SSC CGL2 Dec 2016

SSC CGL 2016 Tier II — General Studies (Finance and Economics) — 2 December 2016

89 of 100 questions · 1 per correct answer · 120 min

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General Studies (Finance and Economics)

01Creating provision for bad & doubtful debts is an application of which of the following principles /concepts :

Realisation PrincipleFull DisclosureConservatismMoney Measurement

02A company has a machinery costing Rs. 5,00,000. Depreciation is charged as follows : Yr 2010 Rs. 50,000 Yr 2011 Rs. 30,000 Yr 2012, 2013 Rs. 50,000 Which principle is violated ?

MaterialitySubstance over formConsistency PrincipleTimeliness

03If a liability is decreased, then for the asset to be constant, there will be a corresponding :

Increase in CapitalDecrease in CapitalDecrease in ProfitDecrease in Asset

04Withdrawal of goods from stock by the owner of the business for personal use should be recorded by

Debiting Stock Account and Crediting Capital AccountDebiting Capital Account and Crediting Drawing AccountDebiting Drawing Account and Crediting Stock AccountDebiting Stock Account and Crediting Drawing Account

05A second hand car was purchased for Rs. 2,00,000 and depreciation is charged @ 10 % on written down value method and car is sold after 2 years for Rs. 1,40,000. Find the profit or loss on the sale of the car.

Loss of Rs. 20,000Loss of Rs. 22,000Loss of Rs. 11,000Profit of Rs. 11,000

06Which of the following is true ?

Payment of liability Causes an increase in Owners equityThe Collection of an Account Receivable will cause total assets to increaseThe accounting equation is Assets + Liability = Owner's equityPurchase of an asset, either in cash or Credit, does not change the owners equity

07Which of the following is true when debtor pays his dues ?

Asset side of The Balance sheet will decreaseAsset side of The Balance sheet will increaseThe liability side of The Balance sheet will increaseThere is no change in total asset or total liabilities

08Only significant events which affect the business must be recorded as per the principle of

Separate EntityAccrualMaterialityGoing Concern

09Treatment of Goods given as free samples are

Added to Carriage InwardAdded to Bad DebtsDeducted from Advertisement ExpensesDeducted from Purchases

10Shyam bought goods having the list price of Rs. 50,000 from Ram less 20% trade discount & 2% cash discount and paid 40% by cheque. What is the amount paid by Shyam ?

Rs. 16,000Rs. 15,680Rs. 19,600Rs. 15,600

11Which of the following is true ?

Bank Account is a Personal Account.Stock of Stationery Account is a Nominal Account.Return Inward Account is a personal Account.Outstanding Rent Account is a Nominal Account.

12Periodic total of Purchase day book is posted to

Creditor AccountDebtor AccountPurchase AccountPurchase Memorandum Account

13Which of the following statements is true ?

Bank charges increase debit balance shown as per Bank column of the cash BookBank charges increase debit balance as per Bank pass BookA cash sale of a nontrading asset is recorded in the Journal properCash discount allowed by the business will appear on the debit side of the debtors account

14After the preparation of Ledgers, the next step is the preparation of

Trading AccountTrial BalanceProfit and Loss AccountBalance sheet

15Total of Sale Book was not posted to the ledger. What is the kind of error ?

Error of omissionError of commissionError of principleCompensating error

18Which of the following is true relating to a trial balance?

If a trial balance tallies, no transaction is omitted.A trial balance does not tally if a transaction is omitted.It is mandatorily prepared to ensure correctness of a Balance sheet.A trial balance is a summary of the General Ledger Balances outstanding on a particular date.

19Which of the following errors will be revealed by the Trial Balance?

Compensating errorErrors of omissionErrors of principleWrong balancing of accounts

20Prepaid expenses are valued in Balance sheet at

Replacement CostCurrent CostCost to acquire less accumulated amortizationCost less expired portion

21Which of the following equations is correct ?

Gross Profit + Sales + Direct expenses + Purchases + Closing balance = Opening StockGross Profit + Sales + Direct Expenses + Purchases Closing stock= Opening StockGross Profit + Opening stock + Direct Expenses + Purchases Closing stock= SalesGross Profit Opening stock + Direct Expenses + Purchases + Closing stock = Sales

22At the time of finalization of accounts, bad debt recovered account will be transferred to

Debtors AccountProfit and Loss AccountProfit and Loss Adjustment AccountProfit and Loss Appropriation Account

23Contingent Liabilities are shown :

Credit side of balance sheetProfit & Loss Appropriation AccountBoth Profit & Loss Account & Balance sheetNone of the options

24If outside liability and owners equity are added we get :

Total LiabilitiesNet WorthShare Holders FundGross Block

25XYZ send goods worth Rs 1,00,000 to Y on consignment basis at 20% above the cost price. The goods were sold by the consignee on a mark up of 15% on invoice price. Find the total mark up % over the cost of the goods.

