Dec 2009

Suggested Answers/CAP-I/December/2009/Group-I
Fundamentals of Accounting
Attempt all questions. Working notes should form part of the answer.
1. From the following Trial Balance of Atmaram as at 31st March, 2009, you are required to prepare a
Trading and Profit and Loss Account for the year ended 31st March, 2009 and a Balance Sheet as at that
date: 20
Trial Balance for the year ended 31st March, 2009
Dr Cr
Particulars
Rs. Rs.
Atmaram's Capital Account 1,81,000
Atmaram's Drawings Account 36,000
Plant and Machinery (balance as at 01.04.2008) 1,20,000
Plant and Machinery (purchased on 01.10.2008) 25,000
Stock on 01.04.2008 95,000
Purchases 7,82,000
Return Inwards 12,000
Sundry Debtors 20,600
Furniture and Fixtures 15,000
Freight and Duty 2,000
Carriage Outwards 500
Rent, Rates and Taxes 24,600
Printing and Stationery 3,800
Trade Expenses 5,400
Sundry Creditors 40,000
Sales 9,80,000
Return Outwards 3,000
Postage and Telegrams 800
Provision for Doubtful Debts 400
Discounts 1,800
Rent of premises sub-let for a year up to 30.09.2009 7,200
Insurance Charges 2,700
Salaries and Wages 31,300
Cash Balance 36,700
Total 12,13,400 12,13,400
Other relevant informations are as follows:
a) Stock on 31.03.2009, was valued at Rs.94,600

b) Write off Rs.600 as bad debts.
c) The provision for doubtful debts is to be maintained at 5% on sundry debtors.
d) Create a provision for discounts on debtors and reserve for discounts on creditors at 2%.
1
e) Provide for depreciation on furniture and fixtures at 5% per annum, and on plant and machinery at
20% per annum.
f) Insurance unexpired was Rs.100.
g) A fire occurred on 25.03.2009 in the godown and stock of the value of Rs.5,000 was destroyed. It
was fully insured and the Insurance Company admitted the claim in full.
Answer:
Mr. Atmaram
Trading and Profit and Loss Account for the year ended 31st March, 2009
Rs. Rs.
To Opening Stock 95,000 By Sales 9,80,000
To Purchases 7,82,000 Less: Returns 12,000 9,68,000
Less: Return 3,000 7,79,000 By Insurance Co. 5,000
To Freight and Duty 2,000 By Closing Stock 94,600
To Gross Profit c/d 1,91,600
10,67,600 10,67,600
To Salaries & Wages 31,300 By Gross Profit b/d 1,91,600
To Rent, Rates & Taxes 24,600 By Discount 1,800
By Reserve for
Discount on
To Printing & Stationeries 3,800 Creditors 800
To Trade Expenses 5,400 By Rent Received 7,200
To Postage and telegrams 800 Less: Advance 3,600 3,600
To Insurance Charges 2,700
Less: Unexpired 100 2,600
To Carriage Outwards 500
To Depreciation:
Plant & Machinery 26,500
Furniture & Fixtures 750 27,250
To Provision for D. Debts:
Required 1,000
Add: Bad Debts 600
1,600
Less: Existing Provision 400 1,200
To Provision for Discount
on Debtors 380
To Net Profit transferred to
Capital Account 99,970
1,97,800 1,97,800
2
Mr Atmaram
Balance Sheet as on 31st March, 2009
Liabilities Rs. Assets Rs.
Sundry Creditors 40,000 Current Assets:
Less: Reserve for Discount 800 39,200 Cash Balances 36,700
Rent Received in Advance 3,600 Sundry Debtors 20,600
Capital: Less: Bad Debt 600
Balance on 01.04.2008 1,81,000 20,000
Less: Provision for
Add: Net Profit for the year 99,970 Doubtful Debts 1,000
2,80,970 19,000
Less: Provision for
Less: Drawings 36,000 2,44,970 Discounts 380 18,620
Stock 94,600
Insurance Company 5,000
Unexpired Insurance 100
Fixed Assets:
Plant and Machinery:
Balance on 01.04.2008 1,20,000
Addition during the yr. 25,000
1,45,000
Less: Depreciation 26,500 1,18,500
Furniture & Fixture 15,000
Less: Depreciation 750 14,250
2,87,770 2,87,770
Working notes:
(i) Depreciation on Plant and Machinery:
Rs.
Depreciation on existing Plant and Machinery:
(Rs.1,20,000 × 20/100) 24,000
Depreciation on newly acquired Plant and Machinery:
(Rs.25,000 × 20/100 × 6/12) 2,500
Total 26,500
2.
a) On 01.07.2005 a company purchased a machine for Rs.3,90,000 and spent Rs.10,000 on its
installation. It decided to provide depreciation @ 15% per annum, using written down value method.
On 30.11.2008 the machine was dismantled at a cost of Rs.5,000 and then sold for Rs.1,00,000. On
01.12.2008 the company acquired and put into operation a new machine at a total cost of
Rs.7,60,000. Depreciation was provided on the new machine on the same basis as had been used in
the case of the earlier machine. The company closes its books of account every year on 31st March.
Prepare Machinery Account and Depreciation Account for four accounting years ended on
31.03.2009. 10
b) Ram and Rahim starts business with capital of Rs.5,00,000 and Rs.3,00,000 on 01.04.2008. Rahim is
entitled to a salary of Rs.4,000 per month. Interest is allowed on capital and is charged on drawings
at 6% per annum. Profits are to be distributed equally after the above noted adjustments. During the
3
year Ram withdrew Rs.80,000 and Rahim withdrew Rs.1,00,000. The profit for the year before
allowing for the terms of the Partnership Deed came to Rs.3,00,000. Assuming the capitals to be
fixed, prepare the Profit and Loss Appropriation Account and the Capital and the Current Accounts
relating to the partners. 10
Answer:
a)
Machinery Account
Date Particulars Rs. Date Particulars Rs.
01.07.'05 To Bank – Purchase 3,90,000 31.03.'06 By Depreciation 45,000
- 9 months
To Bank - Installation 10,000 31.03.'06 By Balance c/d 3,55,000
4,00,000 4,00,000
01.04.'06 To Balance b/d 3,55,000 31.03.'07 By Depreciation 53,250
31.03.'07 By Balance c/d 3,01,750
3,55,000 3,55,000
01.04.'07 To Balance b/d 3,01,750 31.03.'08 By Depreciation 45,262.50
31.03.'08 By Balance c/d 2,56,487.50
3,01,750 3,01,750
01.04.'08 To Balance b/d 2,56,487.50 30.11.'08 By Depreciation 25,648.75
– 8 months
30.11.'08 To Bank 5,000 30.11.'08 By Bank - Sale 1,00,000
– Dismantling charge
01.12.'08 To Bank – Purchase 7,60,000 30.11.'08 By P/L A/c 1,35,838.75
– Loss on disposal
31.03.'09 By Depreciation 38,000
– 4 months
31.03.'09 By Balance c/d 7,22,000
10,21,487.50 10,21,487.50
01.04.'09 To Balance b/d 7,22,000
Depreciation Account
31.03.'06 To Machinery A/c 45,000 31.03.'06 By P/L A/c 45,000
31.03.'08 To Machinery A/c 45,262.50 31.03.'08 By P/L A/c 45,262.50
30.11.'08 To Machinery A/c 25,648.75 30.11.'08 By P/L A/c 25,648.75
63,648.75 63,648.75
4
Working note:
Calculation of loss on disposal of old machine; Rs. Rs.
Written down value as on 01.04.'08 2,56,487.50
Depreciation for 8 months 25,648.75
Written down value as on 30.11.'08 2,30,838.75
Add: Dismantling charges 5,000 2,35,838.75
Sales Proceeds of machine 1,00,000
Loss on disposal of machine 1,35,838.75
b)
Profit and Loss Appropriation Account
For the year ended 31st March 2009
Particulars Rs. Particulars Rs.
To Rahim's Salary Account 48,000 By Net Profit b/d 3,00,000
To Interest on Capital Account: By Interest on Drawings
Account
On Ram’s Capital 30,000 On Ram's Drawing 2,400
On Rahim’s Capital 18,000 On Rahim's Drawing 3,000
To Net Profit transferred to:
Ram's Current Account 1,04,700
Rahim's Current Account 1,04,700
3,05,400 3,05,400
Partners Capital Account

Ram Rahim Ram Rahim
Date Particulars Date Particulars
Rs. Rs. Rs. Rs.
31.03.09 To Bal. c/d 5,00,000 3,00,000 01.04.08 By Cash 5,00,000 3,00,000
01.04.09 By Bal. b/d 5,00,000 3,00,000
Ram's Current Account

To Cash Account- 31.03.0 By Interest on Capital
31.03.09 30,000
Drawings 80,000 9 Account
To Interest on Drawing
31.03.09
Account 2,400
31.03.0 By Profit & Loss 1,04,700
31.03.09
To Bal c/d 52,300 9 Appropriation Account.
1,34,700 1,34,700
Rahim's Current Account

By Interest on Capital
31.03.09 To Cash - Drawings 1,00,000 31.03.09 18,000
Account
5
To Interest on Drawing 31.03.09 By Rahim’s Salary 48,000

31.03.09
Account 3,000 Account
By Profit and Loss
31.03.09 To Bal c/d 67,700 31.03.09 1,04,700
Appropriation Account
1,70,700 1,70,700
Note: Since the date on which, partners actually withdrew money on account of drawing is not given in the
question, it is assumed that the money was drawn evenly throughout the year. For the very same reason
interest on partner's drawing is charged for six month.
3.
a) Dilip and Raj are doing business separately as engineering contractors. They undertake jointly to
build and install new machinery for a company for a contract price of Rs.1,34,000. Out of total
contract price Rs.84,000 payable in installments in cash and the balance as fully paid shares in the
new company. A joint bank account is opened depositing Rs.45,000 by Dilip and Rs.20,000 by Raj.
Dilip and Raj are to share profits and losses in the proportion of 3/5 and 2/5 respectively. Their
transactions were as follows:
Rs.
Advance Payment to suppliers for supply of materials 52,000
Value of materials supplied by suppliers 89,000
Balance amount paid to suppliers in full settlement 35,500
Paid wages 36,000
Materials purchased in cash 2,500
Materials supplied by Dilip from stock 9,250
Engineering consultant fees paid 3,250
Value of stock lost by fire and not covered by insurance 3,500
The contract was completed and the price duly received.
Dilip took all the shares at an agreed value of Rs.47,000 and Raj took the balance stock of materials
worth Rs.3,500 at an agreed value of Rs.2,750.
Prepare the joint venture account showing the resultant profit or loss, bank account and the
accounts of Dilip and Raj. 10
b) The Head Office sends goods to Branch at 20% profit on cost. Freight and duties amounting to 10%
on invoice value being paid by Branch. Branch sells at 20% gross margin on selling prices.
The stock taking date is 30.06.2009 but stock was taken on 10.07.2009. The value of stock was
agreed to be the cost to Head Office which is increased by actual expenses incurred by the Branch
less Rs.6,000. The value of stock as on 10.07.2009 amounted to Rs.64,600 (at Branch cost). Stock
amounting to Rs.6,000 (at invoice value) was received from Head Office on 05.07.2009. Sales made
on 06.07.2009 was Rs.10,000.
Ascertain the value of stock as on 30.06.2009. 10
6
Answer:
a)
Joint Bank Account
Dr. Cr
Particulars Amount in Rs. Particulars Amount in Rs.
To Dilip 45,000 By Suppliers A/c- 52,000
To Raj 20,000 (Materials)
To Joint Venture A/c 84,000 By Suppliers A/c- 35,500
(Materials)
By Joint Venture A/c-

Wages 36,000
Materials 2,500
Consultation fees 3,250
By Dilip 4,400
By Raj 15,350
1,49,000 1,49,000
Joint Venture Account

Dr. Cr
To Supplier A/c-(Materials) 89,000 By Supplier A/c-(Discount 1,500
To Joint Bank A/c received)
Wages By Joint Bank A/c- 84,000
Materials 36,000 By Shares Account 50,000
Consultation fees 2,500 By Raj (Materials) 2,750
To Dilip(Materials) 3,250 By Dilip (Loss) 2,850
To Shares A/c 9,250 By Raj (Loss) 1,900
3,000
1,43,000 143,000
Dilip A/c
Dr. Cr
To Shares A/c 47,000 By Joint Bank A/c 45,000
To Joint Venture A/c-loss 2,850 By Joint Venture A/c 9,250
To Joint Bank A/c
4,400
7
54,250 54,250
Raj A/c
Dr. Cr
To Joint Venture A/c 2,750 By Joint Bank A/c 20,000
To Joint Venture A/c-loss 1,900
To Joint Bank A/c-
15,350
20,000 20,000
b)
Statement Showing Valuation of Stock as on 30.06.2009

Rs. Rs.
Stock as on 10.07.2009 64,600
Less: Stock received on 05.07.2009:
Invoice Value 6,000
Expenses @ 10% 600 6,600
58,000
Add: Cost of goods sold on 06.07.2009:
Sales Value 10,000
Less: Profit 2,000 8,000
66,000
Less: Profit included in Branch Stock 10,000
Agreed Reduction 6,000 16,000
Value of Stock as on 30.06.2009 50,000
Working note:
Calculation of Profit included in Branch Stock:
Rs.
Let, Cost to Head Office be 100
Mark up while invoicing 20
8
Invoice Price 120

Branch Expenses @ 10% 12
Branch Cost 132
Unrealized Profit in Branch Cost = 20/132
Therefore, unrealized profit on total stock: 10,000
Rs.(66,000 × 20/132)
4.
a) On 31st Ashad 2066, a book keeper finds the difference in the Trial Balance and he puts it in the
suspense account. Later on he detects the following errors:
i) Rs.50,000 received from A was posted to the debit of his account.

ii) Rs.20,000 being purchases returns were posted to the debit of purchases account.
iii) Discount of Rs.8,000 received were posted to the debit of discount account.
iv) Rs.9,060 paid for repairs of motor car was debited to motor car account as Rs.7,060.
v) Rs.40,000 paid to B was debited to A's Account.
Give journal entries to rectify the above errors and ascertain the amount transferred to suspense
account on 31st Ashad, 2066 by showing the suspense account, assuming that the suspense account
is balanced after the above corrections. 5
b) Mr. Ram submits you the following information for the year ended 31.3.2066.
Rs.
Stock as on 1.4.2065 1,50,500
Purchases 4,37,000
Manufacturing expenses 85,000
Expenses on sales 33,000
Expenses on administration 18,000
Financial charges 6,000
Sales 6,25,000
During the year, damaged goods costing Rs.12,000 were sold for Rs.5,000. Except the above
transaction, the gross profit has been @ 20% on sales.
Compute the net profit of Mr. Ram for the year ended 31.3.2066. 5
c) On 1st Baisakh 2066, A sells goods for Rs.10,000 to B and draws a bill at three months for the
amount. B accepts it and returns it to A. On 1st Ashad 2066, B retires his acceptance under rebate of
12% per annum. Record these transactions in the journals of A and B. 5
d) From the following particulars prepare customers control account in general ledger: 5
9
Rs.
Opening balance in Customers Ledger: (Dr.) 2,35,000
Opening balance in Customers Ledger: (Cr.) 3500
Goods sold during the year 7,65,000
Returns inwards 15,000
Cash/cheques received 5,90,000
Bills received 1,10,000
Discount allowed 9,000
Cheque received dishonored 5,000
Bills received dishonored 7,000
Bad debts 9,000
A debit of Rs.1,500 is to be transferred from customer’s ledger to supplier’s ledger. Similarly, a credit
entry of Rs.1,600 is to be transferred from supplier’s ledger to customer’s ledger. Closing credit
balance in customer’s ledger is Rs.3,000.
Answer:
a)
Rectification Entries
Rs. Rs.
(i) Suspense Account Dr. 100000
To A's account 100000
(Being the rectification of error by which amount
received from A was wrongly debited to his account)
(ii) Suspense Account Dr. 40000
To Purchases Account 20000
To Purchases Returns Account 20000
(Being the rectification of error by which purchases
returns had been wrongly posted to the purchases
account)
(iii) Suspense Account Dr. 16000
To Discount Account 16000
(Being the rectification or error by which discount
received was wrongly debited to discount account)
(iv) Motor Car Repairs Account Dr. 9060
To Motor Car Account 7060
To Suspense Account 2000
(Being the rectification of error by which motor car
repair expenses Rs.9060 wrongly debited to motor
car account as Rs.7060)
(v) B'S account Dr. 40000
To A's account 40000
(Being the rectification of error by which amount
10
paid to B had been wrongly debited to A)

