Common Proficiency Test Model Paper 2

141. At a labour input of 6, the marginal product of labor is: (a) 120 (b) 20 (c) 15 (d) 10 142. Output per worker is maximized at a labour input of: (a) 2 (b) 4 (c) 6 (d) 8 143. The firm’s output is at a short run maximum at a labour input of : (a) 6 (b) 10 (c) 12 (d) 2 Table 4 provides cost and price information for a firm called Comfy Cushions (CC). The firm produces and sells cushions using a fixed amount of capital equipment but can change the level of inputs such as labour and materials. Read Table 4 and answer questions 144-150 Table 4 Production Price per Total Average Marginal Total Marginal unit Cost Total Cost Revenue Revenue Cost (per unit) (Q) (P) (TC) (ATC) (MC) (TR) (MR) 0 250 500 1 240 730 2 230 870 3 220 950 4 210 1010 Production Price per Total Average Marginal Total Marginal unit Cost Total Cost Revenue Revenue Cost (per unit) (Q) (P) (TC) (ATC) (MC) (TR) (MR) 5 200 1090 6 190 1230 7 180 1470 8 170 1850 9 160 2410 144. What is the value of fixed cost incurred by CC? (a) Rs. 250 (b) Rs. 730 (c) Rs. 500 (d) cannot be determined Common Proficiency Test (CPT) Volume - I 195 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 7 145. What is the average total cost when 5 units are produced? (a) Rs. 218 (b) Rs. 1090 (c) Rs. 730 (d) Rs. 210 146. What is the marginal revenue (per unit) when production increases from 7 units to 8 units? (a) 160 (b) 140 (c) 120 (d) 100 147. What is the marginal cost when production increases from 3 to 4 units? (a) 140 (b) 80 (c) 60 (d) 240 148. To maximize its profit or minimize its loss, what level of production should CC choose? (a) 7 units. (b) 6 units (c) 4 units. (d) 8 units. 149. At the profit maximizing level, what price should be charged? (a) Rs. 190 (b) Rs. 200 (c) Rs. 210 (d) Rs. 220 150. Calculate CC’s maximum profit or minimum loss. (a) Loss of Rs. 100 (b) Loss of Rs. 60 (c) Profit of Rs. 90 (d) Loss of Rs. 90 SECTION – D : QUANTITATIVE APTITUDE(50 MARKS) 151. If q: p is the sub duplicate ratio of q – x 2: p – x2, then x 2 is p+q pq (a) pq (b) p−q pq (c) p+q (d) None of these. 152. If p: q = r: s, implies q: p = s: r, then the process is called (a) Componendo. (b) Invertendo. (c) Alternendo. (d) Dividendo. 153. The gender of a baby is example of : (a) A variable. (b) A discrete variable. (c) A continuous variable. (d) An attribute. 196 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 154. The coefficient of correlation (a) Has no limits. (b) Can be less than one. (c) Can be more than one. (d) Varies between ± 1. 155. If two events A and B are dependent, the conditional probability of B given A i.e., P(B/A) is calculated as (a) P(AB)/P(B). (b) P(A)/P(B). (c) P(AB)/P(A). (d) P(A)/P(AB). 156. Time reversal test is satisfied when (a) P × P = 0 (b) P × P = 1 01 10 01 10 (c) P × P <1 (d) P × P >1 01 10 01 10 157. The mean of binomial distribution is (a) (np)2 (b) np (c) np (d) None of these. 158. Standard deviation of poisson distribution is (a) m (b) m2 (c) m (d) 1/ m 159. If A has 70 elements, B has 32 elements and A∩B has 22 elements then A∪B is (a) 60 (b) 124 (c) 80 (d) None of these. 160. Which of the following statements is not false? (a) Scatter diagram fails to measure the extent of relationship between the variables. (b) Scatter diagram can measure correlation only when the variables are having a linear relationship. (c) Scatter diagram can measure correlation only when the variables are having a non–linear relationship. (d) None of these. ⎛ 1⎞2 ∫ 161. The value of the integral will be _______ for ⎜x– ⎟ dx. ⎝ x⎠ x3 1 x3 1 (a) −2x+ +c (b) +2x+ +c 3 x 3 x x3 1 (c) −2x− +c (d) None of these. 3 x Common Proficiency Test (CPT) Volume - I 197 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 7 162. The derivative of log x.ex is _______. e3 ⎛1 ⎞ (a) +ex(logx) (b) ex⎜ −logx⎟ x ⎝x ⎠ (c) ex (1+log x) (d) None of these. 163. The null set is given by _______. (a) φ (b) {φ} (c) 0 (d) {0} 164. Quartiles are values dividing a given set of observations into _______ equal parts. (a) Two (b) Four (c) Six (d) Ten 165. The data are known to be _______ if the data, as being already collected, are used by a different person or agency. (a) Primary (b) Secondary (c) Specialized (d) Subsidiary 166. The amount of non responses is likely to be maximum in _______ method of collecting data. (a) Telephone interview method (b) Personal interview method (c) Mailed questionnaire method (d) Observation method 167. If two variables x and y are independent then the correlation coefficient between x and y is _______? (a) Positive (b) Negative (c) Zero (d) One 168. The slope of the equation x – y + 5 = 0 is _______. (a) 1 (b) –1 (c) 5 (d) –5 169. The correlation between height and intelligence is _______. (a) Zero (b) Positive (c) Negative (d) None of these 170. The sixth term of a G.P. with common ratio as 2 and first term being 5 is_______. (a) 160 (b) 32 (c) 800 (d) 64 198 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 171. The gradient of the curve y = 4x2 – 2x at x =1 is (a) 4 (b) 6 (c) 8 (d) None of these. 172. Find the f o g for the functions f (x) =x2, g (x) = x+ 1 (a) x2 (x+1) (b) x2 (c) x+1 (d) (x+1)2 173. What is the annual rate of interest compounded annually doubles an investment in 2 years. Given that 2 = 1.4142135. (a) 46.04125 % (b) 14.142135 (c) 41.42135 % (d) None of these. 174. log 8 + log 9 is expressed as (a) log 72 (b) log 27 (c) log 8/9 (d) None of these. 175. The value of 8C + 5C is 4 4 (a) 29 (b) 24 (c) 30 (d) 27 ⎛ 10x –2x ⎞ lim⎜ ⎟ 176. Determine the value of x→0⎝ x ⎠ (a) 2 (b) 10 (c) 0.5 (d) 8 177. Find the sum of progression 8, 15, 12………… 10 terns. (a) 40 (b) 45 (c) -45 (d) 42 178. In how many different ways 3 letters can be formed using the letters of the word SPECIAL? (a) 5040 (b) 6 (c) 840 (d) 450 179. Determine the value of x for the equation x2 – 8x + 16 = 0 (a) 4, 4 (b) –4, –4 (c) 2, 6 (d) 6, 2 Common Proficiency Test (CPT) Volume - I 199 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 7 180. How much money should be invested to earn a monthly interest of Rs. 1800 at 9% per annum simple interest? (a) Rs. 120,000 (b) Rs. 240,000 (c) Rs. 200,000 (d) None of these. 181. Division of Rs. 1100 into 3 parts in the ratio of 4:5:6 is (a) 293.33, 366.67, 440 (b) 200 : 500 : 400 (c) 400 : 300 : 400 (d) None of these. 3 ( ) ∫ x3 +x dx 182. Evaluate −3 (a) 0 (b) 3 (c) –3 (d) 1 183. The denominator of a fraction exceeds the numerator by 7 and if the 2 is added to the 4 denominator then the fraction becomes . Find the fraction. 7 12 7 (a) (b) 19 14 9 11 (c) (d) 16 18 184. A firm plans to purchase hens (x) for its canteen. There cannot be more than 20 hens, this can be shown by (a) x < 20 (b) x = 20 (c) x > 20 (d) None of these. 185. Compute the value of 8! (a) 120 (b) 362880 (c) 720 (d) 40320 186. The sum of progression (a+b), a, (a–b)........n term is n n (a) [2a+(n–1)b] (b) [2a+(3–n)b] 2 2 n (c) [2a+(3–n)] (d) [2a+ (n–1)] 2 200 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 187. The mean of binomial distribution is 4 and standard deviation 3. What is the value of p? (a) 1/3 (b) 1/4 (c) 1/5 (d) 3/4 188. If with a rise of 10% in prices the salaries are increased by 20%, the real salary increases by (a) 10% (b) More than 10% (c) 20% (d) Less than 10% 189. If A and B are mutually exclusive events and P(A) = 0.3 and P(B) = 0.4, find P(A∪∪∪∪∪B). (a) 0.12 (b) 0.7 (c) 0.3 (d) None of these. 190. Two variables x and y are related by 10x + 9y + 8 = 0 and x = 5, then y is (a) 6.33 (b) –6.33 (c) 6.44 (d) –6.44 191. The mean salary for a group of 20 female workers is Rs. 5,000 per month and that for a group of 30 male workers is Rs. 6,000 per month. What is combined mean salary? (a) Rs. 5,400 (b) Rs. 5,500 (c) Rs. 5,600 (d) Rs. 5,700 192. The weight of 8 students expressed in kg. are 40, 35, 50, 45, 46, 39, 41, 42. Find median weight? (a) 40.5 (b) 41 (c) 41.5 (d) 42 193. If the relationship between x and y is given by 4x– 6y =13 and if the median of x is 16. Find median of y. (a) 7.50 (b) 8.00 (c) 8.50 (d) None of these. 194. Refer following table: Frequency distribution of weights of 16 students Weight in kg. No. of students (Class interval) (Frequency) 44 – 48 4 49 – 53 5 54 – 58 7 Total 16 Find width of class interval for the second class interval. (a) 4 (b) 5 (c) 46 (d) 48 Common Proficiency Test (CPT) Volume - I 201 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 7 195. A bag contains 30 balls numbered from 1 to 30. One ball is drawn at random. The probability that the number of the drawn balls will be multiple of 5 or 7 is (a) 1/2 (b) 1/3 (c) 1/4 (d) None of these. 196. A card is drawn from a pack of playing cards and then another card is drawn without the first being replaced. What is the probability of getting two kings? (a) 7/52 (b) 1/221 (c) 3/221 (d) None of these. 197. A and B are two events such that P(A) = 1/ 2 , P(B) = 1/4 and P(A∩B) = 1/5. Find P(A∪B)? (a) 4/5 (b) 11/20 (c) 3/5 (d) None of these. dy 198. If u = (x3 +1)5 and y = (x3 + 5x+7) then is dx 10x ( x²+1 )4 10 ( x²+1 )4 (a) (b) 3x²+5 3x²+5 (c) 5x (x2 + 1)4 (d) None of these. 