30%38%35%25%

30Underestimation of useful life of a depreciable asset will lead to

overstatement of profitexcess charging of depreciation every yearovervaluation of asset in Balance sheetshort charging of depreciation every year

31A firm has a policy of charging depreciation @ 10% on plant and machinery under Written Down Value (WDV) method. If the book value of the same was Rs 81,000 on 31.3.16. Find the original cost, if the same was purchased on 01.04.2014.

Rs 1,10,000Rs 1,00,000Rs 81,000Rs.90,000

32What is included in an Inventory?

Raw MaterialStores & SparesLoose toolsAll of the above

33Opening stock Rs 15,000, Closing stock Rs 6,000 and total purchase during the year was Rs 30,000. It was found that opening stock inadvertently included postage stamp of Rs 1,500. Find the cost of the good sold.

Rs 40,000Rs 39,000Rs 37,500Rs 36,000

34Average inventory is Rs 12,000 and closing inventory is Rs 3,000 more than opening inventory. The value of closing inventory?

Rs 12,000Rs 24,000Rs 10,500Rs 13,500

36A firm commenced business on 1st January 2015, purchased goods costing Rs 90,000. A sum of Rs 6,000 was spent on freight inwards. At the end of the year, the cost of goods still unsold was Rs 12,000. Sales during the year Rs. 1,20,000. What is the Gross Profit earned by the firm?

Rs 36,000Rs 30,000Rs 42,000Rs 38,000

37The receipts and payments account for an nonprofit organization is a

Nominal AccountReal AccountIncome Statement AccountFinancial Account

38What amount should be credited to the Income & expenditure Account as Subscriptions as given in the following information: In 2015, Subscriptions received Rs. 21,000 including Rs. 400 for 2014 and Rs. 500 for 2016. On 31 December 2015, Subscriptions due but not received Rs. 700.

Rs. 22,600Rs. 21,700Rs. 21,300Rs. 20,800

39Early payment of Bill of exchange is called

RetirementRenewalDiscountEndorsement

40Drawee for bills of exchange is the person who

draws a bill of exchangepresents the bill of exchange for paymentaccepts the Bill of exchangeholds the bill of exchange till maturity

41All reports are submitted by the Comptroller and Auditor General of India to the

Prime MinisterPresidentPresident and Governors of State.Finance Minister

42Which Committee of Parliament in India examines the Audit Report of Comptroller and Auditor General ?

Estimates CommitteeCommittee on Public AuditAssurance CommitteePublic Accounts Committee

43Which of the following duties is not performed by the Comptroller and Auditor General of India ?

To audit and report on all expenditure from the consolidated fund of India.To audit and report on all expenditure from the Contingency Funds & Public AccountsTo audit and report on all trading manufacturing and profit & loss accountsTo control the receipt and issue of public Money

44The Finance Commission recommends

Distribution of financial resources between the various ministriesDistribution of financial resources between the Union & the StateDistribution of financial resources from the states to various Panchayati RajDistribution of financial resources from the Union to various plan heads

45Under which Article of the Constitution Finance Commission is constituted?

Article 315Article 280Article 148Article 76

46Which is the constitutional authority in India to decide the share of the states from the proceeds of taxes levied and collected by the Union?

Planning CommissionFinance CommissionFinance Minister of Govt. of India.Union Cabinet

47When a rational person makes a choice, the concept of opportunity cost enters, thus opportunity cost is defined as

the benefit gained in terms of the next best alternative foregone when a choice is madethe benefit lost in terms of the next best alternative foregone when a choice is madethe benefit lost in terms of the next best alternative gained when a choice is madethe benefit lost in terms of the next best alternative foregone when there is no choice at all

48The three main features of the capitalist economies are :

Prices, Patents and Property rightsPrices, Profit and Property rightsPrices, Profits and PatentsPatents, Profit and Property rights

49In a centrally planned economy the factor of production

Are owned by the govt and the welfare of the people are left to the market process.Are owned by the govt and the welfare of the people is the prime concern.Are owned by the people and the market process determines the welfare of the people.Are determined by the market process and the welfare of the people are determined by the Govt.

