QUESTION SET 7 (CBSE COMMERCE NET)
QUESTION SET-7
36.The following is the demand function in the small market:
Q=50-5P
where Q denotes quantity in physical units and P denotes price of the commodity.At price rupees 5 the point price elasticity of demand would be:
A. zero
B. equal to unity
C.highly elastic
D.highly inelastic
ANSWER:-B
EXPLANATION:-As we know that Ed=-(dQ / dP ) X (P/Q )
P=5 (given)
Q=50-5*5
Q=50-25
Q=25
dQ /dP=-5 (by differentiating)
Ed=(-)(-)5*(5/25)
Ed =25/25
Ed=1
equal to unity
Q=50-5P
where Q denotes quantity in physical units and P denotes price of the commodity.At price rupees 5 the point price elasticity of demand would be:
A. zero
B. equal to unity
C.highly elastic
D.highly inelastic
ANSWER:-B
EXPLANATION:-As we know that Ed=-(dQ / dP ) X (P/Q )
P=5 (given)
Q=50-5*5
Q=50-25
Q=25
dQ /dP=-5 (by differentiating)
Ed=(-)(-)5*(5/25)
Ed =25/25
Ed=1
equal to unity
37. Which one of the following technique for appraisal of investment proposals are based on time value of money
a. accounting rate of return
b.Internal rate of return
c.profitability index
d.earning per share
codes:-
A. a and b
B. b and c
C.a and d
D.a,b and d
ANSWER:-B
EXPLANATION:- internal rate of return (IRR) and profitability index (PI) are part of discounted cash flow method which consider time value of money.
a. accounting rate of return
b.Internal rate of return
c.profitability index
d.earning per share
codes:-
A. a and b
B. b and c
C.a and d
D.a,b and d
ANSWER:-B
EXPLANATION:- internal rate of return (IRR) and profitability index (PI) are part of discounted cash flow method which consider time value of money.
38.which of the following assumptions is not included in JAMES E.WALTER valuation model.
A. all financing by retained earning only.
B. no changes in key variables such as EPS and DPS.
C.The firm has finite life.
D.all earnings are either distributed as dividends or invested internally immediately.
A. all financing by retained earning only.
B. no changes in key variables such as EPS and DPS.
C.The firm has finite life.
D.all earnings are either distributed as dividends or invested internally immediately.
ANSWER:-C
EXPLANATION:-refers financial management blog on Walter's model provided in previous blog.
EXPLANATION:-refers financial management blog on Walter's model provided in previous blog.
39.match the following
list 1 list 2
a.Contribution /EBIT j.financial leverage
b.EBIT / EBT k.super leverage
c.Contribution / EBT l. operating leverage
codes:
A.k l j
B.j k l
C.l j k
D.k j l
ANSWER:-C
EXPLANATION:-refer financial management blog of leverage topic here formulas are provided.
40.Match the following
LIST I LIST II
a. INTUC w.1920
b .AITUC x.1947
c .CITU y.1955
d .BMS z.1970
codes:-
A. w,x,y,z
B.x,w,z,y
C.x,w,y,z
D.y,w,z,x
ANSWER:-B
EXPLANATION:- INTUC (1947) Indian National Trade Union Congress , AITUC (1920) All India Trade Union Congress, CITU (1970) Center of Indian Trade Union ,BMS (1955) Bharatiya Mazdoor Sangh . All this trade unions are asked more than once in exam hence quite important to read it in detail.covered in earlier question set also.
41.Current Ratio 2.5, Liquid Ratio 1.5 and working capital rupees 60,000. What is Current Assets?
A.₹ 60,000
B.₹80,000
C.₹1,00,000
D.₹1,20,000
ANSWER:-C
EXPLANATION:- CURRENT RATIO=CURRENT ASSETS / CURRENT LIABILITIES
2.5 =CA/CL
CA=2.5 CL
WORKING CAPITAL=CURRENT ASSETS-CURRENT LIABILITIES
60,000=2.5 CL-CL
60,000=1.5 CL
40,000=CL
CA=2.5 CL
CA=2.5 X 40,000
CURRENT ASSETS=1,00,000
42.Cash Flow Management involves:
I.Lock box system
II.Marketable securities
III. playing the float
IV. concentration bank account
codes:
A.I,II,III
B.II,III,IV
C.I,III,IV
D.I,II,IV
ANSWER:-C
EXPLANATION:-lock box system-Lock box system is a bank operated mailing system where customer of a bank are directed to deposit their payment.Its a cash management system.
Playing the float-Its a cash management technique when cash balance as per company record may not always be the same as bank balance. When the company has issued many cheques which are yet to be cleared than the balance will be larger as per balance.Similarly when company has depositing many cheque which are yet to be cleared than the balance will be smaller than the ledger. Company can gain from this smaller cash balance by prolonging payment and speeding up collection process.
Concentrated bank account-This process is used for cash management in which fund is collected from several bank accounts and than deposited the fund in a single investment account.
43.which of the following is not the agency of WORLD BANK?
