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General Economics

CPT – June

2013



Chapter 1 Q.1 In a capitalist economy, who controls the allocation of resources? a) Government b) Producers c) Policy makers and planners d) It is performed through Price Mechanism

Q.2 Which of the following economic systems has relative equal distribution of income? a) Socialist b) Mixed Economies c) Capitalist d) None

Q.3 Normative economics involves a) Analysis of cause & effect relationship b) Stating facts c) Analysing the values and then prescribing the action to be taken d) Using empirical evidence

Q.4 in _______ economy, dual system of pricing exists. a) Socialistic economy b) Free market economy c) Mixed economy d) None of these

Q.5 If opportunity cost is constant then PPC is ___________. a) Straight line b) Concave c) Convex d) None of these

Q.6 In a mixed economy a) Resources are controlled & managed by the government b) Means of production are in private hands c) Public & private sector co-exist d) There is a central planning authority


Q.7 Which of the following is a part micro economics? a) Study of factor pricing b) Study of product pricing c) Both (a) and (b) d) None

Q.8 Macroeconomics include the study of a) National income and output b) General Price level c) Balance of trade and payments d) All of these

Q.9 According to whom, economics is a positive science? a) L.Robbins b) Marshall c) A.C.Pigou d) Adam Smith

Q.10In a production possibilities frontier, an efficient point of production is a) Inside PPF b) Outside PPF c) On the PPF d)All of these

Q.11 There is a technological advancement which improves the production of both the goods on a production possibilities frontier. Which of the following would be true? a) A point which was earlier considered inefficient will now be considered efficient b) A point that was earlier efficient becomes unattainable now c) A point which was earlier unattainable becomes efficient and attainable now d) None of these

Q.12 Mahima owns a bakery. On Saturday she could prepare 3 cakes and 15 patties. On Sunday she prepared 4 cakes and 18 patties. Mahima has been utilising resources efficiently and has constant costs. Which of the following statements is true about this change? (I) Mahima has more resources to produce both the goods (II) Mahima has moved along her PPF (III) Mahima's PPF has shifted rightwards. a) Only I b) I & II


c) II & III d) I & III

Q.13 Which of the following constitutes the fundamental questions every economy faces? (I) What goods and services will be produced? (II) How will they be produced? (III) When will they be produced? (IV) For whom will they be produced? (V) Where will they be produced? a) (I), (II) & (III) b) (I), (II) & (IV) c) (I) & (II) d) (II), (IV) & (V)

CHAPTER 2 Q.1 A change in which of the following will shift the demand curve of strawberry shake? a) Price of chikoo shakes (a substitute) b) Price of strawberry shake c) Price of strawberries d) Number of strawberry shakes producers in market Q.2 Which of the following statements are correct? (I) If price of sugar falls, its demand will shift to the right (II) If price of sugar rises, the quantity demanded will fall along the demand curve (III) If price of sugar rises, its demand will shift to the left. a)Only (I) b) Only (II) c) Only (III) d) (I) & (III) Q.3 Suppose the price of ink pens decreases by 4% and the producers reduces the quantity supplied by 20%. What will be the price elasticity of supply? a) 5 b) -5 c) 0.2 d) -0.2


Q.4 If price elasticity of supply of a good is 3 and its price doubles then a) Quantity supplied increases by 6% b) Quantity supplied increases by 600% c) Quantity supplied increase by 300% d) Quantity supplied increases by 66.67% Q.5 Anil is a producer of clocks. The price of clocks increases from Rs.100 to Rs.140. So he increases his weekly production from 1000 to 1400 units. Find the arc elasticity of supply. a) 2 b) 1 c) 0.5 d) 0.25 Q.6 If a good has inelastic demand then the value of its price elasticity of demand is a) Zero b) One c) Less than infinity but more than one d) Greater than zero but less than one Q.7 Rohan knows that the demand for his shoes is quite price elastic. If he increases the price even by a small percentage, his total revenue will _______ because ________. a) Decrease; the percentage change in quantity demanded will be more than the percentage change in price b) Increase; the percentage change in quantity demanded will be less than percentage change in price c) Decrease; the percentage in quantity demanded will be less than the percentage change in the price d) Remain constant; percentage change in quantity demanded will be equal to percentage change in price Q.8 If the income elasticity of demand for a good is _______ then it is an inferior good. a) 0 b) 1 c) -1 d) 0.5 Q.9 The income elasticity of demand for tea is 0.50. If there is a 5% increase in the consumer income then consumption of tea will _______ by ______ a) Decrease; 10% b) Decrease; 2.5% c) Increase; 10% d) Increase; 2.5%


Q.10 Two goods are considered substitutes if a) The income elasticity for both the goods is positive b) The cross elasticity of demand for the goods is negative c) The cross elasticity of demand for the goods is positive d) The income elasticity for both the goods is negative Q.11 Consumer maximizes utility when a)MUx / Py = MUy / Px b) MUx/ Px = MUy/ Py c) MUx + Px = MUy + Py d) MUx - Px = MUy - Py Q.12 Demand curve slopes downward because of ______________ a) Law of diminishing total utility b) Law diminishing marginal utility c) Positively sloping supply curve d) Downward sloping marginal cost curve Q.13 which of the following statements are correct? (I) the demand curve for a good is downward sloping because of the diminishing marginal utility (II) As the price of a good falls, its marginal utility per rupee falls (III) As price of a good falls, consumers buy less of that good. a) Only (I) b) Only (II) c) (I) & (II) d) (II) & (III) Q.14 A consumer purchased a new TV. His consumer surplus from the purchase can be found by a) Calculating total utility derived from it b) Subtracting the price of the TV from the maximum amount he would have paid for it c) Subtracting the marginal cost of producing this TV from the price paid d) None of these Q.15 which of the following defines "marginal" the best? a) The foregone one b) The additional one c) The cheapest one d) The average


Q.16 Demand for inferior good a) Is perfectly inelastic b) Increases when income decreases c) Decreases when income decreases d) Increases when income increases Q.17 what can be a possible reason for a leftward shift in the supply curve? a) Consumers preference has shifted to other goods b) Improve in the production technology of the good c) Reduction in the number of producers of the good d) Fall in the price of the good Q.18 When the price of apple juice increased by 3%, the quantity demanded of orange juice increased by 6%. The cross elasticity of demand between apple juice and orange juice is a) 2 b) 0.5 c) -2 d) -0.5 Q.19 The cross elasticity of demand for butter with respect to the price of bread is -0.4. If the price of bread increases by 3%, we can say that the quantity of butter demanded will _____ by _____. a) increase; 1.2% b) increases; 7.5% c) fall; 1.2% d) falls; 7.5% Q.20 Following are the values of cross elasticity between good A & B. Which of the following tells that A & B are substitutes? a) 0 b) 2 c) -0.5 d) -2 Q.21 Consumer receives satisfaction from consumption of goods and services. This overall level of satisfaction is called a) Marginal utility b) Consumer surplus c) Opportunity cost d) Total utility


Q.22 Madan spends his income on milk and bread. The price of milk is Rs.25 per unit and that of bread is Rs.15 per unit. The marginal utility of next unit of milk is 50 and that of bread is 120. How can Madan increase his utility? a)Increase consumption of bread and decrease the consumption of milk b) Increase consumption of bread and milk c) Decrease consumption of bread and increase the consumption of milk d) Decrease consumption of bread and milk Q.23 Supply of automobiles is likely to increase if a) there is a fall in the number of automobiles suppliers in the industry b) there is a fall in the price of automobiles c) there is an increase in the income of the consumers d) there is a fall in the cost of production Q.24 We can say that tea and coffee are ___________ goods because price of tea _______, the demand for coffee ___________. a) complementary; rises; rises b) substitute; rises; falls c) complementary; falls; falls d) substitutes; rises; rises

CHAPTER 3 Q.1The four factors of production are a)Land, labour, capital, money b)Natural resources, labour, money, capital c)Income, capital, labour, land d)Land, labour, capital, entrepreneur Q.2Shrey is planning to go to a fashion designing school and become a fashion designer. Which of the following will be his opportunity cost? a) Money he can borrow to pay his house rent b) The designing school fee he will have to pay c) Income he will have to forego when he quits his current job to join the school d) Time he will take to complete this course Q.3 The opportunity cost of a choice A is best described as a)Additional costs incurred for choosing A b) Cost of scarcity c) Cost of foregoing the next best alternative to choice A d) Combination of all these costs


Q.4 Anish can produce either 2 tables or 4 chairs in a day. What is the opportunity cost of producing one chair? a) 4 b) 0.5 c) 4 tables d) 0.5 tables Q.5 It takes abhishek 4 minutes to answer a quantitative analysis question and 3 minutes to answer logical reasoning question in an exam. What is the opportunity cost of answering quantitative analysis question for abhishek? a) 4/3 logical reasoning questions b) 4/3 minutes c) 3/4 logical reasoning question d) 3/4 minutes Q.6 _______ input cannot be changed in the ______ run a) fixed; long b) fixed; short c) variable; long d) variable; short Q.7 Which of the following is a short run fixed cost? a) Wages paid to the labour b) Electricity charges paid for using the machine for production c) Rent paid for the building used for production process d) Price of raw materials Q.8 If, in short run, the firm's output is zero unit then ______ is always equal to zero. a) Total cost b) Fixed cost c) Total variable cost d) All of these Q.9 A firm hires a variable amount of labour to some fixed amount of capital. The marginal product of labour can be calculated by a) Dividing change in total product by change in total cost b) Dividing change in total cost by change in total product c) Dividing change in total product by change in labour d) Dividing change in total product by total number of labour employed


