October 2011 GSET Commerce Solved Paper, Paper – II, Subject Code: 17

October 2011 GSET Commerce Solved Paper

Paper – II (Commerce)

Subject Code: 17

Marks: 100

Time: 75 Minutes (1.25 Hours)

Note: This paper contains FIFTY (50) Multiple choice/Assertion/Reasoning/Matching questions. Each question carrying TWO (2) marks. Attempt All the questions.

1. The unique features of business environment are:

(A) Its forces are dynamic.

(B) A symbiotic relationship exists amongst the forces.

(C) A single firm cannot change it.

(D) All of the above.

Ans: (D) All of the above.

2. Economic planning is:

(A) Part of economic environment.

(B) Done to promote large businesses.

(C) Done by business houses.

(D) None of the above.

Ans: (A) Part of economic environment.

3. Under the second generations reforms in India business firms:

(A) were put under strict licensing regime.

(B) were not allowed to expand their business abroad.

(C) were given flexibility for entry and exist.

(D) were ordered to hire labor only from the local area only.

Ans: (C) were given flexibility for entry and exist.

4. Privatization process requires:

(A) Changes in legislation.

(B) No planning.

(C) Financing by the government.

(D) More control by the government.

Ans: (A) Changes in legislation.

5. The most important aspect of Fiscal Policy for a business is:

(A) Budget Deficit.

(B) Fiscal Deficit.

(C) Taxes.

(D) Subsidies.

Ans: (C) Taxes.

6. Which one of the following assets is the least liquid asset?

(A) Intangible.

(B) Floating.

(C) Wasting.

(D) Fictitious.

Ans: (A) Intangible.

7. Which account is generally used for rectification of errors?

(A) Cash.

(B) Profit and Loss.

(C) General Ledger Adjustment.

(D) Suspense.  

Ans: (D) Suspense. 

8. X and Y are partners sharing profits and losses in the ratio of 3 : 2. Z is admitted as a partner and their new profit sharing ratio is 3 : 3 : 2. The sacrificing ratio of X and Y is:

(A) 1 : 9.

(B) 9 : 1.

(C) 3 : 1.

(D) 1 : 3.

Ans: (B) 9 : 1.

9. When shares are allotted for consideration other than cash the account to be debited would be:

(A) Goodwill.

(B) Capital Reserve.

(C) Concerned Assets.

(D) Bonus Share.

Ans: (C) Concerned Assets.

10. An unfavourable material prices variance occurs because of:

(A) Price increase in raw materials.

(B) Price decrease in raw materials.

(C) Less than anticipated normal wastage in manufacturing process.

(D) More than anticipated normal wastage in manufacturing process.

Ans: (A) Price increase in raw materials.

11. The major point on which Business Economies differs from pure economics is:

(A) It is more normative in nature leading to decisions.

(B) It is more analytical.

(C) It uses data.

(D) It relates to money.

Ans: (A) It is more normative in nature leading to decisions.

12. A supplier of machine parts should:

(A) Focus only on customers’ demand.

(B) Focus on customers’ and market demand.

(C) Focus on its supply price only.

(D) None of the above.

Ans: (B) Focus on customers’ and market demand.

13. A producer found that for a production of 1039 units the average cost was minimum. For this level of production:

(A) Marginal cost will be equal to average cost.

(B) Average cost will be higher than total cost.

(C) Average cost will be higher than marginal cost.

(D) Average cost will be zero.

Ans: (A) Marginal cost will be equal to average cost.

14. If a firm adopts cost plus pricing policy, it would:

(A) Charge a price which does not include promotional costs.

(B) Charge a price which does not include profit.

(C) Charge a price which does not include transportation cost.

(D) Charge a price which includes minimum profit over all costs.

Ans: (D) Charge a price which includes minimum profit over all costs.

15. A firm can earn maximum profit when:

(A) Average cost is equal to average revenue.

(B) Average cost is equal to marginal revenue.

(C) Marginal revenue is maximum.

(D) Marginal revenue is equal to marginal cost.

Ans: (D) Marginal revenue is equal to marginal cost.

16. Which one of the following is non-parametric test?

(A) F-test.

(B) t-test.

(C) Z-test.

(D) Chi-square test.

Ans: (D) Chi-square test.

17. The ‘cause and effect’ relationship between the two variables is calculated by applying one of the following statistical methods. Which one is that?

(A) Correlation Analysis.

(B) Regression Analysis.

(C) Skewness.

(D) ANOVA.

Ans: (B) Regression Analysis.

18. Here is incomplete statement:

“Random sampling” is one of the important technique of data collection. This technique is also known as _______.

Which one of the following will correctly complete it?

(A) Normal sampling.

(B) Poisson sampling.

(C) Probability sampling.

(D) Non-systematic sampling.

Ans: (C) Probability sampling.

20. Given:

Sum of squares between the columns = 304.22.

Degree of freedom = 2.

What will be the F-value under the method of Analysis of Variance?

(A) 9.85.

(B) 19.70.

(C) 10.85.

(D) 20.70.

Ans: (A) 9.85.

21. The theory of MBO (Management of Objective) was derived by:

(A) Harold Koontz.

(B) Peter F. Drucker.

(C) Henry Fayol.

(D) Philip Kotler.

Ans: (B) Peter F. Drucker.

22. Hawthorne experiment was undertaken between:

(A) 1927 and 1932.

(B) 1928 and 1931.

(C) 1929 and 1932.

(D) 1930 and 1935.

Ans: (A) 1927 and 1932.

23. Theory ‘X’ and theory ‘Y’ of motivation was developed by:

(A) McGregor.

(B) Elton Mayo.

(C) Henri Fayol.

(D) William G. Ouchi.

Ans: (A) McGregor.

24. The process where actual results are compared with desired results is known as:

(A) Co-ordination.

