How you should prepare for Graduate Insolvency Programme entrance test

So how do aspiring candidates prepare for the Graduate Insolvency Programme Common Entrance Test (GIPCET), which is scheduled to be conducted on 19 May 2021 by Centre for Insolvency and Bankruptcy, Indian Institute of Corporate Affairs?

This is a new course and 2021-23 is the third session of the Graduate Insolvency Programme (GIP). Therefore, not too much is known about the nature of the Common Entrance Test, making it difficult for the aspirants to prepare for it. There ain’t any ready study material available as well.

InsolvencyTracker.in talked to a few students pursuing the course as well as faculty members of the Graduate Insolvency Programme to try and decode the GIPCET for the aspirants.

The Common Entrance Test evaluates an applicant’s knowledge on the following:

1. Domain Knowledge (Insolvency laws)
2. Legal aptitude
3. Financial aptitude
4. Mathematics and statistics
5. Ethics
6. General Knowledge and Current Affairs
7. Logical reasoning
8. English comprehension.

Sample questions:

Domain Knowledge (Insolvency law and regulations)

1. When can a bank initiate a corporate insolvency resolution process in relation to a corporate debtor?

a) On determination of default by National Company Law Tribunal. b) Occurrence of default. c) On net-worth of the debtor becoming negative. d) On the bank classified the account as Non-Performing Asset.

Ans. (b)

•  The Adjudicating Authority shall appoint an Interim Resolution Professional within ……… days of the insolvency commencement date.

a) 07 b) 14 c) 21 d) 28

Ans. (b)  

• Can an interim resolution professional act as the resolution professional?
• No, as it involves conflict of interest. b) Yes, if appointed by the committee of creditors with not less than 75% of the voting share of the creditors. c) Yes, if appointed by the committee of creditors with votes of not less than 75% of the creditors. d) Yes, if appointed at a meeting of the committee of creditors with a majority of the creditors present and voting.

Ans (b)

Financial Aptitude

1. Value of a firm is usually based on ________.
   1. the value of debt and equity b) the value of assets and liabilities c) the value of debt d) the value of equity

Ans.: D 14.

• Which one of the following is covered in the valuation report?

a) Proposed Transaction b) Related Parties c) Share Holding Pattern d) Valuation Methodologies

Ans: D 15.

• As the concentration ratio of an industry increases, XYZ Company has more bargaining power with its suppliers and customers. Which of the following agree with the above statement?

a) The company’s accounts receivable turnover increases. B) The company’s accounts payable turnover increases. c) The company’s turnover of advances from customers increases. D. none

Ans: A

Legal Aptitude

1. Which ONE of the following is correct?

a) A contract is frustrated when something happens after it has been entered into, which is not fault of either party and which renders the contract more difficult to perform. b) A contract is frustrated when a party expressly agrees to manufacture and supply goods and then discovers that they will be far more expensive to produce than he thought at the time of the contract. c) A contract is frustrated when something happens after it has been entered into, which is not fault of either party and which renders the contract impossible to perform. d) A contract is frustrated if it is impossible to perform at the time that it is made through no fault of either party

Ans: C

2. Which ONE of the following is not an equitable remedy?

a) Damages. b) Specific performance. c) Rescission. d) Injunction

Ans : A

Ethics

1. Which of the following are an incorrect statement?

A. Professional accountants are always bound by the principle of confidentiality. B. Integrity denotes an attitude of personal and professional consistency in the way in which professional accountants act. C. Professional accountants can be required by law to disclose confidential information about their clients. D. Professional accountants are required to be independent both of mind and in appearance.

Ans: A

2. Which of the following best describes corporate governance?

A. a company’s shareholders are able to regulate the activities of the board of directors B. auditors regulate the directors of companies which are listed on a stock exchange C. boards of directors are regulated by shareholders objectivity D. companies are directed and controlled by internal and external regulation

Ans: D

3.Susan has been working as a manager on the audit of ABC Ltd, a pharmaceutical manufacturer. She is about to completed the audit work on the company’s latest financial statements. Which of the following actions by the Chief Executive would impair Susan’s independence from ABC Ltd. A. He hold a lunch for all ABC’s Ltd employees and customers, and invites Susan to join them. B. He sends Susan a bunch of flowers with a thank you note. C. He gives Susan a gold watch as a thank you gift. D. He invites Susan to join him for a thank you dinner in a local restaurant.

Ans: C

Mathematics and statistics

1.A pair of fair dice is thrown independently three times. The probability of getting a total of exactly 9 twice is

A. 1/729 B. 8/9 C. 8/729 D. 8/243

Ans: D

2. If the event of interest is A, then which of the following statements is correct?

A. the probability that A will not occur is 1 – P(A) B. the probability that A will not occur is the probability of the complement of A C. the probability that A will occur is zero if event A is impossible D. the probability A will occur is one if event A is certain E. all of the above statements are correct

Ans: E

3.Two events, A and B, are said to be independent if: A. P(A and B) = P(A).P(B) B. P(A and B) = P(A) + P(B) C. P(A | B) = P(B) D. P(B | A) = P(A) E. none of the above

Ans: A

Study and reference material

To prepare for the entrance test for Graduate Insolvency Programme, you can read up BARE Acts (Contract and commercial laws), report prepared by Bankruptcy Law Reforms Committee, Insolvency and Bankruptcy Code (IBC), Uncitral Model Law on International Commercial Litigation as well as landmark judgements on insolvency. These will cover the legal aptitude and bankruptcy laws

For business ethics, one can refer to books on advance auditing and professional ethics. (Click here for model question paper)

For Finance aptitude, mathematics and statistics, one can refer to course material for CA foundations, CFA quantitative aptitude, etc.

For Logical reasoning and English Comprehension, one may try CAT tests papers or other MBA entrance study material.