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QUESTION BANK
BBA
SEMESTER II
1
FOR PRIVATE CIRCULATION
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2
QUESTION BANK
COST ACCOUNTING
BBA 102
3
QUESTION BANK
COST ACCOUNTING - BBA 102
BBA - II
UNIT - I
I Test Your Skills:
(a) Multiple Choice Questions:
1 ________aims at safeguarding the interest of the business and its proprietors and others
Connected with it.
A. Cost Accounting
B. Management Accounting
C. Financial Accounting
D. All of the above
ANSWER: C
2 Break -even point means point of____________

A. No profit no loss
B. Profit
C. Loss
D. Normal returns
ANSWER: A
3 The technique and process of ascertaining cost is termed as____________

A. Cost accountancy
B. Costing
C. Auditing
D. Cost apportionment
ANSWER: B
4 Cost accounting is a tool of ___________________ accounting.

A. Management Accounting
B. Financial Accounting
C. Both a & b
D. None of the above
ANSWER: A
4
5 Accounting may be classified into financial accounting and _____________
A. Auditing
B. Management Accounting
C. Cost accounting
D. Both b) and c)
ANSWER: B
6 Incremental cost is a type of:

A. Differential cost
B. Out-of -pocket cost
C. Conversion cost
D. None
ANSWER: A
7 Variable cost per unit:

A. Remains fixed
B. Fluctuates with the volume of production
C. Varies in proportion to volume of sales
D. Varies with budget
ANSWER: B
8 Fixed cost per unit increases when:

A. Production volume decreases
B. Production volume increases
C. Variable cost per unit decreases
D. Variable cost per unit increases
ANSWER: A
9 Opportunity cost helps in:

A. Ascertainment of cost
B. Controlling cost
C. Making managerial decisions
D. All of the above
ANSWER: C
10 ______is the cost of a finished product or work-in-progress comprising direct labor and
manufacturing overhead. It is production cost less the cost of raw material but including
the gains and losses in weight or volume of direct material arising due to production
A. Conversion cost
5
B. Normal cost
C. Traceable cost
D. Avoidable cost
ANSWER: A
11 A cost which does not involve any cash outflow is called_______ or ____________
A. Marginal cost
B. Replacement cost
C. Avoidable cost, unavoidable cost
D. Notional cost, Imputed cost
ANSWER: D
12 A cost is one that has already been incurred and cannot be avoided by decisions
taken in the future:
A. Sunk cost
B. Shut Down cost
C. Differential cost
D. Common cost
ANSWER: A
13 Direct material is a ___________

A. Fixed cost
B. Variable cost
C. Semi-variable cost
D. Step cost
ANSWER: B
14 Which of the following documents is used for issuing materials to the production
departments?
A. Purchase requisition
B. Material requisition
C. Goods received notes
D. None
ANSWER: B
15 A bill of materials is:

A. A schedule of materials needed for a job.
B. An invoice for the materials supplied.
6
C. An acknowledgement of the receipt of materials
D. All of the above
ANSWER: A
16 ________is a devise for breaking up or separating costs into smaller sub-divisions.

A. Cost centre
B. Cost unit
C. Both A and B
D. Neither A nor B
ANSWER: B
17 In case of Weighted Average Price method, the need for calculating a new issue price
arises every time when:
A. A new purchase is made
B. A new issue is made
C. Both, a new issue and new purchase is made
D. Both A and C
ANSWER: A
18 LIFO method of pricing material issues is suitable for:

A. Bulky material
B. Perishable materials
C. Bulky and non-perishable materials
D. Non-perishable material
ANSWER: C
19 A firm using base stock method of pricing materials issue may adopt:
A. FIFO Method
B. LIFO Method
C. Any of the two
D. None
ANSWER: C
20 Material losses may be normal or______________:

A. Abnormal
B. Average
C. Above average
D. None
ANSWER: A
7
21 Costs which are not associated with production are called:
A. Period Costs
B. Product costs
C. Sunk costs
D. Shutdown costs
ANSWER: A
22 ________ are those costs which would be changed by the managerial decision:
A. Irrelevant costs
B. Relevant costs
C. Direct costs
D. Indirect costs
ANSWER: B
23 __________costs are those which would not be affected by the managerial decision:
A. Irrelevant costs
B. Relevant costs
C. Direct costs
D. Indirect costs
ANSWER: A
24 The ______ costs are difficult to trace to a single product or it is uneconomic to do so:
A. Irrelevant costs
B. Sunk costs
C. Direct costs
D. Indirect costs
ANSWER: D
25 These costs are incurred to maintain certain facilities and cannot be quickly eliminated.
The management has little or no discretion in this cost, e.g., rent, insurance etc.:
A. Committed costs
B. Policy & managed costs
C. Discretionary costs
D. Step costs
ANSWER: A
26 The basic objective of cost accounting is ____________:

A. tax compliance
B. financial audit
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C. cost ascertainment
D. profit analysis
ANSWER: C
27 Cost Classification can be done in __________:

A. Two ways
B. Three ways
C. Four ways
D. Several ways
ANSWER: D
28 The cost which is to be incurred even when a business unit is closed is called ________:
A. Imputed Cost
B. Historical Cost
C. Sunk Cost
D. Shutdown cost
ANSWER: D
29 Direct expenses are also called _____________:

A. major expenses
B. chargeable expenses
C. overhead expenses
D. sundry expenses
ANSWER: B
30 Indirect material used in the production is classified as _______:

A. office overhead
B. selling overhead
C. distribution overhead
D. factory overhead
ANSWER: D
31 Warehouse rent is a part of _______:

A. prime cost
B. factory cost
C. distribution cost
D. production cost
ANSWER: C
9
32 Indirect Material scrap is adjusted along with ________:
A. prime cost
B. factory cost
C. labour cost
D. cost of goods sold
ANSWER: B
33 Total of all direct costs is termed as ______:

A. prime cost
B. works cost
C. cost of sales
D. cost of production
ANSWER: A
34 Audit fees is a part of __________:

A. works on cost
B. selling overhead
C. distribution overhead
D. administration overhead
ANSWER: D
35 Cost accounting concepts include all of the following expect _________:

A. planning
B. controlling
C. profit sharing
D. product costing
ANSWER: C
II Short Answer Type Questions:
1 “The term ‘cost’ must be qualified according to its context”. Discuss this statement
referring to important concepts of cost.
2 Distinguish between costing and cost accounting or Costing’ and ‘cost accounting’ are
the same.
3 What do you mean by elements of cost? Discuss the various elements of cost.
4 Define and explain the terms (a) cost centre and (b) cost unit.
5 State the difference between Bin Card and store ledger.
6 Write brief note on Continuous Physical Stock Verification
7 Explain the of Scrap and spoilage.
8 Define inventory control. Why is inventory control necessary?
10
9 Distinguish between direct material and indirect material.
10 What are the requisites of a good inventory control system?
11 What are the different methods of controlling inventory?
12 Discuss the advantages and disadvantages of centralized purchasing of raw materials.
13 Explain what is ‘minimum level’, ‘maximum level’, ‘ordering level’, quantity. How are
they determined?
14 Explain ABC analysis. What are its merits?
15 Define and explain the following terms and the treatment given in Cost Accounts:
(a) Waste
(b) Scrap
(c) Spoilage
(d) Defectives
16 “Costing is an aid to the management”. Discuss.
17 Mention with reasons the type of costing you will adopt in the following industries:
(a) Cement manufacturing,
(b) Soap manufacturing,
(c) Railways,
(d) Ship-builders.
18 Distinguish between Products costs and Period costs.
19 Explain the concept of Activity Based Costing.
20 What is meant by “Economic Order Quantity”?
21 Explain the objectives of Inventory Control.
22 Materials X and Y are used as follows: Minimum usage − 50 units each per week
Maximum usage − 150 units each per week Normal usage − 100 units each per week
Ordering quantities X = 600 units Y = 1,000 units Delivery period X = 4 − 6 weeks
Y = 2 − 4 weeks
Calculate for each material (i) Maximum level (ii) Minimum level and (iii) Ordering level.
(CMA Executive , pg. 48)
23 Ace Ltd. manufactures a product and the following particulars are collected for the year
ended March, 2013:
Monthly demand (units) 250
Cost of placing an order (₹) 100
Annual carrying cost (₹ per unit) 15
Normal usage (units per week) 50
Minimum usage (units per week) 25
Maximum usage (units per week) 75
Re-order period (weeks) 4–6
You are required to calculate:

(i) Re-order quantity
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(ii) Re-order level
(iii) Minimum level
(iv) Maximum level
(v) Average stock level.
(CMA Executive , pg.50)
24 One parcel containing two important materials was received by a factory and the invoice
pertaining to the same discloses the following information:
₹
Material-I 500 kgs. @ ₹2.00 per kg. 1,000.00
Material-II 600 kgs. @ ₹1.60 per kg. 960.00
Insurance 39.20
Sales Tax 98.00
Freight etc. 55.00
Due to mishandling in the factory’s store a loss of 10 units of material-I and 6 units of
material-II was noted. What rate would you adopt, for issuing these vital components to
the jobs? Also give your changed rate, if a provision of 10% is to be kept for probable risk
of obsolescence.
25 A company manufacturers 5,000 units of a product per month. The cost of placing an order
is₹ 100. The purchase price of the raw material is ₹ 10 per kg. The re-order period is 4 to
8 weeks. The consumption of raw materials varies from 100 kg. to 450 kg. per week. The
average weekly consumption being 275 kg. The carrying cost of inventory is 20% per
annum.
Assuming 52 weeks in a year, you are required to calculate —
(i) Re-order quantity;
(ii) Maximum level;
(iii) Minimum level; and
(iv) Average level.
26 Calculate Economic Order Quantity (EOQ) from the following:
Annual consumption 6,000 units
Cost of ordering Rs. 60
Carrying costs Rs. 2
27 From the following particulars, calculate the Economic Order Quantity (EOQ):
Annual requirements 1,600 units
Cost of materials per units Rs. 40
Cost of placing and receiving one order: Rs. 50
Annual carrying cost for inventory value 10%
12
28 Calculate EOQ from the following?
Consumption during the year = 600 units
Ordering cost Rs. 12 per order
Carrying cost 20%
Selling Price per unit Rs. 20
29 Explain the advantages that accrue in using LIFO method of pricing of valuation of raw
material stock.
30 Write short note on various stock levels.
31. Distinguish between Bill of materials and Material requisition note.
32. Stae the important requirements of material control.
33. State the advantages of centralized Purchase Department .
34. Explain the dangers of excessive/inadequate inventory levels.
35. Explain Periodic inventory System
III Long Answer Type Questions:
1 What is meant by cost accounting? In what essential respects does cost accounting differ
from financial accounting?
2 Distinguish between:
a) Cost centre and cost unit.
b) Cost allocation and cost apportionment.
3 Write short notes on:
a) Profit centre
b) Committed Fixed cost
c) Opportunity cost
d) Absorption costing
4 Distinguish between cost estimation and cost ascertainment. Explain why both are
important to a manufacturing concern.
5 Bring out clearly the working of Perpetual Inventory and Periodic Inventory Systems in
inventory management.
6 Distinguish between LIFO and FIFO methods of pricing the issues of materials, which one
do you think is better and why in case of inflationary conditions?
a) Perpetual Inventory System and Continuous Stock-taking.
b) Bill of materials and Material Requisition Note.
8 Describe briefly the various methods of costing. State giving reasons which method of
costing you would recommend for the use in the following:
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a) Chemical Works
b) Nursing Home.
c) Road Transport company
d) Painter & Decorator
e) Coal
9 Explain the following terms:
a) Cost classification
b) Cost apportionment
c) Cost allocation
d) Cost absorption
10 “Cost Accountancy, Cost Accounting and costing are synonymous terms”. Do you agree
with the statement? Support your answer with reasons.
11 Explain the concepts of ABC Analysis and JIT.
12 You have been asked to design a system of cost accounting for installation in a factory.
Describe the essentials that should be considered before you design such a system.
13 What do you mean by elements of cost ? Discuss the various elements of cost.
14 Cost accounting assists: (a) in controlling efficiency; (b) in pricing products; and (c) in
providing a basis for operating policy. Amplify these points, giving reasons for your views.
15 What are the different methods of controlling inventory?
16 What is a cost Centre ?State briefly the different types of cost centres?
17 Write the most appropriate answer from the given options in respect of the following :
The annual demand is 1,000 units. The unit price is ₹10 per unit.
The carrying cost of inventory is 10% and the ordering cost is ₹5 per order. The economic
order lot to be ordered is —
(a) 100 units
(b) 800 units
(c) 200 units
(d) 400 units.
18 From the following transactions, prepare separately the Stores Ledger Accounts, using the
following pricing methods: (i) the FIFO, (ii) the LIFO.
January 1 Opening balance 100 units @ ₹5 each
January 5 Received 500 units @ ₹6 each
January 20 Issued 300 units
February 5 Issued 200 units
February 6 Received 600 units @₹5 each
March 10 Issued 300 units
March 12 Issued 250 units
19. The following receipts and issues of materials were made during the month of January.
January 1 Opening stock 80 units @₹1.00 each
January 7 Received from vendors 40 units @ ₹1.10 each
14
Prepare the Stores Ledgers maintained under (i) the FIFO, (ii) the LIFO methods.
20 From the following details in respect of a material item for the month of Dec. 2016,
Calculate Cost of Material Consumed and the Value of Closing Stock under (i) LIFO ; and
(ii ) Simple Average Price Methods.
December 2016:
Opening stock (1st Dec.) :500 units @ ₹ 2. Per unit
Purchases:
5th Dec.: 1,000 units @ ₹ 3 per unit.
8th Dec.: 1,500 units @₹ 4 per unit
Issued to Production:
10th Dec.: 1,600 units.
21 A firm is able to obtain quantity discounts on its orders of material as follows:

Price per tonne Tonnes Price per tonneTonnes
₹ 6.00 Less than 250 ₹ 5.70 2,000 and less than 4000
₹ 5.90 250 and less than 800 4,000
₹ 5.80 800 and less than 2,000 ₹ 5.60 4,000 and over.
The annual demand for the material is 4,000 tonnes. Stock holding costs are 20% of
material cost per annum. The delivery cost per order is ₹ 6.
You are required to calculate the best quantity to order.
22 From the following information, calculate economic order quantity and the number of
orders to be placed in one quarter of the year for product X:
(i) Quarterly consumption of material 2,000 kg.
(ii) Cost of placing an order ₹ 50
(iii) Cost per unit ₹ 40
(iv) Storage & carrying cost 80% on
average inventory
23 Discuss in detail the various methods of Inventory Valuation.

a) ABC
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b) JIT
c) Kaizen
25 What are the advantages and disadvantages of LIFO and FIFO Methods?
26 The annual demand of a particular item of inventory is 10,000 units. Inventory carrying cost
is 20% and ordering cost is ₹40 per order. The price quoted by the supplier is ₹4 per unit.
However, the supplier is willing to give discount of 5% for orders of 1500 units or more.
Is it worth to avail the discount offer?
27 EXE Limited has received an offer of quantity discounts on its orders of materials as under:
Price per tonne Rs. Tonnes No.s
1200 Less than 500
1180 500 and less than 1000
1160 1000 and less than 2000
1140 2000 and less than 3000
1120 3000 and above
The annual requirement for the material is 5000 tonnes. The ordering cost per order is
Rs1200 and the stock holding cost is 20% of material cost per annum. You are required to
compute the most economical purchase level.
28 The following information is provided by Sunrise Industries for the fortnight of April 2010:
Material Exe: Stock on 1-4-2010, 100 units @Rs 5 per unit
Purchases:
5-4-2010 300 units @ Rs6
8-4-2010 500 units @Rs7
12-4-2010 600 units@Rs8
Issues:
6-4-2010 250 units
10-4-2010 400 units
14-4-2010 500 units
You are required to calculate using FIFO and LIFO methods of pricing:
Value of materials consumed during the period
Value of stock of materials (closing stock) as on 15-4-2010
29 Explain the concept of ABC Analysis as a technique of inventory control.

30 Distinguish between reorder level and reorder quantity.
16
UNIT - II
I Multiple Choice Questions:
1 The total earnings of a worker are same under the both Halsey and Rowan Plans when time
saved is:
A. 50% 0f the standard time
B. Less than 50% of the standard time
C. More than 50% of the standard time
D. None of these
ANSWER: A
2 Time-wage system:
A. Guarantees a minimum wage to the workers.
B. Makes distinction between efficient and inefficient workers.
C. Lowers the cost of product per unit.
D. Increases the cost of product per unit
ANSWER: A
3 Taylor’s differential plan provides for:

A. Two wage rates.
B. Three wage rates.
C. More than three wage rates.
D. Less than two wage rates.
ANSWER: B
4 The __________ workers are temporary workers who are not on the regular payroll of the
Factory.
A. Out- workers.
B. Regular workers.
C. Irregular workers.
D. Casual workers.
ANSWER: D
5 _____________ are the workers who work outside the factory premises on behalf of the
Undertaking.
A. Out- workers.
B. Regular workers.
C. Irregular workers.
17
D. Casual workers.
ANSWER: A
6 Piece -wage system:

A. Benefits the employer only.
B. Recognises individual efficiency.
C. Is favoured by trade unions.
D. None of the above.
ANSWER: B
7 _________ time represents time lost by workers who are paid on time basis.
A. Overtime
B. Idle time
C. In time
D. All of the above
ANSWER: B
8 Under_________ system , workers are paid according to the time for which they work.
A. Time Rate system
B. Piece Rate System
C. Group bonus Plan
D. All of the above
ANSWER: A
9 Under ___________ system, wages are paid according to the quantity of work done.
A. Time Rate system
B. Piece Rate System
C. Group bonus Plan
D. All of the above
ANSWER: B
10 Total earnings= Time rate x Time taken + 50% of [Time saved x Time rate] is:
A. Halsey Premium Plan
B. Halsey Weir Plan
C. Rowan Plan
D. Taylor’s Differential Piece Rate System
ANSWER: A
11 Earnings = (Time taken x Time rate) + Bonus is used under which plan?
18
B. Halsey Weir Plan
C. Rowan Plan
D. Taylor’s Differential Piece Rate System
ANSWER: C
12 In _______________ plan , standard time of each job is determined in minutes.

A. Bedaux Plan
B. Emerson’s Efficiency Plan
C. Gantt’s Task
D. Merrick’s differential Piece rate System
ANSWER: A
13 ___________ plan lays down three rates.

A. Bedaux Plan
C. Gantt’s Task
D. Merrick’s differential Piece Rate System
ANSWER: D
14 _____________ plan is a combination of time rate, differential piece rate and bonus.
A. Bedaux Plan
C. Gantt’s Task & Bonus Plan
D. Merrick’s differential Piece Rate System
ANSWER: C
15 A standard time for each job is set very carefully after time and motion studies in:
A. Bedaux Plan
C. Gantt’s Task & Bonus Plan
D. Taylor’s differential Piece Rate System
ANSWER: D
16 __________ do not increase or decrease when the volume of production changes.

A. Fixed costs
B. Variable costs
C. Semi- variable cost
D. Discretionary cost
ANSWER: A
19
17 ________________ costs tend to vary in direct proportion to the volume of output.
A. Fixed costs
B. Variable costs
C. Semi- variable cost
ANSWER: B
18 _______ are those costs which are not necessary for production and are incurred even if
there is no production.
A. Fixed costs
B. Variable costs
C. Period costs
ANSWER: C
19 A ___________ cost is an expenditure made in the past that cannot be changed and over
which management no longer has control.
A. Fixed costs
B. Variable costs
C. Shut Down cost
D. Sunk cost
ANSWER: D
20 Packing material; stationary used in sales office, cost of samples, price list all are examples
Of:
A. Selling & distribution overheads
B. Office & administrative overheads
C. Production overheads
D. A&B
ANSWER: A
21 In ___________ costing costs are compiled process-wise and cost per unit is the average
Cost.
A. Job costing
B. Process costing
20
C. Batch costing
D. Contract costing
ANSWER: B
22 The amount of loss which cannot be avoided because of the nature of material or process
Is_____:
A. Normal Process Loss
B. Abnormal Process Loss
C. Seasonal Loss
D. Standard Loss
ANSWER: A
23 The type of process loss that should not affect the cost of inventory value is:
A. Abnormal Loss
B. Normal Loss
C. Seasonal Loss
D. Standard Loss
ANSWER: A
24 The stage where joint products are separated from each other is known as:
A. Break-even point
B. Angle of Incidence
C. Split-off point
D. Composite point
ANSWER: C
25 Abnormal loss is charged to:

A. Process account
B. Costing Profit & Loss Account
C. Normal Loss account
D. Normal Account
ANSWER: B
26 According to Taylor’s Differential plan, the worker is paid according to his?

A. Degree of Efficiency
B. Degree of Understanding
C. Degree of Flexibility
D. Degree of Loyalty
ANSWER: A
21
27 Under the Halsey wage plan, a worker is paid?
A. At a time rate higher than the usual rate
B. According to his efficiency
C. At a double rate for overtime
D. Normal wages plus bonus
ANSWER: D
28 Standard output is 100 units per day of 8 hours and the piece rates are 20 paise per unit,
under Taylor’s differential piece rate system, what will be amount of wages if a worker
produces 95 units in a day?
A. Rs.14.00
B. Rs.14.25
C. Rs.15.20
D. Rs.19.00
ANSWER: C
29 Comparing Rowan and Halsey Premium plans, it is seen that when the time saved?
A. Rowan plan allows more wages to a worker than Halsey plan
B. Rowan plan allows fewer wages to a worker than Halsey plan
C. Rowan and Halsey plan allow equal wages to a worker
D. None of above
ANSWER: D
30 When standard output is 10 units per hour and actual output is 12 units per hour, the efficiency
is?
A. 80%
B. 100%
C. 110%
D. 120%
ANSWER: D
31 Given that for a job standard time is 8 hours, actual time taken is 6 hours and the time rate
is Rs.2 per hour. What is the total wages, under Halsey Premium Plan?
A. Rs.18
B. Rs.16
C. Rs.14
D. Rs.12
ANSWER: C
22
32 In which of the following incentive plans of wage payment, wage on time basis are not
guaranteed?
A. Halsey plan
B. Rowan plan
C. Taylor’s differential piece rate system
D. Halsey wire Plan
ANSWER: C
33 Which of the following methods of wage payment is most suitable where quality and
accuracy of work is of primary importance?
A. Rowan plan
B. Time rate system
C. Differential piece work system
D. Halsey premium system
ANSWER: A
34 Which of the following is / are time-based incentive wage plan?

B. Halsey Weir Premium Plan
C. Rowan Premium Plan
D. All of the given options
ANSWER: D
35 A worker is paid Rs. 0.50 per unit and he produces 18 units in 7 hours. Keeping in view the
straight-piece rate system, the total wages of the worker would be?
A. 18 x 7 x 0.50 = Rs. 63
B. 18 x 0.50 = Rs. 9
C. 18 x 7 = Rs. 126
D. 7 x 0.5 = Rs. 3.5
ANSWER: B
a) Work Study and Method Study
b) Casual Workers and Out-workers
2 What is Idle Time? Give reasons for idle time. How do you treat idle time in cost accounts?
3 Distinguish between normal and abnormal idle time.
4 Discuss the different methods of wage payment to workers.
23
5 Explain Halsey System of paying incentive wages to workers.
a) Piece rate and time rate
b) Profit sharing and Co-partnership
7 What is a group bonus? What are the advantages over individual bonus?
8 Bring out clearly the treatment of ‘Idle time’ and Fringe Benefits to Labor in cost
accounts.
9 Explain the following methods of wage payment:
a) Taylor’s Different Piece rate System
b) Rowan Scheme
c) Emerson’s Efficiency Plan
10 Define Overhead. Explain various classifications of overhead.
11 Explain with illustration the classification of ‘Fixed’ , ‘Semi-Fixed’ and ‘Variable’
expenses.
12 Explain the various methods of segregating fixed and variable overhead costs.
a) Cost classification and cost allocation
b) Cost apportionment and overhead absorption
14 Distinguish between allocation, apportionment and absorption of overhead.
15 How would you apportion the following expenses among various departments?
a) Rent
b) Supervision
c) Repair
d) Electric charges
e) Motive Power
f) Depreciation
16 What are the basic differences between job order and process cost systems?
17 How you will deal with:
i) Normal wastage
ii) Abnormal wastage
iii) Abnormal effectives in process cost accounts?
18 From the following information, calculate the bonus and earnings under Emerson
Efficiency Bonus Plan:
Standard output in 12 hours 48
Actual output in 12 hours 42
Time rate ₹7.50 per hour
If the actual output is 60 units, what will be amount of bonus and earnings?
CMA , Executive ,pg. 133
19 A workman’s wages for a guaranteed 44-hour week is ₹ 7.50 per hour. The estimated time
To produce one article is 30 minutes and under an incentive plan , the time allowed is
24
Increased by 20%. During a week ,a worker produced 100 articles. Calculate the wages
under each of the following methods: a) Time rate b) Rowan System , and c) Halsey
System.
20 A worker produced 200 units in a week’s time. The guaranteed weekly wage payment for
45 hours is ₹ 81. The expected time to produce one unit is 15 minutes which is raised
further by 20% under the incentive scheme. What will be earnings per hour of that worker
under Halsey(50% sharing) and Rowan bonus schemes?
21 Calculate the total earnings of the workers under Halsey and Rowan Plans:
Standard time 10 hrs.
Hourly Rate ₹2
Time taken 6 hrs.
22 The following information is given in respect of process A.
Material 1000 kg.@ ₹ 6 per kg.
Labor ₹ 5000
Direct Expenses ₹ 1000
Indirect expenses allocated to Process A ₹ 1,000.
Normal Wastage 10% of input.
Prepare Process A Account when:
a) Scrap value of normal loss is nil.
b) Scrap arising out of normal has a sale value of ₹ 1 per unit.
23 From the following information compute Machine-Hour Rate in respect of machine for the
month of January 2012:
Cost of machine ₹90,000
Other-Charges freight and installation ₹ 10,000
Effective Working Life 10 years
Working hours 2,000 per year
Repair charges 50% of depreciation
Power consumed by the machine 10 units per
hour 10 paise per unit
Lubricating oil at ₹ 2 per day of 8 hours
Consumable stores at ₹ 10 per day of 8 hours
Wages of operator at ₹ 4 per day of 8 hours
24 A factory has three production departments A, B and C and two service departments X and
Y. The overhead costs of the different departments incurred during March, 2012 are as
follows:
Departments Costs(in ₹)
A 10,000
B 8,000
C 6,000
X 5,000
25
Y 3,000
The costs of Departments X has to be charged in the ratio of 2:2:1 and those of departments
Y equally to Departments A, B and C respectively. Find out the overheads costs of each of
the production departments.
25 Cost centre in a factory furnishes the following information:
1) Working hours per week: 30 hours.
2) Number of identical machines installed in the centre:5.
3) Budgeted Factory Overheads for a 4-weekly period for the Cost Centre: ₹ 6,000.
4) Direct Labour Cost for a 4 weekly period for the Cost Centre: ₹ 15,000.
You are required to calculate Factory Overhead Absorption Rate based on:
(1) Machine Hours.
(2) Labour Cost.
26. Explain idle time and overtime in detail.
27. Explain overheads on the basis of functionality and on the basis of elements.
28. The following particulars relate to a new machine purchased:
₹
Purchase price of the machine 4,00,000
Installation expenses 1,00,000
Rent per quarter 15,000
General lighting for the total area 1,000 per month
Foreman’s salary 30,000 per annum
Insurance premium for the machine 3,000 per annum
Estimated repairs for the machine 5,000 per annum
Estimated consumable stores 4,000 per annum
Power-2 units per hour at ₹50 per 100 units
Estimated life of the machine is 10 years and the estimated value at the end of the 10th year
is ₹1 lakh. The machine is expected to run 20,000 hours in its lifetime. The machine
occupies 25% of the total area. The foreman devotes 1/6 of his time for the machine.
Calculate the machine hour rate for the machine.
29. Explain Taylor’s method for calculation of Labour remuneration.
30. Explain idle Time and Overtime. Distinguish between them.
31. Explain payment by time and payment by efficiency.
32. How overtime premium is treated in cost accounts?
33. How time and motion study is useful to management?
34. State measures to minimize labour turnover.
35. Explain time wage system
26
1 Define labour. What is direct labour? What is indirect labour? Give examples. Explain how
they are treated in cost accounts.
2 Explain the different methods of time recording for workers.
3 Discuss the various incentive schemes, their merits and demerits.
4 What is idle time? Give its treatment in cost accounts.
(a) Labour turnover
(b) Idle time
(c) Overtime
(d) Casual workers
(e) Site workers.
6 State the distinction between the two terms in each of the following, giving examples:
(a) Cost allocation and cost apportionment.
(b) Direct cost and indirect cost.
(c) Fixed cost and variable cost.
(d) Indirect expenses and overheads.
7 What are overheads? How should overheads be classified? To what extent will you include
overhead charges in your valuation of (a) work-in-progress, and (b) finished goods?
8 Distinguish between allocation, apportionment and absorption in connection with factory
overhead expenses.
9 Discuss the difference between allocation and apportionment of overheads.
10 Explain the treatment of Over and Under Absorption of overheads in cost accounting.
11 Discuss the objectives of time keeping and time booking.
12 Distinguish between Job evaluation and merit ranking.
13 Explain the concept of normal overhead and normal overhead rates.
14 What is meant by absorption of overheads? Explain briefly the different methods of
absorption of overheads.
15 Why do we employ pre-determined overhead rate of absorption? Under what
circumstances is direct labour cost percentage method to be employed?
16 Explain with examples the difference between:
a) Cost Apportionment and Cost Absorption
b) Actual and pre-determined overhead rates.
17 A company is having three production departments X, Y and Z and two service
departments - boilerhouse and pump-room. The boiler-house has to depend upon the pump-
room for supply of water and pump-room in its turn is dependent on the boiler-house for
supply of steam-power for driving the pump. The expenses incurred by the production
departments are: X - ₹6,00,000; Y - ₹5,25,000; and Z - ₹3,75,000. The expenses for boiler-
house are₹1,75,500 and pump-room are ₹2,25,000.
27
The expenses of the boiler-house and pump-room are apportioned to the production
departments
on following basis:
DEPARTMENT Boiler House Pump Room
X Y Z
Expenses of boiler-house 20% 40% 30% ----- 10%
Expenses of pump-room 40% 20% 20% 20% -----
Show clearly as to how the expenses of boiler-house and pump-room would be apportioned to X
Y and Z departments?
18 In a shop work is done by means of five machines of exactly similar type and specification:
1) Rent & rates (proportional to the floor space occupied) for the shop 4,800
2) Depreciation on each machine 500
3) Repairs and maintenance for the five machines 1,000
4) Power consumed(as per meter) @5 Paise per unit for the shop 3,000
5) Electricity charges for lights in the shop 540
6) Attendants: there are two attendants for the five machines and they are
Each paid ₹. 60 per month.
7) Supervision: for the five machines in the shop there is one supervisor whose
Emoluments are ₹. 250 p.m.
8) Sundry supplies such as lubricants, cotton waste , etc. for the shop 450
9) Hire-purchase instalments payable for the machine 1,200
The machine uses 10 units of power per hour.

Calculate the machine hour rate for machine for the year.
19 Standard time for completion of a task is 20 hours and per hour rate is ₹ 1. In addition for
every hour worked ,there is a dearness allowance at the rate of paise 30.
Time taken by a worker is 15 hours.
Calculate his earnings under:
1) Time wage system
2) Piece wage system
3) Halsey Plan
4) Rowan Plan
20 Compute the total earnings and the rate earned per hour in respect of three workers under
Halseyand Rowan schemes.(Bonus under Halsey Schemes is 50% of time saved).
Standard time 20 hours.
Hourly rate of wages ₹ 2.
Actual time taken 16 hours;10 hours;8 hours.
Also give your comments.
28
21 XYZ Co. Ltd. Has three production departments. A, B and C and two service Depts. D and
E.
The following figures are extracted from the records of the company:
Rs. Rs.
Rent & rates 5000 General lighting 600
Indirect wages 1,500 Power 1,500
Depreciation of machinery 10,000 Sundry expenses 10,000
The following details are further available:
Total A B C D
E
Floor space(Sq. ft.) 20,000 4,000 5,000 6,000 4,000
1,000
Light points 120 20 30 40 20 10
Direct wages(Rs.) 10,000 3,000 2,000 3,000 1,500 500
H.P. of machines 150 60 30 50 10 -------
-
Value of Machinery(Rs.) 2,50000 60,000 80,000 1,00,000 5,000 5,000
Apportion the costs to various departments on the most equitable basis and prepare overhead
Distribution Summary.
Note: it should be noted that the direct wages have been charged only for service departments
because for service departments, all costs are indirect
22 The following particulars relate to a new machine purchased:
₹.
Purchase price of machine 4,00,000
Installation expenses 1,00,000
Rent per quarter 15,000
General lighting for the total area 1000 p.m.
Foreman’s salary 30,000 p.a.
Insurance premium for the machine 3000 p.a.
Estimated repairs for the machine 5000 p.a.
Estimated consumables stores 4000 p.a.
Power-2 units per hour at₹. 50 per 100 units.
Estimated life of the machine is 10 years and the estimated value at the end of the 10th year
is ₹1 lakh. The machine is expected to run 20,000 hours in its life time. The machine
occupies 25% of the total area. The foreman devotes 1/6 of his time for the machine.
Calculate the machine hour rate for the machine.
23 Discuss the concept of collection, classification and Codification of overheads.
24 What are the main sources of Overhead expenses? State with examples the procedure for
such collection from these sources.
25 Explain the nature of administrative overheads. How they are apportioned?
29
26 A company has budgeted ₹5,00,000 for variable overheads and ₹8,00,000 for fixed
overheads for the year. The overheads are recovered on the basis of the machine hours. The
company has budgeted for 1,00,000 machine hours for the year. During the year, the
company used 95000 machine hours for the actual output. Actual costs incurred for the fixed
and variable manufacturing overheads were ₹8,00,000 & ₹4,70,000 respectively.
You are required to compute-
i. The over or under recovered variable manufacturing overhead amount
ii. The over or under recovered fixed manufacturing overhead amount
iii. The over or under recovered total manufacturing overhead amount
27 Explain Emerson’s plan for labour remuneration in detail.
28 Explain fixed cost, variable cost, semi variable cost and step costs in detail.
29 Explain the remuneration/payroll system in place for labour.
30 Compute total earnings of a worker under Halsey Plan and Rowan Plan.
Standard fixed time = 20 hours
Time taken = 16 hours
Hourly rate = Rs.2 per hour
31. Calculate the earnings of a worker (a) Halsey incentive plan and (b) Rowan incentive plan:
Hourly wage rate Rs.20
Standard time for producing 12 articles in 3 hours
Actual time taken by the worker to produce 240 articles was 48 hours.
UNIT-III
1 In automobile industry cost unit is

A. Number
B. Automobile quality
C. Number of automobile industry
D. Either (a) or (c)
ANSWER: B
2 .......... costing is suitable for mines, quarries, cement works etc.

A. Process
B. Contract
C. Batch
D. Operation
ANSWER: D
30
3 .........is an extension of job costing.
A. Process costing
B. Batch costing
C. Contract costing
D. Operation costing
E. None of these
ANSWER: B
4 When job is very big and spread over long periods of time the method of costing adopted
is
A. Process
B. Job
C. Contract
D. Operation
E. Batch
ANSWER: C
5 Continuous costing is also called

A. Operation costing
B. Process costing
C. Batch costing
D. Contract costing
E. None of these
ANSWER: B
6 Cost accounting is based on ......... figures.

