(Basic Commerce Questions) (SET 01)
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 market forces
(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) Privatization 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. Match List-I with List-II and select the correct answer from the codes given below :-
List-I
(a) Planning
(b) Staffing
(c) Directing
(d) Controlling
List-II
1. Training
2. Forecasting
3. Evaluating
4. Motivating
Codes :-
(a) (b) (c) (d)
(A) 2 4 1 3
(B) 1 2 3 4
(C) 2 1 4 3
(D) 3 4 2 1
(Answer :- 2 1 4 3)
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)
Commerce Accounts Questions (SET 02)
1. Henry Fayol is known for :-
(A) Scientific Management
(B) Rationalization
(C) Industrial Psychology
(D) Principles of Management
(Answer :- Principles of Management)
2. Unity of command implies having not more than one :-
(A) Subordinate
(B) Friend
(C) Boss
(D) Unit
(Answer :- Boss)
3. ‘x’ and ‘y’ theory of Motivation has been propounded by :-
(A) McGregor
(B) Maslow
(C) Ouchi
(D) Herzberg
(Answer :- McGregor)
4. Coordination has the following features :-
(A) Continuous
(B) Vertical organization
(C) Horizontal relationship
(D) All of the above
(Answer :- All of the above)
5. Which one of the following is not a barrier in communication ?
(A) Noise
(B) Affection
(C) Fear and distrust
(D) Perception
(Answer :- Perception)
6. 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)
7. 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
(See Answer :- Custom duty on import of machinery)
8. 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)
9. 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)
10. Accounting for research and development relates to :-
(A) AS-7
(B) AS-8
(C) AS-9
(D) AS-10
(Answer :- AS-8)
11. 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)
12. Pohang Steel Company (POSCO) is a company originally based in :-
(A) Vietnam
(B) South Korea
(C) USA
(D) Italy
(Answer :- South Korea)
13. 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)
14. Consider the following statements–
1. Aggregate planning implies operational planning concerned with determining a firm's production requirements and manufacturing capacity.
2. Behavior 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)
15. 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)
16. 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 license 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_
17. 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)
18. 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)
19. 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 utilization 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)
20. 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)
Commerce Exam Questions (SET 03)
1. 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)
2. 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)
3. “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)
4. Maslow’s needs hierarchy theory relates to :-
(A) Motivation
(B) Leadership
(C) Communication
(D) Directing
(Answer :- Motivation)
5. 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)
6. 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)
7. 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)
8. 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)
9. Workmen’s Compensation Fund is a :-
(A) Provision
(B) Surplus
(C) Current liability
(D) Loan
(Answer :- Surplus)
10. 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)
11. 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)
12. 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)
13. 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)
14. 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)
15. Disinvestment in Public Sector is called :-
(A) Privatization
(B) Globalization
(C) Liberalization
(D) Industrialization
(Answer:- Privatization)
16. 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)
17. 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)
18. Given :-
Purchases – Rs.50,000
Sales – Rs.90,000
Closing Stock – Rs.7,000
Manufacturing Exp. – Rs.5,000
Rate of gross profit – Rs.331
3% on cost
What is the opening stock ?
(A) Rs. 20,000
(B) Rs. 19,500
(C) Rs. 22,500
(D) Rs. 25,000
(Answer :- Rs. 19,500)
19. 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)
20. 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)
Commerce GK Questions (SET 04)
1. Audit adopted by banking company is :-
(A) Continuous Audit
(B) Periodical Audit
(C) Internal Audit
(D) Balance Sheet Audit
(Answer :- Continuous Audit)
2. 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)
3. 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)
4. “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)
5. According to ownership, Government Company means ……… share.
(A) Whose paid-up share capital’s 48%, shares are owned by Government
(B) Whose paid-up share capital’s 49% shares are owned by Government
(C) Whose paid-up share capital’s 50% shares are owned by Government
(D) Whose paid-up share capital’s 51% shares are owned by Government
(Answer :- Whose paid-up share capital’s 51% shares are owned by Government)
6. Match the following List-I with List-II and select the correct answer from the answer codes given below–
List-I
(a) AS-6 (b) AS-10
(c) AS-26 (d) AS-20
List-II
1. Accounting for Earning per share 2. Accounting for intangible and fictitious assets
3. Accounting for fixed assets 4. Depreciation Accounting
Codes :-
(a) (b) (c) (d)
(A) 1 2 3 4
(B) 3 2 1 4
(C) 1 3 2 4
(D) 4 3 2 1
(Answer :- 4 3 2 1)
7. 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)
8. Goodwill is :-
(A) Floating Asset
(B) Wasting Asset
(C) Fictitious Asset
(D) Intangible Asset
(Answer :- Intangible Asset)
9. 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)
10. 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
11. Given :-
Realised value of assets Rs. 60,000
Profit on Realization Rs. 3,000
Book value of assets will be :-
(A) Rs. 63,000
(B) Rs. 57,000
(C) Rs. 60,000
(D) Rs. 61,500
(Answer :- Rs. 60,000)
12. 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)
13. 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)
14. 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)
15. 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)
16. 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)
17. 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)
18. What is reduction of paid-up share capital called ?
(A) External reconstruction
(B) Internal reconstruction
(C) Reorganization
(D) Redemption of capital
(Answer :- Internal reconstruction)
19. 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)
20. 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)
Commerce Important Questions (SET 05)
1. 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)
2. “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 Woolen Co. Ltd.
Answer :- London amp; General Bank (1895)
3. 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)
4. Company Auditor is responsible :-
(A) For directors
(B) For shareholders
(C) For public
(D) For creditors
(Answer :- For shareholders)
5. In Balance Sheet, Audit Accounts are audited :-
(A) Monthly
(B) Bi-monthly
(C) Annually or half yearly
(D) Quarterly
(Answer :- Annually or half yearly)
6. 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)
7. 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)
8. 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)
9. Given :-
Depreciation on the basis of Fixed Instalment Method Rs. 2,000 p.a.
Establishment expenses Rs. 5,000
Scrap value Rs. 1,000
Span of life 10 years
The cost of assets will be :-
(A) Rs. 20,000
(B) Rs. 16,000
(C) Rs. 12,000
(D) None of these
(Answer :- Rs. 20,000)
10. Given :-
Cost Rs. 1,00,000
Scrap Value Rs. 10,000
Span of Life 10 years
Rate of depreciation 20% p.a.
The amount of depreciation for the first year on the basis of diminishing balance method will be :-
(A) Rs. 20,000
(B) Rs. 18,000
(C) Rs. 9,000
(D) Rs. 10,000
(Answer :- Rs. 18,000)
11. Internal check is a part of :-
(A) Internal Audit
(B) Internal Control
(C) Annual Audit
(D) Standard Audit
(Answer :- Internal Control)
12. 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
(See Answer :- The Central Government with a copy to the Company)
13. A company auditor addresses his report to :-
(A) Board of Directors
(B) Members
(C) Managing Director
(D) Company Secretary
(Answer :- Members)
14. 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)
15. 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)
16. 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)
17. The balance of old provision for doubtful debts on 1-4-2012 was Rs. 10,000. The bad debts written off during the year 2012-13 amounted to Rs. 12,000, and the new provision requiredon 31-3-2007 was Rs. 15,000. What is the total amount to be debited to profit and loss account on account of bad debts and the provision for doubtful
debts ?
(A) Rs. 37,000
(B) Rs. 27,000
(C) Rs. 17,000
(D) Rs. 15,000
(Answer :- Rs. 17,000)
18. A and B sharing profit in the ratio of 3 : 2 and having capitals of Rs. 30,000 (for A) and Rs. 15,000 (for B), decided to dissolve their firm. After paying off all liabilities, cash realized from various assets is Rs. 15,000. How will this amount be distributed to A and B ?
(A) A–Rs. 9,000 and B–Rs. 6,000
(B) A–Rs. 10,000 and B–Rs. 5,000
(C) A–Rs. 7,500 and B–Rs. 7,500
(D) A–Rs. 12,000 and B–Rs. 3,000
(Answer :- A–Rs. 9,000 and B–Rs. 6,000)
19. X and Y sharing profits in the ratio of 7 : 3 admit Z on 37th share in the new firm. Z takes 27 th from X and 17th from Y.
What is the new ratio among X, Y and Z ?
(A) 7 : 3 : 3
(B) 4 : 2 : 15
(C) 14 : 6 : 15
(D) 29 : 11 : 30
(Answer :- 29 : 11 : 30)
20. 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)
(Commerce Interview Questions) (SET 06)
1. The following data are provided to you.
Fixed cost - Rs. 20,000; Selling price per unit - Rs. 25, Variable cost per unit - Rs. 20. Find out selling price per unit if B.E.P. is brought down to 2,000 units.
(A) Rs. 30
(B) Rs. 40
(C) Rs. 50
(D) Rs. 60
(Answer :- Rs. 50)
2. Among the following which is not an error of commission ?
(A) Wrong totaling
(B) Recording with wrong amount
(C) Wrong posting
(D) Escape from posting
(Answer :- Escape from posting)
3. Internal check means :-
(A) Checking of accounts by cashier
(B) Checking of accounts by the Internal Auditor
(C) Checking the work of one person by another automatically
(D) Managerial control internally over the subordinates
(Answer :- Checking the work of one person by another automatically)
4. Verification includes :-
(A) Valuation
(B) Existence
(C) Ownership & Title
(D) All of the above
(Answer :- All of the above)
5. By whom from the following, auditor can be reappointed ?
(A) Directors
(B) Shareholders
(C) Central Government
(D) All of the above
(Answer :- All of the above)
6. Liability of partners in respect of the firm’s debt is :-
(A) Limited to the amount of his capital in the business
(B) Unlimited
(C) Limited to the amount of guarantee given by the partner
(D) Limited to the amount of capital and the loan to the firm, if any
(Answer :- Unlimited)
7. A Government Company is one in which at least the following percentage of share capital is held by the Central and/or State Government :-
(A) 25%
(B) 26%
(C) 50%
(D) 51%
:- Answer :- 51%
8. Planning function of management is performed by :-
(A) Top level management
(B) Middle level management
(C) Lower level management
(D) None of the above
(Answer :- None of the above)
9. Special plans made for facing competition are known as :-
(A) Objectives
(B) Strategies
(C) Policies
(D) Budgets
(Answer :- Strategies)
10. "Span of Management" means :-
(A) A good organization should consist of five departments
(B) Authority of each person must be clearly defined
(C) Each subordinate should have one superior
(D) A manager can supervise a limited number of executives
(Answer :- A manager can supervise a limited number of executives)
11. The function of an Auditor is :-
(A) To examine arithmetical accuracy of accounts
(B) To detect and prevent errors
(C) To detect and prevent frauds
(D) All of the above
(Answer :- All of the above)
12. Audit is compulsory for :-
(A) Sole Trader
(B) Partnership Firms
(C) Joint Stock Companies
(D) All of the above
(Answer :- Joint Stock Companies)
