Commerce UPSC PYQ 2018

"Standard costing is universally accepted as an effective instrument for controlling costs in industries." In the light of this statement, explain the objectives of standard costing.

Golden Handshake

The following is the Balance Sheet of XYZ Ltd. as at 31st March 2017. Liabilities | ₹ | Assets | ₹ 20,000 Equity shares of ₹ 100 each | 20,00,000 | Goodwill | 25,000 12% Debenture | 5,00,000 | Land & Buildings | 1,50,000 Outstanding debentures interest | 1,20,000 | Plant & Machinery | 3,00,000 Creditors | 3,00,000 | Furniture | 80,000 | | Stock | 2,70,000 | | Debtors | 60,000 | | Cash at Bank | 35,000 | | Preliminary expenses | 20,000 | | Profit & Loss A/c. | 19,80,000 Total: 29,20,000 | Total: 29,20,000 The following is the scheme of reconstruction : (i) Equity shares are reduced by ₹ 95 per share. They are, then, consolidated into 10,000 equity shares of ₹ 10 each. (ii) Debenture holders agree to forego outstanding debenture interest. As a compensation, 12% debentures are converted into 14% debentures, the amount remaining ₹ 5,00,000. (iii) Creditors are given the option to either accept 50% of their claim in cash in full settlement or to convert their claim into equity shares of ₹ 10 each. Creditors for ₹ 2,00,000 opt for shares in satisfaction of their claims. (iv) To make payment to creditors opting for cash payment and to augment working capital, the company issues 50,000 equity shares of ₹ 10 each at par, the entire amount being payable along with applications. The issue was fully subscribed. (v) Land and Buildings are revalued at ₹ 2,00,000 whereas plant and machinery is to be written down to ₹ 2,10,000. A provision amounting to ₹ 5,000 is to be made for doubtful debts. Pass necessary journal entries and prepare the company's balance sheet immediately after the reconstruction.

"ABC Analysis, FSN Analysis and Inventory Turnover Ratio are the most commonly used tools of inventory management." Explain each tool in brief and state the reasons for their popularity.

"The basic aim of talent management is to develop and maintain a talent pool consisting of a skilled, engaged and committed workforce." Do you agree with this comment ? Assess its implications in the context of recent government initiatives for the development of talent management in the country.

"Merit-based promotion leads to dissatisfaction of all except one, hence the resulting effect is negative; seniority-based promotion has the distinctive advantage of satisfying all in due course of time." Critically evaluate this system. Also suggest a suitable promotion policy for Indian enterprises.

"There are a number of misconceptions that people have about the glass ceiling." What are some of these ? Also, what can organisations do to help break the glass ceiling ?

Standing Orders

Adaptive Coping Cycle

Critically examine the relationship between the key financial decisions; return, risk and market value.

"The Weighted Average Cost of Capital (WACC) of a firm depends on many factors which are beyond the control on the investment and financing policies of a firm." Explain in brief.

"Collective bargaining is important to both employers and employees but there are certain snags." Do you agree with this statement ? Suggest measures to make the process more effective.

What are the different bases for establishing the exchange ratio in case of a merger ? How the boundaries for exchange ratio is determined from the view point of acquiring, acquired and combined firm?

ABC Ltd. is considering the following credit policy alternatives: Particulars | Existing Policy | Option A | Option B (A) Credit Sales (₹ in lakhs) | 10.00 | 9.60 | 12.00 (B) Credit Period (days) | 30 | 45 | 60 (C) Bad Debt (% of sales) | 5 | 4 | 6 (D) Cost of Credit Administration (₹ in lakhs) | 0.40 | 0.25 | 0.50 (E) Average Collection Period (days) | 45 | 50 | 70 The company expects to achieve a contribution of 40% on sales. It has the required rate of return on investment of 20% p.a. Assume 365 days in a year. You are required to suggest which credit period option is more suitable to the company.

What are some styles of charismatic leadership ? Critically examine the Robert House theory of charismatic leadership in the context of Indian scenario.

Explain, in brief, the main provisions of Indian Accounting Standards regarding cash flow statement.

What is meant by impression management ? Also distinguish between impression motivation and impression construction.

How is performance management system different from performance appraisal system ? Also explain how customised performance appraisals can be used as a strategic tool for performance management system.

How does a learning organisation differ from a traditional organisation ? What impact do these differences have on the way people are managed ?

What are the major contributions of Herzberg's theory of motivation ? Do you think it makes a contribution to the better understanding of motivation in the workplace ? Comment and give arguments in support of your answer.

Examine the attributes of virtual organisation. Also assess their implications in the Indian corporate sector.