A.MIGA
B.ICSID
C.ADB
D.IDA
ANSWER:-C
EXPLANATION:-World bank Group consist of 5 organisation.These are - 1. IBRD (International Bank for Reconstruction and Development) ,2.IDA (International Development Association), 3.IFC (International financial Corporation) 4.MIGA (Multilateral Investment Guarantee Agency), 5.ICSID (International Center for Settlement of Industrial Dispute )
44."Make sufficient provision for future losses,but do not anticipate future profits." This statement is in accordance to the concept of:-
A. Matching
B.Objectivity
C.Conservatism
D. Materiality
ANSWER:-C
EXPLANATION;-Concept of Conservatism says that we should make anticipate all possible losses.This policy is also known as "Doctrine of Prudence"
45.Accounting information is given by company-
Total Assets Turnover 3 times
Net Profit margin 10%
Total Assets rupees 1,00,000
The net profit is?
A.10,000
B.15,000
C.25,000,
D.30,000
ANSWER:-D
EXPLANATION:- TOTAL ASSETS TURNOVER=NET SALES / TOTAL ASSETS
3=NET SALES /1,00,000
NET SALES=3,00,000
NET PROFIT =10% (GIVEN)
NET PROFIT=3,00,000 X 10%
NET PROFIT=30,000 Rupees
"
list 1 list 2
a.Contribution /EBIT j.financial leverage
b.EBIT / EBT k.super leverage
c.Contribution / EBT l. operating leverage
codes:
A.k l j
B.j k l
C.l j k
D.k j l
ANSWER:-C
EXPLANATION:-refer financial management blog of leverage topic here formulas are provided.
40.Match the following
LIST I LIST II
a. INTUC w.1920
b .AITUC x.1947
c .CITU y.1955
d .BMS z.1970
codes:-
A. w,x,y,z
B.x,w,z,y
C.x,w,y,z
D.y,w,z,x
ANSWER:-B
EXPLANATION:- INTUC (1947) Indian National Trade Union Congress , AITUC (1920) All India Trade Union Congress, CITU (1970) Center of Indian Trade Union ,BMS (1955) Bharatiya Mazdoor Sangh . All this trade unions are asked more than once in exam hence quite important to read it in detail.covered in earlier question set also.
41.Current Ratio 2.5, Liquid Ratio 1.5 and working capital rupees 60,000. What is Current Assets?
A.₹ 60,000
B.₹80,000
C.₹1,00,000
D.₹1,20,000
ANSWER:-C
EXPLANATION:- CURRENT RATIO=CURRENT ASSETS / CURRENT LIABILITIES
2.5 =CA/CL
CA=2.5 CL
WORKING CAPITAL=CURRENT ASSETS-CURRENT LIABILITIES
60,000=2.5 CL-CL
60,000=1.5 CL
40,000=CL
CA=2.5 CL
CA=2.5 X 40,000
CURRENT ASSETS=1,00,000
42.Cash Flow Management involves:
I.Lock box system
II.Marketable securities
III. playing the float
IV. concentration bank account
codes:
A.I,II,III
B.II,III,IV
C.I,III,IV
D.I,II,IV
ANSWER:-C
EXPLANATION:-lock box system-Lock box system is a bank operated mailing system where customer of a bank are directed to deposit their payment.Its a cash management system.
Playing the float-Its a cash management technique when cash balance as per company record may not always be the same as bank balance. When the company has issued many cheques which are yet to be cleared than the balance will be larger as per balance.Similarly when company has depositing many cheque which are yet to be cleared than the balance will be smaller than the ledger. Company can gain from this smaller cash balance by prolonging payment and speeding up collection process.
Concentrated bank account-This process is used for cash management in which fund is collected from several bank accounts and than deposited the fund in a single investment account.
43.which of the following is not the agency of WORLD BANK?
A.MIGA
B.ICSID
C.ADB
D.IDA
ANSWER:-C
EXPLANATION:-World bank Group consist of 5 organisation.These are - 1. IBRD (International Bank for Reconstruction and Development) ,2.IDA (International Development Association), 3.IFC (International financial Corporation) 4.MIGA (Multilateral Investment Guarantee Agency), 5.ICSID (International Center for Settlement of Industrial Dispute )
44."Make sufficient provision for future losses,but do not anticipate future profits." This statement is in accordance to the concept of:-
A. Matching
B.Objectivity
C.Conservatism
D. Materiality
ANSWER:-C
EXPLANATION;-Concept of Conservatism says that we should make anticipate all possible losses.This policy is also known as "Doctrine of Prudence"
45.Accounting information is given by company-
Total Assets Turnover 3 times
Net Profit margin 10%
Total Assets rupees 1,00,000
The net profit is?
A.10,000
B.15,000
C.25,000,
D.30,000
ANSWER:-D
EXPLANATION:- TOTAL ASSETS TURNOVER=NET SALES / TOTAL ASSETS
3=NET SALES /1,00,000
NET SALES=3,00,000
NET PROFIT =10% (GIVEN)
NET PROFIT=3,00,000 X 10%
NET PROFIT=30,000 Rupees
"
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