CPT Revision Sample Paper - I - Answer key

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Session – I

Answer all questions.

(Each question carries 1 mark for correct answer and a negative 1/4 mark for incorrect answer)

(Time : 2 Hrs.)

(Full Marks: 100)




Test Paper – I

Answer all questions (Time : 4Hrs.) (Full Marks: 200)

Section A - Fundamentals of Accounting

1) All of the following are functions of Accounting except: O Decision making. O Measurement. O Forecasting.

Ledger posting. 2) Manufacturing account is prepared to: O ascertain the profit or loss on the goods produced.

ascertain the cost of the manufactured goods. O show the sale proceeds from the goods produced during the year. O both (b) and (c) 3) On March 31, 2009 after sale of goods worth Rs. 2,000, A is left with the closing stock of Rs. 10,000. This is:

An event O A transaction O A transaction as well as an event O Neither a transaction nor an event 4) Financial statements only consider: O Assets expressed in monetary terms. O Liabilities expressed in monetary terms O Assets and liabilities expressed in non- monetary terms

Assets and liabilities expressed in monetary terms 5) A purchased a car for Rs. 5,00,000, making a down payment of Rs.1,00,000 and signing a Rs.4,00,000 bill payable due in 60 days. As a result of this transaction: O Total assets increased by Rs.5,00,000 O Total liabilities increased by Rs.4,00,000 O Total assets increased by Rs.4,00,000.

Total assets increased by Rs.4,00,000 with corresponding increase in liabilities by Rs.4,00,000.




6) The debts written off as bad, if recovered subsequently are:

credited to Bad Debts Recovered Account O credited to Debtors Account. O debited to Profit and Loss Account O None of the above 7) A withdrawal of cash from business by the proprietor should be credited to: O Drawings Account

Capital Account O Profit & Loss Account O None of the above. 8) Contra entries are passed only when: O double column cash book is prepared

three-column cash book is prepared O single column cash book is prepared O None of the above 9) Consignment account is: O Real account O Personal account

Nominal account O None of the above 10) Economic life of an enterprise is split into the periodic interval as per ________. O Money Measurement Periodicity Concept O Going concern O Accrual 11) Accounting policies refer to specific accounting ________. O Principles O Methods of applying those principles

Both of above O None of the above 12) Dividends are usually paid as a percentage of : O Authorized share capital O Net profit

Paid-up capital O Called-up capital 13) ABC Company provides the following information about the month-end bank reconciliation:




Ending cash as per bank statement: 1,367 Ending cash as per company records: 7,383 Monthly bank service charge: 25 Deposits in transit at month-end: 8,345 Outstanding cheques at month-end: 2,399 Customer cheques returned NSF: 45 The correct ending cash balance is: O 4,914 O 7,268

7,313 O 7,383 14) Which of the following inventory methods will always produce the same results under both a periodic and perpetual system?

FIFO O LIFO O Average O None of these 15) When reconciling the ending cash balance as per the bank statement to the correct adjusted cash balance, how would deposits in transit be handled?

Added to the balance as per bank statement O Subtracted from the balance as per bank statement O Added to the balance as per company records O ignored 16) Under the __________ inventory method, the most recent costs incurred are assigned to cost of goods sold on the income statement.

LIFO O FIFO O Weighted Average O None of these 17) A businessman purchased goods for Rs. 25,00,000 and sold 80% of such goods. During the accounting year ended 31st March, 2009. The market value of the remaining goods was Rs. 4,00,000. He valued the closing stock at cost. He violated the concept of: O Money measurement. Conservatism. O Cost. O Periodicity. 18) E Ltd., a dealer in second-hand cars has the following five vehicles of different models and makes in their stock at the end of the financial year 2009-2010: Car Fiat, Ambassador, Maruti Esteem, Maruti 800, Zen Cost (Rs.): 90,000, 1,15,000, 2,75,000, 1,00,000 2,10,000 Net realisable value (Rs.): 95,000, 1,55,000, 2,65,000, 1,25,000, 2,00,000. The value of stock included in the balance sheet of the company as on March 31, 2010 was: O Rs.7,62,500 Rs.7,70,000 O Rs.7,90,000 O Rs.8,70,000. 19) Original cost = Rs.1,26,000; Salvage value = Nil; Useful life = 6 years. Depreciation for the first year under sum of years digits method will be:




O Rs. 6,000 O Rs. 12,000 O Rs.18,000 Rs. 36,000 20) Find the goodwill of the firm using capitalization method from the following information: Total Capital Employed in the firm Rs. 8,00,000 Reasonable Rate of Return 15% Profits for the year Rs. 12,00,000 O Rs. 82,00,000 O Rs. 12,00,000.

Rs. 72,00,000. O Rs. 42,00,000. 21) When a partner draws a fixed sum at the middle of each month, interest on total drawings will be equal to interest of ____ m/s at an agreed rate.