Q.10 when law of diminishing returns operate then, a) Total product increases at a diminishing rate b) Total product starts falling c) Average fixed cost decreases d) Total cost increases at a diminishing rate Q.11 Sumit owns a small factory in which he employs 9 workers who together produces 88 units. He hired 10th worker and the total product increased to 92 units. The marginal product of the 10th worker is _____ and the average product is ________. a) 9.2 units; 4 units b) 92 units; 10 units c) 10 units; 92 units d) 4 units; 9.2 units Q.12 Which of the following statements about variable factors is incorrect? (I) When total product of variable factors is increasing, the marginal product is negative (II) When MP of variable factors > AP of variable factors, AP is rising (III) When Marginal product of variable factors is falling, total product increases at a decreasing rate a)Only (I) b) Only (III) c) (I) & (II) d) (II) & (III) Q.13 Which of the following is correct regarding calculation of total costs? a) Total cost = Variable cost + Marginal cost b) Total cost = Total variable cost - Total fixed cost c) Total cost = Total variable cost + Total fixed cost d) Total cost = Average variable cost + Average fixed cost Q.14 Marginal cost is equal to a)Change in total cost / Change in total variable cost b)Total fixed cost - Total variable cost c)Change in total cost / Change in output d)Total variable cost + Total fixed cost Q.15 Find the incorrect one a)TC = TVC + TFC b)ATC = AVC - AFC c)AVC = ATC - AFC d)None of these


Q.16 Which of the following slopes downward as the production is increased during short run? a)Marginal cost curve b)Total cost curve c)Average fixed cost curve d)Variable cost curve Q.17 During short run, when one factor of production is increased keeping other factors content then, total product ______ and average product ______. a)first rises and then falls; always rises b)first rises then falls; always falls c)first rises then falls; first rises then falls d)always rises; first rises then falls Q.20 If a big company prevents small companies from competing with them on the basis of cost then the large company is using _________ to produce at lower costs. a)copyrights b) advertising c) economies of scale d) product differentiation Q.19 During long run, all costs are a)fixed b)variable c)marginal d)constant Q.18 Difference between economic costs and accounting cost is equal to a) explicit costs b)implicit costs c) abnormal profits d) opportunity cost Q.19 During long run, all costs are a)fixed b)variable c)marginal d)constant Q.20 If a big company prevents small companies from competing with them on the basis of cost then the large company is using _________ to produce at lower costs. a)copyrights b) advertising c) economies of scale


d) product differentiation Q.19 During long run, all costs are a)fixed b)variable c)marginal d)constant Q.20 If a big company prevents small companies from competing with them on the basis of cost then the large company is using _________ to produce at lower costs. a)copyrights b) advertising c) economies of scale d) product differentiation

CHAPTER 4 Q.1 In market, the price output is at equilibrium when a) Total cost = total revenue b) Total cost = marginal revenue c) Marginal cost = marginal revenue d) MC is falling

Q.2 "Why firms in perfectly competitive market are said to be “small” relative to the market." a)Because they have small no. of workers b)Because the capital employed is less than Rs.10 lakh c)Because any individual firm cannot affect the market price d)Because their demand curve is downwards sloping

Q.3 A monopolist firm has to reduce its price in order to sell more units. Due to this a) its marginal revenue curve is below the demand curve b) its marginal revenue curve is above the demand curve c) its marginal revenue curve is same as the demand curve d) its marginal cost curve is upward sloping

Q.4 In which of the market structure, firms incur selling costs? a) Perfect competition b) Monopolistic Competition c) Monopoly d) None of these


Q.5 Under which of the following market structures, firms make normal profits in long run? a) Oligopoly b) Perfect Competition c) Monopoly d) Duopoly Q.6 Which of the following is the shutdown point for the firms? a) Price < AVC b) Price > AVC c) Price = AVC d) None of these Q.7 Which of the following condition imply that the firm is earning normal profits? a) MC = MR b) MR > MC c) AC = AR d) AR > AC

Q.8 In an oligopoly market the demand curve faced by a firm is indeterminate. This is due to the difference in a) Products b) Reaction pattern of the rival firm c) Market share d) Price

Q.9When supply increases and the demand remains constant then price _____ and quantity ______ a) increases; increases b) increases; decreases c)decreases; increases d) decreases; decreases Q.10 In _________ market, price rigidity exist a) Perfectly Competitive b) Monopolistic c) Monopolistically Competitive d) Oligopolistic


Q.11 In competitive price-taker markets, firms are assumed to be producing a) Identical products b) Small products c) Large products d) Differentiated products

Q.12 Firms under which market structure follow price discrimination: a) Perfect Competition b) Monopolistic Competition c) Monopoly d) Oligopoly

Q.13 In the long run, neither competitive price takers nor competitive price searchers will earn economic profits because a) Entry barriers into these markets are high b) The government will dictate moderate prices for these firms c) With low barriers to entry, competition among suppliers will force prices down to the level of production costs d) Marginal revenue is always less than marginal cost when barriers to entry are low

Q.14 The strategy underlying price discrimination is a) To charge higher prices to customers who have good substitutes available to them b) To charge everyone the same price, but limit the quantity they are allowed to buy c) to increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand d) To reduce per unit cost by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand.

Q.15 Which of the following conditions are necessary in the short run equilibrium in monopolistic competition? a) Marginal cost = Marginal revenue b) Price = Marginal cost c) Price = Marginal revenue d) None of these

Q.16 In Perfectly competitive market, price elasticity of demand is a) Unitary b) Infinite c) Less than unity d) More than unity


Q.17 If there is an equal increase in demand and supply, then a) Quantity increases, price increases b) Quantity increases, price decreases c) Quantity increases, price remain same d) Quantity and price remains the same

Q.18 An industry which has three firms selling a standardized or differentiated product would be called a) Monopoly b) Perfectly competitive c) Oligopoly d) Duopoly

Q.19 Amit sells burgers at a constant price of Rs.15 per burger and incurs a constant marginal cost of Rs.10. He sells 50 burgers in a day. His total revenue is a) Rs. 750 b) Rs. 250 c) Rs. 500 d) Rs. 1,250 Q.20 One of the characteristics of perfect competition is a) Homogeneous goods b) Barriers to entry and exit c) Complete control over price d) Small price elasticity of demand Q.21 In a perfectly competitive market, there are a) many firms producing differentiated products with no control over price b) few firms producing differentiated products with complete control over price c) many firms producing homogeneous products with complete control over price d) many firms producing homogeneous products with no control over price Q.22 Perfectly competitive firm earns super normal profits if a) AR = ATC b) MR = MC c) TR = TC d) AR > ATC


Q.23 Which of the following is a feature of monopoly market? a) Barriers to entry b) Availability of substitutes c) Many small producers d) Firms are price taker

Q.24 The demand curve of monopolist slopes _______ and the marginal revenue curve ________ a)downwards; upwards and intersects demand curve b)upwards; downwards and intersects demand curve c)downwards; downwards and lies below demand curve d)upwards; upwards and lie above demand curve

Q.24 The demand curve of monopolist slopes _______ and the marginal revenue curve ________ a)downwards; upwards and intersects demand curve b)upwards; downwards and intersects demand curve c)downwards; downwards and lies below demand curve d)upwards; upwards and lie above demand curve Q.25 Which of the following statements are true? (I) Price taking firms can practice price discrimination (II) For price discrimination to be successful, buyers should not be able to resell the product at higher price (III) Price discrimination can be practiced only if elasticity of demand for all the consumers is same a) Only (I) b) Only (II) c) (I) & (II) d) (I) & (III) Q.26 Monopolists are price makers because a) There are many sellers in the market b) There are no close substitutes available for the good c) There are no barriers to entry d) Firms sell differentiated products Q.27 Which of the following in an example of oligopoly? a) A college campus with just one book shop b) A market with hundreds of coaching centres c) A market for electricity with only one electricity supplier d) A market for guitar classes with only 3 guitar tutors


Q.28 Monopolistically competitive industry is most similar to ______ in the number of firms a) Monopoly b) Oligopoly c) Duopoly d) Perfect competition Q.29 A monopolistically competitive firm is in equilibrium when a) MC = MR & MC cuts MR curve from below b)MC = MR & MC cuts MR curve from above c) MC > MR d)MC < MR Q.30 Which characteristic of monopolistically competitive market lead firms to spend on advertising? a) Free entry and exit b) Homogeneous products c) Differentiated goods d) Small number of sellers Q.31 The market for butter in in equilibrium. If demand for butter increases, which of the following will happen? a) Price & quantity will decrease b) Price will increase & quantity will decrease c) Price will increase & quantity will decrease d) Price and quantity will increase Q.32 The market for laptops is in equilibrium. If demand for laptop decreases then which of the following will happen? a) Price & quantity will decrease b) Price will increase & quantity will decrease c) Price will increase & quantity will decrease d) Price and quantity will increase Q.33 The market for cola drinks is currently in equilibrium. If supply of cola drinks increases then which of the following is most likely to happen? a) Price & quantity will decrease b) Price will decrease & quantity will increase c) Price will increase & quantity will decrease d) Price and quantity will increase


CHAPTER 5 Q.1 While calculating National Income by Value added method, which of the following will be excluded? a) Sale of second hand items b) Production for self-consumption c) Commission of dealer of 2nd hand goods d) None of these Q.2 MODVAT was replaced by _______ in 2000-01. a) CENVAT b) VAT c) Corporate tax d) None of these Q.3 Custom duty is levied on a) Production b) Imports & exports c) Sale in domestic market d) Specified services Q.4 A firm produces goods with Rs.15,000 & the cost of raw material is Rs.10,000. The firm pays tax on Rs.5,000 .It is paying tax according to a)CENVAT b) VAT c) MODVAT d) None of these Q.5 An excise duty is a) regressive b) progressive c) levied on production d) levied on sellers Q.6 Which of the following techniques of production are used by a developed economy? a) Capital intensive b) Traditional c) Home based d) Labour intensive


Q.7 Importance was given to basic and capital good industries during ________ Five Year Plan? a) First b) Second c) Third d) Fourth Q.8 ____________ sector is the major contributor of employment in India. a) Agriculture b) Industry c) Service d) Tertiary Q.9 Financial sector is a part of ____ a) Primary sector b) Tertiary sector c) Secondary sector d) None of these Q.10 which of the following is true? (I) The closer Gini coefficient is to 1, greater is the inequality (II) The closer Gini coefficient is to zero, greater is the inequality (III) Gini coefficient measures poverty a)Only (I) b)Only (II) c)Only (III) d)(II) & (III) Q.11 GDP according to expenditures method can be expressed as a) Consumption + Investment + Government expenditures + Net exports b) Wages + Interest + Rent + Profits – Net factor income from abroad + Capital consumption allowance + indirect business taxes c) The sum of the values added at each stage of production d) National Income + Indirect business taxes Q.12 The sum of all wages, interest, rent and profit is called a) Gross domestic product b) National income c) Government spending d) Government deficit


