COMMERCE QUESTIONS FOR PSC EXAMS

1. Unpaid calls are shown in the balance sheet of a Company: (a) by adding it to the share capital (b) by deducting it from the called-up share capital (c) under the head, Current assets (d) under the head Current liabilities Ans. (b) 2. Part-II Schedule VI to the Companies Act, 1956, prescribes: (a) vertical form of balance sheet (b) requirements as to profit and loss account (c) horizontal form of balance sheet (d) contents of prospectus Ans. (b) 3. X Ltd. forfeited 30 shares of Rs. 10 each fully called-up, for non-payment of allotment money of Rs. 3 per share and call money of Rs. 4 per share. These shares are re-issued for Rs. 8 per share fully paid. What is the amount to be transferred to Capital Reserve Account? (a) Rs. 300 (b) Rs. 60 (c) Rs. 30 (d) Rs. 90 Ans. (c)

4. Rights shares are the shares that are offered to the: (a) directors of the company (b) debenture holders (c) existing shareholders (d) creditors of the company Ans. (c) 5. Pro-rata allotment of shares means allotment of shares: (a) equally amongst the applicants (b) at the discretion of the Directors (c) to all the applicants in proportion to the shares applied for (d) to only a few selected applicants Ans. (c) 6. Interest on calls in arrears is charged according to Table A of Schedule I to the Companies Act 1956 at the rate of: (a) 5% p.a. (b) 6% p.a (c) 12% p.a. (d) 10% p.a. Ans. (a)

7. The best definition of Capital employed in calculating the rate of return on investment is: (a) current assets + gross fixed assets (b) current assets + net fixed assets (c) working capital + gross fixed assets (d) working capital + net fixed assets Ans. (d) 8.Match list-I with list-II and select the correct answer using the Code given below the lists: ListI ListII A. Acid test ratio 1. Liquidity ratio B. Gearing ratio 2. Profitability ratio C. Working capital turnover ratio 3. Leverage ratio D. Return on capital employed 4. Long-term solvency ratio 5. Activity ratio Codes: ABCD (a) 1 3 5 2 (b) 2 5 1 3 (c) 1 5 4 2 (d) 5 3 4 1 Ans. (a)

9. Collection of sundry debtors would: (a) increase current ratio (b) decrease current ratio (c) have no effect on current ratio (d) increase debtors turnover Ans. (c) 10. A company with a paid up capital of 5000 equity shares of Rs. 10 each has a turnover of four times with a margin of 8% on sales. The ROI of the company will be: (a) 28% (b) 32% (c) 35% (d) 42% Ans. (b) 11. The ratios which measure the relative contribution of financing by owners and financing provided by outsiders are called: (a) liquidity ratios (b) leverage ratios (c) activity ratios (d) profitability ratios Ans. (b)

12. The debt equity ratio of a company is 8: 1. It was decided to issue bonus shares in the ratio of 1: 2. The debt : equity ratio after the issue of bonus shares would be: (a) 8: 1 (b) 4: 1 (c) 1:8 (d) 1:4 Ans. (a) 13. Which of the following transaction(s) will improve the Current Ratio? 1. Bills receivable dishonored 2. Cash collected from customers 3. Issue of new shares 4. Payment of preliminary expenses by way of equity shares Select the correct answer using the Code given below: Code: (a) 1, 2 and 3 (b) 4 alone (c) 3 alone (d) 2 and 4 Ans. (c)

14. Which one of the following statements is NOT correct? A high gross profit margin ratio is the result of: (a) higher sales prices, cost of goods sold remaining constant (b) lower cost of goods sold, sales price remaining constant. (c) an increase in the proportionate volume of higher margin items (d) increase in the sales return, cost of goods sold remaining the same Ans. (d) 15. Credit sales of a company during the year are Rs. 1,20,000; Debtors Rs. 20,000 and bills receivables, Rs. 10,000. The average collection period is: (a) 3 months (b) 4 months (c) 5 months (d) 6 months Ans. (a)

