Commerce practice questions

Commerce practice questions
Free Commerce Online Practice Test
Commerce Practice Paper For Civil Service Exam
1. Which one of the following is the first industrial organization to have conducted social audit of its performance?
(a) Associated Cement Companies
(b) Reliance Industries Limited
(c) Bharat Heavy Electricals Limited
(d) Tata Iron & Steel Company
Ans. (a)


2. Which of the following pairs are correctly matched?
1. Cash Compensatory scheme : It is allowed on a selective basis for compensation
the exporters for the elements of unrefunded taxes
and duties paid on the imports required for the
manufacture of goods exported.
2. Inland container depots : Confer all the facilities of dry ports and facilitate the
movement of exports.
3. Duty Drawback Scheme : The exporters are allowed reimbursement of customs
and central excise duties paid on raw materials,
components and packaging.
Select the correct answer using the Code given below:
Code:
(a) 1 and 3
(b) 1, 2 and 3
(c) 1 and 2
(d) 2 and 3
Ans. (b)

3. The following steps are normally taken in an import trade:
1. Indent and letter of credit
2. Ship’s report
3. Delivery and customs formalities
4. Exchange and bill of exchange
The correct sequence of these steps is:
(a) 1, 4, 2, 3
(b) 4, 1, 2, 3
(c) 4, 1, 3, 2
(d) l, 4, 3, 2
Ans. (a)

4. A Red clause letter of credit authorizes the:
(a) banker to transfer the L/C to some other person
(b) banker to take recourse to the drawer in case of default
(c) banker to fix the amount of credit
(d) negotiating banker to provide advance credit to the beneficiary for purchase of materials
Ans. (d)

5. Which one of the following is NOT the primary cause of India’s chronic balance of payments problem?
(a) Value of imports not matched by value of exports
(b) Deficits in merchandise trade
(c) Membership of W.T.O.
(d) POL imports
Ans. (a)


6. Which of the following pairs is/are corrects matched?
1. Presence of insurable interest in life policy : At the time of taking the policy and at
the time of making the claim

2. Presence of insurable interest in a fire policy : At the time of loss but may not be
required at the time of taking the policy

3. Presence of insurable interest in marine policy : At the time of taking the policy and
also at the time to loss
Select the correct answer using the Code given below:
Code:
(a) 1 and 2
(b) 2 alone
(c) 2 and 3
(d) 3 alone
Ans. (c)

7. Which one of the following generalizations can be drawn from the Principle of Subrogation?
(a) It is the principle by which the insurer, after having paid the loss to the insured, steps into the shoes of the ensured person and acquires all. rights and remedies as the insured would have enjoyed regarding the said loss
(b) A person who keeps a stock of inflammable material in his premises must mention the fact while taking out a fire policy
(c) The insured can get only the compensation against actual loss and he can’t make profit but of insurance
(d) In marine insurance the immediate c ise and not the remote cause shall be considered for bearing the loss
Ans. (a)

8. A clause included in the marine policy which covers all losses due to willful misconduct of the master or crew of the ship to the prejudice of the insured is called:
(a) jettison
(b) waiver
(c) preventive penalty
(d) barratry
Ans. (b)

9. Which one of the following clearly defines ‘organization’ as a function?
(a) Management of business
(b) Accomplishment of goals through means
(c) Centralized authority in the hands of an individual to achieve business .goals
(d) Process of assigning duties to individuals to achieve specific ends effectively
Ans. (b)

10. What is the correct sequence of .the following functions of a Manager in an organization?
1. Motivating
2. Controlling
3. Organizing
4. Planning
Select the correct answer using the Code given below:
Code:
(a) 4, 3, 2, 1
(b) 4, 3, 1, 2
(c) 3, 4, 2, 1
(d) 3, 4, 1, 2
Ans. (b)