6 O 6.5 O 7 O 7.5 22) A, B and C are partners sharing profits and losses in the ratio 4:2:1. They admit D for 1/4th share. For the purpose of admission of D, the goodwill of the firm should be valued on the basis of 2 yrs. purchase of last 3 yrs. average profits. The profits were 2009 - 1,24,000; 2008 - 1,20,000; 2007 - 80,000; 2006-1,30,000. Calculate the value of goodwill. O Rs. 2,06,000 O Rs. 2,10,000

Rs. 2,16,000 O Rs. 2,20,000 23) If a purchase return of Rs.1,000 has been wrongly posted to the debit of the sales returns account, but has been correctly entered in the suppliers’ account, the total of the: O trial balance would show the debit side Rs.1,000 more than the credit. O trial balance would show the credit side to be Rs.1,000 more than the debit.

the debit side of the trial balance will be Rs.2,000 more than the credit side. O the credit side of the trial balance will be Rs.2,000 more than the debit side. 24) X and Y are partners sharing profits in the ratio 5:3. They admitted Z for 1/5th share of profits, for which he paid Rs. 1,20,000 against capital and Rs. 60,000 against goodwill. Find the capital balances for each partner taking Z’s capital as base capital: O 3,00,000; 1,20,000 and 1,20,000. O 3,00,000; 1,20,000 and 1,80,000.

3,00,000; 1,80,000 and 1,20,000 O 3,00,000; 1,80,000 and 1,80,000. 25) After all debentures have been redeemed, balance of Debenture Redemption Fund is transferred to:




O Profit and Loss Account O Capital Reserve O Loss on issue of debenture General Reserve 26) Errors, whose effect is not reflected in the trial balance is: O Errors of Principle Compensating errors O Errors of Posting O Errors of Casting 27) If the partner’s capital account are fixed, withdrawal of capital will be recorded in:

Partner’s capital account O Partner’s current account O Partner’s drawing account O Partner’s loan account 28) In the absence of any agreement, partners are entitled to get ____ interest p.a. on loan.

6% O 6.25% O 6.50% O 6.75% 29) A and B are two partners sharing profits and losses in the ratio 4:1. They earned a profit of Rs. 8,000 during the year. A, in addition, is entitled to a commission at a certain percentage of net profit (such commission is to be charged in arriving at the net profit). First, Rs. 2,000 of the net profit to be ignored. Next, Rs. 2,000 of the net profit to carry 10% commission. Next, Rs. 2,000 of the net profit to carry 15% commission, and balance of net profit to carry 20% commission. Calculate the commission of A. O Rs. 500 O Rs. 600

Rs. 700 O Rs. 800 30) A, B and C are partners contributing Rs. 2,00,000, Rs. 3,00,000 and Rs. 4,00,000 respectively. B and C want the profit to be distributed in the ratio of capital contribution but A does not agree to it. The partnership deed also does not exist. In such a situation, profit can be shared:

equally among all partners O Capital contribution ratio O equally among working partners only O as per court order 31) Consider the following data pertaining to a company for the month of March 2010: Particulars Rs. Opening stock 22,000 Closing stock 25,000 Purchases less returns 1,10,000 Gross profit margin (on sales) 20% The sales of the company during the month are: O Rs.1,41,250 O Rs.1,35,600

Rs.1,33,750 O Rs.1,28,400




32) The cash book showed an overdraft of Rs.1,500, but the pass book made up to the same date showed that cheques of Rs.100, Rs.50 and Rs.125 respectively had not been presented for payments; and the cheque of Rs.400 paid into account had not been cleared. The balance as per the pass book will be O Overdraft of Rs. 1,100. O Overdraft of Rs. 2,175.

Overdraft of Rs. 1,625. O Overdraft of Rs. 1,375. 33) A bank reconciliation sometimes points to the need for adjusting entries. In general, the source of the adjustments is: O The reconciliation of the ending balance as per the bank statement to the adjusted cash

balance. The reconciliation of the cash balance as per the company records to the adjusted cash

balance. O (a) and (b) O None of the above 34) Excess of purchase consideration over net assets is transferred to:

Goodwill O Capital reserve O General reserve O Profit and Loss account 35) Omega Ltd., a listed company, acquired assets worth Rs. 7,50,000 from Alpha Ltd and issues shares of Rs. 100 each at premium of 25%. The number of shares to be issued by Omega Ltd. to settle the purchase consideration will be:

6,000 O 7,500 O 9,375 O 5,625 36) A truck costing Rs.1,00,000 and standing in the books at Rs.60,000, was sold for Rs.70,000. The amount of Rs.10,000 is: O Revenue loss O Capital loss O Revenue profit Capital profit 37) X sent out certain goods to Y of Delhi. 1/10 of the goods were lost in transit. Invoice value of goods lost was Rs.12,500. Invoice value of goods sent out on consignment will be: O Rs.120,000 Rs.125,000 O Rs.140,000 O Rs.100,000




38) F Ltd. purchased Machinery from G Company for a book value of Rs.4,00,000. The consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%. The debenture account was credited with: O Rs.4,00,000 Rs.5,00,000 O Rs.3,20,000 O Rs.4,80,000 39) P Ltd. issued 5,000, 12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year is O Rs. 80,000 O Rs. 40,000

Rs. 10,000 O Rs. 8,000 40) A and B are partners sharing profits in the ratio 2:3. They admit C as a partner for 1/5th share. The sacrificing ratio of A and B will be: O 1 : 5 O 1.6 : 2.4 O 2 : 5 2 : 3 41) T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 1, 2007 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2009, the amount shown as “interest accrued but not due” in the Balance Sheet will be:

