General Financial Rules 2017 - Chapter 7: Inventory

1. Who should certify that he has actually received the material and recorded it in the appropriate stock registers?

A. The Store-keeper

B. The cashier

C. The officer-in-charge of stores

D. The head of office

2. Pick the incorrectly matched

A. Fixed Assets such as plant, machinery, equipment, furniture, fixtures etc. - GFR 22

B. Consumables such as office stationery, chemicals, maintenance spare parts etc - GFR 23

C. Library books - GFR 24

D. Assets of historical/artistic value held by museum /government - GFR 24

3. Calculation of the charges to be recovered from the local bodies, contractors and others for hiring out the fixed assets

should be based on the

A. Issue Rate

B. Schedule of Rate

C. Market Rate

D. Historical cost.

4. Fixed assets should be verified at least once in

A. a six-month

B. a year

C. a two year

D. a three year

5. A physical verification of all the consumable goods and materials should be undertaken at least once in

A. a month

B. a six-month

C. a year

D. a two year

6. A material shall generally be considered surplus if it remains in stock for over______ unless adequate reasons to treat it

otherwise exist

A. a year

B. two years

C. three years

D. four years

7. Pick the incorrect one

A. Complete physical verification of books should be done every year in case of libraries having not more than

20000 volumes.

B. For libraries having more than 20000 volumes and up to 50000 volumes, such verification should be done at

least once in three years.

 C. Sample physical verification at intervals of not more than five years should be done in case of

libraries having more than 50000 volumes. In case such verification reveals unusual or

unreasonable shortages, complete verification shall be done.

D. Loss of five volumes per 1000 volumes of books issued/consulted in a year may be taken as reasonable provided

such losses are not attributable to dishonesty or negligence. However, loss of a book of a value exceeding Rs.

1,000/- (Rupees One thousand only) and rare books irrespective of value shall invariably be investigated and

appropriate action taken.

8. A report of stores for disposal shall be prepared in Form

A. GFR 10

B. GFR 11

C. GFR 14

D. GFR 16

9. Pick the correct one

i. Surplus or obsolete or unserviceable goods of assessed residual value above Rupees 2,00,000 should be disposed of by either
obtaining bids through advertised tender or public auction.
ii. For surplus or obsolete or unserviceable goods with residual value less than Rupees 200000, the mode of disposal will be
determined by the competent authority
iii. Certain surplus or obsolete or unserviceable goods such as expired medicines, food grain, ammunition etc., which are hazardous
or unfit for human consumption, should be disposed of or destroyed immediately by adopting suitable mode so as to avoid any health
hazard and/or environmental pollution and also the possibility of misuse of such goods.
iv. Surplus or obsolete or unserviceable goods, equipment and documents, which involve security concerns (e.g. currency, negotiable
instruments, receipt books, stamps, security press etc.) should be disposed of/ destroyed in an appropriate manner to ensure
compliance with rules relating to official secrets as well as financial prudence.

A. i, ii and iii

B. ii, iii and iv

C. i, iii and iv

D. All of the above.

10. If a bid is accepted during the process of auctioning the disposal, earnest money should immediately be taken on the spot

from the successful bidder. The amount of the earnest money should be

A. not less than 10%

B. not less than 20%

C. not less than 25%

D. not less than 30%

11. If a Ministry or Department is unable to sell any surplus or obsolete or unserviceable item in spite if its attempts through

advertised tender or auction, it may dispose of the same at its scrap value with the approval of the competent authority in

consultation with

A. HoD

B. Finance division

C. Accounts Officer

D. Legal Division

12. A sale account should be prepared for goods disposed of in Form GFR 11 duly signed by the

A. officer who supervised the sale or auction

 B. Head of Department

C. Head of the Finance division

D. Accounts Officer

13. Powers to write off of losses are available under the

A. R&P 1983

B. GAR 1990

C. GFR 2017

D. Delegation of Financial Powers Rules.

14. Losses due to depreciation shall be analysed, and recorded under following heads except

A. normal fluctuation of market prices

B. losses due to extra ordinary situations under ‘Force Majeure’ conditions like fire, flood, enemy

action, etc.

C. lack of foresight in regulating purchases

D. negligence after purchase.

15. Losses not due to depreciation shall be grouped under the following heads

(i) losses due to theft or fraud

(ii) losses due to neglect
(iii) anticipated losses on account of obsolescence of stores or of purchases in excess of requirements
(iv) losses due to damage

A. i, ii and iii

B. i, iii and iv

C. ii, iii and iv

D. All of the above

General Financial Rules 2017 - Chapter 6: Procurement of Goods and Services

1. An authority competent to incur expenditure may sanction the purchase of goods required for use in public service in

accordance with provisions given in the

A. Delegation of Financial Powers Rules

B. Departmental Regulations

C. R&P

D. GFR

2. The terms rate contract pertains to

A. Ministries/Departments

B. DGS&D

C. Ministry of Finance

D. Ministry of Corporate Affairs

3. GeM stands for

A. Government Money

B. Government e-marketing
 C. Government e-market Place

D. Goods e-market place

4. Pick the incorrect one

A. Up to Rs.50,000/- through any of the available suppliers on the GeM, meeting the requisite quality,

specification and delivery period.

B. Above Rs.50,000/- and up to Rs.30,00,000/- through the GeM Seller having lowest price amongst the available

sellers, of at least three different manufacturers, on GeM, meeting the requisite quality, specification and

delivery period.

C. Above Rs.30,00,000/- through the supplier having lowest price meeting the requisite quality, specification and

delivery period after mandatorily obtaining bids, using online bidding or reverse auction tool provided on GeM.

D. None (all of the above are correct)

5. The Ministries/Departments shall l project their Annual Procurement Plan of goods and services on GeM portal within

A. 30 days of Budget approval.

B. 30 days of financial year

C. 90 days of budget approval

D. 90 days of financial year

6. Depending on the nature of the goods the supplier(s) will be registered for a fixed period between

A. 1 to 2 years

B. 1 to 3 years

C. 2 to 3 years

D. 2 to 5 years

7. If a procuring entity determines that the bidder has breached the code of integrity it may debar a bidder or any of its

successors from participating in any procurement process undertaken by it for a period

A. not exceeding two years

B. not exceeding three years

C. not exceeding five years

D. not exceeding ten years

8. Purchase of goods without inviting quotations or bids on the basis of a certificate to be recorded by the competent

authority up-to the value of Rupees

A. 10000/-

B. 15000/-

C. 25000/-

D. 50000/-

9. Purchase of goods without inviting quotations or bids on the basis of a certificate to be recorded by the competent

authority up-to the certain has been given in GFR under Rule

A. 145

B. 147

C. 150

D. 154
10. Purchase of goods on each occasion may be made on the recommendations of a duly constituted Local Purchase

Committee costing

A. above Rs. 10,000 up-to Rs.1,00,000/-

B. above Rs. 15,000 up-to Rs.1,50,000/-

C. above Rs. 25,000 up-to Rs.1,50,000/-

D. above Rs. 25,000 up-to Rs.2,50,000/-

11. Purchase of goods on each occasion may be made on the recommendations of a duly constituted Local Purchase

Committee has been referred to in GFR under Rule

A. 151

B. 154

C. 155

D. 157

12. State whether true or false It is desirable, however, not mandatory for all Ministries/Department s of the Central

Government, their attached and Subordinate Offices and Autonomous /Statutory Bodies to publish their tender

enquiries, corrigenda thereon and details of bid awards on the Central Public Procurement Portal (CPPP).

