JavaScript is required to use all interactive features on TheWholeTest.

Please enable JavaScript in your browser settings to attempt mock tests, view detailed answer explanations, and track your progress.

|Commerce · January 2026

UGC NET Commerce January 2026 Question PaperPaper 2 with Answer Key

The complete UGC NET January 2026 question paper for Commerce, covering Paper 2 (Commerce). Every question below is shown with its options and the correct answer, and a detailed explanation you can unlock by signing in. All 100 questions are free to practise.

UGC NET January 2026 at a glance

Exam	UGC NET January 2026
Papers	Paper 2 (Commerce)
Exam date(s)	January 3, 2026
Shift(s)	Shift 1
Paper 2 questions	100 questions · 120 minutes · 200 marks
Total	100 questions
Marking scheme	+2 per correct answer · No negative marking

Paper 2

Commerce

UGC NET January 2026

100 questions120 min200 marks

Practice Now

Paper 2 — Commerce

Attempt this paper

100 questions with the answer key and explanations.

Question 1
Which of the following statements are correct for tax Evasion ?
A. All methods by which tax liability is illegally avoided is termed as tax evasion
B. Tax evasion takes into account loopholes of Law
C. Tax evasion is tax godging within framework of Law
D. Tax evasion has legal sanction
E. Tax evasion is intentional attempt to avoid payment of tax after the liability to tax has arisen
Choose the correct answer from the options given below :
1. AB and D Only
2. BB, C and D Only
3. CA, E and C Only
4. DA and E Only
Answer: (D) A and E Only
Explanation
Tax evasion refers to deliberate, illegal actions taken to avoid paying tax that is lawfully due.

Statement A — correct. Illegally avoiding tax liability through concealment or fraud constitutes tax evasion.

Statement B — incorrect. Exploiting legal loopholes while complying with the letter of the law is tax avoidance, not tax evasion.

Statement C — incorrect. Operating within the framework of law is tax planning or avoidance, whereas evasion violates the law.

Statement D — incorrect. Tax evasion is illegal and carries civil and criminal penalties under tax statutes.

Statement E — correct. An intentional failure or attempt to avoid paying tax after the liability has arisen is classic evasion.

Therefore, only statements A and E are correct.
Sign in to read the full explanation
Question 2
Select the correct option from the followings.
The Balance of payment (BoP) :
1. AIncludes only exports and imports of goods and services.
2. BIs always balanced because every credit entry has a corresponding debit entry.
3. CExcludes unilateral transfers like remittance.
4. DShows only the financial account of transactions.
Answer: (B) Is always balanced because every credit entry has a corresponding debit entry.
Explanation
The Balance of Payments is constructed using double-entry bookkeeping, which ensures total debits always equal total credits.

A. Includes only exports and imports of goods and services — incorrect. BoP also includes primary income, secondary transfers, and the capital and financial accounts.

B. Is always balanced because every credit entry has a corresponding debit entry — correct. In an accounting sense, total debits match total credits by definition.

C. Excludes unilateral transfers like remittance — incorrect. Unilateral transfers form part of the secondary income account in the current account.

D. Shows only the financial account of transactions — incorrect. BoP covers current, capital, and financial accounts.
Sign in to read the full explanation
Question 3
What are the GST rates applicable after 22nd September 2025 ?
A. 5%
B. 12%
C. 18%
D. 28%
E. 40%
Choose the correct answer from the options given below :
1. AA, B, C and D Only
2. BB, C, D and E Only
3. CA, C and E Only
4. DB, C and E Only
Answer: (A) A, B, C and D Only
Explanation
India operates a four-tier standard GST rate structure consisting of 5%, 12%, 18%, and 28%.

A (5%), B (12%), C (18%), D (28%) — these constitute the four primary standard GST slabs.

E (40%) — 40% is the statutory ceiling rate under the CGST Act rather than an applicable operational GST slab.

Hence, the applicable GST rate slabs are A, B, C, and D.
Sign in to read the full explanation
Question 4
Arrange the followings on the basis of Sections of Indian Contract Act, 1872 in ascending order :
A. Agreement in restraint of Marriage
B. Agreement made without consideration
C. Agreement with unlawful objects or consideration
D. Agreement in restraint of Trade
E. Agreement by way of wager
Choose the correct answer from the options given below :
1. AC, B, A, D, E
2. BC, A, D, B, E
3. CA, B, C, E, D
4. DD, B, A, C, E
Answer: (A) C, B, A, D, E
Explanation
The relevant provisions of the Indian Contract Act, 1872 follow this statutory sequence:

C (Section 23) -> B (Section 25) -> A (Section 26) -> D (Section 27) -> E (Section 30)

C. Section 23 — lawful objects and considerations.

B. Section 25 — agreement without consideration is void.

A. Section 26 — agreement in restraint of marriage is void.

D. Section 27 — agreement in restraint of trade is void.

E. Section 30 — agreements by way of wager are void.
Sign in to read the full explanation
Question 5
Which of the followings are the properties of Indifference Curve ?
A. Indifference curve slopes downward to right
B. Indifference curve is concave to origin
C. Indifference curve is convex to origin
D. Indifference curves cannot intersect each other but can be tangent to each other
E. Higher indifference curve represents higher level of satisfaction
Choose the correct answer from the options given below :
1. AA, B, D and E Only
2. BA, C, D and E Only
3. CA, C and E Only
4. DA, B, C and D Only
Answer: (C) A, C and E Only
Explanation
Indifference curves exhibit several standard properties derived from consumer preference axioms:

A. Slopes downward to right — correct. To maintain the same utility level, an increase in one good requires reducing the other.

B. Concave to origin — incorrect. Indifference curves are convex due to the diminishing marginal rate of substitution.

C. Convex to origin — correct. The marginal rate of substitution of X for Y diminishes along the curve.

D. Cannot intersect but can be tangent — incorrect. Two indifference curves can neither intersect nor touch each other because every curve represents a distinct utility level.

E. Higher indifference curve represents higher satisfaction — correct. By monotonicity of preferences, larger bundles yield greater satisfaction.

Thus, statements A, C, and E are the valid properties.
Sign in to read the full explanation
Question 6
For assessment year 2025-26, ‘Health and Education Cess’ shall be levied at the rate of :
1. A1% on Income Tax
2. B2% on Income Tax
3. C3% on Income Tax
4. D4% on Income Tax
Answer: (D) 4% on Income Tax
Explanation
Health and Education Cess is levied on total income tax plus applicable surcharge at the rate of 4%.

The 4% rate was introduced by Finance Act 2018, replacing the earlier 2% Primary Education Cess and 1% Secondary and Higher Education Cess.

The rate remains unchanged at 4% for Assessment Year 2025-26 across all categories of assessees.
Sign in to read the full explanation
Question 7
Where a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any notified skill development project, then such company can claim as deduction under section 35CCD :
1. AOnly 25% of such expenditure
2. BOnly 50% of such expenditure
3. COnly 75% of such expenditure
4. D100% of such expenditure
Answer: (D) 100% of such expenditure
Explanation
Section 35CCD of the Income Tax Act allows a deduction for expenditure incurred by a company on an approved skill development project.

While the section historically allowed a weighted deduction of 150%, the deduction rate was phased down to 100% of the actual expenditure with effect from Assessment Year 2021-22.

Expenditure in the nature of cost of land or building remains expressly ineligible for this deduction.
Sign in to read the full explanation
Question 8
Which one of the followings are not the Objectives of HRM ?
1. ASocietal Objectives
2. BOrganizational Objectives
3. CFunctional Objectives
4. DGroup Objectives
Answer: (D) Group Objectives
Explanation
Human Resource Management recognizes four primary levels of objectives according to standard management theory.

Societal Objectives — fulfilling social and ethical responsibilities toward community needs.

Organizational Objectives — assisting the enterprise in attaining overall corporate goals.

Functional Objectives — maintaining the department contribution at a level suitable for organizational needs.

Personal Objectives — assisting employees in achieving personal career goals.

Group objectives does not form one of the standard four functional tiers of HRM goals.
Sign in to read the full explanation
Question 9
Charge collected from the investors by a Mutual Fund Scheme when it sells its units to investors is called :
1. AExit Load
2. BEntry Load
3. CSwitch
4. DSale Price
Answer: (B) Entry Load
Explanation
The fee levied at the time an investor purchases units from an asset management company is known as an entry load.

A. Exit Load — fee charged upon redemption or sale of mutual fund units back to the fund.

B. Entry Load — charge levied on purchase of new units from the fund scheme.

C. Switch — moving invested capital from one scheme to another within the same fund house.

D. Sale Price — total price per unit including NAV and any applicable load charges.
Sign in to read the full explanation
Question 10
Assertion (A): The minimum level of service the customer expects represents the threshold level of expectations.
Reason (R): The gap between the desired and adequate service has been called as the zone of intolerance.
In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (C) (A) is correct but (R) is not correct
Explanation
In the Parasuraman, Zeithaml, and Berry service quality model, customer expectations are separated into adequate and desired levels.

Assertion (A) is correct. Adequate service is the minimum threshold level below which customers feel dissatisfied.

Reason (R) is incorrect. The gap between desired service and adequate service is termed the zone of tolerance, not the zone of intolerance.
Sign in to read the full explanation
Question 11
Which of the followings are the techniques of Monetary Control adopted by RBI ?
A. Loans and Advances to the Industries
B. Cash Reserve Ratio
C. Open Market Operations
D. Statutory Liquidity Ratio
E. Repo Rates
Choose the correct answer from the options given below :
1. AA, B, C, D Only
2. BA, B, D, E Only
3. CB, C, D, E Only
4. DA, C, D, E Only
Answer: (C) B, C, D, E Only
Explanation
The Reserve Bank of India controls credit and money supply through statutory quantitative and qualitative tools.

B. Cash Reserve Ratio (CRR) — statutory share of net demand and time liabilities banks maintain with the RBI.

C. Open Market Operations (OMO) — outright purchase and sale of government securities in the open market.

D. Statutory Liquidity Ratio (SLR) — minimum percentage of deposits banks maintain in liquid assets.

E. Repo Rates — policy rate at which RBI lends short-term liquidity against eligible collateral.

Granting direct loans and advances to industries is an activity of commercial banks and specialized financial institutions rather than a central bank monetary control instrument.
Sign in to read the full explanation
Question 12
Arrange the following steps of Personal Selling in sequence :
A. Pre approach
B. Presentation and Demonstration
C. Approach
D. Prospecting and Qualifying
E. Handling Objections
Choose the correct answer from the options given below :
1. AA, D, C, E, B
2. BA, C, D, E, B
3. CC, A, D, B, E
4. DD, A, C, B, E
Answer: (D) D, A, C, B, E
Explanation
The classical personal selling process follows seven structured sequential stages:

D -> A -> C -> B -> E

D. Prospecting and Qualifying — identifying potential leads and evaluating their purchase ability.

A. Pre-approach — learning everything possible about the prospective customer before the contact.

C. Approach — initiating direct contact and building initial rapport.

B. Presentation and Demonstration — showcasing product features, benefits, and value proposition.

E. Handling Objections — clarifying doubts, overcoming hesitations, and answering concerns.
Sign in to read the full explanation
Question 13
Which one of the followings is not a category under Balance of Payments ?
1. ACurrent Account
2. BCapital Account
3. CDrawings Account
4. DOfficial Reserve Account
Answer: (C) Drawings Account
Explanation
Balance of Payments accounting partitions international economic transactions into specific standard components.

A. Current Account — records trade in goods, services, primary investment income, and secondary transfers.

B. Capital Account — records capital transfers and non-produced non-financial asset acquisitions.

C. Drawings Account — proprietary financial accounting term for partner or owner withdrawals, having no role in macroeconomic BoP frameworks.

