2013 September UGC NET Solved Question Paper in Commerce, Paper III

1. The first macro-environmental force that a business firm generally monitors is

(A) Economic environment

(B) Demographic environment

(C) Technological environment

(D) International, Political environment

Answer: (B)


2. Which of the following statements is true?

(A) The highest growth rate in India is in the Manufacturing Sector.

(B) Agricultural Sector has the highest share in the GDP in India.

(C) The biggest source of Central Government’s revenue is Central Excise.

(D) None of the above.

Answer: (C)


3. Which of the following statements is true?

(A) The Competition Commission of India is headed by a person having Judicial background. (B) The definition of the term ‘goods’ as given in the Competition Act, 2002, is the same as given in the Sale of Goods Act, 1930.

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

(D) None of the above is true.

Answer: (D)


4. Which one of the following is not included in the Consumer Rights as per the Consumer Protection Act, 1986?

(A) Right to be protected against marketing of hazardous goods and services.

(B) Right to be heard.

(C) Right to a physical environment that will protect and enhance quality of life.

(D) Right to seek redressal of legitimate complaints.

Answer: (C)


5. A consumer can file a complaint under the Consumer Protection Act, 1986, on any of the following grounds except:

(A) Sale of defective goods

(B) Provision of deficient service

(C) Charging very high price

(D) Unfair trade practice

Answer: (C)


6. Financial statements provide a true and fair view if

(A) It is free from any material error and bias.

(B) It is prepared using the appropriate accounting policy and applicable accounting standards.

(C) It is prescribed in the format prescribed by the regulator or, in the absence of a prescribed format, it is prepared in a manner that facilitates analyses of the financial position and the performance of the reporting enterprise.

(D) It conforms to all of the above (A), (B) and (C).

Answer: (D)


7. Which of the formula is used to calculate Absolute Liquid Ratio is?

(A) Current Assets, Loans & Advances-Inventories

     Current Liabilities & Provisions-Bank Overdraft

(B) Current Assets, Loans & Advances

Current Liabilities & Provisions

(C) Absolute Liquid Assets

Current Liabilities

(D) Absolute Liquid Assets

            Quick Liabilities

Answer: (C)


8. A company sells its product at Rs. 15 per unit. In a period if it produces and sells 8,000 units, it incurs a loss of Rs. 5 per unit. If the volume is raised to 20,000 units it earns a profit of Rs. 4.

Variable cost per unit will be

(A) Rs. 9 per unit

(B) Rs. 4.5 per unit

(C) Rs. 5 per unit

(D) Rs. 6 per unit

Answer: (C)


9. Which of the following is a sub variance of labour efficiency variance?

(A) Idle time variance

(B) Labour-mix variance

(C) Labour-yield variance

(D) All of the above

Answer: (D)


10. An investment centre is a responsibility centre where the manager has control over

(A) Costs

(B) Costs and profits

(C) Costs, profits and product quality

(D) Costs, profits and assets

Answer: (C)

11. According to H.A. Simon, if a firm fails to achieve its target initially, it results in

(A) Search behaviour

(B) Sense of helplessness

(C) Appropriate revision of aspiration level.

(D) Sacking of its managerial team

Answer: (A)


12. When the demand curve is relatively highly elastic, the marginal revenue is

(A) Zero

(B) Unity

(C) Positive

(D) Negative

Answer: (C)


13. In which one of the following market situations the practice of price rigidity is found?

(A) Perfectly competitive market

(B) Monopolistic competitive market

(C) Oligopoly market

(D) Discriminating monopoly market

Answer: (C)


14. During short-run, the optimum level of output corresponds to that level of output where

(A) MC is the minimum

(B) AVC is the minimum

(C) AC is the minimum

(D) AFC stops declining

Answer: (C)


15. The opportunity cost is a term which describeswww.netugc.com

(A) A bargain price for a factor of production.

(B) Production cost related at the optimum level of production.

(C) Average variable cost.

(D) The loss of the reward in the next best use of that resource.