Q.13 While calculating national income by income method, which of the following is included? a) Import spendings b) Government expenditure c) Household savings d) Rents and wages Q.14 If to calculate the national income, we sum up the spending done by all the sectors in the economy, which method are we using? a) Income method b) Value added method c) Expenditure method d) Product method Q.15 Mixed income of the self-employed means a) Gross profit received by proprietors b) Rent, interest & profit of an enterprise c) Combined factor payments which are not distinguishable d) Wages due to family workers Q.16 Which of the following statements are incorrect ? a) GDP at market price = GDP at factor cost plus net indirect taxes b) GNP at market price = GDP at market price minus net factor income from abroad c) NNP at factor cost = NNP at market price minus net indirect taxes d) None of the above Q.17 Example of indirect tax is a) Sales Tax b) Custom Duty c) Excise duty d) All of these

CHAPTER 6 Q.1 The unemployment arising due to downturn in business activity is known as a)Disguised unemployment b)Structural unemployment c)Natural unemployment d)Cyclical unemployment


Q.2 Nature on unemployment in India is a)Structural b) Seasonal c) Casual d)Voluntary Q.3 _______ is known as the Year of Great Divide a)1991 b) 1918 c) 1921 d) 1950 Q.4 Density of population is a)Number of people migrating from one city to another every year b)Number of people staying in a state c)Number of persons per square kilometre d)None of these Q.5 _______ has lowest literacy rate a)Tamil Nadu b) Haryana c) Bihar d)Uttar Pradesh Q.6 Relative poverty measure is more appropriate for a)Under developed countries b)Developed countries c)Developing countries d) All of them Q.7 Rural unemployment is a)Seasonal & disguised b)Industrial c)Educated d)Technological Q.8 India ranks _____ in world population a)First b) Second c) Third d) Fourth


Q.9 _______________ occurs when the aggregate demand in the economy is more than the aggregate supply. a)Demand-pull inflation b)Cost Push inflation c)Stagflation d)Deflation

CHAPTER 7 Q.1 Economic reforms had to be implemented in 1991 because of a) High inflation b) Large fiscal deficits c) Low foreign exchange reserves d) All of the above Q.2 Which international body deals with rules of trade between nations? a) WTO b) World Bank c) UNO d) IBRD Q.3 Privatisation means a) Relaxation of previous government restrictions b) Encouraging foreign investment c) Transferring assets from public to Private ownership d) None of these Q.4 Globalisation is good for a country because a) It improves the economic efficiency of the country b) It only helps the developing countries c) It does not require any structural adjustment d) None of these Q.5 Leasing is one of the methods of ________ a) Liberalisation b) Privatisation c) Globalisation d) None of these Q.6 World Bank provides loan to _____________ a) all retail borrowers b) eligible foreign institutional investors c) all those who are in need


d) all member countries Q.7 Which of the following organisations helped in facilitating the process of globalisation. a) World Bank b) WTO c) IMF d) All of these Q.8Which of the following condition prevailed in banking sector during pre-reform period? a) Administered interest rate structure b) Quantitative credit restrictions c) High reserves requirements d) All of these Q.9 Liberalisation is a) Transfer from public ownership to private ownership b) Transfer from private ownership to public ownership c) Relaxation of previous government restrictions d) Disposal of public sector’s unit’s equity in the market Q.10 World Bank is also known as a) International Monetary Fund b) World Trade Organisation c) The International Bank for Reconstruction and Development (IBRD) d) None of these

CHAPTER 8 Q.1 Central Bank of a country does deals with (I)State Government (II) Public (III) Central Government (IV) Commercial Banks a) (II), (III) & (IV) b) (I), (II) & (IV) c) (I), (II) & (III) d) (I), (III) & (IV) Q.2 Which of the following action could be taken up by Central Bank of a country to stabilize the economy during an inflationaryperiod? a) Lowering Bank Reserve requirements b) Lowering discount rate


c) Selling Government securities d) None of the above Q.3 M3 equals to a) M1 + post office saving deposits b) Demand deposits + coins + currency notes c) M1 + Time deposits of the public with Banks d) None of the above Q.4 Fiscal policy is the policy relating to a) Public Revenue and Public Expenditure b) Non – Banking Financial Institutions c) Money & Banking in country d) All of these Q.5 The other name for bank rate is ______ a) Reverse repo rate b) Repo rate c) Lending rate d) Discount rate Q.6 Who determines the CRR in India? a) RBI b) Minister of finance c) Parliament d) SEBI Q.7 Why is money considered as the most liquid asset? a) Because it includes government bonds b) Because it acts a medium of exchange c) Because it includes equities d) Because it includes term deposits Q.8M3 is also called a) Broad Money b) Narrow Money c) Near Money d) None of these Q.9 The rate at which RBI rediscounts the bills with banks is called a) CRR b) SLR c) Bank Rate d) Repo Rate


Q.10 Indian Monetary policy aims at a) Regulating monetary growth b) Ensuring adequate expansion in credit c) Strengthening banking system d) All the above Q.11To increase the money supply, the Reserve Bank of India would a) Decrease the reserve requirement and the discount rate, and buy bonds b) Increase the reserve requirement and the discount rate, and sell bonds c) Increase the reserve requirement and the discount rate, and buy bonds d) Decrease the reserve requirement and the discount rate, and sell bonds Q.12Quantitative measure of regulating credit includes a) Moral suasion b) Open market operations c) Issue of directives d) Rationing of credit Q.13Difference between M1 and M2 is that a)M1 includes demand deposits b)M2 includes currency c)M2 includes other deposits with RBI d)M2 includes saving deposits Q.14The effect of increase SLR will be reduced or nullified if a) Securities are sold in open market b) Bank rate is reduced c) CRR is increased d) None of these Q.15During depression, RBI will a)Lower Bank rate and purchase securities in the market b)Increase Bank rate and purchase securities in the market c)Decrease Bank rate and sell securities in the market d)Increase Bank rate and sell securities in the market Q.16Who is the custodian of national reserves of international currency? a) ICICI b) RBI c) SBI d) None of these


Q.17 The current CRR is ______ (May,2011). a) 8% b) 6% c) 7% d) 5% Q.18 The current SLR is ______ (May,2011). a)31% b)19%% c)24% d)28% Q.19 Who act as the “lender of last resort”? a) Government b) Central Bank c) Commercial bank d) None of these Q.20Which type of money is no longer a part of Indian monetary system? a) M1 b) M2 c) M3 d) M4 Q.21 At present, there are ____ nationalised banks in India. a) 10 b) 21 c) 19 d) 33 Q.22 _____ is also called narrow money. a) M1 b) M2 c) M3 d) M4 Q.23 Functions of banks is/are a) Receive deposits b) Lend money c) Agency services d) All of these


Q.24Cash and chequable deposits are known as a) Narrow money b) Broad money c) Pure money d) None of these


Quantitative Aptitude

CPT – June 2013



Math generally is a student’s weak point. After careful analysis we suggest you focus on Simple and Compound Interest, Permutation Combination, Ratio, Proportions, Logarithm and Limits and Continuity. These topics are relatively easier compared to Statistics and Calculus. We have not added a lot of questions for math but as most students wanted we have added questions which if you know properly, you can without a doubt strike the 30 percent mark. Make sure you acquaint yourself well with these few selected questions as they tend to be repetitive in nature and the probability of them showing up on your exam paper is pretty high.

Please bear in mind – these are our views and we do encourage everyone to practice more maths, to

get much better results.


The cost of machine 1, 25,000/- useful life is estimated 20 years and the rate of Depreciation of its cost is 10% p.a. its scrap. Value is ____

A. 15102 B. 15400 C. 15300 D. 15200

The FV of annuity of 5000/- is made annually for 8 years at INT rate of 9% com. annually (1.09)8 = 1.99256 A. 55142.22 B. 65142.22 C. 65532.22 D. 57425.22

Regression coefficient is

A. Independent of origin & scale B. Dependent of origin & scale C. Independent of origin but not scale D. Dependent on origin but not scale

If there are 3 white, 2 black balls in Urn I, & 4 white, 6 black balls in Urn II if one ball is taken from Urn I & transferred to Urn II & a ball is taken from Urn II then probability that the ball drawn from urn II is white is

a) 23/55 b) 11/44 c) 88/144 d) None

If odds in favor of A is 5:7 and odds against B is 9:6 of solving a problem then probability that a problem can be solved is ____

a) 147/180 b) 122/180 c) 117/180 d) None

A lady traveling with a speed of 20Kmph, and returns quickly with average speed 24Kmph. Find her return speed

A. 30 kmph B. 25 kmph C. 38 kmph D. 22 kmph

For a Poisson distribution,

A. Mean and standard deviation are equal. B. Mean and variance are equal. C. Standard deviation and variance are equal. D. Both (a) and (b).


The best method to collect data in case of natural calamity is

A. Personal interview. B. Telephone interview. C. Mailed questionnaire method. D. Indirect interview.

If the number of students in two classes are in the ratio 5 : 7. If 10 students are subtracted from each class, the ratio becomes 4 : 6. Then the number of students in each class is ____

A. 30, 40 B. 45, 60 C. 40, 60 D. 50, 70

The letters of the words CALCUTTA and AMERICA are arranged in all possible ways. The ratio of the number of these arrangements is _______.

