UPHESC Assistant Professor Commerce 2025, 2026 PYQs

Concept: A tariff barrier is a tax/duty on traded goods; a non-tariff barrier restricts trade by rules, standards, quotas, licensing etc.

1. Import duties and countervailing duties are duties (taxes) – tariff measures.
2. Export subsidies are price-support measures, normally discussed separately from NTBs.
3. Product standards (technical, health, safety, labelling norms) restrict imports without any tax – a classic non-tariff barrier (TBT/SPS measures).

Short trick: Word 'duty' = tariff; 'standard, quota, licence' = non-tariff.

Concept: BoP is a systematic record of ALL economic transactions between residents of a country and the rest of the world during a period.

1. Goods and services alone = balance of trade / current account – only a part.
2. Capital flows alone = capital account – only a part.
3. Government revenue and expenditure = budget, not BoP.

Short trick: BoP = Current account + Capital account (+ financial account) – it covers everything with the rest of the world.

Concept: India's FDI policy permits foreign investment through two routes.

1. Automatic route – no prior approval of the Government/RBI is needed; only post-facto reporting.
2. Government (approval) route – prior approval of the concerned ministry is required (earlier through FIPB, abolished in 2017).
3. Trade, bank or 'approved' routes do not exist in the FDI policy.

Short trick: FDI = 'A or G' – Automatic or Government.

Concept: ASEAN (1967, Bangkok Declaration; secretariat Jakarta) had 10 members: Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, Cambodia (Timor-Leste joined later as the 11th member in 2025).

1. Laos, Vietnam and Brunei are members.
2. India is not a member – it is a dialogue/strategic partner and has the ASEAN–India FTA (2010).

Short trick: India deals with ASEAN through its 'Act East Policy', not as a member.

Concept: When nothing is said about how the retiring partner's share is taken, the continuing partners keep their old ratio between themselves.

1. Old ratio A : B : C = 3 : 2 : 1.
2. B retires; A and C continue in their old mutual ratio 3 : 1.
3. Gaining ratio is also 3 : 1 (B's 2/6 is shared 3 : 1).

Short trick: Just strike out the retiring partner's figure: 3 : 2 : 1 → 3 : 1.

Concept: Vouching = examination of documentary evidence (vouchers) supporting the entries/transactions in the books. Verification = confirming the existence, ownership, valuation and title of assets and liabilities on the balance-sheet date.

1. (A) is the standard definition of vouching – true.
2. (R) is also true: verification is used in a narrower sense, being confined to assets and liabilities shown in the balance sheet.
3. (R) says something about verification; it does not explain what vouching is – so it is not the explanation of (A).

Short trick: Vouching → transactions (whole year); Verification → assets & liabilities (year-end) – two separate facts.

Concept: Accounts are Personal (natural, artificial, representative), Real (tangible and intangible assets) and Nominal (expenses, incomes, losses, gains).

1. Prepaid salary – representative personal account (represents the employees).
2. Bank account – artificial personal account.
3. Proprietor's (capital) account – natural personal account.
4. Patent – an intangible asset, so it is a Real account.

Short trick: Intangible assets (patent, goodwill, trademark) are REAL accounts, not personal.

Concept: A company cannot earn profit before it legally exists, so pre-incorporation profit is not a distributable revenue profit.

1. It is credited to Capital Reserve (or used to write off goodwill/preliminary expenses).
2. It cannot be paid out as dividend, so it is not a revenue/general reserve.
3. A pre-incorporation loss is treated as goodwill (or deducted from capital reserve).

Short trick: Pre-incorporation profit → Capital reserve; loss → Goodwill.

Concept: P/V ratio = Contribution ÷ Sales × 100, and Contribution = Fixed cost + Profit.

1. Contribution = 14,000 + 6,000 = Rs. 20,000.
2. P/V ratio = 20,000 ÷ 1,00,000 × 100 = 20%.

Short trick: C = F + P; P/V = C/S.

Concept: Pre-acquisition profits of a subsidiary are capital profits and go into the cost of control (goodwill / capital reserve) calculation.

1. When the subsidiary capitalises pre-acquisition profit as bonus shares, its share capital rises and its pre-acquisition reserve falls by the same amount.
2. The holding company receives the bonus shares at no cost.
3. Paid-up value of holding's share in capital + its share of pre-acquisition profits stays the same, so cost of control and the consolidated balance sheet are unaffected.

Short trick: Bonus from pre-acquisition profit = only a transfer inside 'capital' items → no effect on CBS.

