111. Which of the following is not an objective of Fiscal policy?
(a) Economic growth
(b) Economic stability
(c) Maximization of employment level
(d) Regulating of financial institutions
112. The main objective of the World Trade Organisation is to secure among others:
(a) A general agreement among common market countries on technical training and mutual
prices of traded goods.
(b) The maintenance of intellectual property rights and patent rights of member countries.
(c) An improvement in the USA’s terms of trade in the next decade.
(d) A reduction in tariffs through negotiation, elimination of import quotas and globalization
of international trade.
113. Which one of the following is the best example of agreement between oligopolists?
(a) GATT (b) OPEC
(c) WTO (d) UNIDO
114. Which of the following concepts of Budget deficit has become practically redundant in India?
(a) Fiscal deficit (b) Budgetary deficit
(c) Primary deficit (d) Revenue deficit
115. Birth rate and Death rate are measured as per:
(a) 100 population (b) 1000 population
(c) 10000 population (d) 100000 population
116. Money includes:
(a) Currencies and demand deposits.
(b) Bonds, government securities.
(c) Equity shares.
(d) All of the above.
117. —————— pair of commodities is an example of substitutes.
(a) Coffee and milk (b) Diamond and cow
(c) Pen and ink (d) Mustard oil and coconut oil
118. When the price of a substitute of X commodity falls, the demand for X ———.
(a) Rises (b) Falls
(c) Remains unchanged (d) Any of the above.
119. Marginal utility approach to demand was given by ————————.
(a) J.R. Hicks (b) Alfred Marshall
(c) Robbins (d) A. C. Pigou
Common Proficiency Test (CPT) Volume - I 45
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 2
120. While analyzing Marshall’s measure of consumer’s surplus one assumes ——.
(a) Imperfect competition (b) Perfect competition
(c) Monopoly (d) Monopsony
121. The law of variable proportions come into being when —————.
(a) There are only two variable factors.
(b) There is a fixed factor and a variable factor.
(c) All factors are variable.
(d) Variable factors yield less.
122. ————— is an implicit cost of production.
(a) Wages of the labour. (b) Charges for electricity.
(c) Interest on owned money capital. (d) Payment for raw material.
123. Excess capacity is not found under —————.
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition. (d) Oligopoly.
124. Stagflation means —————.
(a) Inflation with recession (b) Recession with stagnation
(c) Inflation galloping like a stag (d) Inflation and increasing output.
125. —————— is not a direct tax.
(a) Income tax (b) Wealth tax
(c) Expenditure tax (d) Entertainment tax
126. ————— has been founded to act as permanent watchdog on the international trade.
(a) IBRD (b) ADB
(c) WTO (d) IMF
127. ___________measure usually gives the lowest estimate of unemployment especially for poor
economy.
(a) Usual Status (b) Current Weekly Status
(c) Current Daily Status (d) Current Yearly Status
128. The average profit is the difference between ——————.
(a) AC and TC (b) AC and VC.
(c) AC and AR (d) AC and TR
129. At the point of inflexion, the marginal product is ——————.
(a) Increasing (b) Decreasing
(c) Maximum (d) Negative
46 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
130 . Marginal revenue will be negative if elasticity of demand is ——————.
(a) Less than one. (b) More than one.
(c) Equal to one. (d) Equal to zero.
131. If lowering of fares reduces railway’s revenues and increasing of fares increases, them the
demand for rail travel has a price elasticity of ——————.
(a) Zero (b) Greater than zero but less than one.
(c) One (d) Greater than one
132. If R point bisects the demand curve in two equal parts, then elasticity at R equals ———.
(a) Zero (b) Five
(c) Two (d) One
The following data give the production possibilities frontier of an economy that produces
two types of goods, guns and bread. Read the following table and answer questions 133-135
Table 1: Production Possibilities
Production possibilities A B C D E F G H
Guns 0 10 20 30 40 50 60 30
Bread 105 100 90 75 55 30 0 45
133. According to Table 1, the opportunity cost of increasing gun’s production from 20 to 30
units is equal to
(a) 10 units of bread. (b) 15 units of bread.
(c) 25 units of bread. (d) 24 units of bread.
134. Given the data in Table 1, one moves successively from point A to points B, C, D,E and F, the
opportunity cost of guns:
(a) Increases as more of guns are produced.
(b) Decreases as more of guns are produced.
(c) Remains constant as more of guns are produced.
(d) Nothing can be said.
135. Point D is efficient while point H (30 guns and 45 loaves of bread) is inefficient. Why?
(a) Point D is outside the PPF while point H is on the PPF.
(b) Point D is inside the PPF while point H is on the PPF.
(c) Point D is on the PPF while point H is inside the PPF.
(d) Nothing can be said.
Read the following paragraph and answer questions 136 to 137.
In the Monetary Policy announced for the year 2006-07 the following announcements were
made - Bank Rate, Repo Rate, Reverse Repo Rate and Cash Reserve Ratio have been kept
unchanged at their present levels of 6 per cent, 6.5 per cent, 5.5 per cent and 5 per cent
respectively. These have been kept unchanged as liquidity pressures seen during the last 4
months of 2005-06 have eased off considerably.
Common Proficiency Test (CPT) Volume - I 47
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 2
136. What is Bank Rate?
(a) The rate of interest charged by public sector banks from the general public.
(b) The rate of interest on housing loans.
(c) The rate of interest on educational loan.
(d) The rate at which the RBI discounts the bills of commercial banks.
137. In the given paragraph it is stated that Bank Rate and Cash Reserve Ratio (CRR) have been
kept unchanged. What can RBI do if it wants to control credit in the economy?
(a) Decrease Bank Rate and decrease CRR.
(b) Increase Bank Rate and increase CRR.
(c) Increase Bank Rate and decrease CRR
(d) Decrease Bank Rate and increase CRR.
Use Table 2 to answer questions 138-141.
“Bozzo’s burgers” is a small restaurant and a price taker. The table below provides the data
of Bozzo’s output and costs in Rupees.
Quantity Total Fixed Variable Average Average Marginal
cost cost cost variable cost total cost cost
0 100 - - -
10 210
20 300
30 400
40 540
50 790
60 1060
138. If burgers sell for Rs. 14 each, what is Bozzo’s profit maximizing level of output?
(a) 10 burgers (b) 40 burgers
(c) 50 burgers (d) 60 burgers
139. What is the total variable cost when 60 burgers are produced?
(a) Rs. 690 (b) Rs. 960
(c) Rs. 110 (d) Rs. 440
140. What is average fixed cost when 20 burgers are produced?
(a) Rs. 5 (b) Rs.3.33
(c) Rs. 10 (d) Rs. 2.5
141. Between 10 to 20 burgers, what is the marginal cost (per burger)?
(a) Rs. 11 (b) Rs. 13
(c) Rs. 14 (d) Rs. 9
48 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
In Econoville, there is one grocery shop, Ecoconvenience. It used to sell fresh milk at Rs. 20
per litre, at which price 400 litres of milk were sold per month. After some time, the price
was raised to Rs. 30 per litre. Following the price rise:
(cid:129) Only 200 litres of milk was sold every month.
(cid:129) The number of boxes of cereal customers bought went down from 280 to 240.
(cid:129) The number of packets of powered milk customers bought went up from 90 to 220 per
month.
Now answer Questions number 142-147.
142. The price elasticity of demand when fresh milk’s price increases from Rs. 20 per litre to
Rs. 30 per litre is equal to:
(a) 2.5 (b) 1.0
(c) 1.66 (d) 2 .66
143. The cross elasticity of monthly demand for cereal when the price of fresh milk increases
from Rs. 20 to Rs. 30 is equal to:
(a) - 0.38 (b) + 0.25.
(c) - 0.19. (d) + 0.38.
144. The cross elasticity of monthly demand for powdered milk when the price of fresh milk
increases from Rs. 20 to Rs. 30 per litre is equal to:
(a) + 1.05. (b) -1.05.
(c) -2.09. (d) + 2.09.
145. What can be said about the price elasticity of demand for fresh milk?
(a) It is perfectly elastic. (b) It is elastic.
(c) It is perfectly inelastic. (d) It is inelastic.
146 . Suppose income of the residents of Ecoville increases by 50% and the quantity of fresh milk
demanded increases by 30%. What is income elasticity of demand for fresh milk?
(a) 0.5 (b) 0.6
(c) 1.25 (d) 1.50
147. We can say that fresh milk in economic sense is a/an:
(a) luxury good (b) inferior good
(c) normal good (d) nothing can be said.
148. Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring
explicit costs of Rs. 1,50,000. If the owner could work for another company for Rs. 60,000 a
year, we would conclude that:
(a) the firm is incurring an economic loss.
(b) implicit costs are Rs.50,000.
(c) the total economic costs are Rs.2,00,000.
(d) the individual is earning an economic profit of Rs.50,000.
Common Proficiency Test (CPT) Volume - I 49
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 2
Use Table 3 to answer questions 149-150.
Table 3
Hours of Labour Total Output Marginal Product
0 — —
1 200 200
2 — 160
3 480 —
149. What is the total output when 2 hours of labour are employed?
(a) 160 (b) 200
(c) 360 (d) 400
150. What is the marginal product of the third hour of labour?
(a) 120 (b) 160
(c) 200 (d) 480
SECTION – D : QUANTITATIVE APTITUDE (50 MARKS)
151. Mutually exclusive classification is usually meant for
(a) A discrete variable. (b) A continuous variable.
(c) An attribute. (d) Any of these.
3x+|x|
lim
152.
x→0 7x−5|x|
(a) Exists (b) Does not exist
(c) 1/6 (d) None of these
153. Which measure of dispersion is based on all the observations?
(a) Mean deviation (b) Standard deviation
(c) Quartile deviation (d) (a) and (b) but not (c)
154. If an unbiased coin is tossed once, then the two events Head and Tail are:
(a) Mutually exclusive. (b) Exhaustive.
(c) Equally likely. (d) All these (a), (b) and (c).
155. If P(A) = P(B), then
(a) A and B are the same events.
(b) A and B must be same events.
(c) A and B may be different events.
(d) A and B are mutually exclusive events.
50 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
156. As the sample size increases, standard error
(a) Increases (b) Decreases.