Suspense Account
Rs. Rs.
To A'C A/C 100000 By Difference in trial balance 154000
(balancing figure)
To Purchase a/c 20000 By Motor Car Repairs A/C 2000
To Purchase Returns A/C 20000
To Discount A/C 16000
156000 156000
b) Statement showing computation of net profit of Mr. Ram for the year ended 31.3.2066
Rs. Rs.
 20  124000
Gross Profit on normal sales  Rs .620000 x 
 100 
Less: Loss on sale of damaged goods (Rs.12000 - Rs.5000) 7000
117000
Less: Overhead expenses
Administration expenses 18000
Selling expenses 33000
Financial Charges 6000 57000
Net Profit 60000
Working Notes:
Calculation of normal sales
Actual sales 625000
Less: Abnormal Sales (sale of damaged goods) 5000
Normal Sales 620000
Alternatively, trading and profit and loss account for the year ended 31st Ashad, 2066 can be
prepared to compute the amount of net profit.
Trading and Profit and Loss Account of Mr. Ram

for the year ended 31st Ashad, 2066
Rs. Rs.
To Opening Stock 150500 By Sales 625000
To Purchases 437000 By Closing Stock (Balancing Figure) 164500
To Manufacturing expenses 85000
To Gross profit c/d 117000
11
(Rs.124000 - Rs.7000)
789500 789500
c)
Journal Entries in the books of A
Date Particulars Debit Rs. Credit Rs.
2066
Baisakh 1 B Account Dr. 10000
To Sales account 10000
(Being the goods sold to B on credit)
Bills Receivable Account Dr. 10000
To, B Account 10000
(Being the acceptance of bill received)
2066 Bank Account Dr. 9900
Ashad 1 Rebate on Bills Account Dr. 100
To, Bills Receivable Account 10000
(Being retirement of bill by B one month before
maturity, the rebate being given to him at
12%pa)
Journal Entries in the books of B

Date Particulars Debit Rs. Credit Rs.
2066
Baisakh 1 Purchases Account Dr. 10000
To A account 10000
(Being the goods purchased from A on credit)
A Account Dr. 10000
To, Bills Payable Account 10000
(Being the acceptance of bill given to A)
2066 Bills Payable Account Dr. 10000
Ashad 1 To Bank Account 9900
To Rebate on Bills Account 100
(Being the bill discharged under rebate @ 12% p.a.)
Working Notes:
Calculation of Rebate:
12 1
10000 x x  Rs .100
100 12
12
d)
General Ledger
Customers control account
Dr. Cr.
Rs. Rs.
To Balance b/d 235000 By Balance b/d 3500
To General Ledger By General Ledger Control A/C
Control A/C : Bank / Cash 590000
Sales 765000 Returns Inwards 15000
Bank (Cheque dishonoured) 5000 Bills Receivable 110000
Bills Receivable (dishonoured) 7000 Discount 9000
Bad Debts 9000
Transfer (1500 + 1600) 3100
To Balance c/d 3000 By Balance c/d (Balancing figure) 275400
1015000 1015000
5.
a) State with reasons whether the following statements are true or false: 5
i) Chartered Accountant in service does not have to follow the Accounting Standards/guidelines
issued by the Institute of Chartered Accountants of Nepal.
ii) Custom duty paid on importing a machinery is a capital expenditure.
iii) Receipt & Payment Account and Income & Expenditure Account convey the same information.
iv) Government cannot be a user of financial statement.
v) Freight outwards is a selling expense.
b) Write short notes on the followings: (22.5=5)

i) Statement of changes in equity
ii) Periodicity concept
Answer:
a)
(i) False: All members of ICAN have to follow all the norms & standards prescribed
by it for its members irrespective of whether he is in practice or in service.
(ii) True : Any expenditure incurred for the purpose of importing any asset till the
date it is first put to use is capital expenditure.
(iii) False : Receipt & payment deals only cash item but Income & Expenditure
account also include non cash item.
(iv) False: Every government has to make policies like taxation policy, economic
policies etc which cannot be succeeded without being a user of financial statements of the
business houses.
13
(v) True: Freight outwards expense is for delivering goods to the customers in the course of sales.
b)
(i) According to Nepal Accounting Standards on presentation of Financial Statements
The Board of Directors and/or other governing body of an entity is responsible for the
perpetration and presentation of its financial statements.
A complete set of financial statements includes the following components:
(a) Balance Sheet
(b) An Income Statement
(c) A statement of changes in equity showing either
(i) All changes in equity
(ii) Changes in equity other than those arising from transaction with equity holders
acting in their capacity as equity holders
(d) A Cash Flow Statements and
(e) Notes, comprising a summary of significant accounting policies and other explanatory
notes.
So, it is mandatory for company.
Changes in an entity's equity between two balance sheet dates reflect the increase or decrease
in its net assets or wealth during the period, under the particular measurement principles
adopted and disclosed in the financial statements.
Except for changes resulting from transactions with shareholders, such as capital contributions
and dividends, the overall changes in equity represents the total gains and losses generated by
the entities activities during the period.
(ii) This is also called the concept of definite accounting period. As per 'going concern' concept, an
indefinite life of the entity is assumed. For a business entity it causes inconvenience to measure
performance achieved by the entity in the ordinary course of business. If a textile mill lasts for
100 years, it is not desirable to measure its performance as well as financial position only at the
end of its life.
So a small but workable fraction of time is chosen out of infinite life cycle of the business entity
for measuring performance and looking at the financial position. Generally one year period is
taken up for performance measurement and appraisal of financial position. However, it may
also be 6 months or 9 months or 15 months.
Thus for performance appraisal it is not necessary to look into the revenue and expenses of an
unduly long time-frame. This concept makes the accounting system workable and the term
'accrual' meaningful. If one thinks of indefinite time-frame, nothing will accrue. There cannot be
14
unpaid expenses and non-receipt of revenue. Accrued expenses or accrued revenue is only with
reference to a finite time-frame which is called accounting period.
6. Distinguish between any two of the following: (25=10)

a) Sales day book and sales account
b) Charge against profit and appropriation of profit
c) Periodic & Perpetual Inventory System
Answer:
a) The sales day book is a register specially kept to record credit sales of goods dealt in by the firm,
cash sales are entered in the cash book and not in the sales day book. Credit sales of things
other than the goods dealt in by the firm are not entered in the sales day book; they are
journalized. It is a subsidiary book and posting is made from it to the sales account and accounts
of the customers. The total of the sales day book shows the credit sales made during any
particular day; the amount is credited to the sales account.
Sales account is a final record and postings are made to it from cash book (cash sales) and sales
day book (credit sales). Sales account is maintained in the ledger in the manner, the other
accounts are maintained. Sales account is a nominal account and its balance is used for
ascertaining gross profit or gross loss.
b) Charge against profit means deduction from revenue to arrive at net profit or net loss. It means
a debit to profit and loss account. This may credit provisions also and charges can be made in
spite of losses. Charge against profit is done before appropriation of profit.
Appropriation of profit means distribution of net profit to various heads of accounts. This means
debit to profit and loss appropriation account. Appropriation can be made only if the profits are
earned. Appropriation is done after charges are deducted from profit. This may create reserves.
c)
S. Basis of Differences Periodic Perpetual Inventory

No. Inventory system system
1 Stock Ledger Stock ledger is Stock Ledger is
not maintained. maintained.
2 Suitability Suitable for small Suitable for big firms and
firms and not for not for small firms
big firms
3. Cost Low cost as High cost as compared to
compared to periodic inventory
perpetual system
inventory system
4 Systematic Less systematic More systematic than
than perpetual periodic
5 Control Less control on more control on
15
inventory inventory
6 Real time No real time Real time information is
information is available through stock
available ledger, bin cards etc.
16
Fundamentals of Economics
Attempt all questions.
Part – 'A'
1. Answer the following questions (Any Two):
a) Define income elasticity of demand. What are its types? (2+8=10)
b) Explain the laws of returns to scale. 10
c) Define monopoly. How are the price and the output determined under it in long run? (2+8=10)
Answer:
a) Income elasticity of demand may be defined as the ratio of proportionate change in
quantity demanded of a commodity to the proportionate change in income.
% change in quantity demanded

e y = ----------------------------------------
% change in income
If we assume e means elasticity and y means income, then income elasticity of demand
can be measured by
∆ qd y
ey = ------ X ------
∆y qd
where,
∆ qd = change in quantity demanded
∆ y = change in income of the consumers
There are five types of income elasticity of demand. They are as follows:
1. Zero income elasticity of demand (ey = o): If there is no change in quantity
demanded with the change in income of the consumer. It is called zero income
elasticity of demand. It is related with very low priced items like; envelope, match
etc.
income Y d
Y2
Y1
Y
0 Q X
demand
qd is the zero income elastic demand curve which shows change in income from y1 to
y2 and from y1 to y, quantity demanded remains unchanged i.e., 0q.
2. Income elasticity is greater than unity (ey > 1): It refers to the greater change in
quantity demanded with small change in income of the consumer or quantity
17
demand for a commodity changes more than proportionate to the change in

income. It is related with luxurious goods. It can be shown in the following figure:
income
Y2 C
Y1
D
0 Q1 Q2 X
demand
In the above figure, DC is the more elastic demand curve which shows change in
quantity demanded is greater than the change in income. It means Q1 Q2 > Y1 Y2.
3. Income elasticity is less that unity (ey < 1): When demand for a commodity rises
less than proportionate to the rise in the income, it is called less income elasticity of
demand. It explains about necessities goods. It can be shown in the following
figure:
C
income
Y2
Y1
D
0 Q1 Q2 X
demand
In above figure, DC is the less elastic demand curve which shows change in quantity
demanded is less than the change in income of the consumer. It means Y1 Y2 is > Q
1 Q2.
4. Unitary elastic demand (ey = 1): When the demand for a commodity changes in the
same proportion as the increase in income, elasticity is said to be unity or when the
change in demand is exactly proportionate to the change in income, it is called
unitary elastic demand. It can be shown in the following figure:
Y
Y2 C
Y1
D
0 Q1 Q2 X
demand
18
DC is the unitary elastic demand curve which shows the equal change in quantity
demand and income. It means change in income is equal to change in quantity
demanded. (Y1 Y2 = Q1 Q2).
5. Negative income elasticity of demand (ey < 0): If the quantity demanded varies
inversely with income it is called negative income elasticity of demand. It is
connected with inferior goods. It can be shown in the following figure:
Y
D
Y2
Y1
C
0 Q1 Q2 X
DC downward demand curve shows inverse relationship between income and quantity
demanded.
Lastly, income elasticity of demand expresses the responsiveness of consumer’s demand
for any good to the change in his income. It may be positive, negative or zero.
b) Law of returns to scale associates with long run production theory. According to this
theory, all factors of production are variable. Returns to scale is the rate at which output
changes as the quantities of all inputs are varied in the same proportion. In other word,
the law of returns to scale refers to the efforts of change in the scale of inputs upon
output in the long run when the combinations of factors are changed in some
proportion. It may be constant, increasing or decreasing, as explained below.
i) Increasing returns to scale (IRS): It is the situation in which when all inputs are
increased in a given proportion, output increase in greater proportion. Therefore, if
there is increase in inputs by 20%, output will also increase more than 20%. It is said
to be increasing returns to scale.
This concept is more clear by the help of Isoquant curve. The distance between the
successive isoquant diminishes on the expansion path. It is a case of increasing
returns to scale which is shown in following figure:
In the above figure,

OP = expansion path
OA > AB > BC
19
As shown in the figure, output increase same proportion (100, 200, 300) where as
input increases less proportion. That means 1, 3 and 4.
Increasing returns to scale is the result from specialization and division of labour,
indivisibility of some factors and internal and external economies etc.
ii) Constant returns to scale: If by increasing two factors say labor and capital in the
same proportion, output increases in exactly in the same proportion, there are
constant returns to scale or when all inputs increase by 15%, output also increases
by 15%. It is called constant returns to scale.
It can be explained by the help of following figure. If the segments between two
isoquants are of equal length, there are constant returns to scale.
The figure shows the case of constant returns to scale. Where the distance between
the isoquants IQ1 (100), IQ2 (200) and IQ3 (300) along the expansion path OP is the
same i.e., OA = AB = BC.
When internal and external economies of scale and diseconomies of scale cancel
each other constant returns to scale occur.
iii) Decreasing returns to scale: When the output increases in a smaller proportion than
the increasing in all input, it is said to be decreasing returns to scale or if the %
change in input combination is greater than the % change in output, it is said to be
decreasing returns to scale. It means if all inputs increase by 20% output increase
less than 20%.
It can be shown in the following figure.
20
If there are decreasing returns to scale, the distance between a pair of isoquant
would become longer on the expansion path.
Above figure shows the case of decreasing returns to scale where to get equal
increases in output, larger proportionate increases in both labor and capital are
required. It follows that 100 units of output require 2C + 2L, 200 units of output
require 5C + 5L and 300 units of output require 11C + 11L so that along the
expansion path OP, OA < AB <BC. It is result from difficulties of management,
problems of coordination and control, indivisibility of factors etc.
Lastly, the laws of returns to scale indicate, the changes in output when there is a
proportionate change in all factors of production.
c) Monopoly is that form of market in which a single producer or seller controls the whole
supply of a commodity that has no close substitute. According to A. Koutsoyiannis,
”Monopoly is a market structure in which there is a single seller, there are no close
substitutes for the commodity it produces and there are barriers to entry”. The
monopoly power can be observed in public such utilities as electricity, drinking water
supply, tele-communication etc.
Characteristics of Monopoly
(1) Single Seller: The most important characteristics of monopoly, is that there should be
only one seller for a single commodity at wholesale market. The monopolist owns sole
control either on quantity supply or on the price of the product. Monopoly right can be
observed in the form of individual firm as well as in joint - stock company.
(2) Absence of Close Substitutes: Existence of close substitute goods are strictly
prohibited in monopoly market. If there exist substitute goods, competition takes place
and monopoly power disappears. A seller in monopoly market is known as a king without
a crown.
(3) Barriers to Entry: There is strong barrier to entry of new firms. The existing firms own
sole control either on price or on quantity supply in the market. Therefore, the
monopolist earns abnormal profit both in short – run and long – run.
Price and Output Determination Under Monopoly
A monopolist follows law of demand to determine price. Based on law of demand, he tries
to sell more quantity of his product at falling price. As a result of this, the average
revenue(AR) or the demand curve that a monopolist faces declines from the beginning
from left to right as any increase in output. The marginal revenue (MR) curve also falls
from the beginning from left to right as any increase in quantity supply and lies below the
AR curve.
A monopolist attains equilibrium and determines its level of output at a point where
following conditions are fulfilled.
Slope of MC>Slope of MR
In long- run, there will be enough time for the expansion of plants. In other words, in the
long-run, the monopolist has the time to maximize the profit. With entry blocked for the
new firm in the industry, it is not necessary for the monopolist to produce at the optimal
scale or to build the plant at the minimum point of the AC for profit maximization.
21
Monopolist runs the firm with super normal profit. This can be illustrated graphically as
follows.
Y
MC
AC
P C
A B
AR/D
O X
Q
Quantity MR
The figure shows the long run equilibrium of a monopolist with abnormal profit.
According to the figure, the marginal revenue curve (MR) and the marginal cost curve
(MC) intersect each other at point E. The marginal cost curve also cuts the marginal
revenue curve from below at this point. Hence, E is the equilibrium point of the
monopolist and the price and output determined by this point are the equilibrium price
and output of the monopolist. According to the figure, the monopolist produces OQ
amount of output and sells it at OP price. The cost of production to the monopolist per
unit of output is OA only. Hence, the monopolist makes profit equal to PA (i.e. OP-OA)
per unit of output and his total profit is shown by the shaded rectangle PABC which is
calculated as follows.
Total profit (  ) = profit per unit of output x total output
= AP x OQ = AP x AB = PABC
2. Answer the following questions (Any Three):

a) Define budget line. 5
b) Explain the uncertainty theory of profit. 5
c) Define microeconomics. What are its uses? Explain any three. (1+1+3=5)
d) Distinguish between fixed cost and variable cost. 5
e) Explain the shape of revenue curves under perfect competition. 5
Answer:
a) Budget line is a locus representing various combinations of two goods that can be
purchased by fixed income at given prices. The budget line sets a limit on the
combination of the two goods that a consumer can buy. Budget line represents limit of
budget which should be spend on two goods. So it is called Budget constraint.
Mathematically, budget equation can be written as:
B = Px . Qx + Py . Qy
Where,
B = Budget or income,
Px = Price of x goods
Qx = Quantity of x goods
Py = price of y goods
Qy = Quantity of y goods
22
Concept of budget line can be also expressed by the following example. Let us suppose
that a consumer is considering to purchase two commodities x and y with a fixed
income of Rs 50 and per unit price of x is Rs. 10 and y is Rs. 5, then he purchased total
units of x goods is 5 and y is 10 which is arranged in the following table.
Combinations X goods Y goods

