UPSC Mains 2026 Commerce & Accountancy Optional Paper I questions

28 questions from the Civil Services (Main) Examination 2026. Official UPSC paper (PDF) · All Commerce & Accountancy Optional PYQs

1. What is Profit-Volume ratio? How does it help in Profit planning? Explain with suitable examples.

2. Distinguish between Amalgamation in the nature of merger and Amalgamation in the nature of purchase.

3. What do you understand by 'marginal costing'? How is marginal costing useful for solving various managerial problems?

4. Discuss the perquisites which are taxable for all employees..

5. Explain the major points to be considered by an auditor while auditing the accounts of a charitable trust.

6. X ltd. and Y agreed to amalgamate and form a new company Z ltd. which will take over all the assets and liabilities of the two companies. In the case of X Itd., the assets and liabilities are to be taken over at book value for shares in Z ltd., at the rate of 5 shares in Z Itd., at 0% premium (ie. per share) for every 4 shares in X Itd. In the case of Y Itd.: (i) The debentures of Y ltd. would be paid off by the issue of an equal number of debentures in Z ltd. at a discount of 0%. (ii) The holders of 0% preference shares of Y ltd. would be allotted four, 2% preference shares of 00 each in Z ltd. for every five preference shares in Y Itd. (iii) The equity share holders would be allotted sufficient shares in Z Itd., to cover the balance on their accounts after adjusting assets values by reducing plants and machineries by 0% and providing 5% on sundry debtors. 3 . The summarised balance sheets of the two companies just prior to amalgamation were as follows: Liabilities X ltd. Y Itd. Assets X ltd. Y Itd. Td Equity share 8,00,000 0,00,000 Plant and 6,00,000 6,00,000 capital of $0 machinery each 0% Preference - 6,00,000 Stock,30,000 |,20,000 shares of $200 each 4% Debentures 4,00,000 Debtors,90,000 |,00,000 Profit & 0,00,000 ~ Profit & ~ 2,80,000 Loss a/c Loss a/c Contingency,00,000 Bank,30,000 80,000 Reserve Creditors,50,000},80,000 |_| 20,50,000 2,80,000 20,50,000 2,80,000 You are required to: (i) Calculate the purchase consideration for X Itd. and Y Itd. (ii) Show journal entries in the books of Y Itd. (iii) Prepare balance sheet of Z ltd.

   20 marks

7. What is service tax? Discuss its features. Explain the rationale behind changing the GST rates.

   5 marks

8. How is special investigation different from regular investigation? Discuss the Key Points that an Investigator must consider in special investigation.

9. A of Agra submits the following particulars of his let out residential house: (A) Rent received for house as well as for various amenities provided to the tenant. Amount (i) For House 6,000 per month (ii) For lift maintenance,600 per month (iii) For security charges,400 per month (iv) For electricity and water,600 per month (B) Municipal valuation,70,000 per annum (C) Fair Rental value,52,000 per annum (D) Standard Rent,40,000 per annum (E) Municipal Taxes 0% of Municipal valuation (50% to be paid by tenant) 5 (F) Repair expenses met by tenant 0,000 (G) Insurance premium 2,000 (H) Interest on loan taken in 2014 for Renovation of the house 50,000 per annum (0) Unrealized rent recovered (Actual 748,000 but deduction allowed %36,000 only) 24,000 Compute Mr. A's income from house property and any other income for the Assessment year 2025-26, assuming that Mr. A spent ¥22,000 on providing facilities to the tenant.