(c) Remains constant. (d) Decreases proportionately.
157. The test of shifting the base is called
(a) Unit Test. (b) Time Reversal Test.
(c) Circular Test. (d) None of these.
158. Which sampling is subjected to the discretion of the sampler?
(a) Systematic sampling
(b) Simple random sampling
(c) Purposive sampling
(d) Quota sampling
159. Scatter diagram helps us to
(a) Find the nature correlation between two variables.
(b) Compute the extent of correlation between two variables.
(c) Obtain the mathematical relationship between two variables.
(d) Both (a) and (c).
160. The point of intersection between the straight lines 3x + 2y = 6 and 3x – y = 12 lie in
(a) 1st quadrant. (b) 2nd quadrant.
(c) 3rd quadrant. (d) 4th quadrant.
161. ‘Stub’ of a table is the _______ part of the table describing the _______.
(a) Left, Columns (b) Right, Columns
(c) Right, Rows (d) Left, Rows
162. The logarithm of a number consists of two parts, the whole part or the integral part is called
the ______ and the decimal part is called the _______.
(a) Characteristic, Number (b) Characteristic, Mantissa
(c) Mantissa, Characteristic (d) Number, Mantissa
163. If b2–4ac < 0 then the roots are ________.
(a) Real and equal (b) Imaginary
(c) Real and unequal (d) Irrational and unequal
164. In ________ receipts/payments takes place forever.
(a) Annuity (b) Perpetuity
(c) Annuity regular (d) Annuity due
Common Proficiency Test (CPT) Volume - I 51
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 2
165. Usually _________ is the best measure of central tendency.
(a) Median (b) Mode
(c) Mean (d) G.M.
166. ________ are used for measuring central tendency , dispersion & skewness.
(a) Median (b) Deciles
(c) Percentiles (d) Quartiles.
167. If the plotted points in a scatter diagram lie from upper left to lower right, then the correlation
is_______.
(a) Positive (b) Zero
(c) Negative (d) None of these.
168. A small value of “r” indicates only a _________ linear type of relationship between the
variables.
(a) Good (b) Poor
(c) Maximum (d) Highest
169. The method usually applied for fitting a binomial distribution is known as______.
(a) Method of least square (b) Method of moments
(c) Method of probability distribution (d) Method of deviations
170. An index time series is a list of _______ numbers for two or more periods of time.
(a) Index (b) Absolute
(c) Relative (d) Sample
171. The following data relate to the marks of a group of students:
Marks : Below 10 Below 20 Below 30 Below 40 Below 50
No. of students : 15 38 65 84 100
How many students got marks more than 30?
(a) 65 (b) 50
(c) 35 (d) 43
172. The following data relate to the incomes of 86 persons :
Income in Rs.: 500–999 1000–1499 1500–1999 2000–2499
No. of persons: 15 28 36 7
What is the percentage of persons earning more than Rs. 1500?
(a) 50 (b) 45
(c) 40 (d) 60
52 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
173. Value of 2x1/2.3x–1 if x = 4 is
(a) 3 (b) 4
(c) 3.5 (d) 4.5
174. A number between 10 and 100 is five times the sum of its digits. If 9 be added to it the digits
are reversed, find the number.
(a) 54 (b) 53
(c) 45 (d) 55
175. An employer recruits experienced (x) and fresh workmen (y) for his firm under the condition
that he cannot employ more than 9 people. x and y can be related by the inequality
(a) x + y ≠ 9 (b) x + y < 9
(c) x + y > 9 (d) None of these
176. The sum required to earn a monthly interest of Rs 1200 at 18% per annum Simple Interest is:
(a) Rs. 50,000 (b) Rs. 60,000
(c) Rs. 80,000 (d) None of these
177. The difference between compound and simple interest at 5% per annum for 4 years on
Rs.20,000 is
(a) Rs 250 (b) Rs 277
(c) Rs 300 (d) Rs 310
178. 4P is equal to
4
(a) 1 (b) 24
(c) 0 (d) None of these
179. In how many ways can 8 persons be seated at a round table?
(a) 5040 (b) 4050
(c) 450 (d) 540
180. Five bulbs of which three are defective are to be tried in two bulb points in a dark room.
Number of trials the room shall be lighted
(a) 6 (b) 8
(c) 5 (d) 7
181. Which term of the progression –1, –3, –5, …. is –39?
(a) 21st (b) 20th
(c) 19th (d) None of these
182. The sum of natural numbers upto 200 excluding those divisible by 5 is:
(a) 20100 (b) 4100
(c) 16000 (d) None of these.
Common Proficiency Test (CPT) Volume - I 53
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 2
183. The number of subsets of the set {2, 3, 5} is
(a) 3 (b) 8
(c) 6 (d) None of these.
184. Given A = {2, 3}, B = {4, 5}, C = {5, 6} then A × (BC) is
(a) {(2, 5), (3, 5)} (b) {(5, 2), (5, 3)}
(c) {(2, 3), (5, 5)} (d) None of these.
( )
x2 –16
lim
185. ( ) is evaluated as
x→4 x–4
(a) 8 (b) –8
(c) 0 (d) None of these.
1 dy
186. If y = then is equal to
z dx
1 −1
(a) (b)
2x x x x
1
−
(c) (d) None of these.
2x x
187. f(x) = x2/ex then f’(–1) is equal to
(a) –1/e (b) 1/e
(c) e (d) None of these.
188. Evaluate ∫ 5x2dx and the answer will be
(a) 5x3 / 3 + k (b) 5 / 3x3 + k
(c) 5x3 (d) None of these.
4
∫( 3x−2 )2
189. Evaluate dx and the value is
2
(a) 104 (b) 100
(c) 10 (d) None of these.
190. What is the value of the first quartile for observations 15, 18, 10, 20, 23, 28, 12, 16?
(a) 17 (b) 16
(c) 15.75 (d) 12
54 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
191. What is the coefficient of range for the following wages of 8 workers?
Rs. 80, Rs. 65, Rs. 90, Rs. 60, Rs. 75, Rs. 70, Rs. 72, Rs. 85.
(a) Rs. 30 (b) Rs. 20
(c) Rs. 40 (d) 20
192. If the relationship between two variables x and y is given by 2x + 3y + 4 = 0, then the value
of the correlation coefficient between x and y is
(a) 0 (b) 1
(c) –1 (d) Negative.
193. If two unbiased dice are rolled together, what is the probability of getting no difference of
points?
(a) ½ (b) 1/3
(c) 1/5 (d) 1/6
194. The probability that a card drawn at random from the pack of playing cards may be either
a queen or an ace is
(a) 2/13 (b) 11/13
(c) 9/13 (d) None of these.
195. If the overall percentage of success in an exam is 60, what is the probability that out of a
group of 4 students, at least one has passed?
(a) 0.6525 (b) 0.9744
(c) 0.8704 (d) 0.0256
196. If the mean deviation of a normal variable is 16, what is its quartile deviation?
(a) 10.00 (b) 13.50
(c) 15.00 (d) 12.05
197. If Standard Deviation = 20 and sample size is 100 then standard error of mean is
(a) 2 (b) 5
1
(c) (d) None of these.
5
198. If for two variable x and y, the covariance, variance of x and variance of y are 40, 16 and 256
respectively, what is the value of the correlation coefficient?
(a) 0.01 (b) 0.625
(c) 0.4 (d) 0.5
Common Proficiency Test (CPT) Volume - I 55
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 2
199. The present value of Rs.10000 due in 2 years at 5% p.a. compound interest when the interest
is paid on yearly basis is
(a) Rs. 9,070 (b) Rs. 9,000
(c) Rs. 9,061 (d) Rs. 9,060
200. A town has a total population of 50,000. Out of it 28,000 read the newspaper X and 23,000
read Y while 4000 read both the papers. The number of persons not reading X and Y both is:
(a) 2,000 (b) 3,000
(c) 2,500 (d) None of these.
(cid:2)(cid:2)(cid:2)
56 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
COMMON PROFICIENCY TEST
Model Test Paper – BOS/CPT – 3
Time : 4 hours Maximum Marks : 200
The test is divided into four sections.
Every correct answer carries + 1 mark each and – 0.25 mark will be deducted for each wrong
answer.
SECTION – A : FUNDAMENTALS OF ACCOUNTING (60 MARKS)
1. All of the following are functions of Accounting except
(a) Decision making (b) Measurement
(c) Forecasting (d) Ledger posting
2. Manufacturing account is prepared to
(a) Ascertain the profit or loss on the goods produced
(b) Ascertain the cost of the manufactured goods
(c) Show the sale proceeds from the goods produced during the year
(d) Both (b) and (c).
3. On March 31, 2010 after sale of goods worth Rs. 2,000, he is left with the closing stock of
Rs. 10,000. This is
(a) An event (b) A transaction
(c) A transaction as well as an event (d) Neither a transaction nor an event
4. Financial statements only consider
(a) Assets expressed in monetary terms
(b) Liabilities expressed in monetary terms
(c) Assets expressed in non-monetary terms
(d) Assets and liabilities expressed in monetary terms
Common Proficiency Test (CPT) Volume - I 5555577777
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
5. Which financial statement represents the accounting equation, Assets = Liabilities + Owner’s
equity:
(a) Income Statement (b) Statement of Cash flows
(c) Balance Sheet (d) None of the above
6. 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
(a) Total assets increased by Rs. 5,00,000.
(b) Total liabilities increased by Rs. 4,00,000.
(c) Total assets increased by Rs. 4,00,000.
(d) Total assets increased by Rs. 4,00,000 with corresponding increase in liabilities by Rs. 4,00,000.