16. While calculating the net present value under discounted cash flow method of return on investment analysis, the c4lculations involved are: 1. Cash outflow 2. Discounted net cash flow 3. Cash inflow 4. Net present value The correct sequence of these calculations is: (a) 4, 1, 3, 2 (b) 1, 3, 2, 4 (c) l, 2, 3, 4 (d) 3, 1, 4, 2 Ans. (b) 17. Ajoy Ltd. makes a net profit of Rs. 1,00,000, after providing for depreciation on assets amounting to Rs. 20,000 and writing off preliminary expenses amounting to Rs. 10,000 and gain of Rs. 5,000 on sale of a piece of machinery. Funds from operation of Ajoy Ltd. would be: (a) Rs. 1,00,000 (b) 1,20,000 (c) Rs. 1,25,000 (d) 1,35,000 Ans. (b)

18. Match List-I with List-II and select the correct answer using the Code given below the lists: List-I List-II A. Net loss from operations 1. Source of funds B. Changes in working capital 2. Drain of working capital C. Depreciation 3. Flow of Funds D. Issue of fully paid bonus shares 4. Neither source nor application of funds Code: ABCD (a) 3 2 1 4 (b) 2 3 4 1 (c) 2 3 1 4 (d) 3 2 4 1 Ans. (c) 19. Which one of the following statements is correct? (a) A decrease iii current liabilities causes an increase in the working capital (b) An increase in current liabilities causes a decrease in the working capital (c) A decrease in the current assets causes an increase in the working capital (d) An increase in the current assets causes a decrease in the working capital Ans. (a)

20. Match List-I (Type of audit) with List-II (Purposes) and select the correct answer using the Code given below the lists: List-I List-II A. Continuous audit 1. To ensure efficient conduct of the business and prevent wastage B. Periodical audit 2. Detailed examination of the books of accounts at regular intervals capital C. Interim audit 3. Audit taken up at the close of the financial period D. Internal audit 4. Audit conducted between the ends of two financial period Codes: ABCD (a) 1 3 4 2 (b) 2 3 4 1 (c) 3 2 1 4 (d) 3 1 2 4 Ans. (b)

21. Match List-I (Items) with List-II (Section of Companies Act, 1956) and select the correct answer using the Code given below the lists: List-I List-II A. Appointment of Auditors by Central Government 1. Sec. 22 (1) B. Qualification of Auditors 2. Sec. 224 (5) C. Appointment of Auditors by Board of Directors 3. Sec. 224 (8) D. Remuneration of Auditors 4. Sec. 224 (3) Code: ABCD (a) 4 1 3 2 (b) 1 4 2 3 (c) 4 1 2 3 (d) 1 4 3 2 Ans. (c) 22. Special audit of the accounts of a company is directed by: (a) shareholders of the company (b) Comptroller and Auditor General, of India (c) Company Law Board (d) Central Government Ans. (d)

23. The author of the books Suma de Arithmetica is: (a) H. A. Cassel (b) Luca Paciolli (c) Adam Smith (d) Batliboi Ans. (b) 24. Vouching may be termed as: (a) identification of the documentary evidence supporting the transaction (b) verification of the document supporting the transaction (c) authentication of the document supporting the transaction (d) verification of the accuracy and authenticity of the transaction Ans. (d) 25. Interim audit refers to n audit conducted: (a) in two different accounting years (b) in between two statutory annual audits within the same accounting period (c) in between one statutory audit and an internal audit in the same accounting period (d) in between one statutory audit, one management audit and one internal audit Ans. (b)

26. Various plans that an organization may formulate are forpurpose or mission, objective, strategies, policies, rules and procedures, programmes or projects and budget. These can be arranged in a hierarchy because higher level plans give/generate lower level plans. Identify the correct order according to hierarchy of plans from amongst the following: (a) Purpose or mission, objective, strategies, policies, rules and procedures, programmes or projects and budget (b) Budget, objectives, policies, rules and procedures, purpose or mission, strategies and programmes or projects (c) Purpose or mission, objectives, policies, strategies, programmes or projects, budget, and rules and procedures (d) Strategies, objectives, policies, purpose or mission, programmes or projects, rules and procedures, and budget Ans. (c) 27. What is the correct sequence of the following aspects in auditing? 1. Special audit 2. Internal audit 3. Internal check 4. Annual audit Select the correct answer using the Code given below: Code: (a) 1, 3, 2, 4 (b) 3, 4, 1, 2 (c) 3, 2, 4, 1 (d) 1, 2, 3, 4 Ans. (c)

