commerce Solved MCQ for exams

commerce Solved MCQ for exams
Free Commerce Financial Quiz mcq
finance & economics quiz
Directions: The following items consist of two statements are labelled the ‘Assertion A’ and the other labelled the ‘Reason R’. You are to examine these two statements carefully and decide if the Assertion A and the Reason. R are individually true and if so, whether the Reason is a correct explanation of the Assertion. Select your answer to these items using the codes given below and mark your answer sheet accordingly.
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but l. is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

1. Assertion (A): ROI has aptly been regarded as the primary ratio as it specifies the relative net profit earned on capital employed. Du Pont Chart shows the manner in which the key elements coverage into the ROI
Reason (R): An approximate measure of Return on Equity (ROE) cannot be derived from ROI as the portion of assets financed by equity is difficult to determine.
Ans. (b)

2. Assertion (A): The cost of demolishing an old building preparatory to the construction of a new building in that place is to be treated as Capital Expenditure.
Reason (R): Such cost is not incidental to the construction of the new building.
Ans. (c)

3. Assertion (A): Once incorporated, the name of a Public Limited Co. cannot be changed.
Reason (R): The name of a public limited company must be distinct and should not mislead or resemble that of any other Company.
Ans. (d)

4. Assertion (A): An office system is a standard sequence of operations in a particular business activity and is concerned with how these operations are performed as well as by whom and when they are performed.
Reason (R): Systems include operations; people and purpose.
Ans. (b)

5. Assertion (A): Franking Machines are used for printing postage on mailed letters.
Reason (R): Franking Machines are to be purchased from the market and if doesn’t require a license from the postal deptt.
Ans. (c)

6. Assertion (A): Organization and Methods .is a conscious attempt to improve the quality of management and maintains efficient administrative machinery.
Reason (R): It involves detailed investigation with regard to the subject to be investigated, say proce4ures already being followed.
Ans. (a)

7. Assertion (A): A transferee of shares cannot sue the promoters of a Company for misinformation in the prospectus.
Reason (R): The information provided by the company promoters in the prospectus is addressed only to the original allottees.
Ans. (a)

8. Assertion (A): Effective motivation is moderated by organizational complexity and conflicts.
Reason (R): An individual’s motives may be complex and conflicting.
Ans. (b)

9. Assertion (A): According to theory ‘X’ all employees dislike work and must be coerced, controlled or threatened to make them work.
Reason (R): Theory X makes an assumption about the basic human nature which is relevant to the employees also.
Ans. (d)

10. Assertion (A): Everything that goes to increase the importance of the subordinate’s role is delegation.
Reason (R): Subordinates can be trained by delegation.
Ans. (b)

11. Assertion (A): E-commerce is an emerging field, which cannot be ignored.
Reason (R): The legal framework relating the E-commerce is yet to be crystallized.
Ans. (b)

12. Assertion (A): External alignment of wage rates is possible only when internal alignment is achieved.
Reason (R): Internal alignment of wage rates is dependent on increase in profits.
Ans. (b)

13. Assertion (A): Job evaluation facilitates framing a suitable incentive system for workers.
Reason (R): Incentive can be rationally based on time-saving by workers on a particular job, which can rightly be known from job evaluation.
Ans. (a)

14. Assertion (A): For a company, every debt is not a loan, but every loan is a debt.
Reason (R): In the case of deposit of money with the company, it is the depositor who is the prime mover, whereas in the case of loan it is the company who is the prime mover.
Ans. (a)

15. Assertion (A): The floating policy protects the policy holders against errors and omissions.
Reason (R): Goods are insured even if the policy holder fails to report that goods have already been forwarded from the place of shipment:
Ans. (c)

16. Assertion (A): Social responsibility of business is an idea that cannot be put into practice by most of the business.
Reason (R): There is no norm to measure the extent of responsibility forwards each segment of the society.
Ans. (d)

17. Assertion (A): Prediction of share price movement in a stock exchange s almost impossible.
Reason (R): Speculative activity has made the fundamentals of share quite insignificant.
Ans. (c)

