Commerce MCQ Quiz and Answer

Commerce, the branch of knowledge dealing with buying, selling, transactions, and business. To test your Commerce IQ, take this quiz on commerce mcq questions and answers.

Commerce MCQ Quiz and Answer

1. FEMA stands for–

(A) Foreign Exchange Management Act

(B) Funds Exchange Management Act

(C) Finance Enhancement Monetary Act

(D) Future Exchange Management Act

Answer: Foreign Exchange Management Act

2. What of the following is false about W.T.O.?

(A) It is the main organ for implementing the Multilateral Trade Agreement

(B) It is global in its membership

(C) It has far wider scope than GATT

(D) Only countries having more than prescribed level of total GDP can become its member

Answer: Only countries having more than prescribed level of total GDP can become its member

3. Convertibility of the rupee implies–

(A) Being able to convert rupees notes into gold

(B) Allowing the value of the rupee to be fixed by marketforces

(C) Freely permitting the conversion of rupee to other major currencies and vice versa

(D) Developing an international market for currencies in India

Answer: Freely permitting the conversion of rupee to other major currencies and vice versa

4. …………..… has been founded to act as permanent watchdog on the international trade.

(A) ISRD

(B) ADS

(C) WTO

(D) DIMF

Answer: WTO

5. Which of the following statement is correct?

(A) The disinvestment programme has been successfully carried out in India

(B) Privatisation up to 100% has been carried out in all the PSU in India

(C) Under strategic sale method of disinvestment, the government sells a major share to a strategic partner

(D) None of the above

Answer: Under strategic sale method of disinvestment, the government sells a major share to a strategic partner

6. Advance Income-tax is shown in the–

(A) Debit side of Profit and Loss Account

(B) Liability side of the Balance Sheet

(C) Credit side of Profit and Loss Account

(D) Assets side of the Balance Sheet

Answer: Assets side of the Balance Sheet

7. A and B were sharing profits of a business in the ratio of 3 : 2. They admit C into partnership, who gets 1/3 of A’s share of profit from A, 1/2 of B’s share of profit from B. The new profit sharing ratio will be–

(A) 3 : 2 : 5

(B) 2 : 1 : 2

(C) 3 : 2 : 1

(D) 3 : 2 : 2

Answer: 2 : 1 : 2

8. In the absence of a Partnership Deed, the rate of interest allowed on the partner’s loan to the firm is–

(A) 5%

(B) 6%

(C) 10%

(D) None of the above

Answer: 6%

9. Interim Dividend is shown–

(A) In Profit and Loss Account

(B) In Profit and Loss Appropriation Account

(C) On Asset side of Balance Sheet

(D) On Liabilities side of Balance Sheet

Answer: In Profit and Loss Appropriation Account

10. Redeemable Preference shares of Rs. 1‚00‚000 are redeemed at a premium of 5%. With this object equity shares of Rs. 40‚000 are issued at par. What amount should be transferred to Capital Redemption Reserve Account?

(A) Nil

(B) Rs. 1‚05‚000

(C) Rs. 65‚000

(D) Rs. 60‚000

Answer: Rs. 60‚000

11. Given– Opening inventory : Rs. 3,500, Closing inventory : Rs. 1,500, Cost of goods sold : Rs. 22,000. What is the amount of purchase ?

 (A) Rs. 20,000

(B) Rs. 24,000

(C) Rs. 27,000

(D) Rs. 17,000

Answer: Rs. 20,000

12. Memorandum of Association contains–

(A) Objective clause

(B) Name clause

(C) Capital clause

(D) All of the above

Answer: All of the above

13. ‘Table A’ is an alternative to–

(A) Prospectus

(B) Articles of Association

(C) Memorandum of Association

(D) None of the above

Answer: Articles of Association

14. The ‘Doctrine of Indoor Management’ provides protection to the–

(A) Board of Directors

(B) Shareholders

(C) Managing Director

(D) Outsiders

Answer: Outsiders

15. By which of the following methods a Company Secretary can be removed from his post ?

(A) By passing a resolution in Board Meeting

(B) By order of Registrar of Companies

(C) By passing a resolution in Annual General Meeting

(D) None of the above

Answer: By passing a resolution in Board Meeting

16. Which one of the following statements is correct in respect of Duty Drawback Scheme ?

(A) Relieving export goods of duties paid for components used for manufacturing the export goods

(B) Providing cash incentives to exporters to compensate the duty paid by them in foreign countries

(C) Compensating importers to the extent of import duty paid by them for importing life-saving drugs

(D) Providing a facility for withdrawing the duty paid by exporters if their exports are rejected in foreign countries

Answer: Compensating importers to the extent of import duty paid by them for importing life-saving drugs

17. In foreign trade, what is the price quoted by a supplier which includes all charges incurred up to door delivery of goods to the buyer, called

(A) Loco price

(B) C.I.F. price

(C) Franco price

(D) Landed price

Answer: Franco price

18. Consider the following statements–
1. Letter of credit cannot be opened by mail.
2. Contracts of export of goods and services against payment to be secured partly or fully beyond 90 days are treated as deferred payment exports.
Which of the statements given above is/are correct ?