199. Find Q for the following observations: 1 14, 16, 13, 15, 20, 18, 19, 22 (a) 14 (b) 14.25 (c) 15 (d) 15.25 200. If the coefficient of correlation between two variables is – 0.2, then the coefficient of determination is: (a) 0.8 (b) 0.2 (c) 0.4 (d) 0.04 (cid:2)(cid:2)(cid:2) 202 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 – 8 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. It is generally assumed that the business will not liquidate in the near foreseeable future because of______________ concept (a) Periodicity (b) Materiality (c) Matching (d) Going concern 2. Which of the following is correct? (a) Capital is equal to assets plus liabilities (b) Assets is equal to liabilities minus capital (c) Liabilities is equal to capital plus assets (d) Capital is equal to assets minus liabilities 3. Double column cash book records (a) Only cash transactions (b) All transactions (c) Cash and bank transactions (d) Cash purchase and cash sale transactions 4. Errors of commission do not permit (a) Incorrect totaling of the trial balance (b) Incorrect totaling of the Balance sheet (c) Trial balance to agree (d) None of the above Common Proficiency Test (CPT) Volume - I 203 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 5. All of the following have debit balance except (a) Wages account (b) Debtors accounts (c) Bills payable account (d) Goodwill 6. The term depletion is used for (a) Fixed assets (b) Natural resources (c) Intangible assets (d) None of the three 7. A bill of exchange when drawn requires (a) Noting (b) Discounting (c) Acceptance (d) None of the above 8. According to the provisions of the Reserve Bank of India, a promissory note cannot be made payable to the (a) Bank (b) Endorser (c) Bearer (d) None of the above 9. Rs.5,000 spent to remove a worn out part and replace it with a new one is (a) Capital expenditure (b) Revenue expenditure (c) Deferred revenue expenditure (d) None of the above 10. Outstanding salary account is (a) Real account (b) Personal account (c) Nominal account (d) None of the above 11. Drawings are deducted from: ________ (a) Sales (b) Purchases (c) Expenses (d) Capital 12. The trial balance of Meghna shows the opening stock of Rs. 10,000, it will be___________ (a) Debited to the trading account (b) Credited to the trading account (c) Deducted from closing stock in the balance sheet (d) Added to closing stock in the balance sheet 13. Purchase returns appearing in the trial balance are deducted from ____ (a) Sales returns (b) Capital (c) Sales (d) Purchases 14. _______ will generally show a debit balance (a) Bank Loan (b) Bad debts recovered (c) Salary payable (d) Drawings 204 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 15. Purchase of a fixed asset on credit basis is recorded in _____________ (a) Cash book (b) Purchases book (c) Journal proper (d) None of the above 16. Accounting means recording of _________________ (a) Transactions (b) Events (c) Both (a) and (b) (d) Neither (a) nor (b) 17. Unless given otherwise, the ratio of sacrifice is the same as________ (a) New profit sharing ratio (b) Equal ratio (c) Old profit sharing ratio (d) None of the above 18. The ratio in which the continuing partners acquire the outgoing (retired or deceased) partner’s share is called ________ (a) Sacrificing ratio (b) Gaining ratio (c) New profit sharing ratio (d) Old profit sharing ratio 19. A bill of exchange is called a ________ by one who is liable to pay it on the due date. (a) Bill receivable (b) Noted bill of exchange (c) Bill payable (d) None of the above 20. The amount of calls in arrear is deducted from_____________ to arrive at________. (a) Issued capital, called up capital (b) Called up capital, issued capital (c) Paid up capital, called up capital (d) Called up capital, paid up capital 21. Smita places an order to Priya for supply of certain goods yet to be manufactured. On receipt of order, Priya purchases raw materials, employs workers, produces the goods and delivers them to Smita. In this case, sale will be presumed to have been made at the time of (a) Receipt of order (b) Production of goods (c) Delivery of goods (d) Purchase of raw material 22. If a machinery is purchased for Rs. 1,00,000, the asset would be recorded in the books at Rs. 1,00,000 even if its market value at that time happens to be Rs. 1,40,000. In case a year after, the market value of this asset comes down to Rs. 90,000, it will ordinarily continue to be shown at Rs 1,00,000 and not at Rs. 90,000 due to (a) Realization concept (b) Present value concept (c) Replacement concept (d) Cost concept 23. Mr. Shyam deposited a cheque on 28th March, 2010 for a sum of Rs.10,000. The cheque was collected on 4th April, 2010. If the bank balance as per cash book on 31st March, 2010 is Rs.1,00,000, balance as per pass book will be (a) Rs.1,10,000 (b) Rs.90,000 (c) Rs.1,00,000 (d) None of the above Common Proficiency Test (CPT) Volume - I 205 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 24. If cost of goods sold is Rs.1,00,000, sales is Rs.1,25,000, closing stock is Rs.20,000, the gross profit will be (a) Rs.45,000 (b) Rs. 5,000 (c) Rs. 25,000 (d) None of the three 25. X enters into a joint venture with Y. The goods were purchased by X and Y amounting Rs.20,000 and Rs.40,000 respectively. Y incurred the expenses of Rs.5,000. Goods were sold by X and Y amounting Rs.22,000 and Rs.39,000. Goods unsold were taken over by Y for Rs.2,000. The profit or loss on joint venture is (a) Profit of Rs. 2,000 (b) Loss of Rs. 2,000 (c) Profit of Rs. 1,000 (d) Loss of Rs.1,000 26. On 1st January, 2010, Mohan draws upon Sohan a bill of exchange for three months, of Rs.2,000 for mutual accommodation. On 4th January, 2010 Mohan discounts the bill @ 6% per annum and sends half of the proceeds to Sohan. The amount of proceeds sent to Sohan will be (a) Rs.1,000 (b) Rs.970 (c) Rs.985 (d) Rs.2,000 27. ABC Ltd. sells goods to its approved customers on sale or return basis at a profit of 20% on sales, treating as actual sales. On 26th March, 2010 goods costing Rs.10,000 were sent to Annu Ltd. No confirmation has been received from Annu Ltd. till 31st March, 2010. The amount of stock with customers to be shown as closing stock in the balance sheet of ABC Ltd. as on 31st March, 2010 will be (a) Rs. 12,500 (b) Rs. 8,000 (c) Rs. 10,000 (d) Nil 28. Somesh and Ramesh are equal partners. Their capitals are Rs.40,000 and Rs.80,000 respectively. The profits for the year before charging interest on capital was Rs.6,000. The accounts of the year were closed before providing interest @ 5% per annum as per partnership agreement. To rectify this mistake they decided to pass an adjustment entry between the partners. Therefore, Somesh’s account needs to be debited by (a) Rs.2,000 (b) Nil (c) Rs.1,000 (d) None of the above 29. A, B and C are partners in the ratio of 3:2:1. D is admitted in the firm for 1/6th share in profits. C would retain his original share. The new profit sharing ratio between A, B, C and D will be (a) 12:8:5:5 (b) 8:12:5:5 (c) 5:5:12:8 (d) 5:5:8:12 30. According to which concept, the owner of an enterprise pays the ‘interest on drawings’? (a) Accrual concept (b) Conservatism concept (c) Dual aspect concept (d) Entity concept 206 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 31. A firm earns profit of Rs.1,10,000. The normal rate of return in a similar type of business is 10%. The value of total assets (excluding goodwill) and total outside liabilities are Rs.11,00,000 and Rs.1,00,000 respectively. The value of goodwill by capitalisation method is (a) Rs.1,00,000 (b) Rs.10,00,000 (c) Nil (d) None of the above 32. The cost of stock as per physical verification of Bharat Ltd. on 10th April, 2010 was Rs.1,20,000. The following transactions took place between 1st April, 2010 to 10th April, 2010: Cost of goods sold Rs.10,000 Cost of goods purchased Rs.10,000 Purchase returns Rs.1,000 The value of inventory as per books on 31st March, 2010 will be (a) Rs. 1,19,000 (b) Rs. 1,11,000 (c) Rs. 1,21,000 (d) Rs. 1,20,000 33. The following data has been provided by Omega Ltd.: Item No. Units Cost per unit Realization value per unit 1 2 10 11 2 10 5 4 3 2 2 2 The value of inventory on item by item basis will be (a) Rs. 40 (b) Rs.64 (c) Rs.66 (d) Rs.60 34. Sushila’s business disclosed the following profits for the last two years: 2008 Rs.40,000 (including an abnormal gain of Rs.5,000) 2009 Rs.50,000 (After charging an abnormal loss of Rs.10,000) The value of goodwill on the basis of one year purchase of the average profit of last two years is (a) Rs.45,000 (b) Rs.37,500 (c) Rs.47,500 (d) None of the three 35. Ram sells goods for Rs.1,00,000 to Hari on 1st January, 2010 and on the same day draws a bill on Hari at three months for the amount. Hari accepts it and returns it to Ram, who discounts it on 4th January, 2010 with his bank at 12% per annum. The discounting charges are (a) Rs.12,000 (b) Rs.4,000 (c) Rs.3,000 (d) Nil Common Proficiency Test (CPT) Volume - I 207 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 36. Nidhi started her business with capital of Rs.45,000 on 1st January, 2009. Interest on drawings Rs.5,000 and interest on capital Rs.2,000 were appearing in the Profit and Loss A/c for the year ended 31st December, 2009. Nidhi withdrew Rs.14,000 during the year and profit earned during the year amounted to Rs.15,000. Her capital on 31st December, 2009 is (a) Rs. 67,000 (b) Rs. 47,000 (c) Rs.45,000 (d) Rs. 43,000 37. The accountant of M/s ABC & Bros. paid personal income tax for the proprietor amounting Rs.10,000. This income tax should be (a) Added to capital (b) Credited to Profit & Loss Account (c) Debited to Trading Account (d) Deducted from capital 38. Suresh’s Trial balance provides you the following information: Bad debts Rs.10,000 Provision for doubtful debts Rs.15,000 Suresh wants to make a provision of Rs.20,000 at the end of the year. The amount debited to the Profit & Loss Account is (a) Rs. 45,000 (b) Rs. 5,000 (c) Rs. 15,000 (d) None of the above 39. Following are the extracts from the Trial Balance of a firm as at 31st March, 2010: Name of Account Debit Balance Credit Balance Rs. Rs. Salaries 16,000 P.F. deducted from salaries 1,000 Provide for employer’s share of P.F. equivalent to employee’s share to P.F. The amount at which salaries expense will be shown in the Profit and Loss A/c is (a) Rs.15,000 (b) Rs.17,000 (c) Rs.16,000 (d) None of the above. 