September 2016 GSET Commerce Solved Paper, Paper – III, Subject Code: 17

September 2016 GSET Commerce Solved Paper

Paper – III (Commerce)

Subject Code: 17

Marks: 150

Time: 2.30 Hours

Note: This paper contains Seventy Five (75) multiple choice/assertion/reasoning/matching questions. Each question carrying TWO (2) marks. Attempt All the questions.

1. Michael Porter’s well known model in the area of business environment is known as _______.

(A) A model of structural analysis of industries.

(B) A model of economic analysis.

(C) A model of legal analysis.

(D) A model of transformation.

Ans: (A) A model of structural analysis of industries.

2. Which of the following statements about economic policies is not correct?

(A) Trade policy is often not integrated with the industrial policy.

(B) Industrial policy defines the scope and role of different sectors.

(C) Foreign exchange rate policy is based on liberalization.

(D) Fiscal policy affects the development of various regions and sectors.

Ans: (A) Trade policy is often not integrated with the industrial policy.

3. Read the following statements carefully:

Statement (1): The planning system is an important part of business environment.

Statement (2): The direction of development pattern is determined by the five year plans.

Now select the correct answer about these two statements:

(A) Statement (1) is true, (2) is false.

(B) Statement (1) is false, (2) is true.

(C) Statements (1) and (2) are correct.

(D) Statements (1) and (2) are incorrect.

Ans: (C) Statements (1) and (2) are correct.

4. A kind of practice that involves over invoicing or under-invoicing of intermediate goods (or inputs) between foreign affiliates is called:

(A) Fixed price strategy.

(B) Tender price policy.

(C) Temporal price policy.

(D) Transfer pricing policy.

Ans: (D) Transfer pricing policy.

5. Which one of the following is not the driver of globalization?

(A) Higher trade barriers and more population stability.

(B) Foreign direct investment.

(C) Foreign institutional investment.

(D) Technological advances.

Ans: (A) Higher trade barriers and more population stability.

6. The going concern concept refers to a presumption that:

(A) The entity will be profitable in the coming year.

(B) The entity will continue to operate in the foreseeable future.

(C) The entity will not be involved in a merger within a year.

(D) The top management of the entity will remain same for the foreseeable future.

Ans: (B) The entity will continue to operate in the foreseeable future.

7. Expenses incurred in the installation of machinery is a type of:

(A) Revenue expenditure.

(B) Capital expenditure.

(C) Deferred revenue expenditure.

(D) Operating expenses.

Ans: (B) Capital expenditure.

8. A and B are partners sharing profits and losses in the ratio 5 : 3. They admitted C and agreed to give him 3/10 of profit. What is the new ratio after C’s admission?

(A) 35 : 42 : 17.

(B) 35 : 21 : 24.

(C) 49 : 22 : 29.

(D) 34 : 20 : 12.

Ans: (B) 35 : 21 : 24.

9. A trade creditor would be interested in:

(A) Debt equity ratio.

(B) Net profit ratio.

(C) Acid test ratio.

(D) RoI.

Ans: (C) Acid test ratio.

10. The margin of safety can be defined as:

(A) The excess of actual sales over actual variable expenses.

(B) The excess of actual sales over actual fixed expenses.

(C) The excess of actual sales over break-even sales.

(D) The excess of budgeted net income over actual net income.

Ans: (C) The excess of actual sales over break-even sales.

11. Which of the following is not a characteristic of Business Economics?

(A) Economics of the firm.

(B) Both Science and Art.

(C) Decision making at managerial level.

(D) Firm and industry are synonym.

Ans: (D) Firm and industry are synonym.

12. If AR is average revenue, MR the marginal revenue and e the price elasticity of demand, then which of the following is correct?

(A) AR/MR = e.

(B) MR/AR = e.

(C) MR = AR (1 – 1/e).

(D) AR = MR (1 – 1/e).

Ans: (C) MR = AR (1 – 1/e).

13. Which of the following is not the basic assumption of cardinal utility analysis?

(A) Rationality of consumer.