28. Test checking reduces the: (a) powers of an auditor (b) expenses of audit (c) work of an auditor (d) liability of an auditor Ans. (c) 29. Management audit refers to: (a) examination of books and audit of accounts done by the management (b) the periodic assessment of companys activities by the statutory auditor (c) periodic assessment of companys managerial planning, organizing, actuating and controlling compared to norm of successful operation (d) auditors assessment of the financial statement of the entity Ans. (c) 30. Consider the following documents: 1. Audit Notebook 2. Audit Programme 3. Audit Report 4. Audit Files The correct sequence, in which an auditor prepares these documents is (a) 2, 1, 4, 3 (b) 1, 2, 3, 4 (c) 2, 1, 3, 4 (d) 1, 2, 4, 3 Ans. (a)

31. The most important objective of internal audit, is: (a) early detection of errors and frauds (b) facilitating final audit (c) early finalization of annual accounts (d) ensuring systematic accounting Ans. (a) 32. Section 224 of the Companies Act, 1956 deals with: (a) special audit (b) secretarial audit (c) cost audit (d) appointment and remuneration of auditors Ans. (d) 33. An arrangement in which the accounting work of each individual is checked by other members is known as: (a) internal audit (b) external audit (c) internal check (d) test checking Ans. (c)

34. The main purpose of an independent audit is to: (a) check and correct frauds and errors (b) help in detecting frauds and errors (c) determine if the financial statements fairly represent the actual financial position and the working results of the organization (d) help in formulating future plans Ans. (c) 35. Consider the following statements: I. Foreign institutional investors have been allowed to invest in Mutual Funds 2. The main objective of SEBI is to protect the investors 3. Private placement is the route through which Promoters contribution is mobilized by a public company 4. RBI lays down the guidelines governing the capital market operation Of these statements: (a) 1 and 2 are correct (b) 2, 3 and 4 are correct (c) 1, 2 and 3 are correct (d) 1, 3 and 4 are correct Ans. (b) 36. Dow and Jones, now popularly known as Dow-Jones in the stock market parlance, were the: (a) first financial journalists (b) first bull operators in the New York Stock Exchange (c) first to predict the Great Depression (d) architects of shop-floor trading Ans.(b)

37. The primary function of Stock Exchange is to: (a) mobilize savings from the public for long-term investment (b) offer a secondary market for shares and other securities (c) facilitate barter deals between buyer and seller holding different securities (d) enable Reserve Bank of India to trade in Government securities in their efforts to control money supply in the economy Ans. (b) 38. Consider the following statements: A mutual fund helps the investor in securing: 1. professional management 2. diversification of risk 3. steady appreciation 4. lower cost of operation Of these statements: (a) 1, 2, 3 and 4 are correct (b) 1, 2 and 4 are correct (c) 2 and 3 are correct (d) 3 and 4 are correct Ans. (a)

39. Which of the following pairs are correctly matched? 1. Cooperative movement in India : Nanavahi Committee is breast-fed, bottle-fed and spoon-fed 2. Tax on sole proprietor and partnership : Direct Taxes, Enquiry Committee firms needs rationalization 3. Capital market in India is tightly controlled : Narasimham Committee by the Government Select the correct answer using the Code given below: Code: (a) 1, 2 and 3 (b) 1 and 3 (c) 2 and 3 (d) 1 and 2 Ans. (a) 40. Arbitrage means: (a) a business arrangement by which al share broker tries to take advantages of different in Spot and Futures prices of a share (b) a business arrangement in which a share broker tries to take advantage of difference in prices between two Stock Exchange centers on a particular share (c) an arbitration proceedings that is invoked by either the buyer or the seller when he other party is unable to meet its commitment (d) a compromise arrangement by which the transaction is postponed to the next settlement date Ans. (b)

