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Nature, Process and Types of Communication – BCR Notes CA Foundation

Meaning of Communication:
The word communication has been derived from the Latin ‘Communicare, which means “to share”. Communication may, therefore, be defined as the process of sharing (exchanging) information, ideas, thoughts, feelings and emotions between two or more persons.

Process of Communication:
The communication process consists of the following elements:

→ Sender : Sender is the person who initiates the process of communication. The sender may be a speaker, a writer, an actor, a painter, etc.

→ Encoding: The process of converting the message into words, symbols, pictures, etc. is called encoding
Message: Message means whatever is to be communicated. It is the heart of communication process

→ Channel: The medium through which the message is sent is called channel. It may be a speech, a letter, an e-mail, SMS, gesture, sound, etc.

→ Receiver : The person to whom the message is sent is the receiver. The receiver may be a listener, a reader or a viewer.

→ Feed back : The reaction or response to the message is called feedback

→ Noise : Any disturbance, hurdle or barrier to communication is the notice

Types of Communication:
Communication is of several types and may be classified as follows:

1. Verbal Communication:
In verbal communication words and language are used to convey the message. Verbal communication is of two types:
(a) Oral communication:
It means communication through spoken words. It may be face- to-face (lecture, seminar, conference, meeting, informal conversation, chit-chat, gossip, or telephone). Clear voice and tone are necessary for effective oral communication. Speaking at too fast/slow speed or two high/low volume impairs oral communication:

(b) Written communication:
Communication via SMS, e-mail, letter, brochure, hand book, report is written communication. Such communication is essential in case of formal business interactions (memo, proposal, press release, contract, etc.) and legal documentation. Grammar, vocabulary, writing style, etc. determine the effectiveness of written communication.

Verbal communication is the easiest and fastest form of communication. Even then it constitutes a very small part (about 7 per cent) of all human interactions.

2. Non-Verbal Communication: Communication without using words is called non-verbal communication. Non-verbal communication may take the following forms:
(a) Body Language:
Communication through facial expressions, gestures, stance, touch . and other physical signs is called body language. For example, leaning forward may indicate interest and acceptance whereas leaning backward may mean rejection and lack of interest. Body language (Example – smile, frown, clenching of hands etc. can transmit emotions which cannot be expressed through words. Body language constitutes a major part (about 55 per cent) of all communication.

(b) Paralanguage:
Pitch, tone, quality, etc. of voice is known as paralanguage. The way one speaks, rather than words, reveal the intent of the speaker. Paralanguage constitutes about 38 per cent of all communications.

(c) Aesthetics:
Music, dancing, painting sculpture and other forms of art serve as means of communication. These convey the feelings and thoughts of artists.

(d) Appearance:
Dress and grooming create the first impression. In offices, there is a dress code. Formal dress for men may consist of shirt, trouser, coat and leather shoes. For women, it may consist of saree, suit, shirt, trouser or skirt.

(e) Symbols:
Symbols may relate to religion, status, ego, etc. These convey the special meaning. For example, the number of stars on the shirt of a police officer reveal his/ her status.

3. Visual Communication: In visual communication, signs, drawing, graphic design, colour, illustration and other visual aids are used to convey the message. For example, colours are used to control traffic. Visuals such as graphs, pie chart, flow chart, etc. convey considerable information in a clear and concise manner. These are a powerful medium and are an essential part of official presentations.

4. Audio-Visual Communication: Use of voice and visuals together is called audio-visual communication. Radio is an audio medium while television and films are audio-visual media of communication. Combination of spoken words and pictures is a very powerful form of combination.

5. Formal Communication: Communication through the organisational hierarchy (chain of command) and in accordance with the policies, rules and conventions of the organization is called formal communication. It can be both oral and written.

Formal communication can be in the following patterns:
(a) Vertical communication : Flow of information downwards and upwards in the organization is called vertical communication. Managers pass down orders and instructions to their subordinates for implementation. Subordinates transmit reports, suggestions, grievances and requests to their superiors.

(b) Horizontal communication : Communication between individuals/departments at the same level of authority is known as horizontal communication. For example, heads of production and marketing departments hold a meeting to discuss quality and price of a product.

(c) Diagonal Communication : This type of communication takes place between employees working in different departments and at different levels of authority. Such cross functional communication reduces the chances of distortion or misrepresentation. For example, the marketing manager may directly ask a factory manager about the cost and quality of output.

6. Informal Communication: When two or more employees in an organization exchange views without following the official rules and procedures it is called informal communication or grapevine.

Grapevine:
It is unofficial, friendly and casual. It is based on common interests and attitudes. It helps to satisfy social needs of employees and to build relationships. For example, during the lunch break, employees working in different departments of an organization may discuss new leave rules.

Networks of Communication:
The pattern used to share information is known as communication network. Members of an organisation use various types of communication flows as per their needs. In some organizations there are prescribed networks for communication. Main types of communication networks are given below:
1. Vertical Network: This network is used for communication between a superior and a subordinate. It is a two-way communication in which immediate-feedback can be available

2. Circuit Network : When two employees at the same level of authority communicate with each other, it is a circuit network.

3. Chain Network: In this network, communication flows through the chain of command. The message flows from the chief executive downward to different levels of employees. In the following, diagram A gives command to B, C, D, E, F and G working at different levels in the hierarchy. In chain network

Communication gets delayed as it has to pass through several layers. Communication may be distorted due to filtering at various levels.

4. Wheel: In this network, a single authority gives orders and instructions to all the employees around him. They also report directly to him. This network may be efficient for a small organization provided the central authority is competent. But in a large organization all decisions cannot be taken by one person.

5. Star Network : In this network members of an organization communicate through multiple channels. They exchange information with each other freely without any obstacle. Star network encourages group communication and teamwork in the organization.

This CA Foundation Law Notes CA Foundation Business Law Question Paper is designed strictly as per the latest syllabus and exam pattern.

CA Foundation Business Law Question Paper

 

SECTION A – Marks: 60

Question 1.
(a) Mr. X a businessman has been fighting long-drawn litigation with Mr. Y an industrialist. To support his legal campaign he enlists the services of Mr. C a Judicial officer stating that the amount of ₹ 10 lakhs would be paid to him if he does not take up the brief of Mr. Y.

Mr. C agrees but, at the end of the litigation, Mr. X refuses to pay Mr. C. Decide whether Mr. C can recover the amount promised by Mr. X under the provisions of the Indian Contract Act, 1872? (4 Marks)

(b) ABC Limited has allotted equity shares with voting rights to XYZ Limited worth ₹ 15 Crores and issued Non-Convertible Debentures worth ₹ 40 Crores during the Financial Year 2019-20. After that total Paid-up Equity Share Capital of the company is ₹ 100 Crores and Non-Convertible Debentures Stand at ₹ 120 Crores. Define the Meaning of Associate Company and comment on whether ABC Limited and XYZ Limited would be called Associate Company as per the provisions of the Companies Act, 2013? (4 Marks)

(c) Write any four exceptions to the doctrine of Caveat Emptor as per the Sale of Goods Act, 1930. (4 Marks)
Answer:
1. (a) See answer from Chapter 7: Void Agreement, under Unit 1: The Indian Contract Act, 1872 – Pg. 7.6, Q & Ans. 9.
Thus the agreement is valid and enforceable since the restraint imposed on Mr. C does not amount to restraint of trade and Mr. C can recover the amount from Mr. X.

(b) According to the provisions of section 2(6) of the Companies Act, 2013 an Associate Company in relation to another company means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company. For the purpose of this clause: the expression “significant influence” means control of at least 20% of total voting power or control of or participation in business decisions under an agreement.

In the given case XYZ Ltd. is holding Equity shares with voting rights worth ₹ 15 crores and Non-convertible debentures worth ₹ Rs. 40 crores in ABC Ltd. Further in computing “significant influence” as aforesaid, the holding in respect of Non-convertible debentures shall not be considered since they do not carry voting rights.

It is therefore evident that XYZ Ltd. holds voting rights amounting to only 1596 of the total voting power (15/100*100) of ABC Ltd. which is less than 20% of total voting power required minimally to be regarded as a significant influence. Thus it can be concluded that ABC Ltd. is not the Associate Company of XYZ Ltd.

(c) See answer from Chapter 12: Conditions & Warranties, under Unit 2: Sale of Goods Act, 1930 – Pg. 12.3, Q & Ans. 3. – Exceptions.

Question 2.
(a) Define Misrepresentation and Fraud. Explain the difference between Fraud and Misrepresentation as per the Indian Contract Act, 1872. (7 Marks)
(b) State the circumstances under which LLP may be wound up by the Tribunal under the Limited Liability Partnership Act, 2008. (5 Marks)
Answer:
2. (a) Definition
Fraud: See answer from Chapter 5: Free Consent, under Unit 1: The Indian Contract Act, 1872 – Pg. 5.1, Q & Ans. 1. (part up to the definition of Fraud)
Misrepresentation:
According to the provisions of section 18 of the Indian Contract Act, 1872, misrepresentation means and includes:

• positive assertion of such fact, which is not true, in a manner not warranted by the information of the person making it, though he believes it to be true;
• any breach of duty, which without any intent to deceive, gains an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice or to the prejudice of anyone claiming under him;
• causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.

Thus misrepresentation is an innocent and unintentional false/ wrong statement made without the positive knowledge of falsehood by a person who himself believes it to be true and makes such representations without any intent to deceive.
Difference between Fraud & Misrepresentation from Chapter 5: Free Consent, under Unit 1: The Indian Contract Act, 1872 – Pg. 5.6, Q & Ans. 8 (b)
(b) See answer from Chapter 18: Limited Liability Partnership Act, 2008, under Unit 4: Limited Liability Partnership Act, 2008 – Pg. 18.13, Q & Ans. 13.

Question 3.
(a) (1) What do you mean by ‘Partnership at will’ as per the Indian Partnership Act, 1932? (2 Marks)
OR
(2) Comment on ‘the right to expel partner must be exercised in good faith’ under the Indian Partnership Act, 1932.

(b) Referring to the Provisions of the Indian Partnership Act, 1932, answer the following: (4 Marks)

• What are the consequences of Non-Registration of Partnership firms?
• What are the rights which won’t be affected by the Non-Registration of the Partnership firm?

(c) In light of provisions of the Indian Contract Act, 1872 answer the following: (6 Marks)

• Mr. S and Mr. R made a contract wherein Mr. S agreed to deliver a paper cup manufacture machine to Mr. R and to receive payment on delivery. On the delivery date, Mr. R didn’t pay the agreed price. Decide whether Mr. S is bound to fulfill his promise at the time of delivery?
• Mr. Y was given a loan to Mr. G of INR 30,00,000. Mr. G defaulted the loan on the due date and the debt became time-barred. After the time-barred debt, Mr. G agreed to settle the full amount to Mr. Y. Whether acceptance of the time-barred debt Contract is enforceable in law?
• A & B entered into a contract to supply unique items, alternate of which is not available in the market. A refused to supply the agreed unique item to B. What directions could be given by the court for breach of such contract?

Answer:
3. (a) (1) See answer from Chapter 15: General Nature of a Partnership, under Unit 3: The Indian Partnership Act, 1932 – Pg. 15.6, Q & Ans. 4(1)- Partnership at will
OR
(2) According to the provisions of Section 33 of the Indian Partnership Act, 1932, a partner may not be expelled from the firm by a majority of partners except by exercise in good faith, of the powers conferred by contract between the partners. It is thus essential that:

• The power of expulsion must have existed in the contract between the partners or expressly stated in the deed;
• The power of expulsion has been exercised by a majority of the partners and
• The power of expulsion has been exercised in good faith.

If all the above conditions are satisfied only then the expulsion is treated as valid and effective and in the bona fide interest of the business of the firm. Further for the power of expulsion to have been exercised in good faith, the test of the following is required:

• The expulsion must be in the interest of the partnership
• The partner to be expelled is served with reasonable notice of expulsion &
• He is given a fair and reasonable opportunity of being heard.

If a partner is expelled otherwise, not only the expulsion is treated as null and void, but at the same time, such an expelled partner shall have a right to proceed against the other partners in a court of law and seek reinstatement as a partner in the firm.

(b) See answer from Chapter 17: Registration of a Firm & Dissolution of a firm, under Unit 3: The Indian Partnership Act, 1932-Pg. 17.2, Q&Ans. 2-Consequences of Non- Registration of partnership and rights unaffected by non-registration.