A 0 10
B 1 8
C 2 6
D 3 4
E 4 2
F 5 0
Given in the table, the consumer’s income is limited to Rs. 50. he can choose any one of
the combinations in above table. The above combinations could be altered but by no
means the total expenditure should exceed Rs 50.
The above table can be translated into a figure that gives us the budget line of the
consumer.
Y
A
Goods Y 10
8 B
6 C
4 D
2 E
O F X
1 2 3 4 5 Goods X
In above diagram, AF is the budget line which shows limitation of income and price ratio
of two goods. Consumer cannot buy any other combination which lies above the budget
line. Sometimes budget line changes its position due to change in consumer’s income
and price of the commodity.
b) The uncertainty-bearing theory of profit was propounded by Prof. F.H. Knight in 1921.
According to this theory, profit is the reward for uncertainty-bearing in the business
rather than risk-taking. In his own words-“The most fundamental fact in connection with
organization is the meeting with uncertainty”. Prof Knight has explained his theory by
dividing the risks under two heads: (a) Visible risks and (b) Invisible risks. The theory
assumes that profit is paid only for bearing the invisible risks but not for the visible risks.
23
Visible or Insurable Risks: The risks that can be foreseen by the entrepreneur are called
visible risks or foreseeable risks. For example, the risk of fire in a factory, risk of robbery,
vehicle accidents etc are visible risks.
Invisible or Non-insurable Risks: The risks which cannot be foreseen by an entrepreneur
are called invisible risks or unforeseeable risks. For example, risk of change in demand,
risk of trade cycle, risk of introduction of new technology, risk of government
intervention etc are invisible risks.
According to Knight, visible risks can be insured and can be got covered through
insurance. But the invisible risks cannot be foreseen by the entrepreneur and cannot be
got covered through insurance. Profit is the reward to the entrepreneur for bearing such
invisible risks. There is a direct relationship between uncertainty bearing and profit.
Greater the uncertainty bearing, the higher will be the level of profit. The uncertainty
bearing is looked as a separate factor of production due to its importance by this theory.
c) Micro economics, literary means 'small' studies about the behavior of individual
economics units. It deals with how a rational consumer or a rational producer tries to
maximize utility, profit respectively subject to its budget constraint.
Microeconomics examines how resources are allocated among various individual firms and
industries, how the prices of various products and inputs these who cooperate in the
production of the output. Microeconomics is very useful in decision making which are as
follows:
1. To understand the functioning of free economy: Microeconomics deals with the how an
individual maximizes his satisfaction subject to his budget constraint & how a rational
producer tries to maximize his output or profit or sales at the given cost. Micro
economics helps to understand optimum allocation of resources.
2. Price determination: Microeconomics is also called the price theory as it explains the
product price determination & factor price determination. Micro economics is
useful to understand the price determination in different market structure.
Similarly, it is helpful to determine price of factor inputs such as wage, rent,
interest and profit in perfect and imperfect markets.
3. Useful in business decision-making: It helps business executive in the attainment of
maximum production by the given amount of resources. With the help of
microeconomics business firms can make decisions in demand analysis, cost
analysis, methods of calculation prices and prediction of economic events or
variables.
4. To provide tools for economic policies: Microeconomics helps in the formulation of
economic policies for the promotion of mass welfare. It is on the tenets of
microeconomics that we ascertain the effect of government policies on the
allocation of resources and pricing of certain public utilities like postal service,
railways, water, supply, electricity, etc. Microeconomic theories may also be
applied to examine the implications and effectiveness of the policies adopted by
the government.
d) Short run is a period of time where some inputs cannot be changed regardless of the
amount of output produced. These inputs are known as fixed inputs. Similarly, there are
other inputs known as variable inputs whose amount is changed with the changed in
output.
24
Total fixed Cost: Total fixed cost is the expenditure incurred on fixed inputs. These costs
cannot be changed within a short notice as output increases. It is also known as
supplementary cost. It includes expenses on machines and buildings, insurance fee,
maintenance costs, administrative expenses etc. They do not vary with the level of
output. They remain the same regardless of how much it produced by the firm. Hence, it
is also called unavoidable cost.
Total variable cost: It is the cost incurred on variable inputs. Total variable cost changes
with change in output. If output is high, total variable cost will be high and vice - versa. It
includes payment made to workers, suppliers of raw material, fuel, power,
transportation charges and so on. They do not occur if the firm is temporarily shut
down. Hence, it is also called avoidable cost.
e) Perfect competition is that situation where there is large numbers of buyers and sellers
of homogeneous products. Under this market, price of the product is determined by the
industry and each firm is compelled to accept it. It is due to perfect knowledge about
market and product homogeneity. In other words, the commodity produced by all firms
is homogenous so that the consumers have no motive for preferring the product of one
firm to another. If a firm raises its price, its sale would fall to zero. Hence under perfect
competition, there will be only one price in the market.
At constant price, TR increases at a constant rate as output increases. But both AR and
MR remain constant. This can be explained with the help of the schedule and diagram.
No. of Units Price or AR(in TR in Rs. MR in Rs.
Sold Rs.)
1. 16 16 16
2. 16 32 16
3. 16 48 16
4. 16 64 16
5. 16 80 16
In this example, the firm has accepted the price of Rs. 16 per unit determined by the
industry. Hence, price remains constant when more units are sold.
TR goes on increasing at a constant rate as more and more units are sold. When AR
remains constant and MR is equal to AR.
Y Y
Price/AR & MR
Total Revenue
TR
AR/MR
P
O Quantity X O Quantity X
Fig. A
Fig. B
In the Fig. A, TR slopes upwards to the right as linear that indicating TR increases at a
constant rate when the quantity sold increases. In the Fig. B, AR and MR curves are
horizontal straight line. Horizontal straight line indicates price or AR remains the same at
OP level. When quantity sold in increased & demand is perfectly elastic, MR curve
coincides with AR curve since MR is equal to AR.
25
3.
a) Justify the following statements with appropriate reasons. (5×1=5)
i) Land is the passive factor of production.
ii) IQ convex to the origin.
iii) When TVC increases at a diminishing rate, MC decreases.
iv) All firms, under monopolistic competition earn only normal profit in long run.
v) When firm hires more or more units of labour, value of marginal productivity of
labour obtained from each successive unit goes on falling.
b) Write short notes on (Any Four): (4×2.5=10)

i) Law of supply
ii) Oligopoly
iii) Production function
iv) Scarcity
v) Liquidity preference
Answer:
a)
i) Land is one of the passive or inactive factors of production. It cannot produce any
types of goods and services itself. When we use labour, capital and other inputs in
production of agricultural and industrial output, land become factor of production.
ii) Due to diminishing marginal rate of substitution, indifference curve is always convex
to the origin. This implies that as the consumer goes on increasing more and more
of one commodity on the horizontal axis and less and less of the another on vertical
axis.
iii) Since MC shows a rate of change in TVC. Hence when TVC increases at a diminishing
rate, MC decreases.
iv) All firms, under monopolistic competition, earn only normal profit in long run. It is
due to the condition of free entry and exit of firms.
v) It is due to the operation of law of diminishing returns in the productivity of labour.
b)
i) Other things being equal, when price of commodity increases quantity supplied of
that commodity also increases. Similarly, when price of the commodity decreases,
quantity supplied also decreases. Thus other things remaining the same, law of
supply means there is positive relationship between price and quantity supplied.
Law of supply can be explained by following diagram.
Y
Price
SC= Supply curve
26
O X
Quantity supplied
In this diagram, OX axis represents quantity supplied and OY axis represents price of
the commodity. SC is the upward supply curve which shows the positive relationship
between price and quantity supplied. It means higher the price, more supply and
vice versa.
ii) The term oligopoly has came from the Greek word “oligos” and “polis”, which
means “few” and “sellers” respectively. So it is the market structure where there
will be few sellers. Generally, few implies more than two and nearly twenties. It is
“competition among the few”, which are interdependent. Here action of each firm
affect the other firm of the market, like price cutting of one firm will reduce market
share of other firms. Similarly advertising of a new product may increase sales at the
expense of other firms. So decision making in oligopoly market more difficult.
In modern economic system oligopoly exist at the local as well as the national level.
Example – gas dealers, airlines companies, automobile industries etc.
There are two types of oligopoly – i) Pure oligopoly (if homogeneous product is
produced) ii) Differentiated oligopoly (if heterogeneous product is produced)
iii) It establishes a functional relationship between inputs and output. It also shows a
technical relationship between inputs and output.
On the basis of time, it is of two types;
Short run production function- it establishes a functional relationship between
variable input keeping constant the units of fixed inputs and output.
Mathematically, it is written as Q= f ( N vf ) , where Q=output, f is the function and
N vf =units of variable factors.
Long run production function- it establishes a functional relationship between all
inputs and output. Mathematically, it is written as Q=f(W,L,K,M,T), where W=land,
L=labor, K=capital, M=management and T=technology.
iv) It is one of the central economic problems. Scarcity does not mean rare situation
but it is the situation of getting less than desired. Existence of unsatisfied desired is
scarcity. It is the situation where economic agents like individuals, firms,
governments, international agents etc can only obtain limited amount of resources
at any moment of time. For instance – a family has to live in fixed budget,
government can either construct the road or the hospital.
Due to unlimited wants, limited resources which have alternative uses scarcity arise.
The degree of the problem of scarcity varies differently to the different group of
people. The problem is more to the poor than rich as they have less command on
economic resources. Due to scarcity we have to pay the prices of the goods.
Normally scarcity and price has a positive relation.
v) According to J. M. Keynes liquidity preference is the determinant of the rate of

interest, given the money supply.
27
According to Keynes, it is the amount of money desired to hold by the individual

firms, households rather than other types of assets.
There are 3 motives of liquidity preference according to Keynes. They are –
a) transaction motive
b) precautionary motive
c) speculative motive
There are two main determinants of liquidity preference i.e.

1) Income – Both individuals or households and business firms create their liquidity
preference in order to fulfill transaction and precautionary motives on the basis
of their income. Higher the income in the economy greater the liquidity
preference and vice versa.
2) Rate of interest –people also create their liquidity preference in order to
participate in speculative activities. Higher the rate of interest in the economy
lower will be the liquidity preference and vice versa. But at the minimum level
of rate of interest it is perfectly elastic. So Liquidity preference curve is
downward sloping from left to right and at a lower point it is horizontal.
Ms
Interest
R1
R Lp (Md)
O
Md & Ms
Part – 'B'
4. Answer the following questions (Any Two):

a) Define consumption function. What are its determinants? (2+8=10)
b) Evaluate the role of agriculture in Nepalese economy and critically examine the problems
of Nepalese agriculture. (5+5=10)
c) Define fiscal policy. What are its objectives? (2+8=10)
Answer:
a) A relationship between consumption and its various determinants is called consumption
function. Consumption function can be written as
C = f (Yd, w, Ye, P, Pe, r, s, DF)
Where,
C = consumption
F = function
28
Yd = disposable income
W = Accumulated wealth
Ye = expected future income
P = existing price level
Pe = expected price level
R = rate of interest
S = thriftiness
Df = demographic factors.
Among the various determinants of consumptions, Keynes, however asserted that

disposable income alone was the most important determinant of consumption. Thus the
consumption function can be expressed as
C = f (yd),
Where,
C= consumption, f= function, yd= disposable income
There are two types of determinants of consumption:
1) Subjective Factors
2) Objective Factors
1) Subjective Factors: The internal elements that affect consumption functions are
known as subjective factors. It is also divided two parts.
1) Individual motives: Human beings are rational and they try to make some
security for the future. Due to this motive, they cut down their consumption
and try to save for future as following:
 Motive of farsightedness
 Motive of precaution
 Motive of improvement their life style
 Motive of independence
 Motive of pride
 Motive of avarice etc.
Due to this behaviour of human beings, the consumption goes down.
2) Business motive: People try to keep some portion of income as a liquid and
cut down their current consumption. Business motive can be explained as
follows:
 Motive of enterprise
 Motive of liquidity
 Motive of income improvement
 Motive of financial prudence.
29
2) Objective Factors: The external factors that affect the consumption are known
as objective factors which can be explained as following:
i) Fiscal Policy: consumption function or propensity to consume is also

affected by fiscal policy of the government. If the governments increase the
direct tax, the disposable income will decrease which further reduce
consumption. In contrary to this, if the government reduces the tax rate
through fiscal policy, then disposable income will increase and propensities
to consume also increase.
ii) Changes in wage level: When wage rate increases, the purchasing power of
people also increase and consumption shift upward and vice-versa so that
the level of consumption is also determined by level of wage rate.
iii) Windfall gains and losses: The unexpected change in the prices of stocks and
employment opportunities affect the level of consumption. Wind fall gains
tend to raise the consumption function whereas windfall losses reduce
consumption pattern.
iv) Distribution of Income: It is also one of the most important determinants of

consumptions function. If the national income is equally distributed,
consumption function will be high and vice – versa.
Besides these, credit facility, saving and demonstration effect, social security etc
are also the determinants of consumption.
b) Nepal is an agricultural country. It is considered as a backbone of Nepalese economy.

Importance of agriculture becomes evident from following facts:
i) Source of employment: Agriculture is the predominant source of employment in
Nepal. According to the 1991 census, 81.22 % of economically active
populations of Nepal are employed in agriculture. If agricultural dependence
components of other sectors are considered, employment in agriculture
substantially exceeds this figure.
ii) Source of national income: Agriculture is the predominant source of Nepal's
national income. Agricultural sector generates about 56.03 % of the country's
national income.
iii) Source of food: Nepal annually produces about 4.9 million metric tons of food
grains, including rice, wheat, maize, millet, and barley. Food requirements of the
country are fulfilled by agricultural production. As, population increases the
importance of agriculture as supplier of food will also go on increasing.
iv) Agriculture supplies feed and fodder to livestock population. Agricultural
byproducts from farmland serve as feed and fodder for livestock.
v) Source of industrial raw materials: Nepal has numerous dehiscing and edible oil
extracting plants, jute factories, sugar factories, cigarette factories and floor
mills. Agriculture is the source of raw materials for all these industries.
vi) Source of exportable items: Nepal exports agricultural products including
livestock, food grains cash crops ginger cardamom, jute, tea, fruits and
vegetables. Almost about 70 % of Nepalese exports consist of agricultural
commodities.
30
vii) Agriculture sector is the most important sector of investment. From the
commencement of first plan period in 1956, substantial amounts have been
allocated for agriculture.
Though it plays significant role in Nepalese economy, it is in backward state due to

suffering from several problems. The problems are –
i) Excessive population pressure:
ii) Problems of land: More area of land is lying as cultivable waste due to heavy
initial cost. Sub-division and fragmentation of land has resulted inefficiency in
agriculture. There is the absence of irrigation facilities in agriculture and
dependent on rainfall which is irregular and uncertain. Large tracts of land suffer
from soil erosion etc.
iii) Problems of labor: The labor involve in agriculture is generally poor in health. He
is illiterate, conservative and superstitious. He lacks enterprise and initiative.
He continues to use old methods.
iv) Problems of capital: The tools and instruments used by Nepalese farmers are
also old and outdated. The cattle of the cultivators are also of poor quality.
Similarly agriculture suffers from the lack of proper and timely finance.
v) Problems of organization: It is a seasonal occupational. There are no subsidiary
industries for supplementary income. The cultivators receive not more than half
of the price of agriculture product paid by the consumer.
vi) Low degree of mechanization: Here use of machinery in agriculture is extremely
limited.
c) The term 'Fisc' means 'state treasury' and 'fiscal policy refers to policy concerning the
use of 'state treasury' or the government finances to achieve the macroeconomics goals.
Fiscal policy is one of the important pillars of macroeconomics policy.
Fiscal policy is the government program of making discretionary changes in the pattern
and level of its expenditure, taxation and borrowing in order to achieve intended
economic growth, employment, income equality and stabilization of economy in growth
path.
It is the policy in which the government employs its revenue and spending programme
to produce desirable effects and avoid undesirable effects on the level of income,
output, employment and social welfare.
The objective of fiscal policy may differ from country to country according to the level of
development. Similarly, its objectives may differ from time to time in the same country
according to the level of development and national objectives. Generally, main objective
of fiscal policy in developed countries is to achieve the higher economic growth whereas
in developed countries is to maintain the existing growth rate. The main objectives and
of fiscal policy are as follows:
1. Economic growth: To achieve the high and sustainable economic growth is one of
the major objectives of fiscal policy. Given the manpower, technology and the
natural resources, the growth rate of a country depends on the rate of savings and
investment. The role of the fiscal policy in the regard is to create conditions for
increase in private savings and investment and to enhance investment in public
sector. In order to promote savings, the rate of income tax is reduced and tax
31
incentives are provided for savings and corporate sector is provided with a number
of incentives and concessions include tax holidays, high depreciation allowances,
investment subsidies, exemption of import duties on capital imports and so on.
2. Higher level of employment or full employment: Maintaining full employment in
the developed countries and creation of employment opportunities for millions of
unemployed person in the less developed countries has been one of the objectives
of fiscal policy. According to Keynesian theory of employment, all fiscal measures
that accelerate the pace of economic growth promote employment also. In order to
increase the employment level in a country, government can increase spending on
goods and service, provides transfers to the low income groups and can reduce tax
rates. All of these three efforts would lead to an increase in AD so that employment
may increase.
3. Stability in price: The price instability denotes both inflation and deflation. But the
pressure of inflation is high in developing countries. In developing countries, public
expenditure is increasing rapidly due to the development programme. On the other
hand, production is increasing slowly due to technical rigidity, low efficiency of
labour and deficiency of productive inputs. It has created high rate of inflation.
4. Stabilizing balance of payment: Balance of payment is in disequilibrium when
external payment obligation exceeds the foreign exchange earnings. When the gap
between foreign payment obligations and the external earnings is of a large
magnitude and if it increases over time, it becomes a matter of serious concern and
has serious effect on economy. This gap arises mainly due to decreasing trade
balance or current account deficits.
5. Reduction in economic inequality: There exist a great inequality in income and
wealth in developing countries. Economic disparity beyond a level is, however,
socially, economically and politically undesirable. Therefore, economic disparity
needs to be curbed to its socially acceptable level.
5. Answer the following questions (Any Three):