A. Approximated
B. Estimated
C. Historical
D. Either (a) or (c)
E. None of these
ANSWER: B
7 ...........costing is used in transport undertaking.

A. Operating
B. Standard
C. marginal
D. Absorption
E. Service
31
ANSWER: E
8 In ............. costing the cost of a group of products is ascertained.

A. Process
B. Job
C. Batch
D. Service
E. Marginal
ANSWER: C
9 The total of all direct expenses is known as

A. Total cost
B. Overhead
C. Prime cost
D. Work cost
E. None of these
ANSWER: C
10 An opportunity cost is a
A. Direct expense
B. Indirect expense
C. Variable expense
D. Fixed expense
E. Semi-variable expense
ANSWER: A
11 In cost Accounting, abnormal loss is charged to:

A. Factory overhead control account
B. Work in process account
C. Income Statement
D. Entire production
ANSWER: B
12 The combination of direct material and direct labor is :-

A. Total production Cost
B. Prime Cost
C. Conversion Cost
D. Total manufacturing Cost
ANSWER: B
32
13 Prime cost + Factory overhead cost is:
A. Conversion cost.
B. Production cost.
C. Total cost.
D. None of given option.
ANSWER: B
14 Abnormal loss should be transferred to

A. Abnormal loss account
B. Costing profit and loss a/c
C. Cash account
ANSWER: B
15 The unavoidable loss of material is known as

A. Normal loss
B. Abnormal loss
C. Waste
ANSWER: A
16 Loss due to fire , theft , are …………………….

A. Normal loss
B. Abnormal loss
C. Scrap
ANSWER: B
17 The cost of …………… is not included in the cost of production

A. Normal loss
B. Abnormal loss
C. Scrap
ANSWER: B
18 Prime cost can be also called …………………………….

A. Indirect cost
B. Direct cost
C. Fixed
ANSWER: B
19 Element of cost refers to …………………..

A. Component cost
B. Components of cost
33
C. Prime cost
ANSWER: B
20 Cost of material that can be identified is called ……………. Cost

A. Direct
B. In direct
C. Variable
ANSWER: A
21 …………in the aggregate of indirect material , indirect labour and indirect expense
A. Prime cost
B. factory cost
C. Over head
ANSWER: C
22 The value of benefit sacrificed in favor of an alternative course of action as known as

A. Variable
B. Fixed cost
C. Opportunity cost
ANSWER: C
23 Loss of time due to avoidable reason is known as

A. Normal idle time
B. Abnormal idle time
C. Overtime
ANSWER: A
24 Time lost in the course of normal activity is known as

A. Idle time
B. Abnormal idle time
C. Over time
D. Normal idle time
ANSWER: D
25 Packaging charges is ____________

A. Factory Overhead
B. Administrative overheads
C. Selling overheads
ANSWER: C
34
26 Which of the following System applies when standardized goods are produced
under a series of inter-connected operations?
A. Job order costing
B. Process costing
C. Standard costing
ANSWER: B
27 Total costs incur in a production process, is divided by total number of output units, to calculate
the
A. cost of indirect labor
B. cost of direct labor
C. cost of direct material
D. unit costs
ANSWER: D
28 If beginning work in process equivalent units are 2500 units, work done in current period
equivalent units are 3800 units and ending work in process equivalent units are 5000, then
complete equivalent units in current period are
A. 1800 units
B. 1500 units
C. 1300 units
D. 1500 units
ANSWER: C
29 A unit cost calculated in costing system, by assigning total costs incurred to many similar units
is categorized as
A. accounting period costing system
B. process costing system
C. job costing system
D. none of above
ANSWER: B
30 If beginning work in process equivalent units are 2500 units, work done in current period
equivalent units are 3800 units and units completed in current period are 4000, then ending work
in process equivalent units will be
A. 1800 units
B. 2300 units
C. 10300 units
D. 1500 units
35
ANSWER: C
31 Cost estimation include(s) the following expenditure(s)

A. pattern making
B. tool making
C. selling expenses
D. all of the above
ANSWER: D
32 To calculate the probable cost of the product, knowledge of following factors involves
A. Production time required
B. Use of previous estimates of comparable parts
C. Effect of change in facilities on costing rates
D. All of the above
ANSWER: D
33 The following is also known as overhead costs or on costs.

A. Cost of direct labour
B. Cost of indirect labour
C. Direct expenses
D. Indirect expenses
ANSWER: D
34 Cost of preparing drawings for the manufacture of a particular product is

A. Cost of direct labour
B. Cost of indirect labour
C. Direct expenses
D. Indirect expenses
ANSWER: C
35 The following is cost of indirect materials

A. Lubricating oil
B. Octroi
C. Import duties
D. Insurance
ANSWER: A
36. Labor related to manufacturing of product can be classified under

A. Direct Manufacturing Labor Costs
B. Indirect Manufacturing Labor Costs
36
C. Work In Process Cost
D. Finished Costs
ANSWER: A
37. Direct material costs are added into direct manufacturing costs, to calculate
A. Discuss Costs
B. Prime Costs
C. Resale Cost
D. Merchandise Costs
ANSWER: B
38: Direct manufacturing labour costs is added into manufacturing overhead cost to calculate
A. transaction costs
B. conversion costs
C. resale costs
D. merchandise costs
ANSWER: B
39. In cost terms, direct manufacturing labour cost is included in

A. Manufacturing Costs
B. Prime Costs
C. Conversion Costs
D. Both B & C
ANSWER: D
40. Total costs incur in a production process, is divided by total number of output units, to
calculate the
A. cost of indirect labor
B. cost of direct labor
C. cost of direct material
D. unit costs
ANSWER D
37
41. If beginning work in process equivalent units are 2500 units, work done in current period
equivalent units are 3800 units and ending work in process equivalent units are 5000, then
complete equivalent units in current period are
A. 1800 units
B. 1500 units
C. 1300 units
D. 1500 units
ANSWER: C
1 Explain the treatment of stocks in cost sheet.

a) Historical cost.
b) Estimated cost.
3 Discuss the components of prime cost.
4 What is the importance of cost sheet.
5 What is meant by cost sheet? Explain the importance of Cost Sheet.
6 Define various components of total cost.
7 Give a list of items that are excluded from cost sheet.
8 What is the treatment of scrap in cost sheet?
10 State any three methods of classifications of cost.
11 What are selling overheads? How these differ from distribution overheads?
12 What is works cost? How is it arrived at?
13 What is a cost sheet?
14 What are the three elements of cost?
15 Give examples of selling overheads.
16 Give a list of items that appear on debit side of Process A/C.
17 Write short note on process losses.
18 Write short notes on :
a) Defectives
b) Spoilage
19 What is Process Costing? What are its Characteristics.
20 What are the merits and demerits of process costing?
21 Compute the cost of material consumed from the following data:
Opening stock of raw material ₹9,000
Purchases of raw material ₹1,27,000
Closing stock of raw material ₹12,000
22 Compute Prime cost from the data given below:
38
₹
Direct Material 1,80,000
Expenses on purchases 20,000
Rent of special machine taken on hire for production 40,000
Productive wages 65,000
23 From the following information, calculate the value of goods sold.
₹
Total Cost of Production 1,45,000
Opening stock of finished goods 22,000
Closing stock of finished goods 6,000
Selling and distribution overheads 25,000
Profit 22,000
24 From the following information calculate the total cost.

₹
Direct material 1,60,000
Direct Labour 52,000
Direct Expenses 19,000
Factory overheads 45,000
Office and administration overheads 28,000
25 From the following information, prepare a cost sheet for period ended on
31st March 2006.
₹
Opening stock of raw material 12,500
Purchases of raw material 1,36,000
Closing stock of raw material 8,500
Direct wages 54,000
Direct expenses 12,000
Factory overheads 100% of direct wages
Office and administrative overheads 20% of works cost
Cost of opening stock of finished goods 12,000
Cost of Closing stock of finished goods 15,000
Profit on cost 20%
39
26 From the following information calculate the cost of goods sold.
₹
Total Cost of Production 1,22,000
Opening stock of finished goods 12,000
Closing stock of finished goods 16,000
27 What is process costing? What are its essential characteristics?

28 What is normal process loss? How is it treated in process costing?
29 What is abnormal process loss? How is it treated in process costing?
30 Distinguish between Normal and Abnormal loss in process costing.
31. Can there be abnormal gain under process costing? Explain
32. Distinguish between joint costs under process costing.
33. Explain the term equivalent units in process costing.
34. What are by- products and joint products?
35. How to calculate the value of equivalent units?
1 What is Unit or Output Costing? In which industries is it used?

2 What is a Cost Sheet? In what respects does it differ from a working of Production Account.
3 Write a short note on unit costing method for ascertaining product cost.
4 Why are Factory overheads not sometimes included in the Valuation of Work-in-progress?
Would you advocate their inclusion?
5 Draw a proforma cost sheet.
6 What is a cost sheet? Explain the purposes served by it.
7 Select an article in common use; describe the materials, labour and expenses which enter
into its cost of production land prepare a cost sheet in proper form to present details of the
cost of its production.
8 Distinguish between :
a) Normal Loss and abnormal loss.
b) “Job costing” and “Process costing”.
c) Abnormal Loss and Abnormal gain.
9 Define Joint-products and By-products and cite an example on each. Explain the various
bases available for apportionment of joint costs to joint products.
10 “Job costing is more accurate than Process Costing”. Comment on the statement.
11 Explain normal wastage and abnormal wastage and state how they should be dealt with in
Process Cost accounts.
12 What are the three most common methods of allocating joint costs of production to joint
products?
40
13 ”The value of scrap generated in a process should be credited to the process account”. Do
you agree.
14 State the difference between cost sheet and Production Account.
15 What is a blanket overhead rate? In which situation blanket rate is used and why?
16 Describe ‘Direct Material Cost’ and ‘Direct Labour cost’ methods of absorption of factory
overhead. Which one of these do you consider is better and why?
17 Describe the prime cost method of absorption of factory overhead. Explain in full and
illustrate the basic conditions necessary for its application.
18 Discuss the procedure involved in the calculation of labour hour rate.
19 Discuss the importance of ‘Machine Hour’ as a basis for the absorption of factory overhead.
20. Mr. A furnishes the following data relating to the manufacture of a standard product during
the month of January , 2016:
Raw Material purchased ₹ 15,000
Opening Stock of Raw Materials ₹ 4,000
Closing Stock of raw materials ₹ 5,000
Direct Labor Cost ₹ 9,000
Machine Hours Worked 900 hours
Machine Hour Rate ₹5
Carriage Inwards ₹ 1,000
Administrative Overheads 20 % on Works Cost
Selling Overheads 50 P. per unit sold
Units Produced 17,100
Opening Stock of Finished Products 2,000 units @ ₹ 150 per unit
Units sold 16,000 units
Selling price per unit ₹4
You are required to prepare:
2) Cost Sheet
3) A Statement showing Profit for the period.
21 The following particulars have been extracted from the books of a manufacturing company
for the month of March, 2014:
₹
Stock of materials as on 1st March, 2013 47,000
Stock of materials as on 31st March, 2013 50,000
Materials purchased during the month
2,08,000
Drawing office salaries 9,600
Counting house salaries 14,000
Carriage on purchases 8,200
Carriage on sales 5,100
41
Cash discount allowed 3,400
Bad debts written off 4,700
Repairs of plant, machinery and tools 10,600
Rent, rates, taxes and insurance (factory) 3,000
Rent, rates, taxes and insurance (office) 1,000
Travelling expenses 3,100
Travellers’ salaries and commission 8,400
Productive wages 1,40,000
Depreciation written off on plant, machinery and tools 7,100
Depreciation written off on office furniture 600
Directors’ fees 6,000
Gas and water charges (factory) 1,500
Gas and water charges (office) 300
General charges 5,000
Manager’s salary 12,000
Out of 48 working hours in a week, the time devoted by the Manager to the factory and
office was on an average 40 hours and 8 hours respectively throughout the month. 1,00,000
units were produced and sold; there was no opening or closing stock of it.
Prepare a cost sheet showing the following:

(i) Cost of Materials Consumed;
(ii) Prime Cost;
(iii) Works Overhead;
(iv) Works Cost;
(v) Office and Administration Overhead;
(vi) Cost of Production;
(vii) Selling and Distribution Overhead; and
(viii) Total Cost or Cost Sales.
22 The following information has been obtained form the records of ABC Co. Ltd. for the
month of January, 2014:
`
Cost of raw materials on 1/01/2014 30,000
Purchase of raw materials during the month 4,50,000
Wages paid 2,30,000
Factory overheads 92,000
Cost of work-in-progress on 1/01/2014 12,000
Cost of raw materials on 30 /01/2014 25,000
Cost of work-in-progress on 30 /01/2014 15,000
Cost of stock of finished goods on 1 /01/2014 60,000
42
Cost of stock of finished goods on 30 /01/2014 55,000
Administration overheads 30,000
Sales 9,00,000
Prepare: (i) Cost sheet showing the cost of production of goods manufactured, and (ii)
Statement showing the cost of sales and the profit earned.
23 Prepare a Process Account and Abnormal Loss Account from the following information.
Input of Raw material 1000 units @₹ 20 per Unit
Direct Material ₹ 4,200/-
Direct Wages ₹ 6,000/-
Production Overheads ₹ 6,000/-
Actual output transferred to process II 900 units
Normal Loss 5%
Value of Scrap per unit ₹8/-.
24 The following information is available in respect of Process B of Product X:
Input 5,000 units at a cost of ₹ 25,000
Process material Added ₹ 12,000
Direct Labour ₹ 8,000
Overheads ₹ 3,000
Output of Process B ₹ 4,800 units
Normal Wastage ₹ 55 of input
25 Explain the concept of ‘under-absorption’ and ‘over-absorption’ of overhead.

26 A product passes through three processes known as process I,II and III. The output of each
process is treated as raw material for the next process, and the output of the third process is treated
as Finished Product and transferred to Stock.
Processes
I II III
Material Issued (₹) 40,000 20,000 10,000
Labour 6,000 4,000 1,000
Manufacturing 10,000 10,000 15,000
Overheads (₹)
Output(units) 9,750 9,400 8,000
Normal Loss of Input 2% 5% 10%
10,000 units were issued to process I in the beginning. No stock of materials or WIP was left at
the end. Calculate the cost of finished product.
43
27 The product of a manufacturing concern passes through two processes A and B and then to
finished stock. It is ascertained that in each process normally 5% of total weight is lost and 10% is
scrap which from Processes A and B realized ₹80 per tonne and ₹120 per tonne respectively.
The following are the figures relating to both the processes:
Particulars Process A Process B

Materials in tonne 1,000 70
Cost of materials in rupee per tonne 125 200
Wages in rupees 28,000 10,000
Manufacturing expenses in rupees 8,000 5,700
Output in tonnes 830 780
Prepare Process Cost Accounts showing cost per tonne of each process. There was no stock or
work in progress in any process.
28 The books and records of the Anand manufacturing Company present the following data for the
month of August 2016:
Direct Labour Cost ₹ 16,000 (160% of factory overheads)

Cost of goods sold ₹ 56,000
Inventory records showed these opening and closing balances:
Raw materials on August 1 ₹ 8,000
Raw materials on August 31 ₹ 8,600
Work in Progress on August 1 ₹ 8,000
Work in Progress on August 31 ₹ 12,000
Finished goods on August 1 ₹ 14,000
Finished Goods on August 31 ₹ 18,000
Other Data is as follows:
Selling Expenses Rs.3,400
General and administration expenses Rs.2,600
Sales for the month Rs.75,000
You are required to prepare a statement showing cost of goods manufactured and sold and profit
earned.
29 Explain the elements of cost sheet in detail.

30 From the following particulars of a manufacturing concern, ascertain the Prime Cost:
44
31.
Prepare a Process Account, Abnormal Loss Account and Normal Loss Account from the following
information.
Input of Raw material 1000 units @ Rs. 20 per unit
Direct Material Rs. 4,200/-
Direct Wages Rs. 6,000/-
Production Overheads Rs. 6,000/-
Actual output transferred to process II 900 units
Normal Loss 5%
Value of Scrap per unit Rs. 8/-
32. The product of a company passes through 3 distinct process. The following information is
obtained from the accounts for the month ending January 31, 2018.
(Amount in Rupees.)
Particulars Process – A Process – B Process – C

Direct Material 7800 5940 8886
Direct Wages 6000 9000 12000
Production Overheads 6000 9000 12000
3000 units @ Rs. 3 each were introduced to process – I. There was no stock of materials or work
in progress. The output of each process passes directly to the next process and finally to finished
stock A/c.
45
The following additional data was obtained :
Process Output Percentage of Normal Loss to Input Value of Scrap per unit (Rs.)
Process – I 2850 5% 2
Process – II 2520 10 % 4
Process – III 2250 15 % 5
Prepare Process Cost Account, Normal Cost Account and Abnormal Gain or Loss Account.
UNIT-IV
1 In contract costing, determination of work in progress include:

A. Work Certified
B. Work Uncertified
C. Retention Money
D. Both a and b
ANSWER: D
2 Work Certified is valued at

A. Cost price
B. Market price
C. Cost or market price whichever is less
D. Estimate price
ANSWER: A
3 The degree of completion of work is determined by comparing the work certified with
A. Contract price
B. Work in progress
C. Cash received on contract
D. Retention money
ANSWER: A
4 In contract costing credit is taken only for a part of the profit on

A. Completed contract
B. In complete contract
C. Cost-plus contract
D. Work Certified
ANSWER: B
46
5 Escalation Clause in a contract to prefect the interest of
A. Contractor
B. Contractee
C. Surveyor
D. Contractee's Architect
ANSWER: B
6 In contract costing payment of cash to the contractor is made on the basis of

A. Uncertified work
B. Certified work
C. Work in progress
D. Estimated value
ANSWER: B
7 Materials returned under material return note credited to

A. Contract account
B. Work in progress account
C. Plant and machinery account
D. Profit and loss A/C
ANSWER: A
8 Cash received on contract is credited to

A. Contract Account
B. Plant Account
C. Work in Progress Account
D. Contractee's Account
ANSWER: D
9 ABC Company uses a Manufacturing Overhead Control account and a Manufacturing

Overhead Applied account. If overhead is overapplied during the period, the journal entry
to write it off to cost of goods sold will include:
A. a credit to applied manufacturing overhead
B. a debit to cost of goods sold
C. a debit to manufacturing overhead control
D. a credit to cost of goods sold
E. None of the above.
ANSWER: D
47
10 What type of cost is composed of actual direct material and labor cost plus overhead
applied using a predetermined rate and an actual allocation base?
A. Actual
B. Normal
C. Standard
D. Real
ANSWER: B
11 Which of the following statements describe a primary difference in job costing between
service companies and manufacturing companies?
A. Service companies generally use fewer direct materials.
B. Service companies' overhead accounts have slightly different names.
C. Service companies' finished goods are charged to Cost of Services.
D. All of the above.
ANSWER: D
12 Which of the following terms is used to describe complex tasks that often take months or
years to complete and require the work of many different departments, divisions, or
subcontractors?
A. Jobs
B. Tasks
C. Projects
D. Ventures
E. None of the above
ANSWER: C
13 Which of the following is characteristic of a job order cost accounting system?

A. It records manufacturing activities using a perpetual inventory system.
B. It tracks cost by job.
C. It is best suited for customized products.
D. All of the above.
ANSWER: D
14 Which of the following manufacturers is most likely to use a job order cost accounting
system?
A. A soft drink producer.
B. A flour mill
48
C. A gold mining operation.
D. A builder of offshore oil rigs.
E. All of the above.
ANSWER: D
15 Which of the following would be considered factory overhead using a job order cost
system?
A. Direct materials.
B. Direct labor.
C. Depreciation on factory buildings.
D. Salesperson's salary.
ANSWER: C
16 Service costing is also known as

A. Output costing
B. Operating costing
C. Operation
D. Continuous process.
ANSWER: B
17 Service costing is not used in one of the following;

A. Electricity
B. Transport
C. Hospitals
D. Electronics
ANSWER: D
18 If the present cost of the car is Rs. 50,000, residual value at the end of 5 th year is Rs.
10,000, the monthly depreciation is:
A. Rs. 8,000
B. Rs. 667
C. Rs. 8,667
ANSWER: B
19 A truck starts with a load of 10 tons of goods from station P. It unloads 4 tones at station
Q and rest of the goods at station R. It reaches back directly to station P after reloaded
with 8 tons of goods at station R. The distances between P to Q, Q to R and then from R
to P are 40 kms, 60 kms and 80 kms respectively. What is absolute tone km.
49
A. 1400
B. 1200
C. 1600
D. 2400
ANSWER: A
20 A truck starts with a load of 10 tones of goods from station P. It unloads 4 tones at station
Q and rest of the goods at station R. It reaches back directly to station P after reloaded
with 8 tones of goods at station R. The distances between P to Q, Q to R and then from R
to P are 40 kms, 60 kms and 80 kms respectively. What is commercial tone km.
A. 1400
B. 1440
C. 1640
D. 2440
ANSWER: B
21 The aggregate of direct material and direct labour cost is known as

A. Prime Cost
B. Work Cost
C. Total Cost of Production
D. Cost of Sales
ANSWER: A
22 The Cost expended in the past that cannot be retrieved on product or service is :
A. Relevant Cost
B. Sunk Cost
C. Product Cost
D. Irrelevant Cost
ANSWER: B
23 A statement of cost of production and profit should preferably termed as:

A. Production Account
B. Production Statement
C. Cost sheet
ANSWER: B
24 A system of single costing is used in the case of:

A. Motor workshop
B. Hotels
C. Brickworks
50
ANSWER: C
25 ______________ ac account giving details of costs of production , cost of sales and profit
made during a particular period.
A. Production Account
B. Sales Account
C. Cash Account
ANSWER: A
26 The ……………costing is applied when a quantity of similar and identical products are
manufactured together as one Job.
A. Job
B. Batch
C. operation
D. output
ANSWER: B
27 The loss incurred on an incomplete contract is transferred to …………….account.

A. Costing profit and loss account
B. profit and loss account
C. trading account
D. deferred to next year.
ANSWER: B
28 When the completion stage of the contract is more than half, the profit to be credited to Profit
and Loss account will be equal to…………..
A. 1/3rd of Notional Profit x cash received Work certified
B. ½ of Notional Profit x cash received Work certified
C. 2/3rd of Notional profit x cash received Work certified
D. full Notional Profit
ANSWER: C
29 When the completion stage of a contract is less than ¼, the total expenditure on the contract is
transferred to ………………..account.
A. Work-in-Progress
B. Profit and loss account
C. miscellaneous account
D. none of these
ANSWER: A
51
30 If the amount of work certified is less than………of the contract price,then no profit should be
taken to Profit & Loss Account.
A. 20%
B. 25%
C. 33 1/3%
D. 40%
ANSWER: B
31 Contract costing is not used in one of the following industries.

A. Ship building
B. Civil Construction
C. Automobiles
D. Construction of Bridges
ANSWER: C
32 The sum of value of work certified and uncertified appearing in the Contract Account is
called ……………..
A. Work done.
B. Work in Process
C. Work Completed
D. Work in Progress
ANSWER: D
33 Room/day is the cost unit used in…………………

A. Hotels
B. hospital
C. schools
D. none of these
ANSWER: A
34 ……………………is the most suitable method in a transport industry.

A. Operation costing
B. Service costing
C. Process costing
D. Job costing
ANSWER: B
35 Economic Batch Quantity depends on ……………….and ……………..costs.
52
A. Material, labour
B. set-up costs, carrying
C. transportation, carrying
D. warehousing, labour
ANSWER: B
1 What is meant by job costing ?

2 Explain the meaning of Batch costing.
3 What are the advantages of job costing ?
4 List out the limitations of job costing.
5 Discuss the procedure for job cost accounting.
6 What are the various types of production orders?
7 Explain the concept of cost control in job order system.
8 What’s your viewpoint about advantages and disadvantages of job costing.
9 What do you understand by Economic batch quantity(EBQ)?
a) Sub-contract
b) Surveyor’s certificate
a) Defective work
b) Escalation Clause
c) Work- in- progress
12 Write short note on service costing.
13 Classification of cost in a transport organization.
14 Explain the significance of running cost.
15 State the difference between standing charges and variable charges.
16 Write short note collection of costing data.
17 Explain Absolute Tonne –Kms and commercial Tonne-Kms.
18 Explain the difference between Operating costing and Operation costing.
19 Give few examples of Standing charges and variable charges.
20 Following information is extracted from the job ledger in respect of Job no. 123 :
a. Materials : Rs. 6800
b. Wages 80 hours @ 5 Per hour
c. Variable overheads incurred for all jobs Rs. 10000 for 4000 Labour hours
Find out the profit if the job is billed for Rs. 9000
21 The following was the expenditure on the contract for Rs. 6,00,000. Work commenced on
1st January,2015 :
Materials Rs. 1,30,000
53
Wages Rs. 1,44,000
Plant Rs. 20,000
Other Expenses RS. 18,600
Cash received on account was Rs. 2,40,000, being 80% of work certified. Value of
materials on hand at 31st December, 2015 was Rs. 10,000. Plant is to be depreciated @10%.
Prepare Contract account for 2015, showing the profit to be credited to Profit and Loss
account.
22 M/s Jain & Sons is a firm of Govt. Contractors. It took a contract for Rs. 5,00,000 on 1 st
Jan. 2010 and incurred the following expenses on it upto 31st Dec. 2010:
Rs.
Materials Purchased 62,500
Materials issued from stores 45,000
Plant issued 30,000`
Wages paid 65,000
Outstanding wages 14,500
Office expenses 10,500
Cash received upto 31st Dec. 2010 amounted to Rs. 2,10,000 being 75% of the work certified.
Materials valued Rs. 6,000 and plant costing Rs. 5,000 were destroyed due to fire in the depot.
On 31st Dec. 2010, plant costing Rs. 5,000 returned to stores and the materials coting Rs. 5,000
were sold for Rs. 8,000. He cost of work done but uncertified was Rs. 15,000, Materials at site
were valued at Rs. 8,000. Charge depreciation @10% on plant, reserve ¼ of profit received,
transfer ¾ of profit received to P&L a/c and prepare Contract Account. Also, prepare work in
progress A/c and Balance Sheet.
a) Incomplete projects
b) Steps for allocation of profits
24 Discuss the concept of contract costing and services costing.
25 Discuss in detail the steps involved in service costing.
26 What is the difference between job costing and batch costing?
27 What is escalation clause in contract costing.
28 Explain the accounting treatment for plant used in contract.
29 How work in progress is calculated in contract costing?
30 What is absolute tonne km and commercial tonne km?
31. What is operating costing? How is it different from operation cost.?
32. What is composite unit in service costing?
33. State the features of operating costing.
34. How the unit cost is calculated in service costing?
35. Distinguish between standing charges and running charges in transport costing.
54
1 Discuss the nature of contract costing and how and explain how costs are recorded in
contracts.
2 Describe job Costing and Batch Costing giving example of industries where these are used?
3 Distinguish between Job Costing & Batch Costing?
4 Distinguish between job costing and process costing?
5 what are the methods of costing?
6 “Operating costing is defined as refinement of Process costing”. Explain.
7 State the unit of cost for the following industries:
a. Transport
b. Power
c. Hotel
d. Hospital
e. Steel
f. What is composite unit in service costing?automobile
8 Explain briefly What do you understand by Operating Costing? How composite units are
computed?
a) Escalation Clause
b) Cost Plus Contracts
c) Features of Job costing
10 Give your views regarding justification in charging profit on incomplete contracts and
explain methods of charging profit on incomplete projects.
11 What is the difference between job costing and contract costing? Explain the objectives
and procedure of job costing system.
12 What do you understand by “Operating Cost”? Describe its essential features and state
where it can be usefully implemented?
13 With a mixed fleet of hundred goods-transport vehicles , show how would you calculate
an hourly rate per vehicle for charging to jobs and services.
14 What is “Operating costing”? Draw a statement with imaginary figures for working out the
running cost per Kilometer of a taxi.
15 “The more kilometers you travel with your own vehicle , the cheaper it becomes”.
Comment briefly on this statement.
16 What is job costing? Explain its characteristics and accounting procedure. How does job
costing differ from contract costing?
17 Define contract costing. Discuss the basic features of contract costing.
18 A company has 20 vehicles, which capacities are as follows:
No. of Vehicles Capacity per vehicle
55
5 9 tonne
6 12 tonne
7 15 tonne
2 20 tonne
The company provides the goods transport service between stations ‘A’ to station ‘B’.
Distance between these stations is 200 kilometers. Each vehicle makes one round trip per
day an average. Vehicles are loaded with an average of 90 percent of capacity at the time
of departure from station ‘A’ to station ‘B’ and at the time of return back loaded with 70
per cent of capacity. 10 per cent of vehicles are laid up for repairs every day. The following
informationare related to the month of October, 2008:
Salary of transport manager Rs. 30,000

Salary of 30 drivers Rs.4,000 each driver
Wages of 25 helpers Rs.2,000 each helper
Wages of 20 Labourers Rs.1,500 each labourer
Consumables stores Rs.45,000
Insurance (Annual) Rs.24,000
Road License (Annual) Rs.60,000
Cost of diesel per litre Rs.35
Kilometers run per litre each vehicle 5 Km.
Lubricant, oil etc. Rs.23,500
Cost of replacement of tyres, tubes other parts etc. Rs.1,25,000
Garage rent (Annual) Rs.90,000
Transport technical service charges Rs.10,000
Electricity and gas charges Rs.5,000
Depreciation of vehicles Rs.2,00,000
There is a workshop attached to transport department which repairs these vehicles and other
vehicles also. 40 per cent of transport manager’s salary is debited to the workshop. The
transport department is charged Rs. 28,000 for the services rendered by the workshop
during October, 2008. During the month of October, 2008 operation was 25 days.
You are required:
(i) Calculate per tonne kilometer operating cost.
(ii) Find out the freight to be charged per tone kilometer, if the company earned a profit
of Rs. 25 per cent on freight.
19 Goodwill Ltd. commenced a contract on 1st January, 2005. The total contract was for Rs.
10,00,000 (estimated by the contractee) and was accepted by Goodwill at 10% less. It was
decided to estimate the total profit and to take to the credit of P& L Account that proportion
of estimated profit on cash basis which the work completed bore to the total contract.
Actual expenditure in 2005 and estimated expenditure in 2006 are given below:
56
2005(Actual) 2006( Estimated)
Materials 1,50,000 2,60,000
Labour: Paid 1,00,000 1,20,000
Accrued 10,000 -
Plant purchased 80,000 -
Expenses 40,000 71,000
Plant returned to store on (cost) 20,000 50,000
(31 Dec.) (on 30.09.06)
Material at site 10,000 -
Work certified 4,00,000 Full
Work Uncertified 15,000 -
Cash received 3,00,000 Full
The plant is subject to annual depreciation @ 20% of cost. The contract is likely to be
completed on 30th September, 2006. Prepare the Contract account.
20 In a machine shop, the machine hour rate, worked out at the beginning of a year on the
basis of 13 week period which is equal to 3 calendar months. The following estimates for
operating a machine are relevant:
Total working hours available per week 48 hours

