ICFAI Sample Assignments and Papers

Exim Policies and Procedures

2010-12-27T02:49:00.001-08:00

Q.41. State the objectives and major aspects of the Exim Policy.

Ans.

In exercise of the powers conferred under Section 5 of The Foreign Trade (Development and Regulation Act), 1992 (No. 22 of 1992), the Central Government hereby notifies the Export and Import Policy for the period 2002-2007. This Policy shall come into force with effect from 1st April, 2002 and shall remain in force upto 31st March, 2007 and will be co-terminus with the Tenth Five Year Plan (2002-2007). However, the Central Government reserves the right in public interest to make any amendments to this Policy in exercise of the powers conferred by Section-5 of the Act. Such amendment shall be made by means of a Notification published in the Gazette of India.

Objectives and aspects of Exim Policies.

The principal objectives of this Policy are:

I. To facilitate sustained growth in exports to attain a share of at least 1% of global merchandise trade.

II. To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for augmenting production and providing services.

III. To enhance the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitive strength while generating new employment opportunities, and to encourage the attainment of internationally accepted standards of quality.

IV. To provide consumers with good quality goods and services at internationally competitive prices while at the same time creating a level playing field for the domestic producers.

Procedures

The Director General of Foreign Trade may, in any case or class of cases, specify the procedure to be followed by an exporter or importer or by any licensing or any other competent authority for the purpose of implementing the provisions of the Act, the Rules and the Orders made thereunder and this Policy. Such procedures shall be included in the Handbook (Vol.1), Handbook (Vol.2), Schedule of DEPB Rate and in ITC(HS) and published by means of a Public Notice. Such procedures may, in like manner, be amended from time to time.

Q.41 Explain details the benefits available to the suppliers under Deemed Exports Scheme.

Ans.

Deemed Exports

"Deemed Exports" refers to those transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in free foreign exchange.

Categories of Supply

The following categories of supply of goods by the main/ sub-contractors shall be regarded as "Deemed Exports" under this Policy, provided the goods are manufactured in India:

a) Supply of goods against Advance License/Advance License for annual requirement/DFRC under the Duty Exemption /Remission Scheme;

b) Supply of goods to Export Oriented Units (EOUs) or units located in Special Economic Zone (SEZs) or Software Technology Parks (STPs) or Electronic Hardware Technology Parks (EHTPs);

c) Supply of capital goods to holders of licenses under the Export Promotion Capital Goods (EPCG) scheme;

d) Supply of goods to projects financed by multilateral or bilateral agencies/funds as notified by the Department of Economic Affairs, Ministry of Finance under International Competitive Bidding in accordance with the procedures of those agencies/ funds, where the legal agreements provide for tender evaluation without including the customs duty;

e) Supply of capital goods, including in unassembled/ disassembled condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till the stage of commercial production and spares to the extent of 10% of the FOR value to fertilizer plants.

f) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits the import of such goods at zero customs duty coupled with the extension of benefits under this chapter to domestic supplies;

g) Supply of goods to the power projects and refineries not covered in (f) above.

h) Supply of marine freight containers by 100% EOU (Domestic freight containers–manufacturers) provided the said containers are exported out of India within 6 months or such further period as permitted by the Customs; and

i) Supply to projects funded by UN agencies.

j) Supply of goods to nuclear power projects through competitive bidding as opposed to International Competitive Bidding.

The benefits of deemed exports shall be available under paragraph (d), (e), (f) and (g) only if the supply is made under the procedure of International Competitive Bidding (ICB).

Benefits for Deemed Exports

Deemed exports shall be eligible for any/all of the following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to the terms and conditions as given in Handbook (Vol.1):-

(a) Advance License for intermediate supply/ deemed export/DFRC.

(b) Deemed Exports Drawback.

Q.19 Explain EPCG Scheme in brief.

Ans.

EPCG Scheme

The scheme allows import of capital goods for pre production, production and post production (including CKD/SKD thereof as well as computer software systems) at 5% Customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of license.

However, in respect of EPCG licenses with a CIF value of Rs.100 crore or more, the same export obligation shall be required to be fulfilled over a period of 12 years.

The capital goods shall include spares, jigs, fixtures, dies and moulds. EPCG license may also be issued for import of components of such capital goods required for assembly or manufacturer of capital goods by the license holder.

Second hand capital goods upto 10 years old may also be imported under the EPCG scheme.

Spares for the existing plant and machinery may also be imported under the EPCG scheme subject to an export obligation equivalent to 8 times of duty saved to be fulfilled over a period of 8 years reckoned from the date of issuance of license.

Eligibility

The scheme covers manufacturer exporters with or without supporting manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers.

Conditions for import of Capital Goods

Import of capital goods shall be subject to Actual User condition till the export obligation is completed.

Export obligation

The following conditions shall apply to the fulfillment of the export obligation:-

I. The export obligation shall be fulfilled by the export of goods capable of being manufactured or produced by the use of the capital goods imported under the scheme. The export obligation may also be fulfilled by the export of same goods, for which EPCG license has been obtained, manufactured or produced in different manufacturing units of the license holder/specified supporting manufacturer (s)/ vendor(s). The export obligation under the scheme shall be, over and above, the average level of exports achieved by him in the preceding three licensing years for same and similar products except for categories mentioned in Handbook (Vol.1). Alternatively, export obligation may also be fulfilled by exports of other goods manufactured or service provided by the same firm/company which has the EPCG license. However, in such cases, the additional export obligation imposed under EPCG scheme shall be over and above the average exports achieved by the unit in preceding three years for the substitute products/services. This facility shall only be available to manufacturer exporters/ service provider.

II. The export obligation under the scheme shall be, in addition to any other export obligation undertaken by the importer, except the export obligation for the same product under Advance License, DFRC, DEPB or Drawback scheme.

Any firm/company registered with BIFR or any firm/ company acquiring a unit, which is under BIFR shall be allowed EO extension as per the rehabilitation package prepared by the operating agency subject to subsequent approval of BIFR. However, in cases where the rehabilitation package does not specify the EO extension period, a time period upto 12 years reckoned from the date of issue of license would be permitted on merits of the case for fulfillment of export obligation.

Similarly, small-scale SSI units shall also be entitled for similar facility as per the rehabilitation scheme of the concerned State government. However, in cases where the State rehabilitation scheme does not specify the EO extension period, a time period upto 12 years reckoned from the date of issue of license would be permitted on merits of the case for fulfillment of export obligation

In the case of EPCG licenses issued to agro units in the agri export zones, a period of 12 years reckoned from the date of issue of the license would be permitted for the fulfillment of export obligation.

Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier

A person holding an EPCG license may source the capital goods from a domestic manufacturer instead of importing them. The domestic manufacturer supplying capital goods to EPCG license holders shall be eligible for deemed export benefit under paragraph 8.3 of the Policy.

Benefits to Domestic Supplier

In the event of a firm contract between the EPCG license holder and domestic manufacturer for such sourcing, the domestic manufacturer may apply for the issuance of Advance License for deemed exports for the import of inputs including components required for the manufacturer of said capital goods.

The domestic manufacturer may also replenish the inputs including components after supply of capital goods to the EPCG license holders.

Fixation of Export Obligation

In case of direct imports, the export obligation relating to the EPCG license shall be reckoned with reference to the duty saved value on the CIF value of capital goods (including spares, jigs, fixtures, dies and moulds) actually imported. In case of domestic sourcing, the export obligation relating to EPCG shall be reckoned with reference to the notional Customs duties saved on the FOR of capital goods (including spares, jigs, fixtures, dies and moulds).

Service provider in Agri export zone shall have the facility to move or shift the capital goods within the zone provided he maintains accurate record of such movements. However, such equipments shall not be sold or leased by the license holder.

Q.4. Write short Notes on Advance License, DEPB, DFRC.

Ans.

1. Advance License

Advance License is issued for duty free import of inputs, as defined in paragraph 7.2, subject to actual user condition. Such licenses (other than Advance License for deemed exports) are exempted from payment of basic customs duty, additional customs duty, anti dumping duty and safeguard duty, if any. However, Advance License for deemed export shall be exempted from basic customs duty and additional customs duty only. Such licenses are issued to:-

I. Manufacturer exporter or Main contractor in case of deemed exports.

II. Merchant exporter where the merchant exporter agrees to the endorsement of the name(s) of the supporting manufacturer(s) on the relevant DEEC Book and in the case of deemed exports, sub contractor(s) whose name(s) appear in the main contract.

III. Such licenses and/or materials imported thereunder shall not be transferable even after completion of export obligation.

Such licenses shall be issued with a positive value addition. However, for exports for which payments are not received in freely convertible currency, the same shall be subject to value addition as specified in Appendix- 39 of Handbook (Vol.1), 1997-2002

Advance License shall be issued in accordance with the Policy and procedure in force on the date of issue of license and shall be subject to the fulfillment of a time bound export obligation as may be specified.

The facility of Advance License shall also be available where some of the inputs are supplied free of cost to the exporter. In such cases, for calculation of value addition, the notional value of free of cost inputs along with value of other duty-free inputs shall be taken into consideration.

Advance License for Intermediate Supply

Advance License may be issued for intermediate supply to a manufacturer-exporter for the import of inputs required in the manufacture of goods to be supplied to the ultimate exporter/deemed exporter holding another Advance License.

Advance License for Deemed Export

Advance License can be issued for deemed export to the main contractor for import of inputs required in the manufacture of goods to be supplied to the categories mentioned in `paragraph 10.2(b), (c), (d), (e), (f) and (g) of the Policy. In addition, in respect of supply of goods to specified projects mentioned in paragraph 10.2 (d), (e), (f) & (g) of the Policy, an Advance License for deemed export can also be availed by the sub-contractor of the main contractor to such project. Such license for deemed export can also be issued for supplies made to United Nations Organisations or under the Aid Programme of the United Nations or other multilateral agencies and paid for in foreign exchange.

2. DEPB (Duty Entitlement Passbook Scheme)

For exporters not desirous of going through the licensing route, an optional facility is given under DEPB. The objective of Duty Entitlement Passbook Scheme is to neutralise the incidence of Customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product.

Under the Duty Entitlement Passbook Scheme (DEPB), an exporter may apply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency. The credit shall be available against such export products and at such rates as may be specified by the Director General of Foreign Trade by way of public notice issued in this behalf, for import of raw materials, intermediates, components, parts, packaging material etc.

The holder of Duty Entitlement Passbook Scheme (DEPB) shall have the option to pay additional customs duty, if any, in cash as well.

Validity

The DEPB shall be valid for a period of 12 months from the date of issue.

Transferability

The DEPB and/or the items imported against it are freely transferable. The transfer of DEPB shall however be for import at the port specified in the DEPB which shall be the port from where exports have been made. Imports from a port other than the port of export shall be allowed under TRA facility as per the terms and conditions of the notification issued by Department of Revenue.

Applicability of Drawback

The exports made under the DEPB Scheme shall not be entitled for drawback. However, the additional customs duty paid in cash on inputs under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue. In cases, where the Additional Customs Duty is adjusted from DEPB, no benefit of CENVAT/Drawback shall be admissible.

3. DFRC (Duty Free Replenishment Certificate)

Duty Free Replenishment Certificate is issued to a merchant-exporter or manufacturer-exporter for the import of inputs used in the manufacture of goods without payment of basic customs duty, and special additional duty. However, such inputs shall be subject to the payment of additional customs duty equal to the excise duty at the time of import.

Duty Free Replenishment Certificate shall be issued only in respect of export products covered under the SIONs as notified by DGFT. However, DFRC shall not be issued in respect of SIONs which are subject to "actual user" condition or where the input is allowed with prior import condition or where the norms allow import of acetic anhydride, ephedrine and pseudo ephedrine in the Handbook (Vol-II).

Duty Free Replenishment Certificate shall be issued for import of inputs, as per SION, having same quality, technical characteristics and specifications as those used in the end product and as indicated in the shipping bills. The validity of such licenses shall be 18 months. DFRC and or the material(s) imported against it shall be freely transferable.

The Duty Free Replenishment Certificate shall be subject to a minimum value addition of 33%.
The export products, which are eligible for modified VAT, shall be eligible for CENVAT credit. However, non excisable, non dutiable or non centrally Vatable products, shall be eligible for drawback at the time of exports in lieu of additional customs duty to be paid at the time of imports under the scheme.

The exporter shall be entitled for drawback benefits in respect of any of the duty paid materials, whether imported or indigenous, used in the export product as per the drawback rate fixed by Directorate of Drawback (Ministry of Finance). The drawback shall however be restricted to the duty paid materials not covered under SION.

Duty Free Replenishment Certificate may be issued in respect of exports for which payments are received in non-convertible currency. Such exports shall, however, be subject to value addition as specified in Appendix-39 of Handbook (Vol.1).

Q.5. Benefits recovered by an EOU and SEZ.

Ans. Benefits received by EOU and SEZ

The Policy relating to Export Oriented Units (EOUs), units in Export Processing Zones (EPZs), Electronic Hardware Technology Parks (EHTP) and Software Technology Parks (STP) is given in chapter 9 of the Policy.

Export Processing Zones can also be set up by State Governments or in private/joint sector as per guidelines issued vide notification No. 42(RE)/92-97 dated 31st May, 1994 (Appendix-16G).

Software Technology Park (STP)/Electronics Hardware Technology Park (EHTP) complexes can be set up by the Central Government, State Government, Public or Private Sector Undertakings or any combination thereof, duly approved by the Inter Ministerial Standing Committee (IMSC) in the Ministry of Information Technology.

Software units may undertake exports using data communication links or in the form of physical exports (which may be through courier service also), including export of professional services.

Items Permitted For Import

An EOU/EPZ/EHTP/STP unit may import without payment of duty all types of goods, required by it for activities indicated in paragraph 9.1 of the Policy or in connection therewith, provided they are not prohibited items in the ITC (HS). These inter-alia include:

Capital goods, as defined in the Policy including the following and their spares:

i. DG sets, captive power plants, transformers and accessories,

ii. Pollution control equipment,

iii. Quality assurance equipment,

iv. Material handling equipment, like fork lifts and overhead cranes,

v. Un-interrupted Power Supply System (UPS), Special racks for storage, storage systems, modular furniture, computer furniture, anti-static carpet, tele-conference equipment, Servo Control System, Air-conditioners, panel for electricals.

vi. Security Systems

vii. Tools, jigs, fixtures, gauges, moulds, dyes, instruments and accessories;

2. Raw materials, components, consumables, intermediates, spares and packing materials

3. Prototypes and technical samples for product diversification, development or evaluation;

4. Drawings, blue prints, charts, microfilms and technical data;

5. Office equipment, including PABX, Fax machines, video projection system,

6. Spares and consumables for the above

Note:- The above items may be new or second hand. In case of doubt as to whether the item is required by the unit for its activities or in connection therewith, the decision of the concerned Development Commissioner shall be final.

PART B

Q.1. What are the preliminary registrations required to commence an export business.

Ans. Basic registrations required for exports are as follows:

Importer-Exporter Code Number

No export or import shall be made by any person without an Importer-Exporter Code (IEC) number unless specifically exempted. An Importer-Exporter Code (IEC) number shall be granted on application by the competent authority in accordance with the procedure specified in the Handbook

Registration -cum-Membership Certificate

Any person, applying for (i) a license to import/ export, [except items listed as restricted items in ITC(HS)] or (ii) any other benefit or concession under this Policy shall be required to furnish Registration-cum-Membership Certificate (RCMC) granted by the competent authority in accordance with the procedure specified in the Handbook (Vol.1) unless specifically exempted under the Policy.

Sales Tax Registration

In case of merchant exporters for purchasing goods for export without the payment of sales tax, Form N14/Form H is required to be issued. Such forms can be issued only if the Merchant exporter is holding a registration certificate under relevant Sales Tax Act.

Central Excise Registration:

If a exporter is engaged in the manufacture of trading through warehousing of Excisable goods, such exporter is required to obtain registration certificate under Central Excise Act.

Q.3. Write a short note on initiatives taken for promoting “thrust Sectors”

Ans. Thrust Sector

With a view to achieve the share of 1% of global trade and accelerated growth in exports, the following shall be the thrust sectors:

Electronic hardware

Textile including garments

Auto components /ancillary

Gem & Jewellery

Agriculture

Service sector.

Department of Commerce shall take concerted efforts to promote exports of these sectors by specific sectoral strategy.

Q.5. Write a short note on initiatives taken for export promotion.

Ans.

PROMOTIONAL MEASURES

Central Assistance to States

In furtherance to the methodology outlined in Paragraph 1.5 the State Governments shall be encouraged to fully participate in encouraging exports from their respective states. For this purpose, suitable provisions has been made in the Annual Plan of the Department of Commerce for allocation of funds to the states on the twin criteria of gross exports and the rate of growth of exports from different states. The States shall utilise this amount for developing complementary and critical infrastructure such as roads connecting production centers with the ports, setting up of Inland Container Depots and Container Freight Stations, creation of new State level export promotion industrial parks/zones, augmenting common facilities in the existing zones, equity participation in infrastructure projects and any other activities as may be notified by DGFT from time to time.

Market Access Initiative

Financial assistance shall be available under the scheme to the export promotion councils, industry and trade associations and other eligible entities, as may be notified from time to time, on the basis of the competitive merits of proposals received in this regard for the following purposes which inter-alia includes:-

Marketing studies on country product focus approach basis.

Setting up of common showrooms under one roof and warehousing facility in the identified centres on the basis of marketing studies in important cities abroad.

Participation in sales promotion campaigns through international departmental stores.

Publicity campaign for launching identified products in selected markets.

Participation in international trade fairs, seminars, buyers sellers meet.

Promotion of select brands.

Transport subsidies for select agriculture products.

Registration charges for product registration abroad for pharmaceuticals, bio-technology and agro chemicals and testing charges for engineering products

Inland freight subsidies for units located in North East, Sikkim and Jammu &Kashmir.

Setting up of "business centre" in Indian missions abroad for visiting Indian exporters/ businessmen. .

Towns of Export Excellence

A number of towns in specific geographical locations have emerged as dynamic industrial locations handsomely contributing to India’s exports. These "Industrial Clusters" rooted in history symbolise the bursting forth of the free market spirit and are essentially collective response to common problems of competitiveness. Some have become globally renowned manufacturing bases. It is necessary to grant recognition to these industrial cluster items with a view to maximize their export profiles and help in upgrading them to move up in the higher value markets.

A number of such industrial cluster towns are exporting a substantial portion of their products, which are world class. For example, Tirupur is exporting 80% of its production of hosiery. A beginning has been made to consider industrial cluster towns such as Tirupur for hosiery, woollen blanket in Panipat, woollen knitwear in Ludhiana to be eligible for the following benefits:-

Common service providers in these areas shall be entitled for facility of EPCG scheme. The recognised associations of units will be able to access the funds under the Market Access Initiative scheme in Paragraph 3.2 for creating focused technological services. Further such areas will receive priority for assistance for identified critical infrastructure gaps from the scheme on Central Assistance to States mentioned in paragraph 3.1. The units in these notified areas would be eligible for availing all the EXIM policy schemes as per their choice and the provisions of those schemes shall stand relaxed to the extent provided in this paragraph in respect of such units.

Existing industrial clusters need upgradation of services and simplification of procedures. To achieve that purpose, it is proposed to bring about synergy and convergence of various schemes for development of cluster to improve the competitiveness of the units located there.

Selected towns producing goods of Rs. 1000 crore or more will be notified as Towns of Exports Excellence on the basis of potential for growth in exports. Proposal for strengthening infrastructure, simplifying rules & procedures and developing production infrastructure relating to design, R&D packaging , logistic support as well as to provide awareness and information about international marketing will be considered under the scheme.

Special Focus on Cottage and Handicraft Sector

The small scale sector along with the cottage and handicraft sector has been contributing to more than half of the total exports of the country. The cottage and handicrafts sector, which mostly employs artisan and rural people, contributes significantly to this effort. In recognition of the export performance of this sector and to further increase its competitiveness, the following facilities shall be extended to this sector.

i) The unit in this sector shall be eligible for funds from Market Access Initiative (MAI) scheme as given in paragraph 3.2 of this Policy. Funds shall be earmarked for this sector in the MAI scheme. The funds shall be utilised for developing their website for virtual exhibition, among other activities,

ii) Under the EPCG scheme, these units will not be required to maintain average level of exports as given in paragraph 5.5(ii) of this Policy;

iii) These units shall be entitled to the benefit of export house status on achieving lower total export/deemed export performance of Rs.15.crore during the preceding three licensing years. However, for new entrants, having exports of less than three years, such status may be granted on achieving the total exports of Rs. 15 crore in the current or preceding one/two licensing years as given in paragraph 3.7.2 of this Policy; and

iv) The units in handicraft sector shall be entitled to duty free imports of specified items upto 3% of FOB value of their exports.

Agri Export Zones (AEZ)

With a view to promoting agricultural export from the country and remunerative returns to the farming community in a sustained manner, AEZ as announced earlier would be set up for end to end development for export of specific products from a geographically contiguous area.

AEZ would be identified by the State Government, who may evolve a comprehensive package of services provided by all State Government agencies, State agriculture universities and all institutions and agencies of the Union Government for intensive delivery in these zones. Corporate sector with proven credentials will be encouraged to sponsor new agri export zone or take over already notified agri export zone or part of such zones for boosting agri exports from the zones.

Services which would be managed and coordinated by State Government/corporate sector would include provision of pre/post harvest treatment and operations, plant protection, processing, packaging, storage and related research & development etc. APEDA will supplement, within its schemes and provisions, efforts of State Governments for facilitating such exports.

Units in AEZ would be entitled for all the facilities available for exports of goods in terms of provisions of the respective schemes.

Brand Promotion and Quality

The Central Government aims to encourage manufacturers and exporters to attain internationally accepted standards of quality for their products. The Central Government will extend support and assistance to trade and industry to launch a nationwide Programme on quality awareness and to promote the concept of total quality management.

State Programmes

The Central Government will encourage and assist State Governments in launching similar Programmes in their respective States, particularly for the small scale and handicraft sectors.

Test Houses

The Central Government will assist in the modernisation and upgradation of test houses and laboratories in order to bring them at par with international standards.

Quality Complaints/ Disputes

The Regional Sub-Committee on Quality Complaints (RSCQC) set up at the Regional Offices of the Directorate General of Foreign Trade shall investigate quality complaints received from foreign buyers. The guidelines for settlement of quality complaints, in particular, and such other complaints, in general, is given in Appendix- 37 of Handbook (Vol.1).

Trade disputes affecting trade relations

If it comes to the notice of the Director General of Foreign Trade or he has reason to believe that an export or import has been made in a manner gravely prejudicial

(i) to the trade relations of India with any foreign country;

(ii) to the interest of other persons engaged in exports or imports;

(iii) has brought disrepute to the credit or the goods of the country;

The Director General Foreign Trade may take action against the exporter or importer concerned in accordance with the provisions of the Act, the Rules and Orders made thereunder and this Policy.

Status Certificate

Merchant As Well As Manufacturer Exporters, Service Providers, Export Oriented Units (EOU’s)/ Units Located in Special Economic Zones (SEZ’s) / Agri Export Zone (AEZ’s)/ Electronic Hardware Technology Parks (EHTPs)/ Software Technology Parks (STPs) shall be eligible for such recognition.

Q.7. Explain briefly the procedure for redemption of EPCG License.

Ans. Export Promotion Capital Goods Scheme

Policy
The Policy relating to Export Promotion Capital Goods (EPCG) Scheme is given in chapter 6 of the Policy.
Application Form

An application for the grant of a license may be made to the licensing authority concerned in the form given in Appendix-10A along with documents prescribed therein.

Validity for Import of Spares.

Notwithstanding the provisions contained in paragraph 4.15 for the import of spares, the validity of the EPCG license shall be co-terminus with the validity of the export obligation period under paragraph 6.2 of the Policy and the same shall be endorsed on the license.

Leasing Of Capital Goods

An EPCG license holder may, on the basis of firm contract between the parties, source the capital goods from a domestic leasing company in accordance with paragraph 5.6. In such cases, the Bill of Entry of imported capital goods or the commercial invoice of indigenously procured capital goods, as the case may be, shall be signed jointly by the EPCG license holder and the leasing company at the time of import/ local supply respectively. However, the EPCG license holder shall alone be fully responsible for fulfillment of export obligation.

Indigenous Sourcing Of Capital Goods

a. The EPCG license holder intending to source capital goods indigenously, shall make a request to the licensing authority for invalidation of the EPCG license for direct import. The EPCG license holder shall also give the name and address of the person from whom he intends to source the capital goods.

b. On receipt of such request, either at the time of issuance of license or subsequently, the licensing authority shall make the license invalid for direct import and issue an invalidation letter, in duplicate, to the EPCG license holder. The licensing authority shall simultaneously grant permission to the EPCG license holder to procure the capital goods indigenously in lieu of direct import.

c. The indigenous manufacturer intending to supply capital goods to the EPCG license holder, may apply to the licensing authority in the form given in Appendix-10B along with the documents prescribed therein for import of components required for the manufacture of such capital goods. The indigenous manufacturer may alternatively apply for Advance License for deemed export in terms of paragraph 6.9 of the Policy for import of such inputs as required for the manufacture of capital goods for supply to the EPCG license holder .

EOU/EPZ Units Under EPCG Scheme

i. i) An EOU/ EPZ unit may apply for an EPCG license in terms of paragraph 9.27 of the Policy. Such application shall be made in the form given in Appendix-10A along with the documents prescribed therein. In addition, the applicant shall also furnish a copy of the `No Objection Certificate’ from the Development Commissioner showing the details of the capital goods imported/indigenously procured by the applicant, its value at the time of import/sourcing and the depreciated value for the purpose of assessment of duty under the scheme. Such cases shall not be required to be forwarded to Headquarters EPCG Committee. The concerned licensing authority shall issue EPCG licenses based on the no objection certificate produced from the concerned Development Commissioner.

ii. Deleted

Consideration Of Applications

The applicant may apply for EPCG license to the competent authority on the basis of self declaration subject to final fixation of nexus by Headquarters. EPCG Committee as per the financial power given in the table below. The applicant shall give an undertaking that in case the Headquarters EPCG Committee disallows the Capital Goods including Jigs, fixtures, dies, moulds and spares, the license holder shall pay Customs duty together with 24% interest on such goods.

The Regional Licensing authority, after issuance of the license, shall forward a copy of the application along with a copy of the license to the Headquarters EPCG Committee for its approval within 7 days of the issuance of the license except in such cases where the nexus norms have already been communicated by the Headquarters in any case or the same is already established on the basis of the EPCG licenses , issued in the past by the port office.

CIF VALUE	COMPETENT AUTHORITY
Upto Rs. 50 Crore.	Regional Licensing Authority concerned
Above Rs. 50 Crore	Headquarters EPCG Committee

Benefits To Indigenous Supplier Of Capital Goods

For the purpose of claiming benefit of deemed exports, the indigenous supplier of capital goods shall furnish:

a. Certificate from the respective Assistant Commissioner of Customs and Central Excise Authorities having jurisdiction over the factory as evidence of having supplied/ received the manufactured capital goods and in case of service provider, a certificate from independent Chartered Engineer confirming the supplies/ receipt of the Capital Goods.

b. Evidence of payments received through normal banking channel from the EPCG license holder.

by excluding exports made to such countries.

Questoin20:- Write a short note on Fulfillment of Export Obligation under EPCG Scheme

Answer:-

Introduction: -

Fulfillment Of Export Obligation

a. The license holder under the EPCG scheme shall fulfill the export obligation over the specified period in the following proportions:

Period from the date of issue of license	Proportion of total export obligation
Block of 1st and 2nd year	NIL
Block of 3rd and 4th year	15%
Block of 5th and 6th year	35%
Block of 7th and 8th year	50%

However, the export obligation of a particular block of year may be set off by the excess exports made in the preceding block of year. Where export obligation of any particular block of year is not fulfilled in terms of the above proportions, except in such cases where the export obligation prescribed for a particular block of years is extended by the competent authority, such license holder shall, within 3 months from the expiry of the block of years, pay duties of customs plus 24% interest of an amount equal to that proportion of the duty leviable on the goods which bears the same proportion as the unfulfilled portion of the export obligation bears to the total export obligation.

The license holder shall, if he fails to discharge a minimum of 25% of the export obligation prescribed for any particular block of two years for two consecutive blocks under EPCG scheme, be liable to pay forthwith, the whole of duties of customs plus 24% interest leviable on the goods imported except in such cases where the export obligation prescribed for a particular year or block of year is extended by the competent authority,

However, the licenses issued under the scheme upto 31.3.2000 shall be governed by provisions laid down in paragraph 6.11 as given in Handbook (Vol.1) (RE-99).

Monitoring of Export Obligation

The license holder, upon installation of capital goods in the factory, shall produce to the concerned Licensing Authority, a certificate to this effect by the jurisdictional Excise Authorities within 6 months of clearance of such goods from Customs. The license holder shall submit to the licensing authority, report on the progress made in fulfillment of export obligation against the license issued to him. The report shall be submitted in the form given in Appendix -10C. The periodicity of the report shall be year wise.

6.12A Re-Export of Capital Goods Imported Under EPCG Scheme

Capital Goods imported under the EPCG scheme which are found defective or unsuitable for use may be re-exported with the permission of the Licensing Authority. In cases where the Capital Goods have been cleared without payment of basic Customs duty, no duty otherwise leviable on imports shall be paid on such re-export and the EPCG license holder shall not be eligible for any drawback benefits. However, in cases where the Capital Goods have been cleared on payment of concessional customs duty, no duty otherwise leviable on imports shall be paid on such re-export and the EPCG license holder shall be entitled for drawback in lieu of concessional duty paid at the time of re-export. The export obligation imposed on such capital goods will be extinguished

6.12B Replacement of Capital Goods

The Capital Goods imported under the scheme and found defective or otherwise unfit for use may be re-exported and Capital Goods in replacement thereof be imported under the scheme. In such cases, while

As evidence of fulfillment of export obligation, the license holder shall furnish the following documents;

a. For Physical Exports:

i. A consolidated statement of exports made in the form given in Appendix-10C, duly certified by a Chartered Accountant;

ii. A certificate from the bank evidencing exports and realisation in freely convertible currency.

b. For Deemed Exports;

i. Copy of ARO/ Back to Back Inland letter of Credit.;
OR
Supply invoices duly certified by the Bond Office of EOU/EPZ concerned showing that supplies have been received;

OR
Invoices certified by the Project Authority concerned.

ii. The licensee shall also furnish the evidence of having received the payment through normal banking channel or a self certified copy of payment certificate issued by the Project authority concerned in the form given in Appendix-14B.

c. For Services rendered:

i. Consolidated statement of services rendered in the form given in Appendix-10C, duly certified by a Chartered Accountant;

ii. A certificate from the bank evidencing foreign exchange earning received through normal banking channel.

d. For supply of capital goods to EPCG license holders, where the indigenous manufacturer imports components under EPCG:

in case of import of components by indigenous manufacturer, he shall furnish;

i. Certificate from the jurisdictional Excise authorities as evidence of having supplied/ received the manufactured capital goods;

ii. Evidence of payment received through the normal banking channel, from the EPCG license holder.

On being satisfied, the licensing authority shall issue a certificate of discharge of export obligation to the EPCG License holder and send a copy of the same to the customs authorities with whom BG/LUT has been executed.