(c) (1) According to the provisions of Section 51 of the Indian Contract Act, 1872, in the case of a contract consisting of reciprocal promises which are mutual and dependent, the performance of both the promises is required simultaneously. Thus in the case of reciprocal promises, the promisor need not perform his part of the promise unless the promisee is ready and willing to perform his part of the reciprocal promise.

In the given case, Mr. S & Mr. R by way of reciprocal promises contracted to deliver paper cup manufacturing machine and pay on delivery respectively. However, on the date of delivery, Mr. R refuses to pay the agreed price.

Thus applying the above-stated provision it can be concluded that since Mr. R has refused to perform his part of the reciprocal promise, the promisor, Mr. S is also thereby discharged from giving his performance under the contract.

(2) According to the provisions of section 25(3) of the Indian Contract Act, 1872, a promise to pay a time-barred debt is generally not enforceable, since it is without consideration. However, if the following conditions are fulfilled the same shall be validly enforceable:

• Such a promise is made by the debtor in writing
• In respect of a debt which has become time-barred by the law of limitations &
• The promise is signed by the debtor or his authorized agent.

In the given case Mr. G agrees to settle the amount of the time-barred debt of Rs. 30,00,000, owed by him to Mr. Y. Applying the above-stated provisions it can be concluded that if the promise to pay the time-barred debt by Mr. G, is not in writing and is not signed by him or his duly authorized agent, the same cannot be enforced by Mr. Y.

(3) According to the provisions of the Indian Contract Act, 1872, in the event of a breach of a contract, where the amount of damages sustained by the aggrieved party cannot be determined or where the number of damages is not adequate, then the court may award specific performance as a remedy for breach. An order for specific performance implies that the defaulting party shall have to perform the contract in accordance with the stipulated terms. One of the instances where Specific performance of a contract is awarded as a remedy, at the discretion of the court, is when the goods contracted for are unique or rare in nature.

In the given case A refused to supply a unique item to B which is not available in alternatively in the market. Applying the above provisions it can be concluded that since B cannot be adequately compensated for the breach, thus the court may as a remedy for breach to B, order A for specific performance in accordance with the terms of the contract.

Question 4.
(a) Explain any six circumstances in detail in which non-owner can convey better title to bona fide purchaser of goods for value as per The Sale of Goods Act, 1930. (6 Marks)
(b) P, Q, R and S are the partners in M/S PQRS & Co., a partnership firm that deals in trading of Washing Machines of various brands.
Due to the conflict of views between partners, P & Q decided to leave the partnership firm and started competitive business on 31st July, 2019, in the name of M/s PQ & Co. Meanwhile, R & S have continued using the property in the name of M/s PQRS & Co. in which P & Q also has a share.
Based on the above facts, explain in detail the rights of outgoing partners as per the Indian Partnership Act, 1932 and comment on the following:

• Rights of P & Q to start a competitive business.
• Rights of P & Q regarding their share in property of M/s PQRS &Co. (6 Marks)

Answer:
4. (a) See answer from Chapter 13: Transfer of Ownership, under Unit 2: Sale of Goods Act, 1930 – Pg. 13.2, Q & Ans. 2 – Instances when a non-owner can convey a better title to a bona fide purchaser of goods.

(b) (1) According to the provisions of section 36 of the Indian Partnership Act, 1932, an outgoing partner has the right to carry on a business competing with that of the firm and also to advertise the same, provided no (reasonable) restraint on the same has been expressly provided by an agreement to the contrary, made with a view to safeguarding the interest of the firm. However, the outgoing partner may not:

• use the firm’s name,
• represent himself as carrying on the business on behalf of the firm or
• solicit the customers of the firm.

In the given case the outgoing partners P & Q started carrying on a competing business in the name of M/s PQ & Co., which is not the name of the firm. Moreover, no restriction appears to be imposed on such outgoing partners whereby they may be reasonably restrained from carrying on a competing business.

Thus applying the above-stated provisions it can be concluded that outgoing partners, P & Q can validly carry on a competing business as it is in accordance with the requirements of law.

(2) Section 37 of the Indian Partnership Act, 1932 provides that in case the accounts of the outgoing partners remain unsettled and the remaining partners continue to carry on the business of the firm, such an outgoing partner is entitled to receive any of the following whichever is more beneficial to him:

• Interest at the rate of 6 % p.a. on the amount of his share in the property of the firm.
• Alternatively, he may claim such share in the subsequent profits of the firm as is attributable to his share in capital employed in the business of the firm.

In the given case as the firm continues to carry on its business as before without settlement of accounts, the outgoing partners P&Q can ask for a share in the subsequent profits made by the firm as attributable to their share in capital employed or alternatively ask for interest @ 696 on their share from the firm, whichever is beneficial for them.

Question 5.
(a) Ms. R owns a Two Wheeler which she handed over to her friend Ms. K on a sale or return basis. Even after a week Ms. K neither returned the vehicle nor made payment for it. She instead pledged the vehicle to Mr. A to obtain a loan. Ms. R now wants to claim the Two Wheeler from Mr. A. Will she succeed?

• Examine with reference to the provisions of the Sale of Goods Act, 1930, what recourse is available to Ms. R?
• Would your answer be different if it had been expressly provided that the vehicle would remain the property of Ms. R until the price has been paid? (6 Marks)

(b) What are the significant points of section 8 company which are not applicable for other companies? Briefly explain with reference to provisions of the Companies Act, 2013. (6 Marks)
Answer:
5. (a) (1) According to the provisions of section 24 of the Sale of Goods Act, 1930, when the goods are delivered to a buyer “on approval” or “sale or return” basis, the property therein passes to the buyer :

• When he signifies his approval or acceptance to the seller or
• When the buyer does any other act adopting the transaction, such as further sells or pledges them or
• When the buyer retains the goods without giving notice of rejection, beyond the time fixed for the return of the goods or if no time has been fixed, beyond a reasonable time. In short, the property passes either by acceptance or by failure to return the goods within a specified or reasonable time.

In the given case, Ms. R has delivered the motorcycle to Ms. K on a sale or return basis, which she further pledges with Mr. A as security for a loan.
Thus applying the above-stated provisions it is evident that by further pledging the motorcycle Ms. Khas adopted the transaction and has thereby approved the same. With this act of pledging the motorcycle, the property in the motorcycle passes on to Ms. K and as a consequence, Ms. R is entitled to receive the price. She can claim the price of the motorcycle from Ms. K and can also sue for the same, but cannot recover the motorcycle since the ownership has been passed on to Ms. K.

(2) According to the provisions of the Sale of Goods Act, 1930, when the contract of sale expressly provides that the goods will remain the property of the seller until the price has been paid by the buyer, then the property shall pass on to the buyer only on the payment of the price by him.
Thus if in this case, the contract stipulates that, the motorcycle would remain the property of the seller, Ms. R until the payment of the price by Ms. K, then the property in the motorcycle will not pass even on pledging the same with Mr. A. Thus Ms. R shall be entitled to claim back the possession of the motorcycle from Mr. A since the ownership still vests with his (Ms. R).

(b) According to provisions of the Companies Act, 2013, section 8 deals with the formation of companies that are incorporated to promote the charitable objects of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, etc. Such a company intends to apply its profit in promoting its objects and prohibits the payment of any dividend to its members. Examples of section 8 companies are FICCI, ASSOCHAM, National Sports Club of India, etc.

Significant points of section 8 Companies which distinguish it from other companies:

• It is formed only for the promotion of commerce, art, science, religion, charity, protection environment, sports, etc.
• It uses its profits only for the promotion of the objective for which formed.
• It does not declare dividends to members.
• The requirement of minimum share capital does not apply.
• It operates under a special license from Central Government, subject to certain conditions, and the license entitles it to avail certain privileges in comparison to other companies.
• It need not use the word Ltd./Pvt. Ltd. in its name and can adopt names such as club, chambers of commerce, etc.
• The license can be revoked if the conditions subject to which it was issued are, contravened. On revocation, Central Government may direct it to – convert its status and change its name ie. (add Ltd./Pvt. Ltd.) or may order it to wind-up or amalgamate with another company having similar objects, on such terms as the CG may deem appropriate.
• A section 8 company can call its general meeting by giving a clear 14 days’ notice instead of 21 days.
• The requirement of the minimum number of directors, independent directors, etc. does not apply to a section 8 company.
• It need not constitute a Nomination Committee, Remuneration Committee, and Shareholders’ Relationship Committee.
• A partnership firm can be a member of Section 8 Company.

Question 6.
(a) Enumerate the differences between ‘Wagering Agreements’ and ‘Contract of Insurance’ with reference to the provision of the Indian Contract Act, 1872. (5 Marks)
(b) Explain in detail the circumstances which lead to liability of firm for misapplication by partners as per provisions of the Indian Partnership Act, 1932. (4 Marks)
(c) Mike Limited company is incorporated in India and having a Liaison office at Singapore. Explain in detail the meaning of Foreign Company and analyze, whether Mike Limited would be called a Foreign Company as it established a Liaison office at Singapore as per the provisions of the Companies Act, 2013? (3 Marks)
Answer:
6. (a) See answer from Chapter 7: Void Agreement, under Unit 1: The Indian Contract Act, 1872 – Pg. 7.4, Q & Ans. 5- Differences between Wagering and Insurance Contracts.
(b) See answer from Chapter 16: Relations of Partners, under Unit 3: The Indian Partnership Act, 1932-Pg. 16.7, Q&Ans. 6-Liability of the firm for misappropriation by partners.
(c) According to Section 2(42) of Companies Act, 2013 a foreign company means any company or body corporate incorporated outside India which:
(z) has a place of business in India whether by itself or through an agent, physically or through electronic mode, and
(ii) conducts any business activity in India in any other manner.

In the given case Mike Limited is incorporated in India & having a liaison office in Singapore. Thus applying the above-stated provisions, it is evident that since Mike Limited is incorporated in India therefore it would not be called a foreign company under the Companies Act, 2013.

SECTION B – (40 MARKS)

Question 7.
(a) Mr. Ramesh, the HR Head of ABC Insurance Co. Ltd., who is having charge of training and development also, during his twelve years with the company. He had the experience of training and developing numerous employees, only to see many of them leave the firm after getting their advanced degrees. The company has a policy of reimbursement of 90% of the cost incurred on tuition fees, books, etc. for acquiring such qualifications. Only those employees who have taken prior permission of HR before enrolment in such program/degree and completed three years of service are eligible for seeking the reimbursement. A proof of its popularity was that most of the junior and middle-level managers had availed of this facility to advance their qualifications.

Mr. Kumar, a Sales Executive, who had joined the company just three years ago had also availed the aforesaid facility for pursuing a course in Business Management and had recently completed his master’s degree in business management and submitted the same to the company for seeking reimbursement and recording additional qualifications acquired in official records.

Mr. Ramesh congratulated him and added the additional qualifications acquired by him in the company records and assured him to consider him for a higher position keeping in view his qualifications in near future and of course subject to availability of vacancy as per the approved Organisation Chart. Further Mr. Ramesh allowed reimbursement of 90% of the cost incurred as per the Policy. Mr. Kumar on his achievement when he came to see and thank HR Head, but was strongly taken aback when he expressed his intention to leave the Company in favor of a competitor because he did not see any future for himself in ABC Insurance Co. Ltd. Head HR was annoyed as this had happened so many times in the past.

He immediately rushed to see the Marketing Director seek support for reviewing and discontinuing the Policy of educational reimbursement with immediate effect or to put a condition that all those employees who acquired such qualifications and reimbursed 90% of the expenses shall at least serve the Company for a minimum of 3 years after seeking such reimbursement.

• What could be the possible reasons behind employees quitting the Company after acquiring higher qualifications? (2 Marks)
• Is there any need to amend or abandon the Policy of educational reimbursement? (1 Mark)
• What measures do you suggest for overcoming the high employee attrition problem? (2 Marks)

(b) Read the Passage :

• Make Notes, using Headings, Sub-headings, and abbreviations whenever necessary, (3 Marks)
• Write Summary (2 Marks)

Recycling is simply the process of reusing the items from which utility can still be derived. It is important to recycle waste so that we can at least conserve some of our natural resources for the generations to come. Many products such as paper, cardboard, and cups come from trees. In fact, trees are our natural assets; you can conserve trees by recycling the paper products as by doing so we can minimize the number of trees cut down a year. This is one form of waste recycling.