Rs. 70,000 shown along with debentures O Rs. 2,10,000 under current liabilities O Rs. 1,40,000 shown along with debentures O Rs. 2,80,000 under current liabilities 42) A and B enter into a joint venture sharing profit and losses in the ratio 2:1. A purchased goods costing Rs. 2,00,000. B sold the goods for Rs.2,50,000. A is entitled to get 1% commission on purchase and B is entitled to get 5% commission on sales. The profit on venture will be:

Rs. 35,500 O Rs.36,000 O Rs. 34,000 O Rs.38,000 43) Ram purchased a machine on 01.01.2009 for Rs. 1,20,000. Installation expenses were Rs. 10,000. Residual value after 5 years is Rs. 5,000. On 01.07.2009, expenses for repairs were incurred to the extent of Rs. 2,000. Depreciation is provided under straight line method. Annual depreciation is: O 13,000 O 17,000 O 21,000 25,000 44) X draws a bill on Y for Rs 30,000. X wants to endorse it to W in settlement of Rs 35,000 at 2% discount with the help of Y’s acceptance and balance in cash. How much cash X will pay to W?

4,300 O 4,000




O 4,100 O 5,000 45) The excess of closing capital over opening capital represents: O profit only if there is introduction fresh capital O loss if there is drawing

profit if there is no introduction fresh capital O loss if there is no drawing 46) A company sends its cars to dealers ‘on sale or return’ basis. All such transactions are however treated like actual sales and are passed through the sales day book. Just before the end of the financial year, two cars which had cost Rs.55,000 each have been sent on ‘sale or return’ and have been debited to customers at Rs.75,000 each, cost of goods lying with the customers will be:

Rs.1,10,000. O Rs. 55,000. O Rs. 75,000 O None of the above 47) Goods costing Rs. 2,00,000 sent out to consignee at Cost + 20%. Invoice value of the goods will be: O Rs.250,000 Rs.2,40,000 O Rs.300,000 O None of the above 48) R, J and D are partners sharing profits in the ratio 7:5:4. D died on 30th June 2009 and profits for the accounting year 2008-2009 were Rs. 24,000. How much share in profits for the period 1st April 2009 to 30th June 2009 will be credited to D’s Account. O Rs. 6,000 Rs. 1,500 O Nil. O Rs. 2,000 49) X of Kolkata send certain goods at cost + 25%. Invoice value of goods sent was Rs. 2,00,000. 4/5th of the goods were sold by consignee at Rs.1,76,000. Commission 2% upto invoice value and 10% of any surplus above invoice value is payable. The amount of commission will be:

Rs.4,800 O Rs.5,200 O Rs.3,200 O Rs.1,600 50) The sub-field of accounting is: O Book-keeping O Financial accounting O Management accounting All of the above 51) When a stock is valued at cost in one accounting period and at a lower of cost or net realizable value in another accounting period, this conflicts with the principle of: O Money measurement Consistency O Conservatism O Historical cost




52) As per the Accounting Equation Approach, “outstanding salary account” is classified as: O Assets account Liabilities account O Nominal account O Personal account 53) The maturity date of a bill amounting Rs. 1,000 drawn on 7 January 2009 for a period of 4 months is: O 7 May 2009 O 7 June 2009

10 May 2009 O 10 June 2009 54) The profit/loss on sale of goods sent on consignment belongs to the:

Consignor O Consignee O Buyer O Agent 55) When debentures are to be redeemed at the end of specific period, ___________ is preferred for calculating the amount of loss on debentures.

Fixed installment method O Fluctuating installment method O Both (a) and (b) O None of the above. 56) A Joint venture account reflects: O capital contributed by each co-venturers O expenditure incurred

profit or loss O cash and bank balances 57) On purchase of old machinery, expenditure of Rs. 1,000 was incurred for its repair. The repair expenses of Rs. 1,000 will be debited to: O Repair account Machinery account O Profit/ loss account O Supplier account 58) Under the Reserve Bank of India regulations, __________ cannot be made payable to the bearer.

Promissory note O Bill of exchange O Cheque O None of the above. 59) Depending on the method used for depreciation calculation,

there is a difference in the amount for annual depreciation charged. O there is difference in the total amount of depreciation charged over the entire life of an

asset. O both (a) and (b)




O None of above 60) The books in which transactions or events are first recorded are called: O Principal books Subsidiary books O Ledger O Trial Balance




Section B – Mercantile Law 1) An instrument where the last endorsement is in blank is: O Order instrument O Inland instrument O Foreign instrument Bearer instrument 2) Which of the following agreements are void? O Agreements made under a mutual mistake of fact. O Agreements the consideration of which is unlawful. O Agreements made without consideration.

All of the above 3) As per section 29 of the Indian Partnership Act, 1932 a partner may transfer his interest in the firm _______ . O By sale O By mortgage. O By charge All of the above 4) A finder of goods is entitled to sell the goods only when the: O Lawful charges of the finder, in respect of goods found amounts to 2/3rd of its value. O Owner cannot be found by reasonable diligence. O Owner refuses to pay the lawful charges of the finder.