Pro Rata Reduction/ Extension In Export Obligation

If the EPCG license holder has not utilised the full or utilised in excess, the CIF value of the license for import/ indigenous procurement of capital goods allowed therein, his export obligation shall stand reduced/ enhanced on prorata basis with reference to the actual utilisation of the license. In such cases where the CIF value actually utilised is more than the CIF value covered by the license, the license holder shall furnish additional fee to cover the excess CIF value of imports effected subsequently.

Extension of Export Obligation Period

The competent authority, as mentioned in paragraph 6.8, may consider, on merits, request for extension in export obligation period, including extension for any one year or any one block of years, for fulfillment of export obligation subject to the condition that extension of export obligation shall not exceed a total period of one year from the date of expiry of the export obligation period. The extension in export obligation period shall be subject to such terms and conditions as may be prescribed by the competent authority.

Penal Action

In case of failure to fulfil the export obligation or any other condition of the license, the license holder shall be liable for action under the Foreign Trade (Development & Regulation) Act, 1992, the Orders and Rules made thereunder, the provisions of the Policy and the Customs Act, 1962.

Export Obligation Shortfall

The competent authority as mentioned in paragraph 6.8 may also consider condonation of shortfall upto 5% in the export obligation subject to such terms and conditions as may be prescribed by them.

Maintenance of Records

Every EPCG license holder shall maintain for a period of 3 years from the date of redemption, a true and proper account of the exports/supplies made and services rendered towards fulfillment of export obligation under the scheme.

Regularisation of Bonafide Default

In case, EPCG license holder fails to fulfill the prescribed export obligation, he shall pay duties of Customs plus 24% interest per annum to the Customs authority as per paragraph 6.11. In addition, the license holder shall surrender to the licensing authority SIL of a value equivalent to 5 times the CIF value of actual imports on prorata basis.

Re-fixation of average export obligation

Wherever average level of export obligation was fixed taking into account the exports made to former USSR or to such countries as are notified by the Directorate General of Foreign Trade under this paragraph, the average level of exports shall be reduced by excluding exports made to such countries.

Financial Accounting (MB131) : January 2004

2010-04-24T04:06:00.001-07:00

Question Paper

Financial Accounting (MB131) : January 2004

Section A : Basic Concepts (30 Marks)
• This section consists of questions with serial number 1 - 30.
• Answer all questions.
• Each question carries one mark.
1. Which of the following represent(s) personal accounts in accounting parlance?
a. Sundry creditors
b. Bank account
c. Outstanding wages
d. Prepaid insurance
e. All of the above.
< Answer >
2. Which of the following methods of valuation of inventory is based on the assumption that costs are
charged against revenue in the order in which they occur?
a. FIFO method
b. LIFO method
c. Weighted average method
d. Moving average method
e. Base stock method.
< Answer >
3. Which of the following is not an item of revenue expenditure?
a. Interest on deposits accepted
b. Annual insurance premium on inventory
c. Customs duty paid in connection with the import of equipment
d. Repairs and maintenance on machinery
e. Expenditure on assets like paper weight and pin cushion.
< Answer >
4. Which of the following errors will cause a mismatch in the trial balance?
a. Errors of complete omission
b. Compensating errors
c. Errors of principle
d. Recording dual aspects of a transaction more than once
e. Errors of partial omission.
< Answer >
5. AB & Co. purchased a machine for Rs.10,00,000 on April 1, 2002. The salvage value of the machine is
Rs.40,000. The useful life of the machine is 8 years. If the firm intends to depreciate the machinery on
straight-line method, the rate of depreciation will be
a. 16%
b. 15%
c. 14%
d. 12.5%
e. 12%.
< Answer >
6. If the purchases day book of a firm is overcast, it will
a. Increase gross profit and reduce net profit
b. Reduce gross profit and increase net profit
c. Reduce gross profit as well as net profit
d. Increase gross profit as well as net profit
e. Reduce gross profit but will not have any impact on net profit.
< Answer >
7. Which of the following is true when a debtor pays his dues?
a. The asset side of the balance sheet will decrease
b. The asset side of the balance sheet will increase
c. The liability side of the balance sheet will increase
d. The liability side of the balance sheet will decrease
< Answer >
e. There is no change in total assets or total liabilities.
8. Withdrawal of goods from stock by the owner of the business for personal use should be recorded by
debiting
a. Drawings account and crediting cash account
b. Drawings account and crediting purchases account
c. Capital account and crediting drawings account
d. Purchases account and crediting drawings account
e. Stock account and crediting capital account.
< Answer >
9. The cost price of a machine is Rs.1,20,000 and the depreciated value of the machine after 3 years will
be Rs.66,000. If the company charges depreciation under straight-line method, the rate of depreciation
will be
a. 25%
b. 20%
c. 18%
d. 15%
e. 12%.
< Answer >
10. Consider the following data pertaining to a firm:
The balance as per pass book is
a. Rs.20,600 (Dr. balance)
b. Rs.18,500 (Dr. balance)
c. Rs.18,500 (Cr. balance)
d. Rs.15,600 (Dr. balance)
e. Rs.20,600 (Cr. balance).
Credit balance as per bank column of cash book Rs.13,500
Bank interest on overdraft appeared only in the pass book Rs.2,100
Cheques deposited but not collected by the bank Rs.5,000
< Answer >
11. Consider the following data pertaining to a company for the year 2002-2003:
The bad debts of the company during the year are
a. Rs.40,000
b. Rs.35,000
c. Rs.30,000
d. Rs.25,000
e. Rs.20,000.
Opening balance of sundry debtors Rs. 45,000
Credit sales Rs.4,25,000
Cash sales Rs. 20,000
Cash collected from debtors Rs.4,00,000
Closing balance of sundry debtors Rs. 50,000
< Answer >
12. The opening stock of a company is Rs.40,000 and the closing stock is Rs.50,000. If the purchases
during the year are Rs.2,00,000 the cost of goods sold will be
a. Rs.2,10,000
b. Rs.2,00,000
c. Rs.1,90,000
d. Rs.1,80,000
e. Rs.1,50,000.
< Answer >
13. The balance as per bank statement of a company is Rs.12,500 (Dr.). The company deposited two
cheques worth Rs.8,500, out of which one cheque for Rs.2,800 was dishonoured which was not entered
in the cash book. The credit balance as per cash book is
a. Rs.21,000
b. Rs.15,300
c. Rs.23,800
d. Rs. 9,700
< Answer >
e. Rs. 4,000.
14. During the year 2002-03, the profit of a business before charging manager’s commission was
Rs.1,89,000. If the manager’s commission is 5% on profit after charging his commission, then the total
amount of commission payable to manager is
a. Rs.10,000
b. Rs. 9,450
c. Rs. 9,000
d. Rs. 8,500
e. Rs. 9,947.
< Answer >
15. Which of the following statements is true?
a. The losses from the sale of capital assets need not be deducted from the revenue to ascertain net
income
b. Going concern concept requires that always non-monetary assets should be valued and recorded at
market value
c. According to consistency concept, the results of one accounting period of a business cannot be
compared with that of in the past
d. In terms of conservatism concept all probable losses must be considered in computation of income
e. The system of recording transactions based on dual concept is double accounting system.
< Answer >
16. Which of the following ratios indicates the short-term liquidity of a business?
a. Inventory turnover ratio
b. Debt-equity ratio
c. Acid test ratio
d. Proprietary ratio
e. Net profit ratio.
< Answer >
17. Which of the following should be deducted in the Balance Sheet of a company from the share capital to
find out paid-up capital?
a. Calls-in-advance
b. Calls-in-arrears
c. Share forfeiture
d. Discount on issue of shares
e. Share premium.
< Answer >
18. Which of the following statements is false?
a. The forfeited shares should not be issued at a premium
b. At the time of forfeiture of shares, share premium should not be debited with the amount of
premium already received
c. Shares can be issued at a discount only after one year from the commencement of business
d. Share premium cannot be utilized to redeem preference shares
e. The loss on re-issue of shares cannot be more than the gain on forfeiture of those shares.
< Answer >
19. Which of the following accounting treatments is/are true in respect of accrued commission appearing
on the debit side of a trial balance?
a. It is shown on the debit side of the profit and loss account
b. It is shown on the credit side of the profit and loss account
c. It is shown on the liabilities side of the balance sheet
d. It is shown on the assets side of the balance sheet
e. Both (b) and (d) above.
< Answer >
20. The maximum amount beyond which a company is not allowed to raise funds by issue of shares is
a. Issued capital
b. Reserve capital
c. Nominal capital
d. Subscribed capital
e. Paid-up capital.
< Answer >
21. The discount allowed on re-issue of forfeited shares is debited to
< Answer >
a. Discount on re-issue of shares account
b. Profit and loss account
c. Share premium account
d. Discount on issue of shares account
e. Forfeited shares account.
22. The interest on calls in advance is paid for the period from the
a. Date of receipt of application money to the date of appropriation
b. Date of receipt of allotment money to the date of appropriation
c. Date of receipt of advance to the date of appropriation
d. Date of appropriation to the date of dividend payment
e. Date of appropriation to the date of receipt of final call.
< Answer >
23. Which of the following items should not appear under the head ‘unsecured loans’ in the Balance Sheet
of a company?
a. Sinking funds
b. Loans and advances from subsidiaries
c. Short term loans and advances from banks
d. Loans and advances from others
e. Fixed deposits.
< Answer >
24. Share premium cannot be used to
a. Issue bonus shares
b. Redeem preference shares
c. Write-off preliminary expenses
d. Write-off discount on issue of shares
e. Provide for premium payable on redemption of debentures.
< Answer >
25. Rishi Ltd. issued 1,50,000 shares of Rs.100 each at a discount of 10%. Rama, to whom 300 shares were
allotted failed to pay the final call of Rs.30 per share and hence, all his shares were forfeited. At the time
of forfeiture, the amount transferred to share forfeiture account was
a. Rs. 9,000
b. Rs.18,000
c. Rs.21,000
d. Rs.27,000
e. Rs.30,000.
< Answer >
26. Suma Ltd. announced a rights issue of four shares of Rs.100 each at a premium of 160% for every five
shares held by the existing shareholders. The market value of the share at the time of rights issue is
Rs.440. The value of right is
a. Rs.124
b. Rs.352
c. Rs. 80
d. Rs.110
e. Rs.180.
< Answer >
27. Which of the following statements is true?
a. A company will be deemed to be a holding company of another if, it holds more than 50
percent of both equity and preference share capital
b. The financial year of the holding company and its subsidiary company must end on the same date
c. The share capital of the subsidiary company does not appear in the Consolidated Balance Sheet
d. The inter company owing will be shown in the Consolidated Balance Sheet
e. Minority shareholders of the subsidiary are entitled to proportionate share in capital profits only.
< Answer >
28. On December 01, 2002 H Ltd. acquired 60% shares in S Ltd. The balance of profit and loss account of
S Ltd. on April 01, 2002 and March 31, 2003 was Rs.90,000 and Rs.1,50,000, respectively. The profit is
earned evenly throughout the year. The share of capital profit of
H Ltd. in the profits of the subsidiary as on March 31, 2003 is
a. Rs. 36,000
b. Rs. 60,000
c. Rs. 72,000
< Answer >
d. Rs. 78,000
e. Rs.1,30,000.
29. On April 01, 2002, Sura Chemicals Ltd. issued 10,000, 18% Debentures of Rs.100 each. The company
reserves the right to redeem its debentures in any year by purchase in open market. Interest on
debentures is payable on September 30, and March 31, every year.
• On July 1, 2002, the company purchased 2,000 of its own 18% debentures at Rs.98 cuminterest.
• The company cancelled its own 2,000 debentures on March 31, 2003.
The profit on cancellation of debentures transferred to Capital reserve is
a. Rs. 4,000
b. Rs. 9,000
c. Rs.36,000
d. Rs.13,000
e. Rs.27,000.
< Answer >
30. Consider the following profits pertaining to a company for the last 3 years:
The weighted average profit of the company for the purpose of valuation of goodwill is
a. Rs.4,50,000
b. Rs.4,35,000
c. Rs.4,10,000
d. Rs.3,85,000
e. Rs.3,50,000.
Year Profit (Rs.)
2000-01 Rs.3,30,000
2001-02 Rs.4,20,000
2002-03 Rs.4,80,000
< Answer >
END OF SECTION A
Section B : Problems (50 Marks)
• This section consists of questions with serial number 1 – 5.
• Answer all questions.
• Marks are indicated against each question.
• Detailed workings should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.
1. The following is the balance sheet of Majestic Ltd. as on March 31, 2003.
Additional Information:
i. Profit for the year includes Rs.10,000 income from investments. The market value of the assets is as
follows:
ii. Normal return on capital employed in this type of business is 10%.
iii. Adjustment of depreciation is not required for valuation of goodwill.
iv. Income tax rate @ 50%.
You are required to calculate the value of goodwill on the basis of 3 years purchase of super profits of the
company.
(10 marks) < Answer >
2. M/s. Sneha Associates imported a composite machine on October 01, 2000 for US$ 3,200 (equivalent Indian
Rupees 1,60,000), paid customs duty and freight amounting to Rs.80,000 and incurred erection charges of
Rs.60,000. Another local machine costing Rs.1,00,000 was purchased on April 01, 2001.
On October 01, 2002, one third of the imported machine got out of order and was sold for
Rs.34,800. On the same day, another machine was purchased to replace the same for Rs.50,000. The company
depreciates machinery at the rate of 20% p.a. on the straight-line method.
You are required to show the Machinery Account for the years 2000-2001; 2001-2002; and 2002-2003.
(9 marks) < Answer >
3. The following is the trial balance of Maithrei Ltd. as on March 31, 2003. The company was registered with a
nominal capital of 1,00,000 equity shares of Rs.10 each. Out of which 60,000 shares were issued and called up and
were fully paid-up.
Trial Balance as on March 31, 2003
Liabilities Rs. Assets Rs.
40,000 equity shares of Rs.10
each
issue price Rs.13 each
4,00,000 Goodwill 40,000
Securities Premium 1,20,000 Land & building 2,00,000
Profit & Loss a/c. Plant & Machinery 2,90,000
Balance as on 01.4.2002 40,000 Investments 1,00,000
Profit for the year
before providing for taxes
1,60,000 2,00,000 Stock 85,000
Sundry creditors 80,000 Sundry debtors 95,000
Provision for taxation 40,000 Cash & Bank 30,000
8,40,000 8,40,000
Land & building Rs.2,60,000
Plant & Machinery Rs.3,50,000
Investments Rs.1,50,000
Stock Rs. 80,000
Sundry debtors Rs. 90,000
Particulars Dr.(Rs.) Cr.(Rs.)
Additional Information:
i. Closing stock as on March 31, 2003 was Rs.42,500.
ii. One fourth of the amount of advertisement expenses is to be carried forward to the next year.
iii. Depreciation is to be provided as follows:
Furniture & fittings – 10%
Plant & machinery – 20%
Building – 10%
iv. Salaries outstanding as on March 31, 2003 were Rs.12,450.
v. Create a provision for bad and doubtful debts at 5% on debtors.
vi. Sundry debtors include an amount of Rs.5,000 due from Mr.Amar and Sundry creditors include Rs.3,000
due to Mr.Amar.
Considering the above information and the trial balance, you are required to prepare:
a. Trading and Profit & loss account of Maithrei Ltd. for the year ended March 31, 2003.
b. Balance Sheet of Maithrei Ltd. as at March 31, 2003.
(8 + 6 = 14 marks) < Answer >
4. The accountant of Jay Ltd. has reconciled the trial balance for the financial year 2002-03 by putting the difference
in a suspense account and has prepared Trading and Profit and loss account and Balance Sheet for the period.
Subsequent scrutiny of the books disclosed the following errors:
i. A credit purchase of goods from Mr. Rohan for Rs.21,000 has been debited to his account.
ii. Goods purchased from Mr. Kanithkar amounting to Rs.12,000 were entered in the purchases day book, but
were omitted to be entered in the name of Mr. Kanithkar in the creditors ledger.
iii. Office furniture purchased for Rs.21,000 has been passed through the purchases account.
iv. Repairs to office car of Rs.8,500 were debited to the office car account.
Paid-up Share Capital of Rs.10 each 6,00,000
Stock as on April 01, 2002 40,000
Sales returns and Sales 80,000 9,60,000
Purchases and Purchases returns 6,64,000 84,000
Carriage inward 27,800
Rent & taxes 12,000
Sundry creditors 1,16,000
Sundry debtors 2,40,000
Bank loan (interest at the rate of 12% per annum) 40,000
Interest on bank loan 4,000
Advertisement Expenses 24,000
Bad debts 2,000
Income from Investments 4,000
Cash at bank 21,000
Discount (allowed and received) 4,050 2,800
Investments (10%) 40,000
Furniture & Fittings 45,000
Audit fees 5,400
Insurance premium 2,400
Travelling expenses 2,200
Cash in hand 5,400
Salaries 1,37,550
Wages 50,000
Building 2,50,000
Plant & Machinery 1,50,000
18,06,800 18,06,800
Suggested Answers
Financial Accounting (MB131) : January 2004
You are required to
a. Pass the journal entries for rectification of the above errors.
b. Prepare suspense account.
(5 + 2 = 7 marks) < Answer >
5. ABC Ltd. issued 10,000 equity shares of Rs.100 each at a premium of 10% per share. The amount is payable as
follows:
The applications were received for 9,000 shares and these were allotted in full. All moneys due were received
except the first and final call money on 200 shares, which were forfeited. Out of these shares, 100 shares were
subsequently re-issued @ Rs.90 per share as fully paid.
You are required to pass journal entries for recording the above transactions in the books of ABC Ltd.
(10 marks) < Answer >
END OF SECTION B
Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 6 - 8.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on Section C.
6. The concepts of capital and revenue are of fundamental importance to the correct determination of accounting
profit for a period. Discuss the basic principles which would guide you in allocating expenditure as capital
expenditure, revenue expenditure and deferred revenue expenditure.
(9 marks) < Answer >
7. The Chief Accounts Officer of Shriya Ltd., found that Priya Ltd. who owes a large amount to the company is
rumored to be going into liquidation. As a prudent Accounts Officer of the company, you are required to explain
the concept which you consider in making suitable amount of provision for bad and doubtful debts.
(6 marks) < Answer >
8. A company which has built up substantial reserves decides to capitalize a part of these retained earnings by
issuing bonus shares to the existing shareholders. In this context, explain the provisions relating to the issue of
bonus shares under the SEBI guidelines.
(5 marks) < Answer >
END OF SECTION C
END OF QUESTION PAPER
Rs.
On application 25
On allotment (including premium) 35
On first call 20
On final call 30
1. Answer : (e)
Reason : Personal accounts deal with accounts of individuals like creditors, debtors, banks etc. It shows the
balance due to these individuals or due from them on a particular date and representative personal
accounts represent the amounts due on account of accrual concept like accrued expenses and prepaid
expenses or accrued incomes and pre-received incomes. By virtue of this, the accounts stated in
alternatives (a) sundry creditors, (b) Bank account, (c) outstanding wages and (d) prepaid insurance
represent personal accounts.
< TOP >
2. Answer : (a)
Reason : The basis for pricing inventory is either cost of production or cost of acquisition. FIFO method of
identifying inventory is based on the assumption that costs are charged against revenue in the order in
which they occur. In case of other methods i.e. LIFO (b) method matches the most recent costs incurred
with current revenue, leaving the first cost incurred to be included as inventory. Weighted-Average
method (c) assumes that costs are charged against revenue based on an average of the number of units
acquired at each price level. Moving average method (d) can be used only with a perpetual inventory.
The cost per unit is recomputed after every addition to the inventory. The ending inventory is valued at
the last moving average unit cost for the period. Base stock method (e) wherein a minimal level of it is
a permanent investment, which is necessary for the normal business activities. Base stock would be
carried at historical cost. Thus, FIFO method is the correct answer.
< TOP >
3. Answer : (c)
Reason : Revenue expenditure is incurred for day to day running of the business. Any item of expenditure which
improves the earning capacity of a business entity or the expenditure incurred till the asset is ready for
use is capital expenditure. From the viewpoint of this, the customs duty paid in connection with the
import of equipment (c) is not revenue expenditure. The expenses mentioned in other alternatives
Interest on deposits accepted (a) Annual insurance premium (b) repairs and maintenance (d)
Expenditure on assets like paperweight etc. are items of revenue expenditure.
< TOP >
4. Answer : (e)
Reason : A trial balance in which the total of the debits does not equal to the total of credits due to errors
committed in the process of accounting. One among the errors is Partial omission of an entry If the
debit or credit aspect of a transaction has been omitted to be recorded, the trial balance will disagree.
For example, if a cash sales of Rs.800 is omitted to be recorded in the Sales account then the total
debits will exceed the total credits by Rs.800. Thus, results in a mismatch in the trial balance. But, in
case of errors mentioned in alternatives (a), (b), (c) and (d) the agreeing of trial balance is not affected
as explained hereunder:
Omission of the recording of a transaction from the books of accounts: If the withdrawal of goods
worth Rs.1,200 by the proprietor is omitted to be recorded in the books, the trial balance will still agree
as both the debit and the credit aspects have been omitted to be recorded.
Compensating errors: These are quite difficult to detect. If a cash discount of Rs.215 allowed to a
customer has been posted to the credit of his account as Rs.251 and a cash sale of Rs.2,851 has been
posted to sales account as Rs.2,815, then the excess credit caused by the first error would be exactly
compensated by the lower credit recorded by the second error and the trial balance will be in
agreement.
Errors of principle: If the machinery account is debited for an amount of repair charges incurred for
the machinery, the error will not be disclosed by the trial balance. This is because that both machinery
account and repairs account are debit accounts and it is a question of principle that repair charges
should not be debited to the machinery account. Hence, the total effect will be the same and hence the
trial balance will tally.
Recording both aspects of a transaction more than once in the books of accounts: If a sale of
Rs.3,500 made to PQR Ltd. is entered in the sales book twice, the error will not cause a mismatch in the
totals of the trial balance.
< TOP >
5. Answer : (e)
Reason : Value of machine Rs.10,00,000
Less: Salvage value Rs. 40,000
Depreciable value Rs. 9,60,000
Life of the machine 8 years
Depreciation = = Rs.1,20,000
9,60,000
8
< TOP >
Rate of depreciation = = 12%
1, 20,000 100
10, 00,000
×
6. Answer : (c)
Reason : If purchase day book is overcast, it shows higher cost of production or goods sold. It reduces gross
profit which in turn reduces net profit. It cannot increase gross profit and net profit. Therefore, (c) is the
correct answer.
< TOP >
7. Answer : (e)
Reason : If a debtor pays his dues, debtors balance will decrease and cash balance will increase. Thus, the
composition of assets will change. But there is no change in the total assets or liabilities and hence (e) is
true.
< TOP >
8. Answer : (b)
Reason : If the owner withdraws goods from the business, journal entry will be
Drawings account ……… Dr
To Purcahses account
Other options, given in a, c, d and e, relating to drawings are not correct.
< TOP >
9. Answer : (d)
Reason : Let the rate of depreciation = x
The depreciated value of machine = Rs.1,20,000 (1 – 3x) = Rs.66,000
1 – 3x = = 0.55
3x = 1 – 0.55 = 0.45
x = 0.45 ÷ 3 = 0.15 or 15%.
Thus, the rate of depreciation = 15%.
Alternatively
Cost Price Rs.1,20,000
WDV Rs.66,000
Total depreciation for 3 years 54,000; Depreciation per year Rs. = Rs.18,000
Rate of Depreciation = Rs. = 15%
Rs.1,20,000
Rs.66,000
54,000
3
18, 000 x 100
1, 20, 000
< TOP >
10. Answer : (a)
Reason :
and the amounts mentioned in other alternatives are not correct.
Credit balance as per bank column of cash book Rs.13,500
Add: Bank interest on overdraft debited in pass book Rs. 2,100
Cheques deposited but not collected by bank Rs. 5,000
Debit balance as per pass book Rs.20,600
< TOP >
11. Answer : (e)
Reason :
Opening balance of Sundry debtors Rs. 45,000
Add: Credit sales Rs.4,25,000
Rs.4,70,000
Less: Cash collected Rs.4,00,000
Rs. 70,000
Less: Closing balance of sundry
debtors Rs. 50,000
Bad debts Rs. 20,000
< TOP >
12. Answer : (c) < TOP >
Reason :
Opening stock Rs. 40,000
Add: Purchases Rs.2,00,000
Rs.2,40,000
Less: Closing stock Rs. 50,000
Cost of goods sold Rs.1,90,000
13. Answer : (d)
Reason :
Particulars Rs.
Balance as per banks statement (overdraft) 12,500
Less: Cheque returned but not entered in the cash book 2,800
Balance as per cash book (overdraft) 9,700
< TOP >
14. Answer : (c)
Reason : Let the profit = 100%
Commission = 5%
105%
Amount of commission payable to manager = Rs.1,89,000 × 105% = Rs.9,000
5%
< TOP >
15. Answer : (d)
Reason : The conservatism concept states that the revenues are to be recognized when they are certain and losses
are to be considered when they are probable. Thus, the statement in alternative (d) is true. The
statements in other alternatives are false since, The losses from the sale of capital assets are to be
deducted from revenue to ascertain the net income (a) Going concern pre-supposes that the assets are
categorized into fixed and current and the non-monetary assets are to be recorded at the historical cost
and not at market value (b) The consistency concept facilitates the comparison of the results of one
accounting period with that of the past (c) and the system of recording transactions based on dual aspect
concept is double entry system and not the double account system (e). Hence, the correct answer is (d).
< TOP >
16. Answer : (c)
Reason : Acid test ratio or quick ratio is a liquidity ratio which is an indicator of short term solvency of a
business. Hence © is the correct answer. The ratios mentioned in other alternatives do not indicate the
short term solvency of a business and are not the correct answers.
< TOP >
17. Answer : (b)
Reason : Called up capital is the amount on the shares which is actually demanded by the company to be paid.
However, there may be some shareholders who may make default in the payment. The money due from
them is called calls-in-arrears. This amount should be deducted from the called up capital to arrive at
the paid-up capital. Thus, (b) is the correct answer.
< TOP >
18. Answer : (a)
Reason : Forfeited shares can be re-issued at a premium. Thus, the statement in alternative (a) is false. The
statements in other alternatives are true-, if share premium is already received, share premium account
cannot be debited with the amount of premium on forfeiture of shares; Shares can be issued a discount,
only after one year from the commencement of business; Share premium can be utilized only specific
purposes as per the provisions of section 78 of the Companies Act and it cannot be utilized to redeem
preference shares; The forfeited shares cannot be reissued for a loss more than the gain on those shares.
< TOP >
19. Answer : (d)
Reason : If accrued commission is shown on the debit side list of balances in the trial balance, it indicates that it
is already adjusted in the commission received /receivable and it does not require any adjustment in the
profit and loss account. It directly appears as a current asset in the balance sheet. Hence (d) is true
< TOP >
20. Answer : (c)
Reason : The maximum amount beyond which a company is not allowed to raise funds by issue of shares is
called nominal capital or authorized capital. The issued capital is that part of the nominal capital issued
to the public and subscribed capital is that part of the issued capital which is subscribed by the public.
Paid up capital is the amount which is paid-up by the shareholders. Reserve capital is that capital which
< TOP >
will be called-up only in case of liquidation. Thus, alternative (c) is the correct answer.
21. Answer : (e)
Reason : Discount allowed on re-issue of forfeited shares is debited to forfeited shares account. It cannot be
debited to discount on re-issue of shares, since there is no such account maintained, it is not a usual
discount to be debited to (b) Profit and loss account. The share premium account (c) can be debited
only for the purposes as per the provisons of the Compnaies Act. The discount on issue of shares (d)
can be debited only in the event of issue of shares at a discount originally. Thus, (e) is the correct
answer.
< TOP >
22. Answer : (c)
Reason : The company may receive from the shareholders the amount uncalled on the shares held by them even
though the amount is not called for. In such a case the company is compelled to pay interest on the calls
in advance at prescribed rate from the date of receipt of advance to the date of appropriation i.e. the date
when the call is made and the advance received is appropriated from calls in advance account to the
relevant call account.
< TOP >
23. Answer : (a)
Reason : Sinking fund is created out of profit. It is the part of profit and should be listed under the heading
“Reserves and Surplus” and not under “unsecured loans”. Loans and advances from subsidiaries, short
term loans and advances from banks, loans and advances from others and fixed deposits are unsecured
loans.
< TOP >
24. Answer : (b)
Reason : Share premium should not be used for redemption of preference shares whereas they can be used to
provide for premium on redemption of preference shares or debentures, to issue bonus shares, to writeoff
preliminary expenses and discount on issue of shares.
< TOP >
25. Answer : (b)
Reason : The shares were issued at a discount of 10% i.e. they were issued for Rs.90 per share.
Rama failed to pay the final call of Rs.30. Hence he has paid Rs.60 (Rs.90 – Rs.30).
The amount to be credited to shares forfeited account is Rs.60 x 300 shares = Rs.18,000
< TOP >
26. Answer : (c)
Reason : Value of right =
Where r = No of rights issued
N = No. of existing shares
M = Market price
S = Issue price of rights= Rs.100 + 160% premium = Rs.100 + Rs.160 = Rs.260
∴Value of rights = = Rs.80
r (M S)
N r
    −  + 
4 (440-260)
4+5
 
 
 