Answer: (D)


16. Find chi-square value for the following:

Event                           Expected                                 Observed

   X                                    60                                           52

   Y                                    40                                           48

Choose the correct answer from the following options:

(A) 2.67

(B) 2.77

(C) 3.33

(D) 4.33

Answer: (A)


17. A time series is a set of data collected at

(A) Random intervals

(B) Regular intervals

(C) Convenient intervals

(D) All of the above

Answer: (B)


18. Given the following data calculate the regression coefficient of X on Y. Pearson’s correlation coefficient = + 0.8. Regression coefficient of Y on X = 0.8

Choose the correct answer from the following:

(A) 0.32

(B) 0.64

(C) 0.80

(D) 0.82

Answer: (C)


19. Which kind of test from the following options is the right test to use when the hypotheses for testing are stated as:

H0: Population mean is equal to the sample mean.

H1: Population mean is not equal to the sample mean.

(A) One-tailed test

(B) Two-tailed test

(C) Either one tailed or two tailed test

(D) None of the above

Answer: (B)


20. The steps in data processing are given below:

Choose the correct sequence of steps in data processing from the following options:

(i) Data Storage

(ii) Data Validation

(iii) Data Capture

(iv) Report Generation

(v) Data Manipulation





Answer: (D)

21. Which of the following steps are essential in the staffing process?

1. Hiring the right kind of people.

2. Firing the non-performing employees.

3. Developing skills of the employees through training.

4. Collective bargaining.

5. Maintaining the employees by creating favourable conditions of work.


(A) 1, 3 and 5

(B) 1, 2 and 3

(C) 3, 4 and 5

(D) 2, 3 and 4

Answer: (A)


22. F.W Taylor

1. Viewed man as an adjunct of man.

2. Completely neglected the psychological aspects.

3. Emphasized only a limited number of the psychological variables.

4. Under-estimated the meaning of human motivation.

Select the correct answer from the following:

(A) 1, 2 and 3

(B) 3, 2 and 4

(C) 1, 2, 3 and 4

(D) 1 and 4

Answer: (C)


23. The authoritarian leadership style goes with

(A) Theory X

(B) Theory Y

(C) Theory Z

(D) None of these

Answer: (A)


24. Select the four stages of group development from the following:

1. Forming

2. Storming

3. Discussing

4. Norming

5. Warning

6. Performing


(A) 1, 2, 3 and 5

(B) 2, 3, 4 and 6

(C) 3, 4, 5 and 6

(D) 1, 2, 4 and 6

Answer: (D)


25. Match the following:

List – I                                                                        List – II

(a) To check the quality of work.                                1. Speed boss

(b) To see that work is completed in time.                  2. Inspection

(c) To check absenteeism of workers.                         3. Instruction clerk

(d) To issue instruction regarding method of work    4. Shop disciplinewww.netugc.com


(a)        (b)        (c)        (d)

(A)       3          2          1          4

(B)       2          1          4          3

(C)       2          1          3          4

(D)       4          3          1          2

Answer: (B)


26. A company plans to create the largest possible total sales volume. It should use

(A) Concentrated marketing

(B) Differentiated marketing

(C) Homogeneous marketing

(D) Undifferentiated marketing

Answer: (B)


27. The third stage in the consumer buying decision process is

(A) Evaluation of alternatives

(B) Information search

(C) Purchase decision

(D) None of the above

Answer: (A)


28. Manufacturers of convenience goods typically seek ______ distribution.

(A) Exclusive

(B) Intensive

(C) Restrictive

(D) Selective

Answer: (B)


29. Which promotional tool is most cost effective when a product is in the decline stage of its product life cycle?

(A) Advertising

(B) Personal selling

(C) Public relations

(D) Sales promotion

Answer: (D)


30. Match the items of List-I with those of List-II.

List – I                                                List – II

(a) Product support service                 (i) Information Technology Act 2000

(b) Interviewers’ bias                          (ii) Information Search

(c) On-line advertising                        (iii) Marketing Research

(d) Personal sources                            (iv) User’s Manual Indicate the correct matching.

       (a) (b) (c) (d)


(B) (iv) (iii) (i) (ii)



Answer: (B)


31. Match the items of List-I with the items of List-II.

List – I                                                                                                                        List – II

(a) A theory of capital structure in which the weighted average cost of capital and the total value of the firm remains constant as financial leverage is changed.                              I. Capital Asset Pricing Model

(b) The value of the geared company will always be greater than an ungeared company with similar business risk but only by the amount of debt associated tax savings of the geared company.                                                                                                             II. Traditional Approach

(c) Capital structure that minimizes the firm’s cost of capital and thereby maximizes the value of the firm.                                                                                                                        III. Net Operating Income Approach

(d) Share price is independent of the degree of financial leverage.                           IV. Modigliani-Miller Theory and Corporate Taxation


      (I) (II) (III) (IV)





Answer: (B)


32. Which one of the following expression represents a correct matching?

(A) A decrease in the proportional claim on earnings and assets of a share of common stock due to the issuance of additional shares: Dilution.