7. The debts written off as bad, if recovered subsequently are
(a) Credited to Bad Debts Recovered Account
(b) Credited to Debtors Account
(c) Debited to Profit and Loss Account
(d) None of the above
8. A withdrawal of cash from business by the proprietor should be credited to:
(a) Drawings Account (b) Capital Account
(c) Cash Account (d) None of the above
9. Contra entries are passed only when
(a) Double column cash book is prepared
(b) Three-column cash book is prepared
(c) Simple cash book is prepared
(d) None of the above
10. Consignment account is
(a) Real account (b) Personal account
(c) Nominal account (d) None of the above
11. Economic life of an enterprise is split into the periodic interval as per ________ concept.
(a) Money Measurement (b) Matching
(c) Periodicity (d) Accrual
12. Accounting policies refer to specific accounting ________.
(a) Principles (b) Methods of applying those principles
(c) Both (a) and (b) (d) None of the above
13. Dividends are usually paid as a percentage of ______
(a) Authorized share capital (b) Net profit
(c) Paid-up capital (d) Called-up capital
58 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
14. Outgoing partner is compensated for parting with firm’s future profits in favour of remaining
partners. The remaining partners contribute to such compensation amount in ______
(a) Gaining Ratio (b) Capital Ratio
(c) Sacrificing Ratio (d) Profit Sharing Ratio
15. The balance of the petty cash is ______.
(a) An expense (b) Income
(c) An asset (d) Liability
16. Interest on capital will be paid to the partners if provided for in the agreement but only
from________
(a) Profits (b) Reserves
(c) Goodwill (d) None of the above
17. A proforma invoice is sent by ________
(a) Consignee to Consignor (b) Consignor to Consignee
(c) Debtors to Consignee (d) Debtors to Consignor
18. If a venturer draws a bill on his co-venturer and if the drawer discounts the bill with same
sets of books maintained, the discounting charges will be borne by________.
(a) The drawer of the bill
(b) The drawee of the bill
(c) The discounting charges will be recorded in memorandum account
(d) The discounting charges will be borne by bank
19. X draws a bill on Y. X endorsed the bill to Z. ________will be the payee of the bill.
(a) X (b) Y
(c) Z (d) None
20. A Company wishes to earn a 20% profit margin on selling price. ________is the profit mark
up on cost, which will achieve the required profit margin?
(a) 33% (b) 25%
(c) 20% (d) None of the above
21. A businessman purchased goods for Rs. 25,00,000 and sold 80% of such goods during the
accounting year ended 31st March, 2010. The market value of the remaining goods was
Rs. 4,00,000. He valued the closing stock at cost. He violated the concept of
(a) Money measurement (b) Conservatism
(c) Cost (d) Periodicity
Common Proficiency Test (CPT) Volume - I 59
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
22. M/s ABC Brothers, which was registered in the year 2008, has been following Straight Line
Method (SLM) of depreciation. In the current year it changed its method from Straight Line
to Written Down Value (WDV) Method, since such change would result in the additional
depreciation of Rs. 200 lakhs as a result of which the firm would qualify to be declared as a
sick industrial unit. The auditor raised objection to this change in the method of depreciation.
The objection of the auditor is justified because
(a) Change in the method of depreciation should be done only with the consent of the auditor
(b) Depreciation method can be changed only from WDV to SLM and not vice versa
(c) Change in the method of deprecation should be done only if it is required by some statute
and change would result in appropriate presentation of financial statement
(d) Method of depreciation cannot be changed under any circumstances
23. 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 95,000 1,55,000 2,65,000 1,25,000 2,00,000
value (Rs.)
The value of stock included in the Balance Sheet of the company as on March 31, 2010 was
(a) Rs. 7,62,500 (b) Rs. 7,70,000
(c) Rs. 7,90,000 (d) Rs. 8,70,000
24. 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
(a) Rs .6,000 (b) Rs. 12,000
(c) Rs. 18,000 (d) Rs. 36,000
25. If sales revenues are Rs. 4,00,000; cost of goods sold is Rs. 3,10,000 and operating expenses
are Rs.60,000, the gross profit is
(a) Rs. 30,000 (b) Rs. 90,000
(c) Rs. 3,40,000 (d) Rs. 60,000
26. Consider the following for Alpha Co. for the year 2009-10:
Cost of goods available for sale Rs.1,00,000
Total sales Rs. 80,000
Opening stock of goods Rs. 20,000
Gross profit margin 25%
Closing stock of goods for the year 2009-10 was
(a) Rs. 80,000 (b) Rs. 60,000
(c) Rs. 40,000 (d) Rs. 36,000
60 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
27. A and B entered into a joint venture and purchased a piece of land for Rs 20,000 and sold it
for Rs 60,000 in 2010. Originally A had contributed Rs 12,000 and B Rs 8,000. The profit on
venture will be
(a) Rs. 40,000 (b) Rs. 20,000
(c) Rs. 60,000 (d) Nil
28. On 1.1.2010 X draws a bill on Y for Rs. 50,000. At maturity, the bill returned dishonoured as Y
became insolvent and 40 paise per rupee is recovered from his estate. The amount recovered is:
(a) Rs. 20,000 (b) Nil
(c) Rs. 30,000 (d) 40 paise
29. Average Stock = Rs 12,000. Closing stock is Rs. 3,000 more than opening stock. The value
of closing stock will be
(a) Rs. 12,000 (b) Rs. 24,000
(c) Rs. 10,500 (d) Rs. 13,500.
30. 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
(a) Rs. 82,00,000 (b) Rs. 12,00,000
(c) Rs. 72,00,000 (d) Rs. 42,00,000
31. A & B are partners sharing profits and losses in the ratio 5:3. After admission of C, new
profit sharing ratio between A, B and C are 7:5:4. The sacrificing ratio among A:B will be
(a) 3:1 (b) 4:7
(c) 5:4 (d) 2:1
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 overdraft
balance as per the pass book will be
(a) Rs. 1,100 (b) Rs. 2,175
(c) Rs. 1,625 (d) Rs. 1,375
33. A second hand machinery is purchased for Rs. 10,000, the amount of Rs. 1,500 is spent on its
transportation and Rs. 1,200 is paid for installation. The amount debited to machinery account
will be
(a) Rs. 10,000 (b) Rs. 10,500
(c) Rs. 11,500 (d) Rs. 12,700
Common Proficiency Test (CPT) Volume - I 61
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
34. 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
(a) Rs. 1,41,250 (b) Rs. 1,35,600
(c) Rs. 1,33,750 (d) Rs. 1,28,400.
35. The accountant of the firm M/s ABC is unable to tally the following trial balance.
S. No. Account heads Debit (Rs.) Credit (Rs.)
1. Sales 15,000
2. Purchases 10,000
3. Miscellaneous expenses 2,500
4. Salaries 2,500
Total 12,500 17,500
The above difference in trial balance is due to
(a) Wrong placing of sales account
(b) Wrong placing of salaries account
(c) Wrong placing of miscellaneous expenses account
(d) Wrong placing of all accounts
36. The profits of last five years are Rs. 85,000; Rs. 90,000; Rs. 70,000; Rs. 1,00,000 and
Rs. 80,000. Find the value of goodwill, if it is calculated on average profits of last five years
on the basis of 3 years of purchase.
(a) Rs. 85,000 (b) Rs. 2,55,000
(c) Rs. 2,75,000 (d) Rs. 2,85,000
37. C Ltd. recorded the following information as on March 31, 2010:
Rs.
Stock as on April 01, 2009 80,000
Purchases 1,60,000
Sales 2,00,000
It is noticed that goods worth Rs. 30,000 were destroyed due to fire. Against this, the insurance
company accepted a claim of Rs. 20,000.
1
The company sells goods at cost plus 33 %. The value of closing inventory, after taking
3
into account the above transactions is,
62 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(a) Rs. 10,000 (b) Rs. 30,000
(c) Rs. 1,00,000 (d) Rs. 60,000
38. Rs. Rs.
Opening Stock 20,000 Carriage on sales 3,000
Closing Stock 18,000 Rent of Office 5,000
Purchases 85,800 Sales 1,40,700
Carriage on purchases 2,300
Gross profit will be
(a) Rs. 50,000 (b) Rs. 47,600
(c) Rs. 42,600 (d) Rs. 50,600
39. 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
(a) 6,000 (b) 7,500
(c) 9,375 (d) 5,625
40. X sent out certain goods to Y of Delhi. 1/10 of the goods were lost in transit. Invoice value of
goods lost Rs. 12,500. Invoice value of goods sent out on consignment will be:
(a) Rs. 1,20,000 (b) Rs. 1,25,000
(c) Rs. 1,40,000 (d) Rs. 1,00,000
41. 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
(a) Rs. 4,00,000 (b) Rs. 5,00,000
(c) Rs. 3,20,000 (d) Rs. 4,80,000
42. 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
(a) Rs. 80,000 (b) Rs. 40,000
(c) Rs. 10,000 (d) Rs. 8,000
43. X and Y share profits and losses in the ratio of 2 : 1. They take Z as a partner and the new
profit sharing ratio becomes 3 : 2 : 1. Z brings Rs. 4,500 as premium for goodwill. The full
value of goodwill will be
(a) Rs. 4,500 (b) Rs. 18,000
(c) Rs. 27,000 (d) Rs. 24,000
Common Proficiency Test (CPT) Volume - I 63
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
44. The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs. 45,000. Find out the goodwill
of two years purchase.
(a) Rs. 42,000 (b) Rs. 84,000
(c) Rs. 1,26,000 (d) Rs. 36,000
45. T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2008 and
the company pays interest half-yearly on June 30, and December 31 every year. On March 31,
2010, the amount shown as “interest accrued but not due” in the Balance Sheet will be
(a) Rs. 70,000 shown along with Debentures
(b) Rs. 2,10,000 under current liabilities
(c) Rs. 1,40,000 shown along with Debentures
(d) Rs. 2,80,000 under current liabilities
46. 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:
(a) Rs. 35,500 (b) Rs. 36,000
(c) Rs. 34,000 (d) Rs.38,000
47. Ashok purchased a machine on 01.01.2010 for Rs 1,20,000. Installation expenses were Rs.
10,000. Residual value after 5 years Rs. 5,000. On 01.07.2010, expenses for repairs were
incurred to the extent of Rs 2,000. Depreciation is provided under straight line method.
Annual Depreciation is
(a) Rs. 13,000 (b) Rs. 17,000
(c) Rs. 21,000 (d) Rs. 25,000
48. 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 Y?