< TOP >
27. Answer : (c)
Reason : The share capital of the subsidiary company does not appear in the Consolidated Balance Sheet (c) is
the correct statement and the share capital of the subsidiary company is not shown in the consolidated
balance sheet. and other statements are not true. A company will be deemed to be a holding company of
another if it holds more than 50 percent of both equity and preference share capital is not true because
it should hold share only in equity capital and preference share capital will not be considereed for
deciding the cost of control. and (a) is not the correct answer.
b. The financial year of the holding company and its subsidiary company must end on the same date
is not the correct answer because it need not be on the same date.
d. The inter company owing will be shown in the Consolidated Balance Sheet is incorrect because
intercompany owing are eliminated in the consolidated balance sheet and hence it is not the
correct answer.
e. Minority of the subsidiary is entitled to proportionate share in capital profits only is incorrect
because they are entitled for both capital profits and revenue profit and there is no difference
between the two profits in computation of minority interest. Thus, alternative © is the correct
answer.
< TOP >
28. Answer : (d)
Reason : Profit for the year 2002-2003 = Rs.1,50,000 – Rs.90,000 = Rs.60,000
Profit for 8 months (from April 01, 2002 to December 01, 2002)=
Share of capital profit of H Ltd. = (90,000 + 40,000) x 60% = Rs.78,000.
60,000 8 Rs.40,000
12
× =
< TOP >
29. Answer : (d)
Reason : The profit on cancellation of debentures transferred to capital reserve is Rs.13,000
On purchase of debentures, the journal entry to be made is
On cancellation of the debentures, the journal entry to be made is
Rs. Rs.
Own debentures a/c Dr 1,87,000
Interest on debentures a/c Dr 9,000
To Cash a/c 1,96,000
Rs. Rs.
18% Debentures a/c Dr 2,00,000
To Own debentures 1,87,000
To Capital Reserve 13,000
< TOP >
30. Answer: (b)
Reason: Weighted average profit
∴Weighted average profit = Rs.26,10,000 ÷ 6 = Rs.4,35,000
Year 1 Rs.3,30,000 × 1 Rs. 3,30,000
Year 2 Rs.4,20,000 × 2 Rs. 8,40,000
Year 3 Rs.4,80,000 × 3 Rs.14,40,000
6 Rs.26,10,000
< TOP >
Section B : Problems (MB131)
Majestic Ltd.
1. Average trading capital employed
Land & Building Rs. 2,60,000
Plant & Machinery Rs. 3,50,000
Stock Rs. 80,000
Sundry debtors Rs. 90,000
Cash & Bank Rs. 30,000
Rs. 8,10,000
Less: Current Liabilities
Sundry creditors
Rs.80,000
Provision for taxation
Rs.40,000
Rs. 1,20,000
Rs. 6,90,000
Less: Half of current year’s profit (See note below) Rs. 37,500
Average capital employed Rs. 6,52,500
Note: Profit for the year Rs. 1,60,000
Less: Non-trading income Rs. 10,000
Rs. 1,50,000
Less: Income tax (50%) Rs. 75,000
Current year’s profit Rs. 75,000
Super Profit
Value of Goodwill = Rs.9,750 × 3 years = Rs.29,250.
< TOP >
2.
Sneha Associates
Machinery Account
Dr.
Cr.
Working Notes: Calculation of Depreciation
*1/2 year, ** 20% of Rs.2,00,000 Rs.(3,00,000 – 1,00,000 machinery sold).
(2)
Rs.
Rs.
Profit for the year 1,60,000
Less: Income from investments 10,000
1,50,000
Less: Income tax (50%) 75,000
75,000
Less: Normal return – 10% on average capital employed of Rs.6,52,500 65,250
Super profit 9,750
Date Particulars Rs. Date. Particulars Rs.
2000 Oct
01
To Bank A/c (Purchase price) 1,60,000 2001
March 31
By Depreciation A/c (1/2
year)
30,000
To Bank A/c (Customs Duty and
Freight)
To Erection charges
80,000
60,000
By Balance c/d 2,70,000
3,00,000
3,00,000
2001
April 01
To Balance b/d 2,70,000 2002
March 31
By Depreciation A/c (Note
2)
80,000
To Bank A/c New machine 1,00,000 By Balance c/d 2,90,000
3,70,000 3,70,000
2002
April 01
To Balance b/d 2,90,000 2002
Oct 01
By Depreciation A/c ½ year
By Bank sale Proceeds
By Profit and Loss a/c
10,000
34,800
25,200
To Bank A/c New machine 50,000 2003
March 31
By Depreciation A/c (Note
1)
65,000
By Balance c/d 2,05,000
2003 3,40,000 3,40,000
April 01 To Balance b/d 2,05,000
2000-01 2001-02 2002-03
Acquired Rs. Rs. Rs. Rs.
1st Machinery 1-10-2000 3,00,000 30,000 60,000 **40,000
2nd Machinery 1-04-2001 1,00,000 – 20,000 20,000
3rd Machinery 1-04-2002 50,000 – – *5,000
Total 30,000 80,000 65,000
< TOP >
3. Maithrei Ltd.
Profit & Loss account for the year ended March 31, 2003
Dr. Cr.
Balance Sheet as at March 31, 2003
Calculation of 1/3 of W.D.V on machinery purchase on Oct 01, 2000
Original cost 01-10-2000 (without depreciation for 2000 - 2001 1,00,000
Less: Depreciation for 2000-2001 (1/2 year) 10,000
90,000
Less Depreciation for 2001-2002 20,000
70,000
Less sale proceeds 34,800
Less: Depreciation for 2002-03 (1/2 year) 10,000
Loss on sale of one third of machine 25,200
Particulars Rs. Rs. Particulars Rs. Rs.
To Opening stock 40,000 By Sales 9,60,000
To Purchases 6,64,000 Less Sales return 80,000 8,80,000
Less Purchases returns 84,000 5,80,000
To Wages 50,000
To Carriage inward 27,800 By Closing stock 42,500
To Gross Profit 2,24,700
9,22,500 9,22,500
To Rent & taxes 12,000
To Interest on bank Loan
(12%)
4,000 By Gross Profit 2,24,700
Add: Accrued 800 4,800
To Advertisement 24,000
Less: Unexpired
(1/4 of the Rs.24,000)
6,000 18,000 By Income from investments 4,000
To Bad debts 2,000 By Discount received 2,800
To Discount allowed 4,050 By Net loss 40,700
To Audit fee 5,400
To Insurance 2,400
To Travelling expenses 2,200
To Salaries - 1,37,550
Add: Outstanding 12,450 1,50,000
To Depreciation
Furniture & fittings (10%) 4,500
Plant & Machinery (20%) 30,000
Building (10%) 25,000
To Provision for doubtful debts. (5% on
Rs.2,37,000)
11,850
2,72,200 2,72,200
< TOP >
4. a. Jay Ltd.
Journal Entries
b. Suspense Account
Dr.
Cr.
< TOP >
Liabilities Rs. Rs. Assets Rs. Rs.
Share Capital Fixed Assets
Authorised Capital By Furniture & Fittings 45,000
1,00,000 shares of Rs.10
each
10,00,000 Less: Depreciation (10%) 4,500 40,500
Issued called-up and By Building - 2,50,000
Paid-up Capital Less: Depreciation (10%) 25,000 2,25,000
60,000 share @Rs.10 each 6,00,000 By Plant & Machinery 1,50,000
Less Depreciation (20%) 30,000 1,20,000
Bank Loan 40,000 Investments 40,000
Add Interest 800 40,800 Current Assets, Loans & advances
Current Assets
Current Liabilities & Provision Closing Stock 42,500
A. Current Liabilities Sundry debtors 2,40,000
Sundry Creditors 1,16,000 Less: Mr. Amar 3,000
Less Due to Mr. Amar 3,000 1,13,000 2,37,000
Outstanding salaries 12,450 Less: Provision for doubtful
debenture (5%) 11,850
2,25,150 2,25,150
Cash at Bank 21,000
Cash in hand 5,400
Unexpired expenses
Advertisement expenses unexpired 6,000
Miscellaneous Expenditure –
Profit & loss a/c. 40,700
7,66,250 7,66,250
Particulars Dr.
(Rs.) Cr. (Rs.)
a. Suspense a/c Dr. 42,000
Mr. Rohan account 42,000
(Sales to Mr. Roshan wrongly credited to his account, now rectified)
b. Suspense account Dr. 12,000
To Mr. Kanithkar 12,000
(Purchase from Mr. Kanithkar omitted to be posted to his account in
the ledger, now rectified)
c. Office Furniture account Dr. 21,000
To Profit and loss adjustment account 21,000
(Purchase of office furniture wrongly passed through the purchase day
book, now rectified)
d. Profit and loss adjustment account Dr. 8,500
To Office car account 8,500
(Repairs to office car wrongly debited to office car account, now rectified)
Particulars Amount Particulars Amount
By Diff. In trial balance 54,000
To Kanithkar 12,000
To Rohan 42,000
54,000 54,000
5.
In the books of ABC ltd.
Journal Entries
Here, securities premium on the forfeited shares has already been realized, so securities premium should not
be debited at the time of forfeiture of shares.
Working Note: (1) Calculation of Amount to be Transferred to Capital Reserve
Amount forfeited per share= Rs.10,000 /200 = Rs.50; Less: Loss per share = Rs.10; Surplus per share Rs.40;
Amount to be transferred = 100 × Rs.40 = Rs.4,000 and Rs.50 × 100 = Rs.5,000 should be shown as an addition to
share capital.
< TOP >
Particulars Dr.
(Rs.)
Cr.
(Rs.)
Bank A/c. Dr. 2,25,000
To Share Application A/c. 2,25,000
(Being application money on 9,000 shares @ Rs.25 each received
Share Application A/c. Dr. 2,25,000
To Share Capital A/c. 2,25,000
(Being application money on 9,000 shares @ Rs.25 each transferred to
Share Capital Account as per Board’s Resolution No….dated…)
Share Allotment A/c Dr. 3,15,000
To Share Capital A/c 2,25,000
To Securities Premium A/c 90,000
(Being allotment money due on 9,000 shares @ Rs.35 each as per Board’s
Resolution No…dated)
Bank A/c Dr.` 3,15,000
To Share Allotment A/c 3,15,000
(Being allotment money received on 9,000 shares @ Rs.35 each)
Share First Call A/c Dr. 1,80,000
To Share Capital A/c 1,80,000
(Being first call money due on 9,000 shares @ Rs.20 each as per Board’s
Resolution No…dated…)
Bank A/c Dr. 1,76,000
To Share First Call A/c 1,76,000
(Being first call money received on 8,800 shares @ Rs.20 each)
Share Final Call A/c Dr. 2,70,000
To Share Capital A/c 2,70,000
(Being final call money due on 9,000 shares @ Rs.30 each as per Board’s
Resolution No…. dated….)
Bank A/c 2,64,000
To Share Final Call A/c 2,64,000
(Being final call money received on 8,800 share @ Rs.30 each)
Share Capital A/c Dr. 20,000
To Share First Call A/c 4,000
To Share Final Call A/c 6,000
To Forfeited Shares A/c 10,000
(Being forfeiture of 200 shares of Rs.100 each for non-payment of first and
final call money as per Board’s Resolution No…dated..)
Bank A/c Dr. 9,000
Forfeited Shares A/c Dr. 1,000
To Share Capital A/c 10,000
(Being re-issue of 100 shares of Rs.100 each @ Rs.90 each as fully paidup
as per Board’s Resolution No… dated…)
Forfeited Shares A/c 4,000
To Capital Reserve A/c 4,000
(Being profit on re-issue transferred to Capital Reserve Account)
Section C: Applied Theory
6. Expenditure incurred with respect to the operating activities in the normal course of the business is termed as
revenue expenditure. Expenditure which results in the additional capacity or increase in the utility or operating
efficiency of the fixed assets is termed as capital expenditure. Expenditure of an exceptional magnitude relative to
the size of the enterprise and which is expected to extend its benefit for a period exceeding the year of incurrence
is termed as deferred revenue expenditure.
The benefit of revenue expenditure expires in the year of its incidence (within one year) is charged off to the Profit
and Loss account of that year. The benefit arising as a result of capital expenditure lasts for a longer tenure and is
added to the gross block of fixed assets. It is in the case of capital expenditures that a suitable and reasonable
amount is charged to the Profit and Loss account in the form of depreciation, amortization etc., to account for the
utilization of the fixed assets. In the case of deferred revenue expenditures the classification is dependent on
customs, usage and generally accepted accounting practices as it is often a cumbersome task of christening an
expenditure of such a nature to be a capital expenditure or a deferred revenue expenditure. Once determined, a
portion of direct relevance to the current year is charged to the Profit and Loss account and the balance is carried
forward as deferred revenue expenditure in the assets side of the Balance Sheet under a separate heading
“Miscellaneous expenditures to the extent not yet adjusted”.
Examples of revenue expenditure include administrative expenses, salaries, depreciation, provisions, interest
charges etc.
Examples of capital expenditures are installation costs, wages/insurance/freight and other incidental expenses
incurred with respect to the capital assets etc.
Examples of deferred revenue expenditures include advertisement, preliminary expenses, discount on the issue of
shares or debentures, research & development costs etc.
< TOP >
7. Conservatism concept is the concept to be considered in making provision for all possible losses. This is the
policy of playing safe. It takes into consideration all prospective losses and recognizes revenues only when they
are reasonably certain.
The principle behind this concept is that the recognition of revenue requires better evidence than recognition of
expenses. The principle of conservatism is applied when there is an uncertainty inherent in the activity like the
useful life of an asset, occurrence of loss, realization of income and estimated liability. Making provision for
doubtful and discount on debtors in anticipation of actual bad debts and discount is a citing example of
conservatism. The accounts officer of Shriya Ltd. comes to know that Shriya Ltd. is rumored to be going into
liquidation, as a prudent officer of the company, the CAO should advice the company to make suitable provision
for the amounts owed by them keeping in view the conservatism concept provide for all probable losses.
< TOP >
8. Bonus shares are allotted to the existing shareholders without any consideration being received from them, if
authorized by the articles of association. They are issued to capitalize the profits of the company. Bonus shares can
be issued only out of free reserves built out of the genuine profits or share premium collected in cash.
Issue of Bonus Shares shall be subject to the prescribed SEBI guidelines which inter alia provide for the
following.
i. Bonus issue shall not be made within 12 months of any public/rights issue.
ii. Bonus issue shall be made out of reserves built out of genuine profits or share premium collected in cash.
iii. Reserves created out of revaluation of fixed assets shall not be capitalized.
iv. Bonus issue shall not be made in lieu of dividend.
v. Bonus issue shall not be made unless partly paid shares, if any existing are made fully paid-up.

Information Technology & Systems (MB231) : October 2006

2010-04-24T03:39:00.001-07:00

Information Technology & Systems (MB231) : October 2006

Section A : Basic Concepts (30 Marks)
• This section consists of questions with serial number 1 - 30.
• Answer all questions.
• Each question carries one mark.
• Maximum time for answering Section A is 30 Minutes.
1.
If the finance manager is provided with information on customers who exceeded their credit limits only, such report is termed as
(a)
Exception report
(b)
Scheduled report
(c)
Demand report
(d)
Response report
(
e)
Push report.
< Answer >
2.
Which of the following refers to the storage of data in such a way that it is not affected by modification in the data structure or changes in the application program?
(a)
Data integrity
(b)
Data independence
(c)
Data security
(d)
Data maintenance
(
e)
Data consistency.
< Answer >
3.
The repository of information gathered from multiple sources, stored under a unified schema at a single site is known as
(a)
Data warehouse
(b)
Distributed database
(c)
Undistributed database
(d)
Data mining
(
e)
Object oriented database.
< Answer >
4.
Transformation of data to binary codes, which the primary memory of a computer is designed to accept is done by units called
(a)
Input interfaces
(b)
Transformation interfaces
(c)
Output interfaces
(d)
Internal processing interfaces
(
e)
Binary interfaces.
< Answer >
5.
The unit that maintains order and directs the operations of the entire system, by selecting, interpreting and ensuring the execution of the program instructions is known as
(a)
Arithmetic unit
(b)
Processing unit
(c)
Input unit
(d)
Control unit
(
e)
Memory unit.
< Answer >
6.
Which of the following documents serve as confirmation or proof for their recipients, that certain transactions have occurred?
(a)
Action documents
(b)
Turn-around documents
(c)
Information documents
(d)
Control documents
(
e)
Transaction documents.
< Answer >
1
2
7.
Tasks like printing a block of the worksheet, copying functions and formulae into a new row, etc. can be saved as
(a)
Micros
(b)
Macros
(c)
Templates
(d)
Functions
(
e)
Cell references.
< Answer >
8.
Which of the following stages of system development life cycle involves the monitoring evaluation and modification of a system to make desirable or necessary improvements?
(a)
System analysis
(b)
System design
(c)
Database design
(d)
Systems implementation
(
e)
Systems maintenance.
< Answer >
9.
Which of the following best describes an RDBMS?
(a)
A database with an index on every field
(b)
A database with an object-oriented structure
(c)
A database where related tables are kept separately, but can be used together
(d)
A database designed for high-speed transaction processing
(
e)
A database with a constraint on every field.
< Answer >
10.
Which of the following comes under first generation computers?
I. ENIVAC.
II. EAVAC.
III. EDVAC.
IV. EDSAC.
(a)
Both (I) and (II) above
(b)
Both (II) and (III) above
(c)
(I), (II) and (III) above
(d)
(II), (III) and (IV) above
(
e)
(I), (III) and (IV) above.
< Answer >
11.
Which of the following provides an in-depth study of the end user information needs?
(a)
System analysis
(b)
System design
(c)
Systems specification
(d)
Systems implementation
(
e)
Systems maintenance.
< Answer >
12.
Application programs that are used to create and maintain the database to provide information to users is called as
(a)
File
(b)
DBMS
(c)
Database
(d)
Data
(
e)
System file.
< Answer >
13.
Which of the following determines the cost effectiveness of a proposed system?
(a)
Organizational feasibility
(b)
Economic feasibility
(c)
Technical feasibility
(d)
Operational feasibility
(
e)
Transactional feasibility.
< Answer >
14.
An ATM switch breaks voice, video and other data into fixed cells of
(a)
51 bytes
(b)
52 bytes
(c)
53 bytes
(d)
54 bytes
(
e)
55 bytes.
< Answer >
15.
Which of the following charts are useful for Mr.Suresh, if he wants to compare the population of Hyderabad with the population of Andhra Pradesh?
(a)
Column charts
(b)
Bar charts
(c)
Line charts
(d)
Pie charts
(
e)
Gantt charts.
< Answer >
16.
Which of the following operating systems enables the computer to execute more than one task in a single program?
(a)
Single tasking
(b)
Cooperative multitasking
(c)
Preemptive multitasking
(d)
Multithreading
(e)
Non-preemptive multitasking.
< Answer >
17.
Which of the following work like photocopy machines?
(a)
Line printers
(b)
Dot matrix printers
(c)
Inkjet printers
(d)
Laser printers
(
e)
Plotters.
< Answer >
18.
The collection of information stored in a database at a particular moment is called
(a)
View
(b)
Instance
(c)
Schema
(d)
Entity
(
e)
Field.
< Answer >
19.
In project implementations, the management tool that is most commonly used is
(a)
Line chart
(b)
Column chart
(c)
Gantt chart
(d)
Data chart
(
e)
Pie chart.
< Answer >
20.
Which of the following commands is used to send blind carbon copies to the list of names in UNIX operating system?
(a)
mail-c
(b)
mail-v
(c)
mail-s
(d)
mail-b
(
e)
mail-i.
< Answer >
21.
Which of the following commands is used to read the contents of mail box in UNIX operating system?
(a)
mail-c
(b)
mail-f
(c)
mail-s
(d)
mail-b
(
e)
mail-i.
< Answer >
22.
Which of the following commands in UNIX operating system is used for displaying the count of the number of occurrences of a pattern in a file?
(a)
grep-c
(b)
grep-l
(c)
grep-n
(d)
grep-v
(
e)
grep-i.
< Answer >
3
4
23.
Which of the following (in communication network context) refers to the way in which the end points or stations of a network are linked together?
(a)
Communication protocol
(b)
Topology
(c)
Network protocol
(d)
Scalability
(
e)
Resource sharing.
< Answer >
24.
Which of the following commands in Novell Netware Operating System deletes trustee rights from a directory?
(a)
NCOPY
(b)
REMOVE
(c)
SALVAGE
(d)
REVOKE
(e)
FLAG.
< Answer >
25.
The process of designating a system for the simultaneous transmission of two or more messages over the same channel is called
(a)
Multiplexing
(b)
Networking
(c)
Synchronizing
(d)
Digitizing
(e)
Asynchronizing.
< Answer >
26.
Which of the following protocols in TCP/IP Reference Model is a reliable connection oriented protocol that allows a byte stream originating on one system to be delivered without error to any other system in the network?
(a)
Transmission Control Protocol
(b)
User Datagram Protocol
(c)
File Transfer Protocol
(d)
HyperText Transfer Protocol
(e)
Internet Protocol.
< Answer >
27.
Code conversion is the function of which layer in OSI reference model?
(a)
Data link layer
(b)
Network layer
(c)
Session layer
(d)
Presentation layer
(e)
Application layer.
< Answer >
28.
Which of the following is/are false about functions?
I. Library functions are written by users.
II. main ( ) is user-defined function.
III. Function name should not be same that of library name.
(a)
Only (I) above
(b)
Only (II) above
(c)
Both (I) and (II) above
(d)
Both (II) and (III) above
(e)
All (I), (II) and (III) above.
< Answer >
29.
How many categories of functions are present in C language?
(a)
2
(b)
3
(c)
4
(d)
1
(e)
5.
< Answer >
30.
In C language, which of the following variable(s) is/are stored in memory?
I. Automatic variable.
II. Static variable.
III. Register variable.
(a)
Only (I) above
(b)
Only (II) above
(c)
Both (I) and (II) above
(d)
Both (II) and (III) above
(e)
All (I), (II) and (III) above.
< Answer >
END OF SECTION A
Section B : Caselets (50 Marks)
• This section consists of questions with serial number 1 – 6.
• Answer all questions.
• Marks are indicated against each question.
• Detailed explanations should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.
Caselet 1
Read the caselet carefully and answer the following questions:
1.
How are companies using Information Technology to improve services, lower costs, and become more competitive?
(7 marks)
< Answer >
2.
How do you correlate the implementation of Information Technology, if the following case was of a bank or a financial services firm?
(8 marks)
< Answer >
Endura Corporation is the country’s leading manufacturer and marketer of major home appliances, with headquarters in Mumbai. Its 60,000 employees manufacture fine appliances in 21 states and market them under 11 major brand names in approximately 140 districts around the country. Recent revenues exceeded Rs.78.3 crore annually.
Responding to a competitive price change used to take a lot of effort for Endura. When one of its competitors dropped price, a flurry of faxes and overnight packages flew out of Endura’s headquarters to match them. Yet, it was often weeks before Endura could adjust its prices. A price increase also created major problems. Customers, ranging from mega-retailers to little stores, became understandably upset when they ordered a product and received an invoice with a higher price when the product arrived. Endura had to issue a credit for the difference, but this created extra paperwork and worse yet, dissatisfied customers.
Under this system, changing pricing on every product each quarter took over three months and was error prone. Performing the quarterly pricing required calculating new prices, reviewing, printing, re-reviewing, and feeding them into a mainframe-based computer system. After that, the new price lists were mailed, faxed, and sent by overnight delivery to trading partners and regional sales representatives.
To break free of the cumbersome pricing system, Endura implemented a new system and streamlined work processes to give immediate responses to market changes or to launch a special promotion of its own. Now sales agents access a centralized pricing database for quick reference when making their calls. The new system consolidates pricing and order entry systems of the entire company and halves the time it takes to re-price Endura’s entire product line of more than 2,000 models. The result is that it is easier to do business with Endura.
Endura’s Information Technology overhaul is spreading to other systems also. Not only is the company implementing a new corporate pricing system, it is also undergoing a massive reorganization to streamline all of its business functions. Why is this necessary? To enable Endura to compete with major companies such as Electrolux, BPL, and Videocon.
Caselet 2
Read the caselet carefully and answer the following questions:
5
6
3
If you were in the position of CTO of Innova Solutions, what software and hardware solutions would you recommend to solve the problems faced by the Janardhan Bank in the stipulated time?
(10 marks)
< Answer >
4
After solving the above problem, what other technological improvements do you suggest to make the system future perfect?
(10 marks)
< Answer >
Raipur merchant Janardhan died a couple of decades ago, leaving an enormous amount to be divided between a bank and a private institute that would bear his name. Both the organizations would work as separate entities. Both the organizations operate in many cities with multiple branches in metropolitan cities. The average time taken to process a transaction like making payments by cheque, giving DD etc., was substantial as banking operations were slow, average time taken to create a document like the reconciliation statement, sending and receiving the documents from the main branch was relatively longer and moreover the preparation of the periodical reports and financial statements like the income statement, balance sheet every month/quarter/year used to consume lot of time. The customer satisfaction was on the wane, as the waiting times and response times were longer compared to other banks, and there was a significant drop in the number of customers, in due course of time.
The CEO has decided to computerize the bank and its operations in order to provide better services at lower cost and thus regain/retain the customer base. It was decided that the customer can have access to any of the branches in the metropolis. It has also been decided by the board of directors that the bank would outsource the computerization process from Innova Solutions, a leading software and hardware solutions provider in the country. The bank has planned to complete the total process within six months from now.
Caselet 3
Read the caselet carefully and answer the following questions:
5
Do you think that the bank is adopting a good strategy by entering into Internet banking and also providing a big league of complimentary services?
(7 marks)
< Answer >
6
What do you think the customers will benefit from this kind of innovation by a bank?
(8 marks)
< Answer >
Today more and more companies are seeking to gain a closer relationship with their customers using the Internet. On the other hand, heightened sensitivity to privacy has even the most ambitious businesses treading lightly. “Privacy is clearly at the forefront of our minds in the online arena,” says Krishna Agrawal, manager of on-line banking at Standard Bank, which recently unveiled a major overhaul of its Website for regular customers/investors. Standard is using software that generates personalized Web pages by monitoring and responding to customers’ activities while on the Website. This process is known as personalization.
The Standard Bank’s site represents one of the most aggressive uses of personalization to date. Each time a person visits the site, he or she will see Web pages driven by data from three sources: Standard’s existing database, a detailed questionnaire submitted by customers, and observation of what the person does while on the site. Standard’s cross-marketing partners Jet Airways, Maruti Suzuki and ITC Hotels will also participate in the site. A person who books a ticket in Jet Airways is given travellers cheques from this bank, a person who owns a Maruti Suzuki is charged a less interest rate on the loan availed by him and similarly a discount on the bills made during a stay in ITC Hotels. Such sites may be the wave of the future. Advertisers and Website managers stand to profit from this additional exposure but are concerned with censure from privacy advocates.
How do Websites collect data? Sites gather information with and without consumer’s knowledge. The most common way is through “click stream” data — information about where people go within a site and the ads and content they see. Click stream data is collected by so-called cookies, or small data files placed on users’ hard drives when they first visit a Website. When the individual goes back to that Website, the site’s computer server can read the usage data from the cookies. This data is then stored in a database and can be used to target ads or content, based on preferences tracked. Personal information such as e-mail address, name, street address, age or sex is gathered through registration at such sites. The same sort of data can also be obtained from so called “web stakes”.
Marketers say the ability to gather data and target consumers is what makes the net unique and is key to attracting advertisers and spurring e-commerce. Many say they are taking steps to protect their consumers, but they use information to deliver customized services and ads rather than something random.
END OF SECTION B
Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 7 - 8.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on section C.
7
The primary goal of Database Management System (DBMS) is to provide a convenient and effective environment for storing and retrieving information in a database. In this context, briefly explain about the components of a database system.
(10 marks)
< Answer >
8
Online Analytical Processing (OLAP) designates a category of applications and technologies that allow the collection, storage and reproduction of multidimensional data. In this context, briefly explain about the characteristics, functions and benefits of OLAP.
(10 marks)
< Answer >
END OF SECTION C
END OF QUESTION PAPER
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8
Suggested Answers Information Technology & Systems (MB231) : October 2006
Section A : Basic Concepts
1.
Answer : (a)
Reason : Managers and other decision makers use MIS to request information at their networked workstation that supports their decision-making activities. This information takes the form of periodic, exception, and demand reports and immediate responses to enquiries. Exception reports are generated only in exceptional situations.
(b) This is the traditional form of providing information to the managers that uses a pre specified format designed to provide managers with information on a regular basis.
(c) Here, information is available whenever a manager demands it.
(d) Response report is not the report used by a finance manager who is provided with information on customers who exceeded their credit limits only.
(e) Push report is not the report used by a finance manager who is provided with information on customers who exceeded their credit limits only.
Hence option (a) is the correct answer.
< TOP >
2.
Answer : (b)
Reason : An ideal database should provide rapid access to data, ensuring efficiency in storage and retrieval of data.
(a) This refers to the validity of the data contained in a database.
(b) This refers to the storage of data in such a way that it is not affected by modification in the data structure or changes in the application program.
(c) The data stored in the database should be made accessible only to the authorized users.
(d) Good database systems usually have a system in place for data maintenance.
(e) Data consistency can be maintained by upgrading all the related files of the database at the same time.
Hence option (b) is the correct answer.
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3.
Answer : (a)
Reason : (a) A data warehouse is a repository of information gathered from multiple sources stored under a unified schema, at a single site.
(b) Many organizations replicate and distribute copies or parts of databases to network servers at various sites. Distributed databases may be copies of operational or analytical databases.
(c) Not relevant.
(d) Data mining refers to finding relevant information or discovering knowledge.
(e) The object oriented database systems is an adopting from the object oriented programming paradigm.
Hence option (a) is the correct answer.
< TOP >
4.
Answer : (a)
Reason : All computers performs four basic operations called the IPOS cycle. The internal architectural design of computers may differ from one system to another. But, the basic organization remains the same for all computer systems. Input devices provide a computer with data that is transformed into binary codes.
(a) This transaction is done by input interfaces.
(b) Not relevant.
(c) Output interfaces accomplish the task of converting the binary code, which is produced by the computer, into human readable form.
(d) Not relevant.
(e) Not relevant.
Hence option (a) is the correct answer.
< TOP >
5.
Answer: (d)
Reason : (a) This is the place where the actual execution of the instructions takes place during the processing operation.
(b) The microprocessor performs processing tasks under the direction of a program.
(c) The input unit enters the data and instructions in the computer system bank links the external environment with the computer system.
(d) The control unit maintains order and directs the operation of the entire system, by selecting, interpreting and ensuring the execution of the program instructions.
(e) Internal storage areas in a computer are referred to as memory.
Hence option (d) is the correct answer.
< TOP >
6.
Answer : (c)
Reason : Information documents serve as confirmation or proof for their recipients that certain transactions have occurred.
So option (c) is the answer.
< TOP >
7.
Answer: (b)
Reason : A macro is a set of operations that accomplishes a specific task. When a macro name is issued, the entire set of operations is executed.
Tasks like printing a block of the worksheet, copying functions and formulae into a new row, etc. can be saved as macros.
Hence, from above discussion, we can infer that option (b) is correct.
Option (a) is incorrect. Micros are not defined. So, they are not applicable here.
Option (c) is incorrect. Templates are ready-made designs that include an overall layout, font and font-size choices, a color scheme, and other design elements. So, they are not applicable here.
Option (d) is incorrect. Functions help to write complex formulae more quickly in spreadsheet programs. So, they are not applicable here.
Option (e) is incorrect. Cell references are ways to get values into a formula correctly, in a spreadsheet program. So, they are not applicable here.
< TOP >
8.
Answer : (e)
Reason : The systems maintenance stage of system development life cycle involves the monitoring evaluation and modification of a system to make desirable or necessary improvements. So, Option (e) is the correct answer.
< TOP >
9.
Answer : (c)
Reason : An RDBMS consists of a collection of tables, each of which is assigned a unique name. These tables consist of different fields which can be used together as and when necessary.
Hence, from above discussion, we can infer that option (c) is correct.
Options (a), (b), (d) and (e) are not correct regarding RDBMS.
< TOP >
10.
Answer: (e)
Reason : Some of the first generation computers were ENIVAC, EDVAC and EDSAC. EAVAC is not a first generation computer. So option (e) is the correct answer.
< TOP >
11.
Answer: (a)
Reason : System analysis provides an in-depth study of the end user information needs. So option (a) is the correct answer.
< TOP >
12.
Answer: (b)
Reason : DBMS is used to create and maintain database. So option (b) is the correct answer.
< TOP >
13.
Answer: (b)
Reason : Economic feasibility determines the cost effectiveness of a proposed system. So option (b) is the correct answer.
< TOP >
14.
Answer: (c)
Reason: ATM switch breaks voice, video, data into fixed cells of 53bytes and routes it to its next destination on the network. So option (c) is answer.
< TOP >
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10
15.
Answer : (d)
Reason : Pie charts are used to compare the parts of a whole. So pie charts are useful for Mr.Suresh, if he wants to compare the population of Hyderabad with the population of Andhra Pradesh. So option (d) is correct answer.
< TOP >
16.
Answer : (d)
Reason : Multithreading operating systems enables the computer to execute more than one task in a single program. So option (d) is the correct answer.
< TOP >
17.
Answer : (d)
Reason : Laser printers work like photo copy machines. A laser beam creates electrical changes on a rotating print drum. These changes attract tones, which are transferred to the paper and fused to its surface b a heating process. So option (d) is the correct answer.
< TOP >
18.
Answer : (b)
Reason : The collection of information stored in a database at a particular moment is called AN instance of the database. So option (b) is the correct answer.
< TOP >
19.
Answer : (c)
Reason : The Gantt chart is a bar chart used as a project scheduling technique. The structure of the chart shows output plotted against units of time. It gives quick picture of a project’s progress by the status of actual time lines and projected time lines. The other charts do not provide means to track a project during project implementation. So option (c) is the correct answer.
< TOP >
20.
Answer : (d)
Reason : The ‘mail-b’ command is used to send blind carbon copies to the list of names in UNIX operating system. So option (d) is the answer.
< TOP >
21.
Answer : (b)
Reason : The ‘mail-f’ command is used to read the contents of mail box in UNIX operating system. So option (b) is the correct answer.
< TOP >
22.
Answer : (a)
Reason : ‘grep-c’ command in UNIX operating system is used for displaying the count of the number of occurrences of a pattern in a file. So option (a) is the answer.
< TOP >
23.
Answer : (b)
Reason : Topology (in communication network context) refers to the way in which the end points or stations of a network are linked together. So option (b) is the answer.
< TOP >
24.
Answer : (d)
Reason: The REVOKE command in Novell Netware Operating System deletes trustee rights from a directory. So option (d) is the answer.
< TOP >
25.
Answer : (a)
Reason : The process of designating a system for the simultaneous transmission of two or more messages or over the same channel is called multiplexing. So option (a) is the answer.
< TOP >
26.
Answer : (a)
Reason : Transmission Control Protocol in TCP/IP Reference Model is a reliable connection oriented protocol that allows a byte stream originating on one system to be delivered without error to any other system in the network. So option (a) is the answer.
< TOP >
27.
Answer : (d)
Reason : Code conversion is the function of presentation layer in OSI reference model. So the option (d) is the answer.
< TOP >
28.
Answer : (a)
Reason : Library functions are not written by users .The remaining statements are true about the functions. So option (a) is answer.
< TOP >
29.
Answer : (b)
Reason: Three categories of functions present in C language are functions with no arguments and no return values, functions with arguments and no return values and functions with arguments and return values. So option (b) is answer.
< TOP >
30.
Answer : (c)
Reason : The variables, which are stored in memory are automatic variables and static variables. Register variables are stored in register. So option ( c) is answer.
< TOP >
Section B : Caselets
1. Information systems in many large organizations are combinations of various functional information systems. They support business processes such as product development, production, distribution, order management, etc. Improvements in business processes can help the organization cut costs, improve quality and customer service and develop innovative products. If competitors vary the price, then it becomes mandatory in some situations that the company also change the price. For this, a lot of re-work has to be done. It is not possible to cope up with the competition unless and until there is a competitive edge in using Information Technology to solve the problem. Thus, the company can make use of information Technology tools such as Computer Aided Engineering and Computer Aided Design (CAD), Material Requirements Planning (MRP), Enterprise Resource Planning (ERP) and Supply Chain Management (SCM). Decision Support Systems (DSS) help the managers in decision-making. They are developed using analytical models, specialized databases, and the knowledge and experience of decision-makers. Executive Information Systems (EIS) enable online access to relevant information in a comprehensible format. The use of IT helps streamline the operational and managerial processes. Information technology can be used to develop products, services and other capabilities that will enable companies to achieve strategic advantage.
< TOP >
2. The impact of Information Technology is also felt by the service sectors such as Banking, Insurance, Leasing companies, Investment consultancy, Stock exchanges, Share registry and Custodial services. Most of these services require storage and processing of huge volumes of data. The vast processing capacity of computers along with the latest communication technology enables these companies to operate efficiently. Hence, banks have come up with more customer friendly services such as anytime and anywhere banking using ATMs, and Internet and Mobile Banking. As a result, the banks are able to offer electronic banking, which makes use of computer and telecommunication networks. Some are Internet only banks, which offer banking on the internet. Technology has enabled banks to reduce costs, and improve operating efficiency and customer satisfaction levels.
These developments, collectively, are fostering demand for better services in other industries which are using e-commerce applications. Thus, Information Technology in banking provides a range of services; however, there is a need for the issues related to security that are to be addressed properly.
< TOP >
3. In order to solve this problem, the main hardware resources at the disposal are installing terminals for handling the accounts, a central server which acts as database and the connecting links. The terminals such as microcomputers with all the peripherals such as the keyboards, mouse, scanners, printers, monitors, etc., would suffice the needs of the bank in the present scenario. Coming to software, there is a need for multi-user operating system such as UNIX or Windows 2000. And utility software that can be used are data compression, backup and recovery software, anti virus software. There will be however the application software for writing/creating, editing and formatting the documents. A number of office suites are available in the market and support application software in their own style. There is a need for fiber optic cables for interlinking the branches. The accounting package that is likely to be implemented, brings into play effectiveness. All the other things support this package.
< TOP >
4. The communication links such as the optical fiber cable will suffice the needs likely to come up in the near future also. Installing a workstation instead of a terminal is a costly proposition but that could have an advantage because workstations are more sophisticated and are more reliable in terms of security. The software should be flexible enough for upgradations and this will be an added advantage. The accounting package should be secure enough and there should be options for authorized entry into the banking software. Software, which includes the above options, could be used in the bank thus making it “future perfect”.
< TOP >
5. Yes, the bank is adopting a right strategy by foraying into Internet banking and also providing complimentary services. These days there is a rapid shift of business into the online environment, the pressure to enhance market value, expansion and consolidation — there can be no doubt that the current trends in retail banking confront financial service providers with challenges. Each of these trends already had or will have a considerable effect on retail business; combined together, they will ensure retail banking.
The latest technological innovations, such as broadband transmission, WebTV and wireless Internet access via mobile phones, will all provide further impetus for the digital revolution. Private customer business will also be very strongly affected by the trend to Internet usage. The retail bank of the future will thus have little in common with the bank we know today.
Three important changes will take place: Customer contact will increasingly be online, the Internet portal will be the preferred point of access to the bank, and providers will be quick to expand their product range to include both competitors’ products and new, tailored value added products.
< TOP >
6. In the future, the bank’s Internet portal will become the cornerstone of the customer relationship. This applies particularly for a large part of the high-revenue customers. Customers will not only be able to use their portals for transactions and as information sources, they will also be able to configure them to suit their own requirements. They will, thus, have a wide variety of up-to-
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date information constantly available. The bank will be able to use the central data management tool to make personalized information available to customers on the own “personal” portals. Customers will, thus, have an access to a wide range of improved options for managing their finances, as well as personally tailored product offers.
The more data a bank has on a customer, the better it can interpret it, the better it can support the customer in personalizing his or her portal. The first banks to be able to do this will capture a sustained competitive advantage.
So far, many banks have offered only their own products. This will soon change. The retail bank of the future will offer its customers a selection of the best available products in any product category — including complimentary services such as the ones offered by Standard Bank in comparison with the competitors’ products.
< TOP >
Section C: Applied Theory
7. A database management system consists of interrelated data and a set of programs to access the data. A database is a collection of related data that is organized to make access easier. It could be any information. The primary goal of DBMS is to provide a convenient and efficient environment for storing and retrieving information in a database. The management of data involves the definition of structures for data storage and the provision for the manipulation of data. It also ensures system security preventing data loss due to system failure and unauthorized access.
Components of a database system
A database system has four major components namely data, hardware, software and users.
Data
The data stored in the system is partitioned into one or more databases. A database is a repository for stored data. Database can be either integrated or shared. An integrated database is a collection of related tables. While shared data in a table can be used by other tables in the database.
Hardware
This consists of the secondary storage devices (such as disks and drums) where the database resides. Other associated devices and control units also form a part of the hardware.
Software
Between the physical database, where the data is actually stored and the users there is a layer of software, called Database Management System (DBMS). All requests from users for accessing the database are handled by DBMS. The requests include adding and removing, retrieving and updating data in files or tables. DBMS serves as an interface between the users and hardware.
Users
Users can be classified into three broad groups. The first group consists of application programmers, who are responsible for writing application programs. The application programs are written in languages such as Cobol, C or Pascal. These programs retrieve existing information, insert new information and delete or change existing information in the database. The second group of users is the end users, who interact with the database system through computer terminals. An end user can access the database via online applications or can use an interface provided by the database system software. For example, end users use SQL, a database query language for interacting with the database system.
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8. OLAP designates a category of applications and technologies that allow the collection, storage and reproduction of multidimensional data. OLAP is useful to managers, analysts and executives. It helps them in data analysis by making data access easier and faster. Moreover, the ability to view data in different formats makes the system flexible. OLAP is becoming popular because many companies are migrating to relational databases. In a relational database, data is stored in the form of rows and columns. Data warehousing is confined to relational databases whereas OLAP provides multidimensional analysis.
Architecture for Online Analytical Processing
Functions of OLAP:
Drilling
Drilling essentially is breaking up data into smaller dimensions to facilitate analysis. For example, while performing quarterly sales analysis, the analyst may use information regarding monthly, weekly or daily sales in that quarter.
Slicing and dicing
Slicing and dicing refer to the process of changing the dimension of analysis to suit the analysts’ requirements. For example, the region-wise monthly sales report can be changed into monthly sales report.
Changing displays
Information may be available in tabular form but it can be transformed into charts and graphs if required.
OLAP is used across functional divisions. In the finance department, OLAP can be used for budgeting, activity based costing, financial performance analysis and financial modeling. Similarly, the marketing department can use OLAP for market research, customer analysis, sales forecasting, segmentation, etc. In the production department, OLAP can be used to track the material requirements, the number of units produced and inventory details.
Characteristics of OLAP :
Apart from facilitating multidimensional view of data, there are two more features that OLAP provides: complex modeling and time intelligence.
Multidimensional views
All business models have a minimum of three dimensions: time, location and product. These dimensions may vary according to the analysis. Managers should have the flexibility to use the data for analytical processing irrespective of the database design. Database design should not be a constraint for the access or use of information. Managers should be able to analyze data at any level with ease. The OLAP software should hide complex queries from the user. Managers with no knowledge of database concepts or programming should also be able to access data with ease. Moreover, the time taken by OLAP system to process user requests should be consistent.
Complex modeling
The most important use of OLAP is its ability to perform complex calculations. The key performance indicators of a business are derived using complex calculations. For example, sales analysis is done using trend algorithm. Competitor analysis also requires modeling complex relationships. The ability to model complex relationships is a cardinal feature of OLAP. The OLAP software should provide powerful but simple tools for complex calculations. The methods used for computation should be clear and non procedural so that users can use the system without help. Unless methods used for calculation are understood clearly, using them would be difficult and time consuming. OLAP systems are rated on the basis of their ability to create information from data.
Time intelligence
Time is also a very important factor in analytical processing. It is unique because it is the only dimension that follows a sequence. Generally, business analysis is done over a period of time, i.e. monthly, quarterly etc. An example for timeliness is calculation of moving average of the last five year sales. The use of time hierarchy differs from other hierarchies. For example, managers may seek breakup of sales in a week, a month or during weekends. But it is unlikely that they will ask for details regarding the first five shirts sold.
Benefits of OLAP:
OLAP software can be very useful to an organization especially with respect to data management. But many organizations are not familiar with the benefits of OLAP. Such organizations fail to capitalize on an opportunity to improve analytical processing capabilities. Some of the benefits provided by OLAP are
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• A well designed OLAP increases productivity.
• Complex modeling is made easy using OLAP.
• Software specifically designed for OLAP may be useful in developing applications quickly and providing better service.
• Faster application development will reduce application backlog.
• The query drag option helps in easing network traffic in transaction processing and Data Warehousing.
• Helps the organization respond quickly to market demand by modeling real business problems and using human resources efficiently.

