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Thursday, May 19, 2011

commerce objective type questions

commerce objective type questions
Commerce Multiple Choice Questions
MCQ Commerce Objective test paper
1. Consider the following elements:
1. Policies
2. Objectives
3. Programmes
4.. Procedures
The correct sequence of these elements in the planning process is:
(a) l, 2, 3, 4
(b) 1, 2, 4, 3
(c) 2, 1, 4, 3
(d) 2, 1, 3, 4
Ans. (c)

2. Consider the following steps:
1. Analysis of each decision unit in the context of total decision package
2. Identification of decision units
3. Allocation of resources to each unit based upon ranking
4. Evaluation and ranking of all decision units to develop the budget request
The correct sequence of these steps in Zero-base budgeting is:
(a) 1, 2, 3, 4
(b) 2, 1, 4, 3
(c) 2, 4, 1, 3
(d) 2, 3, 4, 1
Ans. (b)

3. Consider the following stages in Management by Exception:
1. Setting criteria that the management will use to follow progress towards organizational objectives
2. Measurement of current performance in the organization
3. Making comparison of actual and planned performance and identifying the exceptions
4. Decision-making prescribing the action to be taken The correct sequence of these stages is:
(a) 2, 3, 4, 1
(b) 2, 1, 3, 4
(c) 1, 3, 2, 4
(d) 1, 2, 3, 4
Ans. (d)

4. Scalar principle refers to the:
(a) responsibility of a subordinate to a superior
(b) conflict of instructions from two or more superiors
(c) existence of a clear line of authority in all parts of the organization
(d) delegation of authority at all levels of an organization
Ans. (c)

5. Consider the following statements:
The difference between office systems and routines are that the:
1. Systems are plans while routines are procedures
2. Systems are all-inclusive while routines are parts of systems
3. Systems are people oriented while routines are financial in nature
4. Systems are the goals while routines are the means.
Which of the above statements are correct?
(a) l, 2, and 3
(b) 1 and2
(c) 1, 3 and 4
(d) 2 and 4
Ans. (b)

6. The delegation of authority from higher to lower levels of an organization is called:
(a) Diminution of authority
(b) Division of labour
(c) Departmentalization
(d) Decentralization
Ans. (a)

7. Consider the following steps in Management of Change:
1. Identifying the elements to be changed
2. Identifying need for change
3. Assessing change forces
4. Implementing change
The correct sequence of these steps is:
(a) 1, 2, 3, 4
(b) 2, l, 3, 4
(c) 1, 3, 2, 4
(d) 2, 3, 1, 4
Ans. (d)


8. The membership of the Institute of Company Secretaries of India is a must for a person to become the Secretary of a company .having paid-up share capital of:
(a) Rs. 25 lakhs
(b) Rs. 50 lakhs
(c) Rs. 1 crore
(d) Rs. 2 crores
Ans. (b)

9. A special resolution passed for the purpose of reduction of capital of a company must be confirmed by the
(a) Registrar of Companies
(b) Company Law Board
(c) SEBI
(d) Appropriate Law Court
Ans. (d)

10. Equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions are known as:
(a) Employees/Directors stock option
(b) Promoters’ quota
(c) Sweat equity
(d) Rights shares
Ans. (c)

11. A Company Secretary has:
(a) neither statutory liabilities nor contractual liabilities
(b) only statutory liability’
(c) only contractual liability
(d) both statutory and contractual liabilities
Ans. (d)

12. The Board’s Report shall give the prescribed particulars employees, Mio are in receipt of yearly remuneration, which is not less than:
(a) Rs. 1.44 lak1
(b) Rs. 3 lakhs
(c) Rs. 6 lakhs
(d) Rs. 12 lakhs
Ans. (b)

13. An act of a director which is intra vires the Memorandum and ultra vires the Articles of Association:
(a) cannot be ratified by the company
(b) must necessarily be ratified by the company
(c) may be ratified by the company
(d) is void ab inhtio
Ans. (b)