Recycling waste will not only save our natural resources but will also help save energy. By simply recycling an item or making a basic fix to it, we can save all the energy that would have been consumed in the process of making it. The same example can be taken with plastic items. A large amount of energy can be saved by simply reusing plastic items. To recycle waste is to simply reduce pollution. By recycling plastic material, we can reduce air pollution as well as water pollution. Plastic factories produce a large amount of smoke while producing plastic material at the same time; if we don’t have a proper waste disposal system then those waste emissions will cause water pollution. Recycling helps reduce pollution too.

In simple words, recycling waste is essential for both the natural environment and humans. To sum up, recycling minimizes the need for raw materials so that the rainforests can be preserved. Great amounts of energy are used when making products from raw materials. Recycling requires much less energy and therefore helps to preserve natural resources. One needs to know the importance of recycling; at the same time being earth friendly can help make our planet a better place to live in.
Answer:
7 (a) Comprehension:
(1) The following could be the reasons behind the employees quitting the company after acquiring higher qualifications:

• Lack of suitable opportunities in ABC Insurance Co. Ltd., where the employees could apply their newly acquired skills
• Lenient policies of the company in respect of reimbursement of educational costs
• Absence of any policy providing for a minimum service period for employees after availing reimbursement of expenses for their advanced degrees.

(2) The policy of educational reimbursement followed in ABC Insurance Co.Ltd. requires an immediate amendment to containing the attrition of employees. As suggested by Mr. Ramesh, providing for a condition, whereby the employees desirous of availing reimbursement for their educational expenses shall have to compulsorily serve the company for a minimum period of 3 years after seeking such reimbursement, would prove to be remedial.

(3) The following measures can be suggested to the company to overcome the issue of high employee attrition problem:

• The company can amend its educational reimbursement policy and apply the recommendation of Mr. Ramesh and provide for a clause of minimum service of 3 years after availing reimbursement.
• The company can also revise (reduce) the percentage of reimbursement offered by it on the educational costs incurred by its employees for pursuing advanced degrees.
• The company can explore ways to create new job opportunities within the organization which not only involve the application of the skills acquired by the employees through these advanced courses but also offer them growth. This will in turn ensure greater employee retention.

(b) Note Making:
(1) Recycling and its benefits
1. Meaning of Recycling.

• process of reusing items
• imp. to cons, natural resc.
• many pap. prods, from trees
• cons, trees by recyclng. pap. prods.

2. Recylng. waste

• saves resc. & engy.
• reuse plastic items
• recylng plastic reduces air & water pollun.

3. Imprtnce. of recylng.

• essential for humans & natural environ.
• reduce need for raw matrl.
• rainfrst. can be prsrvd.
• recylng. requires less engy.
• preserves naturalresc.
• imp. to make earth better place to live in

Key:

1. Recylng – Recycling
2. imp. – important
3. cons. – conserve
4. resc. – resources
5. pap. – paper
6. prods. – products
7. pollun. – pollution
8. importance- the importance
9. environ. – environment
10. matrl. – materials
11. rainfrst- rainforest
12. prsrvd. – preserved
13. engy- energy

(2) Summary:
Recycling is the process of reusing products made from paper, plastic as well as other items so as to conserve natural resources like trees and the environment. Recycling waste will also help in saving energy and also reduce pollution of air and water which is a consequence of producing more products. Further absence of a waste disposal system also adds to the problem of pollution. Recycling minimizes the need for raw materials and helps in preserving trees and rainforests. It requires less energy and conserves natural resources for the future and makes our planet a better place to live in.

Question 8.
(a) Body language speaks the truth while the speaker may play with words to hide the truth, comment? (2 Marks)
(b) (1) Choose the word which best expresses the meaning of the given word: (1 Mark)

SCINTILLATING

1. Smouldering
2. Glittering
3. Touching
4. Warming

(2) Select a suitable antonym for the word given under : (1 Mark)
Fidelity

1. Commitment
2. Inconstancy
3. Ambitious
4. Devotion

(3) Change the following sentence to indirect speech : (1 Mark)
Varun Said, “Every Kid should learn coding”

(c) Write a precis and give an appropriate title to the passage given below : (5 Marks)
These days, it is not unusual to see people listening to music or using their .electronic gadgets while crossing busy roads or traveling on public transport, regardless of the risks involved. I have often wondered why they take such risks, is it because they want a sense of independence, or is it that they want to tell everybody to stop bothering them? Or is it that they just want to show how cool they are? Whether it is a workman or an executive, earphones have become an inseparable part of our lives, sometimes even leading to tragicomic situations.

The other day, an electrician had come to our home to repair iron. We told him in detail what the fault was and what needed to be done. But after he left, I found that the man had done almost nothing and the iron was not working even after repair. It later turned out that he could not hear our directions clearly because he had an earphone on. Many of such earphones addicts commute by the Metro every day. While one should not begrudge, anyone, their moments of privacy, or their love for music, the fact is ‘iPod oblivion’ can sometimes be very dangerous.

Recently, I was traveling with my wife on the Metro. Since the train was approaching the last station, there weren’t too many passengers. In our compartment, other than us, there were only two women sitting on the other side of the aisle. And then suddenly, I spotted a duffel bag. The bomb scare lasted for several minutes. Then suddenly, a youth emerged from nowhere and picked up the bag. When we tried to stop him, he looked at us, surprised. Then he took off his earpieces, lifted the bag, and told us that the bag belonged to him and that he was going to get off at the next station.

We were stunned but recovered in time to ask him where he was all this while. His answer was that in the compartment, leaning against the door totally involved in the music. He had no clue about what was going on around him. When he got off, earplugs in his hand, we could hear strains of the song.
Answer:
8. (a) See answer from Chapter 20: Communication, Pg. 20.7, Q & Ans. 3
(a) Body Language from Non-verbal communication.
Since body language is often an involuntary response that is an outcome of the mental and emotional state of an individual, it is difficult to control or manipulate it in comparison to spoken words which can be easily played with. Thus is true to say that ‘body language speaks the truth while the speaker may play with words to hide the truth.’
(b)

• (2) Glittering (synonym)
• (2) Inconstancy (antonym)
• Varun said that every kid should learn to code. (indirect speech)

(c) Summary: Earphones – A tragicomic accessory
Earphones have become an integral part of the lives of people nowadays, despite the risks involved. Whether the extensive use of the earphones stems from a need to look cool or to display a sense of independence or to shut out people is worth pondering. From a workman to an executive, earphones are being used by everyone irrespective of the place and time. An electrician who had come to repair iron failed to do his work effectively as he did not hear the directions, because of earphones plugged in. Many people commuting by metro, who have their earphones on, are often completely oblivious to the surroundings which can be dangerous. In another incident, a train approaching its last stop had few passengers and an abandoned duffel bag caught the attention, resulting in a bomb scare that lasted for some time. Later a young man who was in the compartment casually appeared to retrieve the bag, completely unaware of the commotion since he was immersed in music playing through his earphones.

Question 9.
(a) What is formal communication, explain. (2 Marks)
OR
Encoding the matter is an important element of communication, comments? (2 Marks)
(b) (1) Choose the word which best expresses the meaning of the given word: (1 Mark)
Concise

1. Brief
2. Better
3. Important
4. Interesting

(2) Choose the word which best expresses the meaning of the given word: (1 Mark)

Cryptic

1. Pertinent
2. Common
3. Mysterious
4. Loyalty

(3) Change the following sentence to indirect speech : (1 Mark)
“Do you suppose you know better than your own father ?” jeered his angry mother.

(c) Draft Newspaper Report on “Project to interconnect rivers in India” to be published in a national newspaper. (5 Marks)
Answer:
9. (a) See answer from Chapter 20: Communication – Pg. 20.10, Q & Ans. 6 Formal Communication (col)
The formal communication may be vertical, horizontal, or diagonal.
Vertical: Information can flow upward or downwards in the organization
Horizontal: It involves communication between two parts/departments in the organization at the same level of hierarchy.
.Diagonal: It is a cross-functional communication between the employees at different levels of the organizational hierarchy.
OR
Encoding the message implies the translation or conversion of thoughts, ideas, and feelings to be communicated into words, symbols or gestures. Encoding is essential since it is the tool used by the sender to transmit the information he intends to send to the receiver in such a manner that the message can be easily understood by him. While encoding the message, the sender must take into account, the psychological state, the context, the language capability, etc. of the receiver, so that effective communication is ensured.

Sender must have clarity of thought in respect of the message that he desires to transmit. The sender must use such language and symbols that are familiar to the intended receiver and he must step into the shoes of the receiver to visualize the impact of his intended communication on the receiver so that he can draft it more effectively. Thus encoding is an important element of communication since it gives rise to the message that is to be communicated.

(b)

• (1) Brief (synonym)
• (3) Mysterious (synonym)
• His angry mother jeered and asked whether he supposed that he knew better than his father. (indirect speech)

(c) Newspaper Report

“Project to interconnect rivers in India”
Jaswant Sharma 1 New Delhi 1 TOI 1 18.12.2020

The advocates of the rivers’ inter-linking projects claim that inter-connecting rivers in India shall provide the answers to India’s water problem. The project aims to conserve the abundant monsoon water, store it in reservoirs, and deliver; the same to various areas and overtimes when water becomes scarce, by utilizing the canals built under this project. This in turn will solve the problems of flood and will provide water uniformly throughout the year, across the country. Farmers will immensely benefit as they will not be dependent on the monsoon for water.

The Indian Rivers Inter-link is a large-scale civil engineering project that is proposed aims to effectively manage water resources in India by linking rivers by a network of reservoirs and canals to enhance irrigation and groundwater recharge, reduce persistent floods in some parts, and water shortages in other parts of India. Beyond water security, the project is also viewed as a means to develop an inland water transport system through navigation, generate more hydropower and also broaden the income opportunities in rural areas through fish farming.

The project is being managed by India’s National Water Development Agency (NWDA), set up in 1982 by Prime Minister Indira Gandhi, currently under the Ministry of Water Resources. NWDA has studied and prepared reports on 14 inter-link projects for the Himalayan component, 16 inter-link projects for the Peninsular component, and 37 intra-state river linking projects.

The idea of linking rivers was first presented by Sir Arthur Cotton, chief engineer of the Madras Presidency in 1919, 150 years ago. Thereafter many, Governments have championed this cause in their respective tenures but a lot remains to be yet accomplished. On 31 October 2002, the Supreme Court after hearing public interest litigation asked the Central Government to complete this plan expeditiously. A task force was formed under the chairmanship of Suresh Prabhu in 2003 by the then Prime Minister Atal Bihari Vajpayee and it was estimated that this project would cost about 56 billion crore rupees. In 2012, the Supreme Court again directed the Central Government to start this project in the time frame so that the project would be completed with the cost estimated.

In 2017, the Ken-Betwa link project was proposed as a part of this project, in which parts of Uttar Pradesh and Madhya a Pradesh are included at, an estimated cost of 10 thousand crores. Under this project, additional water from Madhya Pradesh will be brought to the Betwa River in Uttar Pradesh through a canal of 231 km. This will result in irrigation of one lakh 27 thousand hectares of land in Bundelkhand, as it is the most drought-affected area. The people who oppose this project are concerned about well-known environmental, ecological, social displacement impacts as well as unknown risks associated with meddling with nature. Others are concerned that these (2 Marks)

(b)

1. Change the sentence from Active to Passive Voice. (1 Mark)
   Question – The crew cleaned the entire stretch of the highway. (1 Mark)
2. Change the sentence from Passive to Active Voice. (1 Mark)
   Question – The house was remodeled by the homeowners to help it sell.
3. Change the following sentence to indirect speech. (1 Mark)
   Question – Socrates said, “Virtue is its own reward.”

(c) Write an article of about 250 words on the topic, “The Pros and cons of online education in India”. (5 Marks)
Answer:
10. (a) Listening is important in ensuring effective communication. The receiver must pay full attention to the message. He must listen for meaning and creating understanding. For communication to be effective the receiver must engage in active and participative listening. He must listen to the message attentively and also make efforts to seek clarifications where the meaning is unclear, rather than making any presumptions. The receiver must not only listen to the words but also pay attention to the body language and paralanguage to find out the true meaning of the speaker’s message. Since there are plenty of distractions, in the form of noise, alarms, bells, etc. in the environment where the communication is taking place, it is the responsibility of the listener to keep himself alert and engaged in the process of communication.

