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CA CPT : Volume 1 - Model Test Paper 12 (with Answers)

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BOARD OF STUDIES THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA COMMON PROFICIENCY TEST Model Test Paper BOS/CPT 12 Time : 4 hours Maximum Marks : 200 The test is divided into four sections. SECTION A : FUNDAMENTALS OF ACCOUNTING (60 MARKS) 1. Which of the following is not a sub-field of accounting? (a) (c) 2. Capital expenditure Deferred revenue expenditure (b) (d) Revenue expenditure Capital loss Salary account Outstanding salary Account (b) (d) Cash account None of the above Total of purchase return book is posted periodically to the credit of ______ (a) (c) 6. Increase in asset and increase in liability Increase in liability and decrease in asset Increase in asset and decrease in liability Increase in one asset and decrease in another asset Salary Rs. 2000 payable to clerk is credited to _______ (a) (c) 5. Cost accounting Book-keeping Cost of shifting of business to a more convenient locality is _____ (a) (c) 4. (b) (d) Capital brought in by the proprietor is an example of _____ (a) (b) (c) (d) 3. Management accounting Financial accounting Purchase return account Journal proper (b) (d) Cash book None of the three No Journal entry is required to be passed when there is ______ (a) (c) Normal loss Loss of bad debts Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) Abnormal loss Loss by riots. 319 MODEL TEST PAPER - 12 7. Inventory is valued at cost or market value, whichever is less, is based on ______ (a) (c) 8. (b) (c) (d) In the ratio of capitals Equally In the ratio of capital invested by partners to the firm None of the above Intangible asset Current liability (b) (d) Current asset Other non-current asset Authorised shares capital Paid up capital (b) (d) Net profit Called up capital Part II of Schedule VI Part II of Schedule VII (b) (d) Part I of Schedule VI Part I of Schedule VII Damaged inventory is valued at (a) (b) (c) (d) 15. If del credere commission is allowed, bad debts will not be recorded in the books of the consignor. If del credere commission is allowed, bad debts will be debited in consignment account. If del credere commission is allowed by consignor to consignee, loss of bad debts is borne by consignee Del credere commission is generally given to promote credit sales. According to the Companies Act, 1956, Balance Sheet of a company is prepared as per (a) (c) 14. Consignee None of the three Dividends are usually paid as a percentage of ______ (a) (c) 13. (b) (d) Loss on issue of debentures for 5 years is treated as ______ (a) (c) 12. Consignor Supplier In the absence of any provision in the partnership agreement, profits and losses are shared: (a) (b) (c) (d) 11. Money measurement concept Conservation Which of the following statement is not true? (a) 10. (b) (d) Account sale is sent by _____ (a) (c) 9. Entity concept Accrual concept Cost or Market price whichever is lower Cost or Market price whichever is higher Cost of Net Realizable Value whichever is lower At net realizable value The main causes of depreciation include: (a) (c) Physical wear & tear Change in the Economic development 320 The Institute of Chartered Accountants of India (b) (d) Passage of time All of the above Common Proficiency Test (CPT) Volume - I 16. In case of credit balance, the words _______ are written on the credit side. (a) (c) 17. Profit & Loss account None of the three Provision Contingent liability (b) (d) Liability None of the above Added Not required to be adjusted (b) (d) Deducted None of the above Deferred revenue expenditure Revenue Expenditure (b) (d) Deferred capital expenditure Capital expenditure A trader purchased a machinery costing Rs. 1,00,000 on 1st Oct. 2009. Transportation and installation charges were incurred amounting Rs. 10,000 and Rs. 4,000 respectively. Dismentling charges of the old machine in place of which new machine was purchased amounted Rs. 10,000. Market value of machine was estimated at Rs. 1,20,000 on March 31, 2010, while finalizing the annual accounts. Trader values the machinery at Rs. 1,20,000 in his books which of the following concepts was violated by the trader? (a) (c) 22. (b) (d) The benefit from the expenditure is spread for not more than one year is called (a) (c) 21. Trading account Balance sheet When preparing a Bank reconciliation statement, if you start with balance as per cash book, then dividends directly collected by bank but not yet entered in cash book within the period are ____________ (a) (c) 20. To balance c/d By balance c/d Present liability of uncertain amount which can be measured reliably by using a substantial degree of estimation is termed as _______ (a) (c) 19. (b) (d) Prepaid insurance given in trial balance is recorded in __________ (a) (c) 18. To balance b/d By balance b/d Cost concept Realisation (b) (d) Matching concept Periodicity concept Accounting has certain norms to be observed by the accountants in recording of transactions and preparation of final statements. These norms reduce the vagueness and chances of misunderstanding by harmonizing the varied accounting practices. These norms are _________ (a) (c) Accounting regulations Accounting standards Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) Accounting guidance notes Accounting frame work 321 MODEL TEST PAPER - 12 23. Opening inventory 8,500 Purchases 30,700 Direct Expenses 4,800 Indirect Expenses 5,200 Closing inventory 9,000 Cost of goods sold will be: _________ (a) (c) 24. (b) (d) Rs. 35,000 Rs. 40,000 The plant and machinery account of a firm had a debit balance