Maintenance time included in above 2 hours
Setting up time included in above 2 hours
Cost details
Operator’s wages p. m
Supervisory salary p.m (Common supervisor’s for
three machines)
W. D. V. of machine (Dep. at 10% plus 2% on an
average for extra shift
allowance)
Repairs and maintenance p.a.
Consumable stores p.a
Rent, rates and taxes (for the quarter apportioned)
Power consumed @ 15 units per hour @ 40 paise per unit. Power required for productive
time but no power is required for setting up jobs.
57
21 A truck starts with a load of 10 tonnes of goods from station P. It unloads 4 tonnes at station
Q and rest of the goods at station R. It reaches back directly to station P after getting
reloaded with 8 tonnes of goods at station R. The distances between P to Q, Q to R and
then from R to P are 40 km, 60 km and 80 km respectively. Compute
(a) Absolute tone-km and (Ans. 1,400 tonne-km)
(b) Commercial tone-km.(Ans. 1,440 tonne-km)
22 Fast Roadway runds 10 buses between two suburban centres which are 25 kilometres apart.
Seating capacity of each bus is 30 passengers. The expenses for the month of November
1994 were as under :
Salaries of Drivers and Conductors Rs. 60,000
Salaries of Mechanical Staff 6,000
Diesel Oil and Lubricants 40,000
Taxes, Insurance, etc. 5,200
Repairs, and Maintenance 8,000
Depreciation 32,000
Seating capacity utilized was 60%.
All the buses ran 25 days of the month.
Each bus made four round trips daily.
(a) Find out the cost per passenger-km and the cost per round trip per passenger.
(Ans. Rs. 0.168 and Rs. 8.40)
(b) What would have been the cost per round trip per passenger, if the seating capacity
utilization were to go up to 80%?
(Ans. Rs.6.30)
(c) What would have been the cost per round trip per passenger, if all the expenses (other than
depreciation) were to go up by 20% at a seating capacity utilization of 80%?
(Ans.Rs.7.30)
23 S has been promised a contract to run a tourist car on a 20 km long route for the chief
executive of a multinational firm. He buys a car costing Rs. 1,50,000. The annual cost of
insurance and taxes are Rs. 4,500 and Rs. 900 respectively. He has to pay Rs. 500 per
month for a garage where he keeps the car when not in use. The annual repair costs are
estimated at Rs. 4,000. The car is estimated to have a life of 10 years, at the end of which
the scrap value is likely to be Rs. 50,000. He hires a driver who is to be paid Rs. 300 per
month plus 10% of the takings as commission. Other incidental expenses are estimated at
Rs. 200 per month. Petrol and oil will cost Rs. 100 per 100 kms. The car will make 4 round
trips each day. Assuming that a profit of 15% on takings is desired and that the car will be
on the road for 25 days on an average per month, what should be the charge per round trip?
(Ans. Rs. 88.22)
58
24 From the following information, prepare a monthly cost shett of XYZ Brick Works,
showing Cost and Profit per ‘S’ brick. (S= 1,000 bricks)
Material used:
Lime 895 tonnes at Rs. 500 per tone
Coal 825 tonnes at Rs. 300 per tone
Sand Rs. 15 per S bricks made
Stores Rs. 1,46,500
Labour:
Sand digging and running Rs. 1,00,000
Bricks making Rs. 4,00,000
Factory O/H 25% on direct charges
Office O/H 10% on direct charges
Bricks sold 3,500 S @ Rs. 550 per S
Opening stock of bricks 100S
Closing stock of bricks 600 S
25 A transport service company is running four buses between two towns, which are 100 miles
apart. The seating capacity of each bus is 40 passengers. The following particulars are
available for October, 2013:
Rs.
Wages of drivers, conductors and cleaners 48,000
Salaries of office staff and inspectors 20,000
Diesel and lubricants 80,000
Repairs and maintenance 16,000
Road tax and insurance 32,000
Depreciation 52,000
Interest and other charges 40,000
26 A contractor commenced a contract on 1st July 2009 and the contractor provides the following
information on 31st March 2010:
Particulars ₹
Material 42,000
Labour 1,02,000
Other charges 12,500
Administrative Expenses 25,500
Material in hand 4,400
59
A machine costing ₹36,000 had been on site for 6 months. The working life of machinery is
estimated six years and the scrap value at ₹6,000. A supervisor who is paid ₹1,600 per year has
spent ½ (one half) of his time on the contract. The contract price was ₹4,00,000 and on 31st March
2010 the 2/3rd of the contract was completed. Cash received ₹1,50,000 being 75% of work
certified. Prepare Contract A/c and Work in Progress A/c.
27 What is Job Costing? Explain its characteristics and accounting procedure. How does Job
Costing differ from Contract Costing?
28 Write short notes on the following-
a) Contract costing
b) batch costing
c) operating costing
d) job costing
29 The following are the particulars relating to a contract which has begun on 1st January 2013.
₹
Contract price 500000
Machinery 30000
Materials 170600
Wages 148750
Direct expenses 6330
Outstanding wages 5380
Uncertified work 9000
Overheads 8240
Materials returned 1600
Materials on hand(opening balance) 3700
Materials on hand(closing balance) 22000
Value of work certified 390000
Cash received 351000
Prepare the contract account for the year 2013 showing the amount of profit that may be taken to
the credit of profit & loss a/c of the year. Also show the amount of the work in progress as it would
appear in the balance sheet of the year.
60
30 Union Transport Company supplies the following details in respect of a truck of 5-tonne
capacity:
The truck carries goods to and from city covering a distance of 50 miles each way.
While going to the city freight is available to the extent of full capacity.
Assuming that the truck runs on an average 25 days a month, work out:
(i) Operating cost per tonne-mile, and
(ii) Rate per ton per trip that the company should charge if profit of 50% on freightage is to be
earned.
31.The following expenditure was incurred on a contract of Rs.12,00,000 for the year ending 31-
12-2015. `
Rs. Materials 2,40,000
Rs. Wages 3,28,000
Rs. Plant 40,000
Rs. Overheads 17,200
Cash received on account of the contract to 31st Dec., 2015 was `Rs.4,80,000, being 80% of the
Work certified. The value of materials in hand was Rs.20,000. The plant had undergone 20%
depreciation.
Prepare Contract Account. \
32. The following expenses were incurred on an unfinished contract during the year 2015.
MaterialsRs. 90,000
Wages Rs.60,000
Other expenses Rs.30,000 `
Rs.2,00,000 was received by the contractor, being 80% of the work certified. Work done but not
certified was Rs.5,000.
Determine the profit to be credited to profit and loss account and profit kept reserve in all the three
alternatives given below:
(i) Contract price is Rs.3,00,000
(ii) Contract price is Rs.5,50,000
(iii) Contract price is Rs.12,00,000
61
33. The following were the expenses on a contract which commenced on 1st January 2016. `
Materials purchased Rs.1,10,000 Material at the end Rs.1,250 Direct wages Rs.15,000 Plant issued
Rs.5,000 Direct expenses Rs.8,000 The contract price was ` Rs.1,50,000. It was duly received
when the contract was completed on 31-3-2016. Charge indirect expenses at 15% on wages and
provide Rs.1,000 for depreciation on plant. Prepare the contract account and contractee’s account.
34. Yogesh & sons.accepted a contract for the construction of a building for Rs.10,00,000, the
contractee agreeing to pay 90% of work certified by the architect. During the first year, the amounts
spent were:
Particulars were:`
Material Rs.1,20,000 Machinery Rs.30,000 Labour Rs.1,50,000 Other expenses Rs. 90,000
At the end of the year, the machinery was valued at ` Rs. 20,000 and materials at site were of the
value of Rs. 5,000. Work certified during the year totalled Rs.4,00,000. In addition workin-
progress not certified at the end of the year had cost Rs.15,000. Prepare Contract Account in the
books of Yogesh & sons. Also show the various figures of profit that can be reasonably transferred
to the Profit and Loss Account
35. The Construction Co.. has undertaken the construction of a bridge. The value of the contract
was Rs. 15,00,000 subject to retention of 20% until one year after certified completion of the
contract, and final approval of the Corporation’s engineer. The following are the details as shown
in the books on 30th June, 2018.
``
Labour on site Rs. 4,05,000
Materials Rs. 6,300
Materials direct to site Rs. 4,20,000
Wages accrued Rs. 7,800
Materials from stores Rs 81,200
Direct expenses accrued Rs. 1,600
Hire and use of plant Rs. 12,100
Works not yet certified at cost Rs. 16,500
Direct expenses Rs. 23,000 Amount certified Rs.11,00,000
General overhead allocated Rs. 37,100
Work certified Rs. 11,00,000 contract
Cash received on account Rs. Rs. 8,80,000
Prepare (a) Contract Account, (b) Contractee’s Account
62
QUESTION BANK
QUANTITATIVE
TECHNIQUES
BBA-104
63
QUESTION BANK
QUANTITATIVE TECHNIQUES– BBA 104
BBA - II
UNIT – I
I. Multiple Choice Questions:
1. The sum of deviations of observations from their arithmetic mean:

A. Maximum
B. Least
C. Zero
D. None of these
ANSWER: C
2. The sum of absolute deviations is minimum when taken from:

A. Mean
B. Median
C. Mode
D. None of these
ANSWER: B
3. The sum of squared deviations is minimum when taken from:

A. Mean
B. Median
C. Mode
D. None of these
ANSWER: A
4. What is the median of 33, 86, 68, 32, 80, 48, 70?
A. 32
B. 68
C. 80
D. 86
ANSWER: B
5. In a moderately skewed distribution, the value of mean is 16 and that of mode is 25.
A. 20
B. 19
C. 21
64
D. None of these
ANSWER: B
6. In a moderately skewed distribution, the following equation indicates the relationship

among mean, median and mode:
A. Mean = 2 Mode - 3 Median
B. Mode = 3 Median – 2 Mean
C. Median = 3 Mean – 2 Mode
D. None of these
ANSWER: B
7. For a symmetrical distribution, Q1 and Q3 are 20 and 60 respectively. The value of median
will be:
A. 20
B. 30
C. 40
D. 50
ANSWER: C
8. The variate values which divide series into ten equal parts are called:
A. Quartiles
B. Deciles
C. Percentiles
D. None of these
ANSWER: B
9. From which average, the sum of deviations is zero?

A. Mean
B. Median
C. Mode
D. None of these
ANSWER: A
10. The average to be used to determine the average size of the shoe sold in a shop is:
A. Mean
B. Median
C. Mode
D. None of these
ANSWER: C
65
11. Find the Mode of 5, 3, 27, 5, 9, 3, 8, 5:
A. 5
B. 27
C. 9
D. 3
ANSWER: A
12. In a moderately asymmetrical distribution, the value of mean is 75 and the value of mode
is 60 :
A. 75
B. 70
C. 85
D. 80
ANSWER: B
13. Given Mean = 70.2 and mode = 70.5. Find the median using empirical relationship among
them.
A. 120
B. 150
C. 180
D. 300
ANSWER: B
14. In a moderately skewed distribution, the value of mode is 120 and that of median is 140.
Find the value of arithmetic mean.
A. 150
B. 160
C. 170
D. 180
ANSWER: A
15. The arithmetic mean of the marks obtained by 50 students was calculated as 44. It was later
discovered that a score of 36 was misread as 56. Find the correct value of arithmetic mean
of the marks obtained by the students.
A. 43
B. 43.6
C. 45
D. 50
ANSWER: B
66
16. The marks obtained by 9 students in a test are 25, 20, 15, 45, 18, 7, 10, 38 and 12. Find
the median.
A. 38
B. 20
C. 18
D. 15
ANSWER: C
17 In a moderately asymmetrical distribution, the mode and mean are 32.1 and 35.4 respectively.
Calculate the median.
A. 35
B. 34.3
C. 36
D. 37
ANSWER: B
18 In a moderately skewed distribution, the mode and median are 20 and 24 respectively. Calculate
the value of mean.
A. 27
B. 26
C. 25
D. 28
ANSWER: B
19 The mean weight of 150 students in a class is 60 Kg. The mean weight of Boy students is 70
Kg and that of a girl student is 55 kg. Find the number of Boys and Girls in the class.
A. 50 and 100
B. 100 and 50
C. 150 and 200
D. 200 and 150
ANSWER: A
20 A distribution consists of three components with total frequencies of 200, 250 and 300 having
means 25, 10 and 15 respectively. Find the mean of the combined distribution.
A. 17
B. 16
C. 15
D. 20
ANSWER: B
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21. Difference of mode and mean is equal to
A. 3(mean-median)
B. 2(mean-median)
C. 3(mean-mode)
D. 2(mode mean)
ANSWER: A
22. If mean is 11 and median is 13 then value of mode is

A. 15
B. 13
C. 11
D. 17
ANSWER: D
23. Distribution in which values of median, mean and mode are not equal is considered as
A. experimental distribution
B. asymmetrical distribution
C. symmetrical distribution
D. exploratory distribution
ANSWER: B
24. If value of three measures of central tendencies median, mean and mode then distribution is
considered as
A. negatively skewed modal
B. triangular model
C. unimodel
D. bimodal
ANSWER: C
25. If value of mode is 14 and value of arithmetic mean is 5 then value of median is
A. 12
B. 18
C. 8
D. 14
ANSWER: C
26. In a negative skewed distribution, order of mean, median and mode is as:
A. mean<median>mode
B. mean>median>mode
C. mean<median<mode
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D. mean>median<mode
ANSWER: C
27. Measure which describes detailed characteristic of whole data set is classified as
A. average or central value
B. positive skewed value
C. negative skewed value
D. positive extended value
ANSWER: A
28. Extent to which values are dispersed around central observation is considered as
A. trailing
B. variation
C. extension
D. centralized valuation
ANSWER: B
29. Manner in which geometric mean, harmonic mean and arithmetic mean are related is as
A. A.M>G.M>H.M
B. A.M>G.M<H.M
C. A.M<G.M<H.M
D. A.M<G.M>H.M
ANSWER: A
30. Mode is best measure of tendency if analysis is

A. descriptive
B. exploratory
C. experimental
D. set of deciles
ANSWER: A
31. In statistics out of 100, marks of 21 students in final exams are as 90, 95, 95, 94, 90, 85,
84, 83, 85, 81, 92, 93, 82, 78, 79, 81, 80, 82, 85, 76, 85 then mode of data is
A. 85
B. 95
C. 90
D. 81
ANSWER: A
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32. Branches of statistics includes
A. applied statistics
B. mathematical statistics
C. industry statistics
D. both a and b
ANSWER: D
33. What is the median of the data 78, 56, 22, 34, 45, 54, 39, 68, 54, 84?
A. 54
B. 53
C. 55
D. 51
ANSWER: A
34. Find the mean of x + 77, x + 7, x + 5, x + 3 and x – 2?

A. x + 8
B. x + 18
C. x – 8
D. x – 18
ANSWER: B
35. In the class intervals 40 – 50, 50 – 60, the number 50 is included in which of the following?
A. 40 – 50
B. 30 – 40
C. 50 – 60
D. 60 – 70
ANSWER: C
36. The method used to compute average or central value of the collected data is considered as
A. measures of positive variation
B. measures of central tendency
C. measures of negative skewness
D. measures of negative variation
ANSWER: B
37. The mean or average used to measure central tendency is called

A. sample mean
B. arithmetic mean
C. negative mean
D. population mean
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ANSWER: B
38. If the mean of percentages, rates and ratios is to be calculated then the central tendency
measure which must be used in this situation is
A. weighted arithmetic mean
B. paired arithmetic mean
C. non-paired arithmetic mean
D. square of arithmetic mean
ANSWER: A
39. In the quartiles, the central tendency median to be measured must lie in
A. first quartile
B. second quartile
C. third quartile
D. four quartile
ANSWER: B
40. A numerical value used as a summary measure for a sample, such as sample mean, is
known as a
A. population parameter
B. sample parameter
C. sample statistic
D. population mean
ANSWER: C
1. Write a short note on measures of Central Tendency.

2. What are the requisites of a good average? Explain briefly.
3. State two important objects of measures of Central Value.
4. Distinguish between Simple and Weighted Average and state the circumstances under
which the latter should be employed.
5. What do you mean by arithmetic mean? Discuss its merits and demerits. Also state its
important properties.
6. State the algebraic properties of arithmetic mean with examples.
7. Define Median.
8. Is it true to say that sum of the absolute deviations from median is the minimum? Illustrate
your answer with the help of an example.
9. State the formula of median for grouped data with class intervals.
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10. Why is the median called a positional average?
11. Point out the merits and demerits of median.
12. Define Mode. When is mode preferred over other forms of average?
13. When is mode said to be ill-defined?
14. Point out the merits and demerits of mode as a measure of central tendency.
15. A stockiest of ready-made garments should follow which type of an average and why?
16. Give the formula for computing mode in a continuous series.
17. Briefly explain the role of Grouping Table and Analysis Table in calculation of Mode.
18. “The arithmetic mean is best among all the averages.” Why or why not?
19. Discuss the importance of statistics. What are various limitations of statistics?
20. What are the chief characteristics of statistics?
21. Discuss the importance of statistics in business and commerce.
22. Explain the importance of statistics with reference to business and industry.
23. Is statistics a science or an art or both?
24. Differentiate between arithmetic mean and median.
25. What are the qualities of a good average?
26. What are the limitations of Statistics?
27. Define Geometric mean.
28. Define Harmonic Mean.
29. What is the relationship between GM, HM and AM?
30. What is the formula for GM?
31. Differentiate between arithmetic mean and median.
32. What are the qualities of a good average?
33. What are the objectives of tabulation?
34. What is a bar graph?
35. What is frequency distribution?
1. Following is the distribution of marks in economics obtained by 50 students:

Marks (more 0 10 20 30 40 50
than):
No. of Students 100 92 80 40 20 6
Calculate the median marks. If 60% of the students pass this test. Find the minimum marks
obtained by a pass candidate.
2. The mean and standard deviation of 100 items is found to be 120 and 20, two items are
wrongly taken as 23 and 7, instead of 13 and 17, find the correct mean and standard
deviation.
3. What are the sources of collection of data? What are the limitations of statistics?
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4. What is the meaning of normalcy of data? How is it measured?
5. Distinguish between skewness and dispersion.
6. A distribution consists of three components with total frequencies of 200, 250 and 300
having means 25, 10 and 15 respectively. Find the mean of combined distribution.
7. Write short notes on:
a) Absolute and Relative Variation
b) Lorenz Curve
8. The following data relate to salaries of the employees of the factory.
Morning Shift Evening Shift
Mean Salary per month (Rs.) 14,300 18,600
Standard Deviation of Salary (Rs.) 1,250 1,320
Number of Employees 40 30
a) For which factory is the total salary higher?

b) In which factory is the variability in salaries greater?
c) Calculate the combined mean salary of two shifts.
9. Represent the following distribution by a histogram:
Class Interval 10-20 20-30 30-40 40-50 50-60 60-70
Frequency 6 8 12 10 4 2
10. Given the following distribution of marks of students of a class:

Marks 20-30 30-40 40-50 50-60 60-70
No. of Students 12 20 48 16 4
a) Calculate median marks.

b) If 80% of the students pass the test, determine the minimum pass marks.
11. Find Combined Mean for the two sets of data from the given information:
Set I Set II
Size 20 40
Mean 110 105
12. Calculate the A.M., Median and Mode for the frequency distribution:
Variable 10-13 13-16 16-19 19-22 22-25 25-28 28-31 31-34 34-37 37-40
Frequency 8 15 27 51 75 54 36 18 9 7
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13. A candidate obtained the following percentage of marks in different subjects in the final
examination:
English 60, Statistics 75, Cost Accountancy 63, Economics 59, Income tax 55. Find the
candidate’s weighted arithmetic mean if weights are 1, 2, 1, 3, 3 respectively are allotted
to the subjects.
14. Calculate Weighted Mean from the following data:
Value 10 12 15 18 20
Weight 2 5 12 4 7
15. An incomplete distribution is given below:

Class 0-10 10-20 20-30 30-40 40-50 50-60 60-70 Total
Frequency 10 20 ? 40 ? 25 15 170
Find out the missing frequencies if median value is 35.

16. Following is the distribution of marks obtained by 65 students in statistics paper:
Marks (more than) 20 30 40 50 60 70
No. of Students 65 63 40 40 18 7
Calculate the median marks.

17. Consider incomplete distribution of the protein consumption unit/day (g) of 400 families-
Protein Intake 15-25 25-35 35-45 45-55 55-65 65-75 75-85
No.of families 30 ? 100 110 80 ? 10
If the median is found to be 47.73, find the missing frequency. Also find the mode of the
completed distribution.
18. Following is the distribution of marks in economics obtained by 50 students:
Marks (more than) 0 10 20 30 40 50
No. of Students 100 92 80 40 20 6
Calculate the median marks. If 60% of the students pass this test, find the minimum marks
obtained by a pass candidate.
19. The mean and standard deviation of 100 items are found to be 120 and 20. If at the time of
calculations, two items are wrongly taken as 23 and 7 instead of 13 and 17, find the
corrected mean and corrected standard deviation.
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20. When is the variance equal to the standard deviation? Under what circumstances can
variance be less than standard deviation? Explain.
21. The scores of two batsmen A and B in ten innings are as follows:
A 32 28 47 63 71 39 10 60 96 14
B 19 31 48 53 67 90 10 62 40 80
Which Batsman is more consistent in scoring?

22. The mean and standard deviation of 100 items are found to be 40 and 10. If at the time of
the calculations, two items are wrongly taken as 30 and 70 instead of 3 and 27, find the
corrected mean and corrected standard deviation.
23. The following data relate to salaries of the employees of the factory.
A B
Mean Salary per month (Rs.) 1600 1750
Variance of salary of workers 256 289
Number of Employees 100 200
Compute the following:
a) Which firm pays larger pay package of salary to workers?

b) Which firm shows greater variability in the distribution of salary to the workers?
c) Compute the combined average salary and combined variance of all the 300 workers of
both the firms taken together.
24. Explain graphical method of locating mode.
25. Why is the median called a positional average? Point out the merits and demerits of median.
26. What do you mean by median? How do you measure median? Can it be measured
graphically? If yes, how? How you compute other positional measures?
27. The following table gives the monthly income of 10 employees in an office. Income (in
Rs): 1780, 1760, 1690, 1750, 1840, 1920, 1100, 1810, 1050, 1950. Calculate the A.M.
28. Jeremy scored the following on his last seven math tests (out of 100): 70, 80, 70, 90, 80,
100, 70 What is the mean of Jeremy’s test scores?
29. In a survey of 10 households, the number of children was found to be 4, 1, 5, 4, 3, 7, 2, 3,
4, 1 A State the mode. Calculate (i) the mean number of children per household (ii) the
median number of children per household. C A researcher says: "The mode seems to be
the best average to represent the data in this survey." Give ONE reason to support this
statement.
30. Students in Year 8 are arranged in eleven classes. The class sizes are 23, 24, 24, 26, 27, 28,
30, 24, 29, 24, 27. A What is the modal class size? (b) Calculate the mean class size. The
range of the class sizes for Year 9 is 3. C What does this tell you about the class sizes in
Year 9 compared with those in Year 8?
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31. Why is the median called a positional average? Point out the merits and demerits of median.
32. Define statistics? Explain its importance in detail.
33. What are the objectives and limitations of statistics?
34. Explain in detail partition values- deciles, quartiles and percentiles.
35. “Statistics is all about numbers or numerical data”. Elucidate the statement in the light of
defining importance, functions and limitation of statistics.
UNIT – II
1. If the sum of squares of the rank differences of 10 pairs of values is 30, find the correlation
coefficient between them.
A. 0.75
B. 0.82
C. 0.90
D. 0.83
ANSWER: B
2. In a bivariate sample, the sum of squares of differences between marks of observed values
of two variables is 33 and the rank correlation between them is 0.8. Find the number of
pairs of observations:
A. 12
B. 10
C. 15
D. 18
ANSWER: B
3. In a bivariate distribution, Spearman’s Coefficient of Correlation is -0.25. If the sum of the

squares of various ranks is 150, find out the number of pairs of items:
A. 10
B. 8
C. 9
D. 7
ANSWER: C
4. The rank correlation coefficient of a debating contest involving 10 participants was

calculated as 0.6. However, it was later discovered that the difference in the ranks of some
participants was read as 8 instead of 3. Find the correct correlation coefficient:
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A. 0.933
B. 0.652
C. 0.854
D. 0.751
ANSWER: A
5. The regression coefficient of X on Y is:

A. bXY
B. bYX
C. Not Specified
ANSWER: A
6. Regression Coefficient of Y on X is:

A. bXY
B. bYX
C. Not Specified
ANSWER: B
7. If one of the regression coefficient is greater than unity, the other must be:
A. More than Unity
B. Less than Unity
C. Unity
ANSWER: B
8. The regression coefficients re independent of change of origin but:

A. Not of Scale
B. Also of Scale
C. No Change in scale
ANSWER: A
9. The coefficient of correlation between the regression coefficients is:

A. Arithmetic Mean
B. Geometric Mean
C. Average
ANSWER: B
10. The correlation coefficient is used to determine:

A. A specific value of the y-variable given a specific value of the x-variable
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B. A specific value of the x-variable given a specific value of the y-variable
C. The strength of the relationship between the x and y variables
D. None of these
ANSWER: C
11. If there is a very strong correlation between two variables then the correlation coefficient
must be:
A. any value larger than 1
B. much smaller than 0, if the correlation is negative
C. much larger than 0, regardless of whether the correlation is negative or positive
D. None of these alternatives is correct
ANSWER: B
12. In regression, the equation that describes how the response variable (y) is related to the
explanatory variable (x) is:
A. the correlation model
B. the regression model
C. used to compute the correlation coefficient
D. None of these alternatives is correct.
ANSWER: B
13. In regression analysis, the variable that is being predicted is the:

A. Response, or dependent, variable
B. Independent variable
C. intervening variable
D. is usually x
ANSWER: A
14. In a regression analysis if r2 = 1, then:

A. SSE must also be equal to one
B. SSE must be equal to zero
C. SSE can be any positive value
D. SSE must be negative
ANSWER: B
15. The coefficient of correlation:

A. is the square of the coefficient of determination
B. is the square root of the coefficient of determination
C. is the same as r-square
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D. can never be negative
ANSWER: B
16. In regression analysis, the variable that is used to explain the change in the outcome of an
experiment, or some natural process, is called:
A. the x-variable
B. the independent variable
C. the predictor variable
D. all of the above (a-d) are correct
ANSWER: D
17. If the coefficient of determination is a positive value, then the regression equation:
A. must have a positive slope
B. must have a negative slope
C. could have either a positive or a negative slope
D. must have a positive y intercept
ANSWER: C
18. If two variables, x and y, have a very strong linear relationship, then:
A. there is evidence that x causes a change in y
B. there is evidence that y causes a change in x
C. there might not be any causal relationship between x and y
D. None of these alternatives is correct.
ANSWER: C
19. If the coefficient of determination is equal to 1, then the correlation coefficient:

A. must also be equal to 1.
B. can be either -1 or +1.
C. can be any value between -1 to +1
D. must be -1
ANSWER: B
20. In regression analysis, if the independent variable is measured in kilograms, the dependent
variable:
A. must also be in kilograms
B. must be in some unit of weight
C. cannot be in kilograms
D. can be any units
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ANSWER: D
21. A process by which we estimate the value of dependent variable on the basis of one or
more independent variables is called:
A. Correlation
B. Regression
C. Residual
D. Slope
ANSWER: B
22. The method of least squares dictates that we choose a regression line where the sum of the
square of deviations of the points from the lie is:
A. Maximum
B. Minimum
C. Zero
D. Positive
ANSWER: B
23. A relationship where the flow of the data points is best represented by a curve is called:
A. Linear relationship
B. Nonlinear relationship
C. Linear positive
D. Linear negative
ANSWER: A
24. All data points falling along a straight line is called:

A. Linear relationship
B. Nonlinear relationship
C. Residual
D. Scatter diagram
ANSWER: A
25. The value we would predict for the dependent variable when the independent variables are
all equal to zero is called:
A. Slope
B. Sum of residual
C. Intercept
D. Difficult to tell
ANSWER: C
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26. The predicted rate of response of the dependent variable to changes in the independent
variable is called:
A. Slope
B. Intercept
C. Error
D. Regression equation
ANSWER: D
27. The slope of the regression line of Y on X is also called the:

A. Correlation coefficient of X on Y
B. Correlation coefficient of Y on X
C. Regression coefficient of X on Y
D. Regression coefficient of Y on X
ANSWER: D
28. In simple linear regression, the numbers of unknown constants are:

A. One
B. Two
C. Three
D. Four
ANSWER: B
29. In simple regression equation, the numbers of variables involved are:

A. 0
B. 1
C. 2
D. 3
ANSWER: C
30. If the value of any regression coefficient is zero, then two variables are:
A. Qualitative
B. Correlation
C. Dependent
D. Independent
ANSWER: D
31. The measurements of spread or scatter of the individual values around the central point is
called:
A. Measures of dispersion
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B. Measures of central tendency
C. Measures of skewness
D. Measures of kurtosis
ANSWER: A
32. The scatter in a series of values about the average is called:

A. Central tendency
B. Dispersion
C. Skewness
D. Symmetry
ANSWER: B
33. The measures used to calculate the variation present among the observations in the unit of
the variable is called:
A. Relative measures of dispersion
B. Coefficient of skewness
C. Absolute measures of dispersion
D. Coefficient of variation
ANSWER: C
34. The measures used to calculate the variation present among the observations relative to
their average is called:
A. Coefficient of kurtosis
B. Absolute measures of dispersion
C. Quartile deviation
D. Relative measures of dispersion
ANSWER: D
35. The degree to which numerical data tend to spread about an average value called:
A. Constant
B. Flatness
C. Variation
D. Skewness
ANSWER: C
36. The measures of dispersion can never be:

A. Positive
B. Zero
C. Negative
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D. Equal to 2
ANSWER: C
37. If all the scores on examination cluster around the mean, the dispersion is said to be:
A. Small
B. Large
C. Normal
D. Symmetrical
ANSWER: A
38. If there are many extreme scores on all examination, the dispersion is:
A. Large
B. Small
C. Normal
D. Symmetric
ANSWER: A
39. Given below the four sets of observations. Which set has the minimum variation?
A. 46, 48, 50, 52, 54
B. 30, 40, 50, 60, 70
C. 40, 50, 60, 70, 80
D. 48, 49, 50, 51, 52
ANSWER: D
40. Which of the following is an absolute measure of dispersion?

A. Coefficient of variation
B. Coefficient of dispersion
C. Standard deviation
D. Coefficient of skewness
ANSWER: C
1. Define Correlation. Explain various types of correlation with examples.

2. What is meant by coefficient of correlation between two variables? Also distinguish
between positive and negative correlation.
3. Does correlation signify the existence of cause and effect relationship between two
variables?
4. What is scatter diagram and how is it useful in the study of correlation?
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5. How does a scatter diagram help in ascertaining the degree of correlation between two
variables? Explain with suitable examples.
6. Give suitable diagrams to show perfect positive and perfect negative correlations.
7. Distinguish between correlation and causation. State the uses of correlation in practical
life.
8. What is meant by coefficient of correlation between two variables? Also distinguish
between positive correlation and negative correlation.
9. Define Karl Pearson’s Coefficient of correlation.
10. State any two of the properties of Karl Pearson’s Coefficient of Correlation.
11. Write the formula of Karl Pearson’s coefficient of correlation when deviations are taken
from assumed arithmetic mean.
12. What is Spearman’s Rank Correlation? When is it calculated?
13. State the merits and demerits of Spearman’s Rank Correlation method.
14. Explain Karl Pearson’s Coefficient of Correlation v/s rank Correlation.
15. What do you mean by regression? Why are their two regression lines in a bivariate series?
Can there be one regression line?
16. What is regression coefficient? How is it different from coefficient of correlation?
17. Distinguish between correlation and regression.
18. State two properties of regression coefficients.
19. The covariance between the length and weight of five items is 6 and their standard
deviations are 2.45 and 2.61 respectively. Find the coefficient of correlation between length
and weight.
20. The coefficient of correlation between two variables X and Y is 0.4 and their covariance is
10. If the variance of X series is 9, find the standard deviation of Y series.
21. Find the coefficient of correlation between X and Y if covariance between X and Y is 10
and the variance of X and Y are respectively 16 and 9.
23. If the sum of squares of the rank differences of 9 pairs of values is 80, find the correlation
coefficient between them.
24. In a bivariate data of 9 pairs of observations, the sum of square of difference between the
ranks of observed values of two variables is 231 and the rank correlation coefficient is -
0.4. Find the value of n.
25. The coefficient of rank correlation between debenture prices and share prices of a company
is found to be 0.143. If the sum of the squares of the difference in ranks is 48, find the value
of n.
26. What do you mean by Karl Pearson’s Coefficient of Correlation.
27. How do you measure Spearman’s rank correlation coefficient?
28. What are the cases of Spearman’s Rank Correlation?
29. What do you mean by forecasting errors?
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30. Explain Forecasting method and how forecasting errors are calculated?
31. What is skewness?
32. What are the various objectivesa of measuring skewness?
33. Difference between skewness and kurtosis.
34. What are the various tests for Skewness.
35. How to determine coefficient of skewness.
1. The coefficient of rank correlation of the marks obtained by 10 students in statistics and
accountancy was found to be 0.2. It was later discovered that the difference in ranks in the
two subjects obtained by one of the students was wrongly taken as 9 instead of 7. Find the
correct value of coefficient of rank correlation.
2. From the following data, calculate the Karl Pearson’s Coefficient of Correlation between
age of students and their playing habits:
Age (years) 15 16 17 18 19 20
No. of Students 300 250 200 150 100 80
Regular Players 240 180 126 60 30 12
3. Calculate the mean values of variables X and Y from the following regression equations-
6X – 7Y + 33 = 0 and 9X + 5Y – 69 = 0
4. Obtain the two regression equations from the following data:
X Y
Mean 28 42
Standard Deviation 10 8
Coefficient of Correlation, r -0.8
Using the equations, estimate the value of Y when X = 30 and the value of X when Y= 42.
5. Calculate the coefficient of Rank Correlation from the following data:

X 8 14 9 20 24 18
Y 26 18 12 12 9 2
6. Two judges in a beauty competition rank the 12 entries as follows:

X 1 2 3 4 5 6 7 8 9 10 11 12
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Y 12 9 6 10 3 5 4 7 8 2 11 1
What degree of agreement is there between the judgement of the two judges?
7. Given Variance = 9 and Regression Equations: 4X – 5Y + 33 = 0, 20X – 9Y – 107 = 0.

Find A Mean of X and Mean of Y (b) Standard Deviation of Y C r (coefficient of
correlation).
8. From the following data, calculate the Karl Pearson’s Coefficient of Correlation between
age of students and their playing habits:
Age 15 16 17 18 19 20
No. of students 250 200 150 120 100 80
Regular Players 200 150 90 48 30 12
9. The age and blood pressure of 10 university teachers are:

Age 46 45 36 47 49 42 60 72 63 55
Blood 147 125 118 140 142 145 155 160 148 151
Pressure
a) Find the correlation coefficient between age and blood pressure.
b) Determine the least square regression equation of blood pressure on age.
c) Estimate the bold pressure of a teacher whose age is 35 years.
10. What is Spearman’s rank correlation? When is it calculated?
11. Consider the following data set:
Week 1 2 3 4 5 6
Sales 2.69 2.62 2.80 2.70 2.55 2.93
Find the correlation coefficient between sales and week.

a) Spearman’s Rank Correlation Coefficient
b) Karl Pearson’s Correlation Coefficient
13. Draw a scatter diagram for the following data:
Height 62 72 70 60 67 70 64 65 60 70
(in
inches)
Weight 50 65 63 52 56 60 59 58 54 65
(in
Kgs)
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Also indicate whether correlation is positive or negative.
15. The deviations from the respective means of X and Y series are given below:
X -4 -3 -2 -1 0 1 2 3 4
Y 3 -3 -4 0 4 1 2 -2 -1
Calculate the Karl Pearson’s Coefficient of Correlation from the above data.
16. From the following data, calculate Karl Pearson’s Coefficient of Correlation:
Expenditure (X) 39 65 62 90 82 75 25 98 36 78
Sales (Y) 47 53 58 86 62 68 60 91 51 84
17. Calculate Karl Pearson’s Coefficient of Correlation between variables X and Y using the
following data:
X 25 40 30 25 10 5 10 15 30 20
Y 10 25 40 15 20 40 28 22 15 5
18. Find Karl Pearson’s Coefficient of Correlation between the age of students and their
playing habits from the following information:
Age (in years) 15 16 17 18 19 20
No. of students 300 250 200 150 100 80
No. of players 240 180 126 60 30 12
19. The coefficient of rank correlation of the marks obtained by 10 students in statistics and
accountancy was found to be 0.2. It was later discovered that the difference in ranks in the
two subjects obtained by one of the students was wrongly taken as 9 instead of 7. Find the
correct value of coefficient of rank correlation.
20. Calculate Spearman’s Coefficient of rank Correlation from the following data:
X 57 16 24 65 16 16 9 40 33 48
Y 19 6 9 20 4 15 6 24 13 13
21. What are the merits and demerits of Karl Pearson’s Correlation Coefficient in comparison
to Spearman’s Correlation Coefficient.
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22. What are different methods of calculating correlation? Explain the methods in detail with
formulas.
23. What is the difference between correlation and regression?
24. What is regression? What are the different properties of regression?
25. Explain Least Square Approach of calculating Regression.
26. The table below shows the scores for 12 students on two Mathematic exam papers. For the
first paper calculators were allowed and for the second paper they were not.
Paper 1 (xx) 74 73 65 75 68 72 69 71 83 68 68 73
Paper 2 (yy) 75 83 69 77 71 77 68 76 84 69 71 75
A Write down the mean score on Paper 1.

