sales'
<> (a)On a job cost sheetz'
(b)ln the work in process Account
146. A cooperative society is registered (c)In the Financial Goods Account
under act of: (d)In the Manufacturing Overhead
(a) 1925 Y (b) 1930 Account
(c) 1984 (d) 1948 ! 53. Which of the following is a cleaning
147. Which one of the following is not account?
considered a legal document of joint (a)Manufacturing Summary
stock company? (b)Manufacturing Overhead
(a)Memorandum of association (c)Depreciation Expense
(b)Articles of association (d)Accumulated Depreciation*
(c)prospectusV 154. The basic concept which recognizes
(d)Shares that the cost of internal control should
148. Average relief is allowed on the not exceed
derived the as:
is known benefits expected to be
following expenditures except: -
(a)Donation for Charitable purposev (a)Reasonable assurancev

(h)Muhagenient responsibility (b)income from cultivation of ricey

(c) Limited liability - (c)Inconse from Sale of irrigation water
(d)Management by exception (d) Income from poultry farm
Which of the following eliminates | S | Which [...] Il{! Of the following
details from the working trial balance by expenditures is admissible under the
classifying and Summarizing similar OT head income from Business?
related items. (a)Cost of issue of Shares
(a)lead Schedules (b) Weath tax
(b) Control accountsv (c)Loss by firew
(e)Supporting schedules (d)Interest payable to partner
(d)Accounts analysis 152. Which of the following rental income is
| 46. Which one of the following would be exempted from tax under the head
least likely to be considered a control income from property?
objective? (a)property income held under trust
(a)Safeguarding assetsV (b)Seif-occupied residential property
(b)Detecting management fraud (c)income from * buildingV
(e)Accuracy of accounting data (d)All of these.
(d)Adherence of managerial policies 153. The face market value of
Which of the following statements in shares remain the same is case of:
false? (a)Public is filed company
(a)Check list is a method of internal (b) Co-operative Society
control for a small business
(h) wo types of audit tests are compliance
: mernber companyv
(d)Private limited company
tests and substantive tests # nich of the following combination of
(c)Materiality and audi risk have direct usinesses makes different types of
relationship - goods and have in common either raw
(d)Internal control consists of both
accounting controls and
Controls
*S material or final product?
(a)Harizontal
(b)Vertical V
3. Which of the following is (principal (c)Circular
purpose of evaluation of internao trol? (d)lateral
(a)Compliance with auditing Standardsv i55. The status of Chamber of Commerce
(b)Checking efficiency o agenient and Industry in Pakistall is:
(c)issuance of letter kness in (a)Partnership
internal control (b)Association of persons'
(d)Determining nature, timing and cxtent (c) Limited company (d)Club
of Substantive audit test 156. Markets are necessary because:
(e)None of these (a)L)emand always exceeds supply
| 49. Which one of the following assets is (b)Barter cannot work properly
not cligible for initial depreciation (c)Competition in encouraged
allowance? (d) Buyers and sellers are different
(a)Vehicle for factory labour peoplev
(b)professional books 157. Discovery of business opportunities
(c)Vehicle plying for hire Y - and arrangement of property, funds
(d)Ship and management ability to set up a
150. Which one of the following is an business is called:
agricultural income? (a) Incorpation (b)Integration
(a Royalty income from mines (c) Amalgannation (d)Promotion*
158. Which of the following transaction (c)Adjusting entries are made after
represent an expense? financial statements are preparcd.
(a) The owner withdrew Rs. 1,600 from (d)Financial statements are preparcd after
the business for personal use. closing trial balance.Y
(b)purchasco a photocopying machine for 163. Which of the following is an intangible
Rs.2.75() cash. asset?
(c)purchased medical supplies for cash (a)An investment in narkctable securities
from Healthcare Labs. Rs. 1,630 (b) Lcasehold land.
(d)Received a telephone bill amounting to (c) Loose tools
Rs. 550 to be paid within ten days. Y (d)Copyrightsv
159. Which of the following statements 164. Expense is recorded in the accounting
about accounting procedures is not records when:
correct? (a)Cash is paid
(a) The journal shows in one place all the (b) The purchase order is placed with the
information about specific transactions supplier
arranged in chronological order. (c)purchases :*
(b)A ledger account shows is one place all (d) None '
the information about changes is a 165. The cash basis of accounting.
specific asset or liability or owner's used by manufacturing firms.
equity. used by merchandising firms. Y
(c)posting is the process of transferring sually results in a larger amount of .
information from ledger accounts to the han under accrual basis accounting,
journal. V Cannot be used in filing income tax
(d) The product of the accounting cycle in 2. retuTT1S.
the formal financial statements such as 66. The straight-line method of
balance sheet and income statement. s' depreciation.
160.Statements
Which reflects
of the thefollowing finangial (a)Generally gives best results because it
overall.ffinancial is easy to apply.
position of the business? (b)Should be used in a period of inflation,
(a)Statement of cash flows
(b) Income Statement
S because it accumulates the fund for the
replacement of asset at a uniform rate.
(c)Balance Sheetv <> (e)Is the best method used for wasting
(d)Statement of ow alSS1S.
l61. Trial Balance is (d)!gnores fluctuations in the rate of asset

(a) To ensure : usage. Y
accounting records. Y 167. Which of the following accounts are
(b) To establish complete accuracy of not closed at the end of an accounting
accounting records. pcriod?
(c) To determine the amounts payable to (a)Revenue accounts
suppliers for purchase of goods on credit. (b)Expense accounts
(d) To ensure efficient use of resources of (e) Drawing accounts
the business. (d)Asset accountsv
162. In the accounting cycle: 168. Under periodic inventory system cost of
(a)Closing entries are made before good sold is determined and
adjusting entries. recognized in the books of accounts.

(b)Closing entries are made after the (a)At the time of purchase of goods
adjusting entires. (b)At the time of sale of goods
(c)At the end of the year/
(d)None of these (c)None of these -
| 09. A transaction caused a Rs. 10,000 176. Verification is carried out for:
decrease in both assets and total liabilities. (a)Closing Stock
| his transaction could have been. (b)Rent income
(a)purchase of furhiture for Rs. 10,000 (c)Dividend Received
(b)An asset costing Rs. 10,000 was (d)Wages & Salaries
destroyed by fire (c)None of thesev. -
(c) Repayment of bank loan Rs. 1 (),000* 77. Retiring auditor can be appointed at:
(d) Collection of a Rs. 10,000 account (a)Statutory Meeting
receivable. (b)AGMV
170. Which ratio indicates a firm,s ability to (c)Directors Meeting
pay current liabilities in the shokest (d)Creditors Melting
possible time? (e)None of these
(a)Current Ratio 178. Unqualified report is favourable for:
(b) Equity Ratio (a)ManagementV
(c)|}cht Ratio v. (b)Creditors O
(d)(Juick Ratio (c)Debtors <> S
| 71. Which of the following is least important (d) Employees N
in determing the fair market value of a (e)None of #s <>
share'' | 79. Normal * is adopted in

(a)Larning and dividends per share case of
(b)Book value per share (a)Continuous Audity
(c) The available supply of shares and the inal Audit
demand to purchase the shares V Interinn Audit
(d) The par value of share. (d)Special Audit
| 72, Financial statements prepared by a
business firm are most likely to be:
(a)Fully reliable
S. (c)None of these
In partnership minimum number of
members is: -
(b)Tentaive in natureV S. (a)2Y (b)3

(c)Relevant for all types of decisi (c)4 (d)5 (e)20
(d)Always misleading 181. In public Ltd. Company, minimum
173. One of the following is *\ome Of number of members is:
a company: (a)2 (b)3
(a)Share registrarv (e)5 (d)7 v.
(b)Controller S (e)10
(C)Secretary 182. Short term finance can be arranged
(d) Treasurer ihrough: -
174. A deficit appears on the balance sheet: (a)Sales of Debentures

(a)Among the assets (b)Sales of Shares
(b) As a deduction from total paid-up (c)Bank loan V
capital V (d)Debtors collection
(c) Among the liabilities (e)None of these
(d) None of these 183. Statutory meeting is necessary in case of
| 75. Audit programme is prepared by: (a)private Ltd. Co.
(a)Audit staff (b)Public Ltd. Co. v.
(b)Chief Accountant (c)Partnership
(c)Directors (d)Cooperative Soeiety
(d)Audit Management V (e)None of these
:
184. Current Companies Ordinance is that of: 192. Which of the following is excmpted
(a) 1932 (b)1984v from tax at present? -
(c)2()() | (d)2()02 (a)Agricultural incomeV

(e)2003 (b)Bank profits
185. The Addition of Matcrial and Labour is (c)Salary Income
called: (d)profit of public Ltd. Co.
(a)Conversion cost (e) Profit of private Ltd. Co.
(b)princ cost V 193. If Income year of a salaried person
(c) Financial cost ends on 30th June, 2008, then tax year
(d)Absorption cost would be.
(e) None of these (a)2007-08./
186. HXpences can be called as: (b)2008-09
(a) Expired cost V (c)20091()
(b)project cost (d)2008
(c)prime cost 194. Which of the following can be adjusted
(d)Conversion cost against Income T. iability?
(e) None of these : (a)Withholding Tax on Telephone Bills*
187, FOQ is adopted to have efficient: (b)Excise du aid -
(a)Material Management V (c)Custorii duty paid

(b) Labour Management (d)Sal x paid
(c)FOH Management '' : tax paid
(d)Selling Expenses Control
(e) None of these
nich one is not a feature of process
sting?
188. Which of the following is Fixed Cost? (a)Classification of costs into fixed and
(a)Rent V Variable
(b) Income Tax (b)Emergence of more than one product
(c)Repair
(d)Electricity (e)Insurance
189. The statement prepared un
s'
N
(c) Equivalent production
(d) Duration of work is long
TOC CSS (c) None of these v
costing is called: 196. The process loss not allowed to affect
(a)Cost of good sold statenki, the cost of goods units is:
(b) Income Statement <> (a)Normal loss Y (b)Standard loss
(c)Cost of Producti portv (c)Abnormal iOSS (d)Material loss
(d)Variance Stat (e) None of these
(e) None of th 197. Agriculture, forestry, bunting and
19U. Current lineome ax Ordinance is fishing is included in:
that of: (a)Genetic industry V
(a) 1990 (b)2001 v. (b)Extractive industry
(c)2002 (d)2003 (c)Manufacturing industry
(e)2008 (d) Construction industry
191. Which of the following will be (e) None of these
considered as capital expenditure? 198. The minimum number directors is
(a)Material Expenses unlisted public limited company is:
(b)Machinery Purchased Y (a)5 (b) 1()
(c) Labour paid (c)3 (d)7 v.
(d)FOH applicd (e)None of these
(e)Income Tax paid !99. In Pakistan chamber of commerce
and industry is registered with:
(a)Registrar of firms (d)Cost of preparation of partnership deed

(b) Registrar of companies V (e)None of these
(c)Registrar of Societies 207. Which of the following is not capital
(d) Registrar of clubs asset'
(e)None of these (a)Shares of connpany
200. Which of the following partnership (b)]ewcliary
can be formed for indefinite period? (c)Coin
(a)i-imited partnership V (d)Copyrightsv
(b)joint venture (e) None of these
(c)partnership will 208. Ground rent is an income from:
(d)particular partnership (a)Agriculture (b)Salary
(e)None of these (c)Business (d)Other sources/
201. Repetition of client clerical routines (e)None of these . .
such as footing and posting is called: 209. Which of the following is admissible
(a)Vouching expenditure in res '5"
income from
(b) Reperformance business?
(c)Scanning (a) Fines and pena's
(d) I racing (b)Income Ta N <>
(c)None of these v. (c)Excise

202. The direction of testing from the (d)Cost anent shop board Y
SO li FC 6: document to the accounting (c)Nori hese
record is called: 2|{). ' one of the following is an
(a)Vouching V (b)Sampling agricu tural income?
(c)Tracing (d)Verifieation }Income from poultry farm
(c)None of these (b)Income from cultivation of ricev
203. Which of the following liability of
auditor has occurred when au
*\ (c)Income from sale of watcr for irrigation
failed to study articles of association

) (d)Royalty income from mines
(e)None of these
and the directors paid dividendow of 211. Identify the item that is likely to serve as
capital'' Source document:
(a)Negligencev (a) Trial balance
(b)Misfeasance s <> (b)Income Statement
(c)Libel (c)Balance sheet
(d)Breach of contra SS (d) Invoice from suppliery
(e)None of these '' 212. The formula (Cost less salvage
204. Visual examination of accounting value. Total capacity in units x units
record and schedules to identify unusual extracted)rcfcrs to which depreciation
items or inconsistcncies is called: method:
(a) Observation* (a)Straight line
(b)Scanning (b)Units of production*
(c)inquiry (c)Declining balance
(d)}nspection (d)Depletion
(e)None of these 213. While passing adjusting entries for
206. Which of the following in revenuc what type of transactions expenses are
expenditure? debited and assets are eredited:
(a)Cost of feasibility report (a)Accrued revenue
(b)Legal experises of income tax appeal (b)Accrued expenses V
(c)Cost of issuance of additional capitalV (c)Declining balance
Advanced Account.' And Auditing
(d)})epletion (e) Sacrificiag ratio
214. Of the following statements, which (d) ( ;aining ratio
one is untrue for the corporate form of 220, A and B are partners in the ration of
organization: 2. l. The admit C for shares who
(a)It is a separate legal entity contribute RS. 3000 for his share of
(b)It has a limited lifev goodwill.
(c)]ncome that is distributed to owners is (a)Rs. 3.00(; (#) Rs. 9,000 V

usually taxed twice (c)Rs. 12,000 (d)Rs. 15,000
(d)Ownership rights can be easily 221. Second hand machinery worth Rs.
transferred 10,000 was purchased, repairing of the
2 5. For each trasaction, double-entry machinery cost Rs. ! .000. T]he
accounting requires which of the 'ollowing, machinery was installed by own workers.
(a)Debits to asset accounts must create Wage for this being Rs.200, the
credits to liability or equity accounts machinery accouat should be debited

(b)A debit to a liability account must for:
create a crebit to an asset accounts.
(c) Total debits must equal total credits'
ta)RS. } {},{}(){}
(c)RS.

'' d)None of these
} | {}{}{)
(d)None of these 222. If net sales Rs. 100,000 cost of goods

216. When costs are rising, which method Sold : Administrative expenses
reports higher net income: Rs. 5* Selling expenses Rs. 4375,
(a)LIFO (b)FIFOv ' it expense Rs. 500, the
1S :
operation
(c)Average
(d) The most recent purchase price : ) RS, 35.325 (b)RS, 45000
217. A transaction caused Rs. 20,000 (c)Rs. 39700 (d)Rs. 34825 v
decrease in both total assets and tota
liabilities.
been:
This transaction could (2) 223. Which ratio best reflects a companys
ability to nect immediate interest
payments'
(a)purchase of an asset for Rs. 20. N (a) Debt ratio
cash - & (b)Equity ratio
(b)Asset costing Rs. 20,000 yed by (c)Times interest earned Y
fire (d)None of these
(c)Repayment of Rs. loan. Y 224. Hidentify which items
from the
are
list annount and not recorded
subtract
(d)("ollection of Rs.2%),000 account
receivable. when computing purchase price:
218. Income and enditure account is a (a)Freight in
In O!" trading institution records {b}Trade discounty
transaction of (c)Purchase discount
(a)Revenue nature only (d)Purchase return
(b)Capital nature only 225. Bonus payable only on the maturity of
(c) Both (a) & (b) the policy is termed as:
(d)lneome of revenue nature and (a)Cash bonus Y
expenditure of revenue and capital (b)Reversionary bonus
nature (c)intertin bonus
219. At the time of admission of a new (d)Bonus is reduction of premiurn
partner, good will raised should be 226, Rebate on bill discounted (unearned
written off in: discount) is:
(a) New profit sharing ratio (a)An expense (b)An income
(b) Old profit sharing ratiox' (c)An liabilityY (d)An asse
227. Which of the following is an example of (e)None of these
internal transaction? 234. In Pakistan commercial bank can be
(a)('ash received from debtor formed and is registered under the
(b)(jods sold on credit (a)Companies Ordinance 1984
(c)Supplies ( onsumed in the officev (b)Banking Companies Ordinance 1962 V.
(d)Salaries paid to employees (c)State Bank of pakistan Act 1956
(e) None of these (d)Modaraba Companies Ordinace 1980
228. Which of the following is an example of (e)None of these
non-exchange transaction? 235. In pakistan a commerical bank prepares
(a Kiood lost by firc~ its annual accounts under the.
(b)Electric Charges paid : (a)Companies Ordinance 1984

(c)Machinery purchased on credit (b)Banking Companies Ordinace 1962V.
(ti)None of these (c)State Bank of pakistan Act 1948
229. A company receives 40% of monthly (d)Modarada Companies Ordinance 1980
sales and 50% in the following month (e)Nonc of these
and rest is received in third month the 236. A company pa Skoms
tax at the
sales for January are Rs. 20 February rate of 40% t 1 income after tax is
|Rs. 30 and March Rs. 40 the collection for Rs. 24. The " me before tax is:
March is. (a)Rs. 2, (b)Rs. 80
(a)Rs. 27 (b)Rs. 3() (c)Rs. (d)Rs. 16
(c)Rs. 33 (d)RS, 36 (c) ofte f these
(e)None of theseV. 237. insurance company can be
23). The time fimit for payment of divident ed and is registered under the.
for a listed public limitcd company is: a)Companies Ordinance 1984
(a)30 days (b)Banking Companies Ordinance 1962
(b)45 days SN (c)insurance Ordinance 2000Y
(c)6() days
(d.190 daysv -
SQ
S. (d)Modaraba Companies Ordinance 1980
(e)None of these
/
(e)None of these
23 ]. The time limit for payment o (9)
cnd for
238. The working of the insurance company is
governed by the:
a unisted limited company is . (a)Companies Ordinance 1984
(a)9(3 days
(c)45 days S. daysV
J)30 days
(b)Banking Companies Ordinance 1962
(c)Insurance Ordinance 2000Y
(e) None of these * - (d)Modaraba Companies Ordinance 1980
232. As per Companies Ordinance 1984 a (c)None of these
listed public limited company is bound to 239. Which of the following transactions
prepare its financial statements on: would result in an increase in the current
(a)Yearly basis v ratio?
(b)Half-yearly basis - (a)paid cash for a one-year insurance
(c)(Juarterly basis policy
(d)Daily basis (b)Collected an account receivableY
(c)None of these (c)Used the allowed method to write-off an
233. As per Companies Ordinance 1984 un-collectiable account -
loose tools are recorded under the head of: (d)Borrowed money by issuing a long
(a)Current assets* {CTIn nte
(b)Fixed assets (e)None of these

(c)' ong-term investment :k k + k + +
(d) ong-term deposits

Principal of Accounting 19
Accounting was developed by people,

who were seeking better ways to gather
Principal of Accounting and report useful information about:
(a) Families (b) Individual
Q. l Four possible answers are given for the (c) Organizations.v. (d) Friends
following questions. Tick mark (Y) the 8. The act of collecting, processing,
COrrCt IlSWer. -
reporting, analyzing, interpreting and

1. A proper and fair planning of projecting financed information is called:
expenditures helps us to ensure proper use (a) Economics
of: - .
(b) Accountingy
(a) Our liabilities (c) Information technology
(b) An incomew (d) Introduction to business
(c) Our expenses Accounting principles, are generally
(d) Assets based on: '
2. The need for keeping a record of income
and expenditures in a clear and systematic
(a) O
manner has given rise to the subject of
(b) Subjectivity'
(c) Convenience in recording
(a) Book keeping/ (d) None of the above
(b) Accounting cycle 1 (). The system of recording transactions
(c) None of the above
(d) Manufacturing cycle

(a) Double
eoncept is called:
account System
3. It is possible to increase the amount of b) Double entry system V
saving through proper management and c) Single entry system
effective control of (d) Management system
(a) The family liabilities No accounting is possible for an event or
(b) The family incomew transaction which is not measurable terms
4.
(c) The family assets
(d) None of the above
It is all the more necess
-
of:
(a) Moneyv. (b) Goods
(c) Units
organization or a concern to k (d) Ethical values
(a) Improper accounts | 2. The stage under which transactions are
(b) Proper accountsv <> s recorded chronologically in the books of
(c) Incomplete reco accounts is called:
(d) None of the (a) Summarizing
5 If proper book accounts are not kept (b) Classifying
in a business the amount of profit: (c) RecordingV
(a) Can be ascertained (d) None of the above
(b) Cannot be ascertained v 13. The stage under which the transactions of
(c) Easily ascertained the same or similar nature are classified
(d) None of the above and recorded separately is known as:
6. Accounting is often referred to as the (a) Classifyingv.
language of the: (b) Recording
(a) BusinessV. (c) Interpretation
(b) Schools (d) None of the above
(c) Daily life 14. The stage under which all necessary dates
(d) Information technology and information's are summarized on the
basis of classified record of transactions
and communicated to management and 21. When the payment or receipt of cash is
other interested persons is called as: postponcq for a future date, this
(a) Recording transaction is said to be:
(b) SummarizingV (a) Credit transaction V.
(c) interpretation (b) Cash transaction
(d) None of the above (c) None of the above
Book-keeping is mainly concerned with: (d) Introduction
(a) Recording of a financial data relating 22. Any activity undertaken for the purpose
to business transactions' of earning profit is called:
(b) Designing the systems in recording, (a) Performance (b) Dealing
classifying, Summarizing the recorded (c) BusinessV. (d) Duties
data 23. The owner of the business is known as:
(c) Interpreting the data for internal and (a) Sale man (b) Agent
external users (c) Proprietorv (d) Employee
(d) None of the above 24, The amount with ich the trader starts
] (). The prime function of accounting is to: his business is '
(a) Record economics data (a) S (b) Capital'
(b) Provide the informational basis for (c) Stock (d) Purchases
action -
(c) Classifying and recording business

24. The
propri
: <>
from
goods taken away by the
the business for his
transaction v # al use arc called his:
(d) None of the above ') apital (b) Cash
Managemcnt accounting provides C Drawings (d) Purchases
invaluable services to management in 65, When saleable goods arc bought in a
performing: business, it is said to be:
(a) All management functions V.
(b) Controlling functions
* (a) Sales
(c) Assets
(b) Purchases V
(d) Goods
(c) Coordinating management functions 26, If the goods are purchased from a supplier
(d) None of the above - and payment is made to him at the same
18, In double entry system of book-keeping time, such purchases are known as:
(a) Debit or affects:

every business transacti
of the same
(a) Credit purchases
(b) Cash purchases V
dCCOld 11t . (c) Cash sales
(b) Two accoun (d) Credit sales
(c) The Same S f the same account 27. If the goods are purchased for which
(d) Nonc of the above. payment will have to be made at some
19. Any dealing between two persons or future date it is known as:
things is a: (a) Cash purchases.
(a) Transaction v. (b) Purchases an accountv.
(b) Introduction (c) Returns outwards
(c) Meeting (d) Seminar (d) Credit sales
20. When cash is paid or received as a result 28. If the defective or damage goods return to
of an exchange, the transaction is said to the suppliers are called:
be a: (a) Purchases returnsv
(a) Sale transaction (b) Sales return
(b) Cash transaction' (c) Return inwards
(c) Credit transaction (d) Expense
29, The other name of purchases return is: , 37. Financial accounting is mainly confined
(a) Return outwards* to preparation of:
(b) Return inwards (a) Manufacturing statement
(c) None of the above (b) Financial statementv.
(d) Sales return (c) Production statement
30, The concession given by the supplier to (d) Sales statement
the buyer on purchases of goods is known 38. The costs of the goods and scrvices used
2S. up in the process of obtaining revenue is
(a) Sales discount called:
(b) Trade discount (a) Liabilities (b) ExpensesV
(c) Purchase discountv. (c) Assets (d) Income
(d) Discount received 39. The term expense and expenditure are:
31. The concession given by supplier to the (a) Same in nature
buyer on sales of goods is said to be: (b) Different in nature
(a) Cash discount (c) Opposite in nature
(b) Trade discount (d) None of the above
(c) Sales discounty 40. A summarized record of transactions
(d) Purchases discount - relating to a person or thing is called as:
32. The form of remuneration for surfaces (a) Ledger (b) Journal
rendered by one person to another I (c) Accounty (d) Trial balance
called: 41. Debtors are also known as:
(a) Loan (b) Commission Y - receivablev'
(c) Equity (d) Sales - b) Account payable
(b
The discount allowed by manufacturer or (c) Bills payable
wholesaler at the time of selling good to (d) Proprietor
retailer as a deduction from the listed 42. Creditors are also termed as:
price or catalogue price, is called *N (a) Account receivable
(a) Trade discountv/
(b) Cash discount SS. (b) Account payablev
(c) Bill receivable
(c) Sale discount
(d) Purchases discount The properties and possessions of a

The deduction or allowance given by a business both tangible and in tangible are
creditor 10 a
paid by the debt
amount due i
fore the due date is
called:
(a) Liabilities (b) Assetsv
known as: (c) Income (d) Expenses
(a) Trade discount 44. The debts due by a business to its
(b) Cash discountv proprietor and others is termed as:
(c) Sales discount (a) Liabilities' (b) Assets
(d) None of the above (c) Expenses (d) Incomes
35. A person who owns money on goods to Any written evidence in support of a
another is called: business transaction is called:.
(a) Employer (b) Debtorv/ (a) A business letter
(c) Account payable (d) Creditor (b) Voucherv
36. A person who pays out something or to (c) Financial statement
whom money is owing is called: (d) Manufacturing Statement
(a) Debtor (b) Creditorv 46. All merchandise commodities which are
(c) Account receivable (d) Owner purchased by the business for selling
purpose is called:
(a) Inventory.( 54. Double entry system requires the

(b) Capital maintenance of:
(c) Assets (a) Not any book of accounts
(d) None of the above (b) Only one book of accounts
47. The rights to propertics of the business (c) A number of books of accountsv .
are called: (d) None of the above
(a) Liabilities 55, Accounting principles are generally based
(b) Assets On:
(c) Equitics (a) Practicability V

(d) None of the above (b) Subjectivity
48. The span of time for which a business (c) Convenience in recording
generally prepares its financial statements (d) Daily life.
is termed as: 56. Events which are related with money are
(a) Accounting period Y called":
(b) Accounting cycle (a) Monetary events'
(c) Accounting standards
(d) Manufacturing period
(b)
(c) Non-social events
49. The price of goods sold or services (d) Political events
rendered by a business to its customers, is 57. ich are not related with money
termed as: Or do not change the financial
(a) Net profit (b) Revenue V i n of a person are known as:
(c) Expenses (d) Net loss onetary events
50. Net income or net profit is equal to: C. ) Non-monetary events
(a) Rcvenue - income (c) Social events
(b) Revenue - expenscsv (d) Political events
SQSNs
(c) Revenue + expenses A transaction will be possible, when these
(d) None of the above will be:
5! Double entry means:
(a) Entry in two sets of
(b) Entry at two dates
* (a) One party
(b) Two parties*
(c) No party -
transaetion V rt
(c) Entry for two aspects
59.
(d) None of the abov
All the events relevant to business must
be measurable in terms of:
(d) Memorandum
52 The system in accounting entries (a) Goods (b) Units
arc made on the basis of amounts having (c) Money Y (d)Ethical values
become due for payment or receipt is 60. If there is a change in total value of assets
known as: and liabilities of a business concern, it
(a) Cash system of accounting will be consider as:
(b) Accrual system of accounting (a) Qualitative change
(c) None of the above (b) Quantitative changev
(d) Manufacturing cycle (c) Monetary change
53. The term 'Accounting and 'Book-keeping (d) Political change
are classified as: 61. If there is increase or decrease in the
(a) Same different elements or liabilities, but the
(b) Different V value of total assets and total liabilities
(c) Opposite remains unchanged, it will be considcras:
(d) None of the above (a) Qualitative changev
(b) Quantitative change
(c) Monetary change (d) None of the above

(d) Political change (39. Realization concept implies:
(32. When there is no question of meeting the (a) The receipt of the order
value of a transaction, it is regarded as a: (b) Thc delivery of the goodsv
(a) Each transaction (c) The receipt of cash from the customer
(b) Credit transaction (d) None of the above
(c) Paper transaction v 70. The proprietor is treated as a creditor to
(d) None of the above the extent of his capital according to:
A transaction taking place with an outside (a) Cost concept -
person or organization, is called on: (b) Business entity concept*

(a) internal transaction (c) Going concern concept
(b) External transaction v. (d) None of the above
(c) Paper transaction 71. The accounting equation is based on:
(a) Going concern concept
64. A transaction taking place with which no (b) Dual aspect concept
outside person or organization is involved
is called as:
(c) Money meas
(d) Nonc of th '" concept*
C
(a) Internal transaction v 72. An

''
treated
the entity to owners is
ility in the balance sheet
(b) External transaction
(c) Paper transaction accordi
(35.
Which of the system of recording $:
(a) concern concept*
al aspect concept
transaction on duel aspect concept of Business entity concept
accounting: d) None of the above
(a) Double account System Market value of investments is shown as
(b) Double entry system v
(c) Single entry system
(d) Management System
s&
SQ
a foot note according to:
(a) Convention of disclosureV
(b) Convention of consistency
66. According to the money me;
concept the following will : 3d in
(c) Convention of conservation
the books of accounts '' iness: 74. Making the provision for doubtful debts
(a) Health of the director of the company in anticipation of actual bad debts is on
(b) Quality of comp oods the basis of: -
(c) Valuc of the p nd machinery V (a) Convention of disclosure
67.
(d) None of ' (b) Convention of consistency
(c) Convention of conservation v
The concept of conservation takes into
CCOunt: (d) None of the above
(a) All future profits and all future losses 75. The use of an accelerated method of
(b) All future profits but leaves all future depreciation is based on:
losses (a) Convention of disclosure
(c) All future losses but leaves all future (b) Convention of materiality
profits V -
(c) Convention of conservation*
(d) None of the above -
68. The concept of conservation will have the 76. The accounting equation is:
effect of - (a) Liabilities = Assets + Capitalv
(a) Understatement of assetsv (b) Assets = Capital Liabilities
(b) Understatement of liabilities V (c) Assets = Capital + Liabilities
(c) Overstatement of assets (d) one of the above
77. In accounting, all business transactions 86. Accounts relating to persons or firms are
are recorded as having: called:
(a) Dual aspect V (a) Real accounts
(b) Single aspect (b) Proprietary accounts.
(c) None of the above (c) Personal accounts
(d) Economic aspect (d) Nominal accounts
78. Accounting principle is general law or 87. When an account represents certain
rule follows in the preparation of: person or person then it is called as:
(a) Accounting equation (a) Artificial person's account
(b) Financial statements (b) Representative personal accountv/
(c) Personal accounts (c) Nature person's account
(d) Bank accountsv. (d) Real accounts
79. Usefulness, objectivity and feasibility are 88. Salary outstanding account relevant to:
the thrce basic norms found in: (a) Representative personal accountv/
(a) Accounting transactions (b) Artificial person's account
(b) Accounting concepts
(d)
:"
(c) Natural
'' AtS
(c) Accounting principles V
(d) None of the above 89. Personal acc are related to:
8(). The cost concept applied only to the (a) iabilities
asscts and not to: (b) Ex ense
, losses
(a) Expenses (c) creditors etcv/
(b) Liabilities V COIT16S
(c) Incomes 89. l account are related to:

(d) None of the above a) Assetsv.
8 1. The" qualitative aspect of things are (b) Expenses, losses and incomes
ignored by:
(a) Dual aspect concept
(b) Entity concept*
*
S,
(c) Customers, creditors
(d) Incomes
Nominal accounts are related to:
(c) Money measurement concept S. (a) Assets and liabilities
(d) None of thc above 'S (b) Expenses, losses and incomes Y.
(c) Customers, creditors etc
82. The equity of creditors represents debts of
thc business and are called: (d) Capital account
(a) Assets Liabilities v. 91. The basic rules of book-keeping debit the
(c) Capital (d) Income receiver and credit the giver is applicable
The equity orite when is called: to:
(a) Assets (b) Liabilities (a) Personal accounty

(c) Capital V (d) Income (b) Real account
84. The cost concept is helpful in making. (c) Nominal account
(a) Unreal records (d) Expense account
(b) Incomplete records The basic rule of book-keeping debit all
(c) Truthful records* expenses and looses and credit' all
(d) None of the above incomes and gains is applicable to:
85. The individual record of an asset, a (a) Personal account
liability, a revenue, an expense or capital (b) Real account
in a summarized manner is called: (c) Nominal accounty
(a) A trial balance (b) Ledger (d) Capital account
(c) An accounty (d) Journal 93. Cash account is concerned with
(a) Real accounty
(b) Personal account 104. The books of account in which business

(c) Nominal account transactions are originally recorded in
(d) Capital account chronological order arc:
94. Capital account is a kind of: (a) Ledger (b) Journal V
(a) Rcal account (c) Trial balance (d) Balance sheet
(b) Nominal account 105. The act of recording each transaction in
(c) Personal accountv. the journal is called:
(d) Income account (a) JournalizingV (b)
95. Mr. Imran account is a kind of: Posting
(a) Real account (c) Journal folio or folioing
(b) Personal accountv/ (d) Ledger
(c) Nominal account 106. Journal shows all necessary information
(d) Expense account regarding:
9(). Sales account is concerned with. (a) The document
(a) Personal account (b) A transaction v
(b) Real account (c) The o
(c) Nominal accountv (d) Meeting
(d) Expense account 107. Transaction recorded chronologically
97. Rent account is a kind of: so, journal is called:
(a) Real account (a) Enghook
(b) Personal account (b) Transaction book
(c) Nominal accounty Chronological book V.
(d) Capital account (d) Voucher
98. Machinery account is concerned with.
(a) Real account Y
* transaction is recorded on the same day
it takes placc SO, journal is also called:
(a) A day book Y
(b) Personal account
(c) Nominal account *
SQ
(b) A history book
99.
(d) Expense account
Profits and losses are
(a) Pcrsonal account
* -
109.
(c) An entry book
(d) Ledger book
Narration is always written:
(b) Real account (A) Above each entry
(c) Nominal :S <> (b) Below each entryv
(d) Machinery accou (c) Between of each entry
1 ()(). Every transactio (d) None of the above
(a) Single
(b) Dual aspect
| }(). A journal is generally kept on:
(a) A columnar basisV
(c) Triple aspect (b) A row basis
(d) Paper transaction (c) A single line basis
1 ()l. The money with which business is started (d) Vertical basis
is known as: ! # 1. The specimen ruling of a journal is
(a) Capitalv (b) Creditor divided into:
(c) Income (d) Debtor (a) Three columns
102. The person who owes money is: (b) Five columns V
(a) A creditor (b) A debtorv (c) Six columns
(c) An owner (d) Agent (d) Two columns
103. The person to whom money is owned is: 112. In form of journal, the first column
(a) A creditorv/ (b) A debtor represent:
(c) An owner (d) Agent (a) Ledger folio (L.F.) (b) Datex/
(c) Amount (d) Debit (c) Cash (d) Loan

| 13. The particular column in journal form is 121. When proprietor brings capital in the
the column for: business it is recorded m:
(a) Account title and descriptionv (a) Capital alc./
(b) Account title and date (b) Proprietor a/c
(c) Amount (c) Creditors a "c
(d) Date (d) Debtors a/c
# 14. Accounting to the journalizing rule, the . Any cash or goods taken away by the
page numbers of the ledger where the two proprietor for his personal use are call
concerned accounts have been posted are his:
written in: (a) Capital (b) Drawingsv
(a) The first column of journal form (c) Income (d) Expense
(b) The second column ofjournal form H23. When goods are given away as charity or
(c) The third column of journal form v free samples, the purchases alc sho j^
(d) The forth column ofjournal forIn be:
Recording a transaction in the appropriate (a) Debited

place of the concerned book of account is
called: (c) &Q
(b) Credited v
lance sheet
(a) An accounting record (d) None of above
(b) A statement 124. When g are lost by fire or by theft or
(c) An entry.* 21I] purchases alc should be:
(d) None of the above MCredited.
| ] (). A short explanation of each transaction is
written under each entry which is called:
(a) Narrationv.
c c) Both of these
(b) Original entry 25. Debit signifies:
(a) Increase in asset account and decrease
| | 7.
(c) Subsidiary cntry
(d) Memorandum entry
The complete story of a transacti
in liabilitiesv
(b) Increase in liabilities accounts and
entry is shown by: decrease in expense or account
(a) Voucher book (b) (c) Increase in asset alc and decrease in
(c) Document (C ay book expenses account
| 18. Any mistake in ledge; can be easily (d) Increase in income a/c and decrease in
detected with the help of expense account
(a) Journalv 126. Credit signifies:
(b) Balance sheet (a) Increase in assets alcs and expense
(c) Trial balance a/cs -
(d) Financial statement (b) Increase in liabilities a "cs and income

119. The entry in which more than one account a/cs . V.
is debited or more than one account is (c) Increase in expenses a'cs and
credited is known as: liabilities a 'cs
(a) Single entry (d) Increase in assets ales and expenses
(b) Compound entryv a/cs
(c) Memorandum entry 127. Left side of asset account is for:
(d) None of the above (a) Recording decreases
120. The money with which proprietor starts (b) Recording increases
his business, is called: (c) Recording the correction of errors
(a) Investment (b) Capitalv (d) None of the above
128. Right side of an asset account is for: (b) Furniture account Y

(a) Rccording decreasesV (c) Purchascs account
(b) Recording increases (d) Fixture account
(c) Recording, decreases and increase 137. A with draw of cash from the business by
(d) None of the above proprietor should be debtted to:
. A business transaction affects: (a) Cash account
(a) At least one account (b) Drawings accountv
(b) At least two accountsv (c) Capital account
(c) Maximum of three accounts (d) Expense account
(d) None of the above | 38. Goods of the value of Rs. 1000 are given
130. Loss of goods by fire should be credited away as charity, this account should be
{Q: debited to:
(a) Purchases a cy (a) Charity accounty
(b) Salcs alc (b) Sales account
(c) Loss by goods by fire a/c (c) Purchases account
(d) Capital a/c (d) Asset acco *O
. Sales of goods to x for cash should be 139. Furniture p ased for private use of a
debited to: partner should 5e debited to:
(a) Purchascs (b) Cash v. (a) Furniture account
(c) Sales (d) Drawings a/c (b) Partner's capital account
12. A payment of rupees five hundred to ((c) Purchases account
Saeed Transporters for bringing a artners drawings accounty
machine to our factory should be debited
1O.
e' amount of Salary paid to imran
should be debited to:
(a) Saeed transporters (a) The account of Imran
(b) Machine a/cv/ (b) Salaries account Y.
(c) Cash alc (c) Cash account
(d) Carriage a/c N (d) Wages account
Rupees 500, with drawn by th r for 14] . The return of goods by a customer should
his private use should be credited to: be debited to:
(a) Owners drawings a'c (a) Customer's accounts
(b) Expenses a/c s <> (b) Sales returns accounty
(c) Cash alc (c) Goods account
(d) Capital a/cv. (d) Purchases account
Wages of wo n employed for setting 142, The rent paid to the landlord should he
up ncw machinery should be debited to: creditcd to:
(a) Expenses a/c (b) Wages a 'c (a) Lanlords account
(c) Machinery a cv. (d) Salaries a/c (b) Renl account
135. Rs. 10 received from Ali whose account (c) Cash account Y
was previously written off as bad debt (d) Rent outstanding account
should be credited to: 143. The Cash discount allowed to a debtor
(a) Ali's account should be credited to:
(b) Bad debts accountv (a) Discount account
(c) Bad debts recovered account (b) Customer's account
(d) Creditors alc (c) Sales a/c
136. A purchase of furniture for cash should be (d) Creditors accounty
debited to: 144. In case of a debt becoming bad, the
(a) Cash account amount should be credited to:
(a) Debtor's accounty (c) Both debit and credit side

(b) Bud debts account (d) None of the above
(c) Sales account } 54 . Ledger is a book in which:
(d) Creditor's account (a) Only real accounts are opened
. The Salc of busincss asset on credit is (b) Only real and personal accounts are
recorded in: opened
(a) Sales journal (c) All the real, personal and nominal
(b) General journal V accounts are openedY
(c) Cash receipt journal (d) None of the above
(d) None of the above 5. The journal reference (J.R) helps in
| 46. Thc Book in which accounts are maintain locating the entry easily in: -
is called: (a) Ledger (b) JournalY

(a) Daybook (b) Journal (c) Trial balance
(c) ledgery (d) Sales book (d) Balance sheet
| 47. The debits and credits of journalized | 56. The process of equalizing the two sides of
transactions are transferred to: an account is k 1S.
(a) Chronological book (a) "

(b) Ledgerv (b) Journalizing
(c) Journal (c) Posti <>
(d) Purchases book (d) '' the above

| 48. The closing balance of the current year 157. '. alancing art account
nce of the two sides is recorded on:
the
will be the opening balance of the:
(#) Last year V. (' Larger side
(b) Current year b) Small sideY
(c) Next year (c) Both iarger and smaller side
(d) None of the above 22 (d) None of the above
149. Excess of debit over credit is called:
(a) Debit balancev GS 158.
Expenses normally shares:
(a) Debit balanceY
(b) Credit balance
(b) Credit balance
(c) Closing balance
(d) Opening balance
& (c) Debit and credit balance both

# 5(). The process of recording a transaction in | 59. Liabilities norinally shows:

ledger is called:" ' (a) Debit balance
(a) PostingV SS(b) Journalizing (b) Credit balancev
(c) Both debit and credit balance
(c) Entry (d) Recording
. Which one "...' is ealled the (d) None of the above
king of all books of account: 160. Accounts of revenue normally have:
(a) The cash book (b) Journal (a) Debit balance
(c) Ledgerv (d) balance (b) Credit balancev
| 52. The unit of classification of data with in (c) Both credit and debit balance
the ledger is the: (d) None of the above
(a) Transaction l()] . Assets normally has:
(b) Account Y (a) Debit balancev
(c) Compound entry (b) Credit balance
(d) Mcmorandum entry (c) Both debit and credit balance
53 The closing dcbit balance falls on thc: (d) None of the above -
(a) Credit sideY Excess of credit over debit is called.

(b) [Debit Side (a) Dcbit balance
Principal of Accounting
(b) Credit balancev (b) Journal folio column of journal
(c) Opening balance (c) Journal folio column of journal
(d) None of the above (d) None of the above
3. It" the two sides of an account are equal, |7|. In casc, the trial balance is not prepared, it
that account will shows: will be almost impossible to prepare:
(a) Zero balancev (a) The journal
(b) Debit balance (b) The ledger
(c) Credit balance (c) The financial Statements'
(d) None of the above (d) None of the above
164. A trial balance is: 172. The ruling of a triai balance is similar to
(a) A balance sheet that of:
(b) A rough draft of the final accounts (a) A journal V
(c) A list of the balances in the ledgery (b) A ledger
(d) None of the above (c) A balance sheet
165. The main purpose of a trial balance is to: (d) None of the above -
(a) Help balance the bank account | 73. Cash sales to Ali will be posted to
(b) Check the accuracy of the books of credit side of
original entry (a) Mr. # 3CCOlllll
(c) Help check the arithmetical accuracy (b) ag t

of the double entry V
:
'
account V
onc of the above
166. Which of the following types of error in 17 ary paid in cash to Rahal will be
the ledger will not be revealed by a trial posted to salary account on the:
balance: (a) Credit side (b) Debit sidev.
(a) An error of omission V (2) (c) Both sides (d) None of the above
(b) An error of commission Building purchased for cash will be
167.
(c) An error of principle
A suspense account is opene
the:
| 75.
posted to building account on the:
(a) Debit sidev
(b) Credit side
(a) Trading account does InCe (c) Both sides
(b) Profit and loss ac t does not
balance
(c) Trial balance
t balancev
176.
Cash purchases from Khalid will be
posted to debit side of:
(d) None of th e
(a) Cash Aic (b) Sale Age
168. The ledger is ook for the: . (c) Purchase Alc v (d) Expense Aic
(a) First entry 177. The person to whom we are indebted
(b) Second entryv 1S.
(c) Third entry (a) Debtor (b) Creditory

(d) Fourth entry (c) Employee (d) Agent
169. The ledger is the book for the: 178. The person who is indebted to us is ours:
(a) Chronological record (a) Debtorv (b) Creditor
(b) Daily record (c) Owner (d) Agent
(c) Analytical recordv 179. The amount with which a business is
(d) None of the above started is ealcd:
17(). When we post the various entries from (a) Capital V (b) Loan
the journal in to the ledger, we should (c) Profit (d) Investment
write the ledger page in the: 180. The left hand side of Account is
(a) Ledger folio column of journal V called:
(a) Credit side (b) Ledger

(b) Debit sidev. (c) Trial balance
(c) Both debit and credit (d) Balance sheet
(d) None of the above 189. Transactions are finally recorded in:
| 81. The right hand side of an Account is (a) Journal
called: (b) Ledgerv
(a) Debit side (c) Trial balance
(h) Credit Sidev. (d) None of the above
(c) Both debit and credit 190. Journal is called.
(d) None of the above (a) Book of original entryv
. Transactions relating to inconic (b) Book of final entry
expenditure and profit-loss-are recorded (c) Book of single entry
in: (d) None of the above
(a) Real account | 9| . Ledger is called.
(b) Nominal accounty (a) Book of original entry
(c) Personal account (b) Book ''
(d) Capital account (c) Book of co ind entry
. Transactions renting to persons or (d) None
institutions: ! 92. The word "By" is used with an account
(a) Real account while making posting on: -
(b) Nominal account (a it side of an account
184.
(c) Personal accountv.
(d) Hrawings account
Transactions relating to properties or
c: redit side of an account V
Both sides of an account
d) None of the above
assets are recorded in:
(a) Real accountsv 2% The word To" is used with an account
while making posting on:
(b) Nominal accounts
(c) Personal accounts
(a) Debit side of an accountv
(b) Credit side of an account
(c) Both side of a account
5. The difference of the tWO (d) None of the above
sides of an account is calle
(a) Brought forward V. <>
(b) Carry forward

BANKING
(c) Balance TRANSACTIONS
| 86
(d) None
The arithmetical accuracy of books of
Q.1 Four possible answers are given for the
account is verified through:
(a) Journal following questions. Tick mark (S) the
Correct anSWer:
(b) Ledger
(c) Trial balancev An institution which purchases and sells
(d) None of the above money and transacts other financial -
business of like nature is called:
187. Cash transactions, are recorded in:
(a) Creditors (a) College (b) Bank V
(b) Debtor's book (c) Hospital (d) Manufacturing
(c) Cash book Y Bank borrow money in the shape of
(d) None of the above deposits and lends it in various ways: it
consider its:
| 88. Transactions are primarily recorded in:
(a) Journal V -
(a) Primary function V
(b) General utility function i (), The customcr is allowed to deposit or

(c) Agency functions withdraw money as and when he likes,
(d) Secondary function in" casc of:
A bank performs certain functions for the (a) Current accounty
benefit of general public which are called (b) Saving bank account
ll.S. (c) Fixed deposit account
(a) Primary functions (d) None of the above
(b) General utility functions.v. 11. In case, deposits can be madc only up to a
(c) Agency functions certain amount and withdrawals are
(d) Secondary function allowed only twice or thrice a week, not
When banks act as agents of their exceeding a certain amount, is:
customers and tender great Service in that (a) Current
capacity these are: (b) Saving bank accounty
(a) Primary functions (c) Fixed deposit account
(b) General utility functions (d) None of the above
(c) Agency functions' 12. When a unt is deposited for a
(d) Secondary function fixed as six months, one year
To keep valuable things and papers in or longer. type of account is:
safe custody, is the example of bank's: (a) Current account
(a) Primary function (b) $&ing bank account
(b) General utility function Y tred deposit account V
(c) Agency function None of the above
(d) Secondary function !3. When a customer is authorized to borrow
To rcalize interest and dividend on behalf up to an agreed amount in excess of the
of their customers is the example "2) customers bank balance, if will be called:
banks: (a) Bank overdraftv
(a) Primary function O (b) Bank under draft
(b) General utility function N (c) Bank balance
(c) Agency function S. (d) None of the above
When a commercial bank advances a
(d) Secondary function 14.
To finance the import an port trade of fixed sum for a definite period of time, it
'"
a country is the banks: will called:
(a) Primary (a) Overdraft
(b) Loans V.
(b) Agency 1 uncti
(c) General : function V
(d) Secondary function
(c) Under draft
Issue of various important documents is 15. Which of the following should be filled
the example of banks: up. When money is to be deposited in the
(a) Primary functions (a) Draft (b) Cheque
(b) General utility function* (c) Pay-in-slip V (d) Pay order
A customer can withdrawal from his
(c) Agency function 16.
(d) Secondary function account or make payment to various
9. A commercial bank receives money on: parties "by issue of:
(a) Two accounts (a) Pay-in-slips
(b) Three accountsv (b) Cheques V
(c) Four accounts (c) Overdrafts
(d) Five accounts (d) None of the above
| 7. In the hooks of the bank, whenever an

account is opened the customer is finished
BILLS OF
With a .
EXCHANGE
(a) Bank-pass book Y
(b) Cheque book
(c) Pay-in-slip book The method of payment by bill of
(d) None of the above exchange depend on:
| 8. When two parallel lines are drawn across (a) Cash basis
the face of a cheque, it is said to be: (b) Credit basis V
(a) A hearer cheque (c) Reserve basis
(b) An order cheque (d) None of the above
2 Bill receivable book is a part of the:
(c) A crossed chequev
(d) None of the above (a) Journalv
| Q}. When the cheque is paid by the drawee (b) Ledger
bank, it is said to be: (c) Profit and loss account
(a) Honoured
3 A bill of exchang&
(d) Balance sheet
ains:
(b) Dishnottred
(c) Endorsed V
(a) An orderV
(d) None of the above (b) A promise <>
When the cheque is not paid by the (c) A deliver goods

(d) Agonditional order
drawee bank, it is said to be:
(a) Honoured
4. A. ' exchange is drawn by:
* ebtor -
(b) Dishonourcd
A creditorv
(c) Endorsed
(d) None of the abovev @...) A holder *
The act of singing on the back of '' (d) Endorsee

Bill receivable account is a:
cheque in order to transfer it to som te) -
else is called: * (a) Nominal account

(b) Personal accountv.
(a) Crossing
(b) Endorsement v. (c) Real account
(d) Expense account
(c) Drafting
(d) None of the ahovc
6. At the time of drawing a bill, the drawer
3 * credits:
Commercial banks gi facility of
m one place to (a) Debtors accountv.
rennittance or mon
another through: (b) Creditors account
(c) Bill receivable account
(a) Cheques
(b) Overdrafts (d) Suppliers account
(c) Bank drafts v. When a bill is discharged, the acceptor
debits:
23 Hundi is exactly like a: (a) Creditors account
(a) Bank draft V (b) Cash account
(b) Cheque (c) Bill payable account V
(d) Bill receivable account
(c) Pay in slip
At the time of endorsement of a bill, the
drawer credits. .
(a) The drawee a/c
(b) The endorsee's personal account
(c) Bill receivable accounty
(d) Endorsee's account (c) Collection of the bill

9. Retiring a bill under rebate means: (d) Honour of the bill
(a) Making payment for the bill before the | 7. When noting charges are paid at the time
due datev of dishonour of the ball, the drawee
(b) Making payment for the bill after the always debits:
due date (a) Noting charges account V
(c) Dishonouring bill (b) Interest accouill
(d) None of the above , (c) Discount account
(). At the time of endorsenment of a bill, the (d) Drawer's account
drawee debits: in casc of bill of exchange, there are
(a) Bill payable account minimum:
(b) Other party's account (a) Two parties V

(c) No account (No entry)Y (b) Three parties
(d) None of the above (c) Four parlies
If a bill is dishonoured, when presented (d) One party
for payment by third party, the drawer Bi of exchange." a conventent method
will debit:
(a) Acceptor's accounty (a) Cash 'S (b) Goods
(b) Third party's account (c) Debt ( , (d) Investment
(c) Neither of that two 20, The prod of time after which a bill
(d) Endorsee becomes payable is called:
When noting charges are paid by the bank (a) Tenor:
at the time of the dishonour of the biil, (b) Usance
the drawee credits: O (c) Grace days
(a) Bill payable (d) None of the above
(b) Discount account When a bill is accepted without any
(c) Noting charges a 'c condition to the" order of the drawer, it is
(d) Drawer's account Y called: -
The person to whom a bill is a (a) Qualified acceptance

the: (b) General acceptancev.
(a) Debtorv ( (c) Unqualified acceptance
(c) Holder d) Agent (d) None of the above
14 A bill from the poil iew of a creditor In casc of accommodation bills, if one
is called a: party becomes insolvent, then the short
(a) Bill '' remittance is credited to:
(b) Bill receivablev (a) Deficiency account Y
(c) Bill acceptable (b) Bad debts account
(d) Bill reject able (c) insolvency account
When the drawer discounts a bill, he (d) Solvency account
debits: Accommodation bill are drawn, accepted
(a) Discount account V and endorsed:
(b) Endorserrient account--- (a) Without any consideration v
(c) Interest account (b) For some consideration
(d) Drawce's account (c) Half for cortsideration
! 6. Refusal by the acceptor to make payment (d) None of the above
of the bill on the maturity date is called: Arnount of noting charges is the actual
(a) Retirement of the bill expense of
(b) Dishonour of the bill Y (a) Draweev (b) Drawer
(c) Banker (d) Endorsee Interest on renewal of a bill is a expense

25 The amount deducted by bank of the bill to- the:
from the face value of the bill is called: (a) Drawer (b) Draweev
(3) Interest (b) Rcbate (c) Endorsee (d) Seller
(c) [Discount Y. (d) Commission 35. In case of discounting of bill vvith the
The procedure by which a bill is bank, the acceptor will passed:
transferred from one person to another (a) Discounting
person for the settlement of debts is (b) Acceptance entry
called. (c) No entryv
(a) Retirement (d) None of the abovc
(b) Endorsement V 36. In case of retiring a bill, rebate is treated
(c) Renewal as expense for the:
(d) None of the above (a) Holder.v. (b) Acceptor
When the bill is dishonoured bill payable (c) Banker (d) Agent
account is-debited in the books of the: The rebate, in case of retiring of a bill is
(a) Bank (b) Drawer revcnue for the: O
(c) Draweev (d) Endorsec (a) Holder (b) Acceptorv
When the bill is dishonoured acceptor's
account is dcbited in the books of the:
(a) Bank (b) DrawerV.
38.
(c) Banker
When bills
accepted
;:*
<> -
(d) Agent
in one country and
ayable in another country
(c) Drawce (d) Endorsee dr Ca
When an endorsed bill is dishonoued Isla
(a) bills
endorsee's or creditor's account is in the
books of the:
&# bills
2) Foreign billsv
(a) Bank d) None of the above
(b) Drawee When bills are drawn in a country upon
(c) DrawerV. persons living in- the same country or
(d) Agent
The drawer always debits
account for noting charges paid
ac
made payable in the same country are
known as:
(a) inland Y
(a) Honour of a bill (b) Toreign bills
(b) Endorsement of a bill (c) Overseas bills
(c) Dishonour of a bill v. (d) None of the above
(d) None of the
When a bijl is

' :*interest account is
40.
-
A promissory note contains.
(a) A conditional order
credited in the books of thc: (b) A promisex'
(a) Drawer Y (b) Drawee (c) A request to deliver goods
(c) Bank (d) Endorsee (d) An unconditional order
When a party becomes insolvent, the bill 41. A promissory note is written by:
accepted by him is treated as: (a) Debtorv/ (b) Creditor
(a) Honoured (e) Bank (d) Agent
(b) Dishonouredv 42. Promissory note is a written promise
(e) Discounted between:
(d) None of the above (a) Four parties
3 3. Interest on renewal of a bill is a revenue (b) Three parties.
to the: -
(c) Two parties
(a) Drawery (b) Drawee (d) Five parties
(c) Endorsee (d) Acceptor
43. A promissory note should be:

(a) Oral SUB-DIVISION OF
(b) Writtenv JOUNRAL
(c) Verbal
44. Accommodation bills are drawn and
CASH BOOK, BANK
accepted for: ... " RECONC1LATION
(a) Financial assistancev
(b) Consideration STATEMENT
(c) Debt
(d) Laon AND PETTY CASH
45. In case of bill of exchange for obtaining
the debt, legal action can be resorted by: BOOK
(a) DrawerV. (b) Drawee Q.1 Four possible answers are given for the
(c) Banker (d) Endorsee following questions. Tick mark (V)
46. The due date of a bill of exchange, when the correct answer:
the amount of the bill is payable by the CASH Book
drawee, is called the: 1. The books in which are recorded the
(a) Acceptance date details of transactions as they place from
(b) Maturity datev dayday. in a classified manner, are
(c) Dishonoured date kno:WI) AlS.
(d) Bill written date Subsidiary booksv

47. In case of bill of exchange, every bill has Vouchers books
to be accepted by the: (c) Recording books
(a) Drawer (b) Bank (d) Receipts books
(c) Draweev (d) Agent Ail cash receipts and cash payments are
48. A liability that will only arise if a
event occurs, is called:
(a) Contingent liability:
-
<\" recorded in:
(a) Sales book
(b) Purchases book
(b) Mutual liability (c) Cash book V
(c) Future liability (d) Recording book
(d) None of the above s\ <> -
3. The book is used to record all credit
49.
when abilis dished, the holder of
a the bill, goes to an. official called:
purchases is called:
(a) Purchases book V.
(a) Clerk S. (b) Purchases return book
(b) Notary public V. (c) Cash bock
(c) Inspector (d) Creditor book
(d) Agent 4. All the transactions, related to credit sales
50. In case of dishonour, the notary public recorded in:
will charge a small fee from the holder, is . (a) Sales return book
known as: (b) Sales book Y
(a) Interest (b) Rebate (c) Cash book
(c) Noting chargesv (d) Discount (d) Debtor's book
5. Those transactions for which there is no
separate book, for recording are recorded
1I]:
(a) Journal properV
(b) Bills receivable book
(c) Bills payable book 13. The treble column cash book makes the
(d) Cash book record of
Subsidiary books are called books of: (a) Cash transactions only
(a) Original entryv (b) Cash and bank transactions
(b) Secondary entry (c)Cash, bank and discount transactionsv
(c) Temporary entry (d) None of the above -
(d) Basic entry 14. Discount deducted from the catalogue or

Practically, the cash book is a substitute list price is called:
for cash account in the: (a) Trade discountv
(a) Journal (b) Cash discount
(b) Ledgerv (c) Catalogue discount
(c) Trial balance (d) Credit discount
(d) Petty cash book 15. If a person pays his debit before the due
When cash is received from a debtor or date df payment the recipient may grant
customer, generally a receipt or cash him an allowance-for doing so, this
memo is issued to the debtor which is allowance is kn
called:
(a) Receipt voucherv
(b) Payment voucher
(c) Cash voucher
(d) Cash receipt -
16. If ount is entered on the debit side
When money is paid to a creditor or account and the exact amount is
supplier a receipt is obtained from him aim entered on the credit side of the
which is called: same account, it is called a:
(a) Receipt voucher (a) Contingent entry
(b) Payment voucherv (b) Contra entryv
(c) Cash vouchcr
(d) Petty cash voucher
<\ (c) Compound entry
(d) Double entry -
| (). A document evidencing cash receipts and The balance on the debit side of the bank
payments and forming the \basis for column in cash book indicates:
making entries in the cash book is called: (a) The total amount withdrawn from ban
(a) Receipt voucher <> (b) The total amount deposited from bank
(b) Payment vouche (c) Cash at bankV
(c) Cash voucher (d) Cash in band
(d) Cash mem 18. The balance of the column is always:
} |. Single column cash book is used for (a) Debit balancev
recording: (b) Credit balance
(a) Cash transactions only V. (c) Both debit and credit balances
(b) Cash and bank transactions (d) None of the above
(c) Cash, book and discount transactions 19. 'Discount columns of the cash book are
(d) None of the above -
totaled whereas bank and cash columns
The double column cash book makes the are 'balanced' because:
record of: (a) Discount columns represent rough
(a) Cash transactions only work
(b) Cash and bank transactions V. (b) Discount columns are in the nature of
(c) Cash, bank and discount transactions memorandum accountsv
(d) None of the above (c) It'represent expense
(d) It represent income
2(). The cash book in book-keeping records: 29. Cash sales are recorded in:
(a) All receipts and payments in cashv. (a) Sales book
(b) All cash and credit sale of goods (b) Cash bookV
(c) All credit and cash purchase of goods (c) Debtor's book
(d) Only cash payments (d) None of the above
Cash discount is provided on: 30. Bank columns of the cash book represent
(a) Prompt paymentV bank account in the:
(b) Sale - (a) Journal (b) Ledger v.
(c) Purchase (c) Trial balance (d) Pass book
(d) List price 31. In business concern, cash balance is a
Cash account is a: very important element of its:
(a) Personal account (a) Financial condition*
(b) Real accountv (b) Administrative condition
(c) Nominal account (c) Managerial condition
(d) Both real and personal account (d) Marketing condition
The discount account is a:
(a) Personal account
The customer
with the'
: cash or cheque
(b) Real account (a) Bank statement

(c) Nominal account V (b) Pay-
(d) Asset account (c) P k
A contra entry is one which does not (d book
require posting to the: 33. py of the customer's account in the
(a) Journal ank's ledger is called:
(b) LedgerY. (a) Deposit statement
(c) Cash book (b) Balance statement
(d) None of the above (c) Bank statement V
25. A contra-entry appears on both *Q \ 34.
(d) Customer
(a) Journal Disagreement in balances may arise
(b) Cash bookV owing to mistake or mistakes in the:
(c) Trial balance (a) Cash book only
(d) Sales book
Cash account will : <>
(b) Bank statement
(c) Cash book or bank statementv/
-
(a) Debit or credit b (d) Bank column of-the cash book only
(b) Credit balanc 35. The statement which contains a complete
(c) Debit bala and satisfactory explanation of the
(d) Both debit and credit differences in balances as per cash book
Cash book is. and bank statement is known as:
(a) Subsidiary journal (a) Bank Statement
(b)Subsidiary journal and ledger (b) Cash statement
account V (c) Balance statement
(c) Ledger account (d) Bank reconciliation statement V
(d) Subsidiary journal or ledger account 36. Bank account is a:
28. A customer's cheque returned (a) Personal account
dishonoured is recorded. (b) Real accounty
(a) Returns inwards books (c) Nominal account
(b) Cash book Y (d) None of the above
(c) Ledger 37. A bank reconciliation statement is
(d) Sales book prepared by:
(a) Bankcr 45. When bank Statement shows a debit total
(b) Accountant of the business V balance, it means:
(c) Statutory auditors (a) Overdraft as per cash book
(d) Registrar (b) L'nfavourbale balance as per cash
38. When bank column of a cash book shows book
a credit balance, it means: (c) Favourable balance as per cash book
(a) Cash balance (d) Overdraft as per bank statementV
(b) Bank balance 46. Bank reconciliation statement is:
(c) Undcr draft (a) A memorandum statementv.
(d) Over draft v. (b) A ledger account
39. Bank reconciliation is not a: (c) A pan of the cash book
(a) Ledger accountv. (d) A part of the journal
(b) Memorandum statement 47. In adjusting the cash balance one of the
(c) Reconcile records following is not taken into account:
(d) Procedure to prove cash book balance (a) Mistakes in the cash book
4(). Bank reconciliation statement is a part of:
(a) Pass book (c)
:
(b) Mistakes in
idends credited in the
-
bank state ent

(b) Ledger accounts
(c) Journal :
(d)
Unf:
above
le bank balance means:
-
41.
(d) Cash book V.
Bank Statement is the statement
account of the customer maintained by
of :
)
balance in the cash bookv.
edit balance in the bank statement
the: Debit balanee in the cash book
(a) Customer (d) Both debit, credit balance in cash
(b) Accountant of the business book
-
(c) Bank Y The payments side of the cash book is

(d) Statutory auditor
The debit balance of the bank ac
S.SS 49.
under cast by Rs. 200, when overdraft as
42. t per bank statement is the starting point:
the books of the business shoul (a) Rs. 200 will be deducted Y
to the credit balance of the : t of the (b) Rs. 200 will be added
business in thc books of the - (c) Rs. 400 will be added
(a) Business Bank v. (d) Rs. 400 will be deducted
(c) Registrar SS 50. An amount of Rs. 1000 is debited twice in
the bank statement: when overdraft as per
(d)Notary-public
43. When bank shows a credit the cash book is the starting point:
balance it means: (a) Rs. 1000 will be deducted
(a) Favourable balancev (b) Rs. 1000 will be added
(b) Unfavourablebalar. (c) Rs. 2000 will be deducted
(c) Overdraft (d) Rs. 2000 will be added V
(d) None of the above 51. The book in which small payments,
44. When bank column of a cash book shows which are not convenient to record in the
a debit balance it means: main cash book, are recorded is called:
(a) Overdraft as per bank (a) Mini cash book
(b) Unfavourable balance as per cash (b) Main cash book
book (c) Daily expenses book
(c) Favourbale balance as per cash book Y (d) Petty cash bookV
(d) Favourable balance as per pass book 52. The balance of petty cash book is:
(a) A liability (b) An expense
(c) Again (d) An assetv/ 6(). Under the imprest system the petty cash
53. The petty cash book is used for recording: is:
(a) Petty cash paymentsv (a) Increased evcry week
(b) Petty cash receipts from customers (b) Reduced every week
(c) All cash payments (c) Always restored to the original
(d) All credit payments amounty
54. Petty cash system is designed: (d) Used up completely before being
(a) To meet the needs of small business restored
(b) To cover small and miscellaneous 61. After the preparation of a trial balance,
income the next level of work in accounting is
(c) To cover the small expenditure to be called:
paid in cashv. (a) Rectification of the errors
(d) To cover both small income and (b) Preparation of bank reconciliation
expenditures: Statement
The term imprest system is used to (c) Work sheet

relation to: (d) Final acco
(a) Purchase book 62. Which of ' llowing, enable us to
(b) Sales book check on the onduct of the business, and
(c) Cash book to discover whether it is being run
(d) Petty cash book*
profitafy:
56. Pctty cash book is a branch of: ( accountsv
(a) Pass book
(b) Sales bank c) Ledgers
(c) Cash bookv. (d) Journal
57.
(d) Purchase book
When the monthly bank statement is
2% The statements which are finally prepared
to show the profit earned "or loss.
out which one of the following d suffered by the firm and financial state of
not appear: S. affairs of the firm at the end of the period.
'S
(a) Interest charged by the
(b) A dishonoured cheque
(a) Bank statements
(b) Final accountsv.
(c) A direct debit (c) Bank reconciliation statements
(d) A payment from cashv. (d) Ledger accounts
The petty cash i t on the imprest 64. The gross result (gross profit or gross
system and the balance at the start of the loss) of the business is shown by:
month is Rs. lt)00. If petty cash expenses (a) Profit and loss account
during the month of Rs. 720 are (b) Profit and loss appropriation account
incurred, the amount received from the (c) Trading account V
cashier at the start of the next. month (d) Balance sheet
should be: r 65. The net result (net profit or net loss) of
(a) Rs. 280 (b) Rs. 720Y the business is shown by:
(c) Rs. 1000 (d) Rs. 1720 (a) Profit and loss accounty
59. An analytical petty cash book (b) Profit and loss appropriation account
(a) Lists different petty cash expenses (c) Trading account
under their relevant headingsv. (d) Balance sheet
(b) Is used instead of a three column cash 66. The net profit or loss of the business has
book been distributed or disposcd off is shown
(c) is not part of the double entry system by:
(d) Is always run on the imprest system (a) Profit and loss accounty
(b) Profit and loss appropriation account 74. A man buys Rs, 40,000 worth of goods
(c) Trading account and sells them for Rs. 50,000. His gross
(d) Balance sheet profit is:
(37. Which of the following discloses thc (a) Rs. 10.000v. (b) Rs. 20,000
financial position of the business: (c) Ro. 30.000 (d) Rs. 40,000
(a) Trading account 75. If the gross profit is Rs. 5000 and the net
(b) Profit and loss account profit is 25% of the gross profit. The
(c) Profit & loss appropriation a/c expenses must be:
(d) Balance sheetv. (a) Rs. 1250 (b) Rs. 3750v.
68. The profit and loss appropriation account (c) Rs. 4150 (d) Rs. 6250
is not prepared in the case of: 76. An operating statement is similar to a:
(a) Partnership business (a) Trial balance
(b) Public limited company (b) Balance sheet
(c) Sole proprietorship businessy (c) Trading profit and loss accountv.
(d) Private limited company (d) Bank reconciliation statement
(39. Trading account is the account which is 77. Net. Sales minus:
prepared to determine the (a) Return outwards
(b) Return inwards v.
(a) Only Gross profit of the business
(b) Only Gross loss of the business
(c) Gross profit or the Gross loss of the
(c) Cost : sold
(d) Carriage on sales
business V 78. A}] on goods purchased should be
(d) None of the above debhed f0.
70. The balance of trading account which Profit and loss account
rcpresents either Gross profit or Gross (b) Balance sheet
loss is transferred to: (c) Position statement
(a) Profit and loss accountv. (d) Trading accountv
(b) Balance sheet
(c) Work sheet
S\, All those expenses which are incurred to
convert raw-materials into finished
(d) Position statement goods or which may be (regarded as a
71. Gross profit equals: part of the cost of purchasing the goods

(a) Sales minus closing
(b) Purchases minus '' stock
are
called:
(c) Net profit minus pen CS (a) Direct expenses V
(d) Sales minus c sto goods soldV (b) Indirect expenses
72. Cost of sales equals: (c) Administrative expenses
(a) Sales minus purchases (d) Sales expenses
(b) Purchases minus returns out plus 80, . All the direct expenses are charged to:
closing stock (a) Balance sheet
(c) Sales + Opening stock - (Purchaser + (b) Profit and loss account
Closing stock) (c) Trading accounty
(d) Opening stock - Closing stock + (d) None of these
Purchases minus return outv 81. An amount paid to a person for exploiting
73. Net profit equals: rights possessed by him, is called as:
(a) Gross profit minus expenses V (a) Excise duty
(b) Sales minus cost of sales (b) Octroi duty
(c) Sales minus expenses (c) RoyaltyV
(d) Capital minus expenses (d) Wages
Principal of Accounting 4]
82. The nominal accounts are transferred to (a) Balance account

the: (b) Trading A/cv.
(a) Profit and loss accountV (c) Bank Statement
(b) Balance sheet (d) Cash statement
(c) Position statement 91. The account which is prepared for
(d) Statement of financial condition determining net-profit or net-loss
83. The real or personal accounts goes to the: (a) Personal account
(a) Profit and loss account (b) Real account
(b) Trading account (c) Profit and loss account V
(c) Income statement - (d) Trading account
(d) Balance sheet V 92. The total operating expenscs is cqual to:
84. The dues imposed on ships and their (a) Gross profit + Selling expenses
cargoes when they are unloaded on the (b) Selling expenses + Gencral
part are called: expensesV
(a) Excise duty (c) Selling expenses - General expenses
(b) Octroi duty (d) Gross pro expenses
The statement of assets, liabilities and
(c) Dock charges V 93.
85.
(d) Clearing charges o:

(capital) on
date lled:
a particular
Dock charges is a: -
(a) Indirect cxpense (a & hcc sheet V

(b) Direct expense v. b) Income statement
(c) Direct income Qe) Bank statement
(d) Indirect income (d) Cash statement
86. All the direct expenses debited to the: The order in which assets and liabilities
(a) Profit and loss account arc Stated on the balance shect is termed
(b) Balance sheet 3.S.
(c) Trading accountv/ SQ (a) Liquidity

(d) Income statement (b) Realizability
87. All the indirect expenses debi he: (c) Marshallingv.
(a) Profit and loss *
(d) None'of the above -
(b) Trading account 95. All the things and properties under the
(c) Balance sheet s - <> ownership of the business is called:
(d) None of the ab. ve (a) Liabilities
88. The excess of the het income from sales (b) Assets V
over the cost of goods sold is called: (c) Incomes
(a) Cost of good sold (d) Capital
(b) Gross profitv. 96. Our dues to others or anything against
(c) Net profit which we are to pay money or render
(d) Operating profit service, is known as:
89. The excess of gross profit on sales over (a) Owner's equity (b) Asset
total operating, expenses is called: (c) LiabilityV (d) Expenses
(a) Cost of good Sold 97. Balance sheet reveals the financial
(b) Gross profit position of a concern on a particular date
(c) Net profity at a point of time, so it is also called:
(d) Non-operating incorne (a) Income statement
90. The account which is prepared for (b) Accounting Statement
determining gross profit or gross loss of a (c) Balance statement
business concern, is called: (d) Position statementV
98. Assets which have some market value are 105. Assets whose value gradually reduce on
called: account of use and finally exhausts
(a) Real assets V completely, are called:
(b) Fictitious assets (a) Liquid assets
(c) Current assets (b) Wasting assetsv
(d) Liquid assets (c) Fictitious assets
Q9. Assets which have long life and which are (d) Quick assets
bought for use for a long period of time 106. Assets which cornes into existence upon
are called: the happening of a certain event, are
(a) Current assets called:
(b) Fixed assetsV (a) Fixed assets
(c) Fictitious assets (b) Fictitious assets
(d) Wasting assets (c) Floating assets
| ()(). Assets which have physical existence and (d) Contingent assets*
which can be seen, touched and felt are 107. Expense paid in advance and income
called: earned but not received are known as
(a) Current assets (a) Contingent assets
(b) Intangible assets (b) Circulating assets
(c) Tangible assetsv (c) Quick assets
(d) Fictitious assets (d) Outstanding assets'
|(} | . Assets which have no physical existence ! 08. The total amount of debts payable by a
and which cannot be seen, touched or business to its owner is called:
(a) Fixed assets Internal liabilities
(b) Tangible assets (b) External liabilities*
SN (c) Deferred liabilities

(c) Fictitious assets
(d) Intangible assets* (d) Quick liabilities
102. Assets which are short-lived and w ia) P109. All debts payable by a business to the
can be converted into cash quic outsiders (other than the owner) are
meet short-term liabilities are called: called:
(a) Current assets* (a) Internal liabilities
(b) Fixed assets (b) External liabilities V
(c) Intangible assets s' <> (c) Deferred liabilities
(d) Tangible assets (d) Liquid liabilities
| ()3. Out of the current assets there which can 110. The liabilities which are repayable after a
be converted it ash very quickly or long period of time are called:
which are already in form of cash are (a) Liquid liabilities
called: (b) Fixed liabilities*
(a) Washing assets (c) Deferred liabilities
(b) Intangible assets (d) Current liabilities
(c) Liquid or quick assets/ I 11, The debts which are repayable within a
(d) Fictitious assets short period of time are called:
()4, ASScts which have no market value are (a) Long-term liabilities
called: (b) External liabilities
(a) Liquid assets (c) Short-term liabilities*
(b) Quick assets (d) Internal liabilities
(c) Fictitious assets V | 12, Debts which are repayable in the course
(d) Real assets of a month are called:
(a) Internal liabilities
(b) Extcrnal liabilities (a) Working capital

(c) Deferred liabilities (b) Fixed capital
(d) Quick liabilities/ (c) Trading capital
il 3, Debts which are repayable in the course (d) Circulating capital
of less than one year but more than one 121, The excess of the floating assets over the
month, is called: floating liabilities is also called:
(a) Liquid or quick liabilities (a) Fixed capital
(b) Deferred liabilities* (b) Trading capital
(c) External liabilities (c) Circulating capital
(d)Contingent liabilities (d) Working capital V
| 14 Those liabilities which arise only on the . The debentures and other fixed loans are
happening of some event, are called: Sometimes called the
(a) Current liabilities (a) Working capital
(b) Contingent liabilities* (b) Circulating capital
(c) Outstanding liabilities (c) Fixed capital
(d) Fixed liabilities (d) Loan capita Q
15. Outstanding expenscs and unearned . Closing Stock is recorded at the:
incomes are known as: (a) ' and trading a cy
(a) Currcnt liabilities (b) Balance sheet only
(b) Contingent liabilities (c) ' loss a 'c
(c) Outstanding liabilities V (d) Trading alc only
(d) Fixed liabilities 124. shalling of balance sheet means:
| 16. The Surplus or excess of assets over The ordering of its assets and
liabilities is called the: Ciabilities.
(a) Assets of proprietor (b) The totaling of its assets and liabilities
(b) Liability of proprietor (c) Excess of assets over liabilities
(c) Income of proprietor (d) Nonc of the above
(d) Capital of proprietorv/ . The valuation of closing stock is at:
117. For the business concern, capitali (a) Cost price
(a) Liabilityx' (b) Market price
(c) Income (c) Cost or market price which ever is
lowerV
| | 8.
:
The portion of the funds of a concern
which is
*
floating assets is :
the fixed and (d) Both on cost and market price
126. Balance shcct shows the:
-
(a) Fixed capital.N-

(a) Profit earned by a business
(b) Trading capital. (b) Financial position of a business'
(c) Circulating capital (c) Balances of all accounts
(d) Working capital (d) Less earned by a business
| 19. The portion of the funds of a concern 127. Profit and loss account shows the:
which is represented by the fixed assets is (a) Profit and loss through sale of assets
called the: (b) Total capital Employed
(a) Circulating capital (c) Profit and ioss distribution
(b) Trading capital (d) Profit earned or loss suffered by the
(c) Fixed capitalv businessv
(d) Working capital 128, Stock in trade is:
. The portion of the funds of a concern (a) A current assetv
which is represented by the floating or (b) A fixed asset
circulating assets is called the: (c) An intangible asset
(d) A wasting asset (d) Within four years

| 29. Expenses relating to sale of goods are | 37. Out of the following, the example of a
shown in: current asset is:
(a) Trading account (a) Surrender value of life insurance
(b) Profit and loss accountv policy
(c) Balance sheet (b) Discount on debentures
(d) Sales account (c) Bill receivablev
. A profit and loss account is prepared: (d) Goodwill
(a) For a certain given period V i 38. Purchase of an asset is called:
(b) At a particular point of time. (a) An expense
(c) On fixed date (b) An expenditure.V.
(d) After the fixed date (c) A loss
. A balance sheet discloses the financial (d) An income
position of a firm: 139. The balance appearing on the debit side
(a) For a given period of the trial balance as an expenditure
(h) On a particular point of time V shown in the: -
(c) On a certain fixed date

(d) After the fixed date
(a) Balance *&Q
(b) Trading :
Sales are equal to: (c) Profit and loss account
(a) Cost of goods sold + Profitv (d) "' :" :-.
(b) Gross profit-Cost of goods sold 14(). ' is 1/4 of the sales then if is:
(c) Gross profit + Cost of goods sold (a) #4 of the cost price
(d) Cost of goods sold-Gross profit /3 of the cost pricev
Gross profit is equal to (' 1/5 of the cost price
(a) Sales - C tosing stock (d) 1/2 of the cost price
(b) Purchases - Closing stock ]. If the profit is 25% of the cost price then
it is:
34
(c) Sales Cost of goods sold v
(d) Saies + Opening stock
Cost of sales is cqual to
SGS (a) 25% of the sale price
(b) 33% of the sale price
(a) Sales Purchases (c) 20% of the sale pricev
(b) Purchases - Returns o Tlosing (d) 26.5% of the sale price
stock 142. Interest on capital is:
(c) Opening Stock * stock + (a) Expenditure for the business
Purchases : Return R (b) Gain for the business
(d) Opening st * Closing stock + (c) Income outstanding for the business
Purchases Returns outv (d) Expense for the business V
5. A balance sheet is- a. 143, Interest on drawings is:
(a) Statement of debtors and creditors (a) Expenditure for the business
(b) Statement of income and expenditures (b) Expense for the business
(c) Financial statement of a business on a (c) Gain for the business Y
particular date V. (d) Loss for the business
(d) Statement of profit earned by a 144, Trade discount allowed on the sales if
business appearing in the trial balance, is shown in
136. Current liabilities are such obligations the final accounts:
which are to be satisficq: (a) On the debit side of trading affe
(a) Within one yeary (b) On the debit side of the profit and loss
(b) Within two year al/C
(c) Within three years (c) On credit side of the profit and loss alc
(d) By way of deduction from the sales in (a) Assets (b) Equity V
the trading a cV. (c) Liability (d) Creditor
145. Goods given as charity should be credited 154. Nct profit transferred:
[O. (a) Capital A/cv.
(a) Purchases a cv. (b) Charity alc (b) Creditor A/e
(c) Sales a 'c (d) Drawing alc (c) Cash A/c
146. Income tax paid by a sole trader is shown: (d) Drawing A/C
(a) On the debit side of trading a/c 155. Net loss is credited to:
(b) On the debit side of profit and loss alc. (a) Trading account
(c) On the credit side of trading alc (b) Profit and loss accounty
(d) By way of deduction from the capital (c) Cash account
in the balance sheet Y (d) None of the above
1 47. The withdrawal of goods from the 156. Sales discount is debited to:
business by the proprietor should be (a) Trading account
credited (b) Balance sheet
(a) Drawings account (c) Profit and count V
(b) Purchases account V (d) Both ' : profit and loss account
157. Gross loss is debited to:
148.
(c) Capital account
(d) Opening stock account
The loss on sale of old machincry is
: (a)
''
a/c
ce sheet
debited to:
(a) Profit and loss a/cv.
(b) Machinery account
g: (g) Qash account
and loss account Y
1583, Wages and salarics are debited to:
(c) Depreciation account (a) Trading accountv.
| 49.
(d) Sales account
Wages paid on the erection of
machinery should be debited to: N
* (b) Profit and loss account
(c) Balance shect
(d) Both trading account and balance
(a) Wages account sheet
(b) Cash account 159. Gross profit is credited to:
(c) Machinery accountv. (a) Trading account
(d) Nonc of the above (b) Profit and loss accounty
. The income statement has normally. (c) Balance sheet -
(a) One part (b) Two parts V (d) Both trading & profit and loss account
(c) Three parts (d) Four parts 160. Closing stock is credited to:
. Patents and di e the examples of: (a) Profit and loss account
(a) Tangible assets (b) Trading accountv.
(b) Intangible assets V (c) Balance sheet
(c) Contingent assets (d) Both trading and profit and loss alc
(d) Outstanding assets 161. Payment for the purchase is
152. If the closing stock appears in the trial machinery I S termed as:
balance, it taken only to the: (a) Expense
(a) Trading account (b) Expenditure Y
(b) Balance sheet V (c) Liability
(c) Profit and loss account (d) Asset
(d) Both trading account and balance 162. Gross profit + Stock in the beginning +
Sheet Purchases + Direct expenses - Stock at
f 53. A claim which can be enforced the assets the cnd = ?
of the firm in the court is called: (a) Sales V
(b) Cost of goods sold (b) Joint stock companies

(c) Cost of goods available for sale (c) Banks
(d) Nct purchases (d) Insurance companies
. The balance sheet that divides its 170. The mixed method is adopted by:
accounts into subgroups within the major (a) Sole proprietorship
Sections of the Statement is called: (b) Partnership
(a) The account form of balance sheet (c) Joint stock companies
(b) The report form of balance sheetz' (d) Banks and insurance companies*
(c) T-form of balance sheet 171. Every business concern ascertains profit
(d) A classified balance sheetv. or loss of the business at the end of the
164. All expenses connected with the office year through:
and its conduct are called: (a) Journal
(a) Selfing expenses (b) Ledger
(b) Marketing expenses (c) Final accountv.
(c) Administrative expenses (d) Bills of exchange
(d) Services expenses 172. The system of ounting, in which
| (35. According to the marshalling method, accounting entri e made only when
under which assets are shown in the order cash received : is known as:
of permanence and liabilities are shown in (a) Cash S stem of accounting
order of liquidity, is known as: (b) Acc stem of accounting
(a) Permanency preference method (c) # system of accounting
(b) Liquidity preference method (d) None of these
(c) Mixed methodv 173. accounting system, in which
(d) None of these @# ounting entries are made on the basis
l ()(3. The marshalling method, under which the of amount having become due for
assets and liabilities are shown in balance
sheet in order of their permanenc
called:
is) * payment or receipt, is known as:
(a) Cash system of accounting
(b)Accrual or mercantile system of a/cv/
(a) Permanency preference metho
(b) Liquidity preference metho
(c) Mixed method
sS. (c) Current accounting period
(d) Outstanding system
174. The act to make a correct record of a
(d) None of these <> transaction which has not been entered or
| 67. The marshalling metho inder which the which has been entered but in an
assets and liabilities own in order of incomplete or wrong way, is said to be:
their liquidity, is (a) A transaction
(a) Permanency preference method (b) On entry
(b) Liquidity preference methodv (c) A reversed entry
(c) Mixed method (d) An adjustmentv/
(d) None of these 175. The expenses incurred but have not been
| 68. Permanency preference : method is actually paid till the end of the current
adopted by: accounting year, is known as:
(a) Sole proprietorship (a) Prepaid expenses
(b) Partnership (b) Un-expired expenses
(c) Banks (c) Accrued outstanding expenses.
(d) Joint stock companiesV (d) Unearned revenue
| 69. The liquidity preference method, mostly , 176. Which of the following correct adjusting
adopted by: entry is to be passed for outstanding
(a) Sole proprietorship and partnershipV expenSes:
(a) Outstanding expenses a "c XX Dr 182. The outstanding income or accrued
To expenses a c XX income will appears in the balance sheet
(b) Prepaid expenses alc XX clS. -
To cxpenses alc XX . (a) A liability (b) An income

(c) Expenses a/c XX Dr Y (c) An expense (d) An assetv
To outstanding expenses alc XX Cr 183. Income received in advance bu : not
(d) Expenses a "c XXX earned is called:
To prepaid expenses alc XX (a) Unearned income V
177. Expenses paid in advance before they (b) Prepaid revenue
have fall.cn due are called: (c) Outstanding income
(a) Prepaid expenses V (d) Accrucd income
(b) Outstanding expenses 184. The credit balance of the income received
(c) Accrued expenses in advance will be shown on thc balance
(d) Expenses payable shect as:
178. Which of the following correct adjusting (a) An asset (b) An expense
entry is to be passed for prepaid expenses. (c) A '' (d) An income
(a) Prepaid expenses a c XX Dr Y 185. Which of e-following correct adjusting
To expenses alc XX Cr entry is tob passed for income received
(b) Expenses a/c XX in adyance during the eurrent period:
To prepaid expenses alc XX (a) Income received in advance a/c XX
(c) Expenses a c XX income a/c XX
To accrued expenses alc XX
(d) Expenses alc XX To income received in advance a/c XX.
To outstanding expenses XX
Q (c) Accrued income a/c XX
179. A prepaid expense is:
To income a/c XX
(d) Income a/c XX
(a) A liability
(b) An asset
(c) An income V N oS 186.
To accrued income a/c XX
The gradual and permanent decrease in
(d) A managCmcnt expense
180. A revenue which have
has become due in the
:orS. which
ent year but
the value of an asset from any cause, is
know as:
(a) Reduction of assets
not been received in cash within the (b) Revaluation of assets
current year, is k (c) Realization of assets
(a) Accured ex (d) Depreciation v
(b) Prepaid e I 87. Which of the following correct adjusting
(c) Unearned revenue entry is passed at the end of the year on
(d) Accrued income V account of depreciation:
| 81. Which of the following correct adjusting (a) Depreciation alc XX Dr.V.
entry is to be passed for accrued income: TO ASSet a/c XX Cr
(a) Income a/c XX (b) Asset a/c XX
To income receivable in advance XX To Depreciation a c XX
(b) Accrued income a "c XX Dr V. (c) Asset a c XX
To income a/c XX Cr Depreciation a/c XX
(c) Prepaid income a/c XX To Asset a/c XX
To income a/c XX (d) None of these entries
(d) Income received in advance a/c XX ] 88. From the business point of view, interest
To income a/c XX -
on capital is regarded as:
(a) An incorne -
(b) An expenscV (d) Unearned income

(c) An assel 195. Insurance premium paid in advance is:
(d) A profit (a) An outstanding expense
| 84). At the end of the year when interest on (b) An accrued incomeV
capital is recorded, which of the (c) A prepaid expense
following (d) An unearned income
correct adjusting entry is to be passed: | 96. Interest due but not received is:
(a) Capital a c XX (a) An outstanding expense

To interest on capital a c XX (b) An accrued incomew
(h) Capital a c XX (c) A prepaid expense
To profit and loss alc XX (d) An unearned income
(c) Interest on capital afc XX Dr V. 197. Rent due but not paid is to be:
To capital a c XX Cr (a) An outstanding expense V.
(d) Profit and loss a/c XX (b) An accrued income
To interest as capital alc XX (c) A prepaid expense
[90. From the business point of view, intcrest
198.
(d) An unearned
Discount to be
'
ed is:
on drawings is:
(a) An asset of the business (a) An
(b) An expense to the busincss (b) An accrued incomeV
(c) A liability of the business (c) A pref expense
(d) A revenue to the businessV (d) Anuhearned income
| 9 | . The unsold stock the cnd of the year 199. Billfor repairs not yet paid is:
represents thc:
(a) Opening Stock
# outstanding expensev.
An accrued income
(b) Opening purchases
(c) Closing stockY
(c) A prepaid expense
(d) An unearned income
(d) Closing purchases d'. In balance sheet rent outstanding should
] ()2.
entry passed at the end of

account of closing Stock:
*
Which of the following correct adjusti appear On:
(a) Asset side
(b) Liabilities sideY
(a) Profit and loss a/c XX (c) Debit side
To closing stock XX <> (d) Both debit and credit side
(b) Closing Stock alc Wages paid for installing a machine
To closing stock all Should be debited to:
(c) Trading a/c (a) Machinery a cv.
To closing stock a/c XX (b) Wages alc
(d)Closing stock a/e XX Dr Y (c) Cash a'c
To trading a c XX Cr (d) Both machinery and wages alc
| 93. Commission received in advance is to 202. In balance sheet, prepaid expenses should
consider as: be appear as:
(a) Outstanding expense (a) Liabilities (b) Incomes
(b) Accrue income (c) Expenses (d) Assets V
(c) Prepaid expense 203, In balance sheet, pre received income is
(d) Unearned incomew shown on:
| 94. Unpaid salaries are to be consider as: (a) Debit side *
(a) Outstanding expensesV (b) Liability sideV

(b) Accrued income (c) Both debit and credit side
(c) Prepaid expenses (d) None of these
Principal of Accounting -49
2(4. Net profit is always: 214. Which of the following correct adjusting
(A) Equal to gross profit entry- to be passed for bad debts:
(b) More than gross profit (a) Bad debts a c XX Dr.V.
(c) Less than gross profity To sundry debtor a c XX Cr
(d) Parallel to gross profit (b) Sundry debtor a c XX.
5. Net loss is always: To bad debts a c XX
(a) Than gross loss V (c) Bad debts a c XX
(b) Less than gross loss To profit and loss a c XX
(c) Equal to gross loss (d) Bad debts ale XX
(d) Parallel to gross loss To creditor a c XX
2[]6. While making the adjusting entry in 215. The bad debts which are appearing in the
respect of depreciation, machinery trial balance only to be debited to:
account is: (a) Balance sheet
(a) Debited (b) Profit and loss a cv.
(b) Credited v (c) I rading a 'c
(c) Both debit and credit (d) I)ebtors aff O
(d) Neither debit nor credit ' required for any bad
216. No adjustme
2()7. The principle of framing a closing entry debt already in the:
in respect of net profit, is to debit profit (a) Trial-balance Y
and loss account and credit: (b) Prand loss account
(a) Cash a 'c (b) Net profit a/c ( ce sheet
2()8.
(c) Capital alc v (d) None of these
Outstanding wages are shown as: *@
C: of these -
he debts, the recovery or realization of

(a) An expense (b) A liabilityv which is doubtful or uncertain, are known
(c) An aSSct (d) An income QS.
209. While making an adjusting entry il (a) Debts

respect of closing stock, we debit: O (b) Bad debts
(a) Closing stock Y N (c) Doubtful debtsv
(b) Trading account (d) Provision for bad debts
(c) Purchases account
(d) Opening stock
S 218. The amount setting a side out of profit for
a possible loss or liability is called as:
While, making an adjusting entry in (a) Debts (b) Provision v
respect of interest ol s' we credit: (c) Interest (d) Doubtful debts
(a) Interest on capi CCOllnt 219. Bad debts is debited to
(b) Capital ac (a) Debtors account
(c) Profit and loss account (b) Creditors account
(d) Trading account" (c) Bad debts account V
When a customer become business debtor (d) Cash account
the amount due from him is called: 220. Bad debt recovered is credited to:
(a) Loan (b) Allowance (a) Debtors account
(c) Bad debt (d) Debtsv (b) Bad debts recovered alc v
2 l 2 . The debts which eannot recovered from (c) Provision for bad debts aic
the debtors, are called: (d) Creditor a 'c
(a) Debts (b) Loans 221. Provision for doubtful debts is debited to:
(c) Bad debts v. (d) Ailowances (a) Debtors affe
2l3 Bad debts is a business: (b) Bad debts recovered affe
(a) Asset (b) Liability (c) Profit and loss age V
(c) Loss V (d) Profit . (d) Provision for bad debts are
While making adjusting entries, income (a) Materiality (b) Consistency

received in advance is debitcd to income (c) Conservatism V. (d) Realization
account and credited to: . The correct entry for creating provision
(a) Profit and loss a 'c for bad debts is:
(b) Bad debts recovered alc (a) Debtors XXX
(c) Debtor's a C To provision for bad debts XXX
(d) Income received in advance a/c (b) Creditors XXX
. Adjusting entries are made at the cnd of To provision for bad debts XXX.
each business: (c) Profit and loss a/c/Bad debtsXXX Dr
(a) Day (b) Week To provision for bad debts XXX Crv
(c) Yearv (d) Hours (d) Provision for bad debts XXX
4. Provision, for bad debts account normally To bad debts XXX
has a: 2 2. The correct entry for creating provision
(a) Debit balance for discount is:
(b) Credit balanccV. (a) Debtors XXX
(c) Both debit and credit balances To provision for nt
(d) None of these (b) Profit and s arch.Discount allowed
5. From the business point of view, the a/cv/
discount allowcd to customers is: TO " discount
(a) A profit (b) A loss V (c) C S
(c) An assel (d) A liability TO ision for discount

226. Business give a cash discount, on making d) Provision for discount
prompt paying to its: discount allowed
(a) Debtors' (b) Creditors 2%
(c) Investors (d) Partners
227. Business received discount from its: SN THE WORK SHEET
(a) Debtors O
(b) Creditors V.
(c) 'nvestors - S
S Q.1- Four possible answers are given for the
following questions. Tick mark (Y) the
22 8.
(d) Partners
The provision for
crediting: -
* made by
correct answer: .
A large columnar working paper for the
accountants for analyzing the all,
(a) Profit and loss accolin accounting data required at the end of the
(b) Debtors ' financial period, is known as:
(a) Bank statement
(c) Creditors acc
(d) Provision for had debts account V. (b) Final accounts
29. The provision for discount on debtors is (c) Worksheetv
calculated on the amount of debtors (d) financial statement
(a) Before deducted the provision for One way of avoiding errors in the
doubtful debts permanent Accounting records, is to use a
(b) Left after deducting the provision for form, called:
doubtful debts V (a) Bank statement
(c) Before deducting the actual bad debts (b) Work sheetv/
(d) Before deducting the provision for (c) Balance sheet
doubtful debts (d) Journal form
. The provision for discount on creditors is A working paper of accountants, p
often not providcd in keeping with the repaired by lead pencil is:
principle of: (a) Work sheetv
(b) Balance sheet (d) Owner's capital statement

(c) Income statement 11. Work sheet also use as a source to
(d) General journal prepared:
Which one of the following is not (a) Cash flows statement
consider the permanent part of the (b) Financial statement
accounting record: (c) Bank reconciliation statement
(a) Journal (d) Owner's capital statement
(b) Trial balance 12. A working paper which is prepared by the
(c) Balance sheet accountant for his own convenience is
(d) Worksheetv. called:
Which one of the following is used to (a) Work sheet
simplifies work to be done at the end of (b) Cash flows statement
the period: . (c) Balance sheet V
(a) Balance sheet (d) Final accounts -
(b) Income statement 13. The amount invested by the person in the
(c) Worksheet business to produce revenue is said to be:
(d) None of these (a) Capital.<\\ (b) Revenue
If the management wants to furnish a (c) Assets (d) Expense
quick means of determining the business 14. The grice of goods sold or services
results, which one of the following will be rendered by a business to its customers is
prepared: -
known as:
(a) Trial balance (b) Journal \
(a) capital (b) Revenue v'.
(c) Bank statement (d) Worksheet O (c) Asset (d) Expense
The body of the work-sheet contain:
(a) One pair of money column
. Transaction having long term effect are
known as:
(b) Two pairs of money columns
(c) Four pairs of money columns
(d) Five pairs of money colum
N s' (a) Revenue transactions
(b) Revenue expenditures
(c) Capital expenditures
In the preparation of the heet the
(d) Capital transactions.v.
amounts in the trial bala olumns are
16. Transactions having short term effect are
taken directly from the . known as:
(a) Journal
(a) Revenue
(b) Trial balance (b) Capital
(c) Ledger (c) Revenue transactionv
(d) Final accounts
(d) Capital transaction
Mostly every adjusting entry affects are: 17.
(a) Income statement
Any expenditure that benefits the
(b) Balance sheet
business for several accounting years is
(c) Both profit and loss accounts and regarded us a: -
work sheet (a) Capital expenditureV

(d) Both the balance sheet and the income (b) Revenue expenditure
Statement (c) Deferred expenditure
1 (). ln work sheet, the amounts appearing in (d) Current expenditure
the adjusted trial balance columns are the 18. Any expenditure that benefits the
amounts that will appear in the: business only for one accounting year is
(a) Financial statements considered a:
(b) Cash flows statement (a) Capital expenditure
(c) Bank reconciliation statement
(b) Revenue expenditure V. (d) It is the personal expenditure of the

(c) Future expenditure owner it of capital
(d) Capitalized expenditure 26. If the goods or a service lost less than one
| Q). Any expenditure which is not incurred year it is:
repeatedly and regularly is a: (a) Revenue expenditure V.
(a) Revenue expenditure (b) Capital expenditure
(b) Short term expenditure (c) Revenue receipt
(c) Capital expenditure.V. (d) Capital receipt
(d) Current expenditure 27. If the goods or a service lost longer than
2{). Any expenditure which is incurred again one year, it is
and again is a: (a) Revenue expenditure
(a) Capital expenditure (b) Capital expenditureV
(b) Future expenditure (c) Revenue receipt
(c) Deterred expenditure (d) Capital receipt
(d) Revenue expenditure.V. 28. Revenue expenditure the impact of which
Any expenditure incurred to the increase is likely to last for more than one year is:
the profit earning capacity of the (a) Capital expenditure
concern is a: (b) Revenue expenditure
(a) Revenue expenditure (c) Deferred revenue expenditurev
(b) Current expenditure (d) NO of hese
(c) Capital receipt - * *
Expenditure to maintain the asset is:
(d) Capital expenditureV. pital expenditure
22 Any expenditure incurred to keep the expenditure.V.
activities of a concern going is: - } Future expenditure
(a) Capital cxpenditure
(d) Deferred revenue expenditure
@,
(b) Revenue receipt Expenditure to improve the asset is:
(c) Revenue expenditureV
(d) Future expenditure
<\ (a) Deferred revenue expenditure
(b) Revenue expenditure
23 Expenditure incurred after buying Seeond (c) Current expenditure
hand asset to bring it in to proper working (d) Capital expenditure V.
place is a: 3]. The expenditure reduce revenue (profit)
(a) Capital expenditure.V. of the-business, arc:
(b) Revenue expendit (a) Revenue expenditure.V.
(c) Deferred expendi (b) Capital expenditure
(d) Capital loss.<\ (c) Fixed expenditure
Expenditurc incurred on the purchase and (d) Future expcnditure
installation of a new asset is regarded as: 32. Which on of the following is not appear
(a) Revenue expenditure in the balance sheet:
(b) Capital expenditureV (a) Revenue expenditureV.
(c) Revenue receipt (b) Capital expenditure
(d) Revenue-loss (c) Deferred revenue expenditure
An expenditure is capital in nature when: (d) Future expenditure -
(a) The amount involved is heavy 33. An expenditure incurred in increasing the
(b) It increases the quantity of fixed efficiency of a fixed asset is called:
assets V (a) Revenue expenditure
(c) It is the paid as interest on loans for (b) Capital expenditureV
the busincss (c) Current expenditure
(d) None of these
Principal of Accounting - 53
34. Any expenditure incurred in acquiring the 42. The cost of furniture purchased for sale
right to carry on a business is: is:
(a) Revenue expenditure (a) Revenue expenditure'
(b) Current expenditure (b) Capital expenditure
(c) Capital expenditure.V. (c) Deferred expenditure
(d) Deferred expenditure (d) None do these
35. Some revenue nature expenditures are 43. Cost of goods purchased for re sale is an
directly connected with fixed assets and example:
are fully added to the cost of assets arc: (a) Capital revenue
(a) Current expenditure (b) Revenue expenditureV.
(b) Revenue expenditure . (c) Deferred revenue expenditure
(e) Deferred expenditure (d) Future expenditure
(d) Capitalized expenditureV. 44. Expenditure incurred in aequiring the
36. The capitalized expenditures are shown patents right for the business is an
is: - - - example of:
(a) Trading alc (a) Revenue CX dilure
(b) Profit and loss a/c - (b) Deferred e expenditure
(c) Balance sheet assets sidev. (c) Capital expenditure:
(d) Balance sheet liabilities side (d) Short term expenditure
37. Preliminary expenses are: 45. Frei id on a new machine will be
(a) Revenue expenditures d Q:
(b) Capital expenditure achinery account V

(c) Capitalized expenditures
(d) Deferred revenue expenditure.V.
-

C# Freight account
(c) Profit and loss account
38. Depreciation on fixed assets is an (d) None of these
example of: 46. Rs.5000 spent on the replacement of worn
(a) Revenue expenditure V. SQ out parts of the machinery is charged to:
(b) Capital expenditure (a) Capital expenditure
(c) Deferred revenue expendit S. (b) Revenue expenditure V.
(d) None of these *
Cartage paid on the new machine is:
(c) Expenditure
(d) Deferred revenue expenditure
(a) Revenue expenditure N. 47. Discount allowed on issue of shares is an
(b) Capital cxpendi example of:
(c) Deferred exp (a) Capital expenditure
(d) Current ex iture (b) Revenue expenditure
40. All revenue expenditure and receipts are . (c) Deferred revenue expenditureV.
taken to: (d) term expenditure
(a) Trading alc only 48. Rs.3000 spent on the repairs before using
(b) Profit and loss the second hand machinery purchase
(c) Trading and profit and loss alc./ recently is a:
(d) Balance sheet (a) Revenue charge
4 . Any expenditure incurred in achieving (b) Deferred revenue charge
operating economy is known as: - (c) Capital charge V
(a) Revenue expenditure (d) None of these
(b) Current expenditureV 49. Expenses incurred in manufacturing
(c) Capital expenditure products is a:
(d) Capital receipt (a) Revenue charge V
(b) Deferred revenue charge
(c) Capital charge (b) current receipt

(d) None of these (c) Capital receiptv
5(). Heavy expenditure on advertisement of a (d) Deferred receipt
new product is a: -
58. Capital contributed by the partners is a:
(a) Capital expenditure (a) Revenue receipt
(b) Revenue expenditure (b) Capital receiptv.
(c) Current cxpenditure (c) Current reeeipt
(d) Deferred revenue expenditurev" (d) Deferred receipt
5|. A sum of Rs.2000 paid as wages to repair 59. The revenue receipts are shown in profit
office furniture should be debited to and loss account on the:
(a) Repairs a cy (a) Debit side
(b) Cash a/c (b) Credit sidev.
(c) Furniture a/c (c) Expense side
(d) None of these (d) Both debit and credit sides
Distinction between capital and revenue 60. The capital receipts are shown in the
balance sheet
items is important for the preparation of
(a) Balance sheet only
(b) Final account V
(a):
(b) Asset side
(c) Bank reconciliation statement
(d) Cash book -
Receipts which are non recurring by 61.