40. Dinesh Garments purchased a machine for Rs.50,000 and spent Rs.6,000 on its erection. On the date of purchase it was estimated that the effective life of the machine will be ten years and after ten years its scrap value will be Rs.6,000. The amount of depreciation for each year on straight line basis is (a) Rs.5,000 (b) Rs. 5,600 (c) Rs.6,000 (d) None of the above 208 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 41. Xeta Ltd. was formed as a Public Limited Company with an authorized capital of Rs.20,00,000 divided into shares of Rs.10 each. Xeta Ltd. issued fully paid up shares of Rs.10 each at a premium of 20%, in consideration for acquiring assets worth Rs.3,64,800 from M/s Rahim Bros. To record this transaction, share capital need to be credited by (a) Rs.3,80,000 (b) Rs.76,000 (c) Rs.2,00,000 (d) Rs.3,04,000 42. Mr. Rajiv was the holder of 200 shares of Rs.10 each in RPG Ltd. upon which Rs.5 per share had been called up but he had paid only Rs.2.5 per share thereon. The company forfeited his shares and afterwards sold them to Satbir, credited as Rs.5 per share paid for Rs.900. The amount to be transferred to capital reserve is (a) Rs.300 (b) Rs.500 (c) Rs.400 (d) None of the above 43. A Ltd. forfeited 1,000 equity shares of Rs.10 each, issued at a discount of 10%, for non- payment of first call of Rs.2 and second call of Rs.3 per share. For recording this forfeiture, calls in arrear account will be credited by (a) Rs. 4,000 (b) Rs. 1,000 (c) Rs. 5,000 (d) Rs. 10,000 44. A fire broke out on 30th March, 2010 in the godown of Mahesh. Stock of invoice value Rs.1,600 was destroyed. The goods were invoiced at 25% above cost. The insurance company admitted claim of 50% only. The insurance claim accepted was (a) Rs. 640 (b) Rs. 600 (c) Rs. 800 (d) None of the above 45. Salary has been paid for 11 months from April 2009 to February, 2010 amounting Rs.22,000. The amount of outstanding salary shown in the balance sheet will be (a) Rs.1833 (b) Rs.2,000 (c) Rs.1,000 (d) None of the above 46. On 1st April, 2009, Raghu invested capital of Rs.2,00,000. He withdrew Rs.50,000 during the year. Interest on drawings is provided @ 10% per annum. The amount of interest on drawings deducted from capital is (a) Rs. 5,000 (b) Rs. 15,000 (c) Rs. 2,500 (d) Rs.7,500 47. The Bank Account of Mukesh was balanced on 31st March, 2010. It showed an overdraft of Rs.50,000. It was observed that one cheque amounting Rs.20,000 deposited but not collected by bank till 31st March. Bank charges of Rs.500 were also charged by the bank during March but accounted in the book of Mukesh on April 4, 2010. The bank statement of Mukesh shows balance of (a) Rs.70,500 (b) Rs.69,500 (c) Rs.70,000 (d) Rs.50,000 Common Proficiency Test (CPT) Volume - I 209 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 48. Rs.5,000 was spent by Saroj for addition to machinery in order to increase the production capacity. The amount is (a) Revenue in nature (b) Deferred revenue in nature (c) Capital in nature (d) Liability in nature 49. Prakash sells goods at 25% on sales. His sales were Rs.10,20,000 during the year. However, he sold damaged goods for Rs.20,000 costing Rs.30,000. This sale is included in Rs.10,20,000. The amount of gross profit is (a) Rs. 1,90,000 (b) Rs.2,50,000 (c) Rs.2,40,000 (d) Rs.2,00,000 50. The total of the debit and credit side of a trial balance of Mr. Rajiv as on 31st March, 2010 were Rs.20,000 and Rs.10,000 respectively. The difference was transferred to suspense account. On 4th April, 2010, it was found that the total of purchase returns book was carry forward as Rs.1,500 instead of Rs.1,400. The balance of the suspense account after the rectification of this error will be (a) Rs.10,000 (b) Rs. 9,900 (c) Rs. 11,500 (d) Rs.10,100 51. Capital introduced by Mr. A on 1.4.2009 Rs. 3,00,000; further capital introduced during the year was Rs. 50,000 in the mid of the year. Mr. A withdrew Rs. 2,000 per month and the profit earned during the year was Rs. 20,000. Capital as on 31.3.2010 will be (a) Rs. 3,94,000 (b) Rs. 3,46,000 (c) Rs. 2,94,000 (d) None of the three 52. Goods costing Rs.10,000 sent out to consignee at Cost + 25%. Invoice value of the goods will be (a) Rs.12,500 (b) Rs.12,000 (c) Rs.10,000 (d) None of the above 53. A, B and C are the partners sharing profits in the ratio 1:1:2. C died on 30th June 2010 and profits for the accounting year ended on 31st December, 2009 were Rs. 24,000. How much share in profits for the period 1st January, 2010 to 30th June, 2010 will be credited to C’s Account? (a) Rs. 12,000 (b) Rs. 6,000 (c) Nil (d) Rs. 3,000 54. A purchased a car for Rs. 5,00,000, making a down payment of Rs. 1,00,000 and signing a bill payable of Rs. 4,00,000. As a result of this transaction (a) Assets will increase by Rs. 5,00,000 (b) Liabilities will increase by Rs. 4,00,000 (c) Assets will increase by Rs. 4,00,000 (d) Both (b) and (c) 210 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 55. Rekha purchased a machinery for Rs. 50,000 on 1.4.2009. She paid electricity and salary amounting Rs. 1,000 and Rs. 2,000 respectively. Telephone bill amounting Rs. 200 was outstanding on 31.3.2010. The amount of expenses for the year ended 31st March, 2010 will be (a) Rs. 53,200 (b) Rs. 3,000 (c) Rs. 53,000 (d) Rs. 3,200 56. Goods costing Rs. 10,000 is supplied to Ram at an invoice price of 10% above cost and a trade discount of 5%. The amount of sales is (a) Rs. 11,000 (b) Rs. 10,450 (c). Rs. 10,500 (d) None of the above 57. Gauri paid Rs. 1,000 towards a debt of Rs. 1,050, which was written off as bad debt in the previous year. Gauri’s account should be credited with (a) 1,000 (b) 1,050 (c) Nil (d) None of the three 58. Ramesh, an employee gets salary Rs. 10,000 per month. He withdrew goods worth Rs. 1,500 for personal use and got salary of Rs. 9,000 in cash in the month of March, 2010. The excess payment of Rs. 500 should be debited to (a) Salaries account (b) Goods account (c) Drawing account (d) Salaries paid in advance account 59. An old furniture was purchased for Rs. 10,000, it was repaired for Rs. 100. The repairs account should be debited by (a) Rs.10,000 (b) Rs.10,100 (c) Rs.100 (d) Nil 60. Rs.1,000 paid as rent to Krishna, the landlord, was debited to Krishna’s personal account. This error will (a) Affect the trial balance (b) Not affect the trial balance (c) Affect the suspense account (d) None of the three Common Proficiency Test (CPT) Volume - I 211 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 SECTION – B : MERCANTILE LAWS (40 MARKS) 61. A wager means: (a) A promise to give money or money’s worth upon the determination or ascertainment of an uncertain future event. (b) A promise to give money or money’s worth upon the determination or ascertainment of a certain future event. (c) A promise to give money or money’s worth upon the happening of future event the outcome of which is predetermined. (d) A promise to give money or money’s worth upon the non-happening of certain future events the outcome if which is predetermined. 62. Following conditions are implied in a contract of sale of goods unless the circumstances of the contract show a different intention: (a) Condition as to wholesomeness. (b) Sale by description as well as by sample. (c) Condition as to quality or fitness. (d) All of the above. 63. Jus in personam means: (a) A right against or in respect of a thing. (b) A right against or in respect of a person. (c) Both (a) and (b). (d) None of the above. 64. Which of the following is not correct: (a) Partner of firm cannot enter into a contract with the partnership firm. (b) A member of a company can enter into a contract with the company. (c) Partner of a firm can enter into a contract with the partnership firm. (d) All of the above. 65. Persons who do not fall under the category of persons of unsound mind (a) Lunatics (b) Alien (c) Drunkard (d) Idiot 66. Delivery of goods in case of transit made by handing over documents of title to goods is (a) Actual Delivery. (b) Constructive Delivery. (c) Symbolic Delivery. (d) All of the above. 212 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 67. Contracts may be classified on the basis of their validity, formation or performance. Contracts classified on the basis of performance are of the following types: (a) Executed Contracts. (b) Executory Contracts. (c) Partly Executed or Partly Executory Contracts. (d) All of the above. 68. A share certificate (a) Allows the person named therein to transfer the share mentioned therein by mere endorsement on the back of the certificate. (b) Allows the person named therein to transfer the share mentioned therein by mere delivery of the certificate. (c) Allows the person named therein to transfer the share mentioned therein by mere endorsement on the back of the certificate and the delivery of the certificate. (d) None of the above. 69. A person employed to do any act for another or to represent another in dealings with the third parties is: (a) Principal. (b) Agent. (c) Servant. (d) Bailee. 70. Coercion involves: (a) Physical force or threat. (b) Mental pressure. (c) Both (a) and (b). (d) None of the above. 71. Implied authority of the partner does not empower him to (a) Submit a dispute relating to the business of the firm to arbitration. (b) Withdraw a suit or proceedings filed on behalf of the firm. (c) Both (a) and (b). (d) None of the above. 72. A proposal may be revoked in the following ways: (a) By notice of revocation. (b) By lapse of time. (c) By death or insanity. (d) All of the above. 73. Which of the following is correct? (a) Recission must be communicated to the other party in the same manner as a proposal is communicated. (b) Recission must be revoked in the same manner as a proposal is communicated. (c) Communication of recission is optional. (d) Both (a) and (b) Common Proficiency Test (CPT) Volume - I 213 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 74. Which of the following statement is / are correct? (a) The general rule is “unless otherwise agreed, the goods remain at the seller’s risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer’s risk whether delivery has been made or not”. (b) Where the delivery of the goods has been delayed through the fault of either the buyer or the seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault. (c) In ordinary circumstances, risk is borne by the buyer only when the property in the goods passes over to him. However, the parties may by special agreement stipulate that risk will pass sometime after or before the property has passed. (d) All of the above. 75. A fraudulently informs B that A’s estate is free from incumbrance. B thereupon buys the estate. The estate is subject to mortgage. Now (a) B may avoid the contract. (b) B may insist upon its performance. (c) B may get the mortgage debt redeemed. (d) All of the above. 