18. Assertion (A): Management accounting provides management with information for decision making.
Reason (R): Management accounting is a branch of cost accounting
Ans. (c)

19. Assertion (A): tinder diminishing balance method of depreciation, the charge for depreciation keeps on diminishing year after year in all subsequent years.
Reason (R): Under diminishing balance method, the rate percent at which depreciation is written off goes on diminishing from year to year.
Ans. (c)

20. Assertion (A): No item of capital expenditure finds its place in the Trading and Profit & Loss Account or some other form of revenue accounts.
Reason (R): Capital expenditure consists of expenditure, the benefit of which is not fully consumed in one accounting period but is spread over several periods.
Ans. (a)

21. Assertion (A): Now-a-days many companies prepare their Balance Sheet in a vertical form rather than in the traditional horizontal form.
Reason (R): Part IV of Schedule VI -to the Companies Act, 1956 permits both the forms.
Ans. (b)

22. Assertion (A): When pro-rata at allotment of shares is made, the surplus application money is transferred to Share Allotment A/c.
Reason (R): The company is not required to pay any interest on such surplus application money.
Ans. (b)

23. Assertion (A): One single primary ratio, that measures the financial outcome of all recorded business activities, is R.O.I.
Reason (R): In practice, however, variations are also found in the ratio because capital and return are subject to different interpretations by firms.
Ans. (b)

24. Assertion (A): ROI is the index to study management efficiency.
Reason (R): Earning power in relation to total investment is measured by ROI
Ans. (b)

25. Assertion (A): Detection of errors is not of considerable importance to an auditor.
Reason (R): Some mistakes which appear to be in the first instance merely clerical errors are ultimately found to be fraudulent manipulation of accounts, but vast majority of mistakes are merely clerical errors committed due to either carelessness or ignorance on the part of clerical staff.
Ans. (d)

26. Assertion (A): Detection of frauds committed by the manipulation of accounts is a very difficult task for an auditor.
Reason (R): Frauds of the type ‘Manipulation of Accounts’ are committed without any misappropriation of cash or goods.
Ans. (a)

27. Assertion (A): A construction company, which by its Memorandum and Articles had powers to borrow and lend, carries on a banking business. This is considered to be ultravires the memorandum.
Reason (R): The borrowing and lending should be related to the main (construction) activity only.
Ans. (a)

28. Assertion (A): A minor can be admitted to the benefits of partnership with the consent of all the partners.
Reason (R): His liability is confined only to the extent of his share in the profits and property of the firm.
Ans. (a)

29. Assertion (A): The auditor should examine the objects Clause of the Memorandum of Association.
Reason (R): This would ensure that the company is carrying on business as specified in the Memorandum of Association.
Ans. (a)

30. Assertion (A): The auditor of a proprietary firm need not be bound by professional propriety.
Reason (R): Proprietary auditor is responsible only to the person(s) who appoint(s) him.
Ans. (d)

31. Assertion (A): The main purpose of auditing is to verify that the accounts have been prepared according to the principles of accounting and to see whether the financial statements so prepared reflect a true and fair view of the state of affairs of a business.
Reason (R): Auditing starts after the completion of recording to transactions in the books of account.
Ans. (b)

32. Assertion (A): The auditor should visit the particular concern at intervals and check the book of accounts.
Reason (R): Some precaution is required to be taken by the auditor to avoid weaknesses of. continuous audit.
Ans. (b)

33. Assertion (A): Return on investment is the ultimate relationship between earnings and investment.
Reason (R) Sales play the pivotal role in such a relationship as sales govern the earnings and investments in turn govern sales.
Ans. (b)

34. Assertion (A): In accounting, a distinction is made between the business and the owner.
Reason (R): Accounting concepts are based on objectivity and not on subjectivity.
Ans. (a)

35. Assertion (A): The investors in the capital market have been showing a decisive shift in favour of fixed income instruments.
Reason (R): The debt instruments have active secondary market.
Ans. (b)