Class 12 SAMPLE PAPER 01

Section01 Economics
1. The 'founding father of modern economics'
is____________
a) F. Hayek
b) Samuelson
c) Adam Smith
d) John Maynard Keynes
Ans. c

2. Macroeconomics is a study of economics that deals with

which 4 major factors:
a) households, firms, government, and demand-supply
b) firms, government, free-market, and regulations
c) households, firms, government and external sector
d) none of the above
Ans. c

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3. Cash Reserve Ratio (CRR) is____________
a) the fraction of the deposits that RBI must keep with
commercial banks
b) the fraction of the deposits that commercial banks lend to the
customers
c) the fraction of the deposits that commercial banks must keep
with RBI
d) none of the above
Ans. c

4. Capital goods means___________

a) Goods and services that are consumed fully when purchased
by the consumers
b) Goods such as tools, machinery, etc which are used to create
final consumer goods
c) Goods used for consumption in the production process
d) None of the above
Ans. b

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5. What is the difference between the Gross value added and
Net value added?
a) Production flow
b) Value added
c) Investment
d) Depreciation
Ans. d

6. Who is author of the book Poverty and Un British Rule in

India?
a. Keynes
b. Dadabai Nauroji
c. W C Banerjee
d. R C Dutt
Ans c.

7. Which one of the following is obtained when depreciation

is deducted from the net value of GDP?
a) Gross national product b) Net domestic product
c) Net national product d) Disposable income

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Ans. c
Explanation:
Net domestic product (NDP) is obtained when depreciation is
deducted from the net value of gross domestic product (GDP).

8. What is the value of NNP at consumer point?

a. GNP at factor cost
b. NNP at market price
c. GNP at market price
d. NNP at factor cost
Ans. b
Explanation:
The NNP at market value is calculated from the NNP by
deducting indirect taxes and subsidies from the factor cost.

9. Characteristic of economic development is indicated by.

a. Structural change in the economy
b. Change in the occupational structure
c. Both a and b
d. None of the above
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Ans: c
The structural change is the shift from primary sector to
secondary and tertiary sectors contribution to the GDP. Change
in occupational structure involves falling share of agriculture in
the total employment.

10. Those countries which have income of_________are

Low-income countries according to the World Bank
classification.
a. $1035 or below
b. $987 or below
c. $1000 or below
d. $1023 or below
Ans c

11. Which of the following is also known as ‘non – factor

inputs’?
(a) Intermediate products
(b) Final products
(c) National income
(d) Consumer products
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Ans a)
12. Consider the following statements:
1. In a Capitalist economy there is private ownership of
means of production
2. In a communist nation, the means of production are
owned by the State
3. In a free-market economy there is minimum role of the
Government
Which of the above 3 statement is/are true?
a) Only 1 and 3
b) Only 2 and 3
c) Only 3
d) All are true
Ans d)

13. Which of the following should be taken into

consideration while determining the normal rate of return
for the valuation of shares under the market value method?
(A) Current rate of interest on gilt-edged securities
(B) Weighted average cost of capital
(C) Degree of risk involved
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(D) All of the above
Ans. (D)
Explanation: All the above options are correct.

14. Which organization is responsible to undertake direct

supervision over depositories and mutual funds?
(A) RBI (B) SEBI
(C) NBFCs (D) All of the above
Ans. (B)
Explanation: Stock Exchange Board of India (SEBI) is
responsible to undertake direct supervision over depositories and
mutual funds.

15. From the following statements (A) and (R), indicate the
correct code:
Assertion (A): Want-satisfying power of a commodity is
called its utility.
Reason (R): Utility may not have the characteristic of
morality.
Codes:
(A) Both statements (A) and (R) are not correct.
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(B) Statement (R) is correct, but statement (A) is not correct.
(C) Both statements (A) and (R) are correct.
(D) Statement (A) is correct, but statement (R) is not correct.
Ans. (C)
Explanation: Since want-satisfying power of a commodity is
called its utility. It may not have the features of morality. Hence
both statements (A) and (R) are correct.

Section02 Business Studies

16. Which of the following is the explanation known as the
general pattern of behavior, shared belief and values that
members have in common?
(A) Organization culture (B) Organization
effectiveness
(C) Organization climate (D) Organization matrix
Ans. (A)
Explanation: The general pattern of behavior, shared belief and
values that members have in common is known as organization
culture.

17. Whose performance is generally easy to measure?

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(A) Sales person
(B) Research and development manager
(C) Industrial relations manager
(D) All of the above
Ans. (A)
Explanation: Sales person’s performance is generally easy to
measure.

18. The principle of ‘Division of Work’ is best described by

which of the following statement?
(a) Resources should be divided among jobs
(b) Labour should be divided
(c) Work should be divided into small tasks
(d) It leads to specialisation
Ans. c
Explanation: Division of work implies division of work into
small tasks.

