KVS PGT Commerce Question Paper 2017 With Answer Key PDF

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1. Which one is false statement?

 A. Consumers undertake variety seeking buying behaviour in situations characterized by low consumer involvement but significant perceived brand differences.

 B. Dissonance-reducing buying behaviour occurs when consumers are highly involved with an expensive or risky purchase and see significant difference among brands.

C. Habitual buying behaviour occurs under conditions of low consumer involvement

 D. The buying process starts with need identification

 2. Which one is true?

 A. Decrease in working capital is a use of funds

 B. Purchase of stock-in-trade is an application of fund

C. Funds flow refers to change in long-term funds

D. Payment of dividends is a use of funds

3. The RBI Act was enacted in which year?

A. 1956

B. 1949

C. 1947

D. 1934

4. Which one is true?

A. A formal group can be only a task group.

B. Groups can cause either desirable or undesirable consequences within the organisation.

C. Groups do not exist in all kinds of organisations.

D. A formal group can be only a command group.

5. Horizontal, Vertical and Random cliques are parts of:

 A. Closed groups

 B. Core groups

C. Informal groups

 D. Formal groups

 6. According to F.W. Taylor, “Prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees.” Which of the ‘Scientific Management’ principles supports this view?

A. Development of each and every person to his/her greatest efficiency and prosperity

 B. Science, not rule of thumb

C. Harmony, not discord

D. Cooperation, not individualism

7. Which one is true?

A. A change in strategy requires the culture of the enterprise to remain the same.

 B. Structure is the organisation chart to show the division of task.

C. In functional structure, employee identification with specialised groups makes change difficult.

D. Organisation structure by product divisions reduces coordination between functions for rapid response.

 8. Which of the following is not a principle governing insurance? A. Indemnity B. Causa Proxima C. Utmost good faith D. Profit

9. In Liquidator’s Final Statement of Account, what is the correct sequence of the following disbursements?

(a) Legal expenses

(b) Liquidators’ remuneration

(c) Preferential and overriding creditors’ dues

 (d) Dues of debenture holders secured with floating charge

(e) Dues of debenture holders secured with fixed charge

10. Which one is false?

A. If the innovative ability of business can be turned to meet social problems, many problems could be handled profitably according to traditional business concepts.

B. Business should engage in socially responsible behaviour to avoid regulation by government.

 C. Social responsibility refers to the obligations of businessmen to pursue those policies which are desirable in terms of the objectives of the society.

D. Managers are the agents of owners (Shareholders) and their decisions in business need to be governed only by the desire to maximise profits.

 11. Which one is true?

 A. Profit-volume ratio indicates the relationship between profit and sales.

 B. The valuation of stock is at a higher price in absorption costing as compared to marginal costing.

C. Semi-variable costs form a part of product cost in marginal costing.

D. Increase in selling, price will have no effect on margin of safety.

 12. According to ‘Ghee and Thayer’ model for identifying training needs, which of the following is required?

A. Organization analysis

 B. Task analysis

 C. Man analysis

D. All of the above

 13. A period of rapid market acceptance and substantial profit improvement represents which stage of “Product Life Cycle”?

 A. Decline

B. Introduction

C. Growth

 D. Maturity

 14. Which one is false?

A. Expansion strategy which fails to make resources more productive is “excess fat”.

 B. A stability strategy may lead to offensive move by obtaining a patent to reduce competition.

 C. The stability strategy can be designed to increase profits.

 D. One of the reasons for pursuing stability strategy is the thinking that too much expansion can lead to inefficiencies.

15. When a company issues shares at a premium, that share premium can be used full or in part for:

A. Writing-off advertisement expenses

B. Writing-off Goodwill

 C. Purchase of fixed assets

 D. Writing-off the Preliminary expenses

16. Which one of the following is false?

 A. The channel is the medium through which the message travels.

B. Communication must include both the transference and the understanding of meaning.

 C. Communication serves four major functions within a group or organisation: control, motivation, emotional expression and information.