:
(c) D
of these
ipts decreases the value of asset or
nature and whose benefit is enjoyed over reases the value of liability are:
a long period are culled: -
c(b) Capital receiptsv.
Revenue receipts
(a) Capital receipts/
(b) Revenue receipts (c) Short term receipts
(c) Short term receipts (d) Capital profit
54.
(d) Capital profit
Receipt which are recurring by
*\ and
62. Receipt does not increases or decrease the
value of asset or liability are:
which are available for meeti ay to (a) Long term receipts
day expenses of a * OnCerti are (b) Capital receipts
known as: (c) Revenue receiptsv
<>
(a) Capital receipts (d) Revenue profit
(b) Revenue recei 63. Money received from the sale of goods is:
(e) Long term ibts (a) Capital receipt
(d) Revenue (b) Long term receipt
55. A receipt is capital in nature, when: (c) Revenue profit
(a) It relates to profit and loss a/c (d) Revenue receiptv.
(b) It relates to fixed assets 64. Money obtained by the issue of
(c) It credited to capital alcv. debentures is:
(d) The amount is heavy (a) Capital receiptv.
56. A receipt is revenue in nature, when: (b) Revenue receipt
(a) It relates to balance sheet (c) Capital profit
(b) It is received in the accounting year (d) Revenue profit
(c) The amount is small 65. Amount received against a trade debt
(d) It relates to routine activity of the previously written off bad is a:
business v - (a) Capital receipt
57. Receipt on account of fixed asset is a: (b) Revenue receiptv.
(a) Revenue receipt (c) Capital loss
(d) Capital profit 74, The loss suffered by the business in the
66. Sale proceeds of stock in trade are: ordinary course or day to day operation is
(a) Capital receipts regarded as:
(b) Revenue receiptsv (a) capital loss
(c) Capital loss (b) Revenue loss V
(d) Capital profit (c) Non recurring loss
67. Amount contributed by the proprietor as (d) Long term, loss
his capital is regarded as: 75. The loss incurred on raising capital of
(a) Capital receiptv . joint Stock company is regarded as:
(b) Revenue receipt (a) Recurring loss
(c) Capital loss (b) Revenue loss
(d) Revenue profit (c) Capital lossv.
68. The profit which is earned on the sale of a (d) Ordinary loss
fixed asset is regarded as: 76. Capital loss may be shown in:
(a) Capital profit V (a) Trading sta '
(b) Revenue profit (b) Income st tv/
(c) Capital loss (c) Cash statement
(d) Capital receipt (d) Balance sheet
69. The profit which is earned during the 77. Reven ses are shown in:
ordinary course of business is regarded as (a ng alc
(a) Capital profit fit and loss alev
(b) Revenue profitv Balance sheet
(c) Revenue loss C'. None of these
(d) Long term profit If a building having book value of
70. The capital profit should be transferred to: Rs.60000 is sold for Rs.45000 the capital
(a) Profit and loss alcv.
(b) Trading alc
& loss is:
(A) 60000
(c) Balance sheet
(d) Both trading and profit &$ S alc
(b) 105000
(c) 15000v
71.
and balance sheet
The revenue profit
tO.
* transferred 79.
(d) None of these
The amount which is actually paid on
account of a capital expenditure is:
(a) Balance sheet SS (a) Capital paymentV
(b) Trading
(c) Profit and loss alc
(b) Revenue payment
(c) Capital loss
(d) None of these (d) Capital expenditure
72. If an asset, whose book value is Rs.6000 80. An amount which is actually paid on the
on the date of sale is sold for Rs.8000 the account of some revenue expenditure is:
capital profit is: (a) Capital payment
(a) 6000 (b) 8000 (b) Revenue paymentv.
(c) 14000 (d) 2000v (c) Revenue loss
73, The loss suffered by a business on the (d) Revenue expenditure
sale of a fixed asset is regarded as: 81. A payment is a capital in nature, when:
(a) Capital lossV (a) It is incurred to decrease the tax
(b) Revenue loss liability
(c) Ordinary loss (b) It arises due to abnormal reasons
(d) Regular loss (c) It relates to capital expenditure.V.
(d) None of these
82. A payment is a revenue in nature, when: (d) Any transaction affect one account
(a) It arises due to normal reason 89. Error due to wrong allocation, as
(b) It relates of capital losses expenditure between capital and revenue
(c) It relates to capital expenditure is regarded as:
(d) It relates to revenue expenditures v. (a) Error of omission
Errors usually occur in the books of (b) Error of principlev
accounts can broadly be divided into: (c) Compensating errors
(a) One class (d) Error of commission -
(b) Two classes V 9(). The errors in which amount have

(c) Three classes occurred on the opposite sides of two or
(d) Four classes more accounts and have concealed
84. Errors which are made in original themselves in the net result, are: -
documents, original entry books and in (a) Errors of principle

the - s
(b) Errors of omission
posting from the original entry books into (c) Errors of commission
thc lcdger are regarded as: (d) Compensatin rs v.
(a) Book-keeping errors Y. 91. If a transacti s been journalized but
(b) Trial balance errors has been ' wrongly in the ledger
(c) Error of final accounts aCCOunt. It 18 an:
(d) None of thcse (a) E posting V

85. If a transaction has been completely (b) Error of principle
omitted from the original books of (QError of omission
account, it will be consider, as: Q) Error of commission -
(a) Error of commission Goods purchased from Robin for Rs. 600
(b) Error of omission v.
(c) Error of principle
3% have been posted to Rahim account, it is
3.11.
86.
(d) Compensating error
Error of commission arises when: :SQ (a) Error of omission
(b) Error of casting
(a) Any transaction is incorrectly (c) Error of posting Y
recorded, either wholly or partiallyv (d) Error of commission
(b) Any transaction is left ith wholly or 93. If the error occur due to short casting or
partially.
(c) Any transactio
''
is recorded in a
excess occur due to short casting or
excess casting in any subsidiary book or
fundamentally in f mnner in any account in the ledger, it is an:
(d) Any transac ffect one account (a) Error of posting
87. Errors in additions and carry-forwards in (b) Error of casting V
books of original entry, is regarded as: (c) Error of omission
(a) Error of omission (d) Error of commission
(b) Error of principle 94. Compensating errors, arises when:
(c) Compensating errors (a) Any transaction is left wholly or
(d) Error of commission V partially
88. Error of principle arises when: (b) Any transaction is incorrectly
(a) Any transaction is incorrectly recorded either wholly or partially
recorded, either wholly or partially (c) Any transaction is recorded in a
(b) Any transaction is left either wholly or fundamentally incorrect manner
partially (d) One error is compensated by the other
(c) Any transaction is recorded in a errorv -
fundamentally incorrect mannerv

Q5. The process of totaling the transactions at (c) Compensating
the end of the period is called: (d) Casting Y
(a) Posting 102. Error of posting affects:
(b) Casting V (a) One account V
(c) Journalizing (b) Two accounts
(d) Compensaling (c) Three accounts
96. Wages paid Rs. 600 were posted to wages (d) Four accounts
account as Rs. 60. To rectify the error; the 103, Sales of Rs. 625 to Ali were posted to his
wages account will be account as Rs. 562. To rectify the error, -
(a) Debited by Rs. 540 V Ali's account will be:
(b) Debited by Rs. 660 (a) Debited by RS: l l 8
(c) Debited by Rs. 600 (b) Debited by Rs. 63v
(d) Credited by Rs. 550 (c) Credited by Rs. 63
97. Omission of a transaction from a (d) Both debited and credited by Rs. 63
subsidiary record affect: 104. Sales of Rs. 500 to Amjad were not
(a) One account recorded this error.
(b) Two accounts' Amjad's acc ill be:
(c) Three accounts (a) Credite R.S. 1000
(d) Sevcral accounts (b) Credited by Rs. 500
97. Error of principle involves an incorrect (c) d by Rs. 500v
allocation of expenditure or receipt ( ebited by Rs. 1000
between: 105. SSct was purchased for the business,
(a) Capital and revenuev wever, the amount was debited to
(b) Capital and capitalized
(c) Revenue and deferred revenue
29 purchases account. It is an error of:
(a) Recording (b) Posting
*Q.*
(d) Revenue and revenue (c) Costing (d) Principle V
98. The crror in the casting of sales 106. Some expenses are incurred at the time of
called as: the sale of an asset. The amount will be
(a) Error of principle dcbited to:
(b) Error of omission (a) Assets accounty
(c) Clerical errorv/ (b) Expenses account
99.
(d) Compensating
Wages paid for the
'' ion of a machine
(c) Cash account
(d) Purchases account
debitcd to wages an example of: 107. Impersonal accounts are affected by:
(a) Clerical e (a) Errors of carry forward Y
(b) Error of principlex (b) Errors, of casting
(c) Error of omission (c) Errors of ornission
(d) Compensating error (d) None of these
| 00, Error of casting in bill receivable book ()8. Purchases from Kamran RS. 499, were not
affccts: recorded. This will affect:
(a) Bill payable a/c (a) Only purchases a 'c
(b) Debtor alc (b) Only Kamran a/c
(c) Bill receivable a/cv/ (c) Both the accounts (
(d) Creditors alc (d) None of these
! () I. Over casting of purchases book is in 109. Sales to Fahad, Rs. 506, posted to his
example of error of: account as Rs. 605 affect:
(a) Carry forward (a) Sales a 'c
(b) Posting (b) Fahad a/cv/
(c) Cash a/c (c) Decrease the net profit by double

(d) Dcbtors a/c amount
110. Sales to Imran Rs. 336, have been debited (d) Have no effect on the net profit
to Kamran's account. This will be 116. Goods sold for Rs. 1,000 were entered in
rectified by: the sales book by Rs. 2000, the
(a) Debiting Imran's A/c and credited rectification of the entry will:
Kamran's alcV (a) Increase the net profit
(b) Debiting Kamran's A/c and crediting (b) Decrease the net profity
Imran's a/c (c) Have double effect on net profit
(c) Crediting both the accounts (d) Have no effect on net profit
(d) None of these 117. Paid our acceptance to Mr. I was posted
| | 1. Cartage paid Rs. 100, for the newly to the debit of M's account. The
purchased machinery, if debited to rectification of the entry will:
cartage account will affect: (a) lncrease-the net profit
(a) Both the cartage and machinery a/cv. (b) Decrease the ofit
(b) Only machinery a/c
(c) Only cartage a/c
:
(c) Have
(d) Have no
net profit
n net profitv
(d) Only cash a/c 118. Error of principle affects:
112. Goods purchased from Salman Rs. 3000,
were passed through sales book. The
(a)
(b) T
: county
only
rectification of the error will: (c than two
(a) increase the gross profit ave no effect on any account

(b) Decrease the gross profity rror of omission from trial balance
(c) Have no effect on the gross profit # affects:
| 13.
was received from X and was credit
:\
(d) Have double effect on the gross profit
An amount of Rs. 600, written off
(a) One accounty
(b) Two account
(c) Three account
X's personal account. The rectification of (d) Four account
this entry will: 120. Errors, which are made in the preparation
(a) Increase net profit by Rs of the trial balance are called:
(b) Reduce net profit by Rs. (a) Errors of omission
(c) lncrease net profit
(d) Reduce net profi
200
S. 1200
(b) Errors of commission
(c) Errors of principle
114. An amount 1000 paid to Ali (c) Trial balance errorsV
against an ac ce was debited to 121. Only those errors affect the profit of the
Awis account. The rectification of the business which are related to:
error will: (a) Trading and profit and loss alc./
(a) lncrease the net profit (b) Balance sheet
(b) Decrease the net profit (c) Trading a/c only
(c) First increase, then decrease the net (d) Profit and loss a/c only
profit -
122. If any expense a/c or revenue a/c is
(d) Have no effecronthe net profity wrongly debited, the profit will decrease
115. A credit sale was wrongly passed through and when it is rectified: -
purchases book, the rectification of the (a) The profit will become double
entry will: (b) The profit will become half
(a) Increase the net profit, by double (c) The profit will increasev.
amountv. (d) The profit will less
(b) Decrease the net profit
123. If by error, any revenue omitted to be (d) None of these
recorded it will: 13]. Short debit to an account increases the
(a) Understate the profit credit side of the:
(b) Overstate the profitv (a) Trial balancev
(c) Both understate and overs ate the (b) Profit and loss account
profit (c) Balance sheet
(d) Having no effect on profit (d) Both profit & loss a c & trial balance
124. If there is any error in cash account, it 132. An account in which, are entered
will affect: -
transactions, which cannot be placed-to
(a) Trading alc their proper accounts for want of
(b) Profit and loss a/c sufficient information is called:
(c) Balance sheetv - (a) Profit and loss alc
(d) Both trading and profit and loss alc (b) Trading alc
125. If the error is committed in liabilities (c) Real a/c
account, it will have its impact-on the: (d) Suspense a/c: ,
(a) Trading alc only 133. Sometimes &'trial balance may not
(b) Profit and loss a-c only agree under-such circumstances, the
(c) Both trading & profit & loss-a/c
(d) None of thesev.
be placed to a:
(a) Trading alc
126. When all the errors are rectified and (b)saspense a/cv/
posted to suspense a "c. the suspense a/c (c) Profit and loss alc
shows: C'd) Personal a/c
(a) Debit balance When the mistakes are discovered
(b) Credit balance subsequently, they are rectified through
(c) Both sides are equalv
(d) None of these
22 the:
(a) Suspense a/c v.
127. In ease of double sided errors, t
entry should be, equal to:
& (b) Trading alc
(c) Profit and loss a/c
(a) Wrong entry + Rectifyin (d) None of these
(b) Wrong entry + Suspe entry 135. Double sided error is one which exists
(c) Rectifying entry + entry simultaneously in:
(d) Correct entry + ifying entry (a) One a/c
128. Under or over casting of a subsidiary (b) Two a/cv/
book is an ex "of error of: (c) Several accounts
(a) Omissi (d) None of these
(b) Principle 136. A purchases returns of Rs. 600 to P if
(c) Both omission and principle entered in the sales book would affect:
(d) Commission v. (a) P's account
129, Errors which affect profit and loss relate (b) Purchases returns account
to: (c) Sales account
(a) Real a/c (b) Personal alc (d) Purchases returns account and sales
(c) Nominal a/cv/ a/cv/
(d) None of these 137. A company's share capital consists of
] 30. Errors of carry forward effect: 50,000 25c ordinary shares, which were
(a) Impersonal accountsv. all issued at a premium of 10%. The
(b) Personal accounts current market value of shares is 40c
(c) Both personal and impersonal each.
aCCOuntS
Principal of Accounting 6()
What is the amount of share capital of the In the year ended 31 December 2007, the
company appearing is Statement of company has paid the preference dividend
Financial Position? for the year and an interim dividend of le
(a) S 5,000 (b) $12,500v per share on the ordinary shares. A final
(c) S 20,000 (d) $18,000 ordinary dividend of 4c per share is
Share capital - No of shares issued x Par proposed.
value per sharc What is the total amount of dividends
- 50,000 x 25/100 = $12,500 relating to the year ended 31 December
. If amanager of a limited liability 2007?
company is also a shareholder of that (a) $180,000 (b) $ 10,000 v.
company, then the salary paid to that (c) S 120,000 (d) $125,000
manager is treated as appropriation of 142. According to IAS l Presentation of
profit and not as an expense of the Financial Statements, dividends paid
company. during the year should be disclosed in:
(a) True (b) Falsev (a) Statement of financial Position
| 3 *} A limited liability company issued 80,000 (b) Income Statement
ordinary shares of 50c cach at a premium (c) Statement of c c, in equity V
of 25c per share. The cash reccived was (d) None of thes - -
correctly recorded but the full amount 3. A limited liability company may have
was credited to the ordinary share capital Several t of reserves. Which of the
#1CCOll1)!. followi available for distribution as
')
Which of the following journal entries is
needed to correct this error? ''
1- Building expansion reserve
(a) Share premium account20,000 Dr - Share premium
Share capital account 20,000 Cr - KC Veil Lle reStef WCS
(b) Share capital account20,000 Dr.V 4- Capital reserve

Share premium account 20,000 Cr 5-General reserve
(c) Share capital account Dr 40,000
Share premium account 40,000 Cr
N oS (a) 1,2,3,4 and
(c) 1,3 and 5v (d) 1 and 5
(b) 4 only
(d) Share capital account Dr25,00

Cash 25.(){}() Cr
S. #44. At 30 June 2007 a companys capital
structure was as follows:
140. Which of the following journ: entries Ordinary sharc capital
could correctly reco *a bonus 600,000 shares of 50c cach 300,000
es? Share premium account 130,000
(a) Cash 80,000 Dr In the year ended 30 June 2008 the
Ordinary share c 80,000 Cr company made a rights issue of 1 share
(b) Ordinary share capital.80,000 Dr for every 2 held at 75c per share and this
Share premium 80,000 Cr was taken up in full. Later in the year the
(c) Share premium 80,000 Dr.V. company made a bonus issue of 1 share
Ordinary share capital 80,000 Cr for cvery 6 held, using the share premium
(d) Investments 80,000 Dr account for the purpose.
Cash 80,000 Cr What was the companys capital structure
. The issued share capital of Beta Limited at 30 June 2008?
is as follows: (a) 550,000 145,000
Ordinary shares of 25c cach 400,000 (b) 355,000 170,000
5%, Preference shares of 50c each (c) 525,000 V 130,000
()()() ()()() (d) 500,000 200,000
Principal of Accounting 6]
145. Which of the following is not a part of 150. The following information is available for
shareholders equity of limited liability LMB, a limited liability company.
company. 50c ordinary shares
(a) Share premium 5% preference shares of 50c
(b) Revaluation reserves. 3,000,000 2,000,000
(c) Ordinary share capital 600,000 350,000
(d) Redeemable preferred share capital V In addition to providing for the preference
146. A company has an authorized share dividend for a financial year, an ordinary
capital of $ 2,000,000 consisting of 50c dividend of 3c per share is to be paid.
ordinary shares. The issued share capital What is the total amount of dividend for
of the company consists of 800,000 the year?
shares. A dividend of 3c per share is (a) $135,000 (b) $134,000
declared, (c) $120,000 (d) S 137,000w
What is the amount of dividend payable . At 3i December 2007 the capital
to shareholders? structure of a company was as follows:
(a) $34,000
(c) $18,000
(b) $24,000V.
(d) $250,000
Ordinary share
25c each. <>
: 300,000 shares of
75,000
| 47. Revenue reserves of a company would Share prel "S" 50,000
increase if the company. During the company made a honus
(a) Declares dividend issue e share for every three held,
(b) Issues shares at a premium us share premium account for the
(c) Retains profit in the companyv se, and later issued for cash another
(d) Creates reserves out of retained ,000 shares at 75c per share.
148.
earning
A companys authorized share
consists of 8,000,000 25c ordinary shares.
(a) 140,000
(b) 130,000
(c) 120,000
93,000
65,000
65,000 v.
The company pays a dividend 5%
total amount received by the shar
'' r 152.
(d) 125,000 57,000
Under which of the following style of
is $60,000. What is the amount is aid business, retained earning account is
up capital of the company a ing in its maintained.
statement of Financial Position' (a) Sole ownership
(a) $ 1,200,000 v.
(b) $ 1,300,000

SS
<> (b) Partnership business
(c) Companyv
(c) $ 1,400,000 (d) All of above
(d) $ 1,300,00 153. The amount for which an asset could be
149. A company has an authorized share exchanged or a liability settled between
capital of 900,000 ordinary shares of Sl knowledgeable willing parties in an arm's
each, of which 600,000 have been issued length transaction is called:
at a premium of 25c each, thereby raising (a) Revenue
capital of $ u750,000 (600,000x 1.25). (b) Fair market valuesv
The directors are considering allocating $ (c) Cost value
480,000 for dividend payments this year. (d) Dividend
This amounts to a dividend of: 154. Minority interest account in the books of
(a) 45c per share Holding company is a liability account.
(b) 90c per share (a) True (b) Falsev
(c) 65c per share 155. In a limited liability eompany, the net
(d) 80c per sharev profit or loss of the company is
transferred to:
(a) Share capital account $1,800,000 divided into 2,000,000 shares

(b) Capital reserve account of $90c each. Benzon & Benzon Ltd
(c) Retained earning accounty issued 1,000,000 shares at a discount of
(d) General reserve account 40c per share. At year end the company
. Following is the detail of assets and declared dividend of $1,000,000.
liabilitics of a limited liability company. (a) 90c per share
Cash in hand 50,000 (b) $1 per sharev
Cash at bank 80,000 (c) 870c per share
Account receivable 25,000 (d) $1/5 per share
Prepaid rent 10,000 160. Which of the following best describes the
Allowance for receivable 3,000 working capital of a business?
Plant an machinery 250,000 (a) Total assets minus current liabilities
Furniture 40,000 (b) Net Current assets minus current
Account payable 20,000 liabilities V
What is the amount of working capital of (c) Fixed assets plus current assets
thc company? (d) Share capital general reserves
(a) S 142,000 V (b) $ 145,000 | 6 l. A company an issue for cash of
(c) S 157,000 (d) $165,000 1,500,000 ares at a discount of 10c
157. Fancy Ltd registered with an authorized <>
share capital of $ 1,500,000 divided into Whic the following journal entries
1,500,000 shares of $1 each. Fancy Ltd correctly records the issue?
issued 500,000 shares at a premium of are capital 750,000Dr
30c per share. At year end the company ( premium 150,000Cr
declared dividcnd of $200,000, Bank 900,000Dr
What is the rate of dividend declared by (b) Bank 900,000Cr
the company? Share capital 750,000Dr
SQ&
(a) 3 lc per share Share premium 150,000Cr
(b) 35c per share (c) Bank 750,000Dr
(c) 45c pcr share S. Share capital
Share Discount
600,000
150,000Cr
(d) 25c per sharev
158. Nicc and fair limited led 90,000 (d) Bank 600,000 Drv
ordinary shares of 80c each at a premium Share Discount 150,000Cr
of 20c hare. Nicc and Fair recorded cash Share capital 750,000
correctly but the full amount was credited . The issued share capital of Alpha is as
to the ordinary e capital account. follows:
Which of the following journal entries is Ordinary shares of 40c each 1,20,000.
needed to the ordinary share capital 10% Preference shares of $1 each
acCOL1111. 500,000
'(a) Share premium alc 18,000 In the year ended 30 September 2008, the
Share capital a/c 18,000 company has paid the preference dividend
(b) Share capital affe 72,000 for the year and an interim dividend of 5c
Share premium a/c 72,000 per share o the ordinary shares. A final
(c) Share capital alc 18,000Dr Y ordinary dividend of 2C per share is
Share premium alc 18,000Cr proposed.
(d) Share capital alc 18,000 What is the total amount of dividends
Cash 18,000 relating to the year ended 30 September
159. Benzon & Benzon Ltd was registered 2008?
with an authorized share capital of (a) $50,000
(b) $210,000 (3) Equity dividends proposed after the

(c) $260,000v. Statement of Financial position date.
(d) $280,000 (4) Issue of share capital.
163. A company has $250,000 ordinary shares (a)(1), (3) and (4) only.
at a par value of 40 cents each and 140,00 (b)(2) and (4) only V.
6% preference shares at a par value of 80 (c) (1) and (2) only
cents each. (d) (3) and (4) only
The board of directors declare a dividend 167. Which of the following statements about
of 8c per ordinary share along with financial statements are in accordance
preference shares dividend. with IAS 12
(a) $50,000 (b) $56,720V !. The authorized share capital of the
(c) $6,720 (d) $56,000 company must be disclosed by note or on
164. The following information is related to a the face of the Statement of financial
position. -
limited liability company:

80c per ordinary share 2. The total of staf for the period must
2,500,000 1,200,000 be disclosed c or on the face of the
7% preference shares of $1 each, 1nCOme Statent.
700,000 350,000 -
3. The acco ting policies adopted by the
At year end the company paid ordinary compa must be disclosed but only if
dividend @5% in addition to preference not comply with accounting
dividend.
What is the total amount of dividends for posed ordinary dividends should not
the year? e recognized as liabilities unless they
(a) $ 84,500v (b) $90,000 have been proposed or declared before the
(c) S 105,000 (d) $110,500 statement of financial position date.
165. A company made an issue for cas (a) 1,2 and 3 (b) 1,2 and 4v.
1,800,000 90c shares at a premiu (c) 2.3 an 4 (d) 1,3 and 4
per share. 168. Which of the following statements about
Which of the following
correctly records the issue?
* -
company financial statements is/are

correct, according to international
(a) Share capital
Share premium
s' ,000000 accounting standards?
1. A material profit or loss on the sale of
Bank 1,800,000 part of the entity must appear in the
(b) Bank S. 1,800,000 v. income statement as an extraordinary
item.
Share capital 1,620,000
Share premium 180,000 2. dividends paid and proposed should
(c) Bank 1,800,000 be included in the income statement.
Share capital 1,620,000 3. the income statement must show
Share discount 180,000 Separately any material profit or loss
(d) Share capital 1,800,000 from operations discontinued during
Share premium 180,000 the year.
Bank 1,620,000 4. The statement of changes in equity
166. Which of the following might appear as must not include unrealized gains or
an item in a companys statement of losses.
changes in equity? (a) 1,2 and 3 (b) 2 and 4
(1) Profit on disposal of properties. (c) 3 onlyv (d) 1 and 4
* >k xx x x * * *
(2) Surplus on revaluation of properties
Cost Concept & Principles 64
An example of fixed cost is
(a) direct material cost
COST CONCEPT &
(b) depreciation of machinery
PRINCIPLES (c) works manager's salary V
(d) chargeable expenses.
Cost accounting concepts include all of
Thc main purpose of cost accounting is
1O the following except
(a) planning
(a) Maximise profits
(b) profit sharingv
(b) help in inventory valuation
(c) controlling
(c)Provide information to management
(d) product costing
for decision-nmakingY 1 ().
(d) aid in the fixation of selling prices. The three major elements of product
costs are all but
2 -
One of the most important tools in cost

(a) direct materials
planning is
(b) direct labour
(a) direct cost
(b) cost shcet
(c) factory &head
(d) indire ur, V.
(c) budgetv 11 Cost of go roduced includes
(d) marginal costing
The purpose of cost accounting is to (a) uction cost and finished goods
provide information for
(a) preparing costing P & L A/c
&
oduction cost and work-in
(b) cost controlv progress Y

(c)locating factors leading to wastages ) production cost, work-in-progress
and losses
(d) assessing the profitability < g: *
and finished goods inventory.
Cost of goods sold includes
(a) cost of production and work-in
financial position of the firm. O progress
Fixed cost per unit increases whe -
(b) cost of production and finished

(a) variahle cost per unit increas
(b) variable cost per unit goods inventoryv
(c) cost of production, work-in-progress
(c) production volume increases
and finished goods inventory.
(d) production volume decreases. Y 13 An overstatement of work-in-progress at
Variable cost per
(a) varies when the end of a period will
(b) remains c (a) overstate cost of goods produced
(c) increases when output increases (b) understate current assets
(d) decreases when output decreases. (c) understate gross profit
increase in total variable cost is due to (d) overstate net profit. Y
(a) increase in fixed cost Conversion cost is equal to the total of
(b) increase in production v. (a) material cost and direct wages
(c) increase in sales (b) material cost and indirect wages
(d) increase in total cost. (c)direct wages and factory overheadV
An example of variable cost is (d) material cost and factory overhead.
15. Multiple costing method is used in
(a) property taxes
(b) direct material costv (a) oil refinery
(c) interest on capital (b) car manufacturing companyx'
(d) depreciation of machinery. (c) sugar mill
(d) multi-product company.
Cost Concept & Principles
|6 Toy manufacturing company should (b) total cost
ll Se (c) marginal cost V
(a) unit costing (d) cost of sales,
(b) batch costingV When premises are owned, a charge in
(c) job costing lieu of rent is
(d) multiple costing. (a) opportunity cost
Electricity generating company should (b) sunk cost
employ (c) imputed cost Y
(a) unit costing (d) future cost
(b) operation costing 26 Research and development cost is a
(c) process costing (a) pre-production cost.*
(d) operating costing. Y (b) opportunity cost
Job costing is used in (c) sunk cost
(a) paper mills (d) imputed cost.
(b) printing press* When annount deposited in a bank is
(c) chemical works withdrawii for financing a project, the
(d) textile mill loss of Interest on bank deposit will be
|Q Output costing is employed in referred to as
s k cost
(a) mining quarries (
(b) brick kilns &: COSl
(c) steel production (c) opportunity cost.*

(d) all of these.V. O (d) replacement cost.
Contract costing is used in Which of the following is virtually
(a) ship-building V 29. always after-production cost 2
(b) automobile industries (a) research and development cost
(c) aeroplanc industries
(d) none of these. SQ
* (b) selling and distribution costv
(c) interest on capital
Which method of costing & suited 29 (d) all of theSc.
for interior decorator ? indirect material cost is a part of
(a) Job costing V (a) Prime cost
(b) , <> (b) Factory overhead v
(c) Contract costing (c) Chargeable expanses
(d) Operating'sing 3() Which of the following is the most
Which method of costing is used in inportant advantage of cost accounting
hospitals' to management 2
(a) Job costing (a) it increase the reputation of the
(b) Operating costingY Company
(c) Unit costing (b) It meets the statutory requirements
(d) No method is used -
of Companies Act.
23 Costs which are ascertained after they (c) It reveal profitable and unprofitabic
have been incurred are known as activities of the business. Y
(a) imputed costs (d) It checks thc accuracy of financial
(b) historical costsY dCCOllntS.
(c) sunk costs 3 || An example of direct expense is
(d) opportunity costs. (a) Direct material cost
24 Prime cost plus variable overhead is (b) Direct labour cost
known as (c) both (a) and (b)
(a) production cost
(d) Hire of a special plant for a (b) Unit cos'ang

particular jobv. (c) Process costing
32 Coal used in a factory is an example of (d) Multiple costing
(a) Direct material 40 In tyre manufacture, which method of
(b) Direct expense costing should be used?
(c) Indirect materialv (a) Unit costing
(d) Indirect expense (b) Batch costing V
33 Which of he following is not a relevant (c) Job costing
COSt (d) Process costing.
(a) Replacement cost
(b) Sunk costv
(c) Marginal cost MATERIAL COST
(d) Replacement cost.
Direct material is a
34 A cost which increases or decreases per 1
unit when volume of output decreases or (a) Fixed cost
increases is (b) Variable cost V
(a) Fixed costv (c) Semi
Direct materialisa
(b) Direct cost 2
(c) Variable cost
(a) Manufacturing costv
(d) Indirect cost (b) Administration cost
35 Which of he following is apart of both (c) Selling and distribution cost
prime cost and conversion cost (d) Any of the above.
In manufacturing industries, the most
(a) Direct material
(b) Direct labourv
3
2' element of cost is
(c) Indirect material (a) Material V (b) Labour
(d) Indirect labour (c) Overheads -
36 Which of he following is a technique

profit planning.
S.
N -
Which of the following is an accounting
record?
(a) Standard costing and v e (a) Bill of Material (b) Bin card
analysis -
(c) stores ledgerv (d) All of these
(b) Marginal costing and cos; olume 5 Which of the following documents is
profit analysis. Y <>
used for issuing materials to productions
(c) Uniform costing departments?
(d) Multiple costing. (a) Purchase Requisition Note
Which of he following is an effective (b) Stores Requisition Notev
technique of cost control 3 (c) Goods Received Note
(a) Standard costing/ (d) Stores Credit Note.
(b) Budgetary control 6 Which of following is considered to be
a normal loss of materials 2
(c) Marginal costing
(d) Uniform costing (a) Loss due to accidents
38 Which of the following industries are (b) Pilferage
not suitable for use of multiple costing? (c) Loss due to breaking the bulkv.
(a) Car manufacture (d) Loss due to careless handling of
materials
(b) Radio manufacture
(c) Paper millv -
(e) All of these.
(d) locomotive works. 7 According to which of the following
39. Batch costing is a variant of methods of pricing, issues are close to
current economic values 7
(a) Job costing/
(a) Last-in-first-out price Y (a) Inflated price method

(6) First-in-first-out price (b) Standard price method V.
(c) Highest-in-first-out price (c) Replacement price method
(d) Weighted average price. (d) Specific price method
In which of the following methods of 15 In which of the following methods,
pricing, costs lag behind the current materials are issued at the price
economic values 2 prevailing at the time of issue 2
(a) Last-in-first-out price (a) Inflated price method
(b) First-in-first-out pricev (b) Standard price method
(c) Replacement price (c) Replacement price method"v
(d) Weighted average price. (d) Specific price method
Which of the following methods of The storekeeper should initiate a
stock control aims at concentrating purchase requisition when stock
efforts on selected items of materials 2 reaches
(a) Perpetual inventory system (a) Minimum !
(b) Materials turnover (b) maximu lv
(c) Maximum, minimum and re-order (c) re-order
level setting (d) aver level
(d) ABC analysis. Y 17 Whi the following material losses
10 In base stock method of pricing the S be transferred to Costing Profit
material issues, the term base stock SS Account 2
represents the O Loss by evaporation
(a) Quantity of stock being issued (b) Loss due to improper storage of
(b) Stock in balance materials'
(c) Minimum stockY (c) Loss due to breaking the bulk
(d) Maximum stock. (d) All of these.
11 Which of the following items
should NOT be treated
s: irect
18 When material prices fluctuate widely,
the method of pricing that gives absurd
material. results is
(a) Electricity representing.90% of the (a) Simple average pricev
total cost <> -
(b) Weighted average price
(b) Sand paper used in production (c) Moving average price
(c) Thread used institching garments (e) Inflated price.
(d) All of the v When prices fluctuate widely, the
12 Continuous stock-taking is a part of mcthod that will smooth out the effect
(a) Annual stock-taking of fluctuations is
(b) Perpetual inventory system v (a) Simple average
(c) ABC analysis. (b) Weighted average.V.
(d) Periodic inventory system (c) FIFO
13 The classification of items in ABC (d) LIFO.
analysis is made on the basis of 20 In which of the following methods, the
(a) Investment value of materials charge to production is at actual cost?
(b) Consumption value of materials (a) Weighted average price
(c) Quantity of materials consumed (b) Standard price
(d) All of thesev. (c) Replacement price
f4 In which of the following methods, (d) FIFO v.
issues of materials are priced at a pre 21 Expected annual usage of a particular
determined rate 2 raw material is 2,00,000 units and the
Cost Concept & Principles (38
economic order quantity is 10,000 units, called

The invoice cost of each unit is Rs. 500 (a) [Defectives (b) Waste
and the cost to place one order is Rs. 80. (c) SpoilageV (d) Scrap
The average inventory is
(a) 1,00,000 units
(b) 5,000 units V
Labour Cost
(c) 10.000 units
(d) 7,500 units. ln which of the following incentive
22 Taking the data in Q, 3.21 above, the plans of wages payment, wages on
estimated annual ordering cost is time basis are NOT guaranteed 2
(a) Rs. 1,600V. (a) Halsey plan
(6) Rs. 10,000 (b) Rowan plan
(c) Rs. 3,200 (c) Taylor's differential piece rate
(d) Rs. 5,000 system V
23 -
On the basis of data given in Q 3.21, (d) Gantt's task and bonus system.
number of orders to be placed in each 'C' plan, a worker is
year are
(a) l () (b) 50 v. (a) at a
v
"&" higher than the usual

(c) 20 (d) 100

24 When matcrial prices are showing a ding to his efficiency
rising trend, which method of pricing
a double rate for overtime
will show lower cost of production ) normal wages plus bonus.
(a) FIFOv (b) LIFO 3= hich of the following incentive
(c) Weighted average methods of wage payment should be
used for indirect workers.
(d) Replacement price.
25 -
In periods of rising prices,

method of pricing shows higher
:* C
(a) Rowan plan
(b) Taylor's differential piece rate
values 5 system
(a) FIFOv (b) LI (c) Gantt's task and bonus plan
(c) Weighted average (d) All of the above
(d) Replacement price (e) None of the above. V.
26 ln which method -
Which of the following methods of
production are wage payment is most suitable where
prevailing in t quality and accuracy of work is of
(a) FIFO primary importance 2
(c) Weighted average (a) Piece rate system
(d) Replaccment pricev (b) Differential piece work system
27 When prices are showing a falling (c) Time rate systemv
tendency, which method of pricing of (d) Halsey premium system
5 Cost of idle time arising due to non
material issues will show higher closing
stock value availability of raw material is
(a) FIFO (b) LIFOv (a) eharged to Costing Profit and Loss
A/cv. -
(c) Weighted average

(d) Specific price method (b) charged to factory overheads
When production is below standard (c) recovered by inflating the wage
ralC.
specification or quality and cannot be
rectified by incurring additional cost, it is
6 When overtime is required for meeting 14 Given that for a job, standard time is 8
urgent orders, overtime premium should hours, actual time taken is 6 hours and
be the time rate is Rs 2 per hour. What is the
(a) Charged to Costing Profit and Loss total wages under Halsey Premium Plan 2
A/c (a) Rs 18 (c) Rs 1-4 v
(b) Charged to overhead costs (b) Rs 16 (d) Rs 12.
(c) Charged to respective jobs. V. 15 What will be the amount of wages if
Wages sheet is prepared by Halsey-weir plan is applied on the data
(a) time-keeping department in Q. 3.14 above 2
(b) payroll departmentv. (a) Rs. 13.00 (c) Rs. 13.80
(c) personnel department (b) Rs. 13.20V (d) Rs. 14.00
(d) cost accounting department. 16 Using data as given in Q. 3 14 above,
Time and motion study is conducted by what will be the amount of wages under
the time rate system 2
(a) time-keeping department #Q (c) 16
(a) Rs.
(b) payroll department (b) Rs. 14 (d) 18.
(c) personnel department 17 Using given in Q. 3.14 above,
(d) engineering departmentV. # e the amount of bonus under
Labour productivity is measured by R lan ''
(b) Rs. 3v.
comparing
(a) Actual time with standard time
(b) Total output with total man hours
$: S.2
(d) None of the above.
Using data as given in Q 3.14 above,
(c) Added value for the product with
total wage cost 2%
AZ)
what is the amount of bonus- under
Halsey plan?
(d) None of the above. Y (a) Rs. 2 V. (c) Rs. 4
Labour turnover is measured b
(a) Number of workers replac
number of workersv.
3. age 19
(b) Rs. 3 (d) Nil.
Standard output is 100 units per day of
8 hours and the piece rates are 20 paise
(b) Number of workers
the beginning plus nu
t the end.
in per unit and 15 paise per unit under
Taylor's differential piece rate system,
(c) Number of workers joining number what will be amount of wages if a
in the beginning of the period worker produces 95 units in a day?
(d) All of these (a) Rs. 14.00 (c) 18.50
(e) None of these. (b) Rs. 14.25 V. (d) 19:00
|l Under Gantt's Task and Bonus plan, no 20 Given the data in 3.19 above, what will
bonus is payable to a worker if his be the amount of wages under Taylor's
efficiency is less than differential piece rate system, if a worker
(a) 50% (c) 83%3% produces 101 units in a day?
(b) 662/3% (d) 100%v/ (a) Rs. 15.15 (c) 20.15
12 Under Emerson's Efficiency System, no (b) Rs. 20.00 (d) 20.20V.
bonus is payable when efficiency is upto 21 Comparing Rowan and Halscy
(a) 50% (c) 83%% Premium plans, it is seen that when the
(b) 662/3%v/ (d) 100% time saved is less than 50% of the tinne
13 When standard outputs is 10 units per saved,
hour and actual output is 12 units per (a) Rowan, plan allows more wages to a
hour, the efficiency is worker than Halsey planv
(a) 80% (c) 120%v/ (b) Rowan plan allows less wages to a
(b) 100% (d) None of these worker than Halsey plan
(c) Rowan and Halsey plan allow equal (a) fixcq overhcad
wages to a worker (b) variable overhead
22 When time saved is 40% of the standard (c) semi-fixed or semi-variable
time, Halsey plan allows overhead V.
(a) more wages than Rowan plan Charging to a cost centre those
(b) less wages than Rowan planY overheads that result solely from the
(c) equal wages as compared to Rowan existence of that cost centre is known as
plan (a) allocation v
Wages under Rowan and Halsey plans (b) absorption
are exactly equal when time saves is (c) apportionment
(a) nil (d) allotment.
(b) 50% of the standard time Absorption means
(c) both (a) and (b) V. (a) charging of overheads to cost
Standard time is 60 hours and guaranteed centTS
time rate is 30 paise per hour. What is the (b)charging of overheads to cost unitsv
amount of wages if job is completed in (c) charging o '" to COSt
48 hours ? Rowan plan is in use. CentreS OT CO
(a) Rs. 24.00 (c) Rs. 17.28V Administra verheads are recovered
(6) Rs. 26.80 (d) Rs. 20.40 dS d. of
Which of the following a group (a) di aterials
incentive plan? (b) prime cost
(a) Priestman plan v rect wages
(b) Halsey Weir plan (' works cost. Y
(c) Badaux plan Which of the following is a service
(d) All of these
2 department 2
(a) Refining department
SN (b) Receiving departmentv
ovERHEAD COSTOP (c) Machining department
(d) Finishing department.
:
The allotment of whole item tC) 9 Which of the following is NOT is
cost centres or cost units i selling overhead?
(a) Cost allocationv <>
(a) Insurance to cover sold goods while
(b) Overhead absorptio in transity
(c) Cost
'
(d) Overhead nt
(b) Royalty on sales
-
(c) Legal costs for debt realisation

Packing cost i (d) Distribution of samples.
(a) production cost 10 Which method of absorption of factory
(b) distribution cost overheads do you suggest in a concern
(c) selling cost which produced only one uniform type
(d) It may be any of the above. Y of product 2
Directors' remuneration and expenses (a) Percentage of direct wages basis

form a part of (b) A rate per unit of outputy
(a) production overhead (c) Direct labour hour rate
(b) selling overhead (d) Any of the above,
(c) administration overheadw (e) Machine hour rate
(d) distribution overhead. ll When the amount of under-or over
Salary of a foreman should be classified absorption is significant, it should be
dS a
disposed of by
(a) transferring to Costing Profit and When the factory overhead control
Loss A/c. account has a closing debit balance,
(b) the use of supplementary rates v. factory overhead was
(c) carrying over as a deferred charge to (a) over-absorbed
the next accounting year. (c) fixed
idle capacity of a plant refers to the (b) under-absorbed V
difference between (d) variable
(a)maximum capacity and practical 19 Factory overhead should be absorbed on
capacity the basis of
(b)practical capacity and normal (a) relationship to cost incurred V
capacity (c) direct labour cost
(c)practical capacity and capacity based (6) direct labour hours
on sales expectancy V (d) machine hours.
(d)maximum capacity and actual In which of the following methods of .
capacity. providing depreciation, the amount of
Maximum possible productive capacity depreciation on decreasing with
of a plant, when no operating time is the age o * Set'?
lost, is its (a) Re ' balance method
(a) Practical capacity (b) f digits method
(b) Theoretical capacity uity method
(c) Normal capacity V (a) and (b) abovev
(d) Capacity based on sales 2]-Oand hich of the following is a scientific
expectancy. accurate method of absorption of
The capacity which is based on the long
term average of the sales expectanc
29 factory overheads
(a) Percentage on prime cost
level is known as SQ (b) Machine hour rate V.
(a) Practical capacity (c) percentage on direct labour cost
(b) Normal capacity* (d) All of these.
(c) Actual capacity S. What is the basis for distribution of
(e) None of these. -
indirect material cost to various
When the amount of ov ad absorbed departments?
is less than the of overhead (a) Direct allocation V
incurred, it is
(a) under-ab
' n of overheadV.
(b) Cost of direct materials consumed
(c) Machine hours worked.
(b) over-ab ion of overhead 23 Warehouse expenses is an example of
(c) proper absorption of overhead. . (a) Production overhead
16 Bad debt is an examples of (b) Selling overhead
(a) Production overhead (c) Distribution overhead. V.
(c) Selling overheadv Selling and distribution overheads are
(b) Administration overhead absorbed on the basis of
(d) Distribution overhead. (a) Rate per unit
|7 Number of workers employed is used as (b) Percentage on works cost
a basis for the apportionment of (c) Percentage on selling price of each
(a) time office costs unit
(b) canteen expenses (d) Any of these V

(c) personnel department expenses 25 The following balances appear as on 31
(d) any of thesev. st Dec. 1997 for X Ltd.
Overhead over-applied RS. 350
Cost of goods sold Rs. 9,50,000 29 If a pre-determined factory overhead

Work-in-progress inventory Rs. 38,000 rate is not employed and the volume of
Finished goods inventory Rs. 75,000 production is reduced from the level
the most appropriate treatment of over planned, the cost per unit would be
applied overhead would be : expected to
(a) to transfer it to costing P & L A/cv/ (a) remain unchanged for fixed costs
(6)to prorate it between work-in and increase for variable costs
progress inventory and finished goods (b) increase for fixed cost and remain
inventory uncharged for variable costs V
(c) to prorate it between inventory of (c) increase for fixed costs and decrease
work-in-progress and finished goods for variable costs
and cost of goods sold. (d) decrease for fixed costs and
The difference over a period of time, decrease for variable costs.
between actual factory overhead and 30 The least suitable basis for applying
absorbed factory overhead will usually overhead is
be minimum when the predetermined (a) materials consumed Y
'
overhead rate is based on (c) direct labou
(a) normal capacityv (b) direct St
(b) machine hours (d) TIl
machi eho TS.
(c) maximum capacity 31 Exces tcapacity means

(d) none of thc above. (a) ary idleness of plant
(e) direct labour hours (b) greater production capacity than a
A company found that the differences in company can usev
product costs resulting from the (c) the difference between theoretical
application of pre-determined overhead capacity and actual capacity,
rates rather than actual overhcad rates The concept of ideal capacity of plant
were immaterial even though actu as used in cost accounting is its
production was substantially less (a) theoretical maximum capacity V
planned production. The * (6)best capacity for normal
cxplanation is that S. production
(c) capacity used for standard setting
(a)factory overhead mainly
composed of variable'cost : (d) capacity below which production
(b)several products
simultaneously
produced
33
should not fall.
General overhead should be
(c) fixed facto S.- WaS 3 apportioned to various departments on
significant co - -
the basis of
(d) costs of factory overhead items were (a) cost of materials consumed
substantially larger than anticipated. (b) production hoursv'
28 Under-absorbed factory overhead costs (c) No. of workers
are (d) capital value of asset
(a) cxcess variable factory overhead 34 Pre-determined overhead recovery rate
COSIS -
is Rs 3 per hour, and predetermined
(b) factory overhead cost not allocated hours are 50,000. Actual hours worked
to units produced are 55,000 and till and overhead Rs
(c) fixed factory costs not allocated to 1,70,000. 'What is the amount of under
unit produced or over-absorption of overhead
(d) cost that cannot be controlled (a) Rs. 20000 over-absorption
(e) None of the above. v.
(b) Rs. 5000 under-absorption v

(c) Rs. 20,000 over-absorpt.Jon
JOB, BATCH &
(d) Rs. 5,000 over-absorption CONTRACT CONSTING
35 -
in Q. 3.34, what is the amount of pre

determined overhead '' ! In a job cost System, costs are
(a) Rs, 1,5() ()()() v accumulated
(c) cannot be computed (a) by specific job Y
(b) RS. 1,05.()()() (b) by department or process
(d) None of these (c) by kind of material used
3 (3 What is the amount of absorbed (e) on a monthly basis
overhead in Q 3.34 2 2 The principal factors to be considered in
(a) Rs. 1,50,000 (c) Rs 15,000 designing a cost system include
(b) Rs 1.65,006 V. (d) Rs 20,000 (a) Manufacturing process
In a factory overhead are recovered at (b) desires of management
the rate of Rs. 5 per machine hour. (c) nature of bu'
Total expenses incurred and actual (d) company tion structure
Inachine hours worked are Rs 80,000 (c) all ' Vev
and 10,000 hours respectively. Pre The able cost system-where
dcternlined overhead amount to Rs the pro differ in type of materials
60,000. What is the amount of USe ork performed is
under over absorption ? costing
(a) Rs. 20,000 under-absorption perating costing
(b) Rs. 30,000 under-absorption v. ) Process costing
(c) Rs. 20,000 over-absorption (d) None of these.
(d) Rs. 30.000 over-absorption In shoe manufacture, the most suitable
In Q 3.37, which method should be use cost system is
to treat under/over absorbed amoun', (a) Job costing
cost accounts 2 (b) Contract costing
(a) Tr. to costing P & L A/c
(b) Carry over to next year
S (c) Batch costing
(d) None of these
(c) Use of supplementary [
<>
5 Job costing is used in
(d) Any of the above, (a) Repair shops
39
number of
(a) 16,000
": predetermincq
In Q 3.37, What
urs ?
(b) Furniture making
(c) Printing presses
annot be known. (d) Automobile garages
(b) 12,000 v (d) None of these (e) All of thesex'
40. A machine purchased for Rs 20,000 is 6 Most of the expenses are direct in
discarded because of obsolescence and (a) job costing
sold for Rs 5000 after three years of (b) contract costing/
scrvice, resulting in a loss of Rs 3,000. (c) batch costing
This loss should be (d) All of these
(a) treated as production cost When a contract is not completed at the
(b) transferred to costing P & L A/c in end of thc accounting year, profit on
the year of saleY incomplete contract is
(c) spread over the years of the (a) transferred to Profit and Loss
remaining expected life of the machine Account
(d) Either (b) or (c) (b) transferred to reserve

(c) transferred partly to Profit and Loss (a) Cost-plus contracts

Account and partly to reserve. V. (b) De-escalation clause
When a contract is not completed at the (c) Escalation clause
end of the year, loss on incomplete (d) All of the above. V.
contract is 14 Cost plus contract is useful from the
(a) transferred to Profit and Loss point of view of
Account V (a) contractor
(b) transferred to work-in-progress (b) contractee
(c) transferred partly to Profit and Loss (c) both contractor and contractee. Y
Account and partly to work-in progress. 15 In contract costing, contract account is
() -
For contracts which are very near prepared by the .

completion, the amount of profit to be (a) contractorv/
credited to Profit and Loss Account is (b) contractee
ascertained by the following -
(c) both by contractor and contractee.
formula: 16 In a building contract of Rs. 2,40,000, at
Work certified the end of the year work certified is Rs.
(a) Estimated profit x 1,60,000 a timated profit is Rs.
Contract price
Work certified X Cashreceived 15,000. Whals the amount of profit to
(b) Estimated profitx be cr ite to Profit and Loss Account
Contract price Work certified aS g cash ratio is 80% 9
Work certified Cost of work done 15,000
(c) Estimated profit x
Contract price Total cost to date ) S. 12,000
(d) Any of the abovev C'. 8,000 v.
10 When a contract is 40% complete, the 7) Economic batch quantity is that size of
amount of profit to be taken credit for is the batch of production where
usually (a) average cost is minimum
(a) the amount of profit estimated
(b) 40% of he estimated profit N
oS& (b) total cost is minimumv
(c) set-up cost of machine is minimum
(c) 1/3 of the estimate profi tiplied (b) carrying cost is minimum
by cash ratio. v. 18 Production order means
-
1 || In contract accounts, amount of (a) an order received from a customer

work-in-progress co ists of for the production of a specific item
(a) cost of work certified (b) instructions to the shops to proceed
and uncertified with the production of the productv.
(b) cost of ncompleted (c) an order to the store-keeper to issue
(c) the am of profit not transferred necessary materials for production.
to Profit and Loss Account 19 In contract costing, valuation of which
(d) (a) and (b) above of the following does not include an
(e) (a) (b) and (c) V. element of profit.
12 Cost-plus contract is usually entered (a) work in progress certified
into in those cases where (b) work in progress uncertified V
(a) cost can be easily estimated (c) Both (a) and (b)
(b) it is not possible to compute the cost (c) Neither (a) nor (b)
in advance with a reasonable degree of 20 A contract of Rs. 5,00,000 is 55%
accuracy. Y complete as certified. It shows a
(e) contractor wants to earn a higher national loss of Rs 20,000. Accounting
amount of profit. -
treatment of this loss is
13 Contract price is not fixed in case of (a) Transfer 2/3 of this loss to P&L A/c
(b) Transfer 2/3 x cash ratio of this loss (a) Dr. Process account
to P&L A/c Cr. Costing Profit and Loss Account
(c) Transfer 55% of this loss to P&L (b) Dr. Abnormal Wastage Account
A/c Cr. Costing Profit and Loss Account
(d) Transfer entire amount of loss to P (c) Dr. Costing Profit and Loss
& L A/cv. accountv.
21 Direct cost chargeable to contract does Cr. Abnormal Wastage Account.
not include - 4 100 units are introduced in a process in
(a) Materials which normal loss is 15 units. If actual
(b) Storage lost.* output is also 100 units, then there is
(c) Labour (a) no abnormal loss or abnormal gain
(d) both (c)and(d) (b) an abnormal loss
(e) Supervision (c) an abnormal gain. Y
Which of the following items is not 5 50 units are processed at a total cost of
written on the credit side of the contract
3CCOUnt
(a) Work in progresscertified and
unit carries
output is
:
Rs. 80, normal-loss being 10%. Each
*
value of 25 paise. If
ts, the value of abnormal
uncertified loss wi Ibe
(b) Materials returned (a) 8.00
.25 (c) Rs. 8.75 v
(c) Cash received from contracteev (d) Rs. 8.88.
(d) Plant at site 6- $. er, the data in Q. 3.5 above, the
ormal cost of one unit is
(a) Rs. 0.25 (b) Rs. 1.78
Process Output and (c) Rs. 1.60 (d) Rs. 1.75 V.
Operating costings 7
A factory transferred out 8,800
completed units during Jan. 1997.
The type of process loss that s Opening stock was 400 units 75%
Ot
affect the cost of inventories i
completed and closing stock was 800
units 50% completed. Assuming FIFO
(a) abnormal loss V
(b)seasonal loss
s method, the equivalent production
during the period was
(c) normal loss
(d) standard loss
During Jan. 199%
s' <>
Marconi Ltd. had

(a) 8,900 units V
(c) 9,300 units
(c) 9,100 units
t otal manufacturing
...' cost of Rs.
(d) 9,500 units.
1,80,000. The business completed In a factory, the equivalent production
14,000 units of product of which 4,000 * (using FIFO method) was 7,500 units
units were half completed in Dec 1996 during a period which had 500 units
and started production on an additional
60% complete on hand at the start and
6,000 units that were half completed at
600 units 75% complete at the end of
the end of Jan. 1997. For Jan. 1997, that
the period. How many units were
production cost per unit was introduced during the period
(a) Rs. 18 (a) 6,750 (c) 7,050
(b) Rs. 12Y (b) 6,850V (d) 7.150
(c) Rs. 16.36 9 An under-statement of ending work-in
(d) Rs. 9
progress inventory will
Accounting entry for writing off the (a) understate cost of goods produced
cost of abnormal wastage in a process is (b) understate net profitv -
(c) overstate gross profit (a) Rs. 280 (c) Rs. 80%
(d) overstate current assets. (b) Rs. 200 (d) Rs. 360
10 An over-statement of beginning work- 17 Hopeless Company, which uses FIFO
in-progress inventory will method in process costing, began
(a) understate cost of goods sold the current year with 300 units 50%
(b) understate the profit. Y completed, transferred out 5,000
(c) overstate net profit completed units during the year and
(d) overstate gross profit. ended with 500 units 70% completed.
ll When units are lost at the end of the Equivalent production for the period
production process, the cost is charged WaS.
to -
(a) 5,000 (c) 5,200.
(a) factory overhead (6) 4,700 (d) 5,800.
(b) work-in-progress 18 Classification and accumulation of costs
(c) selling expense . by fixed and variable costs is of special
(d) completed unitsV importance in
12 The term Economic Batch Quantity is (a) process costing,
used in relation to: (c) operation costing
(a) Operating costing (b) unit costing
(b) Process costing (d) operating costing/
(c) Batch costingV (e) none of these.
(d) Unit costing. 19 Joint product manufacturing is
!3 An advantage of incorporating inter fundamental in
process profits in accounts is that i) automobile industry
(a) profitability of each process is ) oil refineries V
separately revealed V
(b) company can earn higher profits
29 (c) engineering company
(d) All of the above.
(c) it helps in the control of costs i 0 Individual products, each of a
- processes
- - NQ significant sales value, produced
14 lnput in a process is 4,000 units and simultaneously from the same raw
normal loss is 20%. When finished material, should be known as
output in the process is only 3240 units, (a) by-products
there is an (O) (b) joint products
(a) abnormal loss of 4 units (c) main products
(b) abnormal (d) common products.
(c) neither abnormal loss nor abnormal 21 Total manufacturing costs are divided
gain <\\*. by the total number of units produced to
iS In Q. 3.14 further assuming scrap value obtain a cost per unit under the
of loss is Rs. 5 per unit, the (a) average unit cost method
amount of sales from scrap is: (b) sales value method
(a) Rs. 3,800V. (c) physical unit measurement
(c) Rs.200 method. V.
(b) Rs. 4,000 22 Which of the following are virtually
(d) None of these. always subsequent costs
Further assuming (in Q. 3.14 and Q (a) raw material costs
3.15) that cost assigned to abnormal (b) selling and distribution cost.*
gain of 40 units is Rs. 280, the amount (c) direct labour costs
to be transferred to Costing Profit and (d) None of these
Loss Account is
Cost concept & Principles 77
23 When by-products are of Small total 29. Credit is given to the process account at
value, its accounting should be by a pre-determined value of the byproduct
(a) apportioning a part of joint cost to under the
by-products (a) Standard cost method V.
(b) realisable value of by-products (b) Reserve cost method
should be treated as miscullaneous (c) Opportunity cost method
income and transferrco to P & L A/cv. (e) Sales value method.
(c) realisable value of by-products 30 The primary purpose of apportioning
should be apportioned over the main joint costs of a processing centre to
products. various products produced is to
(d) Any of these (a) develop accurate processing cost
24- . Net realisable value of by-products at variances product-wise
the split off point should be calculated (b) report more correct standard product
by reverse cost method when costs for comparative analysis
(a) By products are of small total (c) establish cost assigned to
value unsold uni
(b) By-products are of considerable (d) record accurate cost of sales by
salcs value - -
prod #lines: *
(c) By-products require further (e e of the above

process-ing for their salev 31 $. he sales value method of
25 'Cost per unit is the average cost is O: portioning joint costs to various
applicable in Q products, the basis of apportionment is
(a) Job costing (a) Selling prices of each of joint
(b) Multiple costing -
products
(c) Operating costing (b) Selling price multiplied by units
(d) Contract costing
Trimmings in timber industry *N: \ be
sold of each of joint products.
(c) Sales value less subsequent
treated as a S production costs of individual products
(a) Waste (d) Any of the above. Y
(b) by-product. 32. A product which has practically no
(c) scrap V <> salcs or utility value is -
(d) joint product -

(a) WastcV
The method counting for joint (b) By product Scrap
product co t will produce the same (c) Scrap
gross profit rate for all the products is (d) Spoilage
(a) Sales value methodv 33 A bakery produces cakes, biscuits and
(b) Physical measure method bread. These products should be treated
3S
(c) Average unit cost method *
(d) All of these. (a) joint products

Which of the following methods of (b) co-productsv
accounting of by-products should be (c) by-products
applied when the by-product is to be (d) main products.
utilised in the undertaking itself as 34 A method of apportionment of joint
material for some other process 2 costs to various joint products on he
(a) Sales value method basis of their respective capacitics to
(b) Opportunity cost methodv bear joint costs is
(c) Other income method (a) sales value methodv
(d) Reverse cost method. (b) physical units methods
(c) average cost method (d) None of these.

(d) marginal cost and contribution Which of the following accounts make
method the cost ledger self-balancing?
35 -
Given: Input 1,000 units, Cost of (a) Overhead adjustment account

production-Rs 1,850, Normal loss 10% (b) Costing P. & L. account
of input, Actual loss 50 units, Scrap (c) Cost Ledger control accountv
value Rs 0.50 per unit. What is thc (d) None of the above.
abnormal loss/gain 2 Costing Profit and Loss account does
(a) 50 units abnormal gainv not record the
(6) 50 units abnormal loss (a) Salcs value of goods
(c) 100 units abnormal gain (b) balance of overhead adjustment
(d) 100 units abnormal loss aCCOunt
36 lm Q 3.35, what is the cost per unit? (c) balance of cost of sales account
(a) Rs. 2. 18 (c) Rs.2V (d) balance of stores ledger control
(b) Rs. 2.05 (d) Rs. 1.89 accounty. * ,
37 Output of a process was 2,500 units, The closing lange of cost of sales
normal loss is 10% of input and aCCOlunt is tr ed to
abnormal loss 200 units. How many (a) Cost le control account
units were introduced in the process? (b) Selling and distribution overhead
(a) 2,700 (c) 3,200 3CC
(b)3,000, (d)3,500 ting profit and loss account V

38 In Q 3.37, What is the quantity of total ases for special jobs is debited to
loss? ) Work-in-progress ledger control
(a) 270 units (c) 350 units Q accounty -
(b) 300 units (d) 500 units V (b) Cost ledger control account
When quantity sold is 18,000 units, (c) Stores ledger control account.
opening stock 2,000 units and clos Journal entry for recording sales in non
stock 3,000 units, what is the y integrated system is
produced ?
(a) 16,000 units
(b) 19,000 units v
28 (a) Dr. Cost Ledger Control Account
Cr. Costing Profit and Loss Accounty
(b) Dr. Cost of Sales Account Cr Sales
(c) 17,000 units (c) Dr. Selling and Distribution
40
(d) 20,000 units S. Overhead Account Cr. Sales
Journal entry for absorption of
covcring production overheads in non-integral
a distance of 100 km daily. What is the accounts is
number of passenger km. per day? (a) Dr. Production Overhead Account
(a) 5,000 (b) 300 Cr. Cost Ledger Control Account
(c) 15,000 V (d) 150 (b) Dr. Work-in-progress Control
Accounty
Cr. Production Overhead Account
COST BOOK-KEEPING (c). Dr. Overhead Adjustment
. Account
1 Cost and financial accounts are reconci
Cr. Production Overhead Account.
led under
(d) Dr. Production Overhead Account
(a) Integral system Cr. Work in progress Control Account
(b) Under both (a) and (6)
(c) Non-integral system V
8 Journal entry for the absorption of Cr. Cost ledger control account
selling and distribution overhead (c) Dr. Sundry creditors
account in non-integral accounts is: Cr. Costing Profit and loss account
(a) Dr. Cost of sales accounty (d) No entry is required V
Cr. Selling and distribution and What entry will be passed under
overhead account integrated system for purchase of stores
(b) Dr. Finished goods ledger control on credit 2
aCCQuilt *
(a) Dr. Purchases A/C

Cr. Selling and distribution overhead Cr. Creditors A/c
aCCOunt (b) Dr. Stores ledger control A/c/
(c) Dr. Cost ledger control account Cr. Creditors A/C
Cr. Selling and distribution overhead (c) Dr. Stores ledger control A/C
dCCQuilt Cr. General Ledger Adjustment A/c
(d) None of these. (d) None of these
9 Journal entry for Over-absorbed 14 What accounting entry under integrated
administrative overhead
control accounts is :
amoulit in system
crcditors
: for payment to
plies made?
(a) Dr. Costing profit and loss account (a) Dr. Creditors A/c Cr. Cash A/cv.
Cr. Cost ledger control account if Stores ledger control A/c
(b)
(b) Dr. Overhead adjustment account A/c
Cr. Administration overhead account r. Stores ledger control A/c
(c)
3CCOunt
Dr. Administration overhead C: General Ledger Adjustment A/c
(d) None of these
Cr. Overhead adjustment account
(d) No entry is required Y
o: What will be the accounting entry in
integrated accounts for absorption of
} () Journal entry for issuing
production (in control accounts) i
'' works overheads 2
(a) Dr. Work-in-progress control A/cv/
(a) Dr. Stores ledger control *
t Cr. Cr. Factory overhead control A/c
Cost ledger control accoun (b) Dr. Factory overhead A/c
(b) Dr. Cost ledger control account Cr. Factory overhead control A/c
Cr. Stores ledger controlcount (c) No entry is required.
(c) Dr. Work-in-progress control 16 The accounting entry in integrated
account Cr. ledger control accounts for recording salcs will be
accountv. (a) Dr. Cost ledger control A/c Cr.
(d) No ent equired. Profit and Loss A/c
11 Journal entry for payment of wages (in Dr. Sales A/c
control accounts) is : Cr. Profit and LOSS A/c
(a) Dr. Wages control account Cr. (c) Dr. Debtors or Cash A/c Cr-Sales
Cash A/cv/
(b) Dr. Wages control account. (d) None of these
Cr. Cost ledger control account V 17 Under integral system, the accounting
(c) Dr. Wages Cr. Cash entry for recording depreciation charges
(e) No entry is required on machinery will be
12 Payment to creditors for supplies made. (a) Dr. Depreciation A/c Cr.Machinery
Journal entry (in control accounts) will A/c
be -
(b) Dr. Factory overhead control A/c
(a) Dr. Sundry creditors Cr. Cash Cr. Machinery A/cv.
(b) Dr. Sundry creditors
(c) Dr. Factory overhead control A/c Cr. (a) Heavy donations
Cost ledger control A/c (b) Loss on the sale of fixed assets
| 8 Integral accounts eliminate the (c) Notional rentV.
necessity of operating (d) Interest on borrowed capital
(a) Cost Ledger Control accounty (e) all of these. .
(b) Stores Ledger control account. Which of the following items shall be
(c) Overhead adjustment account added to costing profit to arrive at
(d) All of these, financial profit 2
|9 Which of the following items is not (a) Under-absorption of works
included in cost accounts 2 overhead
(a) Interest received on bank deposits (b) Interest on debentures paid
(b) Debenture interest (c) Rent receivablev
(c) Dividend paid on share capital (d) Income tax paid
(d) Damages payable at law (e) All of the above
(e) All of these v. 27 Which of the following accounts will
Which of the following items is always have a debit balance?
included in cost accounts? (a) Overhead adjustment acCOllIlt
(a) Transfer to general reserve (b) work in Q (progressledger control
(b) Charitable donation accounty \
(c) Notional rentv/ (c) Cost ledger control account

(d) Rent receivable (d) Factory
overhead control account.
(c) Nonc of the above. 28 U ntegral system, accounting entry
When costing profit is Rs. 12,500 and a ccording return of material from
charge in lieu of rent is Rs. 1,000, the duction to stores department is .
financial profit should be a) Dr. Stores ledger control A/cv/
(a) Rs. 12,500 (b) Rs. 11,500 Cr. Work in progress control A/c
(c) Rs. 13,500 V
(b) Dr. Work in progress control A/c Cr.
When costing loss is Rs. 5 :) Stores ledger control A/c
administrative overhead al
-
(c) Dr. Stores ledger control A/c Cr.

being Rs. 400, the loss as per fi Cost ledger control A/c -
accounts should be (d) No entry is required

29
(a) Rs. 5,600 (b) Rs. 6,000% Under non-integral system, accounting
(c) Rs. 5,200 <> entry for recording abnormal wastage in
2 3.
-
Depreciation * is Rs. production is

12,5()() and in fi ' books is Rs. (a) Dr. Stores ledger control A/c
11,200. What will be the financial profit Cr. Work in progress ledger control
when costing profit is Rs. 5,000? A/c
(a) Rs. 5,000 (b) Rs. 3,700 (i) Dr. work in progress ledger control
(c) Rs. 6,300. Y A/c Cr. Costing P&L A/c
Profit as per financial books is Rs. (c) Dr. Costing P & L A/cv/
72,000. What will be the profit as per Cr. Work in progress ledger eontrol
costing books when selling and A/C
distribution expenses, actual as well as (d) No cntry -
predetermined, are Rs. 2,500 30 Under non-integral system, accounting

(a) Rs. 72,000 V (b) Rs. 70,500 entry for cash received from debtors is
(c) Rs. 69,500. (a) Dr. Cash A/c
25 Which of the following items is not Cr. Debtors A/c
included in financial books 2
(b) Dr. Cost ledger control A/c Cr. Cash (c) difference between planned and
A/c actual results
(c) Dr. Cash A/c (d) planning and control of future
Cr, Cost ledger control A/c activities V
(d) No entry. V The basic difference between a fixed
budget and a flexible budget is that a
BUDGETARY fixed budget -
(a) includes only fixed costs, and a

CONTROL flexible budget only variable costs
(b) is a budget for a single level of some
measure of activity, while a flexible
A budget that gives a summary of all
the functional budgets and projected budget consists of several budgets
Profit and Loss A/c is known as based on different activity levels v
(a) Capital budget (c) is concerned with future acquisition of
fixed assets, flexible budge is
(b) Flexible budget
(c) Master budgetv concerned
with sales.
* expenses that vary
(c) Discretionary budget
In flexible budgeting, (d) cannot be changed after a fiscal period
(a) statements included in the budget
be iss, while a flexible budget can be
report vary from period to period ed after a fiscal period begins.
(b) budget-standards may be adjusted at
7 budget for a specific activity level
will uring a year was Rs. 50,000, while
-
O actual costs for the same period was

(c) reporting dates vary according to the
activity level reported upon
(d) planned activity level is adjustedt
2% Rs. 45,000. Considering these facts, it
can be said that the plant manager has
actual activity level before the * done a better than expected job in
comparison report is prepared. controlling the costs if
The fixed-variable cost classification (a) the cost is variable and actual
has a special signifi C. in the production was 80% of budgeted
preparation of, production
''
(a) Flexible <>
(b) the cost is variable and actual
(b) Master '' production was 90% of budgeted
production
(c) Cash budge
(d) Capital (c) the cost is variable and actual
If a company wishes to establish a production equaled budgeted
factory overhead budget system in production. Y
which estimated costs can be derived The budget that is set first and all the
directly from estimates of activity other budgets are subordinate to it, is
levels, it should prepare a (a) Cash budget
(a) Flexible budgetv (b) Master budget
(b) Master budget (c) Capital expenditure budget
(c) Cash budget (d) Budget for the key factorv.
(d) Fixed budget (e) Sales budget
Of little or no relevance in evaluating The success of a flexible budget
the performance of an activity would be depends upon careful study and
(a) Flexible budget -
classification of expenses into:
(b) Fixed budget (a) historical and predetermined
(b) manufacturing, administrative and

Seiling
(c) fixed, variable and semi
STANDARD CONSTING
variable. Y & VARIANCE
10 One of the most important tools of cost
planning is ANALYSIS
(a) cost sheet (b) unit cost
(c) direct cost (d) budgetv 1 The cost of a product as determined
11 A ............... is a planned result that an under standard cost system is
enterprise aims to attain. * (a) fixed cost (c) direct cost
(a) Forecast (c) historical cost
(b) Budgetv (d) pre-determined cost, V
(c) Marginal cost - 2 In evaluating deviations of actual from
(d) None of these standard cost, the probable technique
12 A ............... is a prediction of what will used is
happen as a result of a given set of (a) variable regression
circumstances (b) trend analysis
(a) Forecastv (c) variance analysis'
(b) Budget (d) linear progression
(c) Marginal cost 3. The type of standard that is best suited
(d) None of these. from cost control point of views is
!3 A budget which lays more stress on (a) Theoretical standard
control aspect is a - -
Normal standard
(a) operating budget O (c) Expected standard V.
(b) responsibility budgetv (d) Basic standard.
(c) flexible budget @4. Which of the following standards can
(d) financial budget -
be attained under the most favourable
14 Which of the following is * conditions possible 2
long-term budget 2
(a) Sales budget
<8 (a) Theoretical standard V.
(b) Normal standard
(b) Cash budget (> (c) Expected standard
(c) Capital expenditure budgetv (d) Basic standard.
(d) Fixed budget ~\\ 5 One purpose of standard costs may be
} 5 A budget representing fixed assets described as -
expenditure during the budget period is (a) promoting and measuring perform
(a) Fixed budget" allCC -
(b) Capital expenditure budgetv (b) setting eost of manufacture

(c) Long term cash budget (c) controlling and reducing costs'
(d) Master budget (d) simplifying production operations.
A company using theoretical standards
in a standard cost system should expect
that *
(a) Most
unfavourablev
varianees
will be.
(b) employees will be strongly

motivated to attain the standards
(c) a large incentive bonus will be paid
(d) costs will be controlled better if (e) Rs. 100 (Unfavourable)

lower standards were used. 12 In standard costing, the material price
A company controls its production costs variance is obtained by multiplying the
by comparing its actual monthly (a) actual price by the difference
production cost with the expected between actual quantity purchased and
levels. Any significant deviations from standard quantity allowed
these expected levels are investigated (b) actual quantity consumed by the
and evaluated as a basis for corrective difference between actual price and
action. The quantitative technique that standard price.*
is most probably being used is (c) standard price by the difference
(a) time series or trend regression between standard quantity purchased
analysis and standard quantity allowed.
(b) differential calculus (d) standard quantity by the difference
(c) correlation analysis between actual price and standard price.
(d) standard cost variance analysis 13 If actual materistics is 900 units at Rs.
ln standard costing system, labour rate 8 per unit and sandard material, cost in
variance is obtained by multiplying the 1,000 units at Rs. 6 per unit, the
(a) actual rate by the difference between material cost variance is: *
actual hours and standard hours (a) R$2,400 (Favourable)

(b) actual hours by the difference "Rs.1200 (Favourable)
between actual rate and standard ratew Rs. 2,400 (Adverse)
(c) standard rate by the difference CRs 1,200 (Adverse) .
between standard hours and actual The material price variance in the above
hours.
Overhead cost variance is the differenc
& Q, 3.13 is:
(a) Rs, 600 (Favourable)
between (b) Rs. 1,800 (Adverse) v.
(a) Actual
overhead
overhead *
and
(c) Rs. 1,200 (Adverse)
(d) Rs. 2,400 (Favourable)
(b) Absorbed overhead
overhead
** geted 15 Material usage variance in the above Q.
3.13 is
(c) Absorbed overhead" and actual (a) Rs. 600 (Favourable)
overhead v (c) Rs. 1,800 (Favourable)
(d) Actual overhead and Standard . (b) Rs. 1,000 (Adverse)
overhead (d) Rs. 2,000 (Adverse)
If standard hours are 400 (a) Rs. 1 per 16 Which of the following variances arises
hour and actual hours are 380 (@ Rs. only when more than one material is
1.25 per hour, the labour rate variance used in the manufacture of a product ''
1S. (a) material price variance
(a) Rs. 20 (Favourable) (b) Material mix variancev.
(c) Rs. 100 (Adverse) (c) Material usage variance
(b) Rs. 25 (Favourable) (d) All of the above.
(d) Rs. 95 (Adverse). V. (e) Material yield variance
11 Labour efficiency variance in the above 17 Standard costing will produce the same
Q. 3.10 is financial statement results as actual or
(a) Rs. 20 (Favourable) V. conventional costing when standard
(b) Rs. 95 (Unfavourable) cost variances are distributed
(c) Rs. 25 (Favourable) (a) cost of goods sold
(d) None of these. (b) cost of goods sold and inventory
(c) Income or Expense account 25 The type of variance not computed for
(d) a balance sheet account. factory overhead is :
Material mix variance is a sub-variance (a) controllable
of -
(b) equivalent production v
(a) Matcrial cost variance (c) Volume
(b) Material price variance. (d) idle capacity.
(c) Material quantity variancev 26 Standard costing can be used along
(d) Material yield variance. -
with
| 9 Material cost variance is Rs. 550 (A) (a) Marginal costing
and material price variance Rs. 150 (F), (b) Job and process costing.
the material usage variance should be : (c) Absorption costing
(a) Rs. 400 (A) (c) Rs. 400 (F) (d) All of the above. V.
(b) Rs. 700 (A) v. (d) Rs. 700 (F) 27 Standard cost are useful in all of the
Overhcad Budget Variance is a sub following except:
variance of (a) reducing cost
(a) Overhead volume variance (b) speeding * of operating
(b) Overhead efficiency variance reports . *
(c) Overhead cost variancev (c) establishing records/
(d) None of these. (d) cos inventories,
Idle time a variance is a sub-variance 28 A nd of a financial year Hot Shot
of any had several substantial
lances from standard
(a) Overhead efficiency variance
(b) Labour cost variance
C.manufacturing costs. The one forvariable
which
(c) Labour time variance there is the strongest justification for
(d) Labour efficiency variance, v'. allocation between inventories and
Matcrial price variance is Rs. 300 eost of goods sold is the one attributable
material mix variance Rs. 150 (
material sub-usage variance i

>50
{0.
(a) additional costs of raw materials

(F). The material cost varian acquired under a speculative purchase
(a) Rs. 400 (A) V. COntraCl
(c) Rs. 500 (A) (b) a breakdown of equipment

(b) Rs. 450 (A) (c) increased labour rates won by the
(d) cannot be eo union as a result of strike during the
In Q, 3.22 abo e material quantity yearv
variance is (d) overestimates of production activity
(a) Rs. 50 (A) for the period rsulting from failure to
(b) Rs. 300 (A) predict an unusual decline in the market
(c) Rs. 100 (A) Y -
for the company's product. -
(d) Rs. 250 (A) 29 Controllable variances are best disposed

Overhead budget variance is Rs. 700 of by transferring to
(A), overhead efficiency variance is (a) cost of goods sold ,
Rs. 300 (F). What is the amount of (b) inventories of work-in-progress and
variable overhead cost variance 2 finished goods
(a) Rs. 1,000 (F) (c) cost of goods sold and inventories
(b) Rs. 400 (F) (d) Costing Profit and Loss A/cv.
(c) Rs. 400 (A) V. 30 Uncontrollable variances are best
(d) Rs. 1,000 (A) disposed of by transferring to
(a) cost of goods sold
(b) inventories of work-in-progress and Calendar variance is a sub-variance of

finished goods (a) Expenditure variance
(c)cost of goods sold and (6) Efficiency variance
inventories V (c) Variable overhead cost variance
(d) Costing Profit and Loss A/c (d) Volume variancev.
3| Overhead cost variance may be Total sales margin variance is the
analysed into difference between
(a) two variances (a) Actual profit and standard profit
(c) four variances (b) Actual profit and budgeted profitv/
(6) three variances (c) Actual Sales and budgeted sales
(d) any of the above. Y (d) None of these
Which of the following statement best 37 Which of the following variances is
explains the difference between always adverse
standard costing and budgetary control. (a) Sales margin mix variance.
(a) Budget is a projection of financial (b) Fixed over :* variance
accounts whereas standard cost is a (c) Calendar yariance . .
projection of cost accounts. (d) Idle tim ance V.

(b)Variances are analysed under (e) CS
standard costing but not under 38 WhiC the following variances is

budgetary control always favourable
erhead volume variances
(c) The budget,"as a statement of
expected costs, is used for forecasting
of finance, material and labour cost, etc,
c: Calendar variance
(c) Sales value mix variance
whereas standards tell what the cost (d) None of thesev.
should be if certain performances are
achieved. *
A& -
Sales volume variance is Rs 9,000 (F)

and sales value variance is Rs 5,000
*
(d) Budgetary control is more int (F). What is the sales price variance?
3 -
than standard costing.
Fixed overhead : e is
(a) Rs. 14,000 (F)
(b) Rs. 4,000 (F)
s the difference between (c) Rs. 4,000 (A) /
(a) Budgeted
overhead v
"' <> nd actual
40
(d) None of these
Fixed overhead cost variance is Rs
(b)
overhead
Standard
S
& and actual 2,200 (A), expenditure variance is Rs
200(A), Calendar variance Rs 500 (F).
(c) Absorbed ov erhead and budgeted What is the volume variance?
overhead (a) Rs. 2,700 (A):
(d) Absorbed overhead and standard (b) Rs 2,OOO (A) V.
overhead (c) Rs. 1,900 (A)
34 Variable overhead expenditure variance (d) Rs. 2,500 (F)
is the difference between 41 Given - Material 5 kg per unit of output
(a) Budgeted overhead and actual is allowed Standard price Rs 5 per kg,
overhead Actual price Rs 4.80 per kg. Actuai
(b) Standard overhead and actual material consumed 2,200 kg. Actual
overheadw output 400 units, What is the material
(c) Absorbed overhead and budgeted cost variance?
overhead (a) Rs.400(A)
(d) Absorbed overhead and standard (b) Rs. 560 (A) Y
overhead (c) Rs 560 (F)
(d) Rs. 400 (F) One of the primary differences between

42 What is the material price variance as
marginal costing and absorption costing
pcr Q. 3.41 ?
(a) Rs.400(F) is regarding the treatment of
(b) Rs 440 (F) V.
(a) direct materials
(c) Rs 400 (A)
(d) Rs 440 (A) (b) fixed overheads V
What is the material quantity variance (c) variable overheads
in Q 3,41 ?
(a) Rs'960(A) (d) prime cost.
(c) Rs 1,000 (A) V Contribution margin is also known as
(b) Rs.960(F)
(d) Rs 1,000 (F) (a) marginal incomew
44 Given : Standard wage rate Rs 4 per (c) net income
hour Standard hours Rs 15 per unit of
output Actual wage rate Rs 3.90 per
hour Actuai output 1,000 units Actual
(b) gross o -
hours 15,300 What is the labour

pre
(d) net
efficiency variance? * are

(a) Rs.330(A)
(a) Variable costs
(b) Rs 1,200 (A) Y
(c) Rs1,530(F)
(d) Rs 1,200 (F)
C. prime cost
45 What is the labour rate variance in

Q (c) fixed costs V.
Q.3.44% (d) overhead costs.
(a) Rs. 330 (A)
A costing method in which the fixed
(b) Rs. 1200 (F)
(c) Rs. 1530 (F)*
SS - factory overheads are added to
(d) Rs1200(A) S inventory valuation is
(a) Direct costing
MARGINAL COSTING -
(b) Marginal costing

& COT VOLUME
(c) Absorption costing V
PROFIT
Profit shown by absorption costing will
Product costs under marginal costing tend to exceed profit shown by marginal
include costing method if
(a) prinne costs only (a) units produced exceed units sold V.
(b) prime costs and variable (b)variable manufacturing COStS
overhead: decrease
(c) prime costs and fixed overhead. (c) units sold exceeds units produced
(d) material cost and variable overhead (d)fixed manufacturing costs decrease.
7 There will be no difference in profit as | () Under the marginal costing concept,

shown by marginal costing and that of unit product cost would most likely be
absorption costing when increased by
(a) opening and closing stock of (a) a decrease in the number of units
finished goods remain constant* produced
(b) closing Stock of finished goods is (b) an increase in the number of units
more than its opening stock produced
(c) opening stock of finished goods is (c) an increase in the commission paid
more than its closing stock to salesman for each unit sold Y
(d) none of the above (d) an increas * remaining useful

Absorption costing differs from life of fact achinery depreciated
marginal costing in the on writt down value method.
(a) fact that standard costs can be used 11 margin is equal to
with absorption costing but not with &Sai esFixed costProfit
marginal costing O ) Profit + Variable cost
(b) amount of fixed costs that will be (c) Fixed costLoss. Y
*s:
incurred Profit/Volume ratio is an indicator of
(c) kinds of activities for (a) the volume of sales

can be used & (b) the volume of profit
(d) amount of costs ned to (c) the rate at which goods are sold
individual units of products (d) the rate of profity
unders"
Reporting costing is (e) Ail of these,
* I3 When fixed cost is Rs. 10,000 and P/V
(a) eliminating the work-in progress ratio is 50%, the break-even point will
inventory account be
(b) including only variable costs in (a) Rs. 20,000Y

income statement (c) Rs. 50,000
(c) matching variable costs against (6) Rs. 40,000

revenue and treating fixed costs as (d) None of these
period costsY 14 When fixed cost is Rs. 7,000, profit
(d) treating all costs as period costs. Rs. 3,000 and sales Rs.50,000, the P/V
ratio will be
Cost Concept & Principles - - 288
(a) 14% - - 19- As part of the data presented in support
(b) 20%Y - of a proposal to increase the production
(c) 25% of car radios, the sales manager of XYZ
(d) P/V ratio cannot be computed Electronics reported the total additional
from the data given COS! required for the proposed increased
| 5- . When P/V ratio is 40% and sales value level of production. The increase in
Rs, 10,000, the variable cost will be total cost is known as: .
(a) Rs. 4,000 (a) opportunity cost

(b) Rs. 6,000 V - - (b) controllable cost
(c) Rs. 10,000 - (c) out-of-pocket cost
(d) Variable cost cannot be calculated (d) differen'. v
from the data given. 20- Alto Pa &mpany has temporary

16 If net profit is 10% and P/V ratio is UIlli roduction capacity. The idle
50%, the margin of safety will be - facilities can be used to
(a) 10% (b) 20%v/ 8: a low margin item. The
(c) 50% low margin item should be produced, if

(d) margin of safety cannot b it can sold for more then its:
computed Q (a) fixed costs (b) prime costs

The margin of safety may be & ed (c)variable costs V (d) indirect costs.
by 21- Cost- volume-profit analysis is most
(a) increasing sales vo " important for the detennination of the
(b) increasing selli Ce (a) volume of operations necessary to
(c) lowering V le cost break-even -
(d) COSIS (b) variable-revenues necessary to equal

(e) All of these. Y fixed costs
18 An item whose entire amount is usually (c) relationship between revenues and
a differential cost is costs at various level of operationsv.
(a) factory overhead (d) sales revenue necessary to equal
(b) direct costv - fixed costs.
(c) period cost 22- The alternative that would decrease the
(d) conversion cost contribution margin per unit the most is

a 20%
(a) decrease in selling pricev (a) indeterminate (c) higher
(b) increase in selling price (b) unchanged Y (d) lower
(c) increase in variable costs When margin of safety is 20% and
(d) decrease in variable cost contribution sales ratio is 60% the
23- . When referring to margin of safety, one profit will be
has the following in mind: (a) 30% - (d) 12%."
(a) the excess of budgeted or actual (c) 33 1/3%
sales over fixed costs (d) cannot be computed.
(b) the excess of actual sales over 28 When fixed cost is Rs.20,000 and
break-even sales V margin of safety is Rs. 10,000, the P/V
(c) the excess of actual sales over ratio will be:
budgeted sales (a) 200%\" <>
(b) 33.3%
(d) the excess of sales revenue over
variable cost
s nnot be computed Y
24 The conventional break-even analysis #9 hen sales jumped from Rs. 3,00,000
does not assume that to Rs.4,00,000 and profit increased by
(a) selling price per unit will
fixed
*
SQ
Rs. 40,000, the PAV-atio is:
(a) 7.5% (c) 40%v/
(b) total fixed costs remain th * (b) 10%

(c) variable cost per unit ryx' (d) cannot be computed
(d) productivity '' will remain 30 When total fixed cost is RS. 50,000 and
unchanged. variable cost to sales is 75%, the break

If fixed cos rease while variable even point is:
cost per unit remain constant, the new (a) Rs. 37,500
break-even point in relation to the old (c) Rs. 2,00,000 V
break-even point will be (b) Rs. 12.500
(a) indeterminate (c) higher (d) cannot be determined
(b) unchanged (d) lowerV 31 On Sales of Rs.2,00,000, fixed cost is

26 If fixed costs decrease while the Rs. 30,000 and P/V ratio is 40% What
variable cost per unit remain constant, is the profit? -
the new contribution margin in relation (a) Rs. 50,000 V

to old contribution margin will be
90
Cost Concept & Principles
(c) Rs. 12,000 (a) 20% decrease in fixed cost
(6) Rs. 80,000 (b) 20% increase in selling pricev
- (d) None of these (c) 20% decrease in variable cost.
Woody Company, which manufactures
AWhen sales are Rs. 80,000 and P/V ratio Sneakers, has enough idle capacity
is 80%, the amount Qf variable cost is available to accept a special order of
(a) Rs. 64,000 20,000 pairs of sneakers al Rs.6 per
(b) Rs. 48,000 pair. The normal selling price is Rs.10

(c) Rs. 16,000v. per pair. Variable manufacturing costs
(d) cannot be known. are Rs.4.50 a pair and fixed
In order to earn a profit of Rs. 10,000, manufacturing& Rs. 1.50 a pair.
when fixed cost is Rs. 20,000 and Woody w8. incur any selling
P/V ratio 20%, the amount of Sales expe sa result of the special order.
should be be the effect on operating
(a) Rs. 40,000 Gy ome if special order could be
(b) Rs. 1,00,000 accepted without affecting normal
(c) Rs. 30,000 sales?
39
(d) Rs. 1,50,000 v.
When profit changes by Rs.