(b) Write down the standard deviation of the scores for Paper 1.
C Find the number of students that had a score of more than one standard deviation
below the mean on Paper 1.
(d) Write down the correlation coefficient, rr.
E Write down the equation of the regression line of yy on xx.
Another student scored 75 on Paper 1.
(f) Calculate an estimate of his score on Paper 2
Another student scored 88 on Paper 1.
(g) Determine whether you can use the equation of the regression line to estimate his
score on Paper 2. Give a reason for your answer.
27. The following table shows the average weights for given heights in a population of men.
Heights (x cm) 160 165 170 175 180 185
Weights ( y kg) 65.1 67.9 70.1 72.8 75.4 77.2
A The relationship between the variables is modelled by the regression equation y=-ax+b.
Write down the value of a and of b.
(b) Use this relationship to estimate the weight of a man whose height is 177 cm.
C Find the correlation coefficient.
28. The following table shows the relationship between the number of workers and the
amount of time in minutes it takes them to harvest the sugar cane in a particular field.
30. Time (tt)
29. Workers (nn)
88
32. 799
31. 3
34. 703
33. 4
36. 645
35. 5
38. 570
37. 6
40. 422
39. 8
42. 322
41. 9
44. 241
43. 10
Find the equation of the regression line of tt on nn.
29. In a survey of insect life near a stream, a student collected data about the number of
different insect species (y) that were found at different distances (x) in metres from the
stream.
Distance (x) 2 5 8 11 14 17 22 33 39
Insect species (y) 26 25 19 19 14 9 5 3 2
Draw a scatter diagram to show the data.
30. The following table shows the amount of diesel required by a train to travel certain
distances.
Distance (x km) 90 150 230 310 390
Diesel used (y litres) 19.2 33.9 49.0 79.5 89.9
This data can be modelled by the regression line with equation y=ax+b.
A Find the values of a and of b.
(b) Explain what the gradient a represents.
C Use the model to estimate the amount of diesel the train would use if it is driven 270
km.
89
31. Calculate 1st quartile, 5th decile and 70th percentile for the following frequency distribution
Class interval Frequency
3-5 6
6-8 8
9-11 9
12-14 14
15-17 16
18-20 17
21-23 11
24-26 8
27-29 7
30-32 4
32. From the figures given below, calculate: (i) The range (ii) The arithmetic mean (iii) The
median (iv) The lower quartile (v) The upper quartile (vi) The mean deviation (vii) The
standard deviation
3 14 24 33 42
6 17 25 37 48
9 18 27 38 51
10 21 31 40 56
12 61 63 65 74
33. The mean and the median of a frequency distribution are 4 and 7 respectively. The standard
deviation is 8. Calculate Pearson’s coefficient of skewness.
34. Using the data from the example above (12 13 54 56 25), determine the type of kurtosis
present.
35. The following data is given. Find a) the mean and b) the variance.
Class Intervals f
0 - under 10 10
10 - under 20 20
90
20 - under 30 40
30 - under 40 20
40 - under 50 10
Total 100
UNIT – III
1. In a linear programming, lack of points for a solution set is said to:

A. have no feasible solution
B. have a feasible solution
C. have single point method
D. have infinite point method
ANSWER: B
2. In maximization problem, optimal solution occurring at corner point yields the:

A. mean values of z
B. highest value of z
C. lowest value of z
D. mid values of z
ANSWER: B
3. In linear programming most popular non- graphical:

A. Linear Procedure
B. Non – Graphical Procedure
C. Graphical Procedure
D. Simplex Method
ANSWER: D
4. In linear programming the term which states value of objective function improvement is
classified as:
A. Stated Function
B. Improved Function
C. Better Programmed
D. Best
ANSWER: C
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5. Non basic variable which is used to replace basic variable is variable which has:
A. Most Positive Column
B. Most Negative Column
C. Most Negative Row
D. Most Positive Row
ANSWER: C
6. In linear programming problems, set of basic variables which are appeared in linear
problem consist of:
A. Slack and Real Variables
B. Slack and Artificial Variables
C. Basic Variables
D. Non Basic variables
ANSWER: B
7. In linear programming number of requirements must be satisfied in simplex method are:

A. Two requirements
B. Three requirements
C. Four requirements
D. Five requirements
ANSWER: B
8. A problem has 3 decision variables and problem 5 constraints. How many slack variables
are there?
A. 3
B. 5
C. 8
ANSWER: B
9. How many of the following points satisfy the inequality

2x - 3y> -5?
(1, 1), (-1, 1), (1, -1), (-1, -1), (-2, 1), (2, -1), (-1, 2) and (-2, -1)
A. 3
B. 6
C. 7
D. 6
E. 5
10. How many points with integer coordinates lie in the feasible region defined by
3x + 4y ≤ 12, x ≥ 0 and y ≥ 1?
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A. 6
B. 5
C. 7
D. 4
ANSWER: D
11. Find, if possible, the minimum value of the objective function 3x - 4y subject to the
constraints -2x + y ≤ 12, x - y ≤ 2, x ≥ 0 and y ≥ 0.
A. 8
B. -36
C. No solution
D. 0
ANSWER: C
12. What can you say about the solution of the linear programming problem specified in
above question 11, if the objective function is to be maximized instead of minimized?
A. Unique solution at (0,0)
B. Unique solution at(0,12)
C. Unique solution at(2,0)
D. No solution
ANSWER: C
13. What can you say about the linear programming problem specified in above question 4,
if the second constraint is changed to 3x - 4y ≤ 24 and the problem is one of maximization?
A. Unique solution at (0,0)
B. Infinitely many solutions
C. Unique solution at (8,0)
D. Unique solution at (0,6)
ANSWER: B
14. All linear programming problems may be solved using graphical method.
A. True
B. False
ANSWER: B
15. Divisibility assumption in linear programming implies

A. resources can be divided among products.
B. products can be divided among customers.
C. decision variables may take on integer values.
D. decision variables may take on fractional values.
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ANSWER: C
16. Assumptions of linear programming include

A. linearity
B. additivity
C. divisibility
D. Certainty
ANSWER: A
17.How many of the following points satisfy the inequality 2x - 3y > -5?
(1, 1), (-1, 1), (1, -1), (-1, -1), (-2, 1), (2, -1), (-1, 2) and (-2, -1)
A. 4
B. 6
C. 3
D. 5
ANSWER: D
18.What can you say about the solution of the linear programming problem specified in
question 5, if the objective function is to be maximized instead of minimized?
A. Unique solution at (0, 0)
B. Unique solution at (0, 12)
C. No solution
D. Unique solution at (2, 0)
ANSWER: D
19.Which of the following is not an essential condition in a situation for linear programming to be
useful?
A. An explicit objective function
B. Uncertainty
C. Linearity
D. Limited resources
ANSWER: B
20.What is the objective function in linear programming problems?

A. A constraint for available resource
B. An objective for research and development of a company
C. A linear function in an optimization problem
D. A set of non-negativity conditions
ANSWER: C
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21. Objective of linear programming for an objective function is to
A. maximize or minimize
B. subset or proper set modeling
C. row or column modeling
D. adjacent modeling
ANSWER: A
22. For a linear programming equation, convex set of equations is included in region of
A. feasible solutions
B. disposed solutions
C. profit solutions
D. loss solutions
ANSWER: A
23. In graphical solutions of linear inequalities, solution can be divided into

A. one subset
B. two subsets
C. three subsets
D. four subsets
ANSWER: B
24. Linear programming used to optimize mathematical procedure and is

A. subset of mathematical programming
B. dimension of mathematical programming
C. linear mathematical programming
D. all of above
ANSWER: A
25. In linear programming, objective function and objective constraints are

A. solved
B. linear
C. quadratic
D. adjacent
ANSWER: B
26. Linear programming model which involves funds allocation of limited investment is
classified as:
A. ordination budgeting model
B. capital budgeting models
C. funds investment models
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D. funds origin models
ANSWER: B
27. In transportation models designed in linear programming, points of demand is

classified as
A. ordination
B. transportation
C. destinations
D. origins
ANSWER: C
28. In linear programming, lack of points for a solution set is said to

A. have no feasible solution
B. have a feasible solution
C. have single point method
D. have infinte point method
ANSWER: B
29. In maximization problem, optimal solution occurring at corner point yields the
A. mean values of z
B. highest value of z
C. lowest value of z
D. mid values of z
ANSWER: B
30. In linear programming, oil companies used to implement resources available is classified
as:
A. implementation modeling
B. transportation models
C. oil model
D. resources modeling
ANSWER: B
31. What is the objective function in linear programming problems?

A. A constraint for available resource
B. An objective for research and development of a company
C. A linear function in an optimization problem
D. A set of non-negativity conditions
96
ANSWER: C
32 Which statement characterizes standard form of a linear programming problem?

A. Constraints are given by inequalities of any type
B. Constraints are given by a set of linear equations
C. Constraints are given only by inequalities of >= type
D. Constraints are given only by inequalities of <= type
ANSWER: B
33 Maximize z = 2 x + 7 y subject to
3 x - 2 y <= 1
- x + 3 y >= -1
for non-negative x and y. Which of the following points are feasible: A(0,0), B(1,1),
C(2,2)?
A. A, B, and C
B. A and B
C. A and C
D. B and C
ANSWER: B
34 Consider the constraint

5 x + 3 y - 4 z <= 7
Find the value of the slack variable s associated to this constraint for the point
A(1,2,3).
A. s=8
B. s=6
C. s=0
D. s = -1
ANSWER: A
35 Maximize z = 3x for 0 <= x <= 5. Find an optimal solution of the problem.

A. x=0
B. x=1
C. x=3
D. x=5
ANSWER: D
36 In converting a less-than-or-equal constraint for use in a simplex table, we must add

A. a surplus variable
97
B. a slack variable
C. an artificial variable
D. both a surplus and a slack variable
E. none of the above
ANSWER: D
37 Total profits are maximised when the objective function (as a straight line on a graph)
is:
A. Nearest to the origin and tangent to the ‘feasible region’
B. Furthest from the origin and tangent to the ‘feasible region’
C. Furthest from the origin irrespective of the ‘feasible region’
D. Nearest to the origin irrespective of the ‘feasible region’
ANSWER: C
38 What is the equation of the labour constraint line for the welding department in
this linear programme?
A. 3X + 2Y = 550 hours
B. 2X + 3Y = 1,500 hours
C. 2X + 3Y = 550 hours
D. 3X + 2Y = 1,500 hours
ANSWER: B
39 What is the equation of the labour constraint line for the assembly department in this
linear programme?
A. 1X + 1Y = 550 hours
B. 1X + 1Y = 1,500 hours
C. 3X + 2Y = 1,500 hours
D. 2X + 2Y = 1,500 hours
ANSWER: C
40 What is the solution to this linear programming problem in terms of the respective
quantities of X and Y to be produced if profits are to be maximised?
A. X = 150, Y = 400
B. X = 0, Y = 500
C. X = 550, Y = 0
D. X = 400, Y = 150
ANSWER: A
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II. Short Answer Type Questions:
1. When is linear programming problem said to have multiple solutions under Simplex
Method?
2. When is linear programming problem said to have an unbounded solution under Simplex
Method?
3. When is linear programming problem said to be infeasible under Simplex Method?
4. When is degeneracy in a linear programming problem said to occur under Simplex
Method?
5. Define the following terms:
A. Slack variables
B. Key column
C. Replacement ratio
D. Key row
6. Which column in marked as ‘Key column’ in case of
A. A maximization problem
B. A minimization problem
7. Which row is marked as ‘Key row’ in case of
A. A maximization problem
B. A minimization problem
8. Name of the following situations
A. Where all replacement ratios are infinite

B. Where replacement ratios are negative
C. Where replacement ratios are either infinite or negative
D. Where there is a tie for the minimum positive replacement ratio
E. Where one of the non-basic variable in the Ci - Zj row of the final simplex table has a zero
value.
F. Where one of the artificial variable remains in the final simplex table as basic variable with
non-zero quantity.
9. In case of a maximization problem, how are the slack variables, surplus variables and artificial
variables introduced –
A. In case of constrains having ‘≤’ sign

B. In case of constrains having ‘≥’ sign
C. In case of constrains having ‘═’ sign
99
10. In case of minimization problem, how are the slack variables, surplus variables and artificial
variables introduced –
A. In case of constrains having ‘≤’ sign

B. In case of constrains having ‘≥’ sign
C. In case of constrains having ‘═’ sign
11. Solve the following problem using Simplex Method:

Maximize Z= 21x1 + 15x2
Subject to the constraints:
- x1 - 2x2 ≥ - 6
4 x1 + 3 x2 ≤ 12
x1 ≥ 0, x2 ≥ 0
[Ans. x1 =3, x2 = 0, Z=63]
12. Use Simplex Method to solve the following LP problem:
Maximize Z = 5x1 + 3x2
x1 + x2 ≤ 6
2x1 + 3 x2 ≤ 12
x1≤ 3
x2≤ 3
x1 , x2 , x3 , ≥ 0
[Ans. x1 =3, x2 = 2, Z=21]

2x1 + x2 ≤ 300
3x1 + 4x2 ≤ 480
4x1 * 7x2 ≤ 812
[Ans. x1 =144, x2 = 12, Z=7920]

- x1 + x2 ≤ 4
x1 + 3x2 ≤ 9
x1 ,x2 ≥ 0
6 13
[Ans. x1 =5, x2 = 5 , Z=Rs. 10.2]
100
15.Write short notes on:
A. Key element or Pivot element

B. Surplus variables
C. Artificial variables
D. Dual problem
E. Shadow price or Imputed price
16.When a linear programming problem said to have multiple solutions under graphical
method?
17. When a linear programming problem said to have unbounded solution under graphical
method?
18. When is a linear programming problem said to be infeasible?
19. Enumerate the steps involved in solving a linear programming problem by graphical
method.
20. Define the following terms:
A. A closed half planes
B. A feasible solution
C. A feasible region

A. A convex set
B. A convex polygon
C. Vertexes
D. Redundant constraint

Max. Z = 6x1+ 8 x2
Subject to constrains:
2x1+ 3x2 ≤ 16
4x1+ 2x2 ≤ 16
Maximize Z = 21x1 +15x2

- x1 - 2x2 ≥ - 6
4x1+ 3x2 ≤ 12
x1 ≥ 0, , x2 ≥ 0
101
Max. Z = 50x1+ 60x2
2x1+ x2≤ 300
3x1+ 4x2 ≤ 480
4x1+ 7x2 ≤ 812

Max. Z = 5x1+ 3x2
x1+ x2 ≤ 6
2x1+ 3x2 ≤ 12
x1≤ 3
x2≤ 3
x1, x2, x3, ≥ 0
26. Solve the following linear programming problem graphically:
102

Maximize: Z=3x+2y
31. Name the methods of feasible solution in transportation Problem.

32. Explain North- West Corner method
33. Explain Least cost method
34. Explain VAM method
35. Discuss the similarities in the solution procedures for transportation and assignment.
III. Long Answer Type Questions:
1. Enumerate the steps involved in formulating dual problem from the primal problem.
2. How can the solution of the dual problem be obtained from the final simplex table of the
primal problem?
3. ‘The maximum value of the objective function of the primal problem is the minimum value
of the objective function of the dual problem. ‘Do you agree? Give reason in support of
your answer.
Max. Z = 6x1+ 8 x2
Subject to: 30 x1+ 20x2 ≤ 300
5 x1+ 10x2 ≤ 110
x1, x2 ≥ 0
Max. Z = 6x1+ 8 x2
2x1+ 3x2 ≤ 16
4x1+ 2x2 ≤ 16
Maximize Z = 21x1 +15x2
103
- x1 - 2x2 ≥ - 6
4x1+ 3x2 ≤ 12
x1 ≥ 0, , x2 ≥ 0
Minimize Z = 8x1 + 4x2
3x1+ x2 ≥ 27
x1+ x2 = 21
x1 + 2x2 ≤ 40
x1, x2 ≥ 0
8. Earth Ltd. has two products Sun and Moon. To produce one unit of Sun, 2 units of material
X and 4 units of material Y are required. To produce one unit of Moon, 3 units of material
X and 2 units of material Y are required. As the raw material X is in short supply so not
more than 16 units of material X can be used. Atleast 16 units of material Y must be used
in order to meet the committed sales of Sun and Moon. Cost per unit of material x and
material Y areRs. 2.50 and Rs. 0.25 respectively.
You are required:
(i) to formulate mathematical model.
(ii) to solve it for the minimum cost (Graphically)
[ANSWER: x = 4, y = 0]
9. Sky Ltd. has two products Cloud and Wind. To produce one unit of Cloud, 2 units of
material X and 4 units of material Y are required. To produce one unit of Wind, 3 units of
material X and 2 units of material Y are required. As the raw material X is in short supply
so not more than 16 units of material X can be used. Atleast 16 units of material Y must
be used in order to meet the committed sales of Cloud and Wind. Cost per unit of material
X and material Y are Rs. 2.50 and Rs. 0.25 respectively. The selling price per unit of cloud
and wind are Rs. 12 and Rs. 16 respectively.
You are required:
(ii) to solve it for the maximum contribution (Graphically)
[ANSWER: x = 8, y = 0]
10. Johnson & Johnson has two products Deluxe Stayfree & Deluxe Carefree. To produce one
unit of Deluxe Stayfree, 2 units of material A and 4 units of material B & units of material
C are required. To produce one unit of Deluxe Carefree, 3 units of material A & 2 units of
material B & 1 unit of Material ‘C’ are required. Not more than 16 units of material A can
be used &atleast 16 units of material B must be used & the use of material C in total should
be equal to 16. The contribution per unit of deluxe Stayfree & Deluxe Carefree areRs. 6
and Rs. 8 respectively.
104
You are required:
(ii) to solve it for maximum contribution by graphically method
[ANSWER: x = 8, y = 0]
11. A manufacturer of packing material, manufactures two types of packing tins, Round and
Flat. Major production facilities involved are cutting and joining. The cutting department
can process 300 Round tin or 500 Flat tins per hour. The joining department can process
500 Round tins or 300 Flat tins per hour. If the contribution towards profit for a Round tin
is the same as that of a Flat tin what is the optimum production level?
[ANSWER: x = 187.5, y = 187.50]
12. Solve graphically the following LP problem
Subject to:
- x1- x2 ≥ -8
- 6x1-3x2 ≤ - 12
5x1+8x2 =20
13. Let us assume that you have inherited Rs. 1,00,000 from your father-in-law that can be
invested in a combination of only two stock portfolios, with the maximum investment
allowed in either portfolios at Rs. 75,000. The first portfolio has an average rate of return
of 10%, whereas the second has 20%. In terms of risk factors associated with these
portfolios, the first has a risk rating of 4 (on a scale from 0 to 10), and the second has 9.
Since you wish to maximize your return, you will not accept on average rate of return
below 12% or a risk factor above 6. Hence, you then face the important question. How
much should you invest in each portfolio?
[ANSWER: x = Rs. 60,000, y = Rs. 40,000]
14. Solve graphically the following linear programming problem:
Maximize x1 + x2
Subject to:
x1 + x2 ≤ 1
-3x1 +x2 ≥ 3
x1 , x2 ≥ 0
[ANSWER: No Feasible Region]
15. The Consumer Product Corporation wishes to plan its advertising strategy. There are two
magazines under consideration, Magazine I and Magazine II. Magazine I has a reach 2000
potential customers per advertisement and magazine II has a reach of 3000 potential
customers per advertisement. The cost per advertising is Rs. 6,000 and Rs. 9,000 in
magazine I and II respectively and the firm has a monthly budget of Rs. 1 lakh. There is
105
an important requirement that the total reach for the income group under Rs. 20,000 per
annum should not exceed 3,000 potential customers. The reach of magazine I and II for
this income group is 300 and 150 potential customers respectively per advertisement. How
many times the company should advertise in the two magazines to maximize the total
reach?
[ANSWER: x = 0 ,y = 100/9. Or x = 40/6, y = 40/6]
16. A company buying scrap metal has two types of scrap metal available to him. The first
type of scrap metal has 30% of metal A, 20% of metal B and 50% of metal C by weight.
The second scrap has 40% of metal A, 10% of metal B and 30% of metal C. The company
requires at least 240 kg of metal A, 100 kg of metal B and 290 kg of metal C. The price
per kg of the two scraps areRs. 120 and Rs. 160 respectively. Determine the optimum
quantities of the two scraps to be purchased so that the requirements of the three metals are
satisfied at a minimum cost.
[ANSWER: x = 400 ,y = 300 Or x = 800, y = 0]
17. Solve graphicaly the following linear programming problems:

Maximise 3x1 + 2x2
Subject to:
x1 - x2 ≤ 1
x1 +x2 ≥ 3
x1 , x2 ≥ 0
18. Carefree Corporation has four plants each of which can manufacture any one of the four
products. Product costs differ from one plant to another as follow:
Plant Product
1 2 3 4
A 33 40 43 32
B 45 28 31 23
C 42 29 36 29
D 27 42 44 38
You are required :

(a) to obtain which product each plant should product to minimize cost,
106
(b) to build a Linear Programming Model.
19. The XYZ company has five jobs A, B, C, D, E to be done and five mean L, M, N, O, P to
do these jobs. The number of hours each man would take to accomplish each job is given
by the following table:
L M N O P
A 4 6 11 16 9
B 5 8 16 19 9
C 9 13 21 21 13
D 6 6 9 11 7
E 11 11 16 26 11
Required: Find the optimal schedule with time for the above assignment problem.
20. Stayfree corporation has four salesmen each of them can be assigned any of the four sales
territories. Estimates of the sales revenues in hundred of rupees for each salesman are as
under:
Salesman Sales Territories
1 2 3 4
A 65 78 83 60
B 85 52 59 44
C 83 56 69 64
D 49 80 85 84
You are required :

to obtain the optimal assigned pattern that maximizes the sales revenue
to build an LPP model

Max. Z = 3x1+ 4x2 +x3
107
x1+ 2x2 + 3x3 ≤ 90
2x1+ x2 + x3≤ 60
3x1+ x2+ 2x3 ≤ 80
Max. Z = 2x1+ 3x2
- x1+ 2x2 ≤ 4
x1+ x2 ≤ 6
x1+ 3x2 ≤ 9
x1, x2≥ 0

Minimize Z = 3x1+ 2.5x2
2x1+ 4x2 ≥40
5x1+ 2x2≥ 50
x1, x2≥ 0
24. Using surplus and artificial variables solve the following:
Minimize Z = 5x2+ 6x2
2x1+ 5x2 ≥1500
3x1+ x2≥ 1200
x1, x2≥ 0

Minimize Z = 4x1 + x2
3x1+ 4x2 ≥20
- x1-5x2 ≤ -15
x1, x2≥ 0
108
31. Find the minimum value of c = 2x + 3y subject to

x + 4y 12
2x + y 10
y ≤ 2x
x ≥ 0, y ≥ 0
Ans. c=14, x=4, y=2
32. Convert the following primal to dual:
Max Z= X1+2 X 2+ X 3
subject to,
2 X 1+ X 2 – X 3 <= 2
-2 X 1 + X 2 –5 X 3 >= -6
4 X 1 + X 2 + X 3 <= 6
X 1, X 2, X 3 >=0
33. In addition to the best selection of novels in South Park Mall, O'Hagan Booksellers also
specializes in fantasy novels and art books. The manager at O'Hagan Booksellers, S. Shady,
is considering a sales promotion of a new collection of fantasy novels and art books, and
he plans to price the books so low as to actually take a loss: O'Hagan will lose $3 on every
fantasy novel and $2 on every art book sold in the promotion. Since the store will only
offer the art books to those who purchase two or more fantasy novels, the store will sell at
least twice as many fantasy novels as art books, and also plans to sell at least 210 items in
all. On the other hand, the store can spare up to 900 units of display space for the sale. S.
Shady calculates that fantasy novels each require 3 units of display space, while art books
require 2 units. Given these constraints, how many fantasy novels and art books should
O'Hagan Booksellers order to lose the least amount of money in the sales promotion?
Ans. 140 fantasy novels and 70 art books
34. O'Hagan Bookworm Booksellers buys books from two publishers. Duffin House offers a
package of 5 mysteries and 5 romance novels for $50, and Gorman Press offers a package
of 5 mysteries and 10 romance novels for $150. O'Hagan wants to buy at least 2,500
mysteries and 3,500 romance novels, and he has promised Gorman (who has influence on
109
the Senate Textbook Committee) that at least 25% of the total number of packages he
purchases will come from Gorman Press. How many packages should O'Hagan order from
each publisher in order to minimize his cost and satisfy Gorman? What will the novels cost
him?
Ans. min c= 50x + 150y
s.t 5x - 5y >= 2500
5x + 10y >=3500
x,y>=0
420 packages from duffin publishers and 140 from Gorman, for a total cost of $42000
35. The Sue All Law Firm handles two types of lawsuits: medical malpractice suits against
unscrupulous heart surgeons for performing unnecessary surgery, and suits against hard-
working math professors for failing students who do not deserve to pass. Math professor
lawsuits each require 6 person-months of preparation and the hiring of 5 expert witnesses,
whereas medical lawsuits each require 10 person-months of preparation and the hiring of
3 expert witnesses. The firm has a total of 30 person-months to work with and feels that it
cannot afford to hire more than 15 expert witnesses. It makes an average profit of $1 million
per math professor sued and $5 million per heart surgeon sued. How many of each type of
lawsuit should it initiate in order to maximize its expected profits?
Ans. graphically, initiate 3 medical malpractices suits and no math professor suits
for a profit of $15 million
UNIT – IV
1. In the process of evaluating location alternatives, the transportation model method

minimizes the
A. Total demand
B. Total supply
C. Total shipping cost
D. Number of destinations
ANSWER: C
2. In an assignment problem
A. One agent can do parts of several tasks
B. One task can be done by several agents
C. Each agent is assigned to its own best task
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ANSWER: C
3. In the transportation problem model for production planning discussed in your text, if there
are 3 periods and 4 methods of manufacture in each period, how many rows will be needed?
A. 12
B. 7
C. 13
D. 8
ANSWER: C
4. A transshipment problem has 3 origins, 2 intermediate points and 4 destinations. The

number of decision variables in the linear programming formulation of this problem will
be
A. 24
B. 9
C. 48
D. 14
ANSWER: A
5. What type of model would be used to determine how a person can travel from one city to
another while minimizing total distance traveled?
A. Transshipment model
B. Shortest-path model
C. Transportation model
D. Assignment model
ANSWER: B
6. Which of the following statements is true?

A. To optimally solve a transportation model, supply must equal demand.
B. In a network, the same node can be a combination of source, destination, and
transshipment point.
C. In a transportation model, if total demand exceeds total supply, then the demand
constraints are written as equalities.
D. The assignment model finds the most material that can flow through a network.
ANSWER: B
7. An assignment problem with five jobs to be performed and five employees to do these
jobs will have how many constraints?
A. 25
B. 5
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C. 15
D. 10
ANSWER: D
8. The difference between the transportation and assignment problems is that

A. total supply must equal total demand in the transportation problem
B. The number of origins must equal the number of destinations in the
transportation problem
C. each supply and demand value is 1 in the assignment problem
D. there are many differences between the transportation and assignment problems
ANSWER: C
9. In an assignment problem,
A. one agent can do parts of several tasks.
B. one task can be done by several agents.
C. each agent is assigned to its own best task.
D. None of the alternatives is correct.
ANSWER: D
10. To use the Hungarian method, a profit-maximization assignment problem requires

A. converting all profits to opportunity losses.
B. a dummy agent or task.
C. matrix expansion.
D. finding the maximum number of lines to cover all the zeros in the reduced matrix.
ANSWER: A
11. Arcs in a transshipment problem

A. must connect every node to a transshipment node.
B. represent the cost of shipments.
C. indicate the direction of the flow.
D. All of the alternatives are correct
ANSWER: C
12. The number of units shipped from origin i to destination j is represented by

A. xij.
B. xji.
C. cij.
D. cji.
ANSWER: A
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13.The difference between the transportation and assignment problems is that
A. total supply must equal total demand in the transportation problem
B. the number of origins must equal the number of destinations in the transportation
problem
C. each supply and demand value is 1 in the assignment problem
D. there are many differences between the transportation and assignment problems
ANSWER: C
14. Transportation Model helps us in

A. Finding nearest transport office
B. Finding lowest transportation cost
C. Finding transportation cost between two cities
ANSWER: B
15. North West Corner rule is one of the method of solving

A. Game Theory
B. Transportation Models
C. Queuing Theory
ANSWER: B
16.Vogal's Approximation Method is used in
A. Transportation Models
B. Queuing Theory
C. Game Theory
ANSWER: A
17. Lowest Cost Entry Method is also called as

A. Matrix Minimum Method
B. VAM
C. Simplex Method
ANSWER: A
18. In a transportation problem with total demand equal to 1200 and total supply equal to
900, we should add a _______________ _____________ with a quantity equal to
___________ to convert it to a balanced problem.
A. Dummy supply 300.
B. Dummy supply 2100.
C. Dummy demand 300.
D. Dummy demand 2100.
ANSWER: A
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19.In the linear programming formulation of the transshipment problem, demand at the
destination points are required to be satisfied from shipment from
A. origins.
B. intermediate points.
C. either origins or intermediated points.
D. origins or external sources.
ANSWER: B
20. A problem has 3 decision variables and problem 5 constraints. How many slack variables are
there?
A. 3
B. 5
C. 8
ANSWER: B
21. How many of the following points satisfy the inequality

2x - 3y> -5?
(1, 1), (-1, 1), (1, -1), (-1, -1), (-2, 1), (2, -1), (-1, 2) and (-2, -1)
A. 3
B. 4
C. 7
D. 6
E. 5
ANSWER: E
22. How many points with integer coordinates lie in the feasible region defined by
3x + 4y ≤ 12, x ≥ 0 and y ≥ 1?
A 6
B 5
C 7
D 8
E 4
ANSWER: A
23. Find, if possible, the minimum value of the objective function 3x - 4y subject to the
constraints -2x + y ≤ 12, x - y ≤ 2, x ≥ 0 and y ≥ 0
A 8
B -36
C No solution
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D 0
E -8
ANSWER: C
24. What can you say about the solution of the linear programming problem specified in
above question 4 , if the objective function is to be maximized instead of minimized?
A Unique solution at (0,0)
B Unique solution at(0,12)
C Unique solution at(2,0)
D No solution
E Infinitely many solutions
ANSWER: C
25. In the linear programming formulation of the transportation problem, cost of transporting
one unit of the material from a supply point to a demand point appears in
A. the objective function only.
B. the constraints only.
C. both objective function and constraints.
D. either objective function nor constraints.
ANSWER: A
26. In a balanced transportation model where supply equals demand,

A. all constraints are equalities
B. none of the constraints are equalities
C. all constraints are inequalities
D. none of the constraints are inequalities
ANSWER: A
27. In a transportation problem, items are allocated from sources to destinations

A. at a maximum cost
B. at a minimum cost
C. at a minimum profit
D. at a minimum revenue
ANSWER: B
28. The assignment model is a special case of the ________ model.

A. maximum-flow
B. transportation
C. shortest-route
D. none of the above
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ANSWER: B
29. An assignment problem is a special form of transportation problem where all supply
and demand values equal
A. 0
B. 1
C. 2
D. 3
ANSWER: B
30. The transshipment model is an extension of the transportation model in which

intermediate transshipment points are ______ between the sources and destinations.
A. decreased
B. deleted
C. subtracted
D. added
ANSWER: D
31. Inventory costs include

A. carrying
B. ordering
C. shortage costs
D. all of the above
ANSWER: D
32. The linear programming model for a transportation problem has constraints for supply
at each ______ and _______ at each destination.
A. destination / source
B. source / destination
C. demand / source
D. source / demand
ANSWER: D
33. The transshipment model is an extension of the transportation model in which

intermediate transshipment points are ______ between the sources and destinations.
A. decreased
B. deleted
C. subtracted
D. added
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ANSWER: D
34. As order size increases, total

A. inventory costs will increase, reach a maximum and then quickly decrease.
B. inventory cost will decrease, reach a minimum and then increase.
C. ordering costs will initially increase while total carrying cost will continue to
decrease
D. carrying cost decreases while the total ordering cost increases
ANSWER: B
35. The assignment model is a special case of the ________ model.

A. maximum-flow
B. transportation
C. shortest-route
D. none of the above
ANSWER: B
1. What is assignment problem?

2. What is Hungarian method for solving an assignment problem?
3. Explain Balanced assignment problem.
4. What is Unbalanced assignment problem?
5. Elaborate Dummy job/facility.
6. What is an infeasible assignment?
7. Enumerate the steps involved in solving minimizing assignment problems.
8. Enumerate the steps involved in solving maximization assignment problems.
9. How is an unbalanced assignment problem converted into a balanced assignment problem?
10. How will you deal with the case if a specific job cannot be performed on a particular
machine?
11. What is transportation problem?
12. Define the terms: origin, destination and unit transportation cost.
13. What is ‘Balanced Transportation Problem’?
14. What is ‘Unbalanced Transportation Problem’?
15. What is ‘Dummy Origin/Destination’?
16. How can an unbalanced transportation problem be balanced?
17. Enumerate the methods by which initial feasible solution an be obtained.
20. What is ‘Balanced Transportation Problem’?
21. What is ‘Unbalanced Transportation Problem’?
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22. What is ‘Dummy Origin/Destination’?
23. Enumerate the steps involved in ‘Least Cost Method’.
24. Enumerate the steps involved in ‘North West Corner Method’.
25. Enumerate the steps involved in ‘Vogel’s Approximation Method’.
26. When is a transport problem said to be a degenerate transport problem?
27. How will you proceed if the total number of allocations in the initial feasible solution is
less than m + n – l?
28. Enumerate the steps involved in optimality test.
29. When is the initial feasible solution said to be an optimal solution?
30. Enumerate the steps involved in the looping.
33. What is ‘Balanced assignment problem?
34. What is ‘Unbalanced Assignment problem?
35. When do we use assignment problems?
II Long Answer Type Questions:
1. The XYZ company has five jobs A, B, C, D, E to be done and five mean L, M, N, O, P to
do these jobs. The number of hours each man would take to accomplish each job is given
by the following table:
L M N O P
A 4 6 11 16 9
B 5 8 16 19 9
C 9 13 21 21 13
D 6 6 9 11 7
E 11 11 16 26 11
1. Solve the assignment problem represented by the following effective matrix.
a B c d e f
A 9 22 58 11 19 27
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B 43 78 72 50 63 48
C 41 28 91 37 45 33
D 74 42 27 49 39 32
E 36 11 57 22 25 18
F 3 56 53 31 17 28
2. A transport corporation has three vehicles in three cities. Each of vehicles can be
assigned to any of the four other cities. The distance differs from one city to another as
under:
W X Y Z
A 33 40 43 32
B 45 28 31 23
C 42 29 36 29
You are required:

(a) to assign a vehicle to a city in such a way that the total distance travelled is
minimized.
(b) to build a mathematical model.
3. Solve the following unbalanced assignment problem of minimizing total time for doing
all the jobs:
Operator Jobs
1 2 3 4 5
1 6 2 5 2 6
2 2 5 8 7 7
3 7 8 6 9 8
4 6 2 3 4 5
5 9 3 8 9 7
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6 4 7 4 6 8
4. To stimulate interest and provide an atmosphere for intellectual discussion, a finance

faculty in a management school decides to hold special seminars on four contemporary
topics – leasing, Portfolio Management, Private Mutual Funds, Swaps and Options. Such
seminars should be held once per week in the afternoons. However, scheduling these
seminars (one for each topic, and not more than one seminar per afternoon) has to be done
carefully so that the number of students unable to attend is kept to a minimum. A careful
study indicates that the number of students who cannot attend a particular seminar on a
specific day is as follows:
Leasing Portfolio Private Mutual Swaps and

Management Funds Options
Monday 50 40 60 20
Tuesday 40 30 40 30
Wednesday 60 20 30 20
Thursday 30 30 20 30
Friday 10 20 10 30
Required: Find an optimal schedule of the seminars. Also find out the total number of
students who will be missing at least one seminar.
5. A method Engineer wants to assign four new methods to three work centres. The
assignment of the new methods will increase productions and they are given below. If
only one method can be assigned to a work centre, determine the optimal assignment:
Methods Increase in production (unit) Work Centres
A B C
1 10 7 8
2 8 9 7
3 7 12 6
4 10 10 8
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6. Solve the following Assignment problem . The data given in the Table refer to
production in certain units:
Operators Machine
A B C D
1 10 5 7 8
2 11 4 9 10
3 8 4 9 7
4 7 5 6 4
5 8 9 7 5
7. A company is faced with the problem of assigning 4 machines to 6 different jobs (one
machine to one job only). The profits are estimated as follows:
Jobs Machine
A B C D
1 3 6 2 6
2 7 1 4 4
3 3 8 5 8
4 6 4 3 7
5 5 2 4 3
6 5 7 6 4
Required: Solve the problem to maximize the total profits.
8. A job shop has four men available for work on four separate jobs. Only one man can work
on any one job. The cost of assigning each man to each job is given in Table 1 below. The
objective is to assign men to jobs such that the total cost of assignment is a minimum.
Table 1 Jobs
To 1 2 3 4
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From
Men A 20 25 22 28
B 15 18 23 17
C 19 17 21 24
D 25 23 24 24
[Ans. A -->1, B -->4, C -->2, D -->3, or A -->3, B -->1, C -->2 and D -->4, Minimum cost
78].
9. A tourist car rental firm has one car in each of the five depots D1, D2, D3, D4, D5 and a
customer in each of the five cities, C1, C2, C3, C4, C5. The distances in kilometers between
the depots and the cities are given in the following matrix. How should the cars be assigned
to the customers so as to minimize the total distance covered?
10.
Cities
Depots C1 C2 C3 C4 C5
D1 140 115 120 30 35
D2 110 100 90 30 15
D3 155 90 135 60 50
D4 170 140 150 60 60
D5 180 155 165 90 85
[Ans. D1 --> C4, D2 --> C3, D3 --> C2, D4 --> C5, D5 --> C1, Minimum distance 450 km].
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11. Solve the following assignment problem of minimizing total time for performing all the
jobs.
Operator Jobs
1 2 3 4 5
1 6 2 5 2 6
2 2 5 8 7 7
3 7 8 6 9 8
4 6 2 3 4 5
5 9 3 8 9 7
6 4 7 4 6 8
[Ans. Operator 1 --> 4, Operator 2 --> 1, Operator 3 --> Dummy 6, Operator 4 --> 5,
Operator 5 --> 2, Operator 6 --> 3, [Minimum time 16]
12. The personnel manager of a company wants to assign Mr. X, Y and Z to regional offices
Delhi, Bombay, Calcutta and Madras. The cost of relocation (in Rupees) of the three
officers at the four regional offices are given below:
13.
Officer Office
Delhi Bombay Calcutta Madras
Mr. X 16000 22000 24000 20000
Mr. Y 10000 32000 26000 16000
Mr. Z 10000 20000 46000 30000
Required: Solve the above assignment problem.

