Economics

1-Demand for a commodity refers to:

a. Need for the commodity
b. Desire for the commodity
c. Amount of the commodity demanded at a particular price and at a particular time
d. Quantity demanded of that commodity
(Ans: c)

2-Which among the following statement is INCORRECT?

a. On a linear demand curve, all the five forms of elasticity can be depicted’
b. If two demand curves are linear and intersecting each other then coefficient of elasticity
would be same on different demand curves at the point of intersection.
c. If two demand curves are linear, and parallel to each other then at a particular price the
coefficient of elasticity would be different on different demand curves.
d. The price elasticity of demand is expressed in terms of relative not absolute, changes in
Price and quantity demanded’
(Ans: b)

3-If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the
consumers of the good to:
a. Increase
b. Decrease
c. Remain the same
d. Become zero
(Ans: a)

4-The horizontal demand curve parallel to x-axis implies that the elasticity of demand is:
a. Zero
b. Infinite
c. Equal to one
d. Greater than zero but less than infinity
(Ans: b)

5-An individual demand curve slopes downward to the right because of the:
a. Working of the law of diminishing marginal utility
b. substitution effect of decrease in price
c. income effect of fall in Price
d. All of the above
(Ans: d)

6-Income elasticity of demand is defined as the responsiveness of:

a. Quantity demanded to a change in income
b. Quantity demanded to a change in price
c. Price to a change in income
d. Income to a change in quantity demanded
 (Ans:a)

7-The supply of a good refers to:

a. Stock available for sale
b. Total stock in the warehouse
c. Actual Production of the good
d. Quantity of the good offered for sale at a particular price per unit of time
(Ans: d)

8-In the short run, when the output of a firm increases, its average fixed cost:
a. Remains constant
b. Decreases
c. Increases
d. First decreases and then rises
(Ans: b)

9-The cost of one thing in terms of the alternative given up is called:

a. Real cost
b. Production cost
c. Physical cost
d. opportunity cost
(Ans: d)

10-Assume that consumer’s income and the number of sellers in the market for good X both falls. Based on
this information, we can conclude with certainty that the equilibrium:
a. Price will decrease
b. Price will increase
c. Quantity will increase
d. Quantity will decrease
(Ans: d)

11-The economist’s objections to monopoly rest on which of the following grounds?

a. There is a transfer of income from consumers to the monopolist
b. There is welfare loss as resources tend to be misallocated under monopoly
c. Only A is correct
d. Both A and B are correct
(Ans: d)

12-In which of the following market structure is the degree of control over the price of its product by a firm
very large?
a. Imperfect competition
b. Perfect competition
c. Monopoly
d. In A and B both
(Ans: c)
 13-The offer curves introduced by Alfred Marshall, helps us to understand how the ______ is established in
international trade.
a. Terms of trade
b. Equilibrium price ratio
c. Exchange rate
d. Satisfaction level
(Ans: a)

14-Demand for factors of production is:

a. Derived demand
b. Joint demand
c. Composite demand
d. None of the above
(Ans: a)

15-The producer’s demand for a factor of production is governed by the ___ of that factor.
a. Price
b. Marginal Productivity
c. Availability
d. Profitability
(Ans: b)

16-Under conditions of perfect competition in the product market:

a. MRP=VMP
b. MRP > VMP
c. VMP > MRP
d. None of the above
(Ans: a)

17-Which among the following statements is INCORRECT?

a. Coefficient of correlation can be computed directly from the data without measuring
deviation.
b. Measures of Dispersion are also called averages of the second order.
c. Standard deviation can be negative.
d. Mean deviation can never be negative.
(Ans: c)

18-One of the methods to find out Mode is:

a. Mode = 3 Median + 2 Mean
b. Mode=3 Median – 3 Mean
c. Mode = 2 Median – 3 Mean
d. Mode=3 Median – 2 Mean
(Ans: d)

19-Which among the following statements is INCORRECT?

a. Index number is a relative measurement.
b. In fact all index numbers are weighted.
c. Theoretically the best average in construction of index numbers is Geometric mean.
d. It is not possible to shift the base if it is the case of fixed base index
(Ans: d)

20-Mean Deviation can be calculated from:

a. Mean
b. Median
c. Mode
d. Any of the above
(Ans: d)

21-Scatter diagram is used to study ___ in economic statistics.

a. Variability in the series
b. Nature of Correlation in the two series
c. Regression
d. Secular trend
(Ans: b)

22-Coefficient of Correlation (r) is significant, if:

a. r > 5 times Probable Error
b. r < 6 times Probable Error
c. r > 6 times Probable Error
d. r = 6 times Probable Error
(Ans: c)

23-Which statistical measure helps in measuring the purchasing power of money?

a. Arithmetic average
b. Index numbers
c. Harmonic mean
d. Time series
(Ans: b)

24-Fisher’s ideal index number is:

a. Arithmetic mean of Laspeyre’s and Paasche’s index
b. Harmonic mean of Laspeyre’s and Paasche’s index
c. Geometric mean of Laspeyre’s and Paasche’s index
d. None of the above
(Ans: c)

25-Which among the following is NOT a correct statement?

a. Welfare economics is based on value judgements.
b. Welfare economics is also called ‘economics with a heart’.
c. Welfare economics focuses on questions about equity as well as efficiency.
d. The founder of Welfare economics was Alfred Marshall.
(Ans: d)

26-Who is the ‘lender of the last resort’ in the banking structure of India?
a. State Bank of India
b. Reserve Bank of India
c. EXIM Bank of India
d. Union Bank of India
(Ans: b)

27- ____ is the official minimum rate at which the Central Bank of a country is prepared to rediscount
approved bills held by the commercial banks.
a. Repo rate
b. Bank rate
c. Prime lending rate
d. Reverse repo rate
(Ans: b)

28-In order to control credit, Reserve Bank of India should:

a. Increase CRR and decrease Bank rate
b. Decrease CRR and reduce Bank rate
c. Increase CRR and increase Bank rate
d. Reduce CRR and increase Bank rate
(Ans: c)

29-Which among the following is a function of the Reserve Bank of India?

a. Bank issues the letters of credit to their customers certifying their creditability
b. Collecting and compilation of statistical information relating to banking & other financial
sectors
c. Banks under write the securities issued by public or private organizations
d. Accepting deposits from the public
(Ans: b)

30-Credit creation power of the commercial banks gets limited by which of the following?
a. Banking habits of the people
b. Cash reserve ratio
c. Credit policy of the central bank
d. All of the above
(Ans: d)

31-Number of times a unit of money changes hands in the course of a year is called_______
a. Supply of money
b. Purchasing power of money
c. Velocity of money
d. Value of money
(Ans: c)

32-_____ is the difference between total receipts and total expenditure.

a. Capital deficit
b. Budget deficit
c. Fiscal deficit
d. Revenue deficit
(Ans: b)

33-What is meant by Autarky in international trade?

a. Monopoly in international trade
b. Imposition of restrictions in international trade
c. Removal of all restrictions from international trade
d. The idea of self sufficiency and no international trade by a country
(Ans: d)

34-The following is the direct tax among:

a. House tax
b. Entertainment tax
c. Service tax
d. Value Added tax
(Ans: a)

35-Which among the following is a cause of inflation?

a. Deficit financing
b. Rise in external loans
c. Unfavourable balance of payment
d. A hike in the CRR by the central bank of the country
(Ans: a)

36-Cost push inflation occurs because of:

a. Wage push
b. Profit push
c. Both A and B
d. Ineffective policies of the government
(Ans: c)

37-Which among the following is NOT correct?