Information Technology & Systems (MB231) : July 2006

2010-04-24T03:38:00.000-07:00

1
Question Paper

Information Technology & Systems (MB231) : July 2006

Section A : Basic Concepts (30 Marks)
· This section consists of questions with serial number 1 - 30.
· Answer all questions.
· Each question carries one mark.
1. Mr. Suresh is writing a spreadsheet program in which he has to use a group of commands at different
parts of the program. So which of the following can be used to replace group of commands to decrease
the length of the program?
(a) Keyword (b) Function (c) Constant (d) Procedure (e) Macro.
< Answer >
2. Mr. Srinivas, working as a junior programmer at Converges Inc. wants to write program logic for an
application using imitation code. Which of the following tools is helpful for him?
(a) Flowchart (b) Decision Table (c) Pseudocode
(d) Compiler (e) Interpreter.
< Answer >
3. Genesis inc. uses OSI Network Architecture for communication with other systems. So which of the
following layers of this model is responsible for detecting and correcting errors in the transmission of
data?
(a) Transport Layer (b) Network Layer
(c) Data Link Layer (d) Session Layer
(e) Application Layer.
< Answer >
4. Mr. Malya is working in Dishnet Servics Inc., a leading Internet Service Provider in India. If Malya
wants to know when his friends or coworkers are online, which of the following Internet services can
help him?
(a) File Transfer Protocol (b) Internet Telephony
(c) Internet Fax (d) Internet Paging
(e) Usenet.
< Answer >
5. Mr.Gopal, working on a ‘C’program in which he has to test more than one condition to arrive at the
right decision. So which of the following operators will be helpful for him?
(a) Increment operators (b) Decrement operators
(c) Arithmetic operators (d) Logical operators
(e) Assignment operators.
< Answer >
6. In a ‘C’ program, Mr. Balu defined three variables that represent the existing data types. So which of
the following features in ‘C’language was used by him?
(a) Type definition (b) Size of
(c) Cast of (d) Round of
(e) Assignment operators.
< Answer >
7. The Manager at Food world asked his subordinate to present him a report that lists all those items where
actual expenditures exceeded budget targets by at least 10 percent. The report refers to
(a) External Report (b) Exception Report
(c) Summary Report (d) Periodic Scheduled Report
(e) Push Report.
< Answer >
8. Mr.Suresh, writing a ‘C’ program, wants to print the student name, enrollment number and marks of 10
students. So, which of the following is used to group these data items of different data type that share a
common name?
(a) Float (b) Structure (c) Array (d) Int (e) Long.
< Answer >
9. Which of the following commands is used to list the files by displaying the number of blocks used by a
file in UNIX operating system?
(a) ls –x (b) ls –l (c) ls –a (d) ls –t (e) ls –s.
< Answer >
2
10. Which of the following commands is used to list files by sorting in reversed order in UNIX operating
system?
(a) ls –r (b) ls –R (c) ls –a (d) ls –t (e) ls –s.
< Answer >
11. Which of the following commands is used to prepare a file for printing by adding suitable headers,
footers and formatted text in UNIX operating system?
(a) head (b) pr (c) tar (d) grep (e) mail.
< Answer >
12. The “ % ” symbol used in the statement of “C” program is a
(a) Decision character (b) Conversion character
(c) Data type character (d) Printable character
(e) New line character.
< Answer >
13. In a TCP/IP reference model, which layer is responsible for holding the whole architecture together?
(a) Application Layer (b) Transport Layer
(c) Internet Layer (d) Host-to-network Layer
(e) Data Link Layer.
< Answer >
14. Which of the following is false about a Linked List in C?
(a) Linked List is a list whose order is given by links from one item to the next
(b) Each structure of a Linked List is called a node
(c) Each node in a Linked List consists of two fields, one containing the item (value) and the other
containing the address of the next item
(d) The link is in the form of a pointer to another structure of the same type
(e) A Linked List is a collection of structures ordered by their physical placement in the memory.
< Answer >
15. Which of the following (in communication network context) refers to the way in which the end points or
stations of a network are linked together?
(a) Data flow machine (b) Topology
(c) Multi computer (d) Scalability
(e) Resource sharing.
< Answer >
16. In which of the following contexts does the subnet make the most sense, where it refers to the collection
of Routers and communication lines owned by the network operator?
(a) PBX (b) MAN (c) LAN (d) WAN (e) PABX.
< Answer >
17. In videoconferencing, which of the following signals from a video camera can be digitized and
compressed?
(a) Catalog (b) Analog (c) Digital
(d) Synchronous (e) Asynchronous.
< Answer >
18. Which of the following is/are the areas where telecommunications can be applicable?
I. Enterprise Collaboration Systems.
II. Electronic Commerce Systems.
III. Internal Business Systems.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
< Answer >
19. In which of the following switching alternatives, the message is subdivided into fixed or variable groups
called packets?
(a) Circuit switching (b) Message switching
(c) Packet switching (d) Group switching
(e) Asynchronous switching.
< Answer >
20. Which of the following commands in Novell Netware Operating System recover the deleted files that
have not been purged?
(a) NCOPY (b) REMOVE (c) SALVAGE (d) REVOKE (e) FLAG.
< Answer >
3
21. Which of the following commands in Novell Netware Operating System stops the receiving of
messages sent by another user?
(a) CAPTURE (b) REMOVE (c) LIST (d) CASTOFF (e) FLAG.
< Answer >
22. Which of the following commands in Novell Netware Operating System closes a spooled file and sends
the data to the printer?
(a) CASTOFF (b) ENDCAP (c) CHKVOL (d) LOGOUT (e) FLAG.
< Answer >
23. Which of the following Analytical models is reverse of “what-if analysis model” supported by Decision
Supporting System?
(a) Sensitivity Analysis (b) Goal Seeking Analysis
(c) Optimization Analysis (d) Value Analysis
(e) Time-Series Analysis.
< Answer >
24. In C program, which of the following is/are true?
I. The variable always begins with a letter.
II. The length of the variables should not be more than eight characters.
III. Variables are case sensitive.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
< Answer >
25. Mr. Teja, writing a ‘C’ program to check whether a given character is alphabet or not. Which of the
following files he must include in the program?
I. ctype.h.
II. math.h.
III string.h.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
26. Which of the following statements is/are false about increment and decrement operators in ‘C’
language?
I. Prefix operator first assigns the value to the variable on the left and then increments the operand.
II. Postfix operator first adds one to the operand and then assigns the result to the variable on the left.
III. Both increment and decrement operators are unary operators.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
27. In C language, the syntax of printf statement consists of
I. Characters that will be printed on the screen.
II. Formal specifications that define the output format for display of each item.
III. Variables whose values are formatted and printed.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
28. Murali wants to write a C program for evaluating the square root of a series of numbers. If the series
contains any negative numbers, the process of evaluation of square root should be bypassed for such
numbers because the square root of a negative number is not defined. So which of the following
statements he must use for bypassing the negative numbers in the program?
(a) break (b) continue (c) exit (d) stop (e) stat.
< Answer >
4
29. In C language, which of the following variables scope is local to the function?
I. Automatic variable.
II. Static variable.
III. Register variable.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
30. In a C program, Mr.Ravi initialized the automatic variable in the loop of the program. The total
execution time taken for that loop is 50msec. Which of the following variable he must use in the loop in
order to reduce the execution time?
(a) Static variable (b) Register variable
(c) External variable (d) Boolean variable
(e) Character variable.
< Answer >
END OF SECTION A
Section B : Caselets (50 Marks)
· This section consists of questions with serial number 1 – 8.
· Answer all questions.
· Marks are indicated against each question.
· Detailed explanations should form part of your answer.
· Do not spend more than 110 - 120 minutes on Section B.
Caselet 1
Read the caselet carefully and answer the following questions:
1. Why are companies moving to hybrid object/relational data warehouses?
(4 marks) < Answer >
2. What do you think is the strategic business value of a data warehouse to Kingfisher Airlines?
(4 marks) < Answer >
3. What business benefits does Kingfisher Airlines hope to gain from their new hybrid
object/relational warehouse?
(5 marks) < Answer >
Hybrid object and relational databases are finding their way into the data-warehousing world. Companies are
beginning to use data objects to embed sophisticated data cleansing, modeling, calculating and forecasting routines
in a relational data warehouse.
Hybrid Database Management Systems (HDBMS) were developed as a way to add unstructured data, such as text or
video, into a database. Informix Software markets object extensions called DataBlades to its Database Management
System. Oracle Corporation’s object extensions are called Cartridges, and IBM’s DB/2 Universal Database supports
multimedia extensions.
Because relational structures handle only simple calculations, such as addition or subtraction, users typically move
data from the warehouse to a separate server or desktop application to perform complex functions. But doing
sophisticated analysis within the framework of a relational database has performance and other advantages, even if it
isn’t right for everyone and tends to be priority, consultants say.
Hybrid Database Management Systems and datawarehouses appealed to Sabre Technology Solutions because they
combine the scalability of relational, databases with the flexibility of object code, explained Brad Jensen, a vice
president at the Sabre Group division that develops information systems for the travel industry.
Sabre built a 400 gigabyte summary-data relational warehouse for Kingfisher Airlines in 2005 for several types of
5
analysis, such as passenger demand, fares, and routes. However, Kingfisher Airlines later decided to improve the
results of analysis, Jensen said. Sabre is now working on that project.
The first phase of the new 3-terabyte to 5-terabyte warehouse is scheduled to debut in June. It will use Informix’s
Dynamic Server with DataBlades running a parallel environment. An important part of the strategy is the ability to
reuse object code, Jensen said. Sabre’s building customized DataBlades using a software development tool kit from
Informix, which contains objects for security and integrity, for example.
The strategy also will ensure that everyone at Kingfisher Airlines uses the same calculations. “Kingfisher Airlines
wants to standardize calculation methods and variable names”, Jensen said. For example, many departments have
been using different ways to define such common variables as market and fleet. Departments also may calculate
formulas, such as the percentage of local passengers on a flight, differently.
Jensen declined to reveal investment or return on investment figures. However, Jensen in convinced of the business
value of hybrid databases. “We have seen the power of object extensions to add strategic business functionality”, he
said.
Caselet 2
Read the caselet carefully and answer the following questions:
4. What are the business benefits of Gliders’ switch to a virtual private network?
(6 marks) < Answer >
5. What can be done to overcome several limitations of virtual private networks?
(7 marks) < Answer >
6. Does it make business sense for any company to use the Internet as their private
telecommunications network? Why or why not?
(8 marks) < Answer >
Sandal, shoe and boot maker Gliders Outdoor Corporation recently switched to an Internet networking technology
called virtual private networks to interconnect their global company.
Virtual private networks (VPNs) use the power of the Internet instead of using private telecommunications lines or
other network links. A virtual private network is a secure and encrypted connection between two points across the
Internet. It transfers information by encrypting and encapsulating telecommunications traffic into packets and
sending the packets over the Internet. Most VPNs are built and run by Internet service providers. Companies that go
with a VPN from an Internet service provider essentially outsource their networks to save money on having to
acquire and manage their own Wide Area Network equipment and bandwidth requirements.
Gliders is a $100 million company whose 20 person office in Hoek Van Holland, the Netherlands, collaborates on
product development with its staff in Goleta, California. The VPN cost roughly $31,000 to implement and saves
Gliders $10,000 per month compared with leasing their previous high-speed network connections.
“We need a network that would serve as the foundation for our international expansion”. says Steve Miley, MIS
director at Gliders. “It will be critical because our offices will use it to make sure projects are done on time”.
Employees at the two sites use the VPN to update the status of product development projects through Lotus Notes
groupware databases. The VPN supports Notes’ ability to replicate databases of project information at each work
site, which is crucial to groupware support of project team collaboration.
VPN performance “is slow but workable for interactive Notes database access,” Miley says. And as the quality of
Internet service improves, VPN performance can only improve, he adds.
Security, a reported shortcoming of virtual private networks, is improved with NetFortress software from Fortress
Technologies. It automatically changes encryption keys every 24 hours. “We feel very secure with their products on
our network,” he says.
Offices for production management in Hong Kong, Mexico and Macao will be added to the VPN this year, Miley
says. Those sites currently use expensive international telephone calls to access servers in Goleta. Desktop
videoconferencing over the VPN, to cut international travel costs, is also planned. Gliders doesn’t mind being among
the first to implement a virtual private network. “VPNs are here to say,” Miley says. “And we’re on the leading edge,
not the bleeding edge.
6
Caselet 3
Read the caselet carefully and answer the following questions:
7. Describe the essential hardware and software necessary to establish the Decision Support System
(DSS), explaining why each part is relevant in meeting the aims of Vison Operations.
(8 marks) < Answer >
8. Explain how the new Decision Support System (DSS) may enable Vison Operations to improve
staff retention.
(8 marks) < Answer >
In the welfare department, Vison Operations employs 30 staff that visit individuals to assess their welfare
requirements. This job means visiting individuals, who are normally low-paid of facing difficult family
circumstances, to find out whether they should receive financial assistance (sometimes termed ‘benefits’) from Vison
Operations.
The area covered by Vison Operations has a very low population density. Staff may have to travel many kilometers
between each appointment and may not return to their central office for days at a time. Rules, which determine
whether people are entitled to financial assistance, are complicated, with over 6,500 separate rules and 170 different
forms to complete. These rules change frequently: three rules changing each week is not uncommon. Consistent
application of rules is difficult because of benefit fraud, human error, constant changing of rules and time delays
inherent in the system itself. Staff retention is low because of poor morale.
The existing IT system is a mainframe located at the headquarters of Vison Operations. The mainframe contains a
database, which shows, which benefits are due to which individuals. A list of the benefits is printed out weekly, and
benefits are paid out according to the information on this list. The database is accessed and updated from ten
terminals located in the computer room itself. Staff normally updated the database when they return from their visits
to individuals requiring benefits.
Vison Operations has decided to establish a Decision Support System to assist its staff in the application of benefit
rules to the situation of individuals. Vison Operations requires that staff should have access to the Decision Support
System at any time during their working day.
END OF SECTION B
Section C : Applied Theory (20 Marks)
· This section consists of questions with serial number 9 - 10.
· Answer all questions.
· Marks are indicated against each question.
· Do not spend more than 25 -30 minutes on section C.
9 UNIX file system is a storehouse of information consisting of sequence of characters. Explain the
internal structure of the UNIX file system.
(10 marks) < Answer >
10 Novell Netware is a 32-bit Network Operating System that provides services to client
workstations and Client-Server Operating Systems. Briefly explain the features and services
provided by Netware.
(10 marks) < Answer >
END OF SECTION C
END OF QUESTION PAPER
7
Suggested Answers
Information Technology & Systems (MB231) : July 2006
1. Answer : (e)
Reason : In a spreadsheet program, a macro can be used to execute a set of operations that
accomplishes a specific task. So option (e) is the correct answer.
< TOP >
2. Answer : (c)
Reason : Pseudocode is the program design tool that makes use of "imitation code" for writing the logic
of a program. So option (c) is the correct answer.
< TOP >
3. Answer : (c)
Reason : Data Link Layer of OSI Reference Model is responsible for establishing an error-free
communications path between computers over the physical channel. It performs checksum
Cyclic Redundancy Check (CRC) to detect and correct errors in the transmission of data. So
option (c) is the correct answer.
< TOP >
4. Answer : (d)
Reason : Internet Paging, also known as “Buddy List” software, runs on the background of the user's
computer, letting him/her know when his friends or coworkers (only those who are registered)
are online.
Hence, from above discussion, we can infer that option (d) is correct.
Option (a) is incorrect. File Transfer Protocol is an Internet Standard developed to exchange
files. So, it is not applicable here.
Option (b) is incorrect. Internet Telephony is the mechanism of carrying out telephonic
conversations over the Internet. So, it is not applicable here.
Option (c) is incorrect. Internet Fax is the mechanism of sending faxes through computers
connected over the Internet. So, it is not applicable here.
Option (e) is incorrect. Usenet is a system where messages about any subject can be posted
and other people on the Internet can reply to them. So, it is not applicable here.
< TOP >
5. Answer : (d)
Reason : Option (d) is the correct answer. Logical operators are used to test more than one condition
and make a decision.
< TOP >
6. Answer : (a)
Reason : The type definition feature in ‘C’ language allows users to define an identifier that would
represent an existing data type. So option (a) is the answer.
< TOP >
7. Answer : (b)
Reason : Exception Report is generated only in exceptional situations. It lis ts items that fall outside the
prescribed limits. e.g., a report that lists all those items where actual expenditures exceeded
budget targets by at least 10 percent. So option (b) is the correct answer.
Option (a) is incorrect. External Report is prepared primarily for readers outside the company.
e.g., drafts of income statements and balance sheets. So, it is not applicable here.
Option (c) is incorrect. Summary Report summarizes detailed information into convenient,
compact formats. So, it is not applicable here.
Option (d) is incorrect. Periodic Scheduled Report uses a pre-specified format, designed to
provide managers with information on a regular basis. So, it is not applicable here.
Option (e) is incorrect. Push Report is pushed to a manager’s workstation through Intranet in
the form of a web cast. So, it is not applicable here.
< TOP >
8. Answer : (b)
Reason : Structure is used to group data items that are related to each other and of different data types
under a common name. So option (b) is the correct answer.
< TOP >
9. Answer : (e) < TOP >
8
Reason : The ‘ls -s’ command is used to list the files by displaying the number of blocks used by a file
in an UNIX operating system. So option (e) is the answer.
10. Answer : (a)
Reason : The ‘ls -r’ command is used to list files by sorting in reversed order in UNIX operating
system. So option (a) is the answer.
< TOP >
11. Answer : (b)
Reason : The ‘pr’ command is used to prepare a file for printing by adding suitable headers, footers and
formatted text in UNIX operating system. So option (b) is the answer.
< TOP >
12. Answer : (b)
Reason : ‘ %’ symbol is a conversion character used in the statement of a “C” program. So option (b) is
the correct answer.
< TOP >
13. Answer : (c)
Reason : In TCP/IP reference model, the Internet layer is the key layer that holds the whole architecture
together. So option (c) is the answer.
< TOP >
14. Answer : (e)
Reason : Except (e) all the given statements are true. A Linked List in C is a collection of structures
ordered not by their physical placement in the memory (like an array) but by logical links that
are stored as part of the data in the structure itself. So option (e) is the answer.
< TOP >
15. Answer : (b)
Reason : Topology (in communication network context) refers to the way in which the end points or
stations of a network are linked together. So option (b) is the answer.
(a) These are highly parallel computers with many functional units all working on the same
program.
(c) Multicomputers communicated by sending messages over very short, very fast buses.
(d) This is the ability to increase system performance gradually as the work load grows by
adding more processors.
(e) Management uses resource sharing to make all programs, equipment, and data available
to anyone on the network without regard to physical location of the resource and the
user.
< TOP >
16. Answer : (d)
Reason : A wide area network would cover a large geographic area, generally a country or a continent.
It consists of a collection of systems intended for running user programs. These systems are
called hosts and they are connected by a communication subnet.
A collection of interconnected networks is called an internet work or just an internet. A
common form of an internet is a collection of LANs connected by a WAN.
(b) A Metropolitan Area Network is a bigger version of a LAN and normally uses similar
technology. It may cover a group of nearby corporate offices or city and could be either
private or public. This standard that has been adopted and implemented for MAN is
called Distributed Query Dual Bus.
(c) LANs are privately owned networks with in a single building or campus of up to a few
kilometers in size.
(d) Subnet makes the most sense in the context of a WAN where it refers to the collection of
routers and commu nication lines owned by the network operator.
(a) and (e) are a telephone line multiplexer, connecting a large number of in-house
telephone lines or extensions to a smaller number of external lines that lead to the
service provider’s telephone.
< TOP >
17. Answer : (b)
Reason : In videoconferencing, analog signals from a video camera can be digitized and compressed.
So option (b) is the answer.
< TOP >
18. Answer : (e)
Reason : The areas where telecommunications can be applicable are Enterprise Collaboration Systems,
Electronic Commerce Systems and Internal Business Systems. So option (e) is the answer.
< TOP >
9
19. Answer : (c)
Reason : In Packet switching, the message is subdivided into fixed or variable groups called packets.
So option (c) is the answer.
< TOP >
20. Answer : (c)
Reason : The SALVAGE command in Novell Netware Operating System recover the deleted files that
have not been purged. So option (c) is the answer.
< TOP >
21. Answer : (d)
Reason : The CASTOFF command in Novell Netware Operating System stops the receiving of
messages sent by another user. So option (d) is the correct answer.
< TOP >
22. Answer : (b)
Reason : The ‘ENDCAP’ command in Novell Netware Operating System closes a spooled file and
sends the data to the printer. So option (b) is the answer.
< TOP >
23. Answer : (b)
Reason : (d) Value analysis is not relevant to the answer.
(a) Sensitivity analysis is used to observe how repeated changes in a single variable affect
other variables.
(b) Goal-seeking analysis is the reverse of what-if-analysis where repeated changes are
made to selected variables until a chosen variable reaches a target value.
(c) Optimization analysis is used for finding an optimum value for selected variables, given
certain constraints.
(e) Time -series analysis is not related to analytical modeling.
So option (b) is the answer.
< TOP >
24. Answer : (e)
Reason : All the statements are true. i.e variables are case sensitive and they always begins with a letter
and the length of the variables should not be more than eight characters. So option (e) is the
answer.
< TOP >
25. Answer : (a)
Reason : Whenever we use character functions in the program we must include ctype.h file in the
program. So only statement (III) is true. Hence option (a) is the answer.
< TOP >
26. Answer : (c)
Reason : Prefix operator first adds 1 to the operand and assigns the result to the variable on the left.
Postfix operator, on the other hand first assigns the value to the variable on the left and then
increments the operand. Both increment and decrement operators are unary operators used in
C language. So option (c) is the answer.
< TOP >
27. Answer : (e)
Reason : The syntax of printf statement is (printf(“control string”,arg1,arg2,---argn).
The control string comprises:
Characters that will be printed on the screen and formal specifications that define the output
format for display of each item. The control string indicates the number of arguments and
their types. The arguments arg1,arg2,…arg n are the variables whose values are formatted and
printed according to the specifications of the control string. So option (e) is the answer.
< TOP >
28. Answer : (b)
Reason : Whenever we want to bypass some statements in C program, we must use continue statement
in the program. So option (b) is answer.
< TOP >
29. Answer : (e)
Reason : The scope of the automatic variable, static variable, register variable are local to the function .
So option (e) is answer.
< TOP >
30. Answer : (b)
Reason : As a register access is faster than a memory access, if we keep register variable in the loop,
then every time the variables are stored in registers. As register access is faster than memory,
we can reduce the execution time. So option (b) is the answer.
< TOP >
10
Section B : Caselets
1. The companies are moving to hybrid object data warehouses because they handle simple calculations, such as
addition or subtraction, users typically move data from the warehouse to a separate server to perform complex
functions. They also combine the scalability of relational database with the flexibility of object code. It also
performs several types of analysis such as passenger demand, fares and routes.
< TOP >
2. The strategic business value of a data warehouse to Kingfisher Airlines is that it has an ability to reuse the object
code. The strategy also ensures that every one at Kingfisher Airlines uses the same calculations, which can
standardize the calculation methods and variable names. They have seen the power of object extensions to add
strategic business functionality.
< TOP >
3. The benefits of having a hybrid object warehouse are
· Data objects are used to embed sophisticated data cleaning, modeling, calculating and forecasting routines.
· Performance is high.
· Companies can out down the costs.
· Data can be distributed among various departments.
< TOP >
4. The benefits of Gliders switch to a virtual private network (VPN) are:
a. VPNs satisfy the organizational need for connecting distant employees securely to the corporate databases.
b. VPNs are cost effective when compared to other alternatives.
c. VPNs enable any network resource in the branch office to securely connect to any network resource in the
corporate office.
d. VPN ensures that the data travels safely over the internet.
e. VPN ensures that the data is not tampered while in transit.
< TOP >
5. The only task of a VPN is to provide security for the information to travel between the networks. The security
factors to be considered are authentication of the sender and receiver, integrity or data, encryption of the data and
reliability of delivery. The Internet is used by VPNs for the flow of information by:
a. The client computer connects to the internet through an ISP.
b. The client software recognizes the host address and negotiates a VPN session.
c. The IP packets are encrypted and tunneled through the internet.
d. The VPN server then decrypts the packets.
e. Finally the encrypted data flows to the specified resource.
< TOP >
6. The practical perspective of Gliders to VPN’s is
a. Remote access is becoming a necessity for most of the organizations.
b. VPNs enable corporates to satisfy this need in a cost-effective manner.
c. VPN is not only cost-effective, but also easier to install and maintain.
· VPNs establish secure connections by tunneling their way through the internet.
· VPNs can be implemented through either the hardware or the software.
· Encryption technologies are used to ensure privacy of the data.
< TOP >
7. Hardware requirements for the staff at the Vison Operations will include the following:
· Portable computer with large hard disk, RAM memory etc. This will be needed to store the DSS and provide
processing power necessary to access database and perform the necessary searches for benefit information.
· Modem and/or network connection to attach to central database. These will be needed to ensure that staff
receives daily updates of changes in rules and regulations relating to benefit provision. This hardware will
also provide the ability to transfer completed cases back to central location for printing out and to provide a
backup provision.
11
· Central computer system and file server. This will be situated at the headquarters of the Country Council. It
is needed to store the central database for updating prior to sending to portable computers.
SOFTWARE
· Decision-support system on computers. This must be capable of holding and processing the 6,500 rules and
170 forms required by the benefits systems and provide a user friendly interface required to access and use
the system.
· Report-generating software, or some means of transferring the finished output from the DSS to the modem
for onward transmission to central computer system.
· Copy of DSS on the central computer for initial updating of the DSS prior to downloading to the individual
portable computers.
· Communication software to enable the DSS on the mainframe to transfer updates to the individual portable
computers.
< TOP >
8. The new DSS will help Vison Operations to increase its staff retention rate by
· Making it easier for staff to access the information that they require. There are fewer rules and regulations
for the staff to remember, because all this information is on their portable computers with a system to aid
access to that information. Staff can therefore focus on the problems of individuals rather than have to spend
hours learning rules new rules.
· Fewer errors will be made, both rule-selection and in form-completion. As noted above, staff have more time
to concentrate on this activity, and the computer system itself will start to guide staff to the questions that
they need to ask and the rules that are applicable to each given situation.
· All documentation is on the computers there is not the requirement to carry around a paper copy of the rules
or the forms to be completed. Staff will therefore find that they have less to carry around. Similarly, they
will not find themselves in a situation where they have do not have a copy of a required form or regulation.
All the documentation that they find the job less stressful because they have to remember to take their
computer, rather than lots of individual forms and other documents.
Staff will be able to apply the rules to individuals consistently, leaving less room for human judgment. Many
people prefer to ‘blame the computer’ for bad news, and staff may find this a useful tactic when asked to provide
benefits that are not due. Again, this tactic should decrease the amount of stress that staff may find when working.
< TOP >
Section C: Applied Theory
9. In UNIX, every file has a table introduced with it, which is stored in special areas of the disk. This table is called
the identification node. The I-node describes a file uniquely, every disk, in the UNIX system has at least one file
system each with its own root. Every file system consists of a sequence of blocks, each block consisting of 512
bytes. Some of these blocks are not allotted to the user and are reserved exclusively for the user of the kernel.
The file system breaks the disk into four segments.
Boot block
It is the first block, numbered zero, which is normally assigned by the file system and set aside for the booting
procedure.
Super block
It is the second block, numbered 1, which is used to control the allocation of disk blocks. The super block
contains details of the active file system. The block contains the size and status of the file system, the details of
free blocks, and I-nodes. However, it do not contain a complete list of all the free blocks and I-nodes but only as
much as is required to meet current needs.
I-node block
It is the third block, numbered 2 onwards, upto a number determined during the creation of a file system, and
contains most information pertaining to files every file in the file system will have an entry in their block, referred
to as the I-node,. Every 1node is identified by a unique number, which refers the position of the I-node in the Ilist,
which is the complete list of I -nodes. When the user changes the contents of a file, the I-node also gets
updated.
Data Blocks
The final segment, called Data blocks contains a long chain of blocks of storing the contents of files. The UNIX
file system stores data in physical blocks of 512 bytes. The data blocks commence from the point the I-node
blocks terminate. A UNIX file is sequentially organized set of blocks scattered throughout the disk.
12
< TOP >
10. NetWare is a 32-bit network operating system that runs on processors of Intel 80386 and above. The operating
system provides services to client workstations, and to client-server operating systems. The client programs runs
in workstations and requests services from servers. The server manages communications on the network by
controlling access to network hardware and software. A redirector at the client workstation determines whether
requests made by a user are for the local operating system or should be redirected to a server on the network. The
network support software interfaces with the network hardware and communication system, which in turn,
receives and sends messages across the network.
NetWare provides different types of services. The core services called the Netware Core Protocol (NCP) include
file access, file locking, resource tracking and allocating, event notification, and other services to workstations
that request them. Netware is an ideal platform for server applications as it is modular and expandable. Additional
core services can be installed by loading netware loadable modules (NLM). These services could be name space
support, Internetworking, host connectivity, messaging services, communication services, etc.
The most significant feature of NetWare 4.1 is Netware Directory Services (NDS), which provides both users and
network administrators with a single, integrated view of an entire network and the servers connected to it. NDS
supports a network of servers where users can log in once and access the resources of any server depending on
their access rights.
System Administration Features
A network administrator manages a server on the network, wherever it is located from a single network
management station. A management utility called Netware Administrator runs under Microsoft Windows and
provides a graphic view of the network. All regular administrative tasks can be performed by the Netware
Administrator. The administrator consolidates many of the stand-alone commands and text -based utilities. A
text -based version of Netware Administrator is also available for managers who prefer not to use Windows.
Netware also includes a Simple Network Management Protocol (SNMP) compliant management system with
information about resources on the network.
Security Features
The security features of Netware are critical for large corporate network environment. Netware 4 has a five-layer
security model:
1. Login, User and Password Authentication
2. Login Restrictions
3. NDS Security
4. File System Access Rights
5. Directory/File Attributes
Login/Password Security: Users should type the LOGIN command to gain access to the file system. They
should enter their user name and then a password, this is done from SYS: LOGIN. No access is allowed without
the password. After they are logged in, users can access computers in an inter-network based on the access rights
that have been assigned to them by the network administrator.
Login restrictions: In Netware, each user has an account that is managed by a network administrator.
Restrictions can be imposed on the accounts to control when users can log in, the workstation at which they can
log in and the time their accounts expire. It is also possible to force users to change their passwords on a regular
basis and use a unique password that is not similar to the one recently used.
NDS Security: Once the user has been authenticated and the proper login restriction placed, the next security
feature is the NDS security. NDS contains an ACL (Access Control List), which is a property determining who
can access what objects and what they can do with the objects.
· File System Access Rights – There are 8 file system access rights
· Write – Open and change the contents of files and directions
· Read – Open and Read contents or run applications
· Modify – Change name or attributes of a file or directory
· File Scan – See files and directories
· Access Control – Change the trustee assignments
· Create – Create new files and sub-directories
· Erase – Delete a directory, file or sub-directory
· Supervisor – Grants all rights to a directory and its files and subdirectories.
Directory/File Attributes: Can be modified using the FLAG command or the NWADMIN/NETADMIN utility.
13
When a user logs onto the network, the directory server requires that the user’s workstation authenticate that it
knows the user’s password. A special key encryption technique is used to verify the user and ensure that a user’s
password passes over the network wire in an encrypted format. This ensures that the password is not captured
and used for an unauthorized login.
< TOP >
< TOP OF THE DOCUMENT >