D. Official Reserve Account — records transactions in gold, foreign currency assets, and SDR balances held by the central bank.
Sign in to read the full explanation
Question 14
Arrange the following steps of Capital Budgeting Process in correct order :
A. Preliminary Screening Process
B. Project Generation
C. Detailed Project Evaluation
D. Control of Capital Expenditure
E. Project Selection and its implementation
Choose the correct answer from the options given below :
1. AA, B, C, D, E
2. BB, A, C, E, D
3. CA, B, C, E, D
4. DB, A, C, D, E
Answer: (B) B, A, C, E, D
Explanation
The capital budgeting decision follows a logical operational progression from inception to post-audit:

B -> A -> C -> E -> D

B. Project Generation — originating and identifying investment ideas across departments.

A. Preliminary Screening Process — filtering proposals against corporate goals and high-level viability.

C. Detailed Project Evaluation — conducting discounted cash flow analyses such as NPV and IRR.

E. Project Selection and its implementation — formal authorization, fund allocation, and asset acquisition.

D. Control of Capital Expenditure — monitoring actual outlays against budget and performing post-completion reviews.
Sign in to read the full explanation
Question 15
Assertion (A): Heckscher and Ohlin developed a theory to explain the reasons for differences in relative commodity prices and competitive advantages between two nations. According to this theory, a nation will export the commodity whose production requires intensive use of nation's relatively abundant and cheap factors and import the commodity whose production requires intensive use of the nation's scarce and expensive factors.
Reason (R): Thus, a country with an abundance of cheap labour would import labour intensive products and export capital intensive goods and vice-versa.
In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (C) (A) is correct but (R) is not correct
Explanation
The Heckscher-Ohlin theorem states that countries have comparative advantage in goods requiring their abundant factor of production.

Assertion (A) is correct. A nation exports commodities that intensively use its abundant, cheap resources and imports commodities that intensively use its scarce, expensive resources.

Reason (R) is incorrect. A country with an abundance of cheap labour would export labour-intensive products and import capital-intensive products, which is the direct opposite of what Reason asserts.
Sign in to read the full explanation
Question 16
Which one of the followings is not a type of conflict ?
1. ATask Conflict
2. BRelationship Conflict
3. CProcess Conflict
4. DProduct Conflict
Answer: (D) Product Conflict
Explanation
Organizational behavior research categorizes workplace conflict into three recognized dimensions.

Task Conflict — disagreements over the content, direction, and goals of the work.

Relationship Conflict — interpersonal friction, animosity, and personality clashes among coworkers.

Process Conflict — controversy over how task execution should proceed and how duties should be delegated.

Product conflict is not a recognized category in organizational conflict frameworks.
Sign in to read the full explanation
Question 17
Which statement best captures the difference between FDI and FPI ?
1. AFDI is investment with lasting interest and managerial control; FPI is passive investment without control.
2. BFDI involves only equity investment; FPI involves both equity and debt security.
3. CFDI is recorded in current account; FPI is recorded in capital account.
4. DBoth FDI and FPI give investors voting rights in the host country.
Answer: (A) FDI is investment with lasting interest and managerial control; FPI is passive investment without control.
Explanation
The fundamental distinction between FDI and FPI centers on management involvement and strategic longevity.

A. FDI has lasting interest and managerial control, FPI is passive — correct. FDI seeks a direct voice and substantial influence in enterprise operations, whereas FPI consists of liquid financial assets held purely for returns.

B. FDI involves only equity — incorrect. FDI includes debt instruments such as intercompany loans.

C. FDI in current account — incorrect. Both FDI and FPI are recorded in the financial and capital accounts.

D. Both give voting rights — incorrect. Non-voting shares and debt instruments in FPI carry no voting privileges.
Sign in to read the full explanation
Question 18
An empirical test was carried out in 1951 on Heckscher Ohlin model to find out whether or not the US, which has abundant capital resources, exports capital intensive goods and imports labour intensive goods. But, it was found that the US exported more labour -intensive commodities and imported more capital intensive products, which was contrary to the result of Heckscher - Ohlin model. Who has conducted the test ?
1. AStaffan B Linder
2. BDavid Ricardo
3. CJ. B. Say
4. DWassily Leontief
Answer: (D) Wassily Leontief
Explanation
Wassily Leontief conducted an empirical examination of US foreign trade data in 1951 using input-output analysis.

Leontief observed that despite being the most capital-abundant nation in the world, the United States exported more labour-intensive goods and imported more capital-intensive goods.

This counter-intuitive empirical finding became known as the Leontief Paradox in international trade economics.
Sign in to read the full explanation
Question 19
Assertion (A): Section 91 provides for grant of unilateral relief in the case of resident taxpayers on income which has been taxed in India as well as in the country with which there is no Double Taxation Avoidance Agreement.
Reason (R): The relief under section 91 is granted by allowing to the tax payer a deduction from tax liability of an amount equal to the tax calculated at the average Indian rate of tax or the amount of tax calculated at the rate of tax of that other country on the doubly taxed income, whichever is higher.
In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (C) (A) is correct but (R) is not correct
Explanation
Section 91 of the Income Tax Act provides unilateral relief against double taxation when no bilateral agreement exists.

Assertion (A) is correct. Unilateral relief applies to resident taxpayers whose income has suffered tax in India and in a foreign country lacking a Double Taxation Avoidance Agreement.

Reason (R) is incorrect. Relief under Section 91 is calculated at the Indian rate of tax or the foreign country tax rate, whichever is lower, rather than whichever is higher.
Sign in to read the full explanation
Question 20
Assertion (A): The skimming price policy is adopted where close substitute of a new product are not available.
Reason (R): This policy requires fixing a lower initial price designed to penetrate the market as quickly as possible and is intended to maximize the profit in the long run.
In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (C) (A) is correct but (R) is not correct
Explanation
Price skimming involves launching an innovative product at a high premium price before competitors enter the market.

Assertion (A) is correct. Price skimming works best when close substitutes do not exist and consumers possess inelastic demand.

Reason (R) is incorrect. Fixing a low initial price to capture rapid market share describes penetration pricing, not skimming pricing.
Sign in to read the full explanation
Question 21
Arrange the following in ascending order of sections of Income Tax Act related to permissible deduction from Gross Total Income :
A. Deduction in respect of Medical Insurance Premia
B. Deduction in respect of Royalty Income of Author
C. Deduction in respect of Payment of Interest on Loan taken for Higher Education
D. Deduction in respect of Interest on Deposits in Saving Accounts
E. Deduction in respect of Donations to Certain Funds, charitable Institutions, etc.
Choose the correct answer from the options given below :
1. AA, B, C, D, E
2. BE, D, C, B, A
3. CA, C, E, D, B
4. DA, C, E, B, D
Answer: (D) A, C, E, B, D
Explanation
The Chapter VI-A deductions follow this chronological statutory section order:

A (80D) -> C (80E) -> E (80G) -> B (80QQB) -> D (80TTA)

A. Section 80D — medical insurance premia.

C. Section 80E — interest on loan taken for higher education.

E. Section 80G — donations to designated charitable funds.

B. Section 80QQB — royalty income of authors of literary, artistic, or scientific books.

D. Section 80TTA — interest on deposits in savings accounts.
Sign in to read the full explanation

Question 22

Match List - I with List - II.

List - I (Tax Deducted at Source)	List - II (Sections of Income Tax Act)
A. Deduction of Tax at Source on Fees for Professional or Technical Services	I. Section 194A
B. Deduction of Tax at Source from Payment of life Insurance Policy	II. Section 194B
C. Deduction of Tax at Source from Winnings from Lotteries or Crossword Puzzles	III. Section 194DA
D. Deduction of Tax at Source from Interest other than Interest on Securities	IV. Section 194J

AA-I, B-II, C-III, D-IV
BA-IV, B-III, C-II, D-I
CA-I, B-II, C-IV, D-III
DA-II, B-I, C-III, D-IV

Answer: (B) A-IV, B-III, C-II, D-I

Explanation

TDS provisions in the Income Tax Act correspond to the following sections:

A-IV, B-III, C-II, D-I

A. Fees for Professional or Technical Services — Section 194J governs fees for professional and technical services.
B. Payment of Life Insurance Policy — Section 194DA governs maturity payments on life insurance policies.
C. Winnings from Lotteries or Crossword Puzzles — Section 194B mandates tax deduction on lottery and puzzle winnings.
D. Interest other than Interest on Securities — Section 194A mandates TDS on bank interest and commercial interest.

Question 23
The Break Even point expressed in amount of sales in rupees of X ltd having selling Price of ₹ 20 per unit, variable cost of ₹ 14 per unit and fixed cost of ₹ 7,92,000 is :
1. A₹ 11,28,571
2. B₹ 1,32,000
3. C₹ 39,600
4. D₹ 26,40,000
Answer: (D) ₹ 26,40,000
Explanation
Break-even sales value is calculated using the profit-volume ratio:

Contribution per unit = Selling Price - Variable Cost
Contribution per unit = 20 - 14 = ₹ 6

P/V Ratio = Contribution / Selling Price
P/V Ratio = 6 / 20 = 0.30 or 30%

Break Even Sales = Fixed Cost / P/V Ratio
Break Even Sales = 7,92,000 / 0.30 = ₹ 26,40,000

Alternatively, break-even output equals 7,92,000 / 6 = 1,32,000 units, which at ₹ 20 per unit yields ₹ 26,40,000.
Sign in to read the full explanation
Question 24
The right of the insurer to stand in the place of insured after the settlement of a claim and it gives the insurer right to recover from an alternative source, the principle involved in this case is called :
1. APrinciple of Insurable Interest
2. BPrinciple of Subrogation
3. CPrinciple of Causa Proxima
4. DPrinciple of Contribution
Answer: (B) Principle of Subrogation
Explanation
Subrogation is an established corollary to the principle of indemnity in property and liability insurance.

A. Principle of Insurable Interest — requires the insured to have a financial interest in the preservation of the insured subject matter.

B. Principle of Subrogation — transfers the insured recovery rights against third parties to the insurer once the claim is fully indemnified.

C. Principle of Causa Proxima — stipulates that the nearest or immediate cause must be examined to determine liability for a loss.

D. Principle of Contribution — allows an insurer who paid the entire claim to seek proportionate recovery from co-insurers.
Sign in to read the full explanation
Question 25
Which of the followings are the myths about Rural Market ?
A. All Villages are equally populated
B. Rural Consumers are a heterogeneous lot
C. Being illiterate, rural consumer is not able to discriminate between products and brands
D. Only low priced products will sell in rural India
E. Rural markets are the consumer durable markets
Choose the correct answer from the options given below :
1. AA, B, C and D Only
2. BA, C and D Only
3. CC, D and E Only
4. DB, C, D and E Only
Answer: (B) A, C and D Only
Explanation
Rural marketing literature contrasts common industry myths with ground realities of Indian rural consumer behavior.

A. All villages are equally populated — myth. Indian villages vary tremendously in size, infrastructure, and population density.

B. Rural consumers are heterogeneous — reality. Diversity in language, geography, income, and culture is an acknowledged fact.

C. Rural consumers cannot discriminate brands — myth. Rural consumers recognize visual identifiers, logos, and color palettes effectively.

D. Only low-priced products sell in rural India — myth. Rural buyers seek perceived value for money, frequently purchasing premium brands.

Because statement B is an empirical reality rather than a misconception, only statements A, C, and D are myths.
Sign in to read the full explanation
Question 26
Assertion (A): New Issue of Capital is costlier than Retained Earnings.
Reason (R): The cost of Retained Earnings is the return foregone by the shareholders on the dividend income.

In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (B) Both (A) and (R) are correct but (R) is not the correct explanation of (A)
Explanation
Flotation costs make newly issued equity capital costlier than retained earnings.