(a) Rs. 4,300 (b) Rs. 4,000
(c) Rs. 4,100 (d) Rs. 5,000
49. A and B entered into joint venture for equal profits. A purchased 1,000 kg of rice costing Rs. 200
each. Carriage Rs. 2,000, insurance Rs. 3,000. 4/5th of the boxes were sold by B at Rs. 250 per
boxes. Remaining stock were taken over by B at cost. The amount of stock taken over will be:
(a) Rs. 40,000 (b) Rs. 41,000
(c) Rs. 50,000 (d) Rs. 50,200
64 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
50. 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
(a) Rs. 1,10,000 (b) Rs. 55,000
(c) Rs. 75,000 (d) None of the above
51. Electricity paid on 1 October, 2008 for the year to 30 September, 2009 was Rs. 2,400 and
electricity paid on 1 October, 2009 for the year to 30 September, 2010 was Rs. 3,200. Electricity
payable, as shown in the profit and loss account for the year ended 31 December 2009,
would be:
(a) Rs. 2,400 (b) Rs. 3,200
(c) Rs. 2,600 (d) Rs. 3,000
52. Goods costing Rs 2,00,000 sent out to consignee at Cost + 20%. Invoice value of the goods
will be
(a) Rs. 2,50,000 (b) Rs. 2,40,000
(c) Rs. 3,00,000 (d) None of the above.
53. R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June 2010 and
profits for the accounting year 2009-2010 were Rs. 24,000. How much share in profits for
the period 1st April 2010 to 30th June 2010 will be credited to D’s Account.
(a) Rs. 6,000 (b) Rs. 1,500
(c) Nil (d) Rs. 2,000
54. X of Kolkata sends out certain goods at cost + 25%. Invoice value of goods sends out
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.
The amount of commission will be:
(a) Rs. 4,800 (b) Rs. 5,200
(c) Rs. 3,200 (d) Rs. 1,600
55. Debit balance as per Cash Book of ABC Enterprises as on 31.3.2010 is
Rs. 1,500. Cheques deposited but not cleared amounts to Rs. 100 and Cheques issued but not
presented of Rs. 150. The bank allowed interest amounting Rs. 50 and collected dividend Rs.
50 on behalf of ABC Enterprises. Balance as per pass book should be
(a) Rs. 1,600 (b) Rs. 1,450
(c) Rs. 1,850 (d) Rs. 1,650
Common Proficiency Test (CPT) Volume - I 65
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
56. 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
(a) Trial balance would show the debit side to be Rs. 1,000 more than the credit
(b) Trial balance would show the credit side to be Rs. 1,000 more than the debit
(c) The debit side of the trial balance will be Rs. 2,000 more than the credit side
(d) The credit side of the trial balance will be Rs. 2,000 more than the debit side
57. 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.
(a) Rs. 3,00,000; Rs. 1,20,000 and Rs. 1,20,000
(b) Rs. 3,00,000; Rs. 1,20,000 and Rs. 1,80,000
(c) Rs. 3,00,000; Rs. 1,80,000 and Rs. 1,20,000
(d) Rs. 3,00,000; Rs. 1,80,000 and Rs. 1,80,000
58. L’s acceptances of Rs. 20,000 given to A is renewed upon cash payment of
Rs. 5,000 and the fresh bill of Rs. 15,100. Journal entry for renewal in the books of A will be
__________
(a) B/R A/c Dr 15,100
Cash A/c Dr 5,000
To L A/c 20,000
To Interest A/c 100
(b) B/R A/c Dr 20,100
To Cash A/c 5,100
To L A/c 15,000
To Interest A/c 100
(c) B/R A/c Dr 20,100
To L A/c 20,100
(d) B/R A/c Dr 15,000
Cash A/c Dr 5,000
To L A/c 20,000
59. A company forfeited 2,000 shares of Rs. 10 each (which were issued at par) held by Mr. John
for non-payment of allotment money of Rs. 4 per share. The called-up value per share was
Rs.9. On forfeiture, the amount debited to share capital will be __________
(a) Rs. 10,000 (b) Rs. 8,000
(c) Rs. 2,000 (d) Rs. 18,000.
60. X, Y and Z are partners sharing profits in the ratio 2:2:1. On retirement of Y, goodwill was
valued as Rs. 30,000. The contribution of X and Z to compensate Y will be __________
(a) Rs. 20,000 and Rs. 10,000
(b) Rs. 8,000 and Rs. 4,000
(c) They will not contribute any thing.
(d) Information is insufficient for any comment.
66 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
SECTION – B : MERCANTILE LAWS (40 MARKS)
61. Which of the following statement is true?
(a) An agreement is an unaccepted proposal
(b) An agreement enforceable by law is a contract
(c) An agreement can only consist of an offer
(d) An agreement can only consist of an acceptance
62. An offer may lapse by:
(a) Revocation (b) Counter Offer
(c) Rejection of Offer by Offeree (d) All of these
63. Consideration must move at the desire of
(a) Promisor (b) Promisee
(c) Any other person (d) Any of these
64. Which of the following statements is not true about minor’s position in a firm?
(a) He cannot become a partner in an existing firm
(b) He can become a partner in an existing firm
(c) He can be admitted only to the benefits of any existing firm
(d) He can become partner on becoming a major
65. A contract is discharged by novation which means the
(a) Cancellation of the existing contract
(b) Change in one or more terms of the contract
(c) Substitution of existing contract for a new one
(d) None of these
66. When prior to the due date of performance, the promisor absolutely refuses to perform the
contract, it is known as
(a) Abandonment of contract
(b) Remission of contract
(c) Actual breach of contract
(d) Anticipatory breach of contract
67. In case of breach of contract, which of the following remedy is available to the aggrieved
party?
(a) Suit for rescission (b) Suit for damages
(c) Suit for specific performance (d) All of these
Common Proficiency Test (CPT) Volume - I 67
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
68. A voidable contract is one which
(a) Can be enforced at the option of aggrieved party
(b) Can be enforced at the option of both the parties
(c) Cannot be enforced in a court of law
(d) Courts prohibit
69. A agrees to sell his car worth Rs. 1,00,000 to B for Rs. 20,000 only, and A’s consent was
obtained by coercion. Here, the agreement is
(a) Void (b) Valid
(c) Voidable (d) Unlawful
70. The term “goods” under Sale of Goods Act, 1930 does not include
(a) Goodwill. (b) Actionable claims.
(c) Stocks and shares. (d) Harvested crops.
71. Which of the following is not an implied condition in a contract of sale?
(a) Condition as to title
(b) Condition as to description
(c) Condition as to free from encumbrance
(d) Condition as to sample
72. Which of the following is not a form of delivery?
(a) Constructive delivery (b) Structured delivery
(c) Actual delivery (d) Symbolic delivery
73. Goods which are in existence at the time of the Contract of Sale is known as
(a) Present Goods (b) Existing Goods
(c) Specific Goods (d) None of the above
74. The doctrine of Caveat Emptor does not apply, when
(a) The goods are bought by sample
(b) The goods are bought by sample as well as description
(c) The goods are purchased under its brand name
(d) All of the above
75. If X commissioned Y, an artist, to paint a portrait of A for 200 dollars & Y uses his own
canvas and paint then it is
(a) Contract of sale (b) Contract of work and materials
(c) Sale on approval (d) Hire-Purchase agreement
68 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
76. The most important element in partnership is:
(a) Business
(b) Sharing of Profits
(c) Agreement
(d) Business to be carried on by all or any of them acting for all
77. On dissolution the partners remain liable to till
(a) Accounts are settled (b) Partners dues are paid off
(c) Public notice is given (d) The registrar strikes off the name
78. Which of the following acts are not included in the implied authority of a partner?
(a) To buy or sell goods on accounts of partners
(b) To borrow money for the purposes of firm
(c) To enter into partnership on behalf of firm
(d) To engage a lawyer to defend actions against firm
79. After retirement from firm, which of the following partners is not liable by holding out, even
if the public notice of retirement is not given?
(a) Active partner
(b) Sleeping partner
(c) Representative of deceased partner
(d) Both (b) and (c)
80. An agreement enforceable by law is a __________.
(a) Promise (b) Contract
(c) Obligation (d) Lawful Promise
81. A wrong representation when made without any intention to deceive the other party amounts
to ____________.
(a) Coercion (b) Undue Influence
(c) Misrepresentation (d) Fraud
82. When the consent of a party is obtained by coercion, undue influence, fraud or
misrepresentation, the contract is____________.
(a) Void (b) Voidable
(c) Valid (d) Illegal
83. A threatens to kill B if he does not agree to sell his scooter to him for Rs. 1,000 only. Here B’s
consent is obtained by __________.
(a) Undue influence (b) Fraud
(c) Coercion (d) None of these
Common Proficiency Test (CPT) Volume - I 69
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
84. Where the consent of both the parties is given by mistake, the contract is ___________
(a) Void (b) Valid
(c) Voidable (d) Illegal
85. A mistake as to a law not in force in India has the same effect as ______________.
(a) Mistake of fact (b) Mistake of Indian law
(c) Fraud (d) Misrepresentation
86. An agreement, which prevents a person from carrying a lawful business, is ___________.
(a) Valid (b) Void
(c) Voidable (d) Contingent
87. A agrees to sell his car to B at a price which B may be able to pay. This agreement is
___________.
(a) Void (b) Valid
(c) Voidable (d) Contingent
88. An agreement to pay money or money’s worth on the happening or non-happening of a
specified uncertain event is a ____________.
(a) Wagering agreement (b) Contingent contract
(c) Quasi contract (d) Uncertain agreement.
89. Agreement-the meaning of which is uncertain is ________.
(a) Valid (b) Void
(c) Voidable (d) Illegal
90. The goods are at the risk of a party who has the ____________.
(a) Ownership of goods (b) Possession of goods
(c) Custody of goods (d) Both (b) and (c)
91. In case of unconditional contract of sale, the property passes to the buyer at the time of
making the contract. For this rule to apply, the goods must be ___________.
(a) Specific (b) In a deliverable state
(c) Physically transferred to buyer (d) Both (a) and (b)
92. In case of sale of unascertained goods, the ownership is transferred to the buyer when the
goods are _________.
(a) Ascertained (b) Appropriated to the contract
(c) Weighed and measured (d) Both (a) and (b)
93. In case of sale on approval, the ownership is transferred to the buyer when he _________.
(a) Accepts the goods (b) Adopts the transaction
(c) Fails to return goods (d) In all the above cases.