41. Which one of the following sets is correct with regard to liberalization in financial sector? (a) Globalization, devaluation and privatization (b) Deregulation, moral suasion branch expansion (c) Privatization, computerization and standardization (d) Globalization, deregulation and privatization Ans. (b) 42. Which of the following are the means of marketing new issues of securities? 1. By listing of securities 2. Through jobbers and brokers 3. By private placing of securities 4. Through privileged subscription Select the correct answer using the Code given below: Code: (a) 1 and 2 (c) 3 and 4 (b) 1,2 and 3 (d) 1, 2, 3 and 4 Ans. (d)

43. Narasimham Committee has, apart from other things, recommended: (a) expanding priority sector financing (b) restricting priority sector-financing (c) asking new foreign and private sector banks to follow the existing norms for priority Sector financing (d) total elimination of priority sector financing Ans. (b) 44. Prospectus issued by a company is to be vetted and approved by the SEBI. This, however, does not mean that: (a) disclosures are adequate as per its guidelines (b) project proposal has been presented in conformity with its guidelines (c) disclosures are adequate to take an informed decision by investors (d) project proposal is sound or satisfactory 45. Commercial papers represent a new financial instrument issued for the purpose of: (a) project financing (b) working capital (c) leasing of plant and equipment (d) import of capital goods Ans. (b)

46. Match List-I (Forms of business organization) with List-II (Distinctive characteristics) and select the correct answer using the Code given below the lists: List-I List-II A. Joint Hindu Family Firm 1. Association of persons for their common interests B. Public Enterprise 2. Ownership and control by Government C. Section 25 of Company 3. Ownership by coparceners D. Co-operative organization 4. Limited company formed for promoting art, commerce, science etc. Codes: ABCD (a) 3 2 1 4 (b) 1 3 2 4 (c) 3 2 4 1 (d) 1 3 4 2 Ans. (c) 47. Does modernization of industrial enterprises call for mechanization? (a) Yes, because manual labour alone cannot deliver the goods (b) Yes, because mechanization holds the key to industrial success in most developing countries (c) No, because it is rationalization and not mechanization that holds the key to modernization and higher productivity in the industrial sector (d) No, because it is mechanization will aggravate the unemployment situation in the country and will ultimately result in the collapse of the economy Ans. (a)

48. In the absence of an agreement to the contrary, the partners are: (a) entitled to 6% interest on their capitals, only when there are profits (b) entitled to 9% interest on their capitals, only when there are profits (c) entitled to interest on capital at the bank rate, only when there are profits Ans. (d) 49. Match List-I (landmark case) with List-II (the legal point established by that case) and select the correct answer using the Code given below the lists: ListI ListII A. Solomon vs. Solomon 1. The scope and limits of the Objects Clause B. Ewing vs. Butter Cup Margarine Co. Ltd. 2. A company should not be registered with a name which resembles the name of an existing Co. C. Ashbury Rail Carriage & Iron Co. vs. Ritchie 3. Company is a distinct entity, different from its members D. Royal British Bank vs. Turquand 4. Limitation to the Doctrine of constructive notice 5. Doctrine of Indoor Management Codes: ABCD (a) 2 3 1 4 (b) 3 2 4 5 (c) 3 2 1 4 (d) 2 3 4 5 Ans. (b)

50. Which one of the following is NOT applicable to a .Co-operative form of business organization? (a) Major portion of profit is distributed to members by way of dividend (b) Policy decisions are taken by the members in a General Meeting (c) Membership is open to all having a common interest (d) It is formed generally by the artisans and consumers of limited means Ans. (d)

COMMERCE QUESTIONS FOR PSC EXAMS

1. Sree media Company Limited acquired the business of M/s Bharat Traders. The valuation of the items acquired wasbuilding Rs. 1,20,000; machinery Rs. 80,000 and stock-in-trade Rs. 30,000. The company issued in lieu of the above items 800, 10% debentures of Rs. 100 each at par and 1 5000 equity shares of Rs. 10 each. How much was the flow of funds in the above transaction? (a) Rs. 2,30,000 (b) Rs. 1,00,000 (c) Rs. 50,000 (d) Rs. 30,000 Ans. (d) 2. What are the aspects to be considered while qualifying the audit report on the accounts of a company? 1. An item requiring specific disclosure under the Companies Act is not so disclosed 2. Where the auditor has not been able to form an opinion due to his inability to obtain sufficient, appropriate evidence information and explanation 3. An auditor realizes that items in a financial statement are misstated to such an extent that the financial statement does not give a true and fair view Select the correct answer using the Code given below: Code: (a) 1 only (b) 1 and 2 (c) 2 and 3 (d) 1, 2 and 3 Ans. (d)