50There is no time lag in the production and consumption of

Capital goodsServicesSingle use goodsDurable goods

51Which of the following is a reason for the negative slope of the Production Possibility Curve.

The inverse relationship between the use of technology and the use of natural resourcesScarcity at any point of time due to limited amount of productive resourcesResource specialisationIncreasing opportunity costs

52The law of demand indicates :

The relationship between the increase of a consumer and the quantity demandedThe relationship between the price of a commodity and the quantity demandedThe relationship between price of one commodity and the price of substituteThe relationship between prices of two commodities

53If the demand for a good is priceelastic, a fall in its price will lead to

A rise in total demand for the goodA fall in its salesA fall in total demandNo change in total demand

54Which of the following is not a characteristic of Indifference Curves ?

They are convex to the originThey slope downwards from left to rightThey can never intersect each otherThey can touch either axis

55When marginal utility declines and is positive

Total utility increases at a decreasing rateTotal Utility increases at an increasing rateTotal utility is constantTotal utility is decreasing

57A good is termed as an inferior good if

Its consumption increases with a rise in incomeIts consumption reduces with a rise in IncomeIts consumption reduces with a rise in priceIts consumption remains the same with a rise in price

58A consumer increases its demand for a commodity from 40 to 50 units when its price falls by 10%. The price elasticity of demand is

0.51.52.53.5

59Contraction of demand is the result of

Decrease in the number of consumers.Increase in the price of the good consumed.Increase in the price of other related goodsDecrease in the income of the purchasers.

60Chicken and fish are substitutes. If the price of chicken increases, the demand for fish will

Increase or decrease but the demand curve for chicken will not changeIncrease and the demand curve for fish will shift rightwardsNot change but there will be movement along the demand curve for fish.Decrease and the demand curve for fish will shift leftwards

61The opportunity cost of a factor of production is

what has to be paid to retain it in its present use.what it is earning its present uses.what it can earn in total other uses.what it can earn in the long period.

62Which one of the following is not a characteristic of labour as a factor of production ?

Labour is inseparable from the labourerLabour has high bargaining powerLabour is perishableLabour differs from labourer to labourer

63Short Run Total Cost Curve can never be less than Long Run Total Cost Curve.

Always TrueOften TrueSometimes TrueNever True

64Marginal cost is defined as :

the change in total cost due to one unit change in output.total cost divided by total output.change in output due to one unit change in input.total product divided by quantity of inputs.

65Production function explains the relationship between

initial inputs and ultimate outputinputs and ultimate consumptionoutput and consumptionoutput and exports

66In the initial stages of production, generally the increasing returns to scale operate because

Input is increasedCapital equipment is newEconomies of scale operateAbsence of bottlenecks in production

67If we have constant returns to scale and we increase the quantity of labour used per unit of time by 10% but keep the amount of capital constant, output will

Increase by 10%Decrease by 10%Increase by more than 10%Increase by less than 10%

68In the context of oligopoly, the kinked demand hypothesis is designed to explain

Price and output determinationPrice RigidityPrice leadershipCollusion among rivals

69Price Discrimination exists when

The same product is sold at the same price to different buyersThe same product is sold at different prices to different buyersDifferent product is sold at different prices to different buyersNone of the options

70Which of the following statements is incorrect ?

Under monopoly, there is no difference between a firm and an industryA monopolist may restrict output and raise pricesCommodities offered for sales under perfect competition will be heterogeneousProduct differentiation is peculiar to monopolistic competition

71Which of the following statement is true for a perfectly competitive firm

In the long run all firms earn super normal profitsIn the long run all firms are making lossesIn the long run all firms in the market earn only normal profitIn the long run all firms have slowly increased profits

72A decrease in demand with the supply curve remaining constant leads to

An increase in both equilibrium price and quantityA fall in both equilibrium price and quantityAn increase in equilibrium price and a fall in quantityAn fall in equilibrium price but increase in quantity

73Identify a characteristic of a monopolistic competitive market from the following :

Existence of large number of buyers and sellersIndividual firms are pricetakersHeavy costs are incurred to attract customersNo barriers to entry /exit of firms

74An increase in output in a perfectly competitive and constant cost industry which is in the long run equilibrium, will come

entirely from new firmsentirely from existing firmseither entirely from new firms or entirely from existing firmspartly from new firms and from existing firms

75The Ministry of Statistics and Programme Implementation has revised the base year of national income estimation from 200405 to

20092010201020112011201220122013

76Trickle Down theory of development holds that

Global prosperity spreads to domestic Economy.Development spreads down wards throughout the economy and in all sectors.Rate of growth of an economy is inversely proportional to the rates of taxation.Rate of growth of on economy is independent of the rate of taxation.

