PREVIOUS YEAR SOLVED PAPERS - November 2017

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6. The balance of property at cost has been Rs.20,000 and Rs.17,000 in 2015 and 2016, respectively. The profit on the sale of property of Rs.2,000 is credited to Capital Reserve Account. New property costing Rs.5,000 was bought in 2016. Determine the sale proceeds from property.

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Option : C
Explanation : Sale proceeds from property
= 20,000 + 2,000 + 5,000 – 17,000
= Rs.10,000.

7. Goodwill of a firm of X and Y is valued at Rs.30,000. It is appearing in the books at Rs.12,000. Z is admitted for 1/4 share. What amount he is supposed to bring for goodwill?

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Option : B
Explanation : The value of goodwill is Rs.30,000
Book value of goodwill = Rs.12,000
The share of Z will be 30,000 – 12,000

8. A Ltd. issued a prospectus inviting applications for 2,000 shares. Applications were received for 3,000 shares and pro-rata allotment was made on the applications of 2,400 shares. If A has been allotted 40 shares, how many shares he must have applied for?

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Option : C
Explanation :

9. Which one of the following receipts is of revenue nature?

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Option : B
Explanation : Capital and Revenue Receipts: Contributions to a business enterprise made by a proprietor in the case of sole trader, partners in case of partnership firms, shareholders in case of joint stock company as the capital of the concerns are capital receipts. Loan from third parties, sale of any fixed assets of a business, funds raised by way of debentures are also capital receipts.
Incomes that arise due to the desired results of intense activities in a business enterprise are revenue receipts, such as sales revenue, commission and discount received, interest and dividend received, interest on investments and the like.

10. Statement (I) : Business decision makers deal with the complex, rather chaotic, business conditions of the real world and have to find the way to their destination, i.e, achieving the goal that they set for themselves.
Statement (II) : Even without application of economic logic and tools of analysis, business decisions are always rational and real and are not counter productive.

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Option : C
Explanation : Managerial Economics Fills the Gap between Theory and Practice: There is undeniably a gap between economic theory and the real economic world. But, at the same time, it is also a mistaken view that economic theories can be directly applied to business decision-making. Economic theories do not offer a custom-made or readymade solution to business problems.
Let us now see how business economics bridges the gap between economic theories and business practices. On one side, there is the complex business world and, on the other, there are abstract economic theories, “The big gap between the problems of logic that intrigue economic theorists and the problems of policy that plague practical management needs to be bridged in order to give executive access to the practical contributions that economic thinking can make to top management policies”. Managerial decisionmakers deal with the complex, rather chaotic, business conditions of the real world and they have to find their way to their destination, i.e., achieving the goal that they set for themselves. Business economics applies economic models and analytical tools to eliminate unimportant and inconsequential details and identify the major area of analysis to find a solution to the problem. The economic logic and tools of analysis guide the management in the following managerial functions.
(i) identifying their problems in achieving their goal.
(ii) collecting the relevant data and other relevant information.
(iii) processing and analyzing the collected data.
(iv) drawing the relevant conclusions.
(v) determining and evaluating the alternative means to achieve the goal, and
(vi) taking a decision.