What is the nature of 'selves' in the Johari Window ? What implications does each have for interpersonal conflict ?

Explain the concept and nature of accounting standards. Why are these needed ?

The following information is available for KRISHIV Corporation: - Earning per share: ₹ 4.00 - Rate of return on investments: 18 per cent - Rate of return required by shareholders: 15 per cent What will be the price per share as per the Walter Model if the payout ratio is 40 per cent ? 50 per cent ? 60 per cent ?

The product of a company passes through three distinct processes to completion. From past experience, it is ascertained that the normal wastage in each process is as under : Process | Wastage | Sale value of wastage A | 2% | 25 paise per unit B | 4% | 50 paise per unit C | 2.5% | 60 paise per unit The expenses were as follows : Particulars | Process A | Process B | Process C Materials | 12,000 | 10,000 | 9,000 Direct labour | 16,000 | 5,000 | 4,900 Manufacturing expenses | 2,000 | 3,400 | 3,590 Other factory expenses | 3,500 | 2,005 | 2,004 4,000 units were initially introduced in process A at a cost of ₹ 13,560. The output of each process was as under : Process | Output A | 3,850 units B | 3,600 units C | 3,500 units Prepare process accounts and also work out the sale price per unit of finished stock so as to realize 20% profit on selling price.

In what way does the liability of tax of a "not ordinarily resident" person differ from that of a "resident" person under the Income Tax Act?

"The audit of banks is the audit of balance sheet and advances." Explain. Distinguish between performing and non-performing assets.

Compute the taxable income of X (41 years) for the assessment year 2018-19. Net income from trading business: 8,00,000 Long term capital gain on transfer of debentures (if computed without indexation): 6,00,000 Long term capital gain on transfer of listed debentures (computed after indexation) (X wants to pay tax at the rate of 20% of ₹ 2,50,000 and not at the rate of 10% of ₹ 6,00,000): 2,50,000 Share of income from HUF in which he is a member: 82,000 Winnings from horse races (net of TDS of 30 per cent): 70,000 Interest on bank fixed deposits: - Deposit in his own name: 1,17,000 - In the name of minor son: 1,450 - In the name of minor daughter: 8,000 - In the name of major unmarried daughter: 70,000 Expenditure incurred for medical treatment of his 67 years old elder brother (dependent of X, being a person with disability): 8,000 Repayment of loan taken for part-time studies of major daughter for graduate course in management (loan is taken from a notified charitable institute): 6,90,000 Payment of interest from the aforesaid loan: 76,000 Donation to the aforesaid notified charitable institute: 5,000 Brought forward loss of a discontinued business pertaining to the assessment year 2014-15: 26,000 Purchase of a work of art on November 10, 2017 from a friend for ₹ 1,15,000 (market value is, however, ₹ 1,70,000): 1,15,000 Deposit in Public Provident Fund account and purchase of NSC IX issue: 1,63,000

Namya Ltd. wants to prepare the feasibility of manufacturing one of the components needed for its finished product. It has two options of purchasing from its present supplier or to manufacture it in-house. Its present supplier has shown the willingness to provide at ₹ 125 per unit for the company's requirement of 6000 units per year. If the component is manufactured in-house, it requires equipments costing ₹ 10 lakh and is expected to have salvage value of ₹ 2 lakh after the expiry of five years. Additional fixed cost (excluding depreciation) are estimated to increase by ₹ 1 lakh per year. The variable cost of manufacturing each component will be ₹ 30 per unit. The company is subject to a 35 per cent tax rate. Its cost of capital is 15 per cent for this project. The company's projected annual needs is at 7500 units per year for 5 years. The tax relevant rate of depreciation is 25 per cent based on WDV method. Advise the company, whether it should continue buying from outside supplier or start its own manufacturing. Will your answer be different if the requirement of the company is only 6000 units per year?

"In India, workers' participation in management is a farce and an ineffective mechanism but it can be reinforced with suitable legal initiatives." Comment and offer your suggestions to make the legal framework more effective and viable.

"Financial markets can be classified based on types of financial claims, maturity of claims, claims representing new issues or outstanding issues, timing of delivery and nature of its organizational structure." Summarise the classification in brief.

Discuss the objectives and functions of International Labour Organisation (ILO). Also critically examine its pattern of structure and contribution in the field of Indian labour market.