of Rs. 1,47,390 on Jan. 1, 2010. It has purchased the plant and machinery on Jan 1, 2007. Firm has been following the practice of charging full years depreciation every year on diminishing balance system @ 15%. Cost of machinery on 1.1.2007 will be _____ (a) (c) 25. Rs. 30,000 Rs. 32,000 Rs. 240,000 Rs. 200,000 (b) (d) Rs. 250,000 Rs. 260,000 A new firm commenced business on Jan. 1, 2009 purchased goods costing Rs. 19,500 during the year. A sum of Rs. 400 was spent on carriage inward and Rs. 1000 on wages. At the end of the year the cost of goods still unsold was Rs. 12,000. Sales during the year Rs. 25,000. What is the gross profit earned by the firm _________ (a) (c) Rs. 16,100 Rs. 20,000 26. Cost of goods sold Closing Inventory Trade Receivables Fixed Assets Opening Inventory Sundry Expenses Sales Capital Trade Payables (b) (d) Dr. Rs. 1,50,000 50,000 60,000 90,000 3,50,000 Rs. 18,200 Rs. 15,100 Cr. Rs. 40,000 60,000 20,000 2,00,000 30,000 3,50,000 Total of corrected trial balance will be ________ (a) (c) 27. Rs. 3,20,000 Rs. 3,00,000 (b) (d) Rs. 3,60,000 Rs. 4,00,000 Journal entry for wages paid Rs. 20,000 for installation of machinery will be ______ (a) (b) (c) (d) Dr. wages A/c and Cr. Cash A/c Rs. 20000 Dr. Machinery A/c and Cr. Cash A/c Rs. 20000 Dr. machinery repairs A/c and Cr. Cash A/c Rs. 20000 None of the above 322 The Institute of Chartered Accountants of India Common Proficiency Test (CPT) Volume - I 28. Capital introduced in the beginning by Syam Rs. 40,000, further capital introduced during the year Rs. 1,000 Drawings Rs. 200 per month and closing capital is Rs. 53,600. The amount of profit or loss for the year is _________ (a) (c) 29. Rs. 5,000 loss Information is insufficient for any comment. Rs. 36,000 Rs. 50,000 (b) (d) Rs. 40,000 None of the above. The securities premium account may be applied by the company (a) (b) (c) (d) 31. (b) (d) Goods purchased Rs. 1,00,000. The goods were sold Rs. 80,000. Margin 20% on sales. Closing inventory is _______ (a) (c) 30. Rs. 15,000 profit Rs. 20,000 profit In writing off the preliminary expenses of the company. In writing off the expenses of or the commission paid or discount allowed on, any issue of shares or debentures of the company. In paying up un-issued shares of the company to be issued to members of the company as fully paid bonus shares. All of the above. Following information pertains to X Ltd. Rs. Equity share capital called up 4,60,000 Calls in arrears 7,500 Calls in advance 5,000 Proposed dividend 5% The amount of dividend payable will be ______ (a) (c) 32. (b) (d) Rs. 23,000 None of the three Pavan Ltd. s authorized capital is 60,000 shares of Rs. 10 each. 4000 fully paid shares were issued to promoters for their services. This amount will be debited to_______ (a) (c) 33. Rs. 22,625 Rs. 20,000 Preliminary expenses Sundry expenses (b) (d) Goodwill None of the three X Ltd. purchased the business of Y Ltd. for Rs. 9,00,000 payable in fully paid shares of 100 each at a premium of 25%. The number of shares to be issued by X Ltd. to settle the purchase consideration will be ______ (a) (c) 7000 7200 Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) 5000 None of the three 323 MODEL TEST PAPER - 12 34. Gopal was holding 100 shares of Rs. 10 each of a company on which he had paid Rs. 3 on application and Rs. 2 on allotment but could not pay Rs. 2 on first call. Directors forfeited his shares. Share capital will be debited by _____________ (a) (c) 35. Rs. 1000 Rs. 500 (b) (d) Rs. 700 Rs. 800 Pavan Ltd. invited application for 30,000 shares payable as under: Rs. 3 per share on application; Rs. 3 per share on allotment; Rs. 2 per share on First call; Rs. 2 per share on final call; Ashok, who had been allotted 500 shares failed to pay both the calls. His shares were forfeited and reissued at Rs. 9 per share to Hari, as fully paid up. Amount transferred to capital Reserve will be _____________ (a) (c) 36. (b) (d) Rs. 2,000 Rs. 1,000 Added Not required to be adjusted (b) (d) Deducted Name of the above 8% 10% (b) (d) 9% None of the three X sells goods at Cost plus 60%. Total sales were Rs. 16,000 cost price of the goods will be: _____________ (a) (c) 40. Rs. 3,000 Rs. 1,500 A company purchased plant for Rs. 5,000. The useful life of the plant is 10 years and the residual value is Rs. 500. The management wants to depreciate it by straight line method. Rate of depreciation will be _____________ (a) (c) 39. Rs. 2,500 Rs. 1,500 When preparing a Bank reconciliation statement, if you start with a debit balance as per cash book, cheques sent to Bank but not collected within the period should be _____________ (a) (c) 38. (b) (d) Z Ltd. forfeited 600 shares of Rs. 10 each, on which first call of Rs. 3 per share was not received; the second and final call of Rs. 2 per share has not yet been called. Forfeited share A/c will be credited with _____________ (a) (c) 37. Rs. 2,000 Rs. 2,800 Rs. 12,000 Rs. 13,000 (b) (d) Rs. 10,000 None of the three A trader sells goods at a profit of 25% on sale. In a particular month he sold goods costing Rs. 34,200 sale price of goods will be _____________ (a) (c) Rs. 45,000 Rs. 45,500 324 The Institute of Chartered Accountants of India (b) (d) Rs. 45,600 Rs. 42,000 Common Proficiency Test (CPT) Volume - I 41. A manager gets 5% commission on sales, cost price of goods sold is Rs. 40,000 which he sells at a margin of 20% on sale. Manager Commission will be ______ (a) (c) 42. An event. Either (a) or (b). (b) (d) Sales A/c Cash A/c (b) (d) Rs. 1200 Rs. 1150 (b) (d) Cost of goods sold Inventory in hand at the close of the year Inventory in hand at the beginning of the year Purchases