(b)

• The entire stretch of highway was cleaned by the crew. (passive)
• The homeowners remodeled the house to help it sell. (active)
• Socrates said that virtue is its own reward. (since it’s a universal truth) (indirect)

(c) Article on “Pros and cons of Online learning in India”
Learning has evolved over centuries and the diffusion of technology has certainly transformed learning across the globe. The advancement of technology has revolutionized the way education and learning is viewed world-wide and India is no exception. E-Learning has been witnessing exponential growth in India in the recent years, enabling the education to reach the students & professionals at their door-steps. As per a report published by KPMG India and Google the market of online learning in India is expected to grow 8 times from 247 million USD in 2016 to 1.96 billion USD in 2021 and the user engaged in online learning programs are estimated to grow from approx. 1.6 million in 1 2016 to 9.6 million up to the end of 2021.

The propagation of technology, availability of smart phones, increasing awareness & availability of the necessary infrastructure all have certainly paved way for this growth in online learning. But additionally some innate advantages in this mode of learning and education have propelled this growth.

The ease of learning from anywhere, at any time & place is certainly one of the prime attractions of this mode of learning. This not only enables the students to seek education from the best of the institutes across the world but also to seek tutelage from the finest of teachers and collaborate with best of the minds, This flexibility also enables working professionals to seek higher education to continuously up skill themselves along with their jobs and sharpen their competitive edge. The E- learning mode of education is also quite cost- effective as the students have to only pay for the tuition fees in respect of the courses undertaken by them. Thus it turns out to be an economical mode of learning and personal growth. The courses are usually run on ‘study at your own pace basis thereby recognizing the unique learning capabilities of the aspirants. Many courses often allow the students to customize the course as per their own unique requirements of specialization and thereby end up providing more 1 satisfaction to them.

However one of the biggest challenges of online learning is the lack of self. discipline and motivation among students to complete the online courses and to pursue them with dedication. The lack of motivation and personal touch, is one of the major reasons for high drop-out rate of candidates from these courses. Further many fraudulent educational institutes which are not duly accredited or recognized, trap innocent students into subscribing to their courses which are not worthy of investment of time and money. It is also felt that e-learning ‘ mode is unsuitable and inadequate in instances where hands-on-skill, physical training, workshops, demonstrations, live experience etc. are required to educate the candidate. Further it traditional classroom mode of learning allows greater scope of interaction, learning people skills, overall personality development and increased exposure, which is missing in the online learning mode. Thus it often hinders overall personality development.

Despite the limitations of online learning it is certainly rewarding since it opens up possibility of education for everyone. Government of India, in its Digital India initiatives, through MHRD, has also taken various steps like providing NPTEL Swayam platform etc., to strengthen the movement for online education, in India.

Question 11.
(a) Explain Wheel & Spoke network in communication. (2 Marks)
(b) Select the correct meaning of Idioms/Phrases given below :
(1) To be a mastermind (1 Mark)

1. To be a pioneer
2. To be an entrepreneur
3. To be an amateur
4. To be a villain

(2) At wit’s end (1 Mark)

1. Impoverished
2. Drained
3. Completed
4. Perplexed

(3) Change the sentence into Passive voice : (1 Mark)
Question – Will you tell me a story?

(4) Choose the word which best expresses the meaning of the given word: (1 Mark)

COMBAT

1. Conflict
2. Quarrel
3. Feud
4. Fight

(c) Write a letter to an applicant informing him about the postponement of his interview date. (4 Marks)
Answer:
11 (a) See answer from Chapter 20: Communication – Pg.20.6, Q & Ans. 2 (4) Wheel & Spoke network with diagram.

Thus this network is efficient for a small organization where all the employees get direct instructions from the owner/leader and can report back to him promptly and directly, but is extremely unsuitable for a large organization with thousands of employees and several managers. Moreover if the central figure of authority is incompetent then the entire organisation will suffer.

(b)

• (1) to be a pioneer (idiom’s meaning)
• (4) perplexed (idiom’s meaning)
• Will a story be told to me? (by you) (passive)
• (4) Fight (since combat is physical) (synonym)

(c) Letter:
To,
Rishabh Sharma,
128/478, Civil lines,
Lucknow.
Tenacious Ltd.,
Radiance Towers,
Sector 48, Nodia Date: 9.12.2020
Subject: Postponement of Interview scheduled for 15.12.2020, for the post of Accounts Manager.

Dear Rishabh,
This is to inform you, that your interview for the post of Accounts Manager scheduled for, 15th Dec. 2020, at 11:00 am, has been unfortunately postponed.

The Senior HR Manager of our company, Mr. Somesh Kaushik, who was supposed to oversee the entire process of interview and selection, will not be available on the said date due to some personal health issues.

You will be subsequently notified about the date and time of interview when it is rescheduled at our end. We are extremely sorry for the inconvenience and the delay caused and we assure you that we will reach out to you in the next few days once the dates for the interview are finalized.

Please feel free to reach out to us in case of any further query.
Thanking You,
Mr. Ved Prakash
Assistant HRM.
Tenacious Ltd.

These CA Foundation Accounts Study Material CA Foundation Accounts Question Paper is designed strictly as per the latest syllabus and exam pattern.

CA Foundation Accounts Question Paper Pattern

Question No. 1 is compulsory.

Candidates are also required to answer any four questions from the remaining five questions.
Working notes should form part of the respective answers.

Question 1(a).
(a) State with reasons, whether the following statements are True or False: [6 statements x 2 = 12 marks]
(i) Trade Discount is a reduction granted by a supplier from the list price of goods/or services on business considerations for prompt payment.

(ii) M/s. XYZ & Co. runs a cafe. They renovated some of the old cabins. Because of this renovation some space was made free and number of cabins was increased from 15 to 18. The total expenditure incurred was ₹ 30,000 and was treated as a revenue expenditure.

(iii) Valuation of inventory at cost or net realizable value is based on principle of Conservatism.

(iv) In case of bill of exchange, the drawer and the payee may not be the same person but in case of a promissory’ note, the maker and the payee may be the same person.

(v) A Partnership firm cannot own any Assets.

(vi) Since company has existence independent of its members, it continues to be in existence despite the death, insolvency or change of members.

(b) Distinguish between Provision and Contingent Liability. (4 Marks)

(c) X purchased a machinery on 1st January 2017 for ₹ 4,80,000 and spent ₹ 20,000 on its installation. On July 1,2017 another machinery costing ₹ 2,00,000 was purchased. On 1st July, 2018 the machinery purchased on 1st January, 2017 having become scrapped and was sold for ₹ 2,90,000 and on the same date fresh machinery was purchased for ₹ 5,00,000. Depreciation is provided annually on 31st December at the rate of 10% p.a. on written down value. Prepare Machinery account for the years 2017 and 2018. (4 Marks)
Answer:
(a) (i) False: Trade discount is a reduction granted by a supplier from the list price of goods or services on business considerations for increasing the sales of the business or as trade practice other than for prompt payment.

(ii) False: This expenditure should be treated as Capital expenditure since it will increase profitability of the business.

(iii) True: Because under the principle of lower of cost or net realizable value, any loss due to decrease in sales price of the inventory below its cost is recognized immediately as it is anticipated that the enterprise will make losses whenever it will sell.

(iv) False: In case of a promissory note, maker is the person who is absolutely liable to pay the amount mentioned therein whereas the payee is the person who is entitled to receive the payment. Thus both can never be same.

(v) True: Since a partnership firm does not have separate entity it cannot own any asset in its own name. The property of the firm is actually the joint property of all the partners.

(vi) True: A company has a separate legal entity i.e. its existence is independent of its members. The company is consequently able to enjoy perpetual succession and continues in existence irrespective of death/insolvency/change of members, until it is wound up by law.

(b) Contingent liability:
→ A contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. Possible obligation – An obligation is a possible obligation if, based on the evidence available, its existence at the balance sheet date is considered not probable or

→ A contingent liability is a present obligation that arises from past events but is not recognised because:

• it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
• a reliable estimate of the amount of the obligation cannot be made.

It is said to be ‘probable’ if chances of its happening are more than not happening i.e. probability is more than half.

Contingent Assets:

• A contingent asset is a possible asset that arises from past events the existence of which will be confirmed
• only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise.
• An example is a claim that an enterprise is pursuing through legal processes, where the outcome is uncertain.
• An enterprise should not recognise a contingent asset.
• However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
• A contingent asset is not disclosed in the financial statements.
• It is usually disclosed in the report of the approving authority (Board of Directors in the case of a company, and, the corresponding approving authority in the case of any other enterprise), where an inflow of economic benefits is probable.

(c) Working Note:

Machinery Account

Question 2(a).
On 30th September, 2018, the bank account of XYZ, according to the bank column of the cash book, was overdrawn to the extent of ₹ 8,062. An examination of the Cash book and Bank Statement reveals the following:
(i) A cheque for ₹ 11,14,000 deposited on 29th September, 2018 was credited by the bank only on 3rd October, 2018.

(ii) A payment by cheque for ₹ 18,000 has been entered twice in the Cash book.

(iii) On 29th September, 2018, the bank credited an amount of ₹ 1,15,400 received from a customer of XYZ, but the advice was not received by XYZ until 1st October, 2018.

(iv) Bank charges amounting to ₹ 280 had not been entered in the cash book.

(v) On 6th September 2018, the bank credited ₹ 30,000 to XYZ in error.

(vi) A bill of exchange for ₹ 1,60,000 was discounted by XYZ with his bank.
The bill was dishonoured on 28th September, 2018 but no entry had been made in the books of XYZ.

(vii) Cheques issued upto 30th September, 2018 but not presented for pay¬ment up to that date totalled ₹13,46,000.

(viii) A bill payable of ₹ 2,00,000 had been paid by the bank but was not entered in the cash book and bill receivable for ₹ 60,000 had been discounted with the bank at a cost of ₹ 1,000 which had also not been recorded in cash book.

You are required:
To show the appropriate rectifications required in the cash book of XYZ, to arrive at the correct balance on 30th September, 2018 and to prepare a Bank Reconciliation Statement as on that date. (10 Marks)

(b) Correct the following errors – (i) without opening a Suspense Account and (ii) with opening a Suspense Account:
(1) The sales book has been totalled ₹ 2,100 short.
(2) Goods worth ₹ 1,800 returned by Gaurav & Co. have not been recorded anywhere.
(3) Goods purchased ₹ 2,250 have been posted to the debit of the supplier Sen Brothers.
(4) Furniture purchased from Mary Associates, ₹ 15.000 has been entered in the purchase Daybook.
(5) Discount received from Black and White ₹ 1,200 has not been entered in the books.
(6) Discount allowed to Radhe Mohan & Co. ₹ 180 has not been entered in the Discount Column of the Cashbook. The account of Radhe Mohan & Co. has, however, been correctly posted. (10 Marks)
Answer:
Adjusted Cash Book (Bank Column only)

Bank Reconciliation Statement
as on 30th September, 2018

Particulars	Amount (₹)	Amount (₹)
Cr. Balance as per adjusted cash book		175942
Add: (1) Cheque deposited but not credited by bank	1114000	1114000
		1289942
Less: (1) Amount wrongly credited by bank	30000
(2) Cheque issued but not presented for payment	1346000	1376000
Cr. Balance as per pass book		86058

(b) (i) Without opening a suspense account
(1) In the credit side of the Sales A/c:
“By wrong totalling of the Sales Book ₹ 2100″

(2)

Date	Particulars	L.F	Amount	Amount
	Sales Return A/c                                                          Dr To Gaurav & Co.’s A/c (Being goods returned by Gaurav & Co. not recorded any-where)		1800	1800

(3) In the credit side of Supplier Sen Brothers A/c:
“By error in posting ₹4500”

(4)

Date	Particulars	L.F	Amount	Amount
	Furniture A/c                                                               Dr To Purchases A/c (Being correction of Furniture purchased entered in the Purchase Day Book)		15000	15000

(5)

Date	Particulars	L.F	Amount	Amount
	Black and White A/c                     Dr To Discount received A/c (Being rectification of the entry omitted)		1200	1200

(6) In the debit side of Discount allowed A/c:
“To omission of entry in the Cash book ₹ 180”.

(ii) With opening a Suspense A/c
Journal Entries

Suspense A/c

Question 3(a).
Anand of Bangalore consigned to Raj of Pune, goods to be sold at invoice price which -represents 125% of cost. Raj is entitled to a commission of 10% on sales at invoice price and 25% of any excess realised over invoice price. The expenses on freight and insurance incurred by Anand were ₹ 12,000. The account sales received by Anand shows that Raj has effected sales amounting to ₹ 1,20,000 in respect of 75% of the consignment. His selling expenses to be reimbursed were ₹ 9,600. 10% of consignment goods of the value of ₹ 15,000 were destroyed in fire at the Pune godown and the insurance company paid ₹ 12,000 net of salvage. Raj remitted the balance in favour of Anand.