A. 1: 2 B. 2:1 C. 1:1 D. 1.5:1

In ________ years a sum will double at 5% p.a. compound interest. A. 15 years 3 months B. 14 years 2 months C. 14 years 3 months D. 15 years 2 months

If two numbers are in the ratio 49: 68 and a numbers is added to it then the ratio becomes 3 : 4. The Number is ____

A. 3 B. 5 C. 8 D. 9

If A = Rs. 1000, n = 2 years, R = 6% p.a compound interest payable half-yearly then principal ( P ) is

A. Rs. 888.80 B. Rs. 880 C. 800 D. None of these


The Number of ways of arranging 6 boys and 4 girls in a row, so that all the girls are together __

A. 4 (6!, 4!) B. 6!, 4! C. 7!, 4! D. 2, 7!, 4!

A. 1/6 B. 3/2 C. 3/4 D. 1/2

The error made by a clerk in calculating simple interest for 5 months @ 6.5% and compound interest for 6 months @ 5.5% calculated half yearly is 25.40. Find the sum?

A. 69,960 B. 90,690 C. 60,690 D. 90,660

There are 10 trains plying between Calcutta and Delhi. The number of ways in which a person can go from Calcutta to Delhi and return by a different train is

A. 99 B. 90 C. 80 D. None of these.

The mean salary for a group of 40 female workers is 5200 per month and that for a group of 60 male workers is 6800 per month . What is the combined mean salary?

A. 6500 B. 6200 C. 6160 D. 6100


A bag contains 15 one rupee coins, 25 two rupee coins and 10 five rupee coins. If a coin is selected at random from the bag, then the probability of not selecting a one rupee coin is

A. 0.30 B. 0.70 C. 0.25 D. 0.20

A. 4 B. 1/68 C. 1/4 D. Does not exist

A number between 10 and 100 is five times the sum of its digits. If 9 be added to it the digits are reversed, find the number.

A. 54 B. 53 C. 45 D. 55

The sum required to earn a monthly interest of Rs 1200 at 18% per annum SI is A. Rs. 50000 B. Rs. 60000 C. Rs. 80000 D. None of these

A. 27 B. 36 C. 18 D. 3

In how many ways can 8 persons be seated at a round table? In how many cases will 2 particular persons sit together?

A. 5040 B. 4050 C. 450 D. 540

The index number of prices at a place in the year 2008 is 225 with 2004 as base year then:


A. There has been on an average 125% increase in price B. There has been on an average 225% increase in price C. There has been on an average 1000% increase in price D. There has been on an average 150% increase in price

A. 0 B. 8 C. -8 D. -4

For a P.D. P(x=3) = 5, P(x=5) then S.D. A. 16 B. 2 C. 4 D. 6

A.

B.

C.

D. None of these

A town has a total population of 50,000. Out of it 28,000 read the newspaper Hindu and 23000 read Times of India while 4000 read both the papers. The number of persons not reading Hindu and Times of India both is


A. 4000 B. 3000 C. 3500 D. 2500

The SD of sampling distribution is called A. Standard error B. Mean C. Variance D. Mode

Standard error can be described as

A. Standard deviation of a statistic. B. The error committed in sample survey C. The error committed in sampling. D. The error committed in estimating a parameter.

The sum of all natural numbers between 200 and 400 which are divisible by 7 is ______.

A. 7729 B. 8729 C. 7749 D. 8739

If x + 2y = 5 and 2 x + 3y = 8 are two regression lines then regression line y on x is

A. x + 2y -5 =0 B. 2x + 3y -8 =0 C. Any of these D. None of these

____ of regression coefficients is greater than or equal correlation coefficient

A. A.M. B. G.M. C. H.M. D. None

The Number of numbers not exceeding 1000 formed by using the number 1,2,3,4,5,6,7,8,9 without repetition

A. 384 B. 585 C. 364


D. 529 If A:B = 2:5 then (10A+3B) : (5A+2B) is equal to ____

A. 7:4 B. 7:3 C. 6:5 D. 7:9

A lady traveling with a speed of 20Kmph, and returns quickly with average speed 24Kmph. Find her return speed

A. 30 kmph B. 25 kmph C. 38 kmph D. 22 kmph

The cost of machine 1,25,000/- useful life is estimated 20 years and the rate of Depreciation of its cost is 10% p.a. its scrap value is ____

A. 15400 B. 15500 C. 15350 D. 15200

A. B.

C. D. None

The selection procedure of sample having no involvement of probability is known as

A. Purpose sampling B. Subjective sampling C. Judgment sampling D. All of the above


From the following choices, what is the equation of a line whose x-intercept is1/2 as that of line 3x+4y=12 and y-intercept twice of same.

A. 6x+3y=6 B. 8x+3y=24 C. 3x+8y=24 D. 3x+y=6

Regression coefficient is

A. Independent of origin & scale B. Dependent of origin & scale C. Independent of origin but not scale D. Dependent on origin but not scale

Information from the internet is

A. primary B. Secondary C. Tertiary D. None of these

Two regression lines are x+2y-5=0, 2x+3y-8=0 find regression line of y on x

A. 2x+3y-8=0 B. x+2y-5=0 C. none of these D. any of these

Let the mean of x = 50, then mean of u=10+5x is ____

A. 264 B. 260 C. 286 D. 274

If A = {1,2,3,4,5,} B = {2,4} C = {1,3,5} then (A – C) x B

A. {(4,4), (2,2)} B. {(2,2), (2,4), (4,2), (4,4)} C. {1,2} D. {2,4}

If the sum of 3rd & 9th term of an A.P is 8 then sum of 11 terms

A. 44 B. 22 C. 19 D. 11


On the average experienced person does 5 units work which a fresh one 3 units of work daily but the employer has to maintain an output of at least 30 units of works per day

A. 5 x + 3y ≤ 30 B. 5x + 3y > 30 C. 5x + 3y ≥ 30 D. None

There are 12 questions to be answered in yes or no In how many ways can these be answered

A. 1024 B. 2048 C. 4096 D. None

Average age of a group of 10 students is 20 years, if average age increased by two years when two new students are joined then the average age of two new students

A. 84 B. 64 C. 32 D. 42

If x is inversely related with square of y for x = 1 and y = 2 then find the value of x when y = 6

A. 3 B. 9 C. 1/3 D. 1/9

If the S.I on Rs.1,400 at certain rate of interest for 3 yrs is less than that on Rs.1,800 for the same period and same rate of interest is Rs.80, then the rate of interest is:

A. 6.67% B. 7.67% C. 5.67% D. None

If the difference b/w the compound interest & simple interest of a certain sum of money is Rs.72 at 12% p.a. per two year. Find the sum (in Rs.)

A. 6000 B. 5000 C. 5500 D. 6500

The graphical representation of Median is found by using:

A. Ogives B. Frequency polygon


C. Frequency curve D. Histogram

Given the following observations arranged in ascending order with median = 25. Find the value of n. 11, 13, 15, 19, n + 2, n + 4, 30, 35, 39, 46

A. 22 B. 20 C. 15 D. 30

The classes of a frequency distribution are 80-100, 100-120, 120-140, 140-160 and mode is 125. Then find the class having maximum frequency.

A. 80-100 B. 100-120 C. 120-140 D. 140-160

Out of the following which one affects the regression coefficient?

A. Change of origin B. Change in scale C. Change of origin & scale D. None

If prices increase by 20%. What would be the price index now?

A. 130 B. 120 C. 140 D. None

Fisher Ideal Index Number does not satisfy the:

A. Unit test B. Time Reversal Test C. Factor Reversal test D. Circular Test

If the sum of first n terms of an A.P is 2n2 + n then the difference of its tenth & first term is:

A. 207 B. 36 C. 27 D. 45


A team of 4 is to be selected from 6 boys and 5 girls, find the probability that it includes exactly 2 girls:

A. 2/5 B. 1/2 C. 5/11 D. d) 2/4

The probability that a girl student gets scholarship is 0.6 and that of a boy is 0.8, then probability that at least one gets the scholarship is:

A. 0.48 B. 0.92 C. 0.08 D. None

A coin is tossed 5 times, Probability of getting head exactly 3 times is:

A. 5/16 B. 1/32 C. 1/48 D. 2/17

Given variance of X and Y is 25 & 36 respectfully and covariance of x & Y is 8.4 then find correlation coefficient?

A. 0.33 B. 0.28 C. 0.30 D. 0.36

Two judges were asked to rank 3 candidates for their proficiency in certain job. Their ranking were 2, 1, 3 & 3,2, 1 respectively. The rank correlation coefficient is equal to

A. -0.5 B. -0.8 C. 0.5 D. 0.8


Mercantile Law

CPT – June 2013



Coming to mercantile law this exam a student should particularly take note that capacity, nature, performance and the breach of contract shall be very important in these exams. You can expect about 10- 15 questions right from within these topics. Study the different kinds of contracts and understand them well. These are multiple choice questions you need to know what things mean. The contract of sale shall be our next chapter which we emphasize on. Expect at least 3-4 questions on the different types of partners so make sure you know those well. A minor’s position in a business, along with how profits are shared in a company shall suck out another 3-4 points for you. The mutual rights and duties of partners are some of the things to keep in mind for the long run.

One simple way of cracking Law is to build on your vocabulary

as many answers are common words used in everyday life. It is just simple common general knowledge.


Arshad threatens to kill Warsi’s son if Warsi does not sell his car to him. Warsi enters into an agreement to sell the car. Such an agreement will be treated as an agreement entered into under.

A. Fraud B. Undue influence C. Coercion D. Misrepresentation

_______Agreements are created by situation. A. law B. written C. void D. implied

Every partner is a principal of firm as well as ____ of the firm A. Debtor B. Agent C. Creditor D. Employee

If Mulayam paid the price to a car owner, but he said to deliver the car in future. It is a ________ contract

A. Executory B. Executed C. Future D. Completed

If Sid promises to marry Anusha but refuses to do so, then ______ damages has to be paid A. Special B. Exemplary C. nominal D. None of these

Auction sale will be completed by the ______ A. Delivery of goods B. Price paid to goods C. Fall of hammer D. None of these

Which of the following is not true in case of minor?

