Commerce Questions and Answers - Set 19

1 Which of the following is not true ?

1 When all the forfeited shares are not reissued, the forfeited shares account will also show as credit balance equal to gain on forfeiture of shares not yet reissued.

2 Loss on reissue of shares cannot be more than gain on forfeiture of those shares.

3 At the time of forfeiture of shares, securities premium is debited along with share capital when premium has not been received.

4 When forfeited shares are issued at premium, the premium amount is credited to Capital Reserve Account.

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Answer: When forfeited shares are issued at premium, the premium amount is credited to Capital Reserve Account.

2 Preparation of consolidated Balance Sheet of Holding Company and its subsidiary

1 AS 11

2 AS 22

3 AS 23

4 AS 21

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Answer: AS 21

3 Amount due to outgoing partner is shown in the balance sheet as his

1 Liability

2 Capital

3 Asset

4 Loan

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Answer: Loan

4 In which one of the following market situations, the pricing above the prevailing market price is used as a more common practice ?

1 Markets where the selling firms face perfect competitive situations.

2 Markets where the selling firms want to gain popularity of the products having high cross elasticity of their demand

3 Markets where sellers rely on their customers’ high propensity to consume a prestigious commodity.

4 Markets where the selling firms have entered into the stages of maturity and saturation.

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Answer: Markets where sellers rely on their customers’ high propensity to consume a prestigious commodity.

5 Which one of the following statements is false regarding normal distribution ?

1 Mean, Median and Mode always coincide.

2 Within ± 1.96 σ limits from Mean value, the area under the distribution is 99 percent of the total area.

3 The area under the normal curve represents probabilities for the normal random variable and the total area for the normal probability distribution is one.

4 For every pair of values of Mean and Standard deviation, the curve of the distribution is bell-shaped and symmetric.

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Answer: Within ± 1.96 σ limits from Mean value, the area under the distribution is 99 percent of the total area.

6 Creating the capability of making purchases directly from a firm’s website is known as

1 Electronic Networking

2 Electronic Information Transfer

3 Electronic Data Interchange

4 Electronic Transactions

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Answer: Electronic Transactions

7 In integrating specialist functions of product management with the line function of sales as major challenge to top management can be achieved by which type of marketing organization ?

1 Functional organization

2 Territorial organization

3 None of the above

4 Matrix organization

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Answer: Matrix organization

8 That personal leverage can replace corporate leverage’ is assumed by

1 Traditional Approach

2 Net Income Approach

3 M M Model

4 Net Operating Income Approach

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Answer: M M Model

9 In certainty-equivalent approach, risk adjusted cash flows are discounted at

1 Accounting Rate of Return

2 Internal Rate of Return

3 Hurdle Rate

4 Risk-free Rate

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Answer: Risk-free Rate

10 Which council was established in India by Government of India in the year 1966 to promote safety consciousness among workers in industries ?

1 Factory Advise Council

2 National Industrial Council

3 Safety Regulations Council

4 National Safety Council

View Answer

Answer: National Safety Council

11 With a view to encourage newer classes of entrepreneurs and bringing about wider dispersal of ownership and control of industrial undertakings, IDBI operates a special scheme for supplementing the equity contribution to projects made by small and new entrepreneurs. This scheme is known as

1 Bridge Loan Scheme

2 Soft Loan Scheme for Modernisation

3 Technical Development Fund Scheme

4 Seed Capital Assistance Scheme

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Answer: Seed Capital Assistance Scheme

12 Which one of the following is not the objective of UTI ?

1 To give everyone a chance to indirectly own shares and securities in a large number of select companies.

2 To maximise mobilisation of people’s savings by making insurance linked savings adequately attractive.

3 To channelize the pooled savings into productive outlets.

4 To mobilise savings of the community by offering savers the triple benefits of safety, liquidity and profitability of investments

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Answer: To maximise mobilisation of people’s savings by making insurance linked savings adequately attractive.

13 Which of the following correctly depicts differences between a merger and an acquisition of stock ?

1 An acquisition of stock results in the total absorption of a firm whereas a merger does not.

2 In case of a merger, the firm can deal directly with the shareholders of the acquired firm but not in the case of acquisition of stock.

3 Shareholders of the acquired or target firm vote by their response to a tender offer in an acquisition of stock but cast a formal vote in a merger situation.

4 A formal vote by the acquired firm’s shareholders is required for an acquisition of stock but not for a merger.

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Answer: Shareholders of the acquired or target firm vote by their response to a tender offer in an acquisition of stock but cast a formal vote in a merger situation.

14 Which of the following statements is correct ?

1 The oldest stock exchange of India is OTCEI.

2 In book-building process, the price of the security is announced by the company.

3 Sensex is an index number of 30 scrips.

4 Futures and options in shares are traded at all stock exchanges of India.

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