   20 marks

10. A manufacturer produces certain goods through three processes. Profit is not included in the process transferred but goods in godown are sold at cost plus 25% profit. In each process 5% of weight put in it is lost and 20% is scrapped, which from Process A and Process B realises ¥20 per ton from Process C %5 per ton.. The details of production of three processes are given below: Particulars Process Process Process A B Material 2000 20,000 100 30,000 400 4,000 Wages 8,000 4,000 2,000 Expenses 2,000 6,000 4,000 Passed to next process 60% 80% Carried to Godown 40% 20% 00% Prepare Process Accounts and Godown Accounts. i)

11. Explain the reasons and process of buy back of shares.

    5 marks

12. What is Responsibility Accounting? How does it contribute in improving the organizational effectiveness?

    5 marks

13. Global Itd., produces an article by blending two basic raw materials. It operates a standard costing system and the following standards have been set for raw materials: Standard Mix Standard rate per Kg a The standard loss is processing is 5%. During April 2026 the company produced 3400 kg of finished output. The position of stock and purchases for the month of April 2026 is as under:. Material Stock Stock Purchases during April L4.26 30.4.26 Kg Kg 'z= 8 80 2400 6000 Analyse material variance.

    5 marks

14. Answer each of the following questions in about 50 words

15. Explain the CAPM approach for computing the cost of equity. Discuss the merits and demerits of the approach.

16. Discuss Gordon's model of dividend decision.

17. What is a Funds Flow Statement? Discuss its managerial uses.

    10 marks

18. Discuss the reasons for the emergence of Innovative Debt Instruments.

19. Discuss the role of credit rating agencies in India.

20. Discuss the monetary policy of the Reserve Bank of India over the years. Explain the tools of monetary policy available with the Reserve Bank of India.

21. The following is the data regarding two companies X and Y belonging to the same equivalent risk class: Company X Company 7 Number of Equity Shares 2,00,000 3,00,000 0% Debentures,00,000 = Market price per share 7 -30 =-00 Profit before interest £40,000 %40,000 All profits after paying interest on debentures are distributed as dividends. Explain how under Modigliani and Miller approach, an investor holding 0% of shares in Company X will be better off in switching his holdings to Company Y.

    5 marks

22. Describe the costs of maintaining receivables. Explain the factors which influence the size of receivables.

    5 marks

23. Using the following information, complete the Balance Sheet given below: Total Debt to Net worth — 0-5: l Turnover of total assets (based on year end sales figure) — 2 Gross profit ratio — 20 percent Average collection period (based on 360 days) — 30 days Inventory turnover (based on cost of goods sold and year-end inventory) — 3 Acid-Test Ratio — 0-8: ] All sales are assumed to be on credit basis. Balance Sheet Liabilities and Equity. (®) Assets (%). Notes and Accounts Payable - Cash - Common Stock 9,00,000 Accounts Receivable — Retained Earnings 3,50,000 Inventory - Equipment = Total Total

    20 marks

24. 0-877 0769 0-675 0-592 0-59: l] A company is considering the proposal of installing a new equipment which requires an investment of ¥400 lakhs. The expected life of the equipment is 5 years without any salvage value. The project is expected to generate the following earnings before depreciation and taxes over the next 5 years: Years a 2 3 " 5 The cost of raising additional capital for the project is [4 percent. Assume that the company is allowed to charge depreciation on straight-line basis for tax purposes and that the tax rate is 40 percent. You are required to calculate the net present value of the project and advise the management to take appropriate decision. Present value of at the discounting rate of 4 percent is given below for 5 years: PV at 4% 0-877 0-769 0-675 0-592 0-59

    5 marks

25. Explain the process of financing by the venture capitalists in India. In this context, discuss the types of investment instruments used by them for financing.

26. "Investing in securities through mutual funds is a better choice than direct investment" — explain the statement. Also discuss the types of mutual funds prevalent in India.

    20 marks

27. The earning per share of a company is and the rate of capitalisation applicable is 2 percent. The company has before it, an option of adopting (i) 50, (ii) 60 and (iii) 00 percent dividend payout ratio. Compute the market price of the company's quoted shares as per Walter's Model if it can earn a return of (A) 5, (B) 2 and (C) 5 percent of its retained earnings.

    5 marks

28. Discuss the types of mergers. Explain the financial objectives of mergers.

    5 marks