All of the above 5) One of the essential elements of partnership is agreement _________ . O which is enforceable O which is legal

between two or more persons O the object of which is not prohibited by law 6) A del-credere agent is: O A person who undertakes to act as a mediator for a contract.




A person who undertakes to be liable to the principal for failure of the third party to perform a contract.

O A person who undertakes to act as a guarantor to a signatory of a contract. O A person who is liable to the principal if the third party refuses to carry out the contract. 7) P consigned a quantity of butter through a railway company. Because of a strike, some delay took place in transit and the railway company sold the butter. This is an agency created by:

Necessity O Holding out O Estoppel O Ratification 8) In case of breach of warranty: O The contract is void.

The aggrieved party can claim damages. O The aggrieved party can treat the contract as repudiated. O The contract is voidable at the option of the aggrieved party. 9) Relation of partners to one another is governed by the following sections of The Indian Partnership Act, 1932. O 1-8 9-17 O 18-27 O 28-36 10) Dissolution by agreement is: O Dissolution by the adjudication of all the partners or of all the partners but one as

insolvent. Dissolution as a result of any agreement between all the partners.

O Dissolution by the business of the firm becoming unlawful. O All of the above. 11) A wager is I. a contingent contract. II. void by law. III. that which includes accidental loss. IV. payment of money for work O Only I Only II O I , II and III O Only IV 12) An offer comes to an end when: O It is not accepted within the prescribed time.




O A counter offer is made. O It is not accepted according to the prescribed mode.

All of the above 13) The phrase ‘ex nudo pacto non oritur actio’ means : O The acts of an agent, subject to certain conditions, are acts of the principal.

An agreement made without consideration is void. O Ignorance of law is no excuse. O No action arises from a base cause. 14) In case of a sale, the risk of loss resulting from the insolvency of the buyer is borne by______ .

The seller O The buyer O Both of the above O General Insurance Company of India 15) Registration of a partnership firm is_______ . O Compulsory from the beginning. O Not compulsory till first five years of beginning of the partnership.

Not compulsory at all. O Compulsory only if the registrar of firms gives an order in this regard. 16) Compulsory dissolution includes: O Dissolution by the adjudication of all the partners or of all the partners but one as

insolvent. O Dissolution by the business of the firm becoming unlawful.

Both of above O None of the above 17) The right of a minor when admitted to the benefits of the partnership includes: O Right to share of the property and profits of the firm as may be agreed upon. O Right to have access to and inspect and copy any of the account of the firm. O Right to cast his vote on the question of appointment of managing partner.

(a) and (b) but not (c) 18) ‘Buyer’ means a person who__________ . O Buys goods O Agrees to buy goods O Has bought goods




Buys or agrees to buy goods 19) Agreement to share profits _________ O Implies an agreement to share losses.

Does not necessarily mean an agreement to share losses. O Must be coupled with an agreement to share losses. O Is same as agreement to share losses. 20) Actual sale of future goods is __________ . O Impossible

Possible through an agreement to sale O Illegal O A myth 21) Every __________ forming the consideration for each other is an agreement. O proposal O offer

promise O acceptance 22) Which of the following is correct? O The liability of partners of a firm is unlimited. O Generally the liability of a member of a company is limited but it can be unlimited.

Both (a) and (b). O The liability of partner of a firm is same as any member of a company. 23) The heir of a deceased partner: O Has a right to become partner in the firm of the deceased partner. O Does not have a right to become partner in the firm of the deceased partner. O Can become a partner in the firm of a deceased partner only if the surviving partners

give their consent in this regard. Both (b) and (c)

24) In case of agreement to sale, if the seller becomes insolvent while the goods are in his possession, the buyer’s remedy is: O to claim the goods from the official receiver or assignee.

is to claim dividend from the estate of the seller for the price paid. O is not available O is to file a suit for damages 25) ‘X’ promises to pay ‘Y’ a sum of money if a certain ship does not return within a year. The contract may be enforced if :




O the ship does not return within the year O the ship is burnt within the year

either of the above O none of the above. 26) The original contract needs to be performed, if the parties to the contract agree for: O Novation O Rescission O Alteration None of the above 27) A sold a piece of land to B. At the time of sale, both the parties believed in good faith that the area was 200 sq. yards. It, however turned out to be only 175 sq. yards. The contract of sale is: O Valid Void O Illegal O Invalid 28) Which of the following is not an essential feature of a wagering agreement? O Uncertain agreement

Parties should have control over the event O Promise to pay money or money’s worth O Each party must stand to win or lose 29) Which of the following is an exception to the rule that an agreement without consideration is void? O Promise to pay a time barred debt O Love & affection O Agency

All of the above 30) Chandu orally offered to pay Ashok, an auto mechanic, Rs. 100 for testing a used car which Chandu was about to purchase from Dharam. Ashok agreed and tested the car. Chandu paid Ashok Rs. 100 in cash for his services. The agreement between Chandu & Ashok is: O Implied, executed and valid

Express, executed and valid O Implied, executory and valid O Express, executed and voidable 31) Which of the following relationships does not raise the presumption of undue influence? O Doctor & patient O Debtor & creditor O Landlord and tenant Both (b) and (c) 32) In a contract induced by fraud, the defrauded party




O cannot rescind the contract. O cannot rescind the contract but can sue for damages. O cannot sue for damages.

can insist that he shall be put in a position in which he would have been if the representation made had been true.