a. During inflation lenders suffer and borrowers benefit out’
b. Rising inflation indicates rising aggregate demand and indicates comparatively lower supply
and higher purchasing capacity among the consumers’
c. With rising inflation the currency of the economy depreciates provided it follows the flexible
currency regime.
d. Inflation decreases the nominal (face) value of the wages while the real value increases.
 (Ans:d)

38-The capital that is consumed by an economy or a firm in the production process is known as:
a. Capital loss
b. Production cost
c. Dead-weight loss
d. Depreciation
(Ans: d)

39-Who propounded the opportunity cost Theory of international trade?

a. Ricardo
b. Marshall
c. Heckscher & Ohlin
d. Haberler
(Ans: d)

40-Which among the following is NOT correct?

a. Floating exchange rate system works on the market mechanism
b. Floating exchange rate breeds uncertainties and speculation
c. Economic and political factors and value judgments influence the choice of the exchange
rate system
d. The system of floating exchange rate requires comprehensive government intervention
(Ans: d)

41-Which among below is NOT a correct statement?

a. Bretton Woods conference gave birth to two international organizations-
b. Theory of Absolute Advantage in international trade is given by Adam Smith’
c. Pure and perfect competition is the same market structures.
d. Mint par theory of exchange rate determination is applicable in countries under gold
standard.
(Ans: c)

42-Terms of trade that relate to the Real Ratio of international exchange between commodities is called:
a. Real cost terms of trade
b. Commodity terms of trade
c. Income terms of trade
d. Utility terms of trade
(Ans: c)

43-Who among the following enunciated the concept of single factoral terms of trade?
a. Jacob Viner
b. G.S.Donens
c. Taussig
d. J.S.Mill
(Ans: a)

44-‘Infant industry argument’ in international trade is given in support of:

a. Granting Protection
b. Free trade
c. Encouragement to export oriented small and tiny industries
d. None of the above
(Ans: a)

45-Which of the following is also known as International Bank for Reconstruction and Development?
a. Asian Development Bank
b. World Bank
c. Reserve Bank of India
d. International Monetary Fund
(Ans: b)

46-Which among the following is not a function of International Monetary Fund?

a. It serves a medium term and long term credit institution’
b. It provides a mechanism for improving short term balance of payments position’
c. It provides machinery for international consultations’
d. It provides reservoir of the currencies of the member countries and enables members to
borrow one another’s currency’
(Ans: a)

47-The new world Trade organization (WTO), which replaced the GATT came into effect from____
a. 1ST January 1991
b. 1st January 1995
c. 1st April 1994
d. 1st May 1995
(Ans: b)

48-A change in fiscal policy affects the balance of payments through:

a. The current account only
b. The capital account only
c. Both, the current account and capital account
d. Neither current account nor capital account
(Ans: c)

49-Fiscal Policy means:

a. Policy relating to money and banking in a country
b. Policy relating to non-banking financial institutions
c. Policy relating to government spending’ taxation and borrowing
d. Policy relating to financial matters of international trade
(Ans: c)
 50-Which one of the following is NOT the objective of fiscal policy of government of India?
a. Full employment
b. Price stability
c. Regulation of inter-state trade
d. Economic growth
(Ans: c)

51-Monetary policy is implemented by in India.

a. The Ministry of Finance
b. Planning Commission
c. The Parliament
d. Reserve Bank of India
(Ans: d)

52-Under the Industrial policy of 1991:

a. The mandatory convertible clause is applicable to all term loans.
b. The mandatory convertible clause is applicable to term loans of more than 10 years.
c. The mandatory convertible clause is applicable to term loans of less than 10 years.
d. The mandatory convertible clause is no longer applicable.
(Ans: d)

53-Balance of Payment on capital account includes:

a. Balances of private direct investments
b. Private portfolio investments
c. Government loans to foreign governments
d. All of the above
(Ans: d)

54-Which country was the first to adopt a gold standard in the modern sense?
a. Italy
b. France
c. Great Britain
d. Portugal
(Ans: c)

55-To eradicate the problem of poverty, Twenty Point Economic Programme was launched for the first time
in India on:
a. 7th July, 1971
b. 7th July, 1975
c. 26th January, 1951
d. 15th August, 1983
(Ans: b)
 56-_____unemployment may result when some workers are temporarily out of work while changing job
a. Seasonal
b. Frictional
c. Disguised
d. Technical
(Ans: b)

57-Which among below is the economic effect of population pressure in India?

a. Higher burden of unproductive consumers on total population
b. Disintegration of family
c. Overcrowding of cities
d. Ecological degradation
(Ans: a)

58-Which among the following may be considered as a significant cause of low agriculture productivity in
India?
a. Defective tenancy reforms
b. Lack of enthusiasm among farmers
c. Conservative social systems
d. Absence of agricultural inputs to raise productivity
(Ans: a)

59-What have been the reasons of deficit in India’s Balance of Trade in the past?
a. Very large rise in imports
b. Modest growth of exports
c. High cost and low quality production
d. All of the above
(Ans: d)

60-A high average level of rear income per head is always associated with a high proportion of the working
population engaged in __________ sector.
a. Primary
b. Secondary
c. Tertiary
d. None of the above
(Ans: c)

61-Natural resources determine the course of development and constitute the challenge which may not be
accepted by the human mind. “Who has said it”?
a. W. Arthur Lewis
b. J.I. Fisher
c. Jan Tinbergen
d. W.W. Rostow
(Ans: a)
 62-The credit of developing the concept of modern economic growth goes to:
a. Arthur Lewis
b. Michael P. Todaro
c. Gunnar Mydral
d. Simon Kuznets
(Ans: d)

63-The most simple and popular method of measuring economic development is to calculate the trend of
gross national product (GNP) at __________
a. Current prices
b. Constant prices
c. Both of the above
d. None of the above
(Ans: b)

64-“Underdeveloped countries are the slums of the world Economy.” This statement is by
a. Ragnar Nurkse
b. A.N. Caimcross
c. Colin Clark
d. Jagdish Bhagwati
(Ans: b)

65-Which among the following is a characteristic of underdevelopment?

a. Vicious circle of poverty
b. Rising mass consumption
c. Growth of industries
d. High rate of urbanization
(Ans: a)

66-According to W.W. Rostow, the stages of economic growth are:

a. Two
b. Three
c. Four
d. Five
(Ans: d)

67-Most of the underdeveloped economies suffer from ____ which do not let the rate of growth go up from a
lower level.
a. High population pressures
b. High infant mortality
c. Hugh monetary mismanagement
d. High level of technological unemployment
(Ans: a)

68-By __ growth rate of an economy can be speeded up.

a. Investment in share market
b. Investment abroad
c. Investment in human capital formation
d. Investment in primary sector
(Ans: c)

69-When the population growth rate of an economy becomes greater than the achievable economic growth
rate, it is known as:
a. Population Explosion
b. Population Trap
c. Population Crisis
d. None of the above
(Ans: b)

70-‘Planning from below’ is known as:

a. Centralized planning
b. Functional planning
c. Decentralized planning
d. Structural planning
(Ans: b)

71- _________ got the highest priority during the first plan period in India.
a. Self reliance
b. Growth with social justice
c. Development of Agriculture including irrigation
d. Removal of unemployment
(Ans: c)

72-An expression coined by economists to describe im economy that is growing at such a slow pace that more
jobs are being lost than are being added:
a. Stagflation
b. Recession
c. Growth Recession
d. Ritchet Inflation
(Ans: c)

73-Which five year plan in India gave emphasis on Co-operative Federalism?

a. Ninth five year plan
b. Tenth five year plan
c. Eleventh five year plan
d. Twelfth five year plan
(Ans: a)

74-Which Five year plan in India had ‘poverty alleviation’ as one of its objectives?
a. First five year plan
b. Third five year plan
c. Fifth five year plan
d. Seventh five year plan
(Ans: c)