amount will be ______ (a) (c) 47. (b) (d) Rs. 2000 Rs. 2400 A transaction. Neither (a) nor (b). Purchases A/c None of the three A machinery of Rs. 3,000 was sold for Rs. 4200. Depreciation provision till date of sale was Rs. 400 and commission paid to the selling agent was Rs. 420 and wages paid to the workers for removing the machine was Rs. 30. Profit on sale of machinery will be _________ (a) (c) 46. Rs. 2100 Rs. 2200 Omega Stationers used Stationery for business purposes Rs. 300. Amount will be credited to: (a) (c) 45. Rs. 2500 None of the three On January 1, Mohan paid wages amounting Rs. 10,000. This is ______ (a) (c) 44. (b) (d) A manager gets 5% commission on net profit after charging such commission. If gross profit is Rs. 48,000 and expenses of indirect nature other than manager s commission are Rs. 6,000. Commission amount will be _________ (a) (c) 43. Rs. 2000 Rs. 2800 Rs. 1,40,000 Rs. 1,30,000 Opening balance of Capital Net profit Income tax Drawings Interest on capital Interest on Drawings Capital at end will be (a) (c) (b) (d) 1,58,600 25,400 44,000 Rs. 1,35,000 Rs. 1,45,000 Rs. 5,000 2,770 550 650 500 120 Rs. 6950 Rs. 6500 Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India Rs. 1000 None of the three (b) (d) Rs. 6000 Rs. 6600 325 MODEL TEST PAPER - 12 48. Trial balance of a trader shows the following balances Rs. Opening Inventory 9600 Purchases less returns 11850 Salaries and wages 3200 Carriage on Purchases 200 Carriage outwards 300 Sales 24900 Closing Inventory 3500 Gross profit will be (a) (c) 49. Rs. 370 Rs. 500 (b) (d) Rs. 400 None of the three Trading A/c Balance Sheet (b) (d) P/L Account P/L Appropriation A/c On 1st January, 2010 Badri of Bombay consigned 100 cases (cost price Rs. 7500) at a proforma invoice price of 25% profit on sales to his agent Anil of Agra. On the same date Badri paid non recurring expenses of Rs. 600. On 5th January. Anil took delivery and paid Rs. 1200 for Octroi. On 31st January he sold 80 cases for Rs. 10,500. He charged Rs. 775 as his commission. Consignment profit will be _________ (a) (c) 52. Rs. 6500 Rs. 3200 Goods destroyed by fire Rs. 25000 and Insurance company admitted full claim. Claim receivable will be recorded in _________ (a) (c) 51. (b) (d) Rs. Jan 1, 2009 Provision for Bad Debts 2,500 Dec. 31, 2009 Bad debts 1,870 Trade receivables 20,000 Make a provision for bad debts @ 5% on Trade receivables. Provision for bad debts in Profit and Loss A/c will be _________ (a) (c) 50. Rs. 6750 Rs. 3250 Rs. 2,285 Rs. 2,500 (b) (d) Rs. 2,200 Rs. 2,000 If sales revenue are Rs. 4,00,000, cost of goods sold is 3,10,000 and operating expenses are Rs. 60,000, the gross profit is (a) (c) Rs. 90,000 Rs. 3,40,000 326 The Institute of Chartered Accountants of India (b) (d) Rs. 30,000 Rs. 60,000 Common Proficiency Test (CPT) Volume - I 53. A, B and C are partners in a business sharing profits and losses in the ratio of 3:2:1. On 30 th June, 2009, C retired from business, when his capital A/c after all necessary adjustments showed a balance of Rs. 10,950. It was agreed that he should be paid Rs. 4950 in cash on retirement and the balance in three equal yearly instalments with interest at 6% per annum. Amount of last instalment with interest will be: _________ (a) (c) 54. Rs. 2120 Rs. 2200 (b) (d) Rs. 2100 Rs. 2500 A, B and C share profit and losses in the ratio of 3:2:1. Upon admission of D they agreed to share in the ratio of 5:4:2:1 sacrificing ratio will be: ______ (a) (b) NIL : (c) 55. 1 : NIL : NIL 12 NIL : NIL : 1 12 (d) None of the three Rs. 35,000 was spent on painting the new factory. It is a _________ (a) (c) 56. 1 : NIL 12 Capital expenditure Deferred revenue expenditure (b) (d) Revenue expenditure None of the above The total cost of goods available for sale with a company during the current year is Rs. 12,00,000. Total sales during the period are Rs. 13,00,000. If the gross profit margin is 1 33 % on cost. Closing inventory of the current year will be _________ 3 (a) (c) 57. (b) (d) Rs. 3,00,000 Rs. 2,50,000 Opening Trade receivables Rs.10,200 Cash Received from trade receivables during the year (as per cash book) Rs. 30,400 Returns Inwards Rs. 2,700 Bad debts Rs. 1,2 00 Trade receivables at end Rs. 13,800 Cash Sales (As per cash book) Rs. 28,400 Total Sales will be (a) (c) 58. Rs. 4,00,000 Rs. 2,25,000 Rs. 66,300 Rs. 65,000 (b) (d) Rs. 66,000 Rs. 66,500 A company wishes to earn 20% profit margin on selling price. Which of the following is the profit mark upon cost, which will achieve the required profit margin? (a) (c) 25% 20% Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) 30% None of the above. 327 MODEL TEST PAPER - 12 59. Anwar Ltd. Purchased building worth Rs. 99,00,000 and issued 12% debentures of 100 each at a premium of 10%. Premium amount will be __________ (a) (c) 60. Rs. 9,00,000 Rs. 7,00,000 (b) (d) Rs. 8,00,000 Rs. 10,00,000 Green Ltd. issued 5,000, 6% debentures of Rs.100 each at a discount of 5% repayable after 5 years at a premium of 5%. Total loss on issue of debentures will be __________ (a) (c) Rs. 40,000 Rs. 60,000 (b) (d) Rs. 50,000 Rs. 70,000 SECTION B : MERCANTILE LAWS (40 MARKS) 61. Consent is not said to be free when it is caused by __________ (a) (c) 62. (d) (d) In the case of fraud, the person making the representation believes it to be true. In the case of misrepresentation, the maker does not believe it to be true. Fraud does not afford a ground for bringing an action in tort for damages; whereas misrepresentation does. In the case of misrepresentation, the fact the plaintiff had means of discovering the truth by exercising ordinary diligence can be good defence against the