13. Which of the following organization makes "Doing Business Report" every year?
(A) WTO
(B) World Bank
(C) UNCTAD
(D) IMF
(Answer :- World Bank)
14. In the absence of Articles of Association, an Auditor should keep in mind :-
(A) Prospectus
(B) Table ‘A’
(C) Memorandum of Association
(D) Legal Declaration
(Answer) Table ‘A’
15. Who may recommend Special Audit of a Company ?
(A) Directors of the Company
(B) Shareholders of the Company
(C) Debenture holders of the Company
(D) Central Government
(Answer :- Central Government)
16. Which one of the following statements is correct ?
(A) If an asset is used by a company, it should be owned by the company
(B) Verification of liabilities means that the amounts of current and long-term liabilities shown in the balance sheet are correct
(C) Vouching and verification means the same thing
(D) It is not the duty of an auditor to confirm the physical existence and ownership of an asset
(Answer :- Verification of liabilities means that the amounts of current and long-term liabilities shown in the balance sheet are correct)
17. Which of t he following terms is normally not seen in the field of International Relations?
(A) Alluvial Soil
(B) Exchange Rate
(C) OECD
(D) Free Trade
(Answer :- Alluvial Soil)
18. What does payout ratio mean ?
(A) Ratio of debtors to creditors
(B) Ratio of profit distributed to profit retained
(C) Ratio of dividends per share and earnings per share
(D) Retained earnings
(Answer :- Ratio of dividends per share and earnings per share)
19. Consider the following statements–
1. Premium on issue of shares is transferred to General Reserve Account.
2. For declaration of bonus shares out of General Reserve, a resolution in the shareholders' meeting is necessary.
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 :- 2 only)
20. How is "Calls in arrear" shown in the balance sheet on the liability side ?
(A) By deducting the amount from the called up capital
(B) Under the heading "Reserves and Surplus"
(C) By deducting the amount from "Capital Reserve"
(D) By deducting the amount from the "Share Forfeited Account"
(Answer :- By deducting the amount from the called up capital)
(General Knowledge Commerce Questions Answers) (SET 07)
1. The following figures are presented to you :-
Year Sales Profit/Loss
1999 Rs. 1,00,000 Rs. 10,000 (Loss)
2000 Rs. 2,50,000 Rs. 20,000 (Profit)
Calculate Profit Volume Ratio.
(A) 5%
(B) 10%
(C) 15%
(D) 20%
(Answer :- 20%)
2. The following particulars relate to manufacturing factory for the month of March 2013. Variable cost per unit Rs. 11; Fixed factory overhead Rs. 5,40,000; Fixed selling overhead Rs. 2,52,000; Variable selling cost Rs. 3; Sales Price per unit Rs. 20. Find out the Break-Even Point in rupees :-
(A) Rs. 26,40,000
(B) Rs. 30,80,000
(C) Rs. 25,20,000
(D) Rs. 27,40,000
(Answer :- Rs. 25,20,000)
3. The following information is obtained from the records of K Co. Ltd. :-
Sales (1,00,000 units) Rs. 1,00,000
Variable cost Rs. 40,000
Fixed cost Rs. 30,000
Find out margin of safety.
(A) Rs. 20,000
(B) Rs. 25,000
(C) Rs. 30,000
(D) Rs. 50,000
(Answer :- Rs. 50,000)
4. A manufacturer is operating at 50% of its capacity, due to competition. The following are the details. Raw materials Rs. 6 per unit, Direct Labor Rs. 4 per unit. variable overhead - Rs. 3 per unit, fixed overhead - Rs. 2 per unit, output 15,000 units, total cost Rs. 2,25,000, sales value Rs. 2,10,000, loss Rs. 15,000. A foreign customer wants to buy 6,000 units at Rs. 13•50 per unit and the company does not know whether to accept or not as it is suffering losses at the current level. Advise what he should do ?
(A) Accept the offer
(B) Reject the offer
(C) Remains indifferent
(D) None of the above
(Answer :- Reject the offer)
5. The liability of a sole proprietor is :-
(A) Limited to the extent of his capital invested in the business
(B) Limited to the extent of the value of business assets
(C) Limited to the extent of the value of business assets and his all private assets
(D) None of the above
(Answer :- Limited to the extent of the value of business assets and his all private assets)
6. Which of the following documents defines the scope of company’s activities ?
(A) Memorandum of Association
(B) Articles of Association
(C) Prospectus
(D) Statutory declaration
(Answer :- Memorandum of Association)
7. An indent house is one which :-
(A) Serves as middleman between importer and exporter of goods for getting orders
(B) Packs and forwards the goods
(C) Guarantees the payments for good
(D) Performs custom formalities on behalf of importer
(Answer :- Serves as middleman between importer and exporter of goods for getting orders)
8. A letter of credit (L/C) is produced by :-
(A) An exporter
(B) An importer
(C) Custom authorities
(D) Shipping company
(Answer :- An importer)
9. Table ‘A’ of the Companies Act gives a model of :-
(A) Minute book
(B) Balance Sheet
(C) Memorandum of Association
(D) Articles of Association
(Answer :- Articles of Association)
10. First Auditor of a Company is appointed by the :-
(A) Shareholders
(B) Central Government
(C) Company Law Board
(D) Board of Directors
(Answer :- Board of Directors)
11. Which of the following is not qualified to be a Company Auditor ?
(A) A body corporate
(B) An employee of the company
(C) A person who is indebted to the company for an amount exceeding Rs. 1,000
(D) All of the above
(Answer :- All of the above)
12. Which of the following statement is correct ?
(A) Valuation is a part of verification
(B) Verification is a part of valuation
(C) Valuation has nothing to do with verification
(D) None of the above
(Answer :- Valuation is a part of verification)
13. Test checking refers to :-
(A) Testing of accounting records
(B) Testing of honesty of employees
(C) Intensive checking of a select number of transactions
(D) Checking of all transactions recorded
(Answer :- Intensive checking of a select number of transactions)
14. Continuous audit is suitable for :-
(A) Big institutions
(B) Small institutions
(C) General institutions
(D) None of the above
(Answer :- Big institutions)
15. Which of the following statements is/are correct ?
1. Internal control includes quality control.
2. Internal control is compulsory for all forms of business organizations.
3. Internal control helps external auditor to design suitable audit programme for client's organization.
Select the correct answer using the code given below :-
(A) 1 only
(B) 2 only
(C) 3 only
(D) 1 and 3
(See Answer :- (D) 1 & 3)
16. Which of the following is not a part of the usual contents of the current file and audit working papers ?
(A) A copy of accounts on which auditors are reporting
(B) Audit programme
(C) Minutes of the meetings
(D) Memorandum of Association and Articles of Association
(Answer :- Memorandum of Association and Articles of Association)
17. Consider the following statements :-
Audit working papers are maintained because
1. they act as a guide to subsequent audit.
2. they verify the arithmetical accuracy of the books of accounts.
18. they provide evidence of the work performed by the auditor.
Which of the statements given above are correct ?
(A) 1 and 2 only
(B) 2 and 3 only
(C) 1 and 3 only
(D) 1, 2 and 3
(Answer :- 1 and 3 only)
19. The proportion of labour in GNP (Gross National Product) becomes low due to the following reasons :-
(A) Price lag behind wages
(B) Profit lags behind prices
(C) Prices lag behind profit
(D) Wages lag behind price
(Answer :- Wages lag behind price)
20. Consider the following stages an auditor has to undergo before commencing an audit :-
1. Ascertaining the scope of audit work.
2. Gaining knowledge about business of the client.
3. Going through the agreement with the client.
4. Instructions to and information from the client.
What is the correct sequence of the above stages ?
(A) 2 - 1 - 3 – 4
(B) 3 - 4 - 2 - 1
(C) 2 - 4 - 3 – 1
(D) 3 - 1 - 2 – 4
(Answer :- 3 - 1 - 2 – 4)
(Online Commerce MCQ Quiz) (SET 08)
1. "Yen" is the currency of :-
(A) China
(B) Japan
(C) Italy
(D) South Korea
(Answer :- Japan)
2. Social Accounting means :-
(A) Accounting for social benefits and social costs
(B) Accounting for Government Revenue & Govt. Cost
(C) Accounting for private revenue and private cost
(D) None of the above
(Answer :- Accounting for social benefits and social costs)
3. It is given that cost of stock is Rs. 100. However, its market price is Rs. 98 (buying) and Rs. 140 (selling). If the market price is interpreted as the replacement cost, then the stock should be valued at :-
(A) Rs. 98
(B) Rs. 100
(C) Rs. 140
(D) Rs. 40
(Answer :- Rs. 98)
4. If the goods purchased are in transit, then the Journal Entry at the end of the period will be :-
(A) Goods in Transit A/c Dr. To Supplier’s A/c
(B) Goods in transit A/c Dr. To Purchases A/c
(C) Stock A/c Dr. To Goods in Transit A/c
(D) Supplier’s A/c Dr. To Goods in Transit
(Answer :- Goods in transit A/c Dr. To Purchases A/c)
5. Calculate Return on Investment/ Return on Proprietor’s fund. Gross profit of a firm is Rs. 3,20,000, Operating expenses Rs. 1,00,000, Taxes Rs. 20,000, Owner’s fund Rs. 5,00,000, Debenture Interest Rs. 50,000 :-
(A) 20%
(B) 30%
(C) 40%
(D) 50%
(Answer :- 30%)
6. The technique of “Carrot and Stick” is used in business organization for :-
(A) Reducing absenteeism
(B) Motivation
(C) Effective leadership
(D) Rewarding workers
(Answer :- Motivation)
7. The clearing agent is appointed by the :-
(A) Shipping company
(B) Custom’s Authority
(C) Importer
(D) Exporter
(Answer :- Importer)
8. The importer cannot take delivery of goods unless he produces the :-
(A) Bill of sight
(B) Bill of lading
(C) Shipping Bill
(D) Mate’s receipt
(Answer :- Bill of lading)
9. The principle of indemnity is not related to :-
(A) Life Insurance
(B) Fire Insurance
(C) Marine Insurance
(D) Crop Insurance
(Answer :- Life Insurance)
10. In Marine Insurance, the existence of insurable interest is necessary :-
(A) When the loss is caused
(B) When the policy is taken
(C) Both when the policy is taken and when the loss is caused
(D) Throughout the period of contract
(Answer :- When the loss is caused)
11. The policy of "anticipate no profit and provide for all possible losses" is followed due to :-
(A) Convention of consistency
(B) Convention of conservation
(C) Convention of disclosure
(D) None of the above
(Answer :- Convention of conservation)
12. Receipts and Payments Account is prepared by :-
(A) Companies
(B) Banks
(C) Partnership firms
(D) Non-trading organizations
(Answer :- Non-trading organizations)
13. Examination of documents and vouchers is called :-
(A) Physical verification
(B) Test checking
(C) Vouching
(D) None of the above
(Answer :- Vouching)
14. Internal Audit is done by :-
(A) External Auditors
(B) Employees of the organization
(C) Both (A) and (B)
(D) Neither (A) nor (B)
(Answer :- Employees of the organization)
15. Audit Programme is prepared by :-
(A) The Auditor
(B) The Company
(C) Internal Auditor
(D) Financial Controller
(Answer :- The Auditor)
16. Consider the following statements :-
The vouching of remuneration to directors involve the checking of :-
1. special resolution.