14. The provisions relating to inter-corporate loans are inter-alia laid down in:
(a) Section 370 of the Companies Act, 1956
(b) Section 372 of the Companies Act, 1956
(c) Section 372A of the Companies Act, 1956
(d) Section 371 of the Companies Act, 1956
Ans. (a)

15. According to Companies Act, when the dividend proposal is exceeding 20 percent of the paid-up capital, the amount to be transferred to reserve shall not be less than:
(a) 7.5 percent of the current profit
(b) 10 percent of the current profit
(c) 12.5 percent of the current profit
(d) 15 percent of the current profit
Ans. (b)


16. Investor Education and Protection Fund is required to
be established by:
(a) the Central Government
(b) the SEBE
(c) over the Counter Exchange
(d) the National Stock Exchange
Ans. (a)

17. Which one of the following is an example of a trading block (regional integration in trade)?
(a) North American Free Trade Agreement
(b) Madras Export Trade Processing Zone
(c) Free Trade Zone at Kandla
(d) Indo-American Chamber of Commerce
Ans. (a)


Directions: The following thirteen (13) items consist of two statements, one labelled the ‘Assertion A’ and the other labelled the ‘Reason R’. You are to examine these two statements carefully and decide if the Assertion A and the Reason R are individually true and if so, whether the reason is a correct explanation of the Assertion. Select your answers to these items using the Code given below and mark your answer sheet accordingly.
Code:
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true

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

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

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

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

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

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

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

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

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

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

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

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

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

31. In the case of a particular depreciation method, the periodic depreciation is smaller than the asset’s actual annual depreciation cost. The annual net incidence on profit and loss account remains constant due to incorporation of only fixed depreciation. The periodic depreciation is not recorded through the assets account. The depreciation method used in this case is:
(a) Sinking fund method
(b) Diminishing balance method
(c) Annuity method
(d) Sum-of-years digits method
Ans. (a)

32. Under which one of the following methods of depreciation is the amount of the ‘asset never reduced to zero?
(a) Straight line method
(b) Diminishing balance method
(c) Sum of years digit method
(d) Annuity method
Ans. (b)

33. Writing off the expired cost of an intangible asset is called:
(a) amortisation
(b) capitalization
(c) depletion
(d) depreciation
Ans. (a)

34. A B C analysis is a:
(a) system of profit and loss appropriation
(b) technique of financial planning
(c) technique of inventory control
(d) technique of profit determination
Ans. (c)


35. When prices show a rising trend, which one of the following methods of inventory valuation will result in lower income and lower valuation of inventory?
(a) FIFO
(b) LIFO
(c) Simple average method
(d) Weighted average method
Ans. (b)

36. Match List—I (Items of Expenditure and Receipt) with List—II (Nature of Expenditure and Receipt) and select the correct answer using the Code given below the Lists:
List-I List-II
A. Replacement cost of an old asset 1. Revenue expenditure
B. Special repairing charges of an asset 2. Capital Receipt
C. Huge advertisement expenses 3. Deferred Revenue Expenditure
D. Sale value of an old motor car 4. Capital Expenditure
Code:
A B C D
(a) 4 1 3 2
(b) 4 1 2 3
(c) 1 4 3 2
(d) 1 4 2 3
Ans. (a)

37. A sum of Rs. 50,000 was spent by a factory in overhauling its existing plant and machinery and it enhanced its working life by five years. The aforesaid expenditure is
(a) capital expenditure
(b) partly capital and partly revenue expenditure
(c) revenue loss
(d) deferred revenue expenditure
Ans. (a)

38. Which one of the following is NOT a capital expenditure?
(a) Legal expenses incurred in raising a debenture loan
(b) Compensation paid to a dismissed employee
(c) Brokerage paid to the broker at the time or purchase of land
(d) Expenses for pulling down an old structure
Ans. (b)