75-Who has contributed the modem theory of interest rate determination?

a. Paul A. Samuelson
b. Gunnar Myrdal
c. Knut Wicksell
d. J.R. Hicks
(Ans: d)

76-Whose name is associated with the “Uncertainty-bearing theory of profit”?

a. J. Schumpeter
b. F.H. Knight
c. J.B. Clark
d. F.W. Watker
(Ans: b)

77-Who has sought to measure Consumer’s Surplus with the help of indifference curve technique?
a. Alfred Marshall
b. Edgeworth
c. J.R. Hick
d. Pareto
(Ans: c)

78-Who among the following has given the modem theory of distribution?
a. Nicholas Kaldor
b. Wicksteed
c. David Ricardo
d. Mrs. Joan Robinson
(Ans: a)

79-ln a free enterprise economy, which among the following are the determinants of Investment?
a. Rate of interest
b. Marginal efficiency of capital
c. Both A and B
d. None of the above
(Ans: c)

80- _____ factors determine the position and slope of consumption curve.
a. Objective
b. Subjective
c. Both A and B
d. None of the above
 (Ans: b)

81-Keynes believed that the equality between savings and investment is brought about by:
a. Rate of interest
b. Changes in income
c. Availability of capital
d. Marginal efficiency of investment
(Ans: b)

82-Which among the following is NOT an assumption of Pareto optimality?

a. Every consumer wishes to maximize his level of satisfaction.
b. All the factors of production are used in the production of every commodity.
c. Conditions of perfect competition exist making all the factors of production perfectly mobile
d. The concept of utility is cardinal and cardinal utility function of every consumer is given.
(Ans: d)

83-“Money is a matter of functions four, a medium, a measure, a standard and _______”. What is the fourth
function of money indicated in this popular phrase?
a. A stock
b. A flow
c. A store
d. A payment
(Ans: c)

84-Which of the following measure of the high-power money supply (H) has been used by RBI of India
a. Currency held by the public + Other deposits with the RBI
b. Cash reserves of the commercial banks + Other deposits with the RBI
c. Currency held by the public + cash reserves of the commercial banks + other deposits with
the RBI
d. Currency held by the public + cash reserves of the commercial banks + Time deposits of the
commercial banks + other deposits with the RBI
(Ans: c)

85-Broad Money (M3) constitutes currency with public plus demand deposits with banks plus time deposits
with bank plus _______
a. Other deposits with the RBI
b. Post office deposits
c. Government deposits with RBI
d. Bankers deposits with RBI
(Ans: a)

86-For measuring the changes in the price level of the country, which among the following index number is
used
a. Cost of living index number
b. Production index number
c. Security Price index number
d. Whole sale price index number
(Ans: d)

87-The Heckscher-Ohlin approach to international trade provides important insights, in

a. Gains from trade
b. Effect of trade on production and consumption
c. Effect of trade on the incomes of production factors
d. All of the above
(Ans: d)

88-Under free exchange markets the rate of foreign exchange is determined by:
a. Balance of Payments theory
b. Mint par theory
c. Purchasing power parity theory
d. None of the above
(Ans: a)

89-When national income is calculated with reference to a base year, it is called:

a. Nominal national income
b. Net national income
c. Real national income
d. Gross national income
(Ans:c)

90-Isoguants are right angled only when:

a. Factors are perfect substitutes
b. Factors are neutral
c. Factors are perfect complements
d. Factors are scarce
(Ans:c)

91-Which of the following is known as long run average cost curve?

a. Learning curve
b. Envelope curve
c. Equal product curve
d. Phillips curve
(Ans:b)

92-Identify which of the following is NOT a correct match?

a. World Bank provides loans for reconstruction and development of economies

b. IMF helps in correcting balance of payments

c. RBI provides technical consultancy to Asian countries

 d. WTO Generally forbids the use of quantitative restrictions on trade
(Ans: c)

93-In a perfectly competitive market a firm in the long run will be in equilibrium when:
a. AC =MC
b. AR = MR
c. MR = MC
d. P=AR=MR=AC=MC
(Ans: d)

94-Which market structure symbolizes the existence of ‘few sellers’?

a. Oligopoly
b. Monopoly
c. Monopolistic competition
d. Perfect competition
(Ans:a)

95-Which of the following is a characteristic of capital as a factor of production?

a. It never depreciates
b. It is fixed in supply
c. It is an active factor of production
d. It is a passive factor of production
(Ans: d)

96-By Parallel economy is meant an economy:

a. Which runs side by side of the existing economy?
b. Which has the same characteristics as the main economy?
c. Which has variety of parallel businesses?
d. Which has plentiful of black money?
(Ans: d)

97-On which law of consumption the concept of consumer’s surplus is based?

a. Engel’s law
b. Law of demand
c. First law of Gossen
d. Second law of Gossen
(Ans: c)

98-Which among the following has not been a measure adopted by the government to unearth black money in
India?
a. Voluntary Disclosure schemes
b. Demonetization of currency
c. Special Bearer Bond Scheme
d. Creating civic consciousness
 (Ans: d)

99-Trace the mismatch between the policy and its year of announcement in the pairs given below:
a. National Water Policy 2002

b. New National Forest policy 1999

c. New National Mineral policy 2009

d. National Population Policy 2012

Ans: d

100-Which among the following are the factors that determine the national income of a country?
a. Quantity and Quality of factors of production
b. The state of technical knowledge
c. Economic and political stability
d. All of the above
(Ans: d)

HRM Mcqs
The meaning of the acronym HRM is ______________?

A. Human Relations Management

B. Humanistic Resource Management
C. Human Resource Management
D. Human Resourceful Management

The term used before the language of modern HRM was ___________?

A. Labour Relations
B. Personnel Management
C. Industrial Management
D. All of the above

Which of the following is not a function normally performed by HR department?

A. Accounting
B. Recruitment and Selection
C. Pay and Reward
D. Employee Relations

Which of the following statements is false?

A. Organizations are now less hierarchical in nature
B. Organizations are now generally focusing upon domestic rather than international
matters
C. Organizations have adopted more flexible norms
D. Organizations have been subject to a raft of organizational change programs

Human Resource Management is______________?

A. Employee oriented
B. Employer oriented
C. Legally oriented
D. None of the above

Scope of the HRM includes ______________?

A. Retirement and separation of employees

B. HR training and development
C. Industrial relations
D. All of the above

Human Resource Management (HRM) is_________?

A. A Staff function
B. A line function
C. A staff function, line function and accounting function
D. All of the above

The objectives of HRM are categorized as _____________?

A. Personal objectives
B. Functional objectives
C. Organisational and social objectives
D. All of the above

The scope of HRM does not include ____________?

A. Retirement of employees
B. Manpower planning
C. Training of employees
D. Maintenance of accounts

The meaning of the acronym ‘SHRM’ is ____________?

A. Short-term Human Resource Management

B. Strategic Human Resource Management
C. Strategestic Human Resource Management
D. Strategic Humane Resource Management

Recruitment is widely viewed as a ______________?

A. positive process
B. negative process
C. positive as well as negative process
D. none of the above processes

Recruitment policy usually highlights need for establishing ____________?

A. job specification
B. job analysis
C. job description
D. none of the above

The process of developing the applicant’s pool for job openings in an organization is
called___________?

A. Hiring
B. Recruitment
C. Selection
D. Retention

A brief write-up of what the job is all about is ____________?

A. job finding
B. job summary
C. job analysis
D. job specification

A job specification is one of the areas of ___________?

A. job analysis
B. job design
C. job description
D. job summary

The division of the total task to be performed into a manageable and efficient unit
is____________?

A. a job design
B. a job specification
C. a job analysis
D. a job description

Which of the following is the area from which applicants can be recruited?