76. Dissolution of a firm may take place in the following manner: (a) Compulsory dissolution. (b) Dissolution by agreement. (c) By intervention of the court. (d) All of the above. 77. Dissolution by agreement is: (a) Dissolution by the adjudication of all the partners or of all the partners but one as insolvent. (b) Dissolution as a result of any agreement between all the partners. (c) Dissolution by the business of the firm becoming unlawful. (d) All of the above. 78. Misrepresentation means and includes: (a) The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true. (b) Any breach of duty, which, without an intention to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him. (c) Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement. (d) All of the above. 79. A person may be admitted as a new partner: (a) In accordance with a contract between the existing partners or with the consent of all the existing partners. (b) In accordance with a contract between the existing partners or with the consent of all the existing partners subject to the provisions of Section 30 of the Act. 214 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India (c) After obtaining specific approval of the Registrar of Firms & Societies, to this effect. (d) By simply taking the consent of the new partner. 80. The Doctrine of Privity of Contract states that___________. (a) A contract cannot confer any right on one who is not a party to the contract, even though the very object of the contract may have been to benefit him (b) A contract can confer right on one who is not a party to the contract, if the contract benefits him (c) A contract always confers right on one who is not a party to the contract (d) A contract can confer rights on strangers 81. A proposes by letter, to sell a house to B at a certain price. A revokes his proposal by telegram. The revocation is complete as against B when ___________. (a) A writes the telegram but the same has not been sent to B (b) A dispatches the telegram (c) B receives the telegram (d) B responds to the telegram 82. The Indian Contract Act, 1872 came into operation on and from___________. (a) 1st October, 1872 (b) 1st July, 1872 (c) 15th August, 1872 (d) 1st September, 1872 83. In case of a contract of guarantee ___________. (a) There is only one contract (b) There are two contracts (c) There are three contracts (d) There are actually only agreements and no contracts 84. In case of a sale the risk of loss resulting from the insolvency of the buyer is borne by___________. (a) The seller (b) The buyer (c) Both of the above (d) General Insurance Company of India 85. Agreement to sale is an ___________. (a) Executed contract (b) Executory contract (c) Both of the above (d) None of the above 86. Suit for specific performance and suit for injunction ___________. (a) Are remedies which provide the same result (b) Are different remedies and they provide different results (c) Are not the correct way to act against the party committing the breach (d) Are the only correct way to act against the party committing the breach Common Proficiency Test (CPT) Volume - I 215 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 87. Contracting parties may not remain same in ___________. (a) Remission (b) Recission (c) Novation (d) Alteration 88. The liabilities of a minor when admitted to the benefits of the partnership ___________. (a) Is confined to his share of the profits and property in the firm (b) Is same as that of any other partner in the firm (c) Is similar as that of any other partner in the firm (d) Is unlimited 89. Recission means ___________. (a) Substituting a new contract for the old one (b) Cancellation of the old contract (c) Modifying or altering the terms of contract such that it has the effect of substituting a new contract for the old one (d) Dispensing away the performance of the promise made by the other party 90. Registration of a partnership firm is___________. (a) Compulsory from the beginning (b) Not compulsory till first five years of beginning of the partnership (c) Not compulsory at all (d) Compulsory only if the Registrar of Firms, gives an order in this regard 91. A person to whom money has been paid, or anything delivered by mistake___________. (a) Becomes the owner of such money or those goods (b) Must repay the money or return those goods (c) Is allowed to sell the goods and retain the money realized from such sale (d) Has no obligation to return the money, he may do so only a good gesture 92. Delivery by attornment is ___________. (a) Actual Delivery (b) Constructive Delivery (c) Symbolic Delivery (d) Physical Delivery 93. In case of an agreement to sell, the aggrieved party ___________. (a) Can sue for price (b) Can sue for damages (c) Can sue the buyer for injunction (d) None of the above 94. Return of goods is possible in case of ___________. (a) Sale (b) Bailment (c) Exchange (d) None of the above 95. ‘Buyer’ means a person who___________. (a) Buys goods (b) Agrees to buy goods (c) Has bought goods (d) Buys or agrees to buy goods 216 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 96. The appropriation must be made by___________. (a) The seller with the assent of the buyer (b) The buyer with the assent of the seller (c) The buyer or the seller with or without the assent of the other (d) Both (a) and (b) 97. Partner by holding out is also known as ___________. (a) Active Partner (b) Dormant Partner (c) Partner by estoppel (d) Partner by stoppage 98. Interest on capital subscribed by a partner may be provided for in the partnership deed is ___________. (a) @ 6% per annum, provided it is payable only out of profits (b) @ 8% per annum, provided it is payable only out of profits (c) @ 8.5% per annum, provided it is payable only out of profits (d) At any rate, provided it is payable only out of profits 99. A had offered B, a price of Rs.10, 00,000/- for B’s flat. But B was not ready to sell the flat at all. A says to B that “I shall kill you if you don’t agree to sell me your house for Rs.10,00,000/ -”. B thereafter did all that was the desire of A in order to save his life. What is immediate answer? (a) A can enforce the contract. (b) B can enforce the contract. (c) A has applied coercion. (d) The contract is unenforceable. 100. A had offered B, a price of Rs.10,00,000/- for B’s flat. But B was not ready to sell the flat at all. A says to B that “I shall kill you if you don’t agree to sell me your house for Rs. 10,00,000/ -”. B thereafter did all that was the desire of A in order to save his life. Choose the most suitable statement for the purpose of finding out remedy for B. (a) A has applied coercion. (b) A has done fraud with B. (c) A is guilty of misbehaving with B. (d) A has an anti-social nature. SECTION – C : GENERAL ECONOMICS (50 MARKS) 101. Which of the following statements is correct? (a) In a two-good economy, the production possibilities frontier reflects the maximum amount of one good that can be produced when a given amount of the other good is produced. (b) Microeconomics is the study of the behaviour of the economy as a whole. (c) Positive economics focuses on welfare of the people of a society (d) None of the above Common Proficiency Test (CPT) Volume - I 217 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 102. Which of the following is incorrect? (a) The cross elasticity of demand for two substitutes is positive (b) The income elasticity of demand is the percentage change in quantity demanded of a good due to a change in the price of a substitute (c) The cross elasticity of demand for two complements is negative (d) The price elasticity of demand is always negative, except for Giffen goods 103. Which of the following situation does not lead to an increase in equilibrium price? (a) An increase in demand, without a change in supply (b) A decrease in supply accompanied by an increase in demand (c) A decrease in supply without a change in demand (d) An increase in supply accompanied by a decrease in demand 104. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time.” If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is: (a) Rational, if the firm is covering its variable cost (b) Rational, if the firm is covering its fixed cost (c) Irrational, since plant closing is necessary to eliminate losses (d) Irrational, since fixed costs are eliminated if a firm shuts down 105. An individual firm in a perfectly competitive market faces a demand curve which is: (a) Downward sloping (b) Relatively inelastic (c) Perfectly elastic (d) Upward sloping 106. A firm’s production function: (a) Shows how much output and the level of input required for the firm to maximize profits (b) Establishes the minimum level of output that can be produced using the available resources (c) Shows the maximum output that can be produced with a given amount of inputs with available technology (d) Shows labour force which is employed 107. The law of diminishing returns: (a) States that beyond some level of a variable input, the average product of that variable input begins to increase steadily. (b) Assumes that there is technological improvement over time. (c) States that beyond some level of a variable input, the marginal product of that variable begins to decrease steadily. (d) Informs a firm whether or not to use a factor input. 218 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 108. Which of the following is correct? (a) If marginal revenue is positive and falling, total revenue will rise at a decreasing rate. (b) Total revenue is equal to price times the quantity sold. (c) Under perfect competition, total revenue is equal to marginal revenue times the quantity sold. (d) All of the above. 109. You are given the following data: Table 1 Output Total Costs 0 0 1 15 2 35 3 60 4 92 5 140 The above data is an example of: (a) Decreasing returns to scale. (b) Constant returns to scale. (c) Increasing returns to scale. (d) Positive fixed cost. 110. Monopolies are allocatively inefficient because: (a) They restrict the output to keep the price higher than under perfect competition. (b) They charge a price higher than the marginal cost. (c) Both (a) and (b) are correct. (d) Both (a) and (b) are incorrect. 