You are required to prepare Consignment Account and the account of Raj in the books of Anand along with the necessary calculations. (10 Marks)

(b) A firm sends goods on “Sale or Return basis”. Customers have the choice of returning the goods within a month. During May 2018, the following are the details of goods sent:

Date (May)	2	8	12	18	20	27
Customers	P	B	Q	D	E	R
Value (₹)	17,000	22,000	25,000	5,500	2,000	28,000

Within the stipulated time, P and Q returned the goods and B, D and E signified that they have accepted the goods.
Show in the books of the firm, the Sale or Return Account and Customer-Q for Sale or Return Account as on 15th June 2018. (5 Marks)

(c) Attempt any ONE of the following two sub-parts i.e. either (i) or (ii)
(i) The following amounts are due to X by Y. Y wants to pay on 10th July 2019. Interest rate of 9% p.a. is taken into consideration.
Due dates                              ₹
10th January                         750
26th January (Republic Day) 1,200
23rd March                           3,300
18th August (Sunday)           4,100
Determine average due date and the amount to be paid on 10th July 2019. Assume 10th January as base date. (5 Marks)

(ii) Ramesh has a Current Account with Partnership firm. He had a debit balance of ₹ 85,000 as on 01 -07-2018. He has further deposited the following amounts:
Date                       Amount (₹)
14-07-2018            1.23.000
18-08-2018            21.000

He withdrew the following amounts:
Date                       Amount (₹)
29-07-2018            92,000
09-09-2018            11,500
Show Ramesh’s A/c in the books of the firm. Interest is to be calculated at 10% on debit balance and 8% on credit balance. You are required to prepare current account as on 30th September, 2018 by means of product of balances method. (5 Marks)
Answer:
(a) In the books of Anand
Consignment A/c

Raj’s A/c

Working notes:
(1) Calculation of value of Goods sent on Consignment
Abnormal loss – 10% of consignment goods of the invoice value of ₹ 15000
If, 10% – 15000
Then, 100% – ₹ 150000 – Value of Goods sent on Consignment
Invoice price = 125% of cost
Loading of goods sent on consignment = \(\frac { 150000×2 }{ 125 }\) = ₹ 30000

(2) Calculation of Commission
Invoice price of the goods sold = 75% of 150000 = ₹ 112500
Excess of selling price over invoice price = 120000 – 112500 = ₹ 7500
Total Commission = 10% of ₹ 112500 + 25% of ₹ 7500
= 11250 + 1875
= ₹ 13125

(b) Sale or return A/c

O’s A/c

(c) Base Date = 10 Jan
(i)

= 10th Jan. + \(\frac{1153500}{9350}\)
= 10th Jan. + 123.36 days
= 10th Jan. + 123 days = 13th May
Interest upto 10th July = 9350 x \(\frac{9}{100}\) x \(\frac{58}{365}\) = ₹ 133.717 or ₹ 133.72
Amount to be paid on 10th July, 2019 = 9350 + 133.72 = ₹ 9483.72
Days are rounded off as per mathematical rule.

(ii) Ramesh’s current account with the firm
as on 30th September, 2018

Working Mote: Interest:

Question 4(a).
Arup and Swarup were partners. The partnership deed provides inter alia.
(i) That the annual accounts be balanced on 31st December each year;

(ii) That the profits be allocated as follows:
Arup: One-half; Swarup: One-third and Carried to reserve account: One Sixth;

(iii) That in the event of death of a partner, his executor will be entitled to the following:

• The capital to his credit at the date of death;
• His proportionate share of profit to date of death based on the average profits of the last three completed years; and
• His Share of goodwill based on three years’ purchase of the average profits for the three preceding completed years

Trial Balance as on 31st December, 2018

Particulars	Debit (₹)	Credit (₹)
Arup’s Capital		90,000
Swarup’s Capital		60,000
Reserve	50,000	45,000
Bills receivable	55,000
Investment	1,10,000
Cash
Trade payables		20,000
Total	2,15,000	2,15,000

The profits for the three year were 2016: ₹ 51,000; 2017: ₹ 39,000 and 2018: ₹ 45,000. Swarup died on 1st May 2019.
Show the calculation of Swarup (A) Share of profits; (B) Share of Goodwill; (C) Draw up Swarup’s Executors Account as would appear in the firms’ ledger transferring the amount to the Loan account. (10 Marks)
(b) From the following Income and Expenditure account and the Balance sheet of a club, prepare its Receipts and Payments Account and subscription
account for the year ended 31st March, 2019:
Income & Expenditure Account for the year 2018-19

Balance sheet as at 31st March, 2019

The following adjustments have been made in the above accounts:
(i) Upkeep of ground ₹ 660 and printing ₹ 264 relating to 2017-18 were paid in 2018-19
(ii) One fourth of entrance fee has been capitalized by transfer to General- Fund
(iii) Subscription outstanding in 2017-18 was ₹ 880 and for 2018-19 ₹ 770
(iv) Subscription received in advance in 2017-18 was ₹ 220 and in 2018-19 for ₹ 2019-20 was ₹ 110
(v) Furniture was purchased during the year (10 Marks)
Answer:
(A) Share of profits:
Average profits = \(\frac{51000+39000+45000}{3}\)
= ₹ 45000
Swarup’s share of profits = 45000 x \(\frac { 4 }{ 12 }\) x \(\frac { 2 }{ 5 }\) = ₹ 6000

(B) Share of Goodwill:
Average profits = ₹ 45000
Goodwill = Average profits x No. of years purchase
= 45000 x 3 = ₹ 135000
Swarup’s share of goodwill = 135000 x \(\frac { 2 }{ 5 }\) = ₹ 54000

(C) Swarup’s Executors’ A/c:

(b) Receipts and Payments A/c for the year ended 31st March, 2019

Subscription A/c

Question 5(a).
An inexperienced book keeper has drawn up a Trial balance for the year ended 31st March, 2019.

Draw up a corrected Trial Balance by debiting or crediting any residual errors to a Suspense account. (5 Marks)

(b) Mr. Shyamal runs a factory, which produces detergents. Following details were available in respect of his manufacturing activities for the year ended 31-03-2019.
Opening work-in-progress (9000 units)       26,000
Closing work-in-progress (14,000 units)      48,000
Opening inventory of Raw Materials           2,60,000
Closing inventory of Raw Materials             3,20,000
Purchases                                                     8,20,000
Hire charges of Machinery @ ₹ 0.70 per unit manufactured
Hire charges of factory                                2,60,000
Direct wages-contracted @ ₹ 0.80 per unit manufactured
and @ ₹0.40 per unit of closing W.I.P
Repairs and maintenance                            1,80,000
Units produced-5,00,000 units
Required a Manufacturing Account of Mr. Shyamal for the year ended 31 -03-2019. (5 Marks)

(c) The balance sheet of Mittal on 1st January, 2018 was as follows:

During 2018, his profit and loss account revealed a net profit of ₹ 15,10,000. This was after allowing for the following:
(i) Interest on capital @ 6% p.a.
(ii) Depreciation on plant and machinery @10% and on Furniture and Fixtures @ 5%.
(iii) A provision for Doubtful debts @ 5% of the trade receivables as at 31st December 2018.
But while preparing the profit and loss account he had forgotten to provide for (1) outstanding expenses totalling ₹ 1,85,000 and (2) prepaid insurance to the extent of ₹ 25,000.
His current assets and liabilities on 31st December, 2018, were: Trade receivables ₹ 21,00,000; Cash at bank ₹ 5,20,000 and Trade payables ₹ 13,84,000. During the year he withdrew ₹ 6,20,000 for domestic use. Closing inventories is equal to net trade receivables at the year-end.
You are required Draw up revised Profit and Loss account and Balance Sheet at the end of the year. (10 Marks)
Answer:
Trial Balance as on 31 st March 2019

Name of accounts	L.F.	Dr. Bal.	Cr. Bal.
1. Provision for Doubtful Debts			250
2. Cash Credit Account			1654
3. Capital			4591
4. Trade Payables			1637
5. Due from Customers		2983
6. Discount Received			252
7. Discount Allowed		733
8. Drawings		1200
9. Office Furniture		2155
10. Carriage Inward		829
11. Purchases		10923
12. Returns Inward		330
13. Rent & Rates		314
14. Salaries		2520
15. Sales			16882
16. Inventory		2418
17. Provision for Depreciation on Furniture			364
18. Suspense A/c (bal. Fig.)		1225
Total		25630	25630

(b) In the books of Mr. Shyam Lai
Manufacturing A/c
for the year ended 31st March, 2019

Working Notes:
(1) Direct Wages

(2) Direct Expenses
500000 units @ ₹0.70 per unit = ₹ 350000

(c) Profit and Loss A/c

Particulars	Amount	Particulars	Amount
To Outstanding Expenses	185000	By balance b/d	1510000
To Net Profit	1350000	By Prepaid Insurance	25000
Total	1535000	Total	1535000

Balance Sheet as at 31st December, 2018

Question 6(a).
B Limited issued 50,000 equity shares of ₹ 10 each payable as ₹ 3 per share on application, ₹ 5 per share (including ₹ 2 as premium) on allotment and ₹ 4 per share on call. All these shares were subscribed. Money due on all shares was fully received except from X, holding 1000 shares who failed to pay the allotment and call money and Y, holding 2000 shares, failed to pay the call money. All those 3,000 shares were forfeited. Out of forfeited shares, 2,500 shares (including whole of X’s shares) were subsequently re-issued to Z as fully paid up at a discount of ₹ 2 per share.
Pass necessary journal entries in the books of B limited. Also prepare Balance Sheet and notes to accounts of the company. (15 Marks)
(b) Distinguish between Periodic Inventory System and Perpetual Inventory System. (5 Marks)
Answer:
In the books of B Limited
Journal Entries

Balance sheet of B Limited
as at ……………

Working note:
1. Calculation of Capital reserve

Notes to Accounts:

1. Share Capital:	₹	₹
Authorised Capital
……. Equity shares of ₹ 10 each		……….
Issued Capital
50000 Equity shares of ₹ 10 each		500000
Subscribed, Called up & Paid up Capital
49500 Equity shares of ₹ 10 each	495000
Add: Share forfeiture (500 x 6)	3000	498000
2. Reserves and Surplus :
Securities premium reserve	98000
Capital Reserve	7000	105000
3. Cash and cash equivalent		603000

(b) Periodic/Physical inventory system:

• No records of inventory are maintained.
• Inventory is ascertained by physical counting at the end of the year and then valued.
• It is simple and commonly followed by small organisations.

Perpetual/continuous inventory system:

• Inventory records also known as stores records are maintained in which details of each and every item are kept.
• The records may be in only quantity form or may include value also (known as priced ledger).
• The details of receipt and issue are recorded instantly and balance as certained.
• Hence balance of all items of inventory are always available. The balance of year end can be used in financial accounting for final accounts.

Students should practice CA Foundation Economics Chapter 1 MCQs Nature and Scope of Business Economics – CA Foundation Economics MCQ with Answers based on the latest syllabus.

Nature and Scope of Business Economics CA Foundation MCQ Economics Chapter 1

Introduction:

1. The term ‘Economics’ owes its origin to the Greek word.
(a) Aikonomia
(b) Wikonornia
(c) Oikonomia
(d) None of the above
Answer:
(c) Oikonomia

2. Adam Smith published his master piece “An enquiry into the nature and causes of wealth of nations” in the year __________.
(a) 1776
(b) 1786
(e) 1789
(d 1790
Answer:
(a) 1776

3. Oikonomia means __________.
(a) Industry
(b Management of household
(c Services
(d) None of these
Answer:
(b Management of household

4. Economists regard decision making as important because:
(a) The resources required to satisfy our unlimited wants and needs are finite or scarce.
(b) It is crucial to understand how we can best allocate our scarce resources to satisfy society’s unlimited wants and needs.
(c) Resources have alternative uses.
(d) All of the above.
Answer:
(d) All of the above.