33) The court may grant rescission where:

the contract is voidable by the plaintiff. O the plaintiff has expressly or impliedly ratified the contract. O owing to change in circumstances (not being due to any act of the defendant himself),

the parties cannot restore to their original positions. O third parties have, during the subsistence of the contract, acquired rights in good faith

and for value. 34) Identify the correct statement from the following: O A minor may appoint an agent through his guardian. O An agency without consideration is invalid. O A minor appointed as an agent is capable of creating a valid contract between the

principal and a third party. Both (a) and (c)

35) Which of the following is/are true? O Consideration must be real. O Consideration can be inadequate. O Consideration must be adequate

Both (a) and (b) 36) By which of the following cases a contract stands discharged by operation of law? O By express consent O By novation of terms of contract

By unauthorized alteration of terms of contract O By renunciation of obligations 37) The appropriation must be made by _________. O The seller with the assent of the buyer. O The buyer with the assent of the seller. O The buyer or the seller with or without the assent of the other.

Both (a) and (b) 38) When a party repudiates his promise or obligation under the contract before the time for performance arrives, it is called:




O Waiver O Rescission O Actual breach of contract

Anticipatory breach of contract 39) A had offered B, a price of Rs.10,00,000/- for B’s flat. But B was not ready to sell the flat at all. A says to B that “I shall kill you if you don’t agree to sell me your house for Rs.10, 00,000/-”. B thereafter did all that was the desire of A in order to save his life. What is immediate answer? O A can enforce the contract. O B can enforce the contract.

A has applied coercion. O The contract is unenforceable 40) Partner by holding out is also known as _________. O Active Partner O Dormant Partner

Partner by estoppel O Partner by stoppage




Session – II

Answer all questions.

(Each question carries 1 mark for correct answer and a negative 1/4 mark for incorrect answer)

(Time : 2 Hrs.)

(Full Marks: 100)




Section C – Economics

1) ___________ stands for an economic order in which the four factors of production are privately owned and managed and in which production takes place for private profit.

Capitalist Economy O Socialist Economy O Normative Science O None of these 2) The term “inverse demand curve” refers to: O a demand curve that slopes upward.

expressing the demand curve in terms of price as a function of quantity. O the demand for “inverses.” O the difference between quantity demanded and supplied at each price 3) If the demand curve for a good is horizontal and the price is positive, then a leftward shift of the supply curve results in: O price of zero. O an increase in price. O a decrease in price. no change in price 4) What is the reaction of suppliers to an increase in the incomes of consumers? O Suppliers do not react, since income shifts the demand curve, not the supply curve. O The supply curve shifts to the right. O The supply curve shifts to the left.

Quantity supplied increases. 5) Suppose over a certain period of time the technology for producing compact disk players has improved, and over the same period of time the economy has moved into a recession, causing the incomes of consumers to decrease. Which of the following will happen to the equilibrium price and equilibrium quantity for CD players? (Assume CD players are normal goods.) O Price will increase; quantity cannot be determined.

Price will decrease; quantity cannot be determined. O Quantity will increase; price cannot be determined. O Quantity will decrease; price cannot be determined. 6) Which of the following best describes a perfectly inelastic demand function?

The quantity demanded is completely insensitive to changes in price. O Price is completely insensitive to changes in quantity demanded. O When price changes by a certain percentage, quantity demanded changes by the same

percentage. O The demand function is horizontal at the given price.




7) In the long run, the price elasticity of demand is __________ than in the short run because _________. O less; consumers have more time in which to make adjustments to price changes. O less; the percentage change is measured over a larger amount of time.

greater; consumers have more time in which to make adjustments to price changes. O greater; firms have more time to shift the burden of the tax forward to consumers. 8) Tea and Coffee have: O positive income elasticities of demand with respect to each other. O negative income elasticities of demand with respect to each other.

a positive cross-price elasticity of demand. O a negative cross-price elasticity of demand 9) Which of the following is true with respect to the relationship between the marginal cost function and the average cost functions? O If MC is greater than ATC, then ATC is falling. O The ATC curve intersects the MC curve at minimum MC.

The MC curve intersects the ATC curve at minimum ATC. O If MC is less than ATC, then ATC is increasing 10) The negatively-sloped part of the long-run average total cost curve is due to which of the following? O Diseconomies of scale.

Economies of scale. O The difficulties encountered in coordinating the many activities of a large firm. O Diminishing returns. 11) The condition for the long run equilibrium of the competitive firm is that:

LMC = LAC = P O LMC = LAC & LMC> P O P> LAC < LMC O None of the above 12) Price Discrimination is possible only under the following conditions:

Monopoly in some form is necessary. O The price elasticity should be same in different markets. O It should be possible for buyers of low priced market to resell the product to the buyers

of high priced market. O None of the above. 13) _________ is the money value of all final goods and services produced in the domestic territory of a country during an accounting year. O Gross National Product Gross Domestic Product




O National Income O None of the above 14) ________ refers to that portion of total Deposits of a commercial bank, which it has to keep with the RBI in the form of Cash reserves. O Statutory Liquidity Ratio Cash Reserve Ratio O Margin Requirement O None of the above 15) In Macro Economics, we study the economic behaviour of: O individual O multiple aggregates

large aggregates O national income 16) Difference between the value of goods that a nation exports and the value of goods that it imports per annum is called the: O Balance of Payment O Trade Balance