-
*GS (a) Nil

(b) Rs. 90,000 increase
sales changes by Rs. 25,000,\the Pv (c) Rs. 30,000 increasev.
ratio is (d) Rs. 1,20,000 increase
(a) 20% (b) 2
*************
(c) 80% v.
(d) Cannot *
4() When sales volume increases
(a) break-even point increases

(b) total loss will increase
(c) total profit will increasev.
41 Which of the following would cause the
greatest increase in the unit contribution
margin
Cost Accounting () |
(d) Category of goods

The process cost system, the unit cost in
Cost Accounting computed for a:
(a) Normal costing. Y
(c) Standard costing,
(A) (b) Actual costing
(d) Product costing.
1. The cost of goods manufactured, under a 7. Which of the following is a cost behavior
periodic cost accumlation system, is oriented approach to product cosling
equal to the: (a) Absorption costing.
(a) Beginning finished goods inventory plus (b) Process costing. .
purchases. (c) Direct costing
(b) Beginning work-in-process plus cost of (d) job order costing -
goods in process during the year. Because the unit cost of a product cannot be
(c) Cost of goods put into production plus determined until-the end of the period.
beginning work-in-process less ending periodic Co. ccumulation Systems
work-in-process. Y generally record only:
(d) Cost of goods sold less beginning work (a) Standar Sts. {\ } Process costs.
in-process. (d) Actual costs. Y
(b) N
2 The cost of goods sold under a periodic cost
accumulation system is equal to the:
). '' the following is not an example
f\l hormally issued external financial
(a) Cost of goods available for sale less alleinent'?
cnding finished goods inventory. Y O (a) Statement of financial position.
(b) Cost of goods available for sale plus (b) Statemelit of results of operations.
beginning finished goods inventory. (c) Statement of performance evaluation V
(c) Cost of goods manufactured (d) Statement of retained earnings.
beginning finished goods
(d) Cost of goods
9
': less
-
] (). The amount of cost of goods manufactured
appearing on the bottom of the cost of
beginning finished goods inve -
goods manufactured Statement also appears

Under a perpetual cost cumulation on the:
system, the cost of dircct
(a) Statement of financial position.
labor, and factory '" must first flow
(b) Statement of results of operations. Y
through the: \ (c) Statement of performance evaluation.
(a) Finished go COllnt.
(d) Statement of retained earnings.
(b) Continuou cessing is performe(d) | |. Sparking Seltzer, In(c) bottled 200,000
(e)Homogeneous products are produce(d)Y gallons of Seltzer water at a total cost of
(d) Customized products are produce(d) $56,000. Assuming that 75% of the bottled
A job order cost accumulation system is seltzer is sold, what is the unit cost of the
most suitable where: seltzer and the total cost of the ending
(a) Mass production techniques are use(d) finished goods inventory, respectively?
(b) Continuous processing is performe(d) (a) S.07 per quart: S 14,000
(e) Homogeneous products are produced (b) S.28 per gallon: $42,000
(d) Customized products are produce(d)Y (c) S.28 per gallon; S 12,000Y
5 In a process cost system, the unit cost is (d) S.07 per quart: $42,000
computed for a: 12. Lehmann Manufacturing Corporation has
(a) Job the following information for the period
(c) Batch of goods just completed:
(b) Department. Y Direct materials $65,000
Cost Accounting 92
Direct labor 74,000 predetermined factory overhead application

Factory overhead 2 rate is multiplied by the actual input of a
Beginning work-in-process inventory given perio(d) The management of Balance
31,000 - -
Sneaker Company charges factory overhead
Ending work-in-process inventory in this manner to avoid fluctuations in the
37,680 unit cost of goods produced that would
Beginning finished goods inventory result if factory overhead was charged to
_46,000 work-in-process as it was incurre(d)
Ending finished goods inventory 22,000 Balance Sneaker Company uses:
Additional information: Last year total (a) Normal costing
operating costs were $256,000. This year's (b) Actual costing
total operating costs, of which 18% (c) Standard costing.
- constitute selling, general, and (d) Absorption costing.
administrative expenses, are $30,000 lower . Which statement, if any, is incorrect?
than last year's what amount represents (a) Direct costing is a behavior-oriented .
factory overhead? approach because *: costs are all
(a) $29,000v
(b) $34,300
(c) $47,000
(d) $53,600 a
variable by
direct

ions
rela
direct costing and
ip between cost and
. The accumulation of total costs and the output can be maintain.
computation of unit costs are the primary (b) Both direct and absorption costing
objectives of: methods are suitable for use in a job order
(a) A perpetual cost accumulation system. cost system or in a process cost system.
(b) A periodic cost accumulation system. ( 'For purposes of external financial
(c) Both a periodic and a perpetual cost absorption costing must be use(d)
accumulation system. Y d) ignore the questions wording. All
(d) A job order cost accumulation system. statements are correct. Y
e. Neither a periodic nor a perpetual Lloyed Company has just contracted to sell
accumulation system. 1,000 units of product X to Epson
14, Hogan Manufacturing Company 3. Company for a 125 profit over estimated
process cost system. During eriod cost. Lloyed Company most likely uses a:
$139,000 worth of produced ds were (a) 12% profit over estimated cost, Lloyed
transferred to finished goods inventory. Company most likely uses a: Y
Additional information: (b) Job order cost system.
Beginning finished inventory $ (c) Process cost system.
14,000 ... "
(d) System that cannot be determined from
Ending finished goods inventory $ the information given.
18,000 , Jerry's Pretzel Company uses a process cost
Total cost of operation _ $ 164,000 system. The pretzel products are completed
Selling, general and administrative after they have been through each of Jerrys
expenses $12,000 three manufacturing departments. This
What is Hogan Manufacturing Companys month's departmental unit cost information
cost of goods manufactured? follows: -
(a) $157,000 (c) $138,000 Department l $.14

(b) $139,000v (d) $152,000 Department 2 _ $.39
I5. Balance Sneaker Company charges factory Department 3 $0.9
overhead to work-in-process inventory on Production for the month was 10,000
the basis of a predetermined factory packages of pretzels. During the month,
overhead application rate. To do this, the Jerry's Pretzel Company incurred $500 of
Cost Accounting . 93
selling and administrative expenses. What (d) Materials requisition form.

is the total unit cost of a pretzel package? Which of the following forms must be filled .
(a) $.2] (c) $.67 out when inventory is to be removed from
(b) $.62v (d) $.57 the materials inventory to be placed into
19. Internal reports: production?
(a) May as a basis of valuation use any (a) Purchase order,
monetary or physical measurement basis. (b) Receiving report.
(b) must adhere to generally accepted (c) Purchase requisition.
accounting principles. - (d) Materials requisition form. Y
(c) Usually adopt a company-wide Under a periodic inventory system, the
perspective. purchase of materials is recorded in an
(d) Are directly regulate(d) account entitled:
. The following data relate to Lendl (a) Cost of Goods Sol(d)
Manufacturing Company for the period: (b) Purchases of Materials. v.
Direct labor $ 2.400 (c) Materials in
Factory overhead 1,700 (d) Work-in- cess Inventory. -
Work-in-process inventory at beginning of 5. Under a perpetual inventory system, the

period 11,000 * materials is recorded in an
Work-in-process inventory at end of period
' ' titled:
5,000 &
(a t of Goods Sol(d)
Cost of goods manufactured 16,000 of Raw Materials.
Sales 50,000 -
Q: Materials inventoryv
Opening finished goods inventory 9,000 (d) Work-in-Process inventory.
Closing finished goods inventory 8,000 6. The total of the materials subsidiary ledger
Total selling, general, and administrati inventory card must be equal to the annount
costs 14,000 5
What is the cost of direct materials put into
in the following account:
(a) Cost of Goods Sol(d)
production the period? By
will retained earnings *
'' (assuming
(b) Purchases of Raw Matcrials.
(c) Materials Inventory V.
no taxes or dividends)? (d) Work-in-Process inventory,
(a) $7.700: S 14,000 Which of the following is usually prepared
(b) $4,800; $ daily by employees for each job worked
(c) $5,600, On?
(d) $5,900; $19,000 v (a) Labor job ticket. Y.
(b) Time car(d)
(B) (c) Administrative expense
A written order sent to inform the
(d) cost Control Car(d)
purchasing department of a need for
Factory worker fringe benefit costs are
materials is called a:
usually charged to: -
(a) Purchase order. (a) Work-in-process inventory

(b) Receiving report. (b) Direct labor.
(e) Purchase requisition. V. (c) Administrative expense.
(d) Materials requisition form. (d) Factory overhead Y
2. A written request to a supplier for specified 9. Vacation pay for factory workers should he
goods at an agreed-upon price is called a: charged to:
(a) Purchase order. Y (a) Work-in-process inventory
(b) Receiving report. (b) Dircct labor.
(c) Purchase requisition. (c) Administrative expense.
Cost Accounting 94
(d) Factory overhead Items 13, 8% of all items = 75% of usage

1 (). The cost of idle time incurred by employees cost = A items
that is considered normal for the production. Items 46, 30% of all items = 22% of usage
process should be charged to: cost = B items
(a) Work-in-process inventory Items 79, 62% of all items = 3% of usage
(b) Direct labor. cost = C items
(c) Administrative expense. Items under the A classification should
(d) Factory overhead Y. have all the following control
| |. Which statement is correct? characteristics except for:
(a) for purposes of internal control, the (a) Frequent review.
quantity ordered should not be shown on (b) Detailed records.
the copy of the purchase order sent to the (c) A large quantity of safety stock. Y
receiving department. Y (d) Upper-level supervision.
(b) Three copies of a purchase requisition 15 . Which statement is correct?
are customarily made; the original is for the (a) Vacation ' uld be charged to
purchasing department and a copy goes to #" n an employee is on
both the storeroom clerk and the receiving VCatln.
department. . (b) Acco'ng for holiday pay is handled
(c) For purposes of internal control, the h's way as vacation pay.Y
IIl filll
three
receiving
documentspurchase
report, and
order,
vendor's
(c) ' salaried employee, vacation pay,
holiday pay, and overtime pay should be
invoiceshould be matched and approved over periods of productive labor
by someone who regularly handles one of
these documents.
(d)d charged to factory overhead control.
Because of appreciable increases in
(d) A materials requisition form is
another name for a purchase requi
*
ition
payroll fringe benefit costs, many
companies have changed their treatment of
form. these costs and now charge them to factory
. Jason company accounts for rials overhead control.
issued to production throu eriodic 16. The Lemon Car Company operates two
inventory system. If Jason had shifts. The companys day shift pay rate is
materials available of $30,000, $5.00 per hour and the night shift pay rate
purchases of $16.000,\and an ending is $5.50 for the same work ($50 more per
matcrials inventory ed on a physical hour). Which entry is appropriate for a
count) of $9,0 what is the cost of night shift worker who puts in 35 hours?
materials issued? (a) Work-in-process inventory _ 175.00
(a) $37,000 (c) $5,000 Work-in-process inventory-shift premium
(b) S23,000 (d) $21,000v __ 17.50
13. An inventory control procedure in which a Payroll payable _ 192.50
review of materials on hand is made on a (b) Work-in-process inventory _ 192.50
regular and periodic basis (Such as a review Payroll payable _ 192.50
every 30 days) is known as the: (c) Work-in-process inventory_175.00
(a) ABC plan. Loss from shift premium _ 17.50
(b) Order cycling metho(d) Payroll payable _ 192.50
(c) Automatic order system. (d) Work-in-process inventory _ 175.00
(d) Min-max metho(d) Factory overhead controlshift premium
. The following analysis was prepared by _ 17.50Y
Logic, Inc, using the ABC plan: Payroll payable _ 192.50
Cost Accounting 95
17. Idle time that results from negligence or replacement cost of $10. It sells for $30
inefficiency should: with a disposal cost of $3 and a normal
(a) Be accounted for in a manner similar to profit of $12. Which of the following
overtime premium that resulted from poor statement is not true?
workmanship. v. (a) The cost of goods sold of the following
(b) Be accounted for in the same manner as year will bc understate(d)
idlc time that is normal (cannot be avoided) (b) The current year's income in
for a production process. understate(d)
(c) Be charged to administrative expense. (c) The ending inventory of the current year
(d) Be accounted for in a manner similar to is understate(d)
overtime premium that resulted from the (d) Income of the following year will be
requirements of a specific jo(b) understated Y
. Meat Cutters Corp., according to the law, 22. Which of the following statement is true in
withholds two items from their employees applying the lower-of cost-or-market rule to
earnings: income taxes (federal, state, and work in process inventory?
local) and social security taxes as per the (a) This categor's an exception, and the
Federal Insurance contributions Act. Last rule does not apply.
week thesc items amounted to $12,800 and (b) The cos' completing the inventory is
$3,988, respectively. Last weeks gross added to the cost of disposal, and both are
payroll amounted to $64,000. Meat Cutters deducteghom
Corp pays federal unemployment taxes at a the estimated sales price
realizable value. Y
rate of .8% on gross payroll, pays state , arket value can not ordinarily
unemployment taxes at 1.6%; and ermine(d)
contributors to the employee's pension fund d) Equivalent production is multipated by
at a rate of 7%. What is the combined 2) the sales price.
*
of employer taxes and fringe benefit
for last week?
23. The method of inventory costing which
most nearly approximates the actual flow of
(a) $14,612 (c) *9 costs and units in most manufacturing
(b) $26,792 (d) $6,01 situations is:
Questions 3-19 and 3-20 are e n the (a) Average
following information: (b) First-in-First-outv.
Mitmakers Co. pays their cmployces on a (c) Last-in, First-out;
combined minimum piecework rate (d) Standard -
plan. the minimum guaranteed daily wage 24. If a unit of inventory has declined in value
is $55. Any who produces more
that 20 baseball mitts receives a bonus.
below original cost but the market value,
exceeds net realizable value the amount to
19. yesterday, Mr. Fabor produced 23 mitts. be used for purposes of inventory valuation
What amount should be charged to factory 1S.
over-head control? (a) Net realizable valuev

(a) 0Y (c) $55.00 (b) Original cost;
(b) $8.25 (d) $63.25 (c) Market value;
20. Yesterday Mr. Jackson produced 7 mitts. (d) Net realizable value less normal profit
What annount should be charged to work margin.
in-process inventory? 25. When evaluating materials inventory at cost
(a) 0 (c) $35,75 or market, which ever is lower, the term
(b) $19.25 V (d) $55.00 market means:
21. An item of inventory purchased this period (a) Net realizable value;
for $15 has been written down to its current
*
Cost Accounting 96
(b) Net realizable value less a normal profit 3(). Expected annual usage of materials is
margin: 2,00,000 units, and the economic order
(c) Replacement costv quantity is 10,000 units. The invoice cost of
(d) Discounted present value. each unit is $500, and the cost to place one
20. Which statement is not valid as it applies to purchase order is $80, the average
inventory costing methods? inventory is: * -
(a) If inventory quantities are to be (a) 1,000,000 units:

maintained, part of the carnings must be (b) 5,000 units; V
invested (plowed back) in inventories when (c) 10,000 units,
fifo is used during a period of rising prices. (d) 7,500 units.
(b) Lifo tends to Smooth out thc income 3 f. Based on the information in (a), the
pattern, since it matches the current cost of estimated annual order cost is:
goods sold with current revenue, and (a) $16,000; V
inventories remain at constant quantities, (b) $100,000
(c) When a firm using the lifo method fails (c) $32,000
to maintain its usual inventory position (d) $50,000.
(reduces lock on hand below customary
levels), there may be a matching of old
32 . A Sales
probabilities
office
for Qi
developed
sates of perishable
the
costs with current revcnuc; product. N

(d) Unlike lifo, the use of fifo permits some l)aily Sale Probabilities
control by management over the amount of 100 units
income for a period through controlled 15()
purchases. Y
27. If inventory levels are stable or increasing,
an argument which is not in favor of the lifo 39
#S |
1. ()
*~m
method as compared to fifo is: The product is restocked at the start of each
(a) Income tax tends to be reduced i
periods of rising prices:
* day. If the company desires a 90%
probability of satisfying sales demand, the
(b) Cost of goods sold tends to be initial stock balance for each day should be:
approximately current cost in the Income (a) 250, (b) 160;
Slaltelllel' (, (c) 200; V (d) [50.
(c) Cost assignments typica ly <>parallel the 33. Stewart Company has developed an
physical flow of goods: V. Inventory model for Product A and needs a
(d) Income tends to be sh" 3thed as prices solution for minimizing the total annual
change over a perio ime. inventory cost, Included in A's inventory
8. An inventory costing procedure in which cost are the costs of holding, ordering and
the oldest costs incurred rarely have in receiving, and incurring Stockouts. The
cffect on the ending inventory is: solution for minimizing inventory cost
(a) Fifo Y (b) Lifo: would state:
(c) Conventioinal retail; (d) Average (a) At what inventory level and how many
29). A companys inventory cost on its balance units to recorder;Y. -
sheet was lower using fifo than lifo. (b) Either at what inventory level or how
Assuming no beginning inventory, the inany units to recorder;
direction of movement of the cost of (c) How many units but not at what
purchases during the period was: inventory level to recorder;
(a) Up: (b) Down V (d) At what inventory level but not how
(c) Steady, (d) Undcterminable. many units to recorder.
Cost Accounting - 97
34. A company's treasurer complains about an unit in stock if the cost placing an order
excessive investment in inventories. At the increases by 20%, the annual cost of
same time, the purchasing agent states that carrying one unit in stock increases by
large inventory balances are necessary to 25%, and all other considerations remain
take advantage of supplier discounts, and constant, the economic order quantity will:
the production manager complains that (a) Remain unchanged;
production often is delayed by inventory (b) Decrease; Y
shortages. The quantitative technique most (c) Increase;
relevant to this situation is: (d) Either increase or decrease depending
(a) Economic order quantity models;Y. on the order point.
(b) Linear programming; 38. The basic EOQ model assumes demand is
(c) Payback analysis, determinable and the essence of the model
(d) Probability analysis, is:
35. A company places orders for a certain item (a) To minimize ordering cost or carrying
for which the order size is determined in cost and maxi he rate of inventory
advance, using the EOQ formul(a) All turnOVer: ":
orders are the same size. When the policy is (b) To minimize ordering cost r carrying
implemented, demand per period is only cost, whichever is higher;
one half of the expected demand when (c) To sufficient quantity to meet the
order size was compute(d) Consequently,
the actual total inventory cost will be:
# d's demand economically;
( minimize the total order cost and
(a) Larger than if the expected demand per ing cost. Y
period has occurred, and larger than if the computing economic order quantity, a
actual demand per period has been used to lifo or fifo inventory method will have the
calculate order size, Y following result;
(b) Larger than if the expected demand pe (a) No effectw
period had occurred, and smaller th mit the (b) Lifo will increase the order quantity in
actual demand per period had been used to times of rising prices,
calculate order size, * (c) Lifo will reduce the order quantity in
(c) Smaller than if the expe emand per times of rising prices;
period had occurred, the larger than if the (d) Fifo will increase the order quantity in
actual demand per pe
calculate order size:
been used to times of rising prices.
40. A company has correctly computed its
(d) Smaller than i expected demand per economic order quantity as 500 units.
period had occurred, and smaller than if the However, management feels it would rather
actual demand per period had been used to order in quantities of 600 units; The
caleulate order size. - - companys total annual ordering cost and
36. Ignoring safety stocks, a valid computation total annual carrying cost for an order
of the order points is: quantity of 600 units compared to the
(a) The economic order quantity; - respective amounts for an order quantity of
(b) The economic order quantity multiplied 500 units would be:
by the anticipated demand during the lead (a) A higher ordering cost and higher
time, - carrying cost,
(c) The square root to the anticipated (b) A lower ordering cost and a lower
demand during the lead time.* carrying cost;
37. For its economic order quantity model, a (c) A higher ordering cost and a lower
company has a cost of $10 for placing an carrying cost;
order and an annual cost $2 carrying one
Cost Accounting 98
(d) A lower ordering cost and a higher on the basis of a budgeted volume of
canying cost. Y 100.00() direct babor hours. At the end of
the period, the Factory Overhead Control
account for Department A had a balance of
(C) $270,000; actual direct labor hours were
105.00(). What was the over or
Depreciation based on the number of units underapplied overhead for the period?
produced would be classified as what type (a) $2,250, overapplied
of cost''
(b) $2,250, underapplied V
(a) Out-of-pocket (c) Variablev (c) $15,000, overapplied
(b) Marginal (d) Fixed (d) $15,000, underapplicd
2 The variable factory overhead application (1. Factory overhead application rates best
rule under the normal, practical, and reflect anticipated fluctuations in sales over
expected activity levels would be the same: several years when the rates are computed
(a) Except for normal volume. using figures based on:
(b) Except for practical capacity.
(c) Except for expected activity.
(a) Maximum
(b) Normal ca
)

(d) For all three activity levels.Y '
(c) Practical y
3. Cox Company found that the differences in
product costs, resulting from the application
:
(d)
hderapplied factory overhead
of predetermined overhead rates rather than resulting's from significant unanticipated
actual overhead ratcS, WCI te
immaterial--even through actual

price) creases should be written off by:
ecreasing cost of good sol(d)
production was substantially less than
planned production. The most likely
& Increasing cost of goods sol(d)
(c) Decreasing cost of goods sold, work-in
explanation is that: process inventory, and finished goods
(a) Overhead was composed she's inventory.
variable costs. Y
(d) Increasing cost of goods sold, work-in
(b) Several products WCre ed
process inventory, and finished goods
simultaneously. inventory. Y
(c) Fixed factory oveled W&1S at
in order to identify costs that relate to a
signification cost. <>
specific product, an allocation base should
(d) Costs of over itcms were he chosen that:
substantially higher 1 ticipate(d) (a) Does not have a cause and effect
lf a predetermin erhead rate is not
relationship.
cmployed and the volume of production is (b) las a cause and effect relationship V
increased over the level planned, the cost (c) Considers variable costs but not fixed
per unit would be expected to: costs.
(a) decrease for fixed costs and remain (d) Considers direct matcrials and direct
unchanged for variable costs. Y labor but not factory overhea(d)
(b) Remain unchanged for fixed costs and The only method of allocating service
increase for variable costs.
department costs to producing departments
(c) Decrease for fixed costs and increase for that considers reciprocal services is called
Variable costs. thc:
(d) Increase for fixed costs and increase for (a) Direct method
Variable costs.
(b) Out-of-step method
The Carlo company budgeted overhead at (b) Step method
S255,000 for the period for Department A, (c) Algebraic method Y
Cost Accounting 99
10. In the determination of factory overhead (d) Long-run productive capacity eliminates
application rates, the numerator of the the possibility of manipulating unit product
formula is the: cost by deliberately varying production
(a) Actual factory overhead for the next levclS,
period 14. Lens Crafting Manufactures makes eyewear
(b) Estimated factory overhead for the next products and Various accessories for those
periodv products, ranging from conservative glasses
(c) Actual labor hours for the next period to trendy eye-coloring contacts and
(d) Estimatcd labor hours for the next prescription sports goggles. To manufacture
period such products. Lens Crafting Manufactures
Which productive capacity level does not : relies on competent personnel, from the
consider product demand, but at the same medical eye specialist staff right on down
time accounts for anticipated and on the college student help. Of course, Lens
unavoidable interruptions in production? Crafting manufacturers makes use of the
(a) Short-run productive capacity latest in technological machinery and
(b) Normal productive capacity equipment. Whi the following bases
(c) Theoretical productive capacity would be mo ropriate for computing
(d) Realistic productive capacity V Lens Crafting Manufactures factory
Expected productive capacity for the
current year is 175,000 units. Management
expects production of 208,000 units in the
following year. Fixed factory overhead ircct labor hours V
costs are $18,000. If the factory overhead Machine hours
application rate, under expected productive J & J Company budgeted total variable
capacity, is $2.08, what is the variable overhead costs at $180,000 for the current
factory overhead cost per units? perio(d) In addition, they budgeted costs for
(a) $1.03
(b) $1.05 V.
(c) $1.17
(d) S1.21
SQ factory rent at $215,000, costs for
depreciation on office equipment at
. Which Statement
capacity is incorrect?
regarding *. $12,000, costs for office rent at $92,000,
and costs for depreciation of factory
(a) A main drawback of expected equipment at $38,000. All these costs were
productive capacity ts ability to based upon estimated machine hours of
exaggerate the effect usiness cycles. 80,000. At the end of the period, the
(b) Excess ''
should be charge
a product cost that
a loss account to alert
Factory Overhead Control account had a
balance of $387,690. Actual machine hours
management that something must be done were 74,000. What was the Over-or
to reduce existing facilities that are in underapplied factory overhead for the
excess of what the sales department could period?
ever hope to sell in the long run. Y (a) $12,650 overapplied
(c) When a company that has huge physical (b) $12,650 underapplied
capacity uses expected productive capacity, (c) $108,850 overapplicd
it is possible that low product demand could (d) $108,850 underapplied
lead to fewer products being made, which 16. When the planned activity level used to
would causc the unit cost of production to calculate the predetermined factory
increase. Such an increase could lead to a overhead application rate differs from the
corresponding increase in sales price which actual level achieved for the period, the
would further diminish product deman(d) result is a:
(a) Denominator variance. Y
Cost Accounting 100
(b) Efficiency variance. approximate what they would have been if

(c) Controllable variance. the correct application rate had been used
(d) Underapplication of fixed factory (c) In order to prorate the over application
overhea(d) of factory overhead, cost of goods sold
. Slam Dunk Basketball company has the would be increased Y
following information relating to the (d) Significant differences between applied
current perio(d) |
and actual factory overhead should be
Units sold 100,000 prorated to work-in-process inventory,
Units in finished goods inventory 70,000 finished goods inventory, and cost of goods
Units in work-in-process inventory sold, in proportion to the unadjusted factory
3(),000 overhead balance in each of those accounts.
Materials inventory 50,000 The following information relates to
Additionally, factory overhead control was questions 19 and 20:
chargcd during the period for $325,000 and Service departments (total estimated costs):
factory overhead applied was $375,000. Building and ground maintenance
(The difference is considered significant.) $21,960.40 *
Which of the following entries is the correct Storeroom - 15, 00
manner to account for the difference Producing de ments (estimated factory
between applied and actual factory overhead s):
overhead? Machi 42,000.00
(a) Overapplied factory overhead
Cost of goods sold 50,000
50,000 #:
,
_51,000.00
(b) Cost of goods sold 20,000 Q- Estimated Estimated Number

Finished goods inventory 14,000 Direct Square of .
Work-in-process inventory 6,000 ILabor Feet Requisit
Material inventory 10,000 H. Hours ions
Applied factory overhead
(c) Overapplied factory overhead
50,0 oS
()
Building
and ground
750 150
Cost of goods sold 20,000 : maintenance

Finished goods inventory
Work-in-process invento 10,000
Storeroom 13() 4() -
Machinery 1,925 890 2,500

(d) Overapplied factory head 50,000 Assembly 1,200 2,330 1,400
Cost of goods sold A25,000V. Total 3,125 4,100 4,090
Finished goods i ory 17,500 Management decided that the appropriate
Work-in-pro ventory _ 7,500 bases to be used by the Buildings and
18. Which statement is correct? Ground Maintenance and Storeroom
(a) Insignificant differences between service departments are square feet and
applice and actual factory overhead are requisitions, respectively. Direct labor
usually treated as a period cost by adjusting hours are used to compute the producing
cost of goods sol(d) departments factory overhead application
(b) The purpose of a proration entry to TateS.
account for a diffcrence between actual and 19. Using the direct method, what is the
applied factory overhead is to allocate the Assembly Department's factory overhead
under-or over applied overhead to those application rate?
accounts that were originally distorted if (a) $30,30 (c) $55,70
what unintentionally proved to be the (b) $47,46 (d) $60,53v.
incorrect application rate is used, their 20. Using the algebraic method, compute for
ending balances can be adjusted to the Building and Grounds Maintenance
Cost Accounting 10]
Department the combined total amount to - (c) Price and quantity differences for
be allocated to the Storeroom Servicc factory overhead costs;Y.
Department and both producing (d) Differences caused by production
dcpartmcnts. (Take all calculations to four volume variation.
decimal places but round answers to the 25 . Factory ovcrhead should be allocated on the
nearest dollar). basis of
(a) S21,960 (c) $23,467 (a) An activity basis which relates to cost
(b) $22,584v. (d) S24,722 incurrence; V
2 I. Over applied factory overhead will always (b) Direct labor hours;
result when a predctermined factory (c) Direct labor cost;.
overhead rate is employed and: (d) Machine hours.
(a) Production is greater than definca 26. lf over-or undcrapplied factory overhead is
capacity; interpreted as an error in allocating aetual
(b) Actual overhead costs are less than costs against the production for the year,
expected, this suggest to an accountant that the over
(c) Defined capacity is less than normal or underapplied y overhead for the
capacity, year should be:
(d) Overheat incurred is less than apped (a) Carried forward in the factory overhead
overhead account f: #year to year,
. The difference over a period of time (b) b changing the
between actual faetory overhead and pre incol factory overhead rate in
applied factory overhead will usually S ucht years;
minimal when the predetermined overhead c) Apportioned among the work in process
rate is based on: inventory, the finished goods inventory, and
(a) Normal capacity; (b) Designed the cost of goods sold, Y
capacity, (d) Treated as a special gain or loss
(c) Direct labor hours; (d) Machine '' occurring during the year.
23 . If a predetermined factory over hea 1S 27. Under applied factory overhead costs are:
not employed and the volume of tion (a) Fixed factory costs not allocated to units
is reduced from the level pla Nthe cost produced;
per unit would be expected to (b) Factory overhead costs not allocated to
(a) Remain unchanged fixed cost and units produced;Y.
increase for variable cost: (c) Excess variable factory overhead costs;
(b) Increase for cost and remain (d) Costs that can not be controlle(d)
unchanged for v e COSt. 29. When a manufacturing company has a
(c) Increase for fixed cost and decrease for highly automated manufacturing paint
variable cost; producing many different products, the
(d) Decrease for fixed cost and decrease for nost appropriate basis for applying factory
variable cost. overhead to work in process is:
'4. A spending variance for factory overhead is (a) Direct labor hours,
the difference between actual factory (b) Direct labor dollars,
overhead cost and factory overhead cost (c) Machine hours;Y.
that should have been incurred for the (d) Cost of material use(d)
actual hours worked and results from: 30. According to Internal Revenue Service
(a) Price difference for factory overhead regulations, significant underapplied
COStS, factory overhead resulting from .
(b) Quantity differences for factory unanticipated price increase should be
overhead costs; disposed of by:
Cost Accounting 102
(a) Dccrcasing cost of goods sold; (c) Controllability;v (d) Variability.

(b) increasing cost of goods sold, 36. Of most relevance in deciding how indirect
(c) Decreasing cost of goods sold, work in costs should be assigned to a product is the
process inventory, and finished goods degree of: - -
inventory; - - (a) Avoidability; (b) Causality;

(d) Increasing cost of goods sold, work in (c) Controllability; V (d) Linearity,
process inventory, and finished goods . The most desirable measure for evaluating
inventory. V. the performance of the departmental
3 ]. If a company uses a predetermined rate for manager is departmental:
application of factory overhead, the idle (a) Revenue less controllable departmental
capacity variance is the: expenses;Y.
(a) Over-or underapplied fixed cost element (b) Net income;
of over head; V (c) Contribution to indirect expenses;
(b) Over-or underapplied variable cost (d) Revenue less departmental expenses.
element of vocrhead; 38. The term that identifies an accounting
(c) Difference in budgeted costs and actual system in whic operations of the
costs of fixcd ovcr hcad items, business are br own into cost centers
(d) Difference in budgeted costs and actual and the contro ction of the supervisor or
costs of variable overhead items. the manager is emphasized is:
32 Which of the following should not be on a - accounting; Y
monthly cost control report of a department erations-research accounting;
manager? (c) Control accounting;
(a) Departmental Labor cost; y accounting;
(b) Departmental supplies cost; V
(c)Depreciation on departmental equipment;
(d)Cost of materials used in the departmen
(D)
3 3 . Periodic internal performance reports ascq
upon a responsibility accounting ITT 1. Tillman Corporation uses a job order
should not: system and has two production
(a) Distinguish between * and departments, M and (A) Budgeted
manufacturing costs for 19X} are as
uncontrollable costs:
follows:
(b) Be related to the organization chart;
(c) Include allocated overhead in Pepartment Department A
M
determining performance evaluation;Y
Direct $700,000 $100,000
(d) Include variancs betwccm actual and
controllable costs. materials
3 4. Direct labor 200,000 800,000

The concept of management by exception
refers to managements: Manufacturing 600,000 400,000
overhead
(a) Lack of a predetermined plan;
(b) Consideration of only rare events; The actual material and labor cost charged
(c) Consideration of items selected at to job 432 during 19X1 were as follows:
random, Direct material $25,000
Direct labor:
(d) Consideration of only those items which
vary materially from plans, V. Department M $ 8,000
35 . Of most relevance in deciding how or Department A 12,000 20,000
which costs should be assigned to a Tillman applies manufacturing overhead to
responsibility center is the degree of: production orders on the basis of direct
(a) Avoidability: (b) Causality; labor cost using departmental rates
Cost Accounting ! 03
predetermined at the beginning of the year Rework Cost Account Charged

on the basis of the annual budget. The total (a) $200 | Work-in-Process
manufacturing cost associated with job 432 (b) $200 Factory Overhead Control
for 19X1 should be: (c) $500 Work-in-Process
(a) $50,000 (c) $65,000 (d) $500V Factory Overhead Control
(b) $55,000 (d) $75,000V In job order costing, payroll taxes paid by
Worrell Corporation has a job order cost the employer for factory employees are
system. The following debits (credits) preferably accounted for as:
appeared in the general ledger account (a) Direct labor. (c) Indirect labor
Work-in-Process Inventory for the month of (b) Factory overhead
March 19X2:
(d) Administrative costs.Y
March 1, balanced $ 12,000 Which of the following would not be used
March 31, direct materials $40,000 in job order costing?
March 31, direct labor $30,000 (a) Standards
March 31, factory overhead applied
27,000
$ (b) Averaging & labor and material
ratev <>
March 31, to finished goods $ (c) Direct goshe

(100,000) (d) Factory overhead allocation based on
Worrell applies factory overhead to directlab hours applied to the job
production at a predetermined rate of 90% 6. In job order costing, what journal entry
of direct labor cost, Job 232, the only job d be made for the return to the
still in process at the end of March 19X2, Corekeeper of direct materials previously
has been charged which factory overhead of issued to the factory for use on a particular
$2,250. What was the amount of "o job?
materials charged to job 232? (a) Debit Materials and credit Factory
(a) $2,250 (c) $4,250w. Overhead *
(b) S2,500 (d) $9,000 & (b) Debit Materials and credit Work-in
Under-Heller Company's job-order cost Process. Y
system, estimated costs of fective work (c) Debit Purchase Returns and credit
(considered normal in the nufacturing Work-in-Process.
process) are included in the predetermined (d) Debit Work-in-Proccss and
Materials.
credit
factory overhead a tion rate. During
March 19X2 job or 2,000 handsaws A materials requisition form normally does
was complete he following costs per not contain which of the following?
unit:
(a) Vendor's nameY
Direct materials $5 (b) Unit cost
Direct labor $4 (c) Quantity requisitioned
Factory overhead (applied at 150% of direct (d) Job number
labor cost) $6 A job order cost sheet normally does not
$ 15 contain which of the following?
Final inspection of job 210 disclosed 100 (a) Direct materials
defective saws, which were reworked at a (b) Direct labor
cost of $2 per unit for direct labor, plus (c) Actual factory overheadV
overhead at the predetermined rate. The (d) Applied factory overhead
defective units on job 210 fell within the Units which do not meet production
normal range. What is the total rework cost standards and which are sold for their
and to what account should it be charged? salvage value (if any) are called:
(a) Spoiled unitsY
Cost Accounting 104
(c) Scrap material relating to job 194 during the year was as
(b) Defective units follows: -
(d) Waste material Machine hours:

10. Units which do not meet production Department T__ !50
standards and which must be processed Department P 2,500
further in order to be salable as good units Direct materials $18,000
or irregulars are called: Direct labor:
(a) Spoiled units (c) Scrap material Department T_ $ 1 1,000
(b) Defective units (d) Waste material Department P_ $4,500
ll. Using a perpetual invcntory system, the Factory overhead control:
entry to record thc purchase of indirect Department T_ $14,500
materials would include a debit to , Department P_$24,600
and the entry to record subsequently the If Safety First Parachute Company
placement of indirect materials
production would include a debit to
(a) Materials inventory, work-in-process
into
if estimated
expenses are
:
contracted to sell job, 194 for $100,000, and

administrative
e selling price, what
inventory -
is the estima d'pt fit on job 194?
(b) Materials inventory, factory costs (a) $17,20 <> (c) $28,600
(c) Work-in-process inventory, factory (d) $33,700
overhead control 14. Twe workers, paid at a wage rate of
(d) Materials inventory, factory overhead per hour, worked 40 hours each,
control v. &ntirely on job 52, during the past week.
12. In a job order cost system, the source ight other workers who are paid at a wage
document used for the accumulation *\ rate of $7.50 per hour, spent half of their
factory overhead costs is a: 40-hour work week on job 52 and the
(a) Job factory overhcad cost sheet.
(b) Factory overhead application S r
remainder of their time on job 53. In
addition, Bill Hammond, a part-timer,
(c) Departmental factory overhead-cost worked on job 52 for 16 hours but was
sheet. Y - unable to work for 4 hours because of the
13. Safety first parachute Cor e. a job inefficiency of his fellow workers in prior
order cost system and
departments, P. Budgeted
T
stage. Bill Hammond earns $9.25 per hour.
Salaries for supervisors and maintenance
information for the
l
*
ent T | Department P
-- -
is as follows: personnel related to jobs 52 and 53
amounted to $1,250. Assuming that payroll
Machine hours 500 25,000 withholdings are ignored and jobs 52 and
Direct $400,000 $600,000 53 are the only jobs being performed, what
materials --- -...-- - is the entry to record labor cost?
| Direct labor S350,000 $100,000 (a) Work-in-process inventory job 52
I ()373
| Factory $455,000 s:00,000 --
Love" | | Work-in-process inventory_ job 53

Both Department T and Department P 1,825
apply factory overhead to production order Factory overhead control job 52 37
through the use of predetermined factory Payroll payable 12,235
overhead application rates, which are based (b) Work-in-process inventory job 52 _
upon the yearly budget. Department T 9,748V
applies factory overhead on a direct labor Work-in-process inventory job 53
cost basis while Department P does so on a 1,200
machine hour basis. Actual information Factory overhead control 1,250
Cost Accounting ! ()5
Loss from idle time _37 (b) $50,000 (d) $90,000

Payroll payable 12,235 Questions 5-18 and 5-19 relate to Howards
(c) Work-in-process inventory job 52 Graphite-Boron Tennis Racquet
9,748 Manufacturing Plant. Assume that 15,000
Work-in-process inventory job 53 tennis racquets are placed into production
1,200 -
for job 22. Normal defective units were
Factory overhead control 1,287 expected to be 7% of job 22s production.
Payroll payable _ 12,235 Actual defective units were 1,100. the costs
(d) Work-in-process inventory job 52 to rework the 1,100 defective units were as
_9,748 follows:
Work-in-process inventory job 53 Direct materials $5,500
1,200 Direct labor $19,800
Factory overhead control 1,250 Factory overhead applied (75% of direct
Factory overhead control idle time _37 labor dollars) $14,850
Payroll payable _ 12,235 Total $40,150
15. is similar to a by-product that 18. Assuming that rework costs were
results from a joint manufacturing process. ignored in the putation of the factory
(a) A spoiled unit overhead application rate, what is the
(b) Scrap materialv amount of work costs to be charged to
(c) A defective unit #" inventory for job 22?
(d) Waste material (a) (c) $38,325 V
16. Which statement is correct? . 2,675 (d) $40,150 -
(a) The accounting for abnormal spoilage ! at is the amount of payroll liability
will not affect the unit cost of good units in AZ incurred by Howards Graphite-Boron
a production process. Y Tennis Racquet Manufacturing Plant in
(b) Managements goal should be to
a production process that
:
will yi
servicing job 22s abnorinal defective
units?
'' (a) $0 (c) $1,250
(c) Abnormal spoilage is :
perfect product almost 100% of th
a part of the cost of production.

(b) $900V (d) $1,825
20. Scrap accumulating from job 512 was sold
(d) Spoilage is the res of inefficient for $450 job 512 was sold for $450. Job
production methods. 512 also resulted in waste disposal costs of
17, Assume that 50,000-units are put into $150. If estimated scrap had been taken into
production for jo and the total cost of consideration when computing the factory
production was $1,50,000. Normal spoilage overhead application rate, and if waste
for general production is estimated to be material costs are allocated to specific jobs,
2.5%. At the completion of production only proper accounting treatment would include
47,000 units were goo(d) (The remaining 3.
units were spoiled and had a salvage value (a) Total debit of $150 to factory overhead
of $7 each). Management considers control. Y
spoilage to be inherent in nature to the (b) Total debit of $699 to factory over head
general production process and includes control.
normal spoilage in the predetermined (c) Total debit of $300 to factory over head
factory overhead application rate. When control. -
accounting for the spoilage ofjob 303, what (d) Total debit of $450 to factory over head
is the total amount of costs to be removed control.
from work-in-process inventory?
(a) $37,500v (c) $61,250
Cost Accounting 106
2} . Of the following production operations, the | Supplies | 15,000

one most likely to employ job order cost Materials and supplies requisitioned for
accumulation is: production:
(a) Soft drink manufacturing, Job 775() S 45,000
(b) Shipbuilding;Y Job 77-51 37,500
(c) Crude oil refining, Job 77-52 25,500
(d) Candy manufacturing. Supplies 12,000
22. Under job order cost accumulation, the | S 120,000
dollar amount of the entry involved in the
transfer of inventory from Work in Process Factory direct-labor hours:
to Finished Goods is the sum of the costs Job 775() 3,500 DLH
charged to all jobs; Job 77-51 3,000 DLH
(a) Started in process during the period; JOb 77-52 2,000 DLH
(b) in process during the period; -
(c) Completed and sold during the period;

(d) Completed during the period v.
Labor costs: S
Direct-labor wa S 51,000
(Question No. 23 to 27 are based on Indirect-labor '. (4,000 15,000
following information) Bachr Company is
a manufacturing company with a fiscal year
hours) #
Supervisoa aries
<>
6,000
that runs from July 1 to June 30. The Buildi occupancy costs (heat, light,
Company uses a job-order accounting depreciation, et(c)):
system for its production costs,
A predetermined overhead rate based upon
direct-labor hours is used to apply overhead
2:actory facilities
offices
dministrative offices
$6,500
1,500
1,000
to individual jobs. A ficxible budget $9,000
overhead costs was prepared for the '5
fikscaly yiar as follows: Factory equipment costs:
Direct | ()(),0()() 12(),()()() &% Power $ 4,000
labor hours
Repairs and maintenance 1,500
Variable $325,000 $390 $455,000
Depreciation 1.500
overhead <>
Other 1,000
COSIS s -
$ 8,000
Fixed 210,000 Si 216,000
23. The predetermined overhead rate to be used
overhead
COSIS r
S
-
to apply overhead to individual jobs during

the 19-7-8 fiscal year is
Total S541,000 $6()6,000 $671,000
(a) $ 3.25 per DLH
overhead -
(b) $ 5.05 per DLH

Officials have determined 20,000 direct
(c) $ 5.05 per DLHY
labor hours as the expected volume for the (d) $ 5.41 per DLH
year. I he following information is for 24. The total cost job 77-50 is
November, 19-7. Jobs 775 and 77-51 were (a) $81,750
completed during November. (b) $135, 750V
|
|! Inventories November 1, 19-7:
-
:--
(c) $ 142,750
-
Raw materials and supplies | $ 10,500 (d) $146,750

. Work-in-process (Job 77-50) 54,000 Note: Without prejudice to your answer to
| Finished goods | 112,500 Item 1, assume that the predetermined
Purchases of raw materials and supplies: overhead rate is $4.50 per direct-labor hour.
Raw materials |S 135,000
Cost Accounting 1()7
Use this amount in answering items 2 (c) The amount of material or conversion
through 6: cost necessary to start a unit of production
25. The factory-overhead costs applied to job into work-in-process inventory.
77-52 during November were (d) Fifty in-process inventory.
(a) $9,000 v. (b) $47,500 (d) Fifty percent of the matcrial or
(c) $46,500 (d) $8,000 conversion cost of a unit of finished goods
26. The total amount of overhead applied to inventory (assuming a linear production
jobs during November was pattern).
(a) $29,250 (b) $38,250V Which of the following production
(c) $47,250 (d) S 56,250 operations would be most likely to employ
. Actual factory overhead incurred during a process cost system?
Novembcr 197 was (a) Shipbuilder
(a) $38,000 (b) $41,500 (b) Aircraft manufacturer
(c) $47,500V (d) $ 50,500 (c) Crude oil rcfinerv
(c) None of these (d) Homcbuilder
In proccss cos ". the cost of
(E)
ending w
calculated on 1
process inventory is
Purchased materials are added in the second

(a) schedule
(b) Fquivalent Production schedule
departmcnt of a three-department process;
this increases the number units produced in
# !al Costs to Account For schedule
d) Total Costs Accounted For schedulev
the second department and would always: e system flow in which the initial raw
(a) change the direct labor cost percentage
in the ending work-in process inventory, V
&

materials are placed into process in the first
department and flow through every
(b) Cause no adjustment to the 'S department in the factory is called a:
transferred in from the first departin (a) Sequential product flow. Y
(c) Increase total unit costs.
(d) Decrease total ending work-
S.QC CSS
(b) Parallel product flow.
(c) Selcctive product,
inventory. -
(d) Uniform product flow.

2 Purchased materials are adds: the second The analysis of the activity in a department
department of a three-department process; or cost center for a period is called a:
this does not increase the number of units (a) Quantity report.
produced in the Second department and (b) Cost of production report. Y
would:
(c) Cost of goods manufactured report.
(a) Not change the dollar amount
(d) Equivalent production report.
transferred to the next department. The physical flow of units into and out of
(b) Decrease total work-in-process department is shown on the:
inventory. (a) Quantities schedulev
(c) Increase the factory overhead portion of (b) Equivalent Production schedule
the ending work-in-process inventory. (c) Costs of Account For Schedule
(d) Increase total unit cost V (d) Costs Accounted For schedule.
An equivalent unit of material or 9. The total amount on the Costs to Account
conversion cost is equal to: For schedule Inust equal the total amount
(a) The amount of material or conversion on the:
cost neccssary to complete one unit of (a) Quantities schedule,
production. Y (b) Equivalent Production schedule.
(b) A unit of work-in-process inventory. (c) Costs to Account For schedule,
Cost Accounting 108
(d) Costs Accounted For schedule, V raw material XYZ and then transfers it to
| (). The restatement of incomplete units in Department (B) After Department B puts
terms of completed units is called: on its finishing touches, it transfers the
(a) Quantities produce(d) product to finished goods inventory.
(b) Total production. 14. If Department A had put 95,000 units into
(c) Equivalent production. Y process during the period and had ending
(d) Approximate production units in process of 21,000, what is the
. Reedman Company had 6,000 units in number of units transferred to finished
process at the beginning of the month in goods inventory, if Department Bs ending
Department. (A) During the month an units in process are 12,000?
additional 12,000 units were placed into (a) 104,000 (c) 74,000
process. If Reednman Company had 4,200 (b) 83,000 (d) 62,000v
units in process at the end of the month, 15. M Company's direct materials are added at
what is the amount of units transferred to the beginning of the production process in
Department B, assuming that all units Department (A) If Department A's ending
completed in Department A are transferred units in process gr 60% complete as to
to Department B? conversion costs, on the basis of a separate
(a) 15,800V (c) 20,000 direct mats ria's computation, what is
(b) 18,200 (d) 24,200 Department As equivalent units?
Computouch produces computers. Each of (a) 80,000 (c) 95,000v
their eomputer's circuit boards is prepared (b) 86,6000 (d) 102,400
individually and then will reach a stage Questions 16 and 17 relate to Walboro
where it is affixed to the computer cabinet. Company bottles Waiboros famous spring
Computouch uses a: water. The water is filtered in Department 1
(a) Selective product flow system. and then flows through to Department 2
(b) Parallel product flow system V
(c) Sequential product flow system.
(d) Two tier product flow system,
s' where it is bottle(d) (The company's only
direct material cost occurs in the bottling
stagc.) The quantity schedules of Walboro
, Which of the following sta 1S Company are as follows:
incorrect? Department 1:
(a) The use of a process costem does 110,000
not alter the manner of niulating direct Units started in process
Inaterials, direct "too overhead Units transferred to Department 2 80,000
'COSlS. Ending units in process 30,000
(b) The accumulation of direct materials | 10,000
costs is much simpler in a process cost Department 2:
system than in a job order system. Units received from Department 1
(c) A process cost system may accumulate 80,000
either normal absorption costs or standard Units transferred to finished goods
absorption costs. inventory 61,400
(d) Actual factory costs in a process cost Ending units in process 18,600
system should be charged to work-in 80,000
process to avoid fluctuations in monthly Ending units in process in both departments
unit costs. V. are 72% complete as to conversion costs.
Questions 14 and 15 relate to M Company. 16. Direct material equivalent units of
M Company has two producing production for Department 1 are:
departments: Department A and (a) 0 gallons'
Department (B) Department A works on (c) 101,600 gallons
Cost Accounting |(}9
(b) 80,000 gallons 20. Department 3 of Rocky Robot Company

(d) 110,000 gallons has the following pieces of information
17. Department 2 would have how many included in its cost of production report:
equivalent gallons of production, on the Quantities
basis of a conversion cost computation? Units transferred-in from Department 2
(a) 61,400 gallons - 54,000
(b) 74,792 gallons' Units added to production 24,330 78,330
(c) 68,929 gallons 58,330 78,330
(d) 80,000 gallons Ending units process 78,330
18. Information taken from the Costs to Costs To Account For
Account For schedule of a company with Costs from preceding department
two production departments is as follows: Units Total Cost Equivalent Equivalent
Department AInitial Processing Production Unit Cost
Department
54,000 $391,500 54,000 S7.25

Equivalent
Unit Cost
Costs added by
Direct materi:
$80,000 65,000 $1.23
Costs added by department: $4,29 Direct labor'860,000 60,000 $1.00
Direct materials $2.93 Factor rhead $90,000 60,000 $1.50
Factory overhead $1.17 losts Accounted For
Department BFinal Production : erred to finished goods inventory
Department #221
Equivalent Equivalent ditional information: Ending units in
Production Unit Cost process in Department 3 are 100%
SN22
Costs added by department complete as to direct materials and 45%
Direct labor 20,000 $3.19 completc as to conversion costs.
Factory overhead 20,000
If Department A transferred 32,
41 #) its
What is the amount of total costs accounted
for?
into Department B, what is the OSt to (a) $556,321 (c) $656.321 v

be accounted for? (b) S601,321 (d) $701,321
(a) S356,280 V (c) $4 16 2:. A characteristic which applies to process
(b) $255,600
| 9. Which Statement is correct?
costing but not to job order costing is:
(a) Identifiable batches of production;
, (or received
(a) Units started (b) Equivalent units of production; V.
from other plus units added to (c) Averaging process;
(d) Use of standard costs.
production will always equal units
transferred out plus units completed and . In processing goods through a factory,
still on hand plus ending units in process. materials are successively run through
(b) Units added in subsequent departments producing Departments A, B, and C. For
will affect to transferred-in equivalent unit product costing purposes, Department B
cost in the costs to account for schedule. should treat items received from
(c) The stage of completion of work-in Department A as:

process ending inventory is most often (a) Materials; V (b) Work in process:
based upon the actual physical state of (c) Finished goods; (d) Equivalent units.
23. The type of spoilage that should not affect
completion of each unit in work-in-process
ending inventory. the recorded cost of inventories is:
(d) The Costs Accounted For section of the (a) Abnormal spoilage;Y
cost of production report shows which costs (b) Normal spoilage;
were accumulated by the department. (e) Seasonal spoilage,
Cost Accounting | 10
(d) Standard spoilage. (c) Enmployees will avoid work whenever

24. Transferred in costs in a cost of production possiblev
report are most similar to: (d) Neither a nor b -
(a) Materials added at the beginning of her 7. Theory Y (by MeGregor) assumes that:
process;Y. (a) Employees dislike work
(b) Conversion costs added during the (b) Both a and b
proccSS: (c) Employees will void work whenever
(c) Costs transferred to the next process, possible
(d) Costs included in beginning inventory. (d) Neither a nor b v.
Which of the items below is not a
hierarchy of human needs as set forth by
(F) Maslow?
(a) Self-fulfillment (b) Work
A quantitative expression of nanagement (c) Self-respect V (d) Safety
objectives is a(n). {}
A budgeting process wherein each and
(a) Organization chart
(b) Budget
-
every line of budget is

(c) Management chart.'
specified by "t level management is
called a(n):
(d) Procedural chart
(a) Authoriative budgetv
2 Operations budgets normally cover a (b) M'dge
period of:
(a) One year or less
(c)
(
budget
'ganization budget
(h) One to five years
(c) ()ne to two years
! (), *C)wer
dgeting process wherein middle and
li
level managers plan either in

(d) ()ne to tun years general or specific terms what they
The various
usually components
prepared by: of a budget 'S
O believe to be realistic expectations of
what their performance should be is
(1) Staff management N called at n):
[
b) The budget directorv/
(c) 1...the management
(d) I he controller
SS. (a) Authoritative budget
(b) Master budget V
(c) Participative budget
A budget in which a responsibility center (d) Organization budget
manager must justify Neach planned | | Under which approach do all levels in a
activity and its estimated total cost is
company participate to some extent in
called it. N ~
developing the master budget?

(a) Conventional budget (a) typper management
(b) Program planning and budget systent (b) Grass roots
(c) Master budget (c) Historical estimating
(d) Zero-based budget.* (d) Bottom-up
A budget that focuses on the output of the 13
The foundation of the master budget is:
organization is called a (a) The cash budget
(ii) Conventional budget (b) The sales forecast
(b | Program planning and budget System (c) Current resources V
(c) \laster budget Y (d) Estimate production
(d) Zero based budget } +.
The sales budget (in units) adjusted for
( 1. Theory X (by McGregor) assumes that: inventory changes is the:
(a) Employees dislike work (a) Production budgetV
| |y) Both d and b
(b) Direct materials purchases budget
Cost Accounting |||
(c) inventory storing budget February, you are particularly concerned

(d) Direct materials usage budget with the purchase cost for component 8.
5 Production should. -
three units of componcht 8 are required to

(a) Be set at the highest capacity in order make one deluxe vac unit. If the desired
to establish the highest possible inventory inventory for component 8 is 60% of the
levels. following month's production
(b) Be Scheduled efficiently so that the requirements for component 8 and the
cmployment level can remain stablev unit cost of component 8 is $ 12.50, what
(c) Be set to minimize carrying costs is the purchase cost in February on the
(d) Answers b and c only direct materials purchases budget for
(e) All the above component 8?
The following information relate to (a) $38,875 (b) $92,450
questions 9-16 and 9-17. (c) S64,280 (d) S 16,625 v.
Master Budget Company had a cost of 19. Which Statement would apply to
goods sold budget for the quarter of $210,000. participative budgeting?
The following data are also based on the
quarterly cost of goods sold budget. '''
(a) The aut
has
budgeting process
mentally negative aspects
Finished goods inventory beginning which wi crease the overall efficiency
S38,000 of the firm in the long run
Finished goods inventory ending ( b) Budget pcople can obtain feelings of
$
$41,000 only by finding fault with factory
Factory overhead budget ople
16.
63,000
What
the is the total manufacturing cost for
quarter?
C. (c) Pseudoparticipation is a positive step
toward the establishment of a
participative budgetary process V
(a) $207,000
(c) $213,000
(b) $234,00
( d) $276.0 0)
* (d) An authoritative budget is perceived
by employees as a pressure device
17. Assuming that the direct labor ge for 2(). Jim Slack is a middle level manager in
the quarter was $58,000. What is the charge of a special project. As Jim's
direct materials purchase's for the company uses a participativc budgeting
quarter? O process. Jim submitted a budget of
(a) $86,000 (b) $234,000 $15,000. If actual costs related to the
(c) $98,000
(d) It cann
determine from the
project were $14,400, but it was
determined that the project could have
8.

As president of Super Vac, the vacuum
been completed for $13,900, what is thc
true variance?
company of the future, you are preparing (a) $400 unfavorablev
a master budget. For the deluxe vac, you (b) $1,100 favorable
have forecasted unit sales in January. (c) $600 favorable
February, and March to be 3,000, 3,400, (d) $500 unfavorable
and 3,250, respectively. On January 1, 2] . Flexible budgeting is a reporting system
19XX, as a result of intense emand, you wherein the,
have no beginning inventory. You would (a) Budget standards may be adjustcq at
like to have 1,200 units in ending will
inventory for the month of January, 1,000 (b) Reporting dates vary according to the
units is ending inventory for February, activity levels reported upon
and 800 for March. While preparing the (c) Statement include in the budget report
direct materials purchases budget for vary from period to period
(d) Plane activity level is adjusted to the capacity and normal capacity levels
actual activity level before the budget would be the:
comparison report is preparedY (a) Same except for normal capacity
~ y
- --
The budget for a specific cost during a (b) Same except for practical capacity
fiscal period was $80,000, while thc (c) Same except for expected actual
actual cost for the samc period was capacity
$72,000 considering these facts, it can be (d) Same for all three levelsv.
stated that the plant manager has done a 26. A fixed cost
better than expected job in controlling the (a) May changes in total when such
cost if. change is unrelated to changes in
(a) The cost is variable and actual productionv
production was 90% of budgeted (b) Will not change in total because it is
production. unrelated to changes in production
(b) The cost is variable and actual (c) I constant per unit for each unit of
production has equaled budgeted change in production
production V. (d) May change in total, depending on
(c) The cost is variable and actual
27.
production within #' range
production was 80% of budgeted The term relev ge as used in cost
production accounting means the range.
(d) None of the above (a) Over' costs may fluctuate
The primary difference between a fixed
budget ad a flexible budget is that a fixed
(b)Ove
: h cost relationship are
V
budget.
(a) Includes only fixed costs, while a
:
-
-
production
ver which relevant losts are in
flexible budget includes only variable uTr!]t
OSIS The total cost for Gallop, Inc, is budgeted

(b) is concerned only with acquisitions of
plant assis, while a flexible
concerned with expenses that
'
''
s' at $230,000
Because of
for 50,000 units and at
$280,000 for 60,000 units of output.
the nee for additional
Sales facilities, the budgeted fixed cost for
(c) Cannot be changed afte
period begins, while a flexi

Call
60,000 is 25% more than for 50,000 units.
Gallop' budgeted variable cost per unit of
be changed after a fiscal d begins output is.
(d) Is a budget for a 5 level of some (a) $1.60 (b) $1.67
measure of actiyit hile a flexible (c) $3.00 v. (d) $5.00
budget consists veral budgets or a 30. In the attempt to establish a means of
range of budgets
of activityV. based on some nhcasure

predicting the total cost per desk,
production management has found that
Application rates for factory overhead total direct labour hours per unit correlate
best reflect anticipated fluetuations in very highly with the total incurred cost
sales over a cycle of years when they are per desk. Management proposes the use
computed under the concept of of simple regression analysis as a means
(a) Theoretical capacity of predicting the cost to manufacture a
(b) Normal capacity V desk. Which of the following statements
(e) Practical capacity is not true of this techniques?
(d) Expected actual capacity (a) An equation of the form y = a + bx
The variable factory overhead rate under results
the practical capacity, expected actual
(b) The coefficient of correlation will be (a) Insufficient capacityv.

greater than 1 Y (b) Shortage of experienced salesmen
(c) The predict value is known as the (c) General shortage of power
dependent variable 36. The difference between fixed and variable
(d) The method of least squares can be cost has a special significance in the
used in the determination preparation of
3|. A plant superintendent has noticed that (a) Flexible budgetv
spoiled units occur in the manufacturing (b) Master budget
process on Monday more than on any (c) Cash budget
other day of the week if appropriate data 37. The budget that is prepared first of all is
to determine the relationship between (a) Cash budget (b) Master budget
spoiled units and the day of the week are (c) Budget for the key factorv
collected, the resultant number. 38. In case of materials, the key factors may
(a) Provides a measure of the extent to be -
which the day of the week are accounts

for the variability in the spoiled units. Y
Q
(b) Provides a measure of the extent to (c) Low m
which the spoiled units account for the 39. '. hich commonly takes the
The
variability in the day of the week geted profit and Loss Account
form
(c) Establishes that one variable is the '' nce Sheet is
cause of another variable
(d) Establishes that they day of the week
d: sh budget
) Master budget V
is the cause of the spoiled units (c) Flexible budget
32. A retail store is interested in 2. -
Preparing budget figures for different4
relationship between sales "' levels of activity within a pange, under
variable) and theft losses (de
variable). Using the proper form
flexible budgeting is -
e (a) Multi activity method V.

coefficient of correlation is c (b) Formula method
be 95. Concerning these fact (c) Budget cost allowance method
theft losses) a definite conclusion in that.
(a) An increase in sales causes an increase
in theft losses, '' (G)
(b) Movement ese factors is in
opposite
(c) Movement of these factors is entirely
!. Which of the following terms is not to be
used interchangeably with the word
standard costs"?
unrelated -
(d) Movement of these factors is in the (a) Planned costs

same direction V. (b) Scheduled costs
33.
(c) Predicted costs
The appropriate range for the coefficient
of correlation (r) is: (d) Estimate costsv
(a) 0 < r < 1 (b) -1 < r < 1 v. When factory overhead is applied to
production on the basis of actual inputs
(c) -100.<rs 100
multiplied by a predetermined application
(d) infinity < r < infinity
34. rate, the process in known as:
Sales budgets is a
(a) Functional budgetv (a) Normal costing
(b) Master budget (b) Standard costing
(c) Expenditure budget (c) Actual costing
35. lm the case of plant the key factor may be (d) Historical costing
Cost Accounting l 14
"
.."). Which of the following cost bases should (b) Learning stageV
be used to value inventory for external (c) Constant Stage
financial reporting? (d) Early stage
(a) Standard cost Which one of the following statements
(b) Applied costs V best characterizes standard costs?
(c) Historical cost (a) Per unit costs are
(d) Normal cost (b) Per unit costs have been
Standard costs provide the building locks (c) Per unit costs will be
for a(n): (d) Per unit costs should bev.
(a) Variable cost (b) Budget P. Wilson, CPA, has been conducting an
(c) Unit cost Y (d) Overhcad cost audit of Joy Toys Manufacturing
When standard costs are used, the amount company. The management of Joy Toys
of detailed record keeping will normally listed inventory in the financial
(a) ReduceX Statements at a standard cost of $410,000,
(b) Stay the same in the course of an otherwise clean audit.
(c) lncreasc Wilson found th inventory costs
(d) Be more time consuming -
were $745,000. e giving a favorable
(), A standard that is never altered once option on the financial statements of Joy
established is known as a(n): Toys, Wilsn. .
(a) ledeal Standard (a) Mus inventory costs on the
(b) Attainable standard al-Statements so that they are listed
(c) Basic standard d inventory cost
(d) Projected standard ust adjust the inventories cost at
A standard that is developed using (' to approximate actual costs'
utopian conditions for a given (c) Must approve the use of the standard
manufacturing process is know as a(n): costs for inventory on the financial
(a) [deal standard- O Stalin 1CIllS
(b) Attainable standard (d) Need do nothing

(c) Basic Standard | 3. Unfavorable variances are the result of
(d) Projected standard S. management's use of:
Standards that can be ng) I eVCI) (a) Ideal standards*
surpassed by the '" of efficicht (b) Efficiency standards
operations are know a (c) Basic standards
(a) ideal Standard
(b) Attainable '' (d) None of the above
(e) Attainable standards
(c) Basic standar Which statement regarding direct material
(d) Projected standard - price standards is most correct?
!). Predetermined specifications of quantities (a) Production departments are normally
that should go into the production of one responsible for setting their own direct
finished unit arc known as: material price standards.
(a) Price standards (b) After management Sets a standard
(b) Estimated standards price per unit of direct material, quality
(c) Hypothetical standards and delivery standards can then be
(d) Efficiency standards Y determined. -
| (). The area on a learning curve in which the (c) Even if there are thousands of direct
average direct labor time per unit materials, a standard unit price must be
stabilizes is known as the: computed for each onev.
(a) Boredom stage
Cost Accounting 1 5
(d) Once a direct material price standard (c) .83% (d) 1.20
has been set, it takes effect for the entire 19. Which of the following elements of
financial period production is not viewed ass waste time?
| 5, Which department is in the best position (a) Processing timev (b) Moving timc
to set realistically attainable quantity (c) Inspection time (d) Qucue time
standards for a production process? 20. Which of the following actions will
(a) Production (b) Purchasing increase throughout time?
(c) Accounting (d) EngineeringV (a) Reducing the number of defective
Which statement is incorrect? parts produced
(a) Items like vacation pay and sick pay (b) Changing the plant layout so that
are usually included in the standard rate production departments are spread out
of payV. further in location than they currently
(b) The standard rate of pay that an arev
individual will receive is usually based on (c) Designing a product so that it requires
the type of job being performed and the processing - fewer production
experience that the person has had on the departments
job (d) Better production coordination among
(c) If a union contract calls for an increase production departments
in pay during the dear, this change must 2! . Ap of standard costing is to:
be incorporation into the standard wage ('' C
rmine the break-even production
rate
(d) Direct labor price standards are c Control costsv

predetermined rates for a period (c) Eliminate the need for subjective
17. Standards for the Blackwell Corporation decisions by management
arc listcd below. (d) Allocate cost more accurately
Direct materials price.... $10 per p 22. A company employing very tight
Direct material efficiency ..... 3 ds (thcoretical) standards in a standard cost
per unit system should expect that:
Direct labor price . . . . . . $ r direct (a) A large incentive bonus will be paid
labor hour (b) Most variances will be unfavorable Y
Direct labor *'. 4 direct labor (c) Employees will be strongly motivated
hours per unit s' to attain the standards
Variable factory verh ad application rate (d) Costs will be controlled better than if
..... $2.20 per i.e. t labor hour lower standards were used
Fixed factory overhead application rate 23. Of the different types of standards listed
* * $5 per direct labor hour
* * * * below, the one which best describes labor
What is the total standard cost per unit? cost that should be ineurred under
(a) $106.80 (b) $122.60 forthcoming efficicnt operating
(c) $1 14.40 (d) $128.20% conditions is:
| 8. The following information relates to a (a) Ideal
70% learning curve. (b) Basic
Cumulative units of production (c) Maximum efficiency
1, 2, 4, 8, 16 (d) Normalv -
Cumulative Avcrage Hours/Unit 24. In standards costing, standard hours

5, 3.5. 2.45, 1.715, 2 allowed is a means of measuring,
What is the output per hour that relates to (a) Standard output at Standard hours
16 cumulative units of production? (b) Actual output at standard hours'
(a).76 (b) .97 (c) Standard output at actual hours
Cost Accounting 116
(d) Actual output at actual hours 29. The fixed portion of the standard factory
25. Inn preparing the cost report at standard overhead application rate is a function of
for process costing. a predetermined normal activity level.
(a) Equivalent units are not used. If standard hours allowed for good output
(b) Equivalent unites are computed using equal this normal activity level for a
an approach that ignores inventories given period, the volume variance will be:
(c) The actual equivalent units are (a) Zero? (b) Favorable
multiplied by the standard cost per unity (c) Unfavorable
(d) The standard equivalent units are (d) Either favorable, depending on the
multiplied by the actual cost per unit budgeted overhead
In a standard cost system, the materials 30. Standard Costs are,
purchase price variance is obtained by (a) Ideal costs (b) Normal costs
multiplying the (c) Average costs
(a) Actual price by the difference between (d) Reasonably attainable costs
actual quantity purchased and standard
quantity allowed .
(b) Actual quantity purchased by the

31.
for cost control
(a) Standard Qin
:
The type of closing which is most suitable
v
is
differcnce between actual price and (b) Post costine

standard pricev
(c) Standard price by the difference
(c) costing
between standard quantity purchased and QS

standard quantity allowed.
(d) Standard quantity purchased by the
SS (H)
the total direct materials variance
difference between actual price and "2) (actual cost of direct materials used
standard price compared with the standard cost of the
A favorable labor efficiency varia
indicates. \\ standard amount of direct materials
(a) The average wage rate paid *Q S required) for a given operation is
favorable, why must this variance bet
than the standard rate
(b) The standard labor hour ed for further evaluated as to price and usage?
ater then (a) There is no need to further evaluate
the units produced were
actual labor hours
(c) The actual tota
: <>
r cost incurred
the total direct materials variance if it is
favorable
was less than tandard labor cost (b) Generally accepted accounting
allowed for the produced principles requirc that all variances be
(d) The number of units produced was
analyzed in three stages
less than the number of units budgetcd for (c) All variances must appear in the
the period annual report to equity owners for proper
disclosure
The standard cost variance representing
the difference between actual factory (d) This will allow management to
overhead incurred and budgeted factory evaluate separately the efficiency of the
overhead based on actual hours worked is purchasing and production functions V
thc: Which of the following is the most
(a) Volume variance probable reason a company would
(b) Spending variance experience an unfavorable direct labor
rate variance and a favorable direct labor
(c) Efficiency variancev
(d) Quantity variance efficiency variance?
Cost Accounting 117
(a) The mix of workers assigned to the equivalent units involved or used in the
particular job was heavily weighted cost of production report at standard?
toward the use of higher paid experienced (a) Equivalent units are not used
individuals v. (b) Equivalent units are computed using a
(b) The mix of workers assigned to the special approach
particular job was heavily weighted (c) The actual equivalent units are
towards the use of new, relatively low multiplied by the standard cost per unitz
paid, unskilled workers (d) The standard equivalent units are
(c) Because of the production schedule, multiplied by the actual cost per unit
workers from other production areas were Excess direct labor wages will be
assigned to assist this particular process disclosed in which type of variance?
(d) Defective materials caused more (a) Yield
direct labor to be used I order to produce (b) Direct labor efficiency
a standard unit (c) Quantity -
What type of direct materials variance for (d) Direct labor (; rice) Y
pricc and efficiency will arise if the actual A debit bal in the direct labor
number of pounds of direct materials uscd
exceeds standard pounds allowed but
efficiency : account indicates that:
(a) Standard direct labor hours exceed
actual cost was less than standard cost? actual t labor hours
(a) Unfavorablev Favorable (b) ual direct labor hours exceed
(b) Favorable Favorable rd direct labor hours'
(c) Favorable Unfavorable tandard rate and standard direct labor
(d) Unfavorable Unfavorable ours exceed actual rate and actual direct
What standard cost variance represents labor hours
the difference between actual factory (d) Actual rate and actual direct labor
overhead incurred and budgeted fact hours exceed standard rate and standard
overhead based on actual direct-labor direct labor hours
hours worked? 9. When performing input-output variance
(a) Volume variance S analysis in Standard costing, "standard
(b) Efficiency variancev direct labor hours allowed is a means of
(c)
(d) Spending s'
varianee
Quantity variance w
<> - measuring
(a) Standard output at standard direct
Given below are m. notations labor hours
and their
AH = Actual direct labor hours
(b) Actual output at standard direct labor
hours' - -
SHA = Standard direct labor hours (c) Standard output at actual direct labor
allowed for actual production hours -
AR = actual rate (d) Actual output at actual direct labor

SR = Standard rate hours -
Which formula represents the caleulation 1 (). If a company uses a predetermined rate
of the direct labor efficiency variance? for absorbing factory overhead, the
(a) SR(AH SHA)* volume variance is the.
(b) AR(AH SHA) (a) Under applied or over applied variable
(c) AH(AR SR) cost clement of factory overhead
(d) SHA(AR-SR) (b) Under applied or over applied fixed
When standard costs are used in a process cost element of factory overheadV.
costing System, how, if at all, are
Cost Accounting | |8
(c) Difference in budgeted costs and management can separate the purchasing
actual costs of fixed factory overhead department pricc cfficiencies or
items inefficiencies when analyzing this
(d) Difference in budgeted costs and variance.
actual costs of variable factory overhead (d) If an unfavorable variance is
itcms discovered, management should always
The management of Alfman Brothers set investigate to identify and correct the
a standard on a direct material at $25 per cause of the variance
unit. Actual cost of this direct material (e) None of the abovev
fluctuate during the period. Of the 10,000 15. Shacker Company had the following
units purchased, 50% had a cost of factory overhead variances.
S24.70.20% were purchased at a price of Efficiency variance = $8,000 unfavorable
$24.90, and the remaining units had a cost Controllable variance = $12,000
of $25,60. What is the direct material unfavorable
price variance? Production volume variance = $20,000
(a) $200 favorable unfavorable $
(b) $100 unfavorable What is, Stacker Companys overall
(c) $3,000 favorablev factory overhead'ariance using the one factor
(d) $6,000 unfavorable analysis variance?
nalysis variance
Which statement is incorrect? (a)$40,000 unfavorable
(a) All variances should be computed at '' unfavorablew
the end of a periodv c) $24,000 unfavorable
(b) A management by exception C. $20,000 unfavorable
tcchnique to variance investigation may
(e) It cannot be determined from the
be sub optimal approach given information
(c) Responsibility for costs :* 17. Which statement is correct?
assigned only to the department
center having the authority to
cost
"C) St
the
(a) If you compute the one-factor analysis
of the factory overhead variance, there is
no need to computer direct material or
(d) A major reason for usi Standard direct labor variances.
cost system is to aid agement in (b) The production volume variance will
13.
controlling
Equivalent producti
<>
not critical to the

differ between two-factor and three factor
analysis of factor overhead variances
#
computation of variance? (c) lf a flexible budget I used and actual
(a) Usagc (b) Spending production differs from planned
(c) Direct labor efficiency production, an accurate cost comparison
(d) None of the above w cannot be made
(c) lale capacity (d) Information content should be a major
Which Statement is corrcct? consideration when deciding between
(a) I every instance, a company will using one-factor, two-factor, or three
benefit by having a favorable variance factor analysis of factory overhead
(b) When management sets standards, it variances V
tries to do so realistically. Therefore, 18. A major distinction between the processes
when variances develop it is not as a of computing the budget variance and the
result of the use of incorrect standards price variance lies with the exclusion of
(c) Because the actual price per unit is what component?
used in the computation of a direct (a) Budgeted factory overhead
materials efficiency variance, (b) Actual factory overhead
| 19
Cost Accounting
(c) Actual direct labor hours worked Y (a) Actual rate with the difference
(d) Standard unit price between standard time for standard output
A favorable factory overhead efficiency and actual time
variance indicates that, (b) Standard rate with the difference
(a) Standard direct labor hours allowed between standard time for standard output
exceed actual direct labor hours workedY and actual time
(b) Actual rate and actual direct labor (c) Standard rate with the difference
hours exceed the standard rate and between actual time for actual output and
standard direct labor hours actual time V
(c) Actual direct labor hour worked 25. Overhead Cost Variance is the difference
exceed Standard direct labor hours between
allowed (a) Recovered overheads and actual
(d) Actual ratc and Standard direct labor overhcadsw
hours exceed the Standard rate and (b) Budgeted overheads ad actual
standard direct labor hours Overheads
An organization using ideal standards for (c) Budget & rheads and standard
standard costing purpose should except overheads S
that, .26. Overhead Expenditure Variance is the
(a) Most variances will be unfavorablev. diffe e between.
(b) Employees will be strongly motivated
to work harder and achieves the standard
'. covered overheads and budgeted
rheads
(c) A large incentive bonus will have to ) Budgeted overheads and actual
be aid overheads v.
*@29 (e)
r
Direct Material Price variance Standard overheads and actual

computed by multiplying the overhcads
(a) Standard rate with the
between standard quantity an ual
''
quantity of material (I)
(b) Actual quantity with the difference
bctween Standard rate and | ratew Factory overhead costs under a standard
(c) Actual rate with the difference cost system are debited to Work-in
between standard
quantity of mate
and actual Process Inventory at:
(a) Normal costs
23 Direct sage Varianee is (b) Actual costsY
(c) Standard costs
computed by m. ltiplying the
(a) Standard rate with the differencc (d) Both standard and actual cost
2. Which of the following accounts is not
between the standard quantity for actual
output and the actual quantity* kept at standard costs under a standard
(b) Actual rate with the difference cost system?
betwcen the standard quantity for actual (a) Work-in-Proccss Inventory
output and the actual quantity (b) Finished Goods Inventory
(c) Standard rate with the different (c) Cost of Goods Sold
between the standard quantity for (d) Factory Overhead Controlv
Standard output and the actual quantity Which of thc following method of
Direct Labor Effieiency variance is recording direct materials purchases is
computed by multiplying the preferred for control purposes?
(a) Maintaining the Materials Inventory
account at standard costs V
(b) Maintaining the materials Inventory (c) Closed to cost of goods sold in the
account at actual cost period in which they arosex'
(c) Recording direct materials purchased (d) Capitalized as a cost of ending
at normal costs finished goods inventory
(d) Recording direct materials 10. How should a usage (efficiency) variance
requisitioned at actual cost that is significant in amount be treated at
Under a standard cost system, factory the end of a accounting period?
overhead is applied to work-in-process (a) Reported as a deferred charge or credit
inventory by using, (b) Allocated among work-in-process
(a) Actual direct labor hour and the actual inventory, finished goods inventory, and
factory overhead application rate cost of goods sold Y
(b) Standard direct labor hours allowed (c) Charge or credited to cost of goods
and the actual factory overhead manufactured
application rate (d) Allocated among cost of goods
(c) Actual direct labor hours and the manufactured, finisted goods inventory,
standard factory overhead application rate and cost of goods sold
(d) Standard direct labor hour allowed 11. Journal entries in a standard cost systcm.
and the standard factory ovcrhead (a) Apply only to process cost systems
application rate' (b) Rcc nfavorable cost variances as
5. When inventory is to be shown at debi favorable cost variances as
standard costs, the variances will be C V
charged off as a: ndex actual costs up to the standard

(a) Product cost (b) Fixed cost st level to avoid the hassle of
(c) Variable cost (d) Period costv/
When inventory is to be shown at *
costs, the variances will be charged off
maintaining both actual and standard cost
records.
(d) Rcquire less work than a system that
l . does not use Standard cost
(a) Product cost.* (b) Fixe 12. Standard costs.
(c) Variable cost (d) Pcri OS! (a) Are recorded in addition to actual
For external financial statemedy urposes, COSMS
inventories must be reported at. -

(b) Are the costs used to charge
(a) Standard costs *(b) Actual costs production costs to work-in-process in a
(c) Period costs V (d) Direct costs standard Cost System
Variance that is' as period costs (c) Are used to keep track of finished
will be closed to: goods inventory and cost of goods sold in
(a) Finished goods inventory a standard cost system
(b) Cost of goods soldV. (d) Both a and b
(c) Work-in-process inventory (e) All the aboveY
(d) Finished goods inventory and cost of Questions 12-13 through 12-15 relate to
goods sold the following two common methods for
9. What is the normal year-end treatment journalizing a direct materials price
variances recognized in a cost accounting variance in a standard cost System
system utilizing standards? Method 1: Materials inventory is maintained at
(a) Reclassified to deferred charges until standard cost and price variances are recorded
related production is sold as direct materials are received -
(b) Allocated among cost of goods Method 2: Materials inventory is maintained at

manufactured and ending work-in-process actual cost and price variances are recorded
inventory when materials are put into production.
12]
Cost Accounting
! 3. which method is preferred for control Factory overhead control had a balance of
purposes and which method is preferred $43,5000
for its adherence to the matching concept? Factory overhead price variance had an
(a) Method 2 Method 1 unfavorable balance of $2,000
(b) Method 1 v. Method 1 Factory overhead production volume
(c) Method | Method 2 variance had an unfavorable balance of
(d) Method 2 Method 2 $9,500.
14. As a member of the management In recording the factory overhead
consulting team of Burke and Kurtz, you variances, there would be:
are privy to the following facts of X (a) A debit to total factory overhead
Company. -
variance in the amount $11,500
The actual direct materials weight (b) A debit to factory overhead control for
average purchase price..... $25 $43,000 and a credit to factory overhead
The standard direct materials price ..... applicd for $35,000
$26 (c) A credit to factory overhead price
The dircct materials price variance under variance for $ and a credit to factory
method 1 exceeds the direct material price overhead p ion volume variance for
variance under method 2 by ..... $400 $9,500
Direct materials put into production .... (d) Aeredit to factory overhead efficiency
6,000 units vari for $3,500v.
There is no beginning direct materials (e) None of the above
inventory. 18 enerally accepted accounting principles
Under method 2, how may dollars will be require for external financial statements
debited to Materials Inventory to record
the purchase of direct materials?
29 that.
(a) Variances appear as a separate
(a) $150,000
(c) $156,000 v.
*
(b) $160,000
siO
deduction or addition to gross profit
(b) Variances may be a direct adjustment
]5 Pixley Company has the ing to cost of goods sold
information. (c) The amount of each variance be
Standard direct materials pri ...S 15 prorated among the cost of goods sold,
Direct materials weighted erage actual materials inventory, work in process

purchase price . . . . . .
Direct materials purchased 5,000
inventory, and finished goods inventoryv
(d) None of the above GAAP is silent in
-
unliS
<\\
(SN this matter
Under memost he entry to record the 19. When prorating the direct materials
purchase of direct materials would include a variances.
debit entry to Materials Inventory and a credit (a) The direct materials price variance is
entry to Accounts Payable. What are the dollar allocated first because it affects the direct
amounts of these entries?
materials efficiency variance
(a) $75,000 $75,000 (b) The direct materials efficiency
(b) 82,500 75,000 variance should be allocated first
(c) 82,500 82,500 (c) The direct materials efficiency
(d) 75,000 V 82,500 variance should not be allocated first
| 7. The following information relates to because it has no effect on the direct
Simpson Company and its standard cost materials price variance or the materials
system at the end of the period. inventory account,
Factory overhead of $35,000 was charged (d) Both a and ev.
to Work in process inventory
Cost Accounting 122
20. Bitech Company has the following (b) Amount of costs assigned to
information. individual units of productV
Net unfavorable conversion costs (c) Kinds of activities for which each can
variances be used to report
Direct labor price ..... $4,500 (d) Amount of fixed costs that will be
Direct labor efficiency ..... 2,000 incurred
Total factory overhead . . ... 6,000 Income computed by the absorption
Total ... . . . . . . $ 12,500 costing method will tend to exceed
Work in process inventory 400 income computed by the direct costing
Finishcq goods inventory 1,200 method if:
Cost of goods sold 3, 400 (a) Unites produced excced units sold Y
Total cquivalent units 5,000 (b) Fixed manufacturing costs decrease
Additional, the one variance method was (c) Variable manufacturing costs decrease
used to analyze factory overhead. (d) Units sold exceed units produced
The journal entry to prorate the net What is the te ' means that all
unfavorable convcrsion cost variance would manufacturing direct and indirect,
include: variable and which contribute to
(a) A debit to direct Labor Efficiency the production of the product are traced to
Variance for $2,000 output a ventories?
(b) A debit to Cost of Goods Sold for
$12,5000
(a)
(b
costing
or absorption costing
(c) A debit to Finished Goods Inventory - ocess costingy
for $3,400 Variable or direct costing
(d) A debit to Work in process inventory A basic cost accounting method in which
for $1,200 fixed factory overhead is added to
(e) None of the aboveY O inventory is.
(a) Absorption costing:/
(J) SS (b) Direct costing .
(c) Variable costing
(d) Process costing -
Net profit under absorption costing may

diffcr from net profit
Reporting under the direct costing
under
concept is accomplished by.
direct costing. Is the difference calculated (a) Including only direct cost in the
*S.
income Statement
(a) The quantity o all units an inventory (b) Eliminating the Work in process
times the relevant fixed cost per unitY inventory account
(b) The quantity of all units in inventory (c) Matching variable costs against
times the relevant variable cost per unit rcycnue and treating fixed costs as period
(c) The quantity of all units produced costsV
times the relevant fixed cost per unit (d) Treating all costs as period costs
(d) The quantity of all units produced Which of the following is a more
times the relevant variable cost per unit descriptive term for the type of cost
2 Absorption costing differs from direct accounting often called direct costing?
costing in thc: (a) Out of pocket costing
(a) Fact that standard costs can be used , (b) Variable costing
with absorption costing but not with (c) Relevant costing
direct costing (d) Prime costing
| 23
Cost Accounting
8. Product COS1S under direct costing 14. Which statement is incorrect?
include, (a) For external financial reporting.
(a) Prime cost only absorption costing must be used
(b) Prime costs and variable factory (b) For internal reporting, direct costing
overheadw must be used V
(c) Prime cost and fixed factory overhead (c) Management likes direct costing for
9. The contribution margin is also known as. internal reporting because of its cost
(a) Marginal income V behavior
(b) Net income (d) Management will not use direct
(c) Net operating profit costing for external reports when dealing
1 (). What will be the difference in net with the internal reyenue service.
earnings computed using direct costing as 15. Company D uses direct costing. During
opposed to absorption costing if the this period Company D had variable
ending inventory increases with respect to factory overhead in the amount of S8.4(){)
the beginning inventory in terms of units? and variable cos(of goods manufactured
(a) There will be no difference in net of S74,000. Thding work in process
earnings inventory &
Direct '"
ls ....... $8()()
(b) Net earnings computed using direct
costing will be higher Direct/labor . . . . . . . . . . . . ! ...}{}()
(c) The difference in net earnings cannot Variable factory overhead. . ... 600
be determined from the information given addition, S10,000 was a period cost
(d) Net earning computed using direct f Cl: to fixed factory overhead. Had
costing will be lower. V. , D followed the absorption costing
Direct costing. thod, assuming that 10% of the fixed factory
(a) Lends itself more easily to analysis o' overhead cost relates to ending work in process
cost volume profit relationships "e inventory, the cost of goods manufactured
would have been $98,000. Under the
absorption costing
(b) Has recently grown in use
(c) is more suitable S. tion
absorption costing method, what is total factory
overhead?
costing for manageme planning, (a) S24,000 (b) S22.400
control and decision ma's needs v. (c) S33,400w (d) $37,8()()
(d) Is less widely us-than absorption (e) None of the above
costing
(e) All the abov
'" 16. Which variance cannot exist under direct
costing?
Under direct costing. (a) Production volume variance V.
(a) Variable factory overhead costs are (b) Price variance
product costs (c) Efficietiy variance
(b) Fixed factory overhead is not included (d) Controllable variance
in inventory (e) All the above
(c) Product costs are relate to the volume 17. As chief executive officer of a major
of production company in the automobile
(d) All the abovev -
manufacturing industry you have been
The proponents of which costing method given a contract in which your bonus
argue that production cannot take place hinges upoll obtaining a certain minimum
without incurring fixed factory overhead? level of operating income. If you expect
(a) Absorption (b) Normal sales to exceed production during the
(c) Direct (d) Full period. Your chances of obtaining the
(e) Both a and d.V.
Cost Accounting
bonus are generally greater under which (b) Variable production costs onlyV
of the following methods? (c) All variable costs
(a) The direct costing mcthodv. (d) All variable and fixed manufacturing
(b) The absorption costing method COSfS
(c) The actual costing mcthod 24. The basic assumption made in direct
(d) The prime costing method costing with respect to fixed cost is that a
19. The principal disadvantage of absorption fixed cost is.
costing is: (a) A controllable cost
(a) That it is not acceptable under GAAP (b) A product cost
for extcrmal financial reporting (c) An irrelevant cost
(b) That it is not widely used (d) A period cost V
(c) That is method results in a distortion 25. Operating income computed using direct
of the time relationship between salcs, costing would generally exceed operating
cost of goods sold, and not incomew income computed using absorption
(d) Direct costing costing if, Q -
20. Direct costing is advantageous because: (a) Units sold d units producedY
(a) It facilitates the compilations of (b) Units ' less than units produced
variable cost, contribution margin, and (c) Unit sold equal units produced
fixed costs data necessary for operations (d) T it fixed cost is zero
planning. . 26. A any has operating income of
(b) Deviations from standards are more ,000 using direct costing for a given
readily apparent and can be corrected riod. Beginning and ending inventories
more quickly than in absorption costing O' that period were 13,000 units and
had been used. 18,000 units, respectively. If the fixed
(c) It has better control and yields
information than absorption costin
:* factory overhead application rate is $2 per
unit, the operating income using
incorporate into a respo y absorption costing is.
accounting $ystem. (a) $40,000 (b) $50,000
21.
(d) All thc abovev
The term meaning that
S.
27.
(c) $60,000Y (d) $55,000
Absorption costing differs from direct
costs (Direct and indirCCI, fixed and costing in the.
variable) which ibute to the (a) Fact that standard costs can be used
production of are traced to with absorption costing but not with
output and inventories is: direct costing *
(a) Job ordcr costing (b) Kinds of activities for which each can
(b) Process costing be used to report
(c) Absorption costingY (c) Amount of costs assigned to
(d) Direct costing individual units of productV.
22. The term that is most descriptive of the (d) Amount of fixed costs that will be
type of cost accounting often called direct incurred
costing is. 28. When a firm uses direct costing
(a) Out of pocket costing (a) The cost of a unit of product changes
(b) Variable costingY because of changes in the number of units
(c) Rclevant costing manufactured.
(d) Prime costing (b) Profits fluctuate with sales
23. Costs treated as product costs under direct (c) An idle capacity variance calculated
costing are: by a direct costing system
(a) Prime costs only
Cost Accounting
(d) Product costs include variable (c) Standard costs
administrative costs (d) Conversion costs
29. Operating income under absorption 2 The measureable value of an alternative
costing can be reconciled to operating use of resources is referred to as a(an):
income determine under direct costing by (a) Opportunity costv/
computing the difference between. (b) Differential cost
(a) Inventoried fixes costs in the (c) Imputed cost
beginning and ending inventories and any (d) Sunk cost
defer over or under applied fixed factory 3 A cost incurred in the past and hence
overhead. V. irrelevant for current decision making is
(b) Inventoried discretionary costs in the 3:
beginning and ending inventories (a) Fix.cd cost

(c) Gross profit (absorption costing (b) Sunk cost
method) and contribution margin (direct (c) Discretionary cost V
costing method)
(d) Sales are recorded under the direct ''ake or buy a product, the
(d) Dircct
in decidi!!
costing method and sales as recorded
' of Ashworth company
sider as relevant.
under the absorption costing method.
3{). Under the direct costing concept, unit ( Storical costs
product cost would most likely be "uture costs which will be classified
increased by. as variable rather than fixed
(a) A decrease in the remaining useful life - O (c) Future costs which will be different
of factory machinery depreciated by
unit-of-production mcthod. Y
#29 under the two alternatives V
(d) Future costs which will be classified
(b) A decrease in the number of as fixed rather than variable
produccd A company manufactures two joint
(c) An increase in the remaini seful products at a joint cost of Sl,000. These
life of factory machinery ciate by products can be sold when split off or
the sum of the years digits methods when further processed at an additional
(d) An increase in the ission paid to cost and sold as higher quality items. The
sales persons for each unit sold decision to Scll at Split-off or after further
When using di osting information, processing should be base on the
the contributi margin discloses the (a) Assumption that the S1,000 joint cost
CXCeSS '' is irrelevant. v.
(a) Revenue-bver fixed cost (b) Allocation of the Sl,000 joint cost
(b) Revenue over variable cost using the relative sales value approach.
(c) Projected revenue over the break even (c) Assumption that the S}.000 joint cost
pointv must be allocated using a physical
(d) Variable cost over fixed cost measure approach.
(d) Allocation of the S1,000 joint cost
using any equitable and rational
(K) allocation basis.
(). A company owns equipment that is used
The type of costs presented to to manufacture important parts for its
management for climination of a product production process. The company plans to
line should be limited to:
Scil the equipment for S! (),000 and to
(a) Relevant costsv
Select one of the following alternatives:
(b) Controllable costs () acquire new equipment for S.80,000
Cost Accounting 126
of (2) purchase the important parts from 1 (). In considering a special order situation
an outside company at $4 per part. The that will enable a company to make use of
company should quantitatively analyze currently idle capacity, which of the
the alternatives by comparing the cost of following costs would be irrelevant?
manufacturing the parts. (a) Materials
(a) Plus $80,000 to the cost of buying the (b) Direct laborv
parts less $10,000 (c) Depreciation
(b) To the cost of buying the parts less (d) Variable factory overhead
S1 (), ()()() ll. A manufacturer operating at 95% of
(c) Less $10,000 to the cost of buying the capacity has been offered a new order at
parts $7.25 per unit requiring 15% of capacity.
(d) To the cost of buying the parts.V. No other use of the 5% current idle
Pena Company temporarily has excess capacity can be found. However, if the
production capacity. The idle plant order were accepted, the subcontracting
facilities can be used to manufacture low for the required 10% additional capacity
margin item. The low margin item should would cost $7.50 nit. The variable
be produced if it can be sold for more cost of r the manufacturer
than its. on a per '' ollows.
(a) Fixed costs Materials @* $3.5%)
(b) Variable costs Labor - - - - - - - - - ... .50
tle verhead... 1.5%)
(c) Variable costs plus ay opportunity cost
of the idle facilitics v.
(d) Indirect costs plus any opportunity
-
Vari
profit from eurrent business is

$6.50
cost of the idle facilitics to be $10,000. In applying the

In deciding whether to manufacture a part ribution margin approach to evaluating
of buy if from an outside vendor a O hether to accept the new order, assuming
that is irrelevant to the short run decision' subcontracting, the following values would be
|S. computed for.
(1) Direct labor S (a) S()
(b) $0
S7.17 v
(b) Variable factory overhead $6.83
(c) Fixed factory overhea that will be (e) $5,000 S7.17

avoided if the part is from an (d) S5,000 $6.83
''' Peluso Company, a manufacturer of

outside vendor. 13.
(d) Fix.cd rhead that will Snowmobiles, is operating at 70% of
continue even if the part is bought from plant capacity. Peluso's plant manager is
an outside, Y - -
considering making the headlights now
As part of the data presented in support of being purchased for $11,00 each, a price
a proposal to increase the production of that is to expected to change in the near
clock radios, the sales manager of future. The Peluso plant plant has the
Wittinall Electronics report the total equipment and labor force required to
additional cost required for the proposed manufacture the headlights. The design
increased production level. The increase engineer estimates that each headlight
in total cost is known as: requires S4.00 of direct materials and
(a) Controllable cost $3,00 of direct labor. Pelusos plant
(b) Opportunity cost.* overhead rate is 200% of direct labor
(c) Incremental cost dollar,s and 40% of the overhead is fixed
(d) Out of pocket cost cost. A decision by Peluso Company to
manufacture the headlight will result in a 16. The following segmented statement for a
gain (loss) for each headlight of. party supplied manufacturer represents
(a) S(2,00) income by product line.
(b) $2.80 Sales $20,000, S30,000, $50,0()().
(c) $1,60V. $100,000
(d) None of the above Cost of goods sold ] (),000, 18,000,
14. Darien Industries provides a cafeteria for 40,000, 68,000
its employees. The operation of the Gross profit $10,000, $12,000, $10,000,
cafeteria requires fixed costs of S4,700 $32,000
per month and variable costs of 40% of Operating expenses
sales. Cafeteria sales are currently Administrative 5,000, 5,000, 5,000,
averaging $12,000 per month. 15,000
Darien has an opportunity to replace the Selling 3,000, 4,500, 7,500, 15,000
cafeteria with vending machines. Gross Net income $2,000, $2,500, S(2.5()()),
customer spending at the vending machines is S2,000
estimate to be 40% greater than the current Assume that administrative expense is a
cafeteria Sales because the machines are common cost whi been allocated equally
available at all hours. By replacing the cafeteria to each product." selling expenses are 1.5%
with vending machines Darien would receive
16% of the gros customer spending and avoid
all cafeteria costs. A decision to replace the
The
What
*:cost
of sales, and of goods sold is all variable.
suggested eliminating horns.
bc thc impact on total net income
cafeteria with vending machines will result in a if '' ggestion were adopted?
monthly increase (decrease) in operating O ) $10,000 increase
income of (b) S10,000 decrease
(a) S(580) (b) $1.60 (c) $2,500 increase
(c) S4()
(e) None of the above
*
(d) $2.80 v.
i7.
(d) $2,500 decreasev
The Anthony Company makes two
15. Given the following data. O products, X and Y, in a joint process. At
$21,000,
Salcs
S9 ()()()
Variable costs 15,000, *& the split off point 60,000 units of product
X and 70,000 units of product Y are
available each month. Monthly joint
Contribution margil 400(), S.4.500, production costs total $200,000. Product
$3,000
Directly
2,000, 4,000
<>
costs 5,000,
x can be sold at the split off point for
$3.20 per unit. Product Y can eithcr be
sold at the split off point for $2.60 per
Common ated) fixed costs 2,000, unit of it ean be processed further and
2,000, 2,000 sold for $5.80 per unit. If product Y is
Net income (loss) $(1,000), $500, $3,000 proccssed further, additional processing
Which product(s) if any, should be costs of $2.30 per unit will be incurred.
dropped in order to maximize If product Y is processed further rather
profitability? than being sold at the split off point, the
(a) All threc products change in monthly net income would be.
(b) E and G only (a) $137,000 decrease
(c) E only (b) $245,000 increase
(d) G only V (c) S63,000 increasev
(e) None of the products should be (d) $244,000 increase
dropped (e) None of these
| 8. The Carter Company makes products A (e) A cost common to all alternatives in
and B in a joint process from a single question and not clearly or practically
input, R. During a typical production run. allocable to any of the alternatives.
50,000 units of R yield 20,000 units of A 21. Woody Company, which manufactures
and 30.000 units of E at the split off sneakers, has enough idle capacity
point. Joint production costs total $90,000 available to accept a special order of
per production run. The unit selling price 20,000 pairs of Sneakers at $6,00 a pair.
for A is S4 and for B is S3.8() at the spfit The normal selling price is $10,00 of pair.
off point. However, B can be processed Variable manufacturing costs are $4.50 a
further at a total cost of $60,000 and then pair, and fixed manufacturing costs are
sold for S7.000 per unit. Sl.5%) a pair. Woody will not incur any
lin a decision between selling B at the split selling expenses as a result of the special
off point or proccssing B further, which order. What would the effect on operating
of the following items is not relevant? income be if the special order could be
(a) The S()() ()()() costs to process B accepted without cffecting normal Salcs?
beyond the split off point (a) S{} '
(b) The S3.80 unit sales price of B at the (b) $30,000 increas
split off point (c) $90,000 increas
(c) The portion of the $90,000 joint (d) $120,000 increase
production cost allocated to BY 22 The Reno mpany manufactures Part
(d) The S7 unit selling price for B after No 498 for use in its production cycle.
further processing
(c) All the abovc costs are relevant

The unit for 20,000 units of Part
are as follows.
An avoidable cost is. - irect materials . $6
(a) A cost that many be saved by not rect labor 30
adopting an alternative. V Fariable overhead 12
(b) The profit forgone by Selecting "Q Fixed overhead applied |6
alternative instead of another. $64
(c) A cost, which does not entallfails The Tray Company has offered to sell
dollar outlay but which is
decision making process.

20,000 units of Part No. 498 to Reno for $60
per unit. Reno will make the decision to buy
(d) A cost that continuous to be incurred the part from, Tray if there is a savings of
even though there is no ag $25,000 for Reno. If Reno accepts Tray's offer,
(c) A cost 01111110th it lternatives in S9 per unit of the fixed overhead applied would
question and not or practically
allocate to any of the alternatives
be totally climinated. Furthermore, Reno has
determined that the released facilities could be
The term increment cost refers to: used to save relevant costs in the manufactured
(a) The difference in total costs that of Part No. 575. In order to have a savings of
results from selecting one alternative S25,000, the amount of relevant costs that
instead of another. V. would be saved by using the released facilities
(b) flic profit forgone by selecting one in the manufacture of Parl No. 575 would have
alternative instead of another. to be
(c) A cost that continues to be incurred (a) $80,000
even though there is no activity. (b) S85,000 V
(d) A cost common to be incurred even (c) S125,000
though there is no activity. (d) $140,000
Cost Accounting
$900,000
(L) Selling expenses 240,000
l, Wilson Company prepared the following 360,000
preliminary forecast concerning product Administrative expenses60,000
G for 19X2 assuming no expenditure for 140,000
advertising. $3,900,000
Selling price per unit ...... $1() $1,400,000
Unit sales .................... 100,000 What would be the amount of sales
Variable costs ............... $600,000 dollars at the breakeven point?
Fixed costs .................. $300,000
(a) $2,250,000 (b) $3,500,000
On the basis of a market study in (c) $4.000,000 v. (d) $5,300,000
December 19X1, Wilson estimated that it 4. War field Company is planning to sell
could increase the unit selling price by 15% 100,000 units of product T for $12,000 a
and increase the unit sales volume by 10% if unit. The fixed costs are $280,000. In
$100,000 were spent on advertising. Assuming order to realize a profit of $200,000, what
that Wilson incorporates these changes in its would the variable costs be?
19X2 forecast, what should be the operating
income fSrom product G?
(a) $480,000 &Q (b) $720,000v
(c) $900,000 (d) S920,000
(a) S175,000 (b) $190,000 5. The Seahawk Company is planning to sell
(c) 205,000 v. (d) $365,000 200,000 units of product B. The fixed
2. Birney company is planning its COSIS 00,000 and the variable costs
advertising camping for 19X1 and has are of the selling price. In order to
prepared the following budget data on the 'e a profit of $100,000, the selling
basis of a zero advertising expenditure. e per unit would have to be.
Normal plant capacity ......, 200,000 units a) $3.75 (b) $5.00
Sales . . . . . . . . . . . . . . . . . . . . . . . . 150,000 units
(d) $6.25 V.
Selling price ................ $25.00 per unit
Variable manufacturing costs
22 (c) $4.17
At a break even point of 400 units sold,
the variable costs were $400 and the fixed
Fixed costs
$15.00 p
* costs were $200. What will be 401 unit
sold contribute to profit before income
Manufacturing ............. $80 taxes.
Selling and administrative . 0,000 (a) $0 (b) $0.50V
An advertising agency \claims that an (c) S1.00 (d) $1.50
aggressive advertising ca would enable
7. Koby Co. has sales of $200,000 with
Birney to increase its unit'sales by 20%. What variable expenses of $150,000, fixed
is the maximum ' t Birney can pay for expenses of $60,000 and an operating loss
advertising and obtain an operating profit of of $10,000. By how much would Koby
S200,000? have to increase its sales in order to
(a) $100,000 v. (b) $200,000 achieve an operating income of 10% of
(c) $300,000 (d) $550,000 sales?
3. In planning its operations for 9X1 on the (a) $400,000 (b) $251,000
basis of a sales forecast of $6,000,000, (c) $231,000 (d) $200,000 v.
Wallace, Inc, prepared the following 8. If the fixed costs attendant to a product
estimated data. increase while variable costs and sales
Direct materials
price remain constant, what will happen
S1,600,000 to (1) contribution margin per unit and (2)
Direct labor 1,400,000
break even point?
Factory overhead 600,000 (a) Increase Decrease
Cost Accounting 13()
(h) Decrease Increase income taxes (40%). . . . . . . . . . . . . . . . . . . (63,000)
(c) ( inchanged- Increase Net income after income taxes, ..... $94,500
(d) linchanged Unchanged The break even volume in tons of product
The Ship Company is planning to produce for 19X1 is:
two products. Alt and Tude. Ship is (a) 420 tons (b) 495 tons
planning to sell 100,000 units of Alt at $4 (c) 55() tons (d) 1,100 tonsv
a unit and 200,000 units of Tude at $3 a (e) Some other amount
unit. Variable costs are 70% of sales for If the Sales Volume is estimated to be
All and 80" of sales for Tude. In order to 2,100 tons in the next year, and if the
realize a total profit of 90 160,000, what prices and costs stay at the same levels
must the total fixed costs ber? and amounts next year, the after tax net
(a) S84),i}{}{}V. (b) S90,000 inconic that Dawann can expect for 19X]
(c) 2-4(? (){}() (d) S600,000 ].S.
! (). Mixed costs are those costs that can be (a) $110,250 (b) $135,000.
classified as having. (c) $184,500 (d) S283,500
(a) Both direct and indirect labor (e) Some other
Davann has a
'ial foreign customer
components only
(b) Both direct labor and raw materials that has offered to buy 1,500 tons a $450
only per ton. e that all Davann's eosts
(c) Characteristics of both fixed and would the same levels and rates as
variable costsv in 'hat newt income after taxes
(d) Any costs associated with indirect
labor
avann make if it took this order
rejected some business from regular
1 c) All fixed costs Q' so as not to exceed capacity?
Questions 15-11 through 15-15 are based on (a) $2] 1,500w (b) S252,000
the following information. Treal each question (c) S256,500 (d) $297,500
independently. (e) Some other amount
he statement of income for Dava N. Davann plans to market its product in a
presented below represents the operating new territory. It estimates that an
for the fiscal year just ended.
of 1,800 tons of product during the current
advertising and promotion
costing $61,500 annually would need to
program
year. The manufacturing

product.
3,000 of '" be undertaken for the next two or three

years. In addition, a $25 per ton sales

IDAV AN commission over and above the current
Statemen Income commission to the sales force in the new
For the Year Ende ecember 31, 19X1 territory would be required. How many
Sales. . . . . . . . * * * * * . . . . . . . . . - * * * * * * * * * * * S900 ()()() tons would have to be sold to maintain
Variable costs: Davanns current after-tax income of
Manufacturing. . . . . . . . . . . . . . . . . . . . ... $315,000 S94,500?
Seiling cosis. . . . . . . . . . . . . . . . . . . . . . . ... 180,000 (a) 273.333 tons
Total variable costs. . . . . . . . . . . . . . . . . . S495,000 (b) 307.500 tonsv
Contribution margin. . . . . . . . . . . . . . ... $405,000 (c) 1,095,000 tons
Fixed costs: (d) 1.545.000 tons
Manufacturing. . . . . . . . . . . . . . . . . . . . . . . . $90,000 (e) Some other annount
Selling.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . | | 2,500 Assume that Davann estimates the per ton
Administration. . . . . . . . . . . . . . . . . . . . . . . . 45,000 selling price would decline 10 percent
Total fixed costs....................., $247,500 next year. Variable costs would increase
Net income before income taxes....S 157,500 $40 per ton and the fixed costs would not
change. What sales volume in dollars (e) Some other amount
would be required to earn an after-tax net The number of units of part BT62
income of S94,500 next year? required to be produced and sold to
(a) S825,000 (b) $1,140,000
- contribute S4, 140 to Able's nct after-tax
(c) S1,350,000 v. (d) $1,500,000 income is.
(e) Some other amount (a) 5,400 units (b) 9,000 units
Questions 15-16 through 15-2() are based on (c) 12,800 units (d) 14,600 units'
the following information: (e) Some other annount
The able Company has one department The production and unit sales volunte
that produces thee replacement parts for the level at which Able Company will be
company. However, only one part ean be indifferent as between parts BT.62 and
produced in any month beeause of the GM 7 is:
adjustment that must be made to the equipment. (a) 4,092 units (b) 7,365 units
The department can produce up to 15,000 units (c) 10,380 units (d) 2,275 units V
of any one of the three parts in each month. The (e) Some other amount
company expresses the monthly after tax cost Contribution margin is also known as.
volume profit relationships for cach part using (a) Marginal Income V
an equation method. The format of the (b) Gross Profit
cquations and the equation for each
replacement art are given below. 22.
(c) Net Inco
Period eost ') -
Equation format (a)

(ATR) x [(SP-VC) x U-FC] (b) Fixed cost.*
ATR = After-tax rate (c) Prime cost
SP = Selling price 23 The 'costing method in which fixed
VC Variable cost ctory overhead are added to inventory
U} = Units
Part
FC = Fixed costs
Part Equations
C. (a) Direct costing
(b) Marginal costing
AL45 6[($4.00 - $l.25) U - $33,400 (c) Absorption costing
BT (22 6|($4.05 - $2.55) U - S15, When fixed cost is Rs. 10.00() and P/V
(SM 17 6|($4.10 - S2.00) U - $ ratio is 50% the break-even point will be:
16. The contribution margin per r part (a) Rs.20,000 V
BTQ2 is: (b) Rs.4(),000
(a) $1.50 V { :50 (c) Rs. 50,000
(c) S2.55 (d) $4,05 (d) None of these
(e) Not determini from the facts When profit volume ratio is 40% and
presented sales value Rs. 10,000, the variable costs
17. The break-even Vlume in units for part will be:
GM #7 is. (a) RS, 4,0()()
(a) (3,390 units (b) 10,650 units. (b) Rs. 6,000v.
(c) 13,419 units (d) 17,705 units (c) Rs. 10,000
(c) Some other amount (d) None of these
18. If Able Company produces and sells When margin of safety is 20% and P/V
13,000 units of part AL45, the amount of ratio is 60%, the profit will be:
Ables after tax net income attributable to (a) 30% (b) 33 1/3%
this product would be. (c) 12%Y (d) None of these
(a) S94() (b) $1,410
(c) S2,350v. (d) $8,090
Cost Accounting 32
27. When sales are Rs.2 lanks, fixed cost (b) A proposal
for a 5-years research and
Rs.30,000 Pi V ratio 40% the amount of development by a car manufacturer to
profit will be: develop an cngine that would get 100
(a) Rs. 50,000V (b) Rs.80,000 miles per gallon
(c) RS, 12,000 (c) A proposal to replace a 2-year-old
Question No.28 to 33 are based on following company car with a new car
information) (d) A proposal by a retail food store to
The Dooley Co. manufactures two increase the number of cans of a
products, baubles and trinkcts. The following particular tomato paste held in
arc projections for the coming year. inventory V
28. Assuming that the facilities arc not jointly Survey studies have found that the most
used, the breakeven output (in units) for important and most difficult stage of the
baubles would be. capital budgeting process is:
(a) 8,000 (b) 7,000 (a) Project definition and cash flow
(c) 6.000 (d) 5,000v. estimation V - -
2%). The breakeven volume (dollars) for (b) Project evaluation

Selection
trinkets would be. (c) Project performance review
(a) $8,000 v. (b) $7,000 (d) None oft eabove
(c) S6,000 (d) $5,000 Which of following statements in
3(). Assuming that consumers purchase incorre
composite units for four baubles and three (a) jective systematic analytical
trinkets, the composite unit contribution fr work is needed to guide
margin would be. "anagement in making capital budgeting
(a) S4.40 V (b) $4.00 ClS1C IIS,
(c) S1.33 (d) $1.10 (b) Some capital expenditures are

3 . If consumers purchase composite units of accepted as needed in the normal course
four baubles and three trinkets, the br of business operations
even output for the two products
bc.
(c) The replacement of one typewriter
with another is an example of a strategic
(a) 6,909 baubles; 6,909 trinkel capital budgeting decision V
(b) 6,909 bauhles; 5,182 trinkets (d) A project must be carefully defined so
(d) 5,000 baubles, '':

(c) 5,000 baubles, 8,000
ClS
that its expected benefits and costs are not
dependent upon whether another project
If baubles and trink COllie Oll-[O-OT1C is accepted
complements and there is not change in A proposed project to build a 20,000
the Dooley Co.'s cost function, thc square-foot office facility in Doylestown,
breakeven volume would be Pa.. and which of thc following projects
(a) S22,500 (b) $15,750 would be mutually exclusive?
(c) S : 3,300w (d) $10,858 (a) Purchase a tailor-made software
package for $50,000 for the accounting
department
(M) (b) Purchase a machine to replace one of
the firms existing machines
Which of the following projects does not (c) Purchase four new cars for the sales
involves a capital budgcting decision? force
(a) A proposal to purchase a computer (d) Build an 18,000 square foot office
system .
facility in Doylestown. Pa.V.

