AVJ MOCK TEST SERIES FOR CA FOUNDATION

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 FOUNDATION COURSE

MOCK TEST PAPER Total marks: 100

PAPER 2: BUSINESS LAWS & BUSINESS CORRESPONDENCE & REPORTING

Section A-Business Laws

Question No. 1 is compulsory.

Answer any FOUR questions from the remaining FIVE questions

QUESTIONS

60 marks

1.
(i) Mr. JHUTH entered into an agreement with Mr. SUCH to purchase his (Mr. SUCH’s) motor car for Rs.
5,00,000/- within a period of three months. A security amount of Rs. 20,000/ - was also paid by Mr.
JHUTH to Mr. SUCH in terms of the agreement. After completion of three months of entering into the
agreement, Mr. SUCH tried to contract Mr. JHUTH to purchase the car in terms of the agreement. Even
after lapse of another three month period, Mr. JHUTH neither responded to Mr. SUCH, nor to his phone
calls. After lapse of another period of six months. Mr. JHUTH contracted Mr. SUCH and denied to
purchase the motor car. He also demanded back the security amount of Rs. 20,000/- from Mr. SUCH.
Referring to the provisions of the Indian Contract Act, 1872, state whether Mr. SUCH is required to
refund the security amount to Mr. JHUTH. Also examine the validity of the claim made by Mr. JHUTH, if
the motor car would have destroyed by an accident within the three month’s agreement period. (4
Marks)
(ii) A company registered under section 8 of the Companies Act, 2013, earned huge profit during the
financial year ended on 31st March, 2019 due to some favorable policies declared by the Government of
India and implemented by the company. Considering the development, some members of the company
wanted the company to distribute dividends to the members of the company. They approached you to
advise them about the maximum amount of dividend that can be declared by the company as per the
provisions of the Companies Act, 2013. (4 marks)

(iii) Explain the term “Delivery and its forms” under the Sale of Goods Act, 1930. (4 marks)

2.
(i) Explain the meaning of ‘Quasi-Contracts’. State the circumstances which are identified as quasi contracts
by the Indian Contract Act, 1872. (7 marks)
(ii) What do you mean by Designated Partner? Whether it is mandatory to appoint Designated partner in a
LLP? (5 marks)

3.
(i) State the legal consequences of the following as per the provisions of the Indian Partnership Act, 1932:
a) Retirement of a partner
b) Insolvency of a partner (6 marks)
 (ii) Evergreen Ltd., contracts with Shakti Traders to make and deliver certain machinery to them by 30th
June, 2004 for Rs. 11.50 lakhs. Due to labour strike, Evergreen Ltd. could not manufacture and deliver
the machinery to Shakti Traders. Later, Shakti Traders procured the machinery from another
manufacturer for Rs.12.75 lakhs. Shakti Traders was also prevented from performing a contract which it
had made with Xylo Traders at the time of their contract with Evergreen Ltd. and were compelled to pay
compensation for breach of contract. Advise Shakti Traders the amount of compensation which it can
claim from Evergreen Ltd., referring to the legal provisions of the Indian Contract Act, 1872. (6 marks)
4.
(i) What do you understand by “Caveat-Emptor” under the Sale of Goods Act, 1930? What are the
exceptions to this rule? (6 Marks)

(ii) (a)
A, B and C are partners in a firm. As per terms of the partnership deed, A is entitled to 20 percent of the
partnership property and profits. A retires from the firm and dies after 15 days. B and C continue
business of the firm without settling accounts. Explain the rights of A’s legal representatives against the
firm under the Indian Partnership Act, 1932? (3marks)

(b)
A, B, and C are partners of a partnership firm ABC & Co. The firm is a dealer in office furniture. A
was in charge of purchase and sale, B was in charge of maintenance of accounts of the firm and
C was in charge of handling all legal matters. Recently through an agreement among them, it was
decided that A will be in charge of maintenance of accounts and B will be in charge of purchase
and sale. Being ignorant about such agreement, M, a supplier supplied some furniture to A, who
ultimately sold them to a third party. Referring to the provisions of the Partnership Act, 1932, advise
whether M can recover money from the firm.
What will be your advice in case M was having knowledge about the agreement? (3 Marks)
5.