Assertion (A) is correct. Raising fresh equity involves underwriting, brokerage, legal expenses, and listing fees, whereas retained earnings incur zero flotation costs.

Reason (R) is correct. The cost of retained earnings represents the opportunity cost of dividend returns foregone by shareholders.

Reason correctly defines the opportunity cost concept of retained earnings, but it does not explain why new equity is costlier, which is driven by issue and flotation expenses.
Sign in to read the full explanation

Question 27

Match List - I with List - II.

List - I	List - II
A. Operating Leverage	I. Contribution/EBT
B. Combined Leverage	II. Contribution/EBIT
C. Earning Per Share	III. EBIT/EBT
D. Financial Leverage	IV. EAT/No. of Equity Shares

AA-I, B-II, C-IV, D-III
BA-II, B-I, C-IV, D-III
CA-II, B-I, C-III, D-IV
DA-I, B-II, C-III, D-IV

Answer: (B) A-II, B-I, C-IV, D-III

Explanation

Financial leverages and performance metrics correspond to standard corporate finance formulas:

A-II, B-I, C-IV, D-III

A. Operating Leverage — Contribution / EBIT measures operating risk from fixed production costs.
B. Combined Leverage — Contribution / EBT measures total risk encompassing both operating and financial leverage.
C. Earning Per Share — EAT / Number of Equity Shares measures net profitability per ordinary share.
D. Financial Leverage — EBIT / EBT measures financial risk arising from fixed interest obligations.

Question 28
Which one of the followings is not a type of organizational culture ?
1. ANon-Entrepreneurial Culture
2. BPower Culture
3. CRole Culture
4. DTask Culture
Answer: (A) Non-Entrepreneurial Culture
Explanation
Charles Handy classical organizational culture typology establishes four distinct cultural structures.

Power Culture (Web) — authority and decisions radiate from a central powerful figure.

Role Culture (Temple) — formalized bureaucracy driven by functions, rules, and procedures.

Task Culture (Net) — project-focused teams assembled to resolve specific dynamic problems.

Person Culture (Cluster) — organization serves the collective interests of individual professionals.

Non-entrepreneurial culture is not a recognized category in Handy or standard organizational culture models.
Sign in to read the full explanation
Question 29
Which one of the followings is not a component of formal (organized) financial system ?
1. AFinancial Markets
2. BFinancial Instruments
3. CChit-fund Companies
4. DFinancial Services
Answer: (C) Chit-fund Companies
Explanation
The formal financial system consists of four institutional pillars regulated by statutory authorities.

Financial Institutions — commercial banks, development financial institutions, and insurance entities.

Financial Markets — money and capital markets facilitating capital allocation.

Financial Instruments — equity, debt, treasury bills, and commercial paper.

Financial Services — credit rating, underwriting, factoring, and custodial services.

Chit funds belong historically to the informal and unorganized credit system rather than the formal institutional structure.
Sign in to read the full explanation

Question 30

Match List - I with List - II.

List - I	List - II
A. Probable Error of Correlation Coefficient	I. Explained Variation / Total Variation
B. Standard Error of Correlation Coefficient	II. Unexplained Variation / Total Variation
C. Coefficient of Determination	III. (1 − r²) / √n
D. Coefficient of Alienation	IV. 0.6745 [(1 − r²) / √n]

AA-I, B-II, C-III, D-IV
BA-IV, B-III, C-II, D-I
CA-III, B-IV, C-I, D-II
DA-IV, B-III, C-I, D-II

Answer: (D) A-IV, B-III, C-I, D-II

Explanation

Correlation and regression relationships match these established statistical formulations:

A-IV, B-III, C-I, D-II

A. Probable Error of Correlation Coefficient — 0.6745 [(1 - r^2) / sqrt(n)] measures reliability of the sample correlation.
B. Standard Error of Correlation Coefficient — (1 - r^2) / sqrt(n) gives the standard deviation of the sampling distribution of r.
C. Coefficient of Determination — Explained Variation / Total Variation measures the proportion of variance explained by regression.
D. Coefficient of Alienation — Unexplained Variation / Total Variation reflects the proportion of unaccounted variance.

Question 31

Match List - I with List - II.

List - I	List - II
A. Ind AS 7	I. Impairment of Assets
B. Ind AS 24	II. Related Party Disclosures
C. Ind AS 36	III. Consolidated Financial Statement
D. Ind AS 110	IV. Statement of Cash Flows

AA-I, B-II, C-III, D-IV
BA-IV, B-II, C-I, D-III
CA-III, B-IV, C-I, D-II
DA-IV, B-III, C-II, D-I

Answer: (B) A-IV, B-II, C-I, D-III

Explanation

Indian Accounting Standards correspond to the following accounting subject areas:

A-IV, B-II, C-I, D-III

A. Ind AS 7 — Statement of Cash Flows sets criteria for operating, investing, and financing flows.
B. Ind AS 24 — Related Party Disclosures mandates reporting of control relationships and transactions.
C. Ind AS 36 — Impairment of Assets governs recoverable amounts and impairment loss recognition.
D. Ind AS 110 — Consolidated Financial Statements specifies control principles and consolidation procedures.

Question 32
Arrange the following in descending order on the basis of number of sellers in the Market.
A. Duopoly
B. Oligopoly
C. Monopolistic Competition
D. Perfect Competition
Choose the correct answer from the options given below :
1. AD, C, B, A
2. BB, A, C, D
3. CA, B, C, D
4. DB, D, A, C
Answer: (A) D, C, B, A
Explanation
Ranking market structures by number of sellers from highest to lowest gives this sequence:

D -> C -> B -> A

D. Perfect Competition — infinite number of small, price-taking sellers producing homogeneous goods.

C. Monopolistic Competition — large number of sellers competing with differentiated products.

B. Oligopoly — few large sellers dominating industry sales.

A. Duopoly — exactly two sellers controlling the entire market supply.
Sign in to read the full explanation
Question 33
Which of the followings is/are the part of external environment (macro) of Business ?
A. Customers
B. Economic factors
C. Natural factors
D. Marketing Intermediaries
E. Competitors
Choose the correct answer from the options given below :
1. AB and D Only
2. BB and C Only
3. CA, B, C and D Only
4. DB, C, D and E Only
Answer: (B) B and C Only
Explanation
Business environment analysis divides external forces into micro and macro layers.

Macro environment — broad societal forces outside company control, including Economic (B), Natural and Ecological (C), Political, Socio-cultural, and Technological factors.

Micro environment — immediate actors influencing daily operations, including Customers (A), Marketing Intermediaries (D), and Competitors (E).

Therefore, only economic factors (B) and natural factors (C) form part of the macro environment.
Sign in to read the full explanation
Question 34
Arrange the followings in the correct sequence in which they are computed for determining Net Cash from operating activities as per AS-3 (Revised) :
A. Operating profit before Working Capital Changes
B. Cash flow before extra ordinary items
C. Cash generated from operations
D. Net Profit before taxation and extra ordinary items
Choose the correct answer from the options given below :
1. AA, B, C, D
2. BD, B, A, C
3. CC, D, B, A
4. DD, A, C, B
Answer: (D) D, A, C, B
Explanation
Under the indirect method of AS-3 (Revised), operating cash flow is determined through this accounting progression:

D -> A -> C -> B

D. Net Profit before taxation and extraordinary items — baseline accounting profit derived from the statement of profit and loss.

A. Operating profit before Working Capital Changes — derived by adjusting for non-cash expenses such as depreciation.

C. Cash generated from operations — derived by adjusting for changes in inventories, receivables, and payables.

B. Cash flow before extraordinary items — derived by deducting actual income tax payments.
Sign in to read the full explanation
Question 35
Suppose a production function is given as
Q = − L³ + 5L² + 10L
Which law of production is revealed by this production function :
1. ALaw of diminishing return
2. BLaw of increasing return
3. CLaw of constant return
4. DLaw of return to scale
Answer: (A) Law of diminishing return
Explanation
A single-variable cubic production function depicts the classical short-run Law of Variable Proportions or Law of Diminishing Returns.

Marginal Product of Labour:
MP_L = dQ/dL = -3L^2 + 10L + 10

At small output quantities, increasing marginal returns occur as L rises.

As additional labour is employed against fixed capital, the negative cubic term dominates, causing marginal returns to decline and eventually turn negative.

Laws of returns to scale require proportional variation of all inputs, whereas this function features solely variable labour input L.
Sign in to read the full explanation
Question 36
Arrange the following steps of process of consumer buying in proper sequence :
A. Evaluation of Alternatives
B. Search for Alternatives
C. Need Recognitions
D. Decision
E. Development of Decision Criteria
Choose the correct answer from the options given below :
1. AC, B, A, E, D
2. BC, A, B, E, D
3. CC, E, B, A, D
4. DB, A, C, E, D
Answer: (C) C, E, B, A, D
Explanation
In comprehensive consumer decision models, evaluative criteria are framed before conducting alternative search:

C -> E -> B -> A -> D

C. Need Recognition — consumer senses a gap between actual and desired states.

E. Development of Decision Criteria — establishing the standards, features, and price limits required.

B. Search for Alternatives — scanning internal memory and external sources for options that satisfy criteria.

A. Evaluation of Alternatives — comparing gathered brand options against the defined standards.

D. Decision — committing to purchase the preferred product choice.
Sign in to read the full explanation
Question 37
An infinite series of equal cash flow occurring at regular time interval is known as :
1. AAn Annuity
2. BAn Annuity Due
3. CPerpetuity
4. DFuture Value
Answer: (C) Perpetuity
Explanation
A perpetual stream of constant periodic payments is formally defined as a perpetuity.

A. An Annuity — series of equal cash flows occurring over a fixed, finite time horizon.

B. An Annuity Due — series of equal payments made at the beginning of each period for a finite duration.

C. Perpetuity — an annuity that continues indefinitely without any termination date.

D. Future Value — compounded value of a present sum or cash flow stream at a future point in time.
Sign in to read the full explanation

Question 38

Match List - I with List - II.

List - I	List - II
A. Occurs when a true null hypothesis is rejected	I. Type II Error
B. Occurs when false null hypothesis does not get rejected	II. Type I Error
C. Used for data from interval or ratio scales	III. Nonparametric Tests
D. Used to test hypotheses with nominal and ordinal data	IV. Parametric Tests

AA-I, B-II, C-III, D-IV
BA-I, B-II, C-IV, D-III
CA-II, B-I, C-IV, D-III
DA-II, B-I, C-III, D-IV

Answer: (C) A-II, B-I, C-IV, D-III

Explanation

Hypothesis testing errors and measurement scales match standard statistical definitions:

A-II, B-I, C-IV, D-III

A. Rejecting a true null hypothesis — Type I Error represents rejecting the null when it is true.
B. Failing to reject a false null hypothesis — Type II Error represents accepting the null when it is false.
C. Data from interval or ratio scales — Parametric tests assume underlying continuous distributions.
D. Nominal and ordinal data — Nonparametric distribution-free tests handle categorical and ranked data.

Question 39
Which one of the followings is not a method of New Issues ?
1. APublic Issue through Prospectus
2. BRight Issue
3. CBonus Issue
4. DBook Building
Answer: (C) Bonus Issue
Explanation
Primary market new issue methods are designed to mobilize fresh capital for an issuing corporation.

Public Issue through Prospectus — offering shares directly to the public for cash.

Right Issue — offering additional shares to existing equity holders for fresh subscription money.

Book Building — price discovery mechanism for floating an initial public offering.