5. ‘Economics is the science of choice making’. It implies:
(a) No choice is to be made
(b) Choice to be made between alternative uses
(c) Choice to be made between means and ends
(d) None of the above
Answer:
(b) Choice to be made between alternative uses

6. Which one is the feature of Marshall’s definition?
(a) Limited ends
(b) Scarce means
(c) Study of wealth as well as study of man
(d) Study of allocation of resources
Answer:
(c) Study of wealth as well as study of man

7. According to Robbins, ‘means’ are:
(a) Scarce
(b) Unlimited
(c) Undefined
(d) All of these
Answer:
(a) Scarce

8. Economics is the study of:
(a) How society manages its unlim-ited resources
(b) How to reduce our wants until we are satisfied
(c) How society manages its scarce resources
(d) How to fully satisfy our unlimited wants.
Answer:
(c) How society manages its scarce resources

9. In Economics, we use the term scarcity to mean:
(a) Absolute scarcity and lack of resources in less developed coun¬tries.
(b) Relative scarcity i.e. scarcity in relation to the wants of the society.
(c) Scarcity during times of business failure and natural calamities.
(d) Scarcity caused on account of excessive consumption by the rich.
Answer:
(b) Relative scarcity i.e. scarcity in relation to the wants of the society.

10. What implication(s) does resource scarcity have for the satisfaction of wants?
(a) Not all wants can be satisfied.
(b) We will never be faced with the need to make choices.
(c) We must develop ways to decrease our individual wants.
(d) The discovery of new natural resources is necessary to increase our ability to satisfy wants.
Answer:
(a) Not all wants can be satisfied.

11. Adam Smith defined Economics in terms of:
(a) The Science of welfare
(b) The Science of scarcity
(c) The Science of wealth
(d) The Science of wealth and welfare
Answer:
(c) The Science of wealth

12. Who defines Economics in terms of Dynamic Growth and Development?
(a) Robbins
(b) Paul A Samuelson
(c) Adam Smith
(d) None of these
Answer:
(b) Paul A Samuelson

13. In every economic system, scarcity imposes limitations on __________.
(a) Households, business firms, governments and the nation as a whole.
(b) Households and business firms, but not the governments.
(c) Local and state governments, but not the federal government.
(d) Households and governments, but not business firms.
(e) Business firms, governments, and the nation as a whole.
Answer:
(a) Households, business firms, governments and the nation as a whole.

14. Economic goods are considered scarce resources because they __________.
(a) Cannot be increased in quantity.
(b) Do not exist in adequate quantity to satisfy the requirements of the society.
(c) Are of primary importance in satisfying social requirements.
(d) Are limited to man made goods.
Answer:
(b) Do not exist in adequate quantity to satisfy the requirements of the society.

15. ‘Economics is the study of mankind in the ordinary business of life’ was given by:
(a) Adam Smith
(b) Lord Robbins
(c) Alfred Marshall
(d) Samuelson
Answer:
(c) Alfred Marshall

16. Consider the following and decide which, if any, economy is without scarcity:
(a) The pre-independent Indian economy, where most people were farmers.
(b) A mythical economy where everybody is a billionaire.
(c) Any economy where income is distributed equally among its people.
(d) None of the above
Answer:
(d) None of the above

17. Human wants are in response to satisfy their wants?
(a) Unlimited
(b) Limited
(c) Scarce
(d) Multiple
Answer:
(a) Unlimited

18. Economic goods are considered as scarce resources because __________.
(a) Inadequate quantity to satisfy the needs of the society
(b) Not possible to increase in quantity
(c) Limited hands to make goods
(d) Primary importance in satisfying social requirements
Answer:
(a) Inadequate quantity to satisfy the needs of the society

19. The meaning of time element in Economics is:
(a) Calendar time
(b) Clock time
(c) Operational time in which supply adj usts with the market demand
(d) None of the above
Answer:
(c) Operational time in which supply adj usts with the market demand

20. All wants of an individual are not of:
(a) Equal importance
(b) Immediate importance
(c) Fixed importance
(d) All of the above
Answer:
(a) Equal importance

21. __________ refers to the process of selecting an appropriate alternative that will provide the most efficient means of attaining a desired end, from two or more alterative courses of action.
(a) Decision making
(b) Strategy
(c) Problem Solving
(d) Effectiveness
Answer:
(a) Decision making

22. Business Economics is __________.
(a) Abstract and applies the tools of Microeconomics.
(b) Involves practical application of economic theory in business decision making.
(c) Incorporates tools from multiple disciplines.
(d) (b) and (c) above.
Answer:
(d) (b) and (c) above.

23. Business Economics is also known as?
(a) Applied Economics
(b) Managerial Economics
(c) Micro Economics
(d) All of the above
Answer:
(b) Managerial Economics

24. The question of choice arises because our productive resources __________.
(a) Are limited
(b) Can be employed in alternatives
(c) Both (a) & (b)
(d) None of the above
Answer:
(c) Both (a) & (b)

25. The management of a business unit generally needs to make __________.
(a) Strategic Decision
(b) Tactical Decision
(c) Operational Decision
(d) All of the above
Answer:
(d) All of the above

26. Concept of Business Economics was given by:
(a) Joel Dean
(b) Alfred Marshall
(c) Adam Smith
(d) L. Robbins
Answer:
(a) Joel Dean

27. Which one of the following is incorrect about Business Economics?
(a) It is applied economics that fills the gap between economic theory and business practice.
(b) Business Economics integrates economic theory with business practice.
(c) Business Economics is also re-ferred to as Managerial Econom-ics.
(d) Business Economics is more concerned with Macro Economics.
Answer:
(d) Business Economics is more concerned with Macro Economics.

28. __________ defined Business Economics in terms of the use of eco-nomics analysis in the formulation of business policies.
(a) Joel Dean
(b) Karl Marks
(c) Adam Smith
(d) Schumpeter
Answer:
(a) Joel Dean

29. Business Economics is essentially a component of __________ as it includes application of selected quan-titative techniques.
(a) Pure Economics
(b) Applies Economics
(c) Statistical Economics
(d) None of the above
Answer:
(b) Applies Economics

30. Which of the following is not in-cluded in Economics?
(a) Family Structure
(b) Managerial Economics
(c) Micro Economics
(d) Macro Economics
Answer:
(a) Family Structure

31. The heart of Business Economics is __________.
(a) Micro Economic Theory of the behaviour of consumers and firms in competitive markets.
(b) Macro-Economic Theory of the national income
(c) Income Economic analysis to analyze the industry.
(d) All of the above.
Answer:
(a) Micro Economic Theory of the behaviour of consumers and firms in competitive markets.

32. Which one of the following is not a subject matter of Micro-Economics?
(a) Behaviour of Firms
(b) External Value of Currency
(c) Factor Pricing
(d) Location of Industry
Answer:
(b) External Value of Currency

33. Micro economics does not study __________.
(a) Consumer behaviour
(b) Factor pricing
(c) General price level
(d) Firms equilibrium
Answer:
(c) General price level

34. Micro Economics is the study of:
(a) Individual parts of the economy
(b) The economy as a whole
(c) Choice making
(d) Development of the economy
Answer:
(a) Individual parts of the economy

35. The branch of economic theory that deals with the problem of allocation of resources is __________.
(a) Micro-Economic theory.
(b) Macro-Economic theory.
(c) Econometrics.
(d) None of the above
Answer:
(a) Micro-Economic theory.

36. Which of the following is not the subject matter of Business Economics?
(a) Should our firm be in this busi-ness?
(b) How much should be produced and at price should be kept?
(c) How will the product be placed in the market?
(d) How should we decrease unem-ployment in the economy?
Answer:
(d) How should we decrease unem-ployment in the economy?

37. The branch of economic theory that deals with the problem of allocation of resources is:
(a) Micro Economics
(b) Macro Economics
(c) Econometrics
(d) None of these
Answer:
(a) Micro Economics

38. Micro Economics Covers:
(a) National Income and National Output
(b) External Value of Currency
(c) Overall level of Savings and Investment
(d) Location of Industry
Answer:
(d) Location of Industry

39. A study of how increase in the corporate income tax rate will affect the natural unemployment rate is an example of:
(a) Micro Economics
(b) Descriptive Economics
(c) Micro Economics
(d) Normative Economics
Answer:
(a) Micro Economics

40. __________ examines how the individual units (Consumers or firms) make decisions as to how to efficiently allocate their scare resources.
(a) Macro Economics
(b) Micro Economics
(c) Mathematical Economics
(d) Consumer Economics.
Answer:
(b) Micro Economics

41. Which of the following falls under micro economics?
(a) National Income
(b) General price level
(c) Factor pricing
(d) National saving and investment
Answer:
(c) Factor pricing

42. Which of these is a part of micro economics?
(a) Factor pricing
(b) National Income
(c) Balance of payment
(d) None of the above
Answer:
(a) Factor pricing

43. Micro economics is also known as __________.
(a) Public economics
(b) Price theory
(c) Income theory
(d) Demand theory
Answer:
(b) Price theory

44. Micro Economics is concerned with:
(a) Consumer Behaviour
(b) Product pricing
(c) Factor Pricing
(d) All of the above
Answer:
(d) All of the above

45. Macro Economics is also called __________ economics.
(a) Applied
(b) Aggregate
(c) Experimental
(d) None of the above
Answer:
(b) Aggregate

46. Which of the following does not suggest a macro approach for India?
(a) Determining the GNP of India.
(b) Finding the causes of failure of ABC Ltd.
(c) Identifying the causes of inflation in India.
(d) Analyse the causes of failure of industry in providing large scale employment
Answer:
(b) Finding the causes of failure of ABC Ltd.

47. Macro Economics is the study of __________.
(a) All aspects of scarcity.
(b) The national economy and the global economy as a whole.
(c) Big businesses.
(d) The decisions of individual businesses and people.
Answer:
(b) The national economy and the global economy as a whole.

48. A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of __________.
(a) Macro-Economics.
(b) Descriptive Economics.
(c) Micro-economics.
(d) Normative economics.
Answer:
(a) Macro-Economics.

49. Which of these is an example of macro economics:
(a) Problem of unemployment in India
(b) Rising price level in the country
(c) Increase in disparities of income
(d) All of the above
Answer:
(d) All of the above

50. Macro economics include __________.
(a) Product pricing
(b) Consumer behaviour
(c) External value of money
(d) Location of industry
Answer:
(c) External value of money

51. Which of the following is not a subject matter of Micro-economies?
(a) The price of mangoes.
(b) The cost of producing a fire truck for the fire department of Delhi, India.
(c) The quantity of mangoes pro-duced for the mangoes market.
(d) The national economy’s annual rate of growth.
Answer:
(d) The national economy’s annual rate of growth.

52. Which of the following would be considered a topic of study in Macro-economics?
(a) The effect of increase in wages on the profitability of cotton industry
(b) The effect on steel prices when more steel is imported
(c) The effect of an increasing infla¬tion rate on living standards of people in India
(d) The effect of an increase in the price of coffee on the quantity of tea consumed
Answer:
(c) The effect of an increasing infla¬tion rate on living standards of people in India

53. Which of the following is a part of the subject matter of macro economics?
(a) Study of firms
(b) Aggregate profits of a firm
(c) Market demand for a product
(d) Net national product
Answer:
(d) Net national product

54. The Macro Economics does not cover the area of __________.
(a) General price level and interest rates
(b) Level of employment and rate of economic growth
(c) Balance of trade & Balance of payments
(d) Product Pricing.
Answer:
(d) Product Pricing.

55. Shyam : This year due to heavy rainfall my option crop was damaged
Krishna: Climates affects crop yields. Some years are bad, other are good
Hari: Don’t worry – Price increase will compensate for the fall in quantity supplied
Radhe: The Government ought to guarantee that our income will not fall.
In this conversation, the normative statement is made by
(a) Shyam
(b) Krishna
(c) Hari
(d) Radhe
Answer:
(d) Radhe

56. Business Economics enables appli-cation of economic logic and analytical tools to __________.
(a) Bridge the gap between theory and practice.
(b) Increase the implementation sci-ence.
(c) Increase the effectiveness.
(d) Apply tools of macro economics.
Answer:
(a) Bridge the gap between theory and practice.

57. Business Economics relies heavily on the techniques of __________.
(a) Micro Economics
(b) Macro Economics
(c) Normative Science only
(d) Economics discipline only.
Answer:
(a) Micro Economics

58. Which of the following is a norma-tive statement?
(a) Planned economies allocate re-sources via government depart-ments.
(b) Most transitional economies have experienced problems of falling output and rising prices over the past decade.
(c) There is a greater degree of consumer sovereignty in market economies than planned econo-mies.
(d) Reducing inequality should be a major priority for mixed econo-mies
Answer:
(d) Reducing inequality should be a major priority for mixed econo-mies

59. An example of ‘positive’ economic analysis would be:
(a) An analysis of the relationship between the price of food and the quantity purchased.
(b) Determining how much income each person should be guaran-teed.
(c) Determining the ‘fair’ price for food.
(d) Deciding how to distribute the output of the economy.
Answer:
(a) An analysis of the relationship between the price of food and the quantity purchased.