(A) 1 only

(B) 2 only

(C) Both 1 and 2

(D) Neither 1 nor 2

Answer: Both 1 and 2

19. Under which principle, all the rights of an insured are transferred to insurance company after making payment of claim

 (A) Subrogation

(B) Utmost good faith

(C) Contribution

(D) Average clause

Answer: Subrogation

20. In a marine insurance, when must the insurable interest exist?

(A) At the time of making contract

(B) At the time of loss of subject matter

(C) Both at the time of making contract and at the time of loss of subject matter(D) At the time of termination of the policy

Answer: At the time of loss of subject matter

21. Henry Fayol is known for–

(A) Scientific Management

(B) Rationalisation

(C) Industrial Psychology

(D) Principles of Management

Answer: Principles of Management

22. Unity of command implies having not more than one–

(A) Subordinate

(B) Friend

(C) Boss

(D) Unit

Answer: Boss

23. ‘x’ and ‘y’ theory of Motivation has been propounded by–

(A) McGregor

(B) Maslow

(C) Ouchi

(D) Herzberg

Answer: McGregor

24. Coordination has the following features–

(A) Continuous

(B) Vertical organization

(C) Horizontal relationship

(D) All of the above

Answer: All of the above

25. Which one of the following is not a barrier in communication?

(A) Noise

(B) Affection

(C) Fear and distrust

(D) Perception

Answer: Perception

26. A Company can reissue its forfeited shares–

(A) At a premium

(B) At a face value

(C) At a discount

(D) All of the above

Answer: All of the above

27. Which of the following is an example of capital expenditure?

(A) Insurance Premium

(B) Taxes and Legal expenses

(C) Depreciation

(D) Custom duty on import of machinery

Answer: Custom duty on import of machinery

28. Given :
Average profit of a firm Rs. 21,000
Normal Profit Rs. 18,000
Value of goodwill on the basis of 3 years purchases of super profit shall be–

(A) Rs. 39,000

(B) Rs. 9,000

(C) Rs. 3,000

(D) Rs. 12,000

Answer: Rs. 9,000

29. A co-operative auditor starts his work of audit from–

(A) Account Books

(B) Payment Books

(C) Cash Book

(D) None of the above

Answer: Cash Book

30. Accounting for research and development relates to–

(A) AS-7

(B) AS-8

(C) AS-9

(D) AS-10

Answer: AS-8

31. When does a body corporate become capable forthwith of exercising all the functions of a company?

(A) On finalizing Memorandum of Association

(B) On obtaining certificate of commencement of business

(C) On obtaining certificate of incorporation

(D) On having convened its first Annual General Meeting

Answer: On obtaining certificate of incorporation

32. Pohang Steel Company (POSCO) is a company originally based in–

(A) Vietnam

(B) South Korea

(C) USA

(D) Italy

Answer: South Korea

33. Which one of the following is not one of the elements of the 7S McKinsey Model for analyzing and improving organizational effectiveness?

(A) Strategy

(B) Structure

(C) Shared Values

(D) Standard

Answer: Standard

34. Consider the following statements–
1. Aggregate planning implies operational planning concerned with determining a firm’s production requirements and manufacturing capacity.
2. Behaviour modification is a concept of motivation totally independent of rewards for the employees.
Which of the statements given above is/are correct ?

(A) 1 only

(B) 2 only

(C) Both 1 and 2

(D) Neither 1 nor 2

Answer: Both 1 and 2

35. What is the correct sequence of the following steps in a strategic planning process?
1. Inputs 2. Evaluation of alternatives
3. Execution 4. SWOT analysis
Select the correct answer using the code given below–