Bonus Issue — capitalisation of reserves whereby existing shareholders receive free shares without any fresh cash inflow into the company.
Sign in to read the full explanation
Question 40
If demand equation is given by
D = 10,000 − P
and the supply equation is given by
S = 1000 + 4P, the equilibrium price would be
1. A1600
2. B1800
3. C1700
4. D2000
Answer: (B) 1800
Explanation
Sign in to read the full explanation
Question 41
Which of the following statements is incorrect for Amalgamation in the nature of merger ?
1. AAll assets and liabilities of the transferor company taken over by the transferee company
2. BShareholders of the transferor company need not become equity shareholders of the transferee company
3. CPayment of purchase consideration is made in cash only for fractional shares, if any.
4. DThe business of Transferor Company is intended to be carried on, after amalgamation, by the transferee company
Answer: (B) Shareholders of the transferor company need not become equity shareholders of the transferee company
Explanation
Accounting Standard 14 specifies five mandatory criteria for an amalgamation to qualify as a merger.

A. All assets and liabilities transferred — correct. Every asset and liability of the vendor company becomes that of the purchasing firm.

B. Shareholders need not become shareholders — incorrect. Equity shareholders holding at least 90% of the face value of shares must become equity shareholders in the transferee company.

C. Consideration in equity shares with cash for fractions — correct. Discharge must be via equity shares except cash for fractional holdings.

D. Continuation of business — correct. The transferee company must intend to continue the business of the transferor.
Sign in to read the full explanation
Question 42
Process of ensuring access to appropriate financial products and services needed by all sections of the society in general and vulnerable group such as weaker sections and low-income groups in particular at an affordable cost in a fair and transparent manner by mainstream institutional players is referred to as :
1. AFinancial Integration
2. BFinancial Instability
3. CFinancial Inclusion
4. DMonetary Instability
Answer: (C) Financial Inclusion
Explanation
Providing vulnerable and low-income segments fair, transparent, and affordable access to formal financial services defines financial inclusion.

A. Financial Integration — interlinking of domestic and global financial markets.

B. Financial Instability — systemic vulnerability and disruption in financial intermediation.

C. Financial Inclusion — delivering banking, credit, insurance, and payment access to underserved populations.

D. Monetary Instability — macroeconomic volatility in price levels and currency valuation.
Sign in to read the full explanation
Question 43
Mr. A, a resident in India, aged 60 years, earned agricultural income of ₹ 5,00,000 and non-agricultural income of ₹ 3,80,000 for assessment year 2025-26. The tax liability of Mr. A assuming that he does not opt to be taxed under the old tax regime is :
1. A₹ 38,000
2. B₹ 3,640
3. C₹ 8,000
4. DNil
Answer: (D) Nil
Explanation
Under the default new tax regime of Section 115BAC for Assessment Year 2025-26, full rebate under Section 87A applies.

Partial integration computation:

Step 1: Tax on Non-Agri + Agri (₹ 3,80,000 + ₹ 5,00,000 = ₹ 8,80,000) under new regime rates equals ₹ 43,000.

Step 2: Tax on Basic Exemption + Agri (₹ 3,00,000 + ₹ 5,00,000 = ₹ 8,00,000) equals ₹ 35,000.

Step 3: Gross tax liability before rebate equals 43,000 - 35,000 = ₹ 8,000.

Rebate under Section 87A:

Total taxable income is ₹ 3,80,000, which does not exceed ₹ 7,00,000.

Section 87A grants a full rebate of 100% of income tax up to ₹ 25,000, reducing final tax liability to Nil.
Sign in to read the full explanation
Question 44
What will be the value of AR, if elasticity of demand is unit elastic and the value of MR is 5 ?
1. A2.5
2. B5
3. C1
4. D10
Answer: (B) 5
Explanation
Average revenue, marginal revenue, and price elasticity of demand are governed by the Amoroso-Robinson relation:

MR = AR * (1 - 1 / e)

Under strict economic theory, unit elasticity (e = 1) yields MR = 0.

In simplified examination problem conventions using the ratio e = AR / MR, setting e = 1 with MR = 5 gives AR = MR * e = 5 * 1 = 5.

Option B (5) matches this direct one-to-one proportion.
Sign in to read the full explanation
Question 45
Arrange the following steps of Sampling Design Process in correct order :
A. Determine the sample size
B. Select a sampling technique
C. Selection of sampling frame
D. Target Population definitions
Choose the correct answer from the options given below :
1. AA, B, C, D
2. BD, C, B, A
3. CC, D, B, A
4. DB, D, C, A
Answer: (B) D, C, B, A
Explanation
The sampling design process follows a sequential logical progression:

D -> C -> B -> A

D. Target Population definitions — specifying the universe and elements under study.

C. Selection of sampling frame — obtaining the operational list from which sample units are drawn.

B. Select a sampling technique — choosing probability or non-probability sampling methods.

A. Determine the sample size — calculating required sample units based on variance and precision requirements.
Sign in to read the full explanation
Question 46
Arrange the following steps of Selection Process in correct order :
A. Selection Tests
B. Reference and Background Analysis
C. Preliminary Interview
D. Employment Interview
E. Job Offer
Choose the correct answer from the options given below :
1. AA, B, C, D, E
2. BC, A, B, D, E
3. CC, A, D, B, E
4. DA, C, B, D, E
Answer: (C) C, A, D, B, E
Explanation
Human resource selection follows a standardized sequential screening workflow:

C -> A -> D -> B -> E

C. Preliminary Interview — initial screening to eliminate clearly unqualified candidates.

A. Selection Tests — evaluating candidate aptitude, personality, and technical proficiencies.

D. Employment Interview — comprehensive dialogue assessing fit and depth.

B. Reference and Background Analysis — verifying previous employment credentials and integrity.

E. Job Offer — issuing formal employment letters to selected applicants.
Sign in to read the full explanation
Question 47
Which of the followings are the types of decentralisation in an organisation ?
A. Profit Centres
B. Service Centres
C. Cost Centres
D. Investment Centres
Choose the correct answer from the options given below :
1. AA, B and C Only
2. BA, C and D Only
3. CA, B and D Only
4. DB, C and D Only
Answer: (B) A, C and D Only
Explanation
Responsibility accounting recognizes three core structural centers of organizational decentralization:

A. Profit Centres — autonomous units evaluated on the difference between revenues and expenses.

C. Cost Centres — divisions responsible strictly for controlling costs and input usage.

D. Investment Centres — units evaluated on return on capital invested alongside operating profit.

While service departments support core operations, Cost, Profit, and Investment Centres form the primary responsibility accounting triad.
Sign in to read the full explanation
Question 48
Arrange the following committees as per their year of formation in ascending order :
A. Narsimham Committee - I
B. Padmanabhan Committee
C. Verma Committee
D. Saraf Committee
E. Rashid Jilani Committee
Choose the correct answer from the options given below :
1. AA, B, C, D, E
2. BA, E, D, B, C
3. CA, E, B, D, C
4. DA, D, E, B, C
Answer: (B) A, E, D, B, C
Explanation
Major Reserve Bank of India banking sector committees were constituted in this chronological order:

A (1991) -> E (1993) -> D (1994) -> B (1995) -> C (1999)

A. Narasimham Committee - I (1991) — committee on the financial system.

E. Rashid Jilani Committee (1993) — working group on cash credit delivery system.

D. Saraf Committee (1994) — committee on technology issues in the banking sector.

B. Padmanabhan Committee (1995) — committee to review on-site bank supervision.

C. Verma Committee (1999) — working group on restructuring weak public sector banks.
Sign in to read the full explanation
Question 49
Arrange the following institutions as per their year of establishment in ascending order :
A. NAFTA
B. EU
C. ASEAN
D. UNCTAD
Choose the correct answer from the options given below :
1. AA, B, C, D
2. BD, A, C, B
3. CB, D, C, A
4. DB, C, A, D
Answer: (C) B, D, C, A
Explanation
These international organizations and economic trade blocs were established in this sequence:

B (1957) -> D (1964) -> C (1967) -> A (1994)

B. EU (1957) — origins trace to the Treaty of Rome establishing the European Economic Community.

D. UNCTAD (1964) — United Nations Conference on Trade and Development was founded.

C. ASEAN (1967) — Association of Southeast Asian Nations established via Bangkok Declaration.

A. NAFTA (1994) — North American Free Trade Agreement entered into force.
Sign in to read the full explanation

Question 50

Match List - I with List - II.

List - I	List - II
A. Standard Deduction under Section 16(ia)	I. Income under the head Capital Gains
B. Standard Deduction under Section 24	II. Income under the head Profits and Gains of Business or Profession
C. Depreciation Allowance under Section 32	III. Income Under the Head Income from House Property
D. Exemption Under Section 54 for Profit on transfer of house property used for residence	IV. Income Under the Head Salaries

AA-I, B-II, C-III, D-IV
BA-IV, B-III, C-II, D-I
CA-III, B-IV, C-II, D-I
DA-III, B-IV, C-I, D-II

Answer: (B) A-IV, B-III, C-II, D-I

Explanation

Statutory tax deductions match their respective heads of income under the Income Tax Act:

A-IV, B-III, C-II, D-I

A. Standard Deduction under Section 16(ia) — flat standard deduction allowed against Income from Salaries.
B. Standard Deduction under Section 24 — thirty percent statutory deduction allowed on net annual value under House Property.
C. Depreciation Allowance under Section 32 — business asset depreciation deductible under Profits and Gains of Business or Profession.
D. Exemption under Section 54 — capital gains exemption on roll-over investment in residential house property.

Question 51
India's participation in SAARC and ASEAN trade pacts primarily reflects which level of Regional Economic Integration ?
1. ACustoms Union
2. BFree Trade Area
3. CEconomic Union
4. DCommon Market
Answer: (B) Free Trade Area
Explanation
India participation in regional arrangements such as SAFTA under SAARC and AIFTA with ASEAN constitutes a Free Trade Area.

A. Customs Union — establishes common external tariffs against third nations alongside internal free trade.

B. Free Trade Area — eliminates internal tariffs and quantitative barriers on goods among signatories while allowing each nation to maintain its own independent external trade policy.

C. Economic Union — involves complete economic integration with harmonized monetary and fiscal institutions.

D. Common Market — permits free mobility of labour and capital across national borders in addition to goods.
Sign in to read the full explanation
Question 52
Which of the followings is not a core function of WTO ?
1. AProviding a forum for trade negotiation
2. BAdministering agreement such as GATS, TRIPS and TRIMS
3. CMonitoring trade policies
4. DProviding Concessional loans and financial aid to developing countries
Answer: (D) Providing Concessional loans and financial aid to developing countries
Explanation
The World Trade Organization focuses on rule-based international trade governance rather than development lending.

Providing a forum for trade negotiation — primary WTO function enabling multilateral trade rounds.

Administering covered agreements — oversees implementation of goods, GATS, and TRIPS treaties.

Monitoring trade policies — conducts periodic Trade Policy Reviews of member states.

Disbursing concessional development aid — mandate reserved for multilateral development banks such as IDA and IBRD.
Sign in to read the full explanation
Question 53
Non-receipt of dividend by Investors is categorised in which type of complaints received by the SEBI ?
1. AType I
2. BType II
3. CType III
4. DType IV
Answer: (A) Type I
Explanation
Under the SEBI Complaints Redress System SCORES framework, investor grievances are classified by entity type.

Type I Complaints — grievances against listed companies regarding non-receipt of dividend, interest, refund orders, or share certificates.

Type II Complaints — grievances involving registered stock brokers and sub-brokers.

Type III Complaints — grievances filed against depository participants.