(B) Utility is cardinally measurable.

(C) Diminishing marginal utility of money.

(D) Hypothesis of independent utilities.

Ans: (C) Diminishing marginal utility of money.

14. Peak load pricing can be used for:

(A) Transport.

(B) Electricity.

(C) Drinking water.

(D) Both (A) and (B) but not (C).

Ans: (D) Both (A) and (B) but not (C).

15. Incrementalism is a concept of:

(A) Short run.

(B) Long run.

(C) Market period.

(D) Very short period.

Ans: (B) Long run.

16. Parametric data can be obtained by using:

(A) Nominal scale and interval scale.

(B) Ordinal scale and ratio scale.

(C) Nominal scale and ordinal scale.

(D) Interval scale and ratio scale.

Ans: (D) Interval scale and ratio scale.

17. When data are classified on the basis of descriptive characteristics or on the basis of attributes, the classification is called:

(A) Chronological classification.

(B) Qualitative classification.

(C) Quantitative classification.

(D) Spatial classification.

Ans: (B) Qualitative classification.

18. Find out the correct match between the items of the following:

List I

List II

(a) Probability of a true null hyposis being rejected by a test.

(b) Standard deviation of a sampling distribution of mean.

(c) Comparing average performance of items belonging to more than two sample groups simultaneously.

(d) Testing the significance of the association between two attributes.

(1) Chi-square test.

(2) t-test.

(3) ANOVA.

(4) Standard error of mean.

(5) Level of significance.


(A) (a)-(1), (b)-(3), (c)-(4), (d)-(5).

(B) (a)-(5), (b)-(4), (c)-(3), (d)-(1).

(C) (a)-(4), (b)-(3), (c)-(2), (d)-(1).

(D) (a)-(4), (b)-(5), (c)-(2), (d)-(3).

Ans: (B) (a)-(5), (b)-(4), (c)-(3), (d)-(1).

19. If the regression coefficients byx and bxy are 0.80 and 0.45 respectively, the value of the coefficient of correlation will be:

(A) 0.36.

(B) 0.60.

(C) 0.06.

(D) 0.56.

Ans: (B) 0.60.

20. Processing involves:

(A) Inputting data into a computer system.

(B) Transforming input into output.

(C) Displaying output in a useful manner.

(D) Providing relevant answers.

Ans: (B) Transforming input into output.

21. Match the following:

(a) Philosophy of management.

(b) Scientific management.

(c) General and industrial management.

(d) The practice of management.

(1) Oliver Sheldon.

(2) Peter F. Drucker.

(3) F.W. Taylor.

(4) Henry Fayol.


(A) (a)-(1), (b)-(3), (c)-(4), (d)-(2).

(B) (a)-(1), (b)-(2), (c)-(3), (d)-(4).

(C) (a)-(4), (b)-(3), (c)-(2), (d)-(1).

(D) (a)-(3), (b)-(4), (c)-(1), (d)-(2).

Ans: (A) (a)-(1), (b)-(3), (c)-(4), (d)-(2).

22. The appointment of independent directors is a part of corporate governance as per the:

(A) RBI.

(B) Indian Companies Act.

(C) Government of India.


Ans: (D) SEBI.

23. Organisational structure primarily refers to:

(A) how resources are allocated.

(B) how activities are co-ordinated and controlled.

(C) the location of departments and office space.

(D) the policy statements developed by the firm.

Ans: (B) how activities are co-ordinated and controlled.

24. The definition of communication implies that:

(A) Communication is mostly verbal.

(B) Communication is mostly written.

(C) Most communications is in a vertical direction.

(D) Understanding must occur to have communication.

Ans: (D) Understanding must occur to have communication.

25. Arranging in an order from lowest to highest, what are Maslow’s five classes of needs?

(A) Social Esteem – Physiological – Safety – Self-actualization.

(B) Physiological – safety – Social – self-actualization – Esteem.

(C) Physiological – safety – Social – esteem – Self-actualization.

(D) Self-actualization – Esteem – safety – social – physiological.