D. Encoding is retranslating a sender’s communication message.

17. According to which model/theory of leadership a leader is supposed to match his leadership style with the maturity level of subordinates which moves in stages and has a cyc

A. Vroom–Vetton and Jago’s Contingency Model

B. Fiedler’s Contingency Theory

 C. Hersey-Blanchard Situational Model

D. House’s Path Goal Theory

18. The time limit for filing a complaint before the District Forum, the State Commission or the National Commission, as the case may be, is:

A. Two years from the date on which the cause of action arises

B. 3 months from the date on which the cause of action arises

C. 6 months from the date on which the cause of action arises

 D. One year from the date on which the cause of action arises

19. ______communication attempts to increase the orgnisational efficiency by speeding up information and cutting across departmental barriers.

A. Diagonal

 B. Non-verbal

 C. Horizontal

D. Lateral

20. Which one is true?

A. Cognitive component of an attitude is the emotional or feeling segment of an attitude.

B. National culture refers to primary values and practices that characterize a particular country.

C. Attitudes are favourable evaluative statements concerning objects, people or events

D. Affective component of an attitude is the opinion or belief segment of an attitude.

21. Which one is a false statement?

A. Working capital requirements increase during the period of increasing inflation.

 B. Net working capital of a firm is that portion of its current assets which is financed by long-term funds

 C. Longer the duration of operating cycle, larger is the amount of working capital requirements

D. An increase in average debt-collection period lowers the requirements of working capital

22. The SEBI was constituted as a non-statutory body in the year:

A. 1998

B. 2000

 C. 1987

D. 1988

23. Which one is true?

A. Credit sales increases the working capital.

 B. Purchase of stock-in-trade is an application of fund.

 C. Funds flow analysis shows the position of business as on the closing date of business period.

D. Amortisation of preliminary expenses is a use of funds.


 25. A private limited company can have maximum _______ members as per the provisions of the Companies Act, 2013.

 A. 200

B. 20

C. 50

D. 100

26. Calls in advance is a:

 A. Current liability

 B. Long-term liability

 C. Contingent liability

D. None of the above

27. Which of the following is not a feature of Sole Proprietorship?

 A. One man control

B. Limited Liability

C. Undivided risk

 D. Single ownership

 28. Which one does not affect the choice of capital structure?

 A. Cost of Equity

 B. Cash flow position

 C. Debt Service Coverage Ratio

 D. Debt-Equity Ratio

29. A machinery was purchased and installed on 1st April, 2015 by X Ltd. costing ` 5,00,000 with projected useful life of 10 years and estimated salvage value of ` 50,000. If the company charges depreciation @20% by diminishing balance method, amount of depreciation to be charged in 2nd year, i.e., on 31st March, 2017 shall be:

A. 1,00,000

B. 72,000

C. 80,000

D. 90,000

30. Which one is true?

A. Standard fixed overhead rate is based on budgeted output.

B. Standards are used for planning and coordination purposes.

C. Overhead standards are set like material and labour standards.

D. Labour time standards are generally set on the basis of motion and time studies.

 31. A transport company purchased a delivery truck for ` 60,00,000. The company estimates that the truck will be driven 1,00,000 km over it’s 10 years useful life. The estimated salvage value is ` 12,00,000. The truck was driven 15,000 km in 2015. Which method results in the highest depreciation expenditure for 2015?