A. True

B. False

13. It is mandatory for Ministries/ Departments to receive all bids through e-procurement portals in respect of all

procurements. These instructions will not apply to procurements made by Ministries / Departments through

A. Multinational Companies

B. Public Sector Undertakings

C. DGSD Rate

D. Make in India Companies

14. Advertised Tender Enquiry should be resorted for procurement of goods of estimated value of Rupees

A. 10 lakh and above

B. 20 lakh and above

C. 25 lakh and above

D. 30 lakh and above

15. CPPP Stands for

A. Central Public Procurement Portal

B. Centralized Purchase & Payment Portal

C. Common Public Procurement Portal

D. Common Purchase & Payment Portal

16. Ordinarily, from the date of publication of the tender notice or availability of the bidding document for sale, whichever is

later the minimum time to be allowed for submission of bids should be

A. 2 weeks

B. 3 weeks

C. 4 weeks

D. 7 weeks
17. Where the bids from abroad are also to be obtained, the minimum period should be kept as

A. 3 weeks for domestic and 4 weeks for foreign bidders.

B. 3 weeks for both domestic and foreign bidders.

C. 4 weeks for both domestic and foreign bidders

D. 4 weeks for domestic and 6 weeks for foreign bidders

18. Limited Tender Enquiry may be adopted when estimated value of the goods to be procured is up to Rupees

A. 10 lakh

B. 15 lakh

C. 20 lakh

D. 25 lakh

19. Copies of the bidding document should be sent directly by speed post/registered post/courier/ email to firms which are

borne on the list of registered suppliers for the goods in question under

A. Advertised Tender Enquiry

B. Limited Tender Enquiry

C. Multi Tender Enquiry

D. Two Stage Tender Enquiry

20. The number of supplier firms in Limited Tender Enquiry should be

A. not less than three

B. more than three

C. four

D. six

21. Purchase through Limited Tender Enquiry may be adopted even where the estimated value of the procurement is more

than 25 lakh in the following circumstances except

A. The competent authority in the Ministry or Department certifies that the demand is urgent and any additional

expenditure involved by not procuring through advertised tender enquiry is justified in view of urgency.

B. There are sufficient reasons indicating that it will not be in public interest to procure the goods through

advertised tender enquiry.

C. The sources of supply are definitely known and possibility of fresh source(s) beyond those being tapped is

remote.

D. The goods under procurement is of high value and delicate nature.

22. Pick the incorrect one

A. For purchasing high value plant, machinery etc. of a complex and technical nature, bids may be obtained in two

parts- Technical bid and Financial bid.

B. Technical bid consists of all technical detail s along with commercial terms and conditions and Financial bid

indicating item-wise price for the items mentioned in the technical bid.

C. The technical bid and the financial bid should be sealed by the bidder in separate covers duly

super-scribed and both these sealed covers are submitted separately.

D. The technical bids are to be opened by the purchasing Ministry or Department at the first instance and

evaluated by a competent committee or authority. At the second stage financial bids of only these technically
 acceptable offers should be opened after intimating them the date and time of opening the financial bid for

further evaluation and ranking before awarding the contract.

23. Procurement from a single source may be resorted to in the following circumstances except:

A. It is in the knowledge of the user department that only a particular firm is the manufacturer of the required

goods

B. In a case of emergency and reason for such decision is to be recorded and approval of competent authority

obtained.

C. For standardisation of machinery or spare parts to be compatible to the existing sets of equipment (on the

advice of a competent technical expert and approved by the competent authority), the required item is to be

purchased only from a selected firm

D. None of the above

24. Proprietary Article Certificate is applicable in

A. Limited Tender Enquiry

B. Advertised Tender Enquiry

C. Single Tender Enquiry

D. Two Bid Enquiry Tender

25. An online real-time purchasing technique utilised by the procuring entity to select the successful bid, which involves

presentation by bidders of successively more favourable bids during a scheduled period of time and automatic evaluation

of bids is called

A. Electronic Procurement

B. Electronic Reverse Auction

C. Electronic Buyer Seller Action

D. Electronic Deliberation

26. State whether true or fasle Maintenance contract(s) of suitable period either with the supplier of the goods or with any

other competent firm, not necessarily the supplier of the subject goods is/are especially needed for sophisticated and

costly equipment and machinery.

A. True

B. False

27. To safeguard against a bidder’s withdrawing or altering its bid during the bid validity period in the case of advertised or

limited tender enquiry, Bid Security is obtained. Bid Security is also called

A. Security Deposit

B. Performance Deposit

C. Work Guarantee

D. Earnest Money

28. Amount of bid security should ordinarily range between

A. 1 to 5% of the estimated value of the goods to be procured.

B. 2 to 5% of the estimated value of the goods to be procured.

C. 3 to 5% of the estimated value of the goods to be procured.

D. 5 to 10 of the estimated value of the goods to be procured.

29. Bid Security may be exempted for

A. Micro and Small Enterprises (MSEs)

B. Suppliers registered with the Central Purchase Organisation or the concerned Ministry or Department.

C. Both of the above

D. None

30. The bid security is normally to remain valid for a period of

A. 30 days beyond the final bid validity period.

B. 30 days from date of inviting bid

C. 45 days beyond the final bid validity period

D. 45 days from date of inviting bid

31. Bid securities of the unsuccessful bidders should be returned to them at the earliest after expiry of the final bid validity

and latest on or before the

A. 30th day after the award of the contract.

B. 45th day after the award of the contract

C. 60th day after the award of the contract

D. 75th day after the award of the contract

32. Performance Security should be for an amount of (of the value of the contract as specified in the bid documents)

A. 2 to 5%

B. 5 to 10%

C. 5 to 15%

D. 10 to 15%

33. Period for which Performance Security should remain valid beyond the date of completion of all contractual obligations

of the supplier including warranty obligations?

A. 30 days

B. 45 days

C. 60 days

D. 90 days

34. Advance payments for procurement of goods and services may be made in cases advance payment demanded

A. by firms holding maintenance contracts for servicing of Air- conditioners, computers, other

costly equipment, etc. by firms against fabrication contracts, turn-key contracts etc.