[Ans. Dummy (i.e. no one ) to Calcutta, X --> Bombay, Y to Madras, Z to Delhi
Minimum cost Rs. 48,000]
14. A metal shop has five jobs to be done and have five machines to do them. The cost
matrix gives the cost of processing each job on any machine. Because of specific job
requirement and machine specifications certain jobs cannot be done on certain machines.
These have been shown by X in the cost matrix. The assignment of jobs to machines
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must be done on a one to one basis. The objective is to assign the jobs to the machines so
as to minimize the total cost within the restrictions mentioned above.
15.
Machines Jobs
1 2 3 4 5
1 80 40 X 70 40
2 X 80 60 40 40
3 70 X 60 80 70
4 70 80 30 50 X
5 40 40 50 X 80
[Ans. Job 1 --> Machine 3, Job 2 --> 5, Job 3 --> 4, Job 4 --> 2, Job 5 --> 1, Or Job 1 -
-> Machine 5, Job 2 --> 1, Job 3 --> 4, Job 4 --> 2, Job 5 --> 3, Minimum cost Rs.
220]
16. Six contractors have submitted tenders to take up six projects advertised. It is noticed that
one contractor can be assigned one job as otherwise the time for completion and the quality
of workmanship will be affected. The estimates of cost in thousand rupees given by each
of them are indicated below:
17.
Contractor Project
1 2 3 4 5 6
A 41 72 39 52 25 51
B 22 29 49 65 81 50
C 27 39 60 51 32 32
D 45 50 48 52 37 43
E 29 40 39 26 30 33
F 82 40 40 60 51 30
Required: Find out the assignment such that the total cost of completing the six projects is
minimum. What is the minimum cost?
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[Ans. A --> 5, B --> 2, C --> 1, D --> 3, E --> 4, F --> 6, Minimum Cost Rs. 1,85,000]
18. A freight terminal can accommodate six trucks simultaneously. There is cost of sorting
and transferring of loads associated with parking of each truck on each of the six spots. On
a certain day, four trucks are to be simultaneously parked at the terminal. The cost matrix
is given below:
Spot Truck
1 2 3 4
7 3 6 2 6
8 7 1 4 4
9 3 8 5 8
10 6 4 3 7
11 5 2 4 3
12 5 7 6 2
Required: Find out the assignment which minimize the total cost of parking.
[Ans. Truck 1 --> Spot 9, Truck 2 --> 8, Truck 3 --> 7, Truck 4 --> 12, Minimum Cost 8]
19. A sales manager has to assign salesman to four territories. He has four candidates of
varying experience and capabilities and assesses the possible profit in suitable units for
each salesman in each territory as given below:
Salesman Territories
T1 T2 T3 T4
S1 25 27 28 37
S2 28 34 29 40
S3 35 24 32 33
S4 24 32 25 28
Required: Find out the assignment that maximizes the profit.

[Ans. S1 -->T3, S2 -->T4, S3 -->T1, S4 -->T2, Maximum profit 135]
20. Five different machines can do any of the required five jobs with different profits
resulting from each assignment as shown below:
125
Job Machine
A B C D E
1 30 37 40 28 40
2 40 24 27 21 36
3 40 32 33 30 35
4 25 38 40 36 36
5 29 62 41 34 39
Required: Find out the maximum profit possible through optimal assignment.
[Ans. Job 1 --> Machine C, Job 2 --> E, Job 3 --> A, Job 4 --> D, Job 5 --> B, Maximum
profit Rs. 214]
21. Build the mathematical model for the following transportation problem:
Cost Matrix Supply
W1 W2 W3 W4
F1 1 2 4 4 6
F2 4 3 2 0 8
F3 0 2 2 1 10
Demand 4 5 8 6
22.
Wj--> Warehouse, Fi --> Factory and cell entries are unit/costs.
23. A multi-plant company has three manufacturing plants, A, B and C, and two markets X
and Y. Production Cost of A, B and C isRs. 1500, 1600 and 1700 per piece respectively.
Selling price in X and Y are Rs. 4400 and Rs. 4700 respectively. Demand in X and Y
3500 and 3600 pieces respectively. Production capacity at A, B and C is 2000, 3000 and
4000 pieces respectively. Transportation costs are as follows:
From / To X Y
A 1000 1500
B 2000 3000
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C 1500 2500
Build a mathematical model.
24. Find the initial basic feasible solution by Least Cost Method.
W1 W2 W3 W4 Supplies
F1 48 60 56 58 140
F2 45 55 53 60 260
F3 50 65 60 62 360
F4 52 64 55 61 220
Demand 200 320 250 210
Wj--> Warehouse, Fi --> Factory and cell entries are unit costs.
25. Find the initial feasible solution by Least Cost Method.
W1 W2 W3 Supplies
F1 48 60 56 140
F2 45 55 53 260
F3 50 65 60 360
F4 52 64 55 220
Demand 200 320 250
Note: Cell entries are the unit transportation costs.
127
26.
27. A trucking company has a contract to move 115 truckloads of sand per week between three
sand-washing plants W,X and Y, and three destinations, A,B and C. Cost and volume
information is given below. Compute the optimal transportation cost
28. A Timber company ships pine flooring to three building supply houses from its mills in
Bhunya, Mondi and Pigg’s Peak. Determine the best transportation schedule for the data
given below using the Northwest corner rule and the Stepping Stone method.
29. In each of the following cases write down the North-West corner solution and use the
Stepping Stone method to find the minimal cost.
128
30. In each of the following cases write down the North-West corner solution and use the
Stepping Stone method to find the minimal cost.
129
QUESTION BANK
E-COMMERCE – 106
BBA II
130
QUESTION BANK
E-COMMERCE - 106
BBA II
UNIT - I
I Test Your Skills:
1. The E-commerce domain that involves business activity initiated by the

consumer and targeted to businesses is known as:
A. Business to Business (B2B).
B. Consumer to Business (C2B).
C. Business to Consumer (B2C).
D. Consumer to Consumer (C2C).
ANSWER: B
2. By electronic commerce we mean:

A. Commerce of electronic goods
B. Commerce which depends on electronics
C. Commerce which is based on the use of internet
ANSWER: D
3. E-commerce is
A. B2C
B. B2B
C. C2B
D. All the above
ANSWER: A
4. Advantages of e-commerce are

A. Low cost
B. Economical
C. Productivity gains
D. All the above
ANSWER: B
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5. B2B2C is a model of
A. E-commerce
B. E-business
C. Data mining
ANSWER: C
6. Mobile commerce is same as

A. E-commerce
B. E-business
C. Data mining
ANSWER: B
7. The types of Business to Business e-commerce are ................

A. Direct selling and support to Business
B. Industry portals
C. Information sites about a industry
D. All the above
ANSWER: D
8. Which of the following is not the example of business to consumer (B to C) e-

commerce?
A. Amazon.com
B. e-bay.com
C. dell.com
D. lastminute.com
ANSWER: B
9. Which driver promote E-commerce

A. Digital Convergence
B. 24/7 availability
C. Profit margins
ANSWER: A
10. Advantage of e-com is

A. Lower cost
B. Economy
C. Higher margins
D. All of the above
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ANSWER: A
11. Which model of e commerce deals with virtual auction?

A. Aggregator Model
B. Info-mediary model
C. Community Model
D. Brokerage Model
ANSWER: D
12. When you look at e-commerce and e-business, which is the most realistic relationship
between these two concepts?
A. E-commerce is broadly equivalent to e-business
B. E-commerce has some overlap with e-business
C. E-commerce is a subset of e-business
D. E-business is a subset of e-commerce
ANSWER: C
13. Social network sites such as Facebook and Twitter have become increasingly popular for
sell-side e-commerce and would normally be considered to be in which category?
A. Portal, publisher or media sites
B. Brand-building sites
C. Transactional e-commerce sites
D. Services-orientated relationship-building websites
ANSWER: A
14. A summary of how a company will generate a profit identifying its core product, target
customers, position in the online marketplace, and projections for revenue and costs is
known as:
A. Value chain and marketplace positioning
B. Value proposition
C. Online business model
D. Revenue model and cost base
ANSWER: C
15. While search engines index registered sites which users search by inputting key words,
which type of intermediary updates its content typically through text but can include
video or audio delivered through RSS feeds?
A. Directory
B. Publisher site
C. Blog
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D. Access portal
ANSWER: C
16. What are Microsoft Internet Explorer, Mozilla Firefox, Apple Safari, and Google
Chrome examples of?
A. Web servers
B. Web browsers
C. Web application servers
D. All of the above
ANSWER: B
17. A hardened firewall host on an Intranet is

A. a software which runs in any of the computers in the intranet
B. a software which runs on a special reserved computer on the intranet
C. a stripped-down computer connected to the intranet
D. a mainframe connected to the intranet to ensure security
ANSWER: B
18. Advantages of B2C commerce are

(i) Business gets a wide reach to customers
(ii) Payment for services easy
(iii) Shop can be open 24 hours a day seven days a week
(iv) Privacy of transaction always maintained
A. i and ii
B. ii and iii
C. i and iii
D. iii and iv
ANSWER: C
19. Disadvantages of e-Commerce in India are

(i) internet access is not universally available
(ii) credit card payment security is not yet guaranteed
(iii) transactions are de-personalized and human contact is missing
(iv) cyberlaws are not in place
A. i and ii
B. ii and iii
C. i, ii, iii
D. i, ii, iii, iv
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ANSWER: C
20. Most common uses of the Internet and the Web include communicating, shopping,
A. searching, entertainment, and education
B. e-commerce, e-mail, and searching
C. e-mail, entertainment, and education
D. e-commerce, e-mail, and education
ANSWER: A
21. The __________ is the multimedia interface to resources available on the Internet.
A. Web
B. ISP
C. browser
D. URL
ANSWER: A
22. The multimedia interface to the resources available on the Net is called the
A. World Wide Web
B. Internet
C. GUI interface
D. server
ANSWER: A
23. Rules for exchanging data between computers are called

A. programs
B. procedures
C. protocols
D. hyperlinks
ANSWER: C
24. Moving from one Web site to another is called

A. jumping
B. moving
C. surfing
D. applying
ANSWER: C
25. ____________ are networks that connect people within a company to each other and
to the company network.
A. Internets
B. Intranets
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C. Extranets
D. Components
ANSWER: B
26. The solution for all business needs is –

A. EDI
B. ERP
C. SCM
D. None
ANSWER: B
27. All of the following are techniques B2C e-commerce companies use to attract consumers,
except-
A. Registering with search engines
B. Viral marketing
C. Online ads
D. Virtual marketing
ANSWER: D
28. Which products are people most likely to be comfortable buying on the internet-
A. Books
B. PCs
C. CDs
D. All of the above
ANSWER: D
29. Which type of e-commerce focuses on consumers dealing with each other-
A. B2B
B. B2C
C. C2B
D. C2C
ANSWER: D
30. What is the full from of C2B-
A. Business to Consumer
B. Consumer to consumer
C. Consumer to business
D. Business to business
ANSWER: C
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31. What is the full from of C2C-
A. Consumer to consumer
B. Business to consumer
C. Business to business
D. Consumer to business
ANSWER: A
32. By Electronic Commerce we mean:

A. Commerce of electronic goods
B. Commerce which depends on electronics
C. Commerce which is based on the use of internet
D. Commerce which is based on transactions using computers connected by
telecommunication network
ANSWER: D
33. For carrying out B2B e-Commerce the following infrastructure is essential:
(i) World Wide Web
(ii) Corporate network
(iii) Electronic Data Interchange standards
(iv) Secure Payment Services
(v)Secure electronic communication link connecting businesses
A. i, ii, iii
B. ii, iii, iv
C. ii, iii, iv, v
D. i, ii, iii, iv, v
ANSWER: C
34. A firewall is a
A. wall built to prevent fires from damaging a corporate intranet
B. security device deployed at the boundary of a company to prevent unauthorized
physical access
C. security device deployed at the boundary of a corporate intranet to protect it from
unauthorized access
D. device to prevent all accesses from the internet to the corporate intranet
ANSWER: C
35. Advantages of B2C commerce are

(i) Business gets a wide reach to customers
(ii) Payment for services easy
137
(iii) Shop can be open 24 hours a day seven days a week
(iv) Privacy of transaction always maintained
A. i and ii
B. ii and iii
C. i and iii
D. iii and iv
ANSWER: C
36. The dimension of e-commerce that enables commerce across national boundaries is called
_______.
A. interactivity.
B. global reach.
C. richness.
D. ubiquity.
ANSWER: B
37 E-commerce technologies have improved upon traditional commerce technologies

in______.
A. richness.
B. reach.
C. both richness and reach.
D. neither richness nor reach.
ANSWER: C
38 Which one of the following is not one of the major types of e-commerce?
A. C2B.
B. B2C.
C. B2B.
D. C2C.
ANSWER: A
39 Compared to B2C e-commerce, B2B e-commerce is ______.

A. of equal size.
B. slightly smaller.
C. slightly larger.
D. much larger.
ANSWER: D
138
40 Which of the following is not considered to be one of the three phases of e-commerce?
A. Innovation.
B. Consolidation.
C. Preservation.
D. Reinvention.
ANSWER: C
41 The primary source of financing during the early years of e-commerce was _______.
A. bank loans.
B large retail firms.
C. venture capital funds.
D. initial public offerings.
ANSWER: C
42 The type of firms that benefited the most during the consolidation period of e-commerce were
_______.
A. large, traditional firms.
B. first movers.
C. pure online companies.
D. ISPs
ANSWER: A
43 A _________ is the set of planned activities designed to result in a profit in a marketplace.

A. business model.
B. profit model.
C. business plan.
D. revenue model.
ANSWER: A
44 Which of the following is not a key element of a business model?

A. value proposition.
B. competitive advantage.
C. market strategy.
D. universal standards.
ANSWER: D
45 The source of revenue in a subscription revenue model is _____.

A. Fees from advertisers in exchange for advertisements.
B. Fees for business referrals.
C. Fees from subscribers in exchange for access to content or services.
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D. Fees for enabling or execution a transaction.
ANSWER: C
1 “Now a day’s market is driven by e-commerce”. Justify this statement.

2 Define EC and E-Business.
3 What do you understand by E-commerce? Discuss the driving forces for E-Commerce.
4 What are the advantages and disadvantages of e-commerce?
5 Discuss commercial, social as well as entertainment opportunities in E-Commerce.
6 “Business becomes a global phenomenon through E-Commerce”. Justify this statement.
7 List the major impacts of EC on direct marketing.
8 List the organizational, consumer and societal benefits of EC.
9 Clicks-and-Mortar Model of E-Commerce
10 Broker Model of E-Commerce
11 Distinguish Search Engine and Internet Service Provider
12 Describe some of the barriers to ecommerce for small businesses.
13 What is the difference between e-commerce over extranet and intranet?
14 What is EDI?
15 How EDI can change the way business works?
16 Briefly explain the two standards of EDI.
17 What is Internet and how it helps in e-commerce?
18 Difference between routers and hub
19 Differentiate two-tier and three-tier architecture.
20 “E-commerce on Internet is risky” Comment.
21 What kind of e-commerce architecture is required on the web to perform e-commerce?
22 What do you understand by I-way and what is the need for it?
(a) URL (b) DNS (c) Web browser (d) Web Server (e) WWW
24 What are the various types of broadband?
25 Define a virtual corporation.
26 What are the types of e-commerce?
27 Explain the various models of e-commerce.
28 What is supply chain management?
29 What are the challenges to e-commerce environment?
30 Explain the Indian readiness for e-commerce.
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1 What is the current and prospective size of electronic market? Describe in terms of B2C
versus B2B electronic market?
2 Explain the major methods of Internet based market research.
3 Explain Porter’s Model of Value Chain.
4 Discuss E-Commerce in India.
5 Discuss the concept of value chain in E-commerce.
6 What do you understand by E-Commerce? What are the benefits and drawbacks over
business based on traditional mortar and bricks outlets?
7 Explain clearly, with suitable examples the difference between e-commerce and Electronic
Data Interchange.
8 What do you mean by Search engine? Explain
9 Explain CRM and E-Commerce
10 Explain the history of World Wide Web.
11 Explain OSI Reference Model
12 Explain Applications of Intranet and Extranet
13 Explain in detail Types of Client/server Architecture.
14 Explain in detail B2B E-Commerce. Write in brief advantages and disadvantages of B2B.
15 What are the reasons for ‘dot.com’ bust in the year 2000? Critically analyze. Further the
revival of electronic commerce today is for real’ Comment on the statement. What are the
reasons that make the electronic commerce that today? Compare the global and Indian
scenario.
16 What are the different business models over Internet? Illustrate giving suitable examples.
17 What security and privacy issues are the limitations of the Web? Discuss.
18 Summarize the key benefits and drawbacks of peer-to-peer networks.
19 Summarize three reasons why a company may wish to introduce e-commerce.
20 Describe three of the main barriers to adoption of e-commerce by consumers and suggest
how company could counter these.
21 What do you understand by E-commerce? How broad band technology play an important
role in E-commerce?
22 Discuss the business applications on Intranet and Extranet?
23 Explain the following in detail?
(a) Value chains in Electronic commerce
(b) Components of EDI
24 Illustrate the following with suitable examples:
(a) B2C
(b) B2B
(c) B2G
(d) C2B
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25 What is the difference between e-commerce and EDI? Explain with the help of suitable
example?
26 Explain the E-transition challenges for Indian corporate.
27 What are the challenges and barriers in E-commerce environment?
28 What is e-commerce? Explain its advantages and disadvantages.
29 What are the reasons of transacting online?
30 What are the models of e-commerce?
31 How is brick and mortar model different from click and mortar model?
32 Explain infomediary model of e commerce using real life example.
UNIT - II
I Test Your Skills:
1 Web pages can be created using:

A. HTML
B. Microsoft Word
C. MS Access
ANSWER: A
2 WWW stands for:

A. World Wide Web
B. World Wild Web
C. World Wan Web
D. All the above
ANSWER: A
3 The services provided by Internet are:

A. FTP
B. Telnet
C. Usenet
D. All the above
ANSWER: D
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4 FTP stands for:
A. File Transfer Protocol
B. File Taking Protocol
C. Fund Transfer Protocol
D. Fund Transfer Packet
ANSWER: A
5 HTML stands for

A. Hyper Text Makeup Language.
B. Hyper Text Markup Language
C. High Text Mean Language
D. Hyper Text mean Language
ANSWER: B
6 The common element which describe the web page, is?

A. heading.
B. paragraph
C. list
D. All of these
ANSWER: D
7 Which of the following tag is used to mark a begining of paragraph ?

A. <td>
B. <br>
C. <p>
D. <tr>
ANSWER: C
8 From which tag descriptive list starts?

A. <LL>
B. <DD>
C. <DL>
D. <DS>
ANSWER: C
9 Correct HTML tag for the largest heading is

A. <head>
B. <h6>
C. <heading>
D. <h1>
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ANSWER: D
10 The attribute of <form> tag

A. method
B. action
C. Both (a) and (b)
D. None of these
ANSWER: C
11 Markup tags tell the web browser

A. How to organize the page
B. How to display the page
C. How to display message box on page
D. None of these
ANSWER: B
12 www is based on which model?

A. Local-server
B. Client-server
C. 3-tier
D. None of these
ANSWER: B
13 Which of the following attributes of text box control allow to limit the maximum
character?
A. size
B. len
C. maxlength
D. All of these
ANSWER: C
14 Web pages starts with which of the following tag?

A. <Body>
B. <Title>
C. <HTML>
D. <Form>
ANSWER: C
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15 HTML is a subset of
A. SGMT
B. SGML
C. SGMD
D. None of these
ANSWER: B
16 Which of the following is a container?
A. <select>
B. <value>
C. <input>
D. <body>
ANSWER: A
17 The attribute, which define the relationship between current document and HREF'ed
URL is
A. REL
B. URL
C. REV
D. All of these
ANSWER: A
18 <DT> tag is designed to fit a single line of our web page but <DD> tag will accept a
A. Line of text
B. Dull paragraph
C. word
D. Request
ANSWER: B
19 From which tag the descriptive list starts?
A. <LL>
B. <DD>
C. <DL>
D. <DS>
ANSWER: C
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20 Correct HTML to left align the content inside a table cell is
A. <tdleft>
B. <td ralign = “left”>
C. <tdalign = “left”>
D. <td leftalign>
ANSWER: C
21 The tag which allows you to rest other HTML tags within the description is
A. <TH>
B. <TD>
C. <TR>
D. <CAPTION>
ANSWER: D
22 <Base> tag is designed to appear only between

A. <HEAD>
B. <TITLE>
C. <BODY>
D. <FORM>
ANSWER: A
23 How can you open a link in a new browser window?
A. <a href = "url" target = "new">

B. <a href = "url" target= "-blank">
C. <a href = "url".new>
D. <a href = "url" target ="open">
ANSWER: B
24 A much better approach to establish the base URL is to use
A. BASE element
B. HEAD element
C. Both (a) and (b)
D. None of these
ANSWER: A
25 The tag used to create a new list item and also include a hyperlink is
A. <LI>
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B. <DL>
C. <DD>
D. <UL>
ANSWER: A
26 CSS stands for ____________.

A. Creative Style Sheet
B. Colorful Style Sheet
C. Cascading Style Sheet
D. Computer Style Sheet
ANSWER: C
27 To insert a JavaScript into a HTML page, which tag is used?

A. <js>
B. <javascript>
C. <script>
D. <script=java>
ANSWER: C
28 What is the attribute for img tag?

A. pt
B. url
C. src
D. path
ANSWER: C
29 Dreamweaver MX support __________ linking.

A. Text
B. Image
C. Other Media
D. All of above
ANSWER: D
30 Extension of HTML is _____________.

A. .js
B. .php
C. .html
D. None of above
ANSWER: C
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31 <br> is used for _________.
A. Space
B. Line break
C. Word break
D. Paragraph break
ANSWER: B
32 The ________ properties allow you to specify the style and color of an element’s border.
A. border
B. Space
C. tb – border
D. word-spacing
ANSWER: A
33 ___________ is not a Text Formatting Tag.

A. <big>
B. <sup>
C. <ol>
D. <strong>
ANSWER: C
34 Which attribute is used to set font name ?

A. fontname
B. fn
C. font
D. face
ANSWER: D
35 CSS text-decoration property has value LINE-THROUGH is equivalent to

_____________ tag.
A. <blink>
B. <strike>
C. <u>
D. <i>
ANSWER: B
36 What is <b> tag-

A. Bold
B. Italics
C. Underline
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D. Paragraph
ANSWER: A
37 What is <i> tag-

A. Bold
B. Italics
C. Underline
D. Paragraph
ANSWER: B
38 What is <u> tag-

A. Bold
B. Italics
C. Underline
D. Paragraph
ANSWER: C
39 What is <p> tag-

A. Bold
B. Italics
C. Underline
D. Paragraph
ANSWER: D
40 What is <a> tag-

A. Anchor
B. Italics
C. Underline
D. Paragraph
ANSWER: A
41 What is <sup> tag-

A. Bold
B. Superscript
C. Underline
D. Paragraph
ANSWER: B
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42 What is <sub> tag-
A. Subscript
B. Italics
C. Underline
D. Paragraph
ANSWER: A
43 What is <tr> tag-

A. Bold
B. Italics
C. Table row
D. Paragraph
ANSWER: C
44 What is <td> tag-

A. Table data
B. Italics
C. Underline
D. Paragraph
ANSWER: A
45 What is <th> tag-

A. Table head
B. Italics
C. Underline
D. Paragraph
ANSWER: A
1. What is the difference between form get and form post?

2. List some common IE6 bugs and how you dealt with them?
3. What is the importance of the HTML DOCTYPE?
4. What are some of the online tools and resources you use when you have a problem?
5. What is web application?
6. Name three ways to define a color in html?
7. How do you get an image in a webpage?
8. Do all HTML tags come in pair?
150
9. What are some of the common lists that can be used when designing a page?
10. What is the &nbsp?
11. Is it possible to list elements straight in an html file?
12. Does a hyperlink apply only to text?
13. What hierarchy is being followed when in style sheets?
14. What happens if the list-style-type property is used on a non-list element like a paragraph?
15. What is the advantage of using frames?
16. How can I hide my source?
17. Why doesn't <TABLE WIDTH="100%"> use the full browser width?
18. How would you automatically transfer your visitors to a new web page?
19. You want only a vertical scrollbar and no horizontal scrollbar on your page. How would
you do it?
20. How do you refer to the .css file in the web page?
21. What is a better way to design the layout of a web page – a table tag or div?
22. How to create nest tables within tables in HTML?
23. Explain Non-Breaking space in HTML.
24. What are logical and physical tags in HTML?
25. Explain marquee tag.
26. What are the various types list?
27. What is basic text formatting?
28. What is advanced text formatting?
29. What are the tags used to create tables?
30. What are the tags used to create forms?
31. With the help of an example give the coding for bold tag.
32. With the help of an example give the coding for italics tag.
33. With the help of an example give the coding for paragraph tag.
34. With the help of an example give the coding for underline tag.
35. With the help of an example give the coding for font tag.
1. How do I link to a location in the middle of an HTML document?

2. Explain Cell Padding and Cell Spacing.
3. What is difference between HTML and XHTML?
4. How to create a button which acts like a link?
5. How many types CSS can be include in HTML?
6. Does HTML support Javascripts? Explain.
7. Explain various HTML list tags.
8. Explain HTML background.
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9. How to insert Javascript in HTML?
10. What are the different way in which website layout can be made?
11. Differentiate different types of Doctypes from one another
12. Why it is important to set the meta information?
13. What does the elements mean in syntax given for URL in HTML?
14. What is the purpose of iframe in HTML?
15. What is the advantage of grouping several checkboxes together?
16. What if there is no text between the tags or if a text was omitted by mistake? Will it
affect the display of the html file?
17. How do you create a link that will connect to another web page when clicked?
18. Can you explain the definition of the main element? What is its goal? Are the two
specifications (WHATWG and W3C) in agreement on its definition?
19. Describe when it’s appropriate to use the small element and provide an example.
20. Subheadings are one of the most common elements in any website. A few years ago
the hgroup tag was introduced to address this need, but it has since been removed from
the specs. Can you describe why hgroup was dropped and how the markup can be
addressed today?
21. Is the alt attribute mandatory on img elements? If not, can you describe a scenario where
it can be set to an empty value? Does an empty value affect accessibility in any way?
22. Is it possible to express a date range using a single time element?
23. What’s the difference between the meter element and the progress element?
24. What is the mark element? Can you describe an example of use for this element?
25. How do you make a picture into a background image of a web page?
26. What is basic and advanced text formatting?
27. What is a web page? Explain the various types of tags.
28. Describe the basic structure of an HTML document.
29. How can external images be inserted in a webpage?
30. Explain the various attributes of table tag.
31. With the help of an example give the coding for a nested list.
32. With the help of an example give the coding for an ordered list.
33. With the help of an example give the coding for an unordered list.
34. With the help of an example give the coding for form.
35. With the help of an example give the coding for audio control.
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UNIT - III
I Test Your Skills:
(a) Multiple choice questions
1. E-money is a ……………. medium for making payments

A. Digital
B. Electronic
C. Both (a) and (b)
ANSWER: A
2. Acid testis a set of properties of money transfer that include

A. Atomicity and isolation
B. Consistency and durability
C. Both (a) and (b)
ANSWER: C
3. In…………………., each transaction must be independent

A. Consistency
B. Isolation
C. Durability
ANSWER: B
4. In ICES test, C means

A. Consistency
B. Complexity
C. Conservation
ANSWER: A
5. Electronic payment is a financial transaction made …………. the use of paper documents
A. With
B. Without
C. Both (a) and (b)
ANSWER: B
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6. Electronic payment media can be grouped into
A. Trusted third party type
B. Notational fund transfers related type
C. Authentication type
D. All the above
ANSWER: D
7. ………………is a type of EPS

A. Credit card
B. Debit card
C. Smart card
D. All the above
ANSWER: D
8. Smart card is same as…….

A. Credit card
B. Debit card
C. Both (a) and (b)
ANSWER: C
9. Debit card is used for

A. On line transactions
B. Off line transaction
C. Both (a) and (b)
ANSWER: C
10. ……………………. card is a card with a built-in chip capable of storing information in
its memory
A. Debit
B. Credit
C. Smart
ANSWER: C
11. Applications of smart card are:

A. Government
B. Identification
154
C. Health care
D. All the above
ANSWER: D
12. ……………………………is an application of smart card

A. ATM
B. Telecommunication
C. Transportation
ANSWER: A
13. EFT is a computer based system

A. True
B. False
ANSWER: A
14. EFT is
A. Electronic Fund Transfer
B. Electrical fund transfer
C. Electronic fast transfer
ANSWER: A
15. …………….cards and ………….cards are two ways to make payments on a web site
A. Debit and smart
B. Credit and debit
C. Credit and smart
ANSWER: B
16. ……………………….allows the transfer of money itself

A. Digital cash
B. Electronic money
C. Both (a) and (b)
ANSWER: A
17. E-money has…………….types

A. 3
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B. 4
C. 5
D. 6
ANSWER: A
18. Paisapay is facilitated in………………

A. Amazon.com
B. eBay.co.in
C. Flipkart.com
ANSWER: B
19. The way to hide digital information is through……

A. Cryptography
B. Digital certificate
C. Digital signature
ANSWER: A
20. Main models of internet based payment system are:

A. Electronic currency
B. Credit card
C. Debit card
D. All the above
ANSWER: D
21. ……………………..card is a model of IPS

A. Smart
B. Debit
C. Credit
D. All the above
ANSWER: D
22. Payment systems via the internet include

A. Cyber cash
B. First virtual
C. Both (a) and (b)
ANSWER: C
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23. ………………………cards directly transfer funds from consumers bank account to the
merchant’s
A. Debit
B. Credit
C. Both (a) and (b)
ANSWER: A
24. Credit cards ……………. convenient for making small purchases

A. Are
B. Are not
C. Both (a) and (b)
ANSWER: A
25. ACH is
A. Acid consistency house
B. Acitomated clearing house
C. Automated consistency house
ANSWER: B
26 Full form of URL _____________________________.

A. Uniform Routing Location
B. Unix Routing Locator
C. United Route License
D. Uniform Resource Locator
ANSWER: D
27 What is the term used to describe the information, system and application that support and
drive business processes, most often using web technologies?
A. E-business
B. E-governance
C. E-commerce
D. E-education
ANSWER: A
28 What is full name of EDI?

A. Electronic Document Interchange
157
B. Electronic Data Interchange
C. Educational Data Interchange
D. Express Data Interchange
ANSWER: B
29 When hackers flood a website with useless traffic to overwhelm the network, it is called-
A. Denial of service attack
B. Phishing
C. Pharming
D. Spoofing
ANSWER: A
30 If you need to transfer money to another person via the internet , which of the following
methods could you use?
A. Financial cybermediary
B. Electronic check
C. Electronic bill presentment and payment
D. All of the above
ANSWER: D
31 Which of the following is not a dimension of e-commerce security provided by encryption?

A. Availability
B. Message integrity
C. Non repudiation
D. Confidentiality
ANSWER: A
32 Which of the following permits the transmission of a bill, along with the payment of that
bill, to be conducted over the internet?
A. Financial cybermediary
B. Electronic check
C. Electronic bill presentment and payment
D. All of the above
ANSWER: C
33 Which of the following is used in B2B to pay for the purchases?

A. E-commerce
B. Financial electronic data interchange
C. Electronic data exchange
D. Electronic checks
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ANSWER: B
34 A security plan begins with –

A. Risk assessment
B. Security policy
C. Implementation plan
D. Security organization
ANSWER: A
35 The only payment system that is instantly convertible without intermediation is-
A. Credit card
B. Debit card
C. Digital cash
D. Cash
ANSWER: D
36 Which of the following is an example of a portal?

A. Amazon.
B. eBay.
C. Yahoo.
D. Face book
ANSWER: C
37 All of the following are major B2C business models except ______.
A. content provider.
B. industry consortium.
C. transaction broker.
D. service provider.
ANSWER: B
38 Compared to Internet users, the number of cell phone subscribers is _________.

A. about the same.
B. slightly fewer.
C. much fewer.
D. much larger.
ANSWER: D
159
39 Industry structure is defined as _____.
A. the nature of the players in an industry and their relative bargaining power.
B. a set of plans for achieving long term returns on the capital invested in a business
firm.
C. set of planned activities designed to result in a profit in a marketplace.
D. how a company's product or service fulfills the needs of customers.
ANSWER: A
40 The area of actual or potential commercial value in which a company intends to operate is
a _______.
A. market space.
B. marketplace.
C. perfect market.
D. Bertrand market.
ANSWER: A
41 Which of the following is not one of the stages of the development of the Internet?
A. Innovation.
B. Institutionalization.
C. Globalization.
D. Commercialization.
ANSWER: C
42 Which protocol permits users to transfer files from the server to their client computer, and vice
versa?
A. HTTP.
B. SMTP.
C. IMAP.
D. FTP.
ANSWER: D
43 Which of the following is not a limitation of the current Internet?

A. insufficient capacity throughout the backbone.
B. network architecture limitations.
C. insufficient reach.
D. best-efforts QOS.
ANSWER: C
160
44 Internet users account for about ________ of the world's population.
A. 7%
B. 17%
C. 27%
D. 47%
ANSWER: B
45Which of the following was the first commercial Web browser?

A. Mosaic.
B. Mozilla.
C. Netscape Navigator.
D. Internet Explorer
ANSWER: C
1 Enumerate the various online payment systems.