The following are the balances of Bhushan Co. Ltd. as on 31st March, 2016 : Debit | ₹ | Credit | ₹ Land & Buildings | 30,72,000 | Share Capital (4,00,000 shares @ ₹ 10 each) | 40,00,000 Plant & Machinery | 33,00,000 | 12% Debentures | 30,00,000 Stock | 7,50,000 | P/L A/c. | 2,62,500 Sundry Debtors | 8,70,000 | Bill Payable | 3,70,000 Goodwill | 2,50,000 | Creditors | 4,00,000 Cash at Bank | 4,06,500 | Sales | 41,50,000 Calls in arrear | 75,000 | General reserve | 2,50,000 Interim Dividend paid | 3,92,500 | Bad Debt (Provision on 01.04.2015) | 35,000 Purchases | 13,50,000 | | Preliminary Expenses | 50,000 | | Wages | 9,79,800 | | General Expenses | 68,350 | | Salaries | 2,02,250 | | Bad debts | 21,100 | | Debentures interest paid | 1,80,000 | | Total: 1,24,67,500 | | Total: 1,24,67,500 The following additional information is available : (a) Depreciate Plant & Machinery by 15% (b) Write off ₹ 5,000 from Preliminary Expenses (c) Half-year's Debenture interest due (d) Credit 5% provision on Debtors for doubtful debts (e) Provide for Income Tax @ 50% (f) Stock on 31st March 2016 was ₹ 95,000 (g) A claim of ₹ 25,000 for workmen's compensation is being disputed by the company. Prepare Final Accounts of the company.

Discuss the following ways of incorporating risk in the investment decision making process: The Risk-Adjusted Discount Method and the Certainty Equivalent Method.

Explain the major provisions of compulsory tax audit for claiming deduction under section 35 D and 35 E.

Dissolution of Trade Union

"It is often argued that reward systems should be adjusted in line with changing organisational strategic objectives - yet in the real world, this is not often the case." Comment on this statement.

Explain, in brief, the functions of cost accounting.

State the points to be considered while determining divisible profits in case of a company. What are the auditor's duties in regard to payment of dividends by a company ?

Mayur Manufacturing Ltd. has equity share capital of ₹ 5,00,000 (face value ₹ 10). To meet the requirement of expansion plan, the company wishes to raise ₹ 3,00,000. The company is considering the following four alternative sources to raise the funds: Plan A : To have full money from the equity shares. Plan B : To raise ₹ 1 lakh from equity and ₹ 2 lakhs by borrowing from financial institution at 10% rate of interest per annum. Plan C : To raise full money of ₹ 3 lakhs from bank at 10% rate of interest per annum. Plan D : ₹ 1 lakh in equity and ₹ 2 lakhs issue of preference shares at 8% per annum dividend. The company is expected to have earnings of ₹ 1,50,000 after the expansion programme. The tax rate applicable to company is 35%. Suggest the suitable plan.

"Demand forecasting of human resource is the process of estimating the future quantity and quality of people required." In the light of this statement, evaluate various techniques specially applicable to the service industry.

Discuss the state of the venture capital industry in India.

Organisational Re-engineering

What are the costs used in managerial decision-making ? Explain, in brief, their characteristics.

"The political power game is very real in modern organisations." Comment on this statement. Also examine its postulates of power in organisations that help focus on the political realities.

OCTAPAC Culture

Define and evaluate the following ratios used for analysis of financial statements : (i) Acid-test ratio (ii) Interest coverage ratio (iii) Average collection period (iv) Return on capital employed (v) Price earning ratio

State the assumptions made in Modigliani and Miller Proposition-I that the capital structure is independent of capital mix. Explain with an example that how arbitrage process justifies the theory, using the following data. Shyam Ltd. and Ram Ltd. belong to same risk class. Ram Ltd. has no debt capital. Shyam Ltd. has both debt and equity capital. Other details are as under: Particulars | Ram Ltd. | Shyam Ltd. Net Operating Income (₹) | 10,00,000 | 10,00,000 Debt Interest (₹) | - | 3,00,000 Debt Capitalisation Rate | - | 10% Equity Capitalisation Rate | 14% | 18% Average Cost of Capital | 14% | 14.52% One investor is holding ₹ 1,00,000 worth of equity shares of Ram Limited. What arbitrage will he resort to?

Explain the rating methodology used by CRISIL in debt rating. What symbols are used by CRISIL for determining the risk level of a debt instrument?

What is meant by attrition rate ? Why and how are Indian information technology and marketing companies facing this growing attrition rate ? Develop a suggestive framework to overcome these problems.

What are the provisions of inclusion of the income of a minor child and the wife of an assessee in his total income ?

"The overriding purpose of Quality of Work Life (QWL) is to change the climate at work so that the human technological organisational interface leads to a better quality of work life." Examine this statement. How do gaps create problems for this interface ?