77Liberalisation of trade by the government means

Removal of export credit onlyRemoval of import credit onlyRemoval of tariff, subsidies and other restrictions on flow of goods and servicesExporting of only goods and not services

78The highest share in power generation in India is of

Atomic powerHydro powerThermal powerWind power

79Which one of the following is not the consequence of high population growth in India ?

Ecological degradationUnemployment and unproductive consumers.Insufficient per capita availability of food grainsAdverse balance of payments

80Which one of the following is not correct about the Saansad Adarsh Gram Yojana ?

It was launched by Prime Minister, on the birth anniversary of Lok Nayak Jai Prakash Narain.MPs to adopt villages for their holistic development.Special emphasis on enabling every poor household to come out of povertyJoining every village with a national highway

82Which of the following cannot be termed as an antipoverty programme/ scheme?

RLEGPNREPMRTPIRDP

84National Income is the same as

Net domestic product at market priceNet domestic product at factor costNet national product at market priceNet national product at factor cost

86Disguised unemployment refers to

Persons with no proper jobs.Unemployment of people above to 60 years of age.More persons employed for a job which less persons can accomplish.Unemployment among rural woman.

87Consider the following statements about GST bill of India 1) GST consists of three components such as central GST (CGST), State GST (SGST) and Local GST (LGST) 2) CGST & SGST will apply to all transactions of goods & services Which of the above statements are correct ?

Only 1Only 2Both 1 & 2Neither of the two

88In the postreforms period, Foreign Exchange Regulation Act was replaced by

Foreign Exchange Management Act.Funds Exchange Management Act.Fiscal Exchange Management Act.Foreign Equity Management Act.

89_______ refers to disposal of public sector unit's equity in the market.

LiberalisationGlobalisationDisinvestmentPrivatisation

90Globalisation is a process of increasing economic integration in the world among

Trade organisationsSocial organisationsCountriesFinancial Institutions

91UDAY Stands for

Unmukt Deficit Assurance YojnaUjwal Discom Assurance YojnaUnmukt Discom Assurance YojnaUjjwal deficit Assurance Yojna

92Reserve Bank's Liquidity Adjustment Facility (LAF) refers to

Auction of Treasury BillsRediscounting of Bills of Exchangeuse of Repo and Reverse Repovariation in the Statutory Liquidity Rates (SLR)

93When too much money chases too few goods, the resulting inflation is called.

DeflationDemand pull inflationCost push inflationStagflation

94The effect of increase in Cash Reserve Ratio will be reduced or nullified if

Bank rate is reduced.Securities are sold in the open marketStatutory Liquidity Reserve (SLR) is Increased.People don't borrow from non banking institutions.

95NABARD's primary role is

To act as an finance institutionTo issue shares in the marketTo underwrite shares of govt agenciesTo act as a bank

96Open market operations are

activities of SEBI registered Brokersselling of securities by RBIissue of gilt edged securities by governmentsale of shares by Foreign Institutional Investors

97An enterprise wise resource planning (ERP) system integrates the organization's Computerized subsystems and may also provide links to external parties. Identify the advantage of ERP

The reengineering needed for its implementation should improve business processesCustomizing the software to suit the unique needs of the organization of all sizesThe comprehensiveness of the system reduces resistance to changeIt can be installed by organization of all sizes

98The Rural Infrastructure Development Fund (RIDF) has been created under.

Reserve Bank of IndiaNABARDMinistry of AgricultureMinistry of Rural Development

99Which of the following is not a function of the Securities and Exchange Board of India (SEBI)

Supervising the working of the stock ExchangesUnderwriting new Capital IssuesRegulating merchant banks and mutual fundsPromoting the development of a healthy Capital market

100Which of the following are major components of the Information Technology Enabled Services (ITES) industry in India

IT services and BPOManufacturing ServicesSoftware ProductsAll the options

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Source: SSC CGL CGLE Tier II Paper IV General Studies (Finance and Economics) 02/12/2016 — the Commission’s candidate response sheet for this shift. Answer keys on SSC’s notice board (ssc.gov.in) The answer key was read automatically from the response sheet and has not yet been checked by a person. This paper was read from one copy of the response sheet: each answer is the “Correct Answer” the Commission printed on it, not checked against a second copy.