111. Which of the following statements is correct? (a) Countries which are industrially well-developed generally have higher per capita income than countries which are not (b) India is a capital surplus economy (c) Agriculture sector need not depend upon industrial sector for its growth (d) None of the above 112. EAS stands for (a) Easy Assistance Scheme (b) Endless Assistance Scheme (c) Employment Assurance Scheme (d) Employment Assessment Scheme 113. The effect of increase CRR will be reduced or nullified if: (a) Bank rate is reduced (b) Securities are sold in the open market (c) SLR is increased (d) People do not borrow from non-banking institutions Common Proficiency Test (CPT) Volume - I 219 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 114. Privatization in India has taken place in all of the cases except (a) CMC (b) BALCO (c) VSNL (d) None of the above. 115. What percent of the sick units in India are big units? (a) 10 percent (b) 4 percent (c) 30 percent (d) 96 percent 116. Which among the following is an indirect tax? (a) Income tax (b) Wealth tax (c) Custom duty (d) Gift tax 117. At the time of Independence and a number of years thereafter cotton textiles, jute and tea accounted for more than __________% of our export earnings. (a) 50 (b) 70 (c) 80 (d) 90 118. According to the latest available data, the bed-population ratio in India is __________ per thousand population. (a) 3.2 (b) 1.03 (c) 11.5 (d) 20.3 119. According to the latest UNDP report, 2008 India’s relative global rating on this index is __________ among 179 countries. (a) 150 (b) 177 (c) 132 (d) 5 120. According to the latest NSSO (2004) data, the percentage of people living below poverty line has __________ compared to the previous (1999) data. (a) Increased (b) Remained same (c) Decreased (d) Can’t say 121. According to the 61st NSSO round show that about __________ million of persons were provided job during 2004-05. (a) 36 (b) 30 (c) 40 (d) 47 122. As compared to the targeted growth rate of 10% per annum in industrial production, the actual growth rate was __________ % per annum during the Tenth Plan. (a) 9.4 (b) 8.7 (c) 6.5 (d) 7.5 220 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 123. The value added by the industrial sector in the GDP (2007-08) is __________. (a) 26% (b) 12% (c) 19% (d) 32% 124. The small scale sector in India employs nearly __________ lakh people. (a) 67 (b) 23 (c) 100 (d) 312 125. GDP at factor cost is equal to GDP at market price minus indirect taxes plus __________. (a) Depreciation (b) Direct taxes (c) Foreign investments (d) Subsidies 126. Net domestic expenditure is consumption expenditure plus __________. (a) Net foreign investment (b) Net foreign investment plus net domestic investment (c) Net domestic investment (d) Replacement expenditure 127. Custom duties are levied on __________. (a) Incomes of the individual (b) Production of goods (c) Export and import of goods (d) Incomes of the corporate 128. Demand for final consumption arises in __________. (a) Household sector only (b) Government sector only (c) Both household and government sectors (d) Neither household nor government sector 129. The share of direct taxes in the gross tax revenue (Centre and States combined) was __________ % in 2008-09. (a) 66 (b) 40 (c) 25 (d) 75 130. According to census 2001 the sex ratio (number of females per 1,000 males) in India is __________. (a) 933 (b) 941 (c) 927 (d) 930 131. If as a result of 20 percent fall in the ticket fares the demand for ‘watching movie’ in the cinema hall increases by 10 percent, then __________. (a) Zero (b) Greater than zero but less than one (c) One (d) Greater than one Common Proficiency Test (CPT) Volume - I 221 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 132. According to the Planning Commision, using Mixed Recall period (MRP) _________ % people where below poverty line in 2004-05. (a) 12.3 (b) 21.8 (c) 14.3 (d) 18.3 Questions 133 to 137 are based on the demand and supply diagrams in Figure 1. D and S 1 1 are the original demand and supply curves. D , D , S and S are possible new demand and 2 3 2 3 supply curves. Starting from initial equilibrium point (1) what point on the graph is most likely to result from each change? 133. If Figure 1 represents the market for Mars Bars, the initial equilibrium is at the intersection of S and D. The new equilibrium if there is an increase in cocoa prices will be: 1 1 (a) Point 3 (b) Point 9 (c) Point 4 (d) Point 2. 134. In Figure 1 (which represents the market for Mars Bars), the initial equilibrium is at the intersection of S and D . The new equilibrium if there is rapid economic growth and the 1 1 government also imposes a tax on Mars Bars is: (a) Point 3. (b) Point 9. (c) Point 2. (d) Point 6. 135. In Figure 1 (which represents the market for Mars Bars), the initial equilibrium is at the intersection of S and D . The new equilibrium if there is a health scare about the effect 1 1 Mars Bars may have is: (a) Point 2. (b) Point 9. (c) Point 3. (d) Point 6. 222 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 136. In Figure 1 (which represents the market for Mars Bars), the initial equilibrium is at the intersection of S and D . Assuming that mars bars are an inferior good, the new equilibrium 1 1 if there is a recession and wages of workers producing them fall is: (a) Point 2 (b) Point 7 (c) Point 3 (d) Point 6 137. In Figure 1(which represents the market for Mars Bars), the initial equilibrium is at the intersection of S and D . Assume that the income of the consumers rises and at the same 1 1 time there is an increase in the productivity in the production of Mars Bars. The new equilibrium will be: (a) Point 2 (b) Point 7 (c) Point 3 (d) Point 6 138. A book seller estimates that if she increases the price of a book from Rs.60 to Rs.67, the quantity of books demanded will decrease from 2,035 to 1,946. The book’s price elasticity of demand is approximately (a) 0.4 (b) 0.8 (c) 1.0 (d) 2.5 139. Concerned about the poor state of the economy, a car dealer estimates that if income decreases by 4 per cent, car sales will fall from 352 to 335. Consequently, the income elasticity of demand for cars is approximately (a) –1.2 (b) 0.01 (c) 0.4 (d) 1.2 A competitive firm sells as much as of its product as it chooses at a market price of Rs 200 per unit. Its fixed cost is Rs 600 and its variable costs (in rupees) for different levels of production are shown in the following table. Use Table 2 to answer questions 140-144. Common Proficiency Test (CPT) Volume - I 223 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 Table 2 Quantity Variable Fixed Total Average Average Marginal Cost Cost Cost Variable total Cost Cost Cost 0 0 - - - 5 500 10 940 15 1400 20 1960 25 2700 30 3700 35 5040 40 6800 45 9060 50 11900 140. When production is 40 units, the average total cost is (a) Rs. 8.80 (b) Rs. 15 (c) Rs. 170 (d) Rs. 185 141. In the table marginal cost per unit that corresponds to 40 units of production is (a) Rs. 44 (b) Rs. 170 (c) Rs. 352 (d) Rs. 1760 142. To maximize profit, the firm should produce (a) 15 units (b) 30 units (c) 35 units (d) 50 units 143. If the market price drops from Rs. 200 to Rs. 112, 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. 144. If the market price rises from Rs. 200 to Rs. 352, the firm’s short run response should be (a) Shut down (b) Produce 40 units (c) Produce 20 units (d) Continue to produce the same number of units as before the increase in price. 224 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 145. Suppose a shopkeeper buys inputs worth Rs. 2,00,000 and his sales are worth Rs. 4,00,000 in a month. The input tax rate is 4% and output tax rate is 10%. What is Value added tax here after set off of input tax credit? (a) Rs. 32,000 (b) Rs. 8,000 (c) Rs. 40,000 (d) Rs. 20,000 146. If the quantity of blankets demanded increases from 4600 to 5700 in response to a decrease in their price from Rs. 220 to Rs. 190, the price elasticity of demand for blankets is (a) 0.69 (b) 1.0 (c) 1.46 (d) 2.66 147. The cross elasticity of monthly demand for gel pen when the price of refills increases by 20% and demand for gel pens falls by 30% is equal to: (a) - 0.71 (b) + 0.25 (c) - 0.19 (d) -1.5 148. The cross elasticity of monthly demand for ink pen when the price of gel pen increases by 25% and demand for ink pen increases by 50% is equal to: (a) + 2.00 (b) - 2.00 (c) -2.09 (d) + 2.09 Read the following table and answer question number 149 -150. Table 3 Number of products Total utility Marginal utility 0 0 - 1 3600 2 6800 3 9600 4 12000 5 14000 6 15600 7 16800 8 17600 9 18000 149. What is marginal utility when consumption increases from 4 units to 5 units? (a) 3000 (b) 1200 (c) 2000 (d) 1500 Common Proficiency Test (CPT) Volume - I 225 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 150. What is marginal utility when consumption increases from 8 units to 9 units? (a) 3000 (b) 400 (c) 2000 (d) 1500 SECTION – D : QUANTITATIVE APTITUDE (50 MARKS) 151. This method presents data with the help of a paragraph or a number of paragraphs. (a) Tabular presentation. (b) Textual presentation. (c) Diagrammatic representation. (d) None of these. 152. If two events A and B are independent, the probability that they will both occur is given by (a) P(A) + P(B) (b) P(A) X P(B) (c) P(A) – P(B) (d) P(A)/P(B) 153. The normal curve is (a) Positively skewed. (b) Negatively skewed. (c) Symmetrical. (d) All of these. 154. If x denotes height of a group of students expressed in cm. and y denotes their weight expressed in kg. , then the correlation coefficient between height and weight (a) Would be shown in kg. (b) Would be shown in cm. (c) Would be shown in kg. and cm. (d) Would be free from any unit. 155. The base of log 13 into the common logarithmic base is 6 log 10 log 6 6 10 (a) (b) log 13 log 13 6 10 log 13 10 (c) (d) None of these. log 6 10 156. Data collected on minority from the census reports are (a) Primary data. (b) Secondary data. (c) Discrete data. (d) Continuous data. 157. The nationality of a person is an example of (a) A variable. (b) A discrete variable. (c) A continuous variable. (d) An attribute. 