Cost Accounting } 33
5. The cash flow for a given period is equal (a) Working capital requirements should
1(): not be considered in estimating a project's
(a) The net income after taxes plus cash flow.
depreciation (b) Recapture of depreciation is not taxes
(b) The additional revenue generated by and therefore can bc ignored in capital
the project budgeting decisions.
(c) The additional dollars received minus -
(c) Cash flow is equal to net income after
the additional dollars paid outv taxes for financial reporting purposes
(d) The additional dollars paid out minus (d) None of the abovev
the additional profit 11. Which of the following statements is
Questions 16-6 through 16-8 are based on the correct?
following four hypothetical projects: (a) The value of a tax credit depends on
Project I. Purchase an IBM personal computer the firms marginal tax bracket
for the accounting department. (b) A tax credit is a dollar for dollar
Project II. Purchase an Apple personal reduction of taxable income -
computer for the accounting department. (c) A tax deductib expense has the same
Project III. Purchase software for a personal value as a tax cre
computer that can be used by the account!"g (d) None of the ev
department. 12. A firm in *: marginal tax bracket
Project IV. Purchase equipmcnt that will would be ch itled to a $1 million tax
reduce the amount of air pollution emitted from credit an investment project it is
the manufacturing plant, CO ge. ng. This would increase the cash
6. Which of the following projects n the initial year by:
represents a group of mutually exclusive $250,000 (b) S750,000
projects? c) S500,000 (d) $1,000,000 v.
(a) Project I and Project IIv
(b) Project I and Project II] SQ @ Which of the following statement is
Correct?
(c) Project II and Project III (a) In projecting cash flows, inflation
7.
(d) Project III and Project IV
Which of the above projects re
S.
!\{S a
should be ignorcd because it will impact
both revenues and costs
dependent or contingent or ingent (b) In projecting cash flows for a new
projects? <> product, a higher sales price will always
(a) Project I $
roject II increase the cash flows
(c) Project Illv (\ ) Project IV (c) Firms use only a single dollar estimate
& Which of the following projects for cash flows
represents a group of indepcndcnt (d) None of the answers is correct V
projects? 14. Suppose that the cash flow for an
(a) Project I and Project II investment is $1 million in year 1 and $2
(b) Project and Project III million in year 2. Which of the following
(c) Project II and Project Ill statements is correct assuming that an
(d) Project II and Project IVY appropriate discount rate is x percent
9. The tax shield generated by depreciation (where x is a positive number)?
of S 1 ()(),000 for a firm in the 25% (a) Equal to S3 million
marginal tax bracket is: -
(b) Greatcr than $3 million
(a) S25,000v. (b) $75,000 (c) Less than $3 million*
(c) S90,000 (d) S100,000 (d) Cannot be determined
| (). Which of the following statements is 15. Suppose the cash flow for an investment
correct? is $2 million for each of the next 6 years.
Cost Accounting 134
Which of the following statements is 3 $200,000

correct concerning the present value of The present value of the cash flow
the total cash flow assuming that an assuming a discount rate of 10% is:
appropriate discount rate is y percent (a) S363,640 (b) $323,810 v.
(where y is a positive number)? (c) $300,520
(a) Equal to $12 million (d) None of the above
(b) Greater than $12 million
(c) Less than S12 million v.
(d) Cannot be determined (N)
|0. Which of the following statements is
incorrect? Which of the following statements is
correct?
(a) The present value of $1 assuming a
discount rate of 0% is equal to $1. (a) An investment project with an
(b) The present value of an ordinary unconventional cash flow pattern can
lmave more than -one internal rate of
annuity of Sl for 10 years at 5% will be
less than the present value of an annuity
return V
due of Sl for 10 years at 5%. (b) For all in nt proposals for which
(c) The present value of $1 at 6.7% 4
a cash ow- rom operations can be
years from now is greater than the present
provid ' internal rate of return can be
CO! I'l
value of $1 at 4.5% 4 years from now. Y.
(d) The present value of $1 at 8.4% ten ( ' required rate of return must be
in before the internal rate of return
years from now is less than the present
value of S1 at 8.4% five years from now. n be computed
17. Suppose S100,000 is invested today for 5 (d) The ranking of two mutually exclusive
years at an annual interest rate of 6.7%. projects by NPV is not affected by a
Which of the following Statemen change in the required rate of return
correct'' 'C Which of the following statements is
(a) The future value will be $106 :
correct?
(b) The future value will be .# * (a) The net present value deereases as the
(c) The future value will ater than required rate of return increases. Y
S 33.5()() v (b) Replacement chains should be
<>
(d) None of the above established for independent investment

The present value | million to be projects with unequal lives.
received '
than
(c) A confliet eannot arise between the
internal rate of return and net present
(a) Less S illion
value methods.
(b) Sl million v
(c) More than $1 million (d) The index of profitability will always
(d) Cannot be determined rank projects the same as the payback
method -
The present value of $1 million to be

received 4 years from now is, The net present value for project with an
(a) S730,000 (b) $610,000 initial net cash outlay of $2,000 is $5,000.
Which of the following is correct?
(c) S640.000
(d) Cannot be determined V (a) The index of profitability is 3.5.
24). Suppose the cash flow for an investment (b) The present value of the cash flow
project is: from operations is $7,000
Y car Cash Flow (c) The projeet is profitable at the
! S100,000 required rate of return.
2 S100,000 (d) All the above are correct statements Y
4. The method of project selection which (a) Maximize the sum of the net present
considers the time value of money in a values
capital budgeting decision is (b) Maximize the sum of the internal rates
accomplished by computing the: of return
(a) Accounting rate of return on initial (e) Have the highest present value indexes
investment (d) Are ranked the highest by their net
(b) Accounting rate of return on average present values
investment 10. Future, Inc., is in the enviable situation of
(c) Discounted cash flow Y having unlimited capital fund. The best
(d) Payback period decision rule, in an economic sense, for it
5. Which of the following capital to follow would be to invest in all projects
expenditure planning and control in which.
techniques had been criticized because if (a) The accounting rate of return is
fails to consider investment profitability? greater than the carnings as a percent of
(a) Index of profitability technique Sales,
(b) Net present value technique (b) The paybac
the internal '
&
TC1LIIT]
is greater than
(c) Discounted payback tcchniquev
(d) Internal rate of return technique (c) The internal rate of return is greatcr
6. A method of projcct selection which than #
considers the time value of money in a et present value is greater than
capital budgeting decision is
accomplished by computing the: i . ch of the following statements is
(a) Accounting rate of return rrect?
(b) Internal rate of return Y (a) According to the NPV technique, the
(c) Payback period most profitable project from a group of
7.
If risky cash flows are recast in te
* mutually exclusive projects is the one
with the fastcst payback.
their certainty equivalent, they s be (b) The discountcd payback method does
discounted at: not take into consideration all cash
(a) The required rate of retu flows.v.
(b) The company wide hur. (c) If the NPV of a project is negative, it
(c) The accounting rat is a profitable project
(d) A risk-free rate (d) None of the above
8. Which of the ' capital budgeting 12. If the required rate of return increases,
which of the following is true?
techniques consider(s) cash flow ovcr the
entire life of the project? (a) The internal rate of return increases
(a) Yes Yes (b) The payback period increases
(b) Yes Nov. (c) The discounted payback period is
(c) No Yes unchanged
(d) No NO (d) None of the above Y
9. Budoon, Inc, has small capital budget. 13. Which of the following projects may have
When faced with indivisible projects, more than one internal rate of return?
each of which is estimated to generate a (a) Projects X and Z
return which exceeds the company's cost (b) Projects W and Y
of capital, the company should select the (c) Project Y and ZY
combination of projects which will fully (d) All the projects -
utilize the budget and, Questions 17-14 through 7-18 refer to

the following information:
Cost Accounting 136
The initial outlay an investment project is iii. The internal rate of return assumes
S4 million. The present value of the cash flow that the cash flows are reinvested at an
from operations is shown helow for the interest ratc equal to 12%.
following four interest rates. iv. Neither the net present value nor the
6% $5.7 million internal rate of return assumes that the
80 o $4.8 million cash flows will be reinvested.
|(}%, S4.0 million (a) 1 only
12% $3.2 million (b) II and II onlyv
l4. What is the internal rate of return for this (c) I and III only
project? * (d) IV only
(a) (3% (b) 8% Which of the following statements is
(c) 10%v/ (d) 12% correct?
What is the projects net present value if (a) The theory hehind using the cost of
the required ratc of return is 8%? capital is that a project should earn a rate
(a) $4.8 million Of return that'i fficient to pay off all
(b) $1.8 million those ' shed funds so that the
(c) $0.8 million v project . uld e undertaken.
(d) Cannot be determined (b) Ph with establishing a
| (). What is thc discounted payback required company wide cost of capital is that all
yield is 6%? - rojects have different degrees of risk.
(a) Less than two years # The cost of capital should be
(b) Less than four years computed on an after tax basis
(c) More than six years (d) All the above statements are correet, V
(d) Cannot be determined v
The index of profitability for the
the required rate of return is 6%
*S*
'N (O)
(a) 1,425 v (b) 1.25
(c) ()()() ( d) () () 2 1. Another name
criterion is the:
for
-
the opportunity
If the required rate of n is 13%,
which of the following-statements is (a) Profit criterion
Correct'' s' (b) Mini-max criterion
(c) Regrets criterionv
(a) The net prese e is positive
(b) The indcx fitability is less than (d) Worse case criterion
onev. (e) None of the above
Models in which there is more than one
(c) The internal rate of return is less than
5% possible outcome are called.
(d) None of the above (a) Deterministic models
| 9| The net present value of a project is $5
(b) Stochastic modelsv.
(e) Input-output models
million. If the required rate of return is
7% and the internal rate of return is 12%, (d) Linear programming models
(e) None of the ahovc
which of the following statements is
correct? Which of the following statements is
correct?
1. The newt present value assumes that the
cash flows can be reinvested at an interest (a) A simple event refers to an event
rate equal to 12%. which can be decomposed into more than
One CVCIlt.
it. The net present value assumes that the
cash flows can be reinvested at an interest
rate equal to 9%.
Cost Accounting
(b) Conditional probabilities are (c) S10,000 (d) $15,000
probabilities obtained after the initial (e) None of the above
conditions have changed. Y The standard deviation of the material
(e) Mutually exclusive events refer to cost per unit of product X is S4. The
events where more than one event can variance is:
occur simultaneously, (a) $2. (b) $6.
(d) Two events are statistically (c) $8. (d) $16v.
independent if the occurrence of one (c) None of the above
affects the probability of the other 9. Which of the following statements is
(c) None of the above correct? -
The labor cost per unit of a product over (a) The variance is the square root of the
the previous 50 days was as follows: standard deviation
Labor cost per unit Number of days (b) The expected value is a measure of
realized risk
S5.0() 15 (c) The coefficient of variation is a
S5.5() 20 measure of : risk v.
S6.00 | () (d) The c ient of variation is equal to
$0.5() 5 the vi by the expected
" <>
On the basis is of the above observations,
the probability that the labor cost per unit is
$5.50 is: 10.
(&
valu
S.
of the above
random variable normallyis
(a) 10% (b) 15% O istributed, then what is the approximate
(c) 30% (d) 40%Y probability of obtaining a value within a
(e) 50%
On the basis of the information in
previous questions, the probabilit
# t
range of one standard deviation below the
mean and one standard deviation above
the mean? -
the labor cost per unit is less

1S. *
} (a) 50%
(c) 68%Y
(b) 60%
(d) 95%
(a) 60% (b) & (e) 99%
(c) 70% % Questions 18-11-18015 are based on the
(e) 90% Y following information:
What is the
fixed cost if the
of the monthly
bility distribution is
The variable unit cost of producing a
product is normally distributed with an
as shown belo cxpected Value (mean) of $20 and a standard
Probability Monthly Fixed Cost deviation of $2.
.20 $800,000 1 . The probability that the variable unit cost
.70 1,000,000 will be less than $20 is:
..] () 1,200,000 (a) 10% (b) 20%
(a) S950,000 (b) $980,000v (c) 30%v/ (d) 40
(c) $1.00(),000 (d) S1,050,000 (e) 50%
(e) None of the above 12. The probability that the variable unit cost
What is the expected value of the net is $30 is approximately:
present value of the following project? (a) 20% (b) 15%
Probability NPV (c) 10% (d) 5%
25 $10,000 (e) Less than 1%Y
.5() $10,000 13. The probability than the variable unit eost
.25 $20,000 will be greater than $15 is:
(a) S6,667 (b) S7,500w (a) 20% (b) 40%
Cost Accounting 138
(c) ()()', (d) 90% (e) When the probability distributions for
(c) Greater than 99%v/ proposed investment projects are not
14. The probability of a variable unit cost normally distributed, the coefficient of
greater than or equal to $22 is variation should be used as a measure of
approximately: relative risk. Y
(a) 16% (b) 20% | 8. Which of the following statements is
(c) 28% (d) 34%v/ correct?
(c) +5% (a) A basic theorem of calculus is that an
| 5. Suppose that the standard deviation is 8 optimal value for a function can be
rather than 4. The probability that the determined by taking the first derivative
variable unit cost per unit will be greater of that function, Setting it equal to zero,
than $20 is: and solving the resulting equation. Y
(#) 5{}% v. (b) 40% (b) A basic theorem of calculus is that if
(c)3()", (d) 20% the second derivative of a function is
| ().
(c) l ()',
The standardized value (Z value or normal
positive when
value, the
'
'' d at the optimal
ue is a maximum.
deviate) of a random variable is computed (c) When the tet l cost can be expressed
by: as a nonlinear function, there is only one
(3) Z = Exected value of X possibl k even point -
- Variance of X (d) economic order quantity

f a is derived using regression
(b) z = Expected value of X times the analysis,
probability of X
X Exected value of X
e) None of the above.
S@
(e) z = - * *
Y What is the first derivative of the
Stan ndard deviation of X function.
(d) z = (Standard deviation of X)" SQ 5x 10x + 100
(e) None of the above (a) 10x + 10x + 100x
17. Which of the following
incorrect?
* is
(b) 10x 10 +
1 ()()
X
(a) A subjective probability &he
that is
(c) 10x - 10 Y
assigned to an event when there is no
(d) 10x
prior evidence about '' elihood of the
occurrence of that 20.
What equation can be used to solve for
(b) The expecte * value of perfect the optimal value of the following
information is between the equation for profit, where Q represents
expected value will perfect information the quantity produced and sold?
and the best decision if perfect 100 16,000() - 75,000
information is not available. (a) 100 75,000 = 0
(c) The opportunity loss is the difference (b) 100 16,000 = 0
between the best profit that could be (e) 200 - 16,000 = 0V.
realized if the environment occurred and
(d) 1000 - 16,000 = 0
the profit that would be realized for a (e) None of the above
given decision if that environment
occurred.
(d) In decision theory, the expression of

personal preference is referred to as an
expected utility value.
Cost Accounting 139
(c) Higher purchase-order cost and lower

(P) carrying cost
(d) Lower purchase-order cost and higher
What is the profit maximization formula carrying costV -
for the Golden Hawk Company? 6. The economic order quantity formula can
(a) S2A + $5B + S4C = X (where X = be used to determine the optimum size of
profit) / 2!
(b) S5A + S8B + S5C < 96,000 (a) Yes No

(c) S2A + $5B + $4C < X (where X = (b) Yes Yes Y.
profit) (c) No Yes
(d) $2A + $5B + S4C 96,000 (d) No No
2 What is the constraint for the painting 7. Ridgefield, Inc, is considering a three
department? phase research project. The time estimates
(a) 1A + 2B + 2C > 38.000 for completion of phase 1 of the project
(b) 2B - 5B + 4C > 38,000
(c) 1A-2B + 2C < 38,000 v.
are: - &Q Months
S
(d) 2A + 3B + 2C < 30,000 Optimistic 4
3 When using the graphic method of Most 8
solving a linear programming problem, PCssiistic 18
the optimal solution will always be at:
(a) Minimum value of X
- ' the Program Evaluation Review
Te i (PERT), the expected time for
(b) X and Y intercept -
tion of phase 1 should be:

(c) A corner point described by the (a) 8 months (b) 9 months v.
feasible region* ( c)) l () months
(d) Point of interception
The use of the graphic method as a
* 8. In a Program
(d) 18 months
Evaluation
Technique system (PERT), reducing total
Review
for solving linear programming pro S.

time can be accomplished only by:
(a) Can be used when there ar than
two restrictions '
(b) is limited to situations/Where there are
(a) Shortening a slack path
(b) Shortening the critical pathy
(c) Working overtime
two restrictions (constr
(c) Is limited to si
: -
ns where there is
(d) Using sensitivity analysis
Questions 19-9 and 19-10 are based on the
one restriction { alnt) following.
(d) ed if there are any The S. Rose Construction Company has
restrictions (c raints) contracted to complete a new building and has
Siegal company has correctly computed asked for assistance in analyzing the project.
its economic order quantity as 500 units, Using the Program Evaluation Review
how ever, management feels it would Technique (PERT), the following network has
rather order in quantities of 600 units. been developed.
How should Siegal's total annual The numbers above the paths represent
purchase order cost and total annual expected completion times for the activities
carrying cost for an order quantity of 600 (measured in days).
units compare to the respective amounts 9. The critical path is:
for an order quantity of 500 units? (a) 1-2-5-6 (b) 1-2-3-4-6-V
(a) Higher purchase-order cost and higher (c) 1-3-4-6 (d) 1-7-8-6
carrying cost (e) I-9-6
(b) Lower purchase-order and lower
10. Slack time on path 1-9-6 is:
carrying cost (a) 4.3 days' (b) 2.8 days
Cost Accounting # 4()
(c) .9 day (d) .4 day 16. A spindle manufacturer uses about 200
(e) () days cases of raw wood per month. It pays a
| 1. The economic order quantity model broker $50 to locate a supplier and handle
(OEQ) has several assumptions that the ordering and delivery arrangements.
underlie is use. Which one of the Storage and handling costs are $.2 per
following assumptions is used in the EOQ case per month. If each case costs $.78,
model'? the most economical order quantity
(a) Demand varies with price (rounded to the next whole number) is:
(b) Purchase costs do not vary with (a) 884 cases (b) 1,133 cases
quantity ordered Y (c) 6.25 cascs (d) 1,000 casesw
(c) Replenishment is lagged by (e) Some amount other than those given
availability above.
(d) All costs in the model are negotiable Questions 19-17 to 19-19 are based o the Jarten
(e) Lead time can vary within boundaries Company, which manufactures and sells two
12. A company would use the EOQ modch to: products. Demand for & Awo products has
(a) Minimize thc unit purchase price of grown to such a leve Jarten can no longer
inventory meet the deman <> h its facilities. The
(b) Minimize the number of orders placed company can a total of 600,000 direct
during a year labor hours , using three shifts. A total
(c) Minimize the cost of placing orders of
annual
of machine time is available
yO he company plans to use linear
(d) Minimize the combined costs of
placing orders and carrying inventoryV pro ing to determine a production
(e) Minimize the required amount of S that will maximize its net return.
safety stock The company spends $2 million in
13. Which of the following items is no
cos'
S' and promotion and incurs $l
illion for general and administrative costs.
included in the annual carrying
inventory?
(a) Cost of capital
& The unit sales price for model A is $27.50
model B sells for $75,00 each. The unit
(b) Insurance on inventory manufacturing requirement and unit cost data
(c) Annual warehouse depreci atinv are as how below. Overhead is assigned on a
(d) Taxes on inventory
(e) Inventory * '' <>
Oil stored
machine hour (MH) basis.
17. The objective function the would
inventory S. maximize Jarten's net income is:
14. The calculation of the inventory reorder (a) 10.50A + 32.00BV.
point in units requires the: (b) 8.50A +24.00B
(a) Purchase price per month (c) 27.50A + 75,000B
(b) Annual demand for units (d) 19:00A + 51.00B
(c) Daily demand for units V (e) 17:00A + 43,000B -
(d) Storage cost per unit 18. The constraint function for the direc
(e) Were house capacity labor is:
15. Which of the following items is irrelevant (a) 1A + 1.5B s 200,000
for a company that is attempting to (b) 8A + 12B s 600,000
minimize the cost of a stock out? (c) 8A + 12B s 200,000
(a) Cost of placing an orderY (d) 1A + 1.5B < 4,800,000
(b) Contribution margin on loss Sales (e) 1A + 1.5B s 600,000%
(c) Storage cost of inventory 19. The constraint function for the machine
(d) Probability of being out of stock capacity is:
(a) 6A +24B 3 200,000
Cost Accounting 14]
(b) 1/.5A + 1.5/2.0B < 800,000 (a) The simulation approach requires the
(c) .5A + 2B s 200,000 evaluation of all possible outcomes
(d) (.5 + .5)A + (2 + 2)B s 200,000 V associated with a decision
(e) (.5 x 1) + (1.5 x 2.00) < (200,000 x (b) Simulation provides an optimal
600,000) solution to a problem.
20. Which of the following statements is (c) Simulation uses only the best-guess
correct concerning the just in time value for each random variable. -
inventory management approach. (d) Monte Carlo simulation uses the

(a) The maximum inventory level should probability distribution of each random
be held because ordering costs are often variable. V.
overestimated. (e) None of the above.
(b) The cost of stock out is very high so The final product of a Monte Carlo
more than the inventory level suggested simulation model is:
by the EOQ model should be held. (a) A cumulative probability
(c) For items manufactured internally, no distribution v.
inventory should be held but for items
purchased from outside vendors, the
(b) A : dow prices.
(c) A set of Shadow
amount suggested by the EOQ model (d) A hyperspace solution set.
should be purchased. (e) An optimal solution.
(d) For items purchase from outside In linear regression which
vendors, no inventory should be held but
for items manufactured internally, the
: es the relationship between total
ufacturing costs and output, which
amount suggested by the EOQ model gression parameter measures the fixed
should be manufacture. cost?
(e) Virtually no inventory purchased o 22 (a) The slope of the estimated regression
manufactured internally shoul line
maintained by the firm. Y S. (b) The coefficient of determination V
(c) The intercept of the estimated
regression line
(Q) (d) None of the above
(e) The coefficient of correlation
Which of the ** statements is In a simple linear regression which
incorrect? estimates the relationship between total
(a) Descriptive dels are used to
manufacturing costs and output, which
analyze the im of alternative courses
regression parameter measures the
of action,
variable costs per unit?
(b) Linear programming is a descriptive (a) The slope of the estimated regression
model, Y linev
(c) Sensitivity analysis is a descriptive (b) The coefficient of determination
model.
(c) The intercept of the estimated
(d) Simulation is a descriptive model. regression line
(e) Descriptive models help management (d) None of the above
in deciding on what may be a good, but (e) The coefficient of correlation
not necessarily optimal, Solution to a 6. Which of the following statements is
problem. -
correct?
With respect to simulation, which of the (a) In a multiple regression model there is
following statements is correct? more than one dependent variable.
Cost Accounting 142
(b) In a multiplc regression model there that there is no statistical relationship

can be no more than six independent between two variables.Y
variables. (d) The percentage of the dependent
(c) In a simple linear regression model variable explained by the independent
there is only one explanatory variable. Y variables is the coefficient of
(d) In a simple linear regression model determination,
there can be more than one dependent (e) The coefficient of determination is the
variable. ratio of thc explained sum of squares to
(e) None of the above. the total sum of squares.
7. Which of the following statements is 11. Remart Corporation is revising its pricing
incorrect? -
policy. Remart believes the following
(a) Regression analysis is sometimes actions and estimated probabilities should
referrcd to as the method of least squares. be used to simulate its competitor's
(b) The coefficient of correlation may response if Remart reduces its priees:
have a value between -1 and 1. ACTION
(c) he coefficient of determination may Decreases prices by
<>
R.
entage
have a value between -1 and l. Y Decreases prices by a $nhaller percentage
(d) The high-low method of estimating a No change in <>
relationship is inferior to the regression PROBABII. -
method. 6
(d) in an estimated regression, there will
generally be an observed error tcrm. %
The following regression was estimated: Q: numbers of 0 to 99 are being
Y = } {){} + 2 ()x An appropriate assignment of random
if the observed value for Y was 150
the actual value for X was 4
''
)
o:
m bers for the "decreases prices by same
percentage" category would be:
observed error term is: N (a) 1-60 (b) 10-69
(a) 15 (b) - 100 S. (c) 3()-7() (d) 30-40Y
(c) 35 V (d) 3 (e) 39-99
(e) None of the above With respect to regression analysis, which
9. Qualitative variables may be incorporated
of the following statements is correct?
into a regression mod sing: (a) The standard error of the estimate is
(a) Slack variables larger the higher the explained sum of
(b) e
(c) Random variables. Y
Squares,
(b) For a given confidence level, the
(d) None of the above. eonfidence interval for the forecasted
(e) Dummy variables. value is larger the higher the explained
|(}. Which of the following statements is sum of Squares. -
incorrect? (c) The higher the confidence level, the

(a) to identify mixed costs when using wider the confidence interval for the
regression analysis, dummy variables can foreeasted value. Y
be used. (d) The confidence interval will be the
(b) In regression analysis, statistieal tests same regardless of the confidence level, e
must be employed to determine the None of the above.
statistical significance of the cstimated Suppose that the coefficient of correlation
relationship. -
between direet labor hours and output is
(c) A coefficient of determination of () for 7. Then the coefficient of determination
a simple linear regression always means would be:
Cost Accounting 143
(a) ().49 V. (b) 0.92 17. As cumulative production increases in an
(c) ().70 (d) 0.84 application
curve, the: that is subject to the learning

(c) None of the above c

The correlation coefficient that indicates (a) Average costs per unit of output
the weakest linear association between decrease systematically V
two variables is: -
(b) Average costs per unit of output

(a) -0.73 (b) 0.19 v increase systematically,
(c) -0.1 ! (d) ().52 (c) Fixed costs per unit of output increase
(c) ().25 systematically
Huron's management knows from prior (d) Total fixed production costs decreasc
experience that the direct labor time Systematically.
needed per unit of product will be (e) Cumulative production costs decrease
progressively smaller by a COf]Stalnt systematically.
percentage rate as experience is 18. Simulation, a widely used technique in
gained in manufacturing the product. The decision modeling, is:
quantitative method that would be most helpful (a) A process of "Gdeling wherchy real
in estimating Huron's total costs for the project activities are re in mathematical
iS form or other form.V.
(a) Learning curve tcchniques. Y (b) A technique used to pinpoint random
(b) Linear programming, deviations in industrial processes and
(c) Cost-volume-profit analysis, othe titive operations.
(d) Differential calculus. ( echnique used to separate costs into
(e) Discounted cash flow techniques. and variable portions.
! (3. Proxy Company is a foundry which ) A short-run allocation model.
specializes in custom orders. The
company employs a job
22 (e) An inventory management model that
is used to calculate the optimum order
quantity.
manufacturing facility. Bceause of
nature of its business-. Proxy s
'\
tle)
[9.

T If the explained sum of squares for a

does" the same job more than nd regression is 9,000 and the unexplained
each job has a separate set and Sequence sum of squares is 11,000, the coefficient
of operations. The comp has 10 of determination is:
consider the cost of i nlachine and (a) 91% (b) 45%
labor capacity, the C carrying in (c) 82% v. (d) 23%
process inventory, he importance of (e) 50%
meeting specifi der completion due 2(). With respect to the learning curvc, which
dates. The Proxy management wants to of the following stateinents is correct?
develop a model which incorporates the (a) An index of learning rate is equal to
operating characteristics of the job shop' one minus the learning rate
including random events and occurrences (b) The higher the learning rate, the faster
which affect operations. The will the average cost per unit decrease as
methodology Proxy would find most output increases. Y
useful is: (c) The higher the learning rate is, the
(a) Dynamic programming lower the index of learning rate
(b) Cost-volume-profit analysis. (d) The cost reduction percent is equal to
(c) Linear programming one minus the index of learning rate, e
(d) Markov analysis, None of the above.
(e) Simulation techniques.
Cost Accounting 144
(d) Only costs properly ailocable to the

(R) cost Center under generally accepted
accounting principles
What term identifies an accounting Which of the following items of cost
System in which the operations of the would be least likely to appear in a
business are broken down into cost performance
centers and the control function of a
report based on responsibility accounting
forcman, Sales manager, or supervisor is techniques for the supervisor of an
emphasized? assembly line in a large manufacturing
(a) Responsibility accountingV corporation?
(b) Operations research accounting (a) Supervisor's salaryv.
(c) Control accounting (b) Repairs and maintenance
(d) Budgetary accounting (c) Materials
2 Periodic internal performance reports (d) Direct labor
based upon a responsibility accounting Of most relevance in deciding how or
system should not: . which costs should be assigned to a
(a) Distinguish between controllable and responsibility c s the degree of:
uncontrollable costs
(b) Be related to the organization chart.
(a) Avoid
(b) "
y.
-
(c) lnclude allocated fixed overhead in (c) Causally

determining performanee evaluation V
(d) Include variances between actual and
(d)'
The report to a territorial sales manager
budgeted controllable costs. } the contribution to profit by
3 Which of the following statements best
describes a characteristic of a factory
2: salesperson in the territory is called:
(a) A profit report
overhead control report prepared for use (b) A distribution report.
by a production-line department head? ) (c) An absorption profit report.
(a) It is more important that the repo * (d) A responsibility report.
precise than timely, (e) A gross profit report. Y
(b) The rcport should include
on all costs chargeable to th
ton
rtmcnt,
8. A segment of an organization is referred
to as a profit center if it has:
regardless of their origin or control. (a) Authority to make decisions affecting
(c) The report should be Stated in dollars the major determinants of profit including
rather than in '' l units so the
the power to choose its markcts and
department '' ws the financial
sources of supply. Y
magnitude of any variances. (b) Authority to make dccisions affecting
(d) The costs in the report should include the major determinants of profit including
only those controllable by the department the power to choose its markets and
head. Y
sources of supply and significant control
Internal reports prepared under the over the amount of invested capital.
responsibility accounting approach should (c) Authority to make decisions over the
be limitcd to which of the following most significant costs of operations
costs? -
including the power to choose the sources

(a) Only variable casts of production of supply.
(b) Only conversion costs (d) Authority to provide specialized
(c) Only controllable costsv. support to other units within the
organization.
Cost Accounting # 45
(e) Responsibility for combining the raw managers who are on the rise in the
materials, direct labor, and other factors company.
of production into a final output. II. Managers at corporate headquarters
A segment of an organization is referred have greater control in secing that the
to as an investment center if it has: goals of the company are realized.
(a) Authority to make decisions affecting III. Added decision-making authority and
the major determinants of profit including responsibility often leads to increased job
the power to choose its markets and satisfaction and often persuades managers
sources of Supply to put forth their best efforts.
(b) Authority to make decisions affecting (b) Only I and II (b) Only 1
the major determinants of profit including (c) Only II and III./ (d) None of these
the power to choose its markets and (e) Only I and III
sources of supply and significant control The most desirable measure of
over the annount of invested capitalV departmental performance for cvaluating
(c) Authority to make decisions over the the performance of the department
*
most significant CGS15 of operations manager is departmental

including the power to choose thc sources (a) Revenu '. controllable
of supply, departmental spel sesv.
(d) Authority to provide specialized (b) Net in me
support
organization,
to other units within the (c)
(d)
#:

to indirect expenses
ue less departmental variable
1.15%:S
(e) Responsibility for developing markets
for and selling the output of the 13. osts to be charged against a certain
organization. egment on the basis of the principles of
(). A segment of an organization is referred responsibility accounting are:
to as a cost center if it has: (a) Those costs for which the segment is
(a) Responsibility for developing
for and selling the output
:\
oN
solely responsible
(b) Those costs that would be eliminated
organization. if the segment were discontinued
(b) Authority to make decisions affe. (c) Those costs that exist only because of
the major determinants of profit including the segment
the power to choose * <>
and (d) All of the above:
sources of supply SS w a
(e) a and c only
(c) Authority to make decisions over the 14. A basic requirement for a responsibility
ImC)St of operations accounting system is:
(a) The construction of a personalized
including the power to choose the sources
chart of accounts tailored to fit the
of supply. Y
(d) Authority to provide specialized organizational structureV
support to other units within the (b) A clear system of lines of authority
organization. and cash budget preparation.
(e) Responsibility for combining raw (c) That accounting adapt its reporting to
materials, direct labor, and other factors an organization so that reports reflecting
of production into a final output. all organizational activities can be
1 1. Which of the following are benefits of prepared
decentralization? (d) All the above.
I. Giving managers of divisions greater An equitable solution to the problem of
decision-making control over their cost incurrence responsibility is not:
divisions provides excellent training for
Cost Accounting 146
(a) The arbitrary use of allocations that 20. Frequent reporting often plays an
are devised for product costing. important part in the usefulness of
(b) Charging the cost of a service to the information. Which of the following
person with responsibility over both the Statements concerning a short reporting
acquisition and use of the service. interval is correct?
(c) Charging the cost to the person who (a) The shorter the reporting interval, the
can significantly influence the amount of less expensive the information
cost through his or her own action. (b) Short reporting intervals decrease the
(d) Charging the person whom amount of information which must be
management wants to be concerned with stored until the next reporting time. Y
various cost elements so that he or she (c) Shorter reporting intervals mean fewer
will help to influence those who are reporting periods in the course of a year
sponsible. Y (d) Shorter reporting intervals minimize
- rst step in Setting up a system of the importance of unusual, one-time
VentS,
lity accounting is to:

eporting system that keeps (e) None of the ab SO
rties informed of ()
'ized chart of $<>
sts
on cost
The :
ormance for evaluating the
r
measure of profit
'hat
*
pe" nec of the manager is the profit
denier's
) Net income.
") Contribution to indirect expenses,
venue less variable expenses.

S.
* evenue
expenses. Y
less controllable
*erformance evaluation,
norts based on a
* system should
shart.
"Alien Corp.'s minimum desired rate of was 720,000 units while actual sales
ft LIITl
amounted to only 600,000 units. The units
3 How much is the return on investment? are sold for $20 each and the gross
(a) 60% v. (b) 18% margin ratio is 30%. The dollar amount
(c) 33% (d) 15% which best quantifies the marketing
How much is residual income? department's failure to achieve budgeted
(a) $0 (b) $210,000 performance for the current year is:
(c) $20(),()()()V (d) $246,000 (a) $2,400,000 unfavorable
The purpose of a flexible budget in cost (b) S600,000 unfavorable.
center performance evaluation is to (c) S2,000,000 unfavorable
(a) Allow management some latitude in (d) Some amount other than those given
meeting goals. above V
(b) Eliminate cyclical fluctuations in (e) $720,000 unfavorable
production reports by ignoring variable A flexible budget:
COSIS
(a) Classifies budget requests by activity
(c) Compare actual and budgeted results and estinates the '" arising from
at virtually any level of productive each activity.
activity. Y (b) Presents men of expectations
(d) Reduce the total time in preparing the for a perio
COInn]11n
: not present a firm
annual budget. *
(). Which one of the following statements (c) Pr the plan for only one fevel of
best describes cost allocation? acti nd, does not adjust to changes in
(a) A company can maximize total the level of activity.
company income by selecting different d) Presents the plan for a range of
bases to allocate indirect costs. activity So that the plan can be adjusted
(b) A company should select an for changes inactivity. Y
allocation base to raise or 'S (e) Divides the activities of individual
reported income on ghen products responsibility centers into a series of
(c) A company's total income will remain packages ranked Ordinally.
unchanged no matter how indirect costs 1 (). Which one of the following items would
are allocated Y most likely not be incorporated into the
(d) A company, as a gene al Q.rule, should calculation of a division's investment base
allocate indirect costs r nly or on the when the residual income approach for
basis of an "ability-to-bear" criterion. performance measurement and evaluation
Controllable
accounting purpo
'' or responsibility is used?
are those costs that (a) Fixed assets employed in divisional
are directly influenced by: operations -
(a) A given manager within a given (b) Vacant land being held by the division
period of timev as a potential site for a new plant V
(b) Production volume. (c) Divisional inventories when division
(c) A change in activity management exercises control over the
(d) Sales volume. inventory levels. -
Kane Corporation has a practical (d) Divisional aecounts payable when

production capacity of 1 million units. division management cxercises control
The current year's master budget was ovcr the amount of short-term credit
on the production and sales of (e) Divisional accounts receivable when
inits during the current year. division management exercises control
tion for the current year over credit policy and credit terms.
ll. Suppose a manager's performance is to be this goal. Axle must sell how many units
measured by the ROI formula. Which of per year?
the following will not result in an increase (a) 14,500 (b) 19,500
in the RO1 percentage for this manager, (c) 16,750V (d) 18,250
assuming other factors remain constant? (e) None of these
(a) A reduction in expenses 16. Suppose the manager of Axle desires an
(b) An increase in sales - annual residual income of $45,000. In
(c) An increase in net operating incomew order to achieve this, Axle should sell
(d) None of these how many units per year?
(c) An increase in operating assets (a) 14,500 (b) 19,500 v
12. Suppose a manager's performance is to be (c) i,750 (d) 8,250
measured by the residual income formula. (e) Impossible to determine from the
Which of the following will not result in information given
an increase in the amount of residual The following information should be used
income for this manager, assuming other in answering Questions 22-17 to 2219.
factors remain constant? Moorehead M ' Company
(a) An increase in sales produces two produc which the following
(b) An increase in the minimum required data have been : . Fixed manufacturing
rate of return V cost is applied ** ate of $1.00 per machine
(c) A decrease in expenses hour. -
(d) A decrease in operating assets Setting pride $4.00 $3.00

(e) None of these
Use the following information
Variab
Fix
".
nufacturing
cost 2.00
cost .75
1,50
for .20
Questions 22-13 through 22-16:
The Axle Division of LaBate Company
selling cost 1.00 100
The sales manager has had a $160,000
makes and sells only one product. Annual data increase in budget allotment for advertising and
on the Axle Division's single product 'Q wants to apply the money to the most profitable
product. The products are not substitutes for
Unit Selling price.................... $50
Unit variable cost .................... $ one another in the eyes of the company's
Total fixed costs ..................... ,000 CuStnnerS.
Average operating assets ............. 50,000 17. Suppose the sales manager chose to
Minimum required rate of return..... 12% devote thc entire $160,000 to increased
Axle has no interest 3rise and all the advertising for XY-7. The minimum
revenue and expenses rela operations. Each increase in Sales units of XY-7 required to
question is
13. Jl Axle sells 15,000 units per year, the
offset the increased advertising would be:
(a) 640,000 units
residual inconne for the year will be: (b) 128,000 unitsv
(a) $30,000. (b) $10,000. (c) 60,000 units
(c) $100,000 (d) $50,000v (d) 80,000 units
(c) None of these, - -
14. If Axle sells 16,000 units per year, the 18. Suppose the sales manager chose to
return on investment for the year will be: devote the entire $160,000 to increased
(a) [2%. (b) 18%. advertising for BD-4. The minimum
(c) 15%. Y (d) 1.6% increase in sales dollars of BD-4 required
(e) None of these to offset the increased advertising would
15. Suppose the manager of Axle desires an be
annual ROI of 22%. In order to achieve (a) $160,000 (b) $1,600,000.
(c) $320,000Y (d) $960,000
Cost Accounting
(e) None of the above,
| 9. Suppose Moore head has only 100,000 (T)
machine hours which can be made
available to produce XY-7 and 8D-4. If Which formula represents the calculation
the potential increase in sales units for of the sales price variance?
either product resulting from advertising (a) BUCBSP - ASP) v.
is far in excess of these production (b) BSP(BU - AU)
capabilities, which product should be (c) AU(BSP - ASP)
produced and what is the estimated (d) ASP(AU - BU)
2 Which formula represents the-calculation
increase in contribution margin earned?
of the volume variance?
(a) Product XY-7 should be produced
yielding a contribution margin of (a) BU(BGP - AGP)
$75,000. (b) BGP(BU - AU)*
(b) Product XY-7 should be produced (c) AU(BGP - AGP)
yielding a contribution margin of (d) AGP(BU - AU)
$133,333.
Which formula g" the calculation
of the cost varia
(c) Product BD-4 should he produced
yielding a contribution margin of (a) BC(BU
(b) BU(BQ-AC)
#
$250,000 v.
(d) Product. BD-4 should be produced (c) AC( BU) v.
yielding a contribution margin of (d) e - AC)
$187,500 Anu ease in cost of sales greater than
(e) Some answer other than those given ncrease in sales will cause the gross
ofit
above.
percentage to:
2%
20. The Farrell Company has only variable
costs (i.e., no fixed costs). Last (a) Decrease
Farrell had a margin of 30% and a
on investment of 18%. This year th
'' (b) Increase.
(c) Remain the samez
rcvenue and average operati ':
6. The Stamp Co. had sales of $40,000 and a
were exactly the same
GPR of 20%. Its cost of sales was
year.
However, his year the : le costs
therefore:
went up 10% over last (a) $4,000 V (b) $32,000

. This year the
return on investment is: (c) $36,000 (d) $8,000
(a) 1.8% (b) 15.4%.
9. What, type of change in cost will have an
(c) 23%v/
(e) [Impossible
(d) 13.8%.
determine from the
unfavorable effect on gross profit?
(a) increasex' (b) Decrease
10. The sales mix for the J. F. Company
information given,
* Given below are notations and their changed significantly from the budgeted
amount. In such a situation the president
respective meanings for a single-product
of the company should
company for Questions 23-1, 23-2, and 23-3: .
BU budgeted units (a) Call on the marketing department for
BGP = budgeted gross profit/unit an explanation*
AU actual units (b) Develop a product analysis of cach
AGP = actual gross profit/unit product
BSP = budgeted sales price/unit (c) Ask the production department for all
BC = budgeted cost/unit explanation
ASP = actua,' sales price/unit (d) Both a and b
AC = actual cost/unit. (e) None of the above.
Questions 23- 1 to 23-15 require the use (b) S506 favorable

of the income statement of Duo, Inc., presented (c) $560 favorablev
below. These five questions relate to the (d) $940 favorable
calculation of variances that explain the differ (e) $1,040 favorable
ence between the actual gross profit and 16. If a single product is sold, the changes in
budgeted gross profit in terms of sales price, revenue and in costs are affected by
CoSt. Sales mix. and sales volume. which of the following factors?
| |. The net effect on profit of the unit sales (a) Sales mix and sales price
volume variance of product AR-10 is: (b) Sales mix, sales price, and volume
(a) SI (160 unfavorable (c) Sales mix and volume V
(b) S1,440 favorablev (d) Sales price and volume
(c) S .56() favorable (c) a and b
(d) None of the above 17. lf selling prices and costs remain
(c) Cannot be calculated from the constant, a shift in which item from less
information provided profitable to more profitable products
12. The net cffect on profit of the sales price increases the ross margin and
variance for product ZR-7 is: thereby improve its?
(a) $400 unfavorable (a) Unit costs
(b) $240 unfavorablev (b) Sales v ev
(c) S56() favorable (c) Sale
(d) None of the above (d)' sales
be calculated from the The information below should be used in
13.
(e) Cannot
information provided
The net effect on gross profit from the
answeri:
23-18
data are available
to 23-20.
for the Maxi
The
change in the unit cost of sales of product pany over a 2-year period:
ZR-7 is mber of units sold 10,000 8,000
(a) S280 unfavorablev.
(b) None of the above.
(c) S300 unfavorable
s: elling price per unit $.95
Cost per unit
Gross margin per unit .30
.65
.32
$1.00
.68
(d) Cannot be calculated the !8. Determine the effect on gross margin over
information provided the 2-year period from a change in selling
(e) S120 favorable, <> price: -
14. If products AR-10 ZR-7 are (a) Increasc of $240

substitutes for each a sales mix and (b) Increase of $450V.
pure volume vari: for the combinc? (c) Decrease of $240
products can be calculated. If this (d) Increase of $500
combination . is calculated, (c) Increase of $400
the net effect on gross profit of the change Determine the effect on gross margin over
in the unit Sales mix is: the 2-year period from a change in unit
(a) S.480 favorabie cost price:
(b) S9. favorable (a) Increase of $240
(c) S506 favorablev (b) Decrease of $400
(d) S1.0->() favorable (c) Decrease of $240
(e) S56C) favorable (d) None of the aboveY
15. The pure volumc variation calculation (e) Increase of $400
that would complement thc variance Determine the effect on gross margin over
calculated in Question 23-14 is: the 2-year period from a change in sales
(a) S480 favorable volume:
Cost Accounting 5|
(a) Decrease of $400 V Variable manufacturing costs (900,000)

(b) Decrease of $650 (3,600,000)
(c) Decrease of $600 Fixed manufacturing costs (300,000)
(d) Decrease of $640 (1,200,000)
(e) None of the above Gross margin S(30g,ggO) $ 3,200,000
Unit sales 2() ()()0 80,000
Ajax has an opportunity to sell that ?
(U) 20,000 units to an outside customer at a price
of $75 per unit during .19X2 on a continuing
1. A helpful general way to arrive at an basis. Bradley can purchase its requirements
appropriate transfer price is to determine from an outside supplier at a price of S85 per
the variable costs incurred by the selling unit.
responsibility center to the point of 3. Assuming that Ajax Division desires to
transfer and to add:
maximize its gross margin, should Ajax
(a) Opportunity costs for the company as take on the ' onner and drop its
a wholev Sales to ' f 9X2, and why?
(b) Fixed costs incurred to the point of (a) No, because the gross margin of the
transfer corporati Sa whole would decrease by
(c) Market prices in the intermediate $200,
markct
(b)(Yes, because Ajax Division's gross
2
(d) All of these
Dual pricing is the method of setting:
: would increase by $300,000
Yes, because Ajax Division's gross
(a) Transfer prices based on both fixed margin would increase by S600,000%
and variable costS.
(b) One price for the seller and
for the buyer. V.
* 4
(d) No, because Bradley Division's gross
margin would decrease by $800,000
Assume, instead, that Carlyle permits the
(c) A portion of the transfer price to Q division managers to negotiate the
variable costs and a lump sum Ver
transfer price for 19X2. The managers
fixed costs
agree on a tentative transfer priee of S75
(d) None of the above. per unit, to be reduced on the basis of an
Questions 24-3 and 24-4 arc based on the equal sharing of the additional gross
following information: margin to Ajax resulting from the sale to
Ajax Division of lyle Corporation Bradley of 20,000 motors at $75 per unit.
produces electric no ()% of which are
The actual transfer price for 19X2 would
sold to Bradley Division of Carlylc and the be
rcmainder to outside customers. Carlyle treals (a) $52.50 (b) $60.00
its divisions as profit centers and allows (c) $55.00% (d) S67.50
division managers to choose their sources of 5. Mar Company has two decentralized
sale and supply. Corporate policy requires that divisions, X and Y. Division X has
all interdivisional sales and purchases be always purchased certain units from
recorded at variable cost as a transfer pricc, Division Y at S75 per unit. Because
Ajax Division's estimated sales and standard Division Y plans to raise the price to S100
cost data for the year ending Occember per unit, Division X wants to purchase
31,19X2, on the basis of a full capacity of these units from outside suppliers for S75
100,000 units, arc as follows: per unit. Division Y's costs follow:
BRADLEY OUTSIDERS Y's variable costs per unit......................
Sales S 90(),()(){} $ 8,000,000 S7()
Y's annual fixed costs ...................... S15,000
Cost Accounting 152
Y's annual production of these units for commuter jets currently under construction.
Division X ..... 1,000 units The altimeters are usually bought from the
lf Division X buys from an outside Instruments Division or from either of two
supplier, the facilities Division Y uses to outside suppliers. The following cost data are
manufacture these units would remain idle. available from Instruments Division records:
What would bc the result if Mar Company STANDARD COST PER ALTIMETER
forces a transfer price of $100 per unit between Direct materials............... $10
Divisions X and Y? Direct labor .................. 1|
(a) It would be sub-optimization for the Variable factory overhead ...., 12
company because Division X should buy Fixed factory overhead ........ 20*=
from outside suppliers at $75 per unit * Based on full capacity of 100,00 altimeters.
(b) It would provide lower overall 8. Assuming that current sales of altimeters
company net income than a transfer price to outside customers by the Instruments
of $75 per unit Division are equal to 90,000 and the best
(c) It would provide higher overall of the two outsid ces is equal to $36,
company met income than a transfer price what action sh Jet Plane Division
of $75 per unit take in
as a whole'
:* interests of the company
(d) It would be more profitable for the
company than allowing Division X to buy (a) tside and save the company
from outside suppliers at $75 per unit. Y S3 unit
6. In order to cvaluate the performance of uy outside and save the company $3
individual departments, interdepartmental r unit
transfers
be made atofprices:
a product preferably should
i
(c) Buy inside and save the company $3
per unitY
(a) Equal to the market price of
product, V -
(d) Buy inside and save the company $34
per unit -
(b) Set by thc receiving '' 9. Assuming an opportunity cost of $37 and
no unused capacity in the Instruments
(c) Equal to fully allocated costs to the
producing department Division, what action should the Jet Plane
(d) Equal to variable & to the Division take in the best interests of the
7.
producing <>
In a decentralized-company in which
company as a whole?
(a) Buy outside and save the company
divisions may goods from one $34 per unity
another, the sfer pricing system (b) Buy outside and save the company $3
should be designed primarily to: per unit
(a) Increase the consolidated value of (c) Buy inside and save the company $3
inventory -
per unit
(b) Allow division managers to buy from (d) Buy inside and save the company $34
outsiders .
per unit
(c) Minimize the degree of autonomy of 10. Using the formula provided in the
division managers -
chapter, the synthetic market price on the
(d) Aid in the appraisal and motivation of basis of the facts in Question 24-9 equals:
managerial performanceV. (a) $70% (b) $53
Questions 24-8, 24-9, and 24-10 are based (c) $33 (d) $90
on the following information: Use the following information for
The American Aircraft Company is a Questions 24-11 through 24-13:
large, diversified company. The Jet Plane A company has two divisions, S and T.
Livision nceds 5,000 altimeters for 5,000 Division T makes a timer which has the
Cost Accounting 153
following accounting data per timer: variable 15. From the standpoint of the firm as a
cost, $15; fixed cost, $10 (on the basis of a whole, the critical question in a particular
monthly capacity of 12,000 timers); sclling transfer pricing situation is:
price, $30. Presently, Division S is buying (a) Which division will earn the higher
5,000 timers from an overseas supplier at $27 profit.
each, Division T is operating at capacity, (b) Minimizing income taxes.
selling on the intermediate market for $30 per (c) Whether or not the transfer should
unit all the timers it can produce. - take placeY
11. If Division S buys 5,000 timers per month (d) The ROI for the firm.
from Division T, the price per timer that The following data relate to Questions 24
should control the transfers is: 16 through 24-18. Division A sells its one
(a) $30 (b) $15. b product to Division B of the same firm and to
(c) S27 (d) $25 outsiders. Results expected for the coming year
(e) None of these 31 C.
12. If Division T meets the price of the

overseas supplier and sells 5,000 timers to
Division Search month, the effect on the
Sales at $15/unit
Sales at $12/unit . $%
Variable costs at $7/uni t
},000
7(), ()()() 35.000

monthly net income of the company as a Contribution 1 in $80,000 $25,000
whole will be: 'oidable and allocated on the
:
(a) $15,000 greater
(b) $10,000 greater. Y ''
of rela
'''*
les 50,000
$ 30,000
20.000
$ 5,000
(c) $15,000 less
(d) $60,000 less | supplier offers to provide 5,000 units to
(e) None of these, Division B at $10 each. If Division A
13. Suppose that Division T can sell on! does not mateh the offer and Division B
6.000 timers to outside buyers '' buys from
profit the outsider. Division A's total
will be:
the overseas supplier drops its
$23 per timer. If Division T doe
# eel (a) $30,000

(b) $10,000
this $23 pricc and Division 5,000 (c) $25,000 V (d) $0
timers each month from QWei'SeaS 17. If Division A reduces its price to Division
supplier, the monthly net income of the B to $10 and keeps the business, its total
company as a whole : profit will be: -
(a) $40,000 less th could have been V (a) $30,000 (b) $10,000 V
(b) $10,000 gre an at present (b) $25,000 (d) $0
(c) $15,000 greater than at present 18. If Division A does not meet the price and
(d) $15,000 less than it could have been: cannot increasc its outside sales, what is
(e) None of these the effect on the total profit of the firm if
14. The critical problem in a transier pricing Division B buys outside?
system is: (a) Decrease $5,000
(a) Maintaining the profitability of each (b) Decreasc $20,000Y
division (c) Decrease $15,000
(b) Evaluating the divisional managers. (d) Increase $20,000
(c) Maintaining
divisional both goal congruence and
autonomy.'
19. The worst transfer price of those below is
probably:
(d) Operating the divisions at full (a) Market price
capacity. (b) Actual variable cost
(c) Standard variable cost
(d) Actual total cost.*
Cost Accounting 154
20. A selling division changes the transfer 5. The use of back flush accounting means
price it has been charging to the buying that
division. If the two divisions continue to (a) conversion costs cannot be carried
buy and sell the same quantities of forward in stock values
product: (b) Stocks cannot occur
(a) The total income of the firm will not (c) raw material costs will be reduced
changev. (d) costs are attributed to stock and cost
(b) The thconne of each division will not of Sales when the finished goods are
change made, Y
(c) The Selling division will earn more 6. Unit costs are extensively used in the
profit than before Public Sector. This is because
(d) The buying division will earn more (a) they are a rough and ready guide to
profit than before
cfficiency.V.
(b) they are a good measure of the quality
(V)
of service
(c) they allow gional differences
(d) they Ne able Public Sector
!. Direct wages should always be classified:
(a) as variable costs
(b) as fixed costs 7.
organiz
limits #ns to stay within the set cash -
Whi f the following firms are Inost

(c) as semi-fixed costs
(d) according to their actual behavior. V.
- ' to use process costing?
a car manufacturer
2 The First in First Out (FIFO) materials ) a sugar refinery*
pricing system charges issues at: Q) (c) builder
(a) the price of the most recent batch in (d) a departmental store.
Stock
(b) the price of the first
in the period
:* 8. Activity Based Costing absorbs overheads
into products -
(c) the average price of goods

(d) the price of the oldest batch in stock V
(a) by treating most of them as long-term
variable costs
(b) by ignoring the Volume of production
3 The last in First Out (LIFO) system will: (c) according to the usage of support
(a) value stocks at cu alues overheadsv.
(b) understate pro costs in times of
(d) by only producing on demand.
rising prices 9. Significant Digit Codes are
(c) tend to produce rcalistic product (a) where some of the digits are part of
costs V
the description v.
(d) make cost comparisons between jobs (b) only used for raw materials
easier.
(c) to enable a code to be self-checking
4. When Activity Based Costing is used it is (d) a means of combining expenditure and
probable that location codes
(a) all products will cost more ] ().
Check digit variation is:
(b) high volume products will tend to be (a) the process of checking invoices for
costed lowerV correct calculations
(c) direct costs will be a smaller
(b) a method of making code numbers
proportion of total costs self checking
(d) more costs will be charged to products (c) to enable codes to be self-indexing
which are produced for stock. (d) the encoding of invoices with internal
codes.
Cost Accounting 155
| || Which of the following firms would be (a) minimizes the total of carrying costs
most likely to use job costing? and order costs w
(a) a paint manufacturer (b) minimises the total of carrying costs
(b) a sugar refinery and stockout costs t
(c) a firm of architectsv (c) minimises the total of ordering costs

(d) a car manufacturers. and Stockout costs
12. Labour turnovcr can be expressed as a (d) minimises carrying costs.
ratio as follows: - 18. Which of the following is not a relevant
(a) Number of leavers-Numbers of cost in determining the EOC)?
Starters (a) the cost of insurance based on the
(b) Number replaced - Average number of average level of stocks
employees V (b) the opportunity cost of capital
(c) Number of employees at the end + invested in stocks
Number at the beginning . -
(c) quantity discounts for purchases over
(d) Number of leavers in a period - specified quantitie
Number of weeks in period.
13. A cost driver is 19.
A
(d) the salary o yerV
(a) the amount of overhead caused by an -

(a) is on whe e operatives work for 60
activity -
minute $: <> *

(b) a unit of activity which causes costsV.
(c) a long term variable cost
(d) cquivalent to a cost centre
:time
(b) of hours worked above
is a measure of work contentv/

14. Prime cost includes: is any hour in which standard labour
(a) Direct labour, direct materials and
direct expensesV
%
2
rates are paid. *
E.
The operating profit variance is
(b) All direct costs plus factory overheads (a) the only variable not entered in a
(c) Direct materials plus total overhea ds) ledger accountv.
(d) Direct labour plus factory ove leads. (b) the total of all the cost variances
15. A cost centre is: (c) always equal to the largest variance
(a) A unit of production in relation to (d) is the figure required to make the
which costs are ascertained(*,
Q ledger accounts balance,
A firm that has under absorbed overhead
(b) A location which is responsible for 21.
controlling direct costs. at thc end of the pcriod:
(c) Part of the overhead system by which (a) has been working inefficiently
costs are gathered togetherV (b) would be better not tising
(d) Any location or department which predetermined rates
incurs cost. ... " (c) incorrectly budgeted the absorpt:0.
16. The formula for the sales at breakeveil base and/or the amount of overheads*
point for a multi-product firm is: (d) has overspent on overheads,
Fixed costs - s
22. The simultaneous equation method of
(a) -x sales price pcr unit dealing with reciprocal servicing:
Contribution / ur.
(b) Fixed costs:sale value v (a) is more sophisticatcd and produces
more accurate results
Contribution
(b) is a convention like all the other
(c) Fixed costs x l methods v
S radio
(c) enables servicing department costs to
(d) None of these be controlled
17. The EOQ is the order quantity that:
Cost Accounting 156
(d) needs a computer to work out the . (c) is incremental to the decision in
results. - handv
23, Cost accounting is mainly concerned with (d) includes all of the above,
providing information to: 29. Opportunity cost cannot be
(a) Government agencies such as the (a) the replacement cost of an item -
Inland Revenue (b) the next best operating value of an

(b) Managers within the firmv item *
(c) Shareholders. (c) the net realizable values of the item

(d) Trade Unions on behalf of the (d) th original cost of the item.V.
workers. 30. Decision Support Systems
24. Direct costs are costs that: (a) consist of automatic decision making
(a) are incurred directly the factory is systems -
open -
(b)are best for semi-structured problemsv.
(b) are directly charged to a department. (c)perform the routine data processing of
(c) can be directly identified with a the O firm
product or scrvicev -
(d) can * used for accounting
(d) are directly under the control of a problems. ..
manager. 31. In a bud geting system goal congruence is

The margin of safety is: achieved when:
(a) the difference between budgeted sales
and the breakeven sales V
actual expenditure equals the
(b) the difference between actual sales -

budget
(b) the budgeted allowance is agreed by
and budgeted sales the manager. . . .
{c} sate minus variable costs (c) management by exception is practised
(d) the difference between zero sales
breakeven sales.
'N (d) personal and organizational objectives
coincide. Y -
Using thc Average Price issuing s 32, Participation by staff in standard and
(a) is more complicated than 'O' and budget setting:
#FC) -
(a) always improves performance

(b) the issue price is recated after (b) is liked by all staff
each receiptv. <> (c) needs to be done selectively/
(c) is not recommended by SSAP 9 (d) can only be done when zero-base
budgeting is used
''' 33. Which of the following would increase
material for use in the factory is: the per unit contribution the most?
(a) DR Production overhcadsv (a) a 5% decrease in total fixed costs
CR Stores Ct); trol (b) a 5% decrease in unit variable costs
(b) DR Stores Control (c) a 5% increase in selling pricev
CR Production overheads (d) a 5% increase in unit volume i -
(c) DR Work in Progress 34, A. firm that uses departmental overhead

CR Production overheads rates as opposed to a single blanket rate:
(d) DR Work in Progress (a) might be better able to check the
CR Stores. Control profitability of each job.V.
Rclevant information for decision (b) will charge about the same overhead
making to each job
(a) can include sunk costs (c) will make the departments more
(b) usually includes historical costs profitable
Cost Accounting 157
(d) is more likely to have under-absorbed (a) concerns the alternatives possible
overheads (b) deals with the future, not the past
35. Both nationally and internationally the (c) is concerned with the incremental
wages paid to production workers are: costs and revenues
(b) an increasing proportion of total costs (d) is all of the aboveY
(b) always equal to production overheads 42, A flexible budget is:
(c) a decreasing proportion of total costs V (a) the only suitable budget for control
(d) none of these. purposes
36. Job Evaluation can be described as: (b) a budget analysed to fixed and
(a) a way of assessing how a person suits variable elements
a job (c) designed to show the appropriate
(b) a way of improving the methods by expenditure for the actual production leve
which a job is performed *
(d) all of the above.V.

(c) a way of assessing the content of a 43. Marginal costing gives a different profit
jobv to absorption costing when
(d) a form of staff appraisal (a) all production costs are fixed
37. 'Product costing is mainly concerned with: (b) opening' and closing stocks are
(a) finding the cost of sales and valuing different( \|
stockV. (c) all production costs are variable
(b) analysing cost behaviour - (d) there are no opening or closing stocks.
(c) finding the total of production
overheads
(d) controlling product costs, O
38, When standard process costing is used:
(a) transfers out and WIP are valued a
standard
2? Cost apportionment is carried out by:
(a) Charging each cost unit a realistic
(b) effective units = completed. + units in proportion of overheads
closing WIP units in opening WIP (b) Charging whole items of coat to cost
CentreS
(c) the total variances do not appear in the
process account (c) Ensuring that each period carries its
(d) all of the above apply:<> fair amount of costs by making accruals
39. In a process costing system where there is or prepayments
no opening or closing W IP: (d) Dividing common costs among cost
(a) current production costs equal costs centres in proportion to the benefit
transferred out -
received, V
(b) weighted average and FIFO will give Overhead absorption is done so that:
the same cost per unit (a) Common costs are shared among cost
(c) units completed equals equivalent centres, in proportion to the benefit
received
units of production
(d) all of the above. Y -
(b) The total amount of overheads for the
40. firm can be calculated
To calculate Sales Margin Variances it is
assumed that products are: (c) The total ovcrheads for a cost centre
can be calculated
(a) at standard manufacturing costv
(b) valued at marginal cost only (d) Each unit of the product carries a
(c) always sold in the budgeted . sharc of overheads. V
proportions -
Expenditure on stoel used in the product
would be classified into which of the
(d) sold at standard price following categories: .
1!. Information for decision making:

Cost Accounting 158
(a) direct material/cost unitv/ 'Using process costing the amount of cost
(b) direct imaterial/production overheads transferred to Finished Goods stock is the
(c) indirect material/cost unit cost of *
(d) prime cost/production overhead. (a) the equivalent production for the
A firm uses direct labour as a basis for period
overhead ahsorption. If large fluctuations (b) the units started and completcd during
in labour hours are expcrienced: the period -
(a) this is a reason to use predetermined (c) the units completed during the
overhead rate V. periodv
(b) thia will mean that overheads will be (d) the units in the opening Finished
under or over absorbed for the year Goods stock
(c) different amounts of overhead will be 9 Double loop feedback:
charged to jobs with the same labour (a) is information designed to ensure that
hours operations conform to plans
(d) it will be better to use a machine hour (b) is designed to-assess how wall the
I'llC, control system oper tes and how relevant
A predetermined overhead rate using current plans are:
machine hours as a basis: -
(c) is information passed up two layers of
(a) is calculated by dividing actual the organisation
overheads by budgeted machine hours . (d) is liformation that is double checked
(b) results in the over absorption of for accuracy.
overhead following data relate to questions 10
(c) is inferior to a rate based on labour t 3. A firm makes a single product and data
hours -
a period arc: No opening stock Sales 65,000

(d) results in charging similar
to jobs with sinnilar machine hoursv
@nits & 60 each Production 73,500 units
Variable costs 23 per unit Total fixed costs for
A firm recovers overheads on period 1.3m Fixed overheads are recovered on
hours which were budgeted at 3500 with a unit basit and fle average production level is
overheads of 43,750 Actual results were 70,000 units.
3620 hours with overheads (a
of $44,535. 10, Using marginal costing the profit for the
(a) Overhcads we're u. de sorbed by period is: (to nearest 000)
785 W -
(a) 2,445,000 (b) 1,293,000."
(b) Overheads
715 v s'
* verabsorbed by (c) 1,145,000. (d) 1,295,000
- - 11. Using absorption costing the profit for the
(c) Overheads' were overabsorbed by period is?
1,500 (a) 2,445,000 (b) 1,293,000V.
(d) Overheads were underabsorbed by (c) 1,145,000 (d) 1,295,000
715 Using marginal costing the closing Stock
The costing associated with a typical site valuation is?
based contract: (a) 353,357 (b) 80,500
(a) means that more costs can be (c) 345,840 (d) 195,500V.
identified as direct 13. Using absorption costing the closing
(b) requires some estimate to be made of valuation is? -
interim profits (a) 353,357 V (b) 80,500

(c) meana that the contract account will (c) 345,840 (d) 195,500
be credited with materials at the end of 14. In the accounting for Standard Costing,
the contract . . the costs recorded in the Factory
(d) includes all of these, V. Overhead account: .
(a) must be at Standard (a) 2.6 in an estimate of the fixed costs

(b) may be at Actual or Standard per unit
(c) must be at actualV (b) x is the dependent variable
(d) depend on whether there is over or (c) y is the dependant variablev
under recovery - (d) there are two independent variables.
The following data are to be used for 21. Givea that Jy = 694, Z = 72. Xxy = 8210
questions and A process produces three and x
products R, S and T. Total joint costs were (a) y=#16:22 + 7.60%
17,000 and outputs and felling prices were: (b) y = 72 + 9x
R 250 kgs sold at 22 per kg (c) y= 76 + 1.622
S 550 kgs sold at 19 per kg. (d) none of the above,
T 450 kgs sold at 25 per kg 22. The distance A represents:
15. Apportioning the joint costs on the (a) eontribution at activity level XV
physical unit basis gives: (b) profit at activity level X
(a) R = 4,250 S = 9,350 T=7,650/ (c) the amount of vari able costs at
(b) R a 3,438 S = 3,631 T = 7,031 activity level X
(c) R = 6,667 S = 5,667 T = 5,666
23.
(d) the margin of
The distance B
: 11S
(d) R = 5,667 S = 4,894 T = 6.439
16. Apportioning the joint costs on the sales (a) contribution at: tivity level Y
value basis gives: (b) the amount of variable Soets at activity
(a) R = 4,250 S = 9,350 T = 7,650 level Y
(b) R = 3.438 S = 6.531 T = 7,031 V. (c) the level of sales at activity Y
(c) R = 5,667 S = 5,667 T = 5,666 (d) the ampunt of variable costs at activity
(d) R = 5,667 S= 4,894 T = 6,439 level Y.'
The following data are the basis of 24. OWhich of the following are possible
questions 17 and IS. &: of the changes in the graph at
Process 2 for period activity level Z'?
Units (a) an increase in sales valuc causing an
Opening WIP 1.800 (80% comp increase in contribution
Started in process * (b) a decrease in fixcd costs causing an
Completed ,000
-
increase in variable costs
Closing WIP 2,800 (60% complete (c) an increase in total fixed costs and a
17. Using the FIFO method equivalent decrease in variable costs per unit
production is: -
(d) an increase in total variable costs and
(a) 15,240 V 15,760 a decrease in fixed costs per unit.
(c) 16,680 (d) 15,000 25. What do the lines C and D represent?"
18. Using the Average cost method the (a) Fixed costs and variable costs
equivalent production is: respectively -
(a) 15.240 (b) 15,760 (b) Total costs and variable COStS
(c) 16.680V. (d) 15,000 respectively'

19. Using the high/low method what is the (c) Variable cost and fixed eosts
value of the slope based on the following respectively
data? (d) Sales revenue and total costs
(a) 1 per unit respectively
(b) 2.11 per unit The following data are to be used for questions
(c) 2.51 per unit 26 to 28.
(d) 1.54 per unitv/ Last year This year
20. In the rcgression result, y = 280 + 2.6 Output (units) 15,000 17,000
Cost Accounting 160
Total costs 112,500 128,625 33. What are the fixed overhead expenditure
Coat inflation this year was 6% and volume variances for Dept XXX?
26. What is the underlying real variable cost (a) 2,305 (ADV) and 670 (FAV)*
per unit? - - -
(b) 670 (FAV) and 2,305 (ADW)
(a) #7.6 (b) 7.34 (c) #2,305 (FAV) and 670 (FAV)
(c) 6.41 (d) 3.5V (d) None of the above
27. What is the underlying fixed cost? 34. What are the fixed overhead capacity and .
(a) 660,000w (b) 112,600 fixed overhead efficiency variances for
(c) 16,025 -
Dept XXX?
(d) It is net possible to calculate without (a) 430 (ADV) and 240 (ADV)
nore information. (b) 240 (FAV) and 430 (FAV)*
28. What are the expected total costs for next (c) 430 (FAV) and 240 (FAV)
year if inflation is forecast at 4% and (d) 2,305 (ADV) and 670 (FAV)
output 18.600 units? 35. Assuming a total overhead approach
(a) 144,304 (b) 135,869 calculate the volume and efficiency
(c) 137,524v' (d) 138,760 variances for dept XXX.
The date below are used for questions (a) 240 (FAV) and 920 (ADV)
29to 31.f - (b) 240 (ADV) and 920 (FAV)
A detergent called Kleenawi is made by (c) 240 (FAV) and 920 (FAV)*
mixing 3 ingredients and the standard (d) 2,550(ADV) and 920 (FAV)
cost data are: - * 36. Calculate the efficiency ratio for Dept
Proportions - Standard cost XXX
Ingredient A 40%$2 per litre (a) 09% (b) 98%
B 60% 1.50 per litre (c) 1.01% (d) 102% v.
C 10% 4 per litre
During a period 600 litres of Kleena 32 If the totaf expenditure on Cost type X
was expressed as a cost per unit of the
were produced and inputs were: product, X would be classified as variable
Actual consumption Actual pri if: -
litre, - -
(a) the cot per unit changed with the level
of activity
ingredient A
B
3,200 S
2, 3,950
-
(b) the cost per unit was affected b

s *
inflation
1.46 Q
C s (c) the cot per unit remained constant
31,
4.25
Calculate
*
*
-
d Varaince
with changes in the level of activity
(d) the total expenditure on X remained
Kleenaw? the same -
-
* * * * * * *** .
(a) 1,073 (FAV) (b) 1,300(ADV)
(c) 1,073 (ADV)V (d) 387(ADV)
The data below are to be used for
questions 32 to 36.
32. What are the variable overhead
expenditure and variable overhead
efficiency variances are Dept XXX?
(a) 490 (FAV) and 245 (ADV)
(b) Nil and 245 (ADV) . . .
(c) 245 (ADV) and 490 (FAV)Y
(d) Nil and 490 (FAV)
Subject Specialist & Lectureship Guide - Commerce |6|
8. Propriety audit is normally undertaken in

case of
Audit (a) joint stock company.
(b) government company.
(A) (c) statutory corporation.
l Auditing refers to (d) government departments. Y
(a) preparation and checking of accounts. 9. Test checking should not be applied to.
(b)examination of accounts of business (a) Purchase Book. (b) Sales Book.
units only. (c) Stock Book. (d) Cash Book V.
(c)examination
accountants. Yof accounts by professional
10. Special Audit is necessary for
(a) manufacturing concern.
(d) chccking of Vouchers. (b) processing concern.
2 Main object of auditing is (c) inefficient concern. V.
(a) detection of errors, (d) trading concern.
(b) to find out whether P & L A/c and B/S ! 1. Cost of removal of business to a more
show true and fair state of affairs. convenient place is
(c) detection of frauds. Y (a) capital
(d) detection and prevention of frauds and (b) revenue cxpen the
CTTC)] S.
(c) deferred revenue expenditure.V.
3 Auditing is luxury for a (d) none of the above.
(a) joint stock company, 12. Expenses on experiments are
(b) partnership firm. lue expenses.
(c) small shop-keeper. Y (b) capital expenses.
(d) governmcnt company. eferred revenue expenses.Y
Limitation of audit is
(a) that it does not revcal complete picture,
(b) that it does not guarantee accurac 'S
* ) none of the above.
Interim audit refers to
(a) examination of accounts continuously.
aCCOuntS. '' (b) examination of accounts intermittently.
(c) that auditor may be biased.
(d) all of the above. V. S. (c) audit work to find out and check interim
profits of a company. Y
Auditor, in general, is an
(a) employee of the compan <>
28 (d) carrying on audit for bonus purposes at
the end of year.
(b) agent of the company 14. Final audit implies
(c) agent of the (a) audit of accounts at the end of year.
(d) none of the ' (b) finally checking of accounts to reveal
6. Auditing is compulsory for frauds.
(a) small-scale business enterprises. (c) audit for submitting report inmediately
(b) all partncrship firms. at the end of year.
(c) all joint stock companics. Y (d) audit of banking companies.
(d) all proprietary concerns. 15. A continuous audit is specially needed for
Propriety audit refers to (a) any trading coticern,
(a) vcrification of accounts. (b) smaller concerns.
(b) examination of accounts of proprietary (c) banking companies.
COilCCI 11S, (d) any manufacturing concern.
(e) enquiry against justification and 16. Alteration of a figures after audit is a
necessity of expenses. limitation of
(d) audit of Government companies. (a) final audit.
(b) continuous audit. Y
Subject Specialist & Lectureship Guide - Commerce 162
(c) interim audit. (c)Balance sheet and profit & loss
(d) none of thc above. account. Y.
17. Joint audit implies (d) None of the above.
(a) audit of two concerns together. 24. The audit of accounts of a company shall be
(b) audit ofjoint stock companies, (a) Independentv.
(c) audit of joint sector companies. (b) Comprehensive.
(d) audit of two firms of C. A. V. (c) Moral.
18. Management audit means. (d) All above.
(a) audit undertaken on behalf of the 25, Primary objective of carrying audit is to
management. (a) Impose moral checks on enmployees.
(b) evaluating performance of various (b) Suhmit report to share holders.
managemcnt processes and functions.v. (c) Express an opinion of on financial
(c) audit undertaken on behalf of statements. Y
Government publish management. (d) All abovc.
(d) compulsory audit of company 26. The audit shall be organized in such a
managemcnt. manner to cover.
19. Systems audit implies.
(a) systematic examination of accounts.
(a) Capital
(b)

diture and receipts.
-
and receipts,
(b) audit undertaken to improve auditing (c) All

systems. (d) No *the above,
(c) enquirying accounting and control
systems.< *
27. T is conducted after the close
nancial year is called.
(d) checking the performance of C. Continuous audit.
management. b) Final Audit, V
20. Internal audit means (c) Preparation and examination of the
(a) audit undertaken to ascertain truth a accounts,
fairness of state of affairs. (d) None of the above.
(b) audit undertaken internally to * 28, Auditor is responsible for
management functions. (a) Preparation of the accounts.
(c) audit undertaken by employees f the (b) Expression of an opinion. Y
organisation
irregularities.Y {O ch
A:

& financial (c) Preparation and examination of the
aCCOUniS.
(d) audit by independentauditor to improve (d) None of the above.
internal affairs.
Internal audit is N
S 29. Examine of books of accounts is known as
examination
(a) compulsory for a company with paid-up (a) Accounting. (b) Auditing. V.
capital of Rs. 25 Lakh and ahove. (c) Investigation. (d) Book Keeping.
(b) voluntary for a company, V 30. Continuous audit is compulsory for a
(c) not necessary for a company. (a) Private Limited company.
(d) necessary for a company. (b) Public Limited Company (liste(d)
22 institute of Chartered Accountants of (c) Public Limited Company (unliste(d)
Pakistan was established in. (d) None of the above.<
(a) 1956. (b) 1949. 31. The classes of audit are
(c) 1956. (d) 1961.V. (a) Final audit. (b) Continuous audit.
23 . The audit is an examination of (c) Interim audit, (d) All of the above. Y
(a) Balance sheet. 32. The main objective of an audit is to
(b) Profit and loss account, (a) Examine the books of accounts.
Subject Specialist & lectureship Guide - Commerce
(b) Form an opinion on the financial (c) None of the above.
statement, V (d) All of the above.
(c) Report to the shareholder. 39. A final audit is also called
(d) Investigate the books of accounts. (a) Interim audit.
33. Which of the following statements correctly (b) Complete audit.*
describes the principal purpose of the (c) Statutory audit
external audit of an enterprise within (d) None of the above.
Pakistan? * -
40. A final audit is started
(a) To communicate weaknesses of Internal (a) After the close of the accounting year. V.
Control system, (b) After the close of the book keeping
(b) To assist management in the preparation work
of the cnterprise's periodic financial (c) Both.
StatenmentS. (d) None of the above.
(c) To examine and express an opinion on
the enterprise's periodic financial
statenments. Y l, Internal check r
(d) To assist management in the (a) Checking qf record by the cashier.
maintenance of the enterprise's accounting (b) Checking, f accounts by the internal
records.
To which one of the following does the ''
(c) Checking of work of one person by
fautomatically.Y
auditor formally report when conducting his
annual audit in
Companies Ordinance, 1984?.
accordance with the 3: dinates.
control internally over sub
(a) The directors. The object of internal check is to

(b) Regulatory bodies. (a) Control wastages of resources.
(c) The shareholders/members.
(d) The secretary.

S.
(b) Prevent errors and frauds. Y
(c) Verify the cash receipts and payments.
Interim audit lies between : (d) Facilitate quick decision by the
(a) Final audit & continuous au management.
(b) Between statutory
audit.
*
SS
ontinuous 3. Effective Internal check system reduces.
(a) The liability of auditor.
(c) Both, (b) Work of auditor. Y
36.
(d) None of the #. (c) Both work as well as liability of auditor.
(d) Responsibilities of an auditor.
Depth tests arc also called:
(a) Substantive test. 4. Internal check is a part of
(b) Compliance test. (a) Internal audit. *
(c) Cradle to glave test.* (b) Internal accounting,

(d) Nonc of the above. (c) External audit,
37. Objectives of depth test are (d) Internal control. Y *
a To test the accruacy of the record of the 5: Internal check is carried on by

client's accounting system. (a) Special staff.
(b) To perform compliance test. (b) Internal auditor.
(c) To provide evidence of a substantive (c) Accountant.
nature. (d) None of the above. V.
(d) All of the above. Y 6. Internal check is suitable for
38. Audit starts wherc (a) Larger concerns. Y
(a) Accountancy's work ends. Y (b) Smaller concerns.
(b) Book keeping ends. (c) Petty shop-keepers.
(d) None of the above. (a) Staff specially appointed for the
7. Internal check involves. purpose. -
(a) Reduction of work of cashier. (b) Internal auditor.

(b) Division of responsibilities of members (c) The members of the staff among
of staff. Y themselves. Y
(c) Verification of inventory. (d) Supervisor of the staff.
(d) Collusion among the members of staff. 16. Internal check is essential for
8, internal audit is undertaken. (a) Petty traders.
(a) By independent auditor. (b) Cash transactions in a large concern. Y
(b) Statutorily appointed auditor. (c) A concern using automatic equipments.
(c) By a person appointed by the (d) None of the above.
management. Y -
17. The risk that material errors may occur in
(d) By a Government auditor. the preparation of financial statements is
9. Internal auditor is appointed by the known as : -
(a) Management. Y (a) Audit risk. (b) Control risk.

(b) Shareholders. (c) Inherent risk I) Detection risk.
(c) Government. 18. The ' objective in making a
(d) None of the above. preliminary evaluation of internal control is
|(}. Thc scope of work of internal audit is to . <>
decided by the (a) whether the management has

(a) Shareholdcrs. Inte its responsibility to establish an
(b) Management.Y system.
(c) Government. (b) Determine the degree of reliance which
(d) Law.
. The scope of work of statutory audit for aQ) 2' will be placed on the internal controls.Y
(c) Identify those internal controls on which
company is decided by the he may wish to place reliance.
(a) Shareholders. (b) Management. SQ (d) Identify any weakness in the system
(c) Government. (d) Law.v. - which should be reported to the
12. The object of internal audit is S. management.
(a) To prevent errors and fraud: 19. The nature, timing and extent of substantive
(b) To detect errors and frauds. procedures are influenced by the level of
(c) To in prove financial control. (a) Inherent risk.
(d) All of the above.Y (b) Control risk.
Internal auditor can be removed by the (c) Both((a)&((b).Y
(a) Governmen - (d) None of above.
(b) Shareholders. 20. Internal control system includes.
(c) Management. V (a) Financial controls.
(d) None of the above. (b) Administrative controls.
14. Control and management of audit (c) Both.Y
profession is in the hands of (d) None of the above.
(a) Government. 21. The auditor of public company will be
(b) Regulatory bodies. - (a) Cost and management accountant.
(c) Institute of Chartered Accountants of (b) Chartered Accountant. Y
Pakistan, Y (e) Any individual.
(d) Institute of Cost and Management (d) All of the above.
Accountants of Pakistan. 22. To become an internal auditor person must
| S. Internal check is carried on by be
(a) A Chartered Accountant.
Subject Specialist & Lectureship Guide - Commerce } 65
(b) A cost and management accountant. (b) Examination of vouchers to check

(c) M-Com. authenticity of records*
(d) No qualification is required, V. (c) Surprise checking of accounting
Internal auditor is responsible to report. records,
(a) Shareholders. (d) Examining the various assets.
(b) Creditors. 2. Payment for good purchased should be
(c) Management.Y vouched with the help of
(d) (a) & (b). (a) Creditor's Statement.
. An Audit technique reviewing the internal (b) Correspondence with the suppliers.
control system is known as (c) Cash Memos, Y
(a) Verification. (d) Ledger Accounts.
(b) Substantive test. 3. Payment for wages should be vouched with
(c) Compliance test. Y the help of
(d) Physical check. (a) Piece Work Statement.
25. A simplc control which an enterprise can (b) Wages Sheets.
usefully employ is referred to as the (c) Minute Book. O
'imprest system'. To which of the following
accounting areas is this control applicable?
(d) Bank Pass Bo
4. Commission p
uld be vouched with
-
(a) Wages control and reconciliation. the help of

(b) Petty cash control and reimbursement.Y (a) Salary &
(c) Dcbtor control. (b) Wa s: heets.
26.
(d) Stock control.
Substantive tests are designed to obtain
&:
(c)
''
Statement,
ommission Book and related
evidence as to eements. Y
(a) The effctiveness of the design of the he most reliable voucher is one which
accounting and internal control system. originates
(b) Completeness, accuracy and validity (a) In the concern.
data produced by accounting system.YN (b) Outside the concern,
(c) Both. (c) Outside the concern and sent directly to
(d) None of the above. the auditor. V.
27. Test of control are * obtain (d) In the concern and sent directly to the
evidence as to auditor,
(a) The effectiveness of the design of the 6. Sales proceeds from machine should be
accounting and intern ntrol system. Y vouched with the help of
(b) Completeness accuracy and validity of (a) Cash Books.
data produced SyStem. (b) Sale Contract. Y
(c) Both. (c) Brokers's Statement.
(d) None of the above. (d) None of the above.
28. Another name of test of control is 7. Payment for building purchased should be
(a) Compliance test.Y vouched with the help of
(b) Substantive test. (a) Title Deed.Y
(c) Walk through test. (b) Correspondence with the brokers.
(d) None of the above. (c) Building Account.
(d) Cash Book.
(C) 8. Partner's drawings should be vouched with
Vouching implies the help of
(a) Inspection of receipts. (a) Stock Book.
(b) Cash Book.
(c) Memorandum Drawings Book. V. (b) Checking value of ascets.

(d) Agreement Deed. (c) Examining the authority of their acquisition.
'). Investment should be vouched with the help (d) All of the above. V.
of Which of the following statements is
(a) Commission Book. correct?
(b) Broker's Book. (a) Valuation is a part of verification.*
(c) Sales Deeds. (b) Verification is a part ofvaluation.
(d) Minute Book. (c) Valuation has nothing to do with verification.
1 (). Receipts from debtors should be vouched (d) Auditor is a valuer.
with the help of Stock should be valued at
(a) Counterfoil Receipts and Cash Book. V (a) Cost.
(b) Supplier's Statement. (b) Market Price.
(c) Sales Deeds. (c)Cost or Market price whichever is
(d) General Ledger. lower.v.
| ]. Dividend received should be vouched with (d) Cost less depreciation.
the help of 5 Valuation means -
(a) Debtors Statement.

(b) General Ledger. (b) Checking the '
(a) Calculating valu
SSCIS.
(c) Dividends Book. (c) Checking ** existence of

(d) Counterfoils of dividend warrants.v. SSt S.
. Receipts from sale of investment should be

vouched with the help of
(a) Broker's Budget Notes.
-
:**
(d) Examini of assets.
Valuer" was stated in
(a) Kingston Cotton Mills Case. V.
(b) Broker's Sold Notes. V.
(e) Minute Book.
(d) Inventory of investment.
#
(b on and General Bank casc.
V. Neuchatel Co. Ltd. Case.
London Oil Storage Co, Case.
13. Purchase Rcturns should be vouchcd with Fixcd assets are valued at
OSN
the help of (a) Cost,
(a) Bought Notes, (b) Market Price.
(b) Credit Notes. Y
(c) Goods Inwards Book.
(d) Cash Book. S
S (c) Cost or market price whichever is less.
(d) Cost less depreciation. Y
Plantation products are valued at.

14. Payment for bills should be av with (a) Cost.
'S''
the help of (b) Market Price.
(a) Debtor's (c) Cost or market price whichever is lowcr.
b Creditor's Statement. (d) Net amount subsequently realised. Y
(c) Bills Returned. 9. Incomplete contracts should be valucd on
(d) Bills with the suppliers. the basis of
(a) Net profit of the period.
(D) (b) Two-third of net profit of the period.
Verification refers to (c) Two-third of estimatcd profit of the
(a) Fxamination of journal and ledger. period.*
(b) Examination of vouchers related to assets. (d) None of the above,
(c) Examining the physical existence and 1 (). Motor Cars should be valued on the basis of
valuation of assets. V. (a) CoSt.
(d) Calculation of value of assets. (b) Market Price,
2 Object of verification is (c) Cost or Market price whichever is
(a) Physical verification of assets, lower.
Subject Specialist & Lectureship Guide - Commerce # 67
(d) Depreciated value. Y (a) Cost.

} |. Floating assets are valued at (b) Cost less depreciation.
(a) Cost. (c) Market Price
(b) Market Price. (d) Original cost plus maintenance cost.
(c)Cost or market price whichever is 20. Loans given should be verified with thc
lower. Y. help of
{ d Cost less depreciation. (a) Statement of Loans.

I (b) Schedule of book debts. v.
12. Livestock should be valued with the help of (c) Inspection of agreements.
(a) Actual counting. (d) Certiiicate from the bank.
(b) Cost. 21. Book Debts should be verified with the help
(c) Market value. of
(d) Schedule of livestock. Y , (a) Balance Sheet.
Timber should be valucd at (b) Amount received from Debtors.
(a) Cost, (c) Debtor's schedule. V.
(b) Market Price. (d) Certificate from t agennent.
(c) Cost or market price whichever is lower. 22. To verify Goodwi ' auditor should
(d) Original cost plus maintenance cost.* check. <> 'S
14. Wine should be valued at
(a) Cost.
(a) Sales * e ment. v.
(b) Above Cost. Y Sheet,
(c) Market Value.
(d) Cost or market value whichever is
lower. help of
15. Goods on consignment should be valued at } Schcdule of Investments.
(a) CoSt. (b) Balance Sheet.
(b) Market Price. (c) inspection of Securities.Y
(c) Cost or market price whichever is low AS (d) Certificate from the bank.
24. Inspection of securities for verifying
(d) Original cost plus maintenance cost.
] (3. Goods sold on the basis of "Sales O fT] investment was emphasied in
should, (a) London and General Bank case.
(a) Be included in the stock. Y. (b)City Equitable Insurance Co. Ltd. case. Y
(b) Not be included in the S (c) Armitage V. Brewer and Knott.
(c) Not be checked by a (d) Farrows Bank Ltd.
(d) None of the above, 25. With regard to issue of share warrants to
| 7. Contingent liability r bills discounted the bearers, the auditor should see that it is :
should be verified by (a) Permitted by Melnorandum of
(a) Balance sheet. Association. Y
(b) Note by managment. (b) Sanctioned by the Central Government.
(c) Bills receivables book.< (c) Permitted by the Board of Directors
(d) None of the above, (d) None of the above.
. Outstanding expenses should be verified 26, For the forfeiture of shares, the auditor
with the help of should check that it is permitted.
(a) Cash Book. (a) By Memorandum of Association.
(b) Balance Sheet. (b) By Articles of Association. Y
(c) None of the above, . (c) Under Companies Ordinance 1984.
(d) Journal Proper. Y (d) None of the above.
. Loose tools should be valued at
27. If balance confirmed by the debtor is in (d) All of the above.V.

agreement with the book balance, it 4. The following cannot be appointed as an
provides the audit evidence as to: -
auditor of the company.
(a) Collectibility of balance. (a) A chartered accountant
(b) Existence and accuracy of recorded (b) A firm of C. A
balance, Y (c) A body corporate.
(c) Absence of unrecorded balance. (d) None of the above.
(d) None of the above. . The first auditor of company will hold
. The primary reason an auditor requests that office.
letters of inquiry be sent to a client's lawyer (a) For a period of one year.
is to provide the auditor with: (b) Till holding of statutory meeting.
(a) A description and cvaluation of (c) Till the conclusion of first annual
litigation, claims, and assessments that general meeting. Y
existed at the date of the balance sheet. (d) Till a new auditor is appointed.
(b) An expert opinion as to whether a loss is Normally, a com auditor is appointed
possible probable, or remote. by the
(c) The opportunity to examine, the (a) Central y nt.
documentation concerning litigation, claims

and assessments. -
(b)
(c) Board of Directors.
(d) Corroboration of the information (d) C te Law Authority.
furnished by management concerning itor in a casual vacancy is appointed
litigation, claims and assessments. Y
34. Another name of teeming & lading is. Q() oard of Directors. V
(a) Substantive test. (b) Shareholders.
(b) Compliance test. (c) Central Government.
(c) Lapping.'
*8.
O
(d) C srporate Law Authority.
If an auditor, not appointed at annual
general meeting, is appointed by the
(E)
First auditor of a company i
cQ'
inted by
(a) The Central Government.
(b) Board of Directors.
the (c) Shareholders.
(a) Shareholder. (d) Corporate Law Authority. Y
(b) Central Govern
S\ <>
A vacancy caused by resignation of the
(c) Corporate Law ority. auditor is filled only.
(d) Board of Di s.v (a) By Board of Directors. V.
2 Which of the following persons is qualified (b) At the general meeting of shareholders.
to be a company auditor? (c) By the Central Government.
(a) Chartered Accountant.* (d) By the Corporate Law Authority.
(b) An employee of the company. 1 (). A Special Auditor is appointed by the
(c) A body corporate. -
(a) Shareholdess.
(d) A person who is indebted to the (b) Board of Directors.
company for Rs.800. | (c) Central Government. Y
3 Which of the following persons is not (d) None of the above.
qualified to be a company auditor? 11. A company auditor can be removed before
(a) A body corproate. expiry of his term by
(b) An employee of the company. (a) Shareholders. V.
(c) A person who is indebted to the (b) Board of Directors.
company for an amount exceeding Rs. 100. (c) Contral Government.
(d) State Government. 3. A special auditor has to submit his report to
. The first auditors of a company shall be the - -
appointed. (a) Shareholders. -
(a) Within Sixty days of the date of (b) Central Government, V

incorporation. Y (c) Corporate Law Authority.
(b) Within Sixty days of commencement of (d) Board of Directors.
business. -
4. Internal auditor has to submit report to
(c) During first annual general meeting. (a) Shareholders.
(d) None of the above. (b) Government.
. A notice for appointment as auditor of a (c) Corporate Law Authority.
person other than a retiring auditor shall be (d) None of the above. Y
given 5. Auditor should be dutiful like a
(a) At least 14 days before the retirement of (a) A watch dog. V.
previous auditor. (b) A blood hound.
(b) Not less than 14 days before the (c) A detective,
meeting of Board of Directors. (d) An insurer.
(c)Not less than 14 days before the AGM.Y 6. An audit report is addressed to
(d) None of the above. (a) Chairman of the Board of Directors.
. Auditor is appointed by (b) Chief Execitive of the Company.
(a) Chief Executive of the company. (c) Board of Directors.
(b) Finance Manager of the company. Members. V
(d)
(c) Any individual. 7. The date of the auditor's report should be
(d) None of thc above. V. ( date immediately after completion
First auditor is appointed by amination.
(a) Chief Executive of the company.
(b) Finance Manager of the company,
(c) Shareholders of the company.
s' ) After approval of financial statements
the Board of Directors. Y
(c) After approval of accounts by the
(d) None of the above. Y. SQ shareholders.
! (). Following can be appointed as an a & (d) None of the above,
a public company.
(a) Director of the connpany.
se 8, if detection risk cannot be reduced to an
acceptable level, auditor should
(b) Body Corporate. <> (a) Quality or disclaim his opinion. Y
( c) Chartered Accountant. (b) Withdraw from the engagement.
(d) ((a) and ((b). i (c) Do either ((a) or ((b).
9. Auditor's report is signed by
Remuneration of a company auditor is fixed (a) One Director.
by the (b) Two Directors.
(a) Shareholders. (c) Directors and Chief Executive.
(b) Board of Directors. (d) None of the above.Y
(c) Central Government. 10. Where the auditor qualifies his audit report
(d) Appointing Authority.* on the grounds of uncertainty as to the
2 A company auditor, in general, has to appropriateness of the going concern
submit his report to assumption he should, as far as possible,
(a) Shareholders. V. identify the nature of the adjustments that
(b) Central Government, may have to be made to the financial
(c) Corporate Law Authority. statements. Which of the following is
(d) Board of Directors. unlikely to be a consideration arising in the
Subject Specialist & Lectureship Guide - Commerce 17()
context of financial statements redrafted on (b) A Statement specifying that the auditor
a break up basis? has complied with International Standards
(a) Recoverability of assets. on Auditing. Y
(b) Reclassification of liabilities. (c) Terms of engagement.
(c) Possibility of additional assets. Y (d) Identification of the financial statements
(d) Possibility of additional liabilities. audited.
| ]. The auditor of Shabbir Limited completed
his audit work, including his review of post (G)
balance sheet events, in respect of the !. When annual general meeting of a listed
financial statements for the year cnded 30 company is held
September 19X0 on 1 February 19X1. The (a) The auditor is entitled to attend.
directors approved the financial statements (b) The auditor must attend the AGM in
on 7 February 19X1 and the audit report person. -
was signed and dated the same day. Which (c) The auditor or some other person
of the following is the most preferable date authorised by him, in writing, must attend
for the directors to sign the letter of the AGM. Y.
representation requcstco by the auditor? 2. During the cour udit, an auditor finds
(a) I February 19X! -
that fietitious sales have been undertaken to
(b) 6 February 19X1. inflate profits. Whether he should.
(c) 7 February 19X1.V. (a) ''
(d) February 19X1. (b) ' -
. Which of the following terms represents the (c alify his report for it. Y
form of qualification arising from limitation one of the above,
of scope which the auditor considers to be ring the course of a company audit, an
of fundamental importance? 82.auditor finds that its machinery has been
(a) Disclaimer of opinion. V. shown at R$ 40,000 after charging
(b) Unqualified opinion, depreciation, though its market valuc is
(c) "Except for opinion. only Rs. 20,000. Whether he should.
(d) Subject to opinion. (a) Ignore it.
Which of the following is expli (b) Allow it. Y
in, rather than implied by, (c) Not allow it.
audit report on the accounts of a limited (d) Qualify his report.
company? 4. During a company audit, the management
(a) Working
which an
'' ed.
maintained on argues with the auditor, that machinery has
been very well maintained and is as good as
(b) information given in the directors' report new. Hence there is no need for charging
is consistent with the financial Statements. depreciation on it. Whether the auditor
(c) The financial statements have been should.
properly prepared in accordance with the (a) Accept it. (b) Ignore it.
Companies Ordinance 1984. v. (c) Rejcct it. Y (d) None of the above.
(d) Proper and in-time returns have been 5. If there is a capital loss, the auditor should.
received from the branches. (a) Not allow payment of dividends.
. Which of the following is not a necessary (b) Allow payment of dividends.Y
component of thc audit report for a limited (c) Allow payment of dividends after
company'? making such losses good.
(a) The identify of the auditor. (d) None of the above,
6. A bank can declare dividends.
(a) Without making capital losses goods.
Subject Specialist & Lectureship Guide-Commerce 171
(b) After making capital losses goods. Y 14. The company has earned profits on sale of
(c) None of the above. its machinery and wants to pay dividend out
7 A company auditor should see that the of it. As auditor, you should.
dividend should be paid. (a) Allow it.
(a) After charging depreciation.* (b) Not allow it.
(b) Without charging depreciation. (c) Allow it with certain conditions.v.
(c) Out of capital. (d) None of the above.
(d) None of the above. | 5. There is a large accumulation of unclaimed
Auditor should see that if past revenue losses dividend and the company directors want to
exist, current profits. pay dividend out of it. As auditor, you
(a) May be used for payment of dividends. should.
(b) May not be used for payment of (a) Allow it.
dividends. (b) Not allow it.
(c) Postpone payment of dividends. (c) Allow it after it becomes time-barred.*
(d) None of the above. (d) None of the above.
Profits prior to incorporation of company. ! 6. In the general mecting-of company,
(a) Can be paid as dividends. sharcholders want d @ 10%
(b) Cannot be paid as dividends, Y
(c) Can be used for revenue expenses.
whereas directors * (a) 7: %.
(d) None of the above. As an auditor would you.

. If profits are overstated due to revenue (a) Allow 10%.
expenses being charged to capital, it will (b) Not all %.
amount to payment of dividend, (c) Alice on y 7: %. v.

(a) Out of capital. Y (d) of thc above,
(b) Out of capital profits. | 7. mpany has resorted to heavy sale of
(c) Out of revenue profits.
ock with a view to pay dividends to
(d) Nonc of the above. shareholders. As an auditor, your should.
Which of the following Statements
correct? .
SQ (a) Justify it.
(c) Ignore it. Y
(b) Not justify it.
(d) Report it.
(a) Dividend can be paid out of $: *| 8. A company has earned profits and declared
proceeds of fixed assets. dividends, but does not want to pay
(b) Dividend can never be p d's of
capital. Y s'
(c) Dividend cannot bee-paid out of
dividend due to shortage of cash. As auditor
you should suggest, if asked, that.
(a) Dividend should be paid.
accumulated reservcs.
(b) Dividend need be paid.
(d) Dividend can be pai ithout charging
(c) Dividend must be paid within 42 days of
depreciation. declaration of dividends.
. In his report, thc auditor gives his. (d) Dividend must be paid within 45 days. Y
(a) Judginctit. 19. You find that company has given loan to its
(h) Opinion.* shareholders for purchasing of its shares,
(c) Guarantec to correctneSS of accounts.
Would you, as auditor.
(d) True state of affairs. (a) Allow it. (b) Not allow it. Y
. In his report, the company auditor states. (c) lgnore it. (d) None of the above.
(a) Correct state of affairs. 2(). Auditor finds that there is a change in the
(h) True state of affairs. method of valuation of stock, whether he
(c) True and fair state of affairs. Y should,
(d) Fatr state of affairs. (a) Altow it.
(b) Disallow it, 27. Profits on reissue of forfeited shares should

(c) Allow it with a note to this effect. Y be transferred to -
(d) Ignore it. (a) Shares Forfeited Account.V.

2]
4- i. "
in thc annual general meeting of a (b) Capital Reserve Account.
company, the auditor is questioned as (c) Profit and Loss Account.
why he has signed the balance sheet when (d) Profit and Loss Appropriation Aceount.
assets would not realise the value shown 28. With regard to issue of share certificates,
in it. Which of the following arguments the auditor should refer to section.
given by auditor is correct? (a) l 10. (b) 113.v.
(a) Market value of assets has nothing to do (c) 1.14. (d) 74.
with assets. 29, Increase in share capital is permitted by.
(b) Market value of assets cannot be
ascertained.
(a) Memorandum of Association.
(b) Articles of Association.v.
(c) Asscts are shown treating it as a going (c) Court.
concern. Y (d) Companies Ordinance 1984.
(d) None of the above. 30. FOr shares in smaller
22 . The auditor finds that a company has paid
amount, the auditor'should refer to
intercst out of capital. Whether he should.
(a) Allow it. (b) Not allow it. Y
(a)
(b) Director. inute Book.
(c) Ignore it. (d) None of the above, (c) Shareholders's Minute Book.
23 . The auditor did not care to check adequacy anies Ordinance 1984.
of Provision for bad and Doubtful Debts,
31, Share capital can be increased by.
Whether he can be held. ) Increasing face value of shares.
(a) Liable for it. Y
(b) Not liable for it.
29 (b) Issuing shares at premium.
(c) Issue of fresh shares.v.
(c) Liable criminally for it. (d) None of the above.
(d) None of the above. -
32. For reduction in share capital, the auditor
. The auditor resorted to test checking and should see that
disclose certain
with the result, he could not (a) It is permitted by Memorandum of
frauds. Whether he can be held S \ Association.
(a) Liable for it. Y - (b) It is permitted by Articles of
(b) Not liable for it. A <> Association.
(c) Liable criminall t (c) There is prior sanetion of Federal

(d) None of the abo Government.
During the of an audit, an auditor (d) There is prior sanction by the court. Y
finds that no Vouchers are available for 33. Divisible profits should not include
certain payments. Whether he should (a) Interest on capital.
(a) Seek proper explanation for it. (b) Capital,
(b) Demand vouchers for it. Y (c) Depreciation.
(c) Ignore it. (d) None of the above. Y
(d) Accept certificate for it. 34. Dividends cannot be paid out of
26. Premium received on issue of shares, later (a) Capital profits. Y
forfeited. Should be transferred to (b) Capital receipts.
(a) Capital Reserve. (c) Revenue receipts.
(b) Shares Forfeited Account. (d) None of the above.
(c) Capital Account. 35. Issue of payment of dividend out of capital
(d) None of the above. Y was raised in
(a) Fisher V. Black White Publishing Co.
Subject Specialist & Lectureship Guide - Commerce | 73
(b) Lubbuck V. The British Bank of S. 43. Shares issued for consideration other cash
America. V. should be vouched with the help of
(c) Mckesson & Robbins case. (a) Director's Minute Book.
(d) London & General Bank case. (b) Shareholder's Minute Book.
36. Capital profits. -
(c) Contract with the Party concerned. Y
(a) Can be paid by way of dividends. (d) Cash Book.
(b) Cannot be paid way of dividends. 44. A company can issue Redeemable
(c) Can be paid by way of dividend under Preference Shares, if authorised by
certain conditions. V. (a) Memorandum of Association.
(d) None of the above. (b) Articles of Association.*
3 . Payments of dividend out of capital profit (c) Companies Ordinance 1984.
docS not annount to (d) None of the above, -
(a) Payment of dividend out of capital. 45. Auditor should see that amount received for
(b) Payment of dividend out of profits.< Premium on Issue of Shares should be
(c) Payment of dividend out of capital shown in
receipts. (a) Subscribed Capital,
(d) None of thc above, (b) Capital Reserverund.
Capital profits imply profits earned (c) Share Premium. Account. Y
(a) Through business transactions. (d) Paid-up Capital. Account.
(b) From capital. 46. Share Premiurn. Account should be shown
(c) From sale of fixed assets. Y
-
in the under
(d) From sale of current assets.
While checking allotment of shares, the
auditor should see that it is made within
::
(a) P -Capital,
cribed Capital.
serves and Surplus. Y
(a) 100 days of issue of prospectus. #Reserved Capital.
(b) 120 days of issue of prospectus. Amount of share premium may be utilised
for
40.
(c) 150 days of issue of prospectus.
(d) None of the above. V.
While checking allotments auditor
S* (a) Payment of dividend.
(b) Writing off of preliminary expenses. Y
see that amount, (c) Routine expenses.
(a) Equal to estimated fixed Gap tal is (d) Purchase of fixed assets.
received.< <> 48. Shares can be issued at discount under
(b) Equal to estimated W. g capital is section.
received. (a) 76. (b) 75.
(c) Necessary for of land and (c) 79. (d) 84, V
building has been received. 49. The contents of statutory report are
(d) None of the above. governed by:
41. Auditor should see that the return of (a) Sec. 157.v (b) Sec. 160
allotment hasVbeen (b)
sent2 to Registrar within. (c) Sec. 165. (d) Sec. 175
(a) l month, months. *r 50
. When auditor is not appointed within 120
(e) 3 months. (d) 40 days. days of incorporation of the company then
42. Application money should not be with he will be appointed by.
drawn unless. (a) Directors.
(a) Allotment is made. (b) Shareholders.
(b) Cash Book has been prepared. (c) Corporate Law authority. Y
(c)Certificate to commence business (d) None of the above.
obtained.* 51. Legal provision as to distribution of
(d) Certificate of ineorporation obtained. dividend are contained in.
(a) Sec. 248 to 251. Y 4. An auditor can be held liable under C.A.
(b) Sec. 260 to 265. Ord. 1961 for
(c) Scc, 270 to 272, (a) Negligence.
(d) All of the above. (b) Criminal offence. -
. Following section deals with the treatment (c) Professional misconduct. Y

of surplus arising out of revaluation of fixed (d) Breach of contract.
SS1S. If a company auditor gives false evidence
(a) Sec. 231. (b) Sec. 235, v. intentionally, he can be held for
(c) Sec, 240. (d) None of the above. (a) Negligence.
53. The auditor of private company will be (b) Misfeasance. Y
(a) Chartered Accountant. (c) Brcach of contract.
(b) Cost & Management Accountant. (d) Criminal Liability.
(c) Master of Commerce. If a company auditor has misapplied money
(d) No qualification is mentioned. Y of a company, he may be held liable for
54. Scope of audit of other than public (a) 'Q
b. Misfeasanc
company will be defined by.
(a) Statute.
(b) By management.
-
(c)
(d) Contractual liability. Y
(c) By agreement between client and 7. If an a is found guilty of falsification
auditorv/ of hy books, he will incur.
(d) All of the above. 'riminal liability. Y
55. Company can issue shares at discount if it Civil liability.
is permitted by. c) Contractual liability.
(a) Memorandum of Association. (d) None of the above.
(b) Articles of Association. Y 8. Civil liability of an auditor implies liability
(c) Prospectus.
(d) Statement in liew of ~ for
(a) Misappropriation of Cash.
(b) Misappropriation of goods,
(c) Fraud.
(H) 28
Auditor is liable for
(d) Misfeasance.Y
In which of the following cases, it was
(a) Not verifying pet decided that "it is not the duty of an
(b) Not determini CK. auditor to take stock"?
(c) Not checking accounts properly. (a) London and General Bank case.
(d) All of the above. Y (b) London Oil Storage Company case.
An auditor is held criminally liable for (c) Kingston Cotton Mill case.Y
(a) Loss to his client. (d) None of the above. -
(b) Neglect of his duty. 10. An auditor, working in honorary capacity,

(c) Offecnces against statutory provisions. Y 1S
(d) Frauds. - (a) Liable. Y

If an auditor allows publication of annual (b) Not liable.
reports knowing them to be materially false (c) Criminally liable.
to deceive shareholders, he incurs. (d) None of the above.
(a) Contractual liability. 11. For misstatement in a company prospectus,
(b) Civil liability. the auditor incurs
(c) Criminal liability.V. (a) Civil liability.V.
(d) None of the above. (b) Criminal liability.
(c) Contractual liability.
Subject Specialist & Lectureship Guide - Commerce - - 175
(d) None of the above. (c) Appointment confirmation of auditor.
12. If an auditor fails to satisfy himself that the (d) All of the above.
transactions are ultra virus the directors, he 4. For planning auditor must have knowledge
incurs. - of clients business which can be obtained
(a) Criminal Liability. from
(b) Civil liability.* (a) Clients annual report.
(c) Contractual liability, (b) Previous year working papers.
(d) None of the above. (c) Trade journals and magazines.
13. A Chartered Accountant sent circular letters (d) All of the above. V.
soliciting work. Can he be held liable. 5. The International Standards on Auditing 4
(a) For misfeasance. 'Planning', observes that adequate audit
(b) For negligance. planning helps to ensure that attention is
(c) Criminally. directed to critical aspects of the audit.
(d) For professional misconduct, V - What audit working paper will normally
14, Duty of Auditor is to provide satisfactory evidence of this
(a) Form an opinion. V.
(b) Report. -
aspect of audit plan
(a) Client's ti
& e for accounts
(c) Examine books of accounts. preparation. ... N
(d) Attend annual general meeting.
15. Auditors has right to
(b) Systcms
(c) The pi #Meharts.
memorandum, V.
(a) Obtain information. Y (d) * ught forward schedule.
(b) Give information. O
(c) Prepare accounts. Q J
(d) Nonc of the above. ( )
16. With whom does the auditor of a limited .
company have a contractual relationship? - ngagement letter is written by
(a) The company. (a) Director. (b) Auditors, V.
(b) The directors.
(c) Chief Executive. *
(d) The Company and the sharehO 10G.I.S.
2,
(c) Creditors. (d) Chief Executive.
Bcfore the commencement of his audit
work letter sent by the auditor is known as
(a) Management letter. -
(I) s (b) Representaiton letter.