11. According to Need Hierarchy Theory of Maslow, human needs arise in which one of the following order?
(a) Physiological needs- Social needs- Safety needs- Ego needs- Selfactualisation needs
(b) Physiological needs- Social needs- Ego needs- Safety needs- Selfactualisation needs
(c) Physiological needs—Safety needs—Social needs—Ego needs—Selfactualisation needs
(d) Physiological needs—Safety needs—Ego needs—Social needs—Selfactualisation needs
Ans. (c)

12. Scalar principle of organization implies that:
(a) all subordinates have only one supervisor
(b) line of authority is denied clearly
(c) manager can directly supervise only a limited number of persons
(d) the subordinates need not necessarily have a supervisor
Ans. (b)

13. Consider the following statements:
(1) Planning is looking ahead
(2) Controlling is looking back
(3) Delegation multiplies leadership
(4) Life insurance is a contract of indemnity
Of these statements:
(a) 1, 2 and 4 are correct
(b) 1, 2 and 3 are correct
(c) 1, 3 and 4 are correct
(d) 2, 3 and 4 are correct
Ans. (b)

14. To indicate the functions of management, the catch word POSDCORB was coined by:
(a) Luther Gulik
(b) Henri Fayol
(c) Ernest Dale
(d) None of the above
Ans. (a)

15. Job analysis involves:
1. developing training skills, knowledge and personal traits of the worker necessary for a specific job
2. identifying machines, tools and equipment to be used for the job
3. identification of the task to be performed by an individual
4. determination of the materials, products or services needed
The correct sequence of these steps while conducting job analysis is
(a) 3, 2, 4, 1
(b) 3, 2, 1, 4
(c) 2, 3, 4, 1
(d) 2, 3, 1, 4
Ans. (a)

16. Consider the following statements:
1. Authority flows downward but responsibility flows upward
2.. Authority should be equal to responsibility
3. Both authority and responsibility are divisible
4. If delegation is the end, then decentralization should be the means:
Of these statements:
(a) 1 and 2 are correct
(b) 3 and 4 are correct
(c) 1, 2 and 3 are correct
(d) 2, 3 and 4 are correct

17. Following are the steps in the process of Delegation of Authority:
1. Assignment of task
2. Creation of responsibility
3. Granting authority
4. Fixing accountability
The correct sequence of these steps is:
(a) 1, 3, 2, 4
(b) 1, 4, 2, 3
(c) 1, 3, 4, 2
(d) 1, 2, 3, 4
Ans. (d)

18. Globalization of financial services is being promoted by:
(a) World Trade Organization
(b) International Finance Corporation
(c) International Bank for Reconstruction and Development
(d) International Monetary Fund
Ans. (d)

19. Match List-I (Wage incentive plans) with List-Il (Name of contributors) and select the correct answer using the Code given below the Lists :
List-I List-II
A. Premium Plan 1. Gantt
B. Efficiency Bonus Plan 2. Emerson
C. Points Premium Plan 3. Bedaux
D. Task and Bonus Plan 4. Taylor
5. Halsey
Codes:
A B C D
(a) 5 3 2 1
(b) 1 2 3 4
(c) 2 3 4 1
(d) 5 2 3 1
Ans. (d)

20. Match List-I (Management terms) with List-II (Factors related to these terms) and select the correct answer using the Code given below the Lists:
List-I List-II
A. Resisting forces of change 1. Organization
B. O. D. 2. New Policy
C. Driving forces change 3. Fear
D. Conflict 4. Interpersonal relationship
Codes:
A B C D
(a) 3 1 2 4
(b) 1 2 3 4
(c) 1 3 2 4
(d) 3 4 2 1
Ans. (a)

21. Which one of the following routines best describes the chronology of steps taken in the selling process?
(a) Receipt of order, invoicing, processing order, shipment of goods.
(b) Invoicing, processing order, shipment of goods, accounting for sale
(c) Receipt of order, processing order, accounting for sale, shipment of goods
(d) Processing order, invoicing, shipment of goods, accounting for sale.
Ans. (d)

