2012 December UGC NET Solved Question Paper in Commerce, Paper III

1. In accounting, profit prior to incorporation is treated as

(A) Revenue Reserve

(B) Secret Reserve

(C) Capital Reserve

(D) General Reserve

Answer: (C)


2. Receipts and Payments Account is prepared by

(A) Manufacturing concerns

(B) Non-Trading concerns

(C) Trading concerns

(D) Companies registered under Companies Act, 1956

Answer: (B)


3. Owners equity stands for

(A) Fixed Assets minus Fixed Liabilities.

(B) Fixed Assets minus Current Liabilities.

(C) Current Assets minus Fixed Liabilities.

(D) Total Assets minus Total outside Liabilities.

Answer: (D)


4. When the Debt Turnover Ratio is 4, what is the average collection period?

(A) 5 months

(B) 4 months

(C) 3 months

(D) 2 months

Answer: (C)


5. Which of the following will result into sources of funds?

(i) Increase in current assets

(ii) Decrease in current assets

(iii) Increase in current liabilities

(iv) Decrease in current liabilities


(A) (i) and (iv)

(B) (ii) and (iii)

(C) (i) and (iii)

(D) (ii) and (iv)

Answer: (B)


6. In marginal costing, contribution is equal to

(A) Sales – Fixed cost

(B) Sales – Variable cost

(C) Sales – Profit

(D) Sales – Variable Cost + Fixed cost

Answer: (B)


7. The funds available with a company after paying all claims including tax and dividend is called

(A) Net Profit

(B) Net Operating Profit

(C) Capital Profit

(D) Retained Earnings

Answer: (D)


8. Assertion (A): Accounting information refers to only events which are concerned with business firm.

Reason (R): Accounting information is presented in financial statements.


(A) (A) is correct, but (R) is wrong.

(B) Both (A) and (R) are correct.

(C) (A) is wrong, but (R) is correct.

(D) Both (A) and (R) are wrong.

Answer: (B)


9. When average cost is declining

(A) Marginal cost must be declining.

(B) Marginal cost must be above average cost.

(C) Marginal cost must be below average cost.

(D) Marginal cost must be rising.

Answer: (C)


10. ABC Ltd. has declared 40% dividend. Which one of the following does it mean?

(A) The company has declared 40% of net profit as dividend.

(B) The company has declared 40% of profits after tax as dividend.

(C) The company will provide dividend 40% on issued capital.

(D) The company will provide dividend 40% on paid-up capital.

Answer: (D)

11. The main objective of Accounting Standards is

(A) To prepare the accounting reports which is easily understood by common man.

(B) To comply with the legal formalities.

(C) To harmonise the diversified accounting practices.

(D) To comply with the requirements of the International Accounting Standards (IAS).

Answer: (C)


12. Given below are two statements:

I. Activity ratios show where the company is going.

II. Balance Sheet ratios show how the company stand.


(A) I is correct, but II is wrong.

(B) Both I and II are correct.

(C) I is wrong, but II is correct.

(D) Both I and II are wrong.

Answer: (B)


13. Income and Expenditure Account of non-profit organisation is a

(A) Real Account

(B) Nominal Account

(C) Personal Account

(D) Representative Personal Account

Answer: (B)


14. Which of the following statements are correct?

I. Inventory includes raw materials, finished goods and work – in – progress.

II. Inventory is a part of the working capital.

III. Inventory includes goods likely to be purchased.


(A) I, II and III

(B) II and III

(C) I and III

(D) I and II

Answer: (D)


15. If the current ratio is 2: 1 and working capital is Rs. 60,000, what is the value of the Current Assets?

(A) Rs. 60,000

(B) Rs. 1, 00,000

(C) Rs. 1, 20,000

(D) Rs. 1, 80,000

Answer: (C)


16. Which of the following steps of purchase decision process is in sequence?

1. Problem recognition

2. Search for alternatives

3. Evaluation of alternatives

4. Purchase action

5. Post purchase action


(A) 1, 3, 2, 4, 5

(B) 1, 2, 4, 3, 5

(C) 2, 1, 3, 5, 4

(D) 1, 2, 3, 4, 5

Answer: (D)


17. What is customer value?

(A) Ratio between the customer’s perceived benefits and the resources used to obtain these benefits.

(B) Excess of satisfaction over expectation.