70 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
94. The bidder at an auction sale can withdraw his bid __________.
(a) Any time during auction (b) Before fall of hammer
(c) Before payment of price (d) Cannot withdraw at all.
95. A partner can retire on_____________.
(a) Reaching the age of superannuation
(b) On the balance in the capital account reaching a certain amount
(c) In accordance with the Partnership Deed
(d) On the condition of his nominee becoming a partner
96. Death of partner has the effect of____________.
(a) Dissolving the firm
(b) Result in continuance of the business of the firm
(c) His heirs joining the firm
(d) Computation of profits upto the date of death
97. The reconstitution of the firm takes place in case of __________
(a) Admission of a partner (b) Retirement of a partner
(c) Expulsion or death of a partner (d) All of the above
98. A partner may be expelled from the firm on the fulfillment of the condition that the expulsion
power is exercised ______________.
(a) As given by express contract (b) By majority of partners
(c) In absolute good faith (d) All of the above
99. A contracts with B to buy a necklace, believing it is made of pearls whereas in fact it is made
of imitation pearls of no value. B knows that A is mistaken and takes no steps to correct the
error. Now A wants to cancel the contract on the basis of fraud. Which of the following
statement is correct?
(a) A can cancel the contract alleging fraud
(b) A cannot cancel the contract
(c) A can cancel the contract alleging undue influence
(d) A can claim damages
100. A timber merchant agreed to supply best teak at a certain agreed price to a builder. Later
the merchant supplied timber which was identified as ordinary class of timber and demanded
the payment from the builder. Which of the following statements is/are true?
(a) Builder can reject the goods and can claim damages
(b) Builder has to accept the goods
(c) Builder has to pay the price by taking delivery of teak wood
(d) Timber merchant cannot plead the doctrine of caveat emptor
Common Proficiency Test (CPT) Volume - I 71
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
SECTION – C : GENERAL ECONOMICS (50 MARKS)
101. Which of the following statements is correct?
(a) Agriculture occupies 10 percent population of India
(b) Nearly 5 percent population of India is below the poverty line
(c) The production techniques are backward
(d) None of the above
102. The green revolution is also known as:
(a) Wheat revolution (b) Rice revolution
(c) Maize revolution (d) Forest revolution
103. Which of the following has been specifically established to meet the requirements of credit
of the farmers and villagers?
(a) ICICI Bank (b) Regional Rural Banks
(c) State Bank of India (d) EXIM Bank
104. Per capita national income means
(a) NNP ÷ population (b) Total capital ÷ population
(c) Population ÷ NNP (d) None of the above.
105. In the theory of demographic transition in the last stage,
(a) Birth rate rises, death rate rises
(b) Birth rate falls, death rate rises
(c) Birth rate rises, death rate falls
(d) Birth rate falls, death rate falls
106. Work force refers to that part of:
(a) Labour force which is employed
(b) Population which is unemployed
(c) Population which is forced to work
(d) Labour force which is unemployed
107. According to the latest NSSO survey (2004):
(a) Unemployment rates on the basis of current daily status were same as those on the basis of
usual status
(b) Unemployment rates on the basis of current daily status were higher than those on the
basis of usual status
(c) Unemployment rates on the basis of current daily status were lower than those on the
basis of usual status
(d) None of the above
72 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
108. Electricity generated from radio active elements is called:
(a) Thermal electricity (b) Atomic energy
(c) Hydel electricity (d) Tidal energy
109. FRBM Act stands for:
(a) Fiscal Revenue and Budget Management
(b) Foreign Revenue and Business Management
(c) Fiscal Responsibility and Budget Management
(d) Foreign Responsibility and Budget Management
110. The pre-condition for privatization to be successful requires:
(a) Liberalization and de-regulation of the economy.
(b) Capital markets should be sufficiently developed.
(c) None of the above
(d) Both of the above (a) & (b)
111. Under the new industrial policy, 1991:
(a) The mandatory convertibility clause is applicable for all term loans
(b) The mandatory convertibility clause is applicable for term loans of more than 10 years.
(c) The mandatory convertibility clause is applicable for term loans of less than 10 years.
(d) The mandatory convertibility clause is no longer applicable
112. Fiscal policy means:
(a) Policy relating to money and banking in a country
(b) Policy relating to public revenue and public expenditure
(c) Policy relating to non banking financial institutions
(d) None of the above
113. Money in traditional sense:
(a) Serves as a medium of exchange
(b) Serves as a store of value
(c) Serves as both medium of exchange and store of value
(d) Serves neither as medium of exchange and store of value
114. Narrow money refers to:
(a) M (b) M
1 2
(c) M (d) M
3 4
115. Which of the following statements about banks is incorrect?
(a) Banks encourage saving habits among people
(b) Banks mobilize savings and make them available for production
(c) Banks help in creating credit money
(d) None of the above
Common Proficiency Test (CPT) Volume - I 73
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
116. Who is the official “lender of the last resort” in India?
(a) SBI (b) PNB
(c) RBI (d) OBC
117. Over the planning period the share of industrial sector in the GDP of India has ___________.
(a) Increased
(b) Decreased
(c) Remained constant
(d) Remained above 50 percent
118. Three steel plants in Bhilai, Rourkela and Durgapur were set up in the __________.
(a) First plan (b) Second plan
(c) Third plan (d) Fourth plan
119. The annual addition to the country’s population is almost equal to the total population of
___________.
(a) Bangladesh (b) Australia
(c) Japan (d) China
120. India’s passing through _________ stage of demographic transition.
(a) Fourth (b) Third
(c) First (d) Second
121. At present only __________ industries are reserved for the public sector.
(a) 5 (b) 7
(c) 8 (d) 3
122. At present, 100 percent FDI is allowed in __________ .
(a) Defence (b) Drugs and pharmaceuticals
(c) Banks (d) Insurance
123. When due to introduction of new machinery, some workers tend to be replaced by machines,
their unemployment is termed as __________.
(a) Structural (b) Technological
(c) Mechanical (d) Seasonal
124. Most of the unemployment in India is __________.
(a) Voluntary (b) Structural
(c) Frictional (d) Technical
74 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
125. Rural bank branches constitute ___ percent of total bank branches in India. (as on June 2008)
(a) 14 (b) 60
(c) 41 (d) 82
126. A study of how increases in the corporate income tax rate will affect the national
unemployment rate is an example of__________.
(a) Macroeconomics (b) Descriptive economics
(c) Microeconomics (d) Normative economics
127. If the marginal (additional) opportunity cost is a constant then the PPC would be __________.
(a) Straight line (b) Convex
(c) Backward leading (d) Concave
128. If a good is a luxury, its income elasticity of demand is__________.
(a) Positive and less than 1. (b) Negative but greater than -1.
(c) Positive and greater than 1. (d) Zero.
129. In the case of a Giffen good, the demand curve will be __________.
(a) Horizontal (b) Downward-sloping to the right
(c) Upward-sloping to the right (d) Vertical
130 . __________ is also known as planning curve.
(a) Long run average cost curve (b) Short run average cost curve
(c) Average variable cost curve (d) Average total cost curve
131. If increasing air fares increases revenues and decreasing them decreases revenues, then the
demand for air travel has a price elasticity of:
(a) Zero (b) Greater than zero but less than one
(c) One (d) Greater than one
132. When __________, we know that the firms must be producing at the minimum point of the
average cost curve and so there will be productive efficiency.
(a) AC = AR (b) MC = AC
(c) MC = MR (d) AR = MR
Common Proficiency Test (CPT) Volume - I 75
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
Figure 1 gives the production possibilities frontier of an economy that produces two types
of goods, guns and bread. Read the figure and answer questions 133-135.
133. Which point on the PPF shows a productively efficient level of output?
(a) A
(b) B
(c) C
(d) All of the above
134. Which of the following clearly represents a movement toward greater productive efficiency?
(a) A movement from point A to point B
(b) A movement from point C to point D
(c) A movement from point F to point C
(d) A movement from point E to point B
135. Which of the following illustrates a decrease in unemployment using the PPF?
(a) A movement down along the PPF
(b) A rightward shift of the PPF
(c) A movement from a point on the PPF to a point inside the PPF
(d) A movement from a point inside the PPF to a point on the PPF
Read the para below and answer questions 136-137.
It was the World Trade Organisation (WTO) which gave a real push to the process of
globalization. The World Trade Organisation came into existence on 1st January 1995. It is a
powerful body which aims at making the whole world a big village where there is a free flow
of goods and services and there is no barrier to trade. At its heart are the WTO agreements,
negotiated and signed by the bulk of the world’s trading nations.
136. What is globalization?
(a) It refers to the transfer of assets from public to private ownership
(b) It refers to the disposal of public sector’s equity in the market
(c) It means integrating the domestic economy with the world economy
(d) None of the above
76 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
137. Which of the following is false about WTO?
(a) It is the main organ for implementing the Multilateral Trade Agreements
(b) It is global in its membership
(c) It has far wider scope than GATT
(d) Only countries having more than prescribed level of total GDP can become its members
A competitive firm sells as much as of its product as it chooses at a market price of Rs. 100
per unit. Its fixed cost is Rs. 300 and its variable costs (in rupees) for different levels of
production are shown in the following table. Use Table 2 to answer questions 138-141.
Table 2
Quantity Variable Fixed Total Average Average Marginal
Cost cost cost variable cost total cost cost
0 0 - - -
5 250
10 470
15 700
20 980
25 1350
30 1850
35 2520
40 3400
45 4530
50 5950
138. When production is 40 units, the average total cost is
(a) Rs. 4.40 (b) Rs. 7.50
(c) Rs. 85 (d) Rs. 92.50
139. In the table marginal cost per unit that corresponds to 40 units of production is
(a) Rs. 22 (b) Rs. 85
(c) Rs. 176 (d) Rs. 880
140. To maximize profit, the firm should produce
(a) 15 units (b) 30 units
(c) 35 units (d) 50 units
141. If the market price drops from Rs 100 to Rs 56, the firm’s short run response should be
(a) Shut down
(b) Produce 5 units
(c) Produce 20 units
(d) Continue to produce the same number of units as before the drop in price.
Common Proficiency Test (CPT) Volume - I 77
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
Read the following data and answer Questions number 142-147
A shopkeeper sells gel pen at Rs. 10 per pen. At this price he can sell 120 per month.