22. Is Card Indexing an improvement over .the simple indexing system?
(a) Yes, because the cards can be managed in a particular order and the order can’t be changed at will
(b) No, because the cards wanted for reference can’t be taken out without holding up the work of recording information as other cards are left behind
(c) Yes, because it facilitates location of any name or subject with the minimum of searching, as the cards are arranged in alphabetical order.
(d) No, because it facilitates location of any name or subject with the minimum of searching, as the cards are arranged in alphabetical order.
Ans. (c)


23. A person can act as Secretary for NOT more than:
(a) 2 companies
(b) 3 companies
(c) 5 companies
(d) None of the above
Ans. (d)

24. A Secretary’s duties under the Companies Act are:
(a) purely ministerial
(b) either ministerial or administrative
(c) managerial
(d) supervisors
Ans. (b)

25. The document required to be filed with the Registrar of Companies at the time of incorporation of a company includes:
(a) an agreement, if any, which the company proposes to enter into with any individual for appointment as manager or managing director
(b) the Prospectus
(c) an application for name availability
(d) a statement of minimum subscription
Ans. (c)

26. Consider thei1Iowing statements:
1 A Private Limited Co., must have at least 3 (three) directors and a Public Ltd., at least 7 (seven) directors.
2. Liability of shareholder of a Public Ltd. Co., is limited to the extent of the total authorized Capital and liability of the company.
3. Transfer of shares is restricted in case of Private Ltd. Co.
4. Statement in lieu of Prospectus must be issued by a Private Ltd. Co., before commencement of business.
Of these statements:
(a) 2 alone is correct
(b) 2, 3 and 4 are correct
(c) 3 alone is correct
(d) 1, 2 and 4 are correct
Ans. (c)

27. An exception to the application of Doctrine of Indoor Management is made when:
(a) a person represents the company with or without actual authority to do so
(b) outsiders have knowledge of irregularity of the conduct
(c) the seal of the company is not affixed on the documents issued to outsiders
(d) the directors of the company delegated authority for the internal management to the Managing Director
Ans. (b)

28. The Secretary of a company is generally appointed by:
(a) Registrar of Companies
(b) Central Government
(c) Board of Directors
(d) Board of Directors with the consent of the Institute of Company Secretaries of India.
Ans. (c)

29. Public company can be called as a body corporate after it:
(a) receives certificate of commencement of business
(b) issues prospectus
(c) receives certificate of incorporation
(d) receives approval from the Registrar for the prospectus
Ans. (c)

30. A director should obtain his qualification shares within:
(a) one month of his appointment
(b) two months of his appointment
(c) three months of his appointment
(d) six months of his appointment
Ans. (b)

31. The altered Memorandum of Association must be filed with the Registrar within:
(a) 6 months of the Company Law Board’s Order
(b) 5 months of the Company Law Board’s Order
(c) 3 months of the Company Law Board’s Order
(d) 2 months of the Company Law Board’s Order
Ans. (c)

32. Whenever a company wants to alter it Memorandum for changing the place of registered office from one State to another, it has to pass:
(a) ordinary resolution
(b) special resolution
(c) resolution requiring special notice
(d) unanimous resolution
Ans. (b)

33. When an act is performed or a transaction is carried out, which, though legal in itself, is not authorized by the objects clause in the memorandum or by Statue, it is said to be:
(a) ultra vires the powers of the company
(b) intra vires the powers of the company
(c) ultra vires the powers of the Board
(d) ultra vires the implied authority
Ans. (a)

34. A special notice is required for a resolution when:
(a) a director is to be removed before the expiry of his period of office
(b) a statutory report has to be adopted
(c) there is alteration of share capital
(d) a company wants to convene a meeting of creditors
Ans. (a)

35. Which one of the following powers cannot be delegated to any person by the Board of Directors?
(a) investment of funds of the company
(b) Issue of debentures
(c) Borrowing money otherwise than on debentures
(d) Making loans
Ans. (b)