Information Technology & Systems (MB231): April 2006

2010-04-24T03:37:00.000-07:00

1
Question Paper

Information Technology & Systems (MB231): April 2006

Section A : Basic Concepts (30 Marks)
• This section consists of questions with serial number 1 - 30.
• Answer all questions.
• Each question carries one mark.
• Maximum time for answering Section A is 30 Minutes.
1. The subnet in Wide Area Network consists of
I. Transmission lines.
II. Routers.
III. Bridges.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
< Answer >
2. The technology present in Metro Politan Network is
I. Distributed Queue Dual Bus.
II. Fiber Distributed Data Interface.
III. Fiber Distributed Data Bus.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
< Answer >
3. ADP inc. a reputed BPO company, is maintaining the database of the customers office & home phone
numbers. But it is having a problem in wasting space when the customers are using only either of them.
So which of the following processes can help the company in eliminating the redundant data?
(a) Structuring (b) Randomizing (c) Analyzing
(d) Normalizing (e) Actualizing.
< Answer >
4. The difference(s) between PBX (Private Branch Exchange) and Centrex networks is/are
I. In a Centrex network the switching equipment is located in one of the telephone company’s “central
exchanges” instead of on the premises of a business.
II. Unlike PBX, a Centrex network incorporates data-over-voice technology for transmissions.
III. A Centrex network consists of large-scale networking systems that enable a business with several
offices in the same area whereas a PBX is a telephone multiplexer connecting a large number of inhouse
telephones to a smaller number of external lines that lead to the service provider’s telephone
exchange.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
5. Which of the following information systems gives top management immediate and easy access to
selective information related to the firm’s critical success factors?
(a) Transaction Processing System (b) Management Information System
(c) Decision Support System (d) Executive Information System
(e) Artificial Intelligence System.
< Answer >
6. In which of the following operations, OLAP (Online Analytical Processing) moves in the reverse
direction and automatically displays detailed data that comprise consolidated information?
(a) Consolidation (b) Drill down
(c) Slicing and dicing (d) Abstraction
(e) Encapsulation.
< Answer >
2
7. In which of the following analyses, an end user makes changes to variables or relationships among them,
and observes the resulting changes in the values of other variables?
(a) What-if Analysis (b) Sensitivity Analysis
(c) Goal-seeking Analysis (d) Optimization Analysis
(e) Cost-benefit Analysis.
< Answer >
8. Which of the following is false with respect to strategic information systems planning?
(a) It is an important component of total organizational planning and focuses on the activities and
outputs of strategic business planning
(b) Companies that do strategic information systems planning generally have four objectives in mind.
viz., business alignment, competitive advantage, resource management and technology architecture
(c) Strategic information systems planning is technology driven, and not business driven
(d) Investments in information technology must be aligned with the top management's strategic agenda
(e) The backing of the company's information systems policy committee and user groups is necessary
for the investments in information technology.
< Answer >
9. Web browser and DBMS query languages and report generators enable managers at PC workstations to
get immediate responses or find and obtain customized reports as a result of their requests for the
information they need. Such reports are termed as
(a) Demand reports and responses (b) Exception reports
(c) Periodic scheduled reports (d) Push reports (e) Edit reports.
< Answer >
10. In a Database Management System, the physical level is
(a) The highest level of abstraction that describes how the data is actually stored
(b) Used to describe the customer data as a block of consecutive storage locations
(c) Used to describe each record by a type definition and the interrelationship among the records
(d) Users can see a set of application programs that hide details of the data types
(e) The highest level of abstraction that describes only a small part of the entire database.
< Answer >
11. Entity-Relationship Model falls under which of the following Data Models?
(a) Relational Model (b) Network Model
(c) Hierarchical Model (d) Object-Based Logical Model
(e) Physical Model.
< Answer >
12. In computer networks, the two local area networks can be joined by using
(a) Routers (b) Backbones (c) Bridges (d) Gateways (e) Switches.
< Answer >
13. ATM breaks voice, video and data into fixed cells of 53 bytes. What is the size of data, control
information in each cell?
(a) 48 bytes, 5 bytes (b) 49 bytes, 4 bytes
(c) 50 bytes, 3 bytes (d) 47 bytes, 6 bytes
(e) 46 bytes, 7 bytes.
< Answer >
14. In protocol hierarchy, IDU (interface data unit) is a combination of
(a) Interface control information, service data unit
(b) Interface control information, protocol data unit
(c) Protocol data unit, service access unit
(d) Interface control information, service access unit
(e) Protocol data unit, service data unit.
< Answer >
15. In OSI reference model, which of the following layers provides network transparency to the end users?
(a) Network layer (b) Physical layer (c) Presentation layer
(d) Application layer (e) Transport layer.
< Answer >
16. Which of the following is false about network architecture?
I. Data is directly transferred from layer n on one computer to layer n on another computer.
II. At source machine each layer passes data and control information to the layer below it.
III. At destination machine each layer passes data and control information to the layer above it.
(a) Only (I) above (b) Only (II) above
(c) Both (II) and (III) above (d) Both (I) and (III) above
(e) All (I),(II) and (III) above.
< Answer >
3
17. In computer networks, if the data travels in either of the direction but not simultaneously, then such type
of communication is called
(a) Simplex communication (b) Half-duplex communication
(c) Full-duplex communication (d) Half-simplex communication
(e) Automatic communication.
< Answer >
18. In telecommunication networks, which of the following is/are true about telecommunication media?
I. Twisted pair cables are twisted together to reduce the noise.
II. The insulation in the coaxial cable minimizes the interference from other signals.
III. The disadvantage of fiber optic cable is slicing of the cable to make the connections.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
19. The model in which the data is stored in the series of tables is called
(a) Network Database Model (b) Object Oriented Database Model
(c) Object Relational Database Model (d) Relational Database Model
(e) Hierarchical Database Model.
< Answer >
20. Which of the following collaborative work management tools helps in generating Gantt charts?
(a) Task and project management (b) Workflow system
(c) Calendaring and scheduling tools (d) Knowledge management
(e) System flow analysis.
< Answer >
21. Mr.Suresh, an UNIX programmer, has been asked by his two colleagues, to copy some files in their
directories. But he has copied them wrongly. So which command in UNIX might be helpful for Suresh in
copying the files in respective directories without making a mistake?
(a) tar (b) cat (c) pwd (d) rm (e) cd.
< Answer >
22. In UNIX, bootstrap is
(a) The software essential for starting the system
(b) The command used for starting the system
(c) The command used for allocating memory to different tasks
(d) A system file used to store the current users
(e) A system file used to store the current directories.
< Answer >
23. Which of the following statements is/are false about return statement?
I. To return the control back to calling function we must use the key word return.
II. Every called function must contain a return statement.
III. Each return statement in a function may return a different value.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
24. Mr. Suresh, has wrote the following statement in C program.
a = 2>3? 5>4? 100:200:4>3?300:400
What will be the value of a after executing the above statement?
(a) 100 (b) 200 (c) 300 (d) 400 (e) 500.
< Answer >
25. In C language, which of the following variables default initial value is garbage value?
I. Automatic variable.
II. Static variable.
III. Register variable.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
26. In C program, if a is integer variable then the expression a = (30 x 1000) +2768 evaluates to
(a) 32768 (b) –32768 (c) 113040 (d) 0 (e) –32767.
< Answer >
4
27. In C program, which of the following functions gives the current position in the file?
(a) ftell( ) (b) fpoint( ) (c) fcurrent( ) (d) fseek( ) (e) fset( ).
< Answer >
28. In C language, which of the following symbols are used for comment lines?
(a) *,* (b) / , / (c) &,& (d) /*, */ (e) */, /*
< Answer >
29. Which of the following is/are true about circular linked list?
I. Circular linked list is terminated with null terminating pointer.
II. Circular linked list is that the whole list can be processed beginning at any point.
III. Circular doubly linked lists provide the benefit of both singly liked list and circular linked list.
(a) Only (I) above (b) Both (I) and (III) above
(c) Both (I) and (II) above (d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
30. The most important feature that Netware 4.1operating system provides is
(a) Netware directory services (b) Netware domain services
(c) Netware interface services (d) Netware administrative services
(e) Netware business services.
< Answer >
END OF SECTION A
Section B : Caselets (50 Marks)
• This section consists of questions with serial number 1 – 6.
• Answer all questions.
• Marks are indicated against each question.
• Detailed explanations should form part of your answer.
• Do not spend more than 110 - 120 minutes on Section B.
Caselet 1
Read the caselet carefully and answer the following questions:
1. Which network topology best suits Vision Brokerage Services?
(8 marks) < Answer >
2. Which communication channel best suits Vision Brokerage Services?
(5 marks) < Answer >
Vision Brokerage Services (VBS) is the market leader in financial services. It has been in the industry for more than 15
years. There is need for computerization of all earlier manual and semi manual systems. An administrator controls a
central server. All the client based stand-alone systems are located in the same office and they interact with the central
server. There is a need for interaction between the clients, but not necessarily through the server.
The development of network technologies has prompted people to consider alternatives that reduce costs and
complexity and improve reliability. Early networks used simple twisted shielded-pair (TSP) implementations. Later, the
industry adopted multi-drop buses such as Ethernet. Now we see true web-based networks (example, the World Wide
Web) implemented on the factory floor. VBS is unaware of such developments.
Caselet 2
Read the caselet carefully and answer the following questions:
3. What are the problems that might have been faced by DMA bank using file based approach? Explain.
(15 marks) < Answer >
4. What type of approach they must follow in order to come out of this problem?
(8 marks) < Answer >
DMA banking and financial services is a conglomerate of financial services and is the leader in the industry. It generates
lot of data from its transactions like debit or credit of an account, creating a new account, balance of an account,
generating monthly statements. Data is the raw material from which information is obtained. The processing of data
consists of manipulating it into a form which provides information in a format that is meaningful and usable to the
5
manager or other end-user.
Initially the information needs of DMA were met using a 'manual system'. This system was very labor intensive. With
the arrival of computers, the manual filing system was moved onto a computer. This early use of computers for
gathering information was implemented through the ‘file based approach’. But, the file-based approach has created a lot
of problems whenever a particular record or a file has retrieved; the case is same even for a group of records, as all of
them are maintained in the same manner.
Caselet 3
Read the caselet carefully and answer the following:
5. How do managers use a decision support system? How is it different from an MIS?
(6 marks) < Answer >
6. How must the knowledge, experience, and insights of a manager be coupled with the outputs from a DSS to yield
good decision-making?
(8 marks) < Answer >
CitiOne Bank is implementing a Decision Support System (DSS). With DSS as part of its Quick Response Methods
(QRM) program, CitiOne Bank looks to achieve quicker and more reliable customer response and to reduce the waiting
time for a customer. The bank also expects to maintain Hs own electronic payment systems, while achieving an
expected 30 percent growth rate each year. Additionally, CitiOne Bank is looking to cut costs by significantly reducing
its trivial operations and also making more effective use of e-banking.
"Our customers want convenient banking, fast delivery, durability, just the right amount of options and no hassles
wherever they are," said Aman Jain, Application Development Manager at CitiOne Bank. The Quick Response Method
initiative is designed to support these customer goals. CitiOne Bank is implementing a DSS to provide decision making
support to planners who work in a fastpaced environment and must react quickly to customer or schedule changes. The
system also will improve operations by providing an accurate schedule and ensuring that the delivery of payments is
coordinated with other schedules that come into play.
With Microsoft Windows clients, the DSS software graphically displays the status of each job to CitiOne Bank
personnel, supporting employees, as well as management, and other departments. Operational level employees also will
use the DSS to determine and to view special instructions, to report status exceptions, and to post completed jobs. The
software displays problem areas as they occur and notifies the responsible department.
At the heart of the DSS is Graphical Process Modeling. This component fuels CitiOne Bank's Inter Branch
Reconciliation, a database that defines all the resources and activities necessary to balance the payments between the
branches. It also communicates to support centers about the activities they are required to perform.
The software translates plans or schedules into the details necessary for execution, including online enquiries with upto-
the-minute updates of accounts and the investments etc. Because the system constantly runs and reevaluates actual
status versus new status, the software identifies variances - and their impact - as they occur. Importantly, the system tells
the end user what to do next, not what has already happened. It allows schedulers to perform their real jobs - plan for
future activities - and not have to expedite.
END OF SECTION B
Section C : Applied Theory (20 Marks)
• This section consists of questions with serial number 7 - 8.
• Answer all questions.
• Marks are indicated against each question.
• Do not spend more than 25 -30 minutes on section C.
7. “An MIS would enhance the functioning of an organization to a great extent”. Identify the role and reporting
alternatives of management information systems?
(10 marks) < Answer >
8. A manufacturing company has its manufacturing facilities in Maharashtra. It sources raw materials from a small
group of suppliers. Now it is planning to install Extranet in the company. What are the strategic competitive
benefits do you see in it?
(10 marks) < Answer >
END OF SECTION C
END OF QUESTION PAPER
6
Suggested Answers
Information Technology & Systems (MB231): April 2006
Section A : Basic Concepts
1. Answer: (d)
Reason: The subnet in the wide area network consists of transmission lines and routers. Hence option
(d) is answer.
< TOP >
2. Answer: (d)
Reason: The technologies present in Metro Politan Network are Distributed Queue Dual Bus and Fiber
Distributed Data Interface. Fiber distributed data bus technology is not present in Metro Politan
Network. Hence option (d) is answer.
< TOP >
3. Answer: (d)
Reason: The process of eliminating redundant data by breaking each table into smaller tables is known
as normalizing. Hence option (d) is answer.
< TOP >
4. Answer: (d)
Reason: The difference between a PBX (Private Branch Exchange) and Centrex networks is that in a
Centrex network, the switching equipment is located in one of the telephone company’s
“central exchanges” instead of on the premises of a business. A Centrex network consists of
large-scale networking systems that enable a business with several offices in the same area
whereas a PBX is a telephone multiplexer connecting a large number of in-house telephones to
a smaller number of external lines that lead to the service provider’s telephone exchange. Like
PBX, a Centrex network incorporates data-over-voice technology for transmissions. So both
statements (I) and (III) are correct. Hence option (d) is the answer.
< TOP >
5. Answer : (d)
Reason : Executive Information System gives top management immediate and easy access to selective
information related to the firm’s critical success factors.
Option (a) is incorrect. Transaction Processing System processes data generated from the
occurrence of business transactions. So, it is not applicable here.
Option (b) is incorrect. Management Information System is defined as a computer-based
system that provides flexible and speedy access to accurate data for managerial purposes. It is
not applicable here.
Option (c) is incorrect. Decision Support System provides direct support to decision-makers,
with the use of ‘what-if’ analysis, ‘optimization models’ etc. So, it is not applicable here.
Option (e) is incorrect. Artificial Intelligence System deals in computer functions associated
with human intelligence, such as reasoning, learning and problem solving. So, it is not
applicable here.
Hence, from above discussion, we can infer that option (d) is correct.
< TOP >
6. Answer : (b)
Reason : In drill down operation, OLAP (Online Analytical Processing) moves in the reverse direction
and automatically displays detailed data that comprise consolidated information.
Option (a) is incorrect. Consolidation involves aggregation of data, like simple roll-ups or
complex groupings involving interrelated data. So, it is not applicable here.
Option (c) is incorrect. Slicing and dicing refers to the ability to look at database from different
viewpoints. So, it is not applicable here.
Option (d) is incorrect. Abstraction is the process of hiding background/implementation details
and representing only the essential features. So, it is not applicable here.
Option (e) is incorrect. Encapsulation allows one to group code and data in an object, which is
a sort of wrapper. This wrapper protects code and data from being accessed by other code. So,
it is not applicable here.
Hence, from above discussion, we can infer that option (b) is correct.
< TOP >
7
7. Answer : (a)
Reason : In What-if Analysis, an end user makes changes to variables or relationships among them, and
observes the resulting changes in the values of other variables.
Option (b) is incorrect. Sensitivity Analysis is a special case of What-if Analysis. Typically, the
value of only one variable is changed, but many such iterations are carried out, and the
resulting changes are observed. So, it is not applicable here.
Option (c) is incorrect. Goal-seeking Analysis is the reverse of What-if Analysis and
Sensitivity Analysis. Instead of observing how changes in a variable affect other variables,
Goal-seeking Analysis sets a target value (the goal) for a variable and then repeatedly changes
other values until the target value is achieved. So, it is not applicable here.
Option (d) is incorrect. Optimization Analysis is a more complex extension of Goal-seeking
Analysis. It attempts to find the optimum value for one or more target variables, given certain
constraints. So, it is not applicable here.
Option (e) is incorrect. Cost-benefit Analysis is concerned with whether expected savings,
increased revenue, increased profits, reductions in required investment and other types of
benefits will exceed the costs of developing and operating a proposed system. So, it is not
applicable here. Hence, from above discussion, we can infer that option (a) is correct.
< TOP >
8. Answer : (c)
Reason : Strategic information systems planning is an important component of total organizational
planning and focuses on the activities and outputs of strategic business planning.
Strategic information systems planning is business driven and not technology driven. IT
strategies are developed based on strategic business opportunities.
Hence, from above discussion, we can infer that option (c) is false with respect to strategic
information systems planning.
Options (a), (b), (d) and (e) are all true with respect to strategic information systems planning.
Hence, from above discussion, we can infer that option (c) is correct.
< TOP >
9. Answer : (a)
Reason: In Demand reports and responses, information is available whenever a manager demands it. For
example, web browser and DBMS query languages and report generators enable managers at
PC workstations to get immediate responses, or find and obtain customized reports as a result
of their requests for the information they need.
Hence, from above discussion, we can infer that option (a) is correct.
Option (b) is incorrect because Exception reports are generated only in exceptional situations.
The information content may or may not be included in periodic reports. Such reports help the
managers to take immediate remedial measures and save costs to the organization.
Option (c) is incorrect because Periodic scheduled reports use a pre-specified format, designed
to provide managers with information on a regular basis.
Option (d) is incorrect because in Push reports, information is pushed to a manager's
workstation.
Option (e) is incorrect because Edit reports describe errors detected during processing .
Hence option (a) is the answer.
< TOP >
10. Answer : (b)
Reason: In a Database Management System at the physical level, a customer record can be described as
a block of consecutive storage locations. Hence option (b) is the answer.
< TOP >
8
11. Answer : (d)
Reason : Object-Based Logical Model (OBLM) is used in describing data at the logical level and at the
view level. Under OBLM, Entity-Relationship (E-R) Model falls. E-R Model is based on a
perception of a real world that consists of a collection of basic objects called entities and of
relationships (association) among these objects.
Hence, from above discussion, we can infer that option (d) is correct.
Option (a) is incorrect. The database in a Relational Model is generally a two-dimensional
table. So, it is not applicable here.
Option (b) is incorrect. The records in Network Model are organized as collections of arbitrary
graphs. So, it is not applicable here.
Option (c) is incorrect. The records in Hierarchical Model are organized as collections of trees.
So, it is not applicable here.
Option (e) is incorrect. Physical Model is used to describe data at the lowest level. So, it is not
applicable here.
Hence option (d) is the answer.
< TOP >
12. Answer : (c)
Reason : The two local area networks can be joined by using bridges. So option (c) is the answer.
< TOP >
13. Answer : (a)
Reason : ATM breaks voice, video and data into fixed cells of 53 bytes. The size of data, control
information in each cell is 48bytes, 5 bytes .Hence option (a) is answer.
< TOP >
14. Answer : (a)
Reason : IDU (interface data unit) is a combination of interface control information, service data unit.
Hence option (a) is answer.
< TOP >
15. Answer : (d)
Reason : In OSI reference model, application layer provides network transparency to the end users.
Hence option (d) is answer.
< TOP >
16. Answer : (a)
Reason : Data is not directly transferred from layer n on one computer to layer n on another computer. It
flows from top to bottom at source machine and flows from bottom to top at destination. Hence
option (a) is answer.
< TOP >
17. Answer : (b)
Reason : In computer networks, If the data travels in either of the direction but not simultaneously, then
such type of communication is called half-duplex communication. Hence option (b) is answer.
< TOP >
18. Answer : (e)
Reason : Twisted pair cables are twisted together to reduce the noise. The insulation in the coaxial cable
minimizes the interference from other signals. The disadvantage of fiber optic cable is slicing
of the cable to make the connections. Hence option (e) is answer.
< TOP >
19. Answer : (d)
Reason : The basic structure of a relational database is series of tables, which are called relations .At the
core of relational model, is the concept of table in which data is stored. Hence option (d) is
answer.
< TOP >
20. Answer : (a)
Reason : Task and project management helps in generating Gantt charts. Hence option (a) is answer
< TOP >
21. Answer : (c)
Reason : The pwd command in UNIX is used to find the current directory that is in use. So using pwd
command he can identify the current directory and can copy the files in the respective
directories successfully. Hence option (c) is answer.
< TOP >
22. Answer : (a)
Reason : The UNIX file system consists of four blocks: boot block, super block, I-node block and data
block. The boot block contains the bootstrap, the software essential for starting the system.
Hence option (a) is answer.
< TOP >
9
23. Answer : (c)
Reason : To return the control back to calling function we need not use the key word return. Each return
statement in a function may return a different value. Every function statement may or may not
have return statement. Hence option (c) is answer.
< TOP >
24. Answer : (c)
Reason : a = 2>3? 5>4? 100:200: 4>3? 300:400
We should evaluate the expression from right to left.
(4 > 3)? 300 : 400 = 300
(5 > 4)? 100 : 200 = 100
a = 2 > 3? 100 : 300
a = 300
Hence option (c) is answer.
< TOP >
25. Answer : (d)
Reason : Automatic variables, Register variables will have default initial value as garbage value. The
default initial value for static variable is zero. Hence option (d) is answer.
< TOP >
26. Answer : (b)
Reason : The range of integer constant is from –32768 to + 32767. Here the expression
a = (30x1000) + 2768 evaluates to 32768. But it will not give 32768. This value exceeding the
integer constant’s range. It will give –32768. Hence option (b) is answer.
< TOP >
27. Answer : (a)
Reason : ftell() gives the current position in the file. Hence option (a) is answer.
< TOP >
28. Answer : (d)
Reason : In C language comments lines are used for user readability. The compiler will ignore the
comment lines. Comment lines are written in-between /*, */. Hence option (d) is answer.
< TOP >
29. Answer : (d)
Reason : In circular linked list there is no NULL terminating pointer. Circular linked list is that the
whole list can be processed beginning at any point. Circular doubly linked lists provide the
benefit of both singly liked list and circular linked list. So statements (II) and (III) are true.
Hence option (d) is answer.
< TOP >
30. Answer : (a)
Reason : The most important feature that Netware4.1 provides is Netware directory services which
supports a network of servers where users can log in once and access the resources of any
server depending on their access rights. Hence option (a) is answer.
< TOP >
Section B : Caselets
1. The bus topology was the first local area network topology in use. A bus network is an arrangement in a local area
network in which each workstation is connected to a main cable or link called the bus. In this pattern network
clients are strung along a single cable. The cable must be electrically terminated at each end to function properly.
In a network, a bus is a transmission path on which signals are dropped off or picked up at every workstation
attached to the line. Only devices addressed by the signals pay attention to them; the others discard the signals.
The major advantage of a bus network is a substantial reduction in the cost of cabling. Complete loops, as in ring
networks, or separate lines, as in star network, are not necessary. A bus network is simple and reliable. If one node
fails to operate, all the rest can still communicate with each other. For a major disruption to take place, the bus
itself must be broken somewhere. Bus networks are easy to expand. Additional nodes can be added anywhere
along the bus.
There are several limitations to the bus network topology. The length of the bus is limited by cable loss. A bus
network may not work well if the nodes are located at scattered points that do not lie near a common line. Excess
network traffic, a failure, may affect many users, and problems would be difficult to troubleshoot.
< TOP >
2. Communication channels can be a physical connection between two correspondents. Wires, coaxial cables and
optical fibers are used for this purpose. But from the case it is clear that the systems are located in the same
building, thus coaxial cables will be the best choice due to the following reasons:
10
A coaxial cable consists of a copper or aluminum wire wrapped with spacers to insulate and protect the cable. This
insulation minimizes interference from other signals, which distorts the signals that the cable carries. For easier
installation, a group of coaxial cables may be bundled together in a larger cable. These allow high-speed data
transmission and are used as an alternative for twisted pair wire lines in high-service metropolitan areas.
< TOP >
3. DMA is a savings-bank enterprise that keeps information about all customers and savings accounts. One way to
keep the information on a computer is to store it in operating system files. To allow users to manipulate the
information, the system has a number of application programs that manipulate the files, including
• A program to debit or credit an account
• A program to add a new account
• A program to find the balance of an account
• A program to generate monthly statements
System programmers wrote these application programs to meet the needs of the bank. New application programs
are added to the system as the need arises. For example, suppose that the savings bank decides to offer checking
accounts. As a result, the bank creates new permanent files that contain information about all the checking accounts
maintained in the bank, and it may have to write new application programs to deal with situations that do not arise
in savings accounts, such as overdrafts. Thus, as time goes by, the system acquires more files and more application
programs.
This typical file-processing system is supported by a conventional operating system. The system stores permanent
records in various files, and it needs different application programs to extract records from, and add records to, the
appropriate files.
Keeping organizational information in a file-processing system has a number of major disadvantages:
• Data redundancy and inconsistency: Since different programmers create the files and application programs
over a long period, the various files are likely to have different formats and the programs may be written in
several programming languages. Moreover, the same information may be duplicated in several places (files).
For example, the address and telephone number of a particular customer may appear in a file that consists of
savings-account records and in a file that consists of checking-account records. This redundancy leads to
higher storage and access cost. In addition, it may lead to data inconsistency; that is, the various copies of the
same data may no longer agree. For example, a changed customer address may be reflected in savings account'
records but not elsewhere in the system.
• Difficulty in accessing data: Suppose that one of the bank officers needs to find out the names of all
customers who live within a particular postal-code area. The officer asks the data-processing department to
generate such a list. Because the designers of the original system did not anticipate this request, there is no
application program on hand to meet it. There is, however, an application program to generate the list of all
customers. The bank officer has now two choices: either obtain the list of all customers and extract the needed
information manually or ask a system programmer to write the necessary application program. Both
alternatives are obviously unsatisfactory. Supp that such a program is written, and that, several days later, the
same off needs to trim that list to include only those customers who have an account balance of $10,000 or
more. As expected, a program to generate such a list does not exist. Again, the officer has the preceding two
options, neither of while satisfactory. The point here is that conventional file-processing environments do no
allow needed data to be retrieved in a convenient and efficient manner. More responsive data-retrieval systems
are required for general use.
• Data isolation: Because data is scattered in various files, and files may be in different formats, writing new
application programs to retrieve the appropriate data is difficult.
• Integrity problems:. The data values stored in the database must satisfy certain types of consistency
constraints. For example, the balance of a account may never fall below a prescribed amount (say, ,$25).
Developers enforce these constraints in the system by adding appropriate code in the various application
programs. However, when new constraints are added, it is diff to change the programs to enforce them. The
problem is compounded when constraints involve several data items from different files.
• Atomicity problems: A computer system, like any other mechanical or electrical device, is subject to failure.
In many applications, it is crucial that failure occurs, the data be restored to the consistent state that existed
prior to the failure. Consider a program to transfer $50 from account A to account If a system failure occurs
during the execution of the program, it is possible that the $50 was removed from account A but was not
credited to account resulting in an inconsistent database state. Clearly, it is essential to date consistency that
either both the credit and debit occur, or that neither occurs .That is, the funds transfer must be atomic-it must
happen in its entire not at all. It is difficult to ensure atomicity in a conventional file-processing system.
• Concurrent-access anomalies: For the sake of overall performance of the system and faster response, many
systems allow multiple users to update data simultaneously. In such an environment, interaction of concurrent
dates may result in inconsistent data. Consider bank account A, containing $500. If two customers withdraw
funds (say $50 and $100 respectively) account A at about the same time, the result of the concurrent executions
11
may leave the account in an incorrect (or inconsistent) state. Suppose that the programs executing on behalf of
each withdrawal read the old balance, n that value by the amount being withdrawn, and write the result back. If
two programs run concurrently, they may both read the value $500, and back $450 and $400, respectively.
Depending on which one writes the last, the account may contain either $450 or $400, rather than the correct
value of $350. To guard against this possibility, the system must maintain some form of supervision. But
supervision is difficult to provide because data may be accessed by many different application programs that
have not been coordinated previously.
• Security problems: Not every user of the database system should be able to access all the data. For example,
in a banking system, payroll personnel need to see only that part of the database that has information about the
various bank employees. They do not need access to information about customer accounts. But, since
application programs are added to the system in an ad hoc manner, enforcing such security constraints is
difficult.
< TOP >
4. Database tries to overcome the problems of a file-based approach. Database arose because the definition of data
was embedded in application programs, rather than being stored separately and independently. No control over
access and manipulation of data beyond that imposed by application programs was possible. The result was the
creation of Database Management System (DBMS).
There are three main features of a database management system that make it attractive to use in preference- to
more conventional software. These features are centralized data management, data independence, and systems
integration.
In a database system, the data is managed by the DBMS and all access to the data is through the DBMS providing
a key to effective data processing. These contrasts with conventional data processing systems where each
application program has direct access to the data it reads or manipulates. In a conventional DP system, an
organization is likely to have several files of related data processed by several different application programs. The
database management system provides the interface between the application programs and the data. When changes
are made to the data representation, the metadata maintained by the DBMS is changed but the DBMS continues to
provide data to application programs as before. The DBMS transforms data wherever necessary.
This independence between the programs and the data is called data independence, which is important because
every time some change needs to be made to the data structure, the programs that were being used before the
change would continue to work. To provide a high degree of data independence, a DBMS must include a
sophisticated metadata management system.
Object Database Management System does not have this problem, as it stores all the information inserted into it as
objects. Unfortunately, it is not possible to just stop using a database system and move to another overnight.
This is where the object relational model proves its value. It allows organizations to continue using their existing
systems, without having to make major changes, and allows them the parallel use of using 'object-oriented
systems.
< TOP >
5. A decision suppor system is a system under the control of one or more decision makers that assist in the activity
of decision making by providing an organized set of tools intended to impose structure on portions of the decision
making situation and to improve the ultimate effectiveness of thedecision outcome. ADSS is expected to exetend
the decision maker’s capacity in processing the information involved in making a decision. It can solve serveral
precious time for the decision maker. On the other hand, MIS is a type of information system that supports middle
and higher levels of management by providing information that is used in making decisions.
< TOP >
6. DSS effectiveness depends on the degree of fit between the decsion maker, the context of the decision and the
DSS itself. A DSS can provide the decision maker with potential alternatives that might otherwise go unnoticed or
appear too complex and difficult to pursue. The tools within the DSS can stimulate the problem solver to reach
innovative insights regarding soultions and their associated outcomes. No matter how well a DSS is designed there
exists some drawbacks that limits its ability to perform reasoning processes that require distinctly human
characteristics such ascreativity, intuition, or imagination. Such cognitive activities still belong to human
experience and do not lend themsleves well to automation or machine simulation. Thus to achieve some or all of
these potential benefits, the manager must understand not only the appropriate applicaiotn of a particular decision
support sustem but also its limits. Only then will be able to make good dicisoins using his knowledge, expereience
and insight.
< TOP >
12
Section C: Applied Theory
7. The information reports generated by a MIS can be categorized into' four major reporting alternatives:
Periodic Scheduled Reports: This form of providing information to managers uses a pre specified format,
designed to provide managers with information on a regular basis. Examples of such periodic schedules are daily /
weekly sales analysis reports, monthly financial statements, etc.
Exception Reports: These reports are generated only in exceptional situations. The information content mayor
may not be included in periodic reports. These reports help the managers to take immediate remedial measures and
save costs to the organization.
Demand reports and responses: The information is available whenever a manager demands it. For example, web
browser and DBMS query languages and report generators enable managers at PC workstations to get immediate
responses, or find and obtain customized reports as a result of their requests for the information they need.
Push reporting: Information is pushed to a manager's workstation. Many companies are using web casting
software to selectively broadcast reports and other information to the networked PCs of managers, over their
corporate Intranet.
< TOP >
8. Today when business environment is changing across the world, extranets have become an important business tool
that take advantage of Internet- technology to achieve real cost savings, faster, responses to changing business
conditions and becoming more customer centric.
For a manufacturing company, deployment of extranets provides strategic competitive benefits.
• Enabling manufacturing companies to form stronger relationships with their suppliers by allowing them to
share mission-critical information with each other.
• Automate their supply chains, improve inventory management, optimize business processes and speed their
response time to the customers.
• Manufacturers can outsource all component manufacturing through extranets.
• Engineers can discuss design changes with component manufacturers on real time basis through extranet.
They can securely access and download new designs and immediately implement changes.
• Extranets can provide instantaneous feedback on market trends.

