SSC CGL Paper 4 AAO(Assistant Audit Officer) Questions

SSC CGL Paper 4 AAO(Assistant Audit Officer) Questions

Paper-4 will be those candidates who have applied for the post of Assistant Audit Officer(AAO) in C& AG. The said paper would comprise two parts i.e., Finance and Accounts for which there would be 40 questions carrying 80 marks and Economics and Governance which would have 60 questions carrying 120 marks. In all there would be 100 questions carrying 200 marks with each question carrying 2 marks. 0.50 marks would be deducted for each wrong answer.The paper will be for a duration of 2 hours.

Q1. Accounting is defined as?

(a) An art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least, of a financial character and interpreting the results thereof.

(b) A systematic and regular record of events clear financial picture

(c) A method of ascertaining profits & loss

(d) Noting but book keeping

Q2. What is the method of summarizing and classifying the record of financial transaction in monetary terms?

(a)  Book keeping

(b) Auditing

(c) Accountancy

(d) Cost Accounting

Q3. Accounting is also defined as an 'Information System' because?

(a) The function of accounting is to provide quantitative information, primarily financial in nature about economic entities

(b) It is a system which provides information

(c) Accounting provides required information for anyone seeking it

(d) All of above

Q4.Accounting in modern age is regarded as ?

(a) The art of recording, classifying and summarizing the business transactions in monetary units

(b) The language of business

(c) The source of business information

(d) All of above

Q5. Accounting is the process of matching

(a) Benefits and Costs

(b) Revenues and Costs

(c) Cash inflows and outflows

(d) Potential and real performance

Q6. Choose the correct statement

(a) Keeping systematic recording of business transaction is not the function of financial accounting

(b) Accounting is concerned with monetary transactions

(c) Accounting is concerned with past as well as future events

(d) Business and Businessman are one and the same from accounting point of view

Q7. Which of the following event is subject matter of Accounting?

(a) Death if key executive of the business/company

(b) Strike of workers

(c) Payment of Rs.10,000 to bank in discharge of outstanding loan

(d) Marriage of the daughter of the Managing Director of the Company

Q8. Choose the incorrect statement

(a) Accounting is the language of business

(b) Transaction are recorded in quantitative terms only

(c) Accounting is the art of recording, classifying and summarizing

(d) Transaction and events of financial character are subject matter of accounting

 

Q9. Management Accounting

(a) Is a clerical work

(b) Is accounting for future

(c) Is a recording technique of the management related transactions

(d) Is an analysis of the past business activities

Q10. Which of the following is not available in the Financial Statements of a Company?

(a) Total Sales

(b) Total Profit and Loss

(c) Loss from Fire

(d) None of above

Q11. The problems related to price-rise are handles under?

(a) Management Accounting

(b) Cost Accounting

(c) Financial Accounting

(d) Inflation Accounting

Q12.......... of American Institute of Certified Public Accountants enumerated the functions of Accounting?

(a) Accounting Principles Board

(b) Accounting Standards Board

(c) Accounting Concepts Board

(d) None of above

Q13. Accounting means recording of........ ?

(a) Transactions

(b) Events

(c) Both A and B

(d) Neither A nor B

Q14. Withdrawal of cash by the owner of the business for personal use should be recorded by debiting?

(a) Drawings account and crediting cash account

(b) Drawings account and crediting cash account

(c) Capital account and crediting drawings account

(d) Purchases account and crediting drawings account

Q15. We can say that the business is in profit, when:

(a) Assets exceed Expenditure

(b) Income exceeds Liabilities

(c) Income exceeds Expenditure

(d) Income exceeds Liabilities

Q16. Term "Credit" means_______ by the business.

(a) Receiving of benefits

(b) It has no effect on business

(c) Providing of benefits

(d) It depends upon items

Q17. When a Liability is reduced or decreased, it is recorded on the:

(a) Left or credit side of the account

(b) Right or debit side of the account

(c) Right or credit side of the account

(d) Left or debit side of the account

Q18. When Capital is increased by an amount, it is recorded on the:

(a) Right or debit side of the account

(b) Left or credit side of the account

(c) Left or debit side of the account

(d) Right or credit side of the account

Q19. What type of expenses is paid out of Gross Profit?