A. Rule of estoppel B. Ratification of terms on attaining majority


C. Contract with minor is valid D. All of the above

Holiday packages advertised and promoted by touring operators is _____ A. Cross offer B. Counter offer C. Invitation to offer D. All of the above

In order to sustain a action for deceit, there must be a proof of

A. misrepresentation B. coercion C. Undue influence D. Fraud

Change in the constitution of the firm takes place in the following cases except in A. Change in profit sharing ratio B. Admission of a partner C. Retirement of a partner D. Insolvency of a partner

In case of a breach of contract, remedies available to aggrieved party are

A. Suit for damages B. Suit for recession C. Suit for specific performance D. All of the above.

Rushil’ supplies gold to ‘Sandra’, a Jewelery shop owner, to make an ornament. ‘Sandra’ charged Rs. 500. The contract is _____

A. Agreement to sell B. Hire Purchase C. Contract of labour D. Future Sale

A student agreed, under pressure, to gift his entire property to his educational guru. Such agreement can be set aside on the ground of:

A. Undue influence B. Fraud C. Mistake D. Misrepresentation

Non fulfillment of obligation by offeree preceeding to acceptance. The offer is

A. Revoked B. Lapsed C. Communicated D. Completed


Doctrine of caveat emptor does not apply when _____ A. Goods are purchased by sample. B. Goods are purchased by description. C. Goods are purchased by sample as well as description. D. All of the above.

When a book seller sells a book on cash, it is known as ____ contract A. Executed B. Executory C. Unilateral D. Bilateral

Abs sold a gold chain to ‘Biceps’ on sale or return basis and ‘Biceps’ sold the same to ‘Chest’ on sale or return basis ‘Chest’ lost the chain. Who should bear the loss?

A. A B. B C. C D. None of these

‘Amitabh’, a coolie taken the luggage of ‘Rekha’. Amitabh took the luggage upto the taxi, Rekha didn’t stop Amitabh from taking the luggage. In this case Rekha is ________ to pay the amount.

A. Bound B. Not bound C. Free D. None of these

Reserve price is considered / awarded in

A. Sale by sample B. Sale by description C. Sale by auction D. All of the above

A minor can become the partner, with the consent of ______

A. Guardian B. Parents C. All Partners D. Majority of partners

When the property on goods is transferred from seller to buyer at once. This contract is called.

A. Sale B. Future Sale C. Agreement to Sell D. All of the above


According to Sale of Goods Act, the term deliverable state means a state in which buyer _____ to take delivery of goods

A. Is bound B. Is not bound C. May bound or may not bound D. All of the above

The amount earned for the contract as much as performed A. Recession B. Injuction C. Quantum meruit D. None of these

Can a person of unsound mind enter into a contract?

A. Yes B. No C. May be D. Not Possible.

The main aim of Sale of goods Act, 1930 is to transfer ______ A. Possession of goods B. Property C. Ownership D. None of these

Tutors Circle an education book company made an offer to sell a new book only for the members of “500 questions you must know before your CPT exam” event. This is a ____ offer.

A. General B. Specific C. Implied D. Invitation to offer

A person is said to have made proposal when –

A. They are willing to do something. B. They are unwilling to do something. C. To abstain from doing something. D. To abstain the willingness to do or abstain from doing something.

Khushboo agrees to sell to Gaurav, all the cherries which will be produced next year in his garden. This is an agreement of _____ goods.

A. Ascertained B. unascertained C. Contingent D. Future


CPT Tutors runs a bus service in the city through different routes. What kind of the offer is it?

A. Express Offer B. Implied offer C. No offer D. None

Sanjay, a partner who does not contribute capital in the firm and does not participate actively in the business but allows the firm to use his name along with goodwill is called a_______ partner

A. Active partner B. Sleeping partner C. Nominal partner D. Limited partner

Which of the following is not a disability of unregistered firm

A. It cannot file a suit against the third party. B. Its partners cannot file a fait against the firm C. It cannot claim a set off exceeding Rs. 100 D. It cannot be sued by third party.

James Bond offer to sell his personal bike to superman for Rs 1lac.What kind of offer is it?

A. Express Offer B. Implied Offer C. Specific Offer D. General Offer.

The dissolution of the firm can be informed to the registrar of the firms by A. Any of the partner before dissolution B. Any of agent of partner before dissolution C. Any of authorized agent elected by partners D. Any of the above

The minimum price below which an auctioneer will not sell the goods is called –

A. Reserve price B. Upset price C. Both (a) and (b) D. Perishable price


Nemo dat quod non habet means

A. No one can pass a better title then he himself has B. A bona fide purchaser is always protected in law C. The person is above the law D. No one is above the law

An unregistered firm can set off the claim by up to ____ A. 100 B. 10,000 C. 50,000 D. 1,000

A contract infringing the law is?

A. Valid B. Void C. Illegal D. Voidable

Acceptance on Telephone is complete

A. When words of acceptance are heard by the proposer B. When words of acceptance are spoken C. When proposer hears the words of acceptance & he acts upon it D. When proposer hears the words of acceptance & he communicates this to offeree.

A woman who observes a complete seclusion is called ___________ woman.

A. Pardanashin

B. Unsocial

C. Social

D. None

Fraud means –

A. False representation of facts.

B. Misrepresentation of facts.

C. False representation of facts made to deceive the party.


D. None.

Shoaib sells goods to Salman locally manufactured goods as imported goods charging a higher price. What can this be referred to be?

A. Fraud

B. Coercion

C. Fake

D. Misrepresentation.

The directors of the company issued a prospectus containing false statements. A shareholder who had subscribed for the shares on the faith of the prospectus wanted to avoid the contract. Can it be done?

A. Yes

B. No

C. Not Possible

D. None.

Salman fraudulently informs Shahrukh that Salman`s estate is free from all encumbrances .On the faith of Salman`s statement, Sharukh buys the estate. Actually the estate is subject to mortgage. Can Shahrukh avoid the contract?

A. Yes

B. No

C. Not Possible

D. None.

Salman received defective cannon. In order to conceal the defect he put a metal plug on it. Sanjay bought these cannon without examining. When Sanjay used it burst. Sanjay refused to pay the balance. What can this said to be?

A. Fraud

B. Cheating

C. None


D. Misrepresentation.

The party whose consent was caused by fraud can ___________ the contract.

A. Cancel

B. Promise

C. Perform

D. Justify

Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud”.

A. True

B. False

C. None

D. May be.

_______________ means false representation of facts made innocently or non-disclosure of material fact without any intention to deceive the other party.

A. Misrepresentation

B. Fraud

C. Undue influence

D. Coercion

What is consent?

A. Assenting to an offer B. Dissenting to an offer C. None D. Yes to an agreement.


Two or more persons are said to ________ when they agree upon the same thing in the same sense.

A. Consent

B. Agree

C. Disagree

D. None

Shahrukh has one Maruti and one Santro car. He wants to sell Santro car. Salman does not know that Shahrukh has two cars. Salman offers to buy the Maruti from Shahrukh at Rs 60000.Shahrukh accepts the offer thinking it to be the offer for his Santro car. Can there be any consent to this agreement?

A. Yes

B. No

C. None

D. Not sure

Rekha an illiterate woman signed a gift deed thinking that it was a power of attorney. The gift deed was not explained to her. It was held that her mind did not go with that writing and she never intended to sign a gift deed. What kind of agreement is this?

A. Illegal

B. Legal

C. Void

D. None

_____________ consent is the essential of a valid contract.

A. Free

B. Bound

C. None

D. May be


The consent is said to be free when it is not caused by

A. Coercion,mislead,false,lie.

B. Fraud,undue influence,fake,mistake.

C. When it is not free.

D. Coercion,undue influence,fraud,misrepresentation,mistake

What is the affect of absence of free consent:

A. Illegal agreement

B. Voidable

C. None of the above

D. Not a proper contract

Coercion means

A. Compulsion

B. Pressure

C. Threat

D. Section 15.

A Hindu widow of 13years old was forced to adopt a boy under the threat that her husband`s dead body would not be allowed to be removed if she does not adopt the boy. She adopted the boy. What kind of consent can it be said to be?

A. Void

B. Illegal

C. Consent by coercion

Salman threatens to kill Abhishek, Bachchan`s son, if Abhishek refuses to sell his house to him. Can this consent be said to be obtained by coercion?

A. Yes

B. No


C. None

D. Not any of them.

Delivery under section 2(2) of the Sale of Goods Act is defined as

A. Gratuitous transfer of possession B. Voluntary transfer of possession C. Statutory transfer of possession D. Involuntary transfer of possession

Who can perform the contract? A. Promisor himself B. Promisor agent C. Promisor representatives D. all the above

A contract cannot be performed by

A. Parties to the contract B. Agents to the parties C. Stranger D. Promisor

The law relating to the sale of goods is contained in the Sale of Goods Act, 1930 which came into force on

A. April 1, 193 B. Jan 21st 1930 C. July 1st 1930 D. April 18th 1930

A promise to pay a time barred debt made in writing & signed by the debtor may be

A. Enforceable B. Not enforceable C. Unlawful D. Enforceable at the discretion of the court

An unpaid seller can exercise the right of resale A. if the goods are of durable nature B. If the goods are of perishable nature C. With the consent of buyer D. Without the consent of buyer


Tutors Circle agrees to deliver 6 months from now 4 Rolls Royce worth Rs 3 crore to Rajnikanth in exchange for 4 Aston Martins worth Rs 4 crore and Rs 50000 in cash

A. Agreement to sell B. Barter C. Executed Contract of Sale D. Sale

Which of the following is not the duty of a partner of a firm? A. To indemnify the partner for loss caused by fraud B. To indemnify the firm for loss cause by fraud C. To carry on business of the firm to the greatest common advantage D. To render true accounts

Under the sale of goods act, 1930 the implied condition that the goods are of merchantable quality ____ where the buyer has actually examined the goods

A. Is not applicable B. Is presumed C. Is applicable D. Exists

Who of the following can be a party to enter into contract? A. A convict undergoing sentence B. A joint stock company C. A minor D. All of the above

Reciprocal promises consists of promises by A. Both of the parties B. Only of the promisor C. Only of the promise D. More than two parties