Information Technology & Systems (MB231): January 2006

2010-04-24T03:33:00.000-07:00

1
Question Paper

Information Technology & Systems (MB231): January 2006

Section A : Basic Concepts (30 Marks)
· This section consists of questions with serial number 1 - 30.
· Answer all questions.
· Each question carries one mark.
· Maximum time for answering Section A is 30 Minutes.
1. Which of the following softwares runs on the background of the user’s computer screen, letting him
know when his friends or coworkers are online?
(a) Buddy list (b) Telecommunication software
(c) DBMS software (d) Telecommunication control software
(e) Network software.
< Answer >
2. Which of the following type of file(s) can be copied using File Transfer Protocol?
I. Graphic.
II. Video.
III. Audio.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
< Answer >
3. In World Wide Web, the documents are formatted in a script called
(a) HTML (b) VB Script (c) Shell Script
(d) Java Script (e) C Shell Script.
< Answer >
4. What is the range of integer constant in C language?
(a) -216 to 216 (b) 0 to 216 -1 (c) -215 to 215 (d) 0 to 215 -1 (e) -215 to 215 -1.
< Answer >
5. In a C program, Mr. Suresh initialized ‘a’ and ‘b’ as 50, 50 respectively.
a = a++ + ++b;
b = b++ + ++a;
What will be the values of ‘a’ and ‘b’ after executing the above statements?
(a) 103, 153 (b) 102, 154 (c) 104, 154 (d) 103, 155 (e) 102, 153.
< Answer >
6. Which of the following functions can be effectively used to so lve problems where the solution is found
by repetitively applying the same solution to subsets of the problem?
I. Recursive.
II. Static.
III. Main.
(a) Only (I) above (b) Only (II) above
(c) Both (I) and (II) above (d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
7. In C language , the structure definition is terminated with
(a) Semicolon (b) Colon (c) Comma (d) Period (e) Slash.
< Answer >
8. In C language, which of the following functions is used to read an integer from a file?
(a) getc() (b) putc() (c) getw() (d) putw() (e) rewind().
< Answer >
9. Which of the following statements is/are false about Ring topology?
I. In ring network, the system depends entirely on the central host.
II. Ring network remains operational even if one computer in the network fails.
III. The main advantage of ring network is a substantial reduction in the cost of cabling.
< Answer >
2
(a) Only (III) above (b) Both (I I) and (III) above
(c) Both (I) and (II) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
10. An ATM switch breaks voice, video and other data into fixed cells of
(a) 51 bytes (b) 52 bytes (c) 53 bytes (d) 54 bytes (e) 55 bytes.
< Answer >
11. Which of the following blocks contains the information about the entire disk in an UNIX file system?
(a) Boot Block (b) Super Block (c) I-node Block (d) Data Block (e) First Block.
< Answer >
12. In OSI reference model, which of the following layers provides network transparency to the end users?
(a) Network layer (b) Physical layer (c) Presentation layer
(d) Application layer (e) Transport layer.
< Answer >
13. Which of the following commands in Novell Netware Operating System deletes trustee rights from a
directory?
(a) NCOPY (b) REMOVE (c) SALVAGE (d) REVOKE (e) FLAG.
< Answer >
14. The mechanism used to break the output into two parts in UNIX is known as
(a) Piping (b) Tee (c) Parsing
(d) Redirection (e) Command substitution.
< Answer >
15. Which of the following is/are true about digital transmission technology?
I. It provides higher transmission speeds.
II. It transmits multiple types of communications simultaneously on the same circuit.
III. It transfers larger amounts of information.
(a) Only (I) above (b) Only (II) above
(c) Both (II) and (III) above (d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
16. In telecommunication networks, which of the following is/are true about telecommunication media?
I. Twisted pair cables are twisted together to reduce the noise.
II. The insulation in the coaxial cable minimizes the interference from other signals.
III. The disadvantage of fiber optic cable is slicing of the cable to make the connections.
(a) Only (I) above (b) Only (II) above
(c) Both (II) and (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
< Answer >
17. Which of the following collaborative work management tools helps in generating Gantt charts?
(a) Task an d project management (b) Workflow system
(c) Calendaring and scheduling tools (d) Knowledge management
(e) System flow analysis.
< Answer >
18. Which of the following protocols in TCP/IP Reference Model is a reliable connection oriented protocol
that allows a byte stream originating on one system to be delivered without error to any other system in
the network?
(a) Transmisson Control Protocol (b) User Datagram Protocol
(c) File Transfer Protocol (d) HyperText Transfer Protocol
(e) Internet Protocol.
< Answer >
19. In C language, array index starts with
(a) 0 (b) 1 (c) 2 (d) –1 (e) 0 or 1.
< Answer >
20. How many categories of functions are present in C language?
(a) 2 (b) 3 (c) 4 (d) 1 (e) 5.
< Answer >
21. In C program, the arguments used in the calling function are called
(a) Active arguments (b) Passive arguments
(c) Actual arguments (d) Formal arguments
(e) Dummy arguments.
< Answer >
3
22. Mr. Ramesh, the production manager in a reputed pharmaceutical company, asked his subordinate Mr.
Suresh to provide him details of the first quarter sales in comparison with the overall sales for the year
end ed March 31, 2005. Which of the following charts is helpful to him in this case?
(a) Line Chart (b) Bar Chart (c) Column Chart (d) Pie Chart (e) Row Chart.
< Answer >
23. Mr. Harish, working as an Economist in an MNC, is asked by the sales manager to provide him the
details about how a repeated change in the price of the product affects sales and purchasing power of
the customers. Which of the following types of analytical modeling will be helpful for Harish in this
case?
(a) Value analysis (b) Sensitivity analysis (c) Goal seeking analysis
(d) Optimization analysis (e) Time-series analysis.
< Answer >
24. Elektron Inc. wants to automate the entire production process by replacing the existing system. Which
of the following determines the willingness and ability of the management, employees, customers,
suppliers, and others to operate, use and support a proposed information system?
(a) Organizational feasibility (b) Economic feasibility
(c) Technical feasibility (d) Operational feasibility (e) Systems feasibility.
< Answer >
25. Which of the following commands in Novell Netware Operating System recover the deleted files that
have not be en purged?
(a) NCOPY (b) REMOVE (c) SALVAGE (d) REVOKE (e) FLAG.
< Answer >
26. The main goal of database modeling is to eliminate redundant data by breaking each table into smaller
tables. This process is referred to as
(a) Structuring (b) Randomizing (c) Analyzing
(d) Normalizing (e) Actualizing.
< Answer >
27. Which of the following registers holds the address of next instruction to be executed?
(a) Memory address register (b) Memory buffer register
(c) Program control register (d) Accumulated register
(e) Instruction register.
< Answer >
28. A kernel is a
(a) Spread sheet software (b) Application software (c) Firewall
(d) Memory resident program (e) Virus.
< Answer >
29. Which of the following is/are the applications of Wide Area Network (WAN)?
I. Transaction acquisition.
II. Electronic Data Interchange (EDI).
III. LAN-to-LAN connections.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
< Answer >
30. At which level of data abstraction, each record is described by a type definition and the interrelationship
among these record types is defined?
I. Physical level.
II. Logical level.
III. View level.
(a) Only (I) above (b) Only (II) above (c) Only (III) above
(d) Both (II) and (III) above (e) All (I), (II) and (III) above.
< Answer >
END OF SECTION A
Section B : Caselets (50 Marks)
This section consists of questions with serial number 1 – 8.
Answer all questions.
4
Marks are indicated against each question.
Detailed explanations should form part of your answer.
Do not spend more than 110 - 120 minutes on Section B.
Caselet 1
Read the caselet carefully and answer the following questions:
1. What do you think are the underlying causes of the IT management failures in Washington, D.C.?
(7 marks) < Answer >
2. What can Washington, D.C, learn from Philadelphia’s solution to their formal IS problems?
(6 marks) < Answer >
3. Do you think that CTO Michael Hernon’s plans will solve Washington, DC’s IT crisis? Why or why not?
(6 marks) < Answer >
Because the medicaid computer doesn’t talk to the welfare computer, the district of Columbia mistakenly pays $34
million to 20,000 people. Meanwhile, flaws in another system cause the nearly bankrupt city to overpay hospitals by
$35 million.
Across town, school administrators use the main financial system to report to the public and the U.S. Congress. But,
The Washington Post recently revealed, the administration keep a private set of books on another system to pay tens of
millions of dollars to school officials ordered laid off by the City Council.
And that’s just the tip of the fiscal and IT mismanagement iceberg that has hit the capital city of the United States. Here
are some other IT mismanagement stats:
· Mission-critical applications run on 286-based PCs housed in condemned buildings.
· Redundant computer centers run at 40 percent of capacity, wasting million of dollars.
· Systems highly visible to the public fail constantly because of ancient equipment.
· A procurement process choking on red tape stalls badly needed new systems.
· The city’s 80 data networks don’t connect to one another.
· There are no disaster recovery plans, no performance metrics for IS, and no IS budget.
Just 100 miles north of Washington, D.C., the city of Philadelphia has risen from the ashes of its former near
bankruptcy. In 1992, the city was projecting a deficit of $200 million for the year. Businesses and residents were
fleeing. Labor unions were out of control and city services stank.
The city’s information systems mirrored that sorry state and, in fact, looked a lot like those in Washington, D.C., today.
Many city departments had their own IS shops or had no automation at all. Systems were old and poorly supported and
layers of bureaucracy stifled efforts to improve them. There were few performance measures for IS, and the central
Philadelphia Computing Center was about as user-unfriendly as a service organization could be.
But beginning in 1992 reform Mayor Edward Rendell balanced the budget three years running without cutting services
or raising taxes. In just two years, Philadelphia saved $450 million through outsourcing, services consolidation, labor
union concessions, and technology initiatives. The New York Times called the city's success “one of the most stunning
turnarounds in history”.
To make IS more service-oriented, New CIO, John Carrow appointed four portfolio managers - senior, non -technical
people to coordinate among IS users in government and the public. IS also moved away from traditional process-based
and the public. IS also moved away from traditional process based performance measures - such as numbers of
transactions processed - to results-based performance measures such as the percentage of help desk r equests resolved by
telephone and the number of users trained.
Automation spread throughout Philadelphia government and in four years, the number of computer users increased
from 3,000 to 12,000, all connected by a new fiber -optic wide area network. Meanwhile, newly centralized software
purchases saved the city millions of dollars through volume discounts.
Today, Washington, D.C is at the crossroads Philadelphia stood at six years ago- characterized by fiscal distress,
mismanagement, lack of discipline and antiquated systems. But observers say the capital city could follow the road to
health, right behind Philadelphia.
Philadelphia officials say Washington, D.C., could emulate the city's success. Indeed, new Chief Technology Officer
Michael Hernon’s agenda mirror Philadelphia’s recent past. The former CTO of the city of Boston, Hernon says he’ll
5
centralize and standardize IS, overhaul key applications, modernize computer and communications systems, eliminate
redundant facilities, develop performance based metrics for IS, streamline procurement processes, beef up training, and
move aggressively to solve the year 2000 problems of D.C.’s outdated information systems.
Caselet 2
Read the caselet carefully and answer the following questions:
4. Describe two example s of ‘sophisticated computers, telecommunications, robotics and other information age
technologies’ replacing human beings in business organizations and production.
(7 marks) < Answer >
5. Explain how, according to the passage, new technologies are affecting the organizational structures of business.
(7 marks) < Answer >
6. Discuss why one of the main effects of new information technologies may be to shorten the workforce rather than
the working week.
(8 marks) < Answer >
The global economy is undergoing a fundamental transaction in the nature of the work that will reshape civilization in
the 21st century. Sophisticated computers, telecommunications, robotics and other information age technologies are fast
replacing human beings in virtually every sector and industry. British businesses have reported more downsizing and
corporate restructuring in the past two years than any other country. Many jobs are never coming back. Blue-collar
workers, secretaries, receptionists, clerical workers, sales clerks, bank tellers, telephone operators, librarians,
wholesalers and middle managers are just a few of the many occupations destined for virtual extinction.
Earlier industrial technologies replaced the physical power of human labour, substituting machines for bodies and
brawn. The new computer-based technologies promise a replacement of the human mind itself, substituting thinking
machines for human beings across the entire gamut of economic activity. The restructuring is most apparent in
manufacturing. By the year 2020, less than 2 percent of the global workforce will be engaged in factory work. Over
the next quarter-century, we will see the total elimination of the assembly -line workers would find new job
opportunities in the service sector. Now, however, the service sector is also beginning to automate, eliminating vast
numbers of white-collar workers in the process. In banking, insurance and the wholesale and retail sectors, companies
are deconstructing. They are eliminating layer after layer of management and infrastructure, replacing the traditional
corporate pyramid and mass white-collar workforces, with small highly skilled work teams, using state-of-the art
software and telecommunication technologies.
Caselet 3
Read the caselet carefully and answer the following questions:
7. How does Sony use entertainment to promote its products at its website?
(5 marks) < Answer >
8. How is Java helping to make Sony one of the most popular web sites?
(4 marks) < Answer >
Sony Online Venture isn’t playing around with its popular online games and electronic commerce site. The New Yorkbased
unit of Sony Corporation – giant in electronics, movies and videos – is using Java to rev up and differentiate its
World Wide Web site. Sony is taking its successful game sites into a new realm by turning its fairly static single-user
games into interactive, multimedia ventures with fast-paced animation and graphics.
And so far it is working. Sony was the most popular entertainment Web site of 1997 among all sites accessed from
home PCs, according to Media Metrix, a media research firm. Sony’s web site www.sony.com showcases its movies,
videos and electronics products by dazzling users with multimedia entertainment such as its game show sites.
The Web is being viewed more and more as an entertainment platform and consumers demand very different things
from their entertainment than from buying a book online, “People expect something more just because it’s Sony, so
we’ve got to give it to them. We can do that with Java.” Sony is building server-side Java applications that manage the
multimillion-page site. The media company also is intalling Java Web servers that shoot information in dynamic pages
from databases to users.
But Sony’s popular games sites, with 60 percent growth in their audience and a total of 2.9 million users will get the
most attention. Sony is souping up its online Jeopardy site, which has become one of the most popular games on the
Internet. By midyear, the site is slated for an update that will turn it from a fairly static game into a dynamic
multiplayer experience in which players have animated representations and are able to see four or five different camera
angles. That gives them views from around the “studio” depending on who is asking or answering questions.
6
The online version of the most popular game show in the world, Wheel of Fortune, will undergo a similar Java-based
overhaul. “We had to make the site Sony quality,” said Bob Mason, a developer at Art Technology Group, Inc., a Java
development house in Boston that is working on Sony’s site. “We couldn’t do that with HTML (Hypertext Markup
Language) or dynamic HTML. We needed Java to make it dynamic.”
END OF SECTION B
Section C : Applied Theory (20 Marks)
This section consists of questions with serial number 9 - 10.
Answer all questions.
Marks are indicated against each question.
Do not spend more than 25 -30 minutes on section C.
9. A decision table helps a computer program decide which action to take in a particular condition. What is a
decision table? Explain its advantages and disadvantages.
(10 marks) < Answer >
10. Modern connectivity would not have been possible without the various telecommunication media that have
evolved. Describe the various telecommunication medias along with their functions.
(10 marks) < Answer >
END OF SECTION C
END OF QUESTION PAPER
7
Suggested Answers
Information Technology & Systems (MB231): January 2006
Section A : Basic Concepts
1. Answer : (a)
Reason: Buddy list software runs on the background of the user’s computer screen, letting him know
when his friends or coworkers are online. So, option (a) is the answer.
< TOP >
2. Answer : (e)
Reason: Graphic, video and audio files can be copied using FTP. So, option (e) is the answer.
< TOP >
3. Answer : (a)
Reason: In World Wide Web, the documents are formatted in a script called HTML So, option (a) is
the answer.
< TOP >
4. Answer : (e)
Reason: The range of integer constant in C language is –32768 to 32767.So option (e) is the answer.
< TOP >
5. Answer : (e)
Reason: a = a++ + ++b
b = b++ + ++a
After Ist statement
a = 101, b = 51
After 2nd statement
b = 153, a = 102
So option (e) is the correct answer.
< TOP >
6. Answer : (a)
Reason: Recursive functions can be effectively used to solve problems where the solution is found by
repetitively applying the same solution to subsets of the problem. So option (a) is answer.
< TOP >
7. Answer : (a)
Reason: Structure definition should terminate with semicolon. So option (a) is the answer.
< TOP >
8. Answer : (c)
Reason: getw() is a function is used to read an integer from the file. So option (c) is the answer.
< TOP >
9. Answer : (d)
Reason: Ring network remains operational even if one computer in the network fails. So option (d) is
answer. This network does not rely on the host computer for its operations and there is no
substantial reduction in the cost of cabling.
< TOP >
10. Answer : (c)
Reason: ATM switch breaks voice, video, data into fixed cells of 53bytes and routes it to its next
destination on the network. so option ( c) is answer.
< TOP >
11. Answer : (b)
Reason: Super block contains the information about the entire disk in an UNIX file system. So option
(b) is the answer.
< TOP >
12. Answer : (d)
Reason: In OSI reference model, application layer provides network transparency to the end users. So
option (d) is answer.
< TOP >
13. Answer : (d)
Reason: The REVOKE command in Novell Netware Operating System deletes trustee rights from a
directory. So option (d) is the answer.
< TOP >
14. Answer : (b)
Reason: Tee mechanism used to break the output into two parts in an UNIX operating system. So
option (b) is the answer.
< TOP >
15. Answer : (e) < TOP >
8
Reason: Digital transmission technology provides the higher transmission speeds. It transmits
multiple types of communications simultaneously on the same circuit. It transfers larger
amounts of information. So option (e) is answer.
16. Answer : (e)
Reason: Twisted pair cables are twisted together to reduce the noise. The insulation in the coaxial
cable minimizes the interference from other signals. The disadvantage of fiber optic cable is
slicing of the cable to make the connections. So option (e) is answer.
< TOP >
17. Answer : (a)
Reason: Task and project management helps in generating Gantt charts. So option (a) is answer.
< TOP >
18. Answer : (a)
Reason: Transmisson Control Protocol in TCP/IP Reference Model is a reliable connection oriented
protocol that allows a byte stream originating on one system to be delivered without error to
any other system in the network. So option (a) is the answer.
< TOP >
19. Answer : (a)
Reason: In C program array index starts with 0. So option (a) is the answer.
< TOP >
20. Answer : (b)
Reason: Three categories of functions present in C language are functions with no arguments and no
return values, functions with arguments and no return values and functions with arguments
and return values. So option (b) is answer.
< TOP >
21. Answer : (d)
Reason: Arguments used in the calling function are called formal arguments. So option (d) is answer.
< TOP >
22. Answer : (d)
Reason : Spreadsheet charts are diagrammatic representations of the data presented in a spreadsheet.
(a) Line charts are used to represent time series.
(b) Bar charts comprise of vertical bars that show comp arison of items.
(c) Column charts provide a ready comparison between separate items.
(d) Pie charts are used to compare parts of whole.
(e) Row charts are not defined.
Hence option (d) is the correct answer.
< TOP >
23. Answer : (b)
Reason : (a) Value analysis is not relevant to the answer.
(b) Sensitivity analysis is used to observe how repeated changes in a single variable affect
other variables.
(c) In Goal-seeking analysis repeated changes are made to selected variables until a chosen
variable reaches a target value.
(d) Optimization analysis is used for finding an optimum value for selected variables, given
certain constraints.
(e) Time-series analysis is not related to analytical modeling.
So option (b) is the answer.
< TOP >
24. Answer : (d)
Reason : Option (d) is the correct answer.
(a) Organizational feasibility focuses on how well a proposed information system supports
the objective of an organization and its strategic plan for information systems.
(b) Economic feasibility is concerned with whether expected savings, increased revenue,
increased profits and other types of benefits will exceed the costs of developing and
operating a proposed system.
(c) Technical feasibility can be considered satisfactory if reliable hardware and software
capable of meeting the needs of proposed system can be acquired or developed by the
business, in the required time.
(d) Operational feasibility determines the willingness and ability of the management ,
employees, customers, suppliers, and others to operate, use and support a proposed
information system.
< TOP >
9
(e) Systems feasibility is not defined.
25. Answer : (c)
Reason : The SALVAGE command in Novell Netware Operating System recover the deleted files that
have not been purged. So option (c) is the answer.
< TOP >
26. Answer : (d)
Reason : The process of eliminating redundant data by breaking each table into smaller tables is
known as normalizing.
So option (d) is the correct answer.
< TOP >
27. Answer : (c)
Reason : The program control register holds the address of next instruction to be executed. So option
(c) is the answer.
< TOP >
28. Answer : (d)
Reason : A kernel is a memory resident supervisor program, which is an essential portion of operating
system copied into primary memory when the computer is switched on. So option (d) is the
correct answer.
< TOP >
29. Answer: (e)
Reason: The applications of Wide Area Network (WAN) are transaction acquisition, Electronic Data
Interchange (EDI) and LAN-t o-LAN connections. So option (e) is the answer.
< TOP >
30. Answer : (b)
Reason : At the logical level, each record is described by a type definition and the interrelationship
among these record types is defined. So option (b) is the answer.
< TOP >
Section B : Caselets
Caselet 1
1. The general scenario of information technology especially in the federal administration is a picture of apathy,
neglect and confusion. There are several causes that have resulted in such a situation:
a) The various federal networks in Washington DC, being the national capital, would be expected to be a
wired up place. However the 80 data networks present do not connect to one another due to which, the
government mistakenly releases funds in millions of dollars resulting in a loss to the state exchequer.
b) Most of the critical applications that help run the government machinery is used on archaic computer
systems which themselves are housed in very old buildings. That is, there is no security howsoever that if
such systems were to fail, the government would not stop functioning.
c) Due to the operation of low technology computer centers, for official work, millions of dollars of the
taxpayer’s money are wasted as on an average such computer centers work only to 40% capacity.
d) The bureaucracy is by far the biggest hindrance to any development work initiated to redress the ills of the
system. Any new proposal involving substantial capital expenditure would have to go through endless
bureaucratic wrangles, which ultimately defeats the purpose of the development.
e) Ever and above all, what ever IT infrastructure is there, it is not properly measured for its performance. Nor
there are any contingency plans in cases of system failures. Information systems budgets are absent which
very- vividly show that information technology and its benefits is something whose true potential has not
yet been realized in the federal capital.
< TOP >
2. What Philadelphia faced during its IS problem is very similar to what Washington, D.C. faces today. The
problem being characterized by fiscal distress, mismanagement, lack of discipline and the presence of antiquated
systems.
More than anything what Washington needs to learn from the Philadelphia experience is that a measure of
discipline hardship and commitment would definitely redress the sorry state that they are in presently.
Washington can learn how Philadelphia in spite of not reducing service or increasing taxes was able not to
overspend. It should also learn how the Philadelphia civic authority was able to achieve immense cost savings by
means of outsourcing services consolidation of services, concessions to labor unions and different technology
initiative as well as how to implement this back home.
They should also take note of How CIO, John Carrew had appointed four key people to coordinate among IS
users in government and the public and how it evolved itself from a process based performance measurement
system to a result based performance measurement system.
10
Washington policy makers should also learn from how technology can be an impediment especially when it is
not up to date. They would do well to learn how Philadelphia rapidly modernized it IS systems' in different
departments, that saw the number of computer users increase by 400%.
< TOP >
3. I think the agenda of the CTO is very correct in principle and in the right direction. This is because he has
identified the ills plaguing the system as they are presently. His plan to centralize all IS function is good from the
view that presently the 80 or so data networks are isolated and millions of dollars are wasted due to this in terms
of mistaken payments and benefits. Also he has charted out plans of modernize the present computer system with
new and technologically superior information systems that would minimize the risk of IS failure, unlike now.
Redundancy of existing systems wastes millions of dollars, which would be effectively stemmed once the new
plan is in place. Thus the new plan is definitely going to benefit Washington DC in crisis.
< TOP >
Caselet 2
4. Two examples of human beings being replaced in business organizations are the use of robots in automobile
production and the introduction of ‘hole-in-the wall’ cash machines by banks. In the age of mechanization,
unskilled and semi-skilled workers performed repetitive tasks such as welding together the body panels of a car.
In modern automobile factories computer-controlled robots now perform this task. Mean while in the banking
industry, bank cashier are being made redundant as an increasingly large number of customers obtain cash from a
cash machine rather than by passing a cheque across a bank counter. Related developments in electronic banking
for example via teletext and the Internet, may soon make branch banks obsolet e leading to a further reduction of
employment in the banking industry.
< TOP >
5. The passage refers to the ‘delayering’ of business organizations. This means that layer of middle and junior
management, together also with certain categories of production worker, are no longer needed. Some of these
changes are occurring because IT enables information to pass efficiently upwards and downwards through the
vertical structure of a business, without the need to be filtered, processed and reorganized by managers in the
middle of a business hierarchy. As is often noted, the traditional ‘fall’ organizational pyramid employing a mass
of ‘white-collar’ or office workers is giving way to a ‘flatter’ structure based on small highly-skilled professional
work teams, using state-of-the-art software and telecommunication technologies. Related developments (which
are not however mentioned in the passage) include the growth 'teleworking' (working from home via an
IT/telecommunication link), ‘hot-desking’ (whereby employees share facilities in much smaller offices on their
less frequent visits to business premises) and the emergence of the ‘virtual office’ and indeed the ‘virtual
organizations’ (as IT/telecommunications links dispense completely with the need to maintain anything other
than the minimum business premises for the organization).
< TOP >
6. Besides having a great effect upon the organization structure of many businesses, as the passage indicates
information technology is also significantly affecting the organization’s production. New skills are required and
many old skills, which predated the IT revolution, have become redundant. Inevitably, this means that businesses
must layoff workers who are surplus to current needs, or who are personally incapable of adopting new skills.
Information technology can greatly improve labour productivity i.e. output per worker. IT enables firms to adopt
more capital-intensive and less labour intensive methods of production. Of course it is possible that some
markets will expand so fast that businesses in these industries actually increase their overall demand for labour,
despite increasing the role of capital relative to labour in the production process. However this is not a realistic
scenario for many industries. In these less labour will be demanded as a result of the application of IT to
productive processes. Obviously in this situation one possible employment strategy would be for a firm to
employ the same number of workers with each employee working fewer hours per week. Perhaps equally
obviously this strategy is frequently recommended by trade unions. From a business’s point of view however,
this would be unattractive if workers earned the same wage or salary for undertaking significantly less work. As
a result of rising wage and production costs, the businesses that adopted shorter working weeks become
uncompetitive, losing markets to their competitors who had not shortened the working week. This would be most
damaging in industries where IT simultaneously enables production to move to low -wage countries in the
developing world or eastern Europe. Also, it may often simply not be viable to shorten the working week when
the application of IT destroys completely a particular type of job. However, there may be circumstances in which
shortening the working work is economically attractive for employers. These include the replacement of fulltime
workers by part-time employees; the replacement of employees by self employed or ‘freelance’ workers;
and working mothers (or indeed fathers) joining a job-sharing scheme. From an employer's point of view,
schemes such as these can increase the flexibility of the labour force without resulting in an increased overall
wage bill.
< TOP >
11
Caselet 3
7. Sony is the most popular entertainment website among all sites accessed from home. It provides movies, videos
and electronics products by dazzling users with multimedia entertainment. The web is being viewed more and
more as an entertainment platform and consumers demand very different things from their entertainment. This
will also allow Sony to push the products and provide information about these products.
< TOP >
8. Sony is building server-side Java applications that manage the multinational-page site. The company is also
installing Java -web severs that short information in dynamic pages from databases to users. The users can able
to access information very quickly from Java-web server. Jav a is helping Sony to make their website more
interactive and dynamic so that they build relationships with the customers.
< TOP >
Section C: Applied Theory
9. Decision tables are used to outline a set of conditions that a computer program might encounter, and to indicate
what action should be performed for each condition. They are used to define clearly and concisely the statement
of a problem in a tabular form. When the computer has to make a large number of decisions, or if there are a
large number of different branches within a program, decision tables are particularly useful. However, the
following steps are necessary preconditions for constructing a decision table:
1. Properly define the problem that has to be solved by the computer
2. List out all the conditions to be tested in the problem
3. List out the corresponding actions that should be taken with each combination of conditions.
4. Form a decision table using the two lists.
A typical decision table consists of six parts (see Figure). The first part contains the conditions. The second part
of the table, known as the ‘condition stub’, describes the conditions that exist in the program. Thus, the contents
of the condition stub correspond to the conditions contained in the decision symbols of a flow chart. The third
part, known as the ‘action stub’, contains the action statements, which correspond to the respective conditions.
Figure
Table Heading Decision Rules
Condition Stub Condition Entries
Action Stub Action Entries
While condition statements reveal the probable states of the input data, action statements describe the possible
actions by the computer system. Action entries contain the actual conditions and the actions taken by the
computer. The condition entries correspondingly branch out from decision symbols.
< TOP >
10. Telecommunication Media
Telecommunication media includes twisted-pair wires, coaxial cables and fiber optic cables, which link the
devices in a network physically. Terrestrial microwaves, communication satellites, cellular phone systems and
wireless LANs use microwave and other radio waves. In addition, there are infrared systems, which use infrared
rays to transmit and receive data.
The various functions of telecommunication transmission media such as twisted-pair wire, co -axial cable, fiber
optics, microwave and satellites are as follows:
Twisted-pair wire: This consists of copper wire twisted into a pair and it is the most widely used media for
telecommunications today. Such networks can transmit both voice and data.
Coaxial cable: This consists of a sturdy copper or aluminum wire wrapped with spacers to insulate and protect it.
This insulation minimizes the chance of interference from other signals, and distortion of the signals that the
cable carries. A group of coaxial cables may be bundled together in a big cable for ease of installation. These
allow high-speed data transmission and are used as an alternative for twisted pair wire lines in high-service
metropolitan areas, for cable TV systems.
Fiber Optics: These use cables consisting of one or more hair thin filaments of glass fiber wrapped in a
protective jacket. They can, conduct light pulses generated by lasers at transmission rates as high as 30 billion
bits per second. These cables provide substantial size and weight reductions as well as increased speed and
greater carrying capacity. As they do 'not generate, and are not affected by electromagnetic radiation, multiple
fibers can be placed in the same cable. The only 4isadvantage is the difficulty of splicing the cable to make
connections. This, however, is a security advantage and limits line tapping.
Territorial microwave: This involves earthbound microwave systems that transmit high -speed radio signals
between the relay stations spaced approximately at 30 miles. Microwave antennas, placed on top of buildings,
12
towers, hills and mountain peaks, carry out the transmission from one station to another.
Communications Satellites: They also use microwave radio as a telecommunications medium, but they are
placed in stationary geosynchronous orbits. These are powered by solar panels and transmit microwave signals at
a rate of several hundred million bits per second. Communications satellites are mainly used for voice and video
transmission where high speed transmission of large volumes of data is required. Many large corporations and
other users have developed satellite networks, using satellite dish antennas known as VSAT (Very Small
Aperture Terminal) to connect their distant work areas.
Cellular phone system
They use several radio communication technologies. Computers and other communication processors coordinate
and control the transmission of signals for mobile phone users as they move from one place to another. The
integration of cellular and other mobile radio technologies such as packet radio and the emergence of personal
telephone communication satellite systems are expected to accelerate in the near future.
Wireless LANs
A wireless LAN eliminates or greatly reduces the need for wires and cables. Thus, it becomes much easier to set
up, relocate and maintain a LAN. LAN radio may either involve a high frequency radio technology similar to
digital cellular or a low frequency radio technology called spread spect rum. The other wireless LAN technology
is called infrared because it uses beams of infrared rays to establish network links between the various LAN
components.