(A) 1 – 4 – 2 – 3

(B) 4 – 1 – 2 – 3

(C) 1 – 2 – 3 – 4

(D) 4 – 1 – 3 – 2

Answer: 4 – 1 – 3 – 2

36. Which one among the following is not true for Special Economic Zones?

(A) No routine examination of cargo for export/import by customs authorities

(B) No licence is required for import

(C) Manufacturing and service activities are allowed

(D) No permission for subcontracting

Answer: No routine examination of cargo for export/import by customs authorities

37. Which one among the following industries produces the most nonbiodegradable wastes?

(A) Thermal power plants

(B) Paper mills

(C) Food processing units

(D) Textile mills

Answer: Thermal power plants

38. Brent index is associated with–

(A) shipping rate index

(B) crude oil prices

(C) copper future prices

(D) gold future prices

Answer: crude oil prices

39. Which one among the following is not true of the planning Commission?

(A) It indicates the factors which tend to retard economic development

(B) It is an advisory body and makes recommendations to the cabinet

(C) It is responsible for formulation of a plan for the most effective and balanced utilisation of the country’s resources

(D) It is responsible for the execution of development programmes and plans

Answer: It indicates the factors which tend to retard economic development

40. Which one of the following statements about RBI is ‘True’?

(A) RBI maintains the foreign exchange reserves of India

(B) RBI is the regulator of Banks and Securities market in India

(C) RBI started functioning from 1870

(D) None of these

Answer: RBI maintains the foreign exchange reserves of India

41. Control function of management implies–

(A) To bring harmony in various activities

(B) To keep the workforce satisfied

(C) To take corrective course of action

(D) To dictate the subordinates

Answer: To take corrective course of action

42. Coordination function of management aims at–

(A) Providing sufficient personnel

(B) Bringing harmony in various activities

(C) Taking up corrective course of action

(D) All the above

Answer: Bringing harmony in various activities

43. “Authority flows downwards from top to the bottom whereas accountability flows upwards from bottom to top.” It is found in–

(A) Scalar chain

(B) Functional organization

(C) Committee structure

(D) Multivariate Approach

Answer: Scalar chain

44. Maslow’s needs hierarchy theory relates to–

(A) Motivation

(B) Leadership

(C) Communication

(D) Directing

Answer: Motivation

45. M.B.O. is a technique of–

(A) Planning only

(B) Controlling only

(C) Neither planning nor controlling

(D) Both planning and controlling

Answer: Controlling only

46. Pre-incorporation Profit is transferred to–

(A) General Reserve

(B) Capital Reserve

(C) Profit and Loss A/c

(D) Trading A/c

Answer: Capital Reserve

47. Which of the following is shown in Profit Loss Appropriation A/c ?

(A) Provision for Income Tax

(B) Provision for Depreciation

(C) Provision for Doubtful Debts

(D) Contribution to General Reserve

Answer: Contribution to General Reserve

48. On liquidation of a Company first payment is made in respect of–

(A) Liquidator’s remuneration

(B) Legal expenses

(C) Preferential creditors

(D) None of the above

Answer: Preferential creditors

49. Workmen’s Compensation Fund is a–

(A) Provision

(B) Surplus

(C) Current liability

(D) Loan

Answer: Surplus

50. Debentures of Rs. 4,25,000 are issued against the purchase of assets of Rs. 4,50,000. In this case the amount of Rs. 25,000 is–

(A) Capital Reserve

(B) Securities Premium

(C) Revenue Profit

(D) Goodwill

Answer: Capital Reserve

51. In case of any default made in complying with the provisions relating to the postal ballot, the officer on default will be punishable with which one of the following fines?

(A) Rs. twenty thousand in respect of each such default

(B) Rs. fifty thousand in respect of each such default

(C) Rs. one lakh in respect of each such default

(D) Rs. two lakh in respect of each such default

Answer: Rs. fifty thousand in respect of each such default

52. A listed company opting for buyback of shares under the Companies Act, 1956 has to submit return, after completion of such buy-back within which one of the following periods?

(A) 6 months of such completion to the Registrar of Companies only

(B) 45 days of such completion to the SEBI only

(C) 30 days of such completion to the Registrar of Companies and SEBI

(D) 30 days of such completion to the SEBI only

Answer: 30 days of such completion to the Registrar of Companies and SEBI

53. Private equity investors invest in a company based mainly on–

(A) the creditability and the valuation of the company

(B) the age of the company

(C) the location of the company

(D) the activity undertaken by the company

Answer: the creditability and the valuation of the company

54. What is Director Identification Number (DIN) ?

(A) An identification number which the individual company allots to the intending director

(B) A number which the Central Government allots to any individual intending to be appointed as director or to any existing director of a company

(C) A number which the SEBI allots to any individual intending to be appointed as director or to any existing director of a company

(D) A number which the Central Government allots to retired directors so as to build data base

Answer: A number which the Central Government allots to any individual intending to be appointed as director or to any existing director of a company