19.__________ is not the characteristics of business

environment?

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(a) Complexity
(b) Employees
(c) Relativity
(d) Uncertainty
Ans. b
Explanation: Employees does not characterise the business
environment.

20. The term “CWC” stands for:

(a) Central Water Commission
(b) Central housing Commission
(c) Central Warehousing Corporation
(d) Central Water Corporation
Ans. c
Explanation:
The term “CWC” stands for Central Warehousing Corporation
that provides warehousing services for businessmen across the
country. It is a central government undertaking.

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21. Which problem is resolved by the businessman?
(a) No social problems
(b) Some social problems
(c) All social problems
(d) All economic problems
Ans. b
Explanation: Environmental pollution, unsafe workplace,
corruption in public institutions and discriminatory behavior in
employment are some of the social problems that can be solved
with the help of business people.

22. Which is not the function of an entrepreneur?

(a) Risk taking
(b) Provision of capital
(c) Innovation
(d) Day-by-day activity of business
Ans. d
Explanation:
Day-by-day activity of business is not considered as the function
of an entrepreneur.

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Q.23 find the name from given options that is the function
of the Management which coordinates the physical, financial
and human resources and develops productive relations
among them for the attainments of defined goals.
a. Coordination
b. directing
c. Staffing
d. Organizing
Ans. d
Explanation: Organizing is the function of the Management
which coordinates the physical, financial and human resources
and develops productive relations among them for the
attainments of defined goals.

24. Read the following statements for a policy as a type of

plan and select correct statement from given code:
i A policy is a particular course of action considered necessary
to achieve specific results.
ii. A policy is the future position which the management would
like to achieve.
iii. A policy is a comprehensive plan that is required for the
accomplishment of objectives of an organization.

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iv. A policy is a general statement which provides guidance in
decision making to implement a strategy.
(A) Only I and ii
(B) only ii and iii
(C) Only I and iii
(D) Only IV
(E) all
Ans D)
Explanation:
A policy is a general statement which provides guidance in
decision making to implement a strategy. It is not course of
action and comprehensive plan for the achieving the defined
goal.

25. Match the items of List-I with those in List-II and select
the correct code for answer:
List-I List-II
(i) Market for sale and (a) Primary market
purchase of previously issued
securities
(ii) Private ownership and (b) Secondary market
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 free enterprise
(iii) Market for new long-term capital (c) Socialism
(iv) Government ownership (d) Capitalism
and central authority
Codes:
(i) (ii) (iii) (iv)
(A) (b) (d) (c) (a)
(B) (a) (b) (c) (d)
(C) (b) (d) (a) (c)
(D) (a) (c) (b) (d)
Ans. (C)
Explanation:
(i) Market for sale and purchase of (b) Secondary
market previously issued securities
(ii) Private ownership and (d) Capitalism free
enterprise
(iii) Market for new long-term capital (a) Primary market
(iv) Government ownership and (c) Socialism
and central authority

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26. When do we use Kendall’s co-efficient of concordance?
(A) Test the relationship between variables
(B) Test the randomness of samples
(C) Test the difference amongst two or more sets of data
(D) Test the variations in the given data
Ans. (A)
Explanation: Kendall’s co-efficient of concordance is used to
test the relationship between variables.

27. Match the items of List-I with those in List-II and select
the correct code for answer:
List-I List-II
(i) Grapevine (a) Task group
(ii) Formal group (b) Field force theory
(iii) Informal group (c) Gossip
(iv) Kurt Lewin (d) National group
Codes:
(i) (ii) (iii) (iv)
(A) (c) (a) (d) (b)
(B) (a) (c) (b) (d)
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(C) (d) (a) (b) (c)
(D) (a) (b) (c) (d)
Ans. (A)
Explanation:
(i) Grapevine (c) Gossip
(ii) Formal group (a) Task group
(iii) Informal group (d) National group
(iv) Kurt Lewin (b) Field force theory

28. From the following statements of Assertion (A) and

Reason (R), indicate the correct code:
Assertion (A): Co-ordination and control become difficult
when span of control is wide.
Reason (R): The levels of authority reduce in a narrow span.
Codes:
(A) Both (A) and (R) are true. But (R) is not a correct
explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation
of (A).
(C) (A) is false, but (R) is true.

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(D) (A) is true, but (R) is false.
Ans. (D)
Explanation: Co-ordination and control become difficult when
span of control is wide. This statement is true. The levels of
authority reduce in a narrow span. This is not the correct reason
to exemplify the statement. Hence (A) is true, but (R) is false.