Balance of Trade O Payment Balance 17) IMF commenced its operation in: O 1946 1947 O 1948 O 1949 18) An International Reserve Asset created by the IMF in 1969 to supplement the existing official Reserves of the member countries is: O Special Reserve Asset

Special Drawing Rights O Special Official Reserve O Special International Reserve 19) Which of the following measures have been taken to pursue the objective of globalization? O Convertibility of Rupee O Import Liberalisation O Opening the economy to foreign capital

All of the above 20) Export of primary goods or raw materials of agricultural origin and import of manufactured industrial goods is an indication of: O developed economy developing economy O underdeveloped economy O none of the above 21) Which of the following statement is incorrect?




O The WTO is a chartered trade organisation. O The WTO has a legal status and enjoys privileges/immunities on the same footing as the

IMF and the World Bank. India is not one of the founder members of the WTO.

O The WTO is a successor of GAAT. 22) The _________ is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific.

Asian Development Bank O Asia Pacific Development Bank O Asian Industrial Bank O EXIM Bank 23) Exports and Imports come under the purview of: O Ministry of Finance Ministry of Commerce O Ministry of External affairs O Ministry of Home 24) The balance of invisible are included in:

Balance of payment O Balance of trade O Both of the above O None of the above 25) The opportunity cost is: O Price in different market for a same product. O Cost of increase in consumption due to increase in income. O Cost which cannot be recovered.

Cost of sacrifice of current consumption. 26) Economics is: O A positive science O Neither a positive nor normative science O A science but no art

A science or an art depending on who uses economics and for what purpose. 27) If the supply curve of a product changes so that sellers are now willing to sell 2 additional units at any given price, the supply curve will: O shift leftward by 2 units.

shift rightward by 2 units. O shift vertically up by 2 units. O shift vertically down by 2 units.




28) A was selling his house. The asking price was Rs. 22,00,000, and A decided he would take no less than Rs. 20,00,000. After some negotiation, B purchased the house for Rs. 20,50,000. B’s consumer surplus is: O Rs. 50,000. O Rs. 1,50,000. O Rs. 2,00,000.

not able to be calculated from the information given. 29) Assume that both the consumers’ incomes and the number of sellers in the market for good A decreases. Based upon this information we can conclude, with certainty, that equilibrium O price will increase. O price will decrease. O quantity will increase. quantity will decrease. 30) If a firm has a fixed amount of factory or office space, which of the following will happen as output expands?

Marginal cost increases. O The opportunity cost of an additional unit of output decreases. O The firm will be willing to accept a lower price for an additional unit of output. O Worker productivity usually increases as the firm hires more labor. 31) Which one of the following is not an exception to the law of demand? O Conspicuous goods O Giffen goods O Necessities Luxury goods 32) A higher indifference curve represents:

a higher level of satisfaction. O a lower level of satisfaction. O same level of satisfaction. O marginal level of satisfaction. 33) One of the main kinds of internal economies and diseconomies of scale is: O Development of skilled labour

Managerial economies and diseconomies O Growth of ancillary industries O Cheaper raw materials 34) Point elasticity is useful for which of the following situations? O The bookstore is considering doubling the price of notebooks. O A restaurant is considering lowering the price of its most expensive dishes by 50

percent. An auto producer is interested in determining the response of consumers to the price of

cars being lowered by Rs.1,000. O An insurance company raises the health insurance premiums it charges by 30 percent




35) Assuming that the consumer is at equilibrium, what will be the marginal utility of coffee, if the marginal utility of coke is 75 and the prices of coffee and coke are Rs. 5 and Rs. 15 respectively? O 10 25 O 50 O 100 36) Which of the following is not a feature of perfect competition? O Large number of buyers and sellers O Free entry and exit of the firms O Homogeneous product

No close-substitutes available for the product 37) Under which of the cost conditions can a monopolist incur losses? O TC> TR O MC > MR

ATC> AR O All of the above 38) ________ measures the contribution of each producing enterprise in the domestic territory of the country. O Income Method O Expenditure Method

Value added method O None of the above 39) ________ explains the nature of relationship between population and the means of subsistence and how the latter limits the growth of the former through national checks.

Malthusian Theory O Theory of Optimum Population O Theory of Demographic Transition O None of the above 40) In the __________ method of measuring terms of trade, the change in the price of exports over the change in the price of imports is taken into account. O gross barter terms of trade net barter terms of trade O net index terms of trade O gross index terms of trade 41) Till date Indian Rupee has been devalued: O two times three times O four times O five times 42) Special Drawing Rights is a basket of currency and it currently consists of:

Euro, Pound Sterling, Japanese Yen and U.S Dollar O Euro, Rupee and U.S Dollar




O Euro, Japanese Yen , Singapore Dollar and U.S Dollar O None of the above

43) __________ is issued to a merchant exporter for import of inputs used in the manufacture of goods without payment of basic custom duty and special additional duty:

Duty Free Replenishment Scheme Certificate O Export Promotion Capital Goods Scheme Certificate O Export Registration Certificate O None of the above 44) Which of the following is not one of the four major functions of money? O A medium O A standard O A store General acceptability 45) _________ are those selective instruments which affect the amount of credit in specific areas or regulate the direction of credit. O Quantitative Instruments Qualitative Instruments O Bank Rate Policy O Open Market Operations 46) One of the four parameter of globalisation is: O Increase of trade barriers to permit free- flow of goods and services across national

frontiers. O Reduction of trade barriers to permit free-flow of goods across national frontiers.