B. by firms supplying high value machinery and plants.

C. by firms supplying scientific and technical items

D. by firms supplying items are located abroad.

35. In case of advance to private firms, it should not exceed:

A. 10% of the contract value

B. 20% of the contract value

C. 30% of the contract value

D. 50% of the contract value

36. In case of advance to a State or Central Government agency or a Public Sector Undertaking, it should not exceed:
 A. 20% of the contract value

B. 25% of the contract value

C. 30% of the contract value

D. 40% of the contract value

37. In case of maintenance contract, the amount of advance should not exceed the amount payable for

A. 2 months under the contract.

B. 3 month sunder the contract

C. 6 month sunder the contract

D. 12 months under the contract

38. Ministries or Departments of the Central Government may relax the ceilings (including percentage laid down for advance

payment for private firms) in consultation with

A. CGA

B. CA&G

C. their Principal Accounts Officer

D. their Financial Advisers

39. State whether true or false if a firm quotes NIL charges/consideration, the bid shall be given priority and be treated as

lowest one as it will most economical to the State”

A. True

B. False

40. In case a purchase Committee is constituted to purchase or recommend the procurement, no member of the purchase

Committee should be reporting directly to any other member of such Committee in cases estimated value of procurement

exceeds

A. Rs. 10 lakhs

B. Rs. 25 lakhs

C. Rs. 50 lakhs

D. Rs. 1 crore

41. State whether true or false Disclosure by the bidder of any previous transgressions made in respect of code of integrity

with any entity in any country during the last five (05) years or of being debarred by any other procuring entity.

A. True

B. False

42. Services typically involve providing expert or strategic advice is called

A. Consulting Service

B. Non-consulting Services

C. Advisory Services

D. Management Services

43. Preparation of a long list of potential consultants may be done on the basis of formal or informal enquiries from other

Ministries or Departments or Organizations involved in similar activities, Chambers of Commerce & Industry,

Association of consultancy firms etc. Where the estimated cost of the consulting service is up to Rupees

A. 10 lakh
 B. 15 lakh

C. 25 lakh

D. 40 lakh

44. “Expression of Interest” should be sought where the estimated cost of the consulting services is

A. above Rs. 20 lakh

B. above Rs. 25 lakh

C. up-to Rs. 20 lakh

D. up-to Rs. 25 lakh

45. The number of short listed consultants should

A. not be less than three.

B. be more than three

C. not be less than six

D. be more than six

46. RFP stands for

A. Requirement for Procurement

B. Request for Procurement

C. Request for Purchase & Payment

D. Request for Proposal

47. Technical bids should be analysed and evaluated by a

A. Consultancy Evaluation Committee (CEC) constituted by the Ministry or Department.

B. Consultancy Evaluation Committee (CEC) constituted by the Ministry of Finance

C. Consultancy Evaluation Committee (CEC) constituted by Head of Department

D. Consultancy Evaluation Committee (CEC) constituted by the Parliament.

48. QCBS stands for

A. Quality Control & Budgeting System

B. Quality and Cost Based Selection

C. Quality Control Based Selection

D. Quality and Cost Based Supply

49. The weight age of the technical parameters i.e. non- financial parameters in no case should exceed

A. 30%

B. 50%

C. 60%

D. 80%

50. Services which involve physical, measurable deliverables/outcomes, where performance standards can be clearly

identified and consistently applied, are classified as

A. Contingent Services

B. Labour Services

C. Non-consulting Services

D. Work Charged Services

 51. Pick the incorrect one

A. For identification of likely contractors the Ministry or Department should prepare a list of likely and potential

contractors on the basis of formal or informal enquiries from other Ministries or Departments and

Organisations involved in similar activities, scrutiny of ‘Yellow pages’, and trade journals, if available, web site

etc.

B. The number of the identified contractors for issuing limited tender enquiry for estimated value

of the non-consulting service up-to Rs.10 lakhs should not be less than six.

C. For estimated value of the non-consulting service above Rs.10 lakhs The Ministry or Department should issue

advertisement in such case should be given on Central Public Procurement Portal (CPPP)

D. None (All of the above are correct)

General Financial Rules 2017 - Chapter 8: Contract Management

1. All contracts shall be made by an authority empowered to do so by or under the orders of the President in terms of

A. Article 299 (1)

B. Article 299 (2)

C. Article 301 (1)

D. Article 301 (2)

2. The various classes of contracts and assurances of property, which may be executed by different authorities, are specified

in the Notifications issued from time to time by the

A. Ministry of Finance

B. Ministry of Law

C. Ministry of Trade & Commerce

D. Ministry of Industries

3. The powers of various authorities, the conditions under which such powers should be exercised and the general

procedure prescribed with regard to various classes of contracts and assurances of property are laid down in

A. Rule 107 of GFR 2017

B. Rule 79 of R&P 1983

C. Rule 52 of GAR 1990

D. Rule 21 of the Delegation of Financial Powers Rules.

4. State whether true or false The modifications in standard forms of contracts should be carried out only after obtaining

legal advice.

A. True

B. False

5. A Ministry or Department may, at its discretion, make purchases by issuing purchase orders containing basic terms and

conditions of value up to

A. Rs. 200000/-

B. Rs. 250000/-

C. Rs. 300000/-
 D. Rs. 500000/-

6. Tender documents include the General Conditions of Contract (GCC), Special Conditions of Contract (SCC) and scope of

work, the letter of acceptance will result in a binding contract in respect of Works Contracts, or Contracts for purchases

valued between

A. Rs. 100000-500000

B. Rs. 200000-1000000

C. Rs. 100000-1000000

D. Rs. 200000-1000000

7. A Contract document should be executed, with all necessary clauses to make it a self-contained Contract in respect of

contracts for works with estimated value and purchase of

A. Rs. 1000000 or above

B. Rs. 1500000 or above

C. Rs. 2000000 or above

D. Rs. 5000000 or above

8. Contract document should be invariably executed in cases of following except

A. turnkey works

B. maintenance of equipment

C. provision of services

D. purchase of IT products

9. Contract document, where necessary, should be executed

A. within 21 days of the issue of letter of acceptance

B. within 21 days of the opening of bid

C. within 30 days of the issue of letter of acceptance

D. within 30 days of the opening of bid

10. State whether true or false Non-executing a contract by the Contractor or Supplier within the prescribed period would

not constitute sufficient ground for annulment of the award and forfeiture of Earnest Money Deposit.