(C) Post purchase dissonance

(D) None of the above

Answer: (A)


18. Match the items of List – I with items of List – II.

List – I                                                                                                                        List – II

a. The silent mental repetition of information.                                                            1. Encoding

b. The process by which we select a word or visual image to represent a perceived object.              2. Rehearsal

c. Where information is kept temporarily before further processing.                         3. Working Memory

d. The stage of real memory in which information is processed and held for just a brief period.                                                                                                                  4. Store house


       a b c d

(A) 2 1 4 3

(B) 1 2 3 4

(C) 3 2 1 4

(D) 4 3 2 1

Answer: (A)


19. Fill in the blanks:

Statements                                                                              Alternatives

a. Loyal customers’ ____ products.                                        1. Less attention

b. Loyal customers are ____ sensitive.                                   2. Cheaper

c. Loyal customers pay ____ to competitor’s advertising.     3. Less price

d. Serving existing customer is ____                                      4. Buy more


      a b c d

(A) 3 1 2 4

(B) 4 3 1 2

(C) 2 1 3 4

(D) 4 3 2 1

Answer: (B)


20. Assertion (A): High customer expectations lead to dissatisfaction as product performance never matches them.

Reason (R): Product performance is always customer specific.


(A) Both (A) and (R) are correct.

(B) Both (A) and (R) are incorrect.

(C) (A) is correct, but (R) is incorrect.

(D) (R) is correct, but (A) is incorrect.

Answer: (B)

21. Under which concept of marketing do you find greater emphasis on techniques and technology of production?

(A) Product

(B) Selling

(C) Marketing

(D) None

Answer: (D)


22. Which is used for short-term sales achievement?

(A) Personal selling

(B) Advertising

(C) Sales Promotion

(D) Public Relations

Answer: (C)


23. Public distribution system relates to

(A) Marketing system

(B) Retailing system

(C) Industrial system

(D) Selling system

Answer: (B)


24. Who do buy more, complain less, spread positive word of mouth, ensure a large customer base and repeat business?

(A) Satisfied customers

(B) Delighted customers

(C) Industrial customers

(D) None of the above

Answer: (B)


25. There are impulses which persuade a customer to buy certain products without evaluating the positive and negative value of the same.

(A) Emotional motives

(B) Blind motives

(C) Egoistic motives

(D) All the above

Answer: (D)


26. Which subject is relevant to the study of consumer behaviour?

(A) Economics

(B) Psychology

(C) Sociology

(D) All the abovewww.netugc.com

Answer: (D)


27. Find an incorrect statement.

(A) Consumer attitude can be summarized as evaluation of an object.

(B) Attitudes are learned.

(C) Attitudes are synonymous with behaviour.

(D) Attitudes have motivational qualities.

Answer: (C)


28. Who is considered Father of Scientific Management?

(A) Peter Drucker

(B) F.W. Taylor

(C) Victor Vroom

(D) Henry Fayol

Answer: (B)


29. Who did give the concept of hierarchy of needs?

(A) Fredrick Herzberg

(B) Victor Vroom

(C) Douglas Mcgregor

(D) A.H. Maslow

Answer: (D)


30. Assertion (A): Management is a continuous process.

Reason (R): Managers first plan, then organise and finally perform the function of controlling.


(A) Both (A) and (R) are correct and (R) is correct explanation of (A).

(B) Both (A) and (R) are correct, but (R) is not a correct explanation of (A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

Answer: (A)


31. Induction of employees relates to

(A) Organisational awareness

(B) Training programme

(C) Introduction

(D) Assignment of duties

Answer: (C)


32. ‘Kinked’ demand curve is related with

(A) Monopoly

(B) Discriminating monopoly

(C) Oligopoly

(D) Perfect competition

Answer: (C)


33. Who is not associated with HRM?

(A) Michael J Jucius

(B) Dale Yodar

(C) Edvoin B. Flippo

(D) K.K. Devit

Answer: (D)


34. Merit rating is not known as

(A) Efficiency Rating

(B) Service Rating

(C) Job Rating

(D) Experience Rating

Answer: (C)


35. Match the items of List – I with the items of List – II.

List – I                                                List – II

a. FEMA                                             1. 1986

b. Indian Factories Act                       2. 1999

c. Industrial Dispute Act                    3. 1948

d. Consumer Protection Act               4. 1947


       a b c d

(A) 4 2 3 1

(B) 3 1 2 4

(C) 2 3 4 1

(D) 1 4 3 2

Answer: (C)


36. If price of any commodity decreases by 20% and the demand for that commodity increases by 40%, then elasticity of demand would be

(A) Perfectly elastic

(B) Perfectly inelastic

(C) Unit elastic

(D) Highly elastic

Answer: (D)


37. Which of the following statements is true?

(A) In case of inferior goods, the income effect is negative, although the substitution effect is positive.