(a) General Expenses

(b) Financial Expenses

(c) Selling Expenses

(d) All of the given options

Q20. Which of the following shows summary of a company's financial position at a specific date?

(a) Profit & Loss Account

(b) Cash Flow Statement

(c) Balance Sheet

(d) Income & Expenditure Account

Q21. Which of the following is NOT an example of intangible assets?

(a) Franchise rights

(b) Goodwill

(c) Patents

(d) Land

Q22. Which of the following is an example of business liability?

(a) Land

(b) Building

(c) Cash

(d) Creditors

Q23. The unfavorable balance of Profit and Loss account should be?

(a) Added in liabilities

(b) Subtracted from current assets

(c) Subtracted from capital

(d) Subtracted from liabilities

Q24. What is the main purpose of financial accounting?

(a) Organize financial information

(b) Provide useful, financial information to outsiders

(c) Keep track of company expenses

(d) Minimize company taxes

Q25. Which financial statement uses the expanded accounting equation?

(a) Income statement

(b) Balance sheet

(c) Cash flow statement

(d) Statement of stockholder's equity

Q26. The accounting profession can be divided into three major categories; specifically, the practice of public accounting, private accounting, and governmental accounting. A somewhat unique and important service of public accountants is:

(a) Financial accounting.

(b) Managerial accounting.

(c) Auditing.

(d) Cost accounting.

Q27. The primary private sector agency that oversees external financial reporting standards is the:

(a) Financial Accounting Standards Board.

(b) Federal Bureau of Investigation.

(c) General Accounting Office.

(d) Internal Revenue Service.

Q28. Which of the following equations properly represents a derivation of the fundamental accounting equation?

(a) Assets + liabilities = owner's equity.

(b) Assets = owner's equity.

(c) Cash = assets.

(d) Assets - liabilities = owner's equity.

Q29. Wilson Company owns land that cost $100,000. If a "quick sale" of the land was necessary to generate cash, the company feels it would receive only $80,000. The company continues to report the asset on the balance sheet at $100,000. Which of the following concepts justifies this?

(a) The historical-cost principle.

(b) The value is tied to objective and verifiable past transactions.

(c) Neither of the above.

(d) Both a and b.

Q30. Retained earnings will change over time because of several factors. Which of the following factors would explain an increase in retained earnings?

(a) Net loss.

(b) Net income.

(c) Dividends.

(d) Investments by stockholders.

 

Q31. Which of these items would be accounted for as an expense?

(a) Repayment of a bank loan.

(b) Dividends to stockholders.

(c) The purchase of land.

(d) Payment of the current period's rent.

Q32. Which of the following transactions would have no impact on stockholders' equity?

(a) Purchase of land from the proceeds of a bank loan.

(b) Dividends to stockholders.

(c) Net loss.

(d) Investments of cash by stockholders.

 Q33. Which of the following would not be included on a balance sheet?

(a) Accounts receivable.

(b) Accounts payable.

(c) Sales.

(d) Cash.

Q34. Remington provided the following information about its balance sheet:

Cash 100, Accounts Receivable 500, Stockholders’ equity700, Accounts Payable 200, bank loans 1,000

Based on the information provided, how much are Remington's liabilities?

(a) $200.

(b) $900.

(c) $1,200.

(d) $1,700.

Q35. Gerald had beginning total stockholders' equity of $160,000. During the year, total assets increased by $240,000 and total liabilities increased by $120,000. Gerald's net income was $180,000. No additional investments were made; however, dividends did occur during the year. How much were the dividends?

(a) $20,000.

(b) $60,000.

(c) $140,000.

(d) $220,000.

Q36. Common stock that is widely distributed among individuals describes what type of corporate governance structure?

(a) Public.

(b) Network.

(c) Supervisory.

(d) Market.

Q37. Which of the following is not something performed by the company’s board?