repudiation of the contract but such a defence cannot be set up in the case of fraud other then fraudulent silence. A contract with a minor is voidable at the option of the minor. An agreement with a minor can be ratified after he attains majority. A person who usually of an unsound mind cannot enter into contract even when he is of a sound mind. A person who usually of a sound mind cannot enter into contract when he is of unsound mind. On the valid of the contractual obligations by the parties, the contract (a) (c) 65. Undue Influence All of these Which of the following statement is true? (a) (b) (c) 64. (b) (d) Which of the following statements are correct? (a) (b) (c) 63. Coercion Fraud is discharged. becomes void (b) (d) becomes enforceable. None of these. (b) (d) Something in return Nothing in return Consideration in simple term means: (a) (c) Anything in return. Everything in return 328 The Institute of Chartered Accountants of India Common Proficiency Test (CPT) Volume - I 66. Which of the following statement is true? (a) (b) (c) (d) 67. An agreement is void if it is opposed to public policy. Which of the following is not covered by heads of public policy? (a) (c) 68. (b) (c) (d) (b) (d) Voidable Unlawful Change in one or more terms of the contract Acceptance of lesser performance. Abandonment of rights by a party Cancellation of the existing contract There should be at least seven members and maximum number of members should not exceed fifty. There should be at least two members and maximum number of members should not exceed ten. There should be at least ten members and maximum number of members should not exceed twenty. There should be at least two members and maximum number of members should not exceed fifty. Any time during auction Before payment of price. (b) (d) Before fall of hammer None of these In case of sale on approval, the ownership is transfer to the buyer when he: (a) (c) 73. Void-ab-intio Valid The bidder at an auction sale can withdraw his bid: (a) (c) 72. Trafficking in public offices Contracts to do impossible acts In case of a firm carrying on the business of banking (a) 71. (b) (d) A contract is discharged by rescission which means the (a) (b) (c) (d) 70. Trading with an enemy Marriage brokerage contracts Ordinarily, a minor s agreement is (a) (c) 69. There can be a stranger to a contract There can be a stranger to a consideration There can be a stranger to a contract & consideration None of the above Accepts the goods Fails to return goods (b) (d) Adopts the transaction In all the above cases The heir of the deceased partner (a) (b) (c) (d) Has a right to become a partner in the firm of the deceased partner. Does not have a right to become a partner in the firm of the deceased partner. Can become a partner in the firm of the deceased partner only if the surviving partner give their consent in this regard. Both (b) & (c) Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India 329 MODEL TEST PAPER - 12 74. The Sale of Goods Act, 1930 came into force on ______ (a) (c) 75. Goods Investment The Partnership Act The Companies Act (b) (d) The General Clauses Act The Societies Registration Act Takes part in the business of the firm Actively participates in co-curricular activities Actively shares the profits. Makes a show of authority. Admitted to the benefits of the partnership A partner of the firm Representative of the firm Entitled to carry on the business of the firm Owner Buyer (b) (d) Seller Principal Agreement Set of promises (b) (d) Promises, Proposals Agreement with a minor is altogether ________ (a) (c) 83. (b) (d) All contracts are ________ (a) (c) 82. Property Currency The agent should be in possession of goods with the consent of the ________ (a) (c) 81. Payment of price. None of the above. A minor may be : (a) (b) (c) (d) 80. (b) (d) Active partner is one who : (a) (b) (c) (d) 79. Delivery of goods. Fall of hammer. The maximum number of partners is mentioned in : (a) (c) 78. 30th July, 1930 1st July, 1930 A share in a partnership be transferred like any other ______ (a) (c) 77. (b) (d) An auction sale is complete on the ______ (a) (c) 76. 15th March, 1930 30th June,1930. Void Illegal (b) (d) Voidable enforceable Delivered by acknowledgement is ________ (a) (c) Actual Delivery Symbolic Delivery 330 The Institute of Chartered Accountants of India (b) (d) Constructive Delivery None of the above Common Proficiency Test (CPT) Volume - I 84. Total substitution of new contract in place of old contract takes place in case of ________ (a) (c) 85. General Offer Cross Offer (b) (d) Special Offer Counter Offer Executory Contract Executed contract Executory Contract or Executed Contract None of the above Where obligation are created without a contract Where obligation are created under a contract Out of natural causes Out of man-made causes Must be expressed Must be implied if not expressed May either be expressed or implied None of the above The maxim delegates non protest delegate means ________ (a) (b) (c) (d) 91. Agrees to buy goods Buy or agrees to buy goods Conditions and warranties ________ (a) (b) (c) (d) 90. (b) (d) Quasi-Contracts arise ________ (a) (b) (c) (d) 89. Buys Goods Has bought goods Contract of sale is ________ (a) (b) (c) (d) 88. Rescission Alteration An offer made to the public in general which anyone can accept and do the desired act is ________ (a) (c) 87. (b) (d) Buyer means a person who: (a) (c) 86. Remission Novation A person whom authority has been given cannot delegate the authority to another A person whom authority has been given can delegate the authority to another with prior permission A person whom authority