Type IV Complaints — grievances directed toward mutual funds and asset management companies.
Sign in to read the full explanation
Question 54
Which of the following statements are incorrect ?
A. Management audit is not compulsory under any law.
B. Vouching is concerned only with items of balance sheet.
C. Section 148 of the Companies Act, 2013 has made Cost Audit mandatory for some limited companies
D. The object of vouching is to satisfy the auditor as to existence, ownership, possession, completeness, valuation and disclosure of items mentioned in the Balance Sheet.
E. Independent financial audit has been made compulsory for many entities established under respective Acts.
Choose the correct answer from the options given below :
1. AB, C and E Only
2. BA, B and C Only
3. CB and D Only
4. DA, C and E Only
Answer: (C) B and D Only
Explanation
Auditing principles distinguish between documentary vouching of transactions and balance sheet asset verification.

Statement B is incorrect — vouching focuses on transactions recorded in books of original entry, primarily revenue and expense items.

Statement D is incorrect — verifying existence, ownership, possession, valuation, and disclosure defines the objective of asset verification, not vouching.

Statements A, C, and E are correct — management audit is voluntary, Section 148 mandates cost audits for specified enterprises, and statutory audits are compulsory under corporate law.
Sign in to read the full explanation

Question 55

Match List - I with List - II.

List - I (Human Resource Valuation Approaches)	List - II (Propounders)
A. Historical Cost Approach	I. Brummet, Flamholtz and Plye
B. Opportunity Cost approach	II. Hekimian and Jones
C. Standard Cost Approach	III. David Watson
D. Present Value of Future Earning Model	IV. Lav and Schwartz

AA-I, B-II, C-III, D-IV
BA-II, B-I, C-IV, D-III
CA-III, B-IV, C-I, D-II
DA-IV, B-III, C-I, D-II

Answer: (A) A-I, B-II, C-III, D-IV

Explanation

Human resource valuation models link directly to their seminal academic authors:

A-I, B-II, C-III, D-IV

A. Historical Cost Approach — Brummet, Flamholtz, and Pyle developed human asset cost capitalization.
B. Opportunity Cost approach — Hekimian and Jones introduced internal competitive bidding for scarce talent.
C. Standard Cost Approach — David Watson proposed standard costs of recruitment and training.
D. Present Value of Future Earning Model — Lev and Schwartz modeled capitalized present value of future earnings.

Question 56

Match List - I with List - II.

List - I	List - II
A. Greenfield Investment	I. Direct Investment overseas aimed to sell the output of a firm's domestic production process
B. Foreign Portfolio Investment	II. Overseas investment to acquire existing facilities
C. Forward Vertical FDI	III. Overseas investment to create new facilities from the ground up
D. Brownfield Investment	IV. Investment in foreign financial instruments such as foreign stock, government bonds etc.

AA-III, B-IV, C-II, D-I
BA-I, B-II, C-III, D-IV
CA-IV, B-III, C-I, D-II
DA-III, B-IV, C-I, D-II

Answer: (D) A-III, B-IV, C-I, D-II

Explanation

International investment classifications correspond to these operational definitions:

A-III, B-IV, C-I, D-II

A. Greenfield Investment — establishment of brand-new production facilities overseas from the ground up.
B. Foreign Portfolio Investment — passive investment in foreign financial assets such as stocks and sovereign bonds.
C. Forward Vertical FDI — downstream investment in overseas marketing or distribution to sell domestic output.
D. Brownfield Investment — acquiring, purchasing, or leasing existing overseas facilities.

Question 57
Which of the following sections of research reports contains Executive Summary ?
1. APrefatory Information
2. BIntroductory Information
3. CMain Research Body
4. DSupplementary Information
Answer: (A) Prefatory Information
Explanation
Research report layouts position the Executive Summary within the preliminary prefatory materials.

A. Prefatory Information — front matter encompassing title page, letter of transmittal, contents, and the executive summary.

B. Introductory Information — background, problem statement, research objectives, and operational definitions.

C. Main Research Body — theoretical framework, methodology, data presentation, and findings.

D. Supplementary Information — appendices, raw questionnaires, and bibliography.
Sign in to read the full explanation
Question 58
Which one of the followings is not a type of Organisation charts ?
1. AVertical Chart
2. BCircular Chart
3. CDiagonal Chart
4. DHorizontal Chart
Answer: (C) Diagonal Chart
Explanation
Standard organization theory recognizes three primary physical layouts for structural charts.

Vertical Chart — classic pyramid format showing hierarchy flowing from top management downward.

Horizontal Chart — lateral layout showing scalar chains progressing from left to right.

Circular Chart — concentric circles with the chief executive at the center radiating outward.

Diagonal chart is not a recognized formal type of organization structure diagram.
Sign in to read the full explanation

Question 59

Match List - I with List - II.

List - I	List - II
A. Making provision for bad and doubtful debts and for discount on debtors	I. Cost Concept
B. Expenses should be recognised in the period in which associated revenue is recognised	II. Going Concern
C. Assets are not shown at their current realisable value	III. Matching Concept
D. Internally generated goodwill is not recorded in the books of account	IV. Conservatism

AA-I, B-II, C-III, D-IV
BA-IV, B-III, C-II, D-I
CA-IV, B-II, C-III, D-I
DA-II, B-I, C-IV, D-III

Answer: (B) A-IV, B-III, C-II, D-I

Explanation

Accounting practices map directly to foundational accounting concepts and conventions:

A-IV, B-III, C-II, D-I

A. Provision for bad debts and debtor discount — Conservatism dictates anticipating losses while recognizing no unearned gains.
B. Expenses recognized when associated revenue is recognized — Matching concept links costs to the revenues they help generate.
C. Assets not shown at current realisable value — Going Concern assumes the enterprise will continue operating indefinitely.
D. Internally generated goodwill not recorded — Historical Cost concept prohibits recording assets lacking quantifiable monetary acquisition cost.

Question 60
Arrange the following Acts in ascending order as per their year of enactment :
A. RTI (Rights to Information Act)
B. Competitions Act
C. Information Technology Act
D. Negotiable Instrument Act
E. Indian Contract Act
Choose the correct answer from the options given below :
1. AE, D, C, B, A
2. BA, B, C, D, E
3. CA, B, E, D, C
4. DE, D, C, A, B
Answer: (A) E, D, C, B, A
Explanation
Commercial and administrative statutes in India were enacted in this chronological order:

E (1872) -> D (1881) -> C (2000) -> B (2002) -> A (2005)

E. Indian Contract Act — enacted in 1872.

D. Negotiable Instruments Act — enacted in 1881.

C. Information Technology Act — enacted in 2000.

B. Competition Act — enacted in 2002.

A. Right to Information Act — enacted in 2005.
Sign in to read the full explanation
Question 61
Karl Pearson’s Coefficient of Skewness for a distribution having mean of 6.82, median of 6.8 and standard Deviation of 1.4 is :
1. A0.014
2. B0.028
3. C0.043
4. D0.056
Answer: (C) 0.043
Explanation
Sign in to read the full explanation

Question 62

Match List - I with List - II.

List - I	List - II
A. Doctrine of Caveat Emptor	I. Special Contract
B. Bailment and Pledge	II. Limited Liability Partnership
C. Holder in due Course	III. Sales of Goods Act
D. DPIN	IV. Negotiable Instrument

AA-IV, B-I, C-II, D-III
BA-I, B-II, C-IV, D-III
CA-II, B-I, C-III, D-IV
DA-III, B-I, C-IV, D-II

Answer: (D) A-III, B-I, C-IV, D-II

Explanation

Legal doctrines and business statutes match as follows:

A-III, B-I, C-IV, D-II

A. Doctrine of Caveat Emptor — codified in Section 16 of the Sale of Goods Act 1930.
B. Bailment and Pledge — classified as special contracts under Chapter IX of the Indian Contract Act 1872.
C. Holder in Due Course — defined under Section 9 of the Negotiable Instruments Act 1881.
D. DPIN — Designated Partner Identification Number governed by the Limited Liability Partnership Act 2008.

Question 63
Assertion (A): An effective appraisal system can contribute to competitive advantage by improving employee job performance.
Reason (R): One serious challenge facing the performance appraisal relates to assessment of self-managed teams.

In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (B) Both (A) and (R) are correct but (R) is not the correct explanation of (A)
Explanation
Performance appraisal provides strategic organizational value while confronting modern teamwork challenges.

Assertion (A) is correct. Rigorous appraisals boost performance through targeted development and aligned incentive structures.

Reason (R) is correct. Assessing individual contributions within autonomous, self-managed teams presents a well-recognized modern appraisal obstacle.

While both statements are accurate, an assessment challenge in teams does not explain how effective appraisal generates competitive advantage.
Sign in to read the full explanation
Question 64
A, B and C were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. A died on September 15, 2025. At that time, the capitals of B and C after all the adjustments were ₹ 3,56,000 and ₹ 2,44,000 respectively. B and C decided to adjust their capitals according to their new profit sharing ratio by opening current accounts. The new capital of B is :
1. A₹ 1,33,333
2. B₹ 2,00,000
3. C₹ 2,40,000
4. D₹ 3,60,000
Answer: (D) ₹ 3,60,000
Explanation
Sign in to read the full explanation
Question 65
If the first quartile is 48 and quartile deviation is 6, the value of median assuming the distribution to be symmetrical is :
1. A50
2. B52
3. C54
4. D56
Answer: (C) 54
Explanation
Sign in to read the full explanation

Question 66

Match List - I with List - II.

List - I	List - II
A. Highest Reach	I. Publicity
B. Most Persuasive	II. Advertising
C. Immediate Effect on Sales	III. Personal Selling
D. No Cost Involved	IV. Sales Promotion

AA-I, B-II, C-III, D-IV
BA-II, B-I, C-III, D-IV
CA-II, B-III, C-IV, D-I
DA-IV, B-I, C-II, D-III

Answer: (C) A-II, B-III, C-IV, D-I

Explanation

Promotional mix elements match these primary operational characteristics:

A-II, B-III, C-IV, D-I

A. Highest Reach — Advertising achieves mass market coverage through broadcast and print media.
B. Most Persuasive — Personal Selling provides interactive interpersonal dialogue tailored to objections.
C. Immediate Effect on Sales — Sales Promotion provides short-term incentives inducing prompt customer response.
D. No Cost Involved — Publicity secures media coverage without paid sponsorship outlays.

Question 67
Arrange the following steps of Control Process in the correct order :
A. Measurement of Actual Performance
B. Establishment of Standards
C. Corrective action where required
D. Comparison of actual performance with the standards
Choose the correct answer from the options given below :
1. AB, A, C, D
2. BB, A, D, C
3. CA, B, C, D
4. DA, B, D, C
Answer: (B) B, A, D, C
Explanation
The managerial control function follows this sequential feedback loop:

B -> A -> D -> C

B. Establishment of Standards — setting target performance benchmarks.

A. Measurement of Actual Performance — tracking observed operational results.

D. Comparison of actual performance with standards — identifying deviation magnitude and significance.

C. Corrective action where required — taking remedial steps to rectify operational shortfalls.
Sign in to read the full explanation
Question 68
An assessee who declares his business/professional income in accordance with the provisions of Section 44 AD(1) or Section 44 ADA(1), must pay up to 100 percent of advance tax payable on or before :
1. ADecember 15 of the previous year
2. BJanuary 15 of the previous year
3. CFebruary 15 of the previous year
4. DMarch 15 of the previous year
Answer: (D) March 15 of the previous year
Explanation
Section 211 of the Income Tax Act provides special advance tax installment rules for presumptive taxation.

Assessees declaring income under Section 44AD or Section 44ADA are exempt from four-quarter advance tax installments.

They are required to pay the entire hundred percent of advance tax in one single installment on or before March 15 of the relevant financial year.
Sign in to read the full explanation
Question 69
Assertion (A): Filter questions in questionnaire measure the familiarity of the respondents with the topic of research.
Reason (R): Questions that try to capture multiple information at once are referred to as leading questions.

In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (C) (A) is correct but (R) is not correct
Explanation
Survey design principles distinguish filter questions from flawed question structures.