Concept: Securities premium is a capital receipt but not part of share capital.

1. Schedule III of the Companies Act, 2013: Shareholders' funds → (a) Share capital (b) Reserves and Surplus.
2. Securities Premium is shown under 'Reserves and Surplus' (Other equity in Ind AS format).
3. Its use is restricted by Sec. 52 (bonus shares, writing off preliminary expenses, buy-back etc.).

Short trick: Premium is extra over face value → not 'capital', but 'Reserves & Surplus'.

Concept: ABC (Cooper & Kaplan) assigns overheads to activities and then to products using many activity-specific cost drivers.

1. (B), (C), (D) are its features – activity focus, more accurate product cost, better pricing/product-mix decisions.
2. Relying on a single volume base such as direct labour hours is the feature of TRADITIONAL absorption costing, which ABC replaces.

Short trick: ABC = many drivers (set-ups, orders, inspections), not one labour-hour rate.

Concept: BEP (sales) = Fixed cost ÷ P/V ratio; P/V ratio = 100% − variable cost ratio.

1. P/V ratio = 100% − 70% = 30%.
2. BEP = 90,000 ÷ 0.30 = Rs. 3,00,000.
3. BEP is 60% of capacity sales → capacity sales = 3,00,000 ÷ 0.60 = Rs. 5,00,000.

Short trick: Rs. 3,00,000 (option A) is the BEP, not the capacity – read the question to the end.

Concept: Responsibility accounting divides the firm into cost, revenue, profit and investment centres and holds each manager responsible for controllable items.

1. Identifying responsibility centres, evaluating individual managers and improving control are its essence – (A), (B), (D) are correct.
2. Performance is judged by comparing actual results with BUDGETS/STANDARDS (variance reports), not by historical cost data – so (C) is incorrect.

Short trick: Responsibility accounting = Budget vs Actual for controllable costs, centre-wise.

Concept: Price discrimination (including dumping in foreign markets) is profitable only when price elasticities of demand differ between markets.

1. Higher price is charged in the market with less elastic demand (usually the home market).
2. Lower price is charged where demand is more elastic (usually the foreign market) – this is dumping.
3. Equilibrium: MR equal in both markets; $P=MC\cdot \frac{e}{e-1}$, so price depends on price elasticity.

Short trick: Discrimination needs different PRICE elasticities: inelastic → high price, elastic → low price.

Concept: Excess capacity theorem is associated with Chamberlin's monopolistic competition.

1. In long-run equilibrium the downward-sloping AR curve is tangent to LAC on its falling part.
2. So the firm produces less than the minimum-LAC (optimum) output – the gap is excess capacity.
3. Under perfect competition the firm produces at minimum LAC – no excess capacity.

Short trick: Chamberlin + tangency on the falling part of LAC = excess capacity.

Concept: A trade cycle moves through depression (slump) → recovery (revival) → boom (prosperity) → recession → again depression.

1. Start from the trough: Slump (I).
2. Activity picks up: Recovery (IV).
3. Peak activity: Boom (III).
4. Downturn begins: Recession (II).

Short trick: S-R-B-R: Slump, Recovery, Boom, Recession = I, IV, III, II.

Concept: Exceptions are situations where more is bought at a higher price.

1. Giffen paradox – inferior staple goods (Giffen goods).
2. Demonstration / Veblen effect – prestige goods bought more when dearer.
3. War, emergency or fear of shortage – people buy more even at higher prices.
4. Inflation is a general rise in the price level, not a listed exception to the law of demand.

Short trick: Textbook exceptions: Giffen, Veblen (demonstration), emergency/war, speculation, ignorance, fashion.

Concept: Window dressing means presenting the financial statements so that the position looks better than it really is.

1. The convention of (full) disclosure requires that accounts be honestly prepared and all material facts be fully disclosed, giving a true and fair view.
2. Window dressing hides or distorts facts, so it violates – and is prohibited by – the convention of disclosure.
3. Conservatism leads to understatement (secret reserves); materiality decides what is significant.

Short trick: Window dressing = cosmetic over-statement ↔ Disclosure = full, honest, true and fair.

Concept: MRS is the slope of the indifference curve.

1. For perfect substitutes the IC is a straight line (e.g. $X+Y=k$).
2. A straight line has the same slope everywhere, so MRS is constant.
3. Perfect complements give L-shaped ICs (MRS 0 or ∞); normal goods give convex ICs with diminishing MRS.

Short trick: Perfect substitutes → straight-line IC → constant MRS.