2 What are the basic requirements of any payment system?
3 Briefly explain the concept of Micro, consumer and business payments.
4 Distinguish between pre-paid and post-paid payment system.
5 Explain the transaction flow in e-cash system.
6 Discuss the basic requirements of an online payment system.
7 What are the special considerations involved in the design of an online micro payment
system?
8 Define interoperability in the context of online payment systems.
9 Describe what is meant by scalability, in an online payment system.
10 How electronic payment system differs with traditional payment systems?
11 Explain the working of PayPal.
12 What do you understand by payment gateways and how payment gateways work?
13 What do you mean by virtual PIN?
14 How electronic checks are advantageous over traditional checks?
15 How online banking is giving a push for e-commerce?
16 Write short note on Smart Card.
17 Explain in brief E-Wallet.
18 Explain the key characteristics of E-Money
19 Write difference between
(a) Atomicity and Isolation
(b) Scalability and interoperability
(c) Consistency and durability
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20 Explain EFT.
21 Explain Briefly the B2B Electronic Payment Systems Stating The Application Of Each.
22. What is E-check?
23. What is e-tailing?
24. What is meant by M-Commerce?
25. What are three types of payment cards?
26. What are the types of Electronic payment system.
27. What is encryption?
28. What is decryption?
29. What is electronic fund transfer?
30. What is the concept of e-money?
31. What is identity theft?
32. What is anonymous e money?
33. What is the basic difference between offline money and online money?
34. What is the basic difference between a debit card and a credit card?
35. Is paytm an e wallet or digital cash?
1 Differentiate between credit and debit cards.

2 Discuss the protocol developed by Visa and Master Card.
3 Distinguish between contact and contact less smart cards.
4 “Online shopping is changing market dynamics”. Comment.
5 Briefly explain the concept of digital and cyber cash.
6 What are online payment methods? What are the risks involved in Online Payment System?
7 Explain in detail how smart cards work.
8 What are the requirements of Internet Based payments? Explain
9 What is credit card laundering? How do you think it can be prevented?
10 Electronic Payment System is prerequisite for the success of electronic business. Comment.
What are the issues in electronic Payment systems in Indian context?
11 Explain briefly the working of a credit Payment system over any other transaction.
12 Explain in detail the ACID test.
13 What is electronic payment system? Electronic business is incomplete without electronic
payment system. Comment.
14 Explain the process of online payment in the arena of e-commerce. Explain clearly the
“authorization” and “settlement” processes and how are they affected in respect of e-
commerce?
15 What are the different possible methods of payment over internet? Explain the working
of credit card or any electronic payment system over internet?
16 Difference between electronic payment system and traditional payment systems?
162
17. Discuss various infrastructure issues in Electronic payment systems in India.
18. Explain the legal, ethical and privacy issues for safety of e-payment made by a customer
with a case study.
19. Illustrate briefly the contracts and warranties used in providing privacy to E-commerce
transactions.
20. What is e-payment? State the principles of e-fund transfer. Why is orientation and
standardization required for e-payment businesses?
21. Explain about certificate issuance in Master card/Visa Secure electronic transaction.
22. What is e-payment? Discuss the functions of e-payment system? Why is orientation and
standardization required for e-payment business?
23. What is Smart card? Explain step by step by procedure to define the working of Payment
by Smart card.
24. Explain the following:
A. Digital Cash
B. Electronic Cheque
25. What is Smart Card? Define various characteristics of it.
26. What are the infrastructure issues and risks in Electronic Payment System?
27. What is Electronic Payment System? What are its various types?
28. What are the security threats in E-commerce environment?
29. What is e-wallet? Mention its advantages and disadvantages.
30. What is digital cash? Mention its advantages and disadvantages.
31 Explain the difference between private key encryption and public key encryption.
32 Explain in detail the objectives of e commerce security infrastructure?
33 What id the difference between Trojan horse and worms?
34 Explain the difference between RTGS and NEFT in detail.
35 Explain the working of bitcoin in detail.
UNIT - IV
I Test Your Skills:
(a) Multiple choice questions
1. Google.com is an example of a:
A. Destination site
B. Portal
C. Search engine
ANSWER: C
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2. Currency used in e-business transactions around the world
A. Dollars
B. Rupees
C. None of the above
D. All the above
ANSWER: C
3. ________ is an example of an auction site

A. e-bay
B. Ibibo
C. Facebook
D. Orkut
ANSWER: A
4. What items are traded in e-business

A. Consumer durables
B. Pharmaceutical products
C. Industrial goods
D. All the above
ANSWER: D
5. Once segments have been identified, organizations need to define how best to position
their online services relative to competitors according to four main variables: product
quality, service quality, and fulfillment time. Which variable is missing?
A. After sales service
B. Brand perception
C. Customer value
D. Price
ANSWER: D
6. What could be an implication for an organization if an e-business strategy is not clearly

defined?
A. Clear direction of e-business strategy
B. Effective integration of e-business at a technical level
C. Greater opportunities from evaluation of opportunities
D. None of the above are applicable
ANSWER: D
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7. Before developing any type of strategy, a management team needs to agree the process
they will follow for generating and then implementing the strategy. A framework that
gives a logical sequence to follow to ensure inclusion of all key activities of an e-
business strategic development is generally known as:
A. An E-channel strategy
B. E- business stratification process
C. A strategy process model
D. Multi-channel e-business strategy
ANSWER: C
8. The approach by which applications of internal and external electronic communications

can support and influence strategy is a definition of:
A. Corporate Strategy
B. E-channel strategy
C. E-business strategy
D. E-business responsibility
ANSWER: C
9. A(n) __________ is a private corporate network that uses standard Internet protocols
and interfaces.
A. ethernet
B. extranet
C. local area network
D. intranet
ANSWER: D
10. When measuring the effectiveness on an online advertisement, the __________ is the
percentage of visitors to a page who click on an advertisement.
A. click ratio
B. click rate
C. click-through rate
D. hit ratio
ANSWER: C
11. RACE is a practical framework to help marketers manage and improve the commercial
value gained from digital marketing. The term stands for Reach, Act, C, Engage. What
does 'C' refer to?
A. Collaborate
B. Collect
C. Consolidate
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D. Convert
ANSWER: D
12. A strength of social media and viral marketing is:

A. Cannot be ignored in user's inbox
B. Considered credible
C. It is possible to reach a large number at relatively low cost
D. Highly targeted with controlled costs
ANSWER: C
13. In future, some suggest that the task of searching for suppliers and products may be
taken over by computer programmes which have defined rules or some degree of
intelligence that replicates human neural functioning. These programmes are known as:
A. Spider search engines
B. HTML
C. E-marketplace search engines
D. Software intelligent agents
ANSWER: D
14. Security is a serious concern for e-business managers and there are many potential risks
concerning unauthorized access to customer and company data. One way this occurs is
through misleading users through setting up a bogus website and gaining user details
online. What is this method known as?
A. Denial of service
B. Phishing
C. Malware
D. Firewalling
ANSWER: B
15. The fastest-growing application for the Internet is

A. going shopping
B. conducting research
C. playing games, reading, and listening to music
D. using e-mail
ANSWER: A
16 The most common method for gaining access to the Internet is through a __________.
A. dumb terminal
B. virtual provider or computer
C. point-to-point computer
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D. provider or host computer
ANSWER: D
17 The term ISP refers to

A. internal software protocol
B. international shareware pool
C. Internet service provider
D. interface standard protocol
ANSWER: C
18 These types of commercial Internet service providers are the most widely used
A. national service providers
B. regional service providers
C. centralized service providers
D. decentralized service providers
ANSWER: A
19 When surfing the Web, the browser interprets the HTML command found in a document
file, and displays it as a(n)
A. Applet page
B. Java page
C. Web page
D. Domain page
ANSWER: C
20 Which of the following are not required to send and receive e-mail?
A. e-mail account
B. Web page
C. access to the Internet
D. e-mail program
ANSWER: B
21 ______________ includes all electronics-based information exchanges within or

between companies and customers.
A. E-commerce
B. E-marketing
C. E-communication
D. E-business
ANSWER: D
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22 The flip side of e-marketing is:
A. e-advertising
B. e-selling
C. e-commerce
D. e-purchasing
ANSWER: D
23 Which of the following describes e‐commerce?

A. Doing business electronically
B. Doing business
C. Sale of goods
D. All the above
ANSWER: A
24 Which segments do eBay, Amazon.com belong?

A. B2Bs
B. B2Cs
C. C2Bs
D. C2Cs
ANSWER: B
25 Which type of e‐commerce focuses on consumers dealing with each other?

A. B2B
B. B2C
C. C2B
D. C2C
ANSWER: D
26 Who breaks into other people’s computer systems and steals and destroys information?
A. Hackers
B. Script kiddies
C. Programmers
D. Analysts
ANSWER: A
27 WWW means ____________.

A. World Wide Web
B. Wide World Web
C. Web Wide World
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D. World Web Wide
ANSWER: A
28 DNS stands for ___________________.

A. Domain Name System
B. Dynamic Network Service
C. Detail Name Server
D. All of above
ANSWER: A
29 _________________a subset of the website.

A. Web Site
B. Web Portal
C. Web Space
D. None of above
ANSWER: B
30 ____________________ is not a domain.

A. org
B. gov
C. com
D. trust
ANSWER: D
31 What encourages users of a product or service supplied by a B2C company to ask friends to
join in as well?
A. Spam
B. Viral marketing
C. Affiliate programs
ANSWER: B
32 Compared to B2C e-commerce, B2B e-commerce is …….

A. of equal size
B. slightly smaller
C. slightly larger
D. much larger
ANSWER: D
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33 What is Bitcoin?
A. an online payment blog
B. First decentralized digital currency
C. A mobile app for online shopping
D. A website
ANSWER: B
34 ______________ marketing is the Internet version of word-of-mouth marketing.

A. Visceral.
B. Virile.
C. Viral.
D. Virtual.
ANSWER: C
35 Which of the following is an advantage of e-books?

A. reduced transaction costs for the user.
B. requirement of expensive devices to use.
C. portability compared to print books.
D. copyright management.
ANSWER: A
36 The ability to change the product to better fit the needs of the customer is called ________.
A. customization.
B. personalization.
C. privacy.
D. accessibility.
ANSWER: A
37 All of the following are major categories of computer viruses except _____.
A. Macro viruses.
B. File-infecting viruses.
C. Script viruses.
D. Trojan viruses.
ANSWER: D
38 A worm is designed to spread _________.

A. from computer to computer.
B. from file to file on a computer.
C. from Web site to Web site.
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D. from Web site to computer
ANSWER: A
39 When hackers flood a Web site with useless traffic to overwhelm the network, it is called
______.
A. phishing.
B. pharming.
C. a Denial of Service (DoS) attack.
D. spoofing.
ANSWER: C
40 . Which of the following is not a dimension of e-commerce security provided by encryption?

A. availability.
B. message integrity.
C. nonrepudiation.
D. confidentiality.
ANSWER: A
41 The only payment system that is instantly convertible without intermediation is _______.
A. Credit card.
B. Accumulating balance.
C. Stored value.
D. Cash.
ANSWER: D
42 The most prevalent online payment method is ______.

A. PayPal.
B. checks.
C. credit cards.
D. debit.
ANSWER: C
43 After sending e-mail, which of the following activities is most common among Internet users?
A. sending instant messages.
B. reading someone else's blog.
C. using a search engine to find information.
D. getting news.
ANSWER: C
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44 All of the following are reasons more people don't shop online except ________.
A. lack of trust in online merchants.
B. lack of convenience.
C. inability to touch and feel the product.
D. fear of misuse of personal information.
ANSWER: B
45 The process of getting customers to pass along a company's marketing message to friends,
family, and colleagues is known as _______.
A. affiliate marketing.
B. viral marketing.
C. permission marketing.
D. blog marketing.
ANSWER: B
1 What are the four fundamental security issues in commerce and what is the impact of the
mobile commerce environment on these issues?
2 What are the online payment issues in mobile commerce?
3 What type of payment models have been used in mobile commerce?
4 Define issuer-centric and mobile network operator-centric payment models.
5 What are the important revenue streams on which sustainable businesses can be built in the
mobile commerce environment?
6 Describe the additional benefits offered by location and search services in the mobile
commerce environment as compared to the wired network environment.
7 What do you understand by business models?
8 Explain the click and mortar model.
9 What is Digital Commerce?
10 Write short note on Search Engine.
11 Write short note on Reverse Auction.
12 Define and differentiate between an infomediary and a metamediary.
13 Describe the taxonomy of the business models which can be used.
14 What is affiliate model? Provide two examples of electronic commerce business that use
this model.
15 Describe three different revenue models for a portal such as Yahoo!.
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16 How are e-business models and strategies related?
17 What is the importance of supply chain management in E-commerce.
18 What are some of the factors that may impact a customer’s buying decision.
19 What are the various electronic tokens that are used in electronic payment systems?
20 Differentiate between a smart card and credit card.
21 Write a short note on Ethical issues in Electronic Commerce.
22 Write a short note on Marketing strategies for promoting electronic business over web.
23 What is electronic marketing? Describe various tools used for electronic marketing.
24 Explain the link between e-marketing and e-business and why they may be considered
separately.
25 What is Online Marketing? What are the advantages and limitations of it?
26 What is click jacking?
27 Explain the term Salami technique.
28 What is tort law on the internet?
29 Explain the domain name disputes.
30 Explain product liability laws as a legal consideration in e-commerce.
31 What is tort of nuisance?
32 What is tort of negligence?
33 What is the basic difference between copyright and patent?
34 What is cybersquatting and click jacking ?
35 What is metatagging?
1. What is the electronic store model? What are the major impediments faced by model in
less developed countries.
2. What are the major advantages of the manufacturer model? Describe how the model
reduces market friction and costs through a value chain analysis.
3. Describe some alternative revenue models for a web site from a magazine publisher.
4. Draw a diagram summarizing the different types of online marketplace.
5. For an organization you are familiar with, examine the alternative business and revenue
models afforded by the Internet and assess the options for the type and location of e-
commerce transitions.
6. Select an intermediary site and assess how well it makes use of the range of business
models and revenue models available to it through the Internet.
7. Explain what a business model is and relate it to an Internet pure play of your choice.
8. Discuss briefly the status of E-Governance in the country.
9. What are the key challenges to proliferation of E-Governance in India?
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10. What role do you envisage for the government in smooth conduct of E-Commerce in
country?
11. Societal impacts of E-commerce?
12. Discuss legal and ethical issues in e – commerce?
13. Can you describe why Google is so important to running an online business? Can
14. you make specific detailed recommendations that show what your client should
15. do to gain maximum benefit from Google.
16. Describe the objectives and characteristics of web advertising. Also describe the
17. major advertising methods used on the web.
18. What are the various revenue models adopted by organizations for E-Business.
19. Explain.
20. What are the requirements for conducting e-commerce for an organization dealing
21. in books and music titles?
22. Explain salient features of home banking. Also, discuss the management issues in
23. connection with online banking.
24. Electronic Business changes the way business processes are performed in a organization.
a. Comment. What are the changes that result from adopting electronic Business models?
b. Give suitable examples.
25. What are the infrastructure requirements for adopting electronic business models?
a. Illustrate with an example details of the hardware, software communication network and
b. other tools that may be required to set up the e-Business?
26. What is Electronic Market Place? Describe it for Buyer and Seller.
27. What are the regulatory and ethical considerations in e-commerce?
28. What are the emerging trends in e-commerce?
29. What is mobile commerce? Explain its advantages and disadvantages.
30. How is cybersquatting different from web spoofing? Explain using example.
31. What are the technological and social considerations in e-commerce?
32. How is e procurement different from traditional procurement procedure? Explain using
real life example.
33. Explain the patent law being followed by e commerce companies in India.
34. “Responsive design is one of the most innovative technological considerations of e
commerce.” In the light of statement explain the other technological considerations of e
commerce.
35. “Artificial Intelligence is the latest trend in e commerce.” In the light of statement explain
how artificial intelligence has become an added advantage to the field of e commerce.
174
QUESTION BANK
BUSINESS
COMMUNICATION
BBA 110
175
QUESTION BANK
BUSINESS COMMUNICATION-BBA 110
BBA-II
UNIT – I
I. MULTIPLE CHOICE QUESTIONS :
1. The ________ of weather on ice cream sales is well documented

A. Affect
B. Effect
C. Effect
D. Affected
ANSWER: C
2. They are going to love going _________

A. Their
B. There
C. Farthest
D. Here
ANSWER: B
3. ‘His long experience as a teacher gave him the ability to handle students’ is an example of
A. Countable Noun
B. Uncountable Noun
C. Collective Noun
D. Abstract Noun
ANSWER: D
4. The specialist shared his findings with Dr. Johnson and _______
A. I
B. Me
C. Their
D. They
ANSWER: B
5. ‘Would you like a Cookie with your Coffee?’ has how many nouns?
A. 3
B. 1
C. 4
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D. 2
ANSWER: D
6. Our _____________are available from 9 to 5 every day, we are happy to assist you.
A. Representitives
B. Representatives
C. Reprasentatives
D. Representatives
ANSWER: B
7. If you _______ something, be sure to check our lost and found

A. Loose
B. Lost
C. Loss
D. Lose
ANSWER: D
8. ‘Their Bike is in the Garage’ is an example of

A. Countable Noun
B. Abstract Noun
C. Uncountable Noun
D. Pronoun
ANSWER: A
9. She had a very happy _______

A. Child
B. Children
C. Childhood
D. None of the Above
ANSWER: C
10. Jennifer will share her bag of goodies with _______ sits beside her.
A. Who
B. Whom
C. Whoever
D. Whomever
ANSWER: C
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11. “I am going to visit India during the holidays”. Which words in the sentence are common
nouns?
A. Holidays
B. Visit, Holidays
C. India
D. India, Holidays
ANSWER: A
12. Deepa complained _______ the weather.

A. Against
B. About
C. For
D. To
ANSWER: A
13. We’ve spent _______ of time and resources optimizing our customer service procedures
A. An lot
B. Allot
C. Lot
D. A lot
ANSWER: A
14. He has not yet gone ______ bed. (To the/ To)
A. To
B. Into
C. In
D. To The
ANSWER: A
15. “Goodwill” is an example of

A. Noun
B. Adjective
C. Verb
D. Tense
ANSWER: A
16. ‘They live in a beautiful house’ has how many Adjectives?

A. 2
B. 3
C. 1
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D. None
ANSWER: C
17. ‘I had played football before Susan came’ is an example of which tense?
A. Present Tense
B. Future Tense
C. Present Perfect
D. Past Perfect
ANSWER: A
18. Claudia ________ to be a chef when she was young.

A. Learned
B. Learnt
C. Learn
D. Learning
ANSWER: D
19. ‘Yesterday morning I saw my Good Friend David. We went to the mall and had some good
food to eat’ what is a proper noun in this sentence?
A. Food
B. Mall
C. Yesterday
D. David
ANSWER: B
20. After taking a bad step Glenda cursed _______ allowed a dog to defecate on her pristine
lawn.
A. Whom
B. Whoever
C. Who
D. Whomever
ANSWER: C
21. Meena ______ her medicines to the Doctor.

A. Take
B. Taking
C. Took
D. Taken
ANSWER: B
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22. “What’s the most famous bridge in the world?” ‘bridge’ is
A. Proper Noun
B. Common Noun
C. Abstract Noun
D. Collective Noun
ANSWER: C
23. Receiver should ………...the message objectively and send feedback promptly.
Fill in the blank above out of following:
A. Encode
B. Decode
C. Forward
D. Write
ANSWER: B
24. Sender should select channel in light of:

A. Need for speed
B. Social need
C. Safety need
D. Esteem needs
ANSWER: B
25. Some forms of communication like office order or notice are;

A. Two-way process
B. Unidirectional
C. Multi directional
D. Horizontal process
ANSWER: B
26. Receiver should ………... the message objectively and send feedback promptly.
A. Encode
B. Decode
C. Forward
D. Write
ANSWER: B
27. Sender should select channel considering:

A. Need for speed
B. Social need
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C. Safety need
D. Esteem need
ANSWER: A
28. Some forms of communication like office order or notice are;

A. Two-way process
B. Unidirectional
C. Multi directional
D. Horizontal process
ANSWER: B
29. Which of the following is not a component of communication process?

A. Feedback
B. Context
C. Product of organization
D. Receiver
ANSWER: C
30. Written communication is used mainly for:

A. Understanding emotions of receiver
B. Understanding emotions of sender
C. Understanding receiver’s message quickly
D. Future reference and records
ANSWER: D
31. Receiver should ………. the message objectively and send feedback promptly.
A. Encode
B. Decode
C. Forward
D. Write
ANSWER: B
32. Sender should select channel in light of:

A. Need for speed
B. Social need
C. Safety need
D. Esteem need
ANSWER: A
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33. Upward communication is used for the following:
A. Seeking superior’s intervention to solve the problem
B. Directive to initiate action
C. Motivate seniors
D. Coordinate with other departments
ANSWER: A
34. Downward communication is best suited to

A. Maintain law and order
B. Motivate senior management
C. Coordination with different departments
D. Explain policies and procedures to subordinates
ANSWER: D
35. Indicate the wrong statement out of the following:

A. Grapevine does not follow any fixed path
B. The grapevine is a very fast channel
C. The grapevine provides valuable feedback to the management
D. The management can do a great service to their organization by destroying the
grapevine.
ANSWER: D
36. Participant should not bring up items which are not on the_________.
A. Agenda
B. Minutes
C. Memo
D. letter
ANSWER: A
37. ________plays the role of a leader in a meeting.

A. Boss
B. Chairperson
C. Secretary
D. legal expert
ANSWER: B
38. _______ refers to a list of items to be discussed at a meeting.

A. Agenda
B. Resolution
C. Decisions
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D. Notice
ANSWER: A
39. ____________ refers to a meeting for discussion or an exchange of views.

A. Groups
B. meetings
C. conference
D. committees
ANSWER: C
40. Meetings have a ______________ agenda.

A. fixed
B. indefinite
C. dynamic
D. changing
ANSWER: A
II. SHORT ANSWER TYPE QUESTIONS:
1. Give the meaning of the following idioms and use them in sentences:
A. Time and Tide
B. Add Insult to Injury
C. Ball is in Your Court
D. Burn the Midnight Oil
2. Make sentences using the following pair of words:

A. Stationary- Stationery
B. Profit-Prophet
C. Prey-Pray
D. Illusive-Elusive
3. The sentences below need editing with respect to vocabulary and grammar. Identify the
errors and re-write the sentence correctly:
A. One should not waste his time
B. I shall see the brakes whether they work well
C. I asked for his book but he did not lend me
D. She enjoyed during the holidays
E. Whoever works hard he will win
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4. Following are whole words. Put Apostrophes at the correct places:
A. We Will
B. Do Not
C. They Are
D. Would Not
E. They Would Not
5. How communication is a social activity?

6. Why is communication so important to an organization? How does it relate the organization
to the outside world?
7. Write a note on communication as “an integral part of the process of change”
8. List and briefly describe the six phases of the communication process.
9. Explain the process of communication?
10. Give illustration to show why it is important to adapt the message to the needs of the receiver.
11. Rewrite the following sentences to emphasize you – attitude instead of we – attitude:
A. To help us improve customer service, we would appreciate if we get some
suggestions from you.
B. We are pleased to inform you that your fixed deposit has matured.Since we have our
own problems, we would appreciate if you pay your installments on time.
C. We value your association with us for you are important part of our
Success
D. This pamphlet will acquaint you with the various schemes we have floated to
multiply savings.
12. How does culture affect communication? Discuss in brief.
Write short notes on the following:
A. Filtering
B. Information Overload
C. Goal Conflict
D. Status Consciousness
E. Emotions and Communication
13. Write notes on the following in not more than 50 words.
A. Steps required to develop positive attitude
B. Types of Business Reports
C. Importance of Grapevine for corporate
14. What is 7C’s concept in communication? Explain each briefly
15. Write a detailed note on the factors responsible for the growing importance of
communication in modern times.
16. Effective communication has always been essential for success in business. Explain this
statement in detail.
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17. Imagine a situation in which the intransigent attitude of trade union leaders creates
communication problems for management, and how a resourceful manager deals with them.
18. Explain ways of how To Improve Command Over Spoken and Written English?
19. What are the challenges of 21st Century managing the career of a person?
20. What affect does culture have on communication.
21. Explain the process of communication in detail.
22. Explain in detail the principles of Effective Business Communication.
23. Explain the meaning and significance of communication in the current day scenario.
24. List and describe the six phases of the communication process by giving examples.
25. How does planning of message take place during the process of communication?
26. Why is communication so important to an organization? How does it relate the organization
to the outside world?
28. Effective communication has always been essential for success in business. Explain this
statement in detail.
29. What are the essentials of communication? Discuss in detail giving a suitable example.
30. How does planning of message take place during the process of communication?
31. Why should the letter of application have an attractive beginning? What should the opening
contain?
32. What are the functions of a referee? How does a referee write a reply to an inquiry?
33. Show how computers have changed the modes of communication in the business world and
how we are moving in the direction of a paperless office.
34. “A picture is worth a thousand words.” Discuss with reference to the use of posters in
business communication.
III. LONG ANSWER TYPE QUESTIONS:
1. What are the various ways to build up vocabulary?

2. What are nouns? Give examples of possessive nouns along with collective nouns.
4. How can reading help in confidence building?
5. Effective communication always helps in bringing success to a business organization.
Explain this statement in detail.
6. What are the essentials of communication? Discuss in detail giving a suitable example.
7. “There can be no such things as perfect communication.” Do you agree? Give a reasoned
answer.
8. “Communicators with similar mental filters are more likely to communicate Effectively.
Discuss.
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9. What common punctuation mistakes must be avoided during business communication?
10. Write a brief note on clarity of thought and expression in the communication process.
11. Suggest ways to build vocabulary to communicate effectively in a business environment.
12. Write sentences to bring out the difference between past perfect and present perfect tenses.
13. What are the essentials of communication? Discuss in detail giving suitable examples.
14. ‘We don’t see reality, we interpret what we see and call it reality.’ Discuss.
15. Discuss the main features of communication.
16. State the elements of the process of communication with the help of examples.
17. “Communication is the sum of all things one person does to create understanding in the mind
of another”. Elucidate
18. “The basic purpose of all communication is to obtain an understanding and acceptable
response”. In the light of this statement explain the objectives of communication.
19. Explain the need for communication in modern business organizations.
20. Why is communication considered to be an important responsibility of managers?
21. Explain the various channels of communication used in modern organization.
22. Distinguish between downward and upward communication.
23. Explain the various elements of communication process.
24. Physical and Mechanical barriers to communication always hinder smooth communication
process. Elucidate
25. Explain upward communication. How does it work in an organization?
26. Write a detailed note on the importance of clarity of thought and expression in the
communication process with examples.
27. Discuss the importance of communication in today’s competitive business world. Is the
ability to communicate more important criteria of successful performance of an employee?
28. In business communication courtesy and clarity are as important as conciseness and
completeness.” Discuss in detail.
29. Discuss widely the general principles of effective communication. What are the barriers to
communication? Discuss the guidelines for overcoming these barriers.
30. Show how offensive style is the greatest barrier to communication. Write a note on socio –
psychological barriers to communication.
31. Alana High school, Rajkot, needs a commerce teacher, Apply to the Principal giving
necessary details.
32. Draft a memo to the employee of your firm for irregularities and indiscipline in work.
33. As a principal of a college draft a testimonial for an outstanding student who has just passed
the B.A. examination.
34. As a chief guest, draft the speech you would make on the occasion of the inauguration of the
opening of a free hospital in a rural area.
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UNIT-II
I. MULTIPLE CHOICE QUESTIONS :
1. When communicating, many Latin and Asian cultures stress the value of
A. Closeness.
B. Indirectness.
C. Avoidance.
D. Directness.
ANSWER: B
2. For most Americans, intimate space, or intimate distance, is under

A. 12 inches
B. 48 inches
C. 18 inches
D. 24 inches
ANSWER: C
3. Which principle/s of professional communication promote/s sensitivity to cultural values

and beliefs?
A. The professional communication is in good taste.
B. The professional communication is legal.
C. The professional communication is ethical.
D. All the above.
ANSWER: A
4. Junior members of staff are working long unpaid hours on a project because profits are
down, and the project promises to fund three full-time positions. They do not complain,
although two seek treatment for stress-related illness. Identify the major cause/s of illegal
or unethical behaviour in this scenario.
A. Uncertainty about whether an action is wrong.
B. Unwillingness to take a stand about what is right.
C. Excessive emphasis on profits.
D. All the above.
ANSWER: D
5. Companies need to become aware of how to communicate with people from diverse
cultures because:
A. More companies are conducting business with people from other countries.
B. The workforce is becoming more diverse.
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C. Both 1 and 2.
ANSWER: C
6. Which one of the following statements is inaccurate?

A. There is one definition of culture on which everyone agrees.
B. Culture is a complex, multidimensional concept.
C. Culture is learned social behaviors that develop over time.
D. All the above.
ANSWER: A
7. Intercultural communication is:

A. The sharing of meanings between individuals from different cultures.
B. Shared communication between members of the same culture.
C. The process of adjusting to the host culture.
D. Shared communication between members of same family
ANSWER: A
8. The belief that one's culture is superior to others is referred to as:

A. Cultural relativism.
B. Enculturation.
C. Ethnocentrism.
D. Collectivity
ANSWER: C
9. Which of the following is not a dimension of cultural differences as identified by Hofstede

(1984)?
A. Certainty avoidance
B. Individualism
C. Power distance
ANSWER: A
10. Which of the following lists represents the common barriers to communication?
A. Linguistic, cultural, physical, perceptual, experiential, and emotional.
B. Linguistic, cultural, physiological, perceptual, experimental, nonverbal and
economical.
C. Linguistic, conceptual, psychological, perceptual, experiential, verbal and emotional.
D. Linguistic, cultural, physical
ANSWER: A
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11. Which of the following nonverbal codes is considered universal rather than culturally
specific?
A. Facial expressions.
B. Artefacts
C. Paralanguage.
D. Chronemics.
ANSWER: A
12. In which cultural dimension is the difference in how status is ascribed considered?
A. Specific vs. diffuse.
B. Neutral vs. affective.
C. Universalism vs. particularism
D. Achievement vs. ascription.
ANSWER: D
13. Which cultures tend to value quality of life more than wealth.
A. Feminine
B. Masculine
C. Universalism
ANSWER: A
14. What is the process by which you learn the rules and norms of a culture different from your
own?
A. Enculturation
B. Acculturation
C. Cultural Shock
D. Ethnocentrism
ANSWER: B
15. Culture shock is a psychological reaction to a new culture.

A. Enculturation
B. Acculturation
C. Cultural Shock
D. Ethnocentrism
ANSWER: C
16. Culture refers to

A. The specialized lifestyle of a group of people.
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B. Race or nationality.
C. Genetic similarities.
D. Gender equality.
ANSWER: A
17. In interpersonal communication, ethics

A. Are important.
B. Are not a consideration.
C. Increase barriers to understanding.
D. Stand in the way of honesty.
ANSWER: A
18. Which forms of electronic meeting take place over the Internet?
A. Videoconferencing and audioconferencing
B. Formal electronic meetings and discussion threads
C. Audioconferencing and teleconferencing
D. Audioconferencing and web conferencing
ANSWER: D
19. You send an email in the format of a good newsletter of request. You carefully place each
of 10 requests in a separate numbered paragraph, finishing off the email with the required
completion date and a courteous close. Ten days after the completion date only five of the
requests have been performed. What could have gone wrong?
A. Your sentences and paragraphs were too long.
B. The recipient only read the first screen.
C. The recipient doesn't check their email regularly.
D. You sent the email to the wrong person.
ANSWER: B
20. You need to provide guidance to your work team on how to use a new database that will
become operational next week. Which of the following would be the most suitable email
type to convey the instructions?
A. Announcement email.
B. Instruction email.
C. Authorization email.
ANSWER: B
21. Which of the following is not a purpose of business blogging?

A. Seeking feedback from clients.
B. Correcting misinformation and rumors across the company.
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C. Criticizing competitors.
ANSWER: C
22. A culture-general approach to achieving intercultural communication competence:

A. Focuses on developing cultural awareness and sensitivity.
B. Focuses on acquiring specific knowledge about another culture.
C. Involves stereotyping and feeling sympathy for other cultures.
ANSWER: A
23. You come from a culture where men are expected to help around the house. One of your
colleagues comes from another culture. His wife, who has a postgraduate degree, brings
his lunch to him every day, sits in another room while he eats and then leaves with the dirty
dishes. Your first reaction is strong disapproval. Which term/s defined in this chapter, can
explain your reaction?
A. Enculturation
B. Cultural barriers
C. Masculinity
D. Ethnocentricity
ANSWER: D
24. What will most improve your workplace relationship with your colleague?
A. Development of 'other-orientation'
B. Intercultural communication
C. A culture general approach
D. Cultural relativism
ANSWER: D
25. Your colleague never joins your team in the lunchroom, and therefore is not included in
informal channels of communication. What would improve his workplace relationships?
A. Develop behavioral flexibility.
B. Develop cultural awareness and sensitivity.
C. Overcome experiential barriers to intercultural communication.
D. Acculturation
ANSWER: C
26. Which cultures tend to value quality of life more than wealth.
A. Feminine
B. Masculine
C. Universalism
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ANSWER: A
27. What is the process by which you learn the rules and norms of a culture different from
your own?
A. Enculturation
B. Acculturation
C. Cultural Shock
D. Ethnocentrism
ANSWER: B
28. Culture shock is a psychological reaction to a new culture.

A. Enculturation
B. Acculturation
C. Cultural Shock
D. Ethnocentrism
ANSWER: C
29. Culture refers to

A. The specialized lifestyle of a group of people.
B. Race or nationality.
C. Genetic similarities.
D. Gender equality.
ANSWER: A
30. In interpersonal communication, ethics

A. Are important.
B. Are not a consideration.
C. Increase barriers to understanding.
D. Stand in the way of honesty.
ANSWER: A
31. 31.Which of the following is NOT a problem when calling for a meeting:
A. Personal agenda
B. Team spirit
C. Interpersonal conflicts
D. Cultural differences
ANSWER: B
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32. When communicating, many Latin and Asian cultures stress the value of
A. Closeness.
B. Indirectness.
C. Avoidance.
D. Directness.
ANSWER: B
33. For most Americans, intimate space, or intimate distance, is under

A. 12 inches
B. 48 inches
C. 18 inches
D. 24 inches
ANSWER: C
34. Which principle/s of professional communication promote/s sensitivity to cultural values

and beliefs?
A. The professional communication is in good taste.
B. The professional communication is legal.
C. The professional communication is ethical.
D. All the above.
ANSWER: A
35. Junior members of staff are working long unpaid hours on a project because profits are
down and the project promises to fund three full-time positions. They do not complain,
although two seek treatment for stress-related illness. Identify the major cause/s of illegal
or unethical behaviour in this scenario.
A. Uncertainty about whether an action is wrong.
B. Unwillingness to take a stand about what is right.
C. Excessive emphasis on profits.
D. All the above.
ANSWER: D
36. An employee with the power of attorney signs letters on behalf of the company. Such
signature is called ________.
A. power pro
B. per pro
C. on behalf
D. optional
ANSWER: B
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37. There are ________ popular formats of writing a business letter.
A. three
B. five
C. seven
D. nine
ANSWER: B
38. The ________ style is the most widely used format in business communication.
A. full-block
B. semi-block
C. indented
D. none
ANSWER: B
39. The ________ style of business letter writing is commonly used in India.
A. full-block
B. semi-block
C. indented
D. none
ANSWER: D
40. The ________ style is the traditional format of business letter writing.
A. full-block
B. semi-block
C. indented
D. none
ANSWER: B
II. SHORT ANSWER TYPE QUESTIONS
1. Explain how the religious beliefs of people of a nation impact its communication?
2. Explain how the social environment and language variables cause difference in
communication styles cross nations?
3. Define Proxemics. How does the space language differ amongst the western and the eastern
nations?
4. Compare how Americans and French differ in their time language
5. Define Ethics with reference to business communication.
6. How are ethics a responsibility for an organization?
7. How can ethics be communicated through public messages?
8. How can ethics be communicated informally
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9. Define Op-Ed Pieces
10. How has teleconferencing impacted business communication
11. Enlist the various email etiquette.
12. What do you understand by Defamation?
13. What is a privilege? How is absolute privilege different from conditional privilege?
14. Explain misrepresentations and frauds in business communication.
15. Define Mass Media
16. Define and enlist the various components of the Media Mix.
17. Define Public Relations. What are its objectives?
18. How is publicity different from advertisement?
19. Define a press Release. Enlist various guidelines for writing an effective press release.
20. Write a critical note on:
(a) Differentiate between ‘Advertisement’ and ‘Publicity’
(b) Role of Technology in Communication
(c) Media Mix
21. Write short notes on Importance of body language and gestures in cross cultural
communication.
22. What is the impact of technology on business communication? Explain with valid
examples.
23. What do you understand by the term ‘Handshaking Intelligence’
24. What rules should be followed while hosting a business meal ?
25. As a guest invited to a business meal, do you need to exercise any precaution ?
26. Define Culture
27. What do you understand by Cultural Overlap?
28. How do education system and/or level of a nation impact its communication?
29. How does the Politico-legal environment of a nation impact its communication?
30. What is ethnocentrism, and how can it be overcome in communication?
31. Mention four occasional parts of a business letter.
32. Mention any two details which could be included in the letterhead but not in the inside
address.
33. Write a suitable form of salutation for writing a letter to a lady government officer
34. Write today’s date in ordinal numbers with open punctuations.
35. Write your birth date in the cardinal/ American method with open punctuations.
III. LONG ANSWER TYPE QUESTIONS
1. What do you understand by the term ‘Strategic Business Enetrtaining’.