2. statement of accounts.
3. approval note of the Central Government.
4. Minutes Book.
Which of the statements given above are correct ?
(A) 1 and 2 only
(B) 2 and 3 only
(C) 1, 2 and 4
(D) 1, 3 and 4
(Answer :- 1, 3 and 4)
17. Land Development Banks form part of :-
(A) Commercial Banks
(B) IDBI
(C) FCI
(D) Cooperative Credit Structure
(Answer :- Cooperative Credit Structure)
19. Among the following tax revenues of the Union Government, which is the biggest source?
(A) Income Tax
(B) Corporation Tax
(C) Central Excise
(D) Customs Duty
(Answer :- Central Excise)
19. Under the head "Secured Loans" the following are disclosed :-
1. Loans and Advances from banks.
2. Debentures.
3. Loans and Advances from subsidiaries.
4. Other loans and advances.
What is the correct chronological order of disclosure of the items given above in balance sheet of a company ?
(A) 3 - 1 - 2 – 4
(B) 2 - 4 - 3 - 1
(C) 3 - 4 - 2 – 1
(D) 2 - 1 - 3 - 4
(Answer :- 2 - 1 - 3 - 4)
20. Consider the following statements :-
Accounting control comprises :-
1. The plan of organization concerned with decision process.
2. The plan of organization concerned with safeguarding of assets.
3. The procedure concerned with safeguarding of assets.
Which of the statements given above are correct ?
(A) 1 and 2 only
(B) 2 and 3 only
(C) 1 and 3 only
(D) 1, 2 and 3
(Answer :- 2 and 3 only)
(Commerce Multiple Choice Questions Answers) (SET 09)
1. The Doing Business Report" is prepared by which of the following organizations every year?
(A) World Bank
(B) Asian Development Bank (ADB)
(C) International Monetary Fund (IMF)
(D) World Trade Organization (WTO)
(Answer :- World Bank)
2. Accounting for Intangible Assets are related to :-
(A) AS - 10
(B) AS - 12
(C) AS - 24
(D) AS - 26
(Answer :- AS - 26)
3. Indian Accounting Standard :- 28 is related to :-
(A) Accounting for taxes on income
(B) Financial Reporting of Interests in Joint Venture
(C) Impairment of Assets
(D) Provisions, Contingent Liabilities and Contingent Assets
(Answer :- Impairment of Assets)
4. Recording of capital contributed by the owner as liability ensures the adherence of principle of :-
(A) Consistency
(B) Going concern
(C) Separate entity
(D) Materiality
(Answer :- Separate entity)
5. Bad loans in banking terminology are generally known as :-
(A) BPOs
(B) Prime Asset
(C) NPAs
(D) CBS
(Answer :- NPAs)
6. An association of cement manufacturers is an example of :-
(A) Diagonal combination
(B) Vertical combination
(C) Horizontal combination
(D) Lateral combination
(Answer :- Horizontal combination)
7. The product range is widest in case of :-
(A) Chain store
(B) Departmental store
(C) Specialty shop
(D) One price shop
(Answer :- Departmental store)
8. A public corporation is set up :-
(A) By a Special Act of Parliament
(B) By a special order of the Government
(C) Under Indian Companies Act, 1956
(D) By none of the above
(Answer :- By a Special Act of Parliament)
9. The minimum number of members required for registration of a cooperative society are :-
(A) Two
(B) Seven
(C) Ten
(D) Twenty
(Answer :- Ten)
10. Insurable interest must be present at the time of insurance proposal and payment of claims in :-
(A) Fire Insurance
(B) Marine Insurance
(C) Life Insurance
(D) Motor Insurance
(Answer :- Fire Insurance)
11. A machinery is purchased for Rs. 3,00,000 and Rs. 50,000 is spent on its installation. Rs. 5,000 is spent on fuel. What will be the amount of capital expenditure ?
(A) Rs. 3,00,000
(B) Rs. 3,50,000
(C) Rs. 3,55,000
(D) None of these
(Answer :- Rs. 3,50,000)
12. Which of the following errors are not disclosed by Trial Balance ?
(A) Compensatory Errors
(B) Errors of Principle
(C) Errors of Omission
(D) All the three
(Answer :- All the three)
13. A large amount spent on special advertisement is :-
(A) Capital Expenditure
(B) Revenue Expenditure
(C) Revenue Loss
(D) Deferred Revenue Expenditure
(Answer :- Deferred Revenue Expenditure)
14. Double Entry System was introduced in :-
(A) America
(B) Japan
(C) India
(D) Italy
(Answer :- Italy)
15. According to going concern concept a business entity is assumed to have :-
(A) A long life
(B) A small life
(C) A very short life
(D) A definite life
(Answer :- A long life)
16. Which of the following companies do not have the obligation to get its Articles of Association registered along with the Memorandum of Association ?
(A) Public Company limited by shares
(B) Unlimited companies
(C) Private companies limited by shares
(D) Companies limited by guarantee
(Answer :- Public Company limited by shares)
17. What does management audit imply ?
(A) Complete audit
(B) Detailed audit
(C) Efficiency audit
(D) Interim audit
(Answer :- Efficiency audit)
18. Which one of the following statements is correct ?
(A) Internal audit and Management audit are the same
(B) Internal audit and statutory audit are the same
(C) Internal audit is compulsory in all cases
(D) Statutory audit of company accounts is compulsory
(Answer :- Statutory audit of company accounts is compulsory)
19. Where does an auditor of a cooperative society submit the audit report ?
(A) To the managing committee of the society only
(B) To the Registrar of Cooperative Societies of the State concerned only
(C) To the State Assembly concerned
(D) To the Registrar of Cooperative Societies of the State concerned and a copy to the society
(Answer :- To the Registrar of Cooperative Societies of the State concerned only)
20. Which one of the following statements is correct ?
(A) Audit of an educational institution is compulsory if it is run by a charitable trust
(B) A club is treated as a commercial establishment
(C) The accounts of a charitable trust can be audited by any person who belongs to accountancy profession
(D) Audit of a charitable trust is not compulsory under law
(Answer :- Audit of an educational institution is compulsory if it is run by a charitable trust)
(Free Commerce Objective Questions) (SET 10)
1. A company invited application for subscription of 5,000 shares. The application were received for 6,000 shares. The shares were allotted on pro-rata basis. If X has applied for 180 shares how many shares would be allotted to him ?
(A) 180 shares
(B) 200 shares
(C) 150 shares
(D) 175 shares
(Answer :-150 shares)
2. Which of the following is not a banking related term?
(A) SME Finance
(B) Equinox
(C) Overdraft
(D) Sanctioning Authority
(Answer ;- Equinox)
3. The balance appearing in the books of a company at the end of year were CRR A/c Rs. 50,000, Security Premium Rs. 5,000, Revaluation Reserve Rs. 20,000, P & L A/c (Dr) Rs. 10,000. Maximum amount available for distribution of Bonus Share will be :-
(A) Rs. 50,000
(B) Rs. 55,000
(C) Rs. 45,000
(D) Rs. 57,000
(Answer :- Rs. 55,000)
4. R. G. Ltd. purchased machinery from K.G. Company for a book value of Rs. 4,00,000. The consideration was paid by issue of 10%. Debenture of Rs. 100 each at a discount of 20%. The debenture account will be credited by :-
(A) Rs. 4,00,000
(B) Rs. 5,00,000
(C) Rs. 3,20,000
(D) Rs. 4,80,000
(Answer :- Rs. 4,00,000)
5. Depletion method of depreciation is used in case of :-
(A) Cattle, Loose Tools, etc.
(B) Mines, Quarries, etc.
(C) Machinery, Building, etc.
(D) Books
(Answer :- Mines, Quarries, etc.)
6. A special resolution is passed in a company meeting by :-
(A) Simple majority
(B) 2/3 majority
(C) 3/4 majority
(D) None of the above
(Answer :- 3/4 majority)
7. Articles of Association of a company can be altered by :-
(A) An ordinary resolution
(B) A resolution with a special notice
(C) A special resolution
(D) None of the above
(Answer :- A special resolution)
8. The liability of the shareholders of a public limited company is limited to the extent of :-
(A) Par value of the share
(B) Paid up value of the shares
(C) Market price of the shares
(D) Intrinsic value of the shares
(Answer :- Paid up value of the shares)
9. The first directors of a company are appointed by :-
(A) Promoters
(B) Government
(C) Shareholders
(D) Company Law Board
(Answer :- Promoters)
10. In a public limited company, the minimum number of directors are :-
(A) 2
(B) 3
(C) 5
(D) None of the above
(Answer :- 3)
11. General Insurance Corporation of India was set up in :-
(A) 1956
(B) 1972
(C) 1980
(D) 2000
(Answer :- 1972)
12. "Salvage Charges" is related to :-
(A) Life Insurance
(B) Marine Insurance
(C) Fire Insurance
(D) None of the above
(Answer :- Marine Insurance)
13. In ‘Life Insurance Contract’ the insurable interest is examined at the time of :-
(A) Entering the contract
(B) Filing the claim
(C) Both (A) and (B)
(D) Never
(Answer :- Entering the contract)
14. In connection with marine insurance the ‘Doctrine of Utmost Good Faith’ is based on the concept of :-
(A) Disclosure
(B) Concealment
(C) Misrepresentation
(D) None of the above
(Answer :- Disclosure)
15. Which statement is not true in respect of a Balance Sheet ?
(A) It is an account
(B) It is prepared every month
(C) It is prepared to check the mathematical accuracy
(D) All the above
(Answer :- All the above)
16. Few items of P/L A/c of a company are :-
Sales – Rs.1,60,000
Closing stock – Rs.38,000
Non-operating Expenses – Rs.800
Non-operating Income – Rs.4,800
Net Profit – Rs.28,000
What is the Operating Profit Ratio ?