(B) Anticipated annual dividend divided by the total book value of the firm: Dividend Yield.

(C) When a shareholder receives lesser number of new shares in exchange for a given number of old shares: Stock split.

(D) The costs associated with issuing securities, such as underwriting, legal, listing and printing fees: Transaction Costs.

Answer: (A)


33. When the internal rate of return of a project is more than the hurdle rate, the Net Present Value would be:

(A) Zero

(B) Positive

(C) Negative

(D) Uncertain

Answer: (B)


34. Statement I: The presence of fixed operating costs in the operating cost structure of a firm regardless of the volume denotes the presence of financial leverage.

Statement II: Super leverage is the result of the multiplicative combination of the degree of operating leverage and financial leverage.


(A) Both statements are true.

(B) Both statements are false.

(C) Statement I is true, but Statement II is false.

(D) Statement I is false, but Statement II is true.

Answer: (D)


35. Which one of the following expressions has incorrect matching?

(A) A method of financing where each asset would be offset with a financing instrument of the same approximate maturity: Hedging Approach.

(B) A method of financing where all long term funds are used to finance the current assets: Aggressive Approach.

(C) The amount of current assets required to meet a firm’s long term minimum needs: Permanent working capital.

(D) Trade credit and other payables that arise in the firm’s day to day operations: Spontaneous Financing.

Answer: (B)


36. The Equal Remuneration Act, 1976 is primarily applicable to workers working on

(A) Monthly wage basis

(B) Annual wage basis

(C) Daily wage basis

(D) Contractual wage basis

Answer: (B)


37. In comparing Maslow’s and Hertzberg’s Theories of Motivation, which motivators of Hertzberg are similar to the need specified by Maslow?

(A) Affiliation needs

(B) Physiological needs

(C) Security needs

(D) Self-actualisation needs

Answer: (D)


38. The managerial function of staffing is most closely related to

(A) Controlling

(B) Leading

(C) Marketing

(D) Organising

Answer: (D)


39. The ‘staffing function’ does not include:

(A) Performance appraisal

(B) Placement

(C) Selection

(D) Span of control

Answer: (D)


40. On-the-job training does not include

(A) Job rotation

(B) Planned progression

(C) Sensitivity training

(D) Temporary promotion

Answer: (C)


41. Generally the following are the important items appearing on the assets side of the Balance Sheet of a Commercial Bank.

(a) Cash in hand

(b) Bills discounted

(c) Money at call and short notice

(d) Loans and advances

(e) Investments

Which of the following sequence is correct in the order of liquidity?

(A) (a), (b), (d), (c) and (e)

(B) (a), (c), (b), (e) and (d)

(C) (b), (d), (c), (a) and (e)

(D) (c), (d), (b), (e) and (a)

Answer: (B)


42. Which one of the following is not a correct method of calculating profitability ratio in banking sector?

(A) Burden ratio = Man power expenses ratio + other establishment expenditure ratio – non interest income ratio.

(B) Profitability ratio = Spread ratio – burden ratio

(C) Spread ratio = Interest earned ratio + Interest paid ratio

(D) Interest earned ratio = Interest earned/volume of business

Answer: (C)


43. Capital adequacy norm is expressed as a percentage of

(A) Standard Assets

(B) Risk adjusted Assets

(C) Sub-standard Assets

(D) Investments

Answer: (B)


44. The major sources of funds for IFCI Ltd. (during the year 2011-12) are given below:

(i) Reserves and Surpluses

(ii) Borrowings in Rupees

(iii) Share Capital

(iv) Borrowings in Foreign Currency

Which of the following sequence is correct?




(D) (iv), (ii), (i) and (iii)

Answer: (C)


45. The Bonds and Debentures issued by State Financial Corporations are guaranteed by

(A) Reserve Bank of India


(C) Central Government

(D) State Government

Answer: (D)


46. Items given are related to international trade theories. Match the items in List-A with most suitable options in List-B.