a) What are the arguments for protectionism? Explain any four. (1+4=5)
b) What are the importance of small and cottage industry? Explain any four. (1+4=5)
c) Define monetary policy. Explain its any four instruments. (1+4=5)
d) Explain the role of economic liberalization in Nepalese economy. 5
e) What are the effects of inflation on production? 5
Answer:
a) Government policy which restricts imports of foreign goods is called the policy of
protection. It is just opposite of free trade. Arguments for proctionism are as follows:
1) Protection for infant industries: Newly established industries of various

countries which are in earlier period of development are no match for them.
Such industries are known as infant industries. They need protection to be able
to stand in competition against growing industry of industrially advanced
countries. They are technically undeveloped and cost of production is also high.
Therefore, government should protect such industries by adapting various
protection policies.
2) Natural resources conservation: Natural resources like minerals and forest

products are limited and exhaustible. If exports of such natural resources are
allowed without any kind of restriction to an unlimited extent, shortage
32
situation will soon come up and the country will have to suffer. Therefore,
exports of such resources should be controlled and should not be allowed to
exceed desirable limits. This means that protection should be granted to natural
resource sector by imposing quantitative restrictions and high export duties.
3) Keeping money at home: When domestic products are purchased, money

doesn’t flow abroad. Foreign goods may be cheaper, but paying a little more for
domestic products makes purchasing power stay within the country. This
involves some sacrifice on the part of consumers but this sacrifice is more
compensated by the retainment of wealth at home.
4) Self – dependency concept: A country should be self – dependent on products
of necessity like food grains, clothes. Therefore, such industry also should be
protected by the government.
Besides these, concepts of basic or key industries, exchange rate stability,

national defense argument, increase in employment opportunities etc. are also
arguments for protectionism.
b) A process of production by using less capital, simple techniques, local or family labor,
skill and factors is called cottage industry. According to industrial policy 2049, a cottage
industry as an industry which has machines and equipment of up to Rs. 2 lakhs, which
has a fixed capital not exceeding Rs. 7 lakhs. In the same way, a small scale industry is an
industry which has installed machines and tools worth more than Rs. 2 lakhs and which
have a fixed capital of not exceeding Rs. 1 crore.
Cottage and small industries have a great importance of economic development which
is as follows:
i) Easy to establish: Establishment of cottage and small industries don’t require more
capital and technical knowledge. So it is easy to establish.
ii) To provide employment opportunities: The development of small and cottage
industries increase the employment opportunities. It may provide employment to
the people in different area.
iii) Development of national skill, culture and art: Cottage and small scale industries are
mostly based upon skill, culture and art of the country. Therefore, such industry
develops them. Dhaka cap, knives, Nepali paper, carpet and many other artistic
Nepali goods are the good example.
iv) Utilization of local raw materials: Various types of raw materials available different
parts of Nepal are being locally utilized by cottage and small scale industries. The
economic utilization of the existing resources would lead to the production of
various essential goods, which in turn may promote local self sufficiency. Besides
this basis of large scale industries, source of national income, source of foreign
exchange, self dependent etc are also importance of small and cottage industries.
c) Monetary policy is basically concerned with the monetary system of the country. It aims
at influencing the economic activity in the economy mainly through two major variables,
i.e. money supply and the rate of interest. Monetary policy is a programme action
33
undertaken by the monetary authorities, generally the central bank, to control and
regulate the supply of money with the public and the flow of credit with a view to
achieving predetermined macroeconomic goals. The main instruments of monetary
policy are:
i) bank rate policy ii) open market operations iii) cash reserve ratio iv) regulation of
consumer credit v) direct control vii) credit rationing viii)regulation of margin
requirements.
i) Bank rate policy: The bank rate is the minimum lending rate of the control bank at
which it rediscounts first class bills of exchanges and government securities held by
the commercial banks. During inflation, central bank increases bank rate. On the
contrary, during depression the central bank lowers the bank rate. So the
commercial banks one seduced and their lending power is contracted.
ii) Regulation of consumer credit: An important instrument of qualitative method is
the regulation of consumer credit. It aims at regulating the consumer installment
credit or hire-purchase finance. The central bank regulates the use of bank credit by
consumers to buy durable goods by influencing the amount of down payments and
the maximum period of repayment.
iii) Regulation of marginal requirements: The difference between the value of the
security and the amount of loan granted is known as marginal requirements. The
banks keep this margin to protect themselves against any fall in the value of
security. The central bank influences the availability of bank credit by fixing this
marginal requirement.
iv) Credit rationing: Rationing of credit is another instrument of selective credit
control. The central bank can control credit by increasing or decreasing variable
capital assets ratio and portfolio ceiling in credit creation capacity of the customers.
d) Economic liberalization refers to a process of shifting the economy from government

control to market economy. In other words, encouraging the private sector to set into
the economic activities on a competitive basis by reducing government's interference is
called economic liberalization.
The role of economic liberalization in the economic development of Nepal can be
discussed below:
The private sectors are mostly profit oriented. So they concentrate on the efficient user
and proper allocation of resources in the production of goods and services.
The policy of liberalization increases the involvement of the private sector in industry.
This creates the environment for domestic as well as foreign competition.
Public enterprises failed to get required return owing to the inefficiency of the
management, government control and huge financial burden. Therefore, the
privatization of these enterprises curtails government expenditures and help in reducing
budget deficit.
National product increases with the establishment and operation of private enterprises.
More production means more profit. So private enterprises are initiated to increase
production.
e) Inflation refers to a persistent and appreciable rise in price level over a period. The main
adverse effects of inflation on production are:
34
Inflation hinders the inflow of foreign capital because rising cost of materials and other
inputs makes foreign investment less profitable.
During inflation, entrepreneurs start indulging in speculative activities in order to make
easy and quick profits. As a result productive activities in the economy suffer.
Due to high profit possibilities, businessman and traders are able to indulge in luxuries.
As a result, resources are diverted from production of essential commodities to luxuries.
Due to high rate of inflation, incremental saving ratio declines. As a result, production
process hinders due to low rate of capital formation.
Inflation reduces the degree of competition and protects inefficient producers. As a
result, producers produce sub-standard products in order to earn higher profits.
6.
a) Justify the following statements with appropriate reasons. (5×1=5)
i) Open market operation is the source of expand or contract of money supply.
ii) Transfer payments are excluded from GDP.
iii) Demand-pull inflation results economic expansion.
iv) Macroeconomics is the study of aggregates.
v) The MPC of poor is greater than that of rich.
b) Write short notes on (Any Four): (4×2.5=10)
i) Balance of payment
ii) Direct and indirect Taxes
iii) SAFTA
iv) Poverty
v) Gross domestic product at market price.
Answer:
a)
i) Purchase or sale of government securities by the Central bank are referred to as
open market operation. When central bank wants to increase money supply, it buys
bonds from private agents in the open market by using currency from its vault.
Similarly, when central bank wants to reduce money supply in the background of
inflationary pressure, it sells more securities in the open market.
ii) Transfer payments are excluded from GDP because they do not add productive
capacity of the economy.
iii) Demand-pull inflation is characterized by increase in employment, income and
output with increase in price level. Hence, it results economic expansion.
iv) Macroeconomics deals with the analysis of group or aggregate units of the national
economy. Macroeconomics is that branch of economics, which deals with the
behavior of aggregate such as a national income, total production, total
consumption, total saving, aggregate demand, aggregate supply etc.
v) The MPC of the poor is greater than that of the rich. Generally, poor people are
unable of satisfy even their basic needs. Therefore, they tend to spend larger
amounts of their income on consumption. But the rich people already enjoy a high
standard of living and, therefore, tend to spend less amount of their increased
income.
b)
i) Balance of payment of the country is an annual record of its international
transaction with other countries of the world. It is an important index which reflects
35
the true economic condition of the country whether the country is a creditor or
debtor. Balance of payment is derived by calculating costs of imports and exports of
all the visible as well as invisible items. Thus, total payment of prices of visible and
invisible goods and services during a fixed period of time is called balance of
payment. From all these trades and services, if a country receives more income than
expenses during a year, then it is known as favourbale balance of payment. But if a
country’s expenses exceed her income, then it is known as unfavourable balance of
payment. State of balance of payment is indication of economic development of a
country. Balance of payment consists of two components. They are current account
balance and capital account balance. These accounts constitute overall balance of
payments.
ii) Direct Tax: it is levied directly on individuals or firms or industry on their income,
and source of property. A direct tax cannot be shifted from one person or firm or
industry to the other people, firm or industry. A direct tax is one which is really paid
by the person whom it is legally imposed. This means impact and incidents fall on
the same person in direct tax system. Income tax, property tax etc are the examples
of direct tax.
Indirect tax: Indirect taxes are such tax which is levied on goods and services,
though incidents of the tax falls upon final consumer. It is such tax which is imposed
on one person but is paid partly or wholly by another person. It includes sales tax,
entertainment tax, excise duty, custom duty etc.
iii) Motivated by the commitment to strengthen intra SAARC economic cooperation to

maximize the realization of the region's potential for trade and development for the
benefit of their people, in a spirit of mutual accommodation, with full respect for
the benefit of sovereign equality, independence and territorial integrity of all states.
SAFTA framework also incorporated simplification and harmonization of standards
custom clearance, import licensing, import financing by banks and transit facilities
for landlocked countries. This agreement also provides environment for the
adoption of various instruments of trade liberalization on a preferential basis. The
main objectives of SAFTA are: eliminating barriers to trade, promoting condition for
fair competition, ensuring equitable benefits to all contracting states, creating
effective mechanism for the implementation and application of the agreement.
iv) In general poverty means inability to attain a minimal standard of living. The World
Bank has defined poverty as 'a state of economic, social and psychological
deprivation occurring among people or countries lacking sufficient ownership,
control or access to resource to maintain minimum standard of loving'. National
planning commission has defined a poor as individual with income/consumption
levels below the psychologically required level. Also it has been defined as inability
to attain the basic needs of a human being.
Poverty is a form of condition that affects society. It makes human beings weak,
ignorant and discarded. it is a state of helplessness material as well as morally. The
poor are always ready to negotiate for anything, anywhere and anytime for their
survival.
Poverty may be absolute or relative. Absolute poverty is the insufficiency of

resources available to an economic entity for the maintenance of physical
subsistence is so drastic that the affected parties are no longer able to live in a
36
manner of fit for human beings. The poverty of a country compared with those of
other countries or the status between the rich countries and the poor countries is
called relative poverty.
v) GDP at market price refers to total monetary value of final products produced from
all productive sectors within a country during a year. It includes only those
economic values which add productive capacity of the economy. But it excludes
some economic values such as capital gains, transfer payments, second hand sales,
etc, which do not add productive capacity of the economy.
GDPMP=C+I+G+(X-M)
Where,
C=personal consumption expenditure
I=gross private domestic investment
G=government expenditure
X-M=net exports
37
Business Communication
All questions are compulsory.
1. Why is the importance of communication important in business? Describe the formal and
informal communication networks in the business organization. 15
Answer:
Success of any business lies in communication. The more effective the communication is, the
better the results are. Communication is effective when it produces desired action in the
reader or audience. Effective communication is essential for the survival and progress of a
business concern.
The ability to communicate effectively is an essential quality of a businessman. A person may

be intelligent but he may not be able to get his message across to others. Ideas are generally
common, but the ability to convey then to others is rare.
A successful communicator exercises a good effect on the minds of his/her readers,

employees, supervisors, customers, suppliers, investors and business associates. They form a
good impression of the company and the communicator. S/He builds the goodwill of the
company he represents. Goodwill of a person or company attracts customers and wins
friends. Therefore, the ability to communicate effectively both orally and in writing is an asset
for the communicator. Through successful correspondence like the letters, reports, memos
etc., s/he leads his business to success. S/He writes to the people to demonstrate his ability or
lack of it.
Based on the style of communication in business organization, there can be two broad
categories of communication, which are formal and informal communication. They have their
own set of characteristic features.
Formal communication includes all the instances where communication has to occur in a set
formal format. Typically this can include all sorts of business communication or corporate
communication. The style of communication in this form is very formal and official. Official
conferences, meetings and written memos and corporate letters are used for communication.
Formal communication can also occur between two strangers when they meet for the first
time. Hence formal communication is straightforward, official and always precise and has a
stringent and rigid tone to it.
Informal communication includes instances of free unrestrained communication between

people who share a casual rapport with each other. Informal communication requires two
people to have a similar wavelength and hence occurs between friends and family. Informal
communication does not have any rigid rules and guidelines. Informal conversations need not
necessarily have boundaries of time, place or even subjects for that matter since we all know
that friendly chats with our loved ones can simply go on and on.
Depending on the business and its governing documents, formal communication can take the
form of a public speech, a newsletter, a publication or a letter. Formal communication delivers
38
an official position. For example, when you receive a letter from a company in which you hold
stock asking that you vote for -- or against -- a ballot issue, you can consider the letter a kind
of formal communication. It’s opposite, informal communication, could be, for example, the
internal 'grapevine' which can be oral or written that represents individual opinions and not
necessarily a corporate position.
2. Using the model for the communication process as a base, explain how people reading and
hearing the same message can disagree on its meaning. 10
Answer:
Communication is understood to be a complex process which includes various factors. These
variables make a model for communication process. Firstly the sender formulates message in
his inner mechanism, i.e. brain. Then the message is articulated. The speaker’s intended
meaning of the message can be different from the listener’s or receiver’s interpretation of the
meaning. When message is passed through different channels it is affected by physical
aspects of the environment and psychological aspects of the senders and receivers. There can
be different mental filters, various background knowledge, contexts stylistic knowledge,
strategies and so on in the mind of the listeners. All those factors influence the interpretation
of the meaning of the message. Thus the same message conveyed by the sender is received
differently according to the distinctive contexts and abilities of the individual receivers.
The following points are important to represent the notion which is discussed in the above
paragraph, regarding to the perception of meaning in different modes.
 A message arrives in a receiver’s sensory world (all that one can detect with the
senses).
 The senses pick up the message and relay it to the brain.
 The brain filters the message through all its contents (knowledge, emotions,
biases, and such) and gives it a unique meaning (decodes).
 This meaning may trigger a response, which the mind then forms (encodes).
 The person then sends by some medium this message into the sensory world of
another person.
 Within this person the process described above is repeated (another cycle begins).
 The process continues, cycle after cycle, as long as the people involved care to
communicate.
Since every communicator consists different mental filter, meanings sent are not always
received fully. Meanings are in the mind, not in the symbols used and the symbols we use are
imperfect, primarily because the reality they describe is so complex. (The students may
elaborate this basic concept to support their answer.)
3. Answer any THREE of the following questions: (3×5=15)

a) What is the role of adaptation in selecting the words that communicate?
b) “Some short words are harder and some long words are easy. Thus, the suggestion to
prefer short words doesn’t make sense.” Discuss.
39
c) What is you-viewpoint? What is its importance in business correspondence?