(B) Organization.

(C) Controlling.

(D) Planning.

Ans: (C) Controlling.

25. The leadership style which is based on consultations within the group is known as:

(A) Autocratic.

(B) Democratic.

(C) Free reign.

(D) None of the above.

Ans: (B) Democratic.

26. Marketing concept is based on:

(A) Customer oriented.

(B) Profit oriented.

(C) Programme oriented.

(D) None of the above.

Ans: (A) Customer oriented.

27. Who developed the 4 P’s of marketing?

(A) Philip Kotler.

(B) Peter F. Drucker.

(C) McCarthy.

(D) Cundiff and Still.

Ans: (C) McCarthy.

28. Which of the following cost may be used for price decision?

(A) Fixed cost.

(B) Variable cost.

(C) Average cost.

(D) All of the above.

Ans: (D) All of the above.

30. Marketing planning includes:

(A) Product Policy.

(B) Price Policy.

(C) Promotional Policy.

(D) All of the above.

Ans: (D) All of the above.

31. Principal goal of financial management is considered to be the maximisation of:

(A) Profit.

(B) Shareholders’ wealth.

(C) Earnings per share.

(D) Return on equity.

Ans: (B) Shareholders’ wealth.

32. Given:

Operating Fixed Costs

Sales

P/V Ratio

Rs. 25,000

Rs. 1,00,000

40%

The operating leverage shall be:

(A) 1.50.

(B) 2.50.

(C) 2.67.

(D) 2.47.

Ans: (C) 2.67.

33. A company raises Rs. 1,00,000 by the issue of 1,000, 10% debentures of Rs. 100 each repayable at par after 10 years. If the corporate tax rate is 30%, what is the cost of debt capital to the firm:

(A) 7%.

(B) 7.5%.

(C) 9%.

(D) 10%.

Ans: (A) 7%.

34. Financing current assets involves the following, except:

(A) Determining the level of current assets.

(B) Evaluating alternative policies of financing.

(C) Determining the level of fixed assets.

(D) Finding an appropriate source with regard to cost and risk.

Ans: (C) Determining the level of fixed assets.

35. The objective of a good dividend policy is to:

(A) Maximize the value of the firm.

(B) Minimize the amount to be retained.

(C) Iron out the fluctuations in earnings.

(D) Prevent transfer of shares.

Ans: (A) Maximize the value of the firm.

36. Which of the following does not include under the functions of Human Resource Management?

(A) Planning.

(B) Organising.

(C) Profitability.

(D) Recruitment.

Ans: (C) Profitability.

37. The Basket Training method means:

(A) Development of decision skill.

(B) Development of Institute.

(C) Development of resources.

(D) Development of production.

Ans: (A) Development of decision skill.

38. Which is an Incentive Plan?

(A) Halsey Plan.

(B) Merrick Plan.

(C) Rowan Plan.

(D) All of the above.

Ans: (D) All of the above.

39. Equity shares of work motivation has been developed by:

(A) J.S. Adams.

(B) J. Arun Kaul.

(C) Waterman.

(D) C.K. Prahalad.

Ans: (A) J.S. Adams.

40. When the Payment of Wage Act (Regulation the deductions from wages) was passed?

(A) 1937.

(B) 1936.

(C) 1948.

(D) 1980.

Ans: (B) 1936.

41. A merchant bank:

(A) Accepts deposits from public for retail operations.

(B) Sales merchandize.

(C) Provides bill discounting facility.

(D) Provides management services for corporate public capital issues.

Ans: (D) Provides management services for corporate public capital issues.

42. The National Bank for Rural and Agricultural Development:

(A) is an autonomous financial institution.

(B) is an institution providing re-finance facility for agricultural credit.

(C) provides re-finance for micro-finance.

(D) all of the above.

Ans: (D) all of the above.

43. The capital adequacy norms for Banks according to Basle III cover:

(A) Credit risk and default risk.

(B) Credit risk, interest rate risk and market risk.

(C) Market risk only.

(D) Interest rate risk only.

Ans: (B) Credit risk, interest rate risk and market risk.

44. Which instrument is used most often by the Reserve Bank of India to control liquidity in the short-run?

(A) Interest Rate.

(B) Base Rate.

(C) Repo Rate.

(D) Bank Rate.

Ans: (C) Repo Rate.

45. The Industrial Finance Corporation of India was set up to:

(A) provide finance to small scale industries.

(B) provide medium and long-term finance to large industries.

(C) provide short-term finance to large scale industries.

(D) provide long-term finance to small scale industries.

Ans: (B) provide medium and long-term finance to large industries.

46. Expansion of International Business leads to:

(A) Reduction in risk.

(B) Expansion of market.

(C) Optimum utilization of world resources.

(D) All of the above.

Ans: (D) All of the above.

47. International liquidity is composed of:

(A) Foreign currency reserves and gold reserves.

(B) Gold held by public.

(C) Gold and foreign currency with banks.

(D) Foreign currency with public.

Ans: (A) Foreign currency reserves and gold reserves.

48. One of the objectives of the International Monetary Fund is:

(A) To encourage devaluation of currencies.

(B) To encourage up valuation of currencies.

(C) To discourage competitive devaluation of currencies.

(D) none of the above.

Ans: (C) To discourage competitive devaluation of currencies.

49. Dumping in the international markets means:

(A) Selling in Bulk.

(B) Selling at a high price.

(C) Selling in bulk below cost price or domestic price.

(D) Selling all over the world.

Ans: (C) Selling in bulk below cost price or domestic price.

50. Regulation of foreign trade is an indicator of:

(A) Inward looking policy.

(B) Encouragement of trade.

(C) Discouraging domestic production.

(D) Imposing taxes on domestic production.

Ans: (A) Inward looking policy.

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