List – A                                                                                   List – B

(a) ‘Zero-sum’ game                                                                (i) Factor proportion theory

(b) Labour-Capital relationship                                               (ii) Mercantilism theory

(c) Relative efficiencies of the producing countries               (iii) Theory of ‘Absolute advantage’

(d) ‘Positive-sum’ game                                                          (iv) Theory of Comparative advantage


        (a) (b) (c) (d)

(A) (iii) (iv) (i) (ii)




Answer: (C)


47. The following are the stages in international business entry process. Arrange them in correct sequence.

(i) Direct experience

(ii) In-depth scrutiny

(iii) Country identification

(iv) Preliminary screening

(v) Final selection



(B) (iii), (iv), (i), (ii), (v)

(C) (iii), (iv), (ii), (v), (i)

(D) (iii), (iv), (v), (ii), (i)

Answer: (C)


48. Which of the following intellectual properties were covered under Uruguay Round Agreement on TRIPS?

(i) Copy rights

(ii) Trade marks

(iii) Industrial designs

(iv) Undisclosed information, including trade secrets


(A) (i) and (ii) only




Answer: (D)


49. Which of the following statements is true?

(A) If the absolute Purchasing Power Parity (PPP) holds good, then the relative PPP also holds good.

(B) If the relative PPP holds good, then the absolute PPP also holds good.

(C) If the absolute PPP does not hold good, then the relative PPP also will not hold good.

(D) If the absolute PPP holds good, then the relative PPP may or may not hold good.

Answer: (A)


50. A company is planning to enter a foreign market. Which of the following entry strategies will give it the maximum control?

(A) Direct export

(B) Direct investment

(C) Financing

(D) Licensingwww.netugc.com

Answer: (B)


51. The opportunity cost approach in Human Resources Accounting was introduced by

(A) Hckimian and Jones

(B) Rensis Likert

(C) Eric. G. Flamholtz

(D) William C. Pyle

Answer: (A)


52. The GDRs and ADRs can be listed on

(A) Luxemburg Stock Exchange (LSE)

(B) New York Stock Exchange (NYSE)

(C) Over the Counter Exchange of India (OTCEI)

(D) Any of the Overseas Stock Exchanges

Answer: (D)


53. Match the following:

       List – I                                                                    List – II

(Name of the credit rating agency)                                         (Ownership)

(a) CRISIL                                                                              1. IFCI

(b) ICRA                                                                                 2. ICICI

(c) CARE                                                                                3. Duff & Phelps Corpn.

(d) Duff and Phelps Credit Rating of India Ltd.                   4. IDBI


       a b c d

(A) 1 2 3 4

(B) 2 1 4 3

(C) 1 2 4 3

(D) 2 4 1 3

Answer: (D)


54. Which of the following is responsible for investigating cases referred to it and deciding whether a proposed merger is in the ‘public interest’?

(A) Director General of Fair Trading (DGFT).

(B) Secretary of State for Trade and Industry.

(C) Competition Commission of India (CCI).

(D) Prime Minister Office.

Answer: (C)


55. Match the following:

List – I                                                                                                                        List – II

(a) A popular windows accounting package providing general ledger, accounts receivables, invoicing, accounts payable, inventory and sales analysis capabilities.                  1. Sage Accounting Software

(b) A good, entry level accounting package.                                                              2. M.Y.O.B.

(c) Simplest, yet most powerful software to handle financial accounting, inventory, sales and purchase orders, invoicing and more.                                                                            3. Best Books

(d) A complete range of accounting software providing an integrated solution at the heart of one’s business.                                                                                                        4. Tally


      a b c d

(A) 4 3 2 1

(B) 1 2 4 3

(C) 2 4 1 3

(D) 2 3 4 1

Answer: (D)


56. In order to be useful, market segments must have each of the following characteristics except:

(A) Accessibility

(B) Adaptability

(C) Measurability

(D) Substantiality

Answer: (A)


57. Mass media has the maximum impact at which stage of consumer adoption process.

(A) Adoption

(B) Awareness

(C) Evaluation

(D) Trial

Answer: (B)


58. Pricing decisions are most complex at which stage of the product life cycle?

(A) Decline stage

(B) Introductory stage

(C) Growth stage

(D) Maturity stage

Answer: (D)


59. Industrial buyers are likely to be most responsive to ______ appeal.

(A) Emotional

(B) Moral

(C) Rational

(D) Cognitive

Answer: (C)


60. Indicate the true statement:

(A) Advertisement’s sales effect is easier to measure than its communication effect.