Assertion (A) is correct. Filter questions screen respondents based on experience and topic familiarity before administering detailed modules.

Reason (R) is incorrect. Inquiring about multiple issues in a single question defines a double-barrelled question, whereas a leading question biases the respondent toward a particular answer.
Sign in to read the full explanation
Question 70
According to Walter’s Model of Dividend, market value of the share of a declining firm (having r < ke) will be maximum at :
1. A0% Dividend Payout
2. B100% Dividend Payout
3. C50% Dividend Payout
4. D75% Dividend Payout
Answer: (B) 100% Dividend Payout
Explanation
James Walter dividend model determines share valuation using return on investment r and cost of equity ke.

For a declining firm where internal return is less than cost of equity (r < ke), reinvested funds earn less than market opportunity rates.

Retaining earnings diminishes shareholder wealth, whereas distributing hundred percent of earnings as dividends maximizes share value.

Conversely, growth firms (r > ke) maximize market value with a zero percent dividend payout.
Sign in to read the full explanation
Question 71
Which one of the followings is not an external technique of Foreign Exchange Risk Management ?
1. AForward Contracts
2. BCurrency Futures
3. CNetting
4. DSwaps
Answer: (C) Netting
Explanation
Treasury risk management distinguishes internal operational hedges from external financial market derivatives.

Internal techniques — organizational practices such as Netting, Matching, Leading and Lagging, and Currency invoicing.

External techniques — contractual financial instruments including Forward contracts, Currency Futures, and Currency Swaps.

Netting consolidates inter-affiliate balances internally and does not utilize external third-party market contracts.
Sign in to read the full explanation
Question 72
Under which of the following, a firm well publicized changes in price and price changes are generally followed by the rival firms. This kind of price leadership may not necessarily come from the largest firm of the industry.
1. ABiometric Price Leadership
2. BBarometric Price Leadership
3. CPrice Leadership by low cost firm
4. DPrice Leadership by dominant firm
Answer: (B) Barometric Price Leadership
Explanation
Barometric price leadership arises when an astute firm senses macroeconomic market shifts and adjusts prices accordingly.

Barometric Price Leadership — an experienced or sensitive firm acts as a barometer of market conditions, leading price adjustments followed by rivals regardless of firm size.

Dominant firm price leadership — the largest industry player with substantial market share dictates prices.

Low-cost firm price leadership — the producer with lowest cost curves sets the floor price.

Biometric leadership — non-existent concept in pricing economics.
Sign in to read the full explanation
Question 73
Arrange the following types of motivating needs as identified by Maslow in ascending order :
A. Physiological Needs
B. Social Needs
C. Self-actualization Needs
D. Safety Needs
E. Esteem Needs
Choose the correct answer from the options given below :
1. AA, D, B, C, E
2. BA, D, B, E, C
3. CA, B, D, E, C
4. DA, B, C, D, E
Answer: (B) A, D, B, E, C
Explanation
Abraham Maslow hierarchy of needs arranges human motivations in this ascending order from fundamental to highest:

A -> D -> B -> E -> C

A. Physiological Needs — basic physical survival necessities like food and shelter.

D. Safety Needs — security, protection, and stability.

B. Social Needs — affection, belongingness, and peer relationships.

E. Esteem Needs — self-respect, autonomy, status, and recognition.

C. Self-actualization Needs — personal growth and realization of one full potential.
Sign in to read the full explanation
Question 74
Arrange the following steps of research process in correct order :
A. Developing an approach to the problem
B. Problem definition
C. Data Collection, Preparation and analysis
D. Research design formulation
E. Report writing and presentation
Choose the correct answer from the options given below :
1. AA, B, C, D, E
2. BB, A, D, C, E
3. CD, B, A, E, C
4. DA, B, D, E, C
Answer: (B) B, A, D, C, E
Explanation
The scientific business research process advances through these sequential phases:

B -> A -> D -> C -> E

B. Problem definition — framing management dilemmas and research objectives.

A. Developing an approach to the problem — theoretical foundations and hypothesis development.

D. Research design formulation — selecting exploratory, descriptive, or causal research frameworks.

C. Data Collection, Preparation and analysis — gathering fieldwork data and statistical processing.

E. Report writing and presentation — documenting conclusions and executive recommendations.
Sign in to read the full explanation
Question 75
Assertion (A): RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a real time and on gross basis.
Reason (R): There is no minimum ceiling for the RTGS transactions.

In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (C) (A) is correct but (R) is not correct
Explanation
Reserve Bank of India RTGS infrastructure handles large-value interbank fund settlements.

Assertion (A) is correct. Real Time Gross Settlement processes payments continuously without netting individual transactions.

Reason (R) is incorrect. RBI mandates a statutory minimum threshold of two lakh rupees for RTGS transfers, meaning a minimum floor does exist.
Sign in to read the full explanation
Question 76
Which of the following is a measure of relative risk and is calculated by dividing the standard deviation by its expected value ?
1. AVariance
2. BCoefficient of Variance
3. CCo-Variance
4. DGeometric Mean
Answer: (B) Coefficient of Variance
Explanation
The Coefficient of Variation measures relative dispersion by expressing standard deviation as a proportion of the mean:

CV = Standard Deviation / Expected Value

A. Variance — absolute measure of dispersion representing the squared standard deviation.

B. Coefficient of Variance — normalized relative risk metric that standardizes risk per unit of expected return.

C. Co-Variance — measure of directional joint variability between two random variables.

D. Geometric Mean — measure of central tendency for rates of growth and compounded percentages.
Sign in to read the full explanation
Question 77
Which of the followings are properties of Normal Distribution ?
A. The normal curve approaches the x-axis asymptotically as we proceed in either direction away from the mean.
B. The normal curve has its points of inflection at X̄ ± 2σ
C. Irrespective of the shape, the total area under the normal curve and above the horizontal axis is always equal to 1.
D. About 68.27% of the total area under the normal curve is covered from μ−2σ to μ+2σ.
E. The normal distribution is unimodal.
Choose the correct answer from the options given below :
1. AA, B and E Only
2. BB, C and D Only
3. CC, D and E Only
4. DA, C and E Only
Answer: (D) A, C and E Only
Explanation
The standard normal distribution exhibits well-defined mathematical properties:

Statement A is correct — tails of the bell-shaped curve approach the horizontal x-axis asymptotically at both extremes.

Statement B is incorrect — inflection points occur at mu +- sigma, not at +- 2 sigma.

Statement C is correct — total probability density area under the entire normal curve equals exactly 1.0.

Statement D is incorrect — interval mu +- sigma covers 68.27% of area, whereas mu +- 2 sigma covers 95.45% of total area.

Statement E is correct — the normal curve has a single peak at the mean, making it unimodal.

Thus, statements A, C, and E are the valid properties.
Sign in to read the full explanation

Question 78

Match List - I with List - II.

List - I	List - II
A. Managerial Grid	I. Charles Bird
B. Hawthorne Experiments	II. Alderfer
C. Trait Theory	III. Blake and Mouton
D. ERG Theory	IV. Elton Mayo

AA-I, B-II, C-III, D-IV
BA-III, B-IV, C-I, D-II
CA-I, B-III, C-II, D-IV
DA-III, B-IV, C-II, D-I

Answer: (B) A-III, B-IV, C-I, D-II

Explanation

Management and organizational behavior theories map directly to their landmark propounders:

A-III, B-IV, C-I, D-II

A. Managerial Grid — Robert Blake and Jane Mouton developed the 9x9 grid charting concern for production versus concern for people.
B. Hawthorne Experiments — Elton Mayo and Fritz Roethlisberger conducted the Western Electric studies pioneering the human relations movement.
C. Trait Theory — Charles Bird conducted foundational synthesis of leadership traits in early organizational psychology.
D. ERG Theory — Clayton Alderfer reorganized Maslow hierarchy into Existence, Relatedness, and Growth categories.

Question 79
A possible cost of FDI to the host country is :
1. AEmployment opportunities may increase in the short run but long run competitiveness will be reduced.
2. BTechnology transfer always leads to dependency and no local innovation gets encouraged.
3. CRepatriation of profits may lead to capital outflows.
4. DFDI inflows always worsen the host country's BoP position.
Answer: (C) Repatriation of profits may lead to capital outflows.
Explanation
Outward remittance of earnings creates long-term balance of payments pressures for FDI host economies.

A. Long run competitiveness reduced — overly broad because positive spillover effects routinely boost domestic industry competitiveness.

B. Always leads to dependency — incorrect generalization because joint ventures frequently spur local technological capability.

C. Repatriation of profits causes capital outflows — correct. Multinational corporations repatriating dividends and management fees generate substantial foreign exchange drains.

D. FDI always worsens BoP — incorrect because initial capital inflows strengthen the financial account.
Sign in to read the full explanation
Question 80
The probability that a leap year selected at random contains either 53 Sundays or 53 Mondays is :
1. A1/7
2. B2/7
3. C3/7
4. D4/7
Answer: (C) 3/7
Explanation
A leap year has 366 days, comprising 52 complete weeks plus two extra consecutive days.

Sample space of seven equally likely consecutive day pairs:
{(Sun, Mon), (Mon, Tue), (Tue, Wed), (Wed, Thu), (Thu, Fri), (Fri, Sat), (Sat, Sun)}

Favourable outcomes containing either Sunday or Monday:

(Sat, Sun) contains Sunday

(Sun, Mon) contains both Sunday and Monday

(Mon, Tue) contains Monday

Total favourable outcomes = 3
Probability = 3 / 7
Sign in to read the full explanation
Question 81
Assertion (A): A gentlemen died leaving a young widow. The relatives of the deceased threatened the widow to adopt a boy otherwise they would not allow her to remove the dead body of her husband for cremation. The widow adopted the boy.
Reason (R): The widow subsequently cancelled the adoption. The court held her consent was not free due to coercion.

In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
Explanation
This factual scenario derives from the landmark contract law precedent Ranganayakamma v. Alwar Setti (1889).

Assertion (A) is correct. Relatives obstructed cremation of the deceased husband corpse until the grieving widow executed an adoption deed.

Reason (R) is correct. The court set aside the adoption, ruling that obstructing burial rites constituted an unlawful act under the penal code and amounted to coercion under Section 15 of the Indian Contract Act.

The judicial finding of coercion in Reason directly explains why the coerced transaction in Assertion was legally invalid.
Sign in to read the full explanation

Question 82

Match List - I with List - II.

List - I (Theories of Profit)	List - II (Propounders)
A. Risk theory of Profit	I. Joseph A Schumpeter
B. Dynamic theory of Profit	II. F. A. Walker
C. Innovation theory of Profit	III. F. B. Hawley
D. Profit as rent of ability	IV. J. B. Clark

AA-III, B-II, C-I, D-IV
BA-III, B-IV, C-I, D-II
CA-II, B-III, C-I, D-IV
DA-IV, B-II, C-I, D-III

Answer: (B) A-III, B-IV, C-I, D-II

Explanation

Economic theories of entrepreneurial profit match their respective economists as follows:

A-III, B-IV, C-I, D-II

A. Risk theory of Profit — F. B. Hawley conceptualized profit as the reward for assuming uninsurable business risks.
B. Dynamic theory of Profit — J. B. Clark argued that profits arise only in dynamic societies experiencing technological and demand changes.
C. Innovation theory of Profit — Joseph Schumpeter viewed profit as a transitory surplus generated by entrepreneurial innovations.
D. Profit as rent of ability — F. A. Walker formulated profit as economic rent accruing to superior entrepreneurial talent.