(a) Oversees management and ensures the quality of information provided to shareholders and to financial markets through the financial statements.

(b) Defines the company’s strategy.

(c) Appoints the corporate officers responsible for managing the company and implementing this strategy.

(d) Day to day supervision of the sales manager

Q38. The Sarbanes–Oxley Act requires that executive officers attest to all the following except:

(a) Based on their knowledge there are no untrue statements or omissions of material fact.

(b) The statements fairly present the company’s financial condition.

(c) Their conclusions about effectiveness of internal control.

(d) All deficiencies in internal control or any fraud has been disclosed to regulators.

Q39.In a two-tier structure of corporate governance:

(a) CEO and chair of the board are split.

(b) Non-executives are responsible for the day-to-day operations.

(c) The chair of the non-executive board is also chair of the executive board.

(d) Members of the supervisory board are appointed by the executive board.

Q40. A board member is independent when:

(a) She is a family member of the CEO.

(b) She has no relationship of any kind whatsoever with the corporation, its group or the management of either that is such as to color her judgment.

(c) She represents the shareholders – not other constituencies.

(d) She is a top executive of the company supervised.

Q41: Which one of these is an exception to the law of demand?

(a) Demonstration effect goods

(b) Giffen’s goods

(c)Future scarcity of goods

(d) All of the above

Q42: Elasticity of demand is based on which of the following factors?

(a) Range of substitutes available

(b) Joint demand

(c) Proportion of income spent on the commodity

(d) All of the above

Q43: Movement along a demand curve as a result of change in price is known as?

(a) Change in quantity demanded

(b) Change in demand

(c) Increase or decrease in demand

(d) None of the above

Q44: Ceteris paribus, a change in the price of a commodity causes the quantity purchased of its complements to move:

(a) In the same direction

(b) In the opposite direction

(c) In the improper manner

(d) Cannot be determined

Q45: Which one is not a type of demand?

(a) Price demand

(b) Derived demand

(c) Supply demand

(d) Joint demand

Q46: The total effect of a price change of a commodity is:

(a) Substitution effect + price effect

(b) Substitution effect – income effect

(c) Substitution effect – income effect

(d) Substitution effect – price effect

Q47: When the income elasticity of demand is greater than unity, the commodity is:

(a) A necessity

(b) A luxury

(c) Inferior good

(d) Non- related good

Q48: Which one is the technique of measuring elasticity of demand?

(a) Total outlay method

(b) Arc method

(c) Point method

(d) All of these

Q49: The responsiveness of changes in quantity demand to change in price of other commodity is known as?

(a) Price elasticity of demand

(b) Income elasticity of demand

(c) Cross elasticity of demand

(d) None of the above

Q50: The responsiveness of change in quantity demand to change in price is known as?

(a) Price elasticity of demand

(b) Income elasticity of demand

(c) Cross elasticity of demand

(d) None of the above

Q51: Methods of measurement of elasticity are?

(a) Percentage method

(b) Point elasticity method

(c) Total outlay expenditure method

(d) All of the above

Q52: Reasons for change in demand (increase or decrease in demand) are?

(a) Change income of consumer

(b) Change in population

(c) Change in fashion and custom

(d) All of the above

Q53: The demand for life saving drugs.

(a) Elastic

(b) Inelastic

(c) Infinity

(d) None of these

Q54. When RBI grants loan to commercial banks and charges interest on it, it is called:

(a) Repo rate

(b) Reverse repo rate

(c) Basic rate

(d) Bank rate

Q55. Which of the following is not a function of foreign exchange market?

(a) Stabilization function

(b) Hedging function

(c) Credit function

(d) Transfer function

Q56.Which of the following roles/functions/responsibilities are NOT under the purview of the Financial commission?

1. Sharing of net proceeds of taxes between the Center and States
2. Recommending principles for governing the grants-in-aid to the states by the Center
3. Recommendations on matters referred to it by the President for the interest of sound finance
4. Preparation and periodical revision of electoral rolls

(a) Only 1

(b) Only 2

(c) Only 3 and 4

(d) Only 4

Q57. Who was the Chairman of the First Finance Commission of India that was appointed in 1951?