A. Employment Lines
B.Employees’ Association
C. Labour Market
D. Labour Schemes

For forecasting the demand for manpower, the important techniques used
are_____________?

A. Delphi Techniques
B. Statistical Techniques
C. Work Study Techniques
D. All of the above

Selection of the candidates is done out of______________?

A. Target population
B. internal sources
C. external sources
D. internal as well as external sources

HRM is considered as____________?

A. a reactive function
B. a proactive function
C. an auxiliary function
D. an auxo-reactive function

A job design is ___________?

A. the design involving maximum acceptable job design qualities to perform a job
B. the division of total task to be performed into manageable and efficient units
C. a systematic way of designing and determination of the worth of a job
D. none of the above

According to Edwin Flippo, the first and immediate product of job analysis is__________?

A. the job description

B. the job design
C. the job production
D. the job specification
One of the important organizational factors affecting ‘Job Design’ is ___________?

A. Workflow
B. Autonomy
C. Feedback
D. Diversity

Behavioral factors affecting job design are _____________?

A. Autonomy
B. Diversity
C. Feedback
D. All of the above

Factors affecting job design are ____________?

A. behavioral factors
B. environmental factors
C. organizational factors
D. all of the above

Organisational factors affecting job design are ______________?

A. workforce and cultural factors

B. employee availability and abilities
C. ergonomics and cultural factors
D. feedback and diversity factors

The procedure for determining the duties and skill requirements of a job and the kind of
person who should be hired for it is ______________?

A. job analysis
B. job design
C. job recruitment
D. job description

A list of the duties, responsibilities, reporting relationship, working conditions and

supervisory responsibilities of a job as a product of a job analysis is _____________?

A. job enlargement
B. job design
C. job description
D. job enlistment

Job Characteristics Model is proposed by ____________?

A. Hockman and Coldham
B. Hockman and Oldcham
C. Hackman and Oldham
D. Horkman and Olatham

The Integrated System Model of Strategic Human Resource Manaqement acknowledges

the existence within the organisation of _______________?

A. multiple cultural and strategic environment

B. multiple stakeholders
C. multiple recruitment integrated system
D. multiple structural organisations

One of the dimensions included in the Harvard Model is ______________?

A. HR outcomes interest
B. Behavioral interest
C. Stakeholders interest
D. Performance interest

Manpower inventory involves ________________?

A. the classification of the inventory of workers in an organisation in addition to the qualities.

B. the classification of characteristics of personnel in an organisation, in addition to
counting their number.
C. the classification of characteristics of managers’ qualities in addition to their number.
D. the classification of characteristic features of functions for inventory in addition to the total
number of functions.

One of the external sources of recruitment is ____________?

A. retired managers and employees

B. dependents of deceased employees
C. gate hiring
D. none of the above
(more…)

Selection is_________?

A. Subjective
B. Objective
C. Normative
D. Positive

Recruitment__________________
A. follows selection
B. precedes selection
C. matches selection
D. none of the above

Manpower inventory is ____________?

A. to find out how manpower is to be utilized

B. to prepare inventory for scheduling manpower
C. the data collected about the present employees of an organization
D. the data as calculated by demand forecast and compared with inventory in respect of
manpower

E-recruiting methods include____________?

A. internet job boards

B. career websites
C. employer websites
D. all of the above

The Job Characteristics Model is one of the most influential attempts to____________?

A. design jobs with increased motivational properties

B. assign jobs with proper motivational properties
C. analyse jobs with increase and proper motivation
D. describe jobs with increase motivation for proper jobs

High job satisfaction is the outcome of which of the following core dimensions described by
the Job Characteristics Model?

A. Task identity
B. Task significance
C. Feedback
D. Autonomy

Low absenteeism and turnover is the outcome of which of the following core dimensions
described by the Job Characteristics Model

A. Autonomy
B. Feedback
C. Task Identity
D. Task Significance

Which of the following factors is one of the environmental factors affecting job description:
A. Workflow and culture
B. Autonomy and feedback
C. Employee availability and abilities
D. Culture and diversity

A broad, general and written statement of a specific job based on the findings of an
analysis is called as __________?

A. Specific Job Design

B. Job Identification
C. Specific Particular Analysis
D. Job Description

The Michigan Model emphasis the following functions and their interrelates.

A. selection, recruitment, induction and promotions

B. appraisal, rewards, promotions and retention
C. selection, recruitment, rewards and promotion
D. selection, appraisal, rewards and human resource development

The Integrated system model is also known as ___________?

A. Harvard Model
B. Michigan Model
C. Integrated Model
D. Warwick System Model

A general statement or understanding which provides guidelines for decision-making to

H.R. managers in respect of various H.R. functions and activities is known as
____________?

A. H.R. Vision statement

B. H.R. Philosophy
C. H.R. Mission statement
D. H.R. Policy

When an interviewer prepares a list of questions in advance and asks those question to the
candidate to obtain the information from him; it is called ___________?

A. a structured interview
B. a well-organized interview
C. a systematic type interview
D. none of the above
When an interviewer asks the questions to the candidate according to the response received
from him and the questions asked are not pre-determined in such an interview, it is called
___________?

A. unprepared type of interview

B. unstructured interview
C. unconditional interview
D. none of the above

Job identification is one of the components of _____________?

A. job specification
B. job design
C. job description
D. job evaluation

systematic and orderly process of determining the worth of a job in relation to other jobs is
____________?

A. worth job specification

B. job description
C. job evaluation
D. job identification

A broad statement of the purpose, scope, duties and responsibilities of a particular job
is___________?

A. job specification
B. job description
C. job analysis
D. job design

Job descriptions are also called as____________?

A. Task oriented
B. Task analysis
C. performance oriented
D. Credit analysis

Finance Mcqs for Preparation. Financial Management, Financial Accounting Multiple Choice
Questions and Business Finance Mcqs. Prepare yourself for Finance/ Accounts Jobs.Business
Finance. Learn finance with multiple choice questions and answers on a number of topics related
to financial management and financial markets & institutions.

___________ is concerned with the acquisition, financing, and management of assets with
some overall goal in mind.

A. Financial management
B. Profit maximization
C. Agency theory
D. Social responsibility

Having some overall goal in mind, financial management is concerned with:

A. Acquisition of assets
B. Financing of assets
C. Management of assets
D. All of them

The investment decision is the most important of the firm’s three major decisions, when it
comes to:

A. Value creation
B. Value addition
C. Value proposition
D. Value deletion

Annual cash dividends divided by annual earnings; or alternatively, dividends per share
divided by earning per share is termed as:

A. Earning per share ratio

B. Proposed dividend ratio
C. Dividend payout ratio
D. Expected dividend ratio

Profit maximization is the maximizing a firm’s Earning:

A. Before Tax
B. After Tax
C. Both A and B
D. None of Them

An individual authorized by another person, called the principle, to act on the latter’s on
behalf is known as an/a:

A. Agent
B. Servant
C. Subordinate
D. Assistant

Stakeholders include:

A. Stakeholders
B. Creditors and customs
C. Employees and suppliers
D. All of Them

All the constituencies with a stake in the fortunes of the company are termed as:

A. Stakeholders
B. Directors
C. Chief executives
D. Subordinates

The system by which companies are managed and controlled is known as:

A. Management System
B. Strategic System
C. Corporate Governance
D. Internal System

Corporate governance encompasses the relationship among a company’s:

A. Shareholders and board of director

B. Board of directors and senior management
C. Shareholders and senior management
D. Shareholders, board of directors and senior management

Finance Mcqs for Preparation. Financial Management, Financial Accounting Multiple Choice
Questions and Business Finance Mcqs. Prepare yourself for Finance/ Accounts Jobs.Business
Finance. Learn finance with multiple choice questions and answers on a number of topics related
to financial management and financial markets & institutions.