A. Sum of the years digits

B. Written down value method

C. Straight line method

 D. Double decline balance

32. According to theory “Y”, labelled by Douglas McGregor, which assumption is not correct?

A. The ability to make innovative decisions is widely dispersed throughout the population.

B. Employees can view work as being as natural as rest or play.

C. Employees will seek formal direction whenever possible.

D. The average person can learn to accept, even seek, responsibility.

33. A candidate is likely to receive a more favourable evaluation if preceded by mediocre applicants and a less favourable evaluation if preceded by strong applicants. This phenomenon is known as:

A. Contrast effect

B. Selective Perception

C. Halo effect

D. Stereotyping

34. Which one is true?

A. Change in the agewise composition of population does not necessitate change in strategy.

B. One of the factors affecting industrial and/ or institutional buyers is promotional and merchandising support.

C. The power of the supplier is greatest when the supplier can integrate forward.

D. Demographic factors are referred to as ‘secondary demand factors’.

35. Expertise, competence, role modelling ability to reward, caring and information sharing are the bases of:

A. Persuasive power

B. Referent power

C. Expert power

D. Coercive power

37. Which one of the following errors is disclosed by Trial Balance?

A. Error of principle

B. Omission of the recording of a transaction

 C. Compensating error

D. Partial omission of an entry

38. The current ratio is 4.5 : 1 and liquid ratio is 3 : 1. Stock is ` 3,00,000. What are the current liabilities?

A. 1,75,000

B. 2,50,000

 C. 2,00,000

D. 2,75,000

39. An aggressive financing strategy is one where:

 A. financing decisions are spontaneous.

 B. a portion of short-term funds is raised from long-term sources.

C. a portion of long-term funds is raised from short-term sources.

 D. long-term funds are raised from long-term sources only.

 40. The obligation of a subordinate to properly perform the assigned duty is known as:

A. Responsibility

B. Delegation of authority

C. Authority

 D. Accountability

41. According to ______ of human resource accounting, an individual’s value to an organisation is determined by the services he is expected to render to the organisation during the period he is likely to remain with the organisation in various positions or service states.

A. Morse Net Benefit Model

B. Lev and Schwartz Model

C. Flamholtz Model

D. Jaggi and Lau Model

42. According to the Consumer Protection Act, 1986, which one is not a ‘Service’?

 A. Provision of facilities in connection with the purveying of news.

 B. Provision of facilities in connection with banking.

 C. Provision of facilities in connection with the lodging

D. Provision of any service under a contract a personal service.

43. Which one is false?

A. Providing depreciation in the accounts reduces the amount of profits available for dividend.

B. Depreciation is an amortised expenditure.

C. Straight Line Method of Depreciation is followed to have a uniform charge for depreciation and Repairs and Maintenance together.

 D. Reducing Balance Method of Depreciation is followed to have a uniform charge for depreciation and Repairs and Maintenance together.

44. Which of the following is not a feature of a partnership organization?

A. Implied agency

B. Utmost good faith

C. Restriction on transfer of interest

D. Limited liability

45. Which one is false?

 A. A truly globalised economy implies free movement of people across borders.

 B. Liberalisation signalled the end of licencepermit-quota raj.

C. Liberalisation of the Indian industry has not taken place with respect to removal of restrictions on the movement of goods and services.

D. Privatisation aimed at reducing the role of the public sector.

46. Which one of the following belongs to Primary industry?

A. Oil refining industry

B. Mining ore

C. Manufacture of steel

D. Manufacturing of cement

47. The Business information system are:

 A. Restricted to production and sales systems

B. Not restricted to any particular functional area

C. Restricted to finance function

 D. None of the above

48. Job costing is used in:

A. Cement production

B. Chemical manufacturing

C. Ship-building

D. Brick-making

 49. Under which heading the item, ‘Bills Discounted but not yet matured’ will be shown in the Balance Sheet of a Company?

