commerce multiple choice questions with answers

commerce multiple choice questions with answers
Commerce Multiple Choice Questions solved as a practice for exams
Multiple Choice Questions With Answers On Commerce
1. Rights issue refers to the shares issued to:
(a) Employees
(b) Public
(c) Existing directors
(d) None of the above
Ans. (d)

2. That portion of the state capital which can be called up only on the winding up of the company is the:
(a) Authorized capital
(b) Issued capital
(c) Subscribed capital
(d) Reserve capital
Ans. (d)

3. If vendor are issued fully paid shares of Rs. 80,000 in consi1eration of net assets of Rs. 60,000, then the balance of Rs. 20,000 will be:
(a) Debited to profit and loss account
(b) Debited to goodwill account
(c) Credited to capital reserve account
(d) Credited to share premium account.
Ans. (b)

RATIO ANALYSIS

4. Owner’s equity stands for:
(a) Fixed Assets minus Fixed Liabilities
(b) Fixed Assets minus Current Liabilities
(c) Current Assets minus Fixed Liabilities
(d) Total Assets minus Total liabilities
Ans. (d)

5. Match List-I with List-II and select the correct answer:
List-I List-II
A. G.P. Ratio 1. Convention of conservatism
B. Cash Budget 2. Profitability
C. EOQ 3. Inventory Management
D. Provision for Bad debts 4. Management of Liquid Assets
Codes:
A B C D
(a) 2 4 1 3
(b) 4 2 3 1
(c) 4 2 I 3
(d) 2 4 3 1
Ans. (d)

6. Given that the current ratio is 2:1, if the net working capital is Rs. 60,600, then the amount of current liabilities would be:
(a) Rs. 30,300
(b) Rs. 60,600
(c) Rs. 1, 21,000
(d) Rs. 90,900
Ans. (b)

7. Project Engineering Ltd. has an adverse current ratio which one of the following would improve this ratio?
(a) Sale of fixed assets for cash
(b) Collection of some of the current accounts receivable
(c) Use of cash to pay off some long term debts
(d) Collection from sundry debtors
Ans. (a)

FUNDS FLOW STATEMENT

8. XYZ Ltd. incurs a net loss of Rs. 5,000 during are accounting years. Depreciation for the relevant year amount to Rs. 1000, preliminary expenses written off during the accounting years is Rs. 3,000 and a loss of Rs. 4,000 is due to sale of plant and machinery. Based on this data, found from operation would amount to:
(a) Rs. 3,000
(b) Rs. 2,000
(c) Rs. 5,000
(d) Rs. 4,000
Ans. (a)
AUDITING

9. Auditors of a company have to report to the:
(a) Board of Director
(b) Managing Director
(c) Institutional Investors
(d) Shareholders at the annual general meeting
Ans. (d)

10. Special Audit can be ordered by:
(a) preference shareholders
(b) the central Government
(c) SEBI
(d) debenture holders
Ans. (b)

11. System of internal check is said to exist in an organization when:
(a) an employee is specifically deputed to check the work of another employee
(b) the departmental head checks the works of his subordinate
(c) some outside experts check the work of employees
(d) another employee of the same department checks the work of an employee in routine office procedure.
Ans. (d)

12. Internal Auditor is appointed by the:
(a) shareholders of the company
(b) Statutory auditor
(c) Institute of internal Auditors of India
(d) Board of Directors of the Company
Ans. (d)

13. Which one of the following is true of the position of an auditor regarding the system of internal check in the organization?
(a) He should acquaint himself with the system of internal check
(b) He should monitor and supervise the system of internal check
(c) He himself should lay down the system of internal check
(d) He has nothing to do with the system of internal check
Ans. (b)

14. A continuous audit is most suitable where the:
(a) transactions are few but complicated
(b) there is no urgency to finalize the accounts on a particular date
(c) internal audit work is being carried On in a satisfactory manner
(d) system of internal check in operation is not satisfactory
Ans. (d)

15. Management audit is:
(a) an independent appraisal of the total management process
(b) a statutory requirement
(c) an investigation into the conduct of direction
(d) an independent appraisal of competitiveness of business
Ans. (a)

16. Management audit is conducted by:
(a) the statutory auditors
(b) government auditors
(c) cost auditors
(d) none of the above
Ans. (d)

17. The auditor has a right to ask for information and
explanation from the:
(a) past auditor of the company
(b) directors of the company
(c) officers of the company
(d) internal auditors of the company
Ans. (b), (c)

18. Working papers which contain a record of the audit works are the property of the:
(a) company
(b) auditor
(c) Registrar of companies
(d) Government of India
Ans. (b)