(i) Sohan is a trader in selling of wheat. Binod comes to his shop and ask Sohan to show him some
good quality wheat. Binod is satisfied with the quality of wheat. Sohan agrees to sell 100 bags of
wheat to Binod on 10th June 2021.
The delivery of wheat and the payment was to be made in next three months i.e. by 10th September
2021 by Binod. Before the goods are delivered to Binod, Sohan gets another customer Vikram in
his shop who is ready to pay higher price for the wheat. Sohan sells the goods of Binod (which
were already lying in his possession even after sale) to Vikram. Vikram has no knowledge that
Sohan is not the owner of goods. With reference to Sale of Goods Act,1930, discuss if such a sale
made by Sohan to Vikram is a valid sale?. (6 Marks)
(ii) What is the meaning of “Certificate of Incorporation” under the provisions of the Companies Act, 2013?
What are the effects of registration of a company? (6 Marks)
6.
(i) What is the law relating to determination of compensation, on breach of contract, contained in section
73 of the Indian Contract Act, 1872? (5 marks)
(ii) “Indian Partnership Act does not make the registration of firms compulsory nor does it impose
any penalty for non-registration." Explain. Discuss the various disabilities or disadvantages that a
nonregistered partnership firm can face in brief (4 Marks)
(i) FAREB Limited was incorporated by acquisition of FAREB & Co., a partnership firm, which was earlier
involved in many illegal activities. The promoters furnished some false information and also suppressed
some material facts at the time of incorporation of the company. Some members of the public (not
being directors or promoters of the company) approached the National Company Law Tribunal (NCLT)
against the incorporation status of FAREB Limited. NCLT is about to pass the order by directing that the
liability of the members of the company shall be unlimited. Given the above, advice on whether the
above order will be legal and mention the precaution to be taken by NCLT before passing order in
respect of the above as per the provisions of the Companies Act, 2013. (3 Marks)
 SECTION-B: BUSINESS CORRESPONDENCE AND REPORTING
The section comprises of 5 questions of 10 marks each.
Question No. 7 is compulsory. Out of questions 8 to 11, attempt any three

40 Marks

(a) Read the Passage below and answer the questions that follow: The great Acharyas have said that having discovered
a great goal, surrender yourself to that goal and act towards it drawing your inspiration from that goal whereby you will
get a new column of energy. Do not allow this energy to be dissipated in the futile memories of past regrets or failures
nor in the imagined sorrow of the future or the present and thus bring the entire energy focussed into activity. That is
the highest creative action in the world outside. Thereby the individual who is till now considered most inefficient finds
his way to the highest achievement and success. This is said very easily in a second. But in order to train our mind to this
attitude it needs considerable training because we have already trained the mind wrongly to such an extent that we
have become perfect in imperfection. Not knowing the art of action, we have been master artists in doing the wrong
thing. The totality of activity will bring the country to a wrong end indeed.

If each one is given a car, to achieve an ideal socialistic pattern, and nobody knows driving but everybody starts driving,
what would be the condition on the road? Everybody has equal right on the public road. Then each car must necessarily
dash against the other, and there is bound to be a jumble. This seems to be the very apt pattern of life that we are
heading to. Every one of us is a vehicle. We know how to go forward. The point is that intellect is very powerful and
everyone is driving but nobody seems to know how to control the mental energy and direct it properly or guide it to a
proper destination. (5 Marks)

(1) Which of the following will cause the country to perish?

(a) Driving cars without proper driving knowledge and skill
(b) Directing mental energy to the right destination
(c) Wrong deeds performed without proper knowledge
(d) Memories of past regrets and failures

(2) What is the effect of the wrong training of the mind?

(a) The art of action is too much emphasised.
(b) We have become perfect in all aspects.
(c) Each of us could become a master artist.
(d) We have become perfect in imperfections.

(3) The author’s chief concern is

(a) The car accidents resulting from lack of driving skill.
(b) Regulation of energy in a proper direction
(c) Discovery of a great goal in life
(d) Establishment of socialistic pattern
(4) Which of the following is the source of energy?
(a) Stimulation obtained from a set aim
(b) Highest creative action
(c) A column that supports a building
(d) Proper training of the mind to achieve perfection

(5) Which of the following could lead to success?

(a) Preparing oneself to face the probable sorrows of the future
(b) Cherishing the memories of the past
(c) Bringing all the energy into activity
(d) Being alert about the excitement of present

(b) Read the passage given below.

i. Make notes, using headings, sub-headings, and abbreviations wherever necessary. (3 Marks)
ii. Write summary. (2 Marks)
Mass communication is the procedure of exchanging information, particulars, facts, figures, and data, etc. through
mass media to a large section of the population. In simple words conveyance of messages to several people at the
same time is called mass communication. But by definition, mass communication is the process through which some
information is circulated broadly among people throughout the globe. Through mass communication, information
can be transmitted rapidly to mass that generally stay far away from the root of information. There are many
mediums, such as radio, television, social networking (Facebook, Instagram, WhatsApp, Twitter, etc.), billboards,
newspapers, magazines, film, and internet for spreading information.
Characteristics of mass communication: (i) Large number of audience and (ii) Wide area. It has a large number of
spectators of different races, groups, sections, cultures, communities, etc. and they are geographically scattered
which makes it most popular among communication systems as people keep their eyes on every update. The area of
mass communication is wider than any other communication systems.
The main motive of mass communication study is to learn how the substances of mass communication affect the
attitudes, opinions, emotions, and ultimately behaviours of the people who collect or obtain the message. Studying
involves exposing participants to various media content and recording their reactions through data about the cause
and effect of mass communication.
The survey, which is another method, involves summarizing individuals’ responses to a set of questions to generalize
their reaction to a larger part of the world. Content analysis is another process that concludes the undiluted reaction
on a piece of communication, such as newspaper article, book, television program, film or broadcast news script. A
qualitative method is known as ethnography which permits the analyst to dip themselves into a culture to observe
and document the calibre of communication that exists there. It fosters mass products creating mass consumers
which in turn increase sales of the product. People get the latest news in a short time irrespective of their location
and at the same time, it educates people giving information about health, the environment and much more. Hidden
talents get chances to showcase themselves in the field such as comedy, acting, and singing. Knowledge increases as
watching quiz programs, animal programs and so on increases the general knowledge of the people. Using mass
communication sensibly and accurately leads to the development of a country
8
a) What are the barriers of communication? Explain it. (1 Mark)
b) (i) Choose the word which best expresses the meaning of the given word. (1 Mark)
Quixotic
(a) Pragmatic (b) Mundane (c) Utopian (d) Sane