 A. Unamortized Expenditure

B. Current Liability

C. Current Assets

D. Contingent Liabilities

50. Which of the following is the drawback of scientific management?

 A. Strengthening of Trade unions

B. Increase of individual worker’ initiative

C. Slowering-up of workers

D. Exploitation of workers

51. When debentures are redeemed out of profits, an equal amount is to be transferred to:

A. Capital reserve

 B. Profit and Loss appropriation account

 C. General Reserve

D. Debenture redemption reserve

52. According to Mary Parker Follet which one of the following principles is important for achieving co-ordination?

A. Continuity

B. Direct Contact

C. Reciprocity

D. All of the above

 53. Which one is true?

A. A dormant partner has to give public notice of his retirement.

 B. In case Memorandum Revaluation account is opened, the assets and liabilities appear in the New Balance Sheet at their revised values.

C. All accumulated profits and reserves are to be transferred to the Profit and Loss Adjustment Account on admission of a new partner.

 D. The retiring partner may claim a share in the profits of the firm even after his retirement if his accounts are not settled.

54. Which of the following is not a non-funded business of Banks?

A. Setting up subsidiary to do insurance business

B. Accepting Recurring deposits

 C. Setting up mutual fund subsidiaries

 D. Setting up subsidiary companies to do leasing

55. Opening stock was ` 29,000; Closing stock was ` 31,000. Sales amounted to ` 3,00,000. Gross profit was 25% on cost. What was the Inventory Turnover Ratio?

a. 5 times

 B. 6 times

 C. 7 times

D. 8 times

56. Which one is false?

 A. Database is controlled by a separate authority established for the purpose.

 B. Database consolidates data records formerly stored in many separate data files.

C. Database is not a common data source to various users.

 D. Database can be used by any person having the right to use it.

 57. Which of the following is not involved in ‘Concentration’ in marketing function?

A. Risk bearing

B. Dividing

C. Storing

D. Grading

58. Buy back of securities cannot be made out by a company out of:

A. an earlier issue of the same kind of shares or same kind of other specified securities

 B. its free reserves

C. the securities premium account

D. the proceeds of other specified securities

59. Which of the following rights usually not available to a partner consequent to the dissolution of a firm?

 A. Right to be consulted

B. Right to restrain any partner or his representatives from the use of firm name or property

C. Right of equitable distribution of firm’s property

 D. Right to return of premium on premature winding up

 60. Which one is true?

A. One of the objectives of financial management is to increase the size of the investments in receivables.

B. Receivables represent a stage in the operating cycle of a manufacturing firm which is located in between ‘sales’ and ‘cash’ stages.

C. Receivables do not help growth of sales, other things remaining the same.

D. Seasonal dating requires a firm’s customers to pay in the early part of the season.

61. Identify the odd one out:

A. Span of supervision

B. Span of authority

C. Span of control

 D. Span of direction

 62. Which of the following authors tried to integrate the modern concept of “Consumer Oriented” market with the traditional view of marketing?

A. Copeland

B. F.E. Clark

C. Philip Kotlar

D. Harry Hansen

63. Which of the following is a component in the function of direction?

A. Problem solving

B. Supervising the subordinates

C. Training and development

D. Performance appraisal

 64. Identify the odd one out.

A. Cash book

B. Float

C. Imprest

D. Petty cash book

65. Which one is false?

 A. Generally, individuals who rate high in externality have lower absenteeism rates.

B. Persons who believe they control their destinies, have been labelled ‘internals’.

C. Persons who see their lives as being controlled by outside, forces have been called ‘externals’.

 D. Generally, who rate high in externality are less satisfied with their jobs

66. Which of the following refers to the process wherein various tasks and activities are assigned to different departments and people in the organization?