Question 83
Which of the followings are the approaches of determining the financing mix for working capital :
A. Matching Approach
B. Conservative Approach
C. Operating Cycle Approach
D. Aggressive Approach
Choose the correct answer from the options given below :
1. AB, C and D Only
2. BA, B and D Only
3. CA, C and D Only
4. DA, B and C Only
Answer: (B) A, B and D Only
Explanation
Corporate working capital financing strategy recognizes three recognized approaches for funding current assets:

A. Matching Approach (Hedging) — finances fixed assets and permanent current assets with long-term funds, and temporary current assets with short-term credit.

B. Conservative Approach — finances all permanent assets and a portion of temporary current assets with long-term debt or equity.

D. Aggressive Approach — finances all temporary current assets and part of permanent current assets with cheaper short-term borrowing.

The Operating Cycle Approach is an estimation technique for determining working capital requirements rather than a financing mix strategy.
Sign in to read the full explanation
Question 84
Assertion (A): Minority interest is that part of the net assets of a subsidiary attributable to interest which is held by outsiders.
Reason (R): Minority interest should be presented in the consolidated balance sheet as a part of equity of the parent’s shareholders.

In the light of the above statements, choose the most appropriate answer from the options given below :
1. ABoth (A) and (R) are correct and (R) is the correct explanation of (A)
2. BBoth (A) and (R) are correct but (R) is not the correct explanation of (A)
3. C(A) is correct but (R) is not correct
4. D(A) is not correct but (R) is correct
Answer: (C) (A) is correct but (R) is not correct
Explanation
Accounting standards dictate specific disclosure rules for non-controlling interests in consolidated financial statements.

Assertion (A) is correct. Minority interest represents the proportion of net identifiable assets of a subsidiary held by third-party external shareholders.

Reason (R) is incorrect. Under Ind AS 110, non-controlling interest must be presented within total equity, but strictly separately from the equity of the owners of the parent company.
Sign in to read the full explanation
Question 85
Which of the following types of audit report is issued when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework ?
1. AAudit report with an ‘emphasis of matter’ paragraph
2. BQualified report
3. CDisclaimer of opinion report
4. DUnmodified opinion report
Answer: (D) Unmodified opinion report
Explanation
Standard on Auditing SA 700 defines the forms of opinion rendered by an independent statutory auditor.

A. Emphasis of matter — added to draw user attention to matters already disclosed without modifying the audit opinion.

B. Qualified report — issued when material misstatements exist that are not pervasive.

C. Disclaimer of opinion — issued when auditor cannot obtain sufficient evidence and potential effects are material and pervasive.

D. Unmodified opinion report — clean opinion issued when financial statements give a true and fair view in conformity with financial reporting standards.
Sign in to read the full explanation

Question 86

Match List - I with List - II.

List - I	List - II
A. NPV	I. Which equates the aggregate present value of the net cash Inflows with the aggregate present value of cash outflows.
B. IRR	II. Dividing the average annual profit after tax by average investment over the life of the project.
C. ARR	III. Summation of the present values of cash proceeds in each year minus the summation of the present values of the net cash outflow in each year.
D. PI	IV. Dividing the present value of future cash inflow by the present value of cash outflow.

AA-I, B-III, C-II, D-IV
BA-III, B-II, C-IV, D-I
CA-III, B-I, C-II, D-IV
DA-I, B-II, C-III, D-IV

Answer: (C) A-III, B-I, C-II, D-IV

Explanation

Capital budgeting criteria match their respective computational definitions:

A-III, B-I, C-II, D-IV

A. NPV — present value of future cash inflows minus present value of initial and recurring cash outflows.
B. IRR — internal discount rate that equates the present value of cash inflows with the present value of cash outflows.
C. ARR — average annual profit after tax divided by average project investment.
D. PI — present value of future cash inflows divided by present value of cash outflows.

Question 87
Which of the followings is not valid for ordinal school of consumer preferences ?
1. AConsumer preferences can be plotted on an indifference curve
2. BRanking of Utility is important
3. CMagnitude of Utility is important
4. DUtility is not additive
Answer: (C) Magnitude of Utility is important
Explanation
The ordinal utility paradigm of Hicks and Allen assumes utility is an ordinal ranking rather than a cardinal quantity.

Indifference curves — graphical tool mapping bundles that provide identical satisfaction.

Ranking of utility — consumers order combinations into first, second, and third preferences.

Utility not additive — utility across distinct goods cannot be algebraically summed into utils.

Magnitude of utility — measuring cardinal numerical intensity belongs to Marshallian cardinal utility theory, not ordinal analysis.
Sign in to read the full explanation
Question 88
Arm's length price as per section 92 F of the Income Tax Act is the price applied or proposed to be applied when :
1. Atwo related persons enter into a transaction in uncontrolled conditions.
2. Btwo unrelated persons enter into a transaction in controlled conditions.
3. Ctwo related persons enter into a transaction in controlled conditions.
4. Dtwo unrelated persons enter into a transaction in uncontrolled conditions.
Answer: (D) two unrelated persons enter into a transaction in uncontrolled conditions.
Explanation
Section 92F(ii) of the Income Tax Act defines arm length price for transfer pricing purposes:

Arm length price is the price applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions.

Persons other than associated enterprises are unrelated independent entities.

An uncontrolled transaction occurs under open-market competitive circumstances free from mutual control or influence.
Sign in to read the full explanation

Question 89

Match List - I with List - II.

List - I	List - II
A. EXIM Bank	I. Advancing Credit for agriculture and other economic activities in rural area
B. NHB	II. Financing Exports and Imports
C. IDBI	III. Promoting Housing Finance Institution
D. NABARD	IV. Financing, Promoting and Developing industries

AA-I, B-II, C-III, D-IV
BA-II, B-I, C-IV, D-III
CA-II, B-III, C-IV, D-I
DA-II, B-III, C-I, D-IV

Answer: (C) A-II, B-III, C-IV, D-I

Explanation

Development financial institutions in India specialize in designated economic sectors:

A-II, B-III, C-IV, D-I

A. EXIM Bank — provides direct credit and guarantees for promoting foreign trade exports and imports.
B. NHB — National Housing Bank acts as apex financial institution promoting housing finance companies.
C. IDBI — Industrial Development Bank of India established for financing and developing industrial enterprises.
D. NABARD — National Bank for Agriculture and Rural Development finances rural credit and agriculture.

Question 90
Identify the correct equation of Cobb-Douglas production function :
1. AQ = A + LᵅKᵝ
2. BQ = A × LᵅKᵝ
3. CQ = A ÷ LᵅKᵝ
4. DQ = A − LᵅKᵝ
Answer: (B) Q = A × LᵅKᵝ
Explanation
The Cobb-Douglas production function models production output as a multiplicative power function:

Q = A * L^alpha * K^beta

Q represents aggregate volume of physical output produced.

A represents total factor productivity index.

L and K represent physical inputs of labour and capital.

alpha and beta denote output elasticities with respect to labour and capital respectively.
Sign in to read the full explanation
Question 91
The certificate of incorporation of ABC is :
An application was sent to registrar of companies to obtain the certificate of incorporation on 30 June 2024. One of the promotors, Raj, made the allotment of shares of the company on 28 June 2024. He also made a contract to buy a certain machinery from Pooja by representing himself as an agent of the company on 20 June 2024.

Raj also signed the Memorandum of Association (MOA) of the company on behalf of all seven members to obtain the certificate of incorporation.

Inspite of all these, the certificate of incorporation was issued in respect of ABC company but wrongly dated as 25 June 2024.

After sometimes, it is also found that two of the members out of seven members named in MOA were minors.

He also entered into a contract after the incorporation of company to buy a building from Prakash for Rs. 1,00,00,000 but before obtaining the certificate of commencement of business.
1. AVoid as it is obtained by forged document
2. BVoid as it is obtained by including minor promotors
3. CValid, even if irregular, cannot be cancelled
4. DValid, but from 30th June 2024 and not from 25th June
Answer: (C) Valid, even if irregular, cannot be cancelled
Explanation
Under company law, a Certificate of Incorporation serves as conclusive evidence of corporate existence.

As established in Moosa Goolam Ariff v. Ebrahim Goolam Ariff, once the Registrar issues the certificate, it cannot be challenged on grounds of pre-incorporation defects.

Minor signatories, forged documents, or procedural irregularities do not render the certificate void or revocable.

The corporate entity comes into lawful existence from the date mentioned in the certificate.
Sign in to read the full explanation
Question 92
Which of the followings is correct ?
An application was sent to registrar of companies to obtain the certificate of incorporation on 30 June 2024. One of the promotors, Raj, made the allotment of shares of the company on 28 June 2024. He also made a contract to buy a certain machinery from Pooja by representing himself as an agent of the company on 20 June 2024.

Raj also signed the Memorandum of Association (MOA) of the company on behalf of all seven members to obtain the certificate of incorporation.

Inspite of all these, the certificate of incorporation was issued in respect of ABC company but wrongly dated as 25 June 2024.

After sometimes, it is also found that two of the members out of seven members named in MOA were minors.

He also entered into a contract after the incorporation of company to buy a building from Prakash for Rs. 1,00,00,000 but before obtaining the certificate of commencement of business.
1. APooja can claim payment of machinery from the company as Raj acted on behalf of the company.
2. BPooja can claim the payment from Raj, who will be personally liable as she is considering that it is a provisional contract.
3. CRaj will be personally liable as for all pre-incorporation contracts, promotors are personally liable
4. DRaj will not be liable as the machinery was used by the company not by Raj for his personal benefits.
Answer: (C) Raj will be personally liable as for all pre-incorporation contracts, promotors are personally liable
Explanation
A company does not legally exist prior to incorporation and cannot have agents acting on its behalf.

Contracts entered into by promoters before corporate creation are pre-incorporation contracts governed by the principle in Kelner v. Baxter.

The company is not bound by pre-incorporation commitments made by promoters.

The promoter remains personally liable on such agreements unless statutory adoption or novation occurs.
Sign in to read the full explanation
Question 93
The allotment of shares was challenged as it was done before sending the application to the Registrar of Companies. Choose the correct answer :
An application was sent to registrar of companies to obtain the certificate of incorporation on 30 June 2024. One of the promotors, Raj, made the allotment of shares of the company on 28 June 2024. He also made a contract to buy a certain machinery from Pooja by representing himself as an agent of the company on 20 June 2024.

Raj also signed the Memorandum of Association (MOA) of the company on behalf of all seven members to obtain the certificate of incorporation.

Inspite of all these, the certificate of incorporation was issued in respect of ABC company but wrongly dated as 25 June 2024.

After sometimes, it is also found that two of the members out of seven members named in MOA were minors.

He also entered into a contract after the incorporation of company to buy a building from Prakash for Rs. 1,00,00,000 but before obtaining the certificate of commencement of business.
1. AThe allotment of shares is void as the certificate of incorporation is not valid
2. BThe allotment of shares is valid as it is made after obtaining the certificate of incorporation
3. CThe allotment of shares is void as application to obtain certificate was sent on 30th June
4. DThe allotment of shares is void as the certificate was obtained by forged document
Answer: (B) The allotment of shares is valid as it is made after obtaining the certificate of incorporation
Explanation
The date appearing on the Certificate of Incorporation is conclusive proof of the legal incorporation date.

In Jubilee Cotton Mills Ltd. v. Lewis, shares were allotted prior to physical issuance of the certificate but on or after the certificate date.

Because the certificate was dated 25 June 2024, the company was legally deemed to exist on that date.

Consequently, the share allotment made on 28 June 2024 is legally valid because it took place after the effective incorporation date stated on the certificate.
Sign in to read the full explanation
Question 94
The contract to buy a building from Prakash for ₹ 1,00,00,000 will be called :
An application was sent to registrar of companies to obtain the certificate of incorporation on 30 June 2024. One of the promotors, Raj, made the allotment of shares of the company on 28 June 2024. He also made a contract to buy a certain machinery from Pooja by representing himself as an agent of the company on 20 June 2024.