(A) 18%
(B) 20%
(C) 15%
(D) 57%
(Answer :- 15%)
17. Net profit after tax of Rs. 2,00,000 is Rs. 4,00,000. Share capital is Rs. 8,00,000 and revenue reserve is Rs. 2,00,000. What is rate of return on equity ?
(A) 40%
(B) 50%
(C) 60%
(D) 75%
(Answer :- 40%)
18. Members of a company may apply to which one among the following for relief under the Companies Act, 1956 in cases of oppression ?
(A) Central Government
(B) High Court of Judicature
(C) National Company Law Tribunal
(D) National Company Law Appellate Tribunal
(Answer :- National Company Law Tribunal)
19. A company limited by shares has to call the statutory meeting within a period of not less than one month and not more than six months. This period is counted with reference to which one of the following ?
(A) The date of incorporation
(B) The date at which the company is entitled to commence business
(C) The date of actual receipt of certificate of incorporation
(D) The date of actual commencement of business
(Answer :- The date at which the company is entitled to commence business)
20. Which among the following is eligible to issue Shelf Prospectus ?
(A) Any company contemplating for public issue of securities
(B) Any public financial institution
(C) Only manufacturing companies
(D) Only foreign companies engaged in trading in India
(Answer :- Any public financial institution)
(Commerce Objective Questions with Answers) (SET 11)
1. Current Ratio is 3•75, Acid Test Ratio is 1•25 Stock Rs. 3,75,000, calculate working capital.
(A) Rs. 3,00,000
(B) Rs. 4,00,000
(C) Rs. 4,12,500
(D) Rs. 4,25,000
(Answer :- Rs. 4,12,500)
2. From the information given below, calculate Debt service coverage Ratio :-
Net profit after interest and Tax Rs. 40,000, Depreciation Rs. 5,000, Rate of Income Tax 50%, 10% Mortgage Debentures Rs. 60,000. Fixed Interest Charges Rs. 6,000, Debenture Redemption Fund Appropriation of Outstanding Debentures 10%.
(A) 4•06 times
(B) 5•06 times
(C) 6•06 times
(D) 7•06 times
(Answer :- 4•06 times)
3. Share premium account can be used for :-
(A) Paying tax liability
(B) Meeting the cost of issue of shares or debentures
(C) Paying Dividend on shares
(D) Meeting the loss on sale of old asset
(Answer :- Meeting the cost of issue of shares or debentures)
4. Ploughing-back of profits means :-
(A) Dividend declared but not claimed by shareholders
(B) Non-declaration of dividend in any year
(C) Profits earned from illegal sources and employed in business
(D) Retaining the earnings of business for future expansion programme
(Answer :- Retaining the earnings of business for future expansion programme)
5. As per Schedule VI of the Companies’ Act, 1956, Forfeited Share Account will be :-
(A) Added to paid up capital
(B) Deducted from called up capital
(C) Added to capital reserve
(D) Shown as a revenue reserve
(Answer :- Deducted from called up capital)
6. ‘Profit objective’ is of least priority in case of :-
(A) Private enterprise
(B) Public enterprise
(C) Department undertaking
(D) Cooperative society
(Answer :- Cooperative society)
7. Partnership may come into existence by :-
(A) The operation of law
(B) An express agreement only
(C) An express or implied agreement only
(D) Inheritance of property
(Answer :- An express or implied agreement only)
8. A public company can start business :-
(A) After incorporation
(B) After promotion
(C) After registration
(D) After getting certificate of commencement of business
(Answer :- After getting certificate of commencement of business)
9. Consumers cooperative store is set up by the :-
(A) Central Government
(B) State Government
(C) Registrar of Cooperative Societies
(D) Members
(Answer :- Members)
10. "Object Clause" of a Memorandum of Association can be altered by :-
(A) Ordinary resolution
(B) Special resolution
(C) Special resolution and confirmation by Registrar of Companies
(D) Special resolution and confirmation by Company Law Board
(Answer :- Special resolution and confirmation by Company Law Board)
11. Letter of Credit is presented by :-
(A) Exporter
(B) Importer
(C) Custom Officer
(D) Shipping Company
(Answer :- Importer)
12. The Agreement of Partnership :-
(A) Must be oral
(B) Must be in writing
(C) Can be either oral or in writing
(D) Must be in writing on a stamp paper
(Answer :- Can be either oral or in writing)
13. Export procedure begins with :-
(A) Indent
(B) Shipping order
(C) Marine insurance
(D) None of these
(Answer :- Indent)
14. "Self-help by mutual help" is a feature of :-
(A) Public enterprise
(B) Public corporation
(C) Co-operative society
(D) All of the above
(Answer :- Co-operative society)
15. In India private sector entered into the Life Insurance business in the year :-
(A) 1995
(B) 1998
(C) 2000
(D) 2001
(Answer :- 2000)
16. A company has issued a 20-year bond at Rs. 1000 par value with a coupon rate of 10 per cent. The required rate of return on similar bonds is 12 per cent. What is the current value of the bond ?
(A) Rs. 905•33
(B) Rs. 850•45
(C) Rs. 833•33
(D) Rs. 820•20
(Answer :- Rs. 905•33)
17. Consider the following statements :-
Current ratio is increased by :-
1. issue of redeemable preference shares.
2. selling of old furniture for cash.
3. cash realized from debtors.
Which of the statements given above are correct ?
(A) 1 and 2 only
(B) 2 and 3 only
(C) 1 and 3 only
(D) 1, 2 and 3
(Answer :- 1 and 2 only)
18. Which one of the following statements is correct ?
When creditors' velocity or creditors' turnover is higher as compared to debtors' velocity, it would :-
(A) improve liquidity
(B) reduce liquidity
(C) have no effect on liquidity
(D) improve financial position
(Answer :- have no effect on liquidity)
19.
Sundry Debtors – Rs.15,000
Bills Receivable (B/R) – Rs.12,500
Cash at Bank – Rs.17,500
Stock – Rs.15,000
Profit – Rs.20,000
Creditors – Rs.25,000
Bills Payable (B/P) – Rs.15,000
Sales – Rs.1,00,000
What is the Acid Test Ratio ?
(A) 1•5 : 1
(B) 1•125 : 1
(C) 16 2/3%
(D) 50%
(Answer :- 1•125 : 1)
20. Which one of the following transactions changes the current ratio ?
(A) Purchase of goods for cash
(B) Plant acquired on account
(C) Sold goods on credit
(D) Debentures converted into equity capital
(Answer :- Plant acquired on account)
(Commerce Objective Questions) (SET 12)
1. Total sales is Rs. 7,60,000, cash sales Rs. 30,000 collection period is 25 days, debtors at Balance Sheet date will be :-
(A) Rs. 80,000
(B) Rs. 70,000
(C) Rs. 60,000
(D) Rs. 50,000
(Answer :- Rs. 50,000)
2. Price earning ratio is 83•33% and E.P.S. is Rs. 30. The market price of equity share will be :-
(A) Rs. 33•33
(B) Rs. 66•67
(C) Rs. 20
(D) Rs. 25
(Answer :- Rs. 25)
3. If the current ratio is 2, current assests are worth Rs. 1,600, if current ratio is not allowed to fall below 1•5, how much additional can be borrowed by the company on the short term basis ?
(A) Rs. 400
(B) Rs. 600
(C) Rs. 2,733
(D) Rs. 800
(Answer :- Rs. 400)
4. Rate of Gross Profit on cost is 25%. Total sales is Rs. 1,00,000 and Average Stock is Rs. 1,60,000. Stock Turnover Ratio will be :-
(A) 0•5 times
(B) 0•8 times
(C) 0•10 times
(D) 0•4 times
(Answer :- 0•5 times)
5. Average stock of firm is Rs. 80,000, the opening stock is Rs. 10,000 less than closing stock. Find opening stock.
(A) Rs. 95,000
(B) Rs. 85,000
(C) Rs. 90,000
(D) Rs. 75,000
(Answer :- Rs. 75,000)
6. Auditing of accounts is compulsory for :-
(A) Sole proprietary business
(B) Partnership firms
(C) Joint Stock Companies
(D) None of the above
(Answer :- Sole proprietary business)
7. Under vouching, checking is done of :-
(A) Journal and Ledger
(B) Profit and Loss Account
(C) Balance Sheet
(D) All of the above
(Answer :- All of the above)
8. The goods taken by the proprietor from the shop is debited to :-
(A) Shop account
(B) Goods account
(C) Capital account
(D) Drawings accounts
(Answer :- Drawings accounts)
9. Which of the following types of business organization has a separate legal entity ?
(A) Joint Hindu family business
(B) Partnership
(C) Joint Stock Company
(D) None of the above
(Answer :- Joint Stock Company)
10. The organisation in which power of authority runs in straight line is called :-
(A) Line organization
(B) Functional organisation
(C) Committee organization
(D) None of the above
(Answer :- Line organization)
11. Indian Partnership Act was passed in the year :-
(A) 1956
(B) 1936
(C) 1932
(D) 1930
(Answer :- 1932)
12. According to the Partnership Act, the maximum number of partners in a banking firm may be :-
(A) 10
(B) 12
(C) 4
(D) 20
(Answer :-10)
13. Dissolution of Partnership takes place when :-
(A) A partner misbehaves
(B) A partner becomes of unsound mind
(C) Business is running at a loss
(D) A partner dies
(Answer :- A partner dies)
14. The existence of a Partnership Firm is :-
(A) Separate from partners
(B) Not separate from partners
(C) Both (A) and (B)
(D) None of the above
(Answer :- Not separate from partners)
15. In which State the Mitakshara form of H.U.F. business does not apply ?
(A) Rajasthan
(B) Gujarat
(C) West Bengal
(D) Kerala
(Answer :- West Bengal)
16. What is outsourcing of production and concentrating on marketing operations in international business, known as ?
(A) Licensing
(B) Franchising
(C) Contract manufacturing
(D) Joint venture
(Answer :- Franchising)
17. Which of the following is not a feature of bonds ?
(A) Par value
(B) Yield to maturity
(C) Coupon rate
(D) Maturity
(Answer :- Yield to maturity)
18. On 1st April, 2013, Y Ltd. Issued 1000, 12% debentures of Rs. 100 each at a discount of 6%. These debentures are redeemable in five equal annual instalments at the end of each year. What is the amount of discount to be written off in the first year i.e. on 31st March, 2007, through P & L A/c ?