(a) K.C. Neogy

(b) K.Santhanam

(c) Y.V. Reddy

(d) K.C. Pant

Q58. Who is the Chairman of the 14th and current Financial Commission of India that was appointed in 2013?

(a) K.C. Neogy

(b) K.Santhanam

(c) Y.V. Reddy

(d) K.C. Pant

Q59. Which Article in the Indian Constitution provides for the Finance Commission?

(a) Article 323

(b) Article 280

(c) Article 256

(d) Article 378

Q60. In which year did the Finance Commission of India came into existence?

(a) 1947

(b) 1948

(c) 1951

(d) 1961

Q61. Who is known as father of economics?

(a) Keynes

(b) Samuelson

(c) Marshall

(d) Adam Smith

Q62. The great object of political economy of every country is to?

(a) Increase the equalities of income

(b) Decrease the political and military strength

(c) Ensure regional development

(d) Increase the riches and power of that country.

Q63. In a free-market economy the allocation of resources is determined by?

(a) Votes taken by consumers

(b) A central planning authority

(c) By consumer preferences

(d) The level of profits of firms

Q64. Which of the following organizations looks after the credit needs of agriculture and rural development in India?

(a) IFCI

(b) IDBI

(c) NABARD

(d) ICAR

Q65. Under law of demand—

(a) Price of commodity is an independent variable

(b) Quantity demanded is a dependent variable

(c) Reciprocal relationship is found between price and quantity demanded

(d) All of the above

Q66. Shifts in demand curve as shown in the figure below represents?

(a) Extension of demand

(b) Increment of demand

(c) Increase of demand

(d) Expansion of demand

Q67. If the price of a complement increases, all else equal,

(a) Quantity demanded will increase.

(b) Quantity supplied will increase.

(c) Demand will increase.

(d) Demand will decrease.

Q68. For inferior commodities, income effect is—

(a) Zero

(b) Negative

(c) Infinite

(d) Positive

Q69. Utility means—

(a) Power to satisfy a want

(b) Usefulness

(c) Willingness of a person

(d) Harmfulness

Q70. Which of the following is the second law of Gossen ?

(a) Law of equi-marginal utility

(b) Law of equi-product

(c) Theory of indifference curve

(d) Law of diminishing marginal utility

Q71. Which of the following is a characteristic of a perfectly competitive market?

(a) Firms are price setters.

(b) There are few sellers in the market.

(c) Firms can exit and enter the market freely.

(d) All of these

Q72. If a perfectly competitive firm currently produces where price is greater than marginal

cost it

(a) Will increase its profits by producing more.

(b) Will increase its profits by producing less.

(c) Is making positive economic profits.

(d) Is making negative economic profits.

Q73. When a perfectly competitive firm makes a decision to shut down, it is most likely that

(a) Price is below the minimum of average variable cost.

(b) Fixed costs exceed variable costs.

(c) Average fixed costs are rising.

(d) Marginal cost is above average variable cost.

Q74. In the long run, a profit-maximizing firm will choose to exit a market when

(a) Fixed costs exceed sunk costs.

(b) Average fixed cost is rising.

(c) Revenue from production is less than total costs.

(d) Marginal cost exceeds marginal revenue at the current level of production.

Q75. When firms have an incentive to exit a competitive market, their exit will

(a) Drive down market prices.

(b) Drive down profits of existing firms in the market.

(c) Decrease the quantity of goods supplied in the market.

(d) All of the above are correct.