29. Which of the following participants are allowed to trade

in the call or notice money market?
(A) All corporates
(B) Only commercial banks
(C) All banks, primary dealers and mutual funds
(D) All of the above
Ans. (B)
Explanation: Only commercial banks are allowed to trade in
the call or notice money market.

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30. Match the items of List-I with those in List-II and select
the correct code as answer:
List-I List-II
(a) Price leadership (i) Convex to the origin
(b) Perfect competition (ii) Slopes downwards
(c) Demand curve (iii) P = AR = MR = d
(d) Indifference curve (iv) Oligopoly
Codes:
(a) (b) (c) (d)
(A) (ii) (iii) (iv) (i)
(B) (iii) (iv) (i) (ii)
(C) (iv) (iii) (ii) (i)
(D) (i) (ii) (iii) (iv)
Ans. (C)
Explanation:
(a) Price leadership (iv) Oligopoly
(b) Perfect competition (iii) P = AR = MR = d
(c) Demand curve (ii) Slopes downwards
(d) Indifference curve (i) Convex to the origin

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Section03 Accountancy
31. Consider the below mentioned statements:
1. A debt-equity ratio of m:n indicates that for every n unit
of equity, the company can raise m units of debt.
2. The cost of floating a debt is smaller han the cost of
floating an equity issue.
Which of the statements given above is/are true/false?
(A) Statement 1-True and Statement 2-True
(B) Statement 1-false and Statement 2-True
(C) Statement 1-false and Statement 2-false
(D) Statement 1-True and Statement 2-false
Ans A)
Explanation: both statements are correct.

32. ABC is an cement business company, which does not

have adequate working capital. It fails to meet its current
obligation, which leads to bankruptcy. Identify the type of
decision involved to prevent risk of bankruptcy.
(A) Liquidity decision
(B) Stock decision
(C) Equity decision
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 (D) Economical decision
Ans : A)
Explanation: It is the degree to which an asset or security can
be quickly bought or sold in the market without affecting the
asset's price.

33. ‘M’ Ltd. Company has a liquid ratio of 3:1. If its stock is
Rs. 60,000 and current liabilities are rupees one lakh. What
will be the current ratio?
(a) 2.4 times (b) 5.4 times
(c) 8.2 times (d) 4.1 times
Ans. (a)
Explanation: The current ratio will be 2.4 times.

34. Consider the following statements about Safety stock

1. The smallert the risk of running out of stock, the greater
the safety of stock.
2. The larger the opportunity cost of the funds invested in
inventory, the larger the safety stock.
3. The smaller the uncertainty associated with forecasted
demand, the greater the safety stock.

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 4. The higher the profit margin per unit, the higher the
safety stock necessary
Which of the statements given above is/are incorrect?
(A) 1, 4 only
(B) 2, 3only
(C) Both 1 and 2
(D) 1, 2, 3 Only
Ans D)
Explanation: Safety stock simply is inventory that is carried to
prevent stock outs. The higher the profit margin per unit, the
higher the safety stock necessary.

35. The type of leave requiring an agreement between the

financier and lessor is known as
(A) Sale and lease back (B) Financial lease
(C) Operating lease (D) Leveraged
lease
Ans. (D)
Explanation: The type of leave requiring an agreement between
the financier and lessor is known as leveraged lease.

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36. The concept of cost of capital can also be explained in
terms of ………. Cost.
(a) Opportunity (b) Variable
(c) Fixed (d) Capital
Ans: (a)

37. Finance is required for

(a) Social development
(b) Economic development
(c) Industrial development
(d) All of these
Ans: (d)

38. Which of the following refers to Liquid Assets?

(a) Cash and bills receivable
(b) Cash and debtors
(c) Cash and debtors (except provision for bad debtors)
(d) Cash and debtors (except bad debts) and marketable
securities

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Ans d)
Explanation: Liquid Assets are defined as cash and debtors
(except bad debts) and marketable securities.

39. Read the following the statements regarding to The Stock

Turnover Ratio and choose the correct one:
(a) Turnover at selling prices/stock at cost
(b) Turnover at cost prices/stock at cost
(c) Turnover at selling prices/stock at selling prices
(d) All the above
Ans d)
Explanation: The stock turnover ratio is for calculating how to
good management is managing company stock and generating
sales from it.

40. Which is one of the following terms to be used for

globalization to describe process of removal of restriction?
(A) Foreign trade (B) Investment
(C) Both (A) and (B) (D) None of the
above
Ans. (C)
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Explanation: Both foreign trade and investment are used for
globalization to describe process of removal of restriction.

