Commerce Questions and Answers - Set 2

(1) 4. For which one of the basic reasons, the “Structural Adjustment Programme” was undertaken in India in 1991 ?

[1] Curbing competition among private sector

[2] Establishing predominant role of public sector

[3] Establishing a free market economy

[4] Regional balancing through planning and licensing

Answer: Establishing a free market economy

(2) 7. The balance of property at cost has been ` 20,000 and ` 17,000 in 2015 and 2016, respectively. The profit on the sale of property of ` 2,000 is credited to Capital Reserve Account. New property costing ` 5,000 was bought in 2016. Determine the sale proceeds from property.

[1] 3,000

[2] 7,000

[3] 10,000

[4] 15,000

Answer: 10,000

(3) A Ltd. issued a prospectus inviting applications for 2,000 shares. Applications were received for 3,000 shares and pro-rata allotment was made on the applications of 2,400 shares. If A has been allotted 40 shares, how many shares he must have applied for ?

[1] 40

[2] 44

[3] 48

[4] 52

Answer: 48

(4) Which one of the following receipts is of revenue nature ?

[1] Amount realised from the sale of investments

[2] Dividend received on investment

[3] Amount borrowed from a bank

[4] Compensation received from municipal corporation for the acquisition of land for the construction of road.

Answer: Dividend received on investment

(5) Which one of the following statements is true ?

[1] Pure profit is the return in excess of the opportunity cost

[2] Accounting profit is the excess of total revenue over and above the explicit and implicit

[3] Profit maximization is the sole objective of the modern firms

[4] Profit is maximum when the difference between marginal revenue and marginal cost is maximum

Answer: Pure profit is the return in excess of the opportunity cost

(6) Which one of the following is not the assumption on which the theory of consumer behaviour is based on the cardinal utility approach ?

[1] Rationality

[2] Constant marginal utility from successive units

[3] Constant marginal utility of money

[4] Utility is measurable

Answer: Constant marginal utility from successive units

(7) 15. Which one of the following is not the basic property of indifference curves ?

[1] Negative slope

[2] The indifference curves do not intersect nor are they tangent to one another

[3] Indifference curves of two imperfect substitutes are concave to the point of origin

[4] Upper indifference curves indicate a higher levels of satisfaction

Answer: Indifference curves of two imperfect substitutes are concave to the point of origin

(8) The scale of measurement which has no order, distance and unique origin is known as which one of the following ?

[1] Nominal scale

[2] Ordinal scale

[3] Interval scale

[4] Ratio scale

Answer: Nominal scale

(9) Which one of the following is not the characteristics of normal distribution ?

[1] Bell - shaped and symmetric

[2] Mean, Median and Mode of the distribution are equal

[3] The total area under the curve for the normal probability distribution is one

[4] The two tails of the distribution in both the directions touches the horizontal axis

Answer: The two tails of the distribution in both the directions touches the horizontal axis

(10) When Walt Disney World’s Magic kingdom lets customers visit a fairy kingdom, a pirate ship, or a haunted house, then what is marketed in this example ?

[1] Services

[2] Events

[3] Experiences

[4] Ideas

Answer: Experiences

(11) Which one of the following statements is true according to VALS framework of psychographic segmentation ?

[1] The consumers who are primarily motivated by ideals are guided by knowledge and principles.

[2] The consumers who are motivated by achievement look for knowledge and principles.

[3] The consumers who are motivated by self expression don’t desire social or physical activity, variety, and risk

[4] The consumers who are motivated by achievement desire social or physical activity, variety, and risk.

Answer: The consumers who are primarily motivated by ideals are guided by knowledge and principles.

(12) Select the correct sequence for Hierarchy-of-effects model related to marketing communication :

[1] Awareness→ Knowledge → Liking → Preference→ Conviction → Purchase

[2] Knowledge → Awareness → Liking → Conviction → Preference → Purchase

[3] Awareness → Liking → Knowledge → Conviction → Preference → Purchase

[4] Liking → Awareness → Knowledge → Preference → Conviction → Purchase

Answer: Awareness→ Knowledge → Liking → Preference→ Conviction → Purchase

(13) Which of the following statements is false ?

[1] The opportunity cost of an input is considered in capital budgeting

[2] Capital budgeting decisions are reversible in nature

[3] Cash flows and accounting profits are different

[4] An expansion decision is a capital budgeting decision

Answer: Capital budgeting decisions are reversible in nature

(14) Main objective of employing Financial Leverage is to :

[1] Reduce the risk associated with profits

[2] Maintain the stability in profits

[3] Decrease the cost of debt capital

[4] Magnify the return on equity share capital

Answer: Magnify the return on equity share capital

(15) Which one of the following is not a method of calculating cost of equity capital ?

[1] Dividend yield method

[2] Dividend yield plus growth method

[3] Yield to maturity method

[4] Earnings yield method

Answer: Yield to maturity method

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