(A) Rs. 2000
(B) Rs. 1800
(C) Rs. 1200
(D) Rs. 600
(Answer :- Rs. 1200)
19. XYZ Ltd. issued 10,000 shares of Rs. 100 each at Rs. 120 per share with Rs. 25 on application, Rs. 45 on allotment including premium, Rs. 20 on first call and Rs. 30 on final call. Govind who held 200 shares did not pay any call money and his shares were forfeited. What is the amount to be credited to Share Forfeiture Account on forfeiture ?
(A) Rs. 14,000
(B) Rs. 10,000
(C) Rs. 9,000
(D) Rs. 4,000
(Answer :- Rs. 10,000)
20. X Ltd. purchased a car from Maruti Udyog Ltd. for Rs. 5,00,000. As per agreement Rs. 80,000 was to be paid in cash and the balance by issue of shares of Rs. 10 each at a premium of Rs. 5 per share. How many shares should X Ltd. issue to Maruti Udyog Ltd. for the car ?
(A) 30,000 shares
(B) 29,000 shares
(C) 28,500 shares
(D) 28,000 shares
(Answer :- 28,000 shares)
(Objective Type Commerce Questions) (SET 13)
1. According to Balance Sheet equation concept, the capital will be :-
(A) Capital = Liabilities – Assets
(B) Capital = Fixed Assets – Current Assests
(C) Capital = Assets – Liabilities
(D) Capital = Assets + Liabilities
(Answer :- Capital = Assets – Liabilities)
2. In common size Balance Sheet analysis we evaluate :-
(A) Increase or decrease over two years is analyzed
(B) Only increase over two years is analyzed
(C) Only decrease over two years is analyzed
(D) All assets and liabilities are expressed in terms of percentage of total
(Answer :- All assets and liabilities are expressed in terms of percentage of total)
3. Increase in fixed asset due to purchase is :-
(A) Source of fund
(B) Fund from operation
(C) Use of fund
(D) None of the above
(Answer :- Use of fund)
4. For the purpose of preparation of fund flow statement, fund means :-
(A) Total resources
(B) Cash/bank balances
(C) Current Assets
(D) Working capital
(Answer :- Working capital)
5. The following data, relates to manufacturing company for the year 2006-07–
Net Profit as per P & L A/c–Rs. 2,40,000; Depreciation–Rs. 80,000; Goodwill written-off–Rs. 40,000, Profit on Sale of Fixed Assets–Rs. 16,000, Proposed Dividend–Rs. 96,000. The fund from operation would be :-
(A) Rs. 4,40,000
(B) Rs. 4,00,000
(C) Rs. 6,40,000
(D) None of the above
(Answer :- None of the above)
6. A vacancy caused by the resignation of the auditor is filled only by the :-
(A) Board of Directors of the Company
(B) Central Government
(C) General Meeting of the shareholders
(D) Managing Director of the company
(Answer :- General Meeting of the shareholders)
7. The first auditor of a company appointed, holds office :-
(A) For a period of one year
(B) For that period till new auditor is appointed
(C) Till the conclusion of first Annual General Meeting
(D) Till the holding of statutory meeting of the company
(Answer :- Till the conclusion of first Annual General Meeting)
8. Internal Auditor is appointed by the :-
(A) Management
(B) Shareholders
(C) Government
(D) Statutory Auditor
(Answer :- Management)
9. “Auditor is a watchdog and not a blood hound” was a remark made in the case of :-
(A) The London Oil Storage Co. Ltd. 1904
(B) Kingston Cotton Mills Ltd. 1896
(C) London and General Bank 1895
(D) Delightful Cigarette Co. Ltd. 1943
(Answer :- Kingston Cotton Mills Ltd. 1896)
10. The auditor is generally expected to carryout the following in a particular sequence :-
1. Verification of Assets and Liabilities.
2. Vouching of transactions.
3. Checking of valuation of Assets and Liabilities.
Select the correct sequence of the above from the following :-
(A) 1, 3 and 2
(B) 3, 2 and 1
(C) 2, 1 and 3
(D) 3, 1 and 2
(Answer :- 2, 1 and 3)
11. What is the quorum of General Meetings in the case of a Private Company ?
(A) 2 members
(B) 3 members
(C) 4 members
(D) 5 members
(Answer :- 2 members)
12. Which of these must hold a Statutory Meeting ?
(A) Public Limited Company
(B) Private Company
(C) Unlimited Company
(D) All of these
(Answer :- Public Limited Company)
13. When three sugar mills combine, it is an example of :-
(A) Vertical combination
(B) Horizontal combination
(C) Diagonal combination
(D) None of the above
(Answer :- Horizontal combination)
14. The first electronic computer system was developed in :-
(A) 1920
(B) 1940
(C) 1930
(D) 1950
(Answer :- 1940)
15. An Index is :-
(A) A filing system
(B) A photostat procedure
(C) The procedure to collect data
(D) An important help in filing
(Answer :- An important help in filing)
16. Consider the following statements in respect of PERT :-
1. PERT is a variation of milestone budgeting.
2. PERT employs probabilistic estimate of time required for completion of an activity.
3. PERT also includes the transfer of resources for reduction of duration of completion of a project.
Which of the statements given above are correct ?
(A) 1, 2 and 3
(B) 1 and 2 only
(C) 2 and 3 only
(D) 1 and 3 only
(Answer :- 2 and 3 only)
17. Some organizations have escalator clause in their labor agreements.
What does this clause provide for ?
(A) Automatic increase in wage/salary depending on seniority
(B) Wage increase depending on output per day by the worker
(C) Automatic increase in wage/salary depending upon increase in price index
(D) Automatic increase in wage/salary depending on increase in profits of the firm
(Answer :- Automatic increase in wage/salary depending on increase in profits of the firm)
18. What is an organization structure in which each employee reports to both a functional (or division) manager and to a project (or group) manager, known as ?
(A) Strategic business unit
(B) Departmentation by customer
(C) Matrix structure
(D) Departmentation by territory
(Answer :- Matrix structure)
19. According to force-field theory, every behavior is the result of equilibrium between which of the following ?
(A) Push and pull effect
(B) Strong and weak forces
(C) Positive and negative forces
(D) Driving and restraining forces
(Answer :- Driving and restraining forces)
20. Life insurance is a contract of which one of the following ?
(A) Indemnity
(B) Guarantee
(C) Contribution
(D) Subrogation
(Answer :- Guarantee)
(Commerce Question Bank) (SET 14)
1. In order to reduce the risk of heavy insurance the insurer passes on some business to the other company, it is called :-
(A) Reinsurance
(B) Double Insurance
(C) Joint Insurance Policy
(D) Separate Insurance
(Answer :- Reinsurance)
2. Contents of Marine Insurance include :-
(A) Insurance of Cargo only
(B) Insurance of Freight only
(C) Insurance of Hull only
(D) Insurance of Cargo, Freight & Hull
(Answer :- Insurance of Cargo, Freight Hull)
3. The object of "Agenda" is to inform :-
(A) About the profitability and activity
(B) About the progress of company
(C) About the matter in sequence to be discussed in the meeting
(D) About the routine matters
(Answer :- About the matter in sequence to be discussed in the meeting)
4. The Branch of Accounting which is concerned with the processing and presenting data for decision making is known as :-
(A) Common Dollar Accounting
(B) Social Accounting
(C) Cost Accounting
(D) Management Accounting
(Answer :- Management Accounting)
5. Final accounts prepared in narrative style are in :-
(A) Horizontal form
(B) Accounts form
(C) Vertical form
(D) None of the above
(Answer :- Vertical form)
6. If super profit is Rs. 4‚000 and normal rate of return is 8 per cent, the amount of goodwill will be :-
(A) Rs. 40‚000
(B) Rs. 50‚000
(C) Rs. 4‚00‚000
(D) Rs. 5‚000
(Answer :- Rs. 50‚000)
7. Goodwill, Copyright and Trademarks should be classified as :-
(A) Tangible assets
(B) Intangible assets
(C) Current assets
(D) Fictitious assets
(Answer :- Intangible assets)
8. The portion of share capital which can be called up only on the winding up of a company is known as :-
(A) Called up capital
(B) Paid up capital
(C) Authorized capital
(D) Reserve capital
(Answer :- Reserve capital)
9. Which one of the following is called backbone of auditing ?
(A) Routine checking
(B) Vouching
(C) Internal check
(D) Internal control
(Answer :- Vouching)
10. Internal Audit is provided for in the :-
(A) Companies Act
(B) Partnership Act
(C) Both (A) and (B)
(D) Neither (A) or (B)
Answer :- Neither (A) or (B)
11. What is the maximum limit of remuneration for a whole time manager in a company ?
(A) 3% of net annual profit
(B) 5% of net annual profit
(C) 7% of net annual profit
(D) None of the above
(Answer :- 5% of net annual profit)
12. Which among the following documents defines the relationship between a company and outsiders ?
(A) Memorandum of Association
(B) Articles of Association
(C) Prospectus
(D) None of the above
(Answer :- Memorandum of Association)
13. Registration is not essential in case of a :-
(A) Company
(B) Co-operative organization
(C) Co-operative Societies
(D) Business of Joint Hindu Family
(Answer :- Business of Joint Hindu Family)
14. The Meeting of Board of Directors must be called at least once :-
(A) In four months
(B) In three months
(C) In two months
(D) In one month
(Answer :- In three months)
15. The Secretary of a Company should file copies of Special Resolution passed at Extraordinary General Meeting to the Registrar of Companies within :-
(A) 7 days
(B) 14 days
(C) 21 days
(D) 30 days
(Answer :- 30 days)
16. To which one of the following aspects does an established pattern of relationships among the components of an organization refer ?