19. The first Auditors of a company are appointed by the:
(a) Registrar of Companies
(b) shareholders of the Company
(c) Promoters of the Company
(d) Board of Director of the Company
Ans. (d)

20. Sampling is used in the case of:
(a) collection of debts by the accountant
(b) test checks by the auditor
(c) supervision by the works manager
(d) checking pass book entries by the accountant
Ans. (b)

21. In the case of audit of Statutory Report, an auditor is expected to give his report on the:
(a) numbers of shares allotted, amount received in cash and summarized Receipts and Payments account
(b) authorized capital, subscribed capital and paid up capital
(c) Profit and loss account, Balance sheet and director’s report
(d) Directors’ qualification shares, Calls in arrears and Calls in Advance
Ans. (a)

CAPITAL MARKET (STOCK. EXCHANGE)

22. Match List-I (Activity) with list-II (Associated organization) and select the correct answer:
List-I List-II
A. Mutual fund 1. Stock Exchange
B. Public issue of capital 2. Assets Management Company
C. Forward Trading 3. Merchant Banking
D. Option Pricing 4. Forex Market
Codes:
A B C D
(a) 3 2 4 1
(b) 3 2 1 4
(c) 2 3 1 4
(d) 2 3 4 1
Ans. (d)

23. The scope of MRTP Act, since 1992, has been confined only to the regulation of:
(a) consumer monopolies
(b) monopolistic trade practices
(c) restrictive and unfair trade practices
(d) restrictive trade practices
Ans. (d)

24. EXIM bank can be described as a:
(a) non-banking financial company
(b) commercial bank
(c) non-banking non financial company
(d) scheduled bank
Ans. (a)

BUSINESS ORGANISATION AND COMBINATION

25. One of the consequences of non-registration of a partnership firm is that:
(a) a partner cannot such the other partner to enforce a right arising from a contract
(b) the partner of such a firm cannot sue third parties
(c) third parties cannot sue the firm for claims exceeding Rs. 100
(d) The official Assignee or Receiver will have no power on the property of the dissolved firm
Ans. (a)

26. Consider the following rights:
1. Right to take part in the business
2. Right to share profits
3. Right to interest on advances in excess of capital
4. Right to expel a non-cooperative partner
The legal rights of a partner would include:
(a) 1 and 2
(b) 2 and 4
(c) 1, 2 and 3
(d) 1, 3 and 4
Ans. (c)

27. Match List-I with List-II and select the correct answer.
List-I List-II
(Type of combination) (Illustrations)
A. Association 1.Cartel
B. Federation 2. Chamber of commerce and Industry
C. Partial consolidation 3.Holding company
D. Complete consolidation 4.Amalgamation
Codes:
A B C D
(a) 2 1 3 4
(b) 1 2 3 4
(c) 2 1 4 3
(d) 1 2 4 3
Ans. (a)

28. Which one of the following is an example of a company incorporated by a Special Act of Parliament?
(a) Life insurance Corporation of India
(b) Indian Oil Corporation
(c) State Trading Corporation of India
(d) Bharat Heavy Electricals Limited
Ans. (a)

29. Match List-I with List-II and select the correct answer:
List-I List-II
A. Contract of Uberrimae Fidei 1. Public Utility concern
B. Right of Eminent Domain 2. Co-operative society
C. Statement in lieu of prospectus 3. Partnership
D. System of ‘one man one vote’ 4. Sole trading concern
5. Public limited company
Codes
A B C D
(a) 1 3 5 4
(b) 3 1 5 2
(c) 3 2 1 4
(d) 1 2 5 3
Ans. (b)

30. Integration of various units of similar character producing similar products or engaged in the same sphere of business activity under a single form of management and control is called:
(a) vertical combination
(b) horizontal combination
(c) circular or mixed combination
(d) lateral or allied combination
Ans. (b)

FOREIGN TRADE (IMPORT & EXPORT)
31. Match List-I (Document) with List-II (Where used) and select the correct answer:
List-I List-II
A. Shipping Bill 1. To certify the country of origin of goods
B. Bill of Lading 2. For having loaded the cargo in the ship
C. Consular invoice 3. To Transport cargo by ship
D. Packing slip 4. To identify the cargo in transit
Codes:
A B C D
(a) 2 3 4 1
(b) 2 3 1 4
(c) 3 2 1 4
(d) 3 2 4 I
Ans. (c)

32. In the context of foreign trade, the CIF cost may be obtained by:
(a) adding freight and marine insurance premium to the FOB price
(b) deducting freight and marine insurance premium from the FOB price
(c) adding customs duties, freight and marine insurance premium to the cost
(d) deducting customs duties, freight and marine insurance premium from the price
Ans. (a)