(B) As a tool of promotion, public relations can be more cost-effective than advertising.

(C) A successful salesperson is one who can sell refrigerator to an Eskimo.

(D) All the above are true.

Answer: (B)


61. Who observed in 54 of the cases studied that high morale related to high productivity in 11 of the cases high morale was associated with low productivity and in 35% of the cases there was no relationship between morale and productivity?

(A) Michael J. Jucious

(B) Richard E Walton

(C) Frederick Herzberg

(D) None of the above

Answer: (C)


62. Who developed the goal-setting theory of motivation?

(A) Frederick Herzberg

(B) Edwin Locke

(C) Richard Hackman

(D) None of the above

Answer: (B)


63. Which of the following concepts, involves setting objectives and comparing performance against those objectives?

(A) Performance Appraisal

(B) Merit Rating

(C) Management by Objectives

(D) Formulation of objectives and policies

Answer: (C)


64. The career development cycle includes:

(A) Introductory stage → Growth stage → Saturation stage → Decline stage.

(B) Primary stage → Secondary stage → Stage of self-actualisation.

(C) Pioneering stage → Growth stage → Maturity stage → Decline stage.

(D) Exploratory stage → Establishment stage → Maintenance stage → Stage of Decline.

Answer: (D)


65. It is a mental condition or attitudes of individuals and groups which determine their willingness to cooperate.

(A) Job satisfaction

(B) Motivation

(C) Job Advancement

(D) Morale

Answer: (D)


66. Which of the following most appropriately describes the meaning of the term ‘option forward’?

(A) Forward contract entered into along with buying a call option.

(B) Forward contract entered into for buying or selling at a future date.

(C) Forward contract entered into for buying or selling over a period of time.

(D) Forward contract entered into with writing a put option.

Answer: (C)


67. ‘Dual adaptation strategy’, in the context of international product decisions, means:

(A) Modification of product and packaging it to meet local requirements.

(B) Changing product and price to meet local requirements.

(C) Modification of product and the marketing communication to suit the foreign markets.

(D) None of the above.

Answer: (C)


68. The main promoter of international trade liberalisation





Answer: (A)


69. The most common trade barrier faced by a multinational company is the

(A) Embargo

(B) Quota

(C) Sales tax

(D) Tariff

Answer: (D)


70. Exchange Rate System where the Central Bank intervenes to smoothen out the exchange rate fluctuations is termed as

(A) Free float

(B) Clean float

(C) Managed float

(D) Fixed rate system

Answer: (C)


71. Mr. X, after about 20 years’ stay in India, returns to America on January 29, 2009. He came to India in June 2011. His residential status for the Assessment year 2012-13 will be

(A) Ordinarily Resident

(B) Not Ordinarily Resident

(C) Non-Resident

(D) Resident or Non-Resident

Answer: (A)


72. Mr. X retired from a Pvt. Ltd. Company on 31-3-2011. The company paid Rs. 80,000 in lieu of commutation of 25 percent of pension on 31-01-2012, but does not pay any gratuity to its employees. The amount taxable as commuted pension for the Assessment Year 2012-13 is:

(A) Rs. 80,000

(B) Rs. 3,20,000

(C) Rs. 1,60,000

(D) Nil

Answer: (D)


73. Consider the following: The book profit of a firm of Chartered Accountants, which satisfies all the conditions of Section 184 and Section 40(b), for the year ended 31-3-2012, is Rs. 72,190.

The actual remuneration paid to the partners for the year is Rs. 1,56,000. The amount of remuneration permissible under Sec: 40(b) is:

(A) Rs. 1,56,000

(B) Rs. 72,190

(C) Rs. 64,971

(D) Rs. 1,50,000

Answer: (D)


74. ‘Winman’, software can be used for

(A) Preparation of Balance Sheet

(B) Computation of Income Tax

(C) Filing of e-Returns

(D) All of the above

Answer: (D)


75. Which of the following deductions under Chapter VI A of Income Tax Act, 1961, cannot be claimed by a partnership firm?

(i) Sec. 80-G

(ii) Sec. 80-C

(iii) Sec. 80-D

(iv) Sec. 80-IB


(A) (ii), (iii) and (iv)

(B) (i) and (iii)


(D) (ii) and (iii)

Answer: (D)