Reduction of trade barriers to permit free-flow of goods and services across national frontiers.

O Reduction of trade barriers to permit free-flow of goods and services across local frontiers

47) __________ which is used for further production of goods is called capital. O Money O Wealth O Income All of the above 48) The second devaluation of Indian Rupee took place on: O June, 1967 O June, 1966

July, 1991 O July, 1995 49) __________ does not give the true picture of the financial position of the country and was given up in 1997. It is no longer shown in the budgetary statement.

Budgetary deficit O Fiscal deficit O Revenue deficit O Capital deficit




50) In stage _________ of the Demographic transition model, both death rates and birth rates are high and roughly in balance.

One O Two O Three O Four




Section D – Quantitative Aptitude 1) A total of Rs. 12,000 is invested into two rate is simple interest accounts. The annual simple interest rate on one account is 9%; on the second account, the annual simple interest rate is 6%. How much should be invested in each account so that both accounts earn the same amount of annual interest? O 4,000 & 8,000 4,800 & 7,200 O 5,600 & 6,400 O 6,400 & 5,600 2) An investor deposited an amount of money into a high-yield mutual fund that returns a 9% annual simple interest rate. A second deposit of Rs. 2,500 more than the first, was placed in a certificate of deposit that returns a 5% annual simple interest rate. The total interest earned on both investments for one year was Rs. 475. How much money was deposited in the mutual fund? O 5,000 O 1,500

2,500 O 3,500 3) An eccentric person leaves instructions in his will that a certain sum of money is to be divided between his relatives so that Patrick will receive half and Quentin will receive one fifth. The remainder is to be divided so that Rufus receives three quarters and the rest goes to Simon. If Simon eventually received Rs.324 how much did Patrick and Quentin receive? O 864 and 2160 O 2208 and 816 O 816 and 2208 2160 and 864 4) How many different 6-letter arrangements can be formed using the letters in the word ABSENT, if each letter is used only once? O 6 O 36

720 O 1440 5) A standard deck of 52 cards is shuffled. What is the probability of choosing the card 5 of diamonds? O 1/5 O 1/15 O 3/52 1/52 6) If P(E) is the probability that an event will occur, which of the following must be false? O P(E)=1 O P(E)=1/2 O P(E)=1/3 P(E)= - 1 7) Your state issues license plates consisting of letters and numbers. There are 26 letters and the letters may be repeated. There are 10 digits and the digits may be repeated. How many possible license plates can be issued with two letters followed by three numbers?




O 25,000 O 67,600 O 2,50,000 6,76,000 8) Suppose 60% of a herd of cattle is infected with a particular disease. Let Y = the number of non-diseased cattle in a sample of size 5. The distribution of Y is: O binomial with n = 5 and p = 0.6

binomial with n = 5 and p = 0.4 O binomial with n = 5 and p = 0.5 O the same as the distribution of X, the number of infected cattle. 9) A random sample (without replacement) of 2 members has to be taken from a population consisting of 20 members. The total number of possible samples in such case would be: O 10 O 20

190 O 380 10) The number of traffic accidents per week in a small city has a Poisson distribution with mean equal to 1.3. What is the probability of at least two accidents in 2 weeks? O 0.2510 O 0.3732 O 0.5184 0.7326 11) The best way to recognize whether or not a variable is growing exponentially over time is by: O plotting the variable against time and looking for a straight-line pattern. O calculating the least squares regression line of the variable against time and examining

the residuals. O plotting the logarithm of the variable against time and looking for a straight line pattern.

smoothing the time series by running medians of three or five. 12) The number of bacteria in a drop of water from a lake has a Poisson distribution with an average of 0.5 bacteria/drop. A small dish containing four drops of water from the lake is placed under a microscope. The probability of observing at most one bacteria in the sample is O 0.910 0.406 O 0.271 O 0.135 13) Which of the following is NOT applicable to a Poisson Distribution? O It is used to compute the probability of rare events. O Every event is independent of every other event.

It is parameterized by the sample size and the probability that an event will occur. O The theoretical range for the number of events that could occur is 0,1,2,3, ... 14) Some scientists believe that a new drug would benefit about half of all people with a certain blood disorder. To estimate the proportion of patients who would benefit from taking the drug, the scientists will administer it to a random sample of patients who have the blood disorder. What sample size is needed so that the 95% confidence interval will have a width of 0.06?




O 748 1,068 O 1,503 O 2,056 15) The following table represents the relative frequency of accidents per day in a city. Accidents 0 1 2 3 4or more Relative Freq. 0.55 0.20 0.10 0.15 0 Which of the following statements are true? I. The mean and modal number of accidents are equal. II. The mean and median number of accidents are equal III. The median and modal number of accidents are equal O I only O II only

III only O I, II and III 16) Find k so that x-2 is a factor of : p(x) = x3 – 2x2 + kx –3 O 1/2 O -1/2 O 2/3 3/2 17) James scored 66 and 72 marks in two class tests. What is the lowest marks he must score in his class to qualify for a bonus prize, if an average score of 75 is needed to qualify for the prize.