d) Why is conversational style favored in business correspondence nowadays?
Answer:
a) Principle of Adaptation plays a key role in applying communication theory in practice.
Adaptation in communication means to use the signs and symbols that fit in the mental
filter of the receiver. It is the principle on which many of the rules of good business writing
and speaking are based, and it serves to temper these rules in their applications.
In communication process, the meanings we give to the symbols we receive are
determined by our mental filters. Since our mental filters are made up of everything mind
has retained from all perceptions that have passed through it, every individual has his/her
own knowledge, perceptions and emotions and no two filters are alike. Because of this
difference in the makeup of the mental filters, we must strive to use the words and
symbols that fit the filter of concerned individual for effective correspondence. If the
language we use does not fit well in the receiver’s mind, we will not be able to
communicate and hence our objective remains unfulfilled. Therefore the principle of
adaptation is deemed important in effective correspondence.
b) Of course, the suggestion to use short words does not mean that all short words are easy
and long words are hard. The short words like gybe, verd, id are difficult to understand
than the long words—hippopotamus, automobile, and bicycle. But in general, short words
tend to be more familiar and heavy use of long words--although in some cases they may
be understood—leave an impression of difficulty that hinders communication. The
readability study also proves that short words generally communicate better than long
words. Therefore, the given statement is misleading and only expresses the partial truth.
c) The you-viewpoint involves seeing situations from the readers’ standpoint and choosing
words and strategies that will bring about a favorable response in their minds. To some
extent it involves using second-person pronouns, for the words you and your clearly call
attention to the readers and their interests. But the you-viewpoint goes much deeper. It is
an attitude of mind and, as such, can take many forms.
In business correspondence, using you-viewpoint creates positive effect in the readers. By
reading the phrases like “you will be happy to know” instead of “I am happy to announce”
in business message will make the readers feel happy as it is written from their
standpoint. Since it develops goodwill between the writer and reader, this technique
supports us to achieve our objectives as the writer successfully. Therefore, you-viewpoint
is always preferred in business correspondence.
d) One of the techniques that builds the goodwill in business correspondence is
conversational language. It tends to be warm and natural. Since conversational language is
free of technical words and jargons, readers won't have difficulty in comprehending it. It
looks familiar to them. And, as a result, familiarity breeds comfort and confidence. At the
same time, conversational language tends to be down to earth, thus a pragmatic tool for
any practical minded business executives. .
4. How are advertisements harmful to us? Explain the duty of consumer protection societies with
reference to the essay “Protection from Advertisements”. 10
Answer:
40
The advertisement critics have revealed that most of the advertisements have adverse effects
to human life. The hoarding boards and posters fixed on the roadsides may distract the
attention of the motorists and can cause road accident. Likewise, loudspeaker advertising
becomes more obtrusive than poster advertising. Loudspeaker advertising influences the
“captive audience” who can simply endure or flee. The editor of the New Yorker believes that
the issue of captive audience is simply the issue of life contemplative, whether a citizen has a
right to twirl his thoughts around as he pleases or vice versa.
Likewise, subliminal advertisings are too not beyond the target of the critics. These
advertisings depend on the fact that both aural and visual impressions can be made on the
mind while the person concerned is unaware of them. Since the subliminal advertisings
unknowingly influence the people the people to by the goods, or unconsciously indoctrinate
the people, they are considered harmful and have been shunned from the advertising
profession.
In order to be protected from such harmful and misleading advertisements, the consumer
protection society has run the movement of creating awareness in the consumers against the
misleading. The organization itself tests the goods whether they are of good quality or not and
recommend the buyers to buy the best ones. Such organizations impel people to observe the
advertisements dispassionately and though they work for the benefit of the consumers, like in
politics they restrain them from the freedom of choice.
5.
a) Suppose you are the manager at Himchuli Store. Ms Arati Khanal, a customer from the
nearby city, bought a John Players’ expensive pullover from your store two weeks ago.
Now she has mailed it back asking for a refund. Ms Arati explained that the dress was not
a good fit and that she really did not like it anymore. But some stains on the dress proved
that she had worn it. Now, write a negative message letter refusing her request with
proper explanation why her money can’t be refunded. 7
b) You are the Customer Service Manager of Surya Electronic Supply, Santipath, Birgunj. You
have received a complaint letter from your regular customer demanding replacement for
the damaged goods or refund the money paid. Write an adjustment letter assuring that
the money will be refunded. 8
Answer:
a)
Himchuli Store
(Address and tel. no)
November 19, 2008

Ms. Arati Khanal
(full add.)
Dear Ms. Khanal:

We understand your concern about the exclusive John Players pullover you returned
November 18. As always, we are willing to do as much as we reasonably can to make
things right.
41
What we can do in each instance is determined by the facts of the case. With returned
clothing, we generally give refunds. Of course, to meet our obligations to our customers
for quality merchandise, all returned clothing must be unquestionably new. As you know,
our customers expect only the best from us, and we insist that they get it. Thus, because
the stains on your dress would prevent its resale, we must consider the sale final. We are
returning the dress to you. With it you will find a special alteration voucher that assures
you of getting the best possible fit free of charge.
So, whenever it is convenient, please come by and let us alter this beautiful John Players
creation to your requirements. We look forward to serving you.
Sincerely,
Ajay Das
Manager
b)
Surya Electronic Supply
Santipath, Birgunj
October 30, 2009
Mr.Rajan Adhikiri
Loknath Village,
Hetuda.
Dear Mr. Adhikari:
Thank you for your recent letter. I apologize for the inconvenience you faced. Please, visit
our outlet and choose any other machine for the replacement. If you want refunding,
please let us know.
If you wish replacement, visit our outlet any working day from 9 am to 5 pm. If you prefer
refunding, send us your bank account number or mailing address so that you can send you
a cheque. You call us at 9841528860 in inform us about your decision.
I again apologize for the inconvenience. As you know, errors often occur and best thing
about them at Surya is that we try to avoid them in the future. We assure you that we will
try our best to make you happy in the coming days.
Sincerely,
…………..
Saroj Saha
Manager
6.
42
a) Describe how audience analysis contributes to any oral and written communication. 5
b) Explain the role of voice quality in effective oral communication. 5
Answer:
Audience Analysis / (Audience awareness / Study):- One requirement of good speech
making is to know the audience. Audience analysis can be carried out in two phases--
before and during the presentation (speech). They are called (i) preliminary analysis (ii)
Analysis during presentation
(i)Preliminary Analysis: - In analyzing the audience before the speech, the following points
are considered.
- Size up the audience in advance.
- Look for characteristics of audience that will affect the speech, such as size, sex, age,
education, knowledge and experience.
(ii)Analysis during presentation (Speech) :-
- Continue analyzing the audience during the speech called Feedback.
- Facial expressions, movements and noises give feedback information the helps the
speaker adopt to the audience.
- Continuous alertness provides much information from the audience which helps to make
better speech.
Before we begin our talk (speech) we should size up our listeners - their age, sex,
background, knowledge, experiences and the audience. But even if we do not, a quick
glance will enable us to sense. Whether they are a group of friendly or hostile people,
whether their eyes are lit with eager expectation or they have been huddled into the
room against their wish. A lot of common sense is required to become a good speaker.
Use it to choose a suitable approach to the audience. Try to converse with them. Each
listener should feel the speaker is talking to him/ her individually. No verbal fireworks
(shouts) are necessary to arrest attention. Instead, speak with conviction and sincerity and
we will in all probability be able to lure them into listening. If the subject is drab
(uniteresting) give it a personal touch. If necessary, dramatics certain ideas. Give the
impression that we wish to share our views and ideas with the audience.
Another way to awaken an audience is to relate a joke. Humour arising from personal
anecdotes (description) is perhaps the best. If a listener smiles or whispers to a neighbour,
do not feel disturbed, nor presume that he/ she is critizing you. He / She in fact, be
expressing his admiration. Full concentration on ideas is must.
a) Use of voice quality: - Along with skill of preparing public speech and its presentation,
good voice is also an obvious requirement of good speaking. Like bodily movements, the
voice should not hinder (disturb) the listener's concentration on the message. More
specially, the voice should not detract (reduce) attention from the message. Generally
four faults affect voice:-
(i) lack of pitch variation
(ii) lack of variation in speaking speed.
(iii) lack of vocal emphasis.
(iv) unpleasant voice quality.
(i)Lack of pitch variation :- Speakers who talk in monotones are unlikely to hold their
listener's for long. Because most voices are capable of wide variations in pitch, the
43
problem usually can be corrected. Most often the failure to vary pitch is a matter of habit
of voice problems, developed over years of talking without being aware of effect.
(ii)Lack of Variation in Speaking Speed:- Determining how fast to talk of the message at a
fairly brisk (quick) role an hard to understand information at a slower pace. The reason for
varying the speed of presentation should be apparent. Easy information presented slowly
is irritating; hard information presented rapidly may be difficult to understand.
(iii)Lack of Vocal Emphasis :- A secret of good speaking is to give words their emphasis by
varying the manner of speaking. This can be done by (a) Varying the pitch of voice (b)
varying the pace of presentation, and (c) varying the volume of voice.
We must talk loudly enough for all of our audience for a large group should be greater
than that for a small group. The contrast in voice provides the emphasis. Variety in voice is
the key to making voice more effective.
(iv)Unpleasant Voice Quality:- It is hard fact of communication that some voices, are more
pleasing than others. But some are raspy (rough), nasal, or in some other way unpleasant.
Voices can be improved. By concentrating on variations in pitch, speed of delivery and
volume, one can make even the most unpleasant voice effective.
Improvement through self Analysis :- Most of the fore-going voice problems can be
overcome through self-analysis. With recording technology, it is easy to hear our own talk
and can improve our presentation.
7.
a) Write you-viewpoint sentences to cover each of the situations described. (5×2=10)
i) We are happy to have your order for Hewlett products, which we are sending today
by UPS.
ii) We sell the Chicago cutlery set for the low price of Rs. 400 each and suggest a retail
price of Rs. 500.
iii) Our policy prohibits us from permitting outside groups to use our equipment except
on a cash-rental basis.
iv) We have been quite tolerant of your past due accounts and must now demand
payment.
v) We have received your report of May 1.
b) Rewrite the following sentences by correcting them grammatically and making them more
concise and business like. (5×1=5)
i) A bottle containing poison was found by the man.
ii) Today is my birthday and to celebrate it I had a cake with sixteen candles on it.
iii) A bowl of apples were standing on the table.
iv) Every boy and girl in the class were awarded a certificate for their work.
v) I have a date with the pediatrician tomorrow.
Answer:
a)
i. We are happy to have your order for Hewlett products, which we are sending today
by UPS.
44
● Your selection of Hewlett products should reach you by Saturday, as they were
shipped by UPS today.
ii. We sell the Chicago cutlery set for the low price of Rs. 400 each and suggest a retail
price of Rs. 500.
● You can reap a Rs. 100 profit on each Chicago Cutlery set you sell at Rs. 500, for
your cost Rs. 400.
iii. Our policy prohibits us from permitting outside groups to use our equipment except
on a cash-rental basis.
● As your tax money pays our office expenses, you will appreciate our policy of
cutting operating costs by renting our equipment.
iv. We have been quite tolerant of your past sue accounts and must now demand
payment.
● If you are to continue to enjoy the benefits of credit of buying, you must clear
your account now.
v. We have received your report of May 1.
● Thank you for your May 1 report .
b)
i) The man found a bottle containing poison.
ii) Today is my birth day and I have a cake with sixteen candles to celebrate it.
iii) A bowl of apples was on the table.
iv) Every boy and girl in the class was awarded a certificate for the work.
v) I have a date with a child specialist tomorrow.
8. Write short notes on any TWO of the following : (2×5=10)
a) Nonverbal communication
b) Extemporaneous presentation
c) Grapevine
Answer:
a) Nonverbal communication (NVC) is usually understood as the process of communication

through sending and receiving wordless messages. Such messages can be communicated
through gesture; body language or posture; facial expression and eye contact; object
communication such as clothing, hairstyles or even architecture; symbols and infographics.
Speech may also contain nonverbal elements known as paralanguage, including voice
quality, emotion and speaking style, as well as prosodic features such as rhythm, intonation
and stress. Likewise, written texts have nonverbal elements such as handwriting , spatial
arrangement of words, or the use of emoticons.
However, much of the study of nonverbal communication has focused on face-to-face

interaction, where it can be classified into three principal areas: environmental conditions
where communication takes place, the physical characteristics of the communicators, and
behaviors of communicators during interaction.
b) Extemporaneous presentation is given without the help of notes. The speaker speaks and it
seems natural for the audience. The speaker might have prepared so thoroughly that s/he
45
remembers everything in the presentation. Or the speaker might be a competent natural

talker who just generates ideas and moods during the presentation itself. Whatever the
case, this kind of presentation appears natural, may be little less organized, and may also
have informalities. Most important benefit in this kind of presentation is that the speaker
adapts his or her presentation according to the verbal and non-verbal cues from the live
audience.
c) The informal communication is known as the grapevine (gossip) in management literature.
Certainly, it consists of much gossip and rumor. And it is often changing and inaccurate
depending on the human beings. But even so the grapevine carries far more information
than does the formal communication system and on many matters it is more effective in
determining the organizations life. Wise managers recognize the presence of the
grapevine. They learn who the talk leaders are and communicate to them. Managers can
use this network effectively by keeping in touch with the grapevine and turn it into a
constructive tool.
46
Mathematics & Statistics

Section:-‘A’
1.
a) A company purchased machinery for Rs. 1,20,000 and set aside Rs. 6,000 at the end of each year
to accumulate to replace the machinery. After what time would the sum of Rs. 1,20,000 be
replaced, reckoning interest at 3.5% p.a., compounded? 5
b)
i) Write down symbols used in decimal, hexadecimal and binary system? 2.5
ii) Convert (236.2)8 into decimal form. 2.5
Answer:
a) P.V. (Present Value)= Rs.1,20,000
A= Rs.6, 000
i = 0.035
n=?
Using the formula,
p.v. 
A
i
1  (1  i )  n 
1, 20, 000 
6, 000
.035
 1  (1  .035)  n 
20  .035  1  (1.035)  n
.7  1  (1.035)  n
(1.035)  n  1  .7
(1.035)  n  .3
Taking log of both sides
 n log(1.035)  log(.3)
 n(.0149)  1  .4771
 n(.0149)  .5229
n  35.09
 Re quired time  35 years
b)
i) Symbols in Decimal System are: 0,1,2,3,4,5,6,7,8,9
Symbols in Hexadecimal System are: 0,1,2,3,4,5,6,7,8,9,A,B,C,D,E,F
Symbols in Binary System are: 0,1
ii) (236.2)8 = 2×82+3×81+6×80+2×8-1

=128+24+6+.25
=158.25
2.
47
a) A candidate is required to answer 6 out of 10 questions which are divided into 2 groups each
containing 5 questions and he is not permitted to attempt more than 4 from any group. In how
many different ways can he make up his choice? 5
b) What do you mean by arithmetic progression? Write two differences between arithmetic and
geometric progressions. Mr. Shyam borrows Rs. 8,190 without paying interest, if he pays the
loan in 12 monthly installments, each installment being twice the preceding one. Find the first
and last installment. (1+1+3=5)
Answer:
a) Group A Group B
5 questions 5 questions
A candidate can attempt the questions as follows:
4 from group A 2 from group B
The total number of different ways
 5c4  5c2  5c3  5c3  5c2  5c4
5! 5! 5! 5! 5! 5!
  