158. The total sum of the values of a given year divided by the sum of the values of the base year is a (a) Price index. (b) Quantity index. (c) Value index. (d) None of these. 226 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 159. Find the first derivative of y = log x e 1 (a) (b) e log x x 1 (c) e (d) None of these. x 160. Fisher’s ideal index is (a) Arithmetic mean of Laspeyre’s and Paasche’s index. (b) Median of Laspeyre’s and Paasche’s index. (c) Geometric mean of Laspeyre’s and Paasche’s index. (d) None of these. 161. _________ is the upper part of the table, describing the columns and sub columns. (a) Box head (b) Stub (c) Caption (d) Body 162. The correlation between sale of cold drinks and day temperature is _________. (a) Zero (b) Positive (c) Negative (d) None of these 163. In case of a _________, plotted points on a scatter diagram lie from lower left corner to upper right corner. (a) Zero correlation (b) Negative correlation (c) Positive correlation (d) Simple correlation 164. The _________ the size of the sample more reliable is the result. (a) Medium (b) Smaller (c) Larger (d) None of these 165. _________ are the values dividing a given set of observations into ten equal parts. (a) Quartiles (b) Deciles (c) Centiles (d) None of these 166. Variance of a binomial distribution is always _________ its mean. (a) Equal to (b) More than (c) Less than (d) None of these 167. If in binomial distribution mean is 10 and S.D. is 2, q will be _________. (a) 0 (b) 0.2 (c) 0.8 (d) 0.4 Common Proficiency Test (CPT) Volume - I 227 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 168. The sum of the following is _________. 1+ 3 - 5 + 7 + 9 - 11, + 13............................ 3n terms (a) 2n2 + 3 (b) 5n2 + 2 (c) 3n2 – 4n (d) 3n2 169. If nP = 60 then value of n is _________. 3 (a) 5 (b) 2 (c) 1 (d) 3 170. If one root of the equation x2 + 7x+ p = 0 be reciprocal of the other then the value of p is_________. (a) 1 (b) –1 (c) 7 (d) –7 171. A person borrowed Rs. 4,000 and after 6 months the amount paid was Rs. 4,050, find the rate of interest. (a) 5% (b) 25% (c) 2.5% (d) 20% 16x−1 172. The value of is 4x2/3 (a) 4x–3/5 (b) 4x5/3 (c) 4x–5/3 (d) None of these. 2 xdx ∫ 173. Evaluate x2 +2 1 (a) log 2 (b) log 3 1 1 log log (c) (d) 2 3 4 9 3 174. Find the value of x if : x = : 5 2 4 (a) 15/2 (b) 9/10 (c) 3/4 (d) None of these. 175. The fourth proportional to 2/3, 3/7, 4/9,........ is (a) 2/7 (b) 14/8 (c) 7/2 (d) None of these. 228 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 176. The solution set of equations 3x+ 4y = 7 and 4x – y = 3, is (a) 1, 1 (b) –1, 1 (c) 2, 1 (d) –1, 2 177. A dealer has only Rs. 5,760 to invest in fans (x) and sewing machines (y). The cost per unit of fan and sewing machine is Rs. 360 and Rs. 240 respectively. This can be shown by: (a) 360x + 240y > 5760 (b) 360x + 240y < 5760 (c) 360x + 240y = 5760 (d) None of these. 178. Find the value of 8! / 5! (a) 663 (b) 363 (c) 336 (d) None of these. 179. If A={1, 2, 3, 4} and B={2, 4} then A∩∩∩∩∩B can be written as (a) f (b) {1,3} (c) {2,4} (d) {0} ⎛ x2 +3x+2 ⎞ lim⎜ ⎟ 180. Compute the value of x→1⎝x3 +2x2 –x+1⎠ (a) 5 (b) 9 (c) 7 (d) 2 181. Find g o f for the functions f (x) = x, g (x) = 2x2 + 1 (a) 2x2 + 1 (b) 2x + 1 ( ) (c) (2x2 + 1) x (d) x 182. Two variables x and y are related by 5x + 2y + 5=0 and x = 5, then y is (a) 10 (b) –10 (c) 15 (d) –15 183. What is the median for the following observations 10, 16, 12, 18, 22, 8? (a) 12 (b) 14 (c) 16 (d) None of these 184. The variables x and y are related by 5x + 6y = 70 and median of x is 8. What is the median of y? (a) 4 (b) 4.5 (c) 5 (d) 5.5 Common Proficiency Test (CPT) Volume - I 229 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 185. Find Q for the following observations: 1 7, 9, 5, 4, 10, 15, 14, 18, 6, 20 (a) 4.75 (b) 5.25 (c) 5.75 (d) 6.25 186. If y = 4 + 3x and mode of x is 25, what is the mode of y? (a) 75 (b) 25 (c) 79 (d) 89 187. Refer following table: Frequency distribution of weights of 16 students Weight in kg. No. of students (Class interval) (Frequency) 44 – 48 4 49 – 53 5 54 – 58 7 Total 16 Find Frequency density of the second class interval. (a) 0.80 (b) 0.90 (c) 1.00 (d) 1.10 188. The coefficient of correlation between two variables is 0.5, then the coefficient of determination is (a) 0.5 (b) 0.25 (c) –0.5 (d) 0.5 189. A bag contains 30 balls numbered from 1 to 30. One ball is drawn at random. The probability that the number of the drawn balls will be multiple of 3 or 7 is (a) 7/15 (b) 13/30 (c) ½ (d) None of these. 190. A card is drawn from a pack of playing cards and then another card is drawn without the first being replaced. What is the probability of getting two hearts? (a) 1/17 (b) 1/4 (c) 2/17 (d) None of these. 191. A pair of dice is thrown. What is the probability that the sum of the numbers obtained is more than 10? (a) 1/18 (b) 1/9 (c) 1/ 12 (d) None of these. 230 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 192. If the relationship between x and y is given by 4x+ 5y = 10 and the range of x is 15, what would be the range of y? (a) 10 (b) 11 (c) 12 (d) 13 193. Which term of the progression 1, 2, 4, 8 __________ is 64 (a) 7 (b) 5 (c) 6 (d) 9 194. Evaluate the integral of ∫ x.exdx (a) ex(x2 +1) + c (b) ex(x + 1) + c (c) ex(2x +1) + c (d) ex(x – 1) + c 195. A letter lock has three rings each marked with 10 different letters. In how many ways it is possible to make an unsuccessful attempt to open the lock? (a) 1,000 (b) 999 (c) 5,040 (d) None of these. 196. Find the effective rate of interest if I = Rs.1800, P = 18000, t = 1 year (a) 10% (b) 9% (c) 18% (d) None of these. 197. The length of the perpendicular from the point (2, 5) on the line 4x – 3y +18 = 0 is (a) 2.7 (b) 2.5 (c) 2.2 (d) 2.1 dy 198. If x2 ey + 4 log x = 0 then is dx ey2x2 +4+8x ey2x2 −4 (a) (b) x3ey x3ey −ey2x2 −4 (c) (d) None of these. x3ey dy 199. Find , when y =10x8 dx (a) 80x7 (b) 10x7 (c) 80x8 (d) None of these. Common Proficiency Test (CPT) Volume - I 231 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 8 9x −3x 200. Evaluate lim x→0 4x −2x log3 log4 (a) (b) log2 log2 log9 log3 (c) (d) log2 log4 (cid:2)(cid:2)(cid:2) 232 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 – 9 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. During the lifetime of an entity, accountants prepare financial statements at arbitrary points of time as per (a) Prudence. (b) Consistency. (c) Periodicity. (d) Matching. 2. Real accounts relate to assets of the firm and not (a) Machinery. (b) Debt. (c) Receivables. (d) None of the three. 3. Amit purchased a typewriter, for the purpose of sale, from Arvind for Rs. 8,000. This is (a) An event. (b) A transaction. (c) A transaction as well as an event. (d) Neither a transaction nor an event. 4. Profit leads to increase in (a) Assets. (b) Capital. (c) Both (a) and (b) (d) Neither (a) nor (b) 5. Vikas and Co. account is a (a) Personal account (b) Real account (c) Nominal account (d) None of the above Common Proficiency Test (CPT) Volume - I 233 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 9 6. Depreciation arises because of (a) Fall in the market value of the asset. (b) Fall in the value of money. (c) Physical wear and tear of the asset. (d) None of the three. 7. A promissory note does not require (a) Noting (b) Discounting (c) Acceptance (d) None of the above 8. Which of the following accounts will have credit balance? (a) Sale returns. (b) Bills receivable. (c) Carriage inwards. (d) Outstanding wages. 9. Which of the following error is an error of omission? (a) Sale of Rs. 5,000 was written in the purchases journal. (b) Wages paid to Shyam has been debited to his account. (c) The total of the sales journal has not been posted to the sales account. (d) None of the above 10. Prepaid salary has a (a) Credit balance. (b) Debit balance. (c) Negative balance. (d) None of the above 11. The equality of debits and credits of the ________ does not mean that the individual accounts are also accurate. (a) Bank reconciliation statement. (b) Cash book. (c) Trial balance. (d) None of the three. 12. Change in the method of depreciation is change in ________. (a) Accounting estimate. (b) Accounting policy. (c) Measurement discipline. (d) None of the above. 13. Credit balance in the cash book means ________ . (a) Overdraft as per passbook (b) Favourable balance as per passbook (c) Both (a) and (b). (d) None of the above. 14. Sale of scrap of raw materials appearing in the trial balance are shown on the credit side of ________ (a) Trading account. (b) Manufacturing account. (c) Profit and Loss account. (d) None of the three. 234 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 15. Goodwill is a ________ (a) Current asset. (b) Fictitious asset. (c) Tangible asset. (d) Intangible asset. 16. Joint venture account is a ________. (a) Personal account. (b) Real account. (c) Nominal account. (d) None of the three. 17. Abnormal loss on consignment is credited to ________ (a) Profit and Loss account. (b) Consignee’s account. (c) Consignment account. (d) None of the three. 18. When money is withdrawn from the bank, the bank ________ the account of the customer. (a) Credits. (b) Debits. (c) Either (a) or (b). (d) None of the three. 19. ________ days of grace are allowed in case of time bills for calculating date of maturity. (a) 2 (b) 4 (c) 3 (d) 5 20. The cash discount allowed to a debtor should be credited to (a) Discount account. (b) Customer’s account. (c) Sales account. (d) None of the above. 