The Board of Directors sets company-wide policy and advices the CEO and other senior
executies, who manage the company’s:

A. Managerial activities
B. Year-to-Year activities
C. Day-to-Day activities
D. Financial activities
A major facet of financial management involves providing the financing necessary to
support:

A. Liabilities
B. Debts
C. Loans
D. Assets

The market price of a firm’s stock represents the focal judgment of all market participants
as to the value of the:

A. Particular market
B. Particular firm
C. Particular creditor
D. Particular debtor

Agency theory suggests that managers(the agents), particularly those of large , publically-
owned firms, may have different objectives from those of the:

A. Workers
B. Subordinates
C. Shareholders
D. Employees

Maximizing Shareholder wealth:

A. Relieves the firms responsibility towards society

B. Does not relieve the firm’s responsibility towards society
C. Partially relives the firm’s responsibility towards society
D. None of Them

Earning per share is computed as:

A. ____________Earning After Tax_____________

No of common shares outstanding

B. ____No of common shares outstanding___

Earning after Tax

C. ____Earning before Tax____

Common shares

D. None of Them

Period costs include which of the following?

A. Selling expense
B. Raw material
C. Direct labor
D. Manufacturing overhead

Product costs include which of the following?

A. Selling expenses
B. General expenses
C. Manufacturing overhead
D. Administrative expenses

Financial policy is evaluated by which of the following?

A. Profit Margin
B. Total Assets Turnover
C. Debt-equity ratio
D. None of the given options

Cash flow from assets involves which of the following component(s)?

A. Operating cash flow

B. Capital spending
C. Change in net working capital
D. All of the given options

Finance Mcqs for Preparation. Financial Management, Financial Accounting Multiple Choice
Questions and Business Finance Mcqs. Prepare yourself for Finance/ Accounts Jobs.Business
Finance. Learn finance with multiple choice questions and answers on a number of topics related
to financial management and financial markets & institutions.

Which of the following refers to the cash flows that result from the firm‟s day-to-day
activities of producing and selling?

A. Operating Cash Flows

B. Investing Cash Flows
C. Financing Cash Flows
D. All of the given options

Finance is vital for which of the following business activity (activities)?

A. Marketing Research
B. Product Pricing
C. Design of marketing and distribution channels
D. All of the given options

Which of the following costs are reported on the income statement as the cost of goods
sold?

A. Product cost
B. Period cost
C. Both product cost and period cost
D. Neither product cost nor period cost

Standard Company had net sales of Rs. 750,000 over the past year. During that time,
average receivables were Rs. 150,000. Assuming a 365-day year, what was the average
collection period?

A. 5 days
B. 36 days
C. 48 days
D. 73 days

Which of the following terms refers to the use of debt financing?

A. Operating Leverage
B. Financial Leverage
C. Manufacturing Leverage
D. None of the given options

In which type of market, new securities are traded?

A. Primary market
B. Secondary market
C. Tertiary market
D. None of the given options

Which of the following ratios are particularly interesting to short-term creditors?

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

Quick Ratio is also known as_______________?

A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. Solvency Ratio

A portion of profits, which a company retains itself for further expansion, is known as:

A. Dividends
B. Retained Earnings
C. Capital Gain
D. None of the given options

Which of the following is measured by profit margin?

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

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Finance Mcqs for Preparation. Financial Management, Financial Accounting Multiple Choice
Questions and Business Finance Mcqs. Prepare yourself for Finance/ Accounts Jobs.Business
Finance. Learn finance with multiple choice questions and answers on a number of topics related
to financial management and financial markets & institutions.

Which of the following set of ratios is used to assess a business’s ability to generate
earnings as compared to its expenses and other relevant costs incurred during a specific
period of time?

A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

A company having a current ratio of 1 will have __________ net working capital.

A. Positive
B. Negative
C. zero
D. None of the given options

Which of the following equation is known as Cash Flow (CF) identity?

A. CF from Assets = CF to Creditors – CF to Stockholder

B. CF from Assets = CF to Stockholders – CF to Creditors
C. CF to Stockholders = CF to Creditors + CF from Assets
D. CF from Assets = CF to Creditors + CF to Stockholder

The difference between current assets and current liabilities is known as____________?

A. Surplus Asset
B. Short-term Ratio
C. Working Capital
D. Current Ratio

The principal amount of a bond at issue is called____________?

A. Par value
B. Coupon value
C. Present value of an annuity
D. Present value of a lump sum

Which of the following is the process of planning and managing a firm‟s long-term
investments?

A. Capital Structuring
B. Capital Rationing
C. Capital Budgeting
D. Working Capital Management

A standardized financial statement presenting all items of the statement as a percentage of

total is:

A. a common-size statement
B. an income statemen
C. a cash flow statement
D. a balance sheet

The DuPont Identity tells us that Return on Equity is affected by:

A. The DuPont Identity tells us that Return on Equity is affected by:

B. asset use efficiency (as measured by total assets turnover)
C. financial Leverage (as measured by equity multiplier)
D. all of the given options (a, b and c)

A series of constant cash flows that occur at the end of each period for some fixed number
of periods is ____________ .

A. an ordinary annuity
B. annuity due
C. multiple cash flows
D. perpetuity

Which of the following is the overall return the firm must earn on its existing assets to
maintain the value of the stock?

A. IRR (Internal Rate of Return)

B. MIRR (Modified Internal Rate of Return)
C. WACC (Weighted Average Cost of Capital)
D. AAR (Average Accounting Return)

Finance

Which of the following is known as the group of assets such as stocks and bonds held by an
investor ?

A. Stock Bundle
B. Portfolio
C. Capital Structure
D.. None of the given options

Which of the following relationships holds TRUE if a bond sells at a discount?

A. Bond Price < Par Value and YTM > coupon rate
B. Bond Price > Par Value and YTM > coupon rate
C. Bond Price > Par Value and YTM < coupon rate D. Bond Price < Par Value and YTM <
coupon rate

Which of the following strategy belongs to restrictive policy regarding size of investments
in current assets?

A. To maintain a high ratio of current assets to sales

B. To maintain a low ratio of current assets to sales
C. To less short-term debt and more long-term debt
D. To more short-term debt and less long-term debt

Which of the following statement is CORRECT regarding compound interest?

A. It is the most basic form of calculating interest.

B. It earns profit not only on principal but also on interest.
C. It is calculated by multiplying principal by rate multiplied by time.
D. It does not take into account the accumulated interest for calculation.
When real rate is high, all the interest rates tend to be ___________?

A) Higher
B) Lower
C) Constant
D) None of the given options

Profitability index (PI) rule is to take an investment, if the index exceeds___________?

A. -1
B. 0
C. 1
D. 2

Average Accounting Return is a measure of accounting profit relative to:

A. Book value
B. Intrinsic value
C. Cost
D. Market value

Which of the following is the cheapest source of financing available to a firm?

A. Bank loan
B. Commercial papers
C. Trade credit
D. None of the given options.

_______________refers to the extent to which fixed-income securities (debt and preferred

stock) are used in a firm’s capital structure?

A. Financial risk
B. Portfolio risk
C. Operating risk
D. Market risk

The use of Personal borrowing to alter the degree of financial leverage is

called__________?

A. Homemade leverage
B. Financial leverage
C. Operating leverage
D. None of the given option
_________ refers to the most valuable alternative that is given up if a particular investment
is undertaken?

A. Sunk cost
B. Opportunity cost
C. Financing cost
D. All of the given options

A model which makes an assumption about the future growth of dividends is known as:

A. Dividend Price Model

B. Dividend Growth Model
C. Dividend Policy Model
D. All of the given options

Which of the following is not a quality of IRR ?