In contract of sale, the goods destroyed after delivery thus risk bears by A. The buyer B. The seller C. Partly by the seller or buyer D. Neither buyer nor seller


An agreement to interfere in the legal proceedings before a court is: A. Valid B. Void C. Enforceable under law D. None of these

Where the goods are delivered to a carrier or wharfinger for the purpose of transmission to the buyer, the delivery is

A. Invalid & effective B. Valid & effective C. Conditional D. None

The contract is discharged by _______ A. Performance B. Lapse of time C. Mutual Agreement D. All

Impossibility arising subsequent to entering in to a contract is called____

A. Supervening impossibility B. Irregular impossibility C. Perpetual impossibility D. None

To constitute a partnership, the agreement must be in: A. In writing B. In Oral C. Either in written or in Oral D. Neither in writing nor in Oral

Impossibility arising subsequently to formation of a contract is A. Pre-contractual contract B. Supervening impossibility C. Initial Impossibility D. None of these

A person who is not a party to a partnership agreement and conducts (or) represents himself as a partner in a firm is called

A. Sub partner B. Sleeping Partner C. Partner by estoppels D. A share holder


In a contract of sale, under the sale of goods act 1930, physical delivery of goods is not an essential element. A. False B. Partly True C. True D. None

. _____ is one sided contract in which only one party has to perform his part of promise A. Unilateral contract B. Illegal C. Bilateral D. Enforceable


Fundamentals of Accounting

CPT – June 2013



1. Joint venture account is.

A. A nominal account B. A personal account C. A real account D. None of these

2. Profit or Loss on a Joint Venture is shared by co-ventures

A. Equally B. In the capital ratio C. As per the agreement D. Depends on the venture

3. Which of the following is true? A. Only one venturer takes the risk B. Only one venturer can sell the goods C. Only one venturer can purchase the goods D. In joint venture , provisions of partnership act applies

4. For the purchase of plant from joint bank account, separate sets of books are maintained,

the correct journal entry will be: A. Plant a/c will be debited and joint bank a/c will be credited B. Joint venture a/c will be debited and joint bank a/c will be credited C. Plant a/c will be debited and venture capital a/c will be credited D. Joint venture a/c will be debited and plant a/c will be credited

5. When a venture recording the transactions brings goods to the joint venture from his own stock the amount is credited to

A. Joint venture account B. Purchases account C. C0-venturer account D. Sales Account

6. The amount of discount on discounting of a B/R from the bank by a co-venturer will be debited to:

A. Discount account B. Bank a/c C. Joint venture a/c


D. None of the above

7. X & Y entered into a joint venture and agreed to share profit or losses in the ratio of 3:2. A joint banking account was opened wherein X contributed Rs. 50,000 and Y contributed Rs. 20,000. Material was purchased for Rs. 65,000; wages paid 6,000, sales 1, 12,000, expenses paid by X 1,630. What is the profit earned?

A. 36,400 B. 39,370 C. 33,980 D. 41,460

8. Ram and Shyam purchased a piece of land for Rs. 40,000 and sold it for Rs. 1,20,000. Ram had contributed 30,000 and Shyam Rs. 10,000. What will be the profit of joint venture?

A. 40,000 B. 80,000 C. 30,000 D. 10,000

10. Joint bank Account is

A. Not like a cash book B. Opened specifically for the venture C. Operated by one of the venture D. Personal account

9. A complete separate set of books is kept, when the size of the venture is :

A. Large B. Small C. Not known D. Medium

11. Consignment is-

a) Sale b) Agreement to sell c) Sale on approval d) None of these


12. The consignor is-

A. Principal B. Agent C. Debtor D. None of them

13. Pro- forma invoice is sent by-

A. Consignor B. Consignee C. Principal to his agent D. Debtor to creditor

14. Which of these is not a difference between Consignment and sale transaction?

A. Number of parties involved B. Property in the goods is with the buyer after the sale is made, but it is with the

consignor in case of goods consigned C. Motive to earn revenue D. Seller directly sells goods to the buyer but the consignor sells goods indirectly through

the consignee

15. Consignment A/c is an example of-

A. Nominal A/c B. Personal A/c C. Real A/c D. None

16. The unsold stock is valued at

A. Original cost of the goods B. Original cost plus proportionate expenses paid by both consignor and consignee C. Original cost plus proportionate non- recurring expenses paid by both consignor and

consignee D. Original cost plus proportionate expenses paid by consignor only

17. What is loading on consignment?


A. Consignment at a deflated price B. Consignment at an inflated price C. Consignment + expenses incurred D. None of the above

18. Which of the following statement is false?

A. Consignment a/c is prepared by the consignor B. Goods sent on consignment a/c is prepared by the consignor C. Consignment stock a/c is prepared by the consignee D. Both ‘b’ and ‘c

19. In the books of consignee the expenses incurred by him on consignment are debited to:

A. Consignment A/c B. Cash A/c C. Consignor’s A/c D. Expense A/c

20. Commission will be shared by:

A. Consignor & consignee B. Only consignee C. Only consignor D. Third party

21. The final accounts for sole proprietor business means:

A. Trading account B. P/L account C. Balance sheet D. All of the above

22. A trader bought goods worth Rs. 5,000. He sold the goods for Rs. 8,000 incurring a total expenses of Rs. 1200(including carriage outward). His gross profit is:

A. 2,000 B. 1,800 C. 2,900 D. None of these

23. If the gross profit is 20% on cost of goods sold and the sales are 1, 50,000 then the gross profit will be:


A. 30,000 B. 25,000 C. 37,500 D. 22,500

24. The manager is entitled to a commission of 10% on net profit after charging such commission. Net profit before charging such commission is Rs. 1, 10,000. What is the commission payable to the manager.

A. 11,000 B. 15,200 C. 10,000 D. 9,800

25. Preliminary expenses written off is shown in:

A. Profit and loss a/c B. Profit and loss appropriation account C. Miscellaneous expenditure in balance sheet D. Current assets in balance sheet

26. Advance received from customer s is:

A. An item of current liability B. An item of non-current asset C. An item of contingent liability D. An item of non cash cost.

27. A Co. wishes to earn a 20% profit margin on selling price. Which of the following is the profit mark up on cost, which will achieve the required profit margin?

A. 33% B. 25% C. 20% D. None of these

28. Contingent liabilities must be shown under


A. Current liabilities and provisions B. Miscellaneous expenditure C. By way of footnote only D. Not shown at all

29. Interest on drawings is-

A. Expenses for the business B. Gain for the business C. Loss for the business D. None of these

30. The redemption of preference shares is governed by:

A. Sec. 80A of the Companies Act, 1956 B. Sec. 80 of the Companies Act, 1956 C. SEBI guidelines D. Articles Of Association

31. H Ltd. Had 10,000 8% redeemable preference shares of Rs. 100 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares of Rs. 10 each fully paid up at par.

Number of equity shares to be issued is-

A. 10,000 B. 1,00,000 C. 55,000 D. 67,000

32. The reserve for redemption of preference shares is known as:

A. Capital redemption a/c B. Redemption a/c C. Capital redemption reserve a/c D. Redemption reserve a/c


33. Redemption of preference share can be made by

A. Issue of shares B. Issue of debentures C. Sale of investment D. None of the above

34. If the preference shares are redeemed at premium then such premium may be provided out of the-

A. Securities premium account B. Proceeds fresh issue of shares C. Share forfeiture account D. Capital redemption reserve account

35. Preference shares may not be redeemed unless they are:

A. Paid upto allotment money B. Paid upto first call C. Fully paid up D. None of these

36. Preference shares amounting to Rs. 2,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs. 1,00,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account is:

A. 1,05,000 B. 1,00,000 C. 2,00,000 D. 1,11,000

37. Debentures can be

i. Mortgage or simple ii. Register or bearer iii. Redeemable or irredeemable iv. Convertible or non- convertible

A. Both i. and ii B. Both I and iii C. Both ii and iii D. All of these


38. Can debenture be purchased from the open market?

A. No B. Yes C. Permission needs to be taken from SEBI D. Permission need to be taken from Board

39. Debentures refer to

A. Owner’s capital B. Loan capital C. Short term debts D. All of these

40. The income tax deducted from interest paid on debentures is shown on the:

A. Asset side of the Balance sheet B. Liability side of the Balance sheet C. Credit side of P/L a/c D. Debit side of P/L a/c

41. Premium on redemption of debenture is shown in the Balance Sheet under

a) Reserve & surplus b) Current liabilities & provisions c) Current Assets d) Miscellaneous expenditure

42. X Ltd. Was registered with a share capital of Rs. 50, 00,000 divided into equity shares of Rs. 10 each. It issued 4, 90,000 equity shares to the general public at par payable as to Rs. 2 on application, Rs. 4 on allotment and balance in 2 equal calls. The public had subscribed for 4, 85,000 shares. Till 31st March, 2012, only first call had been made. All the share holders had paid up except Mr. A, a holder of 10,000 shares, who did not pay the call money.