4!1! 3!2! 2!3! 2!3! 2!3! 4!1!
 5 10  10 10  5 10
 200
b)
i) If the difference between any terms to its preceding term is same then the progression
is Arithmetic progression.
ii) In an AP the difference of two consecutive terms is same but the GP their ratio is
same and if a, b, c are in AP then a+k, b+k, c+k, are in AP but if a, b, c are in GP then a+k,
b+k, c+k are not in GP.
iii)
Since
Sn  8190
n  12
r2
We know that
a(r n  1)
Sn 
r 1
a(212  1)
8190 
2 1
8190
a  12 2
2 1
The last term, tn  ar n 1
48
tn  2  2121  4096
Thus, first term = 2 and Last term = 4096
3.
a) A company sells three different items A, B and C from its three different shops X, Y, Z. The
quantity sold from the shops and the profits earned daily are given below:
Shops Sales of Units Profit

A B C (In Rs 100)
X 2 3 4 20
Y 3 4 5 26
Z 3 5 6 31
Find the profit from each unit of the different items. 5

b)
i)
A function f: A B is defined from Set A to Set B, what is the relation between range of f and
Set B. 2.5
ii) A company observes that the fixed cost of the new product is Rs. 4,80,000 and the variable
cost per unit is Rs. 1,500. The revenue function for the sale of x units is given by 400x +
700x2. Find cost function, profit function and breakeven point. 2.5
Answer:
a)
Shops Sales of Units Profit
A B C (In Rs 100)
X 2 3 4 20
Y 3 4 5 26
Z 3 5 6 31
Let the profit from one unit of each of the items A, B and C be x, y and z in Rs.100 respectfully.
Then the equations are
2x+3y+4z=20
3x+4y+5z=26
3x+5y+6z=31
49
2 3 4
 3 4 5
3 5 6
2 1 1
3 1 1
3 2 1
Byc2  c2  c1andc3  c3  c2
2 1 1
Let,  1 0 0
3 2 1
ByR2  R2  R1
 (1  2)
1
20 3 4
1  26 4 5
31 5 6
20 3 4
 6 1 1
5 1 1
ByR2  R2  R1andR3  R3  R2
20 3 4
 1 0 0
5 1 1
ByR2  R2  R3
3 4
(1)
1 1
 (3  4)
1
50
2 20 4
 2  3 26 5
3 31 6
2 20 4
1 6 1
0 5 1
ByR2  R2  R1andR3  R3  R2
2 0 4
1 1 1
0 0 1
ByC2  C2  5C1
2 0
1 1
 (2  0)
2
2 3 20
 3  3 4 26
3 5 31
2 3 20
1 1 6
0 1 5
ByR2  R2  R1andR3  R3  R2
2 3 5
1 1 1
0 1 0
ByC3  C3  5C2
 (2  5)
3
1
x 1


y 2 2


z  3 3

Thus the profit per unit of A,B and C are Rs.100, Rs.200 and Rs.300 respectfully.
51
b)
Since
f :A B
The range of f is subset of set B
That is, range of f  SetB
All the elements of range are present in set B
i) According to question
Cost function=c(x)=1500x+4,80,000
Revenue function=R(x)=400x+700x2
Profit function=P(x)=R(x)-C(x)
=400x+700x2-1500x-4, 80,000
=700x2-1100x-480,000
For Breakeven point
P(x)=0
Or 700x2-1100x-4,80,000=0
Or 7x2-11x-4,800=0
11  (11) 2  4.7.(4,800)
x
2 7
11  121  1,34, 400
x
14
11  366.77
x
14
Negative is not possible ( 366.77 >11)

So,
11  366.77
x  26.98  27(nearly )
14
At x=27, we get the break even point.
4.
a) A factory turns out two articles A and B each of which is processed by two machines X and Y. A
requires 2 hours of X and 4 hours of Y, B requires 4 hours of X and 2 hours of Y. If x is the
number of A and y is the number of B produced daily, write down two inequalities in x and y,
noting that neither x nor y can work more than 24 hours a day. Graph the inequalities and shade
the feasible area. 5
b) If find
5
52
Answer:
4(a)
Machine-X Machine-Y
Article- A 2 4
Article-B 4 2
Total 24 hrs 24hrs
Let the total number of article-A and article-B are x and y respectively.
The required inequalities are
2 x  4 y  24
4 x  2 y  24
x  0, y  0
b) Given,
2mn
TanA 
m n
2 2
A
2Tan
or , 2  2mn
A m2  n2
1  Tan 2
2
A 2 A
or , 2Tan (m  n 2 )  2mn(1  Tan 2 )
2 2
A A
or , mnTan 2  (m 2  n 2 )Tan  mn  0
2 2
A (m 2  n 2 )  ( m 2  n 2 ) 2  4mnmn
or , Tan 
2 2.mn
A ( m 2  n 2 )  ( m 2  n 2 ) 2
or , Tan 
2 2mn
( m  n )  ( m  n )
2 2 2 2

2mn
2 n 2 m 2
2
 ,
2mn 2mn
n m
 ,
m n
5.
53
a) The production function where is the total output and F is units of input.
Find the number of units of input required for maximum output and the output at that point. 5
b) If the marginal revenue function is given as find the maximum revenue and also
the total and average revenue functions. 5
Answer:
a)
Q=8+16F-F2
dQ
  16  2 F
dF
For maximum or minimum

dQ
0
dF
or ,16  2 F  0
or , F  8
d 2Q
 2
dF 2
Which is negative
So Q is maximum at F=8.
The maximum output=8+16.8-82
=72
2
b) MR=9-4Q
Total revenue TR is maximum when
MR=0
Or 9-4Q2=0
3
or , Q 
2
3
Maximum, TR   02 ( MR )dQ
3
  02 (9  4Q 2 )dQ
3
4
 (9Q  Q 3 ) 02
3
3
3 43
 9.     0  0
2 32
27 9
 
2 2
18

2
9
Total revenue function is
54
4
R   (9  4Q 2 )dQ  9Q  Q 3  K
3
when output Q  0, R  0
K  0
4
 R  9Q  Q 3
3
R 4
Average revenue   9  Q2
Q 3
Section:-‘B’
6. The following sums have been obtained from 100 observation pairs: (3+2+3+2=10)
∑x = 12,500∑x2 = 15,85,000
∑y = 8,000∑y2 = 6,48,100
∑xy = 10,07,425.
a) Find regression equationof y on x.

b) Estimate the value of y, when x = 130.
c) Compute the correlation coefficient (r) between x and y.
d) Interpret the obtained value of r.
Answer:
a) Required equation of y on x is y  y  byx ( x  x)
y  80  0.55(9 /15)( x  125)
y  80  0.33x  41.25
 y  0.33x  38.75
b) If x = 130, y = 0.33x 130 + 38.75 = 81.65
∑ ∑ ∑
c) Cov.(x,y) = ( )( ) ( )( )
= 10074.25 – 10000 = 74.25
√∑ (
∑
) √ ( ) √ ( )
=√ √
√ ( ) =√ √ =9
74.25
r   0.55
15  9
d)
There is positive correlation between X and Y.
7.
55
a) A sum of money was invested for 5 years. The average rate of intersest for the five successive
years was 8.50, 10.00, 9.30, 8.76 and 7.88 percent. Compute the combined average rate of interset
for 5 years. (5)
b) The mean, median and mode of a group of 25 observations are 143, 144 and 147 respectively. A
set of 6 observations is added to this data with values 132, 125, 130, 160, 165 and 157. Find
mean, median and mode for the combined group of 31 observations. (2+2+1=5)
Answer:
a)
Let r % be the combined average rate of interset, then
( ) =( )( )( )( )( )
= (1.085)(1.1)(1.093)(1.0876)(1.0788)
5 log( ) = log[1.085 1.1 1.093 1.0876 1.0788]
= log(1.5305683)
log( ) = log (1.5305683) = (0.1848527) = 0.03697
( ) = antilog 0.03697 = 1.0888
= 0.0888
r = 8.88%
.
b)
Mean of 25 observations = 143
Sum of 25 observatins = 143 X 25 = 3575
Sum of 6 observations which are added = 132+125+130+160+165+157
= 869
Sum of 31 observations = 3575+869 = 4444
Mean of 31 observations = = 143.35
Arranging the 6 observations 132, 125, 130, 160, 165, 157 in ascending order, we get
125, 130, 132, 157, 160, 165
Since three observatins are less than 144 and three are more than 144, the median will remain unaffected, i.e., the
median will remain 144.
Mode should remain 147.
8.
a) An analysis of weekly wages paid to workers in two firms A and B gives the following results:(2+3=5)
A B
No. of workers 60 80
Average wages 300 350
Standard deviation 40 45
i) In which firm there is greater variability of wages?
56
ii) What are the measures of average wage and standard deviation of the two firms taken
together?
b) In a certain college, 25% of the students failed in Accounts, 15% of the students failed in
Statistics and 10% failed in both Accounts and Statistics. A student is selected at random. (2.5+2.5=5)
i) What is the probability that he has failed in Accounts given that he has failed in Statistics?
ii) What is the probability of his failure in Statistics given that he has failed in Accounts?
Answer:
a)
Coefficient of variation of firm A =
45
Coefficient of variation of firm B = x100  12.86%
350
The firm A has greater variability
Average wage of two firms taken together =
= = Rs. 328.57
S.D. of the firms taken together or Combined S.D.
( ) ( )
=√ ( )
( )
=√
=√ =√ = 49.54.
b) Let A and B be the events that a student failed in Accounts and Statistics respectively. Then
P(A) = 0.25, P(B) = 0.15 and P(A and B) =0.10
i) The required probability that a student has failed in Accounts given that he has failed in Statistics is
given by
P(A and B) 0.10 2
P( A / B)   
P( B) 0.15 3
ii) The required probability that a student has failed in Statistics given that he has failed in Accounts is
given by
P(A and B) 0.10 2
P( B / A)   
P( A) 0.25 5
9.
a) Write down the characteristics of a good statistical average. 5
b) The following table gives the index numbers for different groups together with their respective
weights for 2000 (base year = 1995): (3+2=5)
57
Group Group Index No. Group Weight

Food 130 60
Clothing 280 5
Lighting and fuel 190 7
Rent 300 9
Miscellaneous 200 19
i) Find out the overall cost of living index number for the year 2000.
ii) Suppose a person was earning Rs. 1,500 per month in 1995, what should be his salary in
2000, if his standard of living in that year is to be the same as in 1995?
Answer:
a) Characteristics of a good average
A M depends on all observations, but mode and median do not depend all observations.
A M can be easily understood and computed but GM and H M can not be easily understood and computed.
Mode and median are easy to understand but their calculations are not so easy.
A M is least affected by sampling fluctuations and it is used for drawing inferences about the population.
A M and G M are suitable for further statistical computations.
A M is very much affected by the presence of a few extremely large or small values of the variable but G
M and H M are not much affected. Similarly median and mode are unaffected by the extreme values
b)
i. Overall cost of living index in 2000
=
ii. The salary of the man in 2000 should be
= Rs. 2,554.5.
10.
a) The following are the annual profit in thousands in a certain business.
Year 2001 2002 2003 2004 2005 2006 2007

Profit (Thousand) 60 72 75 65 80 85 95
Develop the linear estimation equation to estimate the profit for the year 2011 and also find the
monthly increment of the profit. (4+1=5)
b) Write appropriate answer in the given space. (51=5)

i) Mean – Mode = __________ (Mean – Median).
ii) Coefficient of dispersion are _______________ measure of dispersion.
58
iii) A distribution with more C.V. is said to be _____________ than the other.
iv) The correlation coefficient between two independent variable is _________.
v) The product of two regression coefficients cannot exceed ______________ .
Answer:
a)
Fitting a Straight Line Trend by Least Squares
Year profits(ooo) t-1994 XY X2 Yc
t Y X
2001 60 -3 -180 9
2002 72 -2 -144 4
2003 75 -1 -75 1
2004 65 0 0 0
2005 80 +1 +80 1
2006 85 +2 +170 4 Yc =
2007 95 +3 +285 9 76+4.857X
2
N=7 ∑Y = 532 ∑X=0 ∑XY=136 ∑X =28
By the method of least square the normal equations are

Y  na  b X
 XY  a X  b X 2
Since  x  0, a 
 y , b   xy
n x 2
532 136
a   76 and b   4.857
7 28
The trend equation would be Yc  76  4.857 X
For t = 2011, the value of X would be +7.
Then, Y2011  76  (4.857 x7)  Rs.109.99
b 4.857
  0.405
The monthly increment of the profit = 12 12
b)
i) 3
ii) relative
iii) More variable
iv) Zero
v) ±1
59
Management & Organisational Relations

7. Read the following and answer the question accordingly: (4×5=20)
Kankai Tea Estate, situated at Haldibari, Jhapa is one of the famous tea estate among the
tea estates of Jhapa. Parajuli and Brothers started the company in 1995 with 100 staffs. The
company currently employs 500 employees including labour with 50 supervisors and official
staffs.
Mr. Narayan Prakash, after doing MBA in 1994 from Pune University, joined this company as
CEO in 1995. Mr. Narayan Prakash was successful in marketing the products.
During the initial years, the Estate was able to increase its sales at a high rate. During those
periods competition was nominal. But at present, there are more than 20 tea estates in
Jhapa district only.
Mr. Narayan Prakash had a desire to do something better or more efficiently than it has
been done before. Mr. Narayan wanted to improve employees' spirit, but like other, he did
not have the resources to give out big raises.
During October 2008, Narayan had some serious employees' problems. Many labours and
supervisors joined other tea estates, labour absentism increased and production lowered.
Since October 2008, sales is in decreasing level. Many good supervisors are dissatisfied and
are thinking to leave the company. By observing the worst scenario, on 1st January 2009, Mr.
Narayan hosted a party inviting all officials, supervisors and labours, but only 130 out of 500
employees attended the party.
Mr. Narayan failed to boost morale of the employees.

a) What is your assessment about the conditions of Kankai Tea Estate?
b) Identify the company's real problems?
c) What kind of challenges might Narayan encounter?
d) Suggest appropriate ways to improve company's performance through motivation.
Answer:
a) Kankai Tea Estate, established in 1995, did well during twelve years, when competition
was nominal. During initial phase the estate was successful to achieve targeted
production as well as able to sale the product. But during 2008 the scenario of the
estate was a pity. Production lowered and sales goes down.
b) At present, Kankai Tea Estate is encountering the following problems:
 Tough competition among the Tea Estates.
 Increasing absenteeism.
 Excessive turnover.
 Frustration among employees.
 Low output.
 Unrest in the employees.
 Increasing trend of leaving the organization.
c) The biggest challenge Mr. Narendra Prakash might be facing in employees problems.
Honest and successful supervisors are leaving the organization. How to retain these
60
efficient employees? How to improve output and sales? How to motivate the
employees? What factors can energizes behaviour of the employees? How to know the
motivation factors? These are some of the problems before Mr. Narendra Prakash.
d) The following are some of the ways to improve company performance through
motivation:
 A study must be done by Narendra Prakash to know the wages, salaries and
other benefits obtained by employees of other Tea Estates.
 After this study, if variation in salary of the employees observed, adjust the
wages and salary structure.
 Analyze the complete situation about expectations of employees.
 Start the monthly meetings with employees to discuss their problems and
expectations.
 Entertain the appropriate ideas performed by employees.
 Maintain good interpersonal relation.
 Introduce employees reward programmes for motivating employees.
 Performance based wages increase is necessary.
 Formulate suitable performance appraisal system.
 Try to provide for developing personal growth and security.
These are some of the ways to improve employees performance through motivation.
8.
a) Why is decision making so crucial in managerial effectiveness? 10
b) Define goal succession. Explain the goal formation process. (4+6=10)
Answer:
a) A decision is an action to make an answer of a question about possible courses of
action. There are alternatives so managers should go through the process of decision
making. Every manager of all level is involved in decision making activities. In fact
decision making connects all functions of management. The most fundamental function
of management is decision making.
Decision making is at the center of an organization. Decisions are made everyday. Some
decisions are minor and simple but many decisions are major and complex. All the
functions of managers involve decision making. The quality of management decisions
determines, to a large extent, the organizational performance. The managerial
decisions, thus serve as the yardsticks of managers' effectiveness. Right decisions open
up new opportunities for them. But poor decisions can be costly for the organizations. In
fact, all of the managerial decisions have positive or negative and little or more impact.
So decision making is crucial in managerial effectiveness.
Effective decision making requires an understanding of the nature of problems to be
solved and an assessment of the situation in which the solution has to be sought. In the
age of accelerating changes, decision making job has become more complex than ever.
Therefore, the managers who are able to assess the nature of the problem, situation
and uncertainty are able to make more effective decision. Today, decision making has
become a challenging task for managers. Decision making is considered as a vital
managerial skill.
In fact, there are different types of decision in the management process. On the basis of
frequency of recurrence, decisions can be programmed or non programmed. On the
61
basis of nature, organizational decisions are operating, strategic and administrative

decisions.
Programmed decisions are repetitive and routine type and rules provide guidelines. But
non-programmed decisions are those that can not be foreseen and it deals with unusual
and exceptional problems. So the ability to make non programmed decisions become
very important and more crucial. Operating decisions are like programmed decisions
and lower level managers take these decisions. Middle level managers involve in
administrative decisions which maintain a link between the strategic and operating
decisions. Strategic decision making is very challenging so the information and views of
these are taken gain consensus. In process of making decisions, managers can follow
different styles as autocratic and consultative.
As the decision making in management is done by different levels and decision itself is
of different types, and as every decision makes impact, it is very crucial. Though its
crucial, to have effective decision making is necessary in management. Basic elements of
effective decision making should be considered at time of practice. All the time, they
should be clear about decision making body, decision rules and information. They
should not forget that decision should be timely and communication is necessary.
Decision maker has to be aware of the short-term and long-term impact of decisions.
b) Goals are the guiding force for the organizations. Goals are changing due to change in
the internal and external environments of the organization. Goal succession is thus,
defined as "conscious attempt by management to shift an organization's course".
Changes in goals is done consciously and intentionally. If the original goals achieved, the
organization must set new goal for its continued existence. If the environment changes
goal must be modified to cope with changed environment. Similarly, if the existing goals
may prove unrealistic to achieve, modified goals are adopted. Modification of goals may
also be needed to actual performance deviates significantly from target.
Goal formation process
Goals direct the activities of the organization. Therefore, goals should be formulated
carefully. Goals must be specific and such goals must understand by all. Goals should
also be measurable, acceptable, realistic and time bound.
The goal formation process consists of three steps.
i) Environmental scanning:
Environmental scanning includes analysis of trends in the external environment
forces, i.e., political, economic, socio-cultural and technological. Such forces provide
either opportunities or create threats to the organization. However, they cannot be
controlled by the organization.
Strengths and weaknesses- key strengths and weaknesses of internal environment
are analyzed. But these are controllable by the organization.
ii) Formation of overall goals:
Based on the analysis of environmental trends and opportunities, overall goals of
the organization are set. Top level managers determine the organization's mission,
and strategy and overall goals in key result areas. Example are: 10 millions product
marketed, 10% return on investment, 10% increase in market share etc.
iii) Formation of specific goals:
62
Specific goals includes the department-wise goals or section-wise goals. To