Ans: (C) Physiological – safety – Social – esteem – Self-actualization.

26. Which of the demographic variables is not used by marketers for demographic segmentation?

(A) Age.

(B) Occupation.

(C) Poverty.

(D) Gender.

Ans: (C) Poverty.

27. If a company uses its company name for its entire range of products offered, then it is called:

(A) Private branding.

(B) Product live branding.

(C) Specific product branding.

(D) Corporate branding.

Ans: (D) Corporate branding.

28. At which stage of the new product development, the launching of new product will take place:

(A) Business Analysis.

(B) Test Marketing.

(C) Marketing Strategy Development.

(D) Commercialisation.

Ans: (D) Commercialisation.

29. Who defines advertising as “any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor?”

(A) Philip Kotter.

(B) C.K. Prahalad.

(C) Chartered Institute of Marketing.

(D) American Marketing Association.

Ans: (D) American Marketing Association.

30. _______ contributes to the atmosphere of a service organisation.

(A) Brand.

(B) Capacity planning.

(C) Physical evidence.

(D) Packaging.

Ans: (C) Physical evidence.

31. The variability of EPS caused by the use of financial leverage is called:

(A) Operating risk.

(B) External risk.

(C) Financial risk.

(D) Internal risk.

Ans: (C) Financial risk.

32. The returns foregone in the next best investment option is called:

(A) Sunk cost.

(B) Marginal cost.

(C) Opportunity cost.

(D) Foregone cost.

Ans: (C) Opportunity cost.

33. In case where the available funds for investment are lower than the acceptable investment (after applying the appraisal criteria) the suitable additional appraisal criteria, for final decision-making will be:

(A) NPV.

(B) Payback.

(C) ARR.

(D) Profitability index.

Ans: (D) Profitability index.

34. The working capital requirements of the company even at the lowest level of its sales cycle is called:

(A) Gross working capital.

(B) Permanent working capital.

(C) Net working capital.

(D) Fluctuating working capital.

Ans: (B) Permanent working capital.

35. According to Walter model, a firm should have 100% dividend payout ratio when:

(A) r = ke.

(B) r < ke.

(C) r > ke.

(D) None of the above.

Ans: (B) r < ke.

36. Which among the following is odd one?





Ans: (C) FICCI.

37. The ultimate purpose is to relate human resources to future enterprise needs, so as to maximise the future return on investment in human resources. It is referred as:

(A) Demand and Supply.

(B) Forecasting.

(C) Human Resource Planning.

(D) Human Resource Development.

Ans: (C) Human Resource Planning.

38. The two factor theory was propounded by:

(A) Frederick Herzberg.

(B) A.H. Maslow.

(C) McGregor.

(D) Elton Mayo.

Ans: (A) Frederick Herzberg.

39. Which of the following is not a fundamental objective of industrial relations?

(A) To avoid industrial conflicts and their consequences.

(B) To extend and maintain industrial democracy.

(C) To improve workers strength through union bursting devices.

(D) To enhance the economic status of the workers.

Ans: (C) To improve workers strength through union bursting devices.

40. Micro, Small and Medium Enterprises Development Act, 2006 is related to:

(A) Industrial Policy.

(B) Investment Limit.

(C) Business Opportunities.

(D) None of the above.

Ans: (B) Investment Limit.

41. The most significance recommendation of the first Narasimham Committee relating to private banks was related to:

(A) Entry.

(B) Expansion.

(C) Merger.

(D) Branch network.

Ans: (A) Entry.

42. It refers to the advice given by the Reserve Bank of India to commercial banks in respect of banks lending and other operations:

(A) Bank rate.

(B) Open market operations.

(C) Moral suasion.

(D) Repo rate.

Ans: (C) Moral suasion.

43. Which of the following is the correct order by increasing level of risks and loss if P = Loss Assets; Q = Default Asset; R = Standard Asset; S = Non-performing Asset:

(A) P, Q, R, S.

(B) Q, R, S, P.

(C) R, S, P, Q.

(D) R, Q, P, S.

Ans: (D) R, Q, P, S.