21. Huge Ltd. issued 25,000 equity shares of Rs.100 each at a premium of Rs. 15 each payable as Rs. 25 on application, Rs. 40 on allotment and balance in the first call. The applications were received for 75,000 equity shares but the company issued to them only 25,000 shares. Excess money was refunded to them after adjustment for further calls. Last call on 500 shares were not received and were forfeited after due notice. The above is the case of (a) Oversubscription. (b) Pro-rata allotment. (c) Forfeiture of shares. (d) All of the above 22. A, B and C are partners in the firm sharing profits and losses in 5:3:2 ratio. The firm’s Balance Sheet as on 31.3.2010 shows the Reserve balance of Rs. 25,000, Profit of the last year Rs. 50,000, Joint Life policy of Rs. 10,00,000, fixed assets of Rs. 12,00,000. On 1st June C died and on the same date assets were revalued. The executor of the deceased partner will get along with the capital of C (a) Share in the Reserves account of the firm. (b) Proportionate share of profit upto the date of death. (c) Share in Joint life policy. (d) All of the above. Common Proficiency Test (CPT) Volume - I 235 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 9 23. A machine purchased on 1st January, 2006 at Rs. 15,00,000, having useful life of 15 years was depreciated on straight line basis. On 1st January, 2009, the same machine was revalued upward by Rs. 3 lacs. The amount of depreciation for the year 2009 will be (a) Rs. 1,25,000. (b) Rs. 1,00,000. (c) Rs. 1,20,000. (d) Rs. 1,50,000. 24. At the end of the accounting year, material A costing Rs. 10,000 was having net realisable value of Rs. 9,500 only, while material B costing Rs.12,000 was having a net realisable value of Rs. 13,000 in the market and material C costing Rs. 15,000 was having net realisable value of Rs. 14,000 only. The total amount of closing stock will be (a) Rs. 37,000. (b) Rs. 35,500. (c) Rs. 36,500. (d) Rs. 38,000. 25. Atul purchased goods costing Rs. 50,000 at an invoice price, which is 50% above cost. On invoice price he enjoyed 15% trade discount and Rs. 3,750 cash discount on cash payment of goods in lump sum at the time of purchase. The purchase price to be recorded in the books before cash discount will be (a) Rs. 75,000. (b) Rs. 60,000. (c) Rs. 63,750. (d) Rs. 50,000. 26. A cheque of Rs. 35,000 received by M/s Nandini was endorsed to M/s Chandini on account of full settlement of Rs. 35,500 on 1st October, 2009. Chandini deposited the same into the bank on 4th October, 2009. In the books of M/s Chandini, the amount to be debited on 1st October, 2009 will be (a) Cash account Rs. 35,000 and Discount account Rs. 500. (b) Bank account Rs. 35,000 and Discount account Rs. 500. (c) Cash account Rs. 35,500. (d) Bank account Rs. 35,500. 27. If repair cost of a building is Rs.15,000, whitewash expenses are Rs. 10,000, cost of extension of building is Rs.5,00,000 and cost of improvement in electrical wiring system is Rs. 25,000. The amount to be expensed is (a) Rs. 50,000. (b) Rs. 5,50,000. (c) Rs. 25,000. (d) Nil 28. An amount of Rs. 6,000 due from Anshul, which had been written off as a bad debt in a previous year, was unexpectedly recovered, and had been posted to the personal account of Anshul. The rectification entry will be (a) Anshul’s A/c Dr. Rs. 6,000, To Suspense A/c Rs.6,000. (b) Suspense A/c Dr. Rs. 6,000, To Bad debts recovered A/c Rs. 6,000. (c) No rectification entry required. (d) Anshul’s A/c Dr. Rs. 6,000, To Bad debts recovered A/c Rs. 6,000. 236 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 29. There was difference in the bank column of cash book and passbook by Rs. 2,500. On scrutiny it was found that interest of Rs. 500 charged directly by the bank was not entered in the cash book. The same was adjusted in the cashbook before reconciliation statement. Now, in the bank reconciliation statement, this interest of Rs. 500 is to be (a) Added to the cash book balance. (b) Subtracted from the cash book balance. (c) Ignored while preparing bank reconciliation statement. (d) None of the above. 30. Opening stock of raw material of a manufacturing concern is Rs. 10,000, Purchase during the year is Rs. 2,00,000, Wages Rs. 50,000, Carriage Rs. 5,000, Factory overheads Rs. 1,25,000 and closing stock of raw material is Rs. 15,000. The amount to be transferred is (a) Rs. 3,75,000 to cost of goods manufactured account. (b) Rs. 3,75,000 to cost of goods sold account. (c) Rs. 3,75,000 to cost of sales account. (d) Rs. 3,75,000 to cost to company account. 31. Mr. A consigned goods costing Rs. 2,50,000 to Mr. B at an invoice price of Rs. 3,00,000. The goods were to be sold at invoice price or above. Mr. B sold some of the goods at invoice price of Rs. 2,00,000 and some at 10% above cost i.e. Rs.1,10,000. For this he gets 5% commission. The amount of commission is (a) Rs.18,000. (b) Rs.15,000. (c) Rs.12,500. (d) Rs.15,500. 32. 1,000 kg of oranges are consigned to a wholesaler, the cost being Rs. 8 per kg, plus Rs. 925 of freight. It is concluded that a loss of 15% is unavoidable. The cost per kg of orange will be (a) Rs. 9.41. (b) Rs. 10.00. (c) Rs. 10.50. (d) Rs. 8.93. 33. Ajay bought goods of the value of Rs 20,000 and consigned them to Bijay to be sold by them on a joint venture, profits being divided equally. Ajay draws a bill on Bijay for an amount equivalent to 80% of cost on consignment. The amount of bill will be: (a) Rs. 16,000. (b) Rs. 20,000. (c) Rs. 4,000. (d) Cannot be determined. 34. A machine purchased on 1.4.2007 for Rs.10,00,000 was depreciated on straight line basis over its useful life of 10 years. On 1.4.2009, it was found that machine is in a good condition and will be used in the production for another 10 years. The amount of depreciation for the year ending 31.3.2010 will be (a) Rs. 1,00,000. (b) Rs. 80,000. (c) Rs. 83,333. (d) Rs. 66,667. Common Proficiency Test (CPT) Volume - I 237 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 9 35. X of Kolkata sends out goods costing Rs. 1,00,000 to Y of Mumbai at cost + 25%. Consignor’s expenses Rs 2,000. 3/5th of the goods were sold by consignee at Rs. 85,000. Commission 2% on sales + 20% of gross sales less all commission exceeds invoice value. Amount of total commission will be: (a) Rs. 3,083. (b) Rs. 3,000. (c) Rs. 2,500. (d) Rs. 2,000. 36. Anuj bought goods of the value of Rs. 10,000 and consigned them to Bittu to be sold by them on a joint venture, profits being divided equally, Anuj paid Rs. 1,000 for freight and insurance. Anuj draws a bill on Bittu for Rs. 10,000. Anuj got it discounted at Rs. 9,500. Bittu sold the goods for Rs. 15,000. Commission payable to Bittu Rs. 500. The amount to be remitted by Bittu to Anuj will be: (a) Rs. 12,500 (b) Rs. 3,000 (c) Rs. 14,500 (d) Rs. 13,500 37. On 1.12.09 X draws a bill on Y “for 30 days after sight”. The date of acceptance is 8.12.09. The due date of the bill will be: (a) 8.1.2010 (b) 10.1.2010 (c) 11.1.2010 (d) 9.1.2010 38. Mr. Aakash draws a bill on Mr. Yash for Rs. 30,000 on 1.1.2010 for 3 months. On 4.2.2010. Mr. Aakash got the bill discounted at 12%. The amount of discount will be: (a) Rs. 900 (b) Rs. 600 (c) Rs. 300 (d) Rs. 650 39. On 1.6.05 X draws a bill on Y for Rs. 25,000. At maturity Y request X to accept Rs. 5,000 and noting charges incurred Rs. 100 in cash and for the balance X draws a bill on Y for 2 months at 12% p.a. Interest amount will be: (a) Rs. 410. (b) Rs. 420. (c) Rs. 440. (d) Rs. 400. 40. R, the consignor, sends out goods costing Rs.2,00,000 to K for sale on commission basis. Consignor’s expenses Rs.5,000. Consignee’s expenses in relation to sales Rs 2,000. 4/5th of the goods were sold at 20% above cost. Commission charged by K is Rs.5000. The profit on consignment will be: (a) Rs. 21,000 (b) Rs. 32,000 (c) Rs. 26,200 (d) Rs. (6,000) 41. Ansh and Vansh enter into a joint venture to sell a consignment of biscuits sharing profits and losses equally. Ansh provides biscuits from stock Rs. 10,000. He pays expenses amounting to Rs. 1,000. Vansh incurs further expenses on carriage Rs. 1,000. He receives cash for sales Rs. 15,000. He also takes over goods to the value of Rs. 2,000. Profit on venture will be (a) Rs. 3,000 (b) Rs. 5,000 (c) Rs. 6,000 (d) Rs. 3,500 238 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 42. Prakash Ltd. issued 15,000, 15% 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. 15,000. (b) Rs. 30,000. (c) Rs. 45,000. (d) Rs. 22,500. 43. Varun Ltd. sends goods to his customers on Sale or Return basis by recording it as a sale at the time of sending it for approval. During 2009, Varun Ltd. send goods to customers for Rs. 1,00,000 on sale or return basis, at cost plus 33.33%. On September 2009, a letter of approval was received from a customer for Rs. 40,000. In this respect, entry will be (a) Debtors account debited and sales account credited with Rs. 40,000. (b) Sales account debited and debtors account credited with Rs. 40,000. (c) No entry is required for receiving the letter of approval from the customer. (d) Entry for Rs. 40,000 will be made at the end of the year. 44. The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs. 45,000. Capital employed is Rs. 4,00,000 and normal rate of return is 10%. The amount of goodwill calculated on the basis of super profit method for three years of purchase will be: (a) Rs. 2,000. (b) Rs. 4,000. (c) Rs. 6,000. (d) Rs. 8,000. 45. Tista Ltd. has issued 14% Debentures of Rs. 10,00,000 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 paid” in the Balance Sheet will be: (a) Rs. 35,000 shown along with Debentures. (b) Rs. 70,000 under current liabilities. (c) Rs. 1,40,000 shown along with Debentures. (d) Rs. 10,000 under current liabilities. 46. Anny and Bunny enter into a joint venture sharing profits and losses in the ratio 1:1. Anny purchased goods costing Rs. 20,000. Bunny sold the goods for Rs. 25,000. Anny is entitled to get 1% commission on purchase and Bunny is entitled to get 5% commission on sales. The profit on venture will be: (a) Rs. 3,550. (b) Rs. 3,600. (c) Rs. 3,400. (d) Rs. 3,800. 47. A, B & C are equal partners. They wanted to change the profit sharing ratio into 4:3:2. The goodwill was valued as Rs. 90,000. The effected accounts will be (a) C’s capital account debit and A’s capital account credit with Rs.10,000. (b) B’s capital account debit and A’s capital account credit with Rs.10,000. (c) C’s capital account debit and B’s capital account credit with Rs.10,000. (d) A’s capital account debit and C’s capital account credit with Rs.10,000. Common Proficiency Test (CPT) Volume - I 239 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 9 48. 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. 