A. True

B. False

11. Contract in which the price payable for supplies or services under the contract is determined on the basis of actual cost of

production of the supplies or services concerned plus profit either at a fixed rate per unit or at a fixed percentage on the

actual cost of production is called

A. Fixed Rate Contract

B. Finished Rate Contract

C. Cost Plus Contract

D. Negotiated Contract

12. Price Variation Clause can be provided only in long-term contracts, where the delivery period extends

A. up-to 18 months

B. up-to 36 months

C. beyond 36 months
 D. beyond 18 months

13. The variations under Price Variation Clause are calculated by using indices published by Governments or

A. Chambers of Commerce

B. Chambers of Trade

C. Chambers of Industries

D. All of the threes

14. No price adjustment under Price Variation Clause will be made in favour of the supplier where resultant increase is lower

than

A. 1%

B. 2%

C. 5%

D. 10%.

15. No price variation will be admissible beyond the original Scheduled Delivery Date for defaults on the part of the supplier.

However, it may be allowed beyond the original Scheduled Delivery Date, by specific alteration of that date through an

amendment to the contract in cases of Force Majeure or defaults by Government.

A. True

B. False

16. Copies of all contracts and agreements for purchases, and of all rate and running contracts entered into by civil

departments of the Government other than the departments like the DGS&D should be sent to the Audit Officer and /or

the Accounts officer as the case may be when value of the contracts/agreements are of

A. Rs. 10 lakh and above

B. Rs. 15 lakh and above

C. Rs. 20 lakh and above

D. Rs. 25 lakh and above

17. Provision for recovery of liquidated damages applies when

A. Item/service received less than supply/work order

B. Description of items are different than what required in supply order

C. Items/services delivered beyond scheduled delivery date

D. Items/service supplied or rendered are in damaged/inappropriate condition.

18. No claim for the payment from contractor shall be entertained after the lapse of

A. 3 years of arising of the claim.

B. 5 years of arising of the claim

C. 7 years of arising of the claim

D. 10 years of arising of the claim

19. Monthly review should be made of all bank guarantees or other instruments expiring

A. within 6 months

B. after 6 months

C. within 3 months

D. after 3 months
4: Public Finance for CPD2

1. In which of the following type of economy, the revenue from taxation is likely to be the least?

A. Free market economy

B. Keynesian Economy

C. Mixed Economy

D. Socialist Economy

2. The net proceeds of any tax or duty or of any part of any tax or duty, in or attributable to any area shall be ascertained

and certified by the Comptroller and Auditor-General of India, whose certificate shall be final. The power of the CAG with

regard to the certification of the net proceeds is derived from which of the following?

A. Section 16 of the CAGs DPC Act

B. Article 279 of the Constitution of India

C. Article 150 of the Constitution of India

D. Regulations of Audit and Accounts 2007

3. The 'Principle of Maximum Social Advantage' was introduced by

A. Hugh Dalton

B. Adam Smith

C. Franco Modigliani

D. Sir Arthur Lewis

4. The Indian Government Accounting Standards are formulated and recommended by the

A. Institute of Chartered Accountants of India

B. Institute of Cost Accountants of India

C. Government Accounting Standards Advisory Board

D. Indian Financial Accounting Board

5. Which of the following is NOT a type of economic system followed by the countries?

A. Free Market Economy

B. Command Economy

C. Mixed Economy

D. Macro Economy

6. Which of the following statement would describe the term "Public Finance"?

A. It is a study of economic efficiency, distribution of resources and government policies and its

effects

B. It is a study of the public sector banking system in a country

C. It is a study of the finances of the general public and their pattern of spending

D. It is a study of the direct and indirect taxes in an economy

7. The organization of society under the two central tenets of private ownership rights and voluntary trade is the hallmark

of:

A. Mixed Economic System

B. Capitalist System
 C. Socialist System

D. Fascist System

8. Which one of the following would best describe the study of “Public Finance”?

A. It is the social science that describes the factors that determine the production, distribution and consumption of

goods and services

B. It is the study of the role of the government in the economy. It is the branch of economics which

assesses the government revenue and government expenditure of the public authorities and the

adjustment of one or the other to achieve desirable effects and avoid undesirable ones.

C. It is the application of statistical and mathematical theories to economics for the purpose of testing hypotheses

and forecasting future trends

D. It is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the

allocation of limited resources.

9. A form of political association in which two or more states constitute a political unity with a common government, but in

which the member states retain a measures of internal autonomy is generally referred to as:

A. A Union

B. A Federation

C. A Democracy

D. An Autonomous Region

10. According to Prof. Seligman, Which of the following are the three main principles on the basis of which revenue sources

(such as taxes) should be divided between the different layers of government?

A. Principles of Efficiency, Effectiveness and Economy

B. Principles of Economy, Decentralisation and Necessity

C. Principles of Autonomy, Necessity and Surplus

D. Principles of Efficiency, Suitability, and Adequacy

11. Maximum Social Advantage is achieved,

A. at the point where the marginal social benefit of public expenditure and the marginal social

sacrifice of taxation are equated

B. at the point where the marginal social benefit of public expenditure is higher than the marginal social sacrifice

of taxation

C. at the point where the marginal social benefit of public expenditure is lower than the marginal social sacrifice of

taxation

D. at the point where the marginal social benefit of public expenditure and the marginal social sacrifice of taxation

are zero

12. An economic system where the state owns the means of production and attempts to direct economic activity towards

politically identified goals are generally referred to as:

A. Capitalist Economy

B. Federal Economy

C. Socialist Economy

D. Free Economy
13. The horizontal fiscal imbalance that arises in a fiscal federation is also called:

A. Problem of Equalisation

B. Problem of Efficiency

C. Problem of Effectiveness

D. Problem of Economy

14. Which one of the following economists introduced the principle of “Maximum Social Advantage”?

A. Alfred Marshall

B. John Maynard Keynes

C. Karl Marx

D. Hugh Dalton

15. Tax revenue sharing between the federal and sub-national governments is aimed at correcting which of the following type

of imbalances?

A. Vertical imbalances

B. Horizontal imbalances

C. Diagonal imbalances

D. Criss-cross imbalances

16. In a free market economy, self-interested individuals operate through a system of mutual interdependence to promote

the general benefit of society at large. Adam Smith referred this as:

A. Invisible hand

B. Direct Intervention

C. Collective Spirit

D. Private Spirit

17. A multilevel decentralized fiscal system involving sharing of fiscal responsibilities between central, state and local

governments is referred to as:

A. Fiscal Union

B. Fiscal Federalism

C. Fiscal Equalisation

D. Fiscal Generalism

18. Which of the following is an imprest placed at the disposal of the President of India to facilitate Government to meet

urgent unforeseen expenditure pending authorization from Parliament?

A. Consolidated Fund

B. Public Funds

C. Prime Ministers Relief Fund

D. Contingency Fund

19. Which of the following articles of the Indian Constitution provides for the creation of the Consolidated Fund of India?