A. Job Rotation

B. Job Description

C. Integration

D. Differentiation

67. Conversion cost is equal to total of:

A. material cost and factory overhead

B. material cost and direct wages

C. material cost and indirect wage

D. direct wages and factory overhead

68. A mutual fund is to be set up in the form of a:

 A. Trust

 B. Joint Stock Company

 C. Partnership Firm

 D. None of the above

69. The interest coverage ratio or the times interest earned is used to test the:

A. Firm’s liquidity position

B. Firm’s debt servicing capacity

C. Firm’s debt repaying capacity

 D. All of the above

70. Which of the following right is not provided by the Consumer Protection Act, 1986 to the consumers?

A. Right to seek redressal

B. Right to be informed

C. Right to discipline

D. Right to safety

 71. Given : Cash in hand = ` 50,000, Cash at bank = ` 50,000, Marketable securities = ` 1,50,000, Debtors = ` 2,50,000, other current assets = ` 2,50,000, Current Liabilities = ` 2,50,000. Absolute liquid ratio will be: A. 3 : 1 B. 2 : 1 C. 1 : 1 D. 2 : 5 72. Which of the following is a Cause of Business Risk?

 A. Natural Calamities

 B. Change in Technology

 C. Negligence of employees

D. All of the above

73. The practice of appending notes regarding contingent liabilities in accounting statements is in pursuant to:

A. Convention of consistency

B. Money measurement concept

C. Convention of conservatism

d. Convention of disclosure

74. The Earnings Per Share (EPS) is calculated by using the following formula:

A. PAT Number of shares outstanding

B. Dividend Number of ordinary shares outstanding

C. DPS Market Value Per Share

 D. PBT Number of shares outstanding

75. Which one is false?

A.A cost variance is said to be favourable if the standard cost is more than the actual cost. B. The total of capacity variance and efficiency variance is equal to volume variance.

 C. The purchase department should be held responsible for material price variance.

D. The selling department is responsible for factory overhead volume variance.

76. Which one is false?

A. If the Credit terms are changed from ‘2/10, net 30’ to ‘3/10, net 30’, the average investments in accounts receivable are likely to decrease.

B. Required return is a basic variable in the evaluation of a credit policy.

C. Seasonal dating aims at avoiding inventory carrying costs.

D. Seasonal dating results in reduction in credit period during off-season.

77. Which of the following is a Prominent Joint Sector Enterprise in India?

A. Visakha Refineries

B. Cochin Refineries

C. Reliance Refineries

D. None of the above

78. Which one is true?

A. Taylor advocated mix of planning and execution functions.

B. Efficiency is the ratio of effective output to the input required to achieve it.

C. Work-study techniques do not include motion study.

D. Work-study techniques do not include fatigue study.

79. Promoter of a Joint Stock Company shall not be liable for

A. Commencement of business by the company without confirming to capital subscription requirements

B. Misstatement in the Prospectus

 C. Non-compliance of matters to be stated in the Prospectus

D. Compliance of matters to be stated in the Prospectus

.80. What is liquid ratio when Current Assets = ` 20,000, Stock = ` 3,000, Prepaid Expenses = ` 1,000 and working capital = ` 16,800?

A. 3

B. 5

C. 4

D. 2

 81. According to which approach, the overall capitalisation rate and the cost of debt remain constant for all degrees of financial leverage?

A. Net Operating Income Approach

 B. Traditional Approach

 C. Net Income Approach

 D. M-M Approach

82. In modern times, a finance manager is not concerned with

A. accurate record keeping

B. the total amount of capital employed

C. the allocation of funds to different projects

D. the measurement of results of each allocation of funds

83. The emotional or feeling segment of an attitude is known as:

 A. Cognitive dissonance

B. Affective component

C. Behavioural component

D. Cognitive component

84. Buying goods for cash would:

 A. decrease the gross profit percentage

 B. increase the gross profit percentage

C. have no effect on current ratio

 D. increase the current ratio

85. When margin of safety is 20% and P/V ratio is 60%, the profit will be:

A. 12%

B. 30%

C. 33%

D. 22%

 86. Which of the following performance evaluation is very much useful for discovering the potential of employees who can be useful in critical situation?

A. Graphic rating scale

B. Paired comparison

C. Forced choice method

D. Critical incident method

87. Which one is a true statement?

A. Most firms practice the selling concept when they have used full capacity.

 B. Market stands for the place where buyers and sellers gather to exchange their goods.

C. A market is the set of all actual and potential buyers of a product or service.

D. Demarketing aims at destroying demand.

88. As per ‘The Companies Act, 2013’, the whole process of formation of a public company can be broadly divided into _____ stages.