Q76. The monopolistic firm will be in equilibrium, where:

(a) Price = Marginal cost

(b) Marginal revenue = Marginal cost

(c) Marginal revenue = Marginal cost = Price

(d) None of these

Q77. Selling cost is necessary under:

(a) Pure monopoly

(b) Perfect competition

(c) Imperfect competition

(d) None of these

Q78. Price discrimination will always lead to:

(a) Increase in output

(b) Decrease in output

(c) No change in output

(d) None of these

Q79. The law of diminishing marginal returns can be explained in terms of:

(a) Economies of production

(b) Indivisibility of factors

(c) Fixity of the supply of land

(d) All of these

Q80. For a cotton seller in India, dumping refers to selling cotton at:

(a) Lower price in Mumbai and higher price in Delhi

(b) Lower price in Mumbai and higher price in Paris

(c) Higher price in Mumbai and lower price in Paris

(d) Higher price in Paris and lower price in Mumbai

Q81. Bilateral monopoly refers to the market situation of:

(a) Two sellers

(b) Two buyers

(c) One seller and two buyers

(d) None of these

Q82. Match the following:

Q83. The short run equilibrium level of output for monopolistic competitor is given by the point where:

(a) P = SMC

(b) P = SAC

(c) The MR curve interacts the SMC curve

(d) The MR curve intersects the SMC curve from below and P = AVC

Q84. The market period supply curve for perishable commodities is:

(a) Relatively inelastic

(b) Perfectly inelastic

(c) Relatively elastic

(d) Perfectly elastic

Q85. Which one is not the characteristic of oligopoly firm:

(a) Conflicting attitude of firms

(b) Advertising and sales promotion

(c) One firm

(d) Few sellers

Q86. Under perfect competition, the long run equilibrium of the firm is established at:

(a) Minimum point of LAC

(b) Highest point of LAC

(c) Minimum point of SAC

(d) Highest point of SAC

Q87. A profit maximizing monopolist in two separate markets will:

(a) Always charge a higher price in less selling market

(b) Always charge higher price in more selling market

(c) Charge same price in both markets

(d) Adjust his sales in the two markets, so that his MR in each market just equals his marginal cost

Q88. The supply function will move downwards to the right, if the MC of all the firms in a perfectly competitive industry were to:

(a) Decrease

(b) Remain uncharged

(c) Increase

(d) None of these

Q89. Consumers are likely to get maximum variety of goods under:

(a) Imperfect competition

(b) Monopoly

(c) Perfect competition

(d) Oligopoly

Q90. The vertical distance between TVC and TC is equal to:

(a) TFC

(b) AVC

(c) MC

(d) Price

Q91. Approx ______ % of Indian population is still agriculturist:

(a) 46%

(b) 50%

(c) 58%

(d) 64%

Q92. How much population is living below poverty line in India:

(a) Approx 24%

(b) Approx 25%

(c) Approx 26%

(d) Approx 27%

Q93. This is the Govt.’s strategy in respect of public expenditure and revenue which have a significant Impact on business:

(a) Monetary policy

(b) Fiscal policy

(c) Trade policy

(d) Foreign exchange policy

Q94.  --------- is concerned with the withdrawal of State from an industry or sector, partially or fully:

(a) Liberalization

(b) Modernization

(c) Privatization

(d) Globalization

Q95. Which policy is concerned with raising revenue through taxation and deciding on the level and Pattern of expenditure?

(a) Monetary policy

(b) Fiscal policy

(c) Cash policy

(d) None of these

Q96. Fiscal Responsibility and Budget Management Act (FRBMA) ACT 2003 concerns:

(a) Fiscal deficit only

(b) Revenue deficit only

(c) Both fiscal and revenue deficit

(d) Neither fiscal nor revenue deficit

Q97. The objective of taxation by the Government are:

(a) Raising revenue for the state

(b) To maintain economic stability

(c) To remove disparities in the distribution of income

(d) All of the above

Q98. Special assessment is also known as:

(a) Tax Revenue

(b) Battement Levy

(c) VAT

(d) None of the above

Q99. After levying of a tax, if the price does not rise at all, it means that:

(a) Incidence of the tax remains with producer

(b) Tax has been shifted backward

(c) Shifting has taken place

(d) Any of the above

Q100. Pick out the incorrect statement:

(a) In the short period, shifting of a tax is easy

(b) In the long period shifting of a tax is easy

(c) When supply is elastic, shifting is easy

(d) None of the above