INSURANCE (LIFE, FIRE,
MARINE & GENERAL)

33. Paid up value is payable on a life insurance policy:
(a) on. the maturity of the policy
(b) when the policy lapses
(c) when the policy is surrendered
(d) on maturity or expiry whichever is earlier
Ans. (a)

MANAGEMENT

34. Setting the mission which encompasses objectives, policies and goals is known as:
(a) operational planning
(b) strategic planning
(c) tactical planning
(d) contingency planning
Ans. (b)

35. Which one of the following statements is correct?
(a) Planning and controlling are essentially one and the same
(b) Controlling is a part of the planning process
(c) Controlling is a substitute for planning
(d) A control process is meaningless without pre-set goals
Ans. (d)

36. When jobs are broadened in scope and complexity so that the person’s overall area of job responsibility increases, it is a case of:
(a) job rotation
(b) job enrichment
(c) job specification
(d) job enlargement
Ans. (b)

37. Consider the following statements:
Planning involves:
1. Forecasting
2. Choice among alternative courses of action
3. Wishful thinking
4. Decision only by production manager
Of these statements:
(a) 1, 2, 3 and 4 are correct
(b) 1, 3 and 4 are correct
(c) 1 and 2 are correct
(d) 1, 2 and 3 are correct
Ans. (d)

38. Techniques of managerial control are useful in:
(a) selection of Plant location
(b) identifying appropriate technology
(c) profit Planning
(d) conducting shareholder’s meetings
Ans. (b)

39. Motivational process and not the motivators as such is associated with:
(a) need of Hierarchy theory
(b) two-factor theory
(c) ERG theory
(d) expectancy theory
Ans. (a)

40. “Perceived equity in reward results in satisfaction”. Which one of the following motivation theories takes this into account?
(a) Porter and Lawler Model
(b) Victor Varoom’s Expectancy Model
(c) F.W. Taylor’s incentive scheme
(d) Herzberg’s two-Factor Theory
Ans. (a)

41. One of the steps that may be required for achieving effective coordination is:
(a) reporting on performance and taking remedial measures
(b) training in leadership and supervisory abilities of controllers of activity
(c) transmission of messages in a full line communication channel
(d) making an honest appraisal and initiating rewards/punishments
Ans. (c)
42. Minimum wages are fixed by the:
(a) trade unions
(b) employers
(c) state governments
(d) courts of law
Ans. (c)

43. An important aspect of control is that the:
(a) manager motivates his subordinates to give better performance
(b) manager sets an effective management information system
(c) plans are checked before implementation against predetermined measures of performance
(d) performance is checked against predetermined standards
Ans. (d)

44. Consider the following steps:
1. Analysis of variances
2. Initiating corrective action
3. Measurement of actual performance
4. Establishment of standards
The correct sequence of these steps in process of control is
(a) 4, 3, 2, l
(b) 3, 4, 2, 1
(c) 4, 3, 1, 2
(d) 3, 4, 1, 2
Ans. (c)

45. According to the principle of “Span of control” there is:
(a) a tendency to overload supervisors with too much of works
(b) a limit to the number of subordinates a supervisor can effectively supervise
(c) no limit to the number of subordinate a supervisor can supervise
(d) a limit to delegation of authority to the subordinate
Ans. (b)

46. Establishment of management by objectives presupposes:
(a) that limits of authority are not defined
(b) that the employees are provided with result expected
(c) Unlimited freedom to operate in the assigned task
(d) Unlimited freedom to set goals
Ans. (b)

47. Each subordinate should have only one superior whose command he has to obey.
This is known as:
(a) acalar principle
(b) exception principle
(c) unity of command principle
(d) authority responsibility principle
Ans. (c)

48. Consider the following elements:
1. Indicators
2. Objectives
3. Controls
4. Key result Areas
5. Roles and Mission
6. Action Plans
Their correct sequence in Management by Objectives and Result is:
(a) 5, 4, 2, 1, 3, 6
(b) 4, 5, 2, 1, 3, 6
(c) 5, 4, 1, 2, 6, 3
(d) 4, 5, 1, 2, 6, 3
Ans. (d)

49. Delegation of authority takes place when a manager thinks that:
(a) the job is too difficult and hazardous
(b) the job requires the high skill that he does not possess
(c) he cannot look after all the demanding tasks by himself
(d) he needs to punish his subordinate
Ans. (c)

50. Brain storming is used by the management for:
(a) work allocation on the shop floor
(b) generating alternative for problem solving
(c) the promotion of research and development
(d) training employees
Ans. (b)