accomplish the overall goals, section-wise or department-wise goals are formulated.
Individual goals, section-wise goals, department-wise goals are formulated to
achieve overall goals.
9.
f) Define control and explain the elements in the control process. 10
g) What is organizational structure? 5
Answer:
a) Control is one of the important functions of management. It is a function intended to
ensure and make possible the performance of planned activities and to achieve the
predetermined goals. The definition of control as function management is the process of
ensuring that actual activities conform to planned activities. Control picks up where
planning leaves off.
To control means to focus attention on moving ahead and on shaping the pace and
pattern of future events, to make things happen, to secure results, to remove obstacles
and gain command over the forces of uncertainty and complexity. To control also means
to regulate and check. It is necessary to structure and condition the behaviour of events
and people, to place restraints and curbs on undesirable tendencies, to make people
conform to certain norms and standards, to measure progress, to keep the system on
track and to ensure that what is planned is translated into results. The control function
involves monitoring the activity and measuring results against established standards,
analyzing and correcting derivations as necessary.
Apart from being a function of the management, control; it is a process within the
broader management process. Within any control system, the following elements are
identifiable.
1. Objectives and characteristics of the system which could be operationalized into
measurable and controllable standards.
2. A mechanism for monitoring and measuring the characteristics of the system.
3. A mechanism for (i) comparing the actual results with reference to the standards
(ii) detecting deviations from standards and (iii) learning new insights on
standards themselves.
4. A mechanism for feeding back corrective and adoptive information and
instruction to the system, for effecting the desired changes to set right the system
to keep it on course.
These elements can be linked logically and sequentially together that the control cycle is
portrayed. It starts from determination of goals and programmes of action and followed
by determination of work loads and estimation of required resources. It will be linked by
delegation of authority, work performance and evaluation of performance. The notion
of control cycle suggests feedback from one phase to the other on a continuous basis.
Establishment of standards of performance, monitoring, measurement and evaluation
are the phases in the control process. Ideally, the goals and objectives be stated in clear
measurable terms. Monitoring and measurement of performance is ongoing repetitive
process. If performance matches the standards, it is assumed that everything is under
control. If performance falls short of standards corrective action is required.
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Control does not merely identify past failure and monitor performance but emphasis on
devising constructive ways to bring performance up to standard.
b) Organizational structure refers to the ways in which on organization's activities are

divided, organized and coordinated. The process of organizing results in the creation of
a formal organizational structure which is defined as a system of patterned and inter-
related task units and authority positions. It is called formal structure since it is
deliberately and purposefully planned and designed by management. It is a network of
assigned tasks, defined roles and designed relationships among people working for a
common organizational purpose.
The patterns of activities, interactions and behaviours of people are specified and
standardized through the organizational structure to ensure efficiency in the
performance of tasks and utilization of resources. Organizational structure provides the
framework for managers and others for performing the various functions expected of
them and for facilitating the work flow in the organization.
While designing the structure of an organization, management has to consider several

important factors like goal,technology,environment and people. The goals of an
organization have a decisive role in designing the structure as goals determine tasks and
strategies. If technology is routine and simple, it will reflect in the form of a less complex
structural design. Environmental forces make their influence felt directly at the
structural level. Large organizations which operate in a rapidly changing environment
have to design adaptive and organic structures as coping mechanisms. In these types of
structure, jobs, roles and relationships are not rigidly determined. Human organizations
cannot afford to have machine-like impersonal structures for long. People's needs,
aspirations, skills and attitudes are important factors to be considered while designing
an organizational structure. Organizational structure has a great contribution to make
people's motivation, performance and satisfaction.
10.
a) Define planning. Explain the major steps involved in the planning process. (3+7=10)
b) Explain briefly the leadership practices in Nepal. 5
Answer:
a) Planning is deciding in advance about what to do,how to do it, when to do it and who is
to do it. It provides the ends to be achieved. In the words of Ricky Griffin "Planning is
setting an organization's goals and deciding how best to achieve them."
In other words, planning is the process of formulating goals, identifying activities to be
undertaken to attain these goals, choosing the means to attain the goals, and finally
attaining the goals.
Planning attempts to define the future road map of organization. All other management
functions of an organization are based on planning.
Steps in planning
Planning is a systematic way of doing things. The steps involved in planning process are:
i) Setting the goals:
Goals determination is the first step in the planning. Goals provide direction
about what is to be done. They guide actions of the organization. Goals are the
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end point of what is to be done. Where the primary emphasis is to be placed,

and what is to be accomplished by the network policies, strategies, procedures,
rules and budget.
ii) Develop Premises:
The second step involves developing planning premises. Premises are simply
assumptions on which plans are based. It is the anticipated environment, they
are assumptions of future conditions in which the plan is to be implemented.
Premises can be about sales, product, price, cost, technology, tax rates etc.
Premises should be developed about all the aspects of plan.
iii) Determine and evaluate alternatives:
If there is no alternative, planning is not necessary. Therefore every possible
alternative has to be carefully studied and analysed. Most attractive alternatives
are identified for evaluation. Quantitative tools are used for evaluation.
Computer can be a great help.
iv) Select a course of action:
Now, the best course of action is selected. If alternatives have been clearly spelt
out and carefully examined, the most desirable choice is made. Two or more
alternatives can also be selected. The limiting factor determines selection. It can
be time, cost, quality and resource availability.
v) Announcing the final plan:
This is the last step of planning. The activities to be carried out are specified.
Persons responsible for performing the activities are identified. The time for
performing the activities is specified. The methods of doing the activities are
also provided. And budget are prepared for each activity to find out how much
will it cost.
b) Leadership practices in Nepal
- Democratic innovation to impose bureaucracy as a patchwork on feudalism.
The result is feudocracy” in leadership.
- private sector is family-owned and manager has an autocratic leadership.
- leadership in public enterprise is politically oriented, no team work, managers
change with the change in the government, they do not feel accountable for
the performance.
- very little faith in the capacity of subordinates
- participative decision making is lacking
- managers lack requisite skills and training
- lack of professional management
- managers tend not to change their leadership style to suit situational needs
- lacking right people at right jobs
- global organization and INGO’S are sing democratic leadership style.
11. Write short notes on followings (Any Five): (5×3=15)

a) Social responsibilities of a business towards its employees
b) Components of business environment
c) Contingency theory of management
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d) Delegation of authority
e) Management practice in Nepal
f) Quality circle
Answer:
a) social responsibilities towards employees
- better working environment for health and dignity
- fair wage, bonus and other economic incentives
- right to form union, giving representation on decision making bodies
- institute grievance settling, social security and welfare scheme
- greater autonomy and responsibility in jobs
- opportunities for advancement
- flexible working hours
b) Environment occupies a very significant place in the functioning of organization and

management of business. It reflects total of all factors and things external and internal
to an organization that affects it. Business environment consists of the forces that
influence the organization's ability to carry out its operations effectively to attain its
objectives.
The components of business environment can be classified into two broad categories:
internal environment and external environment.
Internal Environment: An organization has several forces operating within its internal
system. Employees, structure, corporate culture, shareholders and unions are the forces
that shape the internal environment. Without cooperation of employees, organizations
cannot attain their expected goals. If the employees resist managerial, technical and
other changes, the impact upon the organization and its work will be negative.
Structure is the overall framework for organizational roles, rules and relations which
includes individuals and group. Corporate culture is an assumption that members of an
organization share in common by their beliefs and values. Shareholders being the
owners of business have a direct interest in the performance of organization. Labour
unions represent the feeling of their members to management.
External Environment: The external environment can be classified into two interrelated
sub- categories: general environment and task environment. The general environment is
composed of a set of forces that are outside the organization's operating system and
beyond the control. These are economic environment, socio-cultural environment,
political environment, legal environment and technological environment. The task
environment involves factors in the immediate competitive situation of a particular
organization like customers, suppliers, competitors, special interest groups, financial
institutions and media.
c) The contingency theory is developed by Tom Burns and G. M. Stalker in 1960. This
theory does not believe on management is not based on simplistic principles to be
applied in all situations. The concepts, tools and techniques, which are highly effective
in one situation, are not at all effective in another situation. Therefore, their conclusion
was that management concepts are contingent on a particular situation. Results differ
because situations differ. Organization size may differ, technology may different,
environmental forces are different. Therefore, managers have to use different
approaches and techniques to manage the organization.
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This theory, therefore, does not agree with other theories believing universalism. It is in
favour of a more "particularist" approach to management.
This theory says that organizations are different. They face different situations and
require different ways of managing.
This theory can be described as "if-then". If this is my situation, then this is the best way
for me to manage.
This theory states that leadership styles, organization structure, job design, motivational
approaches, control system and management of change and conflict should be situation
specific.
d) Delegation is the transfer of authority to subordinates to enable them to make decisions

and use resources. Delegation is the process of entrusting work to others who are
qualified to accept responsibility for doing the work. A superior grants to subordinates
on the basis of competence, the right to act or to decide. By delegating authority the
superior can perform more important tasks. Their day to day operational tasks can be
performed by their subordinates.
There must be a clear-cut flow of authority and responsibility from the top to the
bottom of the organization to carry out all the functions, to exercise managerial control
effectively and to minimize the duplication and overstaffing of assignments.
The delegation of authority is perhaps one of the most difficult job managers and
superiors have to learn. Some managers never learn to delegate and insist on handling
many works by themselves. Some managers give their assistants many responsibilities
but little or no authority. Authority enables a manager to function independently within
the broad limits of authority specified by the superior.
The superior does not delegate the total authority, but retains a part of that for him.
Delegation does not mean giving away authority. It is, of course, a revocable act. The
manager delegating the authority retains the right of call. The superior, who
delegates the authority, can not escape responsibility for the activities of subordinates
whom authority has been delegated. A manager can not delegate what he himself does
not posses.
e) Management practice in Nepal is traditional. Nepalese organizations are not practicing

the modern management concepts. In some sectors, like banking, hotel, travel and
tourism business, competition is growing and for survival managers are professionally
trained. In few organizations, those professional managers adopt modern management
practices as ways of improving their performance and competitiveness. In sectors like
manufacturing, trade and transport, management practices are still very traditional
leading to problems of inefficiencies, wastages and lack of competitiveness. Some
multinational companies operating in Nepal adopt modern management practices. In
public sector organizations, bureaucratic practices are widely prevalent. So most
organizations lack efficiency, cost effectiveness and competitive advantage.
Thus modern management concepts and practices are relatively new for most
organization prevailing in Nepal. The top management is often authoritarian and
prevents younger managers from being creative. The traditional top down approach is
widely practiced. Managers plan but poorly implemented, monitored and evaluated.
Decision making is unnecessarily centralized. Even the coordination and communication
systems are defective. Leadership practices are still predominantly paternalistic.
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f) The concept of quality circle (QC) essentially Japanese, formalized in 1960 by K.

Ishikawa. A quality circle consists of a small group of employees. These circles meet
regularly to discuss the quality problem, investigate causes, recommend solutions and
take corrective actions. Members participate meaningfully in QC meetings. An
important ingredient of QC is the sense of autonomy experienced by its members. This
gives them a sense of pride and satisfaction. Circle members develop a team spirit
through teamwork.
Basically quality circle comprising workers and supervisors meets regularly to discuss
work place problems. Supervisors acts as a facilitator and quality circle leader.
12. Distinguish between (Any Five): (5×3=15)

a) Upward communication and lateral communication
b) Quality management and conflict management
c) Personnel management and human resource management
d) Unity of command and span of control
e) Maslow's hierarchy of needs theory and Herzberg's theory
f) Programmed decisions and non-programmed decisions
Answer:
a) Upward and lateral communication:
Upward communication travels from lower to higher ranks on hierachery such as
suggestions, grievances, participate decision making lateral communication takes place
among the people in the same hierarchical level among the same work team
b) Quality is the only factor that ensures an organization's survival and growth. Quality
focuses on meeting consumer needs, meeting or exceeding the competition and
improving continuously. Today, it has been well understood by managers that the real
price of poor quality is lost consumers and ultimately, the death of an organization.
Therefore, to be successful in today's business environment organizations must pay
attention to quality management. The managers must understand that consumers want
quality, quality affects performance and high quality is the new standard for an
organization's competiveness. Total quality management is a comprehensive approach
to improving product quality and thereby customer satisfaction.
Conflict is also a part of the organizational reality which is inevitable and should be
managed. Managers have to handle and settle conflicts which are occurred between
individuals, groups and with organization itself. When conflict occurs, problems are
created for the management. If timely attention is not paid, they can grow and go out of
control. Managers have to handle and settle conflicts.
Thus, quality management and conflict management, both are integral element of any
organization. But quality is concerned to product and service delivery and make
customer satisfied. But conflict is intra-personal or intra-team and interpersonal or
inter-team. Conflict should be resolved and quality should be improved.
c) Human resource management is concerned with people element in organizations. It has

evolved from personnel management. However, personnel management is not human
resource management. Human resource management integrates basic premises of
personnel management.
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Personnel management is a traditional approach to management of people. It focuses

on personnel administration, employee welfare and labour relations. It is more
discipline and control oriented to perform maintenance function. It is regarded as staff
function in the organization structure.
But the human resource management is a systems approach to management of human
energy and capabilities of people. It is concerned with interrelationships of acquisition,
development, motivation and maintenance functions. It regards people as a resource
and emphasizes development and utilization of human potential.
Personnel management assumes people as input in the production process and concern
of personnel department. Human resource management assumes people as valuable
resource and concern of all levels of managers. In the process of personnel management
what we find is managing routine personnel function for employee satisfaction,
discipline, control and direction oriented. Developing and utilizing human resource
potential for achieving goals with supportive environment is the process of human
resource management. Satisfied personnel and increased production is the outcome of
personnel management but the outcome of human resource management is increased
organizational effectiveness, increased productivity and organizational culture for
participation and team work.
d) The number of subordinate who reports directly to a manager is called the span of
control. Each person in the organization should receive orders from only one supervisor
is called unity of command.
Span of control states that number of subordinate a supervisor can direct. Unity of
command state each subordinate should have one boss.
Span of control is important to direct subordinate effectively. Unity of command is
important to avoid confusion among subordinates.
Span of control principle prescribe limited number of subordinate works effectively.
Unity of command prescribe one subordinate must have one boss to report.
e) Maslow advocated Hierarchy of needs theory and Herzberg advocated motivation
hygiene theory. According to Herzberg job satisfaction has two different dimensions,
one is hygiene factor and another is motivational factor.
The different between them are:
i) Maslow has need hierarchy, they are physiological, safety, social, esteem and
self-actualization. After the satisfaction of lower order needs, higher need in
operation.
But Herzberg do not accept hierarchy of needs and says all needs are
operational at all time.
ii) Maslow thinks unsatisfied needs motivate, whereas Herzberg thinks that only
the motivators motivate employees.
iii) Maslow's theory is descriptive, Herzberg's theory is prescriptive.
iv) Maslow's theory is relevant to all workers whereas Herzberg's theory is relevant
to professional workers. Therefore Maslow's is a macro view Herzberg's theory
is micro view.
f) Programmed decision means the decisions relating to day to day running of an
organization. Non-programmed decisions are those that cannot be foreseen or
programmed.
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Programmed decisions are structured, whereas non-programmed decisions are

unstructured. Programmed decisions are repetitive and routine type, whereas non-
programmed decision deals with complex and non-routine type problems.
Programmed decisions are made by middle and lower level managers using existing
organizational rules and procedures, but non-programmed decisions are made by top
level managers by exercising judgement and creativity.
Programmed decisions are decisions that have been made so many times in the past.
Non-programmed decisions are not recur frequently.
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Information Technology
1.
a) Convert given numbers as indicated showing the process as well : 2
2057(8) = (________) 10
b) When all the columns in a table describe and depend upon the primary key, the table is said to satisfy
_____________________ 2
c) The number of bits in a nibble is ___________ whereas the number of bits in a byte is
__________________ 2
d) Operating system is an example of ______________ software whereas spreadsheet is an example of
________________ software. 2
e) Data or information security can be achieved by a process called ______________ Its reverse process is
called _________________ 2
Answer:
a) 2057(8) ==2*83 +0*82 +5*81 +7*80 = 1024+0+40+7=1071 (10)
b) the third normal form
c) 4, 8
d) system, application
e) encryption, decryption.
2. What is ER diagram? Design a database using ER diagram for a car-insurance company whose customers
own one or more cars each. Each car has associated with it zero to any number of recorded accidents.
10
Answer:
An E-R diagram expresses the overall logical structure of a database graphically. E-R diagram consists of
the following major components:
 Rectangles represent entity sets.