Quantitative Methods-II (MB152): July 2006

2010-04-24T03:31:00.000-07:00

1
Question Paper

Quantitative Methods-II (MB152): July 2006

· Answer all questions.
· Marks are indicated against each question.
1. If one card is drawn from a pack of well shuffled cards, what is the probability of getting a black
jack?
(a) 1/52 (b) 2/52 (c) 2/26 (d) 3/52 (e)
4/56.
(2 marks)
< Answer >
2. Which of the following is true provided P(A or B) = P(B)?
(a) A and B must be mutually exclusive
(b) A and B must be independent
(c) P(A) + P(B) is the joint probability of A and B
(d) P(A) = P(B)
(e) Occurrence of A implies the occurrence of B.
(1 mark)
< Answer >
3. The probability that a person will die in a street accident is 0.0025 while the same for an air
crash is 0.018. What will be the probability of the death of a person either in a street accident or
in an air crash?
(a) 0.0180 (b) 0.0045 (c) 0.03046
(d) 0.0205 (e) 0.0050.
(1 mark)
< Answer >
4. Let there is a 35% probability that the weight of a person will be 55 Kg, a 45% probability that
the weight of the person will be 45 Kg and there is a 20% probability that the weight of the
person will be 50 Kg, then the mean weight of the person is
(a) 30.5 Kg (b) 52.6 Kg (c) 49.5 Kg
(d) 36.5 Kg (e) 40.2 Kg.
(1 mark)
< Answer >
5. The probability of getting two heads from three tosses of a fair coin is
(a)
1
8 (b)
1
4 (c)
3
8 (d)
1
2 (e)
3
5 .
(1 mark)
< Answer >
6. P(A/B) = 0.60, P(B/A) = 0.50 and P(A and B) = 0.25, then value of P(A or B) is
(a) 0.33 (b) 0.42 (c) 0.56 (d) 0.67 (e)
0.73.
(2 marks)
< Answer >
2
7. Which of the following statements is true?
(a) In probability theory, the result of an experiment is known as activity
(b) The probability of two or more statistically independent events occurring together is equal
to the sum of their marginal probabilities
(c) Bayes’ theorem is normally used to develop probabilities according to the classical
approach
(d) The classical probability approach enables us to determine revised probabilities or posterior
probabilities
(e) The set of all possible outcomes of an experiment is called the sample space of the
experiment.
(1 mark)
< Answer >
8. Let A and B are two events (not mutually exclusive), connected with a random experiment. If
P(A) = 1/4, P(B) = 2/5 and P(A or B) = 1/2. What is the probability of events A and B taking
place together?
(a) 3/20 (b) 3/11 (c) 1/10 (d) 1/4 (e)
1/2.
(1 mark)
< Answer >
9. A man draws 3 balls at random without replacement from a bag containing 6 red and 5 white
balls. What is the chance of getting all the balls red?
(a) 4/33 (b) 3/11 (c) 1/6 (d) 1/4 (e)
1/2.
(1 mark)
< Answer >
10. If A and B are two mutually exclusive events and P(A) = 1/3, P(B) = 2/3, then the probability of
events A and B happening together is
(a) 0 (b) 1/3 (c) 2/3 (d) 1/2 (e) 1.
(1 mark)
< Answer >
11. Mr. Resham Jain constructed a portfolio with 70% stocks and 30% bonds. The rate of return on
stocks was 25% and on bonds was 20%. The standard deviation or risk of investing in stocks
was 20 and that in bonds was 5. The correlation between the returns on stocks and bonds is 0.2.
Find the covariance between returns of the two assets?
(a) 15 (b) 13 (c) 10 (d) 20 (e)
12.
(2 marks)
< Answer >
12. The speed of a race car while crossing the target is approximately normally distributed with
mean of 130 km per hour and a standard deviation of 15 km per hour. What will be the percent
of speed of car that is below 85 km per hour?
(a) 0.47% (b) 0.34% (c) 0.59% (d) 0.13% (e)
0.25%.
(2 marks)
< Answer >
13. The binomial distribution may be approximated to a Poisson distribution, if the probability of
success (p) is ________ and the number of trials (n) is _______.
(a) Large, small (b) Small, large (c) 1, finite
(d) Finite, infinite (e) 1, infinite.
(1 mark)
< Answer >
3
14. The persons X and Y together tosses a coin, then the probability of X’s success is 1/4. The
standard deviation of the number of success in a binomial distribution is given by 2.81 .
Find the probability of obtaining exactly 6 successes?
(a) 0.90 (b) 0.85 (c) 0.090 (d) 0.143 (e)
0.45.
(2 marks)
< Answer >
15. Six coins are tossed 128 times. Using the Poisson distribution, find the approximate probability
of getting six heads 4 times?
(a) 0.650 (b) 0.090 (c) 0.100 (d) 0.010 (e)
0.030.
(1 mark)
< Answer >
16. In Balaji chem. Ltd., there are 20 persons working in drug dispatch section. Out of them, 12
members were experienced and 8 were freshers. After completion of one year 10 members got
promoted. Find what is the probability that 4 of the promoted ones were freshers?
(a) 0.415 (b) 0.650 (c) 0.091 (d) 0.856 (e)
0.350.
(1 mark)
< Answer >
17. Assuming that the probability of the birth of a male child is 1/2, find the probability that in a
family of 5 children there will be at least one boy and one girl?
(a) 11/16 (b) 13/16 (c) 15/16 (d) 29/32 (e)
31/32.
(2 marks)
< Answer >
18. With usual notations, find p for a binomial variate X, if n = 5 and 10 P(X = 4) = P(X = 2).
(a) 0.3090 (b) 0.4780 (c) 0.2345 (d) 0.6784 (e) 1.
(2 marks)
< Answer >
19. In a Journal of 420 pages, there occurred 52 printing errors. Assuming Poisson law for the
number of errors per page, find the probability that a random sample of 21 pages will contain no
error.
(a) 0.740 (b) 0.250 (c) 0.074 (d) 0.025 (e)
0.650.
(2 marks)
< Answer >
20. If the mean of the hypergeometric distribution nM/N is said to be small enough, then the
hypergeometric distribution may be replaced by
(a) t-distribution (b) Poisson distribution
(c) Binomial distribution (d) Normal distribution
(e) Lognormal distribution.
(1 mark)
< Answer >
21. An estimator which has a lower standard error than another is said to be
(a) A more efficient estimator (b) A more consistent estimator
(c) A more sufficient estimator (d) A more unbiased estimator
(e) An accurate estimator.
(1 mark)
< Answer >
4
22. For a sample randomly collected from a population, the following details are available:
Sx = 120 Sx2 = 1650
Number of observations = 12
What is the estimated standard error of mean?
(a) 1 (b) 0.672 (c) 1.864 (d) 1.052 (e)
1.650.
(2 marks)
< Answer >
23. Other things remaining same, as the sample size increases, the interval estimate for the
population mean at a given confidence level will
(a) Increase in width
(b) Remain the same
(c) Increase initially and then decrease in width
(d) Decrease in width
(e) Double in width for increase in sample size by one observation.
(1 mark)
< Answer >
24. A researcher is studying the number of trees that contain a certain type of locust in the Smoky
Mountains each year. He has found that in a year an average of 25% of the trees contain the
locust with a standard deviation of 4%. If 100 trees were randomly sampled, which of the
following statements about the sampling distribution mean is incorrect?
(a) The standard error of the distribution of sample mean is 4%
(b) The mean of the distribution of sample mean is 25%
(c) The standard error of the distribution of sample mean is 0.40%
(d) The shape of the distribution of sample mean is approximately normal
(e) The variance of the distribution of sample mean is 16%2.
(1 mark)
< Answer >
25. A local credit card agency reported to the government that the unpaid balance for their
customers is normally distributed with an average of Rs.5,500 with a standard deviation of
Rs.500. If an auditor randomly sampled 10 of the credit card company's customers, find the
probability that the mean of the sample would be less than Rs.5,700.
(a) 0.50 (b) 0.3971 (c) 0.1029
(d) 0.6029 (e) 0.8962.
(2 marks)
< Answer >
26. If the sampling distribution of a sample statistic has a mean equal to the population parameter
the statistic is intended to estimate, the statistic is said to be
(a) An unbiased estimator of the parameter
(b) Biased estimator of the parameter
(c) A point estimator of the parameter
(d) Having a low standard error
(e) Having a high standard error.
(1 mark)
< Answer >
27. A sample has been taken from a population and the sample mean has been found to be 100. The
upper limit of a 90 percent confidence interval for the population mean is 112. Which of the
following can be known on the basis of the given information?
(a) Population mean
(b) Population variance
(c) Sample variance
(d) Sample size
(e) Lower limit of the confidence interval.
(1 mark)
< Answer >
5
28. The following details are available with regard to a test of hypothesis for the population mean
Sample size = 24
Population size = 280
0
2
H : 42
x 58
1600
m =
=
s =
What is the value of the test statistic?
(a) 1.075 (b) 2.520 (c) 2.046 (d) 4.560 (e)
3.500.
(2 marks)
< Answer >
29. In which type of sampling, the sample is generated by picking up one element after a fixed
interval depending on the sampling ratio. Identify the type of sampling?
(a) Stratified sampling
(b) Cluster sampling
(c) Systematic sampling
(d) Sequential sampling
(e) Simple random sampling.
(1 mark)
< Answer >
30. Which of the following can be directly used as the test statistic in hypothesis tests on the basis
of non-standardized scale?
I. The sample mean, when the test involves the population mean.
II. The difference between two sample means, when the test involves the difference between
two population means.
III. The sample proportion, when the test is about the population proportion.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
(1 mark)
< Answer >
31. Which of the following is not true?
(a) The standard normal distribution is a normal distribution
(b) The standard normal distribution has a variance of 1
(c) The normal distribution is a continuous probability distribution
(d) The t-distribution remains the same for all sample sizes
(e) The t-distribution approximates the normal distribution as the sample size increases.
(1 mark)
< Answer >
32. Which of the following statements is false?
(a) An interval estimate is a range of values within which the actual value of the population
parameter will always fall
(b) An interval estimate indicates the probability that the true population parameter will fall
within the given range of values
(c) A point estimate may be either correct or incorrect
(d) A point estimate is a single number that is used to estimate an unknown population
parameter
(e) An interval estimate is a range of values within which the estimated value of the population
mean will always fall.
(1 mark)
< Answer >
6
33. A normally distributed population has a known standard deviation of 1.0. What is the width of a
95% confidence interval for the population mean?
(a) 1.00 (b) 1.96 (c)
0.98
(d) 3.92 (e) Cannot be determined from the given information.
(2 marks)
< Answer >
34. Tyres manufactured by a company are designed to provide a mean life of 28,000 miles. Tests
with 30 tyres show a sample mean of 27,500 miles and a sample standard deviation of 1000
miles. It is to be tested whether the mean life is less than 28,000 miles. Which of the following
can be inferred at a 0.05 level of significance? It is assumed that the life of the tyres
manufactured by the company follow a normal distribution.
(a) The average life of the tyres is 28000 miles
(b) The average life of the tyres is less than 28000 miles
(c) The average life of the tyres is more than 28000 miles
(d) The sample mean is incorrect
(e) No conclusion can be drawn on the basis of the given information.
(3 marks)
< Answer >
35. A magazine claims that 25% of its readers are college students. Of a random sample of 200
readers, 42 are college students. It is to be tested at a 0.10 level of significance whether the
proportion of college students among all the readers of the magazine is not equal to 0.25. What
is the conclusion?
(a) The proportion of college students among the readers of the magazine is 0.25
(b) The sample data are incorrect
(c) The proportion of college students among the readers of the magazine is less than 0.25
(d) The proportion of college students among the readers of the magazine is more than 0.25
(e) No conclusion can be drawn on the basis of the given information.
(3 marks)
< Answer >
36. The following details are available for a hypothesis test on population proportion:
H0: p = 0.40
H1: p ¹ 0.40
Sample size = 360
Sample proportion = 0.43
Significance level = 0.10
It is later known that the true population proportion is 0.47.
Which of the following can be said with regard to the test?
(a) There is insufficient information for doing the test
(b) The chi-square distribution should be used
(c) The test does not lead to either type I or type II error
(d) The test leads to a type I error
(e) The test leads to a type II error.
(2 marks)
< Answer >
37. Which of the following is/are not required for the two-sample test of means for independent
samples when both samples contain less than 30 observations?
I. Both the populations are normally distributed.
II. Both the populations have equal standard deviations.
III. Both the samples have equal means.
IV. Both the samples are of equal sizes.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Only (IV) above
(e) Both (III) and (IV) above.
(1 mark)
< Answer >
7
38. The following details are available with regard to a hypothesis test on means of two populations:
H0: m1 =m2 +1
H1: 1 2 m ¹m +1
n1 = 64
2
1 s = 256 1 åx= 320
n2 = 36
22
s =144 2 x å =144
The samples collected from the two populations are independent.
What is the value of the test statistic?
(a) 2.828 (b) 1 (c) 0.354 (d) 0.125 (e) 0.
(2 marks)
< Answer >
39. The sample mean is an unbiased point estimator of
(a) The population variance (b) The population mean
(c) The population proportion (d) The standard error of
mean
(e) The standard error of proportion.
(1 mark)
< Answer >
40. The following details are available with regard to a hypothesis test on means of two populations:
H0: 1 2 m -m = 0
H1: 1 2 m -m ¹ 0
n1 = 84 1 x å = 504
n2 = 48 2 x 192 å = 22
s = 144
The value of the test statistic is 0.353553.
The samples collected from the two populations are independent. What is the standard deviation
of the first population? Round off your answer to the nearest integer.
(a) 19 (b) 27 (c) 49 (d) 160 (e)
256.
(2 marks)
< Answer >
41. When the chi-square test is used as a test of independence, the number of degrees of freedom is
determined by
(a) The sample size
(b) The ratio of sample size and the population
(c) Number of rows in the contingency table, only
(d) Number of columns in the contingency table, only
(e) Both the number of rows and the number of columns in the contingency table.
(1 mark)
< Answer >
42.The return on a portfolio is equal to the ______ of the returns on individual assets in the
portfolio.
(a) Median
(b) Mode
(c) Weighted average
(d) Mean
(e) Standard deviation.
(1 mark)
< Answer >
8
43. Let dx and dy represent the deviations from assumed means of the data of variables X and Y
respectively. The data of X and Y are paired. The following results are available:
Sdxdy = 3,044
Number of pairs of observations = 10
Sdx = -170 Sdy = -20
2x
Sd = 8,288
2
Sdy = 2,264
Find out the coefficient of correlation between X and Y variables.
(a) 0.6701 (b) – 0.5602 (c) 0.4503 (d) 0.7804 (e) –
0.4025.
(3 marks)
< Answer >
44. Which of the following is true when the slope of a regression line is negative?
(a) The correlation coefficient between the dependent and independent variables is 1
(b) The correlation coefficient between the dependent and independent variables, lies between
0 and 1
(c) There is a negative correlation between the dependent and independent variables
(d) The regression line is parallel to the horizontal axis
(e) The regression line passes through the intersection of the horizontal and vertical axes.
(1 mark)
< Answer >
45. Which of the following is true with regard to a given coefficient of correlation and its
corresponding coefficient of determination?
(a) The coefficient of determination is always greater than or equal to zero, and less than or
equal to 1
(b) The coefficient of determination is always less than zero
(c) The coefficient of determination is always equal to 1
(d) The coefficient of determination always has the same sign as the coefficient of correlation
(e) The magnitude of coefficient of determination is always higher than the magnitude of
coefficient of correlation.
(1 mark)
< Answer >
46. The following regression relationship between two variables, X and Y, has been obtained:
Yˆ
= 1,236 – 104X
Where X is the independent variable and Y is the dependent variable.
The following details are also available:
SY2 = 19,00,400
Y = 612
SXY = 18,100
Number of observations = 5
What is the approximate 95 percent prediction interval for the value of Y if X = 8?
(a) 1,236 ± 404 (b) 404 ± 46.49 (c) 1,236 ± 104
(d) 404 ± 104 (e) 1,236 ± 46.49.
(2 marks)
< Answer >
9
47. The Excise Department of Patna has gathered information on the number of drinkers and the
income on liquor in the city over a weekend. According to them, there is a close relationship
between the number of drinkers and the income on liquor during weekends.
Number of drinkers(in ’000) 18 28 8 10 20 23 32
Income on liquor(in lakhs) 5 8 3 4 6 7 10
Assuming that there is a linear relation between these two variables, what would be your
prediction about the income on liquor on a weekend during which the number of drinkers rises
to 40 that took place in Patna?
(a) 6.13 (b) 7.68 (c) 8.50 (d) 10.45 (e)
11.56.
(2 marks)
< Answer >
48. If r is the coefficient of correlation between two variables X and Y, then the variation in the
observed Y values which is not explained by the regression line is equal to
(a) r2 (b) 1- r2 (c) r (d) 1 – r (e) 1
+ r2.
(1 mark)
< Answer >
49. The method of least squares indicates the smallest possible
(a) Sum of the squared values of the vertical distances from the regression line to the X-axis at
the corresponding ‘x’ values of the plotted points
(b) Sum of the squared values of the horizontal distances from the regression line to the Y-axis
at the corresponding ‘y’ values of the plotted points
(c) Sum of the squared values of the vertical distance from each plotted point to the regression
line
(d) Sum of the squared values of the horizontal distance from each plotted point to the
regression line
(e) Sum of the values of the horizontal distance from each plotted point to the regression line.
(1 mark)
< Answer >
50. The standard error of estimate can be decreased for a regression equation by
(a) Increasing the number of observations
(b) Using ‘t’ distribution
(c) Using the two tails of a ‘t’ distribution
(d) Choosing an observation point close to the estimate required
(e) Increasing the number of independent variables.
(1 mark)
< Answer >
51. In regression analysis, the graphical plot of the numerical values of the dependent and
independent variables is called a
(a) Histogram (b) Frequency polygon
(c) Scatter diagram (d) x chart (e)
Ogive.
(1 mark)
< Answer >
52. The regression line of ‘return on security’ on ‘return on market index’ is given by
Y = 5.6+1.67X. What is the regression coefficient of the line?
(a) 7.27 (b) 5.6 (c) 1.67 (d) 3.93 (e)
3.34.
(1 mark)
< Answer >
10
53. The maximax criterion is used to make decision under
(a) Conditions of certainty irrespective of the nature of the decision maker
(b) Conditions of risk irrespective of the nature of the decision maker
(c) Conditions of uncertainty, the decision maker being perfectly optimistic
(d) Conditions of uncertainty, the decision maker being perfectly pessimistic
(e) Conditions of uncertainty, the decision maker being neither perfectly optimistic nor
perfectly pessimistic.
(1 mark)
< Answer >
54. The regret criterion for decision making suggests that
(a) The largest regret should be maximized
(b) The smallest regret should be maximized
(c) The largest regret should be minimized
(d) The smallest regret should be minimized
(e) The average regret should be minimized.
(1 mark)
< Answer >
55. Which of the following criteria for decision-making is based upon weighted profits?
(a) Maximax criterion (b) Maximin criterion
(c) Hurwicz criterion (d) Regret criterion
(e) Minmax criterion.
(1 mark)
< Answer >
56. While calculating decision node, one should write down the cost of each alterative solution
along the decision line, then
(a) The cost is multiplied by the value of the outcome that is already calculated
(b) The cost is subtracted from the value of the outcome that is already calculated
(c) The cost is added to the value of the outcome that is already calculated
(d) The cost is divided by the value of the outcome that is already calculated
(e) The cost is squared and multiplied by the value of the outcome that is already calculated.
(1 mark)
< Answer >
57. Which of the following is not true about decision tree analysis?
(a) Decision tree is a diagrammatic representation of a decision process
(b) It is an excellent tool for making financial or number based decisions
(c) Alternative decisions and the implications of taking those decisions can be laid and
evaluated
(d) Decision tree cannot help in assessing the risk in making decisions concerning investment
(e) Decision tree analysis can be used with the help of computer.
(1 mark)
< Answer >
58. In a business research report, which of the following presents all the relevant data but makes no
attempt to draw any inferences?
(a) Conclusions
(b) Recommendations
(c) Appendices
(d) Findings
(e) Interpretations.
(1 mark)
< Answer >
11
59. What difficulties are there for the business researcher in ensuring the informed consent of the
participants?
I. It is a time consuming process.
II. It increases the issue of reactivity.
III. It is impossible to present participants with all the information they need.
IV. It has no relevance to a study’s findings.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Only (IV) above
(e) All (I), (II), (III) and (IV) above.
(1 mark)
< Answer >
60. What should the business researcher do if their multi-strategy approach produces inconsistent
results?
(a) Start the whole research project again
(b) Treat one set of results as definitive
(c) Extend the number of research methods used
(d) Re-analyze the data in an attempt to locate more consistent results
(e) To cancel the whole research project.
(1 mark)
< Answer >
61. Which of the following is a way in which qualitative research can facilitate quantitative
research?
I. By using knowledge of context to inform survey design.
II. By allowing for more representative sampling.
III. By negating the need to pilot a questionnaire.
(a) Only (I) above (b) Only (II) above
(c) Only (III) above (d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
(1 mark)
< Answer >
62. What is the benefit of subjecting qualitative data to secondary analysis?
(a) It overcomes ethical concerns about informed consent
(b) It enables the data to be analyzed without the hindrance of a contextual understanding
(c) It is more likely that the findings will be published
(d) It can exploit the large volume of qualitative data that is under-explored
(e) Because it is the better way of analysis.
(1 mark)
< Answer >
63. Among the following the characteristic of the scientific method is:
(a) Conclusions are tentative and subject to change
(b) The methods used can be understood only by experts
(c) Any researcher can replicate the study
(d) Findings frequently contradict personal experience
(e) The results of the research should be accurate.
(1 mark)
< Answer >
64. The group(s) in which the independent variable remains constant is
(a) A treatment group
(b) An experimental group
(c) A control group
(d) Research group
(e) Both (a) and (b) above.
(1 mark)
< Answer >
12
65. A researcher is interested in knowing how accurately something is done and they want to obtain
a more holistic picture of what is happening in a specific setting or situation, then what form of
research is suitable?
(a) Qualitative research (b) Experimental research
(c) Survey research (d) Content analysis research
(e) Quantitative research.
(1 mark)
< Answer >
66. A combination of quantitative and qualitative approaches is known as
(a) Descriptive research (b) Explanatory research
(c) Causal comparative research (d) Mixed methods research (e) Oral
research.
(1 mark)
< Answer >
67. In order for a question to qualify as a research question the researcher must be able to
(a) Make observations and then analyze them to find an answer
(b) Propose several answers to the question that are equally acceptable
(c) Identify value statements in the question that reflect current societal norms
(d) Develop metaphysical answers based on concise statements of belief
(e) Provide the sufficient data to the researcher that supports the research.
(1 mark)
< Answer >
68. Some of the features that the Good research questions must posses are?
(a) Feasible, clear and ethical
(b) Feasible, clear, significant and ethical
(c) Feasible, clear, significant and includes a hypothesis
(d) Clear, significant and ethical
(e) Insignificant and moral.
(1 mark)
< Answer >
69. If a researcher selected six groups at random and then interviewed each member of those six
groups, the researcher uses
(a) Simple random sampling (b) Systematic sampling
(c) Stratified random sampling (d) Two-stage random sampling
(e) Cluster random sampling.
(1 mark)
< Answer >
70. Sample errors or variations among sample statistics are due to
(a) Differences between each sample of the population means
(b) Differences between each sample of the population and among several samples
(c) Differences between one sample of the population and several sample means
(d) Variations among all the sample means