2. Explain any two issues faced while interacting with Foreign Business Dignitaries.
3. How has technology impacted business communication?
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4. Elaborate the various available communication technologies.
5. According to you, what guidelines must the spokesperson of a company follow while
communicating with the outside world?
6. What are the various legal issues of communication?
7. Explain the role and significance of mass media.
8. What are the various forms of mass media? Compare their respective significance and
limitations.
9. Compare and contrast the print media and the electronic media of mass communication.
10. “Advertising is a social evil”. Comment
11. What do you understand by Public Relations? Why are they important? What conditions
can make call for Public Relations necessary for a Government and a Private Organization?
12. Elaborate the various elements and tools and components of Public Relations. What
function do they perform?
13. What do you understand by Public Relations Strategy? Discuss the PR process in detail.
14. Who is a PR Officer? What are his duties? Enlist the various traits of a successful PR
Officer.
15. Identify the types of technology used primarily in internal and external operational
communication to transmit messages. Explain what do you think might account for the
difference?
16. How has technology facilitated the world business through its use in communication?
17. Discuss effective technology in communication.
18. Write note on Ethical and Legal Issues in business communication
19. Write a critical note on “Cross Cultural Dimensions of Business Communication
20. What is Corporate Culture and how does it affect communication?
21. Explain Cross Cultural Dimensions of business communication
22. What are important elements of mass communication? Suppose that you are appointed as
Public Relation officer in an insurance company. Design appropriate media mix for your
organization.
23. Discuss need of ethics in business communication. What are the guidelines that an
organization should follow to fulfill its responsibility towards ethical business
communication?
24. Differences amongst cultures of the various nations of the world impact the way individuals
communicate non-verbally. Do you agree with statement? Explain your answer with the
help of examples.
25. Elaborate the various National Cultural Variables that impact the communication processes
and styles around the world. Support your answer with the help of relevant examples.
26. What are Etic and Emic approaches to culture?
27. Write note on Ethical and Legal Issues in business communication.
28. Write a detailed note on legal aspects of business communication.
29. How do high context cultures differ from low context cultures?
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30. Distinguish between ethical dilemmas and ethical lapses.
31. Prepare a resume for the following advertisement along with cover letter.
Wanted a plant Manager at our new factory in Gaziabad,UP. Engineering Graduates with
minimum 5 years experience in manufacturing industries as Plant Managers can apply.
Apply
with particulars to Box. 650, The Hindu, Chennai – 600004 latest by 30th July.
Wanted a fast, accurate and hard – working stenographer. Apply giving full particulars and
salary expected to Box No.67890, The Times of India, Ahmadabad.
Wanted a Public Relation officer at our Nagpur unit with minimum of 7 years of
experience.
Salary on merit. Apply within 7 days to Box No. 223, The Times of India, Mumbai.
Wanted a Librarian at P.M. College of Arts & Commerce, Ahmadabad, Apply to The
Principal, P.M. College of Arts & Commerce, Ahmadabad
UNIT-III
I MULTIPLE CHOICE QUESTIONS
1. Business writing should use plain English to convey messages because:

A. Plain English is easy to read and understand.
B. Plain English promotes understanding and empowers people.
C. Plain English ensures that the message is efficient.
D. Using plain English ensures that information is created and written from the
receiver's viewpoint.
ANSWER: D
2. Which of the following sentences about reports is NOT true?

A. A short report is meant to convey information in an efficient, compact format.
B. An annual report is usually published once a year for shareholders as well as for
employers.
C. A recommendation report examines a situation and concludes with specific
recommendations.
D. A proposal is a report written to convince a reader that a need exists and that specific
action should be taken to remedy that need.
ANSWER: C
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3. Which of the following is NOT an external business written communication?
A. Complaint letter
B. Curriculum Vitae
C. Memo
D. Enquiries letter
ANSWER: C
4. A memo has two parts, the:

A. Heading and the date.
B. Heading and the complimentary closing.
C. Heading and the body.
D. Subject and the body.
Answer 4. (D)
5. A referral letter should be sent when:

A. An inquiry can be answered better by someone else.
B. You wish to recommend someone for a job.
C. A payment is enclosed.
D. You don't want to be bothered with it.
ANSWER: B
6. Inquiry letters are letters that:

A. Ask for more information about a product or service.
B. Ask for credit.
C. Try to reactivate business.
D. Ask for an adjustment.
ANSWER: A
7. What is essential for meeting to successfully start?

A. A quorum
B. The agenda
C. Proper seating arrangement
D. All of the above
ANSWER: D
8. When asking several questions in a letter, you can make them more obvious by:
A. Putting all the questions in the closing paragraph.
B. Numbering the questions.
C. Putting all questions in the opening paragraph.
D. Putting all the questions in passive voice.
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ANSWER: B
9. The ideal seating arrangement for a face-to-face meeting is:

A. U shaped seating arrangement.
B. V-shaped seating arrangement.
C. Long rectangular seating arrangement.
D. Circular or oval seating arrangement.
ANSWER: D
10. A cover letter is:

A. Courteous and helpful.
B. Unnecessary.
C. Considered to be in poor taste.
D. Always mailed separately.
ANSWER: D
11. Which of the following activities is the responsibility of members during a meeting?
A. To ensure that the agenda items are dealt with.
B. To encourage all members to participate.
C. To prepare for the meeting and be aware of how to conduct themselves.
D. A speech that is delivered unprepared and is unexpected is:
ANSWER: C
12. Feedback can come in the form of

A. Verbal communication only.
B. Nonverbal communication only.
C. Environmental noise.
D. Verbal and nonverbal listener responses
ANSWER: D
13. What kind of information should not be included in a resume?

A. Work experience
B. Education
C. Affiliation and membership
D. Letter of recommendation
ANSWER: C
14. Which of the following is not a bad news message?

A. Declining invitations
B. Refusing credit facility to customers
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C. Cancellation of promotion of employee
D. Sharing details of a new product launch
ANSWER: D
15. A Buffer statement is

A. Compassionate Statement
B. A Negative Statement
C. A Appreciative Statement
D. One which allows you to delay a negative message
ANSWER: D
16. Supply of defective and poor-quality goods will come under the category of
A. Complaint Letter
B. Good News Letter
C. Persuasive Letter
D. Collection Letter
ANSWER: A
17. A junior clerk addressing a letter to a senior clerk would end his address with
A. Yours Truly
B. Yours Sincerely
C. Yours Faithfully
D. None of the Above
ANSWER: C
18. ‘Coherence’ implies

A. Precision
B. Conciseness
C. Reasoning
D. All of the Above
ANSWER: D
19. Which of the following is not a principle of Business Letter Drafting?

A. Making the message purposeful
B. Being too brief
C. Proof Reading
D. Planning the message in advance
ANSWER: B
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20. Which of the following is not an advantage of a ‘Blanket Letter’?
A. They help in saving time and money
B. They help avoiding the usual routine of dictation and transcription
C. They can be used in catalogues and bulletins
D. They help in creating company goodwill
ANSWER: D
21. Which of the following is not a bad news message?

A. Declining invitations
B. Refusing credit facility to customers
C. Cancellation of promotion of employee
D. Sharing details of a new product launch
ANSWER: D
22. Libel is:

A. Malicious defamatory joke
B. Malicious defamatory written accusation
C. Slander
D. Defamatory speech
ANSWER: B
23. Spoken defamation is known as

A. Libel
B. Slander
C. Libel per se
D. Libel per quod
ANSWER: B
24. A defense against libel is

A. The truth
B. Privilege
C. Fair comment and criticism
D. All of the above
ANSWER: B
25. A co-worker comes to your office to introduce you to a friend of his. You:
A. Smile and nod
B. You stand up, establish eye contact, smile and shake his hand
C. Wave and tell him how happy you are to meet him
D. Give him a “high five”
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ANSWER: B

ANSWER: B

B. Ask for credit.
ANSWER: A

ANSWER: B

B. Ask for credit.
ANSWER: A
30. What is essential for meeting to successfully start?

A. A quorum
B. The agenda
C. Proper seating arrangement
D. All the above
ANSWER: D
31. In business, the purpose of writing is mainly to:

A. Both inform and persuade
B. persuade
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C. inform
D. entertain
ANSWER: A
32. Informative writing focuses primarily on the:

A. subject under discussion
B. latest news
C. reader
D. writer
ANSWER: A
33. In writing business letters, one has to be:

A. friendly
B. dull
C. conventional
D. formal
ANSWER: A
34. Technical accuracy of language means:

A. active voice
B. direct narrative
C. simplicity
D. correctness of grammar, spelling, and punctuation
ANSWER: D
35. The principles of effective writing include:

A. brevity
B. accuracy
C. brevity, clarity and accuracy
D. clarity
ANSWER: C
36. A concise business letter avoids ________ words.

A. ambiguous
B. impolite
C. needless
D. technical
ANSWER: A
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37 “You Attitude” is one of the important features of a business letter with ________.
A. clarity
B. consideration
C. concreteness
D. completeness
ANSWER: C
38. A correct business letter follows the standard rules of ________.

A. grammar and usage
B. business and finance
C. style and etiquette
D. time and transport
ANSWER: D
39. Which of these make the business letter effective? _______________

A. seven Samurais
B. seven effective habits
C. seven C’s of communication
D. seven wonders
ANSWER: C
40. A business letter with concreteness presents facts and figures in a _____________ way.
A. poetical
B. straightforward
C. technical
D. universal
ANSWER: C
1. What precautions should be taken while using technical words in business writing?’
2. What considerations should be taken care of while drafting business letters?
3. What is wounded writing?
4. What is a paragraph? What ideally should be the length of a paragraph?
5. Suggest guidelines for drafting office Memos.
6. Write a Memo to an employee calling for an explanation on faulty cable lines.
7. Draft an office circular informing the Production Department about change in weekly shift
timings.
8. You have recently joined Alpha Ltd. as a Secretary. Draft an office report for improvement
of the communication system in the services department.
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9. Are there any precautions to be taken into consideration while writing a press release?
10. Prepare a press release announcing the annual results of the company.
11. What is the difference between a commercial letter and a business letter?
12. What is a Form letter?
13. Explain the importance of Salutation and Complimentary Close in a business letter.
14. What considerations should be kept in mind while writing a good commercial letter?
15. Explain any two layouts of a business letter.
16. As the Principal of a college draft an appointment letter to be issued to a newly appointed
faculty.
17. State the considerations regarding choice of words in writing messages and letters.
18. What are the skills involved in effective business writing?
19. What are the important considerations regarding drafting an office memorandum.
20. Write a short note on body of a report.
21. Write a letter of enquiry seeking information about availability of raw material for a new
product to be launched soon.
22. Write a letter of request to the Manager of a public-sector bank seeking terms and
conditions of credit.
23. Place an order for new office stationery by writing a letter.
24. How does a memo differ from a letter?
25. Writing marketing and sales letters offers challenges to the writer. Discuss some of these
challenges.
26. What is bio – data? What is the importance of enclosing bio – data with an application
letter?
27. Write a note on the use of application blanks.
28. How would you address an application letter in response to an advertisement appearing in
The Pioneer, New Delhi, giving a Post Box reference?
29. Formal are a thing of the past in modern business transactions. Discuss whether this is true.
30. “Most letters written in the course of business are important to the writer as well as the
reader.” Show how this is the case.
31. Explain the meaning of the lay-out of a business letter.
32. What information does the letterhead of a business letter generally contain?
33. Which part of the business letter should match the Salutation?
34. Explain the importance of the signature in a business letter.
III. LONG ANSWER TYPE QUESTIONS
1. Write a letter to Premier Hosiery Limited asking them for an Agency for their goods for
your district.
2. What is Non-discriminatory writing? Offer guidelines for using Masculine words in writing
business messages.
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3. State the considerations regarding choice of words in writing Business messages.
4. What major considerations should be taken care of while drafting and editing business
letters?
5. Write an office order asking employees to visit canteen during lunch hours only.
6. Write a memo to the Managing director of your company for purchase of a 3D printer.
7. Explain the points to be considered while preparing a notice of a meeting of the
shareholders of a company.
8. What is the purpose of an agenda? What factors should be considered while preparing an
Agenda?
9. Differentiate between a press release and a press report and state the essentials of a good
press release.
10. Prepare a press release announcing the appointment of a new CEO of the company
11. Describe in brief the numbering used in commercial correspondence. Give suitable
illustrations.
12. Explain the importance of salutation and complimentary close in a business letter.
13. Draft a letter of complaint on behalf of MTN Enterprises to Suparna Industries regarding
inferior quality of certain goods received.
14. Draft circular inviting students of your college to give entries for the upcoming college
festival.
15. Write a letter to the supplier of goods complaining about receipt of consignment in
damaged condition.
16. Apply to BTL Oils Limited for their agency in your district giving your past experience.
17. Biswas and Co. want to acquire an agency of Delhi Book Co. Draft a letter in this regard.
18. What is a good sales letter? What is the purpose of writing them?
19. Write a suitable letter to an old customer soliciting his orders for supply of goods.
20. Is it possible to make a sales letter appealing? If yes, then state the reasons along with
proper illustrations.
21. Draft an agenda for meeting of the Board of Directors of a company.
22. What points should be taken care of while writing the minutes of a meeting?
23. Why is it important to mention the agenda before the start of a meeting?
24. Distinguish between report writing and writing an agenda of a meeting
25. Draft a letter to the Registrar applying for the post of an Assistant Registrar giving details
about your qualifications and experience.
26. Since you had lost your two-wheeler insurance policy, write a letter to the insurance
company to issue a duplicate policy.
27. Write a letter to the HR manager of State bank of India to extend your joining date.
28. Your close friend has failed in bank exams. Write a letter to her giving your tips on how to
clear the exams next time.
29. Write a letter to the editor of “The Hindu” mentioning about the parking problems in your
area.
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30. Write a letter to the editor of a newspaper about how insurance policies came to the help
of people affected in recent Chennai floods.
31. When is a business letter complete? What does a considerate business letter take into
consideration?
32. How can we achieve clarity in a business letter? What does concreteness mean in a business
letter?
33. Write one feature of a business letter with courtesy? What kind of errors does a correct
business letter avoid?
34. What is meant by “You Attitude”? What is meant by jargon?
UNIT-IV
I. MULTIPLE CHOICE QUESTIONS:
1. Which kind of interview technique focuses on a specific topic?

A. Directive.
B. Non-directive.
C. Decisional.
D. Stress
ANSWER: A
2. The main purpose of a group discussion is to measure:

A. Knowledge
B. Personality
C. Group communication skills
D. Leadership skills
ANSWER: C
3. The following is (are) non-verbal communication

A. Facial expression
B. Appearance
C. Posture
D. All of the above
ANSWER: D
4. The handshake that conveys confidence is

A. Limp
B. Firm
C. Loose
D. Double
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ANSWER: B
5. ______ interviews help recruiters see how you handle yourself under pressure.
A. Situational
B. Stress
C. Group
D. Formal
ANSWER: B
6. A presentation is a form of oral communication in which a person shares factual

information with an audience that is:
A. Specific
B. Mixed
C. Large
D. Small
ANSWER: A
7. The presenter acts as the:

A. Deliverer of the information
B. Advocate of the information
C. Medium of the information
D. Supporter of the information
ANSWER: B
8. The three major elements of presentation do not include:

A. Visual aids
B. An audience
C. A presenter
D. Specific content
ANSWER: A
9. The audience for a presentation consists of people who:

A. Are uninformed and lack a purpose
B. Vary in their level of information and purpose
C. Are confused in their purpose
D. Are uniform in their level of information and purpose
ANSWER: B
10. To be able to give a good presentation, a full rehearsal is:

A. Optional
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B. Necessary
C. Useless
D. Audience based
ANSWER: B
11. Reading out a presentation is:

A. Allowed
B. Not allowed
C. Helpful
D. Dull
ANSWER: B
12. To make a presentation effective and impressive, you should use:

A. Passive sentences
B. Jargon
C. Complex sentences
D. A simple and active form of sentences
ANSWER: D
13. To select the content of your presentation, you should know:

A. The audience’s needs
B. The available material
C. The time limit
D. Your purpose
ANSWER: A
14. In presentation design, maximum time is given to the:

A. Conclusion
B. Introduction
C. Question–answer session
D. Main body
ANSWER: D
15. Initially, a presentation is a form of:

A. Two-way communication
B. Group communication
C. Intrapersonal communication
D. One-way communication
ANSWER: D
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16. A co-worker shares office gossip/rumors with you. You:
A. Thank him for telling you and pass the stories on
B. Check out the facts with other employees
C. Politely listen and keep the information to yourself
ANSWER: B
17. In business, keep telephone calls very short because the other person may not be:
A. Noting down what you say
B. Paying attention to you
C. Interested in talking to you
D. Free to talk to you
ANSWER: D
18. A co-worker comes to your office to introduce you to a friend of his. You:
A. Smile and nod
B. You stand up, establish eye contact, smile and shake his hand
C. Wave and tell him how happy you are to meet him
D. Give him a “high five”
ANSWER: B
19. After a meeting with a contact, in order to express your thanks, it is appropriate to:
A. Send him/her a small box of chocolates with a note
B. Drop by the office and give him/her a hot cup of coffee
C. Send a dozen red roses to his/her home
D. Send a thank you letter
ANSWER: D
20. Generally, a business meeting should not

A. Go into unnecessary detail
B. Be too generic
C. Too informal and personal
D. All of the above
ANSWER: D
21. Netiquette does not require attention towards

A. Mannerisms
B. Addressing recipient appropriately
C. Generalization of subject matter
D. Having appropriate subject lines
ANSWER: C
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22. An office memo does not usually contain
A. Subject
B. Date
C. Heading
D. Guidelines
ANSWER: D
23. A Win- Win business strategy does not include

A. Separating people from the problem
B. Inventing options for mutual gain
C. Agreeing only when options are accepted
D. Insisting on using an objective criteria
ANSWER: C
24. Maintaining eye to eye contact serves the purpose of

A. Signalling the readiness to negotiate
B. Making the parties involved more trustworthy and earnest
C. Removing any differences arising out of ego hazels
D. All of the above
ANSWER: D
25. CHRONEMICS(TIME) does not include

A. Delay in replying to a business letter
B. Arriving on time for a meeting
C. Not attending an early morning call
D. Non completion of an important business task
ANSWER: B
26. Reports present conclusions based on :

A. belief
B. investigation
C. intuition
D. impression
ANSWER: B
27. Which of the following are examples of written communication ?

A. Letters and voicemail
B. Reports and email
C. Circulars and voicemail
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D. Presentations and email
ANSWER: B
28. Communication is the task of imparting ________

A. Training
B. Information
C. Knowledge
D. Message
ANSWER: B
29. AIDA plan stands for:

A. Attention, Interest, Desire, Action
B. Authority, Interest, Disclose, Accuracy
C. Accuracy, Internal, Diction, Attention
D. Action, Interest, Desire, Authority
ANSWER: A
30. Effective communication is essentially a:

A. Three-way process
B. One-way process
C. Both a one-way and a two-way process
D. Two-way process
ANSWER: D
31. An impromptu speech means:

A. A prepared speech delivered without any supporting aids
B. A speech delivered without any preparation
C. A speech delivered while referring to notes
D. A speech delivered by reading from notes
ANSWER: B
32. Initially, a presentation is a form of:

A. two-way communication
B. group communication
C. intrapersonal communication
D. one-way communication
ANSWER: D
33. In presentation design, maximum time is given to the:

A. conclusion
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B. introduction
C. question–answer session
D. main body
ANSWER: D
34. A presentation is a form of oral communication in which a person shares factual

information with an audience that is:
A. specific
B. mixed
C. large
D. small
ANSWER: A
35. The presenter acts as the:

A. deliverer of the information
B. advocate of the information
C. medium of the information
D. supporter of the information
ANSWER: A
36. The letterhead appears at the ________ of the business letter.

A. top
B. bottom
C. centre
D. back
ANSWER: A
37. The layout of the business letter is the arrangement of its ________ in a particular way.
A. sentences
B. paragraphs
C. components
D. colours
ANSWER: B
38. The business letter has ________ regular parts.

A. three
B. five
C. seven
D. nine
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ANSWER: A
39. The salutation is followed by a ________.

A. comma
B. full stop
C. exclamation
D. zero
ANSWER: B
40. The plural form of Madam is ________.

A. Mesdames
B. Madamus
C. Medams
D. Medicin
ANSWER: C
1. Define a project. What are its essential characteristics?

2. How do we prepare a project report?
3. Explain the need and importance of a project report.
4. What points must be kept in mind while writing a project report?
5. Explain in detail the format of a project report.
6. What do you understand by a summer project report?
7. Distinguish between a summer project report and a business report.
8. Describe the format of a summer project report.
9. An American company wants to set up an automobile business in India. Prepare a project
report suggesting the place and site in India.
10. What are the major components of a project report?
11. The reports should be audience – oriented. Why? Support your answer with logical
reasoning.
12. What information is included on the title page of a report? What is the function of report
introduction?
13. You are the sales manager of a company manufacturing soaps and detergents. Write a
report on the recent decline in the sale of your product and give some concrete suggestions
for boosting sales.
14. Write a proposal to the Director/Dean of your institute for organizing an Excursion Trip
for Jaipur for students of MBA.
15. What are special reports? What purpose do they solve?
16. What important factors must be taken into consideration while drafting a business report?
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17. You have recently joined Alpha Ltd. as a Secretary. Draft an office report for
improvement of the communication system in the services department.
18. Are there any precautions to be taken into consideration while writing a press release?
19. Prepare a press release announcing the annual results of the company.
20. State the considerations regarding choice of words in writing Business messages.
21. What major considerations should be taken care of while drafting and editing business
letters?
22. Write an office order asking employees to visit canteen during lunch hours only.
23. Write a memo to the Managing director of your company for purchase of a 3D printer.
24. Explain the points to be considered while preparing a notice of a meeting of the
shareholders of a company.
25. Write an office circular informing the employees of change in the office timings.
26. What are the various barriers in the way of Business Communication? Explain how to
overcome these barriers?
27. Bring out the difference between “conclusions” and “recommendations” in a report.
28. Write short notes on ‘Qualities of a Good Report.’
29. How do we define ‘minutes’ of a meeting? Explain the objective and significance of
minutes.
30. What are the various barriers in the way of Business Communication? Explain how to
overcome these barriers?
31. Explain the meaning of the lay-out of a business letter. What information does the
letterhead of a business letter generally contain?
32. Which part of the business letter should match the Salutation? Explain the importance of
the signature in a business letter.
II. LONG ANSWER TYPE QUESTIONS
1. Apply to BTL Oils Limited for their agency in your district giving your past experience.
2. Biswa and Co. want to acquire an agency of Delhi Book Co. Draft a letter in this regard.
3. What is a good sales letter? What is the purpose of writing them?
4. Write a suitable letter to an old customer soliciting his orders for supply of goods.
5. Is it possible to make a sales letter appealing? If yes, then state the reasons along with
proper illustrations.
6. Draft an agenda for meeting of the Board of Directors of a company.
7. What points should be taken care of while writing the minutes of a meeting?
8. Why is it important to mention the agenda before the start of a meeting?
9. Distinguish between report writing and writing an agenda of a meeting
10. Draft a letter to the Registrar applying for the post of an Assistant Registrar giving details
about your qualifications and experience.
11. What are the features of a good presentation?
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12. Is it possible to master the art of effective speaking? How? Give valid reasoning.
13. What are the steps involved in planning a presentation?
14. How can a speaker grab audience attention?
15. Explain in detail the structure of a presentation.
16. What are the ways through which a presentation can be made successful?
17. What points need to be kept in mind while delivering a presentation?
18. What is the role of body language in giving oral presentation?
19. Are there any precautions to be taken care of while giving oral presentations?
20. Explain in detail the importance of effective listening.
21. What are the various types of listening?
22. Are there any barriers to effective listening? Explain with the help of examples.
23. What are the various guidelines for making listening effective?
24. Lack of interest, closed mind and ego always create a barrier to effective listening. What
are your views on the same?
25. Listening is the key ingredient of effective listening. Explain.
26. What are semantic barriers? How to overcome these barriers?
27. As a process of sharing thoughts and ideas, communication suffers from both physical and
non-physical barriers. Explain with examples.
28. Discuss the importance of Oral Communication and factors to be considered while making
Oral Sales Presentation.
29. Discuss the benefits of using Power point and visual aids when giving a presentation to a
foreign audience.
30. What are the steps involved in report writing? Enumerate these steps with a brief
explanation of each step.
31. How is the window envelope useful to the letter writer? What is the most suitable salutation
for a high ranking lady?
32. Which is the most popular format of writing the business letter today? Write a sample letter
for Resignation.
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QUESTION BANK
BUSINESS ENVIRONMENT
BBA 112
217
QUESTION BANK
BUSINESS ENVIRONMENT - BBA 112
BBA II
UNIT - I
I TEST YOUR SKILLS:
(a) Multiple Choice Question:
1 Diversity means differentiation in

A People
B Cultures
C Sectors of economy
D All above
ANSWER: D
2 Read the following statements and choose the correct answer-

(I) Political environment refers to all forces which have an economic impact on
business
(II) Economic environment refers to all forces which have an economic impact on
business
(III) Technological Environment exercise not considerable influence on Business
(IV) Social and cultural environment refers to the influence exercised by certain factors
A Only (i) and (ii) are true

B All the above statements are true
C (i), (ii) and (iv) are true
ANSWER: C
3 The best indicator of economic growth of any country is:

A. Agriculture
B. Transport
C. Gross Production
D. Per Capita Income
ANSWER: D
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4 Which of the following explains economic development?
A. Increase in per capita production
B. Increase in per capita real income
C. structural change in the economy
D. all the above are right
ANSWER: D
5 Economic development is characterized by

A. Structural change in the economy
B. Change in the occupational structure
C. Both a and b
ANSWER: C
6 An underdeveloped economy is characterized by

A. High per capita real income
B. Large proportion of labor force in the tertiary sector
C. State of deprivation of large proportion of population
D. All the above
ANSWER: C
7 Scarcity of capital, technological backwardness and unemployment are generally found

in:
A. Developed countries
B. None of the above
C. Underdeveloped countries
D. Both
ANSWER: C
8 Which of the following denotes an underdeveloped economy?

A. High level of inequality
B. Low level of capital productivity
C. A relatively closed economy
D. All the above
ANSWER: D
9 The low-income economies are sometimes referred to as ----------

A. First world
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B. Second world
C. Third world
D. None of these
ANSWER: C
10 An organization faces diverse sectors of economy-

A Primary sector,
B Secondary sector
C Tertiary sector
D All above
ANSWER: D
11 Development means economic growth with:

A. Price Stability
B. Social Change
C. Inflation
D. Deflation
ANSWER: B
12 Political and legal environment of business does not consist of

A. Foreign policy
B. Political stability
C. Wealth maximization
D. Legal rules governing a business
ANSWER: C
13 Interaction between business system and its environment consists of

A. Exchange of information
B. Exchange of resources
C. Exchange of influence and power
D. All of the above
ANSWER: D
14 Which of the following is not a strategy to cope with turbulent environment?

A. Wait and watch
B. Exchange of resources
C. Anticipation and adaptation
D. Innovative approach
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ANSWER: B
15 Economic objectives of business consist of

A. Profit making
B. Creation of customers
C. Innovation
D. All of the above
ANSWER: D
16 Which of the following is not a human objective of business?

A. Fair deal to employees
B. Innovation
C. Job satisfaction
D. Participation
ANSWER: B
17 Which of the following is not an essential reason for making profit by a business
organization?
A. Growth
B. Prestige
C. Closure plans
D. Survival
ANSWER: C
18 Which of the following is not a case against social responsibility of business?

A. Dilution of profit maximization
B. Loss of incentive
C. Lack of yardstick
D. Avoiding government intervention
ANSWER: D
19 A business organization has responsibility towards:

A. Shareholders
B. Employees
C. Government
D. All of the above
ANSWER: D
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20 In relation to the PESTEL framework which of the following statements is correct:
A. It assists in the assessment of organisational strengths and weaknesses.
B. It allows a detailed analysis of the structure of an industry.
C. It can be used as a checklist to understand the different environmental influences in
the macro environment.
D. Takes an historical perspective on the main political, economic, sociocultural,
technological, environmental and legal factors.
ANSWER: C
21 Analysing the business environment best assists in:

A. Identifying key competitive forces; identifying competitive position; identifying key
opportunities, threats, strengths and weaknesses.
B. Auditing macro environmental influences; identifying key competitive forces;
identifying competitive position; identifying key opportunities and threats.
C. Auditing external and organisational factors; identifying key competitive forces;
identifying competitive position; identifying key opportunities and threats.
D. Assessing historical trends; auditing environmental dangers; identifying strategic
capabilities; identifying competitive position.
ANSWER: B
22 Which of the following is not an essential reason for profit making in business?
A. Growth
B. Inconsistency with modern trends
C. Survival
D. Efficiency
ANSWER: B
23 Scenarios are used to:

A. Develop a long term view of strategy.
B. Build plausible views of different possible futures and develop a long term view of
strategy.
C. Identify key drivers of change.
D. Develop a view of an environment which has a high degree of uncertainty, build
plausible views of different possible futures and take a long term view of strategy.
ANSWER: D
24 Which of the following is not a cause for growing concern for social responsibility of a
business?
A. Public Opinion
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B. Public Relations
C. Trade Cycle
D. Consumerism
ANSWER: C
25 Which of the following does not become a case for adhering to social responsibility of a
business organization?
A. To Avoid government intervention
B. Recognize socio-cultural norms
C. To improve public image
D. Loss of incentive
ANSWER: D
26 Which of the following does not amount to being responsibility towards the shareholders
of the business organization?
A. Safety of investment
B. Fair wages and salaries
C. Fair return on investment
D. Accurate and full working information
ANSWER: B
27 Which of the following is not an importance of business ethics?

A. Social pressure
B. Moral consciousness
C. Profit maximization
D. Legal imperative
ANSWER: C
28 Which of the following is not a type of code of conduct of business?

A. Organizational code
B. Company philosophy
C. Policy guidelines
D. Professional code of conduct
ANSWER: A
29 The ethical issues in business can be classified into which category?

A. Societal level
B. Stakeholders level
C. Internal policy level
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D. All of the above
ANSWER: D
30 Which of the following is not a principle of corporate governance?

A. Transparency
B. Accountability
C. Globalization
D. Merit based management
ANSWER: C
31 The main issues in the area of corporate governance in India are

A. Role of board of directors
B. Composition of board
C. Audit committee
D. All of the above
ANSWER: D
32 External environment of business is –,

A. Physical
B. Demographical
C. Economic
D. All of the above
ANSWER: D
33 -------- consists of economic conditions, economic policies , industrial policies and

economic system.
A. Business Environment
B. Political Environment
C. Economic Environment
D. All of the above
ANSWER: C
34 ……… Environment is beyond the control of the business

A. Internal
B. External
C. Micro
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D. Macro
ANSWER: B
35 Which one of the following cannot be included under the nature of relationship between
business environment?
A Interdependent
B Dynamic
C Social change
D. Fixed
ANSWER: D
1 Define the term ‘Business Environment’.

2 What is Internal Environment?
3 What is External Environment?
4 What is meant by Micro Environment?
5 What do you understand by Macro Environment?
6 What is meant by Political-Legal Environment?
7 State the main components of Economic Environment.
8 What are the economic and non-economic factors?
9 Distinguish between economic growth and economic development.
10 Outline the basic characteristics of Indian Economy.
11 What are the different indicators of economic development?
12 What is business? How does business of today differ from that of four to five decades ago?
13 “Profit making is the primary goal of any business enterprise.” Yes or no-discuss?
14 What is business environment? What are the objectives of a business?
15 What do you understand by Vision, Mission and Objectives? How are they interrelated?
16 “Environmental scanning should provide inputs for strategic decision-making.” Elaborate.
17 Bring out the limitations of environmental analysis
18 What are the characteristics of Business Environment?
19 How are organisations related to their environment?
20 Bring out the features of political and technological factors
21 List the benefits of environmental analysis
22 Describe the process of environmental analysis.
23 Write short note on environmental analysis or scanning.
24 Write short note on political environment.
25 Write short note on socio-cultural environment.
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26 What is competitive environment
27 What is technological environment of a business
28 Discuss limitations of environmental analysis
29 Discuss the significance of business in modern society.
30 What are the salient features of Business environment.
1. What are the characteristics of Business Environment? What are the problems in
understanding its influence on a business?
2. How are organizations related to their environment?
3. What is Business Environment? How does it affect a business? What are its components?
4. What is demographic environment of a business?
5. What is technological environment of a business? Illustrate the interference between
business and technology with the help of a chart?
6. What is competitive environment? Discuss in detail.
7. How can organizations improve cooperation in competitive environment? What is a
keiretsu?
8. Write Detailed note on socio-cultural environment.
9. “Firms which systematically analyses and diagnose the environment are more effective
than those which don’t.” Elucidate.
10. Explain different types of environmental diversity faced by a business. How does a
business manage diversity?
11. Bring out the features of political and technological factors.
16. Describe the process of environmental analysis or environmental scanning.
17. What are various business objectives? Explain briefly.
18. What do you mean by Macro Environment. discuss various elements of macro-
environment.?
19. Distinguish between Economic growth and Economic Development?
20 What is the impact of political environment and social environment on business.?
21 Discuss the characteristics of Indian Economy. What changes have taken in the structure
of Indian Economy leading to the growth of GDP of our country, India? Discuss them.
22 Analyse the major factors that influence the development of an economy. How far the
Indian Economy has succeeded in meeting the developmental challenges?
23 Discuss the changes in sectoral shares in GDP and sectoral contribution to employment in
post-independence era.
24 Is an increase in real per capita income a good measure of economic development?
Elucidate
25 What are the basic characteristics of Indian economy? In which sector the Govt. should put
more effort to increase employment and growth?
226
26 Briefly discuss various elements of micro-environment and macro-environment.
27 “Diversity managing process is very essential for business & operational planning”,
Explain.
28 Social and cultural environment refers to the influence exercised by certain factors on
business; comment
29 What is business environment? Is it correct to say that all non-economic environmental
factors have economic implications? Discuss.
30 Are economic growth and economic development independent of each other? How is
Economic Growth different from Economic Development?
UNIT II
1 Reasons for adopting globalization –
A. Profit advantage
B. Growth Opportunity
C. Domestic Market Constraints
D. All above
ANSWER: D
2 Relaxing the restrictions and controls imposed on Business and industry means
A. Liberalization
B. Globalization
C. Privatization
ANSWER: A
3. The following factors are key drivers of globalization:

A. Government action, exchange rates, competition and sociodemographic factors.
B. Market convergence, competition, exchange rates and cost advantages.
C. Cost advantages, government action, economic cycles and competition.
D. Market, cost, competition and government policies.
ANSWER: D
4 When was Planning Commission formed?