(c) Engagement letter.Y
1. Thc auditor should pla - (d) None of the above.
(a) Conduct an effecti udit, V (3) Which of the following assertions should be
(b) Disclose fraud. included in the engagement letter for a new
(c) Examine production/manufacturing private company client trading as an
techniques. electrical wholesaler?
(d) Issue unqualified report. 1) The responsibility for the prevention and
2. Audit plan is prepared detection of irregularities and fraud rests
(a) Before the start of audit.v with management.
(b) During audit. 2) The auditor's examination should not be
(c) After audit. relied upon to disclose irregularities and
(d) At any time. fraud which may exist. -
3. Audit programme is a written document 3) The auditor has no responsibility to

which includes. detect fraud and irregularities in the course
(a) Audit procedures to be carried out. V. of his work.
(b) Relevant accounting ratio.
4) The auditor will endeavour to plan his (a) An organisation chart summarising
work So as to have a reasonable expectation management functions and the division of
of detecting meterial misstatements repsonsibilitics within the company.
resulting from irregularities or fraud. (b) Analysis of transactions & balances.
(a) Assertions 1, 2 and 4 only.V. (c) A copy of the bank's response to the
(b) Assertion 2 & 3 Only. Standard audit request letter. Y
(c) All the above. (d) A description of the business and its
(d) Assertions 1, 2 and 3 only. operations.
Which of the following statements
describes most accurately the principal
purpose of the engagement letter in respect
of a limited company audit assignment? Missappropriation of goods may be
(a) To define the extent of the auditor's checked by
responsibilities. Y (a) Proper Supervision over stock. Y
(b) Arrangement regarding the planning for (b) Checking of employees.
an audit. (c) Punishment '"
(c) To cstablish the audit fee for the current (d) None of the above.
year. 2 Window dressing implics
(d) To draw the attention of the directors to (a) '' of cxpenses.
the range of Services that the firm can offer. (b) Checking wastages.
Auditor sends engagement letter (c) Under-valuation of assets.
(a) Before commencement of audit. Y ver-valuation of assets. Y
(b) During the course of the audit. sification of accounts is undertaken by
(c) At the end of the audit. a) Auditors.
(d) All of the above. (b) Clerks.
(c) Accountants.
(d) Responsible officials. Y
(K) Errors of omission are
Working papers are property
(a) Client.
& (a) Technical errors.
(b) Errors of principle.
-
(b) Registrar. (c) Compensating errors.

(c) Auditor Y (d) None of the above. Y
(d) Corporate law au - Valuation of assets on wrong basis is
2. Which one of the following working papers (a) Technical error
would e retained on the (b) Clerical error.
permanent file hmaintained for a limitcd (c) Error of Principle. Y
company audit client? (d) Compensating error.
(a) Extracts of shareholders and Test checking refers to
management meetings. (a) Testing of accounting records.
(b) Entity policy regarding provident fund. (b) Testing of honesty of employees.
(c) Engagement letter. (c) Intensive checking of a selected number
(d) Copy of the Memorandum and Articles of transactions. Y
of Association. Y (d) Checking of all transactions recorded.
3 Which one of the following working papers Which of the following proccolures would
would normally be retained on the current be the most appropriate to identify the fraud
file maintained for a limited company audit of teening and lading?
client? (a) Reviewing aged-debtors' listings.
(b) Debtors' circularisation.*
(c) Reviewing bank reconciliation. disucssed and agreed; the purpose and
(d) Checking subsequent clearance of outcome of the meeting has been minuted.
debtors.
Detection and prevention of errors and
fraud is the responsbility (N)
(a) Auditor (External).
(b) Internal Auditor. One reason why an auditor uses analytical
(c) Management. Y procedures that focus on the client's
(d) None of the above. operations is to identify,
(a) Improper separation of accounting and
other financial duties.
(M) (b) Weakness of material nature in the
system of internal accounting control.
The date of representation letter is normally (c) Unusual transactions. Y
the date on which (d) Noncompliance with prescribed control
(a) Audit is started. procedures. O
(b) Accounts are approved by the Board of An abnormal fluctuation in gross profit that
Directors. -
might suggest ' eed for extchdcd audit
(c) Audit report is signed by the auditors. Y procedures for sals and inventories would
(d) Audit field work is completed. In OSt likely be identified in the planning
The letter issued by the auditor to his clieut phase

(a)
by the use of
of transactions and balances.
describing the weakness in the system
observed during his audit is referred to as - preliminary review of internal
(a) Representation letter. nting control.
(b) Management letter. Y Specialized audit programs.
(c) Audit Engagement letter. {d) Analytical procedrues. Y
3
The directors of Noshaba Limited
refused the auditor's request to
-
N:s' An example of an analytical procedure is

the comparison of:
(a) Financial information with similar
formal letter of representation (c information regarding the industry in which
various matters which were cov the entity operates. Y
representations obtained f company (b) Rccorded announts of major
staff during the audit s' of the disbursements with appropriate invoices.
following is not accep as an alternative (c) Results of a statistical sample the
form of evidence Of the matters expected characteristies of the actual
on which representations were sought' population.
(a) The audit working papers contain a (d) Generated data with similar data
record of the oral representations. Y generated by manual accounting system.
(b) The representations have been formally 4. An auditor ordinarily examines invoice
minuted by the directors. from lawyers primarily in order to:
(c) The auditor has prepared a statement of (a) Substantiate accruals.
the representations which he has sent to the (b) Assess the legal ramifications of
directors; the directors have confirmed in litigation in progress.
writing that the auditor's understanding of (c) Estimate the amount of eontingent
the representations is correct. liabilities. Y
(d) The auditor has held a meeting with the (d) lo'entify possible unassorted litigation,
directors at which a statement of clairns, and assessements.
representations prepared by himself is
Subject Specialist & Lectureship Guide - Coml.,erce j 78
5. The auditors of a public limited company (c) Analytical review can be applied at all
discover an omission which existed on the stages of the audit, including initial
date of the auditor's report. Due to this planning.
discovery they are unable to support the (d) Analytical procudure can only be
previously expressed opinion. If they applied at review stages,
believe persons are currently relying on the
report, they should promptly;
(a) Undertake to apply the omitted (O)
procedure or alternative procedures that
would provide a satisfactory basis for the Which of the following characterises the
opinion. so-called 'around the machine' approach to
(b) Notify the board of directors that the auditing in a computer enviroment?
previously expressed opinion is not to be (a) Audit work is based on the review of
relied on. V. inputs to and outputs from the computer. Y
(c) Notify the stockholders currently relying (b) The detailed computer processing
on the report that the previously expressed routines used in the various parts of the
opinion is not to be relied on. System are examined to determine whether
(d) Notify that the previously expressed controls are adequate."
opinion is not to be relied on. (c) Audit software is used to examine the
6. An auditor should obtain written contents of computer files.
representation from management (d) Transactions are 'walked through
concerning litigation claims and manually - in order to test whether
assessments. These representations may be
limited to matters considered either

&ly.
go:
processes are operating
individually or collectively material, 22' of the following is a general control?

provided an understanding on the limits of a)Procedures for investigating
materiality for this purpose has bec unauthorised access attempts to data files.Y
reached by: 'N (b) Manual scrutiny of output.
(a) The auditor and the client's lawyer N (c) Programmed reasonableness checks.
(b) Management and the auditor. (d) Programmed scquence checking.
(c) Management, the client's
the auditor.
* and The two principal CAATs are test data and
audit software. in respect of which of the
(d) The auditor * Of following audit activities would the use of
management. Y test data be most relevent?
7. *
Analytical review p : are a type of (a) Analytical review of the financial
substantive : of the following StatCInentS.
correctly describes he stages of an audit (b) Testing of programmed controls over

during which the auditor may plan to make sales invoicing.Y
use of analytical review procedures? (c) Selection and extraction of a sample for
(a) Analytical review is confined in its a debtors circularisation.
application to the closing stages of the audit (d) Verification of aged debtors balances.
when thc review of the financial statements Which of the following CAATs may
is couducted. provide a continuous review of a client's
(b) Analytical review procedures can be programmed controls?
applied to individual account areas as well (a) Test data,
as to the review of financial statements and (b) A utility programme.
can be used at all stages of the audit other (c) An embedded Facility.Y
than initial planning. V. (d) A purpose written programme.
(c) consensus ad idem

(d) an agreement plus a legal object
Law Of Contract 9. Flaw in capacity to contract may arise from
(a) lack of free consent
Law of contract is, (b) lack of consideration
(a) not the whole law of agreements nor is (c) minorityv
it the whole law of obligation Y (d) absence of legal formalities
(b) the whole law of agreements
(c) the whole law of obligations
(d) none of the above Offer And Acceptance
2 A contract creates
1. Which of the following result/results in an
(a) rights in personam V.
offer?
(b) right in rem
(c) only rights and no obligations (a) A declaration of intention
(d) only obligations and no rights (b) An invitation to offer"
An agreement is a viodable contract when it (c) An advertisement-offering reward to
1S. anyone who finds the lost dog of the
(a) enforceable if certain conditions are advertiser" ( >
fulfilled (d) An offer made in a joke
(b) enforceable by law at the option of the 2. A specific offer can be accepted by.
aggrieved party, (a) person
(c) enforceable by both the parties y friend of offerer
(d) not enforceable at all -
person to whom it is madeV
An agreement not enforceable by law is @ any friend of offeree
said to be *
letter of acceptance sufficiently stamped
(a) void Y (b) voidable and duly addressed is put into course of
transmission. There is.
(c) valid (d) illegal -
(a) a contract voidable at the option of

A contract.
(a) may be void as originally
(b) may become void subsequent,
< its
acceptor
(b) a contract voidable at the option of
formation V. - offerer
(c) cannot become voi der any (c) no contract at all
circumstances (d) a valid contract.'
(d) may become void he will of a party Acceptance may be revoked by the acceptor
6. The transaction to an illegal (a) at any time
agreement are. (b) before the letter of acceptance reaches
the Offerer
(a) not affected in any manner
(b) also tainted with illegalityV. (c) after the letter of acceptance reaches the
offerer
(c) voidable at the option of the plaintiff
(d) void (d) before the death of the acceptor
An agreements is. An advertisement to sell a thing by auction
1S.
(a) offer
(b) offer + acceptancev (a) an offer
(c) offer + acceptance + consideration (b) an invitation to offerv
(d) contract (c) no offer at all
A contract is. (d) a contract
(a) a legal obligation (e) an obligation .
(b) an agreement plus a legal obligation
Subject Specialist & lcctureship Guidc - Commerce 180
(3. On the face of the ticket for a journey the (c) must move from the third party
words For conditions seek back are (d) may move from the promisor
printed in small print. The passenger. Consideration.
(a) is bound by the conditions whether he (a) must be adequate to the promise made
takes care to read them or not (b) need not be adequate to the promise
(b) is not bound by the condition v madev.
(c) may not take note of the conditions (c) must be of reasonable value
(d) none of the above (d) must be of more value than the value of
An offer is made to Mani in a crowd. It promise made
(a) can be accepted by him aloneV. Consideration must be something which the
(b) may be accepted by any person who promisor.
hearts it (a) is already bound to do
(c) may be accepted by his brother (b) is not already bound to dov
(d) may be accepted by his friend (c) may voluntarily do
An acceptance is not according to the (d) must not do
mode prescribed but the offerer decides to Compromise of d claims.
keep quite. In such a case there is. (a) is a good c ration for a contractv.
(a) a contractv. (b) is not a od consideration for a
(b) no contract contract. *
(c) a voidable contract
(d) an unenforceable contract
(C) a void agreement
9. There is a counter-offer when. 6.
(d) is not permitted by law.
A promise to compensate, wholly or in part,
(a) the offeree gives conditional acceptance Gre: who has already voluntarily done
or introduces a fresh term in Something for the promisor is.
acceptance. Y (a) enforceablev
(b) The offerer makes a fresh offer (b) not enforceable because it is without
] ().
(c) The offerce makes some query
(d) The offeree accepts it
A makes an offer to B on 10" Qa'letter
s' consideration
(c) void
(d) voidable
which reaches B on 12". sts letter of A person who is not a party to a contract.
acceptace on 14" which ..'. on 16". (a) cannot suc (b) can Sue
The communication QRA acceptance is (c) can sue only in well recognized casesv
complete as against AOn Consideration in a contract.
(a) 12" (b) 14" (a) may be past, present or future
(c)16"v (b) may be present or future only
(c) must bye present only
(d) must be future only
Consideration An agreement made without consideration
Consideration must move at the desire of is
(a) the promisory (a) valid (b) illcgal
(b) the promisee (c) voidable (d) void*
(c) promisor or any third party 10. A promises to subscribe to a charity. The
(d) both the promisor and the promisee promise is a
(c) any third party (a) valid contract
Consideration.
(b) voidable contract
(a) must move from the promisee (c) void agreement V
(b) may move from the promisee or any (d) void contract
other pcrsonv
Subject Specialist & Lectureship Guide - Commerce |8|
8. The contractual capacity of a company is

Capacity To Contract regulated by.
(a) its Memorandum of Association and the
l. An agreement with or by a minor is. provisions of the Companies Act V
(a) void V. (b) The terms of contract entered into with
(b) voidable at the option of the minor a third party
(c) voidable at the option of the other party (e) Its Articles of Association
(d) valid (d) Its prospectus
2 On attaining the age of majority a minor's An agreement with a minor is.
agreement. (a) absolutely void V.
(a) can be ratified (b) a voidable contract
(b) cannot be ratified V (c) a contract which is valid
(c) becomes void (d) none of theses
(d) becomes valid I (). Mohiri Bibi v. Bharmodas Ghose, (1903)
3. A minor, by misrepresenting his age, 3{}l Cal. 539 case deals with.
borrows some rimoney. (a) communication of offer
(a) He can be suc for fraud (b) communication of acceptance
(b) He cannot be sued for fraud.V. (c) a minors agreement V
(c) He is liable to return the money (d) fraud
- > *
(d) None of the above (e) a luna agreement
4. A minor enters into a contract for the 1 ! . Flaw in capacity to contract may arise from.
purchase of certain necessaries, in such a (a) want of consideration.
CaSC.
b)(unsoundness of mindv
(a) he is not personally liable to pay illegality of object
(b) he is liable to payv Q uncertainty of objcct
(c) his estate is liable to pay
(d) his guardian is liable to pay
5. A person is usually of unsound min,
N
Sul) Free Consent
occasionally of Sound mind.
(a) He may enter into a
of sound mind V.
* is 1. Where consent is caused by fraud or
misrepresentation, the contract is,
(b) He may not make a comrsen when (a) voidable at the option of the aggrived
he is of sound mind
(c) He cannot enter in
'' <>
ntract at all
party,
(b) void
-
(d) None of the abo (c) unenforceable

6. A contract by an i is. (d) not affected in any manner
(a) voidable 2 Where both the parties to an agreement are
(b) enforceable under a mistake as to matter of fact
(c) invalid essential to the agreement, the agreement is.
(d) void ab initiov (a) voidv. (b) voidable
7. Contracts made before war with an alien (c) illegal. (d) not affected at all
enemy which are against public policy are. Merely because a contract was caused by
(a) suspended and are revived after the war one of the parties to it being under a
is over mistake as to a matter of fact, it is not.
(b) dissolved V (a) voidableV. (b) void
(c) not affected at all (c) affected at all (d) none of the above
(d) void ab initio
Subject Specialist & Lectureship Guide - Commerce
4. Consent given to a contract under (c) valid (d) illegal
misrepresentation by the other party makes (e) not affected at all
the contract. 12. If there is an unilateral mistake as regards
(a) void (b) invalid identity of a party caused by fraud of the
(c) unenforceable (d) voidablev. other party, the contract is,
5 When a person positively asserts that a fact (a) void V. (b) voidable
is true when his information does not (c) valid (d) illegal
warrant it to be so, though he believes it to 13. It there is a fraudulent misrepresentation as
be true, there is to the contents of a document, the contract
(a) misrepresentation/ J.S.
(b) fraud (a) void (b) voidablev.

(c) undue influence (c) valid (d) illegal
(d) coercion 14. If there is a fraudulent misrepresentation as
Fraud exists when it is shwn that a false to the character of a document, the contract
1S.
representation has been made. i
(a) Knowingly (b) unknowingly (a) void v. (b) voidable

(c) unintentionally (c) valid {d} illegal
(d) recklessly, not caring whether it is true 15. Cundy v. Lindsay."(1878) 3 A.C. 459 case
of false deals with \
(e) a & d aboveY (a) coercion - (b) unduc influence

A mere attempt at deceipt by one party (c) mistake as to the nature of transaction
(a) is not fraud unless the other party is (d) mistake as regards identity/
actually decived V 16. A promise made without the intention
(, | -
of
(b) is fraud whether the other party has (performing it amounts to.
been deceived or not @' innocent misrepresentation
(c) amounts to misrepresentation (b) fraud.V.
When consent to an agreement is
by undue influence, the agreement is a
* (c) negligent misrepresentation
(d) wrong ful misrepresentation
(a) contract voidable at the option of the 17. The unlawful detention of any property of a
party whose consent was so obtained person to obtain his consent to a contract
(b) void contract @ amountS to
(c) valid contract (a) misrepresentation (b) fraud

(d) void agreement <> (c) undue influence (d) coercionv
Which of the following relationship raise
presumption of undue influence?
(a) Landlord and tenant Legality of object
(b) Parent and child
(c) Doctor and patient The collateral transactions to an illegal
(d) Husband and wife agreement arc.
(e) Finance and financee (a) void (b) illegalv.
(f) Creditor and debtor (c) voidable (d) not affected at all
(g) b,c,ev. An agreement made with an alien enemy is.
] (). lf there is error in cause, the contract is. (a) unlawful on the ground of public
(a) void (b) voidablev policy'
(c) valid (d) illegal (b) unlawful because it becomes difficult to
11. If there is error in consensus, the agreement be performed
is (c) valid (d) voidable
(a) voidv (b) voidable
Subject Specialist & Lettureship Guide - Commerce | 83
3. A person enters into agreement whereby he (b) void agreement

is bound to do something which is against (c) voidable agreement
his public or professional duty. The (d) contingent contractz
agreement is. - (e) contract of guarantee
(a) void on the ground of public policy V A agrees to pay B Rs. 2,000 if a certain ship
(b) valid (c) voidable does not return at Port of Bombay within a
(d) illegal year. As promise can be enforced when the
Regulations as to thc opening and closing ship.
of business in a market are. (a) arrives Bombay in a damaged condition
(a) not unlawful cven if they are in restraint during the year
of tradev ; (b) is lost during the year
(b) unlawful because they are in restraint of (c) is sunk during the year
trade (d) arrives Bombay in a good condition
(c) void (d) not valid during the year
An employee, by the terms of his service (e) b & c abovc. &
agreement, is prevented from accepting a O
similar engagement after the termination of
his Service. The restraint is. Performance of Contract
<>
(a) valid (b) void*
1. Promises ing consideration for each
(c) illegal (d) unenforceable
Nordenfelt v. Maxim Nordenfelt Gun Co., other are known as.
(a) independent promises
(1904) 29 B.L.R. 107 case deals with
(a) agreement in restraint of legal
Q.
promises
*reciprocal promises:
proceedings
(b) minors agreements (d) mutual promises
Each party is a promisor and a promisee in
(c)
(d)
agreements in restraint of tradev
agreemcnts in restraint of marriag s' case of.
(a) past consideration
Contingent contgsS (b) present consideration

(c) every contract
(d) reciprocal promises V
1. A contract of insurance is '' <>
3 When the promisee refuses to accept
performance
(a) contract of guarante to perform, it from
is the promisor who offers

(b) contingent contra

(c) wagering agre (a) attempted performancev
(d) unilateral agreement (b) vicarious performance
2. Which of the following, are contingent (c) tender
contracts? -
(d) frustration of contract
(a) Contracts of insurancev Sale of goods for cash is an example of
(b) Contracts of guarantee (a) mutual and independent promises
(c) Contracts for the sale of goods on credit (b) mutual and dependent promises
(d) Wagering agreements (c) mutual and concurrent promises'
A contingcnt contract is. (d) conditional and dependent promises
5 When a party to a contract transfers his
(a) void (b)voidable
(c) valid V. (d) illegal contractual rights to another, it is known as,
A contracts to pay B Rs. 10,000 if B's (a) rescission of contract
house is burnt. This is a (b) waiver of contract
(a) wagering agreement (c) discharge of contract
(d) assignment of contractv. (c) voidable at the option of the plantiff

Where the debtor does not expressi, (d) illegal
intimate or where the circumstances 2 An agreement to do an act impossible in
attending on a payment do not indicate any itself.
intention the creditor. (a) is voidV.
(a) may apply it even debet +()a time (b) is voidable
barried. -
(c) is Void ab initio

(b) many apply it at his discretion Fo any (d) becomes void when inmpossibility is
lawful debt due - discovered.
(c) a & b above Y if a new contract is substituted in place of
When two or more persons have made a an existing contract, it is called.
joint promise, then unless a country (a) alteration (b) rescission
intention appears from the contract, all such (c) novationv. (d) remission
persons must fulfill the promisc. *-i-.
The case of Taylor v. Caldwell (1883) 3 B
(a) jointly v & S. 826 deals with
(b) severally (a) discharge 'act by destruction of
(c) jointly an severally subject matte
(d) jointly or severally (b) anticipal breach of contract
Assignment by operation of law takc', (c) dischafge of contract by death of a party
place. (d) '' f contract
(a) by the mutual consent of the parties 5 A. S. 500 to B. He later tells B that
(b) by the will of either party 'd not repay the amount. The contract
(c) when the subject matter of contract ischarged by.
ceases to exist
(d) by the death of a party to a contractv.
2% breach (b) waiver
(c) novation (d) performancev
(). A who owes Rs. 1 (),000 to B dics
an estate of Rs. 6.00(). Th
'
SS 6. A contract has become more difficult of
l
performance due to some un-contemplated
representatives of A are cvents or delays. The contract. -
(a) liable for Rs. 10,000

(b) liable for Rs. 6,000v.
S. (a) is discharged
(b) is not discharged V
(c) not liable at all
(d) liable for Rs. 3,000
28
<>
7
(c) becomes Void
(d) becomes voidable
. Owing to a strike in ctory of A, he is Where a contract could not be performed
not able to suppl goods to as per the because of the default by a third person on
terms of the a ment. The agreenment in whose work the promisor relied, it
Such a case. (a) is not dischargedV
(a) is discharged (b) is discharged
(b) is not discharged V (c) becomes void
(c) becomes void (d) becomes voidable
-,
(d) is voidable at the option of A & A creditor agrees with his debtor and a third
party to accept that third party as his debtor.
The contract is discharged by.
Discharge of a contract (a) performance
(b) atteration
If a contract contains an undertaking to (c) waiverv'.
perform an impossibility, the contract is. (d) remission
(a) void ab initiov (c) rescission
(b) void
(). Satyabrata Ghose v. Mugnceram Bangur &

Co., A.I.R. (1954) S.C. 44 Case deals with.
(a) agreements opposed to public policy:/
Remedies for breech of
(b) supervening impossibility
(c) contracts of guarantee
Contract
(d) agency
| (). A undertakes to paint a picture for B. He The Court may grant rescission where the
contract is.
dies before he paints the picture. The
COntralCt. (a) voidable at the option of the plaintiffV
(a) is discharged by death V. (b) Void
(b) becomes voidable at the option of B ; (c) unenforceable
(c) becomes voidable at the option of the (d) illegal
legal representatives of A The foundation of modern law of damages
was laid down in.
(d) will have to be performed by the legal
representatives of A (a) Tinn. Hoffman
(b) Taylor v. Caldwell
(c) Hadley v. Bax
Quasi Contract (d) Addis v. Gr ne Co.
Specific performance may be order by the
Court whe
A quasi-contract.
(a) thc t is voidable
(a) is a contract (b) is an agreenicnt
(c) has only a legal obligationX (b) d. s are an adequate remedy
(d) is none of these (c ages are not an adequate remedy/
2
e contract is uncertain
When an agreement is discovcred to be
void, any person who has received any c measure of damage in case of breach of
a contract is the difference between the
advantage under such agreement.
(a) is bound to restore itv.
(b) is not bound to return it N
GS (a) contract price and the market price at
the data of breach V.
(c) may retain it (b) contract price and the maximum market
3 A minor has been supplied necessaries on price during the term of the contract
credit. (c) contract price and the price at which the
(a) He is not liable plantiff might have sold the goods
(b) He is personally liabl (d) contract price and the price fixed by
Court
(c) His estate is liable
(d) He is not pcrSoni liable Hadley v. Baxendale, (1854) 8 Ex Ch. 341
Case deals with
A person who finds good belonging to
another an takes them into his custody, is (a) anticipatory breach of contract
subject to the same responsibiiity as a. (b) quantum of damages/
(a) ballee Y (b) true owner (c) supervening impossibility
(c) bailor (d) pledgce (d) quasi-contract
5 A finder of lost goods is a Anticipatory breach of a contract takes
(a) bailor (b) bailcev place
(c) true wiler (d) thief (a) during the performance of the contract
(). Quantum meruit means. (b) at the time when the performance is due
(a) a non-graiutius promise
(c) before the performance is dueV.
(d) at thc time when the contract is entercd
(b) as implied promise Into
(c) as much as is earned Y
(d) as much as is paid
Subject Specialist & Lectureship Guide - Commerce # 86
7. In case of wrongful dishonour of a cheque
by a banker having sufficient funds to the

credit of the customer, the Court may 1. Indemnity And
award.
(a) ordinary damages
Guarantee
(b) nominal damages
1. A contract of indemnity is a.
(c) exemplary damages.V.
(d) contemptuous damages (a) contingent contractv/
Ordinary damages are damages which (b) wagering contract
(a) arise in the usual course of things from (c) wagering contract
the breach v. (d) void agreement
(b) which are in the contemplation of . 2. The definition of a contract of indemnity as
partics at the time when the contract is given in the contract act includes.
made (a) express promises to indemnify
(c) are agreed in advance (b) in piled promises to indemnify
(d) are given by way of punishment for (c) cases where l arises from accicnts
breach of contract and events on the conduct
A agrecd to sell 100 shares to B at Rs. 75 of the promisor or any other person
per share, delivery to he given on 1" March (d) cases her the loss is caused by the
B refused to accept delivery on 1" March as
price had gone down to Rs. 60 per share.
:
' abovev
the promisor himself or by
duct of any other person
subsequantly A sold these shares at Rs. 92 (e
per share. 3. d P go into a shop. S says to the
(a) A cannot recover any damages from B G opkeeper. C, Let P have the goods and if
(b) A will have to restore to B Rs. 1,700 he does not pay you. I will. This is a
i.e., the profit he made
(c) A can recover Rs. 1,500 from
damages.V.
& (a) contract of guaranteev
(b) contract of indemnity
(c) wagering agreentent
(d) A can '' N
recover
be
(d) quasi-contract
determined by the president stock 4. Any variance made without suretys
consent in the terms of the contract between
exchange
. Exemplary damages are. the principal debtor and the creditor
*.,
(a) allowed in ease dishonour of a discharges the surety.
cheque by a bal having sufficient (a) as to transactions prior to variance
funds, V. s (b) as to transactions subsequent
variancev
to
(b) the diffe between the contract
price and the market price (c) as to all transaction
(c) allowcol for income venience eaused by (d) from his liability under the guarantee
breach of contract 5. A guarantee obtained by a creditor by
(d) allowed where in case of breach of keeping silence as to material
circumstanees is.
contract, the plaintiff has not suffered any
loss (a) valid (b) voidable
(c) unenforceable (d) invalid Y
6. Where there are co-sureties, a release by the
creditor of one of them.
(a) discharges the other co-sureties
(b) does not discharge the other co
sureties V
(c) makes all the co-sureties immediately (a) the Baileev
liable (b) the bailor
(d) makes the contract of guarantee void (c) on both of them
7. The right of subrogation in a contract of (d) neither of thern
guarantee is available to the 6. A who purchases certain goods from B by a
(a) creditor (b) principal debtor misrepresentation pledges them with C. The
(c) suretyv (d) indemnifier pledge is.
8. The omission of the creditor to sue within (a) valid V. (b) void
the period of limitation (c) voidable (d) invalid
(a) discharges the surety 7. A gratuitous Bailment is one which is
(b) does not discharge the surety. (a) supported by consideration
(c) makes the contract of guarantee void (b) not supported by consideration*
(d) makes the contract of guarantee illegal (c) not enforceable by law
(d) void
General fien is available to a
Bailment and Pledge 8. (a) bailee
(c) bankerV
'
<> (d) pawnee
1. A bailee has 9.
A finder of goods Sell the goods
(a) a right of particular lien over the goods (a) if the goods are of a value less than Rs.
bailed Y 100
(b) a right of general lien (b) if t ner refuses to pay bailee's
(c) a right of both particular and general s in preserving the goods
lien
goods are of a perishable nature
(d) no lien at all over the goods bailed ith the permission of the police
2 The position of a finder of lost goods is that
of a
2#. above
(a) bailor (b) baileev SN

(c) surety (d) principal debtor NQ Contract of agency
3. A gratuitous bailor is liable to the bai
defects in the goods bailed. 1. For a valid ratification the principal must
(a) even if he is not awarc "P) have contractual capacity.
(b) only if he is aware of them: . (a) both at the time of the contract and at
(c) in all cases of loss the time of ratification v
4. If the goods of the
the like goods of
: mixed up with
'' ee by an Act of
(b) at the time of ratification
(c) at the time of contract
God, the mixture belongs to the bailor and (d) at any time
the bailce in proportion to their shares but 2. An agent is personally liable when he acts
the cost of separation will have to be borne for
by: (a) an undisclosed principal
(a) the bailee Y (b) a named principal
(b) the bailor (c) a principal not in existence
(c) both of them in proportion to the value (d) a & c above
of their goods 3. For a general balance of account between a
(d) neither of them factor and the principal, the factor
5. A bailee fails to return the goods according (a) does not have any lien on the goods of
to the bailor's direction. He takes his principal
reasonable care of the goods but still the (b) has a particular line on the goods of his
goods are lost. The loss will fall on. principal
Subject Specialist & Lectureship Guide - Commerce } 88
(c) has a general lien on the goods of his

principal V
If there is no agreement, an agent is. Sale of Goods
(a) not entitled to any remuneration
(b) entitled to a reasonable remunerationv In a sale, the property in goods.
(c) entitled to remuneration which he thinks (a) is transferred to the buyerV
is reasonable (b) is yet to be transferred to the buyer
(d) entitle to remuneration which the (c) may be transferred at a future time
principal thinks is reasonable (d) is transferred when goods are delivered
For his commission or remuneration, an to the buyer
agent has (e) is transferred when the buyer pays the
(a) a genral lien price
(b) a particular lien v. Specific goods are those which are
(c) no lien at all -
identified
(3. Wherc an agent appoints a sub-agent (a) at the time of contract of Salev/
without having authority to do so. (b) subsequent to the formation of contract
(a) the agent is responsible for the acts of ''
of sale
the sub-agentv (c) by an
(b) the agent is not responsible for the acts (d) by '
of the sub-agent (e) by 'buyer
(c) the principal is responsible for the acts
of the sub-agent
- ':
goo
property as used in the sale of
S act n.16an.S.
(d) both the principal and the agent are a)possession (b) ownership:
responsible for the acts of the sub-agent c) ownership and possession both
An agent is acting for an undisclosed (d) the subject matter of contract of sale
principal. Who of following is liable to 4. If a price is not determined by the parties in
third party? a contract of sale, the buyer is bound to pay
(a) principal alone (b) agent alone SQ (a) the price demanded by the seller
(b) a reasonable pricev.
(c) both principal and agentV
(d) cither principal or the agent (c) the price which the buyer thins is
When dIl ': Q
principal reasonable -
subsequently intervenes the other (d) the price to be determined by a third

contracting party '' independent person
(a) only the "' (b) only the agent
(c) both Y Conditions & Warranties
(d) either the * or the agent
9. A entrusts his property to B and it becomes
necessary for B to incur some expenses for The doctrine of caveat cmptor applies
(a) in case of implied conditions an
preserving it B is, therefore, an agent. warranticsv
(a) by precedent authority
(b) when the buyer does not intimate be
(b) by estoppel
(c) by holding out purpose to the seller and depend upon
(d) of necessityV his own skill and judgment
! (). An agcnt makes some secret profit out of (c) when goods are sold by sample
the business of agency. He loses
(d) when goods are sold by description
(a) his remuneration (b) his profit . If a sale is by sample as well as by
(c) not only his profits but also his description, the implied condition is that the
remuneration V. goods shall correspond with
Subject Specialist & Lectureship Guide - Commerce ! 89
(a) sample (b) description (a) the goods have been delivcred to the
(c) both sample and descriptionX buyer .
(d) either sample or description (b) the goods have not been delivered to
3. In a sale, there is an implied condition on the buyer
the part of the seller that he (c) there is a specific agreementV
(a) has a right to sell the goods' (d) none of the above
(b) is in possession of the goods . In a contract of sale, unless goods are
(c) will have the right to sell ascertained, there is
(d) will acquire the goods (a) a Sale
4. A condition is a stipulation which is (b) an agreement to sellv
(a) essential to the main purpose of contract (c) a void agreement
of saleY (d) an unenforceable agreement
(b) not essential to the main purpose of Where there is an unconditional contract for
contract of sale the sale of specific goods in a deliverable
(c) collateral to the main purpose of the property in the goods passes to the
contract of Sale buyer when *
(d) none of the above (a) the goods are ed to the buyer
5. In case of breach of a warranty, the buyer (b) the price is aid)
Call
(a) repudiate the contract

(c) the
(d) the b
#: madev.
thc buyer
cepts the goods

(b) claim damages only V Where is a contract for the sale of
(c) return the goods unascertained goods, the property in goods.
(d) refuse to pay the price (a)passes when the buyer pays the price
(e) refuse to take delivery of the goods does not pass until the goods are
6. In case of breach of a warranty, the buyer certainedV
Call (c) when the contract is entered into
(a) claim damages only N (d) when the buyer accepts the goods
(b) repudiate the contractv. 7. If the contract is silent as to the party who
(c) cannot return the goods S. is to appropriate the goods.
(d) rcfuse to take delivery of the * (a) the buyer is to appropriate
(b) the seller is to appropriate
-
(c) the party who under the contract is first

Transfer of P erty<>
to act is to appropriatev
1. The main object : of sale is

|- (d) any party may appropriate
. In a C.I.F., contract the property in the
(a) transfer of possession of goods goods passes from the seller to the buyer
(b) transfer of property in goods from seller when the
to buyer/ (a) goods are shippedV
(c) delivery of goods (b) goods are received by the buyer
(d) payment of price (c) contract is entered into
2. Risk follows ownership (d) price is paid
(a) only when goods have been delivered
(b) only when price has been paid
(c) whether delivery has been made or not
(d) ever when price has not been paid
(c) c & d above Y
3. In an agreement to sell, the selle can Sue
for price if
6. Where the neglect or refusal of the buyer to
take delivery of gods amounts to a
Performance of contract
repudiation of the contract, the seller may
sue for the
1. There is a constructive delivery of goods (a) price or damages V
(a) when the seller hands over to the buyer (b) price only
the key of the warehouse where the (c) darnages only
goods are lying (d) both for price and damages
(b) where a third person in possession of
the goods acknowledges to the buyer
that he holds them on his behalfw. Rights of an unpaid seller
(c) when the seller physically delivers the
goods to the buyer 1. The ticn of an unpaid scler depends on
(d) when the seller asks the buyers to take (a) pssession v.
delivery of the goods (b) title
Where there is no specific agreement as to (c) ownership
place, the goods sold are to be delivered at (d) whether the *@" paid the price or
the place. -
(a) at which they are at the time of salev

(b) of the buyer
2. An
nOi
lien
* <>
<>
exercise his right of
(c) desire by the buyer (a) w &he goods have been sold on
(d) to be determined by the seller : the term of credit has not
(e) to be determined by the buyer ired
Unless otherwise agreed, where goods are here the buyer has not become
sent by the Seller to the buyer by in route insolvent
involving sea transit, the seller
(c) for the price of the goods v.

(a) must inform the buyer in time to get

goods insure.V.
'N (d) for the price of the goods and for other
charges
(b) may insure the goods 3. The right of lien exercise by an unpaid
(c) must insure the goods S. seller is to
(d) need not inform the -
(a) retain possession V
Unless otherwise agreed, w goods are (b) regain possession
delivered to the buyer an rejects them. (c) recover price and other charges
(a) he is not bound urn them to the (d) damages
Seller 4. An unpaid seller can exercise the right of
(b) it is suffici he intimates to the stoppage in transit when the carrier holds
seller that the has rejected the goods Y the goods
(c) he is bound to deliver them to the seller (a) as sellers agent
(d) he may keep them with him (b) as buyer's agent
A seller delivers goods in excess of the (c) as agent of both of them
quantity order for the buyer may (e) in his own namev
(a) accept the whole 5. If the goods are rejected by the buyer and
(b) reject the whole the carrier or other bailee continues to be in
(c) accept the goods ordered for and return possession of them, the transit.
the excess (a) is deeme to be at an end
(d) none of these (b) is not demed to be at an end V.
(e) a,b,c above (c) commences
(d) none of the above
6. An unpaid seller has not given notice of (c) 15 (d) 20
resale to the buyer. On resale there is a loss. . An unregistered firm wants to enforce
(a) The unpaid seller can recover it from against a third party a right arising from a
the buyer contract it. -
(b) The unpaid seller cannot recover it from (a) can sue the third party
the buyer/ (b) cannot sue the third partyY
(c) The buyer can recover it from the (c) can Sue the third party subject to certain
unpaid seller conditions
(d) The buyer must compensate the unpaid The case of Cox. V. Hickman, (1860) 8
Seller H.L.C 268 deals with
An unpaid seller has not given notice of (a) test of partnership V
resale to the buyer. On resale there is a (b) registration of firm
profit. The unpaid seller. (c) implied authority of a partner
(a) is bound to hand it over to the buyer/ (d) dissolution of firm
(b) is not bound to hand it over to the buyer . The maximum number of partners allowed
(c) may dispose it of in any manner he likes in a firm carrying on g business is.
(d) may set it off against a previous loss in (a) 10 ' 20V.
similar circumstances (c) 50 <> (d) 100
If a seller makes use of pretended bidding . There is no n in the partnership
to raise the price, the sale is deed regarding) e duration partnership.
(a) voidable at the option of the buyer/ This is
(b) void (c) vali." (a) partnership at will: -
(d) illegal (b) p rtnership for an indefinite period

(c) armership by estoppel
) partnership not recognized by law
Partnership egistration of a firm under the Indian
Partnership Act is
A firml
(a) has a legal existence of its own
SQ (a) compulsory
(c) not necessary V
(b) not optional
(d) inevitable
(b) does not have a legal existence 10. The non-registration of a firm does not
from its partnersv. affect the right of the firm
(c) has no legal existence (a) to title a suit for the recovery of more
(d) none of the above <>
than Rs. 100
2 If one exclusive test of paneship between (b) to file a suit for the recovery of less than
a group of persons is to be named it is, RS. 100
(a) joint ownership of property (c) to file a suit against a partner for
(b) sharing of profits recovery of money due by him
(c) contribution of capital (d) to claim a set-off not exceeding Rs. 100
(d) mutual agency (e) b & d above
In partnership, the liability of the partners is
(a) joint
(b) several
Relation of Partners
(c) joint and several V
(d) joint or several A nominal partner is
The maximum number of partners in a firm (a) liable for the debts of the firmV
carrying on banking business cannot (b) not liable for the debts of the firm
exceed. (c) liable for a nominal sum
(a) 5 (b) 10v (d) one whose liability is primary
2. As to important matters concerning the 8. Where a partner is entitled to interest on
nature of the business, no change may be capital subscribed by him, such intercst will
effected. be payable.
(a) without the consent of all the partners' (a) only out of profit (b) only out of
(b) without the consent of the majority of capital V
the partners (c) out of profits or out of carital

(c) at all (d) none of these
3. In the absence of any agreement, the 9. Where a partner retires, and the remaining
partners are entitled to share profits partners carry on the business with the
(a) equallyV firms property without any final Scttlemcnt
(b) in the ratio of capital of accounts, the outgoing partner is entitled
(c) in the ratio of times spent tC.
(d) none of these (a) interest at 6 percent per annum on the

4. If a minor chooses to become a partner on amount due to him
attaining the age of majority, he will be (b) such share of the profits as may be
liable for the debts of the firm attributable to the use of his sharc of the
(a) from the date of his attaining majority firms
(b) from the date of his admission to the (c) either of ove two a the option of
benefits of the partnership V the outgoing partnery
(c) from the date of his election to become (d) inte at the rate of 15 percent per
a partner of the firm on the amount due to him
(d) from the date of his attaining majority 10. ' ility of partners in a firm is.
or election, whichever is earlier imited (h) unlimited
(e) as determined by other partners
5. Public notice is not given on the death of a
c"(e) b & d abovev
(d) joint and several
partner but the firm continues the business 1. A change in the nature of business of a firm
For the acts of the firm done after his de can be made if
(a) the estate of the deceased p wer)i (a) the majority of the partners agree
liable (b) the senior partners agrec
(b) the estate of the deceased is not (c) the financing partners agree
liablev. (d) the working partners agree
(c) hiss legal representativeCare personally (e) all the partners agreev.
liable N." 12. In the absence of any agreement interest on
6. A firm in the course Stils business receives advances to a partner is.
money from a * party. One of the (a) allowed at 15 percent
partners misapplies it. - (b) not allowed at all
(a) The firm is liable to make good the (c) allowed at the market rate of interest
loss v. (d) allowed at 6 percentv.
(b) The firm is not liable to make good the (e) allowed at 10 percent
loss 13. A partner of a trading firm his implied
(e) The defaulting partner alone is liable authority to.
(d) The defaulting partner is not liable (a) submit a dispute relating to the husiness
7. The position of a minor partner is dealt with of the firm to arbitration
in the partnership Act in (b) open a banking account on behalf of the
(a) Scc.25 (b) Sec.29 firm in his own name
(c) See. 30.V. (d) Sec. 35 (c) employ a solicitor to defend an action
against the firm V
(d) withdraw a suit or proceedings file on
behalf of the firm
(e) admit any liability in a suit or Negotiable Instrument
proceedings against the firm
(f) acquire immovable property on behalf . A negotiable instrument is one of the
of the firm property in which is acquired by any one
who take it.
(g) transfer immovable property belonging
to the firm (a) conditionally (b) for value
(h) enter into partnership on behalf of the (c) bona fide
firm (d) bona fide and for valuev
. A holder in due course gets an instrument
(a) subject to defects
Dissolution of Firm (b) free from defects V
(c) subject to equities between the
Dissolution of partnership means. transferor and the holder -
(a) complete breakdown of the relation of (d) subject to e- available to
partnership between all the partners previous parties
<>
(b) only a change in the relation of the
partnersv -
(c) stopping the business of the firm for Note, Bi "and Cheques
some time
(d) stopping the business permanently
1. A :* note is a document in writing
-8.
2 Where a partner has become of unsound contain
conditional promise to pay
mind, the Court may
(a) dissolve the firm on the petition of any ) a conditional order to pay
partnerv'. (c) an unconditional promise to payV
(b) not dissolve the firm (d) an unconditional order to pay
(c) order te other partners to *> . If a document
promise to pay, it is.
contains a conditional
business
A a partner in a firm, transfers f (a) a promissory note
(b) not a promissory notev
his interest in the firm to a thir y. The
Court may
(c) a bill of exchange *
<>
(a) dissolve the firm at t

(d) a conditional promissory note
tance of any
other partnery . A promise to pay is conditional if
(b) dissolve the # instance of A. (a) it depends upon an event which is
certain to happen .
(c) dissolve the fi its own discretion
(d) not dissolve the firm at the instance of (b) the promise is to pay on X's death if he
leaves the maker enough to payV
any other partner
If the assets of a firm are insufficient to (c) it is to pay on demand
discharge the debts and liabilities of the (d) it is to pay after a certain period
firm, the partners shall bear deficiency . A bill which is not expressed to be payable
on demand is
(a) in the profit sharing ratioV
(b) in the capital ratio
(a) entitled to 3 days of gracev
(c) equally (b) not entitled to any days of grace
(d) as determined by the Court (c) entitle to 2 days of grace
(d) entitled to 5 days of grace
. The addition of the words not negotiable'
to a crossing.
(a) restricts the transferability of the cheque 2. The defence of absence of failure of
(b) does not restrict the further consideration in the case of a negotiable
transferability of the chequev instrument is available
(c) makes the cheque payable at the counter (a) only between parties in immediate
of the bank relationshipy
(d) does not make any difference (b) as against a holder in due course only
A promissory note or bill of exchange or (c) as against drawer
cheque is an inland instrument if (d) as against acceptor
(a) drawn in India and payable outside In a promissory note, a minor can be
India (a) a maker (b) a payeev
(b) draw upon any person resident in India (c) an acceptor (d) a drawer
(c) drawn and payable in India.V. For a promissory note made by a minor for
(d) drawn and payable outside India necessaries supplied to him.
Where a cheque bears across its face an (a) it is only his estate which is liable for
addition of the name of a banker the such a notev
crossing is. (b) he is personally liable for such a note
(a) general (b) specialv (c) he is not liable at all
(c) not negotiable (d) restrictive (d) he is liable if the supplier does not
A bill of exchange cannot be know of his minority
(a) endorsed (b) crossed V It suit on a promissory note by a holder in
(c) accepted (d) transferred due course its maker.
The instruments which are entitled to days (a) can deny the validity of the promissory
of grace are Chote as originally drawn
(a) a cheque (()) cannot deny the validity of the
(b) a promissory note in which no time is promissory note as originally madex'
mentioned (c) can set up the plea of absence of
consideration
(c) a promissory note payable on
specified day
(d) a promissory note payable *
s' * (d) can set up the plea of incapacity of
payee
(e) c & d abovev Where an instrument is negotiated to a
10. If a promissory note fallsdue on 15" holder in due course, other parties to the
August which is a public'holiday, it is instrument can.
deemed to be due on. (a) escape liability on the ground that the
(a) 14"August; (b) NS"August delivery of the instrument was
(c) 16" August ... (d) 18" August conditional
(b) escape liability on the ground that the
delivery of the instrument was for a
Parties to a Negotiable special purpose only
(c) take the plea of absence of
Instrument consideration
(d) none of the above.'
1. An acceptor of a bill used by a holder in 7. The defences of the part of a person liable
due course pleads that the payee is a minor. on a negotiable instrument that is has been
This plea is obtained from him by means of fraud or
(a) valid (b) not validV. unlawful consideration.
(c) unlawful (d) conditional (a) can be set up against a holder in due
CQ\}rSC
(b) cannot be set up against a holder in due (b) indorsed and delivered to the party
coursev (c) stolen by that party
(c) can be set up against any party (d) forcibly taken by that party
including a holder in due course (e)
(d) cannot be et up at all
Presentment of a
Negotiation Negotiable Instrument
1. lf a person takes qualified acceptance he,
A holder negotiates a bill or note payable to
bearer by mere delivery to a bona fide (a) discharges all the parties prior to
transferee for value. The latter. himself.
(a) acquires a good title to it? (b) does not discharge any party prior to
himself
(b) does to acquire a good title to it -
(c) acquires no title to it at all (c) discharges only some of the parties
(d) acquires a conditional title (d) discharges the instr IltS
2 If the signatures of the maker on a If any of the sign on a negotiable

negotiable instrument are forged, a person instrument are & a person acting in
acquiring it in good faith. -
good faith. Q. . . . -
(a) acquires a good title to it (a) acquiresa's d title to it

(b) does not acquire a good title to it? (b) does notaequire any title to it.
(c) acquires a better title (c) doe: ne acquire a good title to it
(d) none of the above (d) mon, of the above
A bill is negotiate by means of a forged 3. Where a bill is dishonoured by non
endorsement. A person elainning under the eptance, presentment for payment.
endorsement for value and in good faith. a) is necessary
(a) acquires a good title to it (b) is not necessary
(b) acquires the right of a holder in O (c) is optional
COUTSC (d) may or may not be made
(c) does not acquire the rights
due coursev
* Where the acceptance of a bill does not
express for whose honour it is made, it is
deemed to be made for the honour of the
In a negotiable instrument,\ as between
immediate parties, the by taking (a) drawerV (b) drawer
plea of absence of consideration. (c) holder (d) maker
(a) can avoid liabilit *
(b) cannot avoid liability Dishonor of a
(c) can rcduce his liability
(d) non of the above
If a finder obtains payment on a lost bill,
Negotiable Isntrument
the person who pays it in due course A promissory note and a cheque are
(a) gets a valid discharge for itv. dishonoured by.
(b) does not get a valid discharge for it (a) non-payment onlyv
(c) continues to be liable to the holder who
lost the bill
(b) by non-acceptance only
(c) by non-acceptance or non-payment
(d) is liable to all prior parties (d) by either non-acceptance or non
6. A negotiable instrument payable to bearer
payment
is said to be negotiated to a party when it is
(a) delivered to that party,
5
In the case of an inland bill or promissory
note, notice of dishonour is Discharge of a
(a) compulsory (b) not compulsory Negotiable Instrument
(c) optional (d) voluntary
The omission to get an instrument note
1. Discharge of an instrument means.
(a) does not affect the rights of the holder
thereonv (a) discharge of one or more of the parties
liable thereon
(b) affects his rights
(c) partially affects his rights (b) extinction of all rights under i V
(d) affects the rights of prior parties (c) discharge of the holder
The acceptor of a bill resides abroad. The (d) none of the above
holder is entitle to receive compensation at 2. If the maker of a note or acceptor of a bill
the current rate of exchange between the becomes its holder at or after its maturity,
two countries on the date when the bill is, in his own right,
(a) dishnonoured V (b) drawn (a) the instrument is not dischargedV
(c) accepted (d) endorsed (b) only the 5 or acceptor is
Notice of dishonour is to be given by discharged
(a) the drawer of a bill in all cases
3.
(c) only the
When
: is discharged
the h ld of a negotiable instrument
(b) acceptor of a bill
(c) the holder of the bill at the time of cancels the name of a party on the
dishonourv instrument with intent to discharge him,
(d) all the prior parties even if they (a) such party and subsequent parties are
G(5 Ylischarged:
themselves have to received the notice -
of dishonour such party and parties prior to him are

(3. A person aequires a negotiable instrument discharged
after its dishonour. He acquires. (c) such party alone is discharged
(a) the rights of a holder in due course (d) the instrument is discharged
(b) the rights of his immediate "'> 4. All previous parties not consenting are
discharged from liability if the holder of a
(c) no rights */
7. When a negotiable
dishonoured, the holder
'
6) ntitled
is
to
bill of exchange allowed the drawer to
accept it more than.
Tecel V e. (a) 1 day exclusive of public holidays
<>
(a) the principal sum (b) 40 hours (c) 48 hours

(b) the principal su S interest on it (d) 48 hours exclusive of public holidays
(c) the plus interest plus (e) 64 hours
5. A payment by a party who is secondarily
expense inc in presenting, nothing
liable
and protesting the instrum.cntv.
(d) the primeipal sum plus damages arising (a) does not discharge the instrument V
from the non-performance of other (b) discharges the instrument
ContractS (c) discharges the parties subsequent to him
(d) discharges the parties prior to him
6. Which of the following alterations are
material and vitiate an instrument?
(a) An alteration of the place of payment
(b) An alteration made for the purpose of
correcting a mistake
(c) An alteration made to carry out the
common intention of the original parties
Subject Specialist & Lectureship Guide Commerce 197
(d) Addition
(e) Filling blank of anof
of place inchoate
paymentinstrument
Banker and Cunstomer

(f) A & e above
1. Banker has, in the absence of a contract to
the contrary,
Rules of Evidence and (a) a general lien V.
International Law (b) a particular lien
(c) no lien at all
2. A banker may disonour a customers
A bill of exchange made payable at a place cheque when
different from that in which it is made or
(a) the customer countermands payment
endorsed, is dishonoured. As to what (b) the customer becomes insolvent
constitutes dishonour and what notice of
(c) a garnishee order is received by it
dishonour is sufficient will bc determined
(d) the baker does not have sufficient funds
by the law of the place where it is. to the credit of the customerv
(a) made payablev
(b) drawn
3. The paying '' placed in a
privileged position as regards the payment
(c) accepted of their customerscheques by
(d) indorsed (a) Sec. 10 S.(b) Sec. 85v.
The liability of the maker of a foreign bill is (c) Sec. 1182) (d) Sec. 131
determined by the law of the place. 4. When a chque is wrongly dishonoured by
(a) where it has been made a banker, the banker is liable to the
(b) of the payeev ' r (b) original payee
(c) of the endorse ) drawery (d) indorsers
(d) of the drawer is case of need arbitration agreement to be valid
The liability of the acceptor of a bill is (a) must be in writing (b) may be oral
dctermined by the place where it has been.
(a) drawn (b) indorsed d (c) may be oral or in writing
(d) must have all the essentials of a valid
(c) made payablev COntraCl
Hundies N <>
< (e) a & b above
6. A party to an arbitration agreement
commences legal proceedings in respect of
some matter covered by the agreement. On
A letter of introduction to the holder
the application of the other party
by some prior party t ndi to be used by
(a) the Court may stay the proceedings'
him in case the hundi is not accepted is (b) the Court must stay the proceeding
called.
(c) thc Court must not stay the proceedings
(a) Nam jog hundi (d) the Court may declare the contract as
(b) Zickri cbitv void - *
(c) Jokhmi hundi 7. The matters which cannot be referred to

(d) Jawabee hudi arbitration include
2. A hundi is payable to or to the order of a (a) time-barred debts
specified person named in the hundi. (b) insolvency matters
(a) Shah jog hundi (c) questions of maintenance payable to a
(b) Nam jog hundiv wife
(c) Zickri chit (d) divorce
(d) Jawabee hundi (e) matters of right to hold office of a priest
in a temple
(f) b & d above, (a) is not in writing

(b) determines all the matters referred tow
(c) is not signed
Arbitration without (d) is not certain
intervention of a court 8. An arbitrator has the power to
(a) determine validity of the arbitration
agreement
1. The authority of a duly appointed arbitrator
(b) alter the terms of the arbitration
or umpire.
agreement
(a) cannot be revoked
(c) order the specific performance of a
(b) may be revoked contract V
(c) can be revoked if the Court grants
leave (d) nuake ex-gratia payment
2. Death takes place of a party to an
arbitration agreement. The agreement Law of Insurance
(a) is discharged
(b) is not discharged V . The insured in & of loss against which
(c) becomes void the policy has issued, is bound to pay
(d) becomes voidable the,
3, #f the reference is to an even number of (a) actual amount of loss
arbitrators, they shall appoint an umpire (b) act ount of loss not exceeding the
within.
(a) l monthv. (b) 2 months
of the policy v.
sonable amount of loss
(c) 3 months (d) 6 months
4. If the parties fail to fix remuneration of the
(
than actual amount of loss
life assurance, insurable interest must be
arbitrator, he is
present.
(a) entitled to a reasonable remuneration* (a) at the time of death
(b) not entitled to any remuneration & (b) when the insurance is effected.<
(c) entitled to remuneration deman (c) both at the time of insurance and at the
hirn time of death
(d) entitle to remuneration to
the Court
& by (d) throughout the term of the policy
In marine insurance, insurable interest must
5. The appointment of a arbitrator is invalid.
The Court shall ' be present.
(a) at the time of contract
(a) modify the
(b) remit the
": 'ard
by him
to him for
(b) at the time of loss
(c) both at the time of contract and at the
reconsiderati time of loss
(c) set aside the award given by him. (d) any time during the currency of thc
6. The Court can set aside an award given by policy
an arbitrator 4.
Cause proxima, in case a loss is the result
(a) where the award is imperfect in form of two or more causes, means.
(b) where the arbitrator is found guilty of (a) the last cause
misconducting himself or the (b) the first cause
proceedings' (c) the most effective causeV.
(c) where the award is indefinite or (d) any cause
incapable of execution 5. lf a co-insurer has paid more than his share
of loss, he
(d) none of these
7. An award is valid if it
(a) is entitled to contribution from his co

insurers in proportion to the amount
Life Insurance
which each insurer has undertaken to
payv A surety has an insurable interest in the life
(b) is entitled to contribution from his co of his
insurers in equal proportion (a) co-surety only
(c) is not entitled to any contribution (b) principal debtor only -
(d) none of the above (c) co-surety and principal debtory

If a contract of insurance is induced by (d) none of the above -
. A father has an insurable interest in the life

fraud or misrepresentation on the part of the
of his son when.
assured and the insurer avoids the policy.
(a) the premium is returnable (a) the former supports the latter
(b) the premium is not returnableV (b) the latter supports the formerV
(c) a part of the premium is returnable (c) the father is independent
(d) the son is independePl
(d) the insurer can claim damages

Where an assured bona fide over-insurers :
A contract of life ins 3 is.
on an unvalued policy. -
(a) a wagering : t
(a) a proportionate premium is returnableV. (b) a contingent contractv.

(b) premium is not returnable (c) a
#:
(d) none
(c) the policy is void
(d) the policy is voidable In the lowing relationships there is
Where an assured insures the same risk pres tion of insurable interest.
a}(Father and Son
with two or more independent insurance
and the total sum insured exceeds the value - Mother and son
of the subject matter. c) Husband and wifev

(a) it is a case of contract of re-insurance C (d) Brother and sister
An insurer can call the validity of life
(b) it is a case of contract of dou
insurancev S. insurance policy in question on the ground
(c) both the policies are void S of concealment of material facts within a
period of.
(d) both the policies are voidabl
In case of double insurance if a loss occurs (a) 6 months from the date of the issue of
the assured may claim pa from the policy
(a) the insures in such er as he may (b) l year from the date of the issue of the
think fit * policy
(c) 2 years from the date of the issue of the
(b) the insurers in e proportions
(c) the insurers is proportion of the amount policyv -
of the policy (d) 3 years from the date of the issue of the
(d) any of the insurers policy
(c) a & b above
! (). The premium is not returnable Fire Insurance
(a) where the consideration for the
premium has totally failed
(b) where the assure has no insurable
. Average clause in a fire policy checks
interest in the subject matter
(a) under-insurance'
(b) over insurance
(c) where the policy is void ab initio
(c) fraud (d) double insurance
(d) wherc the risk is run even for a short
2. Property worth Rs. 5,000 is insured for Rs.
period 1,000. There is an average clause in the
policy. Property worth Rs. 10,000 is 3. In a voyage policy, where the voyage is to
destroyed by fire. The insure can claim. be performed in stages, thc ship must be
(a) Rs. 100 (b) Rs. 2007 seaworth at the commencement of
(c) Rs. 1,000 (d) Rs. 5,000 (a) the voyage
A person who is in lawful possession of (b) each stage of voyagev
goods belonging to another. (c) at prominent stages of voyage
(a) cannot insure them 4. Where a ship, without any lawful excuse,
(b) can insure them even without the deviates from the voyage contemplated by
knowledge of the ownerv the policy the insurer,
(c) cannot insure without the knowledge of (a) is not liable at all
the owner (b) is liable for any loss which might have
(d) can insure them by paying extra occurred prior to deviation*
premium i
(c) continuous to be liable till the
In the event of loss in case of a value policy completion of the voyage
of fire insurance. (d) is liable for loss which occurs after
(a) a fixed amount is payablev deviation &
(b) actual amount of loss is payable 5. Insurable value i" fine insurance means.
c) a reasonable amount is payable (a) insurable interest
(d) none of the above (b) value interestv
In the case of fire policy the persons who
do not have insurable interest in the subject
(c) :
O
be paid by the insurer in case
matter are. -
(d on of the above
(a) morigagee (b) neighbourv 6. Floating policy of marine insurance means
(c) insurer (d) pledgee a policy which. -
In a fire policy the amount payable in case (a) describes the insurance in general
of loss is fixed. This is a terms v -
(a) specific policy (b) covers the risk during a particular

(b) valued policy' - Voyage
(c) floating policy (c) covers the risk during a particular
(d) replacement policy voyage for a specific period
-
(d) is for a definite period of time

* 7. Constructive total loss occurs where
Marine Insurance (a) the subject-matter ceases to be a thing
of the kind insured
Where the subje * has been insured (b) the subject-matter is irreparably
lost or not lost and has arrived afely at the damaged
time when the contract is concluded. (c) the assure is irretrievably deprived of
(a) the premium is returnable the subject-matter -
(b) the premium is not returnable' (d) the cost of recovering the goods or ship
(c) a part of the premium is returnable would exceed their value when
(d) the policy becomes void recovered.Y
2. In PPI policy the existence of insurable
interest.
(a) is to be proved at the time of loss Carriage of Goods
(b) need not be proved at the time of loss
(c) is presumed -
1. For the injury or damage to the goods

(d) I to prove at the time of contract caused by declared enemies of the state a
(e) b & C above. carrier is.
(a) liable (b) not liablev. 3. When goods are to be carried partly by sea
(c) liable only for a part of the loss and partly by land and the ship owner has
(d) liable for the loss to be determined by charged both for carriage by sea and
the Court carriage by land, the bill of lading is called.
2 Unless otherwise agreed, all goods are (a) a through bill of lading V
considered to have been delivered to the (b) on board bill of lading
railway for carriage at. (c) a claused bill of lading
(a) owner's risk rate V. (d) a clean bill of lading
(b) railway risk rate Where goods are carried in a general ship,
(c) ordinary rate (d) special rate the master has
The responsibility of the railway (a) power to sign bills of lading/
administration is. (b) no power to sign bills of lading
(a) limited to that of a bailee (c) power to enter into contract
(b) more than that of a baileev. (d) power to give warranties
(c) extinguished altogether Primage means.
(d) none of the above (a) freight V
The law relating to carriage of goods by (b) demurrage <>
land is found in. (c) a customary e over and above the
(a) The Carriers Act 1865 freight <>
(b) The Bills of Lading Act 1856 (d) the liability of the charter to pay freight
(c) The Merchant Shipping Act 1958 A bill of ading is.
(d) The Railways Act 1989 (a) addeument of title to goods
(e) A & b above. Y (b)-net a document of title to the goods
5 Unless it is declared in writing and an negotiable instrument
additional charge is paid, the liability of a quasi negoliable instrument
railway administration in case of loss of (e) a & d above.
articles of special value is limited to.
(a) Rs. 100 (b) Rs. 500v
O * Seaworthiness of a ship means that the ship
is reasonably fit to encounter the perils of
(c) Rs. 1,000 (d) Rs. 2,000
the sea. This undertaking.
(a) is absolute (b) is not absolute
(c) may be conditional
Carriage by ea. (d) none of the above
A contract bctween ' owner and a
consignor of ich an entire ship Carriage by Air
is placed at the disposal at the disposal of
thc consignor is called. in the carriage of passengers the liability of
(a) charter partyV the air carrier is limited to a sum of
(b) bill of lading (a) 1,00,000 francs
(c) Mate's receipt (b) 1,25,000 francs
(d) bailment (c) 2,50,000 francs V
2 Where a bill lading acknowledges receipt of (d) 5,00,000 francs
goods in apparent good condition, it is The air consignment note is prepared by the
termed a (a) consignor V.
(a) clean bill of lading (b) air carrier
(b) claused bill of lading (c) forwarding agent
(c) dirty bill of lading (d) considnee
(d) through bill of lading
3. The contract for carriage of goods by air is (d) Input tax $6,00 Output tax $5,000
contained in - 6. A business purchased goods on credit for
(a) Passenger ticket $ 50,000 excluding sales tax and paid
(b) Luggage ticket sales tax (@ 15% on its purchases. What is
(c) Air consignment notev the amount of its trade payable?
(d) Airway bill (a) $57,500w
The air consignment note must be made out (b) $42,500
by the consignor in (c) $ 50,000
(a) duplicate (d) $ 60,000 -
(b) two original parts 7. A manufacturer purchased raw material

(c) three original partsv for Rs. 80,000 excluding sales tax and
(d) four original parts paid sales tax (@ 15% on purchases. On
completion of manufacturing process, he
2k xk: * * * * * * *k
sold goods for Rs. 100,000 excluding
'sales tax and charged sales tax (@ 15% on
sales. -
Income Tax What is the h of input tax and

output tax of anufacturer?
Sales tax is: (a) Input tax. ts. 7,500
(a) A wealth tax output' 4,000
(b) An indirect tax V (b) in attax RS, 9,000
(c) A property tax Output tax Rs. 14,500
(d) An income tax nput tax Rs. 8,000
2 Sales tax is levied on: utput tax Rs. 12,500
(a) Sale of all goods and services (d) Input tax Rs. 12,000Y
(b) Sale of taxable goods only Output tax Rs. 15,000
(c)Sale of all taxable goods and
(d) Sale of food items only
*\ 8. The excess of output sales tax on input
Sales tax is,
ssey
The final burden of sales tax is (a) Receivable from tax authorities
(a) Manufacturer (b) Payable to consumer
(b) Whole seller (c) Payable to tax authorities*
(c) Retailer o (d) Receivable from consumer
The excess of input sales tax on output
(d) Consumer Y 9.
sales tax is:
Sales tax levicd Qrissale of taxable goods
and services is termed as output tax. (a) Receivable from consumer
(a) Truev'. (b) False (b) Payable to consumer
A manufacturer purchased raw material (c) Payable to tax authorities
for $40,000 excluding sales tax and paid (d) Receivable from tax authorities*
sales tax (a 15% on purchases. On 1(). A manufacturer purchased material
completion of manufacturing process, he excluding sales tax for $ 50,000 and paid
sold goods for $ 70,000 excluding sales sales tax (a) 15% on purchases. After
tax and charged sales tax (@ 15% on Sales. manufacturing the products, he sold them
What is the amount of input tax and for $ 80,000 excluding sales tax and
output tax of the manufacturer? charged sales tax (@ 15% on sales.
(a) Input tax $10,500 Output tax $6,000 What amount of sales tax is paid by
manufacturer to tax authorities.
(b) Input tax $ 6,000 Output tax $
10,500v -
(a) $ 2,500 (b) $3,500
(c) Input tax $ 4,000 Output tax $10,500 (c) $4,500v (d) $5,500
| |. A manufacturer purchased material 20. Trade receivables and trade payables are
excluding sales tax for Rs. 20,000 and shown in the accounts exclusive of sales
paid Sales tax (a 15% on purchases. After tax.
manufacturing the products, he sold them (a) True (b) Falsev
for Rs. 35,000 excluding sales tax and 21. Sales tax payable to tax authorities is
charged sales tax (@ 15% on sales, shown as:
What amount of sales tax is paid by (a) Expense in income statement
manufacturer to tax authoritics? (b) Current asset in Statement of
(a) 2.300 (b) 2,250 V Financial Position
(c) 1.250 (d) 2,500 (c) Current liability in Statement of
12. The excess of output tax on input tax is Financial Position V
paid by business to tax authorities on: (d) Income in Income Statement
(a) Monthly basis 22. Sales tax refundable from tax authorities
(b) Quarterly basisw is shown as a (n):
(c) Semi-annually basis (a) Current liability-in Statement of
(d) Annual basis Financial Position C.
An unregistered person is not allowed to (b) Current :- in Statement of
reclaim his input sales tax. Financial Pos itio -
(a) Truev (b) False (c) Expens ncome Statement

A business sold goods on credit for Rs. (d) Inco ncome Statement
60,000 excluding sales tax and charged Johnson, a sales tax registered trader
sales tax (a 15% on its sales. What is the pur d a machine for use in his
amount of its trade receivable? business. The invoice for machine
(a) Rs. 60,000 (b) Rs. 51,000 owed the following costs related to
(c) Rs. 69,000 v. (d) Rs. 70,000 purchase of machine.
| 5. Sales tax paid on purchase of
goods and services is termed as out
:6) Machine
Delivery charges
70,000
2,000
tax. Installation & testing charges 2,000
(a) True (b) Falsev
When a business makes credit
S. Maintenance (2 Years) 3,000
l(). S, the 77,000
total amount of invoice including sales Sales tax (17.5%) 13,475
tax charge is recorded in
(a) True v'.
alse
book. Total
How much should Johnson capitalize as a
90,475
The excess of input tax-over output tax is non-current asset in relation to the
receivable. purchase of machine?
(a) By consumer from tax authorities (a) $990,475 (b) $75,000
(b) By business from consumer (c) $74,000 V (d) $13,475
(c) By business from tax authorities* 24. Maria, a sale tax registered trader
(d) By tax authorities from business purchased equipment for use in her
] S. The excess of output tax over input tax is business. The invoice for machine
receivable. showed the following costs related to
(a) By business from tax authorities purchase of equipment.
(b) By business from consumer Equipment 25,000
(c) By consumer from tax authorities Delivery charges 200
(d) By tax authorities from business' Installation & testing charges 800
| (). Sales tax is charged on sales and not on Maintenance (1 Years) 1,000
profit of business. 27,000
(a) True v'. (b) False Sales tax (17.5%) 4,725
Total 31,725 31. In Income statement, a registered person

How much should Maria capitalize as a show his purchases excluding sales tax
non-current asset in relation to the paid on purchases. -
purchase of equipment? (a) TrueV. (b) False

(a) $26,000v. (b) $27,000 32. In Income Statement, a non-registered
(c) $31,725 (d) $4,725 person shows its purchases excluding
25. Irrecoverable amount of input sales tax is sales tax paid on purchases.
included in the cost of item purchased. (a) True (b) Falsev.
(a) TrueV. (b) False 33. In Income Statement, a registered person
A registered person purchased taxable shows its sales including sales tax
goods for $ 45,000 excluding sales tax charged on Sales.
and also paid sales tax (a) 15% on (a) True (b) Falsev.
purchases. 34. A business made sales of $ 57,500
What is the amount of purchases shown including 15% sales tax. What is the
in Income statement? amount of sales shown in Income
(a) S 45,000 V (b) $38,250 statement?
(c) $ 51,250 (d) $ 50,000 (a) $57,500 &Q (b) $66,125
An un-registered person purchased (d) 9% 60,000
taxable goods for $60,00 excluding sales 35.
A registered business made purchases of
tax and also paid sales tax (a) 15% on
purchases. -
$
the
15% sales tax. What is
nt of purchases shown in income
What is the amount of purchases shown
in income statement? Q::
$46,000 (b) $40,000.
(a) $ 60,000 (b) $51,000 c) $ 52,900 (d) $48,000
(c) $69,000 V (d) $ 70,000 A non-registcred business made
Sales tax paid on business entertainin
items is not recoverable from
authorities.
22 purchases of $ 92,000 including 15%
sales tax. What is the amount of
purchases shown in income statement?
(a) TrueV (a) $80,000 (b) $105,800
(c) $97,000 (d) $92,000w
its salcs and paid $ 2,800 37. A registered business made credit sales of
its purchases which incl $ 500 sales $34,500 including 15% sales tax.
tax on busincss entertaining Which of the following is correct entry
What is the amount SfSales tax payable to for the above transaction?
tax authorities by the business? (a) Account receivable 30,000Dr
(a) $ 5,000
(c) $2,200
'' (b) $2,800
(d) $2,700v
Sales tax receivable
Sales
4,500
34,500Cr
3(). A business charges 48,000 of sales tax on (b) Account Receivable 34,500Dr
its sales and paid $ 5,600 of sales tax on Sales 34,500Cr
its purchases which include $ 600 sales (c) Account Receivable 34,500Dr.V.
tax on business entertaining. Sales tax payable 4,500
What is the amount of sales tax payable Sales 30,000Cr
shown in Statement of Financial Position (d) Account receivable 30,000Dr.
of the business? Sales 30,000Cr
(a) $2,400 (b) $ 3,000V 38. A business made credit sales of $80,500
(c) $8,000 (d) $ 5,600 including 15% sales tax.
Which of the following is correct entry
for the above transaction?
(a) Account receivable 70.000Dr Sales tax receivable 10,500

Sales tax receivable 10,500 Account payable 70,000
Sales 80,500Cr (c) Purchases 70,000
(b) Account receivable 80,500Dr Sales tax payable 10,500
Sales 80,500Cr Account payable 80,500
(c) Account Receivable 70,000Dr (d) Purchases 80,500v'
Sales 70,000Cr Sales tax payable 80,500
(d) Account Receivable 80,500Drv 42. An un-registered business purchased
Sales tax payable 10,500 - goods on credit for $40,000 excluding
Sales 70,000Cr sales tax and paid sales tax (a) 15% on its
39. A registered trader, purchased goods for $ purchases.
69,000 including 15% sales tax. Which of the following is correct entry
Which of the following is correct entry for above transaction? Dr Cr
for above transaction? Dr Cr (a) Purchases 46,000 v
(a) Purehases 69,000 Account payable 46,000
Account payable 69,000 (b) Purehases 6,000
(b) Purchases
Sales tax receivable
69,000
9,000 Account :S&
Sales tax receiva 6,000
40,000
Account payable 60,000 (c) <> 40,000.
(c) Purchases 60,000 v. Raya
Sales tax le 6,000
Sales tax payable 9,000 Acco yable 46,000
Account payable 69,000 (d) ' 46,000
(d) Purchases
Sales tax payable
Account payable
69,000
9,000
60,000
43. 2: ax payable 46,000
busincss made credit sales of
75,000 cxcluding sales tax and charged
40. A non registered trader, purchased goods sales tax (@ 15% of sales.
for $23,000 including 15% sales tax.
Which of the following is correct e
: SS Which of the following is correct entry
for the above transaction? Dr Cr
for above transaction? Dr (a) Account Receivable 75,000
(a) Purchases
Account payable

23, 00
Sales tax Receivable
Sales
1,250
86,250
(b) Purchases 23,000. (b) Account Receivable 86,250
Sales tax receivable 3,000 Sales 86,250
Account payable
(c) Purchases
20,000 (c) Account Receivable 86,250V.
Sales tax payable 11,250
Sales tax payable
S 0,000
3,000 Sales 75,000
Account payable 23,000 (d) Account receivable 75,000
(d) Purchases 20,000 Sales 75,000
Sales tax payable 20,000 44. A registered person sold goods on credit
41. A registered business purchased goods on for $ 30,000 and offered a cash discount
credit for $ 70,000 excluding sales tax of 5% if paid within 20 days. What is the
and paid sales tax (@ 15% on its amount of sales tax charged on sales of $
purchases. 30,000 if the customer paid the invoice
Which of the following is correct entry within 20 days. The rate of sales tax is
for above transaction? Dr Cr 15% -
(a) Purchases 70,000 (a) $4,500 (b) $4,600

Account payable "0,000 (c) $4275* (d) $ 5,000
(b) Purchases 80,500
45. A registered person sold goods on credit 9. If the amount of Gratuity is given and
...r $ 50,000 and offered a cash discount nothing will be mention it will be
of 5% if paid within 30 days. What is the assumed as approved by,
amount of sales tax charged on sales of $ (a) Board (b) unapproved
50,000 if the customer failed to pay the (c) FBR (d) CITY
voice with in 30 days. The rate of sales 10. Bench mark rate at the year 2012.
tax is 15%. (a) 10% (b) 11%
(a) $7,500 (b) $6,700 (c) 1.5% (d) 14%v.
(c) $ 7,550 (d) $ 7,125 V. | 1. KIBOR Stands for.
No of heads of income. (a) Karachi inter board offered rate
(a) 4 (b) 5 v (b) Karachi inter bank offered rateV.
(c) 3 (d) 6 (c) Karachi invention
2. Special allowances include. (d) Karachi Inter Break offered rate
(a) Daily allown v. 12. Rate of KIBOR on 3"July 2012 was.
(b) utility (a) 12% (b) 1.95%.<
(c) medical (c) 11.50% (d) 10%
(d) conveyance 13. Types of Tax O
Types of provident fund. -

(a) Normal a!"
(a) Govt. P.F (b) Special tax year

(b) Reorganized P.F
(c) unrecognized P.F
(c)
(d) a, b and cV
tax year
(d) a,b & cw 14. riculture income is treated at what

Medical allowance at 10 percent is (head of income.
exempt of (a) Business (b) Capital gain
(a) M.T.S (e) Salary (d) Other sources V
(b) Salary 15. Employ's contribution in Provident fund
(c) Basic salary, SN 1S.
(d)Medical Allownce
If nothing is mention with the
salary its will always be assul
*S.
() f
(a) Taxable (b) Exempt 10%
(c) Included in Taxable incomew
(d) 25% exempt
(a) Per month (b ilfilli It 16. Teachers are entitled for a concession of
(e) Per year and ev
Employer
unfurnished
:

d
a
tion.
furnished
what percent of Gross Tax.
(a) 50%
(c) 75% v.
(b) 60%
(d) 70%
(i) Rent entitle 17. In which what will not be allowed for
(ii) 45% of or Basic salary in both average relief.
what will be taxable.
(a) Donation for charitable prison

(a) Rent entitlement (b) 45% MTS (b) Contribution to approved pension
(c) Lesser amount fund
(d) Higher amount V (c) Profit an Debt
If faeility provided to Admissible Areas (d) Donation to Bait-ul-Malv
then what will be rate of MTS or B.S 18. Conveyance provided to employec for
(a) 45% (b) 35% - personal use what will be the rate of tax.
(c) 30% v (d) 40% (a) 5% (b) 10%v/
If the amount of Gratuity approved by (c) 15% (d) 20%
Govt. then the amount is: 19. Conveyanee provided by employ Acquire
(a) Taxable (b) Exemptv. on lease. What will be the amount on
(c) 10% exempt (d) 30% exempt which tax is calculate.
(a) Cost (b) Lease Rental (a) Stock in trade

(c) Book value (b) Moveable property
(d) Four market valuev (c) Raw material held for purpose of
20. Dividend written in. business
(a) Salary (b) Capital Gain (d) Shares on public companyv
(c) Business (d) FTRY 29. In which what are the non-agricultural
21. The amount spent on the purchase of income.
fixed asset is: (a) Income from growing tea
(a) Capital Receipts (b) Income from cultivation of wheat
(b) Revenue Receipts (c) Land revenue assigned to tagirav
(c) Capital expenditure.V. (d) Income from stone quarries v
(d) Revenue expenditure 30. In appellate Tribunal the members are
The amount spent on the purchase of appointed by the
floating Asset is. (a) High court
(a) Capital Receipts (b) Board
(b) Revenue receipts
(c) Capital expenditure
(c) Supreme Court
(d)Federal Govt.
&Q
(d) Revenue expenditure Y 31. Find authority of Tax to hear the appeal.
23. Period of benefit more then on year then (a) Court <>
it will be a. (b) Gov Accountan member

(a) Capital expenditure V. (c) C
(b) Revenue Expenditure (d) late Tribunal V
(c) Capital Receipts 32. ion to chartable institution is
(d) Revenue receipts owed for rebate at what rate.
24. Expenditure made at the initiation of a) 30%v/ (b) 50% allowed
business are: (c) 20% (d) 40% allowed
(a) Cap ExpenditureV
(b) Capital Receipts
o,
N What will be charge the rate on winning
from raffle or lottery
SS.
(c) Revenue Expenditure (a) 10% of such wining
(d) Revenue Expenditure (b) 20% of such winning V
25. When the amount is Receive sale of (c) 40% of such winning
circulating asset then it will be. (d) 15% of such winning
(a) Cap Expenditure 34. Flying Allownce received from Pakistan
(b) Revenue Expendi Armed forces PIA, what will be the rate
(c) Capital receipt of tax.
(d) Revenue receipts -
(a) 1.5% of such allowance
26. In small company paid up capital plus (b) 2% of such allowance
undistributed reserves should not exceed. (c) 2.5% of such allowancev
(a) 25 million rupeesv (d) 3% of such allowance
(b) 5 million rupees 35. Which of the following is not under the
(c) 30 million rupees FTR. -
(d) 20 million rupees (a) Dividend income

27. Resident person the total stay during tax (b) Profit on debts
year is more than (c) Winning from lottery
(a) 182 days (b) 183 daysv (d) Agriculture incomew
(c) 184 days (d) 180 days 36. At what amount the property tax is not
28. In which of the following the capital asset charged up to,
is treat. - (a) 150,000 up to V (b) 200,000 up to
(c) 250,000 up to (d) 300,000 up to
37. The tax will not be charged of the taxable
income does not exceed. INCOME TAX
(a) 200,000 (b) 250,000
ORDINANCE 2001
(c) 300,000 (d) 350,000Y
38. For Applying marginal relief if the total
inconne does not exceed 10,50, 100 then Business means any activity the motive of
which is:
what will be the rate of the exceeding last
slab. (a) To loss business
(a) 10% (b) 20% (b) To carn profit V
(c) 30% v. (d) 40% (c) To earn extraordinary amount by
Which withdrawal from banking what illegal way
rate will be charged. (d) None of above
Essential of Business are:
(a) .1% (b) .2%
(c).3%v/ (d) .4% (a) Trade
4(). What will not be deducted out total (b) Commerce
income. (c) Manufactul O
(a) Zakat Paid (d) All of abov
(b) Worker welfare fund All professions are business but all
(c) Donation to approved institution ). re not professions:
(d) Donation to Bait-ul-Malw (a) (b) False
41, l s taxable under the head of income
If the taxpayer in tax office are not agree
dispute on particular point the appeal can
be made to.
(a) Appellate tribunalv
2%
- n business are:
Gains & profit
(b) Income from trade
(b) High court (c) Profession
(c) Cit
(d) FBR
*
SQ
(d) Serviccs & property
(e) Management fee & value of any
The Decision of the Tribunal
facts in final. However, in : of
int of
benefit
(f) Profit on debt
Law the matter may be ref tO. (g) All of above Y
Income which are not taxable:
(a) CIT. b) High Court V.
43.
(c) FBR
Agricultural inco
s' a, b and e
eans income.
(a)
examiner
Remuneration received by an
-
(a) Derived ' d (b) Enrolment fee received by Bar

Council
(b) Land is situated inn Pakistan
(c) Land is used for Agriculture purpose (e) lncome of non-professional writer All
of above
(d) The above ally
44. What will be the Penality for failure to (d) All of above Y
apply for registration under sec 181 of the Capital assets means property of any kind
income tax ordinance rool. held by a person (assessee):
(a) TrueV (b) False
(a) 5000 V (b) 10,000
(c) 1.1000 (d) 20,000 Any profit and gains arising from sale of *
capital asset is taxable under the head of
capital gains:
(a) TrueV (b) False
Movable property is included in the
definition of capital asset.
(a) True v'. (b) False (b) Amount -
9. What are not capital assets: (c) Chargeable to tax and loss of income
(a) Any stock in trade & law materials (d) All of abovev
(b) Any land from which agriculture is 18. What are include in income:
derived (a) Profit gains
(c) Any immovable property for personal (b) Income from imports
USC (c) Income from exports
(d) All of above Y (d) All of abbvev
} (). Essentials of capital gains are: 19. What are not included in income:
(a) Profit (a) Face value of any bonus shares
(b) Capital asset (b) Bonus paid to share holders of
(c) Transfer company
(d) All of above Y (c) Both (a) & (b) Y.
Where asset is disposed off after one (d) None of above
year: 20. Any amount received in installments is
(a) 75% of capital gain is taxable called:
(b) Remaining 25% is exempt from tax (a) Capital income
(c) Both(a)&(b)Y (b)
(d) None of above (c) Both(a) & (b)
Modes of transfer of capital gains are: (d) Note of above
(a) By sale & cxchange 21. Anyam unt which is received lump sum
(b) By disposition is called:
(c) By relinquishment C'. income
(d) Ail of abovev (b) Revenuc incomew
Expenses incurred in any business or
(c) Both (a) & (b)
borne by a taxpayer may be:
(d) None of above
(a) Capital expenditure O 22. Meaning of word income is that which
(b) Revenue/business expenditure N comes as the periodical produce of
(c) Both (a) & (b) Y. S. (a) One's work
(d) Nonc of above (b) One's business
All the expenditures made a initiation (c) One's land or investments
of business are "' (d) All of above Y
(a) Truev False 23. Salary means fixed:
Legal fee paid to 1 dviser for drafting (a) Weekly remuneration
Mcmorandum partnership deed for (b) Monthly remuneration
partnership firm represents: (e) Both(a)&(b) V.
(a) Capital expendituresV (d) None of above
(b) Revenue expenditures 24. Gratuity is a lump sum amount given by
(c) Business expenditure the employer normally at the time of
(d) None of above (a) Appointment
1 (3. Objects of differentiating between capital (b) During continuous serviee
expenditure and business expenditure are: (c) Retirement V
(a) Correct assessment expenditure (d) None of above
(b) Correct preparation of balance sheet 25. According to section 155(2) the tax
(c) Correct preparation of profit and loss deducted under sub-section (1) shall be a
(d) All of above Y final tax on the income from property:
17. Inconne means (a) Truev (b) False
(a) Profit or gains
Subject Specialist & Lectureship Guide - Commerce * 21()
26. Capital gain is the fourth source of (a) Exemptions
income for a person and is chargeable to (b) Deductible allowances.(
tax under the head of "Capital gain". (c) Income from other sources
(a) TrueV (b) False (d) Non of above
Income tax is an annual charges upon a 35. The word depreciation has not been
person deriving such income during tax: defined in Income Tax Ordinance 2001
(a) Month (b) Yearv however it mcans a:
(c) Day (d) None of (a) Decrease in a value of an asset'
above (b) Increase in a value of an asset
28. Classification of income of the person (c) Decrease in capital gain
under five different heads does: (d) None of above
(a) Not mean that a person will have to 36. Kinds of depreciation are:
pay five diffcrent taxes' (a) Initial depreciation
(b) Mean that a person will have to pay (b) Additional initial depreciation
five different taxes (c) Normal depreciation
(c) Boh (a) & (b) (d) All of above Y
(d) None of above 37. Reasons of depreiation are:
Section 39 of Income Tax Ordinance
2001 enumerates the income from:
(a) New '.
(b) Decrease in market value
(a) Other sources V (b) Business (c) of time & loss
(c) Property (d) None of (d) Aftove:
above 38. Asse son which depreciation is allowed
What include in income from other source (a) uilding, plant
}. C. b) Machinery, furniture, Aero engines
(a) Dividend (c) Computer, motor vehicles, ships,
(b) Profit on Debt Air crafts. Air photographic apparatus,
laboratory equipments
3:.
(c) Royalty
(d) All of aboveY
Income from other sources which are not
<\ 39.
(d) All of abovev
A firm is an association of person for the
taxable but included in income from other purpose of.
SQUICCCS: @ (a) Income (b) Property
(a) Director's fee <>
(c) Businessy
(b) Tips (d) None of above -
(c) interest on Bank)eposits 40. Time for application for the registration
of firm is:
(d) All of abov
32. Deductions are admissible under section (a) Start in income year
4() of Income Tax Ordinance 2001: (b) End of income year'
(a) Zakat (c) Mid of income year
(b) Repair & Inaintenance (d) None of above
(c) Insurance charges 41. Return is a statement by which assesses
shows his income.
(d) All of above
Section 41 to 56 of the Income Tax (a) During a income year
Ordinance 2001 deal with the exemptions (b) End of year
and tax concessions available to a tax (c) Start of year
payer: (d) None of above -
(a) TrueV (b) False 43. When taxpayer is file an application on

34, Section 60 to 65 of income tax ordinance the prescribe form along with the returned
are relating to: income, when this return duly completed,
is submitted to the authoritics it is known (d) None of above
ClS. 52. How many cycle of assessment:
(a) Furnishing the return of incomew (a) Five* (b) Six
(b) Return of income (c) Seven
(c) Return of Business (d) None of above
(d) None of above 53. Who can amend the assessment:
++. According to section 114 of income tax (a) Commissionerv'.
ordinance 2001, it is necessary for the (b) Deputy Commissioner
persons to furnish the returns of income: (c) Assistant Commissioner
(a) Every company irrespective of its (d) None of above
income 54. Period of annend of the assessment is:
(b) Any non-profit organization (a) Within five years after the issuance of
(c) Any approved Welfare institution commissioner order V.
(d) All of aboveY (b) Within six years after the issuance of
44. Persons who are not required to furnish a connmissioner orde
return of inconic for a tax year are: (c) Within
JSSliance
&S.
seve after
Order
the
(a) A widow
(b) An orphan below the age of 25 year (d) None of above
(c) A disabled person 55. The ho can file appeal in
(d) All of abovex dinance 2001 are:
45. In case of company who tax year ends '
(a) Taxpayer
between 1" January and 30" June, the ( rd party
time for filing return is upto: & 'ommissioner of income tax
(a) 31 December of the same yearx ) Both (a) & (b) Y.
(b) 31 January of next year Authorities to whom the appeal can be
As:
(c) 30"June of same year submitted:
(d) None of above (a) Commissioner (Appeals)
.17. Grounds for extension of filing of (b) Appellate tribunal
provided by taxpayer (assessee)
(a) Absence from Pakistan
'S (c) Reference to high court
(d) Supreme Court
(b) Sickness - (c) All of abovev
(c) A misadventure or a er genuine Sections 127 to 129 of Income Tax
difficulty Ordinance describe the procedure of
48.
(d) All appeal to:
(a) Commissioner (Appeals)Y
Penalty for not filing return is:
(a) 1/10 of one percent of tax payable for (b) Appellate tribunal
each day of default (c) Both (a) & (b)
(b) minimum 25% of tax, payable (d) None of above
(c) Both (a) & (b) Y. 58. The appellate tribunals is disposing of
(d) None of above an appeal under Section:
49. Section 120 to 126 of Income Tax (a) 132v (b) [33
Ordinance 2001, are relating to: (c) 134 (d) None of
(a) Assessmentv. (b) Return above

(c) Business (d) None of Reference filed before High Court
above does not effect the recovery:
Assessment means process of (a) False (b) Trucv/
(a) Ascertaining (b) Colleetion 60. Reference filed before High Court under
(c) Depositing section: -
(a) 132 (b) 133 v 68. Principles in respect of deduction are laid
(c) 134 down: -
(d) None of above (a) Method of accounting regularly used

6}, When ever a case is reconsidered by the by assessee
same Gr the higher administration (b) Expenditure should be from taxpayer
authority it is known as: (c) Expenditure should be in that income
(a) Revisionv (b) Review year in which such income assessed
(c) Appeal - (d) None of (d) All of above Y
above 69. The principle of deduction of tax at
A person may be appointed as a judicial source is applicable as under:
member of the appellate Tribunal (a) Salary (b) Dividend
if the person: (c) Profit on debt
(a) Has exercised powers of a District (d) All of abovev
Judge or Judge of a High Court 70. A tax payer can take back the amount
(b) Is or has been an advocate of a High which has been paid by him it is in excess
Court and is qualified to be a Judge of the this is called: O
High Court (a) Refund V. &* (b) Deduction
(c) Both (a) & (b)Y
(d) None of above
Alternative dispute resolution is described 7 j. Wh
:
(c) Divid
(d) of above .
titled to claim refund:
under section:
(a) 134 (b) 134AY ' on who paid tax/taxpayer
uardian
(c) 135 c Receiver & Trustee
(d) None of above (d) Legal representative of taxpayer
64. Recovery proceeding can be
W
'2. (e) All of above Y
against defaulter of - income tax 72 Section 170 of Income Tax Ordinance
income tax authorities: 2001 described the procedure of: -
(a) False
Authorities who can recover i
(b) *Q (a) Refunded Y (b) Deduction
65, tax: (c) Dividend
(a) Commissioner inland (d) None of above
(b) Deputy Commissy er inland 73. Penalty is a punishment:
Revenue <> (a) Corporeal or pecuniary
()(),
(d) None of
Modes of R
&
(c) Both (a) & (b)
ery of income tax under

(b) Civil or Criminal
(c) Both (a) & (b)Y
(d) None of above
section f income tax ordinance 74. The principle of mens-rea is not
2(){} | are: applicable under the tax laws regarding:
(a) Attachment of property (a) Imposition of penalty.
(h) Sale of property (b) Imposition of deduction
(c) Appointment of receiver (c) Imposition of refund
(d) Arrcst & detention (d) None of above -
(d) All of abovev 75. Ignorance of law provides no defence

Deduction of tax at source have great against penal liability:
importance (a) TrueV (b) False
(a) It saves time 76. Person fail to furnish income tax return
(b) Collection of tax becomes easy" within reasonable time, the amount of
(c) Both (a) & (b)* imposed penalty is:
(d) None of above
Subject Specialist & l:lureship Guide - Commerce 2 #3
(a) Equal to 1/10 of one percent of taxable 82. Any person obstructs any income tax
for each day of default authority is discharge of function a
(b) Minimum penalty of Rs.50,000 penalty itnposed is:
(c) Maximum penalty of 25% of tax (a) Rs.25000
payable in respect of that tax year (b) 100% of the amount of tax involved
(d) All of abovev which is higher
77. Any person without reasonable cause fails (c) Both (a) & (b) <
to furnish the required statement within (d) None of above.
the time allowed the commissioner Inland 83. Income Tax authorities has great
Revenue the amount of penalty imposed importance in the prope, administration
i.S. of tax system. It provide:
(a) Initial penalty of Rs.2000 (a) Revenue for the country in order to
(b) Additional penalty of Rs.200 for each run the economic affairs V
day during which default continues (a) Administration for justice
(e) Both (a) & (b) Y. . (c) Both (a) & (b)
78.
(d) None of above
Any tax payer fails to pay the tax within 84. Different :
(d) None of above
income tax are
specified time, the amount of penalty described in Incorne*Tax Ordinance 2004
imposed is: under sectio ' <>
(a) First default 5% of tax (a) 207 V. (b) 209

(b) Second default additional penalty 25% QS
(c) 2 i !
of the tax
85.
(d) above
-
(c) Third default 50% Inconie tax authority mean such

(d) All of above Y ority which are appointed for the
79. Any person conceals his income administration of taxation system:
before tax authorities penalty imposed (a) TrueV (b) False
1S.
(a) Rs.25000- - &

o: Service of Notices and other documents is
described undej section: -
(b) Equal to tax which person

(c) Both (a) & (b)Y
*S (a) 218v
(c) 220
(b) 219
(d) None of above (d) None of above

80, Any person without resemble CallS The highest executive authority of incorne
:" *
- - * unts, the penalt
penalty tax in Pakistan is:
(a) Boardv
(a) Rs. 10,000 SS (b) Commissioner
(b) 5% of the amount of tax on income (c) Deputy Commissioner
which ever is higher (d) None of above &
(c) Both (a) & (b)Y 88. Rectification of Mistakes ts described

(d) None of above under section:
8]. Any person without reasonable cause fails (a) 221 V. (b) 222
to comply with the notice penalty (c) 223
imposed is: (d) None of above
(a) First default Rs.5000/ * * * * * * * * * ** * * *
(b) Rs. 10,000-for each subsequent
default
(c) Both (a) & (b) Y.
(d) None of above
(a) make economic theory useless
Economics (b) mean other things equal
(c) enable ceonomists to simplify reality/
(d) used in micro and not in
macroeconomics
| [. A positive statement.
t. Father of political economy.
(a) Adam Smithv (b) Malthus (a) concerns what isY
(c) Robbins (d) Marshall (b) is always accurate
2. He described cconomics as a science of (c) deals with values and opinions
material welfare. 2
(d) cannot be tested in the real world
. Normative ceonomics
(a) Robbins (b) Marshall v. |2
(c) Ricardo (d) Keynes (a) deals Solely with the facts
3. Economic laws are: (b) is never Studied in colleges
{ a } exact (b) approximate V. (c) involves opinions and interpretations*
(c) brief (d) definite (d) is clearly preferable to positive
economics
4. Economic laws arc
-: *-*. 13. Basic economic n is:
(a) scientific Y (b) moral
(c) natural (d) unreal (a) inflation 'S (b) unemployment
5. Economics is a science. 14 (c) , <> (d) searcityv
Scarcity exists.
(a) spiritual (b) socialY -
(a) in Oor countries

(c) dismal (d) moral
6. Economic problems arise because of (b S. a country that l] SeS TeSOLlf C'S
ciently
#
-
(a) greed (b) scarcityv in all countries of the world Y

(c) dishonesty (d) laziness
7. Which StateIT1C11t relates to (d) when society produces uninportant or
macroeconomics. S 15
silly goods
Microeconomics concentrates.
(a) Oil prices are rising in Pakistan. SS -
(a) on inflation
(b) profit rate is high in textile indus (b) international economic relations
(c) The firms try to make huge pr (c) individual economic units'
(d) The government has failed to control
(d) economic development of Pakistan
inflation.Y - 16
Macroeconomic deals with.
8. Which statements is true? (only one answer -
(a) how to buy groceries

is true). -
(b) eggregate ceonomic activity

(a) Economics is apbysical and normative (c) cstablishment of a new firm
Science y
(d) industrial activity

(b) Economics is a social and natural |7
Three basic economic problems.
SC] tenCC.
(a) what, how and for whom Y
(c) Economics is physical and positive
(b) why, where, and when
science.
(c) what, which and how much
(d) Economics is a social and normative
(d) what, which, why
science.Y |8
Economics.
9. Ceteris paribus means. *
(a) is more important than mathematics

(a) other things equal (b) is a social science
(b) all variables are independent (c) should be made compulsory for every
(c) all relationships are inverse Student
(d) that no other assumptions are made (d) is difficult to study
10. In economics, assumptions | 9. Economic laws.
(a) must be followed 30. Wealth of Nations was written by.
(b) are heated by people (a) Adam Smith V. (b) Malthus
(c) have economic behaviour of people.V. (c) Marshall (d) Newton
(d) are unscientific 31, Select the correct statement.
Adam Smith was a (a) economics affects politics
(a) was a Saint (b) economic affects history
(b) a modern economist (c) Geography affects economics
(c) good sports man (d) all of the above are truev
(d) classical economist' 32. Prof. Marshall thins,
2] . Marshall in his definition of economies. (a) economics studies national welfare
(a) uses the concept of material welfarew (b) economics studies personal welfare
(b) dislikes wealth (c) economics studies total welfare
(c) accuses Adam Smith (d) economics studies material welfarev
(d) praises Robbins 33. Everyone should study economics' is a.
2 2 . Wealth of nation (a) positive statemen
(a) is another name for united nations (b) normative state
(b) is a book* (c) true me's
(c) indicates total wealth of rich countries (d) nonsense
(d) contains formulas to earn wealth
. Marshall wrote the book,
o:
34. Utility and
(a) equal
<> .
are.
(b) differentv
(a) introduction to economics (c)
35, RO
'S gs are:
(d) unrelated
(b) principles of economics
(c) classical economics free good v. (b) economic good
(d) microeconomic theory service (d) wealth
Economic theory means. carcity means that
(a) economic policy (a) non availability of goods
S.SQ
(b) economic principles V (b) high price of goods
(c) advises neutrality in economics (c) No body wants to consume it
Robbins in his definition.
S (d) the good is available but it is not freev.
37. The basic economic problem common to all
(a) talks of scarcity of resourc J2) societies is.
(b) preaches moral values (a) the elimination of scarcity
(c) advises neutrality inhics (b) what, how and for whom to produccy
(d) nonc of the above (c) equal distribution of wealth
Market system means' (d) the achievement of full employment
(a) socialism (b) eapitalism w/ 38. Human wants are:
(c) a place where goods are traded (a) one thousand (b) few
(d) all of the above (c) innumerableV. (d) countable
. One or more persons living together and 39, Scarcity means.
having a common budget is called. (a) non availability of goods
(a) union (b) organization (b) high price of goods
(c) household (d) house members (c) less supply than demand
, Wealth of Nations was written in. (d) high profit of the firms
(a) 1976 (b) 1976 40. Validity of economic theorics can never be
(c) 1776v. (d) 1676 proved with 100 percent certainty, because.
29. Economic principles are also called. . (a) ceteris paribus clause:
(a) economic law (b) economic theory (b) limited number of observation is
(c) economic model (d) all of the above. possible
(c) some observation will be made in future (c) the total is negative
which refute the theory (d) the total is decreasing
(d) b and c 6. The term marginal' is economics means.
(a) unimportant
(B) (b) additional V
1. Adam Smith is famous for. (c) the minimum unit
(a) laws of taxation (d) just barely passing
(b) laws of cconomics 7. Utility is most closely related to the term.
(c) the book Wealth of Nations (a) useful (b) useless
(d) a and c of above Y (c) necessary. (d) satisfaction V.
2 An economy means. 8. Demand curve slopes downward because of
(a) Study of economics the law of:
(b) A countrys economic system V (a) consumer equilibrium
(c) domestic trade (b) utility maximization
(d) sources of income of a family (c) utility minimization
3. The basic problem of economics is. (d) diminishing m utility V
(a) corruption of govt officers 9. A consumer's ding is restricted
(b) Infficiency of workers because of
(c) selfishness of people (a) marginal utili
(d) scarcity of resources'
4. Economic laws are made through.
(a) productive method *
(b) lnductive method ] (), f substitution is another name for law

(c) deductive and inductive method.
(d) selective and elective method (2: law of diminishing MU
***** (b) law of equi-MUY
Consumer BehaviouroSN 11. Law of Equi-marginal (d)Utility
(c) law of demand
satisfaction
is a law of
(a) production of wealth
Select the correct answer.
1. Rotten eggs are.
(a) free goodY
&
(b) econ stic good
(b) consumption of wealth
(c) distribution of wealth
(d) exchange of wealth
(c) service ( 'alth 12. Utility and usefulness are.
2. Human WantS are: S -
(a) equal (b) differentV
(a) one thousand S\\) few * (c) similar (d) unrelated
(c) innumerableV (d) countable 13. When MU is positive, TU
3. A consumer is in equilibrium when (a) increases' (b) different
marginal utilities are. (c) similar (d) unrelated
(a) minimum (b) highestv 14. Diminishing marginal utility is the basis of
(c) equal (d) increasing (a) law of supply (b) law of demandy
4. In economics, one or more persons sharing (c) laws of returns (d) None of above
common consumer budget is called 15. When MU = 0, TU is -
(a) business firm (b) gathering (a) minimum (b) maximum V.

