Question Booklet Series

COMMERCE & ACOUNTANCY CODE :- 06 I AI

Time Allowed: Two Hours Marks:100

I Name: Roll No. ----------------

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KL-14/Comm Series-A

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1. Provision for bad and doubtful debts is created in anticipation of actual bad
debts on the basis of:
(A) Conservatism concept (B) Going concern concept
(C) Full disclosure concept (D) Industry practice

2. Which accounting principle is violated by including personal expenses of the

owner in the business expenses?
(A) Cost principle (B) Going concern concept
(C) Entity concept (D) Conservatism

3. X, Y, Z are partners in a firm. IfB is to be admitted as a new partner:

(A) Old partnership has to be dissolved
(B) Old firm has to be dissolved
(C) Both old firm and partnership has to be dissolved
(D) Neither firm nor partnership need to be dissolved.

4. Indian Accounting Standard AS-10 is related to:

(A) Depreciation (B) Accounting for Fixed Assets
(C) Cash Flow (D) Valuation of Inventories

5. In the absence of an agreement to the contrary, the partners:

(A) Are entitled for 6% interest on their capitals, only when there are profits
(B) Are entitled for 9% interest on their capitals, only when there are profits
(C) Are entitled for interest on capital at the bank rate, only when there are
profits
(D) Are not entitled for any interest on their capitals

6. New profit sharing ratio is calculated at the time of:

(A) Admission of a partner (B) Retirement of a partner
(C) Death of a partner (D) All of the above

7. A, B and Care three partners sharing profits and losses in the ratio of 4:3:2, D
is admitted for 1/10 share, the new ratio will be:
(A) 5:4:3:2 (B) 4:4:3:2
(C) 4:3:2:1 (D) None ofthese

8. Sec. 3 7 of Partnership Act provides interest on the amount left by the retiring
or deceased partner at:
(A) 5% (B) 6%
(C) Bank rate (D) Prime lending rate

9. A, B, C and D are equal partners. A, B and D died together in a plane crash.

This accident results in:
(A) Dissolution of partnership
(B) Dissolution of firm
(C) Dissolution of firm as well as dissolution of partnership
(D) Neither dissolution of firm nor dissolution of partnership

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 10. On dissolution all assets are transferred to reaslisation account at :
(A) Book value (B) Market value
(C) Cost or market value, whatever is less (D) None of the above

11. Realisation account is a:

(A) Personal a/c (B) Real a/c
(C) Nominal a/c (D) Memorandum a/c

12. Definition of a public company is given in the Indian Companies Act 1956 :
(A) Section 3 (1) (i) (B) Section 3 (1) (ii)
(C) Section 3 (1) (iii) (D) Section 3 (1) (iv)

. 13. Equity Shareholders are:

(A) Customers of the company (B) Owners
(C) Creditors (D) None of these

14. On an equity share ofRs. 10, the minimum amount of share application under
the law should be:
(A) Rs. 0.50 (B) Re. 1
(C) Rs. 2 (D) Rs. 2.50

15. When shares are forfeited, called up amount on shares is debited to:
(A) Forfeiture Account (B) Capital Reserve Account
(C) General Reserve Ale (D) Capital A/c

16. Redeemable preference shares can be redeemed :

(A) Only ifthey are fully paid
(B) Even if they are partly paid
l (C) If they are paid not less than 50% of the nominal value of shares
(D) Only if they are issued at a premium

17. Bonus shares are issued by the companies because :

(A) Surplus cash is available
(B) There is heavy competition from similar companies
(C) There is heavy accumulated general reserve
(D) They have high gross profit ratio

18. The interest on Debenture Redemption Fund Investments is credited to :

(A) Debenture A/c
(B) Debenture Redemption Fund Ale
(C) Debenture Redemption Fund Investment Ale
(D) Name of the above

19. The analysis by a banker for the purpose of granting cash credit is an example
of:
(A) Internal analysis (B) External analysis
(C) Criticai analysis (D) Horizontal analysis

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20. Vertical analysis is known as:
(A) Static analysis (B) Structural analysis
(C) Both (A) & (B) (D) Dynamic analysis

21. Price-earning ratio is useful to:

(A) Short term creditors (B) Investors in shares
(C) Debenture holders (D) None of these

22. Capital employed is equal to:

(A) Total assets (B) Total assets- total liabilities
(C) Fixed Assets +working capital (D) None ofthe above