44. Which of the following is not a trading block?




(D) IMF.

Ans. (D) IMF.

45. Parent Company and Holding Company words may be used in which type of banking?

(A) Group Banking.

(B) Central Banking.

(C) Chain Banking.

(D) Correspondent Banking.

Ans: (A) Group Banking.

46. Each member of International Monetary Fund (IMF) is assigned a quota expressed in:

(A) Member Country’s Currency.

(B) US Dollar.

(C) Special Drawing Right.

(D) None of the above.

Ans: (C) Special Drawing Right.

47. A tariff on an imported goods levied by the importing country to counter the impact of foreign subsidies is known as:

(A) Countervailing duty.

(B) Quota.

(C) Voluntary export restraint.

(D) Excise Duty.

Ans: (A) Countervailing duty.

48. The number of subordinates a superior can effectively handle is called:

(A) Organising people.

(B) Span of control.

(C) Direction.

(D) Coordination.

Ans: (B) Span of control.

49. Demand for foreign currency is determined by:

(A) Volume of domestic exports.

(B) Volume of domestic imports.

(C) Value of domestic exports.

(D) Value of domestic imports.

Ans: (D) Value of domestic imports.

50. Which of the following is not a part of the structure of WTO?

(A) Trade Policy Body.

(B) General Council.

(C) General Assembly.

(D) Dispute Settlement Body.

Ans: (C) General Assembly.

51. As per AS-23, which of the following accounting methods is adopted in accounting of an associate company in the consolidated financial statements?

(A) Cost method.

(B) Equity method.

(C) Amortised cost method.

(D) None of the above.

Ans: (B) Equity method.

52. Which method of Human Resource Accounting is generally followed by the companies in India?

(A) Historical cost method.

(B) Lev and Schwartz method.

(C) Opportunity cost method.

(D) Replacement cost method.

Ans: (B) Lev and Schwartz method.

53. Institution having an important role in DEMAT set up is:

(A) Stock exchanges.

(B) National Securities Depository Ltd.

(C) Stock Brokers.

(D) Reserve Bank of India.

Ans: (B) National Securities Depository Ltd.

54. Horizontal mergers refers to the merger of firms dealing in:

(A) Different products/services.

(B) Similar products/services.

(C) Unrelated businesses.

(D) Activities of value chain.

Ans: (B) Similar products/services.

55. Venture capital fund cannot invest more than _______ (%) of _______ in one venture capital undertaking.

(A) 25, corpus of funds.

(B) 75, investible funds.

(C) 25, capital issued.

(D) 50, corpus of funds.

Ans: (A) 25, corpus of funds.

56. It is the type of market that describes a cluster of complementary products and services that are closely related in the minds of consumers but are spread across diverse set of industries is:

(A) Market space.

(B) Meta market.

(C) Market place.

(D) Mega market.

Ans: (B) Meta market.

57. It makes sense when good opportunities exist outside the present business described as:

(A) Intensive growth.

(B) Integrative growth.

(C) Diversification growth.

(D) Internal growth.

Ans: (C) Diversification growth.

58. A firm attempts to serve all customer groups with all the products their might need refer to:

(A) Single segment concentration.

(B) Multiple segment concentration.

(C) Multiple segment specialisation.

(D) Full market coverage.

Ans: (D) Full market coverage.

59. The most effective sales promotion scheme to consumer to use in the product information is:

(A) Demonstration.

(B) Push money.

(C) Samples.

(D) Coupons.

Ans: (C) Samples.

60. The words, symbols or marks that are legally registered by a company are called:

(A) Brand.

(B) Agmark.

(C) Trademark.

(D) Hallmark.

Ans: (C) Trademark.

61. The Deiphi technique uses:

(A) Mathematical models as input to the decision making process.

(B) A panel of experts making a series of independent decisions.

(C) A ‘top-down’ approach.

(D) None of the above.

Ans: (B) A panel of experts making a series of independent decisions.

62. The Chart-showing future employment needs for each type of job is called:

(A) Human Resource Forecast.