has been given to indemnify agent for injury caused by principal s neglect can be delegated An authority can be delegated under protest by the person to whom authority has been given. Goods are said to be in a deliverable state when ________ (a) (b) The buyer may take delivery of them The buyer would, under contract, be bound to take delivery of them Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India 331 MODEL TEST PAPER - 12 (c) (d) 92. In case of a sale the position of a buyer is that of ________ (a) (c) 93. (b) (d) The seller The insurance company Sharing of profits Sharing of profit and losses Mutual agency Existence of an agreement to share profit of the business Admission of a partner Expulsion or death of a partner (b) (d) Retirement of a partner All of the above Is confined to his share of the profits and property in the firm Is as that of any other partner in the firm Is similar as that of any other partner in the firm Is unlimited In case of an agreement to sell, the ownership in the goods remains with ________ (a) (b) (c) (d) 98. The buyer Both the buyer and the seller The liabilities of a minor when admitted to the benefits of the Partnership ________ (a) (b) (c) (d) 97. Bailee of the goods None of the above The reconstitution of the firm takes place in case of ________ (a) (c) 96. (b) (d) True test of partnership is ________ (a) (b) (c) (d) 95. Owner of the goods Hirer of the goods In case of an agreement to sell, subsequent loss of destruction of the goods is the liability of ______ (a) (c) 94. The seller is in a position to delivery them All of the above The buyer The seller Both the buyer and seller The Central Government or the state government, as the case may be Expulsion of a partner, which is not in accordance with provisions of the Indian Partnership Act, 1932 is ________ (a) (b) (c) (d) Null and void Null and void to some extent Is unconstitutional In good faith and in the interest of the partnership 332 The Institute of Chartered Accountants of India Common Proficiency Test (CPT) Volume - I 99. State whether X and Y are partners in the following circumstances: (a) (b) (c) (d) 100. X agrees Y to carry passengers by taxi from Delhi to Gurgaon on the followings terms, namely, Y is to pay X Rs. 100 per mile per annum, and X and Y are to share to costs of repairing and replacement of the care, and to divide equally between them the proceeds of fares received from passengers. X and Y are co-owners of a house let to a tenant. X and Y divide the net rents (after deduction of the incidental taxes; etc.) between themselves. X and Y buy 200 bales of cotton agreeing to share the same between them. X and Y agree to work together as carpenters but X shall receive all profit and shall pay wages to Y. An auctioneer in Mumbai advertised in a newspaper that a sale of office furniture would be held on December 23, 2005 a broker came from Hyderabad to attend the auction, but all the furniture was withdrawn. The broker from Hyderabad sued the auctioneer for loss of his time and expenses. Which of the following statement(s) is correct? (a) (b) (c) (d) The broker can get damages from the auctioneer for loss of his time and expenses. The broker will not get damages from the auctioneer for loss of his time and expenses. An invitation to make offer is a valid offer. A declaration of intention by a person will give right of action to another. SECTION C : GENERAL ECONOMICS (50 MARKS) 101. Which of the following statements is correct? (a) (b) (c) (d) 102. State which of the following represents macro from the national point of view. (a) (b) (c) (d) 103. Turnover ratio of Reliance Ltd. Capital output ratio of Indian Industries Debt equity ratio of TELCO All the above Which of the following can be regarded as law of economics? (a) (b) (c) (d) 104. Robbins has made economics as a form of welfare economics The law of demand is always true All capital is wealth but all wealth is not capital None of the above Ceteris Paribus, if the price of a commodity rises the quantity demanded of it will fall Higher the income, greater is the expenditure Taxes have no relation with the benefits which a person derives from the state None of the above When as a result of decrease in the price of good, the total expenditure made on it decreases we say that price elasticity of demand is: (a) (c) less than unity zero Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) unity greater than unity 333 MODEL TEST PAPER - 12 105. The point elasticity at the mid-point on the demand curve is: (a) (c) 106. (b) (d) luxury good can t say Indifference curves are convex to the origin Indifference curves slope downwards from left to right No two indifference curve can cut each other None of the above Perfectly competitive Oligopolistic (b) (d) Monopolistic Monopolistically competitive .77 ( ) .67 (b) (d) .67 ( ) .77 Land is highly mobile factor of production Man cannot create matter The services of housewife are termed as production in economics None of the above Under which market structure, average revenue of a firm is equal to its marginal revenue (a) (c) 113. inferior good necessity Which of the following statement is correct ? (a) (b) (c) (d) 112. increasing returns to scale constant returns to scale If the price of apples rises from Rs. 30 per kg to Rs. 40 per kg and the supply increases from 240 kg to Rs. 300 kg. Elasticity of supply is: (use Arc Elasticity Method) (a) (c) 111. (b) (d) The structure of the cold drink industry in India is best described as: (a) (c) 110. increasing returns to a factor constant returns to a factor Which of the following is not a property of the indifference