 Diamonds represent relationship sets.
 Lines link attributes to entity sets and entity sets to relationship sets.
 Ellipses represent attributes
 Double ellipses represent multi valued attributes.
 Dashed ellipses denote derived attributes.
 Underline indicates primary key attributes
 Double Lines indicate total participation of an entity set in a relationship set.
 Double Rectangles represent weak entity sets.
 Double Diamonds represent identifying relationship sets.
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ER Diagram
id name phone number brand model

e
Customers Cars
Own
Get
Accidents
number place date time
3. What is network topology? Discuss different types of network topologies used in computer networks. What
topology would you choose if you were requested to design a computer network in your organization?
10
Answer:
A network topology is the geometric arrangement of computers in a network. It refers to the layout of
connected devices (e.g. Computers) in the network. Also, a topology is the structure or shape of the
network. Common topologies include bus, ring, and stars.
Bus Topology: Bus topology uses a common backbone to connect all devices in the network. A single cable,
the backbone, functions as a shared communication medium that devices attach or tap into with an
interface connector. A device wanting to communicate with another device on the network sends a
broadcast message onto the wire that all other devices see, but only the intended recipient actually accepts
and processes the message. See figure below.
Ring Topology: In a ring topology, every device has exactly two neighbors for communication purposes. All
messages travel through a ring in the same direction (either "clockwise" or "counterclockwise"). A failure in
any cable or device breaks the loop and can take down the entire network. See figure below.
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Star Topology: A star topology uses a central connection point usually a hub and all the devices in the
network are connected to it typically with UTP cable. We can also use switch or router in the place of hub.
Compared to the bus topology, a star network generally requires more cable, but a failure in any star
network cable will only take down one computer's network access and not the entire LAN. If the hub fails,
however, the entire network also fails. See figure below for star topology.
Mesh Topology:
The type of network topology in which each of the nodes of the network is connected to each of the
other nodes in the network with a point-to-point link – this makes it possible for data to be
simultaneously transmitted from any single node to all of the other nodes.
The physical fully connected mesh topology is generally too costly and complex for practical networks,
although the topology is used when there are only a small number of nodes to be interconnected.
I would choose star topology if I were requested to design a computer network in my organization
because it requires less cable compared to bus topology, a failure in any star network cable will only
take down one computer's network access and not the entire LAN.
4. Write a program using C language that will calculate the average of several different lists of numbers. i.e.
there are ‘n’ number of lists and each list may have ‘r’ members. 10
Answer:
Program
main ()
{
int n, count, loop, loopcount;
float x, average, sum;
/* Read the number of lists*/
printf ( ” How many listst?” );

scanf ( ” %d, &loops” );
/* Outer Loop */
73
for (loopcount = 1; loopcount <= loops; ++loopcount)

{
/* Inittialize and read in a value for n*/
Sum =0;
printf (” \n lif number %d\n How many numbers ? ”, loopcount);
scanf (”%d”, &n);
/* read in the numbers */

for( count =1; count <= n; ++ count)
{
printf(” x= ”);
scanf(” %f ”, &x);
sum +=x;
} /* End of Inner Loop*/
/* Calculate the average and display the answer */

average = sum/n;
printf’(’\n The average is %f \n” average);
} /* End of outer loop*/
}
5. What do you know about looping statements? Discuss each of them using suitable examples. 10
Answer:
When there is a need of executing a task a specific number of times until a termination condition is met, we
use looping statements. These statements are also called iteration statements or repetitive statements. Java
provides three ways of writing iterative statements. They are while statement, do-while statement, and
for statement.
The while Statement: The while statement executes the statements as long as the given condition remains
true. The general syntax of while statement is:
while(condition ) { statements; }
Here the statements within the brace are executed as long as the condition is true. When the condition
becomes false, the while loop stops executing these statements and exits out of the loop.
Example piece of code:
int i=1;
while( i <= 10 ) {
printf( "%d", i );
i++;
}
The do while Statement: The do while loop always executes its body at least once. So, to guarantee, at least
one time, execution of statements do while loop is used. The basic syntax of do while loop is:
do { statements; } while(condition );
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Here the statements inside the braces are executed at least once, because its condition is at the bottom of
the loop.
Example:
int i = 10;
do{
printf("Hello");
i++;
} while( i < 10 );
The for Statement: When we have the fixed number of the iteration known then we use for loop (normally,
while loop is also possible). The basic syntax of for statement is:
for( initialization; termination; increment/decrement ) { statements; }

First before loop starts, the initialization statement is executed that initializes the variable or variables in the
loop. Second the termination condition is evaluated, if it is true, the body of the for loop will be executed.
Finally, the increment/decrement statement will be executed, and the termination condition will be
evaluated, this continues until the termination condition is false. For example,
for( int i = 10; i > 1; i--) {
printf( " %d”, i );
}
6. Draw a generalized block diagram of a micro computer system, identify various components and explain
their functions. 10
Answer:
A generalized block diagram of a micro computer system is shown below:
Memory
Bus
Input Microprocessor (CPU) Output
Bus
Bus Bus
Identification of components
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A microcomputer system basically consists of

 Input device
 Output device
 Memory
 Microprocessor as the CPU.
These components are interconnected by set of buses namely:
 Address Bus
 Data Bus
 Control Bus
Functions of each component

 Input device: used to provide input to the CPU/microprocessor.
 Output device: used to hold or display or record the processed output from the CPU.
 Memory: Used to store data and instructions needed to execute the programs.
 CPU/Microprocessor: it is the major part of the microcomputer. It processes the input data based on the
program and produces the appropriate output. It synchronizes and controls the entire operation of the
system.
Buses:
 Address bus: identifies the location of input device, output device and memory.
 Data bus: carries data bet input/output and CPU or between CPU and memory.
 Control bus: controls the sequence of entire microprocessor operation also synchronizes the activities
between the CPU and Input, Output and Memory devices.
7. Write short notes on: (5×2=10)

a) Flow chart
b) Client-server network
Answer:
a) Flowchart: A flowchart is a common type of chart that represents an algorithm or a computer program
showing the steps as boxes of various kinds, and their order by connecting these with arrows.
Flowcharts are used in analyzing, designing, documenting or managing a process or program in various
fields. A typical flowchart may have the following kinds of symbols.
 Circles, ovals, or rounded rectangles: Usually containing the word "Start" or "End", or another
phrase signaling the start or end of a process.
 Arrows: Shows flow control. An arrow coming from one symbol and ending at another symbol
represents that control passes to the symbol the arrow points to.
 Rectangle: Represents processing steps.
 Parallelogram: Represents input and output.
 Diamond: Represents condition or decision. These typically contain a Yes/No question or True/False
test. This symbol is unique in that it has two arrows coming out of it, usually from the bottom point
and right point, one corresponding to Yes or True, and one corresponding to No or False. The arrows
should always be labeled.
Give one simple example.
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b) Client/server networks:
In Client-Server architecture, the network has certain machines and devices called servers that are
especially dedicated to provide various services to the other computers called clients. Different types of
specialized servers include file, fax, printer, modem, e-mail and database server. The most common type
of client server arrangement is a LAN composed of microcomputers connected to a network server,
which serves to all the clients (users) of the LAN. A client program running on one of the
microcomputers can request specific data from the server. The server program retrieves the requested
data from its databases and returns it to the client. This way, a LAN permits all the computers connected
to it to share hardware, software and data.
8. What do you mean by storage devices? How are they different from primary memories? List different types
of data storage devices used in modern computer system with their characteristic features. 10
Answer:
Storage devices are normally known as auxiliary memory or secondary storage and is the memory that
supplements the main storage. They are long-term, non-volatile memory. They also function as back-up
devices.
Comparison with primary memories
RAM, ROM etc. are primary memories. They are directly accessed by the microprocessor.
Types of Data Storage devices
There are two types of storage devices:
The classification is based on the type of data access: sequential and random.
In the case of sequential-access media, the data stored in the media can only be read in sequence and to get
to a particular point on the media you have to go through all the proceeding points.
Magnetic tapes are examples of sequential access media.
Random access or direct access media are those in which data stored can be accessed any point in random
without passing through intervening points.
Examples include: hard disks, magnetic disks, optical disks, zip disks etc.
Following are the different types of data storage devices:
a) Magnetic tape: it is a magnetically coated strip of plastic on which data can be encoded. It is cheaper,
has large capacity.
 Accessing data is slower.
 Sequential access type
 Used for long term storage and back up
 Also used for transporting large amount of data.
b) Hard disk: it is a magnetic disk on which you can store computer data.
 Less portable
 Now removable hard disks are available.
c) Floppy disk:
 it is a soft magnetic disk
 are portable but now almost nobody uses.
 Slower to access than hard disk
 Haveless storage capacity.
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d) Optical disk: storage medium from which data is read and to which it is written by users. Can store much
more data than magnetic media. Examples: CDROM.
e) Magnetic-optical drives: this is a type of disk drive that combines magnetic disk technologies with CD-
ROM technologies.
9. Show your familiarity with different types of application tools available with package such as MS Office with
suitable examples. 10
Answer:
Computer has become a part of everyday professional life. One of the most widely used application
software such as MS Office provides number of application tools useful for professionals.
The following is a list of widely used tools available with MS Office:
a) Microsoft office Word
 Provides facilities for writing text
 Pages can be formatted
 Tables can be inserted
 Diagrams can be drawn using drawing and graphics
 Document collaboration and mail merge facilities are also available.
Example of use:
Most of the time, when we type anything for a report assignment or any document, we use this tool.
b) Microsoft Office Excel
It is a spreadsheet application. It is a computerized version of a sheet or paper with both horizontal and
vertical ruled lines. Basic data is entered in columns and rows. The computer can then be instructed to
perform operations on the data for example,
Calculating the sum of the numbers in a particular column. By applying a series of simple operations,
complex analysis can be performed. For example:
 Storing tabular data
 Performing mathematical and financial calculations
 Creating charts
 Generating summary reports
 Analyzing data etc.
c) Microsoft Office PowerPoint
It is a tool for creating presentations. Each page in a presentation is called a slide. You can have as many
slides in your presentations as you need.
The slides can be projected directly with an overhead projector. We can create:
 On screen presentations
 Web pages for web use
 Color and black & white overheads
 Audience handouts.
 Speaker notes
Therefore this is one of the most essential tools for professional.
d) Microsoft Office Access
It is a database management system. This tool requires more specialized experience for use and
therefore many people do not use them in their everyday computer use.
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There are other application tools available with Microsoft office but are not normally used in everyday
applications.
10.
a) What kind of data is represented using i) bit ii) nibble iii) byte iv) file? Illustrate with example. 4
b) What do you mean by data processing? Compare i) batch processing & online processing ii) centralized
and decentralized system. (2+2+2=6)
Answer:
a) Data or information is represented by using a bit or sequence of bits.
i) A bit is a single binary number-0 or 1. it is used to represent information that represents either
true/false, yes/no, high/low, on/off type information.
1 may represent TRUE, YES, HIGH, ON whereas
0 may represent the opposite FALSE, NO, LOW, OFF.
ii) Nibble – 4 bit makes a nibble.
A BCD digit 0 to 9, a hexadecimal digit 0-9, A-F, the output of a four bit counter etc can be
represented by a nibble.
iii) Byte – 8 bit makes a byte. Most characters use 8 bit representations.
iv) File – For processing computer data, data can be stored and processed in separate files. Files stores
records.
b) Data processing also known as information processing is defined as the processing of data to make it
more usable and meaningful thus transforming it into information.
i) On-line systems and Batch processing: Online systems refer to processing of individual transactions
as they occur from their point of origin as opposed to accumulating them into batches. Aside from
transaction processing and file updating, inquiries can also be handled by the online processing
systems.
On-line Systems are in use in various organizations for applications such as Electricity and Gas
Boards, Banking industry, Tour operators and Stock exchanges.
On-line systems offer following benefits:
(a) Integration of clerical staff with the computer.
(b) Elimination of tedious tasks.
(c) Reduction in paper work.
(d) Improved accuracy.
(e) Improved file updating.
(f) Management information more readily available.
(g) Improved customer services.
(h) Reduced data preparation cost.
Batch Processing, on the other hand is used in those business applications that consist of high
volume of input transactions. In this, batches of transactions are accumulated in a file sorted by
the key field and processed against the master file to update the latter and produce the desired
results. This job is done periodically and scheduled at a non-peak time depending upon the
workload. Under batch processing, the files can be stored on sequential media also.
.
79
ii) A centralized system is one in which the database as well as processing is centrally located and
controlled whereas in a decentralized system, individual components have independence in
executing processor.
80

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Suggested Answers/CAP-I/December/2009/Group-I

Other relevant informations are as follows:

a) Stock on 31.03.2009, was valued at Rs.94,600

Partners Capital Account

Ram's Current Account

Rahim's Current Account

To Interest on Drawing 31.03.09 By Rahim’s Salary 48,000

The contract was completed and the price duly received.

Ascertain the value of stock as on 30.06.2009. 10

By Joint Venture A/c-

Joint Venture Account

Statement Showing Valuation of Stock as on 30.06.2009

Invoice Price 120

i) Rs.50,000 received from A was posted to the debit of his account.

paid to B had been wrongly debited to A)

Trading and Profit and Loss Account of Mr. Ram

Journal Entries in the books of B

b) Write short notes on the followings: (22.5=5)

6. Distinguish between any two of the following: (25=10)

S. Basis of Differences Periodic Perpetual Inventory

% change in quantity demanded

demand for a commodity changes more than proportionate to the change in

In the above figure,

2. Answer the following questions (Any Three):

Combinations X goods Y goods

b) Write short notes on (Any Four): (4×2.5=10)

SC= Supply curve

v) According to J. M. Keynes liquidity preference is the determinant of the rate of

According to Keynes, it is the amount of money desired to hold by the individual

There are two main determinants of liquidity preference i.e.

4. Answer the following questions (Any Two):

Among the various determinants of consumptions, Keynes, however asserted that

There are two types of determinants of consumption:

Due to this behaviour of human beings, the consumption goes down.

i) Fiscal Policy: consumption function or propensity to consume is also

iv) Distribution of Income: It is also one of the most important determinants of

b) Nepal is an agricultural country. It is considered as a backbone of Nepalese economy.

Though it plays significant role in Nepalese economy, it is in backward state due to

5. Answer the following questions (Any Three):

1) Protection for infant industries: Newly established industries of various

2) Natural resources conservation: Natural resources like minerals and forest

3) Keeping money at home: When domestic products are purchased, money

Besides these, concepts of basic or key industries, exchange rate stability,

d) Economic liberalization refers to a process of shifting the economy from government

iii) Motivated by the commitment to strengthen intra SAARC economic cooperation to

Poverty may be absolute or relative. Absolute poverty is the insufficiency of

All questions are compulsory.

The ability to communicate effectively is an essential quality of a businessman. A person may

A successful communicator exercises a good effect on the minds of his/her readers,

Informal communication includes instances of free unrestrained communication between

3. Answer any THREE of the following questions: (3×5=15)

c) What is you-viewpoint? What is its importance in business correspondence?

November 19, 2008

Dear Ms. Khanal:

Dear Mr. Adhikari:

a) Nonverbal communication (NVC) is usually understood as the process of communication

However, much of the study of nonverbal communication has focused on face-to-face

remembers everything in the presentation. Or the speaker might be a competent natural

Mathematics & Statistics

ii) (236.2)8 = 2×82+3×81+6×80+2×8-1

Shops Sales of Units Profit

Find the profit from each unit of the different items. 5

Negative is not possible ( 366.77 >11)

At x=27, we get the break even point.

For maximum or minimum

a) Find regression equationof y on x.

i) In which firm there is greater variability of wages?

Group Group Index No. Group Weight

A M and G M are suitable for further statistical computations.

Year 2001 2002 2003 2004 2005 2006 2007

b) Write appropriate answer in the given space. (51=5)

By the method of least square the normal equations are

Management & Organisational Relations

7. Read the following and answer the question accordingly: (4×5=20)

Mr. Narayan failed to boost morale of the employees.

basis of nature, organizational decisions are operating, strategic and administrative