(B) In inferior goods, the income and substitution effects are positive.

(C) In inferior goods, the income and substitution effects are negative.

(D) In case of inferior goods, the income effect is positive although the substitution effect is negative.

Answer: (A)


38. In perfect competition, the demand curve of a firm is

(A) Vertical

(B) Horizontal

(C) Positively sloped

(D) Negatively sloped

Answer: (B)


39. Which one is not non-financial incentive?

(A) Additional bonus on minimum wasteful expenditure.

(B) Permanent job.

(C) Participatory decision making.

(D) Recognition of individuality.

Answer: (A)


40. HRM does not include

(A) Job evaluation

(B) Performance appraisal

(C) Sales promotion

(D) Job enrichment

Answer: (C)


41. The term (1-B) is called

(A) Level of the test

(B) Power of the test

(C) Size of the test

(D) None of the above

Answer: (B)



Answer: (C)


43. Sampling distribution of mean is very close to the standard normal distribution when

(A) Population is normally distributed.

(B) Population is not normally distributed, but sample size is large.

(C) Both (A) and (B).

(D) Neither (A) nor (B).

Answer: (C)


44. If the value of co-efficient of determination is 0.64, what is the value of coefficient of correlation?

(A) 0.40

(B) 0.80

(C) 0.08

(D) 0.04

Answer: (B)


45. Which one of the following is not a source of conflict in project ranking in capital budgeting decision as per NPV and IRR?

(A) Independent Investment Project

(B) No Capital Budget Constraints

(C) No time disparity

(D) None of the above

Answer: (D)


46. Match the following:

List – I                                                List – II

a. Trade policy                                    1. Economic conditions

b. Trade flows                                     2. Economic policies

c. Price trends                                                 3. Global linkages

d. Internal sectoral linkages                4. Structure and Nature of Economy


       a b c d

(A) 3 1 2 4

(B) 2 3 1 4

(C) 1 2 3 4

(D) 1 2 4 3

Answer: (B)


47. Which one of the following is not a benefit of privatisation?

(A) Encourage entrepreneurship.

(B) Concentration of economic power.

(C) Better management of enterprise.

(D) Freedom from bureaucracy.

Answer: (B)

48. ‘BOLT’ system in the Indian Securities market is related to

(A) National Stock Exchange

(B) Bombay Stock Exchange

(C) Over the Counter Exchange of India

(D) Multi Commodity Stock Exchange

Answer: (B)


49. Which one of the following is not a money market instrument?

(A) Commercial paper

(B) Participatory certificates

(C) Warrants

(D) Treasury Bills

Answer: (C)


50. Which one is related with micro financing?


(B) Anganwadi workers

(C) Women Entrepreneurs

(D) None of the above

Answer: (A)


51. Which one of the following is not an element of internal environment?

(A) Mission/Objectives

(B) Human Resources

(C) Customers

(D) Shareholders’ values

Answer: (C)


52. The presence of fixed costs in the total cost structure of a firm results into

(A) Financial leverage

(B) Operating leverage

(C) Super leverage

(D) None of the above

Answer: (B)


53. “The cost of capital declines when the degree of financial leverage increases.” Who advocated it?

(A) Net operating income approach

(B) Net income approach

(C) Modigliani-Miller approach

(D) Traditional approach

Answer: (B)


54. A view that the dividend policy of a firm has a bearing on share valuation advocated by James E. Walter is based on which one of the following assumptions?

(A) Retained earnings is only source of financing.

(B) Cost of capital does not remain constant.

(C) Return on investment fluctuates.

(D) All the above.

Answer: (A)


55. Match the following:

List – I                                    List – II

a. Matching approach              1. Dividend Policy

b. Structural ratios                   2. Inventory Management

c. Ordering quantity                3. Financing Working Capital

d. Bonus shares                       4. Capital Structure


      a b c d

(A) 1 2 3 4

(B) 3 4 1 2

(C) 3 4 2 1

(D) 2 1 3 4

Answer: (C)


56. Assertion (A): Operating style of the international business can be spread to the entire globe.

Reason (R): The style is limited to the internal economy only.


(A) Both (A) and (R) are true.

(B) (A) is true, but (R) is false.

(C) (A) is false, but (R) is true.