(c) organization (d) household Y . (c) increasing (d) decreasing
5. When marginal is negative, it must be true 16. Quality of a commodity that satisfies some
that human want or need is called.
(a) the average is negative (a) service' (b) demand
(b) the average is decreasing (c) utility Y (d) efficiency
Subject Specialist & Lectureship Guide - Commerce 21 7
17. indifference curves are convex to the origin 4. If quantity demanded is completely
because. unresponsive to changes in price, demand
(a) two goods are perfect substitutes 1S.
(b) two goods are imperfect substitutes V (a) inelastic

(c) two goods are perfect complementary (b) unit elastic
goods (c) Elastic
(d) none of the above (d) Perfectly inelasticv.
MU curve, Other things equal, if a good has more
(a) rises left to right substitutes, its price elasticity of demand is.
(b) positive utility (a) largery (b) smaller
(c) falls left to right* (c) zero (d) unity -
(d) is always horizontal Price of a product falls by 10% and its

19. Equilibrium is explained by. demand rises by 30%. The elasticity of
(a) negative utility (b) positive utility demand is.
(c) marginal utilityv (d) profit (a) 10% b).30%
2[) . If a person consumes goods X and Y and
maximizes total utility, then MU per rupee
(c) 3 v
If elasticity of

d's
very low it shows
from the two goods must be. that the '' -
(a) equal V (b) unequal (a) a necessit <>
(c) increasing (d) decreasing (b) a luxur

2 | If a consumer moves upward along an
indifference curve, his total utility.
(c) has
(d) a
ame
# in total budget
above
(a) first increases then decreases 8. The to owing are causes of shift in demand
(b) does not change 'EPT the One.
(c) thcreases ) change in income
(d) decreases (b) change in pricev
Demand
O (c) change in fashion
(d) change in prices of substitutes
Select the correct answer.
! Normally a demand curve will
S
the
9. When demand is perfectly inelastic, an
increase in price will result in.
shape. (a) a decrease in total revenue
(a) horizontal (b) an increase in total revenue.
(b) vertical
(c) downward sloping'
(d) upward sloping
s s 10.
(c) no change in total revenue
(d) a decrease in quantity demanded
If demand is unitary elastic, a 255 increase
2 Law of demand shows relation between. in price will result in.
(a) income and price of commodity (a) 25% change in total revenue
(b) price and quantity of commodity/ (b) no change in quantity demanded
(c) income and quantity demanded (c) 1% decrease in quantity demanded
(d) quantity demanded and quantity (d) 25% decrease in quantity demanded
supplied 11. Irrespective of price, Somia always spends
3 This is an assumption of law of demand. Rs. 100 a week on ice cream, we conclude
(a) price of the commodity should not that,
change (a) elasticity of demand is 0%.
(b) quantity should not change (b) elasticity of demand is 1
(c) supply should not change (c) elasticity of demand is infinite
(d) income of consumer should not (d) the law of demand has been violated
changev
I2. When cross elasticity of demand for A and (a) more elastic V. (b) less elastic
B is positive number, one can conclude (c) zero elastic (d) infinite elastic
that. 20. Mr. Suleri 50 liters of petrol when his
(a) the goods are cheaper monthly income was Rs. 25,000. Now his
(b) the goods are inferior monthly income has risen to Rs. 50,000 and
(c) the goods are substitutes he purchases 100 liters of petrol. His
(d) the goods are complements income elasticity of denland for petrol is:
. If demand is inelastic, a change in the price. (a) Iv (b) 100%
(a) will change the quantity is same (c) less than one (d) more than one
direction 2] . When price elasticity of demand for normal
(b) will change total revenue is same goods is calculated, the value is always.
direction* (a) positiveV. (b) negative
(c) will change total revenue in the opposite (c) constant (d) greater than one
direction , Inconne clasticity of demand for normal
(d) will not change quantity good is always.
. This is the assumption of law of demand. (a) ' ) more than one
(a) Price of the commodity should not (c) negative
. Demand is a
&
m& d) positive Y
of:
change
(b) Quantity demanded should not change (a) pricev. (b) quantity
(c) Prices of substitutes should not change
(d) Demand curve must be linear 24.
:(c)
If pri
<> (d) none
total revenue move in the same
Which of the following is a demand gliodi , then demand is
function?
(a) Q - 4P = 20x (b) Q = 35+ 3P
&: unrelated
(b) elastic
(d) perfectly elastic
(c) Q 2P 15 = 0 (d) 5P Q = 4 & Price clasticity of demand measures.
1 (3. Zaheer has a special taste for colle (a) change in price caused by changes in
canteen is chicken rolls. The owner of demand
canteen doubles the price of chick (b) the rate of change of Sales
Zaheer did not respond to the i
prices and kept on demandi
in
an 16
(c) the responsiveness of demand of price
changes.V.
quantity of chicken roll. H mand for (d) the value of sales at a given price
chicken roll is. <> 26. which one can cause a change in demand
(a) perfectly elastic s (a) change in income
(b) change in supply
(b) perfectly inclast
(c) elastic (c) change in tastes
(d) less elastic (d) a and c of above.
Price and demand are positively correlated 27, A seller can increase his sales revenue by
in case of: charging a lower price, if the demand has.
(a) necessities (b) comforts (a) e < 1 V (b) e = 1
(c) Giffen goods (d) luxuries (c) e > 1 (d) e = 0
. The elasticity of demand of durable goods 28. A horizontal demand curve has a price
1S. elasticity of
(a) less than unity (a) Zero (b) infinityV
(b) greater than unity (c) 1 (d) variable
(c) equal to unity 29. Cross elasticity for Suzuki and Honda cars
will be.
(d) Zero
. The demand of a commodity having many (a) positive (b) negative
substitutes is. (c) zero (d) infinite
3(). If price elasticity of demand is very low, the (c) passing through origin
commodity is. (d) touching y-axis V
(a) necessityV (b) luxury Supply curve.
(c) substitute (d) not available (a) is vertical in long run
Which one is not determinant of demand. (b) is flatter in long runv.
(a) lastes (c) is same in long and short run
(b) income (d) is horizontal in both short and long run
(c) method of production During a particular year farmers
(d) pricev experienced a dry weather, if all other
*2 to say that two goods are unreiated, their factors fremain constant, farmers supply
cross price elasticity of demand should be. curve for wheat will shift to
(a) less than () (b) greater than 0 (a) rightward (b) leftward v.
(c) equal to OV (d) l (c) downward . (d) no direction
3. 3.
if demand has unit price elasticity, a change 9. When supply of a commodity increases
in price causes. without change in price it is called.
(a) increase in total revenue (a) fall in Supply ("}
(b) decrease in total revenue (b) expansion in
(c) contraction in
:ly in
(c) no change in total revenuev
(d) indeterminate (d) rise in Su Y*
Market demand curve is a summation of all | (), In May 2 , was supplying 500kg of
individual detmand curves as, Sugar price of Rs. 30/- per kg,
(a) vertical
(c) mathematical
(b) horizontal V
(d) local
: 2011, firm's supply of Sugar
reased to 450kg at priee Rs. 20/- per
hese
&g, changes show that supply of
Suply ugar is:
Which of is increasing function of price. (a) perfectly elastic (b) perfectly inelastic
(a) demand (b) utilityv N (c) less elastic V. (d) more elastic
(c) supply (d) consumption 11. What best explains a shift in market supply
2 It described the law of supply.
(a) supply curvey (b) Supply SC le
S. curve to the right?
(a) An advertising campaign is successful
(c) supply equation (d) all the C
in promoting the good
3 Supply curve will shift
(a) price fails (b
'' <>
riscs
(b) A new technique makes it cheaper to
produce the goody -
(c) demand shifts (c) The government introduces a tax on the

(d) technology''
An i*rease in demand would cause supply
good
(d) The price of raw materials increases
Cl! I V C ! ().
. Supply of a commodity means.
(a) shift to the cit (a) Willingness to sell a certain quantity*
(b) shift to the right (b) physical stocks available
(c) change in slope of supply curvey (c) planned production
(d) no effect on Supply (d) total production in a given period
5 lf price changes by one '0 and supply . If elasticity of supply is one, supply curve
changes by 2% then supply is. will be.
(a) elasticY (b) inelastic (a) horizontal
(c) indeterminate (d) Static (b) vertical |
6. If elasticity of supply is greater than one. (c) passing through originV

Supply curve will be. (d) touching x-axis
(a) horizontal (b) vertical
14. Which of the following shifts supply curve (b) tells consumers to buy more chicken
of cars to the right. (c) tells producers to produce more mutton
(a) tax on new cars (d) provides no information
(b) increasc in wages of workers (e) b and c aboveY
(c) decrease in steel pricev In market equilibrium, supply is vertical
(d) a successful promotion campaign by line. The downward sloping demand curve
sellers shifts to the right. Then
Long period supply curve is. (a) price will fall
(a) relatively flatter (b) price remains same
(b) relatively steeper (c) price will risev
(c) more elastic (d) quantity rises
(d) a and c of abovci/ Equilibrium.
| 6, If a fir makes 200 units of a good available (a) is a state that can never be achieved in
at a pricc of Rs. 10 per unit, the elasticity is. eCGI1CI111C.S.
(a) 0.05 (b) 10 (b) is an important idea for predicting

(c) 20 (d) indetcrminatev economic changes (CN
(c) is a stable condition.
(d) is an unstable condition.
Market Equilibrium Ten rupees is the equilibrium price for good
Z. If govt/fixes price at Rs.5, there is:
1. A decrease I demand causes the equilibrium (a) a shortagev (b) a surplus
price to. (c) excess supply (d) loss
(a) rise (b) fally 9 . A "rise in supply and demand in equal
(c) remain constant (d) indeterminate ortion will result in.
2. When price is below equilibrium level, a) increase in equilibrium price and
there will be. decrease in equilibrium quantity.
(a) surplus commodity in the market
(b) shortage of coomodity in the
(c) supply curve will shift
* (b) decrease in equilibrium price and
increase in equilibrium quantity.
(c) no change in equilibrium price and
(d) demand curve will shift increase in equilibrium quantity.
If equilibrium price rises but equilibrium (d) increase in equilibrium price and no
quantity remains unchanged, the cause is. change in equilibrium quantity.
(a) supply and demand both increase 10. The price and sales of sugar both increase.
equally -S What could be the cause of this?
(b) supply and demand both decrease (a) a decrease in the incomes of the
cqually \ COITSLIII]{2fS.
..(c) supply decreases and demand (b) a decrease in the tax on Sugar.
increases V (c) An increase in the wages of workers in
(d) supply increases and demand decreases the sugar industry. -
Price of a product is determined in a free (d) An increase in the prices of sugar

market. substitutes.Y
(a) by demand for the product 11. If we know that quantities bought and sold
(b) by supply of the product are equal, we can conelude that.
(c) by both demand and supply. (a) quantities demanded and supplied are
(d) by the government also equal.
An increases in the price of mutton (b) the market is in equilibrium.
provides information which. (c) there will be no tendency for a price
(a) tells consumers to buy more mutton change.
(d) all of the above. Y (c) manager (d) entrepreneur.

12. If price is set above equilibrium level, there 2. The three broad types of productive
will be. TSOLII CCS are:
(a) surplus commodity in the marketY (a) money, profit and interest
(b) shortage of commodity in the market (b) capital, labour and natural resources V
(c) supply curve will shift (c) bond, stock shares and deposits
(d) demand curve will shift (d) technology, human capital and markets
13. if equilibrium price rises but equilibrium 3. Land means.
quantity is unchanged, the cause is. (a) Sea
(a) supply and demand both increase (b) surface of earth
equality (c) natural forests
(b) supply and demand decrease equally (d) all natural resources V
(c) supply curve is vertical and demand 4. Economic development of a country
increases. requires.
(d) supply increases and demand is Samc (a) skilled labour
14. Market equilibrium means. (b) diplomacy
(a) number of buyers and sellers are equal (c) abundant natural resources
(b) Dcmand and supply of commodity are (d) a and c of a V
cqual Productivit land can be raised by.

(c) no price is changing
(d) prices risc very slowly
5.
(a) :
(b) intensive cultivation/
15. markets where firms supply goods and (c) r marketing
services dcmanded by households are. d b of above
(a) factor market (b) product market V %: d.
(c) open markets (d) resource markets a) is a free gift of nature
(b) lacks geographical mobility
16. Demand and supply curves cross at.
(a) always at 60 degree
(b) at 90 degree SQ
* (c) is not hirable
(d) a and b of abovev
(c) at equal angle S. 7. Which of the following is NOT and input.
(a) labour
(d) at any anglev (b) entrepreneurship
17. When demand is perfectly astic, an (c) natural resources (d) production'
increase in supply will resulti Which of the following input factor.takes
(a) decrease in quantity risk, innovates and coordinates.
(b) increase in quanti (a) capital (b) labour
(c) fall in price (c) productivity (d) entrepreneury
(d) b and c of above Which of the following is correct with
| 8. Demand and supply forces determine
market price.
respect to resources.
(a) Money is a capital good
(a) only in perfect competition (b) Human skills are a labour inputy .
(b) only in monopoly market (c) Entrepreneur is part of the labour input
(c) in both markets V (d) Natural resources include human input
(d) none of the above 10. The transformation of resources into
economic goods and services is called.
Land or Natural (a) technical efficiency (b) input
(c) production V (d) increasing returns
Resources 11. Economic goods produced by firms are
1. Labour is hirable but you cannot hire. called. -
(a) capital (b) land (a) productivity

(b) innovation 23, Which is true.
(c) technological progress (a) labour produces land .
(d) out put V (b) land produces labour
12. Land is (c) labour produces capital V
(a) hirable (b) not hirable (d) capital produces labour
(c) homogeneous V (d) a for of capital 24. Land, labour and capital are needed to
13. Geographical mobility is not possible for produce goods. They are collectively called.
(a) land Y (b) labour (a) elements of production
(c) capital (d) wealth (b) factors of production*
14. The following is NOT a factor of (c) tools of production
production (d) cost of production
(a) labour (b) entrepreneurship 25. If a firm increases the ratio of capital to
(c) land (d) money V. labour, it becomes Orc.
15. Which of the following factors takes risk, (a) labour intensive
innovates and coordinates. (b) capital intensivey
(a) capital (b) labour (c) output intensive O
(c) bank (d) entrepreneurX (d) input intensi &
16. The transformation of resources into S
economic goods and scrvices is.
(a) input (b) production
Human <>
Resources
Forincreasing
17. (c) productionreturns (d)we
of goods output'
need factors. 1. AC
ng to Matl lation increases
Mathus, population increases
(a) few
(c) 4v. (d) unlimited
(b) 2
systernalic
".(b) arithmetic
arithmeti
- - Yeometric v * * :
18. Standard of living of a country can be (c) geometric". (d) automatic
raised if it increases Productivity of labour can be increased by:
(a) labour force
(c) money supply
(b) production%
(d) cxports N
GS (a) raisig minimum wages
(b) ral Slng a VCrge Wages
: "...rea ci - or ers V
19. Productivity of land can be raised (c) increasing skills of workers
(a) extensive cultivation (d) punishing absentee workers
: ' - ;: ivation V
at 10I) 3. All labour is.
(a) homogeneous (b) heterogeneous
(C) Ot. <> (c) lazy (d) intelligent
(d) increasing money Mobility of labour.
20. Natural environ that Supports
s and services is (a) increases efficiency of labour
production of (b) spoils labour
included
(a) labourin. (b) money (c) increases d'." labout
(c) capital (d) and V. - (d) a and c of - !chanizati f
21. An example of natural resource is. 5. Unemployment due to mechanization 9
(a) factory agriculture
d is.
(b) skilled doctor (a) seasonal (b) structural'
(c) oil reserves in the ground.
-
6 " - - pe
d)) persona |
(d) oil reserves in storage tank Labour inp . . .

(a) inventor (b) innovator
22 Production in economics means.
(c) unskilled work (d) all of the above Y
(a) factors of production 7. A skilled worker is an example of
(b) doing some job (a) entrepreneur (b) capital input
(c) output of goods (c) labour input (d) b and c above.
(d) profit
Subject Specialist & Lectureship Guidc - Commerce 223
8. Labour force participation rate is the, 16. Rickshaw has replaced tonga as local
(a) proportion of population that is working transport. As a result thc tonga-drivers have
(b) proportion of population working or become unemployed. Such unemployment
looking for work.Y is called.
(c) proportion of skilled workers in (a) structural Y (b) frictional
population (c) seasonal (d) personal
(d) proportion of female workers to male 17. Optimum population is defined by the
workers economists as the level of population at
9. The set of skills and abilities that workers which,
possess for production of goods and serves (a) death rate equals birth rate -
is, (b) labour productivity is maximized

(a) motivation (b) wealth (c) country achieves food self sufficiency
(c) human capital V (d) natural talent (d) national income per head is
10. Saqib graduated one month ago. He is still maximized V
unemployed. His unemployment is. 18. The human effort ' the production
(a) Structural (b) frictional V of goods is called in e ics.
(c) scasonal (d) personal (a) labour V. <> S. skill
| 1. The factor that is LEAST likely to be a (c) experience (d) servicc
result of specialization is. 19. To reduce t jewel of unemployment the
(a) inereased production governme
(b) greater refinement of skills (a) reduce money supply
(c) increase in self-sufficiencyV (b) reducemobility of labour
(d) introduction of new technology (c duce minimum wages
12. Every country should have population. increase government spending.
(a) minimum (b) constant hey are included in labour EXCEPT.
(c) optimum Z. (d) fast growing
13. Underemployment of labour means that.
s' (c)(a) office
SQ college principal
clerl
(b) professors
(d) studentsY
(a) a worker does not get full time job 21. Labour cannot be.
(b) a worker is not happy with his & (a) recorded (b) satisfied
job (c) stored Y (d) controlled
(c) A person does not get job according to 22. In Pakistan rate of labour participation is.
his qualification <> (a) 10% (b) 20%
(d) a and c of above Y S (c) 30%v/ (d) 40%
14. An examplc of labouri 23. Estimate of Pakistan's population in 2010
(a) gambler . '' is.
(b) jogger (a) 17 crorev. (b) 27 crore
(c) computer engineerv (c) 37 crore (d) 47 crore
(d) Student 24. This is NOT the result of specialization.
15. Which of the following is NOT an (a) increased production
advantage of division of labour. (b) increase in self sufficiency
(a) workers spend less time moving from (c) increase in cost of production
job to job (d) increase in trade
(b) workers become dependent on other , If a farmer moves from village to a town
workersv' and establishes a small factory, it is a kind
(c) workers become more efficient at of mobility.
performing repeated tasks (a) geographical (b) occupational
(d) machinery is more easily introduced to (c) social (d) all of the aboveV
perform simple tasks. 26. Efficiency of labour is not affectcd by.
Subject Specialist & Lecturesbip Guide - Commerce
(a) attitude of worker 8. An example of money capital is.
(b) attitude of employer/ (a) cash
(c) attitude of wife/husband (b) money in a savings accountv.
(d) all affect (c) prize bond (d) golden ring
. About labour we can say with certainty that 9. Which is NOT a cause of slow capital
it is. -
formation in Pakistan.
(a) perishableV (b) hirable (a) poverty
(c) reliable (d) all of the above (b) illiteracy -
(c) bad governance

(d) low rate of taxes V
Capital Resources . Capital formation takes place when.
(a) people save a part of their incomes
Which of the following is capital? (b) saved amount is invested
(a) toy of a child (c) investors expect good return
(b) plough of the farmer% (d) all of the threev
(c) calculator of the student 11. Which of the is capital.
(d) novel book in thc library (a) tractor ...ON (b) TV station
2. Which is true. (c) Tarbela Ru (d) all of the threev
(a) capital depreciates V 12. The diff'. between iron ore deposits
(b) capital is primary factor of production and the steel produced from these deposits
(c) capital is not hireable illustrates the difference bctWech.
(d) human capital is real capital
To the economist, investment refers to.
(a) sale of real estate
c (a)\labour and natural resources
labour and capital
(c) natural resources and capital'
(b) creation of new capital (d) natural-resources and cntrepreneurship
(c) purchase of a prize bond 13. It is function of capital.
(d) decrease in inventories (a) provision of machinery
A factory is an example of
(a) capitalv (b) :
(c) natural resources (d) non he above
(b) payment of wages
(c) establish good relation with other
countries
In an economy governm onstructed d
(d) a and b of above Y
new water reservoir '. Wangla Dam) for 14. These are kinds of capital EXCEPT.
the purpose of nig' this ight be taken (a) fixed capital
(b) expensive capital V
(a) increase in suppl. of capitalv (c) working capital
(b) increase in supply of land (d) real capital
(c) increase in supply of land and supply of 15. Productivity of capital depends upon,
capital (a) quality of labour
(d) nonc of the above (b) quality of raw materials
(3. Which of the following is NOT capital as (c) quality of management
economists use the term. (d) all of the above
(a) an office building 16. Net investment equals Gross investment
(b) machinery in a factory MINUS.
(c) an industrial robot (a) fixed capital
(d) moneyv. (b) capital depreciation
Which of the following is a producer good. (c) capital appreciation
(a) pcn (b) cycle (d) capital formation*
(c) mobile phone (d) hammerv'.
225
- Subject Specialist & Lectureship Guide - Commerce
(c) fixed tax to bond holders
Organization (d) fixed profit to bond holders
Those who invest in joint stock companies 11. A joint stock company has.
are called.
(a) limited liability, (b) unlimited liability
(a) partners (b) shareholders v. (c) Himited capital (d) unlimited capital
(c) members (d) associates 12. A person who contributes funds in
2 Limited liability is one of the advantages partnership but does not take active part in
of. -
management of business is called.
(a) partnership (b) sole proprietor (a) sleeping partnery (b) helping partner
(c) join stock companyv (c) temporary partner (d) unlimited capital
(d) cooperative Society 13. The word LIMITED at the end of a firm's
3 He prepares the initial plan of the business. Indine IT1CanS.
(a) capitalist (b) manager (a) it produces only one commodity

(c) entrepreneur' (d) officer (b) has limited capital
It is most suitable for large scale business. (c) cannot have more then 100 members
(a) proprietorship
(c) corporation Y
(b) partnership (d) shareholders
cannot exceed
'
*
pay debt of firm
eir investmentv.
(d) cooperative society 14. WAPDA is a .N
A public limited company is run by. (a) public corporation*
(a) boar of governors (b) public c any
(b) board of managers (c) priv mpany
(c) board of advisors (d) rship
(d) board of directors V
They can expand their business by selling
shares in the stock market. scale of Production
(a) proprietor of a business.
(b) partners of the business
(c) joint stock company Y
SS Negative returns in the short run imply that.
(a) average product is negative
(d) industrial cooperative societies (b) total product is negative
7 Reward of which factor of production is not (c) marginal is negative Y
pre-determined? (d) total cost is falling
(a) Labour (b) L <>
Economies of scale.
(c) Capital (d ization V. (a) occur when increase in input causes less
It is an example of pu imited company. than proportionate increase in output
(a) WAPDA (b) suggest that firms marginal cost curve
(b) President House lies above its average cost curve.
(c) SHELL Petroleum V. (c) suggest that the firms marginal cost
(d) none of the above curve is declining
A public corporation comes into existence (d) occur when average cost is falling
by means. In law of diminishing returns at least one
(a) registration under the companies factor.
(b) registration with the stock exchange (a) must be constant*
(c) Act of PalimentV. (b) must be owned by the firm
(d) Decisious by the short holders -
(c) must be purchasable
1 (). If a ublic limited company issues bonds to (d) must be efficient
increase resources, then it pays. Economies of scale are f two kinds.
(a) fixed premium to bond holders (a) temporary and permanent
(b) fixed interest to bond holders (b) internal and external
(c) managerial and industrial (c) Hiring of specialized staff due to

(d) natural and artificial increase in scale of production
5
Laws of return apply to firms working in, (d) A firm starts producing by products
(a) perfect competition 11. Which point shows efficiency in
(b) monopoly production,
(c) small firm (a) A (b) B
(d) all kinds of market situations v. (c) CV (d) D
6. During Short period, diminishing returns 12. Which point is unattainable,
may follow because. (a) Av (b) B
(a) quantity of labour is fixed (c) C (d) D
(b) quantity is fixed 13. Which point shows inefficiency in
(c) quantity of capital is fixed production.
(d) quantity of any one factor is fixed v. (a) A (b) B.V.
7. Which of the following sayings describes (c) C (d) D
diminishing marginal returns is the short 14. The maximum n TP curvc is at
Fun? -
quantity of labo efe.
(a) when the cat is away, the mouse will (a) Average p ical product of labour is
play equal to 1
(b)
*
MMPa our is at its maximum.
(b) Too many cooks spoil the brothy
(c) A rolling stone gathers no moss (c) Qes of APP and MPP of labour
(d) A Stitch in time saves nine in t
8. When a firm susing a fixed amount of land '' PP of labour is zerov

and capital takes on mote workers, it finds (2) an economy government constructed a
that marginal product (MP) of labour falls new water reservoir for the purpose of
but the average product (AP) of 'S irrigation this might be taken as.
rises. This can be explained by the e (a) increase in supply of capital V
that. (b) increase in supply of land
(a) the MP of labour is greater th: Q of (c) increase in supply of land and supply of
labourv capital
(b) the additional workers 2A . inore (d) None of the above
efficient <> 16. lnternal economies of scale include,
(c) MP and AP alway *
'' in opposite (a) risk-bearing economies
directions (b) trade mark
(d) b and c (c) managerial economies
9. Hollowing *. the changes in
output when different units of labour are 17.
(d) a and c of aboveY
If in a production process, all inputs are
combined with fixed units of land and increased by 10% and output increases by
capital. less than 10%. Then it is called.
(a) over the range of employment OPY (a) economies of scale
(b) over the range of employment OC (b) diseconomics of scalev
(c) over the range of employment PC (c)
(d) over the range of employment OX (d)
10. Which of the following is example of 18. The production function relates to.
external economies of scale? (a) cost to Output (b) cost out input
(a) Discount on purchases of raw materials (c) output to input V (d) demand to output
(b) technical progress leads to development !9, Marginal product curve intersects average
of machines at low price V. product curve when AP curve is.
(a) minimum (b) maximum v.
(c) rising (d) falling (d) no close substitutev

20. When MP is zero, TP is. 6. In case of monopoly.
(a) minimum (b) maximum V. (a) marginal revenue curve always slopes
(c) rising (d) falling upward
21. Marginal product indicates. - (b) total revenue curve always slopes
(a) total product' (b) average product upward
(c) variable product (d) none of the above (c) marginal revenue is always equal to
Law of decreasing returns generates. average revenue
(a) law of economic growth (d) marginal revenue is always less than
(b) law of increasing costsv average revenuev
(c) law of variable costs 7. In case of perfect competition in the
(d) law of decreasing costs market.
23. When diseconomies of scale outweigh (a) marginal revenue curve always slopes
cconomies of scalc the upward
(a) long run accurve rises V (b) marginal revenu e always slopes
(b) marginal cost falls downward
(c) ATC curve falls (d) AVC falls (c) marginal rev : s always equal to
Economies and diseconomies determine the average rev '
shape of (d) margin enue is always less than
aVer Cill &
(a) long run AC curvev
(b) short run AC 8. In the ss world.
(c) average fixed cost (a) aOfirm working under perfect
(d) none of the above competition wants to become a
monopolyv *
b) a firm working under monopoly to

Market
Which of the following is one *s' become a competitive firm

(c) monopoly price is always higher than
competitive price
assumptions of perfect S
(a) few buyers and few sellers
(d) competitive price is always higher than
monopoly price
(b) many buyers and few sellers 9. Which is NOT true.
(c) many buyers and many sellersv (a) perfect monopoly does not exist in real
(d) all sellers and buyers neSt world
2 A firm under perfect c ition is.
(b) perfect competition does not exist in
(a) price maker price breaker real World
(c) price takerv (d) price shaker (c) every monopoly is evil V.
Which of the following markets comes (d) every firm wants to reduce competition
closest to perfect market. - 10. The major difference between perfect
(a) wheat marketv (b) cigarette market competition and monopolistic competition
(c) cold drinks market (d) stock market is.
This kind of market is undesirable. (a) unity of firms
(a) general markets (b) specialized (b) differentiated productv.
(c) local market (d) national market (c) rate of profit
(e) None of aboveY (d) free exit and entry
Which is a condition for existence of | ]. Marginal revenue is always less than price
monopoly. at all levels of output in.
(a) big size (b) identical product (a) perfect competition
(c) absence of government taxes (b) monopolyv
Subject Specialist & flectureship Guide - Commerce 23 ]
(d) TRP = wage rate (c) are fixed by contract

6. How is unemployed. (d) are always higher than wages
(a) housewife (b) college student 3. Profits.
(c) a peer who lives on gifts from mureeds (a) are lower in the long run than in the
(d) a fresh graduated engineer who is short run
searching for a job Y (b) can be negative
7. Standard of living of workers depends upon (c) are less in perfect competition than in
their. monopoly
(a) nominal wages (b) real wages/ (d) all of the above Y
(c) average product (d) govt. policy 4. Profits.
8. Doctors get higher wages than clerks (a) are necessaryV

because. (b) are unnecessary
(a) doctors are in short supplyV (c) can never be negative
(b) doctors have more respect in Society (d) all of the above
(c) doctors are organized in trade unions 5. Profits arise because an entrepreneur
(d) people fear doctor's displeasure (a) prepares plan
9. Under marginal Productivity Theory, (b) innovates O
reward for labour is determined by. (c) lends mone
(d) a and bo
S.
ev
(a) Owner (b) government
(c) labour 6. Profits. <>
(d) marginal productV (a) are the long run than in short
10. The reward of their Serviees cannot be (b) negative in the form of loss
fixed. (c) are less in perfect competition than in
(a) Wage earner (b) rent receiver
(c) interest receiver (d) profit earnerV ) all of the above are truev
ll. Fixing of minimum wage. . @ Gross profit does NOT include.
(a) raises demand for labour (a) rent of his own land
(b) raises profits (b) interest receiver
(c) causes unemployment
(d) profit earner
12. The supply of labour is based
S
the trade
(c) wage earner
(d) taxes V
8. Some economists say that profit earner is a
off between leisure and kind of
(a) wealth
(c) Wages
'. price of product
(a) rent receiver
(c) wage earner Y
(b) interest receiver
(d) govt. officer
13. He cannot be unem 9. Risks in the business arise because of.
(a) policeman (b) beggarw (a) introduction of the new products
(c) milkman (d) bank officer (b) uncertain policy of rival firms
(c) changes in tastes
(d) all the aboveY
Profit 10. According to Prof. Knight risks are of .......
Kinds.
1. Professor Knight is famous for his theory (a) 2* (b) 3
of. (c) 4 (d) many
(a) rent (b) profity l 1. This is not a function of the entrepreneur.
(c) population (d) wages (a) supervise (b) innovate
2. Profits. (c) lend moneyV. (d) prepare plan
(a) are residual payment 12, Gross profit includes.
(b) are pre-determined (a) Monopoly profit (b) pure profit
(a) expenditure method 27. It is deducted from GNP to get NNP.

(b) income method (a) indirect taxes (b) depreciation v.
(c) product method (c) direct taxCS (d) transfer payments
(d) all of the above Y 28. Select the correct statements. -
19. Whish Statement is true. (a) transfer payments are included in

(a) NNP = GNP Depreciation v national income
(b) NNP = NI (b) depreciation allowance is a part of
(c) NNP = DPI GNP v
. Transfer payments means. (c) taxes are not included in NNP
(a) bank ioans (d) GDP means Gross Direct Production
(b) the payment without work V 29. Which is the largest figure.
(C) tax payments (a) NNP (b) GNPV
(d) payments made to all factors of (c) DPI (d) PI
production 30, Which is a flow concept.
Direct taxes are not included in. (a) number of my shirts
(a) NNP (b) PI (b) my monthly inc
(c) DP] v. (d) an and c of abovc (c) my total wealt
''
ge
. When national income is estimated by (d) money
expenditure method, we include, 31. To avoid double counting when GDP is
(a) all govt. expenditure estimated, homist.
(b) all households cxpenditure (a) use eflator
(c) all expenditure of the business sector te value added at each stage of
(d) all of a,b and cV
2 3 Which Statement is true. se retail prices
(a) national expenditure = national @ use price only intermediate goods
income V : A TV set purchased from a retail store is an
(b) national expenditure = national inc "O example of
+ national production (a) Intermediate good (b) capital goods
(c) national expenditure = -
national i e (c) surplus goods (d) final goodsv

+ national taxes 33. It is deducted from GNP to find NNP.
(d) national expenditure = (a) savings
1.1X CS <> (b) direct taxes
Which statement is true. (c) depreciation allowanceY
(a) National ''
Expenditure Indirect taxes
--
National (d) subsidies
34. Undistributed profits are considered.
(b) NI GNP N (a) income carned but not received
(c) N1 NNP indirect taxesv (b) income received but not earned
(d) NI PI (c) income earned and received
25. There are methods of measuring national (d) none of the above V
income.
(a) 5 (b) 2
(c) | (d) 3 v. Additional Objective
2(). If we compare GDP and GNP, then
(a) GNP = GDP met income from abroad Questions
1. GNP is.
(b) GNP = GDP + net income from
abroad V. Ta) total sales in the economy
(c) GNP NNP net income from abroad (b) total monetary transactions in an
economy
(d) GNP = NNP + net income from abroad
(c) total increase in wages in an year 7. Which of the following would increase
(d) total production of goods in a period national income.
17. In calculating national income which one (a) increase in taxation
will not be included. (b) increase in savings
(a) exports (c) increase in govt. in govt spending
(b) undistributed by firms (d) decrease in consumption spending
(c) wages of a lecturer Which of the following is a withdrawal
(d) old age pensions* from the circular flow income stream.
| 8. In circular flow model. (a) investment (b) subsidies
(a) Households own the resources v. (c) taxation v (d) consumption
(b) There are never international
transactions
(c) Household income is limited to wages
- NI of Pakistan
and salaries
(d) Financial markets ensure that the federal Pakistans saving rate is.
govt.'s budget is balanced annually. (a) 5% b) 15%v/
(c) 25% ) 35%
Pakistans per a income at constant
Equilibrium of NI prices in rupees is:
(a) Rs. 3 v (b) 62,000
Which shows equilibrium of national (e) 92 (d) 9000
income,
(a) Consumption = investment
3. ector of Pakistan economy is.
a) agricultureV (b) industry
(b) Saving = investment V c) transport (d) services
(c) Saving < investment n the world population-wise Pakistan is.
(d) Saving > investment
2 This may cause an increase in
income.
"' (a) 3rd
(c) 6"Y
(b) 4th
(d) 8"
(a) rise in exportsV.

O > 5. Population growth rate in Pakistan is
(a) 1% (b) 2%.
(b) fall
(c) rise in
in consumer
imports spending S. (c) 3% (d) 4%
Contribution of industrial sector in Pakistan
(d) increase in saving GDP is. -
If C = 200 and I = 40 then Y will equal. (a) 18%Y (b) 28%

(a) [60 ( v
(c) 38% (d) 48%
(c) 8000 none of the above 7.
Consumption is as: of.
According to Pakistan Economic Survey,
per capita income of Pakistan in U.S.
(a) Saving (b) investment dollars is.
(c) incomew (d) none (a) 400 (b) 800V.
Which one is investment in economics.
(c) 1600 (d) 2000
(a) building a factory V. Which one is per capita income.
(b) buying shares in stock exchange (a) per worker income
(c) depositing money in bank (b) per person incomew
(d) depositing money in housing Society (c) per family income
(). Marginal propensity to consume (MPC) is (d) per industrial unit income
(a) total income spent on consumption Base year of Pakistan for national
(b) ratio of total income consumed
accounting is
(c) ratio of additional income consumed V
(a) 1979-1980 (b) 1989-1990
(d) consumption divided by saving (c) 1999-2000v (d) 2009-2010
Subject Specialist & Lcctureship Guide - Commerce
(d) all of the above (d) none of the above
5. Economic development is measured on the 10. Legal money is called so because,
basis of (a) the buyer must pay in that money
(a) increase in nominal GNP (b) can be converted into gold
(b) increase in real GNP Y (c) sellers do not accept any other money
(c) increase in personal incomes (d) it is official medium of exchangev
(d) increase in govcrnment revenuc ll. It is the medium of exchange.
| 6. Select the combination which is most likely (a) black money (b) near money
to be found in developing countries. (c) currency V. (d) foreign exchange
(a) birth rate gross domestic product 12. The govt. can control inflation by
(b) death rate infant mortality rate (a) increasing demand for goods
(c) GDP per head birth ratev (b) increasing supply of goods
(c) increasing money supply
Money (d) decreasing taxes
Rupee is a coin. 13. Government of *: issues currency on
(a) full value (b) token moneyv.
2
(c) credit money (d) convertible
Cash can Not be directly drawn from a
(a) :
the basis of
in the country
(b) availability of dollars in the country
bank against.
(a) Cross chequev (b) Order cheque
(c) :
(d) tax
money in the country.*
tion
(c) beautiful (d) heavy 14. ' f money has relation with value
Money material should be. of y.
(a) abundant (b) scarce* a) direct (b) indircct
(c) beautiful (d) heavy c) inversev (d) no relation
In Pakistan money of account is . Commercial banks create,
(a) paisa (b) rupeev (a) credit moneyv.
(c) gold (d) dollar
if no money is used to exchange goo
-
\r GS (b) token moncy

(c) legal money
callcd. & (d) do not create money
(a) barter V. (b) currency -
16. Cheque is.
(c) black market (d) frce trade) (a) legal money (b) credit money
Which is not the function oney. (c) paper money (d) none moneyv.
(a) make demand and equal V 17. The most important feature of money.
(b) store of value (a) general acceptability Y
(c) medium of ex e
(b) convertibility into gold
(d) mcasurc of value (c) store of value
Which is money. (d) medium of exchange
(a) cheque (b) credit card 18. It can change money supply.
(c) currency V (d) prize bond (a) National Assembly
Convertible money means. (b) Supreme court
(a) it can buy goods
(c) Government
(b) Govt. can give gold against itv. (d) State bankV
(c) illegal money 19. Which of the following increases money
(d) low value money supply in the country?
9. Barter has the defect. (a) purchase of bonds by state bankV
(a) goods exchanged are of inferior quality (b) sale of bonds by state bank
(b) goods cannot be exchanged for services (c) increase in discount rate
(c) lack of common measure of valuev (d) decrease in taxes
(b) Monetary and labour policy (c) Those who are repaying borrowed
(c) Fiscal and commercial policies moneyv.
(d) All of the above (d) Those who have lent money
10. Inflation is a situation when. 19. If quantity of money increases 100% other
(a) Prices of some goods rise things remaining constant, value of money
(b) General price level rises continuouslyv. changes by.
(c) Prices double every year (a) increases by 100%
(d) Prices rise and fall (b) decreases by 100%v/
11. Under normal circumstances, the velocity (c) decreases by 200%
of circulation of money in a country is. (d) does not change
(a) 100% (b) negative 20. For the economy, prices are beneficial,
(c) less than 10 v (d) zero (a) falling slowly (b) rising slowlyv
12. In Pakistan in the year 2005-06 money (c) rising fast (d) falling fast
supply was about? - 21. According to Lord Keynes, people demand
(a) Rs. 1800 billion* money for purposes (motives).
(b) Rs. 1800 million (a) 1 (b) 2C)
(c) Rs. 1800 trillion
(d) uncountable
(c) 3 an
<>
k
! 3. Banks discount it an advance loans.
(a) draft 1. Profit and 1 * is an element of this
(b) bill of exchangev
(c) pay order (d) gold (a)
(c
:S
system.
-
listic
(b) Capitalistic
(d) none
14. Paper money is called fiat money because.
(a) it is issued with authority of 2. cannot be obtain from a bank against.
governmentv. cross cbequev (b) order cheque
(b) it is convertible into gold c) bearer cheque (d) traveler cheque
(c) it can be easily printed
(d) it is light weight.
o, Commercial banks accept deposits and
provide.
15. According to Keynes, demand for m (a) money (b) cheque
affected by. (c) loansv. (d) bill of exchange
(a) income 4. The banks can give loans.
(b) rate of interest <> (a) unlimited (b) equal to deposits
(c) literacy rate s'
-
(c) less than deposits
(d) a and b of abovev SS (d) more than deposits V
16. During inflation. ''
(a) lenders lose, borrowers gainv
5. Banks discount it and advance loans,
(a) draft (b) bill of exchangev
(b) borrowers lose, lenders gain (c) pay order (d) gold
(c) borrowers and lenders both lose 6. Banks prepare their balance sheet.
(d) all sections of the society gain (a) weeklyv. (b) monthly
17. The quantity demanded of money rises. (c) quarterly (d) annually
(a) as the interest rises 7. Balance sheet of a bank has two parts.
(b) as the interest rate fallsv (a) supply and demand for deposits
(c) a the supply of money falls (b) supply and demand of advances
(d) as the number if banks rises (c) assets and liabilities V
18. Which people are most likely to gain during (d) cash reserves and loans
inflation. 8. When banks prepare their balance sheets,
(a) Those living on pension they show the money lent in.
(b) Those living on their saving (a) liabilities (b) assets V
Subject Specialist & Lectureship Guide - Commerce * 24!
(a) They vary inverselyV (b) supervise commercial banks

(b) They vary directly (c) give loans to businessmen policy
(c) They are not relate (d) a and b of above Y
(d) They are related in long run and not in 15. It is NOT an instrument of monetary policy.
the short run (a) Bank rate (b) commercial bank
Which is the most widely used tool of (c) government (d) stock exchangev
monetary policy. ! 6. It creates credit.
(a) Clearing house (a) central bank (b) commercial bankV
(b) open-market operations.v. (c) government (d) stock exchange
(c) discount rate 17. Which is a monetary measure to increase
(d) issuing of notes employment. -
When the State Bank wants to decrease (a) increase in govt. expenditure
money supply in the country, it (b) reduce govt expditure
(a) buys govt, securities in Stock market (c) increase in interest rate
(b) sells govt securities* (d) reducing interest ratev ".
(c) lowers discount rate 18. In order to reduce her borrowing this
(d) b and c of above is raised. *
Monetary policy consists of (a) commercials, k deposits
(a) decreasing taxes (b) government spending
(b) changing total money supplyY (c) interestratev
(c) checking commercial banks (d) the *hange fate -
(d) printing of money 19. controls the banking

in most countries.
9. State Bank of Pakistan has departments.
(a) issue and banking department
(b) issue and research departments
2: bankv.
b) commercial bank
(c) banking and research department (c) investment bank
(d) issue, research and ban (d) world bank
department.
Central bank's rate of lendi
S\
to
2(). Treasury bill is used for.
(a) getting short term loans V.
commercial banks is called. (b) getting long term loans
(a) interest rate (b) discount (c) treasury bill is not credit instrument
(c) money rate (d) control r (d) treasury bill is a govt. tax bill
. When a central bank to increase . Out of the following the only recognized
money supply in circ legal tender is.
(a) purchases govt. urities (a) cheque
(b) lowers bank ra (b) bank notes and coinsv .
(c) directs banks to advance more loans (c) bank notes and cheques
(d) a and b of above Y (d) credit card
State Bank of Pakistan is run by. Open Market Operations is.
(a) Board of directors V (a) buying and selling bills of exchange
(b) Board of governor (b) buying and Seiting govt. Securities*
(c) Board of nmanagers (c) buying and selling shares of companies
(d) Board of bankers (d) buying and selling foreign exchange
Credit money is controlled by.
(a) government (b) commercial banks Banking in Pakistan
(c) central bankV (d) markets Nationalization of banks was done in.
14. Every country establishes central bank to. (a) 1974v. (b) 1976
(a) issue notes (c) 1978 (d) 1980
12 . According to Hecksher and Ohlin basic 20. What would encourage trade between two
cause of international trade is. countries.
(a) difference in factor endowmentsv (a) different tax system
(b) difference in markets (b) frontier checks
(c) difference in political systems (c) national currencies
(d) difference in ideology (d) reduced tariffs V
| 3. All are advantages of foreign trade 21. Terms of trade between two countries
EXCEPT. refer to a ratio of
(a) people get foreign exchangev. (a) export prices to import prices v.
(b) nations connplete (b) currcncy values
(c) cheaper goods (c) exports to imports
(d) optimum utilization of countrys (d) balance of trade to balance of payments
TSC t| f C&S 22. What would encourage trade between two
. Two countries can again from foreign trade countries.
if. (a) different tax system
(a) cost ratios are different (b) quality control 'O
(b) tariff rates arc different (c) reduced tariffsX.
(c) price ratios are different (d) fixing import quotas

(d) a an c of above Y
International trade and domestic trade differ Balance of Payment in
because of
(a) trade restrictions
S Pakistan
l, B of payments of a country includes.
(b) immobility of factors
ITent acCOllnt s
(c) different government policies

(d) all of the above Y monetary account
Terms of trade of developing eountries are (c) capital account
generally unfavorable because.
(a) they export primary goods
2.
(d) all of abovev -
Balance of payments of a country includes.

(b) they import value added goods (a) balance of trade
(c) they export few goods
(d) a and b of abovev
S (b) capital receipts and payments
(c) Savings and investment account
, Term of trade of a country <> (d) a and b of above Y
(a) ratio of goods exporte #imported Final balance of payments of a country is.
(a) always balancedv (b) always dcficit
(b) ratio of import duti
(c) ratio of prices o rts and imports' (c) always surplus (d) fluctuates
(d) a and c of above Balance of Payments of a country has parts.
. In a free trade world in which no (a) 2 (b) 3v.
restrictions exist, international trade will (c) 4 (d) 5
5 Exchange rate for currencies is determined
lead to.
(a) reduced real living standard by supply and demand in system of
(b) decreased efficiency (a) fixed exchange rate
(c) increased efficicncy v. (b) flexiblev
(d) reduced real GDP -
(c) constant
19. Govt. policy about exports and imports is (d) govt. regulated
called. . -
If GNP of Pakistan rises, it will encourage.
(a) monetary policy (b) fiscal policy (a) exports (b) in ports
(c) commercial policy, (d) finance policy (c) bothv. (d) none
Subject Specialist & lectureship Guide - Commerce 245
2 Pakistan's consists of 12.
exports mainly From Jan 2005, custom duties are reduced
products. because of international agreement under.
(a) Semi-manufactured Y (a) WTOY (b) IMF
(b) Machinery (c) World Bank (d) a and b of
(c) Mineral 13. Pakistans exports mainly consists of.
(d) Services (a) Machinery (b) consumer goods V
The largest item in our import list is. (c) minerals (d) Computer
(a) consumer goods (b) machinery 14. To facilitate foreign trade, Pakistan has
(c) petroleum V (d) computers established in different cities.
Select the correct statement. (a) Inland ports (b) Regional parts
(a) Pakistans largest item of import is (c) Dry parts (d) Privatc ports
machinery 15. The balance of paymchts account of
(b) Pakistans exports mainly consist of Pakistan is prepared by.
low-value goods* (a) government of Pakistan
(c) Direction of trade means what goods (b) National Bank of Pakistan
are being exported (c) State Bank of Pakistanv
(d) Imports are not needed (d) Export Bureau istan
Commercial policy means. 16. Pakistan exports!
(a) policy about markets (a) ready-made garments, computers, rice
(b) policy about money supply (b) rice, leather products, tractors
(c) policy about imports and exportsV. (c) cottonygin, fish, rice (
(3.
(d) policy for controlling of prices of goods
17.
(d) : made garments, edible ori, rice
lmport of Petroleum makes Pakistans Pakistan imports these goods.
import bill. *. chinery, tea fish
(a) 15% (b) 25%. machinery, petroleum, fish
(c) 35% (d) 45% ) tea, fish, fertilizers
The largest item of Pakistan's exports is.
(d) machinery, oil, fertilizerV
(a) cotton
(c) cotton yarn
(b) rice
(d) ready made garments

Balance of Payment of Pakistan
8 Largest share of Pakistan's
(a) China (b) Japan
* On the basis of earnings, order of
(c) England (d) USA <>
Pakistan's exports is.
Pakistan's share in the & for cotton (a) rice, cotton, yarn, carpets
textiles is.
(a) less than
(c) 20%
: (d)330%
2.
(b) rice, carpets, cotto: yarn
(c) cotton yarn, rice, carpetsY
(d) cotton yarn, Carpets, rice
On the basis of value, order of Pakistan
Pakistan's :
(a) exports are increasing imports is.
(b) imports are increasing V (a) oil, chemicals, machinery
(c) exports and imports are increasing (b) oil, machinery, chemicals'
(d) all are true (c) machinery, oil, chemicals
. In Pakistan's share in the world for cotton (d) machinery, chemical, oil
textiles is. Devaluation of currency can heip to
(a) export's foreign trade increase exports if clasticity of demand of
(b) exports are greater than imports exportable items in other countries is.
(a) less than one (b) greater than onev.
(c) exports are less than importsV.
(d) imports are double of exports (c) equal to one (d) zero
(a) Govt. cxpenditure outstrips tax receipts 24. A country has proportional system of
(b) Govt. tax receipts outstrips expenditure taxation. A person pays Rs. 500 tax when
(c) Government expenditure equals tax His incoine is 5000, how much tax he will
revcnuev pay if his earning rises to 8000.
(d) None of the above (a) 200 (b) 400
l(). Government finance is called. (c) 600 (d) 800V.
(a) national finance Which source a private company cannot
(b) public finance V liS? -
(c) private finance (a) a bank loan

(d) a and b of above (b) a bank overdraft
| 7. How the government can mect its (c) selling new shares in stock exchange
expenditure. (d) deficit finance (new money)Y
(a) by taxing people 26. Net taxes are.
(b) by borrowing from banks and other (a) Domestic taxes minus foreign taxes
governments (b) Business taxes inimus personal taxes
(c) by printing new money (c) Total taxes ninus govt. transfer
(d) by all the three methods* payments
18. The government can collect funds from. (d) Total taxes mi vt. purchases
(a) taxes Which is counted as public
(b) fees <>
(c) prices of public goods

,
(a) Subsidy given to local city bus service
(d) all the threcy (b) Defene expenditure
| 9. A direct tax is that which, (c) stment spending by public
(a) is heavy burden on the taxpayers reihnanies V
(b) can be directly deposited in the banks 9 interest payment of national debt
. (c) can not be evaded income tax is asses at Rs. 100 on an
(d) is paid by the person on whom it
levied V.
'N income of Rs. 1000. Compared to this,
which one of the following indicates that
. In Pakistan Government budget is pr the income tax rate is progressive?
by. (a) Rs. 150 tax on Rs. 2000 income
(a) National assembly (b) Rs. 350 tax on Rs. 3000 incomew
(b) President of Pakistan
(e) Ministry of Financev
28 (c) Rs. 400 tax on Rs. 4000 income
(d) Rs. 450 tax on Rs. 5000 income
(d) State Bank of Pakist
. In Pakistan Inconnet Tax System of Pakistan
1.
(a) progressive tax Tax is a payment.
(b) proportional (a) compulsory V (b) voluntary
(c) direct (c) unnecessary (d) tenporary
2 The main Source of revenue of federal
(d) a and c of aboveY
22 .Which tax better conforms to the principle government is
of equality in taxation. (a) property (b) income tax
(a) progressive taxY (b) regressive tax (c) custom duties (d) sales taxY
(c) proportional tax (d) fixed tax Hn Pakistan government budget is prepared
23. Which one is NOT a principle of taxation, by.
(a) principle of equality (a) National assembly
(b) principle of certainty (b) President of Pakistan
(c) principle of morality V (c) Ministry of Finance V
(d) principle of diversity (d) State Bank of Pakistan
6. Which is the basic economic problem 5. Multiple ends and scarce mcans is in the
which is common in all economic systems. center of definition of economics by.
(a) allocation of scarce resources v. (a) Alfred Marshal (b) Robbinsv.
(b) climination of inflation (c) Adam Smith (d) Aristotle
(c) to increase exports 6. The concept of welfare is not clearly
(d) to reduce taxation defined and cannot be measured is true for
ln a country like Pakistan. which definition of economics.
(a) all economic decisions are made (a) Classical
through markets (b) Neo-classical V
(b) thcre is no planning (c) Modern
(c) govt. owns most of the means of (d) None of the above
production forces along with some planning 7. While using inductive method, wc move
by the govt. from.
(d) there is reliance on marketY (a) particular to general V
Capitalism is define as an etonomic system (b) general to particular
where there is. -
(c) model to theory oth a and b
(a) a lack of planningv 8. Macroeconomics S topics like.
(b) a reliance over free market (a) national inco
(c) private ownership of property (b) consumer behavior
(d) all of the above (c) individ lfare
(). Pakistan is a. (d) de d supply
(a) mixed economyx' 9. Microeconomics studies topics like,
(b) capitalistic economy alonal Income
(c) socialistic cconomy b) Economic growth
(d) lslamic economy ) Demand and supply V
Economic problems arise because. (d) b and c
(a) Various religions exist O 50. The Principles of Economics (1890) was
(b) Rich people do not pay tax
(c) There
unlimited wants Y
are limited * written by.
(a) Aristotle
(c) Adam Smith
(b) Robbins
(d) Alfred Marshall V
The one who believe that economics is Utility Theory
related to scarcity and A Cardinal Approach. To Consumers
multiplicity of wants wi called. Behaviour
(a) a classical 1. When economists speak of the utility of a
(b) a neo-classical * certain good, they are referring to.
(c) modern economist V (a) the demand for the good
(d) not an economist -
(b) the usefulness of the good in

Human being is the focus of study is the consumption
definition of cconomics by, (c) the characteristic of the good to satisfy a
(a) Alfred Marshall v. human wantv.
(b) Adam Smith (d) all of the above
(c) Paul A. Samuelson (e) None of the above
(d) Aristotle 2. For two commodities X and Y, A utility
Scarcity definition or the modern definition maximizing rational consumer will decide
of economics was given by. to consume a combination such that.
(a) Alfred Marshall (b) Adam Smith
(c) Pigou (d) Lionel Robbins'
(b) Keeping income constant and varying 8. A ten percent increase in income of the
the price of both commodities. consumer will.
(c) Keeping prices constant and varying the (a) Shift the price line parallel upwardsv
income of the consumer. (b) Shift the rice line parallel downwards
(d) Varying both income of the consumer (c) Rotate the price line clockwise on the x
and price of the commodity. axis
(e) Just shifting the price line parallel (d) Rotate the price line clockwise on the y
upwards. axis
An income consumption curve can be most (e) Result in no change
easily derived by joining the tangency The marginal rate of substitution is defined .
points of various ICs and Price lines by. *S.
(a) Keeping income constant and varying (a) The slope of the price line
the price of one commodity. (b) The slope of the indifference curvey
(b) Keeping income constant and varying (c) The length of the indifference curve
the price of both commodities. (d) The length of the price line
(c) Keeping prices constant and varying the
income of the consumer. V. 1 ().
(e) None of the
The consumer is
:
'' ilibrium when.
(d) Varying both income of the consumer (a) The slope of the budget line is zero
and price of the commodity. (b) The s] of indifference curve is
(c) Just shifting the price line parallel negative
upwards. -
(c) '.
lmarginal rate of Substitution is
5 A ten percent increase in income of the 11.1%t *|
consumer will. ( e marginal rate of substitution is

(a) Shift the price line parallel upwards, Y ual to the ratio of processV
(b) Shift the price line parallel downwards. e) All points on the indifference curve lie
(c) Rotate the price line clockwise of the x above the price line
M. 1 S.
(d) Rotate the price line clockwise

axis.
* I.
Demand Analysis
Demand is. *
(e) Result in no change. (a) The annount of a commodity that

6. A ten percent increase in the c of the consumers want to purchase
good represented on the x-axis will. (b) A relationship between quantity
(a) Shift the price line parallel upwards demanded and price.
(b) Shift the rice line parallel downwards (c) The amount of a commodity that
(e) Rotate the pric clockwise on the x tonsumers can purchase
axisv * (d) The inquiries made about a commodity
(d) Rotate the price line clockwise on the y (e) None of the above -
axis Shift factors in the demand function are,
(e) Result in no change (a) The factors that continuously shift.

A ten percent increase price of both the (b) The factors, the change of which, can
commodities will. shift the demand curve.*
(a) Shift the price line parallel upwards (c) The factors, the change of which, can
(b) Shift the rice line parallel downwards* shift the quantity demanded.
(c) Rotate the price line clockwise on the x (d) The factors, the change of which,
*X lS changes the slope of demand curve.
(d) Rotate the price line clockwise on the y (e) None of the above,
axis All of the following are shift factors of
(e) Result in no change demand function except,
(c) None of the above. (d) Taste elasticity

6. We may observe a rise in supply when. (e) None of the above
(a) There is a cut in taxes on inputs. 6. If the price elasticity of demand for good
(b) There is political stability, X is less than one, then good X can be.
(c) Technology improves. (a) A luxury (b) A necessityV
(d) All of the above. V. (c) Highly elastic (d) Unitary elastic
(e) None of the above, (f) None of the above
7. For the supply curve Q = c + d P, the shift 7. For normal goods, income elasticity is.
factors have an impact on the value of. (a) Zero (b) Positive v'.
(a) d (b) cw (c) Negative (d) Greater than one
(c) p (d) all of the above (e) None of the above
(e) none of the above 8. If price of a substitute increases by 10%
1. Given demand function Qd = 100 2P and and the quantity demanded of the good
P 10, the price elasticity of demand is. increases by 5% then the cross elasticity
(a) 2 (b) 2 will be.
(c) -0.5 (d) 0.25 V. (a) V, V. l
(e) /3 (c) Zero ".
2. If demand for a good is elastic. (e) none of the above

(a) a rise in price increases consumer's 9. For normal goods.
expenditure on that good. (a) Price elasticity of demand is positive
(b) A fall in price increases consumer's and income elasticity is negative.
expenditure on that good. Y (b) Price elasticity of demand is negative
(c) Change in prices results in no change in and gross elasticity is negative.
expenditure, - Q' price elasticity and income
(d) Nothing can be said about price- elasticity are negative.
expenditure relationship. (d) Price elasticity of demand is negative
(c) None of the above. SN and income elasticity of demand is
3. Given the following possibilities, whe positive. Y
consumers cxpenditure on the d (e) Both price and income elasticity are
decrease? positive.
(a), demand is unitary elastic an 10. Determinants of clasticity of supply
(b) demand is elastic and price rises include.
(c) demand is inelastic a e falls (a) Time
(d) a & C (b) Stocks
(c) b &c." s
4. If price rises by- 10% and quantity
(c) International trade restrictions
(d) All of the abovev
demanded decreases by 8%. (e) None of the above -
(a) Demand is elastic 11. Increase in international trade restrictions

(b) Demand is inelastic V. normally.
(c) Supply is elastic (a) Have nothing to do with elasticity.
(d) Supply is inelastic (b) Effect elasticity of demand.
(e) None of the above (c) Effect elasticity of supply. Y
5. If the percentage effect of price of a (d) Effect both elasticity of demand and
substitute on the quantity demanded of a Supply,
commodity is expresses as. (c) None of the above is true.
(a) Income elasticity 12, In the long run.
(b) Cross clasticityV (a) Elasticity of supply is greater than short
(c) Price elasticity run. v.
(b) The labour becomes weaker. (b) Diseconomies of scale.

(c) Machincs depreciate. (c) U-shape of short run average cost curve.
(d) All of the above. (d) a & bv.
(e) None of the above. (e) a & c
Marginal cost curve intersects average cost
The Cost of Production Curve at.
1. Cost can be explained as. -
(a) Minimum total cost.
(a) Initial investment to start a business. (b) Minimum fixed cost.
(b) Sum of rewards to the factors of (c) Minimum marginal cost.
production.* (d) Minimum average cost.*
(c) Flow of daily expenditures. (e) None of the above.
(d) Cash spend The planning curve may eventually rise
(e) None of the above because of
2 Marginal cost is. (a) Managerial inefficiencies.*
(a) Derivative of total cost. (b) Lack of planning. O
(b) Slope of total cost curve. (c) Political events.
(c) Ratc of change in cost per unit of (d) All of the above.
output. (e) None ' w
(d) All of the aboveY L-shape lon Verage cost is related to.
(e) None of the above (a) Classi st theorists.
Total cost function with a U-shaped MC (b) MQ ost theorists. V.
can be represented by. (c) economists,
(a) A linear equation COuntantS.
(b) A quadratic equation one of the above.

(c) A cubic equation*
(d) An exponential function The Business Firm
Plant size can be represented by,
SQR The characteristics of perfect competition
include,
(a) Long run average cost curve. S. (a) A single firm,
(b) A short run average Cost curv (b) A homogeneous products.</
(c) Long run marginal cost. (c) Small number of buyers.
(d) All of the above. s' <> (d) Restricted entry and exit.
(c) None of the above. (e) None of the above.
Planning curve is anot me for. Perfect competition is.
(a) Fixed cost curve. (a) A market structure. Y
(b) Short run marginal cost curve. (b) A union of firms.
(c) Long run marginal cost curve. (c) Market where firms have perfect control
(d) Short run average cost curve. over price.
(e) Long run average cost curve. (d) A market where MR = AR = 0
(). In the second stage of production. (e) None of the above.
(a) Marginal cost increases. Y . Under perfect competition with short run
(b) Marginal cost decreases. super normal profit, firms achieve an
(c) Marginal cost is constant. optimum level where.
(d) Marginal product increases. (a) MR =TR = P = MC
(e) Total product falls. (b) MR = AC = P = MCV
Long run average cost is U-shaped because (c) MR = AR = P = AC
of. (d) MR = AR = P = MC
(a) Economies of scale. (e) None of the above
Subject Specialist & Lectureship Guide - commerce *- 257
(d) A market where MR = AR (c) Prices are taken as fixed for an

(e) none of the above individual firm
under monopoly the industry is. (d) All of the above
(a) Constitute of a large number of firms (e) None of the above
(b) Larger than the firm 10. Under monopoly, as compared to perfect
(c) More powerful than the firm competition, the demand is.
(d) The firm itselfv (a) Morc elastic
(e) None of the above (b) Has the same elasticity
Under monopoly in the short run. (c) Less elastic Y
(a) Loss is possible (d) Greater than perfect competition
(b) Loss is not possible (e) None of the above
(c) Super normal profit is possible
(d) a & b Models of Imperfect
(e) a & cw
In the long run under monopoly. Competition
(a) The firm earns super normal profits/ Monopolistic competition is an model
related to. -
(b) The firm earns normal profits

(c) Thc firm may face loss (a) Perfect comp
(b) Imperfect tition V.
(d) All above are possible
(c) The firm must shut down (c) '. <>
(d) All o
(). For equilibrium under monopoly a required
condition is that, - -
2
(e)
The
bove
above
ry of monopolistic competition is
(a) Siopc of MR = slope of MC r ed by
(b) MC = MR
}Joan Robinson
(c) AR = LAC
@, Edward chamber lincx
(e) None of the above (c) Heinrich won stackelberg
7 !N the long run under monopoly, "e ) (d) Alfred marshall
(e) Adam Smith
earn super normal profits after.
3. Freedom of entry of firm is a characteristic
(a) Entry and exit of firms
(b) Forcing all firms to increase
(c) Bribing the government o S
of.
(a)
-
Perfect competition
(d) Succcssive plant sizc ustments (b) Monopoly
(c) Producing at highes ible levels (c) Monopolistic competition
Monopoly. (d) a & cy
(a) Is often the : Situation (e) a & d
An assumption of monopolistic competition
(b) Is always the market situation
(c) In never the market situation not found in perfect competition is.
(d) Describes all markets in developing (a) Free entry of firms
countries -
(b) Product differentiation*
(e) None of the above Y (e) Large number of buyers/sellers
Q). -
Which of the following statement is correct (d) Ali of the above
under monopoly, (e) None of the above
(a) Prices are out of the control of the Every firm has some degree of monopoly
individual firm power can be a statement related to.
(b) Prices are
controlled by the (a) perfect competition -
monopolists (b) monopoly -
(c) monopolistic conupetition V

(b) A factor of production with perfectly (d) 1917

clastic supply (e) none of the above
(c) Not a factor of production . National Income does not include,
(d) The only real factor of production (a) Production of goods for sale
(c) None of the above - (b) Production of goods for the household
3 Return to a firm owner above the (c) Childcare within the household by the
opportunity cost of his capital invested in mothers
business is called. (d) a & b
(a) Inframarginal rent (e) b & cw
(h) Recardian rent GDP can be estimated by summing.
(c) Quasi-rentv. (a) Production (b) Incomes
(d) Super rent (c) Expcnditures (d) All of the abovev
(e) None of the above (c) None of the above
The Recardian theory of rent assumes that Pakistan's GDP does not include.
there is. (a) Cars produced in Pakistan
(a) Monopoly situation in the labour market (b) Cars produced in China
(b) Perfect competition In the labour (c) Cars produced it a by a Pakistan
markct V firm
(c) Imperfect competition in the labour
market
(d) a & b <>
-
(e) b & cv. <>
(d) The law of increasing returns applies to Income of igners within a country is
land 'N country's.
The rent on the marginal land in Recardian
theory is.
(a) The highest
(b) Equal to profit on the most fertile land e) National Income at factor cost
(c) Zerov
(d) Decided by the land owner N o: Circular flow of income shows that.
(a) Expenditures = household production =
(e) None of the above income
(). The following theory can be (b) Salaries = outputs = incomes
rent determination. .
(a) Marginal utility theory
* (c) Expenditures = outputs = income V
(d) Expenditures = outputs = disposable
(b) Modern theory of cost s' income
(c) Monopoly (e) None of the above
(d) Marginal * theoryV GNP = C + I + G + (X M) is an
(e) None of the above estimation of GNP by the
The difference between total earnings an (a) Expenditure approach V
transfer carnings is called. (b) Income approach
(a) Recardian rent (c) Value added method
(b) Economic rent V (d) All of the above
(c) Inframarginal rent (e) None of the above
(d) All of the above GDP can be.
(e) None of the above (a) Greater than GNI
National income accounting being in. (b) Less than GNI
(a) The fifteenth century (c) Equal to GNI
(b) The seventeenth century V (d) All of the above Y
(c) The mincteenth century (e) None of the above
(b) All investment is induced investment (d) is always at less than full employment
(c) All investment is autonomous.* level
(d) All investment is un-played (e) None of the above

(e) None of the above . lf the investment multiplier is 5 and there is
4. According to Keynes, Marginal efficiency new investment of Rs. 500 million, the
of capital and interest rate are. national income will. -
(a) Directly related (a) increase by Rs. 500 million

(b) Inversely relatedV (b) increase by Rs. 2500 million v.
(c) Not related (c) Decrease by 1%
(d) The same thing (d) Decrease by 5%
(e) None of the above (e) Remain unchanged
5. A project may be undertaken if the net . If the MPC = 0.8, the multiplier will be,
present value of future income is. (a) 5v (b) 2
(a) Less than cost (c) 10 (d) 50
(b) Greater than costv (e) can not be determined
(c) Less than interest rate When total expenditures fall short of full
(d) All of the above employment income, we may be facing,
(d) None of the above (a) An inflationary gap'
6. If the society becomes more optimistic then (b) A deflationary gap:/
the net present value of future incomes will. (c) Both inflationary and deflationary gap
(a) Increasev. -
(d) Full employment problem

(b) Decrease (e) None ofthe above
(c) Remain unchanged . Theory of absolute advantages was given
(d) Become zero (d) None of the above b
Income And Employment d:: dam Smithv (b) David Ricardo

(d) Ohlin
Determination SN (e) None of the above
1. David Hume and Ricardo are considere NS: A country has absolute advantage in the
be. * production of a commodity as compared to
(a) Classical economistsV
(b) Neoclassical economists
28 other nation if she
(a) Produces greater quantity of the
(c) Monetarists <>
commodity at a given cost
(d) Structuralist (b) Produces the same quantity of the
(e) Keynesians commodity at lower cost
2 Supply creates its *
(a) Is a classical theory
-
(c) It produces lesser quantity of the

commodity than the other nation
(b) Is a Keynesian theory (d) a & bv.
(c) Is a monetarist theory (e) a & C
(d) All believe in it . The theory of absolute advantages can not
(e) Is true only in the short run be applied if, for two goods, one trade
3 partner. . .
Keynes believed that equilibrium level of -
income is. (a) Has absolute disadvantage in one

(a) Always at full employment level commodity only
(b) Never at full employment level (b) Has absolute advantage in one
(c) Not necessarily at full employment commodity only
level v. (c) Has absolute advantage in both
commodities*
(d) All of the above
263
Subject Specialist & Lesureship Guide - Commerce
5. ln a proportional tax system, (c) Tabulation V (d) Distribution
(a) The rate of tax increases with the level 4. In a table, foot note and source notes are:
of income (a) DifferentV (b) Same
(b) The rate of tax decreases with the level (c) Identical
of income (d) None of above
(c) The rate of tax remains the same Which of the following is written at the top
regardless of income V of the table?
(d) Proportionally higher tax rate is charged (a) Prefatory note (b) Titlev
from the clite class (c) Foot note (d) Source note
(e) None of the above The minimum number of classes may be
(). The basic canons of taxation were provided determined by the formula:
bv.
(a) C = Wn(approximately V
(a) Canon (b) Smithv.
(b) 1 + 3.3
(c) Marshall (d) Ricardo R
(c) Keynes (c) #"> -
In a progressive tax system,

(a) The rate of tax increases with income
brackets V
*
(d) *
(b) The rate of tax decreases with income The graph of the symmetrical distribution
brackets
". . . .e.
(c) The rate of tax remains the same
regardless of income -
- ped
(d) Proportionally higher tax rate is charged 11-shaped V.
from the elite class ) None of above
@ ower class boundary of 30-35 will be:
Wealth tax is an example of. (a) 35 (b) 30.V.
(a) Indirect tax
(c) Injustice
(b) Direct tax V
(d) All of the abov N s' 9.
(c) 32.5 (d) None of above
(e) None of the abovc : The graph of mid points and frequency is
called: *
(a) Pie diagram V (b) Bar diagram

x * xk + k + k =< *k (c) Histogram (d) None of above
1 (). For a given class 3436, the mid point will
Business Ma natics be:
& sta tics (a) 34

(c) 70
(b) 36
(d) 35 V.
1 1, Relative frequencies arc obtained by:
Tabulation means, the process of arranging (a) Dividing the mid points by the total
the data into:
frequency
(a) Rows and columnsv (b) Dividing the total by the frequency
(b) Columns (c) Dividing the frcquency by total
(c) Rows frequencyV
(d) Different classes 12. Which of the following is written at the
2 A graph of cumulative frequency is called: bottom of the table?
(a) Frequency polygon (b) OgiveV. (a) Footnote (b) Source note
(c) Histogram (d) Polygon (c) Prefatory note (d) both a and b.v.
The process of systematic arrangement of 13. As a gencral rule, statisticians tend to use
data into rows and columns is called.
which of the following number of classes
(a) Presentation (b) Classification when arranging the data:
(b) pproximately v.
45. Classification of data on the basis of place
is called:
(a) Temporal classification
(c) C = \n-34 (b) Spatial classification
(d) #(approximately (c) Geographical classification
(d) Both b and dv
35. The presentation of available data in 46. Classification of data on the basis of
ascending order of magnitude called: characteristics or attributes like social status
(a) Classification (b) Tabulation etc is called:
(c) Arrayv (d) Random (a) Spatial classification
36. The arrangcment of data according to its (b) Temporal classification
time of occurrence is known as:
(c) Qualitative classification v
(a) Chronological classification (d) Quantitative classification
(b) Spatial classification 47. Classification of data on the basis of
(c) Tcmporal classification differences in quantity is called:
(d) Both a and cV (a) Spatial classificati
37. Graph of time series is also called: (b) Temporal classi ion
(a) Band graph (c) Qualitative classification V
(b) Line graphy (d) Quantitative classification
(c) Bar graph 48. The arran t of sector in a Pie chart is:
(d) None of above (a) Rang
38. A graph which is used to show the (b) ing order
maximum and minimum values of a
(c) *
variable is called. ti clockwise V. -
(a) Lien graph ich of the following is not involved in

(b) Bar graph the formation of frequency distribution?
(c) Range graphy (a) Editing V (b) Range
(d) Nonc of above N (c) Number of classes (d) Class interval
39. (a)
A graph containing set of rectangles:
Historigram SS. 50. Median is graphically obtained by using.
(a) Histogram (b) OgiveV
(b) Histogram V. (c) Frequency curve (d) None of these
(c) Frequency polygon <>
40. Histograml is a: Linear Equations

(a) Bar graph of "
(b) Bar graph of time Srie
!. If 2x + 3 y = 5 and x = 2, then the value of
y is:
(c) Line graph of frequency distribution
4!. The term bar mean a: (a) | (b) 1
(a) Thick wide linev (c) 3 V (d) 9
(b) Thin wide inc 2. The values of x am y that simultaneously
(c) Thick narrow line satisfy the equations 2x + 3y = 5 and 7x
42. Only one variable can be represented on: 4y = 3 are. -
(a) Simple bar diagram V. (a) 0, 1 (b) 1,0

(b) Multiple bar diagram (c)-1,1 (d) 1, 1 v.
(c) Grouped bar diagram 3. The solution of the system of simultaneous
43. A device of representing statistical data in linear equations, 4x 3 y = 7 and 7x + 5y =
picture. 2 is:
(a) Pictograph (b) Pictogram (a) x = 1, y = 1
(c) Cartogram (d) Both a & by (b) x = - 1, y = 1
l |2 | (d) None of the sets I and II possesses a
4 = + and
2(2x +3y) 7(3x 2y) 2 unique solution
24. The equations 2x + y = 5 and x + 2y = 4 are
" *"=2 is: ' (a) consistent and have a unique solutionv
(2x +3y) (3x 2y) (b) consistent and have infinitely many
(a) {(1,0); (b) {(1,-1)} solution
(c) + (1.2)} (d) (2,1); V (c) inconsistent
. The Solution of the equation 4x + 6y = 3 xy (d) None of these
and 8x + 9y = 5 xy is given by: . The equations 4x + 7y - 10 = 0 and 2x +
(a) x = 1. y = 2 (b) x = 2, y = 3 35y 50 = 0 are:
(c) x = i, y - - ) (d) x = 3, y = 4v. (a) consistent and have a unique solution
| Q). |f 2, 3 - 9 and 4, 9 21, where x + (b) consistent and have infinitely many
X y xy X y Xy solutionsX.
(), y + (), then the values of x and y are (c) inconsistent
respectively. (d) none of these -
(a) () and 1 (b) I and 2 26. The equations 3x

5 = () are <>
&Q = 0 and 6x + 2y -
(c) 2 and 3 (d) l and 3 Y -
(a) consister au have a unique solution

2 . The
equations
S.Ct of honogeneous simultanco.s
(b)
Solutions
: and have infinitely many
4x + 2y - 0 and 6x + 3y = 0 has:
(a) x = 0, y - () as Solutions . (c)
he of these
(b) x = 0. y = 0 and x = 1, y = - 2 as - -
solutions
%
$ number of Solution of the equations
(c) x = 0. y = 0, x = -1, y = 2 and x = 1, y =
- 2 as solutions
x '-2 and 2 xy 3y = -2 is:
y
(d) an infinite number of solutions Y
he equations 3x 4y 5 and 12x
SN (a) 0V.
(c) 2
(b) {
(d) None of these
2() have:
(a) no common solution
(b) exactly one common *$9 29. The condition for which the system of
equations.
Kx ~ y = 2 andd 6x - 2y = 3 has a unique
(c) exactly two common so tit S
Solution, is
(d) more than two comi lutions V. (a) k = 3 (b) k + 3 v.
32 . I he system of
6x + 2y 2 = ()
T y 1 0 and
3().
(c) k + () (d) k = ()
The value of k for which the system of
(a) has x = | 'S as solutions
equations 2x + 3 y = 5 and 4x + ky = 10 has
(b) has x = - 1 and y = -2 as solutions an infinite number of solutions, is
(c) does not have a solution (a) l (b) 3
(d) has infinitely many solutionsv. (c) 6Y (d) ()
Consider the following two sets of 31. The value of k for which the system of
equations: equations x + 2y 3 = 0 and 5x + ky+ 7 =
i. 2x y = 0 and 6x 3y = 0 0 has no solution, is
ii. 3x 4y = () and 12x 20y = () then (a) 10 (b) 6
(a) both sets I and II possess unique (c) 3 (d) 1
Solutions
}. Fow what value of k will the system of
(b) Set I possesses unique Solution nand set equations 3x + 5 y = 0 and kx + 10y =
l! has infinitely many solutions have a non Zero Solution?
(c) Set II possesses unique solution and set (a) () (b) 2
I possesses infinitely many solutions V
(c) 70.50 (d) 60,40 half ticket as on full ticket. One reserved
47. A an B each has some money. If A gives first class ticket for a journey between two
Rs. 30 to B, then B will have twice the stations is Rs. 362 and one full and one half
money left with A. But if B gives Rs. 10 to reserved first class tickets cost Rs. 54. The
A, then A will have thrice as much as is left reservation charge is:
with B. Then, A and B have respectively: (a) Rs. 18 (b) Rs. 22 v .
(a) Rs. 44, Rs. 72 (b) Rs. 62, Rs. 34* (c) Rs. 38 (d) Rs. 46
(e) Rs. 72, Rs. 44 (d) Rs. 34, Rs. 62 55. Points A and B are 60km apart. A bus starts
48. A two digit number is obtained by either from A ad another from B at the same time.
multiplying the sum of the digits by 8 and If they go in the same direction they meet in
adding 1 or by multiplying the difference of 6 hours and if they go in opposite
digits by 13 and adding 2. The number is: directions, they meet in 2 hours. The speed
(a) 41 V. (b) 63 of the bus with greater speed is:
(c) 31 (d) 23 (a) 10 km/hr (b) 20 km/hrv
49. A man has some hens and cows. If the (c) 30 km/hr (d) 40 km/hr
number of heads be 48 and number of feet 56. In covering a distance of 30km Amit takes
equals 140, the number of hens will be: 2 hours more thai's Arsh. If Amit doubles
(a) 26v. (b) 24 his speed, he' take hour less than
(c) 23 . (d) 22 Suresh. Ami's speed is: -
5(). The monthly incomes of A and B are in the (a) 5 km br (b) 7.5km/hr
ratio 4:3. Each of them saves Rs. 600. If thc (c) 6 km.fr/ (d) 6.25 km/hr
ratio of their expenditures is 3:2, then the 57. The area of a rectangle gets reduced by 9m
monthly income of A is: ifts length
is reduced by 5m and breath
(a) Rs. 2400 V (b) Rs. 1800 (increased
by 3m. If we increase the length
(c) Rs. 2000 (d) Rs. 3600 y 3m and breadth by 2m, the area is
Rs. 49 were divided among 150 children, increased by 67m. The length of the
Each girl got 50 paise and a boy 25
How many boys were there?
*\
N
rectangle is:
(a) 9m (b) 15.6m
(a) 100 (b) 102 - O (c) 17mv (d) 18.5m
(c) 104v. (d) 105 >
58. If from twice the greater of the two
2. A man purchased 47 stamps of 20 paise and numbers, 20 is subtraeted, the result is the
15 paise. The total amount he spent was Rs. other number. If from twice the smaller
8.80. The number of 20 palse and 15 paise number, 5 is subtracted, the result is the
stamps which he pure' first number. The largest number is:
(a) is 12 and 35 respectively (a) 12 (b) 18
(b) is 10 and 37 respectively (c) I5Y (d) 25
(c) is 35 and I2 respectivelyv 59, The system of linear in-equations x + y <
(d) cant be determined from the given data 0, x > 0 and x > 0, y > 0 has:
53. A purse contains only 25 paise and 10 paise (a) 3 solution
coins. The total amount in the purse is Rs. (b) 1exactly 1 solutionv
8.25. If the number of 25 paise coins is one (c) no solution
third of the number of IQ paise coins in the (d) an infinite number of solutions
purse, then the total number of coins in the 60. If x + 2y s 3, x > 0 and y > 0, then one of
purse is: the solutions is:
(a) 30 (b) 40 (a) x = - 1, y = 2
(c) 45 (d) 60V (c) x = 1, y = 1 v
54. A railway half ticket costs half the full fare
but the reservation charge is the sanne on
Subject Specialist & Lectureship Guide - Commerce 27 |
(c) m 2 - 1 (d) m > 0 (c) + 8w (d)2+W3
26. The positive value of k for which the 34. The relationship between x and y as shown
equation x + kx +64 = 0 in the given table is:
(a) 4 (b) 8 X U-T L = La T-4
(c) 12 (d) 16v. Y 100 90 70 || 40 || 0
27. If the equation x = ax + 1 = 0 has two (a) y = 100 10x
distinct roots, then the value of a is
(b) y = 1005x 5x**
precisely different from: (c) y = 100 5x
(a) l & -l (b) 2 & 2*
(c) 1 & 2
(d) y = 20-x-x
(d) l & -2
35. The value of p so that x + 5 px + 16 = 0
28. The roots of the equation (q r) x + (r- p). has no real root:
x + (p q) = 0 are:
(a) TPI
q =r
(b) P-81 &
qr
(a) is greater than
:
(b) is less than _8
(c) "I'l (d) T'l 5
p q p-d
29. If logio (x - 6x + 45), then the values of x (c) lies between 8 &5
d TC.
N
(a) 6.9
(c) 10,5
(b) 9,-5
(d) 1 1,-5 v.
(d) None of thes
36. The roots of
2. The eq
is:
equation are 5 and
30. Vidya and Vandana solve a quadratic (a) x 3x'+ 10 = 0

equation. In solving it, Vidya made a (b) x'=3x - 10 = Ov
mistake in the constant term and got the
roots as 6 and 2, while Vandana made a (c) 3x + 1 () = ()
x*- 3x 10 = 0
mistake in the eoefficient of x only and 3 the sum of the roots of a quadratic
obtained the roots as 7 an ~ 1. The correct
equation is 6 and the product of the roots is
roots of the equation are: also 6, then the equation is:
(a) 6,-l (b) 7.2
(a) x* 6x +6= 0<
(c) --6,-2 (d) 7,1 v.
31. A and B solved a quadratic equation,
Solving it, A made a mistake in t Stant
$9 (b) x + 6x 6 = 0
(c) x 6x 6 = 0
term and obtained the roots as : B
(d) x + 6x + 6 = 0
38. If one root of the equation 3x - 10x +3 = 0
made a mistake in the coe t of x and
obtained the roots as 1,
of the equation are:
# COTrct roots
-
.
IS 3.
1 -
the other root is:
1
(a) +1,+3 (b) -1,3 h k - - b) -3
(a) 3 (b)
(c) 1,-3 (d) 1,-]
32 . If the equation 9x + 6kx + 4 = 0 has equal l
roots, then the value of k must be:

(c) 3.v. (d) 3
(a) Zero 39-The quadratic equation whose one root is 3
(b) either 2 or zero + 2 N3, is
(c) either 2 or zero
(a) x + 6x 3 = 0(b) x 6x 3 = 0x
(d) either 2 or 2* (c) x + 6x + 3 = 0(d) x 6x + 3 = 0
x +4 x -4 10
33. The roots of + = -- are: 40- If the equation ax" - 5x + c = 0 has 10 as
X 4 x +4 3
the sum of the roots and also as the product
(a) + 4 (b) + 6 of the roots, which of the following is true?
(c) x + 5x 6 = 0(d) x - 5x +6=0% 66. If the ratio between the roots of the
57. If a. are the roots of the equation 2x = equation lx" + nx + n = 0 is piq, then the
5x + 7 = (), then the equation whose roots
are (2 (1 +3 |}) and (3 0 +2 (3) is:
* '' q Wp W{
is:
(a) 2x 25x + 82 = 0 -
(a) 1 (b) 3
(b) 2x - 25x 82 = 0 (c) 0V. (d) l
(c) 2x 25x + 82 = Ov 67. The condition for ax + bx + c to be
(d) 2x + 25x - 82 = 0 expressed as the product of linear
. The quadratic equation whose roots are the polynomials is:
reciprocals of the roots of the equation 3x' (a) b. 4 ac=0 (b) b - 4ac < 0
20x + | 7 = () is:
(c) b 4 ac > 0% (d) b =ac
(a) 20x 17x + 3 = 0 68. The expression x = x + 1 has:
(b) 17x 20x +3 = Ov (a) one proper linear factor
(c) 20x + 17x 3 = 0 (b) two proper linear factors
(d) 17x + 20x 3 = 0 (c) no proper linear factorv.
59 If a B are the roots of the equation x + kx (d) None of these
is:
120 such that OC 3 = 1, the value of k 69. Which of the
polynomials &m. factorized
quadratic
into a
(a) () (b) +5 product of real linear factors?
(c) +l (d) +7 v.
60. The roots of the equation x + px + q = 0
(a) 2x -
(c) 3x"
:
6
(b) 2x + 4x = 5%
(d) 5x 3x + 2
are and 2. The roots of the equation qx 70. Which of the following is true for real
px l = {} must be:
| l *
$ k for which the polynomial 12x +
k can be factorized into a product of
(a) 15 (b) #-1: & linear factors? -
(c) +.
2 s
(d) - '2
- O *...: 2 (b) ks:
2
ol. Consider the equation px + qx + r (c) k >* (d) k2"

where p,q,r are real. The roots are 1I] 2 2
magnitude but opposite inn sign
(a) q = 0, r = 0, p = 0
:* 72. The value of x for which the polynomials x'
l and x = 2x + 1 vanish simultane-ously,
(b) p = 0, qr # 0 <> is: -
(c) r = 0, pg. # 0 (a) 2 (b) -l

(d) q = (), pr # 0Y (c) v. (d) 2 . .
62. If the equations 3 = 0 and x + 3x
k . () have a common root, then the non-
- .
73. The Solution set of the equation x'

2 = 0 is:
X''
zero value of k is: (a) {8, 1} (b) {8,-l'

(a) ' (b) 2 (c) {-8,-] } (d) {-8,1} v.
(c) 3 (d) 4v. 74. The value of x inn the equation
63. If the equations 2x 7x + 3 = 0 and 4x +
ax 3 = 0 have common root, then the Wi-x X
" l-X
X =2. |
1S
values of a are: 5 - 7
(a) l l or 4v. (b) l l or 4 (a) (b) =
(c) l l or 4 (d) l l or 4 13 13
Q
r) --
(c) 13 v. (d) None of these
fo
r.in
ne
cor
ee
plo y
.em
w
w
w
ner.info
loyeecor
mp
www.e
87. If x is the set of all integers and f is defined (c) 1700 (d) 1400
on X by f(n) = n, then the image of the set 11. 35% of 3() = 25% of 2 + 1 .
[-2,-1,0,1,2} is: (a) 28 (b) 38w
(a) {-2,-1,0,1,2} (b) {-2,1,0) (c) 42 (d) 32
(c) {0,1,2} (d) {0,1,4} V. 12. What percent is 3% of 5%)
88. The range of the function f(x) = a cos (bx + (a) 60%v/ (b) 50%
c) + d, a > 0 is: (c) 15% (d) 30%
(a) [-a,aj
(c) [-d-a,cita]
(b) [-a-d,a-d]
(d) (d-a,c-HajY
13. 2 % of 6 I44 = 2: x 245,76
(a) 16 (b) 20:/

Percentage (c) 5 (d) 10
O2 = ? 9%
14. 12.5%. Of 192 = 50% of 3
(a) 20 (b) 2/ (a) 48v (b) 96
(c) 02 (d) .2
(c) 24 (d) None
1 .
2
-
12: is equivalent to: D.A.

15, 30% Of
-
*=24
(a) 0.8
(c) 0.125 V.
(b) 1.25 39 - &Q
<>
b) -
3.
(d) 12.5
5 out of 2250 parts of eart.) is sulphur.
@#
a -
'S' (b):
What is the percentage of sulphur in earth? (c) 1 v. S.<> (d) 2
16. What is 2 25% equal to?
o: (b) #: (a) #. (b) .625
2 (c) 0625 (d).00625
(c) + (d) - 17.45% or? -30% of 9030% of 210.
45 45 120 (b) 80%
4.5 x 2 = 25% of 90() - e) 6{} (d) 90
(a) 16.20 (b) 500 S\, One fourth of one third of two fifth of a
(c) 4
21.8% of 1674 = 2 x 1800
(d) 5 V. SQ number is 15. What Will be 40% of that
number?
(a) 4 (b) 0.5 S. (a) 120 (b) 350
(c) 6 (d) None of the (c) 270 (d) 180Y
(). 13937,869 : 199354 + 15% of 2010-2. 19. If 37% of a number is 990,86, what will be
(a) 150 (b)(90 approximately 19% of that number?
(c) 80 ()v (a) 600 (b) 400
Q., 4 :.. (c) 500 V (d) 700
63% of 3, is S 20. If 15% of 40 is greater than 25% of a
(a) 2.25 V. (b) 2.40 . number by 2, the number is:
(c) 2.50 (d) 2.75% (a) iw (b) 20
If 30% of a number is 12.6, then the (c) 24 (d) 32
number is: * 21. What percent of 7.2 kg is 18gms?
(a) 41 (b) 51 (a) 25%v/ (b) 2.5%
*
(c) 52 v (d) 42 * (c) .25% (d) ()25%

9. 5% of (25% of Rs. 1600) is: 22, 1 40% of 40% of x = 40, then x is:
(a) Rs. 5 (b) Rs. 17.50 (a) 100 (b) 400
(c) Rs. 20V. (d) Rs. 25 (c) 250V - (d) 1000
* s!". of Q = 150 23, A/3.6% Of 40 = ?
3 * (a) 2.8 (b) 1.8

(a) 1250 (b) 1800V (c) 1.2V (d) None
44. A student has to Secure 40% marks to pass. 51. The price of jute has been reduced by 20%.
He gets 178 marks and fails by 22 marks. If the reduced price is Rs. 800 per Quintal,
The maximum marks are: the original price per quintal was
(a) 200 (b) 500v, (a) Rs. 900 (b) Rs. 640
(c) St)() (d) 1 ()()() (c) Rs. 960 (d) Rs. 1000V.
. A house-owner was having his house 52. Swati spends 40% of her salary on food,
painted. He was advised that he would 25% on house rent, 15% on entertainment
require 25 kg of paint. Allowing for 15% and 5% on conveyance. If her saving at the
wastage and assuming that the paint is end of a month is Rs. 1200, then her salary
available in 2kg cans, what would be the per month (in Rs.) is:
cost of paint purchased, if one can cost Rs. (a) 4000 (b) (3000
] () 2 (c) 8000 v (d) 10000
(a) Rs. 240 V (b) Rs. 180 53. Samir spends 40% of his salary on food
(c) RS. ()() (d) Rs. 36() articles and one third of the remaining on
+(). A reduction of 12.5% in the price of a transport. If he saves Rs. 450 per month
dining table brought down its price to Rs. after spending
which is half of t
4375. The original price (in R.S.) of the table on food items '' nsport, what is his
\\ is . monthly salary:Q\ -
(a) ()(){}() (b) 54()() (a) Rs. 45()() S (b) Rs. 2250V
(c) 52()() (d) 5000v (c) Rs. 1 #5 (d) Rs. 2500
. Of the total amount received by Kiran, 20% 54, Kamai has some apples. He sold 40% more
was spent on purchases and 5% of the than heate. If he sold 70 apples, how many
remaining on transportation. If he is teft it he eat?
with Rs. 1520, the initial amount was: &: (b) 90
(a) Rs. 2800 (b) Rs. 2000 @ 18 (d) 42
(c) RS, 24()() (d) Rs. 1600 _ 5
48. In a library, 20% books are inn Hindi,
of the remaining are in English '
5\ S.
~. - -
g part of the population in a village are

males. if 30% of the males are married, the
-
remaining 9000 are in variou !"

percentage of unmarried females in the total
languages. What is the total man of
population is:
books in English? (a) 70% (b) 40%
(a) 400() (b) 3000 (c) 27: v. (d) 20%
(c) 225() f'thesex
(d) N
-19. A vinash spends 30%\of his income on 56. In an examination, 1 100 by 900 girls
|
Scooter petrol, | e remaining on house appeared. 50% of the boys and 40% of the
girls passed the examination. The
rent and the balance on food. If he spends percentage of candidates failcd is:
Rs. 300 on petrol, the what is the (a) 45 (b) 45.5
expenditure on house rent? (c) 54.5V. (d) 59.2
(a) Rs. 525 (b) Rs. 1000 57. A school has only three classes which
(c) Rs. 675 (d) Rs. 175v. contain 40,50 and 60 students respectively.
50. A man spends 35% of his income on house The pass percentages of these classes are
rent, 75% of the remaining on other items. 10,20' and 10 respectively. The pass
What percentage of income docs he save? percentage of the School is:
(a) 10.25 V. (b) 34.50 |
(c) 48.75 (d) None (a) 13: V. (b) 15
3
Subject Spccialist & Lectureship Guide - Commerce 283
(a) 4 (b) 5 (a) 30% (b) 21.6%

(c) () v. (d) 7 (c) 17.8% (d) 15.6%
71. To a sugar solution of 3 liters containing 78. 5% of income of A is equal to 15% of
40% sugar, on liter of water is added. The income of B and 10% of income of B is
percentage of sugar in the new solution is: equal to 20% of income of C. If income of
| C is Rs. 2000, then total income of A,B &
(a) 13:% (b) 15% C is:
J.
(c) 30% v. (d) 33% (a) Rs. 6000 (b) Rs. 18000 V
2. The price of an article is cut by 20%. To (c) Rs. 20000 (d) Rs. 14000
79. In an examination, A got 10% marks less
restore it to the former value, the new price
must be increased by: than B,B got 25% marks more than C and C
(a) 20% (b) 25% V. got 20% less than D. If A got 360 marks out
o of 500, the percentage of marks obtained by
(C) 165% (d) 24% D was. -
3. The income of a brokcr

(a) 70 (b) 75
remains un
(c) 80*. (d) 85
changed though the rate of commission is 80. If the numerator o tion be increase by
increased from 4% to 5%. The percentage 15% and its de inator be diminished by
of slump in business is:
(a) 1% (b) 8% 8%, the Vale N
o the fraction
. is
. -. The
15
(c) 20% w/ -
|6
74. origin on is
lm an examination, there are 3 papers of
mathematics of 100 marks each. A by
secure 60% in the first paper and 70% in
ad' (b) # V
the second paper. In order to secure 70% in

thc aggregate the percentage of marks he
should secure in third paper will be:
2 (
d) 2
3
. In an examination, 35% of total students
(a) 90% (b) 80%v/
75.
(c) 75%
A candidate scoring 25% mark
(d) 70% all
failed in Hindi, 45% failed in English and
20% in both. The percentage of those who
passed in both the subjects is:
examination fails by 30 m: ilc (a) 10 (b) 20
another candidatc who score 6 marks (c) 30 (d) 40%
: required to
gets 20 marks more than
pass. The pass percentage is:
Ramans salary was decrease by 50% and
subsequently increased by 50%. He has a
(a) 2.5%
(c) 40%v/
35%
(d) 50%
loss of:
(a) 0% (b) 25% v.
7(), Two numbers * than a third number (c) 0.25% (d) 2.5%
by 30% and 37% respectively. How much 83. Arvind spends 75% of his income. His
percent is the second number less than the income is increased by 20% and he
first?
increased his expenditure by 10%. His
(a) 1 ()" ov (b) 7% savings are increased by:
(c) 4% (d) 3% (a) 10% (b) 25%
77. A bag contains 600 coins of 25p
denomination and 1200 coins of 50p (c) 37% (d) 50% /
denomination. If 12% of 25p coins and 84. There are 600 boys in a hostel, Each plays
24% of 50p coins are removed, the either hockey of football or both. If 75%
percentage of money remove from the bag play hockey and 45% play football, how
is nearly.
many play both?
ratio between the reduction in consumption (c) 23760V. (d) None

and the original consumption is: 106. The value of sewing machine
(a) 3 (b) 1:4 depreciates every year by 4%, its value at
(c) 1:5 V. (d) l 6 present is Rs. 200. What will be its value
100. The price of sugar increased by 20%. after 2 years?
As a result, a family decreases its
consumption by 25%. The expenditure of
(a) *(* 5. )
23
X
the family on sugar will be decreased by:

(a) 10% V.
(c) 1.4%
(b) 5%
(d) 15%
(b) Rs.
|(*#) |. 24\"
25
101. If the price of sugar rises from Rs 6 per
\ |
kg to Rs 7.50 per kg, a person, to have no
increase in his expenditure on sugar, will
(c) *:26)
have to reduce his consumption of sugar by:
(a) 15%
(c) 25%
(b) 20%.<
(d) 30%
(d) *: 2
25
102. The price of sugar increases by 32%. A
family reduces its consumption so that the
I ()7. The '' of a city increases at the
expenditure of the sugar is up by 10% only.

rate of 5% annua ly. Its presents population
in 1,85,220 Jts population 3 years ago was:
If the total consumption of sugar before the
price rise was 10kg per month, then the
consumption of sugar per month at present
1 ()

(a) l
()v.
(b) 183433
(d) 127783
e value of a machine depreciates at
(in kg) is:
I - | rate of 10% every year. It was
a) 8-
(a) 3 V. b) 8
(b) 2 purchased 3 years ago. If its present value is
(c) 8-
3
(d) 9 - SQ
* Rs. 8748, its purchase price was:
(a) Rs. 10000 (b) Rs. 1 1372.40
4 (c) Rs. 12000Y (d) None
103. Prices register an increase ofA Con
109. A ball pen factory decided to reduce its
food grains and 15% on : items of production by 10% over that of previous
expenditure. If the ratio ployee's month for next 3 months starting from
expenditure on food grail San other items February 1994. In January 1994, it
be 2:5, by how much d his salary be produced 300 ball pens. How many ball
may maintain the
same level of :
increascd in order t
as before, his
present salary being Rs. 2590?
pens were produced in March 1994?
(a) 2700
(c) 2187V
(b) 2430
(d) 2400
(a) Rs. 323.75 (b) Rs. 350 110.The present population of a country
(c) Rs. 360.50 (d) Nonev estimated to be 10 crores is expected to
104. The population of a town increases by increase to 13.3 l crores during the next
15% annually. If its population was 8000 in three years. The uniform rate of growth is:
1995, what will it be in 1997? (a) 8% (b) 12.7%
(a) 9200 (b) 10400 (c) 10% (d) 15%
(c) 9600 (d) 1058)w 1 11. A building worth Rs. 133,100 is
105. The population of a town is '8000. It constructed on land worth Rs. 72,900. After
increases by 10% during first year and by how many years will the value of both be
20% during the second year. The the same if land appreciates at 10% p.a. and
population after 2 years will be: building depreciates at 10% p.a.?
(a) 19800 (b) 21600
(a) 3600 (b) 1440

(c) 1800V. (d) Data inadequate
(a) 9: (b). 10%
127. Arun gave a portion of the money he !
had to Gopal, Gopal in tur gave 40% of (c) 1 'o % (d) Nonev.
what he got from Arun to Dinesh. How 4. A shopkeeper sold an article for Rs.
much money did Dinesh get? To find out
2564.36. Approximately what was his profit
the answer, which of the following percent if the cost price of the article was
information given in statements (P) and (Q) Rs. 2400?
is/are sufficient?
(a) 7V. (b) 8
P: Arun had Rs. 4,000 with him
(c) 12 (d) 60
Q: The difference between the amounts of
When a commodity is sold for Rs. 34.80,
Gopal and Dinesh was Rs. 500. there is a loss of 25%. What is the cost
(a) Only Q is sufficientV.
price of the commodity?
(b) Only P is sufficient (a) Rs. 46.40Y (b) Rs. 26.10
(c) Either P or Q is sufficient (c) Rs. 43 (d) Rs. 43.20
(d) Both P and Q together are needed. A man sold an for Rs. 247.50
128. The price of an article was increased by
p%. Later the new price was deereased by thereby gainin &M.
2
The cost of the
p%. If the latest price was Rs 1. The
original price was
article was:
*
(a) Rs. 2 (2) (b) Rs. 224
a) Rel
(a) b) RS.
(b)
1-p
1 ()() | 7
(c)
A
: - (d) Rs. 210
r buys a radio for Rs. 225. His
-
- n erhead expenses are Rs. 15. He sells the

1000()
io for Rs. 300. The profit percent of the
- p" retailer is:
(a) 10 (b) 25.v.
Profit & Loss (c) 50
Cost of 3 cricket balls = cost of 2
leg pads.
* 8.
3.19.60.
(d) 52
A shopkeeper bought an article for Rs.
Approximately, at what price
Cost of 3 pairs of leg pads = co
of glovcs. %
should he sell the article to make 25%
profit?
Cost of 3 pairs of gloves s: 2 cricket (a) Rs. 400 V (b) Rs. 450
bats. (c) Rs. 500 (d) RS, 600
If a cricket bat cost , what is the cost
If the selling price of an article is s times
of a cricket ball? ...}
(a) Rs. 12 (b) Rs. 14 its cost price, the profit percent is:
(c) Rs. 16v. (d) Rs 18 l 1
2. If by selling an article for Rs. 100, a man (a) 33 3- V. b) 25
(b) 4
gains Rs. 15, then his gain percent is. | I

(C):) 20-
2 d) 20
(d)
(a) 15% (b) 12#% 3
. There would be 10% loss if a toy is sold at

l
(c) 17:2.
17
(d) 17:2.
4
Rs. 10.80 per piece. At what price should it
be sold to earn a profit of 20%
3 What is the loss percent if a man loses Rs. (a) Rs. 12 (b) Rs. 12.96
10 on selling an article for Rs. 100? (c) Rs. 14.40Y (d) None
(a) 2#. loss (b) 3:. gain 34.

(c) Rs. 25 (d) None of these
A dealer professing to sell his goods at cost
price, uses a 900gm weight for a kilogram.
(c) 35% loss (d) 2% gain Y His gain percent is:
28. (a) 9 (b) 10
A man buys oranges at Rs. 5 a dozen and an
equal number at Rs. 4 a dozen. He sells (c) 11 (d) n: Y
item at Rs. 5.50 a dozen and makes a profit

of Rs. 50, how many orange does he buy? 35. A dishonest dealer professes to sell his
(a) 30 dozens (b) 40 dozens goods at cost price. But the uses a false
18
(c) 50 dozens V (d) 60 dozens s -
weight and thus gains

-
6.7% . For a kg, he

29. Ajay bought 15 kg of dal at the rate of Rs.
14.50 per kg and 10 kg at the rate of Rs. 13 uses a weight of
per kg. He mixed the two and sold the (a) 953 gms (b) 940 gmsV.
mixture at the rate of Rs 15 per kg. What (c) 960 gms (d) 947 gms
was his total gain in this transaction? 36. A grain dealer cheats to the extent of 10%
(a) Rs. 1.10 (b) Rs. 16.50 while buying as Selling, by using
(c) Rs. 11 (d) Rs. 27.50% false weights. * gains is:
30. A producer of tea blends two varieties of (a) 10% N (b) 20%
tea from two tea gardens one costing Rs. 18
per kg and another Rs. 20 per kg in the ratio (c) 22:22-
9
(d) 21%*
5:3. If he sells the blended variety at Rs. 21
per kg, then his gain percent is:
37. : bought at the vat of 3 for a
rupee)To gain 50%, they must be sold at:
(a) 10 (b) 12Y (a): or a rupee.* (b) 1 for a rupee
(c) 19 (d) 22 4 for a rupee (d) 5 for a rupee
3 ] . Gopal purchased 35 kg of rice at the rate of
. By selling toffees at 20 for a rupee, a man
Rs. 9.50 per kg and 30kg at the rate of Rs. loses 4%. To gain 20%, for one rupee, he
10.50 per kg. He mixed the must sell.
Approximately, at what price per kg s (a) 16 toffees (b) 20 toffees
he sell the mixture to make 35% in
the transaction?
(a) Rs. 12

(b) Rs2)2.50
39
(c) 24 toffees (d) 25 toffees
. By selling 45 lemons for Rs. 40, a man
loses 20%. How many should he sell for
(c) Rs. 13 (d) Rs. 13.50% Rs. 24 to gain 20% in the transaction?
32. Pure ghee costs Rs. 100\per kg. After (a) 16 (b) 18:/
adulterating it with vegetable oil costing Rs. (c) 20 (d) 22
50 per kg, a shopkeeper sells the mixture at 40. Vikas bought paper sheets for Rs. 7200 and
the rate of Rs. 96 per kg, thereby making a spent Rs. 200 on transport. Paying Rs. 600,
profit of 20%. In what ratio does he mix the he had 330 boxes made, which he sold at
two?. -
Rs. 28 each. Hiss profit percentage is:

(a) 1:2 (b) 3:2* (a) 15.5 V. (b) 40
(c) 5:3 (c) 60 (d) None of these
33. By mixing two qualities of pulses in the 41. Bhajan Singh purchased 120 reamss of
ratio 2:3 and selling the mixture at the rate paper at Rs. 80 per ream. He spet Rs. 280
of Rs. 22 per kilogram, a shopkeeper makes on transportation, paid octroi at the rate of
a profit of 10%. If the cost of the smaller 40 paise per ream and paid Rs. 72 to the
quantity be Rs. 14 per kg, the cost per kg of coolle. If he wants to have a gain of 8%,
the larger quantity is: what must be the selling price per ream?
(a) Rs. 23 (b) Rs. 24v. (a) Rs. 90% (b) Rs. 87.48
55. Monika purchased a pressure cooker at (c) 12000 (d) 1000()
9 - - - -
inth of its selling price and sold it at 8% 62. Vivek purchased 120 tables at a price of Rs.
110 per table. He sold 30 tables at a profit
more than its S.P. Her gain is of Rs. 12 per table and 75 tables at a profit
(a) 20% v. (b) 18%
of Rs. 14 per table The remaining tables
(c) [0% . (d) 8% were sold at a loss of Rs. 7 per table. Wh:
. An article is sold at a certain price. By is the average profit per table'?
2 . *
(a) Rs. 12,875 (b) RS i () ():

selling it at 2. of that price one loses 10%.
(c) Rs. 10.875 V. (d) Rs. 128()
The gain percent at original price is: 63. Hemants old 10 Sarces for a total profit of
*] I, Rs. 460 and 12 sarees for a total profit of
(a) 20% (b) 33; % Rs. 144, at what profit pet saree should he
(c) 35% v. (d) 40% sell the remaining 20 sarees so that he gets
57. The selling price of an article is Rs. 39. lf an average profit of Rs. 1.8 per saree?
its cost price is numerically equal to its (a) Rs. 7.40 (b) Rs. 760 v
profit percent, then its cost price (in Rs.) is: (c) Rs. 780 i (d) Rs. 8.()()
(a) 25 (b) 30.V. 64. A fruit seller ' of apples. He sells a

(c) 35 (d) 37 part of these '' gain and the balance at
58. A grocer sells rice at a profit of 10% and a loss of on the whole he earns a
uses weights which are 20% less than the : profit of row, the amount of apples sold at
market weight. The total gain earned by a loss is: -
him will be: (b) 4.6kg

(a) 30% (b) 35% A 9,6kg/ (d) 1 1.4kg
(c) 37.5%v/ (d) Nong of these % e C.P of two watches taken together is
59. A dealer Sold three-fourth of his artleles at a Rs. 840. If by selling one at a profit of 16%
gairt of 20% and the remaining at C.P.
gain earned by him in the whole transa
SS
:
and the other at a loss of 12%, there is no
loss or gain in the whole transaction then
is: * the C.P. of the two watches are
(a) 25%
(c) 15%v/
(b)
(d) I
:S respectively.
(a) Rs. 360, Rs. 480V
6(). A man purchased sugar wor 4()(). He (b) Rs. 480, Rs. 360
sold (3/4)th at a loss % and the (c) Rs. 380. Rs. 46
remainder at a gain of . On the whole, (d) Rs. 400, Rs. 400 -
he gets 66. The C.P. of an article is 40% of the S.P.