23. According to AS-3 (Revised), purchase of fixed assets is treated as:

(A) Operating activity (B) Investing activity
(C) Financing activity (D) None ofthese

24. Cash flow statement is prepared from:

(A) Balance Sheet (B) Profit and Loss A/c
(C) Additional Information (D) All of the above

25. Which ofthe following will not change working capital?

(A) Purchase of goods for cash
(B) Purchase of machine for cash
(C) Purchase of machine against cheque
(D) Sale of old machine against cheque

26. A transaction does not result into flow of funds:

(A) When a current assets is converted into another current assets
(B) When a fixed assets is bought out of current assets
(C) When a long term liability is paid out of current assets
(D) None ofthe above

27. Generally Auditing is not necessary for small sole trading business because :
(A) Legally it is not necessary
(B) Its scope is limited
(C) Its proprietor has full control on it
(D) None ofthe above

28. The selection of transactions is made for test checking:

(A) According to plan (B) As per tradition
(C) Random (D) As per future strategy

29. Audit Note Book contains:

(A) Various dates of reference
(B) Details of work done
(C) Notes regarding item requiring clarification explanations, etc.
(D) All ofthe above

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 30. Whi ch of the following has a broader scope?
(B) Internal checking
(A) Internal control
(D) Non e of the above
(C) Internal audit

31. An Internal Auditor is:

(B) Permanent Employee
(A) Tem pora ry Employee
(D) Non e of the above
(C) Daily wager

32. The main object of vouching is:

(A) To prepare trial balance
(B) To conduct routine checking
actions
(C) To verifY authenticity and authority of trans
(D) Checking of vouchers

33. Which one of the following is true?

(A) Entry can be made without a voucher
not essential
(B) Comparing the vouchers with entries is
hers and no vouchers without entry
(C) There should be no entry without vouc
(D) All of the above

34. Valuation is the base of:

(B) Vouching
(A) Verification
(D) Non e of the above
(C) Marketing
evolved by:
35. The double entry system of book-keeping was
(B) Stevenson
(A) Luca Pacioli
(D) Churchill
l (C) Wilson
the remuneration of the auditor is
36. Under which section of the Companies Act,
finalised?
(B)2 25
(A)2 24
(D) 231
(C) 224 (8)
the branch audi tor is appointed?
37. Und er which section of the Companies Act
(B)2 28
(A)2 24
(D) 231
(C) 225
following?
38. Dividend can be distributed from whic h of the
(B) Last year 's profit
(A) Current year 's profit
(D) Non e of the above
(C) Both (A) and (B)
of Association requ ires:
39. Alteration of name clause in Mem oran dum
ral Government in writing
(A) Special resolution with approval of Cent
ral Government in writing
(B) Ordinary resolution with approval of Cent
pany Law Board
(C) Special resolution with the approval of Com
Company Law Board
(D) Ordinary resolution with the approval of

Series- A 4
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40. Under which of the following section of the Companies Act, shares of a
company are issued at a premium?
(A) Section 78 (B) Section 79
(C) Section 81 (D) None ofthe above

41. While auditing accounts of a Railway, Company Auditor should see:

(A) That the provisions of Memorandum and Articles of Association are
formed
(B) The Director's Statement Book and all other agreements
(C) The Act passed in the parliament
(D) All of the above

42. "A plan is a trap to capture the future". This statement is of:
(A) Newman (B) Hurley
(C) Allen (D) Terry

43. The concept of bounded rationality has been given by:

(A) George R. Terry (B) Peter F. Drucker
(C) Herbert A. Simon (D) R.S. Davar

44. "Management by objectives have failed to motivate people". This statement is

of:
(A) Harry Levision (B) R.S. Davar
(C) A.M. Brown (D) E.F.L. Brech

45. SWOT analysis is used in:

(A) Environment Analysis
(B) Strategy formulation
(C) Environment analysis and strategy formulation both
(D) None ofthe above

46. "Wrong organisation structure prevents business performance upto the extent
that it destroys it". This statement is of:
(A) Drucker (B) Terry
(C) Allen (D) Brech

47. Factor which is common to Maslow, Herzberg and McGregor is that they have
propounded theories of:
(A) Control (B) Leadership
(C) Motivation (D) Communication

48. Departmentation is suitable for:

(A) Small Industries (B) Large Industries
(C) Cottage Industries (D) All type of industries