39. A, B, C ‘were partners sharing profits in the proportion of 1/2, 1/3 and 1/6 respectively. On 31st March, 1997 their capital stood as follows:
A = Rs. 4, 00,000/-
B = Rs. 3, 00,000/-
C Rs. 2, 50,000/-
A sum of Rs. 1, 20,000, also appeared as reserve fund in their balance sheet on this date. B retires on this date when the goodwill of the firm was valued at Rs. 1, 80,000/-
Profit and loss adjustment account prepared on that date without taking goodwill and reserve fund into consideration showed a net profit of Rs. 28,500/-. The net amount payable to B will be:
(a) Rs. 3, 82,500/-
(b) Rs. 4, 09,500/-
(c) Rs. 3, 63,800/-
(d) Rs. 4, 04,000/-
Ans. (b)

40. A and B are partners sharing profits and losses in the ratio of 3:1. They have agreed to admit C into the partnership firm. C is given 1/4th share of future profits which he acquires in the ratio of 2: 1 from A and B. The new profit-sharing ratio would be:
(a) 4:3:1
(b) 7:2:3
(c) 3:1:7
(d) 7:3:2
Ans. (b)

41. On the death of a partner, the amount of joint life policy should be credited to the capital accounts of:
(a) all partners including the deceased partner in their profit-sharing ratio
(b) remaining partners in the new profit sharing ratio
(c) remaining partners equally
(d) all partners including the deceased partner in their capital ratio
Ans. (a)

42. X and Y are partners sharing profits in the ratio of 1:1. They admit Z for 1/5th share who contributed Rs. 25,000/- for his share of goodwill. The total, value of the goodwill of the firm will be:
(a) Rs. 25,000/-
(b) Rs. 50,000/-
(c) Rs. 1, 00,000/-
(d) Rs. 1, 25,000/-
Ans. (d)

43. For piecemeal distribution .of cash for return of capital among the partners on dissolution, the method adopted should ensure that the amount finally left unpaid i.e., the loss to be borne by the partners is in:
(a) profit-sharing ratio
(b) proportion to closing capital the time of dissolution
(c) equal proportion
(d) proportion to assets realized
Ans. (a)

44. According to the decision in Garner vs. Murray, in the absence of any agreement to the contrary, the deficiency of the insolvent partner must be borne by other solvent partners in:
(a) profit-sharing ratio
(b) capital ratio which stood after the dissolution of the firm
(c) capital ratio which stood before the dissolution of the firm
(d) equal proportion
Ans. (c)

45. In the absence of any contract to the contrary, capital profit arising on dissolution of a partnership firm is credited to the partners, capital account in:
(a) equal proportion
(b) capital ratio
(c) profit-sharing ratio
(d) proportion to assets realized
Ans. (a)

46. Match List—I (Balance sheet items) with List—Il (Classification) and select the correct answer using the Code given below the lists:
List-I List-II
A. Discount on debenture 1. Current liability
B. Forfeited shares account 2. Non-current asset
C. Income tax payable 3. Current asset
D. Debtors acceptance 4. Non-current liability
Code:
A B C D
(a) 2 4 1 3
(b) 4 2 3 1
(c) 2 4 3 1
(d) 4 2 1 3
Ans. (a)

47. Consider the following statements:
Secret reserves serve the purpose of:
1. enabling the directors to tide over unfavorable items
2. meeting exceptional losses
3. increasing the working capital
Of these statements:
(a) 1 and 2 are correct
(b) 2 and 3 are correct
(c) 1 and 3 are correct
(d) 1, 2 and 3 are correct
Ans. (d)

48. Profit prior to incorporation is an example of:
(a) revenue reserve
(b) secret reserve
(c) capital reserve
(d) general reserve
Ans. (c)

49. Outstanding wages is an item of:
(a) current asset
(b) current liability
(c) non-current asset
(d) non-current liability
Ans. (b)

50. Patents and copyrights fall under the category of:
(a) current assets
(b) liquid assets
(c) intangible assets
(d) nominal assets
Ans. (c)

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