87 O 78 O 67 O 76 18) Find the value of x in : 5x + 6 = 13 - 9x O 1 1/2 O 1/3 O 1/4 19) Express the following in index form: Log3 x = 4.

34 = x O 43 = x O X3 = 4 O X4 = 3 20) An Ogive can be prepared in ______ different ways.

2 O 3 O 4 O 5 21) The value of (8/27)1/3 is:

2/3 O 3/2 O 2/9 O None of these 22) The equation –7x + 1 = 5–3x will be satisfied for x equal to: O 2 -1




O 1 O None of these 23) The sum of two numbers is 52 and their difference is 2. The numbers are O 17 and 15 O 12 and 10

27 and 25 O None of these 24) In what time will Rs.85,000 amount to Rs.1,57,675 at 4.5 % p.a.? O 18 yrs O 18.5 yrs

19 yrs O 20 yrs 25) The 4 arithmetic means between –2 and 23 are O 3, 13, 8, 18 O 18, 3, 8, 13

3, 8, 13, 18 O None of these 26) Significant birth defects occur at a rate of about 4 per 1000 births in human populations. After a nuclear accident, there were 10 defects observed in the next 1500 births. Find the probability of observing at least 10 defects in this sample if the rate had not changed after the accident. O 0.008 O 0.003 O 0.041 0.084 27) In a certain communications system, there is an average of 1 transmission error per 10 seconds. Let the distribution of transmission errors be Poisson. What is the probability of more than 1 error in a communication one-half minute in duration? O 0.262 O 0.738 O 0.199 0.801 28) _________ is an area diagram which emphasises the widths of rectangles between the class boundaries. O Bar Diagram Histogram O Frequency Polygon O Ogive 29) Statistics is concerned with O Qualitative information O Quantitative information O (a) or (b). Both (a) and (b) 30) For any two numbers SD is always: O Twice the range Half of the range O Square of the range O None of these




31) Bivariate Data are the data collected for: O One variables. O More than two variables.

Two variables at the same point of time. O Two variables at different points of time. 32) Karl Pearson’s coefficient is defined from:

Ungrouped data. O Grouped data O Both O None 33) What would be the index of the following using method of relatives? Commodity Base price Current price Wheat 15 20 Rice 10 12 Pulse 20 25 O 126.66 O 378.33

126.11 O 133.33 34) In _________ sampling method, sample units are selected at equal intervals. O Random O Purposive O Stratified Systematic 35) If an investment of Rs.60,000 and Rs.70,000 yields an income of Rs.5,750 Rs.6,500 respectively. An investment of Rs. 90,000 would yield income of Rs.__________. O 7,500 8,000 O 7,750 O 7,800 36) The sum of all natural numbers between 200 and 400 which are divisible by 7 is ________ O 7730 8729 O 7729 O 8730 37) Mutually inclusive classification is usually meant for______

A discrete variable O A continuous variable O An attribute O All these 38) _____ is an absolute measure of dispersion. O Range O Mean Deviation O Standard Deviation All these measures




39) For finding the degree of agreement about beauty between two Judges in a Beauty Contest, we use______ . O Scatter diagram

Coefficient of rank correlation O Coefficient of correlation O Coefficient of concurrent deviation 40) Probability density function is always_____ O Greater than 0

Greater than equal to 0 O Less than 0 O Less than equal to 0 41) On what sum will the compound interest at 5% per annum for two years compounded annually be Rs.1,640?

Rs. 16,000 O Rs. 17,000 O Rs. 18,000 O Rs. 19,000 42) Find the future value of an annuity of Rs. 500 made annually for 7 years at interest rate of 14% compounded annually. Given that (1.14)7 = 2.5023 O Rs.5635.25 Rs.5365.25 O Rs.6535.25 O Rs.6355.25 43) Find n if nP3 = 60 O 4 5 O 6 O 7 44) A man has 5 friends. In how many ways can he invite one or more of his friends to dinner? O 29 O 30

31 O 32 45) The second term of a GP is 24 and the fifth term is 81. The series is O 16, 36, 24, 54,.. O 24, 36, 53,…

16, 24, 36, 54, .. O 12, 24, 48, 96…. 46) In a group of 20 children, 8 drink tea but not coffee and 13 like tea. The number of children drinking coffee but not tea is: O 6 7 O 12 O None of these.




47) Integration of 3 – 2x – x4 will become O – x2 – x5 / 5 O 3x – x2 – x5 / 5

3x – x2 - x5 / 5 + k O None of these 48) Find the number of observations between 250 and 300 from the following data: Value : > 200 > 250 > 300 > 350 No. of observations: 56 38 15 0 O 56 23 O 15 O 8 49) If the range of x is 2, what would be the range of –3x +50 ? O 2 6 O -6 O 44 50) ________ are values which divide the total number of observations into four equal parts. O Median Quartiles O Deciles O Percentiles




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CPT Revision Sample Paper - I - Answer key

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