A. Article 371

B. Article 366

C. Article 266

D. Article 271
20. The role of Government would be highest in which of the following type of economy:

A. Free market economy

B. Keynesian Economy

C. Mixed Economy

D. Socialist Economy

21. Under the system of federal finance, a Government should be autonomous and free about the internal financial matters

concerned. This principle is referred to as:

A. Principle of Equity

B. Principle of Uniformity

C. Principle of Fiscal Access

D. Principle of Independence

22. The system of assigning the source of revenue to the Central as well as State Governments is generally referred to as

A. Public Finance

B. Distributive Finance

C. Unitary Finance

D. Federal Finance

23. The principle of federal finance which envisages that the resources should be distributed among the different states of the

federation so that each state receives a fair share of revenue is referred to as

A. Principle of Equity

B. Principle of Uniformity

C. Principle of Fiscal Access

D. Principle of Independence

24. Taxes are levied to

A. Provide general benefits to the People

B. Encourage people on unnecessary spending

C. Accumulate funds for the Government for future use

D. All of the above

25. In a federation differences exist in the per capita distribution of income and wealth and the volume of trade among

different states. Such an imbalance existing among different subnational governments are referred to as

A. Vertical imbalances

B. Horizontal imbalances

C. Diagonal imbalances

D. Criss-cross imbalances

26. Which of the following factors contribute to public debt of a country?

A. To undertake public welfare

B. Urge for economic growth

C. Inefficiencies of public organisations and corruption

D. All of the above

27. A country’s repayment obligations of principal and interest for a particular year on its external debt as a percentage of its

exports of goods and services (i.e., its current receipt) in that year is generally referred to as:

A. Real burden

B. Money burden

C. Debt-service ratio

D. Export Earnings Ratio

28. A one-time tax on all wealth holders with the goal of retiring public debt is generally referred to as

A. Indirect Tax

B. Capital Levy

C. Orthodox Tax

D. Socialist Tax

29. Which of the following are the causes of public debt of a country?

A. War or war-preparedness, including nuclear programmes

B. To cover the budget deficits on current account

C. To undertake public welfare schemes

D. All of the above

30. Compulsory loans are superior to voluntary public borrowing in which of the following contexts?

A. In the context of an inflationary situation

B. In the cases of deflationary situation

C. When the interest rates are very low

D. When the Government has a huge fiscal deficit

31. Which of the following scheme provided for compulsory deposits by certain class of tax payers?

A. Compulsory deposit scheme (income-tax payers) act, 1974

B. Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016

C. Both A and B

D. None of these

32. Deadweight debt refers to which of the following form of Public Debt?

A. Internal Debt

B. External Debt

C. Unproductive Debt

D. Productive Debt

33. Which of the following statement is INCORRECT with regard to the burden of public debt of a country?

A. If the public debt is taken for productive purposes it will not be a burden on the economy.

B. If the public debt is taken for unproductive purposes, it will impose both money burden and real burden on the

economy.

C. In case of Internal Debt, the direct money burden on the economy is huge as transfer of wealth

happens within the community

D. In the case of External debt, the amount of repayment of interest and principal represents the direct money

burden on the community

34. Public Debt means

A. Borrowing by a Government from abroad and does not include borrowing from within the country

B. Borrowing by general public, private individuals or association of individuals from the Government which they

need to repay to Government under the prescribed terms and conditions

C. Borrowing by General Public in the form of loans or advances from the Government, Local Bodies, Government

owned financial institutions

D. Borrowing by a Government from within the country or from abroad, from private individuals

or association of individuals or from banking and non-banking institutions

35. Debt obligations of the government that have maturities of one year or less is normally called

A. Commercial Papers

B. Commercial Deposits

C. Treasury Bills

D. Certificate of Deposits

36. Redeemable debt is also called

A. Perpetual loans

B. Terminable loans

C. Flexible loans

D. Rigid Loans

37. Irredeemable debts are also called:

A. Perpetual debt

B. Terminable debt

C. Flexible debt

D. Unproductive debt

38. A Funded Debt refers to a

A. A Short term loan

B. A Short term Deposit

C. A Long Term Loan

D. Ways and Means Advances

39. Converting or altering a public debt from a higher to a lower rate of interest is referred to as:

A. Conversion

B. Sinking Fund

C. Repudiation

D. Terminable Annuities

40. Which of the following could be a reason for raising public loans by a country?

A. Bringing gap between revenue and expenditure through temporary loans from central bank.

B. To reduce depression in the economy and financing public works programme.

C. Financing the public sector for expanding and strengthening the public enterprises

D. All of the above

41. The Ways and Means advances (WMA) from central bank is an example of
 A. Unproductive Debt

B. Productive Debt

C. Short-term Debt

D. External Debt

42. Which of the following method of public debt redemption is most UNLIKELY to be resorted to by the Government?

A. Conversion

B. Sinking Fund

C. Repudiation

D. Terminable Annuities

43. Public burden on account of public debt is generally classified as:

A. Productive Burden and Unproductive Burden

B. Money burden and Real Burden

C. Consumption burden and Distribution burden

D. Debt burden and Finance Burden

44. A fund created by the government and gradually accumulated every year by setting aside a part of current public revenue

in such a way that it would be sufficient to pay off the funded debt at the time of maturity is called

A. Consolidated Fund

B. Equity Fund

C. Credit Fund

D. Sinking Fund

45. Which of the following are the purposes for raising public loans?

A. Bringing gap between revenue and expenditure through temporary loans from central bank.

B. To reduce depression in the economy and financing public works programme.

C. To curb inflation by withdrawing the purchasing power from the public

D. All of the Above

46. Which of the following is NOT an accepted method of redemption of public debt?

A. Repudiation of Public Debt

B. Refunding

C. Conversion

D. Sinking Fund Method

47. Which of the following is NOT a method of debt redemption by the Government?

A. Repudiation of Debt

B. Buyback of Government bonds

C. Payment of Terminable Annuities

D. Issue of Treasury Bills

48. In which of the following situations, any direct money burden on the society is least likely?

A. Raising and repayment of internal debt

B. Raising and repayment of external debt

C. Raising and repayment of internal debt taken for unproductive purposes

 D. Raising and repayment of long term debt from external agencies

49. Which of the following would refer to the self-liquidating form of public debt?

A. Internal Debt

B. External Debt

C. Productive Debt

D. Short-Term Loan

50. Which of the following is NOT TRUE with reference to public finance?

A. According to Classical Economics Public Financing is highly unproductive on the assumption that full

employment, inelasticity of money supplies and unproductive nature of public expenditure

B. Voluntary Public Borrowing has a disincentive effect whereas taxation does not have a

disincentive effect and as such taxation is preferable to voluntary public borrowing

C. In modern times public borrowing is most extensive and intensive meaning that almost all countries resort to

public borrowing and public borrowing in each country is deepening

D. Public Debt has become a powerful tool of developmental monetary policy as management of public debt is used

as a method to influence the structure of interest rates.