55. Disinvestment in Public Sector is called–

(A) Privatisation

(B) Globlisation

(C) Liberalisation

(D) Industrialisation

Answer: Privatisation

56. Debtors turnover ratio is 4. What is the average collection period ?

(A) 5 months

(B) 4 months

(C) 3 months

(D) 2 months

Answer: 3 months

57. The net profits of a business after providing for taxation for the past five years are Rs. 80,000, Rs. 85,000, Rs. 92,000, Rs. 1,05,000 and Rs. 1,18,000. Capital employed in the business is Rs. 8,00,000. Normal rate of return is 10%. What is the value of goodwill on the basis of capitalization of super profit method ?

(A) Rs. 1,00,000

(B) Rs. 1,50,000

(C) Rs. 1,60,000

(D) Rs. 1,80,000

Answer: Rs. 1,60,000

58. A particular firm provided the following data for a year– Current Ratio 2•5 : 1, Liquid Ratio 1•5 : 1, Net Working Capital Rs. 3,00,000. What are the current assets and current liabilities of this firm, respectively ?

(A) Rs. 3,00,000 and Rs. 1,50,000

(B) Rs. 5,00,000 and Rs. 2,00,000

(C) Rs. 2,00,000 and Rs. 5,00,000

(D) Rs. 3,00,000 and Rs. 1,00,000

Answer: Rs. 5,00,000 and Rs. 2,00,000

59. Depreciation is a process of which one of the following?

(A) Valuation of assets

(B) Allocation of acquisition cost over the estimated useful life of the asset

(C) Allocation of realizable value over the estimated useful life of the asset

(D) Estimating the market value of the asset on the balance sheet date

Answer: Allocation of acquisition cost over the estimated useful life of the asset

60. Establishment expenses of a new machine will be debited to–

(A) Expenses Account

(B) Profit and Loss Account

(C) Machinery Account

(D) None of the above

Answer: Machinery Account

61. Audit adopted by banking company is–

(A) Continuous Audit

(B) Periodical Audit

(C) Internal Audit

(D) Balance Sheet Audit

Answer: Continuous Audit

62. Which of the following have lien of Company Auditor ?

(A) Books of Accounts of the Company

(B) Vouchers of the Company

(C) Auditor’s working paper

(D) All of the above

Answer: Auditor’s working paper

63. To appoint new auditor in place of retiring auditor, to adopt the procedure, which section of Companies’ Act, 1956 is applicable?

(A) 223

(B) 224

(C) 225

(D) 226

Answer: 224

64. “A company has a separate legal existence from its members.” This principle was first laid down in case of–

(A) Saloman Vs. Saloman & Co. Ltd. (1897)

(B) Daimler Co. Ltd. Vs. Continental Tyre & Rubber Co. (1916)

(C) State of U. P. Vs. Renu Sagar Power Co. (1991)

(D) Santunu Roy Vs. Union of India (1989)

Answer: Saloman Vs. Saloman amp; Co. Ltd. (1897)

65. Goodwill is–

(A) Floating Asset

(B) Wasting Asset

(C) Fictitious Asset

(D) Intangible Asset

Answer: Intangible Asset

66. A Balance Sheet shows only–

(A) Personal Accounts and Nominal Accounts

(B) Real Accounts and Nominal Accounts

(C) Personal Accounts and Real Accounts

(D) Personal, Real and Nominal Accounts

Answer: Personal Accounts and Real Accounts

67. Discount on Issue of Shares A/c is shown at the–

(A) Debit side of P & L A/c

(B) Assets side of B/S

(C) Liabilities side of B/S

(D) None of the above

Answer: Assets side of B/S

68. A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. D is admitted for 1/10 share. The new ratio will be–

(A) 5 : 4 : 3 : 2

(B) 4 : 4 : 3 : 2

(C) 4 : 3 : 2 : 1

(D) None of the above

Answer: 4 : 3 : 2 : 1

69. If actual average profit is Rs. 30,000 and normal rate of return is 12%, then capitalization value of the profits will be–

(A) Rs. 3,60,000

(B) Rs. 2,50,000

(C) Rs. 3,05,000

(D) None of the above

Answer: Rs. 2,50,000

70. Under which Section of Companies’ Act an auditor has a right to participate and to speak in the General Meeting?

(A) 231

(B) 229

(C) 226

(D) 224

Answer: 231

71. New profit sharing ratio is calculated at the time of–

(A) Admission of a new partner

(B) Retirement of a partner

(C) Death of a partner

(D) All of the above

Answer: All of the above

72. Consider the following– Amortization refers to writing off the value of (1) tangible assets (2) intangible assets (3) fictitious assets. Which of the above is/are correct ?