After some time, he raises the price to Rs. 15 per pen. Following the price rise:
(cid:129) Only 60 pens were sold every month.
(cid:129) The number of refills bought went down from 200 to 150.
(cid:129) The number of ink pen customers bought went up from 90 to 180 per month.
142. The price elasticity of demand when gel pen’s price increases from Rs. 10 per pen to Rs. 15
per pen is equal to:
(a) 2.5 (b) 1.0
(c) 1.66 (d) 2.66
143. The cross elasticity of monthly demand for refills when the price of gel pen increase from
Rs. 10 to Rs.15 is equal to:
(a) - 0.71 (b) + 0.25
(c) - 0.1 (d) + 0.38
144. The cross elasticity of monthly demand for ink pen when the price of gel pen increases from
Rs. 10 to Rs. 15 is equal to:
(a) + 1.66 (b) -1.05
(c) –2.09 (d) + 2.09
145. What can be said about the price elasticity of demand for pen?
(a) It is perfectly elastic (b) It is elastic
(c) It is perfectly inelastic (d) It is inelastic
146. Suppose income of the residents of locality increases by 50% and the quantity of gel pens
demanded increases by 20%. What is income elasticity of demand for gel pen?
(a) 0.4 (b) 0.6
(c) 1.25 (d) 1.50
147. We can say that gel pen in economics sense is a/an
(a) Luxury good (b) Inferior good
(c) Normal good (d) Nothing can be said.
148. Suppose that a sole proprietorship is earning total revenues of Rs.120,000 and is incurring
explicit costs of Rs 90,000. If the owner could work for another company for Rs.50,000 a
year, we would conclude that:
(a) the firm is incurring an economic loss
(b) implicit costs are Rs. 90,000
(c) the total economic costs are Rs. 100,000
(d) the individual is earning an economic profit of Rs. 25,000
78 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
Use Table 3 to answer questions 149-150.
Table 3
Hours of Labour Total Output Marginal Product
0 — —
1 300 300
2 — 240
3 720 —
149. What is the total output when 2 hours of labour are employed?
(a) 160 (b) 200
(c) 360 (d) 540
150. What is the marginal product of the third hour of labour?
(a) 120 (b) 160
(c) 200 (d) 180
SECTION – D : QUANTITATIVE APTITUDE (50 MARKS)
151. Statistics is concerned with
(a) Qualitative information (b) Quantitative information
(c) (a) or (b) (d) Both (a) and (b)
152. For any two numbers Standard Deviation is always
(a) Twice the range (b) Half of the range
(c) Square of the range (d) None of these
153. Bivariate Data are the data collected for
(a) Two variables
(b) More than two variables
(c) Two variables at the same point of time
(d) Two variables at different points of time
154. Karl Pearson’s coefficient is defined from
(a) Ungrouped data (b) Grouped data
(c) Both (d) None
155. An experiment is known to be random if the results of the experiment
(a) Cannot be predicted
(b) Can be predicted
(c) Can be split into further experiments
(d) Can be selected at random
Common Proficiency Test (CPT) Volume - I 79
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
156. A theoretical probability distribution
(a) Does not exist (b) Exists only in theory
(c) Exists in real life (d) Both (b) and (c)
157. Poisson distribution may be
(a) Unimodal (b) Bimodal
(c) Multi-modal (d) (a) or (b)
158. Standard error can be described as
(a) The error committed in sampling
(b) The error committed in sample survey
(c) The error committed in estimating a parameter
(d) Standard deviation of a statistic
159. P is the index for time
01
(a) 1 on 0 (b) 0 on 1
(c) 1 on 1 (d) 0 on 0
160. The present value of an annuity of Rs. 3,000 for 15 years at 4.5% p.a CI is
(a) Rs. 23,809.41 (b) Rs. 32,218.644
(c) Rs. 32,908.41 (d) None of these.
161. If b2– 4ac >0 then the roots are ______ and ______ .
(a) Real, Equal (b) Real, Unequal
(c) Imaginary, Unequal (d) Imaginary, Equal
162. If an investment of Rs. 60,000 and Rs. 70,000 respectively yields an income of
Rs. 5,750 Rs. 6,500 an investment of Rs. 90,000 would yield income of Rs. ___________
(a) 7,500 (b) 8,000
(c) 7,750 (d) 7,800
163. In ______ ways can 4 Americans and 4 English men be seated at a round table so that no 2
Americans may be together.
(a) 4! × 3! (b) 4P
4
(c) 3 ×4P (d) 4C
4 4
164. The last term of the series x², x, 1, …. to 31 terms is _______ .
(a) x28 (b) 1/x
(c) 1/x28 (d) 1/x30
80 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
165. The sum of all natural numbers between 200 and 400 which are divisible by 7 is ______.
(a) 7730 (b) 8729
(c) 7729 (d) 8730
166. An Ogive can be prepared in ______ different ways.
(a) 2 (b) 3
(c) 4 (d) 5
167. Mutually inclusive classification is usually meant for______ .
(a) A discrete variable (b) A continuous variable
(c) An attribute (d) All these
168. ______ is an absolute measure of dispersion.
(a) Range (b) Mean Deviation
(c) Standard Deviation (d) All these measures
169. For finding the degree of agreement about beauty between two Judges in a Beauty Contest,
we use______ .
(a) Scatter diagram
(b) Coefficient of rank correlation
(c) Coefficient of correlation
(d) Coefficient of concurrent deviation
170. Probability density function is always ______ .
(a) Greater than 0 (b) Greater than equal to 0
(c) Less than 0 (d) Less than equal to 0
1
⎛ 8 ⎞ 3
171. The value of ⎜ ⎟ is
⎝27⎠
(a) 2/3 (b) 3/2
(c) 2/9 (d) None of these.
172. The equation –7x + 1 = 5 – 3x will be satisfied for x equal to
(a) 2 (b) –1
(c) 1 (d) None of these
173. The sum of two numbers is 52 and their difference is 2. The numbers are
(a) 17 and 15 (b) 12 and 10
(c) 27 and 25 (d) None of these.
174. In what time will Rs. 85,000 amount to Rs. 1,57,675 at 4.5% p.a.Simple Interest?
(a) 18 years (b) 18.5 years
(c) 19 years (d) 20 years
Common Proficiency Test (CPT) Volume - I 81
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
175. On what sum will the compound interest at 5% per annum for two years compounded
annually be Rs. 1,640?
(a) Rs. 16000 (b) Rs. 17000
(c) Rs. 18000 (d) Rs. 19000
176. Find the future value of an annuity of Rs.500 is made annually for 7 years at interest rate of
14% compounded annually. Given that (1.14)7 = 2.5023.
(a) Rs. 5,635.25 (b) Rs. 5,365.25
(c) Rs. 6,535.25 (d) Rs. 6,355.25
177. Find n if nP = 60
3
(a) 4 (b) 5
(c) 6 (d) 7
178. A man has 5 friends. In how many ways can he invite one or more of his friends to dinner?
(a) 29 (b) 30
(c) 31 (d) 32
179. The 4 arithmetic means between –2 and 23 are
(a) 3, 13, 8, 18 (b) 18, 3, 8, 13
(c) 3, 8, 13, 18 (d) None of these
180. The second term of a G P is 24 and the fifth term is 81. The series is
(a) 16, 36, 24, 54,….. (b) 24, 36, 53,… …
(c) 16, 24, 36, 54,…… (d) None of these
181. 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
(a) 6 (b) 7
(c) 1 (d) None of these
x2 −6x+9
182. Evaluate: lim .
x→3 x–3
(a) –1 (b) 0
(c) 1 (d) 2
x2 − x
183. lim is equal to
x→1 x –1
(a) –3 (b) 1/3
(c) 3 (d) None of these
82 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
dx
184. If y = x (x –1) (x – 2) then is
dy
(a) 3x2 – 6x + 2 (b) –6x + 2
(c) 3x2 + 2 (d) None of these.
3−5x
185. The derivative of w.r.t. x is
3+5x
(a) 30 / (3 + 5x)2 (b) 1 / (3 + 5x)2
(c) –30 / (3 + 5x)2 (d) None of these
186. Integration of 3 – 2x – x4 will become
x5
(a) – x2 – x5 / 5 (b) 3x – x2 –
5
(c) 3x – x2 – x5 / 5 + k (d) None of these
1( )
∫ 2x2 −x3
187. Evaluate dx and the value is
0
(a) 4/3 (b) 5/12
(c) – 4/3 (d) None of these.
188. Find the number of observations between 250 and 300 from the following data:
Value : More than 200 More than 250 More than 300 More than 350
No. of observations: 56 38 15 0
(a) 56 (b) 23
(c) 15 (d) 8
189. What is the median for the following observations?
5, 8, 6, 9, 11, 4.
(a) 6 (b) 7
(c) 8 (d) None of these
190. The third decile for the numbers 15, 10, 20, 25, 18, 11, 9, 12 is
(a) 13 (b) 10.70
(c) 11 (d) 11.50
191. If the range of x is 2, what would be the range of – 3x + 50 ?
(a) 2 (b) 6
(c) –6 (d) 44
Common Proficiency Test (CPT) Volume - I 83
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 3
192. What is the standard deviation of 5, 5, 9, 9, 9, 10, 5, 10, 10?
(a) 14 (b) 42
(c) 4.50 (d) 8
193. When r = 0 then cov(x,y) is equal to
(a) + 1 (b) – 1
(c) 0 (d) None of these
194. If an unbiased die is rolled once, the odds in favour of getting a point which is a multiple of
3 is
(a) 1:2 (b) 2:1
(c) 1:3 (d) 3:1
195. If A, B and C are mutually exclusive independant and exhaustive events then what is the
probability that they occur simultaneously?
(a) 1 (b) 0.50
(c) 0 (d) Any value between 0 and 1
196. It is given that a family of 2 children has a girl, what is the probability that the other child is
also a girl?
(a) 0.50 (b) 0.75
(c) 1/3 (d) 2/3
197. If the quartile deviation of a normal curve is 4.05, then its mean deviation is
(a) 5.26 (b) 6.24
(c) 4.24 (d) 4.80
198. If 2 log x = 4 log 3, the x is equal to
(a) 3 (b) 9
(c) 2 (d) None of these.