43. the company which can invite the public to subscribe to its share capital is called:

A. Private Company B. Public Company C. Private Company with share capital exceeding 50,00,000 D. None of these


44. A company is an association of-

A. Parties

B. Persons

C. Debtors

D. Partners

45. Acc. to Sec. 78 of the Companies Act , 1956 Securities Premium is:

A. Capital profit

B. Operating profit

C. Non-operating profit

D. Holding profit

46. guarantee to subscribe an agreed number of shares for consideration is called

A. Guarantee

B. Forfeiture

C. Underwriting

D. Buyback

47. The amount of calls in arrear is deducted from …..to arrive at…………..

A. Issued capital; called up capital

B. Called up capital; issued capital

C. Paid up capital; called up capital

D. Called up capital; paid up capital

48. If the forfeited shares are re-issued at premium, then the amount of premium should be credited to:

A. Securities premium a/c B. Share forfeiture a/c C. Capital reserve a/c D. None of these


49. The capital, which is offered to the public for subscription:

A. Authorized B. Issued C. Paid up D. Called up

50. Discount on issue of shares is a:

A. Revenue loss B. Capital loss C. Issue expenses D. Trading loss

51. The term capital represents:

A. excess of external liabilities over the assets

B. excess of assets over the external liabilities

C. excess of external liabilities over the fixed assets

D. excess of assets over the internal liabilities

52 Financial Statement forms a part of

A. Accounting

B. Book-keeping

C. All the above

D. None of these

53 which of the following can be described as limitation of accounting-

A. ignores qualitative elements

B. ignores price levels changes

C. involves subjectivity

D. All of the above

55. Current liabilities are those liabilities which

A. fall due for payments within a period of not more than 6 months

B. fall due for payments within a period of not more than 12 months

C. fall due for payments within a period of more than 12 months

D. None of these


56. Sale of car for cash Rs.1,000 is a-

A. cash transaction

B. credit transaction

C. Barter

D. internal event

57. Financial statements do not include-

A. Assets expressed in monetary terms

B. Liabilities Expressed in monetary terms

C. Assets expressed in non-monetary terms

D. Assets and liabilities expressed in non-monetary terms

58 The accounting policies can be adapted to which of the following areas-

A. Cash flow statements

B. Contingencies and events occurring after balance sheet date

C. Valuation of investments

D. All of the above

59. Which accounting principle is followed in adopting accounting policy of making provision for doubtful depth @5 % on debtor

A. Prudence

B. substance over form

C. Materiality

D. All of the above

60. It is essential to standardize the Accounting Principles and policies in order to ensure – A. Transparency B. Consistency C. Comparability D. All of these

61. Accounting records

A. All transactions B. All financial transactions C. All non financial transactions D. All of these


62. The first entry in the journal is to record –

A. Purchase B. Sales C. Opening stock D. Closing balances of assets and liabilities of the previous year.

63. Ledger is also called

A. Principal book B. Subsidiary book C. Day book D. Proper book

64. What is the order in which the accounting transactions are recorded in the books?

A. Journal, subsidiary books, ledger, trial balance B. Ledger, journal, balance sheet, profit or loss account C. Journal, ledger, profit and loss account, balance sheet D. Profit & loss A/C, ledger, balance sheet, journal

65. Accountants use Generally Accepted Accounting Principles (GAAP) to make the financial information

I. Relevant

II. Reliable

III. Comparable

IV Profitable

A. I, II and III B. I, II and IV C. I, III and IV D. II, III and IV

66. One of the detailed rules used to record business transaction is

A. Objectivity B. Accruals C. Double entry book keeping D. (D)Going Concern


67. The elements of the accounting equation are

I. Assets

II. Liabilities

III. Trial Balance

IV. Capital

A. I, II and III B. (B)I, II and IV C. I, III and IV D. (D)II, III and IV

68. Total of purchase book is posted to

A. Purchase account B. Supplier’s account C. Debtor account D. Creditor account

69. Bought machinery on credit from CPT Tutors& co. Rs. 10,000. Which account should be credited?

A. Cash account B. CPT Tutors & co. account C. Machinery account D. None of these

70. Goods worth Rs. 1,500 stolen by an employee cost of which was Rs. 1,000. Jounalise-

a) Drawings a/c dr. 1,000 to purchases cr. 1,000

b) Loss in transit a/c dr. 1,500 To purchases a/c cr. 1,500

c) Loss by embezzlement a/c dr. 1,000 To purchases a/c cr. 1,000

d) Loss by embezzlement a/c dr. 1,500 To purchases a/c cr. 1,500


71. Rent a/c can be classified as-

A. Personal B. Real C. Nominal D. None of these

72. The rent paid to landlord is credited to-

A. Landlord’s a/c B. Rent a/c C. Cash a/c D. None of the above

73. Bank overdraft will be-

A. On debit side B. On credit side C. Won’t come in trial balance D. None of the above

74. Valuation of inventory is covered under:

A. AS 1 B. AS 2 C. AS 3 D. AS 4

75. Inventories can be in the form of-

A. Raw materials B. Work in progress C. Finished goods D. All of the above

76. If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is?

A. periodic B. FIFO C. LIFO D. Average


77. Closing stock is valued at:

A. Cost price B. Market price C. Cost price or Market price whichever is higher D. Cost price or Market price whichever is lower

78. What is FIFO method?

A. Issue made out of latest receipt B. Issue made out of first receipt C. Issue made out of highest value receipt D. Issue made out of lowest value receipt

79. Over valuation of closing stock indicates:

A. Inflate current year profit B. Deflate current year profit C. No effect on gross profit D. None of these

80. Which of the following shall form part of the cost of inventory?

A. Interest cost on money borrowed B. Abnormal losses C. Storage cost of work-in- progress D. Administrative expenses

81. An asset with a first cost of Rs.100, 000 is depreciated over 5-year period. It is expected to have an Rs.10, 000 salvage value at the end of 5 years. Using the straight-line method, what is the amount of depreciation to be charged?

A. 20,000 B. 18,000 C. 16,000 D. 14,000

82. A firm purchased an asset of Rs.20, 000 and followed diminishing method @ 15%. After 3 years the method was changed and now fixed depreciation if Rs. 3,000 is charged. The total difference in profit is:

A. Rs. 1,200


B. Rs, 1,282 C. RS. 1,300 D. RS. 1,382

83. On Ist January a firm’s loose tools are valued at RS. 4,500. A year later they are revalued at RS. 3000. The depreciation charge for the year is

A. RS. 500 B. RS. 1,000 C. RS. 1,500 D. RS. 3,000

84. The depreciation method that does not use residual value in calculating the first year’s depreciation expense is:

A. Straight-line B. Declining balance C. Units-of-production D. None of the above

85. A plant asset with a cost of Rs.15,000 is traded for a similar asset priced at Rs.20,000. Assuming accumulated depreciation of Rs.12,500 and a trade-in allowance of Rs.1,500, what is the cost basis of the new asset for financial reporting purposes?

A. Rs.20,000 B. Rs.15,000 C. Rs.21,500 D. Rs.12,500

86. A company has the following asset account balances:

Buildings & Equipment Rs. 92, 00,000

Accumulated Depreciation 12, 00,000

Patents 7, 50,000

Land Improvements 10, 00,000

Land 50, 00,000

The total amount reported on the balance sheet under Property, Plant, & Equipment would be:

A. Rs.14,000,000


B. Rs.13,000,000 C. Rs.12,800,000 D. Rs.13,550,000

87. M ltd. purchased land for Rs.80, 000. The company also paid Rs.12, 000 in accrued taxes on the property, incurred Rs.5, 000 to remove an old building, and received Rs.2,000 from the salvage of the old building. The land will be recorded at:

A. Rs.80,000 B. Rs.95,000 C. Rs.92,000 D. Rs.83,000

88. Burden on the profit and loss account in the form of depreciation and interest would be ......... in the annuity method compared to Straight Line Method as well as Diminishing Balance Method:

A. More B. Less C. same D. can be more or less

89. Depreciation arises due to:

A. Physical wear and tear of the asset B. Fall in the market value of an asset C. Fall in the value of money D. None of these

90. Under the diminishing balance method of charging depreciation, it

A. Increases every year B. Decreases every year C. Is constant every year D. None of these

91. if a concern proposes to discontinue its business from March 2012 and decides to dispose of all its assets within a period of 4 months, the Balance Sheet as on March 31st, 2012 should indicate the assets at their

A. Historical cost


B. Net realizable value C. Cost less depreciation D. Cost price or market price whichever is lower

92. The principal function of final statement is to exhibit:

A. True and fair profit B. True and fair financial position C. Both ‘a’ and ‘b’ D. None of these

93. In India partnership is governed by-

A. Indian Partnership Act, 1930 B. Indian Partnership Act, 1932 C. Indian Partnership Act, 1936 D. None of these

94. Definition of partnership is given in……..of the Indian Partnership Act, 1932:

A. Sec-4 B. Sec-5 C. Sec-6 D. Sec-11

95. Following are the essentials of a partnership except:

A. at least two persons B. there is an agreement between all partners C. equal share of profit and loss D. partnership agreement is for some business

96. Maximum no. of partners incase of banking business:

A. 2 B. 7 C. 20 D. 10

97. A partner withdrew Rs. 8,000 during a year and interest is charged @15% p.a. interest on drawings is:

A. Rs. 1,200


B. Rs. 650 C. Rs. 600 D. None of these

98.X and Y are partners of a firm sharing profit and losses in the ratio 3:2 with a capital of 2,50,000 and 2,00,000 respectively. They are entitled to 8% interest on capital during the year the firm earned a profit of Rs. 50,000 after allowing interest on capital. Interest on capital is:

A. Rs. 16,000 and Rs. 20,000 B. Rs. 20,000 and Rs. 16,000 C. Rs. 12,000 and rs. 6,400 D. Rs. 6,400 and Rs. 12,000

99. In the absence of a partnership agreement the partners are-

A. Entitled to get salaries, commission etc B. Not Entitled to get salaries, commission etc C. Entitled to get salaries, commission etc only to active partners D. None of these

100. Interest on partner’s capital Is considered as:

A. Appropriation of profit B. Business expenditure C. Financial expenses D. Charge against profit

101. In case the partner’s capital accounts are fixed, which one of the following will not be recorded in the current account?

A. Drawings made by the partner B. Salary payable to a partner C. Additional capital introduced by a partner D. Share of profit

102. A and B are partners in a firm contributing Rs. 50,000 and Rs. 40,000 respectively and sharing profit and loss equally after allowing interest on capital@10%p.a. For the year ending 31.12.2012, the profit before making any allowance for interest was Rs. 12,000. Interest on capital is

A. A-5,000; B-4,000


B. A-4,000; B- 3,200 C. No interest on capital is provided to any partner D. None of these

103. When balance sheet is prepared after the new partnership agreement, assets and liabilities are recorded at

A. Original value B. Revalued figure C. At realizable value D. At current cost

104. A and B are partners sharing profits and losses in the ratio of 2:1. They admit C into partnership with 1/4th share in profits which he acquires equally from A and B. C brings in 1, 65,000 as capital and Rs. 30,000 as goodwill.