(ii) Select a suitable antonym for the word given in question. (1 Mark)
Nebulous
(a) Sullen (b) Dismal (c) Definite (d) Gist

(iii) Change the following sentences into passive voice. (1 Mark)

Director supposes the staff to follow the rules.

(iv) Change the following sentences to indirect speech. (1 Mark)

I will tell my students, “I have completed my syllabus.”

c) Write a précis and give appropriate title to the passage given below. (5 Marks)
UGC targets 30% enrolment in higher education by 2020. The University Grants Commission has set a target
to increase the Gross Enrolment Ratio (GER) in higher education to 30 per cent by 2020 from the present
25.4 per cent, UGC Chairman DP Singh said on Wednesday. The UGC has also set certain objectives to
improve the quality of higher education in institutions, he said. “The number of students enroll ed in higher
education system has gone up to about 3.66 crore in 2017-18. The GER rose to 25.4 per cent in 2017-18,
while the aim is to increase it to 30 per cent by 2020,” Singh told reporters here. GER is the ratio of students
enrolled in the age group of 18-23 years to the population in that age group. Singh said the UGC has also
recently chalked out some objectives for improving the quality of learning in higher education institutions
(HEIs).“The objectives include regular revision of curriculum with cl early specified learning outcomes and
soft skills, enabling youth to secure access to employment/self -employment, developing social-industry
connect, availability of motivated teachers and accreditation to ensure qualitative self -improvement in
HEIs,” he said.He also informed that the UGC and the Ministry of Human Resources Development (HRD)
recently organised a three- day national conference in Pune to discuss research and innovation in higher
education and adopted 10 resolutions. These include achieving the UGC quality mandate in universities and
affiliated institutions by 2020, adopting and implementing learning outcome -based curriculum framework,
enhancing research productivity and boosting vocationalisation of higher education by participating in the
National Apprenticeship Promotion Scheme (NAPS). The experts at the conference also stressed on the need
to sensitise students and encourage them to participate in social/economic betterment of the community by
adopting at least five villages under the Unnat Bharat Abhiyan, and to strive for smart and clean campus by
2020, the official said. Source: The Hindu (Business Line)

9
a) Differentiate between the Vertical Network and the Wheel and spoke method of communication. (1 Mark)
b) (i) Choose the word which best expresses the meaning of the given word. (1 Mark)
Stolid
(a) Stain (b) Strafe (c) Stork (d) Stoical

(ii) Choose the appropriate word to fill the blank: (1 Mark)

_______Students need to be aware of the significance of collocation.
(a) Solipsistic (b) Inchoate (c) Advanced (d) Minger
 (iii) Change the following sentences into passive voice: (1 Mark)
Had they completed the paperwork?

(iv) Change the following sentence to indirect speech. (1 Mark)

“Chinese Language is very difficult to learn.” He said.

c) Write an article on the following topic. (Word limit: 300 words) (5 Marks)
Growing health problems in the youth today: Causes and Consequences.

10.
a) Based on communication channels, what are the different kinds of communication methods? Explain. (2 Mark)

b) (i) Change the following Direct speech into Indirect speech.(1 Mark)
The fans said, ‘We want India to win’

(ii) Select the correct meaning of the given idioms:

1) Face the music (1 Mark)
(a) Escape from the situation
(b) Act violently
(c) Enjoy the music
(d) Face the challenges/ consequences
2) Food for thought (1 Mark)
(a) Incomplete information
(b) Good knowledge
(c) Uncensored words
(d) Baseless facts

c) Prepare a detailed resume in the functional format for a candidate applying for the post of a sales manager in an
FMCG company. Include past experiences, with emphasis on the sales background. (5 Marks)
Other inputs: Name: Manish Reddy
Experience: over 10 years, (divide it into two jobs)
Current designation: Senior Sales Executive

11.
a) What are the characteristics of effective communication? (2 Marks)
b) (i) Select the correct meaning of the idioms/phrases given below.
(1) For good (1 Mark)
(a) Sometimes
(b) Permanently
(c) Occasionally
(d) Usually

(2) Right-hand man (1 Mark)

 (a) Faithful
(b) Punctual
(c) Hard worker
(d) Most efficient assistant
(ii) Change the following sentence to indirect speech ( 1 mark)
My mother said to me, “Will you go and swim atleast now.
(c) As the HR Manager of your organization, draft a circular for all the employees of your company, informing them
about New Year party being organized over the weekend in the office campus. Mention a few events and request for
active participation(5 Marks)
CA FOUNDATION