curve ? (a) (b) (c) (d) 109. zero less than zero The income of a household rises by 20 per cent, the demand for computer rises by 25 percent, this means computer (in Economics) is a/an: (a) (c) 108. (b) (d) If as a result of 50 per cent increase in all inputs, the output rises by 75 per cent, this is a case of: (a) (c) 107. one less than one Oligopoly Perfect competition (b) (d) Monopoly Monopolistic competition If a seller realizes Rs. 10,000 after selling 100 units and Rs. 14,000 after selling 120 units. What is the marginal revenue here? (a) (c) Rs. 4000 Rs. 200 334 The Institute of Chartered Accountants of India (b) (d) Rs. 450 Rs. 100 Common Proficiency Test (CPT) Volume - I 114. Under which market condition, though the firms earn normal profits in the long run, there is always excess capacity with them: (a) (c) 115. Even monopolist can earn losses Firms in a perfectly competitive market are price takers It is always beneficial for a firm in the perfectly competitive market to discriminate prices Economic laws are less exact than the laws of physical sciences Consumer s equilibrium Consumer s expenditure (b) (d) Consumer s surplus None of the above above the isoquant cutting the isoquant (b) (d) below the isoquant tangent to isoquant In elastic demand Zero elastic demand (b) (d) Unit elastic demand Elastic demand Which of the following is not an economic activity? (a) (b) (c) (d) 122. real cost deferred cost If the price of X rises by 10 per cent and the quantity demanded falls by 10 per cent, X has: (a) (c) 121. (b) (d) The producer is in equilibrium at a point where the cost line is: (a) (c) 120. opportunity cost actual cost In economics, what a consumer is ready to pay minus what he actually pays, is termed as: (a) (c) 119. the elasticity of the product in different markets is same the elasticity of the product in different market is different the elasticity of the product in different market is zero none of the above. Which of the following statement is incorrect? (a) (b) (c) (d) 118. Monopoly Monoplistic competition The cost of one thing in terms of the alternative given up is known as: (a) (c) 117. (b) (d) Price discrimination is profitable when: (a) (b) (c) (d) 116. Perfect competition Oligopoly A son looking after his ailing mother A chartered accountant doing his own practice A soldier serving at the border A farmer growing millets If real national income rises by 10 per cent and population increases by 2 per cent, per capita income will increase by: (a) (c) 5 per cent 12 per cent Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) 8 per cent 6 per cent 335 MODEL TEST PAPER - 12 123. Which of the following statement is correct? (a) (b) (c) (d) 124. Which sector of the Indian economy contributes the largest to national income? (a) (c) 125. GDP at market price = GDP at factor cost plus net indirect taxes NNP at factor cost = GNP at market price GNP at market price = NNP at market price plus net income from abroad All of the above public revenue, public expenditure and public debt controlling the BOP situation controlling the banks none of the above decrease Cash reserve ratio buy securities in the open market (b) (d) decrease Bank rate sell securities in the open market Pick up the correct statement: (a) (b) (c) (d) 130. synonymous with economic growth narrower concept than economic growth broader concept than economic growth none of the above In order to control credit and investment, the Central Bank should: (a) (c) 129. Manufacturing sector Tertiary sector Fiscal policy is concerned with: (a) (b) (c) (d) 128. (b) (d) Which of the following is correct: (a) (b) (c) (d) 127. Primary sector Secondary sector Economic development is (a) (b) (c) (d) 126. Cropping pattern in India is quite balanced India is passing through the first stage of demographic transition India s population is second largest in the world None of these Inflation is a persistent fall in the price level The Indian direct tax structure relies on a very narrow population base Mixed income of self-employed means gross profits received by proprietors All of the above Which of the following is an economic activity? (a) (b) (c) (d) Medical facilities rendered by a charitable dispensary Teaching one s own nephew at home A housewife doing household duties Watching television 336 The Institute of Chartered Accountants of India Common Proficiency Test (CPT) Volume - I 131. Which of the following statement is correct ? (a) (b) (c) (d) 132. Demand for intermediate consumption arises in: (a) (c) 133. net output method industry of origin method (b) (d) production method all the above GDP at market price = GDP at factor cost plus net indirect taxes NNP at factor cost = NNP at market prices minus net indirect taxes GNP at market prices = GDP at market prices plus net factor income from abroad None of the above First Third (b) (d) Second Fourth In which state or union territory is the literacy rate highest in the country? (a) (c) 139. equal to national income more than national income less than national income always more than the gross national product What is India s world rank in population? (a) (c) 138. without any exchange of goods and services to workers on transfer from one job to another as compensation to employees none of the above Which of the following is incorrect? (a) (b) (c) (d) 137. government enterprises only all producing sectors of the economy The net value added method of measuring national income is also known as: (a) (c) 136. (b) (d) Net National Product at factor cost is: (a) (b) (c) (d) 135. household consumers corporate enterprises only Transfer payments refer to payment which