(B) Human Resource Information System.

(C) Trend Analysis.

(D) Staffing Table.

Ans: (D) Staffing Table.

63. “The introduction of advanced technology tends to reduce the number of jobs that require considerable skills”. This transformation is referred to as:

(A) ‘Touch labour’ to knowledge workers.

(B) ‘Touch labour’ to touch workers.

(C) ‘Untouched labour’ to touch workers.

(D) ‘Untouched labour’ to knowledge workers.

Ans: (A) ‘Touch labour’ to knowledge workers.

64. Which of the following terms is related to the process of identity, developing and tracking key for an individuals executive positions?

(A) Skill Inventories.

(B) Succession Planning.

(C) Trend Analysis.

(D) Human Resource Audit.

Ans: (B) Succession Planning.

65. Recruitment is concerned with:

(A) Selecting the right candidate.

(B) Developing a pool of job candidates.

(C) Getting applications.

(D) None of the above.

Ans: (B) Developing a pool of job candidates.

66. Direct investment in a joint venture abroad can be made by an Indian party without ceiling on limit under automatic route if the investment is made from:

(A) balances in EEFC account.

(B) funds raised through ADR/GDR.

(C) balances in EEFC account or funds raised through ADR/GDR.

(D) There is no such provision.

Ans: (C) balances in EEFC account or funds raised through ADR/GDR.

67. The relationship between the general council and dispute settlement body is:

(A) Dispute settlement body reports to General council.

(B) Both report to ministerial council.

(C) Both have trade policy review body as the appellate body.

(D) Both are same, functioning differently.

Ans: (D) Both are same, functioning differently.

68. According to purchasing power parity theory exchange rates are determined by:

(A) Inflation rates.

(B) Interest rates.

(C) Relative prices.

(D) Demand and supply.

Ans: (C) Relative prices.

69. Which of the following is not a member of NAFTA:

(A) USA.




Ans: (D) SPAIN.

70. Which is the basic form of innovation?

(A) Introduction of novel production process.

(B) Improvement of existing process.

(C) Development of existing firm.

(D) All of the above.

Ans: (D) All of the above.

71. Income which accrues outside India from a business controlled from India is taxable in case of:

(A) Resident only.

(B) Not ordinarily resident only.

(C) Both ordinarily resident and NOR.

(D) Non-resident.

Ans: (C) Both ordinarily resident and NOR.

72. For the purpose of deductibility U/S 35D of the Income Tax Act for Xavier Ltd. preliminary expenses cannot exceed:

(A) 2.5% of the project cost.

(B) 5% of the project cost.

(C) 5% of the capital employed.

(D) Higher of (B) and (C).

Ans: (D) Higher of (B) and (C).

73. Which one of the following is a ‘transfer’ for computation of capital gains?

(A) Distribution of asset on dissolution of partnership firm.

(B) Distribution of asset on partition of HUF.

(C) Distribution of asset on liquidation of a company.

(D) None of the above.

Ans: (A) Distribution of asset on dissolution of partnership firm.

74. Which one of the following is not an ‘income’ under the provisions of the Income-Tax Act, 1961?

(A) Extra money received on account of devaluation of foreign currency.

(B) Illegal income.

(C) Dividend.

(D) Pin money.

Ans: (D) Pin money.

75. Match the following:

(I) Tax Evasion.

(II) Tax Avoidance.

(III) Tax Planning.

(IV) Tax Administration.

(a) Art of lodging tax without actually breaking the law.

(b) Taj group of hotels, opening a hotel in the world heritage centre.

(c) Making suitable arrangement for TDS.

(d) Understatement of income.


(A) (I)-(a), (II)-(b), (III)-(c), (IV)-(d).

(B) (I)-(b), (II)-(c), (III)-(d), (IV)-(a).

(C) (I)-(d), (II)-(a), (III)-(b), (IV)-(c).

(D) (I)-(c), (II)-(d), (III)-(a), (IV)-(b).

Ans: (C) (I)-(d), (II)-(a), (III)-(b), (IV)-(c).


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