A. Most widely used

B. Ideal to rank the mutually exclusive investments
C. Easily communicated and understood
D. Can be estimated even without knowing the discount rate

Which of the following is a series of constant cash flows that occur at the end of each period
for some fixed number of periods?

A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options

During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases
by Rs. 8,000. What will be the amount of cash received from customers for the period?

A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000

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The conflict of interest between stockholders and management is known as:

A. Agency problem
B. Interest conflict
C. Management conflict
D. Agency cost
Which of the following form of business organization is least regulated?

A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation

Which of the following ratios are intended to address the firm’s financial leverage?

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Asset Management Ratios
D. Profitability Ratios

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Balance Sheet is based upon which of the following formula?

A. Assets = Liabilities – Stockholder’s equity

B. Assets + Liabilities = Stockholder’s equity
C. Assets + Stockholder’s equity = Liabilities
D. Assets = Liabilities + Stockholder’s equity

Quick Ratio is also known as_________?

A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. None of the given options

Which of the following is a special case of annuity, where the stream of cash flows
continues forever?

A. Ordinary Annuity
B. Special Annuity
C. Annuity Due
D. Perpetuity

You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which
option do you prefer and why if you can earn 5 percent on your money?

A. Rs. 1,000 because it has the higher future value

B. Rs. 1,000 because you receive it sooner
C. Rs. 1,050 because it is more money
D. Either because both options are of equal value
Which of the following ratios are particularly interesting to shortterm creditors?

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

In which form of Business, owners have limited liability?

A. sole proprietorship
B. partnership
C. joint stock company
D. none of the above

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Which of the following item provides the important function of shielding part of income
from taxes?

A. Inventory
B. Supplies
C. Machinery
D. Depreciation

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The process of determining the present value of a payment or a stream of payments that is
to be received in the future is known as:

A. Discounting
B. Compounding
C. Factorization
D. None of the given options

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You need Rs. 10,000 to buy a new television. If you have Rs. 6,000 to invest at 5 percent
compounded annually, how long will you have to wait to buy the television?

A. 8.42 years
B. 10.51 years
C. 15.75 years
D. 18.78 years

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In which of the following type of annuity, cash flows occur at the beginning of each period?

A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options

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Between the two identical bonds having different maturity periods, the price of the ______
bond will change less than that of ______ bond.

A. long-term; short-term
B. short-term; long-term
C. lower-coupon; higher-coupon
D. None of the given options

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Which of the given area is NOT addressed by Business Finance?

A. Financing
B. Investing
C. Managing day today expenses
D. None of the given options

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A company having a current ratio of 1 will have ________ net working capital.

A. Positive
B. Negative
C. zero
D. None of the given options

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Business Finance addresses which of the following?

A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options
In which type of business, all owners share in gains and losses and all have unlimited
liability for all business debts?

A. Sole-proprietorship
B. General Partnership
C. Limited Partnerhsip
D. Corporation

Which of the following is measured by retention ratio?

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

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How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual
payment and a 5% interest rate?

A. 6 years
B. 12 years
C. 24 years
D. 48 years

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Which one of the following terms refers to the risk arises for bond owners from fluctuating
interest rates?

A. Fluctuations Risk
B. Interest Rate Risk
C. Real-Time Risk
D. Inflation Risk

Which of the following set of ratios relates the market price of the firm’s common stock to
selected financial statement items?

A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

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If a firm uses cash to purchase inventory, its quick ratio will?

A. Increase
B. Decrease
C. Remain unaffected
D. Become zero

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Standard Corporation sold fully depreciated equipment for Rs.5,000. This transaction will
be reported on the cash flow statement as a(n):

A. Operating activity
B. Investing activity
C. Financing activity
D. None of the given options

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Which of the following ratios are particularly interesting to short term creditors?

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to
employ which of the following type of business?

A. Sole-proprietorship
B. Partnership
C. Corporation
D. None of the given options

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When the market’s required rate of return for a particular bond is much less than its
coupon rate, the bond is selling at:

A. Premium
B. Discount
C. Par
D. Cannot be determined without more information

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Which of the following statement is considered as the accountant’s snapshot of firm’s

accounting value as of a particular date?
A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement

The most important item that can be extracted from financial statements is the actual
________ of the firm.

A. Net Working Capital

B. Cash Flow
C. Net Present Value
D. None of the given options

A firm has paid out Rs. 150,000 as dividends from its net income of Rs. 250,000. What is
the retention ratio for the firm?

A. 12%
B. 25%
C. 40%
D. 60%

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Which of the following ratios is NOT from the set of Asset Management Ratios?

A. Inventory Turnover Ratio

B. Receivable Turnover
C. Capital Intensity Ratio
D. Return on Assets

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Which of the following statement about bond ratings is TRUE?

A. Bond ratings are typically paid for by a company’s bondholders.

B. Bond ratings are based solely on information acquired from sources other than the bond
issuer.
C. Bond ratings represent an independent assessment of the credit-worthiness of bonds.
D. None of the given options

If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be the worth
of your amount after 4 years if interest is compounded annually?

A. Rs. 5,400
B. Rs. 5,900
C. Rs. 6,600
D. Rs. 6,802

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Which of the following statement is TRUE regarding debt?

A. Debt is an ownership interest in the firm.

B. Unpaid debt can result in bankruptcy or financial failure.
C. Debt provides the voting rights to the bondholders.
D. Corporation’s payment of interest on debt is fully taxable.

A firm reports total liabilities of Rs. 300,000 and owner’s equity of Rs. 500,000. What
would be the total worth of the firm’s assets?

A. Rs. 300,000
B. Rs. 500,000
C. Rs. 800,000
D. Rs. 1100,000

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Which of the following measure reveals how much profit a company generates with the
money shareholders have invested?

A. Profit Margin
B. Return on Assets
C. Return on Equity
D. Debt-Equity Ratio

If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what
will be the future value of your savings?

A. Rs. 1,000
B. Rs. 1,244
C. Rs. 1,331
D. Rs. 1,464

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In case of international business which of the given factor(s) must be considered?

A. Role of foreign exchange

B. Balance of payments
C. Attitude of Governments
D. All of the given options
Which of the following refers to the difference between the sale price and cost of inventory?

A. Net loss
B. Net worth
C. Markup
D. Markdown

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Who of the following make a broader use of accounting information?

A. Accountants
B. Financial Analysts
C. Auditors
D. Marketers

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The Yield to Maturity of a bond is the same as_____________?

A. The present value of the bond

B. The bonds internal rate of return
C. The future value of the bond
D. None of these

Choose from the following a symptom which is not relating to “Over Trading”?

A. Cash shortage
B. Low inventory turnover ratio
C. Low current ratio
D. High inventory turnover ratiO

The formula to calculate the present value of a single cash flow is given by:

A. CF1 / (1+r)n
B. C2 / (1+r)
C. C0 + C (1+r)n
D. None of these

The effect of purchasing power or inflation on present value is important because

_________?

A. It increases the real value of cash flows received in the future

B. It reduces the real value of cash flows received in the future
C. It has no effect on real value of cash flow received in the future
D. None of these
An Asset is __________?

A. Sources of funds
B. Use of funds
C. Inflow of funds
D. None of these

If a company revaluates its fixed assets, the current ratio of the company will:

A. Improve if assets are revalued upward

B. Remain unaffected
C. Improve if assets are revalued downwards
D. Undergo change only if liabilities are remaining constant

If we were studying a sample of 100 students and their examination performance and if the
standard deviation of the list of results was say 14, then we could calculated the standard
error by ___________?