49. Maximum discipline exists in:

(A) Line and staff organization (B) Committee organisation
(C) Line organization (D) Functional organisation

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 50. X andY Theory of motivation has been propounded by:
(A) Meslow (B) Ouchi
(C) Herzberg (D) McGregor

51. "The main reason of most business enterprises becoming unsuccessful is the
inefficient leadership." This statement is of:
(A) Koontz and O'Donnell (B) Peter F. Drucker
(C) George R. Terry (D) Mooney and Reley

52. Likert's management systems are:

(A)4 (B) 5
(C) 6 (D) 8

53. Contingency Model is given by:

(A) Fiedler's (B) Likert's
(C) Blake and Mouton (D) Victor Vroom

54. "Change is compulsory in management." This statement is of:

(A) Terry (B) Allen
(C) Taylor (D) Fayol

55. 'NCLAT' stands for:

(A) National Corporate Law Appellate Tribunal
(B) National Company Law Appellate Tribunal
(C) National Corporate Law Appeal Tribunal
(D) National Company law Appeal Tribunal

I 56. The Securities and Exchange Board of India was set up in the year:
(A) 1991 (B) 1992
(C) 1981 (D) 1982

57. Minimum number of members required to incorporate a company in case of

banking business are:
(A) 5 (B) 7
(C) 10 (D)20

58. Corporate veil can be lifted or pierced under following circumstances:

(A) Under statutory provisions
(B) Under judicial interpretation
(C) (A) and (B) both
(D) None of the above

59. "A company limited by share" is defined under section of

Companies Act 1956.
(A) Sec. 12 (1) (a) (B) Sec. 12 (2) (a)
(C) Sec. 12 (1) (b) (D) Sec. 12 (2) (b)

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 60. A Government company is defined under section of Companies Act
1956.
(A) 617 (B) 617 A(l)
(C) 619 A(2) (D) 620

61. Filing of Article of Association to the Registrar for the incorporation is

___ for the public company adopting Table A.
(A) Compulsory (B) Optional
(C) Necessary (D) Recommendatory

62. Change ofRegistered office from one state to another state requires:
(A) Ordinary resolution only
(B) Ordinary resolution and sanction of the company law board
(C) Special resolution only
(D) Special resolution and sanction of the company law board.

63. The Doctrine of Ultra Vires implies to those acts which are outside of the
ambit of:
(A) Object clause
(B) Capital clause
(C) Liability clause
(D) All ofthe above

64. Doctrine of Constructive Notice applies to:

(A) Article of Association
(B) Memorandum of Association
(C) (A) and (B) Both
(D) None of the above

65. Under which of the following section of the Companies Act, Self prospectus is
defined?
W6M ｾＶＰ＠
(C)61A (D)61B

66. Book building is a method of:

(A) Issuing shares (B) Buy back of share
(C) Issuing debenture (D) Redemption of debenture

67. A partnership firm having more than 20 partners is termed as:

(A) A company (B) Limited Liability partnership
(C) Illegal association (D) Association not for profit.
)
68. The first auditor or auditors are appointed by:
(A) Central Government (B) Company Law Board
(C) Board ofDirectors (D) Shareholders

69. Special Audit is specified under section _ _ _ of Companies Act.

(A) 233A (B) 233B
(C)232A (D)232B

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 70. Disqualification of Director includes:
(I) Unsound mind (II) Undischarged insolvent
(III) Convicted by a court (IV) failed to pay any call.

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

71. After the commencement of the Companies (Amd.) Act 2000, no person can
be director of more than:
(A) 10 companies (B) 20 companies
(C) 15 companies (D) 12 companies

72. Criminal Liability of Director includes:

(A) Willful Misconduct (B) Misstatement in prospectus
(C) Acting dishonestly (D) Breach oftruch

73. Match the following:

(a) Issue of share at discount (i) 79A
(b) Issue of share at premium (ii) 79
(c) Sweat equity share (iii) 77A
(d) Buy Back of own share (iv) 78
(a) (b) (c) (d)
(A) (i) (ii) (iii) (iv
(B) (ii) (iv) (i) (iii)
(C) (iii) (iv) (i) (ii)
(D) (i) (iii) (iv) (ii)
l
74. Special resolution is required to pass for the following:
(a) To pass annual account
(b) To declare dividend
(c) To alter memorandum
(d) To issue sweat equity share