are made: (a) (b) (c) (d) 134. Income tax was abolished in India in 1991 Gift tax abolished in India in 1998 All the States have adopted VAT Estate duty was abolished in 1995 Delhi Karnataka (b) (d) Chandigarh Kerala Which year is known as year of great divide for India s population? (a) (c) 1921 1991 Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) 1951 1981 337 MODEL TEST PAPER - 12 140. Which is the other name that is given to the average revenue curve? (a) (c) 141. (c) (d) Horizontal Positively sloped (b) (d) Vertical Negatively sloped zero equal to one (b) (d) infinity greater than zero but less than one. Law of demand (b) Law of diminishing marginal utility (d) Law of diminishing returns Law of supply An indifference curve slopes downward to the right Convexity of a curve implies that the slope of the curve diminishes as one moves from left to right The elasticity of substitution between two goods to a consumer is zero The total effect of a change in the price of a good on its quantity demanded is called the price effect The second slice of bread gives less satisfaction to a hungry boy. This is a clear case of: (a) (c) 148. Average Revenue curve Indifference Curve Which of the following statement is incorrect? (a) (b) 147. (b) (d) The second glass of lemonade gives lesser satisfaction to a thirsty boy, this is a clear case of: (a) (c) 146. Profit curve Average Cost Curve A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is: (a) (c) 145. his output is maximum he charges a high price his average cost is minimum his marginal cost is equal to marginal revenue What is the shape of the demand curve faced by a firm under perfect competition? (a) (c) 144. Demand curve Indifference curve Which is the other name that is given to the demand curve? (a) (c) 143. (b) (d) A monopolist is able to maximize his profits when: (a) (b) (c) (d) 142. Profit curve Average cost curve Law of demand Law of diminishing utility (b) (d) Law of diminishing returns Law of supply Three steel plants in Bhilai, Rourkela and Durgapur were set up in the (a) (c) First plan Third plan 338 The Institute of Chartered Accountants of India (b) (d) Second plan Fourth plan Common Proficiency Test (CPT) Volume - I 149. About _______ per cent of the sick units in India are small units (a) (c) 150. 10 per cent 30 per cent (b) (d) 4 per cent 96 per cent Which of the following has been specifically established to meet the requirements of credit of the farmers and villagers? (a) (c) ICICI Bank State Bank of India (b) (d) Regional Rural Bank EXIM Bank SECTION D : QUANTITATIVE APTITUDE (50 MARKS) 151. The class having maximum frequency is called ______ (a) (c) 152. Ungrouped data Both (b) (d) Grouped data None Mutually exclusive Independent (b) (d) Equally like Exhaustive Never Symmetrical Symmetrical when p = 0.5 (b) (d) Never Negatively skewed never positively skewed Increases Remains constant (b) (d) Decreases Increases proportionately Standard deviation of sampling distribution is itself the standard error: (a) (c) 158. Negative All these As the sample size decreases, standard error: (a) (c) 157. (b) (d) A binomial distribution is (a) (c) 156. Positive Zero If P (A B) = 0 then two events A and B are: (a) (c) 155. Median class None of these Karl Pearson s coefficient is defined from ______ (a) (c) 154. (b) (d) The errors in case of regression equation are ______ (a) (c) 153. Modal class Mean Class True Both (b) (d) False None of these Theoretically, A.M. is the best average in the construction of index nos. but in practice, mostly the G.M. is used: (a) (c) False Both Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India (b) (d) True None of these 339 MODEL TEST PAPER - 12 159. The result of ODI matches between INDIA and ENGLAND follows: (a) (c) 160. Independent None of these (b) (d) 23 None of these (b) (d) log 64 log 8 8 log 64 b2 4ac = 0 b2 4ac<0 b2 4ac >0 b2 4ac <0 6 pq 6p2q2 (b) (d) 36 pq None of these Different Both (b) (d) Same None of these 1024 32 (b) (d) 256 2048 The total no. of seating arrangement of 5 person in a row is _____. (a) (c) 168. (b) (d) The 8th term of series 4, 8, 16 ... nth term is ______________. (a) (c) 167. Dependent Both r, bxy, byx all have _____________ sign (a) (c) 166. Equally like None _____________ is the mean proportional between 4p2 and 9q2 (a) (c) 165. (b) (d) If ________, the roots are real but unequal (a) (c) 164. Dependent Independent log 64/8 is equal to ______ (a) (c) 163. Poisson distribution (b) or (c) Correlation Co-efficient is _______ of the units of measurements (a) (c) 162. (b) (d) If P (AB) = P (A) P(B), two events A and B are said to be (a) (c) 161. Binomial distribution Normal distribution 5! 2 x 5! (b) (d) 4! None of these In __________________ the quantities are in ratios (a) (c) A.M. H.M. 340 The Institute of Chartered Accountants of India (b) (d) G.M. None of these Common Proficiency Test (CPT) Volume - I 169. The present value of Rs. 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on half yearly is Rs. _______ (a) (c) 170. 9069 9060 2x + y + 1 = 0 x+y+1=0 (b) (d) 2x + y + 2 = 0 x+2y+1=0 (b) (d) 6 6 x2 9 is equal to x 3 x 3 lim (a) (c) 172. (b) (d) The equation of line passing through the points (1, -1) and (3, -2) is given by ________ (a) (c) 171. 9070 9061 0 Does not exist The derivative of y = 2x+1 w.r.t..x is: (a) (b) (c) 173. 1 2x+1 -1 2x+1 1 . 2x+1 2 (d) None of these 1 x dx is equal to (a) (b) 1 x2 (c) 174. x log x log x + c (d) none of these (b) (d) 2/3 0 If f (x) = (a) (c) 175. 1 1 -x, f x 2 3/2 1 The sum of square of first natural numbers (a) n ( n + 1) 2 (c) n ( n + 1) 2 (b) n (n + 1)(2n + 1) 6 (d) None of these 2 Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India 341 MODEL TEST PAPER - 12 176. P10 is the index for time (a) (c) 177. 