36. The Board of Directors cannot appoint:
(a) additional directors
(b) alternate directors
(c) directors in casual vacancy
(d) directors under Section 408 of the Companies Act, 1956
Ans. (d)

37. Under Section 68A of the Companies Act. 1956, any person who’ induces a company to allot shares or register transfer of shares in ‘a fictitious name shall be punishable with:
(a) a fine of Rs. 500
(b) a fine of Rs. 5,000
(c) imprisonment upto 5 years
(d) a fine of Rs. 500 and imprisonment upto 5 years
Ans. (c)

38. Which one of the following is an ‘Ordinary Business’ for the purpose of an Annual General meeting?
(a) Change in the Articles of Association of the company
(b) Issue of debentures
(c) Change in the ‘objects clause’ of the Memorandum of Association
(d) None of the above
Ans. (d)


39. Match List-I with List-II and select the correct answer using the Code given below the lists:
List-I List-II
A. L U T 1. D G FT
B. E PZ 2. Export promotion
C. E PCG Scheme 3. 100% Exports
D. Value Addition 4. 100% E O U
Codes:
A B C D
(a) 1 3 2 4
(b) 3 2 1 4
(c) 1 4 3 2
(d) 2 4 1 3
Ans. (c)



Directions: The following ten (10) items consist of two statement, one 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 answers to these items using the Code given below and mark your answer sheet accordingly.
Codes:
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is NOT a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

40. Assertion (A): The auditor of a partnership firm is appointed under a contract with the firm but not under any statute.
Reason (R): The firm can also appoint him to act as an accountant for preparation of accounts.
Ans. (b)

41. Assertion (A): A common protectionist argument has been that nurse the baby, protect the child, guide the boy and free the adult.
Reason (R): Protection given in most cases creates rested interests which are averse to the removal of the protection.
Ans. (d)

42. Assertion (A): The matching concept requires that costs be recognized as expenses in the period in which revenue is realized.
Reason (R): There may not be a match between expenditure and revenue over a short period.
Ans. (c)

43. Assertion (A): According to International Accounting Standards Committee, fixed production expenses should be included in inventory valuation on the basis of normal capacity. According to the Institute of Chartered Accountants of India, it is for the management to decide the Question.
Reason (R): The Question to be decided is whether the fixed production expenses be excluded from inventory valuation and charged wholly to the revenue of that year or whether these expenses be included on the basis of normal level of production.
The former method is called ‘marginal costing’ and the latter ‘absorption’ costing’.
Ans. (c)

44. Assertion (A): The fixed assets in the balance sheet of a limited company are required to be shown at cost less depreciation.
Reason (R): The balance sheet and profit and loss account are to disclose a true and fair view.
Ans. (a)

45. Assertion (A): Share premium amount can be refunded in cash to equity shareholders.
Reason (R): Share premium is usually collected when the market price of the shares is higher than the face value of the share.

46. Assertion (A): Conventionally, a newly started company should adopt a low-geared capital structure where the share of equity capital and reserves is higher than the share of fixed interest bearing securities.
Reason (R): During initial years, the profit is low and the company tries to strengthen its financial position.
Ans. (a)

47. Assertion (A): A new firm can be profitable and yet not be able to pay its debts as they become due.
Reason (R): New firms often have the problem of having increased investments in inventory and fixed assets at an amount which exceeds cash generated from operations.
Ans. (a)

48. Assertion (A): A company is accountable to the society since it makes use of community owned assets and other infrastructural facilities and concessions provided by the State from the tax payers’ money.
Reason (R): The best way of social responsibility reporting is to prepare a Value Added Statement (VAS) which shows the income earned by shareholders.
Ans. (c)

49. Assertion (A): Audit procedure and audit techniques are two different aspects of auditing but are complementary to each other.
Reason (R): Audit procedure is concerned with determining the existence of documentary evidence and audit techniques are concerned with examination of those evidences.
Ans. (a)