A. March15,1950
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B. March15,1951
C. August15,1947
D. January 26, 1950
ANSWER: A
5. Planning Commission was —

A A statutory body
B A consultative body
C Both of above
D None of these
ANSWER:B
6. Industry globalization drivers identified by do not include.

A. Market drivers
B. Governmental drivers
C. Production drivers.
ANSWER: C
7. Anti-globalization has been voiced

A. All developing countries
B. Supporters from both developing and developed countries.
C. Only developed countries.
ANSWER: B
8. Outsourcing of components is an example of globalization.

A. Production
B. Marketing
C. Purchase
ANSWER: A
9. When was first five-year plan introduced?

A 1st April, 1950
B 1st April, 1951
C 1st April, 1952
D 31st March, 1950
ANSWER:B
10. When was 10th five-year plan introduced?

A 1st April 2002
228
B 1st April, 2003
C 1st April, 2004
D None of the above
ANSWER:A
11. What is the period of 12th five-year plan?

A 2006-2011
B 2012-2017
C 2008-2013
D 2009-2014
ANSWER:B
12. For which year the latest census is being conducted in India ?
A 2001
B 2010
C 2012
D 2011
ANSWER:D
13. How many censuses (including the 2011 census) have been carried out since
independence?
A 05
B 06
C 07
D 08
ANSWER:C
14. At what interval of years population census is conducted in India?

A 05 years
B 06 years
C 10 years
D 15 years
ANSWER:C
15. When was first human development report of India issued?

A March 2000
B April 2002
C June 2002
D April 2001
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ANSWER:B
16. In which state the literacy rate of women is highest?

A Tamil Nadu
B Kerala
C Mizoram
D West Bengal
ANSWER:B
17. Objectives of the Industrial Act 1951 are:

A. Regulation and development.
B. Implementation of industrial policy
C. Planning and future development.
D. All of the above
ANSWER:D
18. If the available workers are unaware of the jobs being offered and the employers are not
aware of the available workers, such type on unemployment is called:
A. Frictional unemployment
B. Structural unemployment
C. Disguised unemployment
D. Demand pull unemployment.
ANSWER:A
19 Unemployment that arises when there is a general downturn in business activity is known as:
C. Cyclical unemployment
D. Disguised unemployment
ANSWER:C
20 Full employment is the level at which there is

A. Zero unemployment
B. Normal rate of unemployment
C. Less supply of labor
D. Demand for goods is less than supply.
ANSWER:C
21 Natural rate of unemployment increases due to

A. General downturn in business activity
230
B. Changes in labor market
C. Structural changes in economy
D. Frequent changes of jobs by labor
ANSWER:D
22 Unemployment that arises due to regional occupational pattern of job vacancies, which
does not match the pattern of workers availability and suitability, is known as:
C. Cyclical unemployment
D. Demand pull unemployment
ANSWER: B
23 Disguised unemployment means:

A. Unemployment in agriculture
B. Unemployment due to recession
C. Unemployment due to downturn in business activity
D. Marginal Productivity of Labor (MPL) is zero.
ANSWER: C
24 In which sector of Indian economy will we find a high rate of disguised unemployment?
A. Service sector
B. Agriculture sector
C. Manufacture sector
D. Mining sector
ANSWER: B
25 During the recessionary phase of a business cycle:

A. The natural rate of unemployment will increase dramatically
B. Potential national income will exceed actual national income
C. Actual national income will exceed potential national income
D. The real rate of interest will exceed the nominal rate of interest.
ANSWER: A
26 When was the National Institution for Transforming India (NITI Aayog) formed?
A January 1, 2015
B Aug. 15, 1947
C July 31, 2010
D 23 Dec. 2012
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ANSWER: A
27 Who is the Chairperson of NITI Aayog?

A Prime Minister, Narendera modi
B Finance Minister, Nirmala Sitaraman
C Home Minister, Amit Shah
D None of above
ANSWER: A
28 Who is the Vice-Chairperson of NITI Aayog?

A Narendera modi
B Nirmala Sitaraman
C Amit Shah
D Rajiv Kumar
ANSWER: D
29 The National Institution for Transforming India (NITI Aayog) was formed via-
A A resolution of the Union Cabinet
B Narendera Modi
C Mahatma Gandhi
D None of the above
ANSWER:A
30 The following is not a feature of globalization.

A. Similar strategies are adopted by a firm in all markets.
B. Only multinational firms engage in international business.
C. Convergence of idea and culture.
ANSWER: B
31 As per the United Nations Development Programme (UNDP)reports on Human

Development Index (HDI) for 189 countries in the year 2018, India achieved ------rank.
A 81
B 130
C 97
D 175
ANSWER:B
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32 What is the rank of India in the United Nations Development Programme (UNDP) reports
on Human Development Index (HDI) in the year 2019
A 129
B 130
C 97
D 175
ANSWER:A
33. Which country is ranking on the top in the United Nations Development Programme
(UNDP)reports on Human Development Index (HDI) in the year 2019
A Norway
B Switzerland
C Ireland
D Germany
ANSWER:A
34. According to population census 2011, what is the number of women per 1000 men in
India?
A. 939
B. 959
C. 940
D. 927
ANSWER:C
35. Which of the following is the major functions of Niti Aayog?

A To evolve a shared vision of national development priorities, sectors and
strategies with the active involvement of States
B To develop mechanisms to formulate credible plans at the village level and
aggregate these progressively at higher levels of government.
C To provide advice and encourage partnerships between key stakeholders and
national and international like-minded Think tanks, as well as educational and
policy research institutions.
D All of the above
ANSWER:D
1 Discuss the relationship between industry, trade and commerce.

2 Discuss in brief the Industrial licensing policy of India before economic reforms.
3 Discuss briefly the objective of industrial licensing system
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4 Write a short note on:
a) Current economic reforms in India
b) Economic growth as one of the major objectives of planning in India
5 Describe the main reasons of problem of poverty in India.
6 What progress has been achieved in the field of regional balanced development of Indian
Economy?
7 Explain the nature of Unemployment in India.
8 What are the measures to reduce poverty in India?
9 What measures will you suggest for generating employment opportunities in rural areas?
10 Elucidate the phases of globalization chronologically.
11 Define globalization and discuss indicators of globalization
12 Discuss the impact of globalization on telecom & financial sector.
13 Discuss the causes of low rate of capital formation in India.
14 What are the methods used for privatization?
15 Discuss the causes for concentration of wealth and economic power.
16 What are the negative effects of globalization?
17 Why is capital formation important for economic growth?
18 What do you understand by unemployment? What are its major causes in India?
19 What is meant by economic inequality? Expalin.
20 How does liberalization facilitate globalization?
21 How can Globalization pose a threat to domestic industry?
22 Explain the pros and cons of globalized economic system.
23 What is meant by Privatization? List the reasons for privatization.
24 Explain major factors of Industrial sickness in India
25 Give a brief account of the impact of liberalization and globalization on the economy of
our country?
26 Discuss various forms of rural unemployment and urban unemployment.
27 Why is unemployment and underemployment a social problem?
28 What is the disinvestment policy of India?
29 How does disinvestment affect Indian economy?
30 What is the difference between investment and disinvestment?
1 Explain the salient features of government’s policy 1991 towards public sector.
2 “Public sector in India is a mixed bag of failures and success.” Explain.
3 What is balanced regional development? State the causes of regional disparities in India
and suggest measures to remove them.
4 Explain the objectives of privatization and disinvestment of public enterprises.
234
5 The role of public sector has eventually declined in India”. Do you agree with this
statement? Give reasons.
6 Discuss in detail the Industrial sickness and its consequences?
7 Why is the Industrial Policy, 1956 hailed as the economic constitution of India? What are
its objectives? How industrial policy has changed over period of times?
8 Explain the reform process initiated by the government for the industrial development of
the country.
9 State the main objectives of planning in India. Do you think that five-year plans have been
successful in achieving these objectives?
10 Discuss briefly the nature and causes of rural unemployment in India.
11 Elucidate the nature and extent of Unemployment in India? What remedies would you
suggest for solving the problem of unemployment?
12 Discuss the concept of ‘Inclusive Growth’ in the light of 12th Five Year Plan.
13 Suggest remedies for Industrial Sickness in Indian Context.
14 What is Unemployment? What are different types of unemployment prevailing in Indian
economy?
15 Discuss the impact of new Industrial policy of 1991 on Indian economy. In view of current
global and domestic economic environment, what new policies were framed to achieve
high growth rate in Industrial and manufacturing sector.
16 What do you mean by economic inequality? Describe the extent of inequality in India after
independence. Provide policy suggestions to remove inequality from Indian economy.
17 What is globalization? Why do companies go global?
18 How were liberalization, privatization and globalization policies for relaxing the
restrictions and controls imposed on business and industry in India?
19 What do you understand by Niti Aayog? What are the major functions of Niti Aayog?
20 What do you mean by Human Development Index (HDI)? Discuss its various parameters.
21 Describe different measures for rehabilitation of sick industrial units.
22 Do you believe that industrialization and economic growth has led to monopoly &
economic concentration in India? What methods have been taken to tackle this problem?
23 Discuss the relationship between inequality poverty and growth.
24 What is the current unemployment rate in India? How can we control unemployment?
25 What are four types of unemployment? What is the solution of unemployment in India?
26 What are the reasons of disinvestment in public sector enterprises? Discuss the main
objectives of disinvestment
27 Why is disinvestment in public sector enterprises tough and tricky? Explain various
challenges associated with it.
28 Discuss India’s strategy to remove poverty. Explain various poverty reduction programs.
29 Elaborate various remedial measures to solve rural unemployment, urban unemployment
and general unemployment in India.
235
30 Which are different employment policies and schemes introduced by NDA Government in
India. Has global economic recession, made any impact on the problem of unemployment
in India?
UNIT-III
1 In a two sector economy circular flow of income takes place between ---------- &----------
A. Firms, households
B. Firms, Banks
C. Firms, Government
D. Firms, foreign sector
ANSWER: A
2 National income is computed ---------year.

A. Every
B. Every two years
C. Every five years
D. Every four years
ANSWER: A
3 The money value of -----------goods is not included in the estimation of national
income.
A. Intermediate
B. Capital
C. Final
D. Consumer
ANSWER: A
4 There are methods of measuring national income:

A. 5
B. 2
C. 1
D. 3
ANSWER: D
5 If we compare GDP and GNP, then:

A. GNP = GDP – Net Income from Abroad
B. GNP = GDP + Net Income from Abroad
236
C. GNP = NNP – Net Income from Abroad
D. GNP = NNP + Net Income from Abroad
ANSWER: B
6 It is deducted from GNP to get NNP:

A. Indirect Taxes
B. Depreciation
C. Direct Taxes
D. Transfer Payments
ANSWER: B
7 It is added to GDP to get GNP:

A. Depreciation Allowance
B. Direct Taxes
C. Subsidies
D. Net Income from abroad
ANSWER: D
8 Select the correct statement:

A. Transfer Payments are included in National Income
B. Depreciation Allowance is a part of GNP
C. Taxes are not included in NNP
D. GDP means Gross Direct Production
ANSWER: B
9 Which is the largest figure:

A. NNP
B. GNP
C. DPI
D. PI
ANSWER: B
10 Undistributed profits are considered:

A. Income earned but not received
B. Income earned but not received
C. Income earned and received
ANSWER: A
237
11 Total value of all final goods and services produced in a country for one year is:
A. NNP
B. GNP
C. GDP
D. NI
ANSWER: C
13 Personal income includes:

A. Transfer Payments
B. Indirect taxes
C. Depreciation
D. All of the above
ANSWER: A
14 If savings exceed investment then:

A. National income rises
B. National Income falls
C. National Income is not affected
ANSWER: B
15 It is avoided to make correct estimate of national income:

A. Free Services
B. Double Counting
C. Export Earnings
D. All of the above
ANSWER: B
16 It is not included in estimation of national income:

A. Illegal Income
B. Services of house wife
C. Imports
D. All are not included
ANSWER: D
17 Circular flow of income links:

A. Income, expenditure
B. Exports, Imports
C. Govt. Taxes, Govt. Expenditure
238
D. Saving and Investment
ANSWER: A
18 This statement is true:

A. NI = Rent + Interest + Wages + Profit
B. NI = Rent + Interest + Wages + Taxes
C. NI = Govt. Expenditure + Interest + Wages + profit
D. NI = Rent + Interest + Wages + Pensions
ANSWER: A
19 National Income is estimated by:

A. Product, Import and Export Methods
B. Product, Income and Consumption Methods
C. Product, Income and Market Methods
D. Product, Income and Expenditure Methods
ANSWER: D
20 GDP stands for:

A. Great Domestic progress
B. Grand Development Plan
C. Gross Domestic Product
D. Gross Domestic Plan
ANSWER: C
21 Which of the following would not be included in GNP:

A. Government Support to the very poor
B. Government purchase of an airplane
C. Payment for construction of highway
D. The salary paid for the President’s Secretary
ANSWER: A
22 The circular flow of income in all the four-sector economy includes financial sector as
well.
A. True
B. False
ANSWER: A
23 Gross National Product equals:

A. Net National Product adjusted for inflation
B. Gross Domestic Product adjusted for inflation
239
C. Gross Domestic Product plus net property income from abroad
D. Net National Product plus net property income from abroad
ANSWER: C
24 Net National Product equals:

A. Gross National Product adjusted for inflation
B. Gross Domestic Product adjusted for inflation
C. Gross Domestic Product plus net property income from abroad
D. Gross National Product minus depreciation
ANSWER: D
25 The standard of living is often measured by:

A. Real GDP per capita
B. Real GDP
C. Real GDP * population
D. Real GDP plus depreciation
ANSWER: A
26 Real national income measures:

A. Nominal national income adjusted for population change
B. Nominal national income adjusted for unemployment
C. Nominal national income adjusted for inflation
D. Nominal national income adjusted for exchange rates
ANSWER: C
27 Which of the following statements is true about the circular flow?

A. Output is greater than income
B. Income is more than expenditure
C. Output is less than expenditure
D. Output equals income equals expenditure
ANSWER: D
28 GDP measures:
A. A country's income
B. A country's wealth
C. Consumer spending
D. Net trade income
ANSWER: A
240
29 To adjust GDP from market prices to factor cost:
A. Add indirect taxes
B. Subtract subsidies
C. Deduct indirect taxes and deduct subsidies
D. Deduct indirect taxes and add subsidies
ANSWER: C
30 To adjust from Net National Product to Gross National Product:

A. Add depreciation
B. Deduct indirect taxes
C. Add subsidies
D. Add inflation
ANSWER: A
31 A higher GDP per capita may not mean that the quality of life has really improved
because:
A. It measures wealth not income
B. It measures Gross Domestic Product
C. It does not measure the quality of the items produced
D. It is only measured every five years
ANSWER: C
32 Which of the following is not an injection into the circular flow of income?
A. Spending on exports.
B. Spending on imports.
C. Spending by government on public goods and services.
D. Spending by firms on investment.
ANSWER: B
33 Which of the following is/are included in the aggregate demand of an economy?

A. Consumption demand
B. Investment demand
C. Net exports
D. Both (a) and (b) above
E. (a), (b) and (c) above
ANSWER: E
34 Which of the following estimates National Income in India:

A. Central Statistical Organisation
B. National Income Committee
241
C. Planning Commission
D. Reserve bank of India
ANSWER: A
35 National Income is the:

A. Net National Product at market price
B. Net National Product at factor cost
C. Net Domestic Product at market price
D. Net Domestic Product at factor cost
ANSWER: C
II SHORT ANSWER TYPE QUESTIONS:
1. Explain the two-sector model of circular flow of income in an economy.

2. Why are intermediate goods not included in GNP?
3. Explain two sector circular flow of income in an economy.
4. Write short note on product market and money market.
5. Explain GDP and Net National Income.
6. Write a note on circular flow of income.
7. Distinguish between real and nominal gross domestic product.
8. Explain the basis of classifying goods into intermediate and final goods. Give suitable
examples.
9. Distinguish between consumer goods and capital goods. Which of these are final goods?
10. Explain how distribution of G.D.P. is its limitation as a measure of economic welfare.
11. Explain the meaning of “Domestic Territory of a country”.
12. Distinguish between ‘factor income’ and ‘transfer income’.
13. Define operating surplus, write its components.
14. Distinguish between domestic product and national product.
15. When can domestic product be more than National Product?
16. What do you mean by net export?
17. Who is considered as normal resident of a country?
18. What do you mean by economic territory?
19. When will be NDPMP be less than NDPFC?
20. State the meaning of consumption of fixed capital?
21. State the meaning of injection in income flow, with the help of an example.
22. What do you mean by leakage in income flow?
23. Define ‘Nominal GNP’ and ‘Real GNP’.
24. What is the difference between intermediate goods & final goods and services?
25. Why are the imports subtracted when GDP is calculated in expenditure approach?
242
26. Define GDP deflator as a measure of inflation.
27. What is the principal difference between government purchases of goods & service and
transfer payments?
28. Define production as an income generating activity.
29. Why the national income is measured at factor prices and not at market prices?
30. Why do the economists use real GDP rather than nominal GDP to gauge economic well-
being?
II LONG ANSWER TYPE QUESTIONS:
1. What do you understand by Macro Economics? How is it different from Micro economics?
2. What do you understand by the concept of National Income? Discuss the significance of
the estimates of National Income?
3. Explain the circular flow of income in all the four-sector economy. Draw a relationship
between leakages and injections in circular flow.
4. What are the various methods of estimating National Income data? Which method is being
followed in respect of estimation of National Income of India? Can you make some
suggestions in making more accurate data for estimation of National Income in India?
5. What is the role of consumption function and investment function in National Income
determination? Support your answer by diagram and citing some practical examples.
6. Discuss the meaning and scope of Macro-economics. Discuss the significance of macro-
economic variables in business decision making.
7. How is the equilibrium level of national income determined? Show that both the aggregate
demand-aggregate supply approach and Saving - Investment approach give the same level
of equilibrium income.
8. What is Macro Economics? Discuss its importance. Explain the three and four sector model
of economy.
9. What is National Income? Discuss different methods of measuring national income.
10. Explain the problem of double counting in estimating national income, with the help of an
example. Also explain two alternative ways of avoiding the problem.
11. Distinguish between real gross domestic product and nominal gross domestic product. Can
gross domestic product be used as an index of welfare of the people? Give two reasons.
12. How will you treat the following in estimating national income of India? Give reasons for
your answer.
(a) Value of bonus shares received by share-holders of a company.
(b) Fees received from students.
(c) Interest received on loan given to a foreign company in India.
13. Explain the steps of measuring national income by income method.
14. Explain value added method of estimating National Income with the help of suitable
example.
243
15. Briefly discuss the classical model of Income, output and employment determination
16. Describe various methods of measuring national income. Also explain the conceptual &
practical difficulties in measuring national income in India.
17. Write detailed notes on the circular flow of income covering all sectors
18. Discuss in detail Keynesian consumption function, its significance and implications
19. What is the difference between GDP & GNP? Which one is the better measure of income?
Why?
20. Define private saving. How is the private saving used in the economy? What is the
relationship between private saving & national saving?
21. Discuss critically GDP as a measure of economic welfare.
22. Explain why we cannot calculate the national product simply by adding up the production
of all firms.
23. Why do the economists use real GDP rather than nominal GDP to gauge economic well-
being? Explain the significance.
24. How each of the following events is likely to affect GDP?
a) Environmental laws prohibit the firms from emitting pollution
b) Strikes by trade unions.
c) Discovery of new seed increases farm harvest.
25 Define private saving. How is the private saving used in the economy? What is the
relationship between private saving & national saving?
26 Derive saving- investment identify in the context of an open economy.
27 From national income accounting show that an increase in taxes (while transfer unchanged)
must imply a change in net exports, government purchases or the saving investment
balance.
28 Explain in detail all the components of aggregate demand.
29 Explain the Keynesian approach on Full employment and Income.
30 Discuss the concepts of Marginal Efficiency of Capital and Marginal Efficiency of
Investment
31 What is meant by investment multiplier? Explain the relationship between MPC and K?
32 Why must aggregate demand be equal to aggregate supply at the equilibrium level of
income and output? Explain with the help of a diagram?
33 Explain the equilibrium level of income with the help of saving and investment curves. If
saving exceeds planned investment, what changes will bring about the equality between
them?
34 Distinguish between inflationary gap and deflationary gap. Show deflationary gap on a
diagram. Can this gap exist at equilibrium level of income? Explain.
35 Can there be equilibrium in case of underemployment. Explain with the help of a diagram?
244
UNIT-IV
Multiple Choice Questions:
1 -------- consists of economic conditions, economic policies, industrial policies and

economic system.
A. Business Environment
B. Economic Environment
C. Natural environment
ANSWER:B
2 An analysis of the external environment enables a firm to identify –

A. Strengths and opportunities
B. Strength and weakness
C. Weakness and threats
D. Opportunities and threats
ANSWER:D
3 The economic environment of a business includes

A. Economic system
B. Economic policies
C. Economic conditions
D. All of these
ANSWER:D
4 In this type of economic system, the Government intervention will be absent

A. Mixed economy
B. Capitalist economy
C. Socialist economy
ANSWER:D
5 Government carries out monetary policy through

A. Commercial Bank
B. Central Bank
C. Cooperative Bank
ANSWER:B
245
6 Commercial banks credit creation capacity will, if central bank increases CRR.
A. Increases
B. Come down
C. Have no effect
ANSWER:B
7 Fiscal policy refers to:

A. The actions of the central bank in controlling the money supply.
B. The spending and taxing policies used by the government to influence the economy.
C. The government's regulation of financial intermediaries.
D. The government's attitude to taxation.
ANSWER:B
8 Where do MNCs choose to set up production?

A. Cheap goods
B. Cheap labor resources
C. Economic sustainability
D. None of these
ANSWER: B
9 Trade between countries

A. determines prices of products in different countries
B. decreases competition between countries
C. makes a country dependent on the other
D. none of these
ANSWER: A
10 WTO aims at
A. establishing rules for domestic trade
B. restricting trade practices
C. liberalizing international trade
D. none of these
ANSWER: C
11 Globalization has created new opportunities of

A. Employment
B. emerging multinationals
C. providing services
D. all of the above
246
ANSWER: D
12 One major government initiative to attract foreign companies to invest in India is

A. to raise the standard of education
B. to promote unemployment in the public sector
C. to build special economic zones
D. both (a) and (c)
ANSWER: C
13 Economic environment refers to the forces which have a …..

A. Political
B. Natural
C. Economic
D. Social
ANSWER: C
14 What is the underlying characteristic of the WTO?

A. It facilitates economic co-operation between different countries
B. It resolves disputes between economic trade blocks
C. It facilitates the development of less developed countries
D. It acts as an umbrella institution that regulates the agreements concluded at the
Uruguay round, the organisation’s ultimate goal being the promotion of free
international trade.
ANSWER: D
15 Does the WTO come with its own institutional framework?

A. No, the WTO depends on the relevant frameworks of national governments
B. No, the WTO provides certain institutional arrangements but only on an ad hoc
basis
C. Yes, the WTO provides a certain institutional framework which changes depending
on the nature of free trade agreements
D. Yes, the WTO provides a common institutional framework for the implementation
of free trade agreements.
ANSWER: D
16 What are the three key ‘components’ of the WTO?

A. A Senate, a Judiciary and a Directorate
B. A Trade Commission, a Dispute Settlement Body and a Council of Ministers
247
C. An Executive apparatus, a Legislative apparatus and an Enforcement apparatus
D. A Board of Governors, the Assembly of Member States and a Steering Committee.
ANSWER: C
17 Does the WTO apply its framework in exactly the same fashion throughout the world?
A. Yes, the WTO applies its framework in exactly the same way throughout the world
B. Yes, the WTO applies its framework in exactly the same way around the world,
unless it deals with trade blocks
C. No, the WTO makes allowance for regional variation
D. No, the WTO makes allowance for variation in the case of economically stronger
countries.
ANSWER: C
18 What are the two main functions of the WTO?

A. The promotion of free trade and economic liberalism
B. The administration of the WTO agreements and the resolution of international trade
disputes
C. The promotion of world peace, economic stability and financial co-operation
D. The administration of the WTO’s institutional framework and the promotion of
economic co-operation amongst its members.
ANSWER: D
19 Theoretically, what is the most significant organ of the WTO?

A. The Committee on Trade and Development
B. The Council for Trade in Goods
C. The General Council
D. The Ministerial Conference
ANSWER: D
20 Practically, what is the most significant organ of the WTO?

A. The Committee on Trade and Development
B. The Council for Trade in Goods
C. The General Council
D. The Ministerial Conference
ANSWER: C
21 Where is provision made with regard to the WTO’s institutional arrangements?

A. In the WTO Agreement
B. In the GATT
C. In the UN Charter
248
D. In the WTO Agreement on Subsidies and Countervailing Measures
ANSWER: A
22 With regard to the WTO, subsidies are covered in two separate international economic law
agreements. Which are they?
A. The GATT and the Agreement on Subsidies and Countervailing Measures
B. The Reform Treaty and the Treaty of Rome
C. The North American Free Trade Agreement and the Organization of American
States Charter
D. The International Monetary Fund’s Articles of Agreement and the European Central
Bank’s Statute.
ANSWER: A
23 Foreign Exchange Management Act, 1999 (FEMA) emerged as a replacement of

A. FERA
B. GATT
C. WTO
ANSWER: A
24 Foreign direct investment (FDI) is an investment in a business by an investor from another

country for which the foreign investor has
A. control over the company purchased.
B. No control over the company purchased.
C. Can’t say
ANSWER: A
25 FDI can be an effective way for a business to -----------into a foreign market

A. Enter
B. Exit
ANSWER: A
26 FDI is a means for a business to ----------------the cost of production if the labor market is
cheaper and the regulations are less restrictive in the target foreign market
A. reduce
B. increase
ANSWER: A
27 Foreign direct investment helps organizations in

A. to gain access to bigger markets
B. to reduce the cost of production
249
C. to acquire cheaper resources
D. All above
ANSWER: D
28 ---------------is investment by non-residents in Indian securities including shares,

government bonds, corporate bonds, convertible securities, infrastructure securities etc.
A. Foreign Portfolio Investment
B. Foreign Direct Investment
ANSWER: A
29 A greenfield investment is the direct investment made in –

A. creating a new foreign enterprise
B. acquisition of a foreign firm
C. None of above
ANSWER: A
30 A brownfield investment is the direct investment made in –

D. creating a new foreign enterprise
E. acquisition of a foreign firm
F. None of above
ANSWER: B
31 Foreign Portfolio Investment made by non-residents in Indian securities including shares,

government bonds, corporate bonds, convertible securities, infrastructure securities etc
gives a ------- over their investments.
A. direct control
B. indirect control
ANSWER: B
33 FDI is allowed through two different routes namely-

A. Automatic route & Public route
B. Automatic route & Government route
C. Government route & Public route
ANSWER: B
33 What happens when CRR is increased?

A. It decreases money supply
B. It increases demand for money
C. It decreases inflation
250
ANSWER: A
33 What do we call the rate at which the Reserve Bank of India lends money to commercial
banks?
A. Repo Rate
B. Reverse Repo Rate
C. CRR
D. SLR
ANSWER: A
34 What do we call the funds that the banks keep with RBI as a portion of their Net Demand
and Time Liabilities?
A. Repo Rate
B. Reverse Repo Rate
C. CRR
D. SLR
ANSWER: D
II Short Answers Type Questions:
1. What was the initial name of WTO? Give the reason of change in name.
2. Examine the policy of the government regarding promoting foreign capital in India.
3. Explain WTO and its different Components.
4. What are the impact of TRIPS and TRIMS on an economy?
5. Discuss the implication of WTO trade negotiation and policies on Indian Economy.
6. Discuss the tools of monetary policy.
7. Explain the relevance of open market operations in an economy.
8. Analyze the objectives of monetary policy.
9. What is meant by “reserve requirement” by bank?
10. Distinguish between REPO RATE & BANK RATE.
11. What is meant by Bankers’ Bank? Define Central Bank.
12. What do you understand by credit control?
13. Distinguish between CRR and SLR
14. What are the various instruments of monetary policy?
15. Discuss the various instruments of Fiscal Policy.
16. How are the instruments of monetary and fiscal policy used to regulate the economic
environment?
17. Write short note on economic environment
251
18. What are the confronting issues in which India and WTO are still in news?
19. What is the difference between FDI and FII?
20. Distinguish between Repo rate and Reverse Repo rate
21. Elaborate TRIPS and TRIMS.
22. What is the role of FDI in retail sector?
23. Examine the role of WTO with special reference to TRIPS in India.
24. Make a case for Foreign Institutional Investment (FII) in Indian economy.
25. Discuss the implications of WTO on Indian Agriculture.
26. Discuss the impact of monetary and fiscal policies on the aggregate demand.
27. Which is the most effective method of credit control? Explain the need and progress of
selective credit control in India.
28. Why is Reserve Bank’s monetary policy is termed as a policy of ‘controlled expansion’?
29. Explain in detail the meaning of “public expenditure”. How does it affect aggregate
demand?
30. Explain how moral persuasion affects the practices of the commercial banks.
III Long Answers Type Questions:
1. What are the factors affecting the monetary policy? What role does RBI play in formulating
monetary policy?
2. Discuss the tools and the objectives of fiscal policy in the developing countries. What are
the limitations?
3. Explain the highlights of Recent Monetary Policy of Government and discuss it will help
to reduce inflation in the country.
4. What are the objectives of WTO? Discuss its advantages and disadvantages for India.
5. Examine the role of WTO with special reference to TRIPS in India.
6. Discuss the various reasons for the money fall against the dollar and what are the
measures taken up by RBI to tide over the situation.
7. What are the objectives of Fiscal Policy? How far these have been realized in our country?
8. Discuss the important provisions of industrial policy in India. Has this policy provided the
growth momentum to our industrial sector in India? Discuss.
9. What is the impact of Monetary Policy in Economy? What are the selective methods of
credit control that a central bank can employ in order to reduce money supply?
10. Discuss the quantitative methods of credit control used by the RBI.
11. Discuss the role of RBI in respect of monetary and fiscal policy?
12. Do you think that Central Bank autonomy will help the countries in their economic
activities?
13. Explain the objectives, instruments and limitations of monetary policy.
252
14 What are the objectives of World Trade Organization (WTO)? Examine the impact of
WTO agreement on Indian economy.
15 FDI is increasingly important in economic development because of its close links in trade,
financial flows and technology transfer. Explain this statement and examine the policy of
the government regarding promoting foreign capital in India.
16 Write notes on:
A. TRIPS and TRIMS
B. FDI
17 What are the objectives of WTO? Discuss its advantages and disadvantages for India.
18 Comment on Foreign Direct Investment (FDI) in Indian economy.
19 What are WTO provisions? Examine the impact of these provisions on Indian business.
20 Critically examine the principles, functions and impact of WTO on Indian business.
21 What are the different characteristics of international trading environment?
22 Evaluate the impact of liberalization measures on the structure of India’s foreign trade.
23 How does globalization affect business environment on a company? What are the critical
factors in this regard?
24 What kinds of steps are undertaken under monetary policy in India during reform period?
Critically explain the impact of monetary policy on Indian economy. Also make brief
comment on impact of demonetization on monetary policy.
25 Provide a critical note on the inflow of foreign direct investment in India. Suggest robust
policies that can attract high dose of foreign direct investment in the significant sectors of
economy.
26 Explain the importance of understanding the economic and non-economic environment for
a business.
27 What do you understand by General Agreement on Tariffs and Trade (GATT)? Discuss its
objectives and fundamental principles.
28 What do you mean by Greenfield investment & Brownfield investment under FDIs?
Explain with examples.
29 Elucidates various advantages and dis-advantages of foreign direct investment.
30 What do you understand by Foreign Exchange Management Act, 1999 (FEMA)? What is
the role of FEMA in the growth of Indian economy?
253

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QUESTION BANK

The Questions contained in this booklet have been prepared by the

I Test Your Skills:

(a) Multiple Choice Questions:

2 Break -even point means point of____________

3 The technique and process of ascertaining cost is termed as____________

4 Cost accounting is a tool of ___________________ accounting.

6 Incremental cost is a type of:

7 Variable cost per unit:

8 Fixed cost per unit increases when:

9 Opportunity cost helps in:

13 Direct material is a ___________

15 A bill of materials is:

16 ________is a devise for breaking up or separating costs into smaller sub-divisions.

18 LIFO method of pricing material issues is suitable for:

20 Material losses may be normal or______________:

26 The basic objective of cost accounting is ____________:

27 Cost Classification can be done in __________:

29 Direct expenses are also called _____________:

30 Indirect material used in the production is classified as _______:

31 Warehouse rent is a part of _______:

33 Total of all direct costs is termed as ______:

34 Audit fees is a part of __________:

35 Cost accounting concepts include all of the following expect _________:

II Short Answer Type Questions:

You are required to calculate:

III Long Answer Type Questions:

21 A firm is able to obtain quantity discounts on its orders of material as follows:

23 Discuss in detail the various methods of Inventory Valuation.

29 Explain the concept of ABC Analysis as a technique of inventory control.

I Multiple Choice Questions:

3 Taylor’s differential plan provides for:

6 Piece -wage system:

12 In _______________ plan , standard time of each job is determined in minutes.

13 ___________ plan lays down three rates.

16 __________ do not increase or decrease when the volume of production changes.

25 Abnormal loss is charged to:

26 According to Taylor’s Differential plan, the worker is paid according to his?

34 Which of the following is / are time-based incentive wage plan?

II Short Answer Type Questions:

The machine uses 10 units of power per hour.

I Multiple Choice Questions:

1 In automobile industry cost unit is

2 .......... costing is suitable for mines, quarries, cement works etc.

5 Continuous costing is also called

6 Cost accounting is based on ......... figures.

7 ...........costing is used in transport undertaking.

8 In ............. costing the cost of a group of products is ascertained.

9 The total of all direct expenses is known as

11 In cost Accounting, abnormal loss is charged to:

12 The combination of direct material and direct labor is :-

14 Abnormal loss should be transferred to

15 The unavoidable loss of material is known as

16 Loss due to fire , theft , are …………………….

17 The cost of …………… is not included in the cost of production

18 Prime cost can be also called …………………………….

19 Element of cost refers to …………………..

20 Cost of material that can be identified is called ……………. Cost

22 The value of benefit sacrificed in favor of an alternative course of action as known as