A. Dividing the square root of the number of items in the sample by the mean
B. Dividing standard deviation by number of items in the sample
C. Dividing the standard deviation by the square root of the number of items in the sample
D. We cannot calculate standard error on account of inadequacy of information

Rule of 72 as a short cut method is explained by the formula:

A. 72 divided by the annual interest rate

B. Annual interest rate dividend by 72
C. 72 divided by (annual interest rate multiplied by discount factor)
D. None of these

Full Form of BCCI ?

A. Bank of Commerce and Cooperation International

B. Bank of Central Cooperation International
C. Bank of Credit and Commerce International
D. None of These

Submitted by: Farman Hussain

The Capital Asset Pricing Model calculate expected:

A. Risk
B. Risk and Return
C. Return
D. None of the above
 Auditing:

____________ is a systematic examination of the books and records or a business?

A. Auditing
B. Vouching
C. Verification
D. Checking

The term ‘Audit’ is derived from a Latin word “audire” which means___________?

A. To inspect
B. To examine
C. To hear
D. To investigate

The main object of an audit is _____________?

A. Expression of opinion
B. Detection and Prevention of fraud and error
C. Both (A) and (B)
D. Depends on the type of audit.

An auditor is like a_______________?

A. Blood haunt
B. Watch dog
C. May both according to situation
D. None of these

Process of verifying the documentary evidences of transactions are known as___________?

A. Auditing
B. Testing
C. Vouching
D. Verification

Auditing is compulsory for____________?

A. Small scale business

B. Partnership firms
C. Joint stock Companies
D. Proprietary Concerns

Concealment of shortage by delaying the recording of cash receipts is known

as_____________?
A. Embezzlement
B. Misappropriation
C. Lapping
D. None of these

The fundamental objective of the audit of a company is to_____________?

A. Protect the interests of the minority shareholders

B. Detect and prevent errors and fraud
C. Assess the effectiveness of the company’s performance
D. Attest to the credibility of the company’s accounts

The concept of stewardship means that a company’s directors________________?

A. Are responsible for ensuring that the company complies with the law
B. Are responsible for ensuring that the company pays its tax by the due date
C. Safeguard the company’s assets and manage them on behalf of the shareholders
D. Report suspected fraud and money laundering to the authorities

Why do auditors concentrate their efforts on material items in accounts?

A. Because they are easier to audit

B. Because it reduces the audit time
C. Because the risk to the accounts of their being incorrectly stated is greater
D. Because the directors have asked for it

Which of the following is NOT the responsibility of a company’s directors?

A. Reporting to the shareholders on the accuracy of the accounts

B. Establishment of internal controls
C. Keeping proper accounting records
D. Supplying information and explanations to the auditor

International auditing standards are issued by the______________?

A. International Accounting Standards Board

B. Financial Accounting Standards Board
C. International Standards Board
D. Auditing Practices Board

Which of the following is not true about opinion on financial statements?

A. The auditor should express an opinion on financial statements.

B. His opinion is no guarantee to future viability of business
C. He is responsible for detection and prevention of frauds and errors in financial
statements
D. He should examine whether recognised accounting principle have been consistently

A sale of Rs. 50.000 to A was entered as a sale to B. This is an example of____________?

A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle

When an auditor is proposed for removal from office, which one of the following is he NOT
permitted to do?

A. Circulate representations to members

B. Apply to the court to have the proposal removed
C. Speak at the AGM/EGM where the removal is proposed
D. Receive notification of the AGM/EGM where the removal is proposed

Which one of the following is NOT a duty of the auditor?

A. Duty to report to the company’s bankers

B. Duty to report to the members
C. Duty to sign the audit report
D. Duty to report on any violation of law

Assuming that it is not the first appointment of the auditor, who is responsible for the
appointment of the auditor?

A. The shareholders in a general meeting

B. The managing director
C. The board of directors in a board meeting
D. The audit committee

The independent auditor’s primary responsibility is to______________?

A. the directors
B. the company’s creditors (payables)
C. the company’s bank
D. the shareholders

How long is the auditor’s term of office?

A. Until the audit is complete

B. Until the financial statements are complete
C. Until the next AGM (Annual General Meeting)
D. Until the directors remove them
Which of the following is correct in relation to materiality?

A. A matter is material only if it changes the audit report

B. A matter is material if the auditor and the directors both decide that further work needs to be
done in the area under question
C. A matter is material only if it affects directors’ emoluments
D. A matter is material if its omission or misstatement would reasonably influence the
decisions of an addressee of the auditors’ report

Which one of the following is NOT considered to be part of planning?

A. Background i.e. industry

B. Previous year’s audit i.e. any qualifications in the report
C. Considering the work to be done by the client staff e.g. internal audit
D. Considering whether the financial statements show a true and fair view

Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?

A. Compliance risk
B. Detection risk
C. Control risk
D. Inherent risk

Which of the following should NOT be considered at the planning stage?

A. The timing of the audit

B. Analytical review
C. Last year’s written representation letter
D. Obtaining written representations

At the planning stage you would NOT consider____________?

A. the timing of the audit

B. whether corrections from the inventory count have been implemented
C. last year’s audit
D. the potential use of internal audit

Which of the following describes sampling risk?

A. The risk of the auditor carrying out a test the wrong way round
B. The risk of reliance on unsuitable audit evidence
C. The risk that the sample does not reflect the population
D. The risk of the auditor reaching the wrong conclusions from testing

Which of the following is NOT an accepted method of selection in sampling?

A. Systematic selection
B. Pervasive selection
C. Random selection
D. Haphazard selection

Which of the following are you unlikely to see in the current file of auditors’ working
papers?

A. Memorandum & articles of association

B. Audit planning memorandum
C. Summary of unadjusted errors
D. Details of the work done on the inventory count

According to ISA 500, the strength of audit evidence is determined by which two qualities?

A. Appropriateness & competence

B. Sufficiency & appropriateness
C. Reliability & extensiveness
D. Objectivity & independence

Which of the following is normally the most reliable source of audit evidence?

A. Internal audit
B. Suppliers’ statements
C. Board minutes
D. Analytical review

The degree of effectiveness of an internal control system depends on:

A. The design of the internal control system and the implementation of the controls
B. The design of the internal controls and the implementation of the control system
C. The implementation of the controls and the correctness of the accounting records
D. The design of the internal control system and the correctness of the accounting records

According to ISA 315, which of the following is NOT an element of the control
environment?

A. Participation of management
B. Information processing
C. Commitment to competence
D. Human resource policies and practices

According to ISA 315, which of the following is NOT a control activity?

A. Performance reviews
B. Physical controls
C. Organizational structure
D. Segregation of duties

Lapping is also known as___________?

A. Teeming and lading

B. Looping
C. Embezzlement
D. Hacking

Goods sent on approval basis’ have been recorded as ‘Credit sales’. This is an example
of____________?

A. Error of principle
B. Error of commission
C. Error of omission
D. Error of duplication

Which of the following statements is not true?

A. Management fraud is more difficult to detect than employee fraud

B. Internal control system reduces the possibility of occurrence of employee fraud and
management fraud
C. The auditor’s responsibility for detection and prevention of errors and frauds is similar.
D. All statements are correct.

Internal audit is undertaken:

A. By independent auditor
B. Statutorily appointed auditor
C. By a person appointed by the management
D. By a government auditor

The scope of internal audit is decided by the___________?

A. Shareholders
B. Management
C. Government
D. Law

Audit of banks is an example of_____________?

A. Statutory audit
B. Balance sheet audit
C. Concurrent audit
D. All of the above
Concurrent audit is a part of____________?

A. Internal check system

B. Continuous audit
C. Internal audit system
D. None of these

Audit in depth is synonymous for____________?

A. Complete audit
B. Completed audit
C. Final audit
D. Detailed audit

Institute of Chartered Accountants of Pakistan was established in____________?