What is the new profit sharing ratio?

A. 5:6:13 B. 6:5:13 C. 13:5:6 D. 6:13:5

105. Which of the following assets is not revalued at the time of admission of a new partner?

A. Stock B. Fixed assets C. reserve D. Goodwill

106. When new partner does not bring his share of goodwill, then for adjusting goodwill of the firm which account should be debited?

A. Old partner’s capital a/c B. New partner’s capital a/c C. Goodwill a/c D. Premium for goodwill a/c

107. If the incoming partner brings his share of goodwill in cash, which of the following accounts will be credited:

A. Goodwill a/c B. New partner’s capital a/c


C. Old partner’s capital a/c D. All partner’s capital a/c

108. Z is admitted in a firm as a new partner for 3/10th share of profit for which he brings Rs. 60,000 as goodwill. It will be credited to old partner’s capital a/c in the ratio of:

A. New profit sharing ratio B. Old profit sharing ratio C. Gain ratio D. Sacrificing ratio

109. At the time of admission of new partner in the firm, revaluation of assets and liabilities are made for the:

A. Benefit of Old partners B. Benefit of new partners C. Benefit of the firm D. Mutual benefit of old and new partner

110. General reserve at the time of admission of a new partner is transferred to:

A. p/L adjustment a/c B. balance sheet C. partner’s capital a/c D. none of these

111. At the time of death of a partner the balance of capital a/c of the deceased partner will be credited to:

A. Deceased partner’s capital a/c B. Deceased partner’s executors a/c C. Wife of deceased partner D. Son of deceased partner

112. At the time of death of a partner, JLP appears in the books at surrender value, then the share of amount received on account of JLP is:

A. Full amount received from LIC B. Surrender value C. Full amount – surrender value D. Either a or b

113. The accounting procedure on death of a partner is very similar to those cover a partner’s:


A. Admission B. Dissolution C. Retirement D. None of these

114. A, B and C are sharing profits and losses in the ratio 3:2:1. C dies on 31st March 2,013. Accounts are closed on 31st December every year. Sales for the year 2012 amounted to 6, 00,000. Sales from 1.1.2013 to 31.3.2013 amounted to 2, 40,000. The profit for the year 2012 is 30,000

Deceased partner’s share in current year’s profit is:

A. 3,000 B. 2,000 C. 5,000 D. 4,500

115. As per Sec-37 of Indian Partnership Act, 1932 the executors would be entitled to interest on the sum due to them at……..% p.a

A. 7 B. 4 C. 6 D. 12

116. A, B and C are partners in a firm sharing profits in the ratio of 5:4:3. B retired and his share is divided equally between A and C.

The new ratio is:

A. 7:5 B. 3:4 C. 5:3 D. 3:5

117. The gaining ratio between P and Q is:

A. 1:1 B. 2:1 C. 1:3 D. 1:2


118 at the time of retirement, accumulated losses are transferred to capital account of the partners in:

A. Old ratio B. New ratio C. Gaining ratio D. Sacrificing ratio

119. A,B,C were partners sharing profits and losses in the ratio of 5:3:2 with a capital balance of 50,000 for A, 35,000 for B and 25,000 for C. C retires.the balance in reserve on that date was 8,000. If the goodwill of the firm was valued at 20,000, goodwill already appearing in the books at 6,000 and profit on revaluation was 9,600 then what amount will be transferred to loan account of C?

A. 53,300 B. 31,320 C. 36,980 D. 44,390

120. P, Q, R are partners sharing profit and losses in the ratio 2:3:2. They had taken Joint Life Policy (JLP) of 2, 00,000 with surrender value of 35,000. Q retires, and remaining partners decides to continue and share profits equally.

What will be the treatment in JLP a/c on transferring the amount of JLP to partner?

A. JLP a/c to be credited with 2,00,000 B. JLP a/c to be debited with 2,00,000 C. JLP a/c to be credited with 35,000 D. JLP a/c to be debited with 35,000

121. A, B and C were partners sharing profits and losses in the ratio 1:2:3. A retires and the goodwill of the firm is valued at 42,000. The amount payable to retiring partner is:

A. 7,000 B. 14,000 C. 21,000 D. No amount is payable

122. To provide funds to pay the retiring partner the balance is transferred to:

A. Retiring partner’s loan a/c B. Retiring partner’s capital a/c


C. Retiring partner’s bank a/c D. Retiring partner’s goodwill a/c

123. Goodwill of a business is built in the past but it is paid for future advantages calculated on the basis of:

A. Future maintainable profit B. Abnormal profit C. Opportunity profit D. All of these

124. A and B are partners, sharing profits in the ratio 5:3. They admit C with 1/5th share in profits, which he acquires equally from both. the new profit sharing ratio is:

A. 21:11:8 B. 21:8:11 C. 11:8:21 D. 8:11:21

125. If there is no anticipated excess earnings over normal earnings, then goodwill calculated on super profit of the business will be:

A. Above the normal earnings B. Less than the normal earnings C. Nil D. Equal to the normal earnings

The profits of last 5 years are: 50,000; 20,000(loss); 10,000; 60,000; 80,000. Goodwill of the firm is valued at three years purchase of average profits

126. Average profit of the firm is:

A. 30,000 B. 36,000 C. 40,000 D. None of these

127. Which of the following assets is compulsorily revalued at the time of admission of a new partner?

A. Stock B. Fixed assets C. Investment


D. Goodwill

128. Weighted average profit of the firm is:

A. 22,400 B. 18,600 C. 18,000 D. 21,000

129. On 1.1.2013, an existing firm had assets of Rs. 2, 00, 000 including cash of Rs. 4,000. Creditors amounted to Rs. 10,000 on that date. The partner’s capital accounts showed a balance of Rs. 1, 60,000 while the reserve fund amounted to Rs. 30,000. If the normal rate of return is 15% and the goodwill of the firm is valued at Rs.36, 000 at 3 year’s purchase of super profits. Super profit for that year is:

A. 12,000 B. 10,000 C. 13,000 D. 12,500

130. As per AS-10, goodwill can be recorded in the books only in case of-

A. Purchase of goodwill B. Retirement of partners C. Admission of partners D. Change in profit sharing ratio

131. the sum of sacrificing ratio of old partners will be equal to:

A. Profit share of new partner B. Total share of the firm C. Share pertaining to old partners D. Old ratio-new ratio

132. Following are the methods of calculating goodwill except:

A. Super profit method B. Average profit method C. Weighted Average profit method D. Capital profit method

133. Bank reconciliation statement is a part of-


A. Balance sheet B. Profit or loss account C. Cash book D. None of the above

134. Errors in pass book can be rectified by-

A. Customer of the bank B. Bank officials C. Tax authorities D. Registrar

135. Amount deposited in the bank are recorded on………..side in cash book and on………….side in the pass book:

A. Credit ,debit B. Debit, credit C. Credit, credit D. Debit, debit

136. If the bank column of cash book shows a debit balance, the pass book must show a balance of-

A. Debit B. Credit C. Overdraft D. None of the above

137. if credit balance of cash book(bank column) of Rs. 2,500 is carried forward as debit balance and starting point of BRS is debit balance of pass book, then………….

A. Rs. 2,500 will be added B. Rs. 5,000 will be added C. Rs. 5,000 will be deducted D. Rs. 2,500 will be deducted

138. Direct deposit by a customer into bank increases-

A. Pass book balance B. Cash book balance C. Balance sheet total


D. Both ‘a’ and ‘b’

139. Bank charges levied by bank will decrease the:

A. Credit balance as per pass book B. Credit balance as per cash book C. Debit balance as per cash book D. Debit balance as per pass book.

140. What is the treatment if starting point is bank overdraft as per pass book, when cheques deposited but not credited by bank-

A. Add to pass book B. Subtract from pass book C. Add to cash book D. Subtract from cash book

141. What is the treatment when the starting point is unfavorable balance as per cash book, when bank charges not yet recorded in the cash book-?

A. Add to pass book B. Subtract from pass book C. Add to cash book D. Subtract from cash book

142. While preparing BRS from debit balance of pass book as starting point which one of the following item will be added:

A. Interest credited by bank but not entered in the cash book B. Cheques deposited but not yet credited by bank C. Bank charges not yet recorded in the cash book D. Direct payment by bank as per the standing order

143. Dingo, a current account holder had only Rs. 3,000 in his account and a cheque for Rs. 3,500 issued by him was paid out by bank. The above situation is:

A. Bank deficit B. Bank overdraft C. Bank deposit D. None of these

144. Given: bank balance as per cash book 3, 00,000. Following amendments have to be made to reconcile the differences of balance between pass book and cash book;


Dividend directly collected by bank 12,000

Cash sales wrongly recorded in the bank column of the cash book 35,000

Cheques issued but not yet presented for payment 2, 80,000

Cheques deposited but not yet credited by bank 1, 50,000

Bank balance as per cash book after making amendment is:

A. 3,12,000 B. 2,77,000 C. 3,23,000 D. 2,67,000

145. Final statements are prepared-

A. At the end of accounting year B. At the end of calendar year C. Both of then D. None of these

146. Bad debt is an example of-

A. Administrative expenses B. Selling expenses C. Distribution expenses D. Factory expenses

147. B pays rent for his premises quarterly in advance on 1st December, 1st march, 1st June and 1 September. The annual rent was 84,000 until 31.05.2012. it was increased from that date to Rs. 96,000 per year.

By what amount rent a/c should be debited for the year end 31.03.2013?

A. 14,000 B. 94,000 C. 86,000 D. 84,000

148. A wine manufacturer gave wine worth Rs. 18,000 to his office staff for their personal use. To record this transaction which account will be debited?

A. Drawings a/c


B. Advertisement a/c C. Free sample a/c D. Salaries a/c

149. Doubtful debt is-

A. Probable loss B. Real loss C. Real income D. Probable income

150. Closing stock is an item of-

A. Fixed asset B. Current liability C. Fictitious asset D. Current asset

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