(e) Variations among all the population means.
(1 mark)
< Answer >
71. Which of the following sampling, on proper application can significantly increase the statistical
efficiency of sampling?
(a) Stratified sampling (b) Simple random sampling
(c) Systematic sampling (d) Cluster sampling
(e) Judgment sampling.
(1 mark)
< Answer >
72. The statistical measures like mean, median, mode and standard deviation which are used to
describe the characteristics of a sample, are known as
(a) Parameters (b) Constants
(c) Measurements (d) Statistics (e) Both (a) and (c) above.
(1 mark)
< Answer >
13
73. Which of the following sampling method is most susceptible to subjectivity in selection?
(a) Simple random sampling (b) Stratified sampling
(c) Cluster sampling (d) Judgmental sampling
(e) Systematic sampling.
(1 mark)
< Answer >
74. A person performing a market research will waste resources by taking larger samples, if the
estimator is not
(a) Unbiased (b) Efficient (c) Consistent (d) Sufficient (e)
Inconsistent.
(1 mark)
< Answer >
75. In SPSS, what is the 'Data Viewer'?
(a) A table summarizing the frequencies of data for one variable
(b) A spreadsheet into which data can be entered
(c) A dialog box that allows you to choose a statistical test
(d) A screen in which variables can be defined and labeled
(e) A table where output can be saved.
(1 mark)
< Answer >
76. Which of the following is true with regard to SPSS?
(a) This is just advanced to MS Excel
(b) This is a software language helps to analyze the research results
(c) This is a package which can perform highly complex data analysis using statistical and
mathematical functions
(d) We can input the data into SPSS only from MS Excel
(e) This is a package which cannot be used in business research.
(1 mark)
< Answer >
77. What does the word SPSS stands for
(a) Software plan for system schedule
(b) Statistical package for software solutions
(c) Software package for the social sciences
(d) Statistical package for the social sciences
(e) Systematic project scheduling services.
(1 mark)
< Answer >
14
Suggested Answers
Quantitative Methods-II (MB152): July 2006
1. Answer : (b)
Reason : The probability of getting a black card is 52
26
and the probability of getting a jack
is 52
4
. Therefore, the probability of getting a black jack can be given as 52
26
52
4
´
= 52
2
Alternatively, there are two black jacks in a pack of 52 cards. Therefore the probability of
getting a black jack can be given as 52
2
.
< TOP >
2. Answer : (e)
Reason : From the addition theorem of probability, P(A or B) = P(A) + P(B) – P(AB),
substituting P(A or B) = P(B) in this equation, we get P(A) = P(AB) which means that
occurrence of A implies the occurrence of B.
< TOP >
3. Answer : (d)
Reason : Let S be the event of death of a person in a street accident while A be the event of
death in an air crash. The probability of the death of a person either in a street accident
or an air crash = P(A) + P(B) = 0.0205 (i.e. 0.018+0.0025) as A and B are mutually
exclusive.
< TOP >
4. Answer : (c)
Reason : The expected weight of a person = (0.35) (55) + (0.45) (45) + (0.20) (50) = 49.5 Kg
< TOP >
5. Answer : (c)
Reason : Two heads in three tosses of a fair coin can be obtained in any one of the following
three combinations of outcomes – (Head, Head, Tail) or (Head, Tail, Head) or (Tail,
Head, Head). The probability of getting any one of these combinations
=
÷ø
ö
çè
+æ ´ ´ ÷
ø
ö
çè
+ æ ´ ´ ÷
ø
ö
çè
æ ´ ´
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
= 8
3
.
< TOP >
6. Answer : (d)
Reason : P (A/B) = 0.60 or P(B) = 0.60
P(A and B)
= 0.60
0.25
= 0.4167.
P(B/A) = 0.50 or P(A) = 0.50
P(A and B)
= 0.50
0.25
= 0.50.
P(A or B) = P(A) + P(B) – P(A and B)
= 0.4167 + 0.5000 – 0.2500 = 0.6667 » 0.67.
< TOP >
7. Answer : (e)
Reason : The first four alternatives are clearly fals e. The fifth alternative is true. (Self
explanatory.)
< TOP >
15
8. Answer : (a)
Reason : P (A or B) = P(A) + P(B) – P(A and B)
\ Probability of both event A and event B taking place together
P(A and B) = P(A) + P(B) – P(A or B)
= 2
1
5
2
4
1 + -
= 20
5 +8 -10
= 20
3
.
< TOP >
9. Answer : (a)
Reason : No. of Ways of drawing three red balls at random from 6 red balls are
1x2x3
6 4x5x6
C3 =
= 20
Ways of drawing three balls at random from 11 balls are
1x2x3
11 11x10x9
C3 =
= 165
\ Probability of all three drawn balls being red is 165
20
= 33
4
.
< TOP >
10. Answer : (a)
Reason : Two mutually exclusive events cannot take place together. So the probability of two
mutually exclusive events happening together is 0 (zero).
< TOP >
11. Answer : (d)
Reason : Covariance between returns of the two assets = r12s1s2
where s1 represents the standard deviation of risk of stocks = 20
s2 represents the standard deviation of risk of bonds = 5
r12 represents the correlation between returns = 0.2
r12s1s2 = 0.2*20*5 = 20
< TOP >
12. Answer: (d)
Reason: P (x<85) =
P z 85 130 P(z 3.0) 1 P(z 3.0)
15
1 P(z 3.0)
1 (0.5 0.4987)
1 0.9987
0.0013 i.e.0.13%.
æ < - ö = < - = - > - çè ÷ø
= - <
= - +
= -
=
< TOP >
13. Answer: (b)
Reason: This situation occurs when the Poisson distribution is limiting case of binomial
distribution. Where the probability of success (p) is infinitesimally small and the
number of trials (n) is so large that the product ‘np’ equals l, a finite constant.
< TOP >
16
14. Answer : (c)
Reason : Probability of success p = 1/4.
Then q = 1-p = 3/4.
To find the value of n, put the values of p and q in variance.
i.e. variance = npq
2.81 =
1 3
n
4 4
´ ´ Þn = 14.986 @ 15.
n = 15
6 9
15
6
1 3
p(r 6) 0.090
4 4
= = c æç ö÷ æç ö÷ = è ø è ø .
< TOP >
15. Answer : (b)
Reason : The probability of obtaining six heads in one throw of six coins(a single trial), is
P = (1/2)6, assuming that head and tail are equally probable.
l = np = 128 ´ (1/2)6 = 2.
Hence using Poisson probability law, the required probability of getting six heads 4
times is given by:
e . r e 2.(2)4 P(x 4) 0.090
r! 4!
-l l - = = = =
< TOP >
16. Answer : (e)
Reason : The number of pro moted members who are freshers follows
hypergeometric distribution.
Given details are:
N = no. of persons working in Balaji chemical’ s Ltd.= 20 .
r = no. of fresher members labeled as success = 8
x = desired success = 4
n = no. of promoted members = no. of trials = 10
r (N r ) 8 (20 8 ) 12
x (n x ) 4 (10 4) 6
N 20 20
n 10 10
70
P(x 4) 0.350
c c c c c
c c c
- -
- - ´
= = = = =
< TOP >
17. Answer : (c)
Reason : In a family of 5 children, at least one boy and one girl can occur in the following
mutually exclusive forms:
{(1B, 4G), (2B, 3G), (3B, 2G), (4B, 1G)}. The probability of such combination can be
found as:
=
1 4 2 3 3 2 4 1
5 5 5 5
1 2 3 4
1 1 1 1 1 1 1 1
2 2 2 2 2 2 2 2
C æç ö÷ æç ö÷ + C æç ö÷ æç ö÷ + C æç ö÷ æç ö÷ + C æç ö÷ æç ö÷ è ø è ø è ø èø è ø è ø è ø è ø
=
5 10 10 5 30 15 .
32 32 32 32 32 16
+ + + = =
< TOP >
17
18. Answer : (a)
Reason : For the binomial variable X with parameters n=5 and p, the probability function is:
P(X=r) =
r 5 r
4 1 2 3
2 2 2 2 2 2
2 2 2
5
pq ;r 0,1,2,.....5
r
5 5
wearegiven:10P(X 4) P(X 2) 10 pq p q
4 2
50p 10q 5p q 0 5p (1 p) 0
5p (1 2p p ) 0 4p 2p 1 0 p 0.3090and 0.8090
æ ö -
= ç ÷ =
è ø
= = = Þ ´æ ö = æ ö ç÷ ç ÷
èø è ø
= Þ - = Þ - - =
Þ - - + = Þ + - = Þ = -
Since the probability cannot be negative value, so the probability p = 0.3090.
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19. Answer: (c)
Reason: The average number of typographical errors per page in the book is given by:
52 0.124
420
l= =
errors per page, then the probability is given by:
e . x e 0.124 .(0.124)x P(X x) ;x 0,1,2,......
x! x!
-l l - = = = =
The required probability that a random sample of 21 pages will contain no error is
given by:
[P(X=0)]21 = (e–0.124)21 = e–2.604 =0.074.
< TOP >
20. Answer : (c)
Reason : If the mean of the hypergeometric distribution nM/N is said to be small enough, then
the hypergoemetric distribution may be replaced by the binomial distribution.
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21. Answer : (a)
Reason : An estimator which has lower standard error than another is said to be a more efficient
estimator.
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22. Answer : (c)
Reason : Estimated standard error of mean =
Sample standard deviation
n
Sample standard deviation,
x2 nx2 s
n 1 n 1
= -
- -
å
x 120
x 10
n 12
= = = å
\ s =
( )2 1650 12 10 6.396
11 11
- =
\ Estimated standard error of mean =
6.396
1.846
12
=
< TOP >
23. Answer : (d)
Reason : Other things remaining same, as the sample size increases, the interval estimate for the
population mean at a given confidence level will decrease in width.
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18
24. Answer : (a)
Reason : E (x) = m = 25%
x s = n
s
=
4
100 = 0.40%
The shape of the distribution of sample means is approximately normal. (a) is incorrect
because x s ¹ 4.0%.
< TOP >
25. Answer : (e)
Reason : Because the sample size is small we cannot apply the CLT. However, since the
population is normally distributed the sampling distribution of mean will also be
normally distributed with mean = population mean and standard deviation n
s
=
E (x) = m = 5,500
x s = n
s
=
500
10 = 158.11
\P (x <5700) =
P z 5700 5500
158.11
æ < - ö çè ÷ø = P(z < 1.265)
= 0.5000 +0.3962
= 0.8962.
< TOP >
26. Answer : (a)
Reason : If the sampling distribution of a sample statistic has a mean equal to the population
parameter the statistic is intended to estimate, the statistic is said to be an unbiased
estimator of the parameter.
< TOP >
27. Answer : (e)
Reason : The population mean or population variance or sample variance or sample size cannot
be known. However the lower limit of the confidence interval can be mathematically
derived as = x - (UL - x )
< TOP >
28. Answer : (c)
Reason : This is a case of sampling from finite population, because
n
N =
24
280 = 0.085 > 0.05.
\ x s =
N n
n N 1
s -
- =
1600 280 24
24 280 1
-
- = 7.82.
\Test statistic = x
x- m
s =
58 42
7.82
-
= 2.046.
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29. Answer : (c)
Reason : Systematic sampling proceeds by picking up one element after a fixed interval
depending on the sampling ratio.
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30. Answer : (e)
Reason : In hypothesis tests using the non-standardised scale:
The sample mean can be directly used as the test statistic when the test involves the
population mean. The difference between two sample means can be directly used as
the test statistic when the test involves the difference between two population means.
The sample proportion can be directly used as the test statistic when the test is about
the population proportion.
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19
31. Answer : (d)
Reason : t-distribution depends on the degrees of freedom (df). For each ‘df’ there will be a
particular t-distribution. ‘df’ is dependent on the sample size. We know that as sample
size increases the t-distribution approaches the normal distribution. Alternatives (a),
(b), (c) and (e) are true. Alternative (d) is false.
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32. Answer : (a)
Reason : An interval estimate is a range of values within which the actual value of the
population parameter may (or may not) fall.
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33. Answer : (e)
Reason : Width of confidence interval for mean = UCL – LCL
= (x +zsx ) -(x - zsx )
= 2z x s
x s cannot be known without knowing the sample size, which is not given.
< TOP >
34. Answer : (b)
Reason : H0 : m = 28000
H1 : m < 28000
Standard error of mean =
1000
182.57
30
=
Test statistic value =
=
s
-m
n
x 27500 28000 2.74
182.57
- = -
The sample size can be considered small because samples of size greater than 30 are
considered large. The population standard deviation is not known. It is assumed that
the life of the tires manufactured by the company follow a normal distribution. Hence
the appropriate distribution is the t distribution with 29 degrees of freedom. The test
will be a left tailed test.
\ Critical value = -1.699
The value of the test statistic is less than the critical value. Hence it falls in the
rejection region. \ We reject H0. We can infer that the mean life is less than 28000
miles.
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35. Answer : (a)
Reason : H0 : p0 = 0.25
H1 : p0 ¹ 0.25
Standard error of proportion =
0 0
p
p (1-p ) 0.25(1 0.25) s 0.03062
n 200
= = - =
Sample proportion of success n
p
p =
=
42 0.21
200
=
Test statistic: z =
0
p
p p 0.21 0.25
1.31
0.03062
- -
= = -
s
This is a large sample test of proportion. The standard normal distribution will be used
to approximate the sampling distribution of proportion. The test will be a two-tailed
test. From the standard normal distribution table and using interpolation the critical
values are –1.645 and 1.645.
We can see that the test statistic does not fall below the lower tail critical value. Hence
the test statistic falls in the acceptance region. We accept H0 and conclude that
proportion of college students among the readers is 0.25.
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20
36. Answer : (e)
Reason : H0: p = 0.40
H1: p ¹ 0.40
This is a large sample test of proportion. So we can use the normal approximation to
the binomial.
p s =
( ) 0 0 p 1 p
n
-
=
0.40 0.60
360
´
= 0.02582.
\ z =
0
p
p - p
s =
p 0.40 0.43 0.40
0.02582 0.02582
- = -
= 1.162
At a = 0.10, the critical values are ±1.645.
The test statistic is less than the right tail critical value. So it falls in the acceptance
region.
\ We accept H0. The true proportion is 0.47. So H0 is false. Hence the test leads to a
type II error.
< TOP >
37. Answer : (e)
Reason : The populations must follow the normal distribution and have equal standard
deviations, but the sample sizes do not have to be the same or the sample means need
not be equal.
< TOP >
38. Answer : (e)
Reason :
Value of the test statistic =
( 1 2 ) ( 1 2 )
2 2
1 2
1 2
320 144 1 x x 64 36 1 1 0
256 144 2.828
n n 64 36
æ - ö - - - m -m çè ÷ø - = = =
s + s +
< TOP >
39. Answer : (b)
Reason : The sample mean is an unbiased estimator of the population mean.
< TOP >
40. Answer : (c)
Reason :
( ) ( )
1 2 1 2 1 2
1 2
1 2
1 2 1 2
x x x x x x
x x
2 2 2
2 1 2 2 1
x x
1 2
2 2
1
504 192 0 x x 84 48 2
Value of the test statistic = 0.353553
or 2 5.6568
0.353553
144
or 5.6568
n n 84 48
or 5.6568 144 84 (32 3)
48
- - -
-
-
æ - ö - - - m -m ç ÷ = è ø = =
s s s
s = =
s s s
\s = + = +
s = æ - ö´ = - çè ÷ø
1
84
2436 49.35 49
´
\ s= = @
< TOP >
21
41. Answer : (e)
Reason : (a) This is a wrong answer. The number of degrees of freedom does not depend on
the sample size.
(b) This is the wrong answer. The number of degrees of freedom does not depend on
the ratio of sample size and the population.
(c) This is the wrong answer. The number of degrees of freedom does not depend on
the number of rows in the contingency table only.
(d) This is the wrong answer. The number of degrees of freedom does not depend on
the number of columns in the contingency table only.
(e) This is the right answer. When the chi-square distribution is used as a test of
independence, the number of degrees of freedom is related to both the number of
rows and the number of columns in the contingency table.
< TOP >
42. Answer : (c)
Reason : The return on a portfolio is equal to the weighted average of the returns on individual
assets in the portfolio.
< TOP >
43. Answer : (d)
Reason : Given that,
å dx = -170, y å d = -20,
2
x åd = 8288,
2y
å d = 2264
x y å d d = 3044, n = 10.
x y x y
2 2 2 2
x x y y
2 2
n dd d d
r
n d ( d ) n d ( d )
10 3044 ( 170)( 20)
10 8288 ( 170) 10 2264 ( 20)
0.7804(approx.)
å -å å
=
å -å å - å
´ -- -
=
´ - - ´ - -
=
< TOP >
44. Answer : (c)
Reason : a. When the slope of a regression line is negative the correlation coefficient need
not be 1.
b. When the slope of a regression line is negative, there is a negative correlation
between the variables; hence the correlation coefficient lies between –1 and 0.
c. When the slope of a regression line is negative, there is a negative correlation
between the variables.
d. When the slope of a regression line is zero, the regression line will be parallel to
the horizontal axis.
e. When the y-intercept of a regression line is zero, the regression line passes
through the intersection of horizontal and vertical axes
< TOP >
45. Answer : (a)
Reason : a. The coefficient of determination is the square of coefficient of correlation (r).
Hence it will always be ³ 0 and £ 1.
b. From above we can see that the coefficient of determination cannot be less than
zero.
c. The coefficient of determination is will be equal to 1, only if the coefficient of
correlation is equal to –1 or 1; in other cases it will be > 0 and < 1.
d. The coefficient of determination is always positive; The coefficient of correlation
may be negative.
e. Since -1 £ r £ 1, the coefficient of determination which is the square of
coefficient of correlation (r), will always have magnitude less than or equal to r
< TOP >
22
46. Answer: (b)
Reason:
Standard error of estimate, se = n 2
Y2 a Y b XY
-
S - S - S
SY2 = 19,00,400 (given)
SY = Y ´ n = 612 ´ 5 = 3060
SXY= 18,100 (given)
Yˆ
= 1,236 – 104X
\ a = 1,236 and b = -104
\ se = 5 2
19,00,400 (1236) (3060 ) ( 104) (18,100)
-
- - -
= 14.61.
The sample size is less than 30 and the standard deviation of the population is not
known. Hence the appropriate distribution to be used for the prediction interval is the
t-distribution.
Degrees of freedom = n – 2 = 5 – 2 = 3.
The appropriate t–value is 3.182 (from the t–table).
The limits of the prediction interval are given below:
For, x = 7.50, Yˆ = 1236 – 104 (8.00) = 404
The prediction interval is: Yˆ ± t (se) = 404 ± (3.182´ 14.61) = 404 ± 46.49
passengers
< TOP >
47. Answer : (e)
Reason : Let X be the number of drinkers and Y be the income on liqour during weekends.
åX = 139, åY= 43, n = 7
åXY = 979,
åX2 = 3225,
X = 19.85 , Y = 6.14
The coefficient of regression b = ( )2 2
n XY X Y
n X X
å -å å
å - å =
( ) ( )
( ) ( 2 )
7 979 139 43
7 3225 139
´ - ´
´ -
=
876
3254 =
0.269
The Y intercept a = Y - b X = 6.14 – (0.269 ´ 19.85) = 0.800
Therefore the estimating equation is ˆY= 0.800+ 0.269 X
The estimate of Y for X = 40, is ˆY = 0.800 + 0.269 ´ 40 = 11.56 (Approx)
< TOP >
48. Answer : (b)
Reason : (a) This is the wrong answer. The coefficient of determination r2 measures how good
the fit is and gives the variation explained by the model.
(b) This is the right answer. If r be the coefficient of correlation between two
variables X and Y, then the variation that is not explained by the regression line
is equal to 1 - r2.
(c) This is the wrong answer. ‘r’ is the coefficient of correlation and it signifies the
degree of association between two variables.
(d) This is the wrong answer. ‘1- r ’ does not give the variation that is not explained
by the model.
(e) This is the wrong answer. ‘1+r2’ does not have any meaning associated with it.
< TOP >
23
49. Answer : (c)
Reason : The method of least squares indicates the smallest possible sum of the squared values
of the vertical distance from each plotted point to the regression line. Other options are
incorrect.
< TOP >
50. Answer : (a)
Reason : Standard error of estimate = (n 2)
) Yˆ (Y 2
-
S -
We see that number of observations in the denominator, i.e. as the value of ‘n’
increases, the value of standard error decreases.
< TOP >
51. Answer : (c)
Reason : In regression analysis the graphical plot of the numerical values of the dependent and
independent variables is called a scatter diagram.
< TOP >
52. Answer : (c)
Reason : The return from a given security are regressed with the return from the marketindex.
The regression line or the line of best fit for the observations is called as the
characteristic line. The slope of the line is the regression coefficient of the line.
< TOP >
53. Answer : (c)
Reason : Maximax criterion is used to make decision under conditions of uncertainty, when the
< TOP >
54. Answer : (c)
Reason : In case of regret criterion, the largest regret is minimized.
< TOP >
55. Answer : (c)
Reason : The decision maker lies in between two extremes, i.e. (neither complete optimistic nor
complete pessimistic) chooses the maximum of the weighted profits. This approach is
known as Hurwicz criterion.
< TOP >
56. Answer : (b)
Reason : While calculating decision node, one should write down the cost of each alterative
solution along the decision line, and then the cost is subtracted by the value of the
outcome that is already calculated.
< TOP >
57. Answer : (d)
Reason : Decision tree helps in assessing risk in decision concerning investment. All other
statements are true for decision tree analysis.
Therefore the option (d) is not true.
< TOP >
58. Answer : (d)
Reason : Findings in a business research report include all the relevant data but do not make any
attempt to draw any inferences.
< TOP >
59. Answer : (c)
Reason : It is impossible to present participants with all the information they need. Relatively
minor transgressions in obtaining informed consent are likely to be part of all business
research projects because it is not feasible to give a participant all of the information
about the research. Nevertheless, the researcher must still make every effort to obtain
informed consent if they wish to act ethically.
< TOP >
60. Answer : (b)
Reason : Treat one set of results as definitive.
Unfortunately, if the selection of one set of data over another is entirely arbitrary, this
is not an ideal approach to overcoming the difficulty of contradiction within a research
project that has adopted a multi-strategy approach. Instead, researchers may wish to
either explore reasons for the contrasting findings, or establish a clearly reasoned
argument for the selection of one type of data as definitive.
< TOP >
24
61. Answer : (a)
Reason : By using knowledge of context to in form survey design.
Qualitative research can give the researcher an in-depth understanding of context,
which can then mean that a survey instrument can be designed to more effectively
explore this context. Qualitative research can also provide hypotheses that can then be
tested using quantitative methods.
< TOP >
62. Answer : (d)
Reason : It can exploit the large volume of qualitative data that is under-explored.
Where a number of significant problems remain with the secondary analysis of
qualitative data, there are opportunities for researchers to exploit because of the
volume of data that is cast aside as part of the analysis.
< TOP >
63. Answer : (a)
Reason : The one of the characteristics of the scientific method is that the conclusions are
tentative and subject to change.
< TOP >
64. Answer : (c)
Reason : While conducting experimental hypothesis testing research, if the group is studied
under usual conditions then it is called a control group. A control group is one in
which the independent variable is kept constant.
< TOP >
65. Answer : (a)
Reason : Qualitative research places a greater emphasis on describing in detail all of what goes
on in a particular situation, rather than, on comparing the effects of a particular
treatment or on describing the behaviors of people.
< TOP >
66. Answer : (d )
Reason : A combination of quantitative and qualitative methods defines mixed methods
research.
< TOP >
67. Answer : (a)
Reason : Researcher must be able to make observations and then analyze them to find an
answer
The defining characteristic of a research question is that it can be answered by
collecting data that pertain to the question. Research questions are not metaphysical,
philosophical, or questions of value.
< TOP >
68. Answer : (b)
Reason : Questions should be feasible, should be clear, should be significant, and should be
ethical.
< TOP >
69. Answer : (e)
Reason : Cluster random sampling is when a researcher selects intact groups of individuals to
participate in the study. The difference between cluster and two-stage sampling is that
with two-stage sampling the clusters are selected first, then individuals are selected
from each cluster. In this exercise, all the individuals in each cluster participated in the
study.
< TOP >
70. Answer : (b)
Reason : Samples errors or variations among sample statistics are due to differences between
each sample of the population and among several samples.
< TOP >
71. Answer : (a)
Reason : Stratified sampling on proper application can significantly increase the statistical
efficiency of sampling.
< TOP >
72. Answer : (d)
Reason : The statistical measures like mean, median, mode and standard deviation which are
used to describe the characteristics of a sample are known as statistics.
< TOP >
25
73. Answer : (d)
Reason : Judgmental sampling is not a type of random sampling. In judgmental sampling the
sample is selected according to the judgment of the investigators. Hence, there is a
degree of subjectivity in the selection.
< TOP >
74. Answer : (c)
Reason : A person performing a market research will waste resources by taking larger samples,
if the estimator is not consistent.
< TOP >
75. Answer : (b )
Reason : It is a spreadsheet into which data can be entered.
The Data Viewer is one of the two screens that compromise the Data Editor in SPSS,
the other being the Variable Viewer. The Data Viewer is a spreadsheet grid into which
you can enter your data for analysis.
< TOP >
76. Answer : (c)
Reason : This is a package can perform highly complex data analysis using statistical and
mathematical functions.
< TOP >
77. Answer : (d)
Reason : SPSS stands for Statistical package for the social sciences.