(D) Both (A) and (R) are false.

Answer: (B)


57. The Comparative Cost Advantage Theory was given by

(A) David Ricardo

(B) Adam Smith

(C) Raymond Vernon

(D) Michael E. Porter

Answer: (A)


58. The companies globalise their operations through different means:

(A) Exporting directly

(B) Licensing/Franchising

(C) Joint ventures

(D) All the above

Answer: (D)


59. The components of W.T.O. are

(A) Ministerial Conference

(B) Disputes Settlement Body

(C) Director General

(D) All the above

Answer: (D)


60. India is not associated with

(A) SAARCwww.netugc.com



(D) None of the above

Answer: (B)


61. Which one of the following is true statement?

(A) A balance of trade deals with export and import of invisible items only.

(B) A balance of payment deals with both visible and invisible items.

(C) The current account is not a component of balance of payment.

(D) All the above.

Answer: (B)


62. SDRs are popularly known as

(A) Currency Notes

(B) Paper Gold

(C) Silver Coin

(D) Gold Coin

Answer: (B)


63. Which one is not international institution?





Answer: (D)


64. Assertion (A): Indent may be open or closed. Open indent does not specify the price and other details of the goods. The closed indent specifies the brand, price, number, packing, shipping mode, insurance, etc.

Reason (R): This is required as a part of export procedures.


(A) Both (A) and (R) are correct.

(B) Both (A) and (R) are not correct.

(C) (A) is true, but (R) is false.

(D) (R) is true, but (A) is false.

Answer: (C)


65. Which one of the statements is not true?

(A) Institutional infrastructure facilitates market intelligence.

(B) STC is the chief canalizing agent for export and import of agricultural products.

(C) IIPO organizes trade fairs and exhibitions.

(D) Letter of credit does not indicate that the bank will pay the value of imports to the exporter.

Answer: (D)


66. Match the items of List – I with items of List – II.

List – I                                                            List – II

a. Selective credit control                               1. Consumer Credit Regulation

b. Encourage credit for desirable use              2. Cash Reserve Ratio

c. Quantitative credit control                          3. Variation in Margin

d. Bank Rate                                                   4. Re-discounting Rate


       a b c d

(A) 4 2 3 1

(B) 3 1 2 4

(C) 1 3 2 4

(D) 2 1 3 4

Answer: (B)


67. Assertion (A): Use of paper money is replaced by plastic money. The future will see the electronic money clearance through satellite networking.

Reason (R): RBI is encouraging e-banking.


(A) (A) is false, but (R) is true.

(B) (A) is true, but (R) is false.

(C) Both (A) and (R) are false.

(D) Both (A) and (R) are true.

Answer: (D)


68. Which one is not Finance Company?

(A) Hire-Purchase Finance Company


(C) Mutual Benefit Finance Companies

(D) Loan Companies

Answer: (B)


69. The Securities and Exchange Board of India was not entrusted with the function of

(A) Investor Protection.

(B) Ensuring Fair practices by companies.

(C) Promotion of efficient services by brokers.

(D) Improving the earnings of equity holders.

Answer: (D)


70. Which one is a not Non-Marketable security?

(A) Corporate Securities

(B) Bank Deposits

(C) Deposits with Companies

(D) Post Office Certificates and Deposits

Answer: (A)


71. Minimum Alternative Tax (MAT) under Sec.115 JB of the Income Tax Act is applicable on

(A) Partnership firm

(B) Association of persons

(C) Certain companies

(D) All types of companies

Answer: (C)


72. For the Assessment Year 2011-12, deduction under Sec. 80G is available without any limit but at the rate of 50% on

(A) Prime Minister’s National Relief Fund.

(B) National Foundation for communal Harmany.

(C) Jawahar Lal Nehru Memorial Fund.

(D) Chief Minister Relief Fund.

Answer: (C)


73. Interest on capital paid by a firm to its partners, under the Income Tax Act, 1961, is allowed

(A) 6%

(B) 12%

(C) 15%

(D) 18%

Answer: (B)


74. Under capital gains head of the Income Tax Act, the income from sale of Household Furniture is

(A) Taxable Income

(B) Capital Gain

(C) Revenue Gain

(D) Exempted Income

Answer: (D)


75. Under Section 80E of the Income Tax Act, 1961 deduction in respect of payment of interest on loan taken for higher education shall be allowed up to

(A) Rs. 10,000

(B) Rs. 15,000

(C) Rs. 20,000

(D) Without any limit

Answer: (D)