A. 5

B. 2

C. 3

 D. 4

 89. Which one is true?

A. When goodwill appears at the amount which is more than its agreed value, the difference will be credited to all partners’ capital accounts in the case of retirement of a partner.

B. When goodwill does not appear in the books, goodwill is raised by crediting continuing partners in the gaining ratio unless agreed otherwise.

C. Joint Life Policy becomes due in the event of death of any of the partners or on the maturity of policy, whichever is later.


D. In the event of retirement of a partner, if the Joint Life Policy already appears at its surrender value, no further adjustment is required.

 90. In relation to ‘Accounting System’ using DBMS _____ are the foundations of any application and allow the designer to create a set of programming instructions.

A. Wizards


C. Macros

D. Modules

91. With reference to Piece wage system, which of the following is correct?

 A. Affect the employer-employee relations positively.

B. It makes the workers feel insecure.

 C. Less stress on the quantity of production.

D. Piece rates strengthen labour unions.

92. Accounting Period Postulate:

A. Refers to the limited life of a joint venture.

B. Suggest the companies to prepare financial statements on the basis of a systematic time interval, eventhough the operating cycle(s) of the entity may be incomplete.

 C. Suggest companies to prepare financial statements on a periodic basis, when all operating cycles are complete.

D. Refers to the fact that adjusting entries must be made before financial statements are prepared periodically.

 93. Which one is true?

 A. Larger the safety stocks a firm keeps, greater is its scope for speculation on inventory.

 B. The point at which the slopes of ordering costs and carrying costs curves are equal but of opposite direction, determines the EOQ.

C. Inventory in relation to total working capital has similar proportions over a business cycle.

D. Generally a large number of items of inventory claim a large proportion of total value of all inventories.

94. Prime cost plus variable overhead is known as:

A. Cost of sales

B. Production cost

C. Marginal cost

D. Total cost

95. Which of the following is an unlevered firm?

A. A firm that uses debt only to finance it’s assets.

B. A firm that uses both debt and equity to finance it’s assets.

 C. A firm that uses no debt and finances it’s assets entirely by equity.

 D. None of the above

96. The ending balance of owner’s equity is ` 1,02,000. During the year, the owner contributed ` 15,000 and withdrew ` 6,000. If the firm had a net income of ` 13,000 for the year, what was the beginning owner’s equiyt?

 A. ` 89,000

B. ` 80,000

 C. ` 96,000

D. ` 93,000

97. Match items in List-I with those in List-II and choose the correct code: List-I List-II

 (a) Top management (i) Technical skill

 (b) Middle (ii) Human skill management

(c) Operational (iii) Conceptual management skill Codes:

 (a) (b) (c)

A. (iii) (ii) (i)

 B. (i) (ii) (iii)

 C. (ii) (iii) (i)

D. (i) (iii) (ii)

98. Which one is true?

A. Contribution margin is also known as Net Income

 B. All future costs are not relevant costs

C. Past cost are significant for decision making

D. Difference in costs between alternatives is termed as relevant cost

99. Which one is true?

A. Conversion cost is the sum total of direct material cost and direct wages cost.

B. Incremental cost is a type of differential cost.

C. Variable cost per unit fluctuates with the volume of production.

D. Opportunity cost helps in ascertainment of cost.

 100. X and Y are partners sharing profits and losses in the ratio of 3 : 1. They admit Z as a partner who pays ` 4,000 as his share of goodwill. The new profit sharing will be 2 : 2 : 1. The amount of goodwill will be credited to:

A. Y only

B. X and Y as ` 3,000 and ` 1,000 respectively

C. X and Y as ` 1,000 and ` 3,000 respectively

D. X only

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