3. Analytical review by an auditor mainly includes: (a) examining vouchers and other documents (b) physical verification of assets (c) examining day books with ledgers (d) study of ratios and trends Ans. (d) 4. Statements on Standard Auditing Practices (SAPs) are important while discharging the auditing function by a member of the ICAI in case of a company, because SAPs are: (a) prescribed by the ICAI (b) contained in the Companies Act, 1956 (c) approved by the Department of Company Affairs (d) approved by the Central Government in consultation with Comptroller and Auditor-General Ans. (a) 5. Which audit is carried out during the accounting period with some interval, it is called: (a) periodic audit (b) partial audit (c) continuous audit (d) interim audit Ans. (c)

6. Which one of the following pairs is NOT correctly matched? (a) Suppression of invoices : Window dressing (b) Overcharging depreciation : Secret reserves (c) Omission of cash receipts from debtors : Understatement of sales (d) Omission of credit sale : Understatement of debtors Ans. (a) 7. Internal audit report is submitted to: (a) Government (b) Shareholders (c) Creditors (d) Board of Directors Ans. (d) 8. The main purpose of auditing is to: (a) detect accounting offences and to punish the offender (b) prepare and authenticate the accounts (c) prepare the accounts and authenticate their true and fair view (d) certify the financial position of the business Ans. (d)

9. Every auditor appointed under Section 224 (1) of the Companies Act, 1956 shall inform in writing as to whether he has accepted or refused to accept the appointment. Such an intimation shall be given by him to the (a) company within 30 days of receipt from the company of the intimation of his appointment (b) Company Law Board within 30 days of receipt from the company of the intimation of his appointment (c) company within 7 days of receipt from the company of the intimation of his appointment (d) Registrar within 30 days of receipt from the company of the intimation of his appointment Ans. (d) 10. If an auditor does something wrongfully in the performance of his duties resulting in financial loss to the company, he will be held guilty of: (a) civil negligence (b) misfeasance (c) criminal negligence (d) financial irregularity Ans. (b) 11. Audit Committee shall act in accordance with the terms of reference to be specified by: (a) Statutory Auditors (b) SEBI (c) Board of Directors (d) Central Government Ans. (c)

12. The selection of items, to be included in the audit on a subjective basis without consideration of sample size of method of selection, is: (a) probability sampling (b) systematic sampling (c) random sampling (d) judgment sampling Ans. (a) 13. The scope of audit in a partnership firm is governed by: (a) partnership act (b) partnership deed (c) agreement between partnership firm and auditor (d) number of partners of the firm Ans. (c) 14. While establishing the statistical sampling plan, the degree of precision required is determined by: (a) keenness of the management (b) suitability of accounting systems and. procedures (c) allowable margin of error the auditors are willing to accept (d) random number table used for the purpose Ans. (d)

15. Match List- I with List -II and select the correct answer using the Code given below the Lists: ListI ListII A. Inspection of books of account under 1. Central government Section 209A of the Companies Act, 1956 B. Constitution of National Advisory Committee 2. Registrar of Companies on Accounting Standards C. Books of account 3. Registered office D. Reasons for failure to buy back shares 4. The ICAI 5. Directors Report Code: ABCD (a) 2 1 3 5 (b) 3 1 2 4 (c) 2 4 3 5 (d) 3 4 2 1 Ans. (c) 16. The scope of management audit is determined by the: (a) shareholders (b) Board of Directors (c) Comptroller and Auditor-General (C & AG) (d) Comptroller and Auditor-General in consultation with the Central Government Ans. (b)