51. Which of the following statement is INCORRECT with reference to the burden of public debt?

A. An internal debt has no direct money burden since the interest payment on debt and the imposition of taxation

to pay interest to the lenders is simply a transfer of purchasing power from one to another

B. Internal debt involves direct real burden to the community as it involves redistribution of aggregate income

leading to inequalities in the distribution of income and wealth.

C. The direct money burden of external debt is the interest payment as well as the principal repayment (i.e., debt

servicing) to external creditors

D. An external debt has no direct money burden since interest payment on debt and the imposition

of taxation to pay interest to the foreign country accelerates export earnings

52. Which of the following could be a purpose for raising public loans?

A. Financing economic development esp. in under-developed countries.

B. Financing the public sector for expanding and strengthening the public enterprises.

C. War, arms and ammunition financing

D. All of the above

53. Which of the following statement is INCORRECT with reference to the classification of public debt?

A. Internal debt refers to the public loans floated within the country, while external debt refers to the obligations

of a country to foreign governments, foreign nationals or international institutions

B. Public debt raised and used to finance a war is unproductive because it does not create an asset, it is a dead

weight debt or a useless burden on the community

C. Redeemable debt refers to a debt which may not be redeemed at all but on which the government promises to

pay the interest regularly

D. A funded debt is short term debt undertaken for creating a temporary asset and the government

normally makes arrangements for repayments through current revenue

54. Treasury Bills fall under the category of

 A. Funded Debt

B. Unfunded Debt

C. External Debt

D. Productive Debt

55. Public Debt has a secular tendency to go up in every country. Which of the following are reasons contributing to such a

trend?

A. Increase trend in Financing of Public works programmes

B. Increasing trend in Financing for Economic Development

C. Undertaking of Welfare Schemes by the Government

D. All of the above

56. Which of the following refers to market borrowing by Government?

A. Sales to the public of government bonds, treasury bills in the capital market

B. Issue of national savings certificates

C. Issue of National Plan Bonds

D. Collection of deposits at State owned Post Offices

57. Expenditure incurred by the Government on building durable assets, like highways, multipurpose dams, irrigation

projects are in the nature of

A. Capital Expenditure

B. Revenue Expenditure

C. Transfer Expenditure

D. Unproductive Expenditure

58. Which of the following describes the situation where revenues and expenditures are equal during a given period?

A. Public Debt

B. Budget Surplus

C. Balanced Budget

D. Budget Deficit

59. During the process of economic development, the share of public expenditure to Gross Domestic Product tends to

expand. This is called:

A. Wagner’s law

B. Keynes Law

C. Adam Smith’s Theory

D. Brettonwoods Law

60. Old age pension is “National Old Age Pension Schemes”, “Interest payments”, “Subsidies”, “Unemployment allowances”,

“Welfare benefits to weaker sections, etc.” By incurring such expenditure, the government does not get anything in

return, but it adds to the welfare of the people, especially belong to the weaker sections of the society. Such expenditure

basically results in redistribution of money incomes within the society.

A. Non-Transfer Expenditure

B. Transfer Expenditure

C. Capital Expenditure
 D. Non-Distributive Expenditure

61. With increase in urbanization and industrialization, the role of Government started:

A. Declining

B. Increasing

C. Stagnant

D. Unstable

62. A heterodox macroeconomic theory developed by Abba Lerner during World War II that seeks to eliminate economic

insecurity through government intervention in the economy is generally referred to as:

A. Micro Finance

B. Heterodox Finance

C. Public Finance

D. Functional Finance

63. The principle of public expenditure that requires that Government should avoid shortfall of revenue in comparison with

its expenditure is termed as

A. Canon of Deficit

B. Canon of Surplus

C. Canon of Elasticity

D. Canon of Sanction

64. The ratio of change in the national income in relation to the change in government spending that causes it is referred to

as:

A. Fiscal Multiplier

B. Spending Ratio

C. Expenditure Ratio

D. Cost Multiplier

65. Expenditures incurred on civil administration, defence forces is in the nature of

A. Capital Expenditure

B. Revenue Expenditure

C. Transfer Expenditure

D. Productive Expenditure

66. The canon of neutrality in public expenditure refers to which one of the following?

A. The principle of public expenditure which requires that public expenditure before it is incurred should be

sanctioned by a competent authority and should not be incurred for the benefit of only one section of the people

B. The principle of public expenditure which requires that it should be possible for public authorities to vary the

expenditure according to the need and circumstances and not on the basis of any political or bureaucratic

influence

C. The principle of public expenditure which requires that public expenditure should have no

adverse affect on production and consumption instead it should lend a helping hand to the

production process and bring about equality of income and wealth distribution
 D. The principle of public expenditure which requires that every government must try to keep its budgets well

balanced. There should be neither ever recurring surpluses nor deficits in the budgets.

67. The action taken to stimulate an economy, usually during a recessionary period, through government spending, and

interest rate and tax reduction is called: Pump priming relates to the Keynesian economic theory, named after noted

economist John Maynard Keynes, which states that government intervention within the economy, aimed at increasing

aggregate demand, can result in a positive shift within the economy. This is based on the cyclic nature of money within an

economy, in which one persons spending directly relates to another person’s earnings, and that increase in earnings leads

to a subsequent increase in spending.

A. Force Funding

B. Piggy backing

C. Direct Funding

D. Pump Priming

68. The practice by Governments in which a government spends more money than it receives as revenue is referred to as:

A. Piggy backing

B. Direct Funding

C. Deficit financing

D. Pump Priming

69. The principle of public expenditure which requires that public expenditure before it is incurred should be sanctioned by a

competent authority is

A. Canon of Economy

B. Canon of Sanction

C. Canon of Elasticity

D. Canon of Maximum Social Benefit

70. Deepening of Government activities refers to:

A. Increase in the existing activities of the Government

B. Taking up additional activities by the Government

C. Privatization of the activities of the Government

D. Dilution of Government Share in the Public Sector Enterprises

71. Principle of Maximum Social Benefit was propounded by which of the following economists?

A. Keynes

B. Marshall

C. Dalton

D. Wiseman

72. The increase in public expenditure doesn't follow any smooth and continuous trend but the increase in public

expenditure occurred in step like manner. This hypothesis is called

A. Caldor’s model

B. Peacock and Wiseman Hypothesis

C. Wagner’s Law of Public Expenditure

D. Keynes Law of Public Expenditure

73. Expenditure on defence, interest payments, law and order maintenance and public administration expenses are generally

treated as:

A. Productive Expenditure

B. Unproductive Expenditure

C. Growth-oriented Expenditure

D. Progressive Expenditure

74. Developmental expenditure refers to

A. Revenue Expenditure incurred for meeting current expenses of the Government

B. Capital Expenditure incurred for creating long-term assets of the Government

C. Expenditure which is incurred on activities directly related to economic development

D. Expenditure which is incurred on running the normal government administration

75. The multiplier effect is best described as:

A. the increase in final income arising from any new injection of spending

B. the increase in the expenditure of a country

C. the increase in the public debt of a country

D. the increase in investment of a country

76. Multiplier in Macro economics refers to which of the following:

A. A factor of proportionality that measures how much an endogenous variable changes in

response to a change in some exogenous variable

B. A factor of proportionality that measures the increase in exports in a given period

C. A factor proportionality that measures the increase in public debt in a given period of time

D. A factor of proportionality that measures the increase in investments in a given period of time.

77. Which of the following principles of public expenditure propounded by Prof. Findlay Shirras is considered irrelevant in a

modern government?