(A) a and b
(B) band c
(C) c and d
(D) d and a

75. Extraordinary General Meeting can be called by:

(A) Directors (B) Requisitionists
(C) Company Law Board (D) All of the above

76. How many day's written notice to every shareholder, director and auditor of
the company to call an annual general meeting is required?
(A) 14 days (B) 15 days
(C) 21 days (D) one month

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77. The Board meeting ofthe Directors should be held at least:
(A) 2 times a year (B) 3 times a year
(C) 4 times a year (D) 5 times a year

78. Which ofthe following is a statutory duty of a Company Secretary?

(A) To sign documents requiring authentication
(B) To sign annual return
(C) To sign annual accounts ofthe company
(D) All of the above

79. The theory of trusteeship of the business assets was pronounced by:
(A) Henry fayol (B) Mahatma Gandhi
(C) Jawaharlal Nehru (D) Karl Marx

80. In which form of combination, all the member units submit their output on
paper to the central authority which in tum allocates the output to all the
member units:
(A) Pool (B) Gentlement agreement
(C) Cartels (D) Amalgamation

81. "Delegation means assigning work to others and giving them authority to do
it." This statement is given by:
(A) Brech (B) Terry
(C) Allen (D) F.G.Moore

82. Horizontal integration is combination of companies engaged in the production of:

(A) Same product
(B) Product in successive stages of production
(C) Product having a number of by product
(D) Different type of unrelated product.

83. FICCI was formed in the year of:

(A) 1921 (B) 1926
(C) 1930 (D) 1953

84. A partner who merely lends his name to the firm is called:
(A) Dormant partner (B) Nominal partner
(C) Active partner (D) Partner by holding out

85. The equity share of a company are first issued in the:

(A) Money market (B) Primary market
(C) Secondary market (D) None of the above

86. EPCG schemes in international trade allows:

(A) Duty free imports of all goods
(B) Duty free import of capital-goods
(C) Remission of duty in export
(D) Duty drawback irt export

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 port is issued by: ny
87. 'B ill of lading' in ex (B) Shipping compa
nk
(A) Commercial ba (D) Exporter
ities
(C) Custom author
gins with: e
88. Import procedure be (B) Marine insuranc
(A) Indent (D) Shipping order
e
(C) M at 's Certificat
ty according to:
ea ns imposition of du s
89. Dut y ad va lo ru m m (B) N um be r of item
s ove
(A) Weight of good (D) None of the ab
(C) Value of goods
s for:
ads to higher return eholder
90. Trading on equity le (B) Preference shar
der e
(A) Equity sharehol (D) AU of th e abov
ho ld er
(C) Debenture n as :
in g to th e w ei gh t of goods, it is know
is levied accord
91. When custom duty (B) Specific duty
du ty
(A) A d valo ru m (D) General duty
(C) Excise duty
plicable to:
Pr in ci pl e of ut most good faith is ap
92.
(A) Insurer only
(B) Insured only
d insured
(C) Both insurer an r in other
e policies and insure
(D) Insured in som
t
loss due to :
po licy covers risk of ees
93. Fide lit y in su ra nc e (B) Theft by employ
er e
(A) Theft by outsid (D) All of the abov
su pp lie r
(C) Fraud by
:
ty does not apply to e
94. Principle of ln de m ni (B) Marine insuranc
(A) Life insurance nc e (D) Fire insurance
ar in e in su ra
(C) Life and m
established in:
. Bo m ba y St ock Exchange was (B) 1900
95
(A) 1887 (D) 1925
(C ) 19 12
ravaniwala is a:
In sto ck m ar ke t terminology, a Ta (B) Dealer
96. ove
(A) Broker (D) None of the ab
(C) Agent of br ok er
tive society is :
m em be rs re qu ire d to form a co-opera
ber of
97. The minimum num (B) 5
(A ) 2 (D)20
(C) 10

10
Series- A
KL14/Comm

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 98. Which of the following has implied authority to bind HUF firm of his conduct
in business?
(A) Only karta
(B) Only co-parceners of the firm
(C) Karta as well as co-parceners
(D) None of the above

99. Which of the following type of organisation can be wind-up very easily?

I (A) Sole proprietorship

(B) Co-operative society
(C) Government company
(D) Public limited company

100. Dematerialisation of shares means :

(A) Selling shares to non registered member
(B) Holding shares in electronic form
(C) Future trading of the share
(D) Repurchase of share from the market

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