17. In the case of an auditor appointed under Section 619 of the Companies Act, 1956 by the Comptroller and Auditor-General of India, the remuneration shall be fixed by the (a) company in general meeting (b) comptroller and Auditor-General of India (c) comptroller and Auditor-General of India consultation with the Central Government (d) Company Law Board Ans. (d) 18. Test checking reduces: (a) the work of an auditor (b) tie liability of an auditor (c) both work and liability of an auditor (d) the remuneration of an auditor Ans. (a) 19. X is proposed to be appointed as the auditor of ABC Co. Ltd. at the ensuing AGM in place of the retiring auditor Y. This requires: (a) a special resolution and approval of the Company Law Board (b) a special notice (c) an ordinary resolution and approval of the Company Law Board (d) a special resolution and approval of Central Government Ans. (b)

20. Test checking of entries in the audit work refers to: (a) the internal checks (b) the internal controls (c) checking some sample items from a large number of similar items (d) checking the cash flow of business Ans. (c) 21. The First Standard Auditing Practice (SAP-I) is related to: (a) objectives and scope of the audit of financial statements (b) basis principles governing an audit (c) documentation (d) detecting fraud and error Ans. (a) 22. Which of the following relating to Audit Programme is NOT correct? (a) The auditor cannot defend himself on the basis of audit programme if there is a charge of negligence against him (b) it is useful basis for planning the programme for the subsequent year (c) It helps in the final review before the report is signed (d) it simplifies the allocation of work amongst the audit staff Ans. (a)

23. Who is bull? (a) A stock broker who deals or specializes in a few shares (b) An investor who sells securities in anticipation of being able to re-buy them later at a lower price (c) An investor who buys securities in anticipation of being able to sell them at a higher price (d) An investor who expects the price of a security or of the market as a whole to fall Ans. (c) 24. Commercial paper is a: (a) long-term corporate security meant for small investors (b) medium-term corporate security meant for institutional investors (c) treasury paper meant for corporate investors (d) short-item corporate security meant for large-scale investors Ans. (c) 25. A cartel is a combination of firms: (a) which are functioning in a particular industry (b) whose combined assets are worth more than 90% of total assets of the industry (c) who control major chunk of the market (d) whose combined profits are enormous Ans. (d)

26. Social responsibility of business assumes considerable importance towards: (a) owners and workers (b) consumers and community (c) government and nation (d) All the above Ans.(d) 27. The distinctive characteristic of perpetual succession of a joint stock company refers to: (a) uninterrupted business in spite of continuous losses (b) immunity from government direction for the closure of the company (c) immunity from resolution passed in the annual general body meeting for closure of the company (d) uninterrupted existence not affected by the death or insolvency of members of the company Ans. (d) 28. A statutory corporation is one which comes into being by: (a) registration under Companies Act, 1956 (b) virtue of enactment of a Special Act (c) registration under any enforceable Act operating in India (d) the entrepreneurial effort of the government Ans. (d)

29. Consider the following statements: An unregistered partnership firm suffers from the following disabilities4. 1. A partner of such firm cannot file a suit for the dissolution of the firm 2. The firm cannot file a suit against any third party for realization of its dues 3. A partner cannot file a suit against any other partner to enforce any right arising out of partnership deed Which of the above statements are correct? (a) 1, 2 and 3 (b) 1 and 3 (c) 1 and 2 (d) 2 and 3 Ans. (d) 30. Exim Bank of India provides financial assistance to exporters and importers in India: (a) in foreign currency only (b) both in Indian currency and foreign currencies (c) as zero-interest loans (d) as subsidies Ans. (d) 31. In life insurance, the risk insured is: (a) certain to occur and also the timing of its occurrence is known (b) certain to occur, but its timing of its occurrence is not known (c) not certain to occur and also the timing of its occurrence is not known (d) not likely to occur Ans. (c)

32. The national re-insurer in India is: (a) General Insurance Corporation of India (b) United India Insurance Company Ltd. (c) Insurance Regulatory and Development Authority (d) Oriental Fire and General Insurance Company Ltd. Ans. (a) 33. Which one of the following risks is not insured by the Export Credit and Guarantee Corporation? (a) The risk of non-payment by the foreign buyer (b) The risk that the importer may return the goods on the ground of lower quality (c) The political risk that the import license may be revoked (d)The risk of war, revolution, etc.; in the buyers country Ans. (b) 34. Which one of the following indicates the correct chronological order of the system designed for purchasing office supplies? (a) Select sources of supply, initiate requisition, order supplies, receive supplies and pay vendor (b) Initiate requisition, order supplies, select sources of supply, receive supplies and pay vendor (c) Select sources of supply, initiate requisition order supplies, pay vendor and receive supplies (d) Initiate requisition, select sources of supply, order supplies, receive supplies and pay vendor Ans. (b)