A. Canon of Economy

B. Canon of Sanction

C. Canon of Maximum Social Benefit

D. Canon of Surplus

78. Peacock and Wiseman Hypothesis on public expenditure consists of three concepts which are:

A. Subscription Effect, Tax Effect, Expenditure Effect

B. Tax Effect, Expenditure Effect, Consumption Effect

C. Displacement Effect, Concentration Effect, Inspection Effect

D. Consumption Effect, Labour Effect, Income Effect

79. Which of the following occurs when all taxes and other revenues exceed government expenditures for a year?

A. Public Debt

B. Budget Surplus

C. Balanced Budget

D. Budget Deficit
80. The principle of public expenditure that requires that it should be possible for public authorities to vary the expenditure

according to the need and circumstances is:

A. Canon of Economy

B. Canon of Sanction

C. Canon of Elasticity

D. Canon of Maximum Social Benefit

81. Expenditure on Internal law and order and defence, Public administration etc. are in the nature of

A. Transfer Expenditure

B. Non-Transfer Expenditure

C. Capital Expenditure

D. Productive Expenditure

82. According to Peackock Wiseman hypothesis, A discontinuity in the growth pattern which produces expenditure peak

during social disturbances is referred to as:

A. Displacement Effect

B. Concentration Effect

C. Inspection Effect

D. Substitution Effect

83. Audit of the Accounts of the Insurance Regulatory and Development Authority of India is the responsibility of the:

A. Comptroller and Auditor General of India

B. Chartered Accountants appointed by the Government of India

C. Chartered Accountants appointed by the Government of India from the Panel of Auditors prepared by the CAG

of India

D. Chartered Accountants appointed by the CAG of India

84. According to the Securities and Exchange Board of India Act 1992 ,the head office of the Securities and Exchange Board

of India shall be located at:

A. New Delhi

B. Chennai

C. Calcutta

D. Mumbai

85. The Forward Markets Commission (FMC) merged with which of the following regulatory bodies?

A. Insurance Regulatory and Development Authority of India

B. Reserve Bank of India

C. Life Insurance Corporation of India

D. Securities and Exchange Board of India

86. According to the Pension Fund Regulatory & Development Authority Act , the head office of the Pension Fund Regulatory

and Development Authority shall be located at:

A. Hyderabad

B. The head office of the Authority shall be at such place as the Central Government may decide from time to time

C. Chennai
 D. National Capital Region

87. According to the Securities and Exchange Board of India Act 1992, Chairman of the SEBI would be appointed by:

A. Reserve Bank of India

B. Central Government

C. Central Government in consultation with the Government of Maharashtra

D. Board of Members of the Securities and Exchange Board of India

88. According to the, INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA ACT, 1999, the head

office of the Insurance Regulatory and Development Authority shall be located at:

A. Hyderabad

B. The head office of the Authority shall be at such place as the Central Government may decide

from time to time

C. Chennai

D. Mumbai

89. Securities and Exchange Board of India (SEBI) was established under

A. Securities Contracts (Regulation) Act, 1956

B. Securities and Exchange Board of India (SEBI) Act 1994

C. Finance Act 1996

D. Finance Act 1998

90. The Food Safety and Standards Authority of India was established under which of the following acts?

A. Prevention of Food Adulteration Act,2000

B. Edible Oils Packaging (Regulation)Order 1988

C. Food Safety and Standard Act, 2006

D. Prevention of Food Adulteration Act,1954

91. The Chairperson of the Pension Fund Regulatory and Development Authority is appointed by:

A. Reserve Bank of India

B. Central Government

C. Board of Members of the Pension Fund Regulatory and Development Authority

D. Board of Members of the Securities and Exchange Board of India

92. According to the IRDA Act, The Chairperson of the Insurance Regulatory Authority of India is appointed by:

A. Central Government in consultation with Government of Telengana

B. Life Insurance Corporation of India

C. Central Government

D. Reserve Bank of India

93. The Regulatory body established under an Act of Parliament and assigned with the functions to protect the interests of

the policyholders, to regulate, promote and ensure orderly growth of the insurance industry is called

A. Life Insurance Corporation of India

B. Insurance Regulatory and Development Authority

C. Insurance and Depositories Board of India

D. Pension and Insurance Fund Regulatory Authority of India

94. The Central Office of the Reserve Bank is located in which of the following cities in India:

A. New Delhi

B. Chennai

C. Calcutta

D. Mumbai

95. Pension Fund Regulatory and Development Authority is established under:

A. General insurance business (nationalization) Act, 1972

B. The Pension Fund Regulatory & Development Authority Act 2013

C. Executive Order of the Government and Finance Act 2013

D. Finance Act 2015

96. The regulatory body established under an act of Parliament to provide for the establishment of an Authority to promote

old age income security by establishing, developing and regulating pension funds, to protect the interests of subscribers

to schemes of pension funds is called:

A. Insurance Regulatory and Development Authority of India

B. The Pension Fund Regulatory and Development Authority

C. Securities and Exchange Board of India

D. Insurance and Pension Fund Regulatory Authority of India

97. The Regulatory body established under an act of Parliament and assigned with the functions to regulate the issue of Bank

notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency

and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of

an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth:

A. Ministry of Finance

B. Reserve Bank of India

C. Securities and Exchange Board of India

D. Central Minting and Notes Authority

98. A public authority or government agency responsible for exercising autonomous authority over some area of human

activity in a supervisory capacity is generally referred to as:

A. Statutory Bodies

B. Regulatory Bodies

C. Constitutional Bodies

D. Executive Authorities

99. Forward Markets Commission (FMC) was established under which of the following Act of the Parliament?

A. Forward Contracts (Regulation) Act, 1952

B. Forward markets commission (FMC) Act 1992

C. Finance Act 1992

D. Securities and Exchange Board of India Act 1994

100. The Insurance Regulatory and Development Authority of India is established under:

A. Life Insurance Corporation Act, 1956

B. General insurance business (nationalization) Act, 1972

 C. Insurance Act, 1938

D. Insurance regulatory and development authority of India Act, 1999

101. FORWARD MARKETS COMMISSION functioned under which of the following administrative ministries?

A. Ministry of Home

B. Ministry of Agriculture

C. Ministry of Statistics and Programme implementation

D. Ministry of Consumer Affairs, Food and Public Distribution

102. Audit of the Accounts of the Pension Fund Regulatory and Development Authority is the responsibility of the:

A. Comptroller and Auditor General of India

B. Chartered Accountants appointed by the Government of India

C. Chartered Accountants appointed by the Government of India from the Panel of Auditors prepared by the CAG

of India

D. Chartered Accountants appointed by the CAG of India

103. The Regulatory body established under the Act of Parliament to protect the interests of investors in securities and to

promote the development of, and to regulate, the securities market is:

A. Reserve Bank of India

B. Securities and Exchange Board of India

C. National Stock Exchange of India

D. Insurance Regulatory and Development Authority of India

104. The Reserve Bank of India was established:

A. In 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934

B. In 1950 in accordance with the provisions of the Reserve Bank of India Act, 1950

C. In 1950 in accordance with the provisions of the Finance Act 1950

D. In 1945 in accordance with the provisions of the Finance Act 1944

Absorption and Marginal Costing

1. The term contribution refers to ____

A. The difference between selling price and fixed cost

B. The difference between selling price and variable cost

C. Profit

D. None of these

2. Marginal costing technique helps the management in deciding _____

A. Pricing

B. To accept fresh orders at low price

C. To make or buy

D. All of the above

3. The other name of marginal costing is _______

A. Direct costing

B. Variable costing
 C. Incremental costing

D. All of the above

4. The term gross margin refers to _______

A. Total profit

B. Contribution

C. Profit before tax

D. Profit before interest and tax

5. Sales Rs. 100000, variable cost Rs. 50000 and net profit ratio is 10% on sales, find out fixed cost.

A. 50000

B. 40000

C. 20000

D. The data inadequate

6. Profit volume ratio establishes the relationship between _______

A. Contribution and profit

B. Fixed cost and contribution

C. Profit and sales

D. Contribution and sales value

7. Contribution/sales is equal to _______

A. P/V ratio

B. Net profit ratio

C. BEP

D. EPS

8. The profit of an undertaking is affected by _______

A. Selling price of the products

B. Volume of sales

C. Variable cost per unit and total fixed cost

D. All of the above

9. The profit at which total revenue is equal to total cost is called ______

A. BEP

B. Margin of safety

C. Break even analysis

D. None

10. The break even chart helps the management in ______

A. Forecasting costs and profits

B. Cost control

C. Long term planning and growth

D. All of the above

11. Break even chart presents only cost volume profits. It ignores other considerations such as ________

A. Capital
 B. Marketing aspects

C. Government policy

D. All of the above

12. Expenses that do not vary with the volume of production are known as _______

A. Fixed expenses

B. Variable expenses

C. Semi‐variable expenses

D. None

13. ________ is the excess of sales over the break even sales.

A. Actual sales

B. Total sales

C. Margin of safety

D. Net sales

14. __________ indicates the extent of which the sales can be reduced without resulting in loss.

A. BEP

B. Key factor

C. Contribution

D. Margin of safety

15. The formula for Margin of Safety is one of the following ________

A. PV ratio/profit

B. Profit/P/v ratio

C. Profit/sales

D. Contribution/fixed cost

16. Margin of safety can be improved by ________

A. Increasing production

B. Increasing selling price

C. Reducing the costs

D. All of the above

17. If a firm is dealing in several products the________ is calculated.

A. Composite BEP

B. BEP

C. Break even sales

D. Cash BEP

18. _________ refers to a situation where the costs of operating two alternative plants are equal.

A. Simple BEP

B. Cost BEP

C. Contribution BEP

D. None

19. The angle formed by the sales line and total cost line at the break even point is known as _________
 A. Profit variable

B. Margin of safety

C. Angle of incidence

D. None

20. A high margin of safety indicates the more actual sales than break even sales.

A. True

B. False

21. The term contribution margin refers to _________

A. Marginal income

B. Marginal cost

C. Gross profit

D. Net income

22. Overvaluation of stock is practiced on absorption costing technique.

A. True

B. False

23. The BEP decreases if the fixed cost ________

A. Increases

B. Decreases

C. Remains constant

D. Inadequate data

24. Marginal costing is the most useful technique for the ______

A. Shareholders

B. Management

C. Auditors

D. Creditors
 Which of the following is not an inventory?
a. Machines
b. Raw material
c. Finished products
d. Consumable tools
(Ans:a)

The following classes of costs are usually involved in inventory decisions except
a. Cost of ordering
b. Carrying cost
c. Cost of shortages
d. Machining cost
(Ans:d)

The cost of insurance and taxes are included in

a. Cost of ordering
b. Set up cost
c. Inventory carrying cost
d. Cost of shortages
(Ans:c)

‘Buffer stock’ is the level of stock

a. Half of the actual stock
b. At which the ordering process should start
c. Minimum stock level below which actual stock should not fall
d. Maximum stock in inventory
(Ans:c)

The minimum stock level is calculated as

a. Reorder level – (Nornal consumption x Normal delivery time)
b. Reorder level + (Nornal consumption x Normal delivery time)
c. (Reorder level + Nornal consumption) x Normal delivery time
d. (Reorder level + Nornal consumption) / Normal delivery time
(Ans:a)

Which of the following is true for Inventory control?

a. Economic order quantity has minimum total cost per order
b. Inventory carrying costs increases with quantity per order
c. Ordering cost decreases with lo size
d. All of the above
(Ans:d)

The time period between placing an order its receipt in stock is known as
a. Lead time
b. Carrying time
c. Shortage time
d. Over time
(Ans:a)

Re-ordering level is calculated as

a. Maximum consumption rate x Maximum re-order period
b. Minimum consumption rate x Minimum re-order period
c. Maximum consumption rate x Minimum re-order period
d. Minimum consumption rate x Maximum re-order period
(Ans:a)

Average stock level can be calculated as

a. Minimum stock level + ½ of Re-order level
b. Maximum stock level + ½ of Re-order level
c. Minimum stock level + 1/3 of Re-order level
d. Maximum stock level + 1/3 of Re-order level
(Ans:a)

The Economic Order Quantity (EOQ) is calculated as

a. (2D*S/h)^1/2
b. (DS*/h)^1/2
c. (D*S/2h)^1/2
d. (D*S/3h)^1/2
Where, D=Annual demand (units), S=Cost per order, h=Annual carrying cost per unit
(Ans:a)

The order cost per order of an inventory is Rs. 400 with an annual carrying cost of Rs. 10 per unit.
The Economic Order Quantity (EOQ) for an annual demand of 2000 units is
a. 400
b. 440
c. 480
d. 500
(Ans:a)