(a) a loss of 5%v/ The percent that the S.P. is of C.P. is
1 . . (a) 250V (b) 240
(b) again of 55% (c) 60 (d) 40
i 67. A machine is sold at a profit of 10%. Had it
(c) a loss of 5-96 been sold for Rs. 80 less, there would have
19 been a loss of 10%. The C.P. of the
(d) a loss of 5+% machine is:
|9 (a) Rs. 350 (b) Rs. 400w
61. Two-third of a consignment was sold at a (c) Rs. 450 (d) Rs. 520
profit of 5% ad the remainder at a loss of 68. If an article is sold at 5% gain instead of
2%. If the total profit was Rs. 400, the 5% loss, the seller gets Rs. 6.72 more. The
value of the consignment (in rupees) was: C.P. of the article is:
(a) 20000 (b) 15000v (a) Rs. 67.20% (b) Rs. 120
Subject Specialist & ectureship Guide - Commerce 293
* l l ,.
83. A dealer sold an article at a loss of 2-90.
' (a) 2()', (b) 1 '1. %
Had he sold it for Rs 100 more, he would (c) H5% v. (d) 12%
have gained 7'9. To gain 12:.
91. A tradesman marks his goods 30% above
he
the C.P, If the allows a diseoutht of o," -
should sell it for:

(a) Rs 850 (b) Rs 925 then his gain percent is:
(c) Rs 1080 (d) Rs 1 [25 v 3
84. A single discount equivalent to a discount
to a discount series of 40% and 20% is:
(a) 50% (b) 52%v/ (c) 21:. V (d) None
(c) 55% (d) 60% 92. The difference between a discount of 40%
85. A single discount equivalent to a discount on Rs. 500 and two successive discounts of
series of 30%, 20% ad 10% is:
36% and 4% on thc Same amount is:
(a) 50% (b) 49.6% V
(a)Nil (b) Rs. 2
(c) 49.4% (d) 51%
(e) Rs. 7.20% (d) Rs. 1.93
8(). Successive discounts of X % and y% are
equivalent to a single discount. 93. At what percent ove the C.P. must an
article be market'so as the gain 33% after
(a) (x + y)%
allowing a customer a discount of 5%'
x-y-'). #S.#S his goods 20% above C.P.
/
(b) (a) 38% (b) 40%v/
w. 1 ()() (c) (d) 48%
f
c)
#) x + y %
94. A ler mark
en allows some discount on it
[s, y-I. P. CX
(d)
f
}.
x + y + Xy
f 2: 1S.
a profit of 8%. The rate of discount
k | {}() (a) 4% (h) 6%
87. A table is offered for Rs. 300 with 20%
10% off. If in addition, a discount of
offered on cash payment, then
s' (c) 10%v/ (d) 1.2%
95. Rajesh buys an article with 25% is count on
its nuarked price. He makes a profit of 10%
price of the table is: by selling it at Rs. 660. The marked price
(a) Rs. 24() is:
(c) Rs. 210
(b) Rs.
R226205.20 V (a) RSS. 600 (b) Rs. 685
88. On a Rs. 10000 paym der, a person (c) Rs. 700 (d) Rs. 8()() v.
has a choice b 3 successive 96. What price should a shopkeeper mark on ar.
discounts of 10%: % and 30% and 3 article, costing him Rs. 153, to gain 20%
successive discounts of 40%, 5% and 5%. after allowing a discount of i5?
By choosing the better offer, he can save: (a) Rs. 224 (b) RS. 21(, *
(a) Rs. 200 (b) Rs. 225 v (c) Rs. 184 (d) RS, 162
(c) RS. 400 (d) Rs. 433 97. A video cassette is listed at Rs. 150, with a
89. The marked price of a fan is Rs. 620. Due discount of 20%. What additional discount
to off season, a 15% discount is allowed. must be offered to bring the net price to Rs.
The S.P. of the fan is: ! 082
(a) Rs. 427 (b) Rs. 527 v. l
(c) Rs. 537 (d) Rs. 547 (a) #5% (b) 12 5 " (,
-
()(). A bag marked at Rs 80 is sold for RS, 68. (c) 10% V (d) 8%
The rate of discount is: -
watch. Had he not allowed any discount, he

would have made a profit of 20%. What
} |. 32.4 . 2
was the C.P. of the watch? -
W 9
(a) Rs. 648

(c) Rs. 500v
(b) Rs. 600
(d) None of these
'',
'' 54
'
(d) Nonc
Square Roots & Cube 12. W. =:

* * Roots (a) 108
(c) 2916 (b) 324v.
(d) 4800
1. W64009 is equal to: - N24 + V216 f
(c) 347 (d) 253v. :

2. 248+ W51+VI69 is equal to:
- (a) 2.N6
(a) b) 2v
(b) 2
(a) 14 (b) 16v (c) 6V2 .

(c) [6.6 (d) 18.8 32 + \/48 &Q
3. N170+ N2401 is equal to: 14. #-". S
(a) 14 (b) 15:v 8+N12 - \
(c) 18 (d) 24 (a) N2 (b) 2v
(c) 4 (d) 8
4. The value of \ll 56 I2 + \ll 54+ N225 is: 13
(a) 13 (b) 15 15. If = + , then x is equal to:
(c) 25 - (d) 125 V. 12
- (b) 12
5. NO.01 + NO.0064 is equal to: 13 (d) 25 V.
(a) 0.3 * (b) 0.03 14
'" (d) None SQ -
6. If
X
"TGS T13. then x is equal to:
-
6,
N
: = 234
-
S. (a) '
(c) 27v
(b) 13
(d) None
(a) 8 (b) 16 2
(c) 64v.
2592 32 -
(d) 8 <>
17. . '- 89
W 0012]
is equal to
7.
-
= 324 -
S. (a) '''.
17 17
(b) -
(a) 8 ) 16 11 1 10
(e) (d)
8. 140 N2 + 315 = 1015 }| 1!
(a) 25.
(c) 5 (b) 16
(d) 36 18.
* = . .
102.4 is equal to:
. *
2707 29 19
9. = 27.07 *-m- b) -
2 (a) : (b) :
(a) 10 (b) 100 19 29
(c) 1000 (d) 10000. (c) + v. (d) =
32 62
10 V81 + \0.81 =10.09? 1296 x
(a) 1.19 (b) 1.1 19. If ~ 2.25 then the value of x is:
v X
(c) | (d) 0, 19 (a) 6 (b) 7v
(c) 8 (d) 9
(c) 2.666 (d) 0.544 48. The square root of (8+ 2/15) is:
39. If V75.24 + x = 8.71, the value of x is: (a) (V2 + V6) (b) (V5+ N3) *
(a) 6.241 (b) 62.41
(c) 6241 v. (d) None (c) (2/3+5N5) (d) 2+ V6
The square root of (3 + N5)
4(), '#### is equal to:
49. is:
####|**
(a) 2(N74 W5) (b) 2(V7N5)
#: (b) #)
(a)
2 N2,N2
(c) 2 (d) 12Y (V5 1 5 |1
41. E. is equal to: o'-'.) o').

</2.2
(a) (32N2) 50. If N2 = 1.4142, then is equal to:
(2+N2)
(b) (3+22) * (a) 0.4713 (b) 0.2071
(c) 'G-22) (c) 0.4142* 1.414 * (d) 0.828

51. If N2 = square root of

(d) 'G-22) W21 is e wanto.
(2/27N75+M2) is equal to:

V2+1 3
(b) 20.3652
(a) V3 (b) 2N3
(c) 1.314 (d) 0.4142v

(c) 3.3
|
-
f
+
(d) 4N3
l
52. I

= 1.4142, then #N2+]
*/22 ) .
is equal to:
(N9V8) (VS-V7) (V7V6 (a) 2.1236 (b) 2.2426v

l - l -
=-->= +=-- is equal to (c) 2.4136 (d) 2.3216

-V, ". SQ 53. The greatest number of four digits which is
(a) 0 (b) 1 S. a perfect square, is:
(a) 99.96 (b) 9801 v.
3@S
l
(C) 5 v d) -
(d) (c) 2.4136 (d) 2.3216
54. The largest number of five digits which is a
44. N8750 is equal to: s <> perfect square is:
(a) 99999 (b) 99764
:" '
(a) 24.75 (b) 27.25 (c) 99976 (d) 99856v
(c) 25 v. (d) 35 55. The least number of 4 digits which is a
45. V50x W98 is equal to: perfect squarer, is:
(a) 65.95 (b) 63.75 (a) 1000 (b) 1016
(c) 70.25 (d) 70v (c) 1036 (d) 1024Y
56. What is the smallest number to be
46. If N6 = 2,449, then the value of 3.2 is subtracted from 549 l62 is order to make it
2/3 a perfect square?
(a) 0.6122 (b) 1.223 (a) 28 (b) 36
(c) 1.224.5V. (d) 0.8163 (c) 62 (d) 81 v
47. The square root of (7+ 2./10) 1S: 57. The least number to be added to 269 to
make it a perfect square, is:
(a) (V5+ N2) * (b) (V3+ N4) (a) 3 (b) 16
(c) (N6+1) (d) (2-W5) (c) 7 (d) 20Y
| Subject Specialist & Lectureship Guide - Commerce 299
(a) 6.7 (b) 77v (c) 49.5 (d) 49

(c) 87 (d) 57 6. If a,b,c,d,e are five consecutive odd
numbers, their average is:
WOOOOOH =?
(a) 02 (b) .2V (a) 5(a+4) (b) *
(c) 2 (d) None
79. The largest four-digit number which is a (c) 5(a+b+c+d+e) (d) None of thesev.
7. The average of 7 consecutive numbers is
perfect cube is:
(a) 9999 (b) 926l V 33. The largest of these numbers is:
(c) 8000 (d) None (a) 36 (b) 33
8(). By what least number 675 be multiplied to (c) 30 v (d) 28
8. The average of four consecutive even
obtain a number which is a perfect cube?
(a) 5v (b) 6 numbers is 27. The largest of these numbers
1S.
(c) 7 (d) 8
81. By what least number 4320 be multiplied to (a) 36 (b) 32
obtain a number which is a perfect cube? (c) 30 V (d) 28
10. The average height of 30 boys out of a class
(a) l () (b) 30
(c) 20 (d) 50 V of 50, is 160cm. If the average height of the
82. What is the smallest number by which 3600 remaining boys' c, the average height
be divide to makc it a perfect cube?
of the whole ' cm) is:
(a) 9 (b) 50 (a) 16] (b) 162v
(c)3()() (d).450% (c) 163 (d). 164
83. The cube root of .000216 is:
(a) , ()
(c) ()()6
(b) 06v
(d) None
:
] ] . There "ar three Sections of a class in a
he number of Students in the three
ons is 38.32 and 40 and the average
age of the students in these sections
12
84. "4+ =? separately is 15.3 years, 16.5 years and 15.9
W 125 O years respectively. What is the average age
of the class?
(a) ' ' ' to 3 N (a) 15.9 yrs (b) 15.92 yrs
5 - 5 S. (c) 15.96 yrs (d) Nonev
(c)
..., 's
1* (d) 3:S
$2, . The average of three numbers is 20. If two
numbers are 16 and 22, the third is:
Avera e' <> (a) 22* (b) 20
| . The average of first
(a) 4.5
's (b) 5
number is: (c) 19 (d) 18
13. The average of two numbers is M. If one
(c) 5.6 V. (d) 7.5 number is N, then the other number is:
2. The average of first five multiples of 3 is: (a) 2N (b) 2M
(a) 3 (b) Qv (c) M-N (d) 2M-Nv.
14. The average of five results is 46 ad that of
(c) 12 (d) 15
the first four is 45, the fifth result is:
3. The average of first 50 natural numbers is:
(a) 12.25 (b) 21:25 (a) l (b) 10
(c) 25 (d) 25.5V (c) 12.5 (d) 50Y
4. The mean of 1*,2,3,4,5,6,7 is: 15. The average of Kanchans marks in 7
(a) 40 (b) 20:v subjects is 75. His average in six subjects

(c) 30 (d) 10 excluding Science is 72. How many marks
5. The average of all odd numbers upto 100 is: did he get in Science?
(a) 5 ! (b) 50 V (a) 72 (b) 90
(c) 93* (d) None of these
Subject Specialist & Lectureship Guide - Commerce 3{}}
numbers is 8.5. The average of the three (a) 76.kg (b) 76.5kg
new numbers is: (c) 76.7kg (d) 77kg/
(a) 1 v. (b) 7.75 41. The average weight of 9 mangoes increases
(c) 8.5 (d) 7 by 20g if one of them weighing 120g is
34. The average age of 30 students is 9 years. If replace by another. The weight of the new
the age of their teacher is included, it mango is:
becomes 10 years. The age of the teacher (a) 180g (b) 200g
(in years) is: (c) 260g (d) 300gv
(a) 27 (b) 31 42. The average weight of 6 men decreases by
(c) 35 (d) 40% 3 kg when one of them weighing 80 kg is
5. The average age of 24 boys and the teacher replaced by a new man. The weight of the
is 15 years. When the teacher's age is new man is:
excluded, the average decreases by 1. What (a) 56kg (b) 58kg
is the age of the teacher? (c) 62kg.V. (d) 76kg
(a) 38 years (b) 39 yearsv. 43. The average of 5 e umber is n. If
(c) 40 years the next two numbe also included, the
(d) Data inadequate l
average will, *
36. The average weight of 50 balls is 2 lbs. If (a) increase by #
the weight of the container bc included, the (b) remaint *:
average weight will increase by 0.05 lbs. (c) incre 1.4
The weight of the container is:
(a) 4.55 lbs./ (b) 2.2 lbs 44.
(d) :
The gy *age
y2 -
age of a committee of eight

(c) 2.3 lbs (d) 2.5 lbs :: is 40 years. A member aged 55
37. The average weight of 29 students is 28kg, @' rs retired and his place was taken by
By the admission of a new students, the other member aged 39 years. The average
average weight is reduced to 27.8 kg. The
weight of the new student is.
SN age of the present committee is:
(a) 39 years (b) 38 yearsv
(a) 22kg.V. S.
(b) 21.6kg (c) 36 years (d) 35 years
(c) 22.4kg (d) 21 kg
38, The average salary per '' f 3()
45. A cricketer has a certain average for 9
inning. In the tenth inning, he scores 100
employees in a connpany is (). If the runs, thereby increasing his average by 8
manager's salary is adde:S e average runs. His new average is:
salary increase to Rs. 4300, what is the (a) 20 runs (b) 24 runs
salary of the manager' (c) 28 runsv (d) 32 runs
(a) Rs. 10000 * (b) Rs. 13000 46. A man whose bowling average is 12.4,
(c) Rs. 12000 (d) Rs. 13300Y takes 5 wickets for 26 runs and thereby
30. The average age of 40 students of a class is decreases his average by 0.4. The number
15 years. When 10 new students are of wickets, taken by him before his last
admitted, the average is increased by 1.5kg match is:
when one of the mean who weighs 65kg is (a) 85v (b) 78
replaced by a new man. The weight of the (c) 72 (d) 64
new man is: 47. The mean temperature of Monday to
(a) 15.2 yrs (b) 16 yrs v. Wednesday was 37C. If the temperature on .
(c) 16.2 yrs (d) 16.4 yrs 4
40. The average weight of 8 men is increased
Thursday was sh that of Monday, the
by 1.5 kg when one of the men who weighs temperature on Thursday was:
65kg iss replaced by a new man. The (a) 36.5C (b) 36C.V.
weight of the new man is: -
(c) 35.5C (d) 34C
3. The ratio of the ages of Swati and Varun is (a) 96 years (b) 84 years
2:5. After 8 years, their ages will be in the (c) 48 years (d) 60 yearsv.
ratio of 1:2. The difference in their present 11. The total of the ages of A,B and C at
ages (in years) is: present is 90 years. Ten year ago, the ratio
(a) 24v. (b) 26 of their ages was 1:2:3. What is the age of
(c) 29 (d) 32 B at present?
A father is twice as old as his son. 20 years (a) 40 years (b) 30 years V
age, the age of the father was 12 times the (c) 20 years (d) 18 years
age of the son. The present age of the father
(in years) is: -
13. Snehs age is 'th of her father's age.
(a) 44v. (b) 32 Snehs fathers age will be twice of Vimals
(c) 22 (d) 45. age after 10 years. If Vimals eighth
Five year ago, the total of the ages of a birthday was celebrated two year before,
father and his son was 40 years. The ratio then what is Snehs present age?
of their present ages is 4:1. What is the
present age of the father?
(a) 24 years *
(a) 30 years (b) 20 years (c) o: years * of thesev.
(c) 25 years (d) None of thesev. 14. Jayesh is a & younger to Anil as he is
One year age, Mrs Promila was four times older to Pr t. If the sum of the age of
as old as her daughter Swati. Six years
- hant is 48 years, what is the
hence, Mrs Promilas age will exceed her
daughters age by 9 years. The ratio of the
(b) 30 years
present ages of Promila and her daughter is:
(a) 9:2 (b) 11:3 Can not be determined
(c) 12:5 (d) 13:4v.
he sum of the age of a father and son is 45
Sachin was twice as old as Ajay 10 years
back. How old is Ajay today if Sachin 68 years. Five years age the product of their
ages was four times the father's age at that
be 40 years old 10 years hence?
(a) 20 yearv
(c) 30 years
(b) 10 ye
(d) No
$
hese
time. The present age of father and son,
respectively are:
(a) 25 years 10 years
Ten years ago A was half of B in age. If the (b) 36 years, 9 yearsv.
ratio of their present ages is 3:4, what will
be the total of their
(a) 8 years
: ) 20 years
(c) 39 years, 6 years
(d) None of these
16. Kamla got married 6 years ago. Today her
(c) 30 years (d) 35 yearsv . . . . -
9. Sushil was thrice as old as Sehal 6 years age IS 1. times her age at the time of
back. Sushil will be # times as old as -
marriage. Her sons age is

*
10
.
times her
Sneha! 6 years hence. How old is Snehal
today? age. Her son's age is:
(a) 18 years (b) 24 years (a) 2 years (b) 3 yearsv
(c) 12 yearsv (d) 15 years (c) 4 years (d) 5 years -
. If 6 years are subtracted from the present 17. Ten years ago, Chandrawati mother w
four times older than her daughter. After
age of Gulzar and the remainder is divided
by 18, then the present age of his grandson ten years, the mother will be twice older
Anup is obtained. If Anup is 2 years than daughter. The present age of
Chandrawati is:
younger to Mahesh whose age is 5 years,
then what is the present age of Gulzar? (a) 5 years (b) 10 years
34. The average age of 12 students is 20 years. (c) 50 (d) 100
if the age of one more student is include, 8. Six digits are selected at Iandom again and
the average decreases by 1. What is the age again from a randon number table and the
of the new student? eve digit are counted each time. In most of
(a) 5 years (b) 7 yearsv the cases, the number of even digits will be:
(c) 9 years (d) l l years (a) 36 (b) 12
3 5. The average age of an adult class is 40 (c) 6 (d) 3v.
years. Twelve new students with an average 9. The term sample space is used for:
age of 32 years join the class, thereby (a) All possible outcomes V
decreasing the average of the class by four (b) Probability
years. The original strength of class was. (c) Sample
(a) 10 (b) 11 (d) one of above
(c) 12V (d) 15 1(). The term even is used for:
(a) Sample space
Probability Distributious (b) A sub-set of the sample spaceV
!. When n dice are rolled, the possible
Out COInCS arc:
(c) Total number * COIT]eS
(d) Probability
(a) 6
(c) 4
(b) 2
(d) 6nv
-
11. The six die are called cquaily

likely if the dic is: -
Two cards are selected at random with

(a) Six-f (b) Round
rcplacement from a pack of 52 playing
cards. The possible outcomes are:
(a) 208 (b) 2704
12. :
(c) Fa'
sive if:
(d) Steeper
A and B are called mutually
(c) 104 (d) 1326v. @'A'." (b) AUB = @ v.
Five cards are selected at random from a
(c) A UB = S (d) None of
pack of 52 cards without replacement. The above
possible combinations are:
(a) 2704 O 13. If A an B are two mutually exclusive
(b) (52)5
(c) 259.8960V (d) 26 N events, then:
The digits 1,2,3,4,5 are the

5 students there roll numbers
' s of (a) P(AUB) = 0 (b) P(Af]B) = 1
(c) P(Af). B) = 0 (d) None of thesev.
ritten on
the paper slips and two apa slips are 14. The two events A and B are called not
selected at random replacement. mutually exclusive events. If:
(a) AUB = 2, (b) AUB : V
-
The possible combinations are:

(a) 10 V (b) 5 (c) A QB = 2 (d) A[] B :
(c) 2 S. (d) 25 15. When a die and a coin are rolled together,
A fair coin is tossed 100 times, the expected all possible out comes.
number of heads are: (a) 2 (b) 36
(a) 75 (b) 200 (c) 6 (d) 12V
(c) 100 (d) 50w 16. An event that contains more than one
When two dice are rolled, the maximurn - sample point is called.
total on the two faces of the dice will be: (a) Compound eventv.
(a) ' (b) 4 (b) Independent event
(c) 12Y. (d) 36 (c) Simple event
A random sample of 200 random digits is (d) Multipic event
selected from a random number table. 17. AUB means:
Expected number of zeros in the sample is: (a) Elements of A and B
(a) 25 (b) 20:V (b) Elements of A or BY
(a) 0.6 (b) 0.06 v 26
(c) = d) #
(c) () | (d) ().5 52 (d) #
If P(B) = () then the conditional probability -
is: Instructions Ideas

(a) Undefined (b) Zero !.
If one event is unaffected by the outcome of
(c) One (d) None of another event, the two events are said to be.
above
(a) Dependent (b) Independentv/
. In Venn diagram universal set U is rereseted (c) Mutually exclusive (d) All of above
by a 2 If P(A or B) = P(A), then
(a) Rectangle (b) Square (a) A and B arte mutually exclusive
(c) Circlev (d) Both a & b (b) The Venn diagram areas for A ad B
. A set having no element is called: overlap r
(a) Infinite set (b) Null setv (c) P(A) + P(B) is the joint probability of A
(c) Zero Set (d) Enmpty set and B v.
. If every clemcnt of a set A is also an (d) None of the above
element of B, then A set is called. 3. The simple probabilit &T an occurrence of
(a) Subset of B v. (b) Subset of A an event is called th &
(c) Universal Set (d) Null Sct (a) Bayessian probab ity
. I he probability of drawing a picture card (b) Joint probability,
from a pack of 52 cards is, (c) Marginal frobabilityx
(a)
|2
#)
S(, b) -
(b) 52
4
4.

(d)
Why are the events
probability
of a coin loss mutually
2() 13 exclusive?
(c) #5 (d) : (g) The outcome of any toss is not affected
. The probability of drawing spade cards by the outcomes of these preceding it.
from a pack of 52 cards is: 'b) Both a head an a tail cannot turn up on
*
(a) 5:
|2
(b) -
(b) :
20
Ss' any one toss. Y
(c) The probability of getting a head and the
4 13
probability of getting a tail arc the same
* * . d) v. (d) All of these
"52 (d) : (e) A and B but not C
-40. The probability of drawing red &m &l 5.
lf a venn diagram were drawn for events A
pack of 52 cards is: '' and B which are mutually exclusive, which
|3
(a) 5: Ss' 52
of the following would always be true of A
and B? -
4 26 (a) Their parts of the rectangle will overlap

* T. Y
(c) #: (d) : (b) Their parts of the rectangle will be equal
41. The probability of drawing black cards in area .
from a pack of 52 cards is: (c) Their parts of the rectangle will not
|3 4 overlap Y
2y - v. b) --
(d) None of these
(a) : (b) : (e) b and e but not a
2& 2
(C) # (d) 52
-
6. What is the probability that a value chosen

at random from a particular population is
. The probability of drawing king from a larger than the median of the population?
pack of 52 cards is: (a) 0.25 (b) 0.50w
13 (c) 1.0 (d) (),67
(d) #.
52 (b) :
| 5 7 - l
- b) - (c) 36 d) -
(d) .
(a) I. (b);
13. In a simultaneous throw of two dice, what
(c) 3, V * (d) .7
is the probability of getting a doublet?
1 |
Tickets numbered 1 to 20 are mixed up and 3) -.
(a) 6 v. (b) 4
-
then a ticket is drawn at ration. What is the

probability that the ticket drawn bears a 3 2
(c) 4 (d) 3.
number which is a multiple of 3?
3 3
(a) 20 - b)
(b) | 0 v. 14. In a simultaneous throw of two dice, whal
is the probability of getting a total of l () or
2 ] 112
(c) 5 d) -
(d) : (a) 12
7
-
**
(b)
(b)
5
36 v.
One card is drawn at random from a pack of
52 cards. What is the probability that the
card drawn is a face card? (e)'6 d):
C#).
a) --
(a)
4
13 /
l
(b) 4 I5. Tickets numbered l to 20 are Inixed
up and a ticket is dra n at random. What is
9 l the probabili at the ticket drawn has a
(c)
C )
25 d) -
(d) |3
number which is a multiple of 3 or 7?
9. l |
One card is drawn of random from a pack (a)# (b):
of 52 cars. What is the probability that the
card drawn is a king? 2) , 7
| l
:5 * (d) 20
a y v. b)
(a) [5 (b) : A bag contains 6 black and 8 white balls.
] One ball is drawn at random. What is the
(C) 3.
|3 @ probability that the ball drawn is white?
. One card is drawn at random from a 4 3
52 cards. What is the probabilit

card drawn is either a red card or

a) 7 V.
(a)
4
b) -
(b) 4
|
d) -
<>
(c)
C} -
3 (d) 8
(a)
<1)
6
13 17. A bag contains 8 red and 5 white balls, 2
7 balls are drawn at random, What is the
(c) Y d) :
} |.
!3 S 52
What is the probability that an ordinary.
probability that both are white?
5 2
(a)
)
16 b) -
(b) 13
year has 53 Sundays?
53 l 3 5
b) - V. c)
(c 26 d) --
(d) 39 Y
(a) #: ();
2 48 18. A bag contains 5 blue and 4 black balls.
d) -
(e) ; (d) : Three balls are drawn at random. What is
. In a simultaneous throw of two dice, what the probability that 2 are blue and l is
black? *
is the probability of getting a total of 7?

1 7 | 1 || 2
(a)
d 3 -
(b) 5
(a): (),
1
v. (d) None
.
Subject Specialist & Lectureship Guide - Commerce 3.11
(b) Tomorrows profit will be less than $ 6. If p = 0.4 for a particular Bernoulli process,
* 7:
13.45
(c) Tomorrow's profit will be more than $
the calculation
-
s: 3% 4!
\ *
(0.4). (0.6)" givcs

} 3.45
the probability of getting.
(d) Tomorrow loss will be $13.45
(a) Exactly three successes in seven trials Y
(c) None of the abovex
2
(b) Exactly four successes in seven trials
For a given binomial distribution with n
(c) Three or more successes I seven trials
fixed, if p < 0.5, then: (d) Four or more successes I seven trials
(a) The Poisson distribution will provide a
(e) None of these
good approximation
7. For binomial distributions with p = 0.2.
(b) The Poisson distribution will provide a (a) A distribution for n = 2,000 would more
bad approximation
closely approximate the normal distribution
(c) The binomial distribution will be
than onc for n = 50.
skewed left
(b) No matter what the value of n, the
(d) The binomial distribution will be
distribution is skewed to the right
skewed rightv (c) The graph of th ribution with p = 2
(e)
symmetric
The binomial distribution will be
and n = } 00 '' the exact
Suppose we have a Poisson distribution (d) All of these%.

(c) a and b not C
with } = 2. Then the probability of having 8. Which e following is a necessary
exactly 10 occurrences is: condi r use of a Poisson distribution?
~ 10 - 10 if) - -2
- - C - 2 e
(a ability of one arrival per second is
(a)-. (b) = i nt
2-10 it) 210 e-2
(c) d) v
} The number of arrivals in any 1 second
] ()! - ( 1()! interval is independent of arrivals in other
intervals
Which of the following is a characteristic
the probability distribution for any ran (c) The probability of two or more arrivals
in the same second is zero
variable?
(a) A probability is provide ry
(d) All of these V.
(e) b and c but not a
possible value 9. In what case would the Poisson distribution
(b) The sum of all probabili is: be a good approximation of the binomial?
(e) No given probabilit rs more than
Qin Ce
(a) n = 40, p = 0.32
(b) n = 4, q = 0.79
ing could never be (c) n = 200, q = 0.98%
described by a binomial distribution? (d) n = 10, p = 0.03
(e) a and c
(a) The number of defective wedgels
(f) All of these
produced by an assembly process
10. For a normal curve with u = 55 and C = i ().
(b) The amount of water user daily by a
how much area will be found under the
single household Y
(c) The number of people in your class who curve to the right of the value 55?
(a) 1.0 (b) (),68
can answer this question correctly
(d) All of these could always be describe by (c) 0.5V. (d) ().32
a binomial distribution (e) Cannot be determined from the
information given.
11. Suppose you are using a normal distribution
to approximate a binomial distribution with
distribution of the mean for samples of size } | . A border patrol checkpoint that stops every
25? passenger van is using
(a) 2.4% (b) 2 (a) Simple random sampling
(c) 4,8 (b) systematic sampling
(d) Catinot be determined from the (c) stratified sampling
information given (d) complete enumeration'
(3. The central linnit theorem assures us that the ] 2. ln a normally distributed population, the
sampling distribution of the mean. sampling distribution of the mean

(a) Is always normal * (a) is normally distributed
(b) is always normal for large sample sizes (b) Has a mean equal to the population
(c) Approaches nortnality as sample size mean
increases V *
(c) Has a standard deviation equal to the
(d) Appears normal only when N is greater population standard deviation divided by
that ,t}{}() -
the square root of the sample size
Suppose that, for a certain population os is (d) All of the aboveY
calculated as 20 when samples of size 25 (e) Both a and b *O
are taken and as 10 when samples of size
. The central imitle on
100 are taken. A quadrupling of sample (a) Requires some knowledge of the
size, then, only halved o, . We can frequency distribution
- * - -
(b) Permitss' to use sample statistics of

conclude that increasing Sample size is make Cinferences about population
(a) Always cost effective para Sv/
(b) Sometimes cost effectiveV
(c) Never cost cffective
(c) Relates the shape of a sampling
distribution of the mean to the mean of the
(d) Never cost effective
ample
Refer again to the data of Question 30.
What must be the value of or for "No (d) Requires a sample to contain fewer than
30 observations
finite population?
(a) 1,000 (b) 500 S. Index Number
(c) 377.5 (d)
The finite population multipli
:S CS flC)1
Index numbers are called:
(a) Economic barometers V
have to be used when the * fraction
(b) Mathematical barometers
is.
(c) Statistical barometers
(a) Greater than ().05 SS (d) Scientific barometers
(b) Greater than 0.50 Pasache's index number is called:
(c) Less than 0.50 (a) Composite index number/
(d) Greater than 0.90 (b) Simple index number
(c) None of these v. (c) Un-weighted index number
| (). The Standard error of the mean for a sample (d) None of above
size of two or more is.
If Laspayer's price index = 109.5,
(a) Always greater than the standard Paasche's price index = 112.5, then
deviation of the population Faishers ideal index will be equal to:
(b) Generally greater than the standard (a) 104, l (b) l l l V
sieviation of the population (c) 100 (d) 10.2
(c) Usually less than the standard deviation Laspeyres index number is also called:
of the population (a) Currennt year weighted index number
(d) None of thesex' (b) Ideal indcx number -
(c) Base year weigh index numberV

(d) None of above 15. If all the value of equal importance, the
S Index number are divided into following index numbers are called.
two types, (a) Un-weightcdvf. (b) Weighted
(a) Up-weighted and weight index number (c) Simple (d) Value index
(b) Simple and un-weighted index numbers 16. If all the values are not of equal importance,
(c) Price and quantity index numbers' the index number is called.
(d) Simple and composite index numbers (a) Weighted V (b) Un-weighted
(). An index number having a wide scope is (c) Composite (d) Simple
called: 17. When the price of a year is divided by the
(a) Special purpose index number price of a particular year, we get?
(b) Price index number (a) Price relative (b) Link relatives
(c) General purpose index number/ (c) Simple relatives V (d) All of above
(d) Quantity index number 18. When the price of a year is divided by the
The most suitable average for computation price of the preceding year, we get?
of index numbers is: (a) Price index
(a) G.M.V. (b) Median (b) Simple relati O
(c) A.M - (d) Mode (c) Link relati #
8 Geometric mean of the relatives is:
(a) Non-reversible (b) Reversible Y 19.
(d) Value :
Index number calculated by Fisher's
(c) Both a and b (d) None of above formula is ideal because it satisfies.
*). Which of the following is called an ideal (a r reversal test
index number? inc reversal test
(a) Paasche's index number Circular test
(b) Lasperye's index number d) All of above Y
(c) Marshalls index number
(d) Fisher's index number V 2% Marshall Edge worth price index was
proposed by:
| (). A normal year should be free from: SQ \ (a) Two English economist.
(a) Floods (b) Strikes (b) Two English Mathematician
(c) War (d) All of ab (c) Three English economist
index for base period is alwa n dS. (d) The English scientist
(a) 50 ( v 21. The general purchasing power of the
(c) 120 (d) 200 currency of a country is determined by:
. In chain base metho ase period is: (a) Simple index
(a) Constant ixed (b) Whole sale price index V
(c) Not '' None of above (c) Volume index
(d) Composite index
Consumer price index numbers are obtained
by: 22. An index number is called a simple index
(a) Fisher's idcal formula when it is computed from:
(b) Marshali Edge worths formula (a) Multiple variables
(c) Paasche's formula (b) Bi-variables
(d) Laspayle's formulav (c) Single variablev
14. Price relatives computed by chain base (d) All of above
method is called: 23. WPI stands for:
(a) Simple relatives (a) Whole sale price index V
(b) Link relatives Y. (b) Whole price index
(c) Price relatives (c) Wider price index
(d) Value index (d) Weighted price index
24. Paasehe's price index is define as:
ST p P Pll Il
"...100 (b) *"
*
(a) = (a) = x 100 V (b) #">100

X. Poqn X. Pnqo PO PO
qn 1, C]O
Pnd!" Pnun c) + x 100 d) + x 100
( '."
X_Pndo.
'
XII
(d)
Oqn
.
31. Fishers index number is the G.M. of the
":
2 ... The formula for constructing Paaschc's (c) Laspeyure's index number
quantity index is: (d) Paasche's index numbery
S unpo 32. In fixed base method the base period should
(a) ="... 100 be:
S. qo Po
(a) Normal yearx
S. Pnejn (b) Abnormal year
(b) = x 1 ()()
S.
4
Poqn (c) Fluctuating year
(d) Both b & C
S. qnPn 33. The
(c) = -X I ()() v number of
commodities in the
X.
qo!Pn construction of wh sale index should
between 20 to 50, : ding to:
(d)
!) X_dopt
=<--->
| (){}
(a) Fisherv 'S (b) Marshall
XLuoPh
(c) Edge (d) Paasche's
<> -
). The formula for constructing Fisher's 34. The ice are compared by:
quantity index. (a) Weig index V
f=-------
(1) '. X_q
nPO nPO
9. |(}() v.
(b)
(*
e index
imposite index
WX_qopo X_qoPm d) Compound index
S unpo
(b) = i.
Aggregative expenditure method & family
b udget method always give,
N. qo Po
{ C)
S.JPG
WX Coro XLuoPn
**
*= X qoPn x
x. ()() < O
(a) Approximate results
(b) Same results.
(c) Differcnt results
(d) Antonymous results
36. Which formula is used in chain base
(d) :=
X. Pn(in *o method.
7. The index numbers are lated in: (a) "...loo (b) "x100.
(#) RatioS - ' Percentages.V. p
JT PI) |
(c) Decimal (d) Fractions -
(c) PQ
"x100 (d) Pn
"...100
28. Base year Juantities are used a weights in
(a) Paassche's index number 37. Which formula is used in fixed base
(b) Fisher's index number nlethod.
(c) Marshali Edge worth index number (a) "...loo v (b) "2100
(d) Lespeyre's index numberv PO Pri -
. An index number calculated for more than

on items is called. (c) "2100
Pi) -
(d) P11"-100
}
(a) Simple index number
38. The general purchasing power of currency
(h) Compound index number is determined by:
(c) Composite index numbery
(d) Relative index number
(a) Volume index
(b) Composite index
30. A simple price index is defined as: (c) Whole sale price index V
Subject Specialist & Lectureship Guide - Commerce 3 || 6
(d) Retail price index (a) The Paaschc index in incorrect

39. Geometric mean of the relatives is: (b) There is a trend toward less expensive
(a) Flexible (b) Rigid goods
(c) Non-reversible (d) ReversibleV. (c) There is a trend toward more expensive
40. What is the most suitable average for index goods/
number? (d) The difference can be attribute to a poor
(a) Mode (b) G.M.v. estimation of consumer attitudes
(c) A.M. (d) Median (e) a and b only
When computing a weighted average of
INDEX NUMBER relatives index, we would be best able to
1. If an index number calculation over 8 years compare indices from various period if:
with a base value of 100 gave an index for (a) Base values were used as PhOn
1993 of 110, what would be the percentage (b) Current values were as P,Q)
relative for 1993? (c) Fixed values were used as Pn(Q,
(a) 110V (b) 90.9 (d) Either base or fixed values were used as
&S.
(c) 13.75 (d) 880 P,Qav
(e) Cannot to determine from
the (e) Either curr ues or fixed values
2
information given
To measure changes in total monetary
were used as
Commodities subject to considerable price
worth, one should calculate. d best the measured by a.

(a) A price index
(b) A quantity index
(c) A value index V 8.
:
(a) Prie index
.
index
(b) Value index V
(d) None of these
e period can be described as a
(d) None of these rmal period if:
3 Suppose a composite price index for 1
gallon of milk, 2 loaves of bread, and \
2% It is at neither the peak nor
a fluctuation v
the trough of
pound of hamburger was 110 in 1995 : (b) It is the most recent period for which we
! #9 in 1996. If both indices were co
have data
from a 1994 base of 100, how mu (c) There was no inflation or deflation of
general price level rise from 199 prices during the period
(a) 9% (b) (d) It is the average of several consecutive
(c) 19% (d) 7. periods
(c) Cannot be det d from the The weights used in a quantity index are:
information given Y (a) Percentages of total quantity
Which of the '' ing describes an (b) Prices v.
advantage of using the Laspeyrcs method? (c) Average of quantities
(a) Many commonly used quantity (d) None of these
measures are not tabulated for every period 10. In an un-weighted average of relatives
(b) Changes in consumption patterns are index, (P/Po) x 100 is calculated for each
taken into account
product in the composite. What is then done
(c) One index can be easily compared with with these values for finish the calculation?
another
(a) The values are multiplied together
(d) All of these (b) The larges value is found
(e) a and c but not b (c) The values are averaged V
5 What can be concluded if the weighted (d) The average difference from the median
aggregates price index for a set of prices of the values is found and then squared
was calculated as 1061 using the Laspeyres 1 ! . To measure how much the cost of some
method and l 12 using the Paasche method? variable changes over time, you would use:
Subject Specialist & Lectureship Guide - Commerce 3 #7
(a) A value index . (a) An un-weighted aggregates index, with

(b) An inflation index 1980 as the basev.
(c) A quantity index (b) A weighted aggregates index with 1980
(d) All of these as the base using the number of competitors
(e) None of thesev. each year as the weights
. It is possible to change the base year (c) The Paasche method
without changing the quantities used for (d) Any of the above
weights when using. (e) a or b but not c
(a) The Paasche method
(b) The Laspeyres method REGRESSION AND
(c) The weighted aggregates method CORRELATION
(d) None of thesev.
. When the base year values are use as Suppose that we know the height of a
weights the weighted average of relatives student but do not know her weight. We use
price index is the same as: an estimating equation to determine an
(a) The Paasche index estimate of her weight based on her height.
(b) The Laspeyres index V
We can therefore surmise that.
(c) The un-weighted average of relatives (a) Weight is themdependent variable
price index -
(b) H eight's the dependent variable
(d) None of the above (c) The slationship between weight and
14. A primary difference between average of
relatives and aggregates methods is that:
#
hei inverse one
e of thesev.
and C but not a
(a) Aggregates methods sum all prices
before finding the ratiov 3: you are told that there is a direct
relationship between the price of artichokes
(b) Average of relatives methods sum all
prices before finding the ratio and the amount of rain that fell during the
growing season. It can be calculated that.
(c) Aggregates methods are useful
price indices
(d) a and c but not b
<>
S.
(a) Prices tend to be high when rainfall is
high V.
(e) None of the above (b) Prices tend to be low when rainfall is
Comparing price indices 2p military high
airplanes from 1976 to 1996. (c) A large amount of rain causes prices to
(a) Would de:y' how defense
rise
(d) A lack of rain causes prices to rise .
spending has skyrocketed in the last 20
years *\ Suppose it is calculated that a is 4 and b is 2
*\
(b) Would best be accomplished using the for a particular estimating line with one
Paasche method independent variable. If the independent
variable has a value of 2, what value should
(c) Should use the average of 1974 and
1975 for the base period be expected for the dependent variable?
(d) Would make little sense, given the (a) 8v. (b) 10
significant technological differences in the (c) 1 (d) 0
items being comparedv Suppose the estimating equation Y = 5 -
16. If the organizers of the 1995 Iron man 2x has been calculated for a set of data.
Triathlon wished to evaluate the winning Which of the following is true for this
times each year, relative to the winning situation?
time in 1980 (the first year of the (a) The y-intercept of the line is 2
competition), they might use. (b) The slope of the line is negative
(c) The line represent an inverse } () , Suppose you wish lo compare the
relationship hypothesized value of B to a sample value

(d) All of thee of b that has been calculated. Which of the
(e) ban c but not av following must be calculated before the
5 We know that the standard error is the same others?
at all points on a regression line because we (a) Sb (b) Sev
assumed that: (c) Sp -
(a) Observed values for Y are normally (d) Calculations can be made in any order
distributed around each estimated value of | ]. For the estimating equation to be a perfect
Y estimator of the dependent variable, which
(b) The variances of the distribution around of these would have 10 be true?
each possible value of y are the same V (a) The standard error of the estimate is
ZE!'O
(c) All available data were taken into
account when the regression line was (b) All the data points are on the regression
calculaled line
(d) None of these (c) The coefficient of determination is

(). The variation of the Y values around the (d) a and b but !" Ole C
regression line is best expressed as: (e) all of 's
. If the dependent variable increases as the
(a) X_(Y-Y). independ& variable increases in an
(b) X (Y-Y) / estima equation, the coefficient of
(c) X (Y-Y).
CO'' tion will be in the range.
O | (b) () to ().05
(d) X_(Y +Y). '' to -2 (d) None of thesev.
The value of r for a particular situation is *Suppose the fraction of variation in Y that
0.49. What is the coefficient of correlation? is unexplained by the independent variable
(a) ().9 (b) 0.7 X is 1/4. Then r is:
(c) 0.07 SQ (a) 'a (b) #4 V.
(d) Cannot be determined f (c) 15/16 (d) None of these
information giveny 14. The sample coefficient of determination is
The fraction X (Y- * YQXY-Y).
<>
developed from
observed Y values around.
the variation of the
represents, (a) The mean of the observed independent

on
(a) The fraction of in Y that variables
is '' (b) The mean of the observed dependent
(b) The fraction tal variation in Y that variable
is explained (c) The fitted regression line
(c) The fraction of total variation Y that (d) b and c but not av
was caused by changes in X (e) a, b and c
(d) None of these | 5. lf Y = a + b X, the sample regression line,
). In the equation Y = A + BX + c, the e and Y = A + BX, the true unknown
represents. population regression equation, are
(a) The X-intercept of the observed data equivalent, then the following must be true.
(b) The valtic of Y to which others are (a) The estinating equation l a perfect
compared to determine the best fit estimator of the dependent variable
(c) Random disturbances from the
(b) All the data points are on the regression
population regression linev. line
(d) None of these (c) r =
3.19
(d) All of the above (e) 200.75
(e) None of the abovev
5. Suppose that Y = 10 + 3x describes well an
TIME SERIES annual time series for 1987-1993. If the
l. A time series of annual data can contain
actual value of Y for 1990 is 8, what is the
which of the following components?
percent of trend for 1990?
(a) Secular trend
(a) 125% (b) 12.5%
(b) Cyclical fluctuation (c) 90%. (d) 80%v/
(c) Seasonal variation
6. A time series for the years 1985-1996 had
(d) All of these the following relative cyclical residuals in
(e) a and b but not cy chronological order. 1%, -2%, 1%, 2%, -
Suppose you were considering a time series 1%, -2%, 1%, 2%, -l&o C-2%, 1%, 2%. The
of data for the quarters of 1992 and 1993.
The third quarter of 1993 would be coded
relative cyclical * for 1997 Should
be. <>
tlS.
(a) 3% (b) - 1%
(a) 2 (b) 3
'Sbe
(c) 5v (d) 6 (d)(C) Ot determinc from information
Suppose that a particular time series should
be fitted with a parabolic curve. The 2
. . "Assumed that you have been given
general from for this Second-degree quarterly sales data for a 5-year period. To
equation is Y= a + bx + cx . What * use the ratio-to-moving-average method of
xs represent in this formula? s
&
computing a seasonal index, you first Step
(a) Coded values of the time vari <> would be:
(b) A numerical constant t determined
(a) Compute the 4-quarter moving average
by a formula (b) Discard highest and lowest values for
(c) Estimates of the * variable
each quarter
(d) None of these
(c) Calculate the 4-quarter moving totaly
Assume that a time series with annual data
(d) None of these
for the years 1988-1996 is described well
8. What is the unadjusted index for the third
by the second degree equation Y = 5 + 3x
quarter?
- 9x". Based only on this secular trend, (a) 108.88 (b) 109.0%
what is the forecast value for 1997.
(c) 110.23 (d) l 10.96
(a) 16 l (b) 245* (c) None of these
(c) 347 (d) 293.75
9. Assume that the total of the unadjusted
13, For a given year, if an adjusted seasonal
index for some period is greater than 100,
indices for the four quarters is 404.04. If the
then the following must be true:
unadjusted index for the first quarter is
(a) The adjusted index for some other
97.0, what is the adjusted seasonal index for period is > 100 -
the first quarter? (b) The adjusted index for some other
period is < 100 V
(a) 96.03 V (b) 97.98
(c) The adjusted index for some other
(c) 2.4.0] (d) 99.00 period is = 100
(e) Cannot be determine from the (d) a and b but not c
information given -
(e) None of the shove
14. If the percent of trend for a particular year
. The adjusted seasonal index for the fourth
in a time series is greater than 100%, then
quarter is 95.0. If the deseasonalized trend for this year. $9
line that was calculated to estimate (a) The '' he-series value lies below
quarterly sales is Y = 400 + 9x, what would the treni * and the relative cyclica)
<> . . .
positive
be the Seasonalized sales estimate for the
"actual time-series value lies below
fourth quarter of 1994. rend line and the relative cyclical
(a) 499.7
(c) 643.()
(b) 610.85 V.
(d) 676.8
c: is positive
(c) The actual time-series value lies above
the trend line and the relative cyclical
| | . If a time series has an even number
residual is negative
years, and we use coding, then ** (d) The actual time-Series value lies above
interval is equal to: the trend iine and the relative cyclical
(a) l year (b) 2 ye residual is positive Y
(c) I nmonth | 6 months V
15. Which of the following are common
reasons for studying both secular trends and
(e) None of these seasonal variation:
. A mcthod us deal with cyclical (a) To allow the elimination of the
variation wh cyclical component does
component from the series
not explain most of the variation left (b) To describe past patterns
unexplained by the trend component is: (c) To project past patterns into the future
(a) Spearman analysis (d) All of the above Y
(b) Specific analysis (e) None of the above
(c) Second-degree analysis
(d) Relative cyclical residual
x * * *k xx 2k x *
(e) All of these
(f) None of thesev.
Subject Specialist & Lectureship Guide - Commerce 32]
PUNJAB PUBLIC (a) To credit an overseas bank account

(b) To pay a creditor who does not have a
bank account
SERVICE COMMISSION,
(c) To pay money into a bank accounty
LAHORE (d) To with draw money from current
aCCOunt
WRITING TEST FOR
Dishonored cheque means:
RECRUITMENT TO THE POSTS
(a) Cheque cashed by ban:
OF LECTURER COMMMERCE (b) Cheque presented to the bank and
BS 17 MALE refused for the paymentv. -
(c) a cheque the amount has not been filled

FEMALE IN THE PUNJAB
(d) a cheque which is not signed
EDUCATION s
Commercial Bank is called:
DEPARTMENT, 2011. (a) Banker's Bank

Time Allowed: 2 Hours (b) Custodian of exchange
Maximum Marks: 100 (c) Banker to Government
l, Write your allotted roll number in the top (d) Bank of Pubhe
The World Bank has bcen derived from?
right corner of QUESTION PAPER and in
the specified place of ANSWER SHEET. (a) Ban (b) Bancus
(c) :account (d)is None of thesev.
suitable for business
Read the QUESTION PAPER carefully
and mark your answers on the ANSWER
SHEET. : Saving account
(b) Current accountv.
Each question has four options. Fill only
one box that you think is correct answer.
0.25 marks will be deducted for *o
s' (c) Profit and loss account
(d) Deposit account
incorrect answer. 8. The objective of central bank is
::
Instructions of filling box have been (a) Welfare of publicv/
on the Answer Sheet. Read (b) To earn profit
- attempting. (c) Economic prosperity & development
J.
Read the instruction for filling your ROLL (d) Receiving Deposits
*Y. < The State Bank of Pakistan was
NO. and marking your answer on the
-
inaugurated by -
ANSWER SHEET - before starting (a) Liaqat Ali Khan

answering. N* -
Sign the Answer Sheet in the box provided - (b) Abdul Rub Nishter
at thc left bottom corner. (c) Allama Iqbal
Return both Question Paper and Answer (d) Quaid-e-Azam V.
10. Commercial Banks creates the following:
Sheet, to the staff, at the end of test.
(a) Metallic Money (b) Credit
The amount of money in the account of (c) Paper (d)All of abovev
11. On what type of bank account may a
account holder is called.
(a) Profit (b) lnterest trader draw cheques?
(c) Depositv. (d) Loan (a) Current Accountv.
2. Cheque is always crossed by: (b) Deposit Account
(a) drawerV. (b) Drawee (c) Investment Account
(c) Holder (d) None of these (d) Loan Account
12. A trader with a bank current account
What is the purpose of bank slip?
wishes to make monthly payments for a
Subject Specialist & LectureShip Guide - Commerce 322
trade journal. Which method of payment (a) Shares are issued only to a certain total
would be most Suitable to use? value -
(a) Bank Draft (b) Bank Notes (b) Shareholders are paid back only certain
(C) Cable Transfer percentage of their investment
(d) standing Order.v. (c) Shareholders can lose only the value of
Which service is not available to bank their investment V
customer through ATMs? (d) Shareholders can buy only a certain
(4) Checking the balance of their accounts sun of share capital
(b) Organizing personal loans 20. A company raises finance by issuing
(c) Requesting Printed Bank Statements debentures. The debentures holders
(d) With drawing cash- -
entitled to:
: \f2C Corporation is a large nanufacturing (a) Interest after the share holders have
ct;inpa:ly. It needs immediate finance as it been paid
is having cash flow problems. Which (b) one vote per share
Source 3 of finance would be the most (c) Repayment before shareholders if the
suitable for ABC Corporation? company gees into liquidation
(a) figher purchase (b) Over draft V (d) Vais' dividend
(c) Shares (d) Trade Credit A CO tact comprises of:
! sing credit means that the customer. (a) offer + Acceptance Y
(a) always pays extra for the goods (b) Agreement * Consideration
(b) Gets goods repaired for nothing . /* (e) offer + Acceptance Agreement
(c) Obtain discounts on goods S. (d) Agreement + Enforceability
ld) uses of goods but pay latery An agreement is void ab-initio is called.
A.
A customer wishes to buy a laptop O (a) Void contract

computer on credit. Which form of (b) Void Agreementv
v. ii! ensure the laptop computer bec (c) Voidable contract
the customer property "S (d) illegal agreement
in) Credit card Y -N Which of the following is an offer?
{b} Credit Trailsfer S. (a) An invitation to offer
(c) Higher Purchase
(d) Leasing
S (b) An advertisement
i
(c) Both a & b Y

Telephone banking i
who do not
person.
by customers
their bank in
Which-Service can customer
24.
(d) None of these
specific offer can be accepted by:
(a) Any person
receive thro ''
ephone banking? (b) Any friend of offeror
-
(a) Buying elling shares (c) The person to wbon offer is madev
(b) confirining account balances V (d) Any one of the public
'e) Organizing insurance cover 25. An agreement without consideration is:
(d) Safeguarding legal documents (a) Voidv (b) Valid
8 What is a current account at a commercial (c) Voidable (d) lilegal .
bank'? Consideration must move fux
(a) An account for daily transactions.v. (a) PrOmisor (b) Promiseev
(b) An account requiring a passbook (c) Third party
(c) An account used for saving (d) Promisee or any other person
(d) An accounting which eannot be 27. Incapacity of contract may be due to:
ty. Crdrawn (a) Absence of legal formalities
'''1:It is the meaning of the term limited (b) Lack of consideration
. . "
.bility (e) Minorityx'
Subject Specialist & ectureship Guide - Commerce
(d) None of these 38. Income tax appellate tribunal is appoin'.'
28. Contract of insurance is a: by the -
(a) Unilateral contract (a) Federal board of revenue

(b) Contingent contract (b) Federal Governmcntv.
(c) Wagering contract (c) Supreme court of Pakistan
(d) Contract of guarantee (d) Income tax ordinance 24)()]
29. Quantum meruit means: There can be no loss under the Head:
(a) As much as is earned (a) Income from $3 la y V
(b) As much as is paid (b) Income 10m busticss
(c) A non gratuitous act (c) income from other sources
(d) None of thesev. (d) None of above
30. Each party to a contract is both promisor 4() Revenues can be defined as:
and promisee in case of: {a} Economics resources owned
(a) Present consideration entity that is expected to provide , , , ,
(b) Valid contract benefits
(c) Reciprocal promises V (b) Inflows of
Sold or servic
:
'Xchillige 19: " is
by the entity -
(d) Part of consideration
31. Income tax ordinance 2001, was (c) Any inct ' owner equity
promulgated on: (d) An ingr: : in cash
(a) 1" July 2001 41. The obj ty principie requires that:
(b) 13" September 2001 (a) Blastiless transactions must .
(c) 1 January 2001 CC tent with the objectives of the or it,
(d) l' July 2002V b) Accoul't')\g principles must mt (" !"
*2 Normal tax year starts from: bjectives of the securities and ex:indig.
(a) 1" September each year commission
(b) "July each yearv
(c) 1." January each year
(d) 1" March each year S.
s' (c) Armounts recorded in the financial
Statement must be based on indepetident,
verifiable evidencev
33 Income from property is taxable
(a) NTRY (b) FTR
'S -
(d) FASB must be fair and unbiased in :
deliberation ovci new eccotint #:
(c) Both a & b (d) %.
None standards
34. A person shall be resident the A fiability in the amount of Rs. 500 is paid
following days in Pakista in cash. Which of the following is true.
(a) 182 days \l 80 days (a) An asset is increased an a habi'
(c) 1.81 days ) 183 days decreased
35. Benchmark rate for loan given by (b) An asset is increased and a liabili: , is
employer to employee for tax year 2011 is: increased
(a) l'o (b) 12% (c) An asset is decreased ak! a ii:Bilti, i.
(c) 1.3% (d) 10% decreased Y
36. The rates of tax are specified in: (d) A liability is decreased and ov. . . . .
(a) 1" Schedulev (b) 3" Schedule equity is increased
(c) 5"Schedule (d) 7"Schedule 43. All owner withdraws Rs. 3() each ' , i.
37. Employer's contribution in case of the business. Which of the folio wing is
Government provident fund is: true?
(a) Taxable (b) Exempt (a) An asset is decreased and ()\ }. r
(c) No treatment equity is decreased

(d) Exempt up to 10% of basic salaryv (b) An assel is decreased and w in
equity is increased
(c) An asset is increased and a liability is (c) Expenses should be recorded in the
decreased same period as the associated revenue
(d) There is no effect on any asset, (d) Revenue should be listed on the
liability, or owner's equity income statement first
44. An expense is incurred that will be paid 49. A company purchased a 1-year insurance
for the next month. Which of the policy on June 1 for Rs. 720. The entire
following is true? amount was debited to prepaid insurance
(a) An asset is decreased and owner's at that time. At Dec. 31 year end the
equity is decreased proper adjusting entry would include,
(b) An asset is increased and a liability is (a) A debit to insurance expense for Rs.
increased V 300
(c) A liability is increased and owner' (b) A credit to insurance expense for Rs.
equity I increased 420
(d) A liability is increased and owners (c) A credit to prepaid insurance for Rs.
equity is decreased 720
A customer is billed for services rendered. (d) The to prepaid insurance for Rs.
Which of the following is true? 420 v
(a) An asset is increase and a liability is 50. A "Pan collected 1 years rent in
decreased ad ' on Oct. 1. The entire amount Rs.
(b) An assed is increased an owner's was credited to unearned revnue the
equity is increased per adjusting entry at the Dec 31 year
(c) One asset is increased and another end would to include,
asset is decreased -
(a), A debit to unearned revenue for Rs.
(d) There is no effect on any asset, liability 90 s -
or owner's equity V (b) A debit to unearned revenue for Rs.

46. The amount due from a customer whose 300v.
was billed last month is collected. (c) A credit to unearned revenue for Rs.
(a) An asset is decreased and \ewher's 900
equity is decreased (d) A debit to revenue earned for Rs. 900
(b) An assct is increase owner's 51. Which of the following items is a current
equity is increased asset? -
4c.) One asset is increased and another (a) Unearncq Revenue

asset is decreased Q (b) Real estate held for resalev/
(d) An asset is increased and a liability is (c) Temporary investments
increased -- (d) Patents
47. Which one-Sof the following accounts 52. When interest earned but not yet collected
would most likely be included in an is accrue at year end, thc proper adjusting
accrual type adjusting entry? entry includes a:
(a) Insurance expense (a) Debit to interest receivable
(b) Prepaid rentv (b) Debit to cash
(c) Interest expense (c) Credit to interest expensev
(d) Unearned revenue (d) Credit to interest payable
48. The revenue recognition principle states 53. The operating cycle is:
that: -
(a) The average iength of time between the
(a) Revenue should be recorded, when purchase of merchandise inventory and the
earned V realization of cash from the sale of the
(b) Revenue should be recorded when the inventory.
cash is collected
(a) The length of time between the (a) Are called real accounts
preparation of financial statements' (b) Represent amounts accumulated during
(b) The estimate length of time that the a specific period of time V
entity will remain in business (c) Have Zero balances after the closing
(c) The average length of time between the process is complete
sale of merchandise inventory and the (d) Are called nominal accounts
replacement of inventory 60. It is useful to make reversing entries for:
54. Which one of the following accounts (a) . Adjusting entries recording
would usually have a credit balance? depreciation expense
(a) Cash (b) Account payableV. (b) Adjusting entries relate to accruals.Y. .
(c) Equipment (d) Salaries Expense (c) Adjusting entries relate to deferrals that
55. Which one of the following account would were recorded initially in a liability
3CCOuilt r
usually have a debit balance? *
(a) Notes payable (d) All of the above

(b) Bilal, Capital 61. A company collected Rs. 3600 for 1 year'
(c) Bilal, Withdraws v. rent in advance on Nov. 1* of the current
(d) Service's Fees Earned year. The e amount recorded by
56. A trail balance is prepared to: making acredit to rental revenue. The year
(a) Prove that there were no error is made end 'usu g entry on Dec 31 should
in recording the business transaction in the
general journal ''redit to the rental revenue for Rs.
(b) Prove that there were no error is made
in posting form general journal to the Q) A debit to unearned revenue for Rs.
general ledger ".
O 3000
(c) Prove that each account balance is (c) A debit to rental revenue for Rs.
COITCCt 3000 v.
(d) Summarize the account balances as
aid in the preparation of the fi
* (d) A debit to unearned rental revenue for
Rs. 6000
statcmcmtsv 62. Net income plus operating expenses is

57. Which of the following does " QIT equal to:
a work sheet? : (a) Net sales
(a) The unadjusted trial balancev (b) Cost of goods available for sale
(b) Adjusting entries
(c) Closing entries
' (c) Cost of goods sold
(d) Gross profitv/ -
(d) The withdraw 'a COunt 63. When purchase merchandise is returned, a
58. Which of the indicates that a credit would be made to:
company earned a net income for the (a) Merchandise inventoryV
period? (b) Purchase return and allowances
(a) Adjusting entries were not made (c) Accounts payable
(b) The sum of the debits exceed the sum (d) Purchases
of the credit in the income statements 64. A cash payment journal would not include
columns of the worksheet a.
(c) The sum of the credits exceeded the (a) Cash credit column
sum of the 'debits in the income statement (b) Accounts payable debit columnv
columns of the worksheet V (c) Sales discount credit column
(d) The withdrawals account had a debit (d) Sundry accounts debit column
balance 65. A customer return merchandise that was
59. Balance shect accounts: sold on account. The account has not been
326
paid. This transaction should be recorded (a) FIFO (b) LIFO
in: - *-
(a) Sales journal Y (d) Specific identification*
(b) Cash receipts journal 72. The inventory method that assigns the
(c) Cash payments journal most recent costs to cost of goods sold is:
(d) General journal (a) FIFO (b) LIFOv
(36. A cash sale of merchandise should be (c) weighted average
recorded in the: (d) Specific identification
(a) Sales journal 73. In a period of rising prices, the inventory
(b) General ledger method that results in the high net income
(c) Cash receipts journalV 1S.
(d) Cash payments journal (a) FIFO (b) LIFOv

67. When posting the column totals of a cash (c) Weighted average
payments journal a debit should be posted (d) Specific identification
to: 74. The lower of cost or market rule for
(a) Cash inventory is justified by the:
(b) Purchase discounts (a) Maching" iple
(c) Accounts receivable (b) Consistenes e
(d) Account payablev (c) Conservathm principlex
68. A purchase requisition is:
(a) An internal document to indicate the
quantity and specification of goods needed
75. #
(d) Historical cost principle
the following is an example of a
expenditure?
capi
and to request that the company acquire $ 'ost of cleaning the carpet in the main
them V
(b) Written authorization to pay vendor
3: -
(b) Cost of replacing light bulbs in the

(c) An internal document to indicate the factoryv. *
(d) Document Sned to a vendor

that goods to shipped

quantity an condition of good received (c) Cost of replacing the roof on the office
factory *
(d) Cost of turn up the delivery trucks

69. One of the weaknesses of 'Q. Ct 76. The time, period over which an intangible
(a) It under States *

written off method is that:
ivable on
asset should be amortized is:
(a) Its estimate useful life V.
the balance sheet (b) Its estimated useful life or 40 years,
(b) it violates the
(c) It is too diffi
use or many
whichever is shorter
(c) 40 years
companies -
(d) Its estimate useful life or 40 years,.
7().
(d) It is base * 77.
whichever is longer -
Sananne Company receives a 10%, Rs. An advantage of a partnership form of

15,000 note receivable from Halima business organization is:
Company. The note is due in omonth. The (a) Unlimited liability
maturity value of the note is: (b) Mutual agency
(a) Rs. 13,500 (b) Rs. 15,000 (c) Ease of formation*
(c) 15,750V (d) Rs. 16,500 (d) Limited life
71.Which of the following inventory cost 78. Partnership liquidation occur when:
methods is most appropriate for a (a) A new partner is admitted
merchandise inventory with a relatively (b) The ownership interest of one partner
small number of unique items and a high is sold to a new partner
cost per item?
(c) The assels are Sol, liabilities paid and (d) Both b and c
business operations terminated V 84. When common stock is issued in exchange
7). When a limited partnership is formed. for a non-cash asset, the transaction should
(a) The partnership activities are limited V be recorded at:
(b) All of the partners have limited (a) The par value of thc Stock issue
liabilities (b) The fair value of the stock issue
(c) Some of the partners have limited (c) The fair value of the asset acquired V
liabilities (d) The fair value of the stock issue or the
(d) None of the partners have limited fair value of an asset acquired, whichever
liabilities can be determined more objectively
8(). Which of the following is not a right 85. How is treasury stock shown on the
possessed by common stockholders of a balance sheet? -
corporation? (a) As an asset

(a) The right to vote in the election of the (b) As a decrease in a stockholder's
board of directors V equityV
(b) The right to receive the minimum (c) As an * in a stockholder's
amount of dividends each year equity S.
(c) The right to sell their stock to anyone (d) Treas stock is not shown on the
they ehoose bala
(d) The right to purchase
proportionate of any new stock issuev.
their 86.
$
Stock has dividends in arrears,
preferred stock must be: -
8[. A corporation issues 2000 shares of } Participating (b) Callable

common Stock for Rs. 32000. The stock (c) Cumulative V (d) Convertible
has a state value of Rs. 10 per share. The (287. Which of the following is not classified as
journal entry to rcoord the stock issuance paid in capital on the balance sheet.
would include a credit to common
for.
SS (a) Common stock
(b) Common stock subscribed
(a) Rs. 20,000 V (b) Rs. 32 (c) Donated capital V
(e) Rs. 12,000 (d) Rs.20 (d) Treasury stock
The par value per share of n Stock 88. An appropriation of retained earnings:
represents: (a) Decreases total retained earnings
(a) The minimum * of the stock (b) Increases total retained earnings
established by e articles of (c) Decreases total retained earningsv
incorporation* (d) has no effect no total retain earnings
(b) The mininn ount the stock holder 89. When a small stock dividcnd is declared,
will receive when the corporation is which of the following account is
liquidated credited? .
(c) An arbitrary amount established in the (a) Common stock
articles of incorporation (b) Dividends payables.
(d) The amount of dividends to be (e) Stock dividend distributablev
received each year (d) Retain earnings un-appropriated
When a stock subscription at a price above 90. Which of the following increase cash?
par is recorded, which of the following (a) Depreciation expense
accounts would be credited? (b) Acquisition of treasury stock
(a) Common stock V (c) The declaration of a cash dividend
(b) Common stock subscribed (d) Borrowing money by issuing a 6
(c) Paid in capital in excess of par month note payablev
CO11111101)
328
t} | . Which of thc following should be shown (a) Product costs are assetsy
on a statement of cash flows under cash (b) Product costs are the costs incurred to
flows from financing activities. acquire products to sell
(a) The purchase of a long term investment (c) Product costs are expensed when
in the common stock of another company incurred
(b) The payment of cash to retire a long (d) Product costs may be fixes or variable
term note payable. |
97. Which of the following cost is not a period
(c) The purchased from the sale on a cost?
building. (a) Sales peoples salaries*
(d) The insurance of a long term note (b) Factory rent
payable to aequire land. (c) General administrative costs
Common size financial statements are: (d) Research and development costs
(a) Financial statements for companies of 98. Total manufacturing costs for a period
the same size in the same industry include all of the following costs except.
(b) Comparative financial statements in (a) Raw materials used
which each item is expressed as a (b) Direct 1 OSt
percentage of the item in a base year (c) Cost ds eompleted V

(c) Financial statements for different (d) Factory overhead
companies that have the same number of 99. The total cost of units completed from
income statement and balance sheet wrk in process is transferred to which of
3CCOUnt S following accounts?
(d) Financial statements in which each C: Cost of Goods sold
item on a statement is expressed as a (b) Finished Goodsv
percentage of a key item on the same
statementv. 29 (c) Cost of Goods Complete
(d) Merchandise inventory.
93. Which of the following generally is 100. The numerator of the rate of return on total
most useful in analyzing compani
different size? -
(a) Comparative financial state

* assets ratio is equal to:
(a) Net Income
(b) Income before taxes
(b) Common size financial statements V (c) Income before interest expense
(c) Constant dollar accoun (d) Net income minus preferred
(d) The accounting policies note dividends V
94. Quick assents in which of the
following? ****** ***********************
(a) Cash s'
(b) Account receivable
(c) Marketable securities
95. The numerator of the rate of return on
common stock holders equity ratio is
equal to:
(a) Net income
(b) Net income minus preferred
dividendsv
(c) Income before interest expense
(d) Dividend per share of common stock
9(3. All of the following are true of product
costs except.
328
9] . Which of the following should be shown (a) Product costs are assets/
on a statement of cash flows under cash (b) Product costs are the costs incurred to
flows from financing activities. acquire products to sell
(a) The purchase of a long term investment (c) Product costs are expensed when
in the common stock of another company incurred
(b) The payment of cash to retire a long (d) Product costs may be fixes or variable
term note payable. 97. Which of the following cost is not a period
(c) The purchased from the sale on a cost?
building. (a) Sales people's salaries*
(d) The insurance of a long term note (b) Factory rent
payable to acquire land. (c) General administrative costs
Common size financial statements are: (d) Research and development costs
(a) Financial statements for companies of 98. Total manufacturing costs for a period
the same size in the same industry include all of the following costs exccpt.
(b) Comparative financial statements in (a) Raw materials used
which each item is expressed as a
percentage of the item in a base year
(b) Direct '
(c) Cost 9 s completed V
(c) Financial statements for different (d) Fact verhead
companies that have the same number of 99. The
cost of units completed from
income statement and balance sheet work in process is transferred to which of
3CCOlllllS ollowing accounts?
(d) Financial statements in which each S. 3. Cost of Goods sold
item on a statement is expressed as a O (b) Finished Goods
percentage of a key item on the same
statementv 29 (c) Cost of Goods Complete
(d) Merchandise inventory.
93. Which of the following generally is '' 100 The numerator of the rate of return on total
most useful in analyzing compa *} assets ratio is equal to:
different size? - ' (a) Net income
(a) Comparative financial state (b) Income before taxes
(b) Common size financial state 2nts v. (c) income before interest expense
(c) Constant dollar account (d) Net income minus preferred
(d) The accounting policies note dividends v.
94. Quick assents inc which of the
following? ******************************
(a) Cash * -
(b) Account receivable

(c) Marketable securities
(d) All of the above V
95. The numerator of the rate of return on
common stock holder's equity ratio is
equal to:
(a) Net income
(b) Net income minus preferred
dividends V
(c) Income before interest expense
(d) Dividend per share of common stock
96.
All of the following are true of product
costs except.
326
Subject Specialist & Leetureship Guide - Commerce
paid. This transaction should be recorded (a) FIFO (b) LIFO
in: *x

(a) Sales journal V (d) Specific identificationv
(b) Cash receipts journal 72. The inventory method that assigns the
(c) Cash payments journal most recent costs to cost of goods sold is:
(d) General journal (a) FIFO (b) LIFOv
66, A cash sale of merchandise should be (c) weighted average
recorded in the: (d) Specific identification
(a) Sales journal 73. In a period of rising prices, the inventory
(b) General ledger method that results in the high net income
(c) Cash receipts journalY 1S.
(d) Cash payments journal (a) FIFO (b) LIFOv

67. When posting the column totals of a cash (c) Weighted average
payments journal a debit should be posted (d) Specific identification
f(): 74. The lower of cost or market rule for
(a) Cash inventory is justified by the:
(b) Purchase discounts (a) Matching ple
(c) Accounts receivable (b) Consist rinciple
(d) Account payableV (c) Conservatim principlex
68. A purchase requisition is:
75
(d)
W
cost principle
(a) An internal document to indicate the the following is an example of a
quantity and specification of goods needed tal expenditure?
and to request that the company acquire
then V.
c:ffice
Cost of cleaning the carpet in the main
(b) Written authorization to pay vendor

O (b) Cost of replacing light bulbs in the
(c) An internal document to indicate the factory.
quantity an condition of good received
-
(c) Cost of replacing the roof on the office

(d) Document Sned to a vendor * factory -
that goods to shipped (d) Cost of turn up the delivery trucks

(39. Onc of the weaknesses of t 76. The time-period over which an intangible
written off method is that:
(a) It under States accounts
the balance sheet <>
&
eivable OIn
asset should be amortized is:
(a) Its estimate useful lifev
-
(b) Its estinnated useful life or 40 years,

(b) It violates the matc * whichever is shorter
(c) It is too diff to use or many (c) 40 years
companies (d) Its estimate useful life or 40 years,.
(d) lt is base on estimatesv whichever is longer
7(). Saname Company receives a 10%, Rs. 77. An advantage of a partnership form of
15,000 note receivable from Hallma business organization is:
Company. The note is due in omonth. The (a) Unlimited liability
maturity value of the note is: (b) Mutual agency
(a) Rs. 13,500 (b) Rs. 15,000 (c) Ease of formationv.
(c) 15,750 v. (d) Rs. 16,500 (d) Limited life
71.Which of the following inventory cost 78. Partnership liquidation occur when:
methods is most appropriate for a (a) A new partner is admitted
merchandise inventory with a relatively (b) The ownership interest of one partner
Small number of unique items and a high is sold to a new partner
cost per item?
324
(c) An asset is increased and a liability is (c) Expenses should be recorded in the
decreased same period as the associated revenue
(d) There is no effect on any asset, (d) Revenue should be listed on the
liability, or owner's equity income statement first
44. An expense is incurred that will be paid 49. A company purchased a 1-year insurance
for the next month. Which of the policy on June 1 for Rs. 720. The entire
following is true? - amount was debited to prepaid insurance
(a) An asset is decreased and owner's at that time. At Dec. 31 year end the
equity is decreased proper adjusting entry would include.
(b) An asset is increased and a liability is (a) A debit to insurance expense for Rs.
increased V 300
(c) A liability is increased and owner' (b) A credit to insurance expense for Rs.
equity I increased 420
(d) A liability is increased and owners (c) A credit to prepaid insurance for Rs.
equity is decreased 720
45. A customer is billed for services rendered. (d) The red; tO prepaid insurance for Rs.
Which of the following is true? 420 v.
<>
(a) An asset is increase and a liability is 50. A c any collected 1 years rent in
decreased advance on Oct. 1. The entire amount Rs.
(b) An assed is increased an owners Q: 0 was credited to unearned revnue the
equity is increased -
Qorope: adjusting entry at the Dec 31 year
(c) One asset is increased and another end would to include.
asset is decreased -
(d) There is no effect on any asset, liability

C
O
(a),A debit to unearned revenue for Rs.
90 s
or owners equity* (b) A debit to unearned revenue for Rs.

46. The amount due from a customer 300 v. -
was billed last month is collected. (c) A credit to unearned revenue for Rs.
(a) An asset is decreased : owners 900
equity is decreased (d) A debit to revenue earned for Rs. 900
(b) An asset is increas owners 51. Which of the following items is a current
equity is increased asset?
4c) One asset is increased and another (a) Unearned Revenue
asset is decreased (b) Real estate held for resalev
(d) An asset i eased and a liability is (c) Temporary investments
increased (d) Patents
47, Which one-of the following accounts 52. When interest earned but not yet collected
would most likely be included in an is accrue at year end, the proper adjusting
accrual type adjusting entry? entry includes a:
(a) Insurance expense (a) Debit to interest receivable
(b) Prepaid renty (b) Debit to cash
(c) Interest expense (c) Credit to interest expense V.
(d) Unearned revenue (d) Credit to interest payable
The revenue reeognition principle states
48. that:
53. The operating cycle is:
(a) The average length of time between the
(a) Revenue should be recorded when purchase of merchandise inventory and the
earned V realization of cash from the sale of the
(b) Revenue should be recorded when the inventory.
cash is collected
Subject Specialist & LectureShip Guide - Commerce - 322
trade
wouldjournal.
be most Which
suitablemcthod
to use? of payment (a) Shares
value are issued only to a certain total
-
(a) Bank Draft (b) Bank Notes (b) Shareholders are paid back only certain
(c) ("able Transfer percentage of their investment
(d) standing Order/ (c) Shareholders can lose only the valuc of
i. Which Service is not available to bank their investmentv
customer through ATM's? - (d) Shareholders can buy only a certain
(a) Checking the balance of their accounts sum of share capital
(b) Organizing personal loans 20. A company raises finance by issuing
(c) Requesting Printed Bank Statements debentures. The debentures holders
(d) With drawing cashv - entitled to:
\BC Corporation is a large nanufacturing (a) Interest after the share holders have
ce inpa: y it needs innmediate finance as it been paid
is having cash flow problems. Which (b) one vote per share
sources of finance would be the most (c) Repaymcnt before sharcholders if the
suitable for ABC Corporation? company goes into liquidation:
(4) Higher purchase (b) Over draftv (d) Vari: vidend
(c) Shares (d) Trade Credit 21. A contract comprises of:
5 Slug credit means that the customer. (a) offer + Acceptance Y
(a) always pays extra for the goods 'ssment + Consideration
(b) Gets goods repaired for nothing . C(C) Offer + Acceptance + Agreement
(C) Obtain discounts on goods (d) Agreement + Enforceability
td) uscs of goods but pay laterv Q. An agreement is void ab-initio is called.
(. A customer wishes to buy a laptop O (a) Void contract
Computer on credit. Which form of 2. (b) Void Agrcement V
v, ill ensure the laptop computer becom (c) Voidable contract
the customer properly immediately? (d) Illcgal agreemcnt
(a) Credit card V. 23. Which of the following is an offer?
(h) ("redit Transfer S. (a) An invitation to offer
(c) Higher Purchase
(d) Leasing i
S (b) An advertisement
(c) Both a & bv.
|7 Felephone banking is used by customers (d) None of these
who do not wish-to-visit their bank in 24, specific offer can be accepted by:
person. Which \service can customer (a) Any person
receive throug'elephone banking? (b) Any friend of offeror . -
(a) Buying and selling sharcs (c) The person to whom offer is made Y
{b} confinning account balances V (d) Any one of the public
te) Organizing insurance cover 25. An agreement without consideration is:
(d) Safeguarding legal documents (a) Voidv (b) Valid
18. What is a current account at a commercial (c) Voidable (d) Illegal
b.nk'' 26. Consideration must move fux
(a) An account for daily transactionsv (a) Promisor (b) Promiseev
{b} An account requiring a passbook (c) Third party
(c) An account used for saving (d) Promisee or any other person
(d) An accounting which cannot be 27. Incapacity of contract may be due to:
(33 erairawn (a) Absence of legal formalities
19. What is the meaning of the term limited (b) Lack of consideration
H bility"? (c) MinorityV
(). Assume that the total of the unadjusted
13. For a given year, if an adjusted seasonal
index for some period is greater than 100,
indices for the four quarters is 404,04. If the
then the following must be true:
unadjusted index for the first quarter is (a) The adjusted index for some other
97.0, what is the adjusted seasonal index for period is > 100 -
the first quarter? (b) The adjusted index for some other
period is < 100Y
(a) 96.03 Y (b) 97.98
(c) The adjusted index for some other
(c) 24.01 (d) 99.00 period is = 100
(e) Cannot be determine from the (d) a and b but not c
information given .*
(e) None of the 'vove
14. If the percent of trend for a particular year
10. The adjusted seasonal index for the fourth
in a time series is greater than 100%, ther
quarter is 95.0. If the deseasonalized trend for this year.
line that was calculated to estimate (a) The value lies below
quarterly sales is Y = 400+ 9x, what would the trends in, and the relative cyclica)
residual is positive
be the seasonalized sales estimate for the
(b) <>
time-Series value lies below

fourth quarter of 1994. line and the relative eyclical
(a) 499.7 (b) 610.85V. idual is positive -
The actual time-series value lies above

(c) 643.0 (d) 676.8 O')
| |. If a time series has an even number the trend line and the relative cyclical
residual is negative
S
years, and we use coding, then eacl (d) The actual time-serics value lies above
interval is equal to: the trend iinc and the relative cyclical
(a) l year (b) 2 years residual is positive Y
. Which of the following are common
(c) l month (d) 6 months v.
reasons for studying both secular trends and
<>
(e) None of these seasonal variation:
12. A method used * with cyclical (a) To aliow the elimination of the
variation whe yclical component does component from the series
not explain st of the variation
left (b) To describe past patterns
unexplained by the trend component is: (c) To project past patterns into the future
(a) Spearman analysis (d) All of the above Y
(b) Specific analysis (e) None of the above
(c) Second-degree analysis
(d) Relative cyclical residual
* k >k:k: * * * *
(e) All of these
(f) None of thesev.
(c) The line represent an inverse ! (). Suppose you wish to compare the
relationship hypothesized value of B to a sample value
(d) All of thee of b that has been calculated. Which of the
(e) ban c but not av following must be calculated before the
We know that the standard error is the same Others?
at all points on a regression line because we (a) Sh (b) Sev
assumed that: (c) Sp
(a) Observed values for Y are normally (d) Calculations can be made in any order
distributed around each estimated value of ll. For the estimating equation to be a perfect
W. estimator of the dependent variable, which
(b) The variances of the distribution around of these would have to be true?
each possible value of y are the samev (a) The standard error of the estimate is
(c) All available data were taken into ZCTO
account when the regression line was (b) All the data points are on the regression
calculated line
(d) None of these (c) The coefficient of determination is -l
(). The variation of the Y values around the (d) a and b but not
regression line is best expressed as: (e) all of these.
12. If the dependent. ariable increases as the
(a) X_(Y Y). independel variable increases in an
(b) X (Y-Y) / estimati [uation, the coefficient of
(c) XXY-Y).
COITC
(a) () to l
be in the range.
(b) () to . () ()5
(d) XXY +Y)" { 2 (d) None of these v.
] uppose the fraction of variation in Y that
The value of r for a particular situation is
().49. What is the coefficient of correlation?. is unexplained by the independent variable
(a) 0.9 (b) ().7
X is 1/4. Then r is:
(a) '4 (b) A v.
(c) 0.07
(d) Cannot
information given v
be determined * (c) 15/16 (d) None of these
14. The sample coefficient of determination is
The fraction X (Y-Y). -Y)" developed from the variation of the
observed Y values around.
represents. <>
(a) The mean of the observed independent
(a) The fraction of total * -
in Y that variables
is unexplained Y (b) The mean of the observed dependent
(b) The fraction of i variation in Y that variable
is explained (c) The fitted regression line
(e) The fraction of total variation Y that (d) b and c but not av
was caused by changes in x (e) a, b and c
(d) None of these 15. If Y = a + bX, the sample regression line,
9. in the equation Y = A + BX + c, the e and Y = A + BX, the true unknown
represents. population regression equation, are
(a) The X-intercept of the observed data equivalent, then the following must be true.
(b) The value of Y to which others are (a) The estimating equation I a perfect
compared to determine the best fit cstimator of the dependent variable
(c) Random disturbanees from the (b) All the data points are on the regression
population regression linev line
-
(d) None of these (c) r' - |
(d) Retail price indcx (a) The Paasche index in incorrect

39. Geometric mean of the relatives is: (b) There is a trend toward less expensive
(a) Flexible (b) Rigid goods
(c) Non-rcversible (d) Reversiblev (c) There is a trend toward more expensive
40. What is the most suitable average for index goodsv. -
number? (d) The difference can be attribute to a poor

(a) Mode (b) G.M.v. estimation of consumer attitudes
(c) A.M. (d) Median (e) a and b only
When computing a weighted average of
INDEX NUMBER relatives index, we would be best able to
If an index number calculation over 8 years compare indices from various period if:
with a base value of 100 gave an index for (a) Base values were used as P,Q)
1993 of 110, what would be the percentage (b) Current values were as P,Q,
relative for i 993? (c) Fixed values were used as PnOn
(a) 110v. (b) 90.9 (d) Either base or fixed values were used as
(c) 13.75 (d) 880 P,Quv'
(e) Cannot to determine from the (e) Either s:@'s or fixed values
2
information given were used as '
To measurc changes in total monetary Commodities subject to considerable price
worth, one should calculate. variations d"best the measured by a:
(a) A price index (a) Pric (b) Value index V
(b) A quantity index (c) ity index (d) None of these
(c) A value index V
(d) None of these
8. :
#
period can be described as a
al period if:
3 Suppose a composite price index for 1 It is at neither the peak nor the trough of
gallon of milk, 2 loaves of bread, and 1 a fluctuation v.
pound of hamburger was 110 in 1995 an

(b) It is the most recent period for which we
i 19 in 1996. If both indices were '' r e have data
from a 1994 base of 100, how much (c) There was no inflation or deflation of
general price level rise from 1995 to 2 prices during the period
(a) 9% (b) 8.18% (d) It is the average of several consecutive
(c) 19% (d) 7.56% periods
(e) Cannot be determined from the The weights used in a quantity index are:
information givenV. (a) Percentages of total quantity
Which of the fo g describes an (b) Pricesv.
advantage of usil Laspeyrcs method? (c) Average of quantities
(a) Many commonly used quantity (d) None of these
measurcs are not tabulated for every period 10, In an un-weighted average of relatives
(b) Changes in consumption patterns are index, (P/P0) x 100 is calculated for each
taken into account
product in the composite. What is then done
(c) One indcx can be easily compared with with these values for finish the calculation?
another
(a) The values are multiplied together
(d) All of these (b) The larges value is found
(c) a and c but not bv. (c) The values are averaged V
5 What can be concluded if the weighted (d) The average difference from the median
aggregates price index for a set of prices of the values is found and then squared
was calculated as 1061 using the Laspeyres ! I. To measure how much the cost of some
method and | 12 using the Paasche method? variable changes over time, you would use:
(d) None of above 15 . If all the value of equal importance, the

Index number are divided into following index numbers are called.
two types. (a) Un-weighted V (b) Weighted
(a) Up-weighted and weight index number (c) Simple (d) Value index
(b) Simple and un-weighted index numbers 16. If all the values are not of equal importance,
(c) Price and quantity index numbers V. the indcx number is called.
(d) Simple and composite index numbers (a) Weighted V (b) Un-weighted
(). An index number having a wide scope is (c) Conmposite (d) Simple
called: 17. When the price of a year is divided by the
(a) Special purpose index number price of a particular year, we get?

(b) Price index number (a) Price relative (b) Link relatives
(c) General purposc index numberv'. (c) Simple relativesv(d) All of above
(d) Quantity index number 18. When the price of a year is divided by the
The most suitable average for computation price of the preceding year, we get?
of index numbers is: (a) Price index
(a) G.M.Y (b) Median (b) Simple relative
(c) A.M (d) Mode (c) Link 'Q
Geometric mean of the relatives is: (d) Value 'N
(a) Non-reversible (b) Reversiblev 19. Index numbers calculated by Fisher's
(c) Both a and b (d) None of above formula sidcal because it satisfies.
(). Which of the following is called an ideal (a) F. tSt
index number? ime reversal test
(a) Paasche's index number Circular test
(b) Lasperye's index number All of abovev
(c) Marshalls index number : Marshall Edge worth price index was
(d) Fisher's index numberv. proposed by:
] (). A normal year should be free from: (a) Two English economist V
(a) Floods
(c) War (d) All :s'
(b) Strikes
Index for base period is always S.

(b) Two English Mathematician
(c) Three English economist
(d) The English scientist
(a) 50 (b 21. The general purchasing power of the
(c) 120 ( currency of a country is determined by:
. In chain base method, th: base period is: (a) Simple index
(a) Constant (b) Whole sale price index V
(c) Not fixedv(d) None of above (c) Volume index
Consumer ': numbers are obtained (d) Composite index
by: . An index number is called a simple index
(a) Fisher's ideal formula . when it is computed from:
(b) Marshall Edge worth's formula (a) Multiple variables
(c) Paasches formula (b) Bi-variables
(d) Laspayre's formulav (c) Single variablev
14, Price relatives computed by chain base (d) All of above
method is called: 23. WPI stands for:
(a) Simple reiatives (a) Whole sale price index v
(h) Link relatives V (b) Whole price index
(c) Price relatives (c) Wider price index
(d) Value index (d) Weighted price index
24 . Paasche's price index is define as:
u = 5, G = 2, and wish to determine the (a) W always know the chance that any
probability of getting more than seven population element will be included in the
Successes. From the normal table, you Simple
would determine the probability that z is (b) Every sample always has an equal
greater than. chance of being selected
(a) 0 (b) 0.5 (c) All the samples are of exactly the saine
(c) 0,75 (d) 1.0 size and can be counted
(e) 1.25 / (f) 1.5 (d) None of these
. For a normal curve with a mean of 120 and (e) a and b but not cy
a standard deviation of 35, what proportion Suppose you are performing stratified
(in percent) of the area under the curve will sampling on a particular population and
lic between the values of 40 and 82? have divided it into strata of different sizes.
(a) 12.7V (h) 85.1 How can you now make your sample
(c) 13.8 (d) 48.9 sclection?
(c) 12.1 (f) 19.4 (a) select at random an equal number of
. Which of the following normal curves elements from each stratum
curve looks most like the curve for t = } (), (b) draw equal 1, of elements from
C = 5? each Stratum h the results
(a) Curve for u = 10, G = 10 (c) draw : of elements from cach
(b) Curve for u = 20, G = 10 Stratunl p ional to their weights in the
(c) Curve for u = 20, o = 5 v
(d) Curve for u = 12, O = 3 :
#
(d)
(e
b only
d c only Y
(e) a, c and d
(f) None of these 1 which of the following situations would
. A binomial C;
distribution may be
approximated by a Poisson distribution if o: = --- be the correct formula to use for
n
(a) n is large and p is large \ C.Onnputing G, 2

(b) n is small and p is large
(c) n is small and p is small
SQ (a) Sampling is from an infinite population
(b) Sampling is from a finite population
(d) none of these V.
with replacement
(e) a and b but not c
| 5. The standard deviation 13. binomial
(c) Sampling is from a finite population
without replaccnment
distribution depends on:
(d) A and b onlyv
(a) Probability of succ -
(e) B and c only -
(b) probability of fai -
The dispersion among sample means is less

(c) Number of tria
than the dispersion among the sample items
(d) a and b but no c themselves because.
(e) b and c but not a
(a) Each sample is smaller than the
(f) a, b and cy -
population which it is drawn

SAMPLING & (b) Very large values are averaged down
and very small values are averaged up:/
SAMPLING (c) The sampled items are all drawn from
the same population
DISTRIBUTION (d) None of these
In random sampling, we can describe (e) B and c but not a
mathematically how objective our estimates Suppose that a population with N = 144 has
are. Why is this? H = 44. What is the mean of the sampling
Subject Specialist & Lectureship Guide - Commerce 3 ] {}
19. Two cards are drawn at random from a , 4 b * .
pack of 52 cards, What is the probability (a) 13 (b) 13
that the drawn cards are both aces? 2 4
(a) ~51
|
v (b) 2 -
(c) :
!3 .
(d) |-
3
22 13 26. In a single throw of two dice what is the
(c) (d) None probability of not getting the same number
26 - o both the dice'?
20. The odds in favour of an event are 3:5. The l 2
probability of fthe event is (a) - (b) =
} ility of occurrence of the event is: 6 3
(a) ' -
(b) ". - *C | -
P& i
d)
5 8 (c) a (d)
(C) l (d) l 27. A card is drawn at random from a pack of
3. 5 52 cards. What is the probability that the
21. The odds against the occurrence of an event card drawn is a spade or a king?
are 5:4. The probability of its occurrence is: 4 3
4. 4 (a) 13 O (b) , ,
(); (b), .
(c)
# S S |
, , ! l * # D - N (d)
|3
(c)
C 5
- d) --
(d) 4 -
. The p y of occurrence of two events

2 What is the probability of getting a king or F. : are 0.25 and 0.30 respectively. The
a queen in single draw from a pack of 52 ' bility of their simultaneous
cards? -
currence is 0.14. the probability that

,, . * b } either E. Occurs of F occurs is:
(a) 5. (b) = (a) 0.31 (b) ().6 l V.
(c) *
2
V (d) None * 2
(c) ().69
. If B and F be events in a sample space such
(d) 0.89
23 .
that P(EU F) = 0.8, P(Era F) = 0.3 and P(E)
In a lottery there are 10 priz 25
= 0.5, then P(F) is: -
blanks. What is the probabili getting

prize? 's (a) ().6v
(c) ().8
(b) |
(d) None
a)
(a 10
l
- s' r: *
- 30. If E and F be mutually exclusive events

such that P(E) = 0.4 and P(F) 0.5, then
2
(c } ~
7 V. SS d : 5
(d) - P(H J F) is:
(d) ().2 (b) (). '
An urn contai red, 7 white and 4 biack (c) ().9 v (d) None
balls. A ball is drawn at random. What is , If E and F independent events such that
the probability that the ball drawn is not P(E) = 0.7 and P(F) -- ().3; then P(l: r", F) is:
red' (a) 0.4 (b) |
(a) l (b) 9. (c) 0.21% (d) Noric
* - is
|T-
|
--- v
Probability-3
* T | E. s r *
(c) 1. (d) : Probability Distribution

2 A card is drawn from a pack of 52 cards. A If to respected daily profit of a lemonade
card is drawn at random. What is the Stand is $13.45, then:
probability that it is neither a heart nor a (a) Tomorrow's profit will be $13.45
king?
7. Assume that a single fair die is rolled once. 15. If we sum all the probabilities of the
Which of the following is true? conditional events in which the event A
(a) The probability of rolling a number occurs while under statistical dependence,
higher than 1 is 1 - P(1 is rolled). the result is. -
(b) The probability of rolling a 3 is 1 (a) The marginal probability of A

P(1,2,4,5 or 6 is rolled) (b) The joint probability of A
(c) The probability of rolling 5 or 6 is (c) The conditional probability of A
higher (d) None of thesev.
(d) All of these
(e) a and b but notev. Probability-2
If A and B are mutually exclusive events
then P(A or B) = P(A) + P(B). how does the
Practice
calculation P(A or B) change if A and B to . In a throw of a coin, the probability of
mutually exclusive? getting a head is:
(a) P(AB) must be subtracted from P(A) +
P(B). v. * -
(a): -
(b):4
(b) P(AB) must be added to P(A) + P(B). (c) |
In a 'SSdie, the(d) probability
None
of
(c) [P(A)+P(B)] must be multiplied by
P(AB). getting prim number is:
(d) [P(A)+P(B)] must be divided by P(AB).
(e) None of these (a)#2 (b):
9. Leo C. Swartz a taxi driver the Chieago, 3
has found that the weather affects his (d) 4
customers tipping. If it is raining, his
customers usually tip poorly. When it is n
raining however, they usually tip w
Which of the following is true?
(a) Tips and weather are st al y
#. In a simultaneous throw of two coins, the
probability of getting at least once head is:
(a) 2
1
(b) 3.
2
independent
(b) The weather e< ! ited are
(c) 3.
4 (d) l
3
Three unbiased coins are tossed. What is

not mutually exclusive
(c) P(good tip rain)
rain)
''m P(bad tip I the probability of getting exactly two
heads?
(d) None of these l 3
(a) 3 (b) 4.
(e) a and c but
10. ASSume ''' die is rolled twice
-
in 2 3
-
(c) 3 (d) 8 V.
-
succession and that you are asked to draw

the probability tree showing all possible . Three unbiased coins are tossed. What is
outcomes of the two rolls. How many the probability of getting at most 2 heads?
braches will your tree have? l 3
(a) 6 (b) 12 - b) -
(c) 36 (d) 42v
(a) , (b) ;
7 1
(e) 48 (c) -
8 V. (d) 2 -
! 4. Symbolically, a marginal probability is.

(a) P(AB) (b) P(BA)
What is the probability that a number

(c) P(BIA) (d) P(ABC) Selected from the number 1,2,3,4,5..... 16 is
(c) None of thesev. prime number is?
(c) Element of A (a). A UBUC =S V

(d) Elements of B (b) A UBU C = A
. Total possible sample space by rolling 3 (c) None of above
dice would be: 26. The probability of appearing 5 in rolling is
(a) 144 (b) 216 six faced cubic dice is:
(c) 42 (d) 256v. 2 l
- V.
. The probability of drawing black cards (a) 6 -
(b) 6
from a pack of 52 cards is 3 l

| a\
(a) 52
|3
( b) -
12
5: (c) 6 (d) 2
27. The probability of drawing a white ball
4 26
(C) 52
* 1
(d) :
d -- v. from a bag containing 6 red 8 black 10
green and 5 white balls is:
. The probability of drawing black cards
from a pack of 52 cards. (a) 6
29
|3 4
(a) 55 (b) 52 8
(b)
C
(c) T-v.
52
26
d 52
(d)
|2
-
(c)
29
5
29
<>&Q
. The probability of drawing king from a (d) None bove.
pack of 52 cards is: 28, When r of dice is rolled, the sample
4 13
a) v. b) - Spa nsists of:
(a) 5: (b): OutCOmeS (b) 8 outcomes
26 12 c) 36 outcomes V (d) 30 out comes
(c) 52 (d) 52
Probability of an ace from pack of cards is:
Four fair coins are tossed what is ' *...* ! - b
4
V
probability that exactly one head turn up: (a) : (b) :
(a)
4
|6
(b) :<$9 (c) 52
C]
13
d) -
(d) 52
26
(C) 4 30. Probability of head on tossing a coin is:

8
. A coin is thrown
"@
four times what is the
..M. M.
(a)
l
--
4 (b)
1
b) -
3
probability that at least ad turns up?

4 ! (c) +3 (d) 2:
(a) b) -
|6
4
S*"; 2
31. From a bag containing 4 white and 5 black
ball 2 balls are drawn at random the
( C) -
8 d) 4
(d) - V.
probability that they are of same colour is:
. A card is drawn frame an ordinary pack of 3 2
52 cards. The probability that it is red, and
(a) ;: (b) 9
either an ace or a heart is. 4 5
(c) Q - d) -
(d) 9
( 2 b)
* 52 (b) is 32. If P(A) = 0.30 and P (B) = 0.6 then P
2 (a).9 (b) .18v
(c) 52
-
(d) . V.
d) -
(c) 3 (d).3
25. The events A,B and C are ealled exhaustive 33. For two independent events A and B,P(A) =
QVCltS. 20 and P (B) = 0.30, then P (A[] B)
(c) 20 years V. (d) 30 years 26 , Average age of A and B is 24 years and

18. In 10 years, A will be twice as old, as B average age of B,C and D is 22 years. The
was 10 years ago. If A is now 9 years older sum of the ages of A,B,C and D.
than B, the present age of B is: (a) 90 years (b) 96 years
(c) 114 years f
(a) 19 years (b) 29 years
(c) 319 yearsv (d) 49 years (d) Data inadequatev
19. The age of father 10 years ago was thrice 27. The ratio of Meena's age to the age of her
age of his son. Ten years hence, the fathers mother is 3:8. The difference of their ages
age will be twice that of his son. The ratio is 35 years. The ratio of their ages after 4
of their present ages is: years will be:
(a) 5:2 (b) 9:2 (a) 7:12 (b) 5:12V
(c) 7:3v (d) 13:4 (c) 84:43 (d) 42:47
20. Two years ago a man was 6 times as old as 28. One year ago, a father was four times as old
his son. After 18 years, he will be twice as as his son. In 6 years time his age exceeds
old as his son. Their present ages (yin twice his sons age by 9 years. The ratio of
years) are: their present ages i
(a) 32,7v
(c) 36,11
(b) 34,9
(d) None of these
. The ages of two persons differ by 20 years. 29.
(a) 9:2
(c) 12:5
The age A. u's
'.se
father
(b) 11:3v
(d) 13:4
is four times his
lf 5 years ago, the elder one be 5 times as age. If ars ago, the father's age was
old as the younger one, their present ages even times the age of his son at that time,
(in years) are respectively. is Anu's fathers present age?
(a) 30, 10v (b) 25,5 5 years (b) 40 yearsv
(c) 29,9 (d) 50,30 ) 70 years (d) 84 years
22. Thc difference between the ages of 2) . Runial is four times as old as his son. Four
persons is 10 years. 15 years ago, the years hence, the sum of their ages will be
one was twice as old as the younger ele 43 years. The present age of the son is:
present age of the elder person is: SS (a) 5 years (b) 7 yearsv
(a) 35 years V (b) 45 (c) 8 years (d) 10 years
(c) 55 years (d) 31. Ratio of Ashoks age to Sandeeps age iss
23. There years ago the averag f A and B 4:3. Ashok will be 26 years old after 6
was 18 years. With C joining them now, the years. How old is Sandeep now?
average becomes 22 . How old is C (a) 12 years (b) 15 yearsv
now? 1
(a) 24 yearsv S (b) 27 years
(c) 19: years (d) 21 years
(c) 28 years (d) 30 years 32. The ratio of Vimals age and Aruna's age is
24 Pushpa is twice as old as Rita was 2 years
3:5 and the sum of their ages is 80 years.
ago. If the difference of their ages be 2 The ratio of their ages after 10 years will
years, how old is Pushpa today? be: -
(a) 6 years (b) 8 yearsv (a) 2:3* (b) 1:2

(c) 10 years (d) 12 years (c) 3:2 (d) 3:5
. The ratio of the fathers age of his son's age 33. The average age of five members of a
is 7:3. The product of their ages is 756, the family is 21 years. If the age of the
ratio of their ages after 6 years will be: grandfather be included, the average is
(a) 5:2 (b) 2:1 v. increased by 9 years. The age of the
(c) 11:7 (d) 13:9 grandfather is:
(a) 66 years (b) 72 yearsv
(c) 75 years (d) 84 years
Subject Specialist & Lectureship Guide - Commerce 3{}2
48. A team of 8 persons joins in a shooting 55. In a cricket cleven, the average of eleven
competition. The best marksman scored 85 players is 28 years. Out of these, the
points. If he had seored 92 points, the average ages of thrce groups of three
average score for the team would have been players each are 25 years, 28 years and 30
84. the number of points, the team scored, years respectively. If in these groups, the
W.A.S. captain and the youngest player are not
(a) 672 (b) 665V. included, and the captain is eleven years
(c) 645 (d) 588 older than the youngest player, what is the
49. The average weight of 3 men A,B and C is age of the captain?
84kg. Another man D joins the group and (a) 33 years (b) 34 years
the average now becomes 80kg. If another (c) 35 yearsv (d) 36 years
man E, whose weight is 3 kg more than that 56. After replacing an old member by a new
of D, replaces A then the average weight of member, it was found that the average age
B,C,D and E becomes 79kg. The weight of of five members of a club is the same as if
A is: -
was 3 years ago. What is the differcnce

(a) 70kg (b) 72kgv. between the ag the replaced and the
(c) 75kg (d) 80kg new members? -
50. Three years age, the average age of A,B (a) 15 yrs' 'S (b) 8 yrs
and C was 27 years and that of B and C, 5 (c) 4 yrs <> (d) 2 yrs
years ago was 20 years, As present age is: 57. The average age of a class is 15.8 years.
(a) 30 yrs (b) 35 yrs The average age of the boys in the class is
(c) 40 yrsv. (d) 48 yrs s while that of the girls is 5.4 years.
51. Three years ago, the average age of a t is the ratio of boys to girls in the
family of 5 members was 17 years. A baby ass?
having been born, the average age of the (a) 1:2 . (b) 3:4
family is the same today. The present age (c) 3:5 (d) None of thesev.
the baby is:
(a) 2 yrsv
(c) 3 yrs
(b) 2.4
(d) 1.5
$: 58. The average age of 3 children in a family is
20% of the average age of the father an the
eldest child. The total age of the mother and
52. Five years ago, the average
and D was 45 years. With
: ,B,C
ning them
the youngest child is 39 years. If the
father's age is 26 years, what is the age of
now, the average of all the five is 49 years. second child?
How Old is E2 (a) 15 yrs (b) 18 yrs
(a) 25 yrs V (c) 20 yrs
(c) 45 yrs * (d) Can not be determined V
53. Five years ago, the average ago of P and Q
was 15 years. Average age of P,Q and R
Problems On Ages
today is 20 years. How old will R be after 1. The ratio of the ages of Meena and Meera is
10 years? 4:3. The sum of their ages is 28 years. The
(a) 35 yrs (b) 40 yrs ratio of their ages after 8 years will be:
(c) 30 yrsv. (d) 50 yrs (a) 4:3 (b) 12:1 I
54. The average age of boys in the class is (c) 7:4 (d) 6:5v
twice the number of girls in the class. If the 2. The ages of Ram and Mukta are in the ratio
ratio of boys and girls in the class of 36 be of 3:5. After 9 years, the ratio of their ages
5:1, what is the total of the ages (in years) will becomes 3:4. The present age of Mukta
of the boys in the class? (in years) is: -
(a) 490 (b) 196 (a) 9 (b) 15 V.