(A) Organization strategy
(B) Organization structure
(C) Organization process
(D) Organization policy
(Answer ;- Organization structure)
17. Consider the following statements :-
1. Authority in an organization is the formal or institutional right to command stemming from official delegation of position.
2. Legitimate power is the right to manage derived from delegation based on ownership or property rights.
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)
18. Which one of the following is not correct in respect of the Theory X?
(A) It emphasizes that most average human beings avoid to be led, want to lead
(B) According to the theory X, the Managers tend to be autocratic
(C) The theory X assumes that most human beings must be directly controlled in order to achieve organizational goals
(D) The theory X assumes that most individuals have little ambition and want security
(Answer :- It emphasizes that most average human beings avoid to be led, want to lead)
19. When Maslow's need hierarchy is compared with Herzberg's two-factor theory of motivation, which of the following statements are correct ?
1. Maslow's psychological needs; security, safety and affiliation or acceptance represent almost the same meanings as Herzberg's maintenance factor.
2. Esteem or status is also a part of maintenance factor.
3. Self-actualization can be compared as a component of motivators as in Herzberg's theory.
Select the correct answer using the code given below :-
(A) 1, 2 and 3
(B) 1 and 2 only
(C) 2 and 3 only
(D) 1 and 3 only
(Answer :-1 and 2 only)
20. Which one of the following is not an element of direction ?
(A) Planning and organizing various resources for doing work
(B) Continuous training activity in which subordinates are instructed to carry out a particular assignment
(C) Motivation of subordinates to try to meet the expectations of manager
(D) Maintaining discipline and rewarding those who perform properly
(Answer :- Motivation of subordinates to try to meet the expectations of manager)
(Online Commerce Questions) (SET 15)
1. The present World Economic Depression first of all, started from which country ?
(A) U.S.A.
(B) U.K.
(C) France
(D) India
(Answer :- U.S.A.)
2. Which, institution is known as the ‘Soft Loan Window’ of World Bank ?
(A) I.F.C. (International Financial Corporation)
(B) I.D.A. (International Development Association)
(C) I.M.F. (International Monetary Fund)
(D) Indian Development Forum
Answer :- I.D.A. (International Development Association)
3. Which is not a insurable risk ?
(A) Accident Risk
(B) Loss of Crops Risk
(C) The Risk of Trading in New Market
(D) The Risk of Sinking of a Ship
(Answer :- The Risk of Trading in New Market)
4. The Life Insurance in India was nationalized in the year :-
(A) 1870
(B) 1956
(C) 1960
(D) 1966
(Answer :- 1956)
5. Fire Insurance is based on the principle of :-
(A) Utmost Good faith
(B) Insurable Interest
(C) Indemnity
(D) Cooperation
(Answer :- Indemnity)
6. X Limited forfeited Ram’s 20 shares of Rs. 10 each on which Rs. 7 is called up. Ram had paid application and allotment money of Rs. 5 per share. Of these forfeited shares 15 shares were reissued to Hari as fully paid up for Rs. 6 per share. What amount should be transferred to Capital Reserve account ?
(A) Rs. 15
(B) Rs. 20
(C) Rs. 75
(D) Rs. 100
(Answer :- Rs. 15)
7. In case of a company, “Buy Back” is related to :-
(A) Prospectus
(B) Shares
(C) Debentures
(D) Cheques
(Answer :- Shares)
8. The profit of a company (whose capital is divided into 25‚000 shares of Rs. 10 each) for the last three years are : Rs. 50‚000; Rs. 60‚000 and Rs. 40‚000. The fair return on investment is taken at 10% p.a. The value of company’s share will be :-
(A) Rs. 10
(B) Rs. 20
(C) Rs. 30
(D) Rs. 40
(Answer :- Rs. 20)
9. The amount deposited in Securities Premium Account can be used for :-
(A) Distributing profits
(B) Issue of Bonus Shares
(C) Paying the amount to director
(D) None of the above
(Answer :- Issue of Bonus Shares)
10. Profit prior to incorporation is transferred to :-
(A) Capital reserve
(B) General reserve
(C) Profit and Loss Account
(D) Trading Account
(Answer :- Capital reserve)
11. Dividend paid between two Annual General Meetings is known as :-
(A) Final dividend
(B) Interim dividend
(C) Special dividend
(D) None of the above
(Answer :- Interim dividend)
12. In a Private Company there are restrictions regarding :-
(A) Transfer of shares
(B) Issue of prospectus
(C) Number of members
(D) All of the above
(Answer :- All of the above)
13. The gap between two General Meetings of the Company should not be more than :-
(A) 12 months
(B) 18 months
(C) 15 months
(D) 20 months
(Answer :- 15 months)
14. Statement containing details of items to be considered in a meeting is called :-
(A) Agenda
(B) Minutes
(C) Resolution
(D) Notice
(Answer :- Agenda)
15. The minimum and maximum number of members in a Private Company is :-
(A) 2 and 50
(B) 2 and 20
(C) 2 and 10
(D) None of the above
(Answer :- 2 and 50)
16. What is/are the consequence(s) of non-registration of partnership firm ?
1. It cannot sue any of its partners.
2. Partners of an unregistered firm can file suits against each other.
3. Partners can sue the firm to enforce their claims.
Select the correct answer using the code given below :-
(A) 1
(B) 2
(C) 3
(D) None of the above
(Answer :- None of the above)
17. Which of the following apex body and regulators has asked banks to swap customer related information so that the frauds and defaults may be prevented in future?
(A) Bombay Stock Exchange (BSE)
(B) Indian Banks Association (IBA)
(C) Securities Exchange Board of India (SEBI)
(D) Reserve Bank of India (RBI)
Answer :- Reserve Bank of India (RBI)
18. Which of the following committees is associated with reforms in small industries?
(A) K. L. Rekhi Committee
(B) R. Chelliah Committee
(C) Abid Hussain Committee
(D) None of the above
(Answer :- Abid Hussain Committee)
19. Consider the following statements in respect of the “Duty Free Import Authorization Scheme”.
1. The scheme offers the facility to import the required inputs before exports.
2. The scheme allows the transfer of scrip once the export obligation is complete.
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)
20. Under which one of the following is the term "Dominant Undertaking" defined ?
(A) MRTP Act
(B) FEMA
(C) Companies Act
(D) SEBI
(Answer :- Companies Act)
(Top Commerce Questions) (SET 16)
1. A meeting of the shareholders held only once during the life time of the company is known as :-
(A) Meeting of the Directors
(B) Meeting of the Creditors
(C) Extraordinary General Meeting
(D) Statutory Meeting
(Answer :- Statutory Meeting)
2. For calling the Extraordinary General Meeting a clear notice of _______ days must be given to all the members.
(A) 7
(B) 15
(C) 21
(D) 30
(Answer :- 21)
3. Appointment of a person who is a Director, as a Secretary in the Company would require approval of the company by :-
(A) Special Resolution
(B) Ordinary Resolution
(C) Resolution by circulation
(D) None of the above
(Answer :- Special Resolution)
4. The first Stock Exchange in India was established in :-
(A) Kolkata
(B) Delhi
(C) Mumbai
(D) Chennai
(Answer :- Mumbai)
5. Blue Chips Shares mean :-
(A) Those shares which are listed in Stock Exchange
(B) Those shares whose guarantee is given by Government
(C) Those shares on whom dividend is paid at higher rate regularly
(D) Those shares which are issued at first time
(Answer :- Those shares on whom dividend is paid at higher rate regularly)
6. The profit ratio of A, B and C, who are partners in a firm, is 4 : 3 : 2. After D is admitted, their sacrificing ratio will be :-
(A) 4 : 3 : 2
(B) 1 : 3 : 2
(C) Equal
(D) 5 : 3 : 2
(Answer :- 4 : 3 : 2)
7. X and Y are sharing profits in the ratio of 4 : 3. Z joins and new profit sharing ratio of X, Y and Z is 7 : 4 : 3. The sacrificing ratio of X and Y will be :-
(A) Equal
(B) 4 : 3
(C) 2 : 1
(D) 1 : 2
(Answer :- 1 : 2)
8. A and B were partners in a business and were sharing profit and loss in the ratio of 3 : 2. They admitted C as a partner for 15th share. The new profit sharing ratio shall be :-
(A) 3 : 2 : 1
(B) 6 : 4 : 1
(C) 12 : 8 : 5
(D) 12 : 6 : 2
(Answer :- 12 : 8 : 5)
9. At the time of admission of a new partner, general reserve is transferred to :-
(A) Old partner’s Capital Account
(B) Profit and Loss Adjustment Account
(C) Balance Sheet
(D) None of these
(Answer :- Old partner’s Capital Account)
10. A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. D is admitted in the first as a partner for 1/5th share. The sacrificing ratio of A, B and C will be :-
(A) 3 : 2 : 5
(B) 5 : 3 : 2
(C) 5 : 2 : 3
(D) 2 : 3 : 5
(Answer :- 5 : 3 : 2)
11. Grapevine communication is a type of :-
(A) Formal communication
(B) Informal communication
(C) Horizontal communication
(D) Vertical communication
(Answer :- Informal communication)
12. The "Principle of Exception" states that management should :-
(A) Check everything without exception
(B) Invariably take corrective action without exception
(C) Accept exceptions in emergencies
(D) Concentrate their attention on exceptions
(Answer :- Concentrate their attention on exceptions)
13. Which of the following is not a component of "SWOT Analysis" ?
(A) Threats
(B) Strengths
(C) Weaknesses
(D) Options
(Answer :- Options)
14. Organizational change is necessitated by :-
(A) External environmental pressure
(B) Internal strengths and weaknesses
(C) Sequential changes
(D) All the above
(Answer :- All the above)
15. Which management functions are closely related to ?
(A) Planning and Organizing
(B) Organizing and Staffing
(C) Staffing and Control
(D) Planning and Control
(Answer :- Planning and Control)
16. Which one of the following statements is not correct ?
(A) Business firms combine to avoid wasteful competition
(B) Business combination is possible only among joint stock companies
(C) Business firms may combine to take advantage of patent rights of individual firms
(D) During economic depression, small firms are absorbed by financially sound large firms
(Answer :- Business combination is possible only among joint stock companies)
17. What is the theory of social responsibility that focuses on how companies respond to issues, rather than trying to determine their ultimate social responsibility, called ?
(A) Corporate social performance
(B) Corporate social responsiveness
(C) Stewardship principle
(D) Enlightened self-interest
(Answer :- Corporate social performance)
18. What is a systematic evaluation of a company's activities in a given area of social interest such as environmental protection, workplace safety or community involvement, called ?