199. The number of subsets of the sets {6, 8, 11} is
(a) 9 (b) 6
(c) 8 (d) None of these.
ex +1
200. lim is evaluated to be
x→∞ex +2
(a) 0 (b) –1
(c) 1 (d) None of these.
(cid:2)(cid:2)(cid:2)
84 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
COMMON PROFICIENCY TEST
Model Test Paper – BOS/CPT – 4
Time : 4 hours Maximum Marks : 200
The test is divided into four sections.
Every correct answer carries + 1 mark each and – 0.25 mark will be deducted for each wrong
answer.
SECTION – A : FUNDAMENTALS OF ACCOUNTING (60 MARKS)
1. In the books of manufacturing concern, opening stock consists of
(a) Raw materials (b) Work-in-progress
(c) Finished goods (d) All of the above
2. When adjusted purchase is shown on the debit column of the trial balance then
(a) Both opening stock and closing stock do not appear in the trial balance
(b) Closing stock is shown in the trial balance and not the opening stock
(c) Opening stock is shown in the trial balance and not the closing stock
(d) Both opening and closing stock appear in the trial balance
3. Following is the example of external users:
(a) Government (b) Owners
(c) Management (d) Employees
4. “Business unit is separate and distinct from the person who supply capital to it”, is based on
(a) Money measurement concept (b) Going concern concept
(c) Business entity concept (d) Dual aspect concept
Common Proficiency Test (CPT) Volume - I 85
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 4
5. State the case where the going concern concept is applied?
(a) When an enterprise was set up for a particular purpose, which has been achieved, or to be
achieved shortly
(b) When a receiver or liquidator has been appointed in case of as a company which is to be
liquidated
(c) Fixed assets are acquired for use in the business for earning revenues and are not meant
for resale
(d) When an enterprise is declared sick
6. If two or more transactions of the same nature are journalised together having either the
debit or the credit account common is known as
(a) Compound journal entry (b) Separate journal entry
(c) Posting (d) None of the above
7. If the cheque issued is not presented for the payment upto the date of the preparation of the
Bank Reconciliation Statement, then the balance as per Pass Book will be
(a) Higher than the balance shown by the cashbook by the amount of unpresented cheque
(b) Lower than the balance shown by the cashbook by the amount of unpresented cheque
(c) Same as shown by the cashbook
(d) None of the above
8. Whenever errors are noticed in the accounting records, they should be rectified
(a) At the time of preparation of the trial balance
(b) Without waiting the accounting year to end
(c) After the preparation of final accounts
(d) In the next accounting year
9. Parties to a bill of exchange are
(a) Drawer (b) Drawee
(c) Payee (d) All of the above
10. All the expenditures and receipts of revenue nature go to
(a) Trading account (b) Profit and loss account
(c) Balance Sheet (d) Either to (a) or (b)
11. A _______ is sent to a customer when he returns the goods.
(a) Debit note (b) Credit note
(c) Proforma invoice (d) None of the above
12. Noting charges are paid at the time of _______ of a bill.
(a) Retirement (b) Renewal
(c) Dishonour (d) None of the above
86 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
13. Depreciation of fixed assets is an example of _______ expenditure.
(a) Revenue (b) Deferred revenue
(c) Capital (d) None of the above
14. Interest on drawings is _______ for the business.
(a) Loss (b) Expense
(c) Gain (d) None of the three
15. An amount of Rs.200 received from A credited to B would affect _______
(a) Accounts of A and B both (b) A’s account only
(c) Cash account (d) B’s account only
16. In _______ method, depreciation is charged by allocating depreciable cost in proposition of
the annual output to the probable life-time output.
(a) Working hours method (b) Replacement method
(c) Revaluation method (d) Production units method
17. As per section 12 of Negotiable Instruments Act, which of the following is not a foreign bill?
(a) A bill drawn outside India and made payable outside India
(b) A bill drawn outside India and made payable in India
(c) A bill drawn outside India on a person resident in India
(d) A bill drawn in India on a person resident outside India and made payable outside India
18. General reserve at the time of admission of a new partner is transferred to ______.
(a) Profit and Loss adjontment Account
(b) Old partners’ capital accounts
(c) Revaluation account
(d) Memorandum revaluation account
19. A suspense account facilitates the preparation of ______ even when the ______ has not
tallied.
(a) Ledgers; Trial balance
(b) Financial statements; Trial Balance
(c) Trial balance; Financial statements
(d) Journal; Trial balance
20. Recording of a transaction in the ledger is called ______ .
(a) Costing (b) Balancing
(c) Journalizing (d) Posting
Common Proficiency Test (CPT) Volume - I 87
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 4
21. Accounting has certain norms to be observed by the accountants in recording of transactions
and preparation of financial statements. These norms reduce the vagueness and chances of
misunderstanding by harmonizing the varied accounting practices. These norms are
(a) Accounting regulations (b) Accounting guidance notes
(c) Accounting standards (d) Accounting framework
22. RPG Ltd. purchased equipment from PQR Ltd. for Rs.50,000 on 1st April, 2009. The freight
and cartage of Rs.2,000 is spent to bring the asset to the factory and Rs.3,000 is incurred on
installing the equipment to make it possible for the intended use. The market price of
machinery on 31st April, 2010 is Rs.60,000 and the accountant of the company wants to
disclose the machinery at Rs.60,000 in financial statements. However, the auditor emphasizes
that the machinery should be valued at Rs.55,000 (50,000+2,000+3,000) according to:
(a) Money measurement principle (b) Historical cost concept
(c) Full disclosure principle (d) Revenue recognition
23. Mr. A started a business on 1st January 2009 with Rs. 5,00,000. During the year he bought
goods worth Rs. 1,00,000 on credit and sold 80% of the same goods at profit of 20% on cost.
At the end of the year 2009, the amount of opening stock to be shown in the trial balance of
Mr. A will be
(a) Rs. 20,000 (b) Rs. 24,000
(c) Rs. 1,00,000 (d) Nil
24. Sundry debtors on 31st March 2010 are Rs.55,200. Further bad debts are Rs.200. Provision
for doubtful debts are to be made on debtors @ 5% and also provision of discount is to be
made on debtors @ 2%. The amount of provision of doubtful debts will be
(a) Rs.1,045 (b) Rs.2,750
(c) Rs.1,100 (d) Rs.2,760
25. A firm purchases a 5 years’ lease for Rs. 40,000 on 1st January. It decides to write off
depreciation on the Annuity method, presuming the rate of interest to be 5% per annum.
The annuity for it is 0.230975. The amount of annual depreciation will be
(a) Rs. 8,000 (b) Rs. 2,000
(c) Rs. 9,239 (d) Rs. 6,000
26. The balance of machine on 31st March 2010 is Rs.72,900 (after changing depreciation of the
year). The machine was purchased on 1st April 2007 charging depreciation @10% p.a. by
diminishing balance method. The cost price of the machine as on 1st April 2007 would be
(a) Rs. 1,00,000 (b) Rs. 90,000
(c) Rs. 81,000 (d) Rs. 72,900
88 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
27. On May 01, 2009, Y Ltd. issued 7% 40,000 convertible debentures of Rs.100 each at a premium
of 20%. Interest is payable on September 30 and March 31, every year. Assuming that the
interest runs from the date of issue, the amount of interest expenditure debited to Profit and
loss Account for the year ended March 31, 2010 will be
(a) Rs. 2,80,000 (b) Rs. 2,33,333
(c) Rs. 3,36,000 (d) Rs.2,56,667
28. A company cannot issue redeemable preference shares for a period exceeding
(a) 6 years (b) 7 years
(c) 8 years (d) 20 years
29. E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. The
amount payable on application is Rs.2. F applied for 420 shares. The number of shares
allotted and the amount carried forward for adjustment against allotment money due from
F will be
(a) 60 shares; Rs.120 (b) 340 shares; Rs.160
(c) 320 shares; Rs.200 (d) 300 shares; Rs.240
30. Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The
company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share.
He paid Rs.6 for application and allotment money. On forfeiture, the share capital account
will be _________.
(a) Debited by Rs. 2,000 (b) Debited by Rs. 1,600
(c) Credited by Rs. 1,600 (d) Debited by Rs. 1,200
31. R, J and D are partners sharing profits in the ratio 7:5:4. D died on 30th June 2010 and
profits for the accounting year 2009-2010 were Rs. 24,000. How much share in profits for
the period 1st April 2010 to 30th June 2010 will be credited to D’s Account.
(a) Rs. 6,000 (b) Rs. 1,500
(c) Nil (d) Rs. 2,000
32. 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
(a) Rs.1,10,000 (b) Rs. 55,000
(c) Rs. 75,000 (d) None of the above
33. A second hand car is purchased for Rs. 10,000, the amount of Rs. 1,000 is spent on its
repairs, Rs. 500 is incurred to get the car registered in owner’s name and Rs. 1,200 is paid
as dealer’s commission. The amount debited to car account will be
(a) Rs. 10,000 (b) Rs. 10,500
(c) Rs. 11,500 (d) Rs. 12,700
Common Proficiency Test (CPT) Volume - I 89
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 4
34. A bill of Rs. 12,000 was discounted by A with the banker for Rs. 11,880. At maturity, the bill
returned dishonoured, noting charges Rs 20. How much amount will the bank deduct from
A’s bank balance at the time of such dishonour?