(A) 1 and 2

(B) 2 and 3

(C) 1 only

(D) 2 only

Answer: 2 only

73. The following information is disclosed by ‘A’– Rs. Provision for doubtful debts as on 1.1.2012 : 6,000 Bad debts written off during the year 2012 : 1,200 Total debtors as on
31.12.2012 : 80,000 A provision for Doubtful Debts to be made @ 5% What is the amount to be shown on the credit side of P/L A/c ?

(A) Rs. 4,800

(B) Rs. 2,400

(C) Rs. 1,200

(D) Rs. 800

Answer: Rs. 800

74. What is reduction of paid-up share capital called ?

(A) External reconstruction

(B) Internal reconstruction

(C) Reorganization

(D) Redemption of capital

Answer: Internal reconstruction

75. Under which of the following methods of depreciation the amount of an asset is never reduced to zero?

(A) Straight line method

(B) Diminishing balance method

(C) Sums of Years Digit method

(D) Annuity method

Answer: Diminishing balance method

76. An insurance claim of Rs. 300 was accepted in respect of stock (inventory) of Rs. 500, which was destroyed by fire. Rs. 200 not covered by insurance should be debited to which one of the following?

(A) Stock account

(B) Trading account

(C) Profit and loss account

(D) Goodwill account

Answer: Profit and loss account

77. Auditor shall be punished with imprisonment for a maximum period of ……… under Section 539 for falsification in the books of accounts.

(A) 3 years

(B) 5 years

(C) 7 years

(D) 9 years

Answer: 7 years

78. “Auditor is not an insurer.” In which of the following cases, the decision has been given?

(A) The Kingston Cotton Mills Co. Ltd. (1986)

(B) London & General Bank (1895)

(C) Allen Craig & Co. Ltd. (1934)

(D) Irish Woollen Co. Ltd.

Answer: London amp; General Bank (1895)

79. The Section 80A of the Companies’ Act is related with the redemption of–

(A) Debentures

(B) Redeemable preference shares

(C) Irredeemable preference shares

(D) None of the above

Answer: Irredeemable preference shares

80. Company Auditor is responsible–

(A) For directors

(B) For shareholders

(C) For public

(D) For creditors

Answer: For shareholders

81. In Balance Sheet, Audit Accounts are audited–

(A) Monthly

(B) Bi-monthly

(C) Annually or half yearly

(D) Quarterly

Answer: Annually or half yearly

82. The share of new partner in the profits is 1/5 and his capital is Rs. 20,000. The new profit sharing ratio is 3 : 1 : 1. The share of partners in total capital will be–

(A) 60,000 : 20,000 : 20,000

(B) 80,000 : 20,000 : 20,000

(C) 50,000 : 20,000 : 25,000

(D) None of the above

Answer: 60,000 : 20,000 : 20,000

83. At the time of dissolution the loss of the business, will be compensated first of all from–

(A) Capital

(B) Profits

(C) Personal resources of the partners

(D) Donations

Answer: Profits

84. The meaning of written down value is–

 (A) Original cost – Scrap value

(B) Book value + Depreciation

(C) Book value – Depreciation

(D) None of these

Answer: Book value – Depreciation

85. Internal check is a part of–

(A) Internal Audit

(B) Internal Control

(C) Annual Audit

(D) Standard Audit

Answer: Internal Control

86. Cost Audit Report is to be submitted to–

(A) The Company

(B) The Central Government with a copy to the Company

(C) The Central Government

(D) The Company Secretary

Answer: The Central Government with a copy to the Company

87. A company auditor addresses his report to–

(A) Board of Directors

(B) Members

(C) Managing Director

(D) Company Secretary

Answer: Members

88. Which of the following Sections of the Companies’ Act 1956 relates to the maintenance of proper books of accounts?

(A) Section-211

(B) Section-217

(C) Section-209

(D) Section-205

Answer: Section-209

89. X and Y are partners sharing profits in the ratio of 4 : 3. They admit a new partner Z and new profit sharing ratio is 7 : 4 : 3. The sacrificing ratio between X and Y will be–

(A) Equal

(B) 4 : 3

(C) 2 : 1

(D) 1 : 2

Answer: 1 : 2

90. BIPA with Sudan comes into effect was the news, it is an agreement for–

(A) Investment in a country

(B) Peaceful use of atomic power

(C) Allowing students to visit each other’s nation

(D) Allowing people to come for medical treatment

Answer: Investment in a country

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