(A) Social responsibility
(B) Social accounting
(C) Social audit
(D) Social forecasting
(Answer :- Social audit)
19. What is cross rate ?
(A) A rate of exchange derived from central bank
(B) A rate of exchange between two currencies, other than those that form a market's principal rates
(C) A rate of exchange derived from the quotations for buying currencies
(D) A rate of exchange quoted by a dealer in foreign exchange for selling currencies
(Answer :- A rate of exchange between two currencies, other than those that form a markets principal rates)
20. Which one of the following statements is not correct ?
(A) Working capital is made available by the banks to the export sector at subsidized rates of interest
(B) Market Development Fund provides the necessary financial assistance for market promotion
(C) Export Houses/Star Trading houses are granted additional license against exports made during the preceding year
(D) Export profits enjoy a variety of tax concessions in India
(Answer :- Export Houses/Star Trading houses are granted additional license against exports made during the preceding year)
(Commerce Questions and Answers) (SET 17)
1. The Essence of Control is :-
(A) To take decision
(B) To take corrective action
(C) To make enquiry
(D) To motivate
(Answer :- To take corrective action)
2. An annual general meeting may be called after giving shorter notice instead of 21 clear days, if consent is accorded by :-
(A) All the directors of company
(B) All the members entitled to vote there at
(C) Majority of members entitled to vote there all
(D) None of the above
(Answer :- All the members entitled to vote there at)
3. “The position of a Company Secretary is like that of a hub in a bicycle wheel.” This statement shows the :-
(A) Importance of Company Secretary
(B) Rights of Company Secretary
(C) Duties of Company Secretary
(D) Liabilities of Company Secretary
(Answer :- Importance of Company Secretary)
4. The first Secretary of the company is appointed by :-
(A) Shareholders
(B) Promoters
(C) Government
(D) Directors
(Answer :- Promoters)
5. Appointment of full time Company Secretary is compulsory in all those companies, whose paidup share capital is :-
(A) Rs. 50 lakhs or more
(B) Rs. 1 crore or more
(C) Rs. 2 crores or more
(D) Rs. 3 crores of more
(Answer :- Rs. 2 crores or more)
6. Stock should include :-
(A) Goods held as security
(B) Goods held as consignee
(C) Goods with customers for approval on sale or return basis
(D) Goods sold but not delivered
(Answer :- Goods held as consignee)
7. Receipts and Payments Account is an abbreviated form of :-
(A) Cash Book
(B) Pass Book
(C) Both Cash Book and Pass Book
(D) None of the above
(Answer :- Cash Book)
8. At what price the stock is valued under conventional method ?
(A) At cost price
(B) At market price
(C) At cost price or market price whichever is lower
(D) At cost price or market price whichever is higher
(Answer :- At cost price or market price whichever is lower)
9. Which of the following is a personal account ?
(A) Outstanding Expense
(B) Investment
(C) Share premium
(D) Salary
(Answer :- Outstanding Expense)
10. On the admission of a partner, fictitious assets are :-
(A) Transferred to Revaluation Account
(B) Transferred to Capital Account
(C) Transferred to Reserves
(D) Shown in the new Balance Sheet
(Answer :- Transferred to Revaluation Account)
11. Strategy is used in :-
(A) Military
(B) Business
(C) Industry
(D) All of the above
(Answer :- All of the above)
12. ‘3-D’ Model of leadership is propounded by :-
(A) Likert Reinsis
(B) Kurt Levis
(C) William Ridin
(D) Henry Fayol
(Answer :- William Ridin)
13. Personal selling includes :-
(A) Selling
(B) Services to the customers
(C) Developing goodwill of the firm
(D) All of the above
(Answer :- All of the above)
14. The process of evaluating employees is called :-
(A) Performance appraisal
(B) Recruitment
(C) Induction
(D) Job evaluation
(Answer :- Performance appraisal)
15. Franking machine is used for :-
(A) Specimen signature
(B) Postage stamps
(C) Arrival and departure timings
(D) None of the above
(Answer :- Postage stamps)
16. Which one of the following statements about preparation of financial statements of a limited liability company is correct ?
(A) Financial statements should
be prepared according to the cash basis of accounting only
(B) Financial statements should be prepared according to the accrual basis of accounting only
(C) Financial statements should be prepared according to either the cash basis or accrual basis of accounting
(D) Financial statements should be prepared according to both the accrual and cash basis of accounting
(Answer :- Financial statements should be prepared according to the accrual basis of accounting only)
17. Expenses need to be recorded in the period in which the associated revenues are recognized. This is to be ensured as per which one of the following accounting principles ?
(A) Revenue recognition
(B) Cost benefit
(C) Matching
(D) Periodicity
(Answer :- Revenue recognition)
18. How is profit prior to incorporation treated as ?
(A) Revenue reserve
(B) Secret reserve
(C) Capital reserve
(D) General reserve
(Answer :- Capital reserve)
19. Which one of the following has replaced the Budla system in India ?
(A) Rolling settlement
(B) Trading in equity derivatives
(C) Depository system
(D) Online trading
(Answer :- Rolling settlement)
20. Which one of the following is not correct ?
(A) Mutual Fund ensures its participants a professional management of portfolio selection
(B) Mutual Fund schemes can be open-ended and/or closeended
(C) Balanced Mutual Fund aims at earning current income and capital appreciation
(D) Mutual Fund is an investment company and a merchant banker
(Answer :- Mutual Fund is an investment company and a merchant banker)
(Commerce Questions for Interview) (SET 18)
1. “Organization is a Management Process by which people, functions and physical factors are brought together to form a controllable unit.” This definition is given by :-
(A) Haney
(B) Kelling B. Lewis
(C) Oliver Sheldon
(D) Cornell
(Answer :- Oliver Sheldon)
2. Out of the following forms, which form of organization is the oldest one ?
(A) Line and staff organization
(B) Functional organization
(C) Committee organization
(D) Line organization
(Answer :- Line organization)
3. “A body of persons elected or appointed to meet on an organized basis for the discussion and dealing of matters brought before it.” It is called :-
(A) Functional organization
(B) Formal organization
(C) Committee organization
(D) Informal organization
(Answer :- Committee organization)
4. Due to coordination :-
(A) There is a unity of order
(B) There is a unity of direction
(C) There is a leadership
(D) Employees are motivated
(Answer :- There is a unity of order)
5. In "Direction" who is given importance ?
(A) To machines
(B) To paper work
(C) To man
(D) To production
(Answer :- To man)
6. Closing stock appearing in the Trial Balance is shown in :-
(A) Balance Sheet only
(B) Trading Account only
(C) Trading Account and Balance Sheet both
(D) None of the above
(Answer :- Balance Sheet only)
7. The rate of gross profit is 20% on sales and the cost of goods sold is Rs. 1‚00‚000, the amount of gross profit will be :-
(A) Rs. 30‚000
(B) Rs. 25‚000
(C) Rs. 20‚000
(D) Rs. 16‚667
(Answer :- Rs. 25‚000)
8. The policy “anticipate no profit and provide for all possible losses” arises due to :-
(A) Convention of consistency
(B) Convention of conservatism
(C) Convention of Disclosure
(D) None of the above
(Answer :- Convention of conservatism)
9. Donations received for the special purpose will be taken to the :-
(A) Income and Expenditure Account
(B) Assets side of the Balance Sheet
(C) Liabilities side of the Balance Sheet
(D) Receipts and Payments Account
(Answer :- Liabilities side of the Balance Sheet)
10. A sports club receives admission fees. It is a :-
(A) Revenue receipt
(B) Capital receipt
(C) Deferred receipt
(D) None of these
(Answer :- Revenue receipt)
11. Which of the following is not an element of marketing mix ?
(A) Product
(B) Price
(C) Promotion
(D) Product life cycle
(Answer :- Product life cycle)
12. Market segmentation means :-
(A) Grouping of buyers
(B) Grouping of sellers
(C) Grouping of middle men
(D) Grouping of producers
(Answer :- Grouping of buyers)
13. Standard costing is a technique of :-
(A) Planning
(B) Organising
(C) Coordination
(D) Control
(Answer :- Control)
14. The principle of "Unity of Command" was introduced by :-
(A) Elton Mayo
(B) Henry Fayol
(C) F. W. Taylor
(D) Urwick
(Answer :- Henry Fayol)
15. The last step of communication process is :-
(A) Controlling
(B) Implementation
(C) Correction
(D) Reaction
(Answer :- Reaction)
16. Match List-I with List-II and select the correct answer using the code given below the Lists :-
List-I (Nature of Expenditures/Receipts)
(a) Capital receipts
(b) Capital expenditure
(c) Revenue expenditure
(d) Revenue receipt
List II (Example)
1. Sale of fixed assets
2. Improvement of fixed assets
3. Income received as interest
4. Interest on loan for business
Codes :-
(a) (b) (c) (d)
(A) 1 2 4 3
(B) 3 4 2 1
(C) 1 4 2 3
(D) 3 2 4 1
(Answer :- 1 2 4 3)
17. Which of the following is affected by treatment of an accrued item in accounting ?
(A) Profit and Loss A/c only
(B) Profit and Loss Appropriation A/c
(C) Balance Sheet only
(D) Profit and Loss A/c and Balance Sheet
(Answer :- Profit and Loss A/c and Balance Sheet)
18. Income and expenses for the year 2012 are :-
Fee Received in Cash – Rs.24,000
Accrued Fee – Rs.6,000
Rent for Chamber Paid – Rs.6,000
Outstanding Rent – Rs.2,000
Salary Paid to Staff – Rs.6,000
Miscellaneous Expenses Paid – Rs.200
Salary paid in advance to staff included in the above : Rs. 1,000.
What is the income under accrual basis ?
(A) Rs. 11,800
(B) Rs. 13,200
(C) Rs. 16,800
(D) Rs. 30,000
(Answer :- Rs. 13,200)
19.
If Opening Stock – Rs.15,000
Purchases – Rs.37,500
Direct Expenses – Rs.1,500
Closing Stock – Rs.7,500
Operating Expenses – Rs.3,000
Sales are Rs. 60,000 during the year, what is the net profit ?
(A) Rs. 12,000
(B) Rs. 10,500
(C) Rs. 7,500
(D) Rs. 3,000
(Answer :- Rs. 10,500)
20. On 1.4.2007, a firm's capital was Rs. 2,00,000, Assets Rs. 2,40,000 and Liabilities Rs. 40,000. It sold goods costing Rs. 10,000 for Rs. 12,000. What will be the position of accounting equation after this transaction has been recorded in accounts ?