60. Business Economics is __________ in its approach as it tackles practical problems which the firm faces in the real world.
(a) Scientific
(b) Programmatic
(c) Theoretical
(d) Mathematical
Answer:
(b) Programmatic

61. The difference between positive and normative Economics is:
(a) Positive Economics explains the performance of the economy while normative Economics finds out the reasons for poor perfor¬mance.
(b) Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.
(c) Normative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people.
(d) Positive Economics prescribes while normative Economics de-scribes.
Answer:
(b) Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.

62. Normative aspect of Economics is given by:
(a) Marshall
(b) Robbins
(c) Adam Smith
(d) Samuelson
Answer:
(a) Marshall

63. Normative Economics is based on:
(a) Ethical Considerations
(b) Facts and Generalization
(c) What is?
(d) All of the above
Answer:
(a) Ethical Considerations

64. Deductive and Inductive methods are complimentary to each other. It is:
(a) Absolutely correct
(b) Absolutely incorrect
(c) Partially incorrect
(d) None of the above
Answer:
(a) Absolutely correct

65. In inductive method, logic proceeds from:
(a) General to Particular
(b) Particular to General
(c) Both (a) and (b)
(d) None of these
Answer:
(b) Particular to General

66. Which of the following is a norma-tive economic statement?
(a) Unemployment rate decreases with industrialization
(b) Economics is a social science that studies human behaviour.
(c) The minimum wage should be raised to ₹ 200 per day
(d) India spends a huge amount of money on national defence.
Answer:
(c) The minimum wage should be raised to ₹ 200 per day

67. Ram: My corn harvest this year is poor.
Krishan: Don’t worry. Price increases will compensate for the fall in quantity supplied.
Vinod: Climate affects crop yields. Some years are bad, others are good.
Madhu: The Government ought to guarantee that our income will not fall.
In this conversation, the normative statement is made by
(a) Ram
(b) Krishan
(c) Vinod
(d) Madhu
Answer:
(d) Madhu

68. Positive science only explains __________
(a) What is?
(b) What ought to be?
(c) What is right or wrong
(d) None of the above
Answer:
(a) What is?

69. Under Inductive method logic proceeds from:
(a) General to particular
(b) Positive to normative
(c) Normative to positive
(d) Particular to general
Answer:
(d) Particular to general

70. __________ analyses causes and effect relationship between variables in an objective and scientific manner.
(a) Positive Science
(b) Normative Science
(c) Negative Science
(d) Analytical Science
Answer:
(a) Positive Science

71. Business Economics is generally in nature.
(a) Normative
(b) Prescriptive
(c) Normative or Prescriptive
(d) Theoretical
Answer:
(c) Normative or Prescriptive

72. Which of the following statements is incorrect?
(a) Business economics is normative in nature.
(b) Business Economics has a close connection with statistics.
(c) Business Economist need not worry about macro variables.
(d) Business Economics is also called Managerial Economics.
Answer:
(c) Business Economist need not worry about macro variables.

73. Under Inductive method, the logic proceeds from:
(a) General to particulars
(b) Particular to general
(c) Both (a) and (b)
(d) None
Answer:
(b) Particular to general

73A. Who gave the positive aspect of science?
(a) Alfred Marshall
(b) A.C. Pigou
(c) Adam Smith
(d) Robbins
Answer:
(d) Robbins

74. Although business economics combines the essentials of normative and positive economic theory but the emphasis is on :
(a) Positive
(b) Normative
(c) Both Positive and Normative
(d) Neither Positive nor Normative.
Answer:
(b) Normative

75. Business Economics is __________.
(a) Normative in nature
(b) Interdisciplinary in nature
(c) Both
(d) None
Answer:
(a) Normative in nature

76. Find out the correct statement __________
(a) Higher the prices, lower the quality demanded of a product are a normative statement
(b) Micro and macro-economics are interdependent
(c) In a capitalist economy, the eco-nomic problems are solved by planning commission
(d) In deductive method logic pro-ceeds from particular to the general
Answer:
(b) Micro and macro-economics are interdependent

77. “Economics is neutral between ends”. The statement is given by:
(a) L. Robbins
(b) Mrs. Joan
(c) Alfred Marshall
(d) A.C. Pigou
Answer:
(a) L. Robbins

78. Economics which is concerned with welfare propositions is called __________.
(a) Socialistic economics
(b) Capitalistic economics
(c) Positive economics
(d) Normative economics
Answer:
(d) Normative economics

79. The Business Economics incorpo-rates tools from other disciplines such as Mathematics, operations Research, Management theory, Accounting, etc. Therefore, Business Economics is
(a) Intra-disciplinary
(b) Inter-disciplinary
(c) Multi-disciplinary
(d) Flexi-disciplinary
Answer:
(b) Inter-disciplinary

80. Under inductive method logic proceeds from:
(a) General to particular
(b) Positive to narrative
(c) Normative to positive
(d) Particular to general
Answer:
(d) Particular to general

81. Business Economics involves the elements of __________.
(a) Micro Environment
(b) Macro Environment
(c) Both (a) and (b)
(d) None of the above.
Answer:
(c) Both (a) and (b)

82. In which of the following methods conclusions are drawn on the basis of collection and analysis of facts?
(a) Deductive method
(b) Scientific method
(c) Inductive method
(d) Experimental method
Answer:
(c) Inductive method

83. Business economy involves theory of Business economics with __________.
(a) Normative Economics
(b) Business practices
(c) Micro Economics
(d) Macro Economics
Answer:
(b) Business practices

84. The operational or interval issues to which economic theories can be directly applied are related with.
(a) Micro Economics
(b) Macro Economics
(c) Business Economics
(d) Environmental Economics
Answer:
(a) Micro Economics

85. Which factor is included in business Economics?
(a) Business Economics is an art
(b) Inter-disciplinary in nature
(c) Normative in nature
(d) All of the above
Answer:
(d) All of the above

86. Applied economics includes __________.
(a) Regression analysis and math-ematical linear programming
(b) Capital budgeting
(c) Both (a) and (b)
(d) None
Answer:
(c) Both (a) and (b)

87. Which of the following is not within the scope of Business Economics?
(a) Capital Budgeting
(b) Risk Analysis
(c) Business Cycles
(d) Accounting Standards
Answer:
(d) Accounting Standards

88. __________ explains the rela-tionship between inputs and output.
(a) Production Theory
(b) Demand Analysis
(c) Inventory Management
(d) None of the above
Answer:
(a) Production Theory

89. Business Economics with the help of advanced tools like __________ enables the firm to arrive at the best course of action for optimum utilisation of available resources.
(a) Accounting
(b) Finance
(c) Linear Programming
(d) Marketing Mix
Answer:
(c) Linear Programming

90. Business Economists use method(s) __________ to maintain optimum stock of inventories.
(a) ABC Analysis
(b) Simple simulation exercises
(c) Mathematical models
(d) All of the above
Answer:
(d) All of the above

91. Which of the following Macro-Economic Factor is considered in Business Economics?
(a) Business Cycles
(b) Employment, Prices
(c) Saving & investment
(d) All of the above.
Answer:
(d) All of the above.

92. Which of the following statement is false?
(a) The Resources are limited.
(b) The Resources have alternative uses.
(c) If resources are unlimited, people would be able to satisfy all their wants.
(d) The economics problem arises because resource has only a single use.
Answer:
(d) The economics problem arises because resource has only a single use.

93. Which of the following economic system has to deal with the control problem of scarcity of resources?
(a) Capitalist
(b) Socialist
(c) Mixed
(d) All of the above
Answer:
(d) All of the above

94. The Central problem in every eco-nomic society is:
(a) To ensure a minimum level of income for every individual.
(b) To allocate scarce resources in such a manner that societies unlimited wants are satisfied in the best possible manner.
(c) To ensure that production occurs in the most efficient manner.
(d) Toprovidejobtoeveryjobseeker.
Answer:
(b) To allocate scarce resources in such a manner that societies unlimited wants are satisfied in the best possible manner.

95. A developed economy uses technique in production.
(a) Labour intensive.
(b) Capital intensive
(c) Home-based
(d) Traditional
Answer:
(b) Capital intensive

96. The central problem in economics is that of __________.
(a) Comparing the success of com-mand versus market economies.
(b) Guaranteeing that production oc¬curs in the most efficient manner.
(c) Guaranteeing a minimum level of income for every citizen.
(d) Allocating scarce resources in such a manner that society’s un-limited needs or wants are satis-fied in the best possible manner.
Answer:
(d) Allocating scarce resources in such a manner that society’s un-limited needs or wants are satis-fied in the best possible manner.

97. Capital intensive technique would get chosen in a __________.
(a) Labour surplus economy where the relative price of capital is lower.
(b) Capital surplus economy where the relative price of capital is lower.
(c) Developed economy where technology is better.
(d) Developing economy where technology is poor.
Answer:
(b) Capital surplus economy where the relative price of capital is lower.

98. Which of the following is not a part of central economic Problem?
(a) What to Produce?
(b) How to Produce?
(c) For whom to Produce?
(d) Price fixation of Production.
Answer:
(d) Price fixation of Production.

99. refers to the sum total of arrangements for the production and distribution of goods and services in a Society.
(a) Economic System
(b) Social System
(c) Business system
(d) Comprehensive System
Answer:
(a) Economic System

100. Economic Problem arises when:
(a) Wants are unlimited
(b) Resources are limited
(c) Alternative uses of resources
(d) All of the above
Answer:
(d) All of the above

101. Which of the following is not one of the four central questions that the study of economics is supposed to answer?
(a) Who produces what ?
(b) When are goods produced?
(c) Who consumes what?
(d) How are goods produced?
Answer:
(b) When are goods produced?

102. The classification of economies into Capitalist, Socialist and Mixed is based on their:
(a) Mode of Production, exchange and distribution
(b) Government’s role in economic activity.
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(c) Both (a) and (b)

103. The choice between labour and Capital intensive techniques is related with.
(a) What to Produce?
(b) How to Produce?
(c) For whom to Produce
(d) All of the above.
Answer:
(b) How to Produce?

104. Which one of the following is not an example of capitalist economy?
(a) Japan
(b) Mexico
(c) Germany
(d) Cuba
Answer:
(d) Cuba

105. Freedom of choice is the advan-tage of __________.
(a) Socialism
(b) Capitalist
(c) Mixed economy
(d) None of the above
Answer:
(b) Capitalist

106. A capitalist economy consists of __________.
(a) Central planning authority
(b) A mechanism to decide as what, how and for whom to produce
(c) Both (a) and (h)
(d) None of the above
Answer:
(b) A mechanism to decide as what, how and for whom to produce

107. In a free market economy the al-location of resources is determined by __________.
(a) Voting done by consumers
(b) A central planning authority.
(c) Consumer preferences.
(d) The level of profits of firms.
Answer:
(c) Consumer preferences.

108. A capitalist economy uses __________ as the principal means of allocating resources.
(a) Demand
(b) Supply
(c) Efficiency
(d) Prices
Answer:
(d) Prices

109. Price Mechanism is the main feature of which economy __________.
(a) Capitalistic Economy
(b) Mixed Economy
(c) Socialist Economy
(d) All of the above
Answer:
(a) Capitalistic Economy

110. Which out of these are the feature of capitalism?
(i) Profit motive
(ii) Human welfare
(iii) Work through price mechanism
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) All of these
Answer:
(c) (i) and (iii)

111. __________ is an economic system in which all means of production are owned and controlled by private individuals for profit.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) None of the above
Answer:
(a) Capitalist

112. Which of the following is consid-ered as a disadvantage of allocating resources using the market system?
(a) Income will tend to be unevenly distributed.
(b) People do not get goods of their choice.
(c) Men of Initiative and enterprise are not rewarded.
(d) Profits will tend to be low.
Answer:
(a) Income will tend to be unevenly distributed.