35. Which one among the following is an instance of Participative Management? (a) Board of Directors (b) Trade Unions (c) Work Committees (d) Task Force Ans. (c) 36. The size of an office can be measured in which of the following ways? 1. Production capacity of the organization 2. Number of employees 3. Investment in equipment and machines 4. Total administrative expenses Select the correct answer using the Code given below: Code: (a) 1 and 4 are correct (b) 1 and 2 are correct (c) 1, 2 and 3 are correct (d) 2, 3 and 4 are correct Ans. (d) 37. Contingency School of Management (a) practice-oriented (b) principle-oriented (c) result-oriented (d) profit and loss-oriented Ans. (a)

38. The term organizational climate best represents: (a) human environment prevailing in an organization (b)union management relations within an organization (c) problems introduced by faulty organizational structure (d) socio-cultural environment in an organization Ans. (d) 39. Which one of the following is the correct sequence in terms of the four management functions, first identified by Henry Fayol? (a) Planning, Organizing, Leading and Controlling (b) Planning, Organizing, Staffing and Coordinating (c) Planning, Motivating, Directing and Reporting (d) Planning, Staffing, Communicating and Leading Ans. (b) 40. Match List-I (Office records) with List-II (Need of such record) and select the correct answer using the Code given below the Lists: List-I List-II A. File 1. Recording small and necessary expenses B. Ledger 2. Recording transactions C. Petty cash book 3. Keeping necessary documents D. Office manual 4. Computerizing office system Code: ABCD (a) 3 2 1 4 (b) 4 5 3 1 (c) 3 5 1 2 (d) 4 2 3 1 Ans. (a)

41. Organizations require narrow span of control if there are: (a) mature subordinates within (b) competent and trained managers (c) unclear plans for non repetitive operations (d) well defined plans for repetitive operations Ans. (b) 42. Which one f the following traits describes properly organic or behavioral structure of organization? (a) Wider spans of control (b) More centralization (c) Higher degree of specialization (d) Taller hierarchy Ans. (a) 43. People resist change in organization because of: (a) fear of unemployment (b) increase in responsibility (c) need for new social adjustments (d) All the above Ans. (d)

44. When there are large number of smaller projects and the activities of those projects are to be accomplished by setting up some temporary departments, the appropriate organizational structure should be: (a) project organization (b) functional organization (c) matrix organization (d) divisional organization Ans. (c) 45. The managerial function of organizing involves: (a) reviewing and adjusting plan in the light of changing conditions (b) establishing programme for the accomplishment of objectives (c) creating a structure of functions and duties to be performed by a group (d) getting things done through others Ans. (c) 46. Which one of the following is the major consideration for decentralization? (a) Organizations environment (b) Nature of management function (c) Size of the organization (d) Ability of higher-level managers Ans. (c)

47. Which among the following is the most popular approach for accomplishing the results? (a) Management by exception (b) Reward system (c) Management by objectives (d) Mentor system Ans. (c) 48. Which among the following is the oldest and simplest device for achieving coordination? (a) Hierarchy (b) Planning (c) Incentives (d) Rules Ans. (b) 49. Centralizing the office work is desirable mostly because it: (a) fixes responsibility (b) avoids duplication (c) permits better supervision (d) permits better delegation Ans. (a)

50. Match List-I with List-II and select the correct answer using the Code given below the List: List- I List-II A. F.W. Taylor 1. Principles of Management B. Maslow 2. Team Work C. Esprit de Corps 3. Scientific Management D. V Henry Fayol 4. Theory of Human Motivation Code: ABCD (a) 1 4 2 3 (b) 3 2 4 1 (c) 1 2 4 3 (d) 3 4 2 1 Ans. (d)