A. 1949
B. 1956
C. 1961
D. 1972

Which of the following statements is not true about continuous audit?

A. It is conducted at regular interval

B. It may be carried out on daily basis
C. It is needed when the organization has a good internal control system
D. It is expensive

Internal check is carried on by___________?

A. Staff specially appointed for the purpose

B. Internal auditor
C. Supervisor of the staff
D. Members of the staff

Errors of Omission are_____________?

A. Technical errors
B. Errors of principle
C. Compensating errors
D. None of the above

Window dressing implies_______________?

A. Curtailment of expenses
B. Checking of Wastages
C. Under valuation of assets
D. Over Valuation of assets

Test Checking refers to___________?

A. Testing of accounts and records

B. Checking of selected number of transactions
C. Examination of adjusting and closing entries
D. Checking of all transactions recorded

Which of the following statements is not correct about materiality?

A. Materiality is a relative concept

B. Materiality judgments involve both quantitative and qualitative judgments
C. Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of
an informed decision maker who will rely on the financial statements
D. At the planning state, the auditor considers materiality at the financial statement level
only

______the audit risks_______the materiality and_________the audit effort.

A. Lower, Higher, Lower

B. Lower, Lower, Higher
C. Higher, Lower, Lower
D. Lower, Higher, Higher

When issuing unqualified opinion, the auditor who evaluates the audit findings should be
satisfied that the___________?

A. Amount of known misstatement is documented in working papers

B. Estimates of the total likely misstatement is less than materiality level
C. Estimate of the total likely misstatement is more than materially level
D. Estimates of the total likely misstatement cannot be made

In determining the level of materiality for an audit, what should not be considered?

A. Prior year’s errors

B. The auditor’s remuneration
C. Adjusted interim financial statements
D. Prior year’s financial statements

Analytical procedures issued in the planning stage of an audit, generally

A. Helps to determine the nature, timing and extent of other audit procedures
B. Directs attention to potential risk areas
C. Indicates important aspects of business
D. All of the above

Which of the following statements is most closely associated with analytical procedure
applied at substantive stage?

A. It helps to study relationship among balance sheet accounts

B. It helps to discover material misstatements in the financial statements
C. It helps to identify possible oversights
D. It helps to accumulate evidence supporting the validity of a specific account balance

Verification refers to_________?

A. Examining the physical existence and valuation of assets.

B. Examining the journal and ledger
C. Examination of vouchers related to assets.
D. None of the above.

Stock should be valued at_________?

A. Cost
B. Market price
C. Cost or Market price whichever is lower.
D. Cost less depreciation.

Floating assets are valued at____________?

A. cost
B. Market price
C. Cost or market price whichever is lower
D. Cost less depreciation

Goods sold on the basis of ‘sales or return ‘ should:

A. Be included in the stock

B. Not be included in the stock
C. Not be checked by auditor
D. None of the above

Of the following, which is the least persuasive type of audit evidence?

A. Bank statements obtained from the client

B. Documents obtained by auditor from third parties directly.
C. Carbon copies of sales invoices inspected by the auditor
D. Computations made by the auditor

Which of the following statements is, generally, correct about the reliability of audit
evidence?

A. To be reliable, evidence should conclusive rather than persuasive

B. Effective internal control system provides reliable audit evidence
C. Evidence obtained from outside sources routed through the client
D. All are correct.

In an audit of financial statements, substantive tests are audit procedures that __________?

A. May be eliminated for an account balance under certain conditions

B. Are designed to discover significant subsequent events
C. Will increase proportionately when the auditor decreases the assessed level of control risk
D. May be test of transactions, test of balance and analytical procedures

The nature, timing and extent of substantive procedures is related to assessed level of
control risk

A. Randomly
B. Disproportionately
C. Directly
D. Inversely

Which of the following factors is most important in determining the appropriations of

audit evidence?

A. The reliability of audit evidence and its relevance in meeting the audit objective
B. The objectivity and integrity of the auditor
C. The quantity of audit evidence
D. The independence of the source of evidence

When is evidential matter, generally, considered sufficient?

A. When it constitutes entire population

B. When it is enough to provide a basis for giving reasonable assurance regarding
truthfulness
C. When it is objective and relevant
D. When auditor collects and evaluates it independently

Which of the following is not corroborative evidence?

A. Minutes of meetings
B. Confirmations from debtors
C. Information gathered by auditor through observation
D. Worksheet supporting consolidated financial statements

What would most appropriately describe the risk of incorrect rejection in terms of
substantive testing?

A. The auditor concludes balance is materially correct when in actual fact it is not
B. The auditor concludes that the balance is materially misstated when in actual fact it not
C. The auditor has rejected an item for sample which was material
D. None of the above

Which of the following affects audit effectiveness?

A. Risk of over reliance

B. Risk of incorrect rejection
C. Risk of incorrect acceptance
D. Both A and C

What would most effectively describe the risk of incorrect acceptance in terms of
substantive audit testing?

A. The auditor has ascertained that the balance is materially correct when in actual fact it
is not
B. The auditor concludes the balance is materially misstated when in actual fact is not
C. The auditor has rejected an item from sample which was not supported by documentary
evidence
D. He applies random sampling on data which is inaccurate and inconsistent

Audit programme is prepared by____________?

A. The auditor
B. The client
C. The audit assistants
D. The auditor and his audit assistants

The working papers which auditor prepares for financial statements audit
are___________?

A. Evidence for audit conclusions

B. Owned by the client
C. Owned by the auditor
D. Retained in auditor’s office until a change in auditors
The quantity of audit working papers complied on engagement would most be affected
by__________?

A. Management’s integrity
B. Auditor’s experience and professional judgment
C. Auditor’s qualification
D. Control risk

Which of the following best describes the primary purpose of audit programme
preparation?

A. To detect errors or fraud

B. To comply with GAAP appropriate evidence
C. To gather sufficient
D. To assess audit risk

Which of the following is not an advantage of the preparation of working paper?

A. To provide a basis for review of audit work

B. To provide a basis for subsequent audits
C. To ensure audit work is being carried out as per programme
D. To provide a guide for advising another client on similar issues

The auditor’s permanent working paper file should not normally, include__________?

A. Extracts from client’s bank statements

B. Past year’s financial statements
C. Attorney’s letters
D. Debt agreements

For what minimum period should audit working papers be retained by audit firm?

A. For the time period the entity remains a client of the audit firm.
B. For a period of ten years
C. For a period auditor opines them to be useful in servicing the client
D. For the period the audit firm is in existence.

Which of the following factors would least likely affect the quantity and content of an
auditor’s working papers

A. The assessed level of control risk

B. The possibility of peer review
C. The nature of auditor’s report
D. The content of management representation letter
Which of the following statement is true regarding an auditor’s working papers?

A. They document the level of independence maintained by the auditor

B. They should be considered as the principle support for the auditor’s report
C. They should not contain details regarding weaknesses in the internal control system
D. They help the auditor to monitor the effectiveness of the audit firm’s quality control

Which of the following statement best describes the understanding with respect to
ownership and custody of working papers prepared by an auditor?

A. The working papers may be obtained by third parties when they appear to be relevant
to issues raised in litigation
B. The safe custody of working papers is the responsibility of client, if kept at his premises
C. The working papers must be retained by an audit firm for a period of 10 years
D. Successor auditors may have access to working papers of the predecessor auditors. The
approval of client is not required.

The current file of the auditor’s working papers, generally, should include____________?

A. A flowchart of the internal controls

B. Organisation charts
C. A copy of financial statements
D. Copies of bond and debentures

Auditing is what?

A. Reporting the financial information

B. Examination of financial statements
C. Preparation financial statements
D. maintaining the ledger records