113. Exploitation and inequality will be more in __________.
(a) Socialism
(b) Capitalism
(c) Mixed
(d) All of the above
Answer:
(b) Capitalism

114. __________ means that buyers ultimately determine which goods and services will be produced and in what quantities.
(a) Capitalist Economic
(b) Socialist Economy
(c) Mixed Economy
(d) Consumer Sovereignty
Answer:
(d) Consumer Sovereignty

115. In which type of economy do consumers and producers make their choices based on the market forces of demand and supply?
(a) Open Economy
(b) Controlled Economy
(c) Command Economy
(d) Market Economy
Answer:
(d) Market Economy

116. The economic system in which all the means of production are owned and controlled by private individuals for profit.
(a) Socialism
(b) Capitalism
(c) Mixed economy
(d) Communism
Answer:
(b) Capitalism

117. In a free market economy, when consumers increase their purchase of a goods and the level of exceeds then prices tend to rise:
(a) Demand, supply
(b) Supply, demand
(c) Prices, demand
(d) Profits, supply
Answer:
(a) Demand, supply

118. Capitalistic Economy uses as principal means of allocating resources.
(a) Demand
(b) Supply
(c) Price
(d) All of the above
Answer:
(c) Price

119. In a capitalist economy, allocation of resources is done by:
(a) Producers
(b) Government
(c) Planners
(d) Price mechanism
Answer:
(d) Price mechanism

120. A Free Market economy solves its Central Problems through __________.
(a) Planning authority
(b) Market mechanism
(c) Both
(d) None
Answer:
(b) Market mechanism

121. A capitalist economy is by and large __________.
(a) A closed economy
(b) A free market economy
(c) A centrally controlled economy
(d) An economy in which a govern-ment neither collects any taxes nor incurs any expenditure.
Answer:
(b) A free market economy

122. Which one is not the characteristic of capitalistic economy?
(a) Profit motive
(b) Income inequality
(c) Free employment
(d) Collective ownership
Answer:
(d) Collective ownership

123. Capitalistic Economy uses as principal means of allocating resources.
(a) Demand
(b) Supply
(c) Price
(d) All of the above
Answer:
(c) Price

124. Which one of the following is not true about capitalist economy?
(a) There is freedom of economic choice.
(b) Profit motive is the driving force.
(c) It is also called as free market economy or laissez Faire economy.
(d) Producer is the king under capitalism
Answer:
(d) Producer is the king under capitalism

125. The merits of Capitalist economy do not include:
(a) Faster process of economic growth
(b) Efficient economic decisions and their implementation
(c) Incentives for innovation and technological progress
(d) Welfare of labour
Answer:
(d) Welfare of labour

126. A free market economy’s driving force is:
(a) Profit motive
(b) Welfare of the people
(c) Rising income and levels of living
(d) None of the above.
Answer:
(a) Profit motive

127. An economic system in which all means of production are owned and controlled by private individuals for profit is called:
(a) Mixed Economy
(b) Socialist Economy
(c) Capitalist Economy
(d) Developed Economy
Answer:
(c) Capitalist Economy

128. Where does price mechanism exists?
(a) Capitalist Economy
(b) Socialist Economy
(c) Both type of economies
(d) None of the above.
Answer:
(a) Capitalist Economy

129. In which among the following systems the ‘right to property’ exists __________.
(a) Mixed economy
(b) Capitalist economy
(c) Socialist economy
(d) Traditional economy
Answer:
(b) Capitalist economy

130. A system of economy in which all the means of production are owned and controlled by the private individuals for the purpose of profit, is called:
(a) Socialist Economy
(b) Capitalist Economy
(c) Mixed Economy
(d) All of the above
Answer:
(b) Capitalist Economy

131. Capitalistic Economy user __________ as principal means of allocating resources:
(a) Demand
(b) Supply
(c) Price
(d) All of the above
Answer:
(c) Price

132. Which of the following is not demerit of Capitalism?
(a) Precedence of property rights over human rights.
(b) Misallocation of resources.
(c) Punishment for inefficient & imprudent men.
(d) Environmental degradation due to excessive materialism.
Answer:
(c) Punishment for inefficient & imprudent men.

133. Freedom of choice is the advan-tage of __________.
(a) Socialism
(b) Capitalism
(c) Mixed Economy
(d) Communism
Answer:
(b) Capitalism

134. Under a free economy, prices are:
(a) Regulated
(b) Determined through free inter-play of demand and supply
(c) Partly regulated
(d) None of these
Answer:
(b) Determined through free inter-play of demand and supply

135. Which of the following statements does not apply to a market economy?
(a) Firms decide whom to hire and what to produce.
(b) Firms aim at maximizing profits.
(c) Households decide which firms to work for and what to buy with their incomes.
(d) Government policies are the pri-mary forces that guide the deci-sions of firms and households.
Answer:
(d) Government policies are the pri-mary forces that guide the deci-sions of firms and households.

136. Which of the following is not a feature of a capitalist economy?
(a) Right to private property
(b) Restrictions on consumers Right to choose
(c) Profit motive
(d) Freedom of enterprise
Answer:
(b) Restrictions on consumers Right to choose

137. Freedom of choice is the advan-tage of __________.
(a) Socialism
(b) Capitalism
(c) Communism
(d) None of the above
Answer:
(b) Capitalism

138. A Capitalist Economy follows the policy of:
(a) Laissez faire
(b) Regulated markets
(c) Promoting public sector
(d) None of the above
Answer:
(a) Laissez faire

139. In a capitalist economy the allocation of resources is performed by:
(a) Producers
(b) Government
(c) Planners
(d) Price mechanism
Answer:
(d) Price mechanism

140. The Concept of socialist economy was propounded by __________.
(a) Karl Mark
(b) Frederic Engels
(c) Adam Smith
(d) Both (a) & (b)
Answer:
(d) Both (a) & (b)

141. Socialist economy is __________.
(a) Self regulation
(b) Profit Oriented
(c) Command economy
(d) Allocation of resources as per market requirements
Answer:
(c) Command economy

142. Exploitation and inequality are minimal under:
(a) Socialism
(b) Capitalism
(c) Mixed economy
(d) None of the above
Answer:
(a) Socialism

143. Socialist Economy was pro-pounded by:
(a) Karl Marx
(b) Samuelson
(c) A.C. Pigou
(d) Adam Smith
Answer:
(a) Karl Marx

144. Socialist economy is also called as __________.
(a) Command Economy
(b) Centrally Planned Economy
(c) Free market Economy
(d) Both (a) & (b)
Answer:
(d) Both (a) & (b)

145. Although Price mechanism exists in __________, but it has only a secondary role.
(a) Capitalist economy
(b) Socialist economy
(c) Mixed Economy
(d) Price Economy.
Answer:
(b) Socialist economy

146. Inequalities of income do not perpetuate in __________.
(a) Socialism
(b) Mixed economy
(c) Capitalism
(d) None
Answer:
(a) Socialism

147. Administered prices refer to:
(a) Prices determined by forces of demand and supply
(b) Prices determined by sellers in the market
(c) Prices determined by an external authority which is usually the government
(d) None of the above
Answer:
(c) Prices determined by an external authority which is usually the government

148. Socialism ensures __________.
(a) Rapid growth and balanced development
(b) Right to work
(c) Incentives for efficient economic decisions
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)

149. The erstwhile U.S.S.R. is an example of __________ economy.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) Price
Answer:
(b) Socialist

150. Which one of the following is Not a feature of socialist economy?
(a) Collective ownership
(b) Absence of consumer choice
(c) Minimum role of Price Mechanism
(d) High Competition
Answer:
(d) High Competition

151. Which of the following is an example of Socialist economy?
(a) Erstwhile U.S.S.R.
(b) North Korea
(c) China and Cuba
(d) All of the above
Answer:
(d) All of the above

152. The demerits of Socialism do not include:
(a) Predominance of bureaucracy
(b) Red tapism & favoritism
(c) Corruption
(d) Consumer Sovereignty
Answer:
(d) Consumer Sovereignty

153. Under __________, the Consumers have no freedom of choice.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) None of the above
Answer:
(b) Socialist

154. Socialist Economy is also known as __________.
(a) Mixed Economy
(b) Planned Economy
(c) Capitalist Economy
(d) None of the above
Answer:
(d) None of the above

155. In which economy market and government both play on important role?
(a) Mixed economy
(b) Socialistic economy
(c) Capitalistic economy
(d) Business economy
Answer:
(a) Mixed economy

156. Which economic system is de-scribed by Schumpeter as capitalism in the oxygen tent?
(a) Laissez-faire Economy
(b) Command Economy
(c) Mixed Economy
(d) Agrarian Economy
Answer:
(c) Mixed Economy

157. The Government itself must run important and selected industries and eliminate the free play of profit motive and self-interest. It is applicable in case of economy.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) Price
Answer:
(c) Mixed

158. The term “Mixed Economy” denotes:
(a) Co-existence of both consumers and producers goods’ industries in the economy.
(b) Co-existence of both private and public sectors in the economy.
(c) Co-existence of both rural and urban sectors in the economy.
(d) Co-existence of both large and small industries in the economy
Answer:
(b) Co-existence of both private and public sectors in the economy.

159. Mixed economy means __________.
(a) All economic decisions are taken by Central Authority
(b) All economic decisions are taken by private entrepreneurs
(c) Economic decisions are partly taken by the state and partly by private entrepreneurs
(d) None of these
Answer:
(c) Economic decisions are partly taken by the state and partly by private entrepreneurs

160. Which of the following are the features of a mixed economy?
(a) Planned economy
(b) Dual system of pricing exists
(c) Balance regional development
(d) All of the above
Answer:
(d) All of the above

161. In a mixed economy __________.
(a) All economic decisions are taken by the central authority.
(b) All economic decisions are taken by private entrepreneurs.
(c) Economic decisions are partly taken by the state and partly by the private entrepreneurs.
(d) None of the above.
Answer:
(c) Economic decisions are partly taken by the state and partly by the private entrepreneurs.

162. Dual system of pricing exist in:
(a) Free market economy
(b) Socialistic economy
(c) Mixed economy
(d) None of the above
Answer:
(c) Mixed economy

163. Which Economic System is de-scribed by Schumpeter as ‘capitalism in the oxygen tent’?
(a) Laissez- Faire Economy
(b) Command Economy
(c) Mixed Economy
(d) Agrarian Economy
Answer:
(c) Mixed Economy

164. The existence of three sectors of industries (Private, Public and Combine sector) is one of the futures of __________.
(a) Capitalist
(b) Socialist
(c) Mixed
(d) Price
Answer:
(c) Mixed

165. Mixed economy means:
(a) Coexistence of both private and public sector
(b) Coexistence of poor and rich people
(c) Both (a) and (b)
(d) None
Answer:
(a) Coexistence of both private and public sector

166. Mixed economy means:
(a) Co-existence of small and large industries
(b) Promoting both agriculture and industries in the economy
(c) Co-existence of rich and poor
(d) Co-existence of public and private sectors
Answer:
(d) Co-existence of public and private sectors

167. __________ is a sector in which both the government and the private enterprises have equal access and join hands to produce commodities and services, leading to the establishment of joint sector.
(a) Private Sector
(b) Public Sector
(c) Combined sector
(d) Price
Answer:
(c) Combined sector

168. In India Mixed Economy exists due to:
(a) Coexistence of public sector and private sector.
(b) Individual forces of demand and supply.
(c) Orders by government.
(d) None of these.
Answer:
(a) Coexistence of public sector and private sector.

169. Larger production of __________ goods would lead to higher production in future.
(a) Consumer goods
(b) Capital goods
(c) Agricultural goods
(d) Public goods
Answer:
(b) Capital goods

170. __________ refers to the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity, such that if they are removed the total level of output remains unchanged.
(a) Voluntary
(b) Disguised
(c) Structural
(d) Technological
Answer:
(b) Disguised

171. Which of the following statements is incorrect?
(a) Alfred marshall propagated the wealth definition of Economics
(b) L. Robbins introduces the “Scarcity” definition of Economics
(c) Samuelson emphasized upon the “growth” aspect of Economics
(d) A.C. Pigou believed in “welfare” aspect of Economics
Answer:
(a) Alfred marshall propagated the wealth definition of Economics

172. Who has defined economics as “Science which deals with wealth”?
(a) Adam Smith
(b) Canon
(c) J.B. Say
(d) A.C. Pigou
Answer:
(c) J.B. Say

173. Who is the author of “The Nature and causes of wealth of Nation”?
(a) Karl Marx
(b) Adam Smith
(c) JB Say
(d) AC Pigou
Answer:
(b) Adam Smith

174. “Features of the book wealth of __________.
(a) It was the first book user on economics
(b) It was created in 1776.
(c) It was also known as ‘wealth of nations” nations’.
(d) All of the above.
Answer:
(d) All of the above.