(a) Rs. 12,000 (b) Rs. 11,880
(c) Rs. 12,020 (d) Rs. 11,900
35. In a joint venture between A and B, A purchased goods costing Rs.42,500. B sold goods
costing Rs. 40,000 at Rs. 50,000. Balance goods were taken over by A at same gross profit
percentage as in case of sale. The amount of goods taken over by A will be:
(a) Rs. 3,125 (b) Rs. 2,500
(c) Rs. 3,000 (d) None of the above
36. Mr. X is a partner in a firm. He withdraws Rs.200 at the end of each month. If rate of
interest on drawings is @ 5% p.a., the interest on drawings is
(a) Rs. 65 (b) Rs. 55
(c) Rs. 60 (d) Rs. 50
37. Mohan and Sohan are partners in a firm sharing profits and losses in the ratio 5:3. The firm
earned profits during last four years amounting Rs.18,000, Rs.8,500 (loss), Rs.30,000 and
Rs.16,500 respectively. The value of goodwill on the basis of one and a half year’s purchase
of average profits of last four years will be
(a) Rs.14,000 (b) Rs.27,375
(c) Rs.21,000 (d) Nil
38. A to whom 100 shares of Rs.10 each was allotted at par, paid Rs.3 on application, Rs.3 on
allotment but could not pay the first and final call money of Rs.4. His shares were forfeited
by the directors. The amount to be credited to shares forfeited account will be
(a) Rs.500 (b) Rs.400
(c) Rs.600 (d) Rs.1,000
39. Balance as per cash book is Rs. 5,000. Cheques issued but not presented for payment Rs.
2,000 and cheques sent for collection but not collected Rs. 1,500. The Bank had wrongly
debited the account of firm by Rs. 20. Balance as per pass book will be
(a) Rs. 5,500 (b) Rs. 5,480
(c) Rs. 5,700 (d) Rs. 8,300
40. Following are the extracts from the trial balance of a firm as on 31st December, 2009:
Particulars Dr. Cr.
Investments in 6% Debentures of A Ltd. (Interest Rs. 30,000
payable on 31st March and 30th September)
Interest on investments Rs. 900
The amount of accrued interest on 31st December will be
(a) Rs. 1,800 (b) Rs. 900
(c) Rs. 450 (d) None of the above.
90 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
41. Following are the extracts from the Trial Balance of a firm as on 31st December, 2009.
Particulars Rs.
Sundry debtors 30,000
Bad debts 5,000
Additional information:
(i) After preparing the trial balance, it is learnt that a debtor, Mohan became insolvent
and therefore, the entire amount of Rs.3,000 due from him was irrecoverable.
(ii) 10% provision for bad and doubtful debts is generally created.
The amount of provision for bad and doubtful debts to be charged to profit and loss
account will be
(a) Rs. 3,000 (b) Rs. 2,700
(c) Rs. 2,500 (d) None of the three
42. A and B are partners in a firm. During the year 2009, A withdrew Rs.1,000 p.m. and B
withdraw Rs.500 p.m. on the first day of each month for personal use. Interest on drawings
is to be charged @ 10% p.a. The interest on drawings will be
(a) Rs. 650 (b) Rs. 975
(c) Rs. 900 (d) Rs. 1,800
43. A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They have invested
capitals of Rs.40,000 and Rs.25,000 respectively. As per the partnership deed, they are entitled
to interest on capital @ 5% p.a. before dividing the profits. During the year, the firm earned
a profit of Rs.3,900 before allowing interest. The net profit will be apportioned as
(a) Rs.260 to A and Rs.390 to B
(b) Rs.390 to A and Rs.260 to B
(c) Rs.2,340 to A and Rs.1,560 to B
(d) Rs.1,560 to A and Rs.2,340 to B
44. Advertisement expenditure of Rs.10,000 paid on 30.12.2009, the advertisement in respect of
which has appeared in the magazines of January, 2010.
This expenditure will be
(a) Shown as ‘expense’ in the financial statements of the year ended 31st December, 2009
(b) Shown as ‘liability’ in the financial statements of the year ended 31st December, 2009
(c) Shown as prepaid expense in the financial statements of the year ended 31st December,
2009
(d) None of the three
45. Our acceptance to Mr. A for Rs.8,000 renewed for 3 months on the condition that Rs.2,000 is
paid in cash immediately and the bill for remaining balance to carry out interest at 18% p.a.
The amount of the renewed bill of exchange will be
(a) Rs.6,270 (b) Rs.8,270
(c) Rs.8,000 (d) None of the three
Common Proficiency Test (CPT) Volume - I 91
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 4
46. On 1st January, 2009, Alpha Ltd. purchased a machine for Rs.50,000 and spent Rs.4,000 on its
carriage and Rs.2,000 on its installation. On the date of purchase, it was estimated that the
effective life of the machine will be 10 years and after 10 years its scrap value will be Rs.6,000.
Depreciation is charged on straight line basis. Depreciation for the year 2009 will be
(a) Rs.4,600 (b) Rs.5,000
(c) Rs.4,800 (d) Rs.4,500
47. Ram and Gopal are partners sharing profits and losses in the ratio of 2:1. Gopal gave a loan
of Rs.12,000 to the firm. They did not have any specific agreement about interest on loan
mentioned in the partnership deed. Gopal claims interest on loan @ 10% p.a. The interest
on loan as per rules of Partnership Act, 1932 will be:
(a) Rs.840 (b) Rs.820
(c) Rs.720 (d) Rs.960
48. Mr. A is a partner in a firm along with Mr. B. Both contributed capitals of Rs.40,000 and
Rs.50,000 respectively on the 1st of July, 2009. Interest on capital is to be charged @ 10%
p.a. Books of account are to be closed on 31st December, 2009. Interest on capital is
(a) Rs.2,500 (b) Rs.2,000
(c) Rs.4,500 (d) None of the above
49. A firm has an average profit of Rs.60,000. Rate of return on capital employed is 12.5% p.a.
Total capital employed in the firm was Rs.4,00,000. Goodwill on the basis of two years
purchase of super profits is
(a) Rs.20,000 (b) Rs.15,000
(c) Rs.10,000 (d) None of the above.
50. A transport company purchases a truck for Rs.2,00,000 on 1st January, 2009. It charges
20% depreciation p.a. according to w.d.v. method. The truck was sold on 1st July, 2010 for a
sum of Rs.1,60,000.
The profit or loss on sale of truck is
(a) Loss of Rs. 16,000 (b) Profit of Rs. 16,000
(c) Profit of Rs. 12,000 (d) Loss of Rs. 12,000
51. Ram started business with cash Rs.50,000
Purchased goods from Mohan on credit Rs.20,000
Sold goods to Shyam (costing Rs.3,000) for cash Rs.3,600
The accounting equation on the basis of the above transactions will be
(a) Assets Rs.70,600 = Laibilities Rs.3,600+Owner’s equity Rs.67,000
(b) Assets Rs.70,600 = Liabilities Rs.50,600+Owner’s equity Rs.20,000
(c) Assets Rs.70,600= Liabilities Rs.20,000+Owner’s equity Rs.50,600
(d) None of the three
92 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
52. Value of physical stock on 15.4.2010 was Rs.3,00,000. Sales amounting Rs.1,00,000 and
purchases worth Rs.50,000 were held between 31.3.2010 and 15.4.2010. Goods are sold at a
profit of 20% on sales. Value of inventory as on 31.3.2010 is
(a) Rs.3,50,000 (b) Rs.2,70,000
(c) Rs.3,30,000 (d) Rs.3,00,000
53. A and B entered into a joint venture agreement to share the profits and losses in the ratio of
2:1. A supplied 100 radio sets worth Rs.1,00,000 to B incurring expenses of Rs.5,000 for
freight and insurance. B sold 95 radio sets for Rs.1,20,000. 5 radio sets were taken over by
B. The profit/loss on venture will be
(a) Profit of Rs.20,000 (b) Profit of Rs.15,000
(c) Loss of Rs.20,000 (d) Profit of Rs.20,250
54. A cheque of Rs.1,000 received from Ramesh was dishonoured and had been posted to the
debit of sales returns account.
The rectifying journal entry will be
Rs. Rs.
(a) Sales Returns A/c Dr.1,000
To Ramesh 1,000
(b) Ramesh Dr.1,000
To Sales Return A/c 1,000
(c) Ramesh Dr.1,000
Sales Returns A/c Dr.1,000
To Suspense A/c 2,000
(d) None of the above
55. Record of purchase of T.V.parts.
Date Quantity Price per unit
Units Rs.
March 4 900 5
March 10 400 5.50
Record of issues
March 5 600
March 12 400
The value of T.V. sets on 15 March, as per LIFO will be
(a) Rs.1,500 (b) Rs.1,650
(c) Rs.1,575 (d) None of the three
56. A purchased a computer costing Rs.10,000. Repairing expenses Rs.1,000 and miscellaneous
expenses Rs.500 were incurred by him. He sold the computer at 20% margin on selling
price. The sales value will be
(a) Rs.12,500 (b) Rs.11,000
(c) Rs.14,375 (d) Rs.13,800
Common Proficiency Test (CPT) Volume - I 93
© The Institute of Chartered Accountants of India
MODEL TEST PAPER - 4
57. Priya sold goods to Nidhi for Rs.1,00,000. Priya will grant 5% discount to Nidhi. Nidhi
requested Priya to draw a bill. The amount of the bill will be
(a) Rs.1,00,000 (b) Rs.95,000
(c) Rs.93,800 (d) Rs.90,000
58. A bill is drawn on 28th March, 2010 for one month after sight.The date of acceptance is 2nd
April, 2010. The due date of the bill will be
(a) 1st May, 2010 (b) 28th April, 2010
(c) 5th May, 2010 (d) 2nd May, 2010
59. Under mutual accommodation, Mohan drew a bill on Shyam for Rs.50,000 for 3 months.
Proceeds are to be shared equally. Mohan got the bill discounted at 12% p.a. and remits
required proceeds to Shyam. The amount of such remittance will be
(a) Rs.24,250 (b) Rs.25,000
(c) Rs.16,167 (d) Rs.32,333
60. Goods costing Rs. 10,000 were sold at 1/6 profit on selling price. The sale value will be
(a) Rs.12,000 (b) Rs. 12,500
(c) Rs. 10,000 (d) None of the three
SECTION – B : MERCANTILE LAWS (40 MARKS)
61. Cross Offers means
(a) Exchanging identical offers by two parties in ignorance
(b) Offer made to the public in general
(c) Offer allowed to remain open for acceptance over a period of time
(d) Offer made to a definite person
62. Valid Contract:
(a) In case of this collateral agreements are void.
(b) Not enforceable in a court of law.
(c) An agreement enforceable by law at the option of one or more of the parties thereon but
not at the option of the other or others
(d) Enforceable at the option of both the parties
63. Which of the following is a requirement for misrepresentation to exist?
(a) Misrepresentation should relate to a material fact
(b) The person making a misrepresentation should not believe it to be true
(c) It must be made with an intention to deceive the other party
(d) All of the above
94 Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
Please verify you're human to unlock the download & viewer links.