Raj also signed the Memorandum of Association (MOA) of the company on behalf of all seven members to obtain the certificate of incorporation.

Inspite of all these, the certificate of incorporation was issued in respect of ABC company but wrongly dated as 25 June 2024.

After sometimes, it is also found that two of the members out of seven members named in MOA were minors.

He also entered into a contract after the incorporation of company to buy a building from Prakash for Rs. 1,00,00,000 but before obtaining the certificate of commencement of business.
1. APre-incorporation Contract
2. BProvisional Contract
3. CPreliminary Contract
4. DVoid Contract
Answer: (B) Provisional Contract
Explanation
Agreements entered into by a company post-incorporation but before receiving the business commencement certificate are provisional contracts.

A. Pre-incorporation Contract — contract entered into by promoters prior to the grant of certificate of incorporation.

B. Provisional Contract — contract executed between incorporation and receipt of commencement certificate, becoming fully binding only upon certification.

C. Preliminary Contract — synonym for pre-incorporation agreements executed before legal corporate existence.

D. Void Contract — contract with illegal object or unenforceable at law.
Sign in to read the full explanation
Question 95
The contract made with Pooja on 20 June 2024 will be called :
An application was sent to registrar of companies to obtain the certificate of incorporation on 30 June 2024. One of the promotors, Raj, made the allotment of shares of the company on 28 June 2024. He also made a contract to buy a certain machinery from Pooja by representing himself as an agent of the company on 20 June 2024.

Raj also signed the Memorandum of Association (MOA) of the company on behalf of all seven members to obtain the certificate of incorporation.

Inspite of all these, the certificate of incorporation was issued in respect of ABC company but wrongly dated as 25 June 2024.

After sometimes, it is also found that two of the members out of seven members named in MOA were minors.

He also entered into a contract after the incorporation of company to buy a building from Prakash for Rs. 1,00,00,000 but before obtaining the certificate of commencement of business.
1. APre-incorporation Contract
2. BProvisional Contract
3. CPreliminary Contract
4. DStandard Contract
Accepted answers: (A) Pre-incorporation Contract, (C) Preliminary Contract
Explanation
Contracts entered into by promoters prior to the legal incorporation of the company are pre-incorporation contracts.

In corporate law terminology, agreements negotiated before the certificate of incorporation is granted are interchangeably referred to as pre-incorporation contracts or preliminary contracts.

Provisional contracts describe agreements executed after incorporation but before obtaining the certificate of commencement of business.

Both Option A and Option C accurately describe contracts executed by promoters on June 20 before incorporation.
Sign in to read the full explanation
Question 96
By selling through online platforms, retail stores and direct sales agents, Ecofresh is focusing on :
Ecofresh Pvt. Ltd, a startup in India, produces eco-friendly home cleaning products such as liquid detergents, floor cleaners and dishwashing liquids. The company follows a green marketing approach and highlights its products as biodegradable, safe and affordable.

To reach its customers, Ecofresh sells through online platforms, retail stores and direct sales agents. The firm has designed its marketing mix carefully. Pricing is slightly above competitors due to its ecofriendly positioning but promotions include digital campaigns, social media advertising and discounts on bulk purchases.

Recently Ecofresh launched a new product; a herbal air freshener. During its product life cycle’s introduction stage, the firm invested heavily in promotion and awareness building activities. The company also engages in customer relationship management by offering loyalty points and personalised recommendation to repeat buyers.
1. APricing Strategies
2. BPromotional Mix
3. CService Marketing
4. DMulti Channel distribution
Answer: (D) Multi Channel distribution
Explanation
Reaching target consumers through multiple marketing intermediaries characterizes multi-channel distribution.

Pricing Strategies — decisions regarding market skimming, penetration, and volume discounting.

Promotional Mix — blended communications encompassing advertising, PR, and personal selling.

Service Marketing — strategies targeting intangible offerings with high customer coproduction.

Multi Channel distribution — utilizing several integrated channels, such as e-commerce platforms, brick-and-mortar stores, and direct agents.
Sign in to read the full explanation
Question 97
Ecofresh use of digital campaigns, social media and discounts reflects decisions related to :
Ecofresh Pvt. Ltd, a startup in India, produces eco-friendly home cleaning products such as liquid detergents, floor cleaners and dishwashing liquids. The company follows a green marketing approach and highlights its products as biodegradable, safe and affordable.

To reach its customers, Ecofresh sells through online platforms, retail stores and direct sales agents. The firm has designed its marketing mix carefully. Pricing is slightly above competitors due to its ecofriendly positioning but promotions include digital campaigns, social media advertising and discounts on bulk purchases.

Recently Ecofresh launched a new product; a herbal air freshener. During its product life cycle’s introduction stage, the firm invested heavily in promotion and awareness building activities. The company also engages in customer relationship management by offering loyalty points and personalised recommendation to repeat buyers.
1. ADistribution Mix
2. BPromotion Mix
3. CProduct Mix
4. DPricing Policy
Answer: (B) Promotion Mix
Explanation
Digital campaigns, social media advertising, and promotional discounts are components of the promotion mix.

Distribution Mix — logistical decisions covering transportation, warehousing, and channel partners.

Promotion Mix — marketing communications tools designed to inform, persuade, and remind target buyers.

Product Mix — assortment, branding, packaging, and product lifecycle management.

Pricing Policy — setting list prices, credit terms, and standard trade margins.
Sign in to read the full explanation
Question 98
The launch of herbal air freshener during its introduction stage of the product life cycle primarily requires heavy investment in promotion and awareness building activity. It will lead to (in short run) :
Ecofresh Pvt. Ltd, a startup in India, produces eco-friendly home cleaning products such as liquid detergents, floor cleaners and dishwashing liquids. The company follows a green marketing approach and highlights its products as biodegradable, safe and affordable.

To reach its customers, Ecofresh sells through online platforms, retail stores and direct sales agents. The firm has designed its marketing mix carefully. Pricing is slightly above competitors due to its ecofriendly positioning but promotions include digital campaigns, social media advertising and discounts on bulk purchases.

Recently Ecofresh launched a new product; a herbal air freshener. During its product life cycle’s introduction stage, the firm invested heavily in promotion and awareness building activities. The company also engages in customer relationship management by offering loyalty points and personalised recommendation to repeat buyers.
1. AHigh Profit
2. BLow/Negative Profit
3. CHigh Revenue, low cost
4. DHigh Revenue, High cost
Answer: (B) Low/Negative Profit
Explanation
During the introduction phase of the product life cycle, profits are characteristically low or negative.

Sales volume during market launch grows gradually as consumer awareness is established.

Promotional outlays and distribution setup costs are highest during introduction.

Substantial front-loaded marketing expenditure combined with limited initial revenue results in depressed or negative short-run profitability.
Sign in to read the full explanation
Question 99
The use of loyalty points is an example of :
Ecofresh Pvt. Ltd, a startup in India, produces eco-friendly home cleaning products such as liquid detergents, floor cleaners and dishwashing liquids. The company follows a green marketing approach and highlights its products as biodegradable, safe and affordable.

To reach its customers, Ecofresh sells through online platforms, retail stores and direct sales agents. The firm has designed its marketing mix carefully. Pricing is slightly above competitors due to its ecofriendly positioning but promotions include digital campaigns, social media advertising and discounts on bulk purchases.

Recently Ecofresh launched a new product; a herbal air freshener. During its product life cycle’s introduction stage, the firm invested heavily in promotion and awareness building activities. The company also engages in customer relationship management by offering loyalty points and personalised recommendation to repeat buyers.
1. AAdvertising
2. BSales Promotion
3. CPersonal Selling
4. DSponsorship
Answer: (B) Sales Promotion
Explanation
Loyalty programs and purchase reward points constitute sales promotion tools.

Advertising — non-personal paid mass media communication.

Sales Promotion — short-term and recurring consumer incentives designed to encourage repeated purchasing behavior.

Personal Selling — face-to-face customized communication between sales representatives and buyers.

Sponsorship — supporting cultural, sporting, or community events to enhance brand visibility.
Sign in to read the full explanation
Question 100
Ecofresh's emphasis on biodegradable safe product reflects which marketing approach ?
Ecofresh Pvt. Ltd, a startup in India, produces eco-friendly home cleaning products such as liquid detergents, floor cleaners and dishwashing liquids. The company follows a green marketing approach and highlights its products as biodegradable, safe and affordable.

To reach its customers, Ecofresh sells through online platforms, retail stores and direct sales agents. The firm has designed its marketing mix carefully. Pricing is slightly above competitors due to its ecofriendly positioning but promotions include digital campaigns, social media advertising and discounts on bulk purchases.

Recently Ecofresh launched a new product; a herbal air freshener. During its product life cycle’s introduction stage, the firm invested heavily in promotion and awareness building activities. The company also engages in customer relationship management by offering loyalty points and personalised recommendation to repeat buyers.
1. AProduction approach
2. BSelling approach
3. CSocietal marketing approach
4. DProduct approach
Answer: (C) Societal marketing approach
Explanation
Balancing consumer satisfaction, business profit, and long-term ecological well-being exemplifies the societal marketing concept.

Production approach — emphasizes manufacturing efficiency and widespread low-cost distribution.

Selling approach — relies on aggressive promotional push and hard selling.

Societal marketing approach — prioritizes environmental preservation, consumer welfare, and societal health alongside profitability.

Product approach — focuses narrowly on continuous product engineering improvements regardless of market demand.
Sign in to read the full explanation

Attempt Paper 2 — Commerce as a timed test

Spotted a shift or questions missing from this paper?

Frequently asked questions

How many questions were in the UGC NET Commerce January 2026 exam?

Paper 1 had 50 questions and Paper 2 (Commerce) had 100 questions, for 100 in total across 3 hours.

Is there negative marking in UGC NET?

No. Each correct answer earns 2 marks and there is no penalty for a wrong answer, so leaving a question blank is never better than attempting it.

Are the January 2026 answers on this page official?

Answers follow the official NTA answer key for this session. If you spot a discrepancy, use the report option inside the practice test and we will review it.

Can I attempt the January 2026 paper as a timed mock test?

Yes. Every paper on this page has an "Attempt this paper" button that opens the same questions in the timed test interface, with instant scoring and weak-area analysis afterwards.

Want the full mock experience?

Attempt Paper 1 + Paper 2 (Commerce) together in a single timed session.

Full Mock Tests →

More Commerce practice

All 2026 sessions All Commerce PYQs Commerce topic-wise practice Paper 1 topic-wise practice

Practice Paper 1 from other subjects

Every subject's exam sitting has its own Paper 1 (General Aptitude) set — more real PYQs to solve.

Paper 1 · English Literature sittings Paper 1 · Economics sittings Paper 1 · Computer Science & Applications sittings Paper 1 · Management sittings

UGC NET Commerce January 2026 Question PaperPaper 2 with Answer Key

UGC NET January 2026 at a glance

Commerce

Paper 2 — Commerce

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10

Question 11

Question 12

Question 13

Question 14

Question 15

Question 16

Question 17

Question 18

Question 19

Question 20

Question 21

Question 22

Question 23

Question 24

Question 25

Question 26

Question 27

Question 28

Question 29

Question 30

Question 31

Question 32

Question 33

Question 34

Question 35

Question 36

Question 37

Question 38

Question 39

Question 40

Question 41

Question 42

Question 43

Question 44

Question 45

Question 46

Question 47

Question 48

Question 49

Question 50

Question 51

Question 52

Question 53

Question 54

Question 55

Question 56

Question 57

Question 58

Question 59

Question 60

Question 61

Question 62

Question 63

Question 64

Question 65

Question 66

Question 67

Question 68

Question 69

Question 70

Question 71

Question 72

Question 73

Question 74

Question 75

Question 76