Assets = Capital + Liabilities
(A) 2,42,000 = 2,02,000 + 40,000
(B) 2,52,000 = 2,12,000 + 40,000
(C) 2,30,000 = 2,00,000 + 30,000
(D) 2,22,000 = 1,82,000 + 40,000
(Answer :- 2,52,000 = 2,12,000 + 40,000)
(Commerce Questions Quiz) (SET 19)
1. “Organization is the foundation of management.” This statement is given by :-
(A) Henry Ford
(B) Haney
(C) Keeling
(D) Lansberry Fish
(Answer :- Henry Ford)
2. The number of subordinates a superior can effectively handle is called :-
(A) Cooperation
(B) Coordination
(C) Supervision
(D) Span of control
(Answer :- Span of control)
3. In Need Hierarchy Theory of Abraham H. Maslow, Self Actualization needs are at level :-
(A) Lower level needs
(B) Middle level needs
(C) Higher level needs
(D) Highest level needs
(Answer :- Lower level needs)
4. Motivation - Hygiene Theory was propounded by :-
(A) Abraham H. Maslow
(B) Fredrick Herzberg
(C) Peter F. Druker
(D) Argyris Chris
(Answer :- Fredrick Herzberg)
5. "Carrot and Stick" principle is given in Theory :-
(A) McGregor Theory X
(B) McGregor Theory Y
(C) William Ouchi Theory Z
(D) None of the above
(Answer :- William Ouchi Theory Z)
6. Match the following :-
List-I
(a) Principle of subrogation
(b) Principle of ultra vires
(c) Holding company
(d) SEBI
List-II
1. Business combination
2. Insurance
3. Company Law
4. Stock Exchange
Codes :-
(a) (b) (c) (d)
(A) 2 3 1 4
(B) 1 3 2 4
(C) 4 2 1 3
(D) 1 2 3 4
(Answer :- 2 3 1 4)
7. Reserve Bank of India is a :-
(A) Government Company
(B) Departmental Organization
(C) Statutory Corporation
(D) None of the above
(Answer :- Government Company)
8. Application of Theory "X" implies practicing of :-
(A) Free leadership
(B) Democratic leadership
(C) Autocratic leadership
(D) None of the above
(Answer :- Autocratic leadership)
9. Which of the following is the Accounting equation ?
(A) Capital = Assets – Liabilities
(B) Capital = Assets + Liabilities
(C) Assets = Liabilities – Capital
(D) Liabilities = Assets – Capital
(Answer :- Capital = Assets – Liabilities)
10. Expenditure on installation of a plant should be debited to :-
(A) Installation Expenses account
(B) Sundry expenses account
(C) Plant account
(D) Maintenance of Assets A/c
(Answer :- Plant account)
11 Which is the oldest form of organization ?
(A) Line
(B) Line and staff
(C) Functional
(D) Matrix
(Answer :- Line)
12. Decentralization :-
(A) Reduces burden of chief executives
(B) Increases burden of chief executives
(C) Does not effect burden
(D) None of the above
(Answer :- Reduces burden of chief executives)
13. Planning is a :-
(A) Primary function
(B) Secondary function
(C) Supplementary function
(D) None of the above
(Answer :- Primary function)
14. Planning function of management is performed by :-
(A) Top management
(B) Middle management
(C) Lower management
(D) All of the above
(Answer :- All of the above)
15. MBO approach in management was introduced by :-
(A) M. P. Follet
(B) Keith Davis
(C) Peter Drucker
(D) Oliver Sheldon
(Answer :- Peter Drucker)
16. What is Capital Redemption Reserve Account available for ?
(A) Redemption of redeemable preference shares
(B) Redemption of redeemable debentures
(C) Reorganization of share capital
(D) Issue of fully paid bonus shares
(Answer :- Issue of fully paid bonus shares0
17. Match List-I with List-II and select the correct answer using the code given below the Lists :-
List I (Item)
(a) Earnings per share
(b) Cash flow statement
(c) Inventory valuation
(d) Disclosure of accounting policies
List-II (Accounting Standard)
1. AS-3
2. AS-20
3. AS-1
4. AS-2
Codes :-
(a) (b) (c) (d)
(A) 3 1 4 2
(B) 2 4 1 3
(C) 3 4 1 2
(D) 2 1 4 3
(Answer :- 2 1 4 3)
18. Government grants related to income as per the Accounting Standard (AS)-12 should be :-
(A) Presented as a credit in the statement of Profit and Loss
(B) Presented as a deferred income on the asset side of the balance sheet
(C) Presented as a capital grant on the liability side of balance sheet
(D) Presented both in the Profit and Loss statement and in the balance sheet
(Answer :- Presented both in the Profit and Loss statement and in the balance sheet)
19. What is the renewal fees paid for a patent right ?
(A) Capital expenditure
(B) Revenue expenditure
(C) Deferred revenue expenditure
(D) Development expenditure
(Answer :- Revenue expenditure)
20. According to the Accounting Standard (AS)-2, the inventory is to be valued at which one of the following ?
(A) Actual cost or sales value, whichever is lower
(B) Historical cost
(C) Net realizable value
(D) Historical cost or net realizable value, whichever is lower
(Answer :- Historical cost or net realizable value, whichever is lower)
Commerce Questions with Answers (SET 20)
1. Bombay Stock Exchange Sensex consists of _______ script as on 31st March, 2005.
(A) 10
(B) 20
(C) 30
(D) 40
(Answer :- 30)
2. The basic aim of Securities and Exchange Board of India (SEBI) is to :-
(A) Develop an effective and efficient monitoring and control system for the Indian Capital Market
(B) To help Bombay Stock Exchange only
(C) To help National Stock Exchange of India Ltd. only
(D) To help OTC Exchange of India only
(Answer :- Develop an effective and efficient monitoring and control system for the Indian Capital Market)
3. A public company can start its business operations after getting :-
(A) Certificate of Incorporation
(B) Minimum Subscription
(C) Certificate of Commencement of Business
(D) Permission of the Controller of Capital Issue
(Answer :- Certificate of Commencement of Business)
4. Principle of "Unity of Command" means :-
(A) Unity of directions
(B) To receive orders from one officer only
(C) A fixed place for every person
(D) Proper delegation to subordinates
(Answer :- To receive orders from one officer only)
5. Managerial Planning is a :-
(A) Middle Level Function
(B) Lower Level Function
(C) Top Level Function
(D) All Level Function
(Answer :- All Level Function)
6. Paperless office calls for :-
(A) Minimum record keeping
(B) Maximum use of telephone
(C) Maximum use of computers
(D) Elimination of reporting
(Answer :- Maximum use of computers)
7. Delegation of authority signifies the delegation of :-
(A) Authority
(B) Responsibility
(C) Both of the above
(D) None of the above
(Answer :- Both of the above)
8. Management by exception implies focusing attention on :-
(A) All variations
(B) Normal variations
(C) Abnormal variations
(D) Randomly selected variations
(Answer :- Abnormal variations)
9. The most recent form of retail distribution is :-
(A) Mail order business
(B) Chain stores
(C) Departmental stores
(D) Sky shopping
(Answer :- Sky shopping)
10. Decentralization :-
(A) Increases the importance of supervisors
(B) Decreases the importance of supervisors
(C) Increases the importance of subordinates
(D) Decreases the importance of subordinates
(Answer :- Increases the importance of subordinates)
11. Hawthorne Experiments were conducted by :-
(A) Elton Mayo
(B) Henry Fayol
(C) F. W. Taylor
(D) Peter F. Drucker
(Answer :- Elton Mayo)
12. Who is called "The Father of Scientific Management" ?
(A) Elton Mayo
(B) Henry Fayol
(C) E. F. L. Breach
(D) F. W. Taylor
(Answer :- F. W. Taylor)
13. A plan when expressed in quantitative terms is called :-
(A) Policy
(B) Procedure
(C) Objective
(D) Budget
(Answer :- Budget)
14. Theory ‘X’ and Theory ‘Y’ of Motivation was propounded by :-
(A) Herzberg
(B) Maslow
(C) Elton Mayo
(D) McGregor
(Answer :- McGregor)
15. Direction involves :-
(A) Physical factors
(B) Financial factors
(C) Human factors
(D) None of the above
(Answer :- Human factors)
16. Consider the following categories of documentary evidence from the point of view of the degree of their reliability.
1. Documentary evidence originating from and held by the entity.
2. Documentary evidence originating from third parties and held by the entity.
3. Documentary evidence originating from and held by the third party.
4. Documentary evidence originating from entity and held by the third party.
Which one of the following is the correct order (high to low) of their degree of reliability ?
(A) 4 - 1 - 3 – 2
(B) 3 - 2 - 4 - 1
(C) 4 - 2 - 3 – 1
(D) 3 - 1 - 4 - 2
(Answer :- 3 - 2 - 4 - 1)
17. Which one of the following is not included in the internal check as regards purchases ?
(A) Assessment of requirements
(B) Placing orders
(C) Despatch of goods
(D) Recording and making payments
(Answer :- Despatch of goods)
18. Consider the following statements :-
1. It is mandatory for all business enterprises to conduct audit of accounts.
2. Audit Note Book is a tool in the conduct of audit.
3. Internal check system is an inbuilt mechanism within an organization to check frauds and errors.
Which of the statements given above is/are correct ?
(A) 1 only
(B) 2 and 3 only
(C) 3 only
(D) 1, 2 and 3
(Answer :- 3 only)
19. Match List-I with List-II and select the correct answer using the code given below the Lists :-
List-I (Type of Books)
(a) Minutes Book
(b) Subsidiary Ledger
(c) Stores Ledger
(d) Log Book
List-II (Content)
1. Records of issue of packing materials
2. Records of running hours of machine
3. Records of decisions at a meeting
4. Records entry of receipt from debtors
Codes :-
(a) (b) (c) (d)
(A) 3 2 1 4
(B) 1 4 3 2
(C) 3 4 1 2
(D) 1 2 3 4
(Answer :- 3 4 1 2)
20. What is the method in which an amount equal to the amount written off as depreciation is invested in outside securities in order to facilitate replacement of an asset at the expiry of its life period, called ?
(A) Annuity Method
(B) Sinking Fund Method
(C) Replacement Method
(D) Depletion Method
(Answer :- Sinking Fund Method)