49. Hum and Tum are partners sharing profits and losses in the ratio 5:3. On admission, Woh brings Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between Hum, Tum and Woh are 7:5:4. The sacrificing ratio between Hum:Tum will be: (a) 3:1. (b) 4:7. (c) 5:4. (d) 2:1. 50. Mr. Big who was the holder of 200 equity shares of Rs.100 each on which Rs.75 per share has been called up could not pay his dues on allotment and first call each at Rs. 25 per share. The Directors forfeited the above shares and reissued 150 of such shares to Mr. Small at Rs. 65 per share paid-up as Rs. 75 per share. The amount to be transferred to Capital Reserve account will be (a) Rs. 1,500. (b) Rs. 2,250. (c) Rs. 5,000. (d) Nil. 51. A company issued 15,000, 9% preference shares of Rs.100 each at 5% discount and 2,00,000 equity shares of Rs. 10 each at 10% premium. Full amount was received from the applicants in one instalment. The net balance of securities premium account will be: (a) Rs. 75,000. (b) Rs. 1,25,000. (c) Rs. 2,00,000. (d) Cannot be determined. 52. Anju Ltd. forfeited 300 equity shares of Rs. 10 each fully called-up, held by Manju for non- payment of final call @ Rs. 4 each. However, she paid application money @ Rs.2 per share and allotment money @ Rs. 4 per share. These shares were originally issued at par. The amount to be credited to Share forfeiture account will be: (a) Rs. 1,200. (b) Rs. 3,000. (c) Rs. 4,200. (d) Rs. 1,800. 53. Raj, Jai and Hari are the partners sharing profits in the ratio 7:5:4. Hari 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 Hari’s Account. (a) Rs. 6,000. (b) Rs. 1,500. (c) Nil. (d) Rs. 2,000. 54. 10,000 equity shares of Rs. 10 each were issued to public at a premium of Rs.2 per share. Applications were received for 12,000 shares. Amount of securities premium account will be (a) Rs. 20,000. (b) Rs. 24,000. (c) Rs. 4,000. (d) Rs. 1,600 240 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 55. A company offers to the public 10,000 shares for subscription. The company receives application for 12,000 shares. If the shares are allotted on pro-rata basis, then applicants for 12,000 shares are to be allotted as (a) 4 shares for every 5 shares applied. (b) 2 shares for every 3 shares applied. (c) 5 shares for every 6 shares applied. (d) 3 shares for every 4 shares applied. 56. The Board of Directors of a company decides to issue minimum number of equity shares of Rs. 10 each at 10% discount to redeem Rs. 5,00,000 preference shares. The maximum amount of divisible profits available for redemption is Rs. 3,00,000. The number of shares to be issued by the company will be (a) 20,000 shares. (b) 22,223 shares. (c) 18,182 shares. (d) 25,000 shares. 57. Rich Ltd. had 3,000, 12% Redeemable preference shares of Rs. 100 each, fully paid-up. The company issued 25,000 equity shares of Rs. 10 each at par and 1,000 14% debentures of Rs. 100 each. All amounts were received in full. The payment was made in full. The amount to be transferred to Capital Redemption Reserve Account is (a) Nil. (b) Rs. 2,00,000. (c) Rs. 3,00,000. (d) Rs. 50,000. 58. Koina Ltd. issued 15,00,000, 12% debentures of Rs. 50 each at premium of 10% payable as Rs. 20 on application and balance on allotment. Debentures are redeemable at par after 6 years. All the money due on allotment was called up and received. The amount of premium will be (a) Rs. 3,00,00,000. (b) Rs. 2,25,00,000. (c) Rs. 75,00,000. (d) Rs. 5,25,00,000. 59. G Ltd. purchased land and building from H Ltd. for a book value of Rs. 2,00,000. The consideration was paid by issue of 12% Debentures of Rs. 100 each at a discount of 20%. The debentures account is credited with (a) Rs. 2,60,000 (b) Rs. 2,50,000 (c) Rs. 2,40,000 (d) Rs. 1,60,000 60. Win Ltd. issued 20,000, 8% debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be (a) Rs. 40,000. (b) Rs. 10,000. (c) Rs. 20,000. (d) Rs. 8,000. Common Proficiency Test (CPT) Volume - I 241 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 9 SECTION – B : MERCANTILE LAWS (40 MARKS) 61. An agency is said to be irrevocable where agency cannot be terminated or put to an end. An agency is irrevocable in the following cases: (a) Where the agency is coupled with interest and the interests exists before the creation of the agency or where the agent has incurred personal liability. (b) Where the agency is coupled with interest but the interest arises after the creation of the agency or where the agent has incurred personal liability. (c) Where the agent has incurred personal liability. (d) None of the above. 62. Which of the following is correct: (a) A wagering agreement is void. (b) A contingent contract is valid. (c) A wagering agreement is void while a contingent contract is valid. (d) None of the above. 63. The heir of the deceased partner (a) Has a right to become a partner in the firm of the deceased partner. (b) Does not have a right to become a partner in the firm of the deceased partner. (c) Can become a partner in the firm of the deceased partner only if the surviving partners give their consent in this regard. (d) Both (b) & (c). 64. In case of an agreement to sale, if the seller becomes insolvent while the goods are in his possession, the buyer’s remedy (a) Is to claim the goods from the official receiver or assignee. (b) Is to claim dividend from the estate of the seller for the price paid. (c) Is not available. (d) Is to file a suit for damages. 65. The following are goods as per the Sale of Goods Act, 1930: (a) Trademark. (b) Goodwill. (c) Patent. (d) All of the above. 66. An unpaid seller loses the right of lien under the following circumstances: (a) Where the seller so conducts himself that he leads third parties to believe that the lien does not exist. (b) Where seller has waived the right of lien. (c) Where the buyer or his agent lawfully obtains possession of the goods. (d) All of the above. 242 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India 67. Essentials involved in appropriation of the goods are (a) The goods should conform to the description and the quality stated in the contract. (b) The goods must be in a deliverable state. (c) The goods must be unconditionally appropriated to the contract either by delivery to the buyer or to its agent or the carrier. (d) All of the above. 68. Which of the following is not correct: (a) Coercion involves physical force. (b) Undue influence involves physical force. (c) Coercion need not be directed at the promisor. (d) Undue influence is always exercised between the parties to the contract. 69. State which of the following is correct: (a) There is not much difference in the nature of a partnership from the nature of a HUF. (b) There is considerable difference in the nature of a partnership from the nature of a HUF. (c) There is difference in the nature of a partnership from the nature of a HUF because unlike the nature of a HUF, the nature of a partnership is voluntary and contractual. (d) There is not much difference in the nature of a partnership from the nature of a HUF because both involve a certain interest of a particular individual. 70. One person can contract with himself or with himself and others jointly (a) No at least two persons or parties must be involved. (b) Yes as the contract is between the individual and others jointly. (c) Yes if there is a formal agreement. (d) None of the above. 71. The cardinal principle of partnership law implies that (a) The business must be carried on by all the partners or by anyone or more of the partners acting for all. (b) The business may be carried on by all the partners acting for all. (c) The business may be carried on by anyone or more of the partners acting for all. (d) The business must be carried on in accordance with the decided profit (loss) sharing ratio. 72. In case of a public company (a) There should be at least seven members and maximum number of members should not exceed fifty. (b) There should be at least seven members and maximum number of members should not exceed hundred. (c) There should be at least two members and maximum number of members should not exceed fifty. Common Proficiency Test (CPT) Volume - I 243 © The Institute of Chartered Accountants of India MODEL TEST PAPER - 9 (d) There should be at least seven members and there is no restriction on the maximum number of members. 73. Silent is fraudulent in the following cases: (a) If the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak. (b) Where the circumstances are such that silence is in itself equivalent to speech. (c) Both (a) and (b). (d) None of the above. 74. An agency can be created by the following ways: (a) Agency by actual authority. (b) Agency by ratification. (c) Agency by ostensible authority. (d) All of the above. 75. The features of a Quasi Contract are as follows: (a) Such contracts do not arise from any agreement of the concerned parties. It is imposed by law. (b) Such a right is always a right to money, very often a right to a liquidated sum of money. (c) It is a right available against a particular person or persons only, not against the world at large. (d) All of the above. 76. An agency coupled with interest does not come to an end in case of the following: (a) Death of the principal. (b) Insanity of the principal. (c) Insolvency of the principal. (d) All of the above. 77. The test of good faith as provided in ‘expulsion of the partner’ in the Indian Partnership Act, 1932 requires the following: (a) That the expulsion must be in the interest of the partnership. (b) That the partner to be expelled is served with a notice. (c) That he is given an opportunity of being heard. (d) All of the above. 78. The relationship of principal and agent may arise by (a) Express or implied agreement. (b) Ratification. (c) Operation of law. (d) All of the above. 79. The following are the essential elements which need to co-exist in order to make a valid contract: (a) Offer & Acceptance. (b) Intention to create legal acceptance. (c) Capacity of parties – competency. (d) All of the above. 244 Common Proficiency Test (CPT) Volume - I © The Institute of Chartered Accountants of India