(c) 420 (d) 360 v (c) 18 (d) 24
Subject Specialist & Lectureship Guide - Commerce 3()()
16. The average of eight numbers is 14. The 24. The mcan of 100 observations was
average of six of these numbers is 16. The calculated as 40, it was found later on that
average of the remaining two numbers is, One of the observations was misread as 84
(a) 4 (b) 8v instead of 53. The correct mean is:
(c) 16 (d) Data inadequate (a) 39 (b) 39.7 v.
| 7. The average price of three items of (c) 40.3 (d) 42.7
furniture is Rs. 15000. If their prices are in 25. The average of six numbers is 30. If the
the ratio 3:5:7, the price of the cheapest average of first four is 25 and that of last
item is: -
three is 35, the fourth number is:
(a) Rs. 9000x (b) Rs. 15000 (a) 25 V. (b) 30
(c) Rs. 18000 (d) Rs. 21000 (e) 35 (d) 40
18. Of the three numbers, second is twice the 26. The average of l l observations is 60. If the
first and is also thrice the third. If the average of first five observations is 58 and
average of the three numbers is 44, the that of the last is 56, then the sixth
largest number is: observation is:
(a) 24 (b) 36 (a) 90Y (b) l l ()
(c) 72.v. (d) 108
19. The average of ten numbers is 7. If each
(c) 85
27. In seven

'" (d) 100
bers, the average of first
number is multiplied by 12, then the four num ers' 4 and that of the last four
average of new set of numbers is: numbers is also 4. If the average of these
(a) 7
(c) 82 (d) 84v.
(b) 19 :*

is 3, the fourth number is:
(b) 4
). A man spends Rs. 1800 monthly on an (d) l l V
average for the first four months an RS, e average of 25 results is 18, The average
2000 monthly for the next eight months and of first twelve of them is 14 and that of last
saves Rs. 5600 a year. His average month twelve is l7, the thirteen result is:
income is:
(a) 28 (b) 78w

(a) Rs. 2000 (b) Rs. 2200O (c) 72 (d) 85
(c) Rs. 2400 V 29. Out of four numbers, the average of first
(d) Rs. 26
. The average age of 30 students of a class is three is #6 and that of the last three is 15. If
12 years. The average age of 5 of
the students is 10 years an &lat of another
the last number is 18, the first number is:
(a) 20 (b) 21 v
group of 5 of them
average age of

''
WIlat is the
ing students? 30.
(c) 23 (d) 25
Mukesh has twice as much money as Sohan
(a) 8 years (b) 10 years and Sohan has 50% more money than what
(c) 12 years V (d) 14 years Pankaj has. If the average money with them
. A class has two sections, in one of which is Rs. 110, then Mukesh has.
there are 40 students with an average of (a) Rs. 55 (b) Rs. 60
14.5 years. The average of the class is 14.2 (c) Rs. 90 (d) Rs. 180V.
years. If there will be 32 students in the 3] . A motorist travels to a place 150 km away
other scction, it's average age is: at an average speed of 50 km per hour and
(a) 13.5 years (b) 13.6 years returns at 30km per hour. His average speed
(c) 13.7 years (d) None V. for the whole journey in km per hour is.
23. The average of 50 numbers is 38. If two (a) 35 (b) 37
numbers, namely 45 and 55 are discarded, (c) 37.5 v. (d) 40
33. The average of 5 numbers is 7. When 3 new
the average of the remaining numbers is:
(a) 36.5 (b) 37 numbers are added, the average of the eight
(c) 37.5V. (d) 37.52
58. The least square number which is exactly (c) 3-a-4 (d) a = 3
divisible by 10,12,15 and 18, is: 68. The value of V0.4 is:
(a) 360 (b) 400 (a) 0.2 (b) 0.02
(c) 900 V (d) 1600 (c) 0.63 V (d) 0.51
59. The least number by which 294 must be
69. The value of N0. 121 is:
multiplicd to make it a perfect square is:
(a) 2 (b) 3
(a) 0.1 ! (b) I.]
(c) 0.347 V (d) 0.01 |
(c) 6 Y (d) 24
6(). The least number by which 1470 must be 70. The value of N0.064 is:
divided to get a number which is a perfect (a) 0.8 (b) 0.08
Square, is: -
(c) 0.008 (d) ().252/
(a) 6 (b) 5
(c) 15 (d) 30Y 71. The value of |old is:
0.4
i |
(a) 0.2 (b) 0.02
61. V5 JT1 .. 10+ W99 | (c) 0.63% (d) None
-----, . If 2 * 3 = V13 Mc, 4-5 then hevalue
J9 Vil Of 5* 12 is: -
(a) 2* (b) 3 (a) V17 <> (b) V29

(c) 4 (d) None (c) 122. (d) 13v.
- M7+ V5 is equal to:
If * (x+2(y-3)
(, II,
-
, the value of
V7N5
(a) 6+ N35 % (b) 6N35 5-3) is
(e) 2 )2 (b) 3
(33.
(d) 1
Which one of the following numbers has 2% (c) 4 (d) Nonev
rational square root?
(a) 0.4 (b) 0.09v,
-
74. If V0.4x4xa - 004x4 x\b, then : is:
(c) 0.9 (d) 0.025 SQ (a) 16x10" (b) 16 x 10'

64. The value of V2 up to thre
decimal is:
es of
(c) 16x10" v. (d) None
75. A man plants 15376 apple trees in his
(a) 1.410 (b) (Al2 garden and arranges them so that there are
(c) 1.413 ) 1.414v.
as many rows as there are apple trees in the
. If a = 5 + 2 en the value of row, then the number of rows is.
(a) 126 (b) 124v'
[* Na#)-S -
76.
(c) 134 (d) 144
A General wishes to draw up his 36581
(a) 2N2 * (b) 3-2 soldiers in the form of a solid square. After
(c) 2N3 (d) 3.3 arranging them, he found that some of them
are left over. How many are left?
66. W121 V12+ V12:... = ? (a) 81 (b) 65
(a) 3 (b) 4 V (c) 100V. (d) None
(c) 6 (d) greater than 6 77. A group of students decided to collect as
many paise from each member of the group
67. If a = \|3 + V3+\}+...., then which of the
as is the number of members. If the total
following is true? collected amounts to Rs. 59.29, the number
(a) 2<a:3v (b) a >3 of members in the group is:
20. If N6084 = 78, then the value of (c) 3666.66 (d) 2

(N60.84 + W.6084+ NO06084+ N.00006084) 30, N.00059049 = ?
is: (a) .243 (b) 0243 v
(a) 86.658 (b) 8.6658 (c) .00243 (d).000243
(c) .86658 (d) 866.58 V 31. The least perfect square number divisibly
by 3,4,5,6 and 8 is:
21. If W841 = 29, then the value of
(a) 900 (b) 1200
(W841 + V8.41 + N0.841 + \/0,000.841 is: (c) 2500 (d) 3600V.
(a) 322.19 (b) 32.219.V.
(c) 34.179 (d) 31.129 32. If S -2.236, then the value of -- is
V5
(a) .367 (b).745
22. Ji 10'4 = }
(c) .447v. (d) None
(a) 19.5
(c) 10.5 V.
(b) 10.25
(d) 11.5
33. If W3 c 1.732, then the value of | is:
(a) 0.577 (b) 0.866v

23. |ost.*
.0064x 6.25
is equal to:
(c) 0.433 &Q (d) None
(a) 9 (b) 0.9 34. If N5 = 2.236 and N3 = 1.732, the value
(c) 99 (d) 0.99 V Of l is:
is equal to:
N5 -
24.
().()7 x 3.4 (a) 0. (b) 0.252v
(a) 6v (b) 0.6 362 (d) None
- ... 1 7
c) ().06
(c) d) -
(d) 6 V2 = 1.4142, the value of is:
(3 : N2)
~ 9.5 x 0.085 x 18.9 . (a) 1,5858V (b) 4.4142
is equal to:
Ns'
25.
()() 17 x 1.9 x 2.1 (c) 3.4852 (d) 3.5858
(a) 0.15 (b) 0.5 V5+1 N51
36. If a = and -, the value of
(c) 15 v (d) 25 N51 V5+1
0.081 x 0.324 x 4.624 a' + ab + b \ .
26. ual to:
W.
(a) 24
5:00:5:
) 2.4
| #)

ab
is:
SS(c) 0,024v. (d) None (a)

3
4 (b) 3
4
* : * 1.1 x 0.11 (c)

3
5
-- d) -
(d) 3
5
(a) 2 (b) 3v. 1

(c) 9 (d) 11 37. The ex p ression (2+ V2)+ (2+N2)
-
28. W. 5. is equal to:

16
1
-E equals:
- 1 22
3
a) l b) 1 v.
(a) 1, (b) 1, (a) 2v (b) 2/2
(c) 1.125 (d) None (c) 2N2 (d) 2+ N2
29. If
X
</2.25
= 550, then the value of x is:
-
38. If W24 = 4.889, the value of | is:
(a) 825 V. (b) 82.5 (a) 1.333 (b) 1.633 v

Subject Specialist & Lectureship Guidu - Commerce: 2.94
98, if the S.P. of Rs. 24 results i a 20%, 105. Anil bought : T.V. with 20% discount
discount on list price, what S.P. would h the labeled pricc, Had he bought it with
result in a 30% discount on list price? 25% discount, he would have saved Rs.
(a) Rs. 27 (b) Rs. 2] : 500. At what price did he buy the T.V.
(c) Rs. 20 (d) Rs. 9 (a) Rs. 16000 (b) Rs. 12000
99. A house was sold for Rs.y by giving a (c) Rs. 10000 v. (d) Rs. 5000
discount of X"/0. Then, its list price is: 100. A retailer buys a sewing machine at a
()() V * discount of 15% and sells it for Rs. 1955.
100,
1 - (x : 100)
(b) |".
0() X
. Thus, he makes a profit of 15%. The
discount is:
(C) l| ()()w
-
Ivy (d) None of these (a) Rs. 300V (b) Rs. 290
- X
(c) Rs. 275 (d) Rs. 270
100. A trader allows two Successive
! ()7. A discount of 30% on the marked price
discounts of 20% and I 0%. If he sells an
of a toy reduces its S.P. by Rs. 30 What is
article for Rs 108, then the marked price of the ticw S.P.
the article is:
(a) Rs. 130 (b) Rs. 100
(a) Rs. 150Y (b) Rs. 148 (c) Rs. 70V. (d) RS. 21
(c) Rs. 142 (d) Rs. 140 108. A cloth '' announces 25% rebate
101. A customer purchased an office bag in prices. If one needs to have a rebate of
with a price tag of Rs 600 in a sale where Rs. 40, then hew many shirts each costing
25% discount was being offered on the tag HS 3 (), h&ould purchase?
price. The customer was given a further (a) 5 (b) ()
discount of 10%. The final amount paid by (G (d) 10
the customer was:
a commission of 10% is given on the
(a) Rs. 565 (b) Rs. 540 ''itten price of an article, the gain is 20%.

(c) Rs. 405 V. (d) Rs 390 If the commission is increased to 20%, the
|02. A shopkeeper carns a profit of 12% on gain is:
selling a book at 10% discount on
printed price. The ratio of the
the printed price of the book is:
'' 2
(a) 6+% V.
3

(b) 7%
!
(a) 50:61
(c) 99; $25
#
(b)
(d)(55.69
(C) 12'0
]
-
a
(d) 13:00
...)
| (). A shopkeeper professes to sell all things

l{)3.
-
A retailer buys s' Q- s

from a at a discount of 10%, but increases the S.P.
wholesaler at the
at their marked
' - 7. If he se!!s this
* he gain percent in the
of each article by 20%. His gain on each
article IS.
transaction is: (a) (3% (b) 8% v.
(c) 10% (d) 12%
{a} 9 # % (b) 0% | | | | Even after reducing the marked price of
a transistor by Rs. 32, a shopkeeper makes
11,"
"," lo. v' to:20. W0
a profit of 15%. If the cost price be Rs. 320,
what percentage of profit would he have
104. Pankaj bought a bag with 20% discount made if he had sold the transistor at the
on the original price. He got a profit of RS marked price? -
50, by selling it at a price 150% of the price (a) i 0% (b) 20%

at which he bought. What was the original (C) 25% v (d) None of these
price of the bag? | 12. After allowing a discount of 10% on
(a) Rs. 125 V. (b) Rs. 150
M.P., a shopkeeper charges Rs. 540 for a
(c) Rs. 175 (d) Rs. 200
{C) Rs. 134.4() (d) Rs. 240 76. Nandial purchased 20 dozen notebooks at
()'). If by selling an article there would have Rs. 48 per dozen. He wold 8 dozen at 10%
been a loss of 2''. and by selling it at Rs.
*
profit and the remaining 12 dozen with 20%
profit. What is his profit percentage in this
6 more than the earlier S.P., there would transaction?
have been a profit of 5%. Then the C.P. of (a) 15 (b) 16v
the article is: (c) 7.68 (d) 19.2
77. Profit after selling a commodity for Rs. 425
(a) Rs. 78 (b) Rs. 80%
(c) Rs. 82 (d) Rs. 84 is the same as the loss after selling it for Rs.
7{}. A person bought an article and sold it at a 355. What is the cost of the commodity?
loss of 10%. If he had bought it for 20% (a) Rs. 385 (b) Rs. 390 V
less and sold it for Rs. 55 more, he would (c) Rs. 395 (d) Rs. 400
. An article when sold for Rs. 840 earns a
have had a profit of 40%. The C.P. of the
article is: profit which is double the amount of loss
(a) Rs. 200 (b) Rs. 225 when the same article is sold for Rs. 60).
(c) Rs. 250v (d) None of these What is the C.P. O leyticle?
<>*
7 1. A man bought at article and sold it at a gain (a) Rs. 500
of 5%. lf he had bought it at 5% less and (b) Rs. 680x
(c) Rs. 720 < .
sold it for Rs. 1 less, he would have made a
profit of 10%. The C.P. of the article was:
79. The
*
(d) Data
d
Llate
by selling an article for

(a) Rs. 100 (b) Rs. 150
'
(c) Rs. 200Y (d) Rs. 500
7 2. Kishan bought a certain quantity of rice at
the rate of Rs. 150 pcr quintal and 10% of
:
RS is double the loss incurred when the
is sold for Rs. 450. At what
ice should the article be sold to make
the rice was spoiled. At what price should 5% profit?

he sell the remainder to gain 20% of 'S (a) Rs. 600
(b) Rs. 750V
outlay'?
(a) Rs. 190 per quintal SQ (c) Rs. 800
(b) Rs. 200 per quintalV S. (d) Data inadequate
(c) Rs. 210 per quintal
(d) Rs. 215 per quintal
S S(). The percent profit made when a article is
sold for Rs. 78 is twice as much as when it
A reduction of 25% in the price of eggs will is sold for Rs. 69. What is the cost price of
the article?
enable one to buy 4 dozenshire eggs for Rs
96. What is the pric (a) Rs. 51 (b) Rs. 55.50
(a) RS. 6
(c) Rs. 8.50
'' (b) Rs 8 v.*
(d) Rs. 9 81.

(c) Rs. 60x (d) None
Profit earned by selling an article for Rs.
. An article when sold at a gain of 5% yields 1060 is 20% more than the loss incurred by
Rs. 15 more than when sold a loss of 5%. selling the article for Rs. 950. At what price
What is the C.P. should thc article be sold to earn 20%
(a) Rs. 64 (b) Rs. 80 profit?
(c) Rs. 150Y (d) Rs. 200 (a) Rs. 980 (b) Rs. 1080
7 5 , Raghu bought 4 dozen oranges at Rs. 12 per (c) RS. 1800 (d) None V.
82. A man sold an article for Rs. 75 and lost
dozen and 2 dozen Oranges at Rs. 16 per
tlozen. He sold them all to earn 20% profit. . something. Had he sold it for Rs. 96, his
At what price per dozen did he sell the gain would have been double the former
loss. The C.P. of the article is:
oranges?
(a) Rs. 14.40 (b) Rs. 16v (a) Rs. 81 (b) Rs. 82v
(c) Rs. 16.80 (d) Rs. 19.20 (c) Rs. 83 (d) Rs. 85.50
(c) Rs. 89 (d) Rs. 86 the other, he gained 10%. His gain or loss
42. A man gains 10% by selling a certain percent in the entire transaction was.
article for a certain price. If he sells it at (a) 10% loss
double the price, the profit made is: (b) 1% gain
(a) 20% (b) 120%v/ (c) 1% lossv
(c) 1.00% (d) 140% (d) Neither loss nor gain
43. A person bought 20 liters of milk at the rate 50. A man sells two houses at the rate of Rs.
of Rs. 8 per liter. He got it churned after 1.995 lakhs each. On one he gains 5% and
spending Rs. 10 and got 5 kg of cream and on the other, he loses 5%. His gain or loss
20 liters of tone milk. If he sold the cream percent I the whole transaction?
at Rs. 30 per kg and tone milk at Rs 4 per (a) 0.25% loss v. (b) 0.25% gain
liter, his profit in the transaction is: (c) 2.5% loss (d) 25% loss
(a) 2.5% (b) 35.3%v/ 51. A man sells two commodities for Rs. 4000
(c) 37.5% (d) 42.5% each, neither losing nor gaining in the deal.
44. A sclls a bicycle to B at a profit of 20% and If he sold onc commodity at a gain of 25%,
B sells it to C at a profit of 25%. If C pays the other commodity 8."
at a loss of:
Rs. 1500, what did A pay for it? 2
(a) Rs. 825 (b) Rs. 1000Y (a) 16:%x
3 <>
& (b. 185%
(c) Rs. 1100 (d) Rs. 1125 (c) 25% S (d) None
45. A bought a ratio set and spent Rs. 110 on its
repairs. He then sold it to B at 20% profit,
52. A horse
each.
: were sold for Rs. 12000
rse was sold at a loss of 20%
B sold it to C at a loss of 10% and C sold it and ' ow at a gain of 20%, The entire
for Rs 1188 at a profit of 10%. What is the transac ion resulted in: -
amount for which A bought the radio set? o loss or gain

(a) Rs. 850 (b) Rs. 890V. @b) loss of Rs. 1000
(c) Rs. 930 (d) Rs. 950 (c) gain of Rs. 1000v.
46. If the manufacture gains
-
wholesale dealer 15% and the

10%,
'' (d) gain of Rs. 2000
53. A person earns 15% on an investment but
then the cost of production of a ta e
loses 10% on another investment. If the
retail price of which is Rs. 1265 w * ratio of the two investments be 3:5, what 18
(a) Rs. 632.50 (b) Y
the gain or loss on the two investments
(c) Rs. 814 (d) 34.34 taken together?
47. Kanak owns a plot wor'Rs. 10000. He
sells it to Raman at Raman sells (a) o: loss (b) 13: gain
the plot back to Kanaka a loss of 10%. In
the whole transaction, Kanak gets. (c) is: loss (d) None of thesev.
(a) no profit no loss
54. The manufacturer of a certain item can sell
(b) profit of Rs. 2000
(c) profit of Rs. 1100V all he can produce at the selling price of Rs.
60 each. If costs him Rs. 40 in materials
(d) profit of Rs. 1000
48. Two mixers, and one T.V. cost Rs. 7000, and labour to produce each item and he has
while two T.V.s and a mixer cost Rs. 9800. overhead expenses of Rs. 3000 per week in
the value of one T.V. is, order to operate the plant. The number of
(a) Rs. 2800 (b) Rs. 2100 units he should produce and sell in order to
(c) Rs. 4200V. (d) Rs. 8400 make a profit of at least Rs. 1000 per week,
1S.
49. A dealer Sold two of his cattle for Rs. 500
each. On one of them he lost 10% and on (a) 200V. (b) 250
(c) 300 (d) 400
ll. By selling an article for Rs. 19.50, a dealer 19. If by selling 110 mangoes, the C.P. of 120
makes a profit of 30%. By have much mangoes is realized, the gain percent is:
should be increase his selling price so as to ;
make a profit of 40%2 (a) 1 '9! 0. ... 1) (b) 9'0
()
(a) Rs. 1.5() V (b) Rs. 1.75 | ()
(c) Rs. 2 (d) Rs. 3 (c) 10-% (d) 9+2. v
|| | |
12. Rahim buys mangoes at the rate of 3 kg for
20. A vendor loses the S.P of a oranges on
Rs. 21 and sells them at 5 kg for Rs. 50. To
earn Rs. 102 as profit, he must sell. selling 36 oranges. His loss percent is:
|
(a) 20kg (b) 32kg (a) 12'0
: (b) 11,
(c) 34kg.V. (d) 56kg
13. If books bought at price ranging from Rs. (c) 10%v/ (d) None of these
200 to Rs. 350 are sold at prices ranging 21. By selling a pen for Rs. 15, a man loses
from Rs. 3()() to Rs. 425, what is the one-sixteenth of what is cost him. The cost
greatest possible profit that might be made price of the pen is:
in selling eight books? (a) Rs. 180 (b) Rs. 20
(a) Rs. 400 (b) Rs. 600
-
(c) Rs. 21 S$ (d) Rs. 16 V.

(c) Cannot be determined 22. By selling an at # Sheetal earned a profit
(d) None of these Y
14. He cost price of 20 articles is the same as
equal to * | -
- -
he price he bought it. If he

-
selling price of 15 articles. The profit Rs. 375, what was the cost price'?
percent in the transaction is: 1.75 (b) Rs. 300 V
(a) 25 (b) 3() (d) Rs. 350
3l V
(c) 33+ (d) 50
3 | - - - - -
loses - of what it costs him. His cost price

15. A man sells 320 mangoes al the cost ": | ]
of 400 mangoes. His gain percent is. lS.
(a) 10% (b) 15% SQ (a) Rs. 9

(c) Rs. 1 ! V
(b) Rs. 10
(c) 20% (d) 25% (d) Rs. 12
! 6. If the cost price of 12 tables is 4: o the 24. A fruit seller purchases oranges at the rate
selling price of 16 tables, ": percent of 3 for Rs 5 and sells them at 2 for Rs. 4.
1S. His profit in the transaction is:
(a) 15%
(c) 25%
S: d) 30%
(a) 10%
(c) 20%v/
(b) 15%
(d) 25%
17. H the selling price articles is cqual to 25. If I purchased 11 books for Rs. 10 and sold
the C.P. of 2 icles the loss or gain all the books at the rate of 10 books for Rs.
percent is: 11, the profit percent is:
) 5 (a) 10% (b) 1%
(a) 16:% gain (b) 14.5% gain (c) 21% v. (d) ()0%
2 26. A man bought a number of oranges at 3 for
:
(c) 16% loss Y (d) 14.5% loss
18. A man sold 250 chairs and had a gain equal
a rupee ad an equal number at 2 for a rupee.
At what price per dozen should he sell them
to make a profit of 20%
to selling price of 50 chairs. His profit (a) Rs. 4 (b) Rs. 5
percent is: (c) Rs. 6Y (d) Rs. 7
(a) 5% (b) 10%
27. A man buys eggs at 2 for Rel and an equal
(c) 25% v (d) 50% number at 3 for Rs. 2 and sells the whole at
5 for Rs. 3. His gain or loss percent is:
r
]
2 __ - Q 119. The length and breadth of a square are
(a) 2 5 (b) 2
- increase by 40% and 30% respectively. The
area of the resulting rectangle exceed the
(c) 1: (d) 3 v area of the square by: *
(a) 42% (b) 62%

112. The population of a town increases 4%
(c) 82%v/ (d) None
annually but is decrease by emigration
annually to the extent of (1/2)%. What will 120. The length of a rectangle is increased by
20% and the width is decreased by 20%.
be the increase percent in 3 years?
The area decreases by:
(a) 9.8 (b) 10
(a) ().8% (b) 1.2%
(c) 10.5 (d) 10.8V
(c) 4% v (d) 8%
| 13. The current birth rate per thousand is
121. The length of a rectangle is increased by
32, whereas corresponding death rate is ll
60%. By what percent would the width
per thousand. The net growth rate in terms have to be decreased to maintain the same
of population increase in percent is given area?
by.
(a) 0.02.1%
(c) 21%
(b) (),002.1%
(d) 2, 1%v/
:
(a) 37 +% V &Q (b) 60%
| 14. A reduction of 21% in the price of
122.
(c) 75%
If the
<>
'' of a
(d) None
circle is decreased by
wheat enables a person to buy 10.5 more
for Rs. 100. What is the reduced price per 50%, its is reduced by:
kg? (a) 2 S (b) 50%
(a) Rs. 2 V. (b) Rs. 2.25 (C (d) 45%
(c) Rs. 2.30 (d) Rs. 2.50
115. A mans basic pay for a 40 hours week 2:
123 r a sphere of radius 10cm, the
value of strface area is what
of the numerical value of its
is Rs. 20. Overtime is paid for at 25% ercent
above the basic rate. In a certain eek, h volume?
worked overtime and his total wage #9 (a) 2.4%

(c) 30%v/
(b) 26.5%
(d) 45%
25. He therefore, worked for a total o
(a) 45 hours (b) 47 h 124. The radius of a sphere is increased by
(c) 48 hours V (d) 5 S 50%. The increase in surface area of the
| 16. Salarics of A, B and C are in the ratio sphere is:
1:2:3. Salary of B and ogether is Rs. (a) 100% (b) 25% v
6000. By what percen ary of C more (c) 1.50% (d) 200%
than that of A'? : 125. A cricket team won 40% of the total
number of machines it played during a year.
(a) 3()() (b) 600
(c) 100 (d) 200v If it lost 50% of the matches played and 20
matches were drawn, the total number of
117. The price of a table is Rs. 400 more
than that of a chair. If 6 tables and 6 chairs matches played by the team during the year
WaS:
together cost Rs. 4800, by what percent is -
the price of the chair less than that of the (a) 200V. (b) 100
table? (c) 50 (d) 40
(a) 200 (b) 400 126. In a market survey, 20% opted for
(c) 100 (d) None of these V. product A whereas 60% opted for product
1 i 8. If the side of a square is increased by B. The remaining individuals were not
certain. If the difference between those who
25%, then its area is increased by:
(a) 2.5% (b) 55% -
opted for product B and those who were
(c) 40.5% (d) 56.25%v/ uncertain was 720, how many individuals
were covered in the Survey?
(a) 48 (b) 60 92. At an election involving two candidates. 68

(c) 8() (d) 120Y. votes were declared invalid. The winning
S5. In a certain office, 72% of the workers candidate scores 52% and wins by 98 votes.
prefer tea and 44% prefer coffee. If each of Total number of votes polled is:
them prefers tea or coffee and 40 like both, (a) 2.518 V (b) 2450
the total number of workers in the office is: (c) 2382 (d) None
(a) '()() (b) 240 93. A's income is 25% more than B's income
(c) 25() V. (d) 320 B's income in terms of A's income is:
. In an examination, 80% of the students (a) 75% (b) 80%v/
passed in English 85% in Mathematics and (c) 90% (d) 96%
75"o in both English and Mathematics. If 94. Anil's height is 20% less than Deepak's.
40 students failed in both the subjects, the How much is Deepak's height more than
total autuber of students is: Anil's'
(a) 200 (b) 24()
(a) 16:% (b) 18%
(c) 250V (d 324) .*
87. In an examination, 35% candidates failed in (c) 20% (d) 25%v.
one subject and 42% failed in another 95. Water tax is it eased by 20% but its
subject while 15% failed in both the consumption is reased by 20%. Then,
subjects. If 2500 candidates at the the increase & rease in the expenditure
examination, how many passed in either of the 's
subject but not in both? (a) NO change
(a) 325 (b) l l 75 V. 'CI"CalSC
(c) 21:25 (d) None of these 1T CITC: SC

S.S. p is six times as large as q. The percent that "o decreasev.
q is less than 2, #: 89 in increasing the price of T.V. sets by
(a) 83 '.
_*
(b) 16
: 30%, their sale decreases by 20%. What is
the effect on the revenue receipts of the
84).
(c) 9() (d) 60
The boys and girls in a college ar
* shop?
(a) 4% increase. (b) 4% decrease
ratio 3:2. If 20% of the boys and 2 the (c) 8% increase (d) 8% decrease
girls are adults, the percentag 97. A nnan spenc's 75% of his income. His
who are not adults is. income increases by 20% and he increased
(a) 58% ) :..5% his expenditure by 15%. His savings are
(c) 78% v. 82.5% then increased by.
*)(). in an election betw. two candidates, a
candidate who g }% of total votes is
(a) 33% (b) 33!,
defeated by 5() Votes. The n!">ber of (c) 35%v/ (d) 40%
votes polled by the winning candidat? is: 98. The price of sugar increases by 20%. By
(; ) () ()()(? (b) |{)()()() what percent must a house wife reduce the
(c) 22:500 (J) 45000v. consumption of sugar, so that the
() || In an election betw','een two candidates, one
expenditure on sugar is the same as before?
got 55% of total valid votes. 20% of the
votes were invalid. If the total number of (a) to:- (b) 20
votes was 7500, the number of valid votes
that the other candidate got was: (c) 80 (d) s:
(a) 27()()v (b) 2900
(c)3()()() (d) 310') 99. The price of oil is increased by 25%. If the
expenditure is not allowed to increase, the
64 , From a container having pure milk, 20% is
(c) 20 (d) 16# replaced by water and the process is
repeated thrice. At the end of the third
58. 30% of A's salary is equal to 20% of 'm operation, the milk is:
(a) 40% pure (b) 50% pure
of B's salary. If Bs salary is Rs. 2400,
what is A.s salary? (c) 51.2% purev
(a) Rs. 1880
. A man bought a house for Rs.5 lakhs and
(b) Rs. 1000
59.
(c) Rs. 960V. (d) Rs. 2160
Alekh secured 50% marks in Hindi, 60% in
rents it, He puts 12% of each months
English and 70% in Maths as well as in rent aside for repairs, pays Rs. 1660 as
Science. What were his total marks if the annual taxes and realizes 10% on his
maximum marks obtainable in each of these investment thereafter. The monthly rent of
the house is:
4 subjects was50?
(a) 125 Y (b) 120 (a) Rs. 5000 (b) Rs. 4920 V
(c) 250 (d) 150 (c) Rs. 2500 (d) Rs. 2460
1
6(). If x', of a is the same as y% of b, then Z%
of b is:
66.
-
In a public School #(h)of -
girls and #" of
(a) *% of a (b) *% of a boys are '' years age. If the total

X Z. strength of the Sehool is 1000 and number
(c) *% of av (d) None of these of girls i h of the total, what part of the
61.
y
ln a city, 35% of the population is :
: gth of the school is accounted for
se which are 12 years or more of age?
composed of migrants, 20% of whom are
from rural areas. Of the local population, 3% (b) 45%
c) 55% (d) 77%v/
48% is female while this figure for rural
and urban migrants is 30% and
respcctively. If the total population

'
. The salaries of A and B together amount to
Rs. 2000. A spends 90% of his salary and
city is 728400, what is its e e B, 85% of his. If now, their saving are the
same, what is A's salary?
population?
(a) 3241.38 (b) 3
(a) Rs. 1500V. (b) Rs. 1250
(c) 509940 (d) V (c) Rs. 750 (d) Rs. 1600 t
68. A debtor can pay 87 paise in the rupee, but

A's marks in Biology are less than 25%
of the total marks if his creditors would take 20% of his debts,
ed by him in
Biology, Maths and he could pay them and have Rs. 42 left. His
ing. If his marks
at are his marks in debts and assets respectively are.
in Drawing be 5
Maths? (a) Rs. 600, Rs. 522*
(a) 40 (b) Rs. 500, Rs. 521
(b) 45 (c) Rs. 400, Rs. 520
69. 300 grams of sugar solution has 40% sugar
(c) 50
(d) Cant be determined Y in it. How much sugar should be added to
make it 50% in the solution?
63. An increase of Rs. 60 in the monthly salary
of Madan made it 50% of the monthly (a) 10 gms (b) 40 gms
salary of Kamal. What is Madan's present (c) 60 gmsV. (d) 80 gms
70. The quantity of water (in ml) needed to
monthly salary? (b) Rs. 240 w reduce 9 ml shaving lotion containing 50%
(a) Rs. 180
(d) Data inadequate V. alcohol to a lotion containing 30% alcohol,
(c) Rs. 300
is:
24. By how much percent is four-fifth of 70 (a) 320 (b) 400
lesser than five-Seventh of 1 12? (c) 640 (d) Nonev.

(a) 42% (b) 30%v/ 34. Subtracting 6% of x from x is equivalent to
(c) 2.4% (d) 36% multiplying x by how much? -
25. What will be 1.60% of a number whose (a) 0.94v. (b) 9.4
200% is 140? (c) 094 (d) 94
(a) 200 (b) 160 35. If 8% of x = 4% of y, the 20% of x is:
(c) 40 (d) 112 v. (a) 10% of y (b) 16% of y
26. If 75% of a number is added to 75, the (c) 80% of y (d) None of these v.
result is the number itself. Then, the 36. (x% of y + y% of x) = ?
number is: (a) x.9% of y (b) y% of x
(a) 400 (b) 300w (c) 2% of xyY (d) xy% of 3
(c) 6() (d) 50 37. If 90% of A = 30% of B and B = x', of A,
27. Subtracting 40% of a number from the then x is equal to:
number, we get the result as 30. The (a) 900 O (b) 300V.
number is: (c) 800 & (d) 600
(a) 28 (b) 50 v. 38. x% of y is *&
(c) 52
28. If three fifth of a
d) 70
" is 40 more than -
(a) % <>
(b) 100
X
40% of the same number. What is the ).

number? s' X (d) +
(a) 100
-
(b) 150
-
8 l
i ()()
(c) 200V. (d) 400

29. A number, on subtracting 15 from it
2% number increased by

37.5%
-
gives 33.
reduces to its 80%. What is 40% of t

number?
(2) '" a J ..
(b) 25
-
(a) 60 (b) 45 SQ (c) 24v. - (d) 22

(c) 30.V. (d) 90 40. ". number which when decreased by
30, Calculation shows that an 37:

is 27.5% gives 87 is:
The size obtained drawing and (a) 27 (b) #
measurement is 36. rror percent is (c) 24% - * (d) 22
| 41. 40 quintals is what percent of 2 metric
(a) l - (b) 3 tonncs?
2 S (a) 20% (b) 2%
(c) 4x @ 4' (c) 200%v/ (d) 150%
() 42. It is known that 20% of the mangoes are
31. The population of a town has increased rooten. If the number of rotten mangoes is
from 133575 to 138918. The percent 35, then the total number of mangoes is:
increase in population is. (a) I50 (b) 175v
(a) 2.5 (b) .3 - (c) 180 (d) 185
(c) 3.5 (d) 4v. 43. If 70% of students in a school are boys and
32. If X is 90% of Y, What percent of X is Y? the number of girls is 504, the number of
(c) 90 (d) 1 | 1.1 V (a) 1680

(c) 1276
(b) 1176 v.of these
(d) None
- 4
33. If x", of y is the same as 3. of 80, then the
value of xy is:
(c) A U B v (d) B A 76. X and Y are subsets of a universal set U. If

65. A B = B = A if and only if for all subsets P of U, Pr" X = P J Y, then
(a) A G B or B c A X and Y are respectively: -
(b) A = p or B = } (a) (), 4 (b) U,U

(c) A = B.V. (c) U, p v. (d) (), U .
(d) None 80. In a group of persons, each one knows
66. If Ara B = p, then: either Hindi or Tamil. If 100 know Hindi,
50 know Tamil and 30 know both, how
(a) Bc A (b) A G B v.
many persons are there in the group?
(c) A" c B' (d) B" c A" (a) 120Y. (b) 13()
67. (A U B')' equals: (c) 150 (d) 180
(a) A U B (b) A C B v. 81. If 63% of Indians like milk and 76% like
tea, how many like both?
(c) A B (d) (AB)'
(a) 13% (b) 26%
68. If A J B = A \U C, then: }
(a) B = C (b) Bg C (c) 39%v/ (d) 65%
(c) C c B
69. A B = p if and only if:
(d) Nonev 82, in a group
not coffee :
: 16 drink, tea but
3 drink tea. How many
(a) A : B (b) Bc A drink coffee but not tea?
(c) A C B v. (d) None (a) 3 (b) 7
7(). If A and B are two Subsets of X, then (c)."> (d) 19 V.
A G B if and only if 83. A
().dinner party is to be fixed for a group
(b) Ary B = }
(a) A U B = XV
(C) A^ B = A (d) None 2 $onsisting
: of 100 persons. In this party, 50
do not prefer fish, 60 prefer
chicken and 10 do not prefer either chicken
71. Ar. (B-C) is equal to:
(a) (A - B)(A (UC) or fish. The number of persons who prefer
(b) (Ari B) C
(c) (AC, B) (Ara C) V. Ss' both fish and chicken is:
(a) 10
(c) 30
(b) 20:V
(d) 4()
(d) A (B^ C) 84. In a class consisting of 100 students 20
72. If A = {2,3,5}, B = {4,5,6}, (Ary B} X know English and 20 do not know Hindi
A is: and 10 know neither English nor Hindi. The
'oses, s'set
(b) {(5,2),(5,3)}
number of students knowing both Hindi and
English is:
(c)) {(5,2),(5,3),(5,5)} V (a) 5 (b) 10v.
(d) {(5,2),(2,5),(3,5)} (c) 15 (d) 20
73. If A {0,1,2} and B {2,4,6}, then 85. The function f:N-> N f(x) = 2x, where N is
(Ara B) x (A \) B) the set of natural numbers, is:
(a) {(0,2),(1,2),(2,2),(4,2),(6,2)} (a) one-one & onto
(b) {(2,0),(2,1),(2,2),(4,2),(2,6)} (b) one-one but not onto Y
(c) {(0,2),(2,1),(2,2),(2,4),(2,6)} (c) onto but not one-one
(d) (2,0),(2,1),(2,2),(2,4),(2,6)} Y (d) Neither one-one nor onto
74. If a set A has 5 elements and a set B has 10 86. If f(x) = x and g(x) = x, x being real, then:
elements, then number of elements in Ax B (a) f is one-one but g is not one-one
1S.
(b) fis not one-one and g is one-onev
(a) 50 v. (b) 15 (e) Neither f nor g is one-one
(c) 5 (d) None (d) Both f and g are one-one
info
corne r.
loyee
mp
.e
www
75. The value of x in the equation 8 [. '')X*

(a) 18
(c) 81
(b) 24v'
(d) 42
84. The perimeter of a rectangle is 82 m and its
-42 [. -: X A
+ 29 = () is: area is 400m'. The breadth of the rectangle
is:
(a) 4Y (b) 2 (a) 25m (b) 16m*
| I (c) 9m (d) 20m
(c) 2. (d) 4
. The value of x in the equation
85. Out of a group of Swans, (#)
7 -
times the
-
-
\'
(x'x -#x-:)
2
|
X
= 4 is:
square root of the number are swimming in
water while two remaining are playing on
the shore. The total number of Swans is:
!
(a) -2 (b) - (a) 4 (b) 8
) 2
(c) 12 (d) 16v
(c) I v. (d) 0
77. The solution set of the equation (x+1)(x+2) Set-Theory
(x +3)(x+4) = 120 is:
(a) {6, 1 } (b) {6,-1}
. A set is:
(a) a collecti
*
(c) 3-6,1} V . (d) {-6,-1}
&:
(b) a group of objects
78. The value of x in the equation N4x3 + (c) a ction of objects with a fixed
V2x+3 = 6 is: common property
(a) 3 (b) 1 '') well defined collection of objectsv
(c) 100 (d) # 11 v.
24-1'- A * {1}, which of the following
tatements is correct?
79 . The roots of the cquation 4 3.2 + 32 = (a) A = } (b) 1 c A
() would include.
(a) 1,2 and 3 (b) 1 and 2 SN (c) {1} e A (d) I e AY
lf A = {1,2{3,4}}, which of the following
84).
(c) l and 3 (d) 2 and
The Solution set of the equation 'Q O 2-X =
3.
statements is incorrect?
(a) 3 e A (b) {1} cAv
126 is:
(a) , 1,2} (b }v (c) {2} e A (d) 1 c A
(c) { 1,-2} (d) { 1,-2} 4. If A = {1,42,3},5}, which of the following
. The two parts into
divided so that 's
ct is 782 are:
should be statements is incorrect?
(a) {2,3} e A (b) {{2,3}} c A
(a) 43. 14 (b) 33,24 (c) {3} c A V. (d) {5} c A
(c) 34.23v. S (d) 44,13 5. If A = {2, {3,4},6}, which of the following
is correct?
. The sum of a number and its reciprocal is
2. ' . The nuinber is:

(a) {2} A (b) {3} e A
20 (c) {4} e A (d) {3,4} e AY
S - 3 6. If A = {1,2,3},4}, which of the following
(a) - V b) - is a subset of A'
4 (b) ,
4 | (a) { 1,2} (b) {2,3}
d) -
(C) 3* M --
(d) 6 (c) {3,4: (d) { 1,4} V.
3. A two digit number is such that the product 7. Let A = {3, T , 3. -5, 3 + N74. The
of the digits is 8. When 18 is added to the subset of A containing all the elements
number, the digits are reversed. The from it which are irrational numbers is:
number is:
(a) a = +l , c = 5 v (b) a = 2, c = 3 -
49. If ol, 3 are the roots * *on * X2 5X
-
2 -
+6 = 0, the value of C1 3 is.
|
(c) a = 5, c = + (d) = a 3. c = 2 (a) + 4 (b) +5 V
2 (c) + 6 (d) ()
41. If the sum of the roots of the equation kx + , 0 . [3 .
50. If a,B are the roots of x2 + px of D".
-
2x + 3k = 0 is equal to their product, then 1S.
the value of k is: * 2 * +2

(a) ' (b) -: (a) P =# / (b) P " +
3 3 2 C.
2 p" + 2 n' 2
3 3 C] C]
42. If (x+3)(x+4)(x+5) = x(x-2)" + 16x 26, 51. If ot, S are the roots of the equation ax +
3
then.
(a) x = -2v. (b) x = 2 * -- "wro' is:
(c) x = 3 (d) x = 4
43. If a, B be the roots of ax + bx + c = 0, the
~
(a) b 2ac &O (b) -b'+3abc

3.
value of a + B' is:

* 2 - h". "
* 'S *
- 2:
a'
b" 4ac b* 2ac (c) = **. (d) b = 2a:

(a) (b) 2 - a
.* .* 52. If one root of 5x + 13x + k = 0 be the

(c) b -2" v (d) b # of the other root, the value of k .
al" dC :
44. If q, 3 are the roots

the value of a +3 is:
of x*-px + q = 0, then 29. (c) 2
() (b) 1
(d) 5*
53. The roots of the equation ax + bx + c = 0
will be reciprocals if:
(c) p(p. 34) (d) ' 'S
45. If a, 3 are the roots of '' (a) a =b
(c) c = av
(b) b = c
(d) None of these
equation x' 6x + 6 = 0 lue of
54. The value of k for which the roots 0, 3 of
a"B" is: the equation x 6x + k = 0 satisfy the
(a) 36 s' 24v. relation 3 o' + 29 = 20, is -
(c) 12 (d) 6 (a) 8V (b) 8

46. If ol, [3 are the T f the equation x - 8x (d) 16
(c) 16
+ p = 0 and * = 40, then p is equal to: 55. If a,9 are thc roots of the cquation 2x -
(a) 8 (b) 10 3x + 1 = 0, ther the equation whose roots
(c) 12Y (d) 14 are * and B. is:
47. If q, are the roots of the equation x + x + C.
1 = 0, thc valuc of a "B" is: (a) 2x + 5x + 2 + 0

(a) 0 (b) 1 (b) 2x* - 5x 2 =0
(c) 1 v. (d) None of these (c) 2x + 5x 2 =0
48. If G,B are the roots of the equation 2x - (d) 2x 5x + 2 + 0
56. If G,B are the roots of the equation x 3x
4x + 3 = 0, then the value of a +3 is:
+ 2 = 0, then the equation whose roots are
(a) V. (b) 1
(q -1) and (3 + 1) is:
(c) 2 (d) ()
(a) x + 5x +6 = 0(b) x 5x 6 = 0
_7
Quadratic Equations (c) 7 V (d) 2
l, The value of the expression 16x + 24x + 9 16. The ratio of the sunn and the product of thc
- 3 .
for x = -- is: roots of 7x - 12x 180 is:
4. -
(b) 2:3 V
(a) 7:12
(a) 2 (b) l . (c) 3:2 (d) 7: 18
(c) ()w (d) l 17. The roots of 2x 6x 7 = 0 are:
2 x = 3 is solution of the equation 3x + (k - (a) real, unequal and rational
l) x + 9 = 0 if k has value, (b) real, unequal and irrational
(a) #3 (b) 13 (c) real and equal
(c) | 1 (d) 11 V (d) imaginary V
The roots of the equation x + 2x 35 = 0 18. The roots of 2x2 6X + 3 + () are:
al C.
(a) real, unequal and
(a) 5,7 (b) -5,-7 (b) real, unequal and irrational V
(c) 5.7 (d) 5,-7 v. (c) real and equal
The quadratic polynomial in x whose zeros
are a, 2a is:
(d) imaginary s of x = x -2 = 0,
19. With respect to t
(a) (x+a)(x-2a) (b)(x-2a) (x+2a) WC can Say that S
(c)(x+a) (X+2a) (d)(x-a)(x-2a)Y (a) both of ' matural numbers
6. The expression x' + 7x + 16 can be (b) both n are integers'
factorized as: (c) th #6'the two is negative
(a) (x + x + 1) (x + x + 16) (d)
(b) (x + x +4) (x -x -4) 20.
() uation x + 4x + k = () has real roots.
(c) (x" + x 4) (x -x +4).
(d) (x + x -4) (x -x -4) (b) k < 4v.
The Solution of 2 - X =
x2
W Oll
2% ' (c) k < 0' (d) k > 0
X 21. The value of k for which x2 > 4x + k = 0
include: has coincident roots is:
(a)-2,-l (b) 2,-1 V. S. (a) 4v. (b) -4
(c) -4.2
The common root of the
#S
(d) (c) () (d) 2
22. The equation (m being real), mx + 2x + m
x 7x + 10 = 0 and x* 10x + 16 = 0 is: = 0 has two distinct roots, if:
(a) -2 3 (a) m + () (b) m + 0,1
(c) 5 (d) 2w (c) m + 1,-1 V.
If x is real, the vals." he expression-3x" 23. If the equation x + 2 (k+2) x + 9k = 0 has
+ 6x 1 is: equal roots, the values of k are:
(a) less than 2 (b) greater than 2 (a) 1,4Y (b) -1,4
(c) lies between 2 and 2 (c) 1,-4 (d) -l,-4
(d) None of thescw 24. If the roots of ax + bx + c = 0 be equal,
then the value of c is:
14. if the product of the roots of x2 3x + k =
0 is 2 the value of k is b b
a
(a)
2a (b)) -
2a
(a) 2 (b) 8v
(c) 12 (d) 8 b b
15. If one root of the equation 2x + ax + 6 = 0 C}
(c) -
4a - V.
(d) 4a
is 2 the value of is:
25. If the roots of x + 4mx + 4m 4 m + 1 = 0
7
(a) 7 (b) 2. are real, then:
(a) m = -l (b) m s - 1 v.
(c) 6* (d) 8 40. The difference between two numbers is 5

33. The course of any enemy submarine as and the difference between their squares is
plotted on a set of rectangular axes gives 65. The larger number is:
the equation 2x + 3y = 5. On the same axes, (a) 9./ (b) 10
the course of destroyer is indicted by x y (c) 11 (d) 12
= 10. The point (x,y) at which the 41, If 3 chairs and 2 tubes cost Rs. 1200 and 5
submarine can be destroyed is: chairs and 3 tubes Cost Rs. 1900, then the
(a) (7,-3) v. (b) (3,7) cost of 2 chairs and 2 tubes (in Rs.) is:
(c) (7,3) (d) (3,-7) (a) 700 (b) 900
34. A system of two simultaneous linear (c) 1000v (d) l 100
cquation in two variables is inconsistent, if 42. Let x and y be the costs of a mango and an
their graphs. orange respectively. Suppose, cost of 2

(a) are parallel V (b) are coincident mangoes is 1 rupee more than cost 3
(c) interest in one point (d) None of these oranges and cost of 3 oranges is 1 rupee
35. For what value of k will the equations 2x + more than the cost of one mango. Then,
32y+3 = 0 and 3x + 48y + k = 0 represent (a) 2x 3y = 1, x 7.35% - 1 v.
concident lines?
2 3
2.
(a) 3 (b) 2
######
:
(d) 3 y 2x
43. lf three ti
-- 3y = 1
the larger of two numbers is
(c) ** (d) | divid smaller, the quotient and the

2
re ' r, each is equal to 6. If five times
36. The equations ax + b = 0 and cx + d = 0 are
consistent, if
#: is divided by the larger, the
utient is 2 and the remainder is 3. The
(a) ad = bcv.
(c) ab cd = 0
(b) ad + be = 0
(d) ab + cd = 0
22: number is.
(a) 6 (b) 7./
37. Ei and E2 are two linear equations in tw
(c) 8 (d) 9
variables x and y, (0,1) is a solution o
Ei and E2, (2,-1) is a solution of El O d
44. A number consists of two digits, whose
sum is 10. lf 18 is subtracted from the
(-2,-1) is a solution of E2 only. E2
dre.
number, digits are reversed is 2 and the
remainder is 3. The smaller number is.
(a) x = 0, y = 1 (a) 64% (b) 46
(b) 2x y = -1, 4x + y = 1 <>
(c) 55 (d) 78
(c) x + y = 1, x - y = -l 45.
. A number consists of two digits whose sum
(d) x + 2y = 2, x +
is 9. The number obtained by reversing the
38. The total cost of ooks and 4 pencils is order of the digits of the given number,
Rs. 34 and that of 5 books and 50 pencils is exceeds the given number by 27. The
Rs. 30. The cost of each book and pencil (in number is.
Rs.) respectively is.
(a) 36v (b) 45
(a) l and 5 (b) 5 and 1% (c) 54 (d) 27
(c) 6 and I (d) 1 and 6 46. There are two examination halls, P and Q.
39. The sum of two numbers is 80. If the larger
number exceeds four times the Smaller one
If 10 students are sent from P to Q, then the
number of students in each room is the
by 5, then the smaller number is. same. If 20 students are sent from Q to P,
(a) 5 (b) 15:/ then the number of students in P is double
(c) 20 (d) 25
of that in Q. The number of students in P
and Q respectively are.
(a) 100,80V. (b) 80,60
fo
orner.in
ec
www.employe
Subject Spccialist & Lectureship Guide - Commcrce 264
(a) Bctween 5 and 20v (b) Fewer than 5 24. In pie diagram the angle Q is obtained by
(c) Between l and 5 (d) More than the:
14. Thc Smallest and the largest values of any Component Part
a) x 180
given class of a frcquency distribution are ( Total -
called.
(b) Component Part x 360 v
(a) Class interval (b) Class limits V Total
(c) Class marks (d) None of above (c) componen Part x 1 ()()
15. In construction of frequency distribution,
Total
the first step is:
(a) To find the class boundaries (d) Component Part x 120
(b) To calculate the class marks Total
(c) To find range of the datav 25. Frequency polygon is a:
(d) None of above (a) Circular graph (b) Square graph
. The footnotes are normally represented by: (c) Bar graph (d) Line graphY;
(a) ---------- (b) * * * * * 26. The cumulative fr
called. gecy polygon is also
polyg
(c) . . . . . . . . . . . . (d) 22????
17. In a statistical table, column captions are (a) Ogivew - S (b) Bar graph
also called: (c) Rectangular graph (d) Histogram
(b) Box headsv. 27. A bimod uency curve consists of:
(a) Stubs
(c) Prefatory spaces (d) Body
Source notes are given at the:
(a)
(c)
: maxima
(b) One maxima
(d) No Maxima
(a) End of the tablev 29. ifference between the upper and the
(b) Beginning of the table er class boundaries of a class is known
S.
(c) Top of the table
(d) Middle of the table (a) Class marks (b) Class limit
| 9. The number of tally count for each
called its:
*\ (c) Class interval V (d) Range
30. To show no entry in a cell of the dashes (---
(a) Class mark (b) Class al -) and . . ... are used:
(c) Frequency V (d) Ra (a) 22?? (b) * * * *
. The part of the table containi column (c) ......... v (d) zeroes
captions is called: 31. In frequency curve if the longer tail occurs
(a) Stub (b) B adv to the left curve is called:
(c) Body (a) Positively skewed (b) Symmetrical
''
. The part of the \table containing row (c) Negatively skewed V (d) Identical
captions is called: 32. In frequency curve if the longer tail occurs
(a) Stub v. (b) Box-head to the right, the curve is called:
(c) Body (d) Prefatory (a) Positively skewed V
. The headings for different rows are called: (b) Symmetrical
(a) Rows captions V. (c) Negatively skewed
(b) Column captions (d) Idcntical
(c) Stubs 33. Graph of time series:
(d) Both a & c (a) Historigraniv (b) Histrogram
. The headings for different columns are (c) Frequency polygon (d) Ogive
called. 34. Width of the class (h) is obtained by the
(a) Column captions relation.
(b) Rows captions (a) Vn
(c) Box-head
(d) Both a & cy
(e) None of the above (a) Theory of absolute advantagcs
4. The theory of comparative advantages can (b) Theory of comparative advantages
be applied if, for two goods, one trade (c) Heckscher-Ohlin theorem
partner. (d) All of the abovev
(a) Has absolute disadvantage in one (e) None of the above
commodity only 14. According to modern theory of trade, after
(b) Has absolute advantage in one trade, both trading nations are on a.
commodity only (a) Higher production possibility curve
(c) Has absolute advantage in both (b) Highcr community indiffercnce curvev
commodities (c) Lower production possibility curve
(d) All of the above Y (d) Lower community indifference curve
(e) None of the above (e) None of the above .
Comparative advantage means. 15. According to the modern theory of trade,
(a) Greater absolute advantage in one engaging in trade, the welfare of
commodity (a) Both countries increases
(b) Less absolute disadvantage in one
-
(b) Of the : y having absolute

commodity advantage in both commoditics increases
(c) Comparative advantage in both (c) None of the countries increases
commodities
(d) a & b v.
(d)
(e)
: only increases
f the above
(e) a & C 1. -
(3. A country can not have. aid by choice

(a) Absolute advantage in both ) A compulsory contribution to the
commodities
(b) Comparative
commodities V
advantage in s: society.'
(c) A type of fine for living in a country
(d) A type of fee for citizcnship
(c) Absolute disadvantage in (e) None of the above
commodities S. 2. In a tax system, the canon of economy
(d) a & b
(c) a & C
- S means that
(a) Less tax should be collected
| |. According to the Inode of trade, a (b) Only economists should be taxed
labor intensive
by a
will be produced (c) Only economists should collect taxes
(d) Tax collection costs should be
(a) Capital abu ountry reasonablev
(b) Labour ' country (e) None of the above
Ad Valoreni tax means.
(c) Both the labour abundant and capital
abundant countryv. (a) Tax at valuev (b) Tax at volume
(d) By none of the countries (c) Tax per unit (d) Tax on weight
(e) None of the above (e) None of the above
12. Partial specialization is a result of trade Indirect taxes are.
according to which theory? (a) Paid by one person and burden is on
(a) Theory of absolute advantages another personv.
(b) Theory of comparative advantages (b) Paid by a person and the burden fall on
(c) Heckscher-Ohlin theorem V the same person -
(d) All of the above (c) Paid by a person and the burden is on
(c) None of the above the government
. Both tradc partners benefit from trade (d) All the above are possible
according to which theory? (c) None of the above
Subject Specialist & Lectureship Guide - Commerce 26{}
9. (c) Long run consumption function
GNP/ GNI is not a good measure of welfare
because it does not include. (d) All of the abovev
(a) Household production (e) None of the above
(b) Non-material items . The idea that long run consumption
(c) Happiness function passes through the origin was
(d) All of the abovev given by. -
(e) None of the above (a) J.M. Keynes

10. GNP minus depreciation gives (b) Simon Kuznets*
(a) GNI (b) PI (c) Alfred Marshall
(c) NNPY (d) GDP (d) Adam Smith
(e) None of the above (e) None of the above
. The following may influence consumption.
Consumption And (a) Household size
(b) Future expectations
Saving . (c) Geographical location
. According to Keynes theory of (d) All of the abovev.
consumption, consumption grows with (e) None of theasoye
income but
. If MPC declines over time then.
(a) More than proportionality (a) MPS will increasev.
(b) Less than proportionatelyY (b) MPS will also decrease
(c) Only till the need for necessities is (c) MPS nay remain the same
fulfilled
(d)"All of the above is possible
(d) At a constant rate
/(e)..None of the above
(e) None of the rate NIf the structure of the population changes in
MPC is the slope of the such a way that the proportion of young
(a) Consumption functionv. people increases considerably then.
(b) Saving function (a) APC will increase
(c) Disposable income
(d) All of the above s' N
(b) APC will decline
(c) APS will decline
For the consumption :
the equation C = 500 + 0.8 he MPC is.
by
.
(d) a & b
(e) a & cv.
Induced investment is the

part of
(a) 8% (t .8 investment that.
(c) 80%v/ (d) a & b (a) Depends on income
(e) b & c * *
The following is not correct.

(b) Is independent of incomew
(c) Some times depends and some time
(a) MPC + A 1 v.
does not depend on income
(b) MPC + MPS = 1 (d) Depends on income only in the long run
(c) APC + APS = 1 (e) None of the above
(d) C = a + b Yd . Investment is,
(c) b & c (a) A decreasing function of income
If average propensity to save is 0.2, then (b) An increasing function of income.
(a) MPC = 0.2 (b) MPC = 0,1 (c) The change in existing stock of
(c) MPC = 1 (d) MPC = 2 capitalv
(e) None of the above.V. (d) a & b
(). The following is are positively sloped. (e) b & c
(a) Saving function . Keynes believed that in the short run.
(b) Consumption function (a) Investment depends on income
(d) all of the above 2. In a competitive labour market, wage rate is

(e) none of the above determined by. -
(). Advertising. - (a) The owners of a firm

(a) Normally shifts the demand curve to the
right
(b) Developed countries
(c) Demand and supply of labourv
(b) May increase the slope of demand curve (d) Demand and supply or goods
(c) May cause a decrease in elasticity of (e) None of the above
demand According to marginal productivity theory,
(d) All of the abovev the price of a factor, in the long run will be
(e) None of the above equal to.
In the long run, a firm operating under (a) The factor's available quantity
monopolistie competition earns. (b) The price decided by the government
(a) Normal profity (c) The factor's price in other countries
(b) Super normal profit (d) The factor's marginal revenue productV
(c) Negative profit (e) None of the above
(d) Positive economic profits Marginal productivity is also called.
(e) None of the above (a) Marginal revenue product
Under oligopoly, we find (b) Marginal physical product
(a) One seller (b) Two sellers (c) Marginal produet of a factor
(c) few sellersv (d) Many sellers (d) All of the above/
(e) Any number of scllers * (e) None of the above
Sweezys kinked demand model is related 5. in the \marginal productivity theory, the
[O. supply of labour is.
(a) Oligopolyv (a)inelastic
(b) Perfect competition (b) Perfectly elasticv/
(c) Monopolistic competition (c) Highly elastic
{d) All of the above (d) Equai to population
. Cartel is a type of.
S\, (e) None of the above
The modern theory of factor pricing
(a) Perfect competition S. discussed here assumes that labour Supply
(b) Monopolyv
(c) Monopolistic competition
S 1S.
(a) Perfectly elastic

(d) All of the abovc <> (b) Inelastic
(e) None of the above (c) Less than perfectly elasticV.
(d) Infinite
Factors et And . (d) None of the above
Income Distribution Wages The Price of
Distribution theories explain.
(a) Distribution of produced wealth among Labour
factors of production V Rent is a concept the can be used for.
(b) Distribution of bribe money among (a) Labour (b) Capital
government officials (c) Land
(c) Distribution of power among politicians (d) All factors of production V
(d) Distribution of oil resources among (e) None of the above
developed nations Land is.
(c) None of the above (a) A relatively fixed factors of
production V
-Subject Specialist & Lectureship Guide - Commercc 256
4. Under perfect competition with short run | 1. The firm feels that she can not cover
super normal profit. average total cost in the short the firm will
(a) AC < MC (b) AC > MCV decide to.
(c) AC = MC (d) AC = AR (a) Permanently hut down
(c) AR = MC (b) Temporarily shut down v.
In the long run under perfect competition. (c) Do nothing because nothing can be
(a) LAC < LMC done
(b) LAC < LMC (d) Increase production
(c) LAC = LMC = AR = MR = Pv. (e) Decrease production
(d) LAC > AR = MR 12. perfect competition.
(e) None of the above (a) Is often the market situation
For equilibrium under perfect competition a (b) is always the market situation
required condition is that, (c) In never the market situation
(a) Slope of MR = slope of MC (d) Is rarely the market situation*
(b) Slopc of MC > slope of MRY (e) None of the above
(c) Slope MR = slope of MC } 3. Which of the fo statement is correct
(d) Slopc of MC < slope of MR under perfect competition.
(e) None of the above (a) Prices, are: ut of the control of the
A shut down point is actually. individyal firm
(a) A long run situation (b) Prices/are determined by demand and
(b) A long run profit maximization supply in the industry
(c) A short run loss minimization' Prices are taken as fixed for an
(d) A point where revenues are Zero individual firm -
(e) None of the above (d) All of thc aboveY

In the long run under perfect *@ 14.
If the price per unit of a product in the
-
firms earn only normal profits.

(a) Costs are high O market is Rs. 20 and average cost is Rs. 18
(b) Government does not 'Q per then the firm is earning.
(a) Normal profits
normal profits
(c) Price are very low (b) Super normal profits'
(d) Taxes are high - (c) Nothing
(e) Free entry and exit offirms is possiblev (d) Rs. 20 per unit
9. Under perfect competition in the short run, (c) None of the above
the supply curve of the firm is actually her. 15. Under perfect competition, the demand is.
(a) Marginal cost curvey (a) Inelastic (b) Infinitcly elasticv/
(b) Average cost curve (c) Less elastic (d) Minimum possible
(c) Input supply curve (c) None of the above
(d) Marginal revenue curve The characteristics of monopoly include:
(e) None of the above (a) A single firm
. Under perfect competition in the long run, (b) Control over price
thc industry supply curve is by. (c) Barriers to entry of firms
(a) Intersection of demand and supply (d) Free entry and exit
curves Y. (e) None of the above
(b) Adding all marginal costs Monopoly is.
(c) Adding all supply curves (a) A market structure
(d) All above can be used (b) A union of firms
(e) None of the above (c) Market where many firms have perfect
control over price
(b) Elasticity of supply is less than short (e) None of the above,
Tulln. . Production function is.
(c) Elasticity of dcmand is less than short (a) a mathematical formula,
full). (b) A relationship between goods and
(d) B & c scrvices.
(e) a & c (c) A relationship between labor, capital,
| 3. For a luxury. CtC,
(a) Price elasticity of demand is positive (d) A relationship between inputs and
(b) Demand is highly elasticY outputs. Y
(c) Demand is less elastic (c) None of the above.
(d) Supply is less elastic The relation between inputs and out put is
(e) None of the above. give by.
14. If price rises from 10 to 20 Rs. Quantity (a) Law of eventually diminishing returns.
demanded fall from 100 to 50, the point (b) Law of variable proportions.
eiasticity of demand at Rs. 10 is. (c) Laws of production.
(a) V: (b) V, (d) All of the abo )
(c) % v. (d) 1 (e) None ''
(e) 2 Marginal Product is.
Market Equilibrium
(a) The
(b) R
production function.
change of output w.r.t one
es
If both demand and supply rise, what
happens to equilibrium price?
(a) It will increase -

in
* t
Ull.
in TP/ change in some variable
(b) It will decrease @(d) All of the above.<

(c) It will Not change (e) None of the above.
(d) Nothing can be saidV. At maximum total product, marginal
2.
(c) First price will rise then fall
If demand rises by 10% and supply rise by
G\ .
-
product is.
(a) Zerov.
50% what happens to equilibrium price? (b) Negative
(a) It will increase (b) It will decreasev (c) Positive
(c) It will not change -
(d) Negative and rising
(d) Nothing ean be *S. <> (e) None of the above
(e) First price will rise then fall In the second stage of production.
In a shortage situation price will. (a) MP fails and TP remains constant.
(a) Risex S(b) Fall (b) MP falls and total product increases.Y
(c) Be unchanged (c) Marginal product increases and TP
(d) Nothing can be said falls.
(e) First fall and then rise (d) MP increases and TP remains constant.
(e) None of the above,
Production Law of returns are also called.
Production can be explained as. (a) Laws of revenues
(a) A process to use labor, capital and other (b) Laws of inputs
factors to create new commodities.
(c) Laws of diminishing revenues
(b) A process to transform inputs into (d) Laws of increasing revenues
Output (e) Laws of costs
(c) Creating goods using factors of . The returns may diminish because.
production. (a) Only one variable factor is combined
(d) All of the above. Y with fixed factors of production. Y
(a) Pricev 10. The demand equations for two consumers

(b) Tastes are Q = 50 P and Q = 50 2P. The
(c) Supply market demand equation (assuming only
(d) Price of other goods two consumers) would be
(c) Expectations of future price change (a) Qd = 20 P (b) Q = 5050 2P
The law of demand implies that, ceteris (c) Qa = 1002P (d) Qa = 503P
paribus, (e) Qa = 100 3PV
(a) Demand varies directly with price.
(b) Denmand varies inversely with price. Y Supply
(c) Demand has nothing to do with price. 1. Supply is.
(d) Demand always increases when price (a) The amount of a commodity that is
changes. produced.
(c) Demand always decrease when price (b) A relationship between quantity
changes. -
supplied and price, Y
5 The quantity demanded of a normal product (c) The availability of raw material for
increases when. production of the commodity.
(a) The consumer's income decreases. (d) All of the ab
(b) The price of the product falls.v. (e) None '' We.
(c) The price of a substitute falls. 2. Shift factors in the supply function are.
(d) All of thc above. (a) The factors that continuously shift.
(e) None of the above. (b) The factors, the change of which, can
6. We may observe a rise in demand when, shiftthe supply curve. Y
'The factors, the change of which,
(a) Thcre is a general rise in income.
(b) Population grows.
(c) The price of other substitutes increases.
$: the slope of supply curve.
d) All of the above.
(e) None of the above.
(d) All of the above. Y
(e) None of the above. N 3. All of the following are shift factors of
The 'ceteris Paribas' assumption
of demand includes that.
or's supply function except.
(a) Pricew
S. (b) Cost of production
(b) The
changc.
quantity :*
(a) The price does not change.
InOt (c) Price of inputs
(d) Tax
(c) The expectations a future price do (e) Political Stability
not change. Y 4. The law of supply implies that, ceteris
(d) All of the abo paribus,
(e) None of th *C. (a) Supply varies directly with price.Y
Extension and contraction in demand are (b) Supply varies inversely with price.
caused hy. (c) Supply has nothing to do with price.
(a) Income changes (b) Price changes' (d) Supply always increases when price
(c) Population changes (d) All of the above changes.
(e) None of the above (e) Supply always decreases when price
9. For the equation Q4 = 330 P of the changes.
demand curve, the slope of the demand 5. The quantity supplied of a normal product
curve is. increases when.
(a) l V. (b) 330 (a) The cost of production increases.

(c) 2 (d) P (b) The price of the product falls.
(e) None of the above (c) The price of the product rises. Y
(a) The ratio of Marginal utilities to price is remaining within the same budget limits,
equal for all commodities. total utility will.
(b) TUVP, is equal to TU,/Py (a) Decreasev. (b) Increase
(c) P. (TUV) = P, (TU.) (c) Not change (d) Vanish
(d) All of the abovev (e) Be negative
3. Economists use the term marginal utility to 9. Utility theory is attributed to.
II] Call, -
(a) Walras (b) Marshall
(a) Additional satisfaction gained divided (c) Gossen (d) All of the above Y
by additional cost of the last unit. (e) None of the above
(b) Total satisfaction gained when I (). Utility is an ex ante concept means that.
consuming a given number of units. (a) After consumption the consumer knows
(c) Additional satisfaction gained by the what utility she gained.
consumption of one more unit of a good.Y (b) Consumer know the utility before
(d) The utility if all available units of a consuming
commodity are eonsumed, (c) Utility changes before consumption
(e) None of the above. (d) The quality of the commodity worsens
4. The following must hold true for the law of for every extra
diminishing marginal utility. (c) The * utility is very old
(a) Utility should be subjective Ch3 <>
(b) Utility should be additive

(c) Consumption should be continuous
l
*
e
:
bc
Curves slope negatively
(d) All of the aboveY cy are convex to origin

(e) None of the above To show same level of satisfaction, the
5. If a consumer derives marginal utilities for ncrease of units of one commodity must be
6 successive units of a commodity as offset by decrease in the units of the
12, 10,8,0,4 and 2 respectively, the tot (2) second. Y
utility after consuming the fourth unit-Wi (e) The do not intersect each other.
be. N (d) All of the above
(a) 30 (b) 40 S. (e) none of the above
(c) can not be calculated 2 Whish of the following is not a property of
(d) the same as marginal utih -
a normal indifference curve?
(e) none of the above Y (a) It is convex to the origin
6. Total utility is maxi (b) The marginal rate of substitution is
(a) Marginal utility. constant as you move along an indifference
(b) All the '' nsumed CUI'Ve.
(c) Marginal uti is maximum
(c) It will not intersect another IC of the
(d) Total utility intersects marginal utility same individual.
(e) None of the above (d) Satisfaction is greatest where a 45
7. The area under the marginal utility curve degree line originating from origin
represents. interseets the indifference curve.Y
(a) largest value of marginal utility (e) It slopes negatively.
(b) demand 3. A price eonsumption curve can most easily
(c) Marginal utility be derived by joining the tangency points of
(d) Total utilityV various ICs and Price lines by.
(c) The number of unit of the commodity (a) Keeping income constant and varying
consumed
the price of one commodity.Y
8. If a consumer is at the equilibrium point,
change in the combination consumed while
4. In Pakistan Income tax is. (a) increased choice
(a) progressive tax(b) proportional (b) increased government revenuev.
(c) direct V (d) a and c of above (c) more competition
5. The budget estimate prepare by ministry of (d) more trade
finance is finally approved by. 14, Pakistans public debt is.
(a) State Bank (b) President (a) larger than GNP
(c) Senate (b) approximately equal to GNP
(d) National Assembly V (c) smaller than GNPY
6. Federal govt. budget estimate of 2005-06 is. (d) smaller than our exports
(a) 1315 million (b) 1315 billion* 15, Pakistans fiscal year starts from.
(c) 1315 trillion (a) 1" September (b) 1" January
(d) bigger than 1315 trillion (c) 1* April (d) 1" Julyv
7. Government of Pakistan can increase its 16. Tax is a payment.
resources by. (a) unnecessary (b) compulsoryV
(a) taxing people (b) printing new notes (c) voluntary (d) temporary
(c) borrowing (d) all the threev 17. The Federal 'O. presented in the
8. The Non-Muslims pay Zakat. parliament by.
(a) at a higher Tate than Muslims (a) Prime M:
(b) at a lower rate than Muslims (b) President
(c) at the same rate (c) Final inisterv
(d) do not pay ZakatV (d ) erce Minister
-
9. To control inflation the government should

increase.
(a) budget deficit
-
&onomic
o: System
there is sovereignty of
(b) consumer spending (a) producer (b) consumerv
(c) income tax V (c) government (d) businessmen
(d) pensions 2. Basic principle of lslamic economic system
1S.
10. In past decades Pakistan increased its GD
(a) equality (b) justice V.
risen. The most important cat (c) high profit (d) less consumption
situation is. 3. In capitalistic system, prices of goods are
(a) increased govt. expenditure determined by.
(b) increased imports (a) sellers
(c) increase educati (b) buyers
(d) increased :
ll. Which of the following should NOT be the
(c) government
(d) forces of demand and supply V
aim of a government, 4. In soeialistic system prices of goods are
(a) economic growth determined by,
(b) full employment (a) sellers
(c) inequality of ineomes Y (b) buyers
(d) price stability (c) governmentV
12. Which of the following would cause (d) forces of demand and supply
incomes to become more unequal. 5. In working of markets, the Islamic system
is nearer t0.
(a) increased employment
(b) increased unemployment allowance (a) capitalism (b) socialism
(c) more progressive taxes (c) mixed economy.* (d) none of the
above
(d) more regressive taxes'
I 3. What is the benefit of tariffs.
4. Rising prices of goods in Pakistan will. 6. One of the following is NOT a feature of
(a) increase our cxports public finance.
(b) increase our imports: (a) publicity
(c) will increase both exports and imports (b) secrecyv
(d) will not affect exports or imports (c) efforts to balance income and
Balance of payments statement of Pakistan expenditure
is prepare by. (d) taking steps to increase income
(a) finance minister It is direct tax.
(b) central statistical (a) excise tax (b) sales tax
(c) state bankV (c) income tax v (d) custom duty
(d) export promotion These are heads of expenditure of the
6. What could a government do to correct the government EXCEPT.
current account deficit. (a) provide Social Services
(a) reduce the deficit on the balance of (b) defence
tradev (c) improve transport and communication
(b) reduce the repayment of loans (d) provide cosmetics
(c) reduce the surplus on the capital The most 'G'" of income of a
aCCOunt government is.N
(d) reduce the volume of exports (a) foreign lo
Rich countries have deficit in their balance (b) taxes (< *
of payments. - of new money
(a) always (b) never f government property
(c) alternate years (d) sometime.* ssive taxes.
|crease government revenue
Public Finance ) bring equality in distribution of incomes
Taxes are lived to. (c) act as penalty for rich people
(a) penalize people (d) a and b of above V
(b) provide direct benefits to tax payers . These are principles of taxation.
(c) provide general benefits for the (a) Principle of equality
(d) to accumulate funds (b) principle of certainty
Whom of the following nded
(c) principle of secrecy
principles of taxation. (d) a and b of abovev
(a) Keynes (b) Marshi 12. ln Pakistan, taxes are levied by.
(c) Adam Smith V (d) (a) Prime minister of Pakistan
Taxcs on commoditi (b) President of Pakistan
(a) direct taxes
(b) indirect taxes
(c) Federal cabinet of ministers
(d) National assembly'
(c) progressive taxes 1 3 Which of the following tax is best example
(d) proportional taxes of ability to pay principle of taxes.
Govt. prepares its budget. (a) excise tax on cigarettes
(a) weekly (b) monthly (b) highway toll tax
(c) quarterly (d) annually' (c) proportional sales tax
One of the following is NOT a feature of (d) personal incorne taxY
private finance. -
14. Govt. taxing and spending policies are
(a) balancing of income and expenditure called. -
(b) secrecy (a) monetary policy (b) fiscal policyv

(c) saving some part of income (c) commercial policy (d) finance policy
(d) publicityv 15, Govt. budget is balanced when,
-:
# .
A country that does not trade with other (a) the price of Pakistan goods in USA will
countries is called an economy, rise
(a) open (b) closed V (b) the price of Pakistan in Pakistan will
(c) independent (d) none fall
lf Japanese import more goods from (c) the price of American goods in USA
Pakistan (other things remain same) will fall
(a) our balance of payments will improve (d) the price of American goods in Pakistan
(b) Japan's BOP will deteriorate will rise V.
(c) Our BOP will deteriorale 17. If TOYOTA company, establishes a factory
(d) A and b of above V in Pakistan, this will be recorded in balance
(). Invisible items in balance of payments of payments in the section.
include: (a) capital accounty
(a) foreign remittances (b) visible balance
(b) Income from tourists (c) invisible balance
(c) Internet charges (d) official financin -
! ().
(d) All the above V 18. If CDA (Capita
Islamabad) get
m Authority
n from world bank for
Pakistan follows the policy of
(a) fixed exchange rate roads, it will be recorded in the balance of
(b) flexible exchange rateV. payments insection.
(c) controlled exchange rate (a) capital ecountz
(d) increasing exchangc rate -
(b) visible balance
} |. it helps countries to meet deficit in balance (g) invisible balance
of payments. ( rfficial financing r
(a) |MFv/ (b) WTO Which of the following must always

(c) World Bank (d) UNO
. The balance of payments of country mean
2% balance.
(a) the balance of payments V
(a) balance in income and cKpd. Of govt O (b) the balance of trade
(b) balance in demand and supply of: (c) the exchange rate
(c) balance in export and import *gs (d) the terms of trade
(d) The annual account of foreign trade/ 2(). Which of the following compares the
!3 Pakistan exports are part of of G P. average price of exports to average price of
(a) 5% (b) 15%Y imports,
(c) 25% (d) # (a) the balance of payments
What would
rate to fall.
'"
S
exchange (b) the balance of trade
(c) the exchange rate
(a) an increased demand for its exports (d) the terms of tradev
(b) increascd demand for its importsV.
(c) an increased inflow of capital Foreign Trade of
(d) none of the above Pakistan
Which of the following must always
balance.
i. Pakistans exports mainly consists of
(a) balance of visible trade produets. *
(b) balance of invisible trade (a) semi-manufactured goods and manufa

(c) balance on the current account ctured goods'
(d) balance of payments V (b) primary
l (). What will be expected result if the value of (c) manufactured goods
(d) food products
rup, falls against dollar.
~,
National Bank of Pakistan is. (a) Adam Smith (b) Ricardo V.
(a) industrial bank (b) connmercial bank V. (c) Hicks (d) Arshad
(c) central bank (d) investment bank Which is NOT an advantage of
3 Total number of branches of Pakistan banks international trade.
in approximately. (a) export of surplus production
(a) 2500 (b) 7500v (b) import of defence material
(c) 12500 (d) 17500 (c) dependence of foreign countries*
National Bank of Pakistan was established (d) availability of cheap raw materials
l11. . If Japan and Pakistan start free trade,
(a) 1949.V. (b) 1959 difference in wages in two countries will.
(c) 1969 (d) 1979 (a) increase (b) decreasev
5 The bank established for loans to very small (c) n effect (d) double
enterprises is called. Trade between two countries can be useful
(a) Micro Finance Bank v. if cost ratios of goods are.
(b) Modarba Bank S (a) equal (b) differentV.
(c) SME Bank (c) undetermined creasing
(d) First Mini Bank Modern theory & rnational trade is base
(). Pakistan has a banking system. on the views of:\
(a) Developed V (a) Robbi :and Ricardo
(b) underdeveloped (b) Ad. hith and Marshall
(c) very inefficient (c) esher and Ohinv
(d) a and c of above ( em and Kareem
Commercial banks in Pakistan are gn trade creates among countries,
supervised by. conflicts (b) cooperationv.
(a) State Bank (c) hatred (d) a and b
(b) National Bank Net exports equal.
(c) Finance minister (a) exports x imports
(d) World Bank (b) exports + imports
National Bank is a. (c) exports importsV.
(a) Public sector bank (d) exports of services only
(b) Private Bank A tariff
(c) Miero finance bank <> (a) increases the volume of trade
(d) Specialized bank (b) reduces the volume of tradev
First Women bank is: (c) has no effect on volume of trade
(a) Private bank (d) a and c of above
(b) Govt. bankV (), A tariffis. -
(c) Non Scheduled bank (a) a restriction on the number of export

(d) Investment bank firms. *
(b) Limit on the amount of imported goods

International Trade (c) Tax on imports/
Which of the following is international (d) b and c of above
trade. 11. Dumping refers to.
(a) Trade between provinces (a) buying goods at low prices abroad and
(b) Trade between regions selling at higher prices locally.
(c) Trade between countries V (b) Expensive goods selling for low priees
(d) B and c of above (c) Reducing tariffs -
Theory of comparative advantage was (d) Sale of goods abroad at low a price,
presented by. below their cost and price in home marketY
(c) both assets and liabilities 18. When a commercial bank creates credit, its
(d) none immediate effect its that it raises.
{). Thc power of a bank to create credit is (a) the exchange rate -
affected by, (b) the interest rate

(a) the cash reserve requirement (c) the money supplyw
(b) the amount of cash available (d) the real national income
(c) the number of branches of a bank 19. Total number of bank branches in Pakistan
(d) a and b of aboveY 1S.
i (). Demand deposits are. (a) more than 5000 but less than 10,000 V
(a) bank notes (b) more than 10,000 but less than 15,000
(b) money (they can be used to make (c) more than 15,000 but less than 20,000
payments)* (d) more than 20,000 but less than 25,000
(c) considered as near money 20. Demand deposits mean.
(d) legal money (a) saving accounts
An asset is liquid when it is. (b) profit loss account
(a) being traded frequently
(b) earning a good rate of return
(c) chequeable
(d) time deposi
.
(c) is money or easily converted into 21. Which is * -
red liability by a bank.
money V. (a) loans: <>
(d) all of the above (b) builin g and equipment

12. A bank has Rs. 5 million in cash. The (c) time deposits V
minimum reserve ratio is 20%. What is
maximum potential increase in total 2
(Dlime deposits
: Demand deposits are money because.
deposits. (a) they are backed by gold
(a) 0 (b) 5m (b) they are assets of banks
(c) 10m (d) 25m. (c) they can be used to make payments'
13, The following is not abank liability-O \ (d) all of the above
(a) demand deposit it
(c) saving deposit Central Bank
14, When a commercial bank cre credit, it Bank rate in Pakistan is.
immediately raises. (a) 9%v/ (b) 19%
(a) its assets (b) its labilities (c) 29% (d) 39%
(c) money supply.<\ 's -
2. State Bank was established in.
(a) 1948v (b) 1950
(d) real national income
| 5. Which is the source of interest for a bank. (c) 1952 (d) 1954
3 10-rupee note is issued by.
(a) advances (b) bills discounted
(c) investments (d) ally (a) National Bank
16. Commercial banks are able to create money (b) State Bankv
by. (c) Govt. of Pakistan
(a) printing money (d) Governor State Bank
4. Acting as lender of last resort, a central
(b) making loans V.
bank lends to:
(c) moral suasion
(d) selling government bonds (a) money markets
17. Which is a function of a commercial bank. (b) stock exchange
(a) acting as a govt. banker (c) commercial banks'
(b) fixing the exchange rate (d) does not lend
(c) issuing bank notes . Which statement is true of the relationship
(d) making loansv between bond prices and bon yields?
2(), Paper money came into use. (d) bill of exchange
(a) 100 years ago (b) 200 years agov/ 30. Which is NOT a desirable characteristic of
(c) 1000 years ago(d) 2000 years ago money?
21. Which property me paper money does not (a) portable
posses. (b) uniform
(a) acceptability (b) divisibility (c) easily recognized
(c) durabilityv (d) portability (d) easily duplicated V
22. A saving account in a bank represents the
function of money. Value of Money
(a) a measure of value , Purchasing power of money during
deflation is.
(b) a medium of exchange
(c) a standard for deferred payments (a) reduced (b) increased V
(d) store of valuev. (c) constant (d) fluctuating
23. 2 Velocity of circulation of money means the
A student records her income and spending
for past month, she uses the function of number of times a unit of money,
money. (a) changes hands daily
(a) medium of exchange (b) changes hands monthly
(b) standard of deferred payments (c) changes hands annuallyV
(c) store of value (d) changes purchasing power
(d) unit of accountv. The equation of exchange PT = MV was
24. Who implements monetary policy of the given by."
country? (a)(Fisher. (b) Crowther
(a) ccntral bankV _{c}}<uznet (d) Keynes
(b) commercial banks 4CValue of money in Pakistan is determined
(c) finance company by.
(d) a govt. department (a) Govt. of Pakistan
25. Which property paper money does
possess.
s (b) State Bank
(c) General price levelv.
(a) acceptability
(c) durabilityv
(b) S
(d) portabili 5.
(d) Value of dollar
When value of money falls, they benefit

. Anything usc as money : s
In OTe.
(a) fixed in value (b) f'.Si) supply (a) farmers (b) industrialist
(c) lenders (d) debtors'
(c) legal tender
(d) readily acceptablev
27. What will gs? -
When the nations money supply is Rs.
1200 billion and GDP is Rs. 4800 billion,
(a) increase in credit facilities
(b) increase in taxation velocity of circulation money is.
(c) increase in personal incomesV (a) 0.25 (b) 4v.
(d) rising prices (c) 0.4 (d) billion rupees
28. Treasury Bill is a document used for Which one is equation of exchange.
(a) a short term loan to be exporter (a) PT = MVV (b) PV = MT
(b) a long term loan to the government (c) PM = TV (d) None
(c) a short term loan to the government If quantity of money is doubled, then
(d) a short term loan to a govt. employee according to quantity theory value of
29. Which does NOT represent a method of money is.
payment? -
(a) remains constant (b) doubled
(a) cheque (c) Wav (d) /
(b) saving certificatev Inflation can be controlled by applying.
(c) currency note (a) Monetary and fiscal policiesV
Subject Specialist & Lectureship Guidc - Commerce 236
10- Avcragc growth ratc of Pakistans national 4. Pakistan is an economy.
income in past five years have been, (a)developing
(a) 36% (b) 26% (b) developed
(c) 1.6% (d) 6% w/ (c) fast growing economy
ll. Which of the following is an example of (d) a and c of above
primary production 5. Contribution of industrial sector in Pakistan
(a) production of a computer economy is.
(b) farmcr growing wheatv (a) 28% (b) 18%v/
(c) housewife bakes a cake (c) 8% (d) undetermined
(d) opening of a new school 6. The largest sector of Pakistan economy is.
12. Which is most likely to cause a more even (a) Transport (b) Agriculturew
distribution of income, (c) Industry (d) Trade
(a) an increase in indirect taxes 7. Size of Pakistan's 8" plan was in rupees.
(b) an increase in managers salaries (a) 700 billion (b) 1700 billionv
(c) an increase in progressive taxationX (c) 2700 billion (d) 3700 billion
(d) an increase in the rate of inflation 8. Pakistan produces '' requirements.
13. If a countrys growth rate were 5%, it (a) 25%v/ '' %
means there would be 5% inerease in (c) 45% <> j) 55%
(a) industrial output (b) retail price index 9. Investment rate in Pakistan is around.
(c) government revenue (a) 8% (b) 18%v/
(d) goods and services producedV (c) 28% d) 38%
14. Pakistan's per capita income is less than. 10, which cristie
of the following is NOT a
of underdeveloped countries.
(a) Japan (b) Korea Cll:
(c) India (d) all V ow per capita income

15. Working population is percent of total ) low growth ratc of GDP
population of Pakistan.
(a) 20%
(c) 40%
(b) 30%
(d) 50%
(c) low educational levcis
(d) low population growth sate
| ] . Pakistan income is low because.
10. Literacy rate in Pakistan is. (a) fast growing population*

(a) 33% (b) 43% S. (b) lack of natural resources
(c) 53%Y (d) 73%
28
<>
(c) low saving rate
(d) a and c of above
12. The most important factor in economic
Economic Development development is.
(a) quality of human resources V
1. Pakistan started s' five-year plan in. (b) lack of natural resources
(a) 1947 (b) 1950 (c) quality of governance
(c) 1955% (d) 1960 (d) quality of banking systcm -
2 Contribution of agriculture in Pakistan's 13. Which is likely to be higher in a developing

national income is. country like Pakistan. *
(a) 20% (b) 24%. V. (a) birth rate V. (b) GDP per had
(c) 28% (d) 32% (c) life expectancy
3. Most of our exports consist of. (d) net investment per head
(a) cotton productsV 14. Economic development
(b) machinery (a) is the same as economic growth
(c) sports goods (b) means improvement in lifestyle%
(d) a and b of above (c) exists when there is equal distribution of

income. -
(c) the market value of all goods and (d) salary paid for the presidents secretary
Services produced in an economyv 9. Consumption spending does not include.
(d) total spending in an economy (a) Household's purchases of food
GNP includes. (b) Households purchase of a car
(a) a loan from a bank (c) Households payment of rent for an
(b) a loan from ones parents apartment
(c) gifts and donations (d) Households purchase of stock in any
(d) a broker's commission v. XYZ corporation v
In terms of national income accounts, 10. Net exports are,
multiple counting refers to. (a) total exports pulse total imports
(a) the addition to GNP of multiple units of (b) total exports minus total importsV.
a good (c) total imports minus total exports
(b) counting currently produced goods - (d) total exports divided by total imports
more than oncev | ]. National income is.
(c) the inclusion in GNP of gross spending (a) Total income spent in the economy
and taxes * personal income and
(b) sum of
(d) counting both goods and services SaVing
net Investment is. (c) NNP * capital consumption
(a) gross investment minus household allowance.
investment (d) Total income earned in producing the
(b) gross investment minus govt. nati whal product.
investment 12. w:
C esonal income.
of the following is not included in
(c) gross investment minus capital
consumption allowanceV. (a) social security benefits
(d) none of the above (b) dividend payments -
PI is equivalent to, (c) undistributed corporate profitsV

(a) DPI minus personal taxes
(b) DPI plus unearned receipts
(c) DPI minus income earn
In Ot
(d) interest received
certificates
13. Traffic fines are.
from of saving
received (a) part of personal consumption spending

(d) NI plus unearned ibtS minus (b) excluded from national income accounts
earnings not received (taxes), (c) included in NI but not in PI
Market value of all fi a goods and Services (d) included in PI but not in disposable PIV
produced in a county
~
during a year is 14. Govt. transfer payment include.
* | *
definition of S (a) social security benefits

(a) NI (b) NNP (b) welfare bencfits
(c) GNPV (d) Consumption (c) student scholarships
Investment spending includes the purchase (d) all of the above V
of. 15. Which of the following would increase
(a) Stocks (b) govt. bonds level of national income.
(c) residential construction* (a) an increase in taxation
(d) all of the above (b) a reduction in government spending
Which of the following would not be (c) a reduction in consumer spending
included in GNP. (d) an increase in exportsV.
(a) govt. transfer payments' 16. National income is a measure of.
(b) payment for construction of state high (a) the size of government revenue
(b) payments made to factors Of
way
(c) govt. purchase of an airplane productionv
Subject Specialist & Lcctureship Guide - Commerce 232
(c) windfall profit (d) all of the aboveY (b) purchase of an old house
13. He put forward the theory of profit. (c) salaries of coliege professors
(a) Keynes (b) Adam Smith (d) a and b of above
(c) KnightV (d) Anyson 9. GNP is always.
14. Profits arise (a) less than NNP
(a) only in monopoly (b) greater than NNPV
(b) because of uncertainty/ (c) equal to NNP
(c) shortage of goods (d) any of i,ii,iii
(d) like interest 10. The four factor payments are:
-
(a) money, capital, Salaries and income
d (b) wages, rent, interest and profity
National Income (c) money, power, prestige and wealth
-
(d) wages, interest, salaries and income
1. NI = NE is an 11. Which of the following is transfer
(a) equation (b) identity V payment?
(c) function (d) none (a) payment of college tuition
2. Per capita income is. (b) a social Secu ymentV
(a) income per worker
(b) income per heady
(c) a n ''
(d) payment for a leased car
(c) income per household 12. Which following is counted in GDP.
(d) income per industrial unit (a) sale
If indirect taxes are deducted from NNP (b hase of ()() shares of PSO
and subsidies are added, we achieve. a TV set produced this year but not
(a) personal savings (b) DPI ld. V.
(c) NIV (d) Per capita income (d) the leisure people COIlSll ill C.
Transfer payments are not included 13. If government increases taxes, private
national income because. savings.
(a) Such payments are made to ons (a) increase (b) decrease V.
living abroad S. (c) do not change
(b) Double counting would 14. If C = 200 and l = 40 then Y will equal.
(c) They are illegal (b) 240 V
To determine the cont

t
(d) There is no method * for these
vel of GNP, it is
(a) 160
(c) 200 (d) none of the above
15. Corporate tax is levied on:
necessary to: (a) landlords
(a) To add up the values of goods and (b) municipal corporations
services during one yeary -
(c) big companies'

(b) Add up all savings (d) importers
(c) To count all imports 16. If we deduct direct tax from personal
(d) To add up the value of semi finished income, we get.
goods (a) Net national income
(). Real national income increases when. (b) personal Saving
(a) price of goods are rising (c) disposable incomew
(b) national savings increase (d) per capita inconne
(c) quantity of goods and services 17. The largest part of national income is.
increascsv (a) consumption v (b) investment
(d) none of above (c) saving (d) transfer payments
It is considered as investment. 18. We measure national income by this
(a) construction of a house. unethod.
(a) variable costv

Equilibrium of firm (b) fixed cost
(c) total cost
A firm decides to exit the industry when, (d) explicit cost (money outlays)
(a) AC starts rising 11. A monopoly generally.
(b) MC starts rising -
(a) allocates resources in a socially optimal

(c) Price is less than LAC V. way
(d) TC starts rising (b) encourages greater income equality
Profit is maximum when. (c) encourages greater efficiency
(a) TC and TR curves are parallel V (d) produces less quantity than the quantity
(b) MC and MR curves are parallel which minimizes average costv
. . (c) TC and TR curves cross each other 12. Marginal revenue is always less than price
(d) AC and AR curves cross each other at all levels of output in.
3 In monopoly and perfect competition the (a) perfect competition
COSt CurvS are. (b) monopoly (c) both a and b
(a) similarv (b) different (d) none of the above.
(c) opposite . Marginal revenue of a monopolist is.
(d) falling in competition, rising in (a) equal to price -(b) greater than price
monopoly (c) less t pricev
Normal profit is called normal because. (d) in: s with output
(a) it is neither very high nor very low
(b) it is minimum acceptable to the S.
producerV Wages
(c) it is minimum which buyer wants to pay
(d) it is the maximum allowed by govt.
cQ
. Union leaders are in a better position to
If a firm shuts down temporarily, it wi bargain for higher wages if demand for
incur loss equal to. labour is.
(a) AFC (b) AR = *O (a) elastic (b) inelastic V.
(c) TFCY (d) None of above (c) very large (d) permanent
Under perfect competition, * 2. Sometimes the supply curve of labour
(a) AC = AVC (b) ' *AC bends,
(c)MC=MR. (d) AR4MR (a) downward (b) upward
The necessary * for equilibrium (c) backward Y
(d) firstly upward and then downward
position of a firm i
(a) MR = MC (b) MC > price 3. In which form the largest percentage of
(c) MC = MR (d) MC = AC national income is earned. .
When a competitive firm achieves long run (a) interest income
equilibrium then. (b) proprietor's income
(a) P = MC (b) MR =MC (c) employee's wages'
(c) P = ATC (d) all of the above Y (d) rental income
The most efficient scale of production of a 4. The minimum wage is an example of
firm is where. - (a) price floor/ (b) price ceiling
(a) LAC is minimumv. (c) equilibrium wage
(b) SAC is minimum (d) efficiency of labour
(c) LMC is minimum 5. A firm maximizes profit if
(d) SMC is minimum (a) MRP = Wage rate V.
10. A firm should shut down in the short run if (b) MRP = ARP
it is not covering its. (c) MRP is rising
(c) both a and b (a) short run

(d) none of the above (b) long runv
Which of thc following is NOT a (c) both periods
characteristic of perfect competition? (d) none of the period
(a) free entry and exit of the firms 7. Which statemcnt is true.
(b) demand curve of a firm is horizontalv (a) ATC + AVC = AFC
(c) marginal revenue curve is horizontal (b) ATC + MC = AFC
(d) individual firm can influence the price (c) ATC + AFC = AVC
When marginal revenue is zero, total (d) AFC + AVC = ATCv
revcnues is. 8. Which is NOT a cause of shift in cost
(a) maximum V. (b) minimum curves of a firm.
(c) Zero (d) decreasing (a) excise tax (b) prices of inputs
. Marginal revenue is always less than price (c) increase in productivity
at all leveis of output in. (d) price of productV.
(a) perfect competition 9. MC is given by slope of
(h) monopolyv (a) TFC O (b) TCV
(c) both a and b (c) ATC & (d) AVC
(d) none of the above 1(). H C <> S
| S . Under perfect competition MR and AR (a) origin (b) not from origin Y
Clif VeS. (c) is el to y-axis(d) parallel to y-axis
(a) are the same Y i 1. T
(h) are different tarts from origin (b) not from originV
(c) intersect each other is parallel to y-axis(d) parallel to y-axis
#TC
Cost of Production * (a) rises continuously (b) falls then rises V

(c) is horizontal to x-axis
(d) is parallel to y-axis
In monopoly at various output lev O 13. All the following are U-shaped EXCEPT.
(a) AR = MR (a) AVC (b) AFCY
(b) AR < MR S -
(c) AC (d) MC
(c) AR = MRY 14. The cost which a firm incurs for purchasing
2
(d) AR and MR curves * or hiring factors is called.
Excise tax is a part of \ . (a) implicit (b) explicitv
(a) fixed cost S(b) variable costv (c) real (d) basic
(c) inlplicit eost\ (d) is not part of cost 15. Short run neans is a period.
3 The shape of rectangular hyperbola is made (a) less than one year
by. (b) in which at least one input is fixedV
(a) MC (b) AFCY (c) in which no input can be changed
(c) AVC (d) TFC (d) in which firms can easily enter or exit
As output increases, 16. Long run is a period.
(a) MC curve firstly falls then risesv. (a) three years or longer.
(b) MC firstly rises then falls (b) long enough to allow firms to change
(c) MC continuously rises plant size and capacityV
(d) continuously falls (c) in which a firm need not get loans
Unit cost is another name for. (e) which affects larger more than smaller
(a) MC (b) AFC firms
(c) AVC (d) ATCv 17. As output increases, AC curve.
(). All inputs can be varied in. (a) falls (b) rises

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Contents

Advanced Accounting Auditing

10 | Public sease" Lahore Paper 2011,

Advanced Accounting 9. All of the following are forms of busines

expenses are shown as part of (a)Liabilities (b)Owners equity

prepaid expenses (a) Decrease withdrawals

(c)Additional expenses e OWI 10 - equity

from business by owncr is: 12. A : chase of supplies would:

depreciation amount is:

6. Users of accounting information O (a) Increase assets:

(c)Creditors (d)Decrease owner's equity

(a)partnership (b)increase liabilitics

(d)partnership and proprietorship I5. Which one of the following accounts

; :)None of these 24. Completion of a job is a result in:

timat: 26. Expenses such as rent and depreciation of

36, There is a differencebetween Q 46. Current Ratio can be calculatcd as

(b)Worksheet and profftand Loss -

(a)Current Liabilities Current Assets

Which one of the following in not

(a)Liability Sidew (b)Asset Side (a)issued to promoters for their services

(e)None of these (c)profit and loss account below the line

74. Statutory report in necessary in the

(e)None of these (c)Cash flow operating acticititesv.

Financial Statements are: 88. Uzmai icome was Rs 4,00,000 in

(e)None of these a).50% (b)150%v/

(c)None of these (a)Investors (b)Labour Unions

(b)increase an asset and decrease liability.

(b)Mustafa Account (c)(ii) and

(a)Contain only income statement (d)Costs incurred which can be attributed

100. A master budget comprises: (e)None of the above .

(b)Cost Accounting procedures

(c)issue of fresh Capital V (a)Expired InsuranceX

(a)Sales quantity+Opening Stock+Closing which of the following is not an intang bic

(b)Sales quantity-Opening stock+Closing (a)A patent (b)A tradicmark

at the end of year I. Which ouc of the

(a)Saics of bonds payao'e at a discount Y

(d) Notic of these (c)Capital Fund

that month. Hassan & Company paid.

sharing ratio. (a)Rs. 6,100 (b)Rs. 6,800

following expenditures except: -

(a)Donation for Charitable purposev (a)Reasonable assurancev

(h)Muhagenient responsibility (b)income from cultivation of ricey

l61. Trial Balance is (d)!gnores fluctuations in the rate of asset

adjusting entries. recognized in the books of accounts.

(d)None of these (c)None of these -

share'' | 79. Normal * is adopted in

(b)Tentaive in natureV S. (a)2Y (b)3

174. A deficit appears on the balance sheet: (a)Sales of Debentures

Advanced Accounting And Auditing 15

(c)2()() | (d)2()02 (a)Agricultural incomeV

(a)Material Management V (c)Custorii duty paid

(a)Registrar of firms (d)Cost of preparation of partnership deed

(c)None of these v. (c)Excise

failed to study articles of association

(c)]ncome that is distributed to owners is (a)Rs. 3.00(; (#) Rs. 9,000 V

credits to liability or equity accounts machinery accouat should be debited

(d)None of these 222. If net sales Rs. 100,000 cost of goods

(b)Electric Charges paid : (a)Companies Ordinance 1984

(b)Fixed assets (e)None of these

(d) ong-term deposits

Accounting was developed by people,

reporting, analyzing, interpreting and

(c) Classifying and recording business