41. Read the following statements of Assertion (A) and

Reason (R).
Assertion (A): The financial statements prepared on
historical cost basis result into an evolution of capital in the
long run.
Reason (R): Maintaining the books of accounts as per
current purchasing power technique only may contain the
inflationary pressure.
In the context of above two statements, which one of the
following is correct one?
(A) Both (A) and (R) are true, but (R) is not the correct
explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation
of (A).
(C) (A) is false, but (R) is true.
(D) (A) is true, but (R) is false.
Ans. (A)
Explanation: In the context of above two statements both (A)
and (R) are true, but (R) is not the correct explanation of (A).

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42. Which one of the following is not an example of tax
evasion?
(A) Suppression of facts.
(B) Not maintaining proper accounts of income earned.
(C) Submitting misleading proper accounts of income earned.
(D) Interpreting the tax in one’s own way to minimize tax
liability.
Ans. (D)
Explanation: Interpreting the tax in one’s own way to minimize
tax liability is not an example of tax evasion.

43. Capital structure designing has nothing to do with.

(a) Profitability (b) Solvency
(c) Flexibility (d) Transferability
Ans: (b)

44 .In the trial balance of Kanu &Co. prepared on March

31, 2016, there appears an item 9% Loan with a credit
balance of Rs.2,00,000. The loan was taken on June 01, 2015.
Also a corresponding item in the trial balance Interest on
Loan (paid during the period) appears with a debit balance

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of Rs.10,000. The amount of expense in respect of Interest on
Loan debited to profit and loss account is
A. Rs.2,00,000
B. Rs.18,000
C. Rs.15,000
D. Rs. 1,00,000
Ans C)
Explanation: This is a hidden item requiring adjustment. Since
the loan was taken on June 01, 2015 for the period ended March
31, 2016 an amount in respect of interest due is
Rs.2,00,000 x 9% x 10/12 = Rs.15,000.
Hence for the period ended March 31,2016 since only 10
months interest has accrued, only 10 months interest is to be
taken and not 12 months, also the amount of interest paid is
irrelevant in Profit and loss account since accounting is on
accrual basis.

45. Rohit & Co. undertook construction of a building which

was completed on March 31, 2016 and let out the building
for a rental value of Rs.4,500 pm on July 01, 2016. The
tenant paid Rs.49,500 on the same day. The amount in
respect of rent received to be credited to profit and loss

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account of Rohit & co. for the period ended March 31,2017
is
A. Rs.54,000
B. Rs.40,500
C. Rs.49,500
D. Rs.45,000
Ans b)
Explanation: The building was let out on July 01, 2016. From
July 01, 2016 to March 31, 2017, nine month rent has accrued.
Hence the amount of rent accrued
= Rs.4,500 x 9 = 40,500
In the profit and loss account, actual rent accrued will be taken.
Hence the balance = Rs.49,500 – Rs.40,500 = Rs.9,000 will be
shown as rent received in advance for which services have not
yet been rendered, and shown on the credit side of the balance
sheet.

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ACHIEVER SECTION
46. In order to encourage investment in the country, the
RBI may
a. reduce CRR
b. increase CRR
c. sell securities in the open market
d. increase Band Rate
Ans. a)
Explanation:
High deposits and high loans means reduce cash reserve ratio.
Higher the CRR, lesser is bank’s lending capacity and low
investment. When there is an inflationary situation. Central bank
raises the rate of minimum CRR. But if reduce CRR means
increase in deposits and lending capacity.

47. Consider the following statements about the Reductions

in stocks are a
1. Source of cash
2. No effect on cash flow
3. Allotment of flow
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4. Applications of flow
Select correct options from given codes below
(A) Only 1, 2, 3 (B) Only 2, 3
(C) Only 3, 4 (D) Only 1
Ans. a)
Explanation: the Reductions in stocks is a source of a cash
flow.

48. Who can file a complaint in a consumer court?

(a) Any consumer.
(b) Any registered consumer’s association.
(c) The Central Government or any State Government
(d) All of the above
Ans. D

49. Cyber Ltd. Has furnished the following information for

the year 2017-2018:
Rs.
Opening balance of Sundry debtors account
Closing balance of Sundry debtors account
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Cash collected from debtors 50,000
60,000
5,00,000
Discount allowed to debtors 10,000
The total amount of credit sales was
A. Rs.6,00,000
B. Rs.5,20,000
C. Rs.5,10,000
D. Rs.5,00,000
Ans c)
Explanation: Cash collected from debtor Rs.5,00,000
Closing balance Rs.60,000
Discount allowed Rs.10,000
---------------
Rs. 5,70,000
Less: Opening balance Rs.50,000
------------------
Credit sales Rs. 5,20,000

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50. What is the main objective of fiscal policy of India?
(A) To minimize inequality in income and wealth
(B) To promote employment opportunities
(C) To increase liquidity in the economy
(D) To promote price stability
Ans. (C)
Explanation: The main objective of fiscal policy of India is to
increase liquidity in the economy.

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