10 7 and 15 121 110 (b) (d) 100 None of these 11 13 (b) (d) 12 14 16 14 (b) (d) 15 13 Reduced by 12 Unchanged (b) (d) Increased by 12 None of these 22 25 (b) (d) 4 8.30 (b) (d) 2 4 If f (x+1) = 2x + 7 then f ( 2) is ________ (a) (c) 185. (b) (d) If x and y are perfectly related by 2x + 3y + 4 = 0 and SD of x is 6 then SD of y is (a) (c) 184. 7 15 If each item is reduced by 12, A.M. is ________ (a) (c) 183. 0.05 0.0593 The sum of certain numbers of terms of an A.P. series 6, -3, 0 . nth term is 225. The number of terms is ________ (a) (c) 182. (b) (d) If in a party every person gives a gifts to each other and total number of gift taken is 132. The number of guests in the party is ________ (a) (c) 181. 0.01 0.028 There are 11 trains plying between Delhi & Kanpur. The number of ways in which a person can go from Delhi to Kanpur and return by a different train (a) (c) 180. 0 on 1 0 on 0 The mode of the nos. 7, 7, 9, 7, 10, 15, 15, 15, 10 is (a) (c) 179. (b) (d) If a sample of 500 eggs produces 25 rotten eggs arranges, then the estimates of SE of the proportion of rotten eggs in the sample is (a) (c) 178. 1 on 0 1 on 1 1 3 The roots of the equation 4x+1 + 41-x = 10 are ________ (a) 1 1 , 2 2 (b) 2, 2 (c) 1, 1 (d) None of these 342 The Institute of Chartered Accountants of India Common Proficiency Test (CPT) Volume - I 186. An employer recruits experienced and fresh workmen for his firm under the condition that he cannot employ more than 12 people. It can be related by the inequality (a) (c) 187. x + y = 12 x + y > 12 109.54 95.54 13.23 11.13 16/91 24/91 1/13 2/13 x.e (a) (c) 193. 12.33 None of these (b) (d) 42/91 None of these (b) (d) 1/4 2/4 If x and y are related as 4x + 3y + 11 = 0 and mean deviation of x is 2.70. what is mean deviation of y? (a) (c) 192. (b) (d) A card is drawn from a well shuffled pack of playing Cards. Find the probability that it is a king or a Queen: (a) (c) 191. 99.54 None of these A bag contains 5 white and 10 blackballs. Three balls are taken out at random. Find the probability that all three balls drawn are black (a) (c) 190. (b) (d) The standard deviation of 25, 32, 43, 53, 62, 59, 48, 31, 24, 33 is ________ (a) (c) 189. x + y < 12 None of these There are 5 bags of wheat weighing on an average 102 kgs and another 8 bags weighing 98 kgs on an average. What is combined mean of 13 bags. (a) (c) 188. (b) (d) 7.20 3.60 ax (b) (d) 14.40 None of these (b) (d) eax a (b) 2x. log x dx is eax 1 x a a log x eax a 1 x a d logx dx (a) 1 2 x log x Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India 343 MODEL TEST PAPER - 12 1 log x (c) (d) 1 x (b) (d) 100 None of these 4 194. Evaluate (3x - 2) 2 dx 2 (a) (c) 195. In how many ways can 7 persons be seated at a round table if 2 particular persons sit together ________ (a) (c) 196. 25, 23, 21 19, 22, 25 (b) (d) 21, 23, 25 None of these 2 2 (b) (d) 0 None 2952.45 3000.00 (b) (d) 2500.00 2559.50 The sum of series 8, 4, 0 to 50 terms is ________ (a) (c) 200. 1440 None of these A machine for which the useful life is estimated to be 5 years cost Rs. 5000. rate of depreciation is 10% p.a. The scrap value at the end of its life is: (a) (c) 199. (b) (d) The line joining (-1, 1) and (2, -2) and the line joining (1, 2) and (K, 3) are perpendicular to each other for the value of K. (a) (c) 198. 420 240 Three numbers are in A.P. whose sum is 69 and the product of first two is 483. Numbers are ________ (a) (c) 197. 104 10 18900 4500 (b) (d) 9000 None of these The number of subset of set {2, 4, 6} is ________ (a) (c) 12 6 344 The Institute of Chartered Accountants of India (b) (d) 8 None of these Common Proficiency Test (CPT) Volume - I Model Test Paper BOS/CPT-12 SECTION A : FUNDAMENTALS OF ACCOUNTING 1 (d) 2 (a) 3 (c) 4 (c) 5 (a) 6 (a) 7 (d) 8 (b) 9 (b) 10 (b) 11 (d) 12 (c) 13 (b) 14 (a) 15 (b) 16 (c) 17 (c) 18 (a) 19 (a) 20 (b) 21 (a) 22 (c) 23 (b) 24 (a) 25 (a) 26 (a) 27 (b) 28 (a) 29 (a) 30 (d) 31 (a) 32 (b) 33 (c) 34 (b) 35 (b) 36 (a) 37 (b) 38 (b) 39 (b) 40 (b) 41 (b) 42 (b) 43 (b) 44 (b) 45 (c) 46 (a) 47 (a) 48 (a) 49 (a) 50 (c) 51 (a) 52 (a) 53 (a) 54 (a) 55 (a) 56 (c) 57 (a) 58 (a) 59 (a) 60 (b) SECTION B : MERCANTILE LAWS 61 (d) 62 (d) 63 (d) 64 (a) 65 (b) 66 (b) 67 (d) 68 (a) 69 (d) 70 (b) 71 (b) 72 (d) 73 (d) 74 (d) 75 (c) 76 (a) 77 (c) 78 (a) 79 (a) 80 (a) 81 (a) 82 (a) 83 (b) 84 (c) 85 (d) 86 (a) 87 (c) 88 (a) 89 (c) 90 (a) 91 (b) 92 (a) 93 (b) 94 (c) 95 (d) 96 (a) 97 (b) 98 (a) 99 (a) 100 (b) Common Proficiency Test (CPT) Volume - I The Institute of Chartered Accountants of India 585 ANSWERS SECTION C : GENERAL ECONOMICS 101 (c) 102 (b) 103 (a) 104 (a) 105 (a) 106 (b) 107 (b) 108 (d) 109 (c) 110 (a) 111 (b) 112 (c) 113 (c) 114 (d) 115 (b) 116 (a) 117 (c) 118 (b) 119 (d) 120 (b) 121 (a) 122 (b) 123 (c) 124 (d) 125 (c) 126 (a) 127 (a) 128 (d) 129 (b) 130 (a) 131 (c) 132 (d) 133 (a) 134 (a) 135 (d) 136 (d) 137 (b) 138 (d) 139 (a) 140 (b) 141 (d) 142 (b) 143 (a) 144 (b) 145 (c) 146 (c) 147 (c) 148 (b) 149 (d) 150 (b) SECTION D : QUANTITATIVE APTITUDE 151 (a) 152 (d) 153 (a) 154 (a) 155 (c) 156 (a) 157 (a) 158 (a) 159 (a) 160 (c) 161 (b) 162 (a) 163 (b) 164 (a) 165 (b) 166 (c) 167 (a) 168 (b) 169 (c) 170 (d) 171 (b) 172 (a) 173 (c) 174 (a) 175 (b) 176 (b) 177 (b) 178 (d) 179 (c) 180 (b) 181 (b) 182 (a) 183 (b) 184 (a) 185 (a) 186 (b) 187 (b) 188 (a) 189 (c) 190 (c) 191 (c) 192 (a) 193 (a) 194 (c) 195 (c) 196 (b) 197 (a) 198 (a) 199 (c) 200 (b) 586 The Institute of Chartered Accountants of India Common Proficiency Test (CPT) Volume - I

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