COMMERCE MCQs WITH ANSWERS by Usman Ghani

COMMERCE MCQs WITH ANSWERS
1. Who is Father of Scientific Management?

(A) Henry Fayol (B) Elton Mayo (C) Chester Bernard (D) F. W. Taylor
Answer: F. W. Taylor
2. Appointment of a Company Secretary is made by–

(A) Promoters (B) Board of Directors (C) Debenture holders (D) Government
Answer: Board of Directors
3. Bonus Shares are issued to–

(A) Equity Shareholders (B) Preference Shareholders (C) Debenture Holders (D) Secured Creditors
Answer: Equity Shareholders
4. Liability of a Company Secretary is–

(A) Contractual only (B) Statutory only (C) Civil only (D) Both contractual and statutory
Answer: Both contractual and statutory
5. The Life Insurance in India was nationalized in the year–

(A) 1870 (B) 1956 (C) 1960 (D) 1966
Answer: 1956
6. Memorandum of Association contains–

(A) Objective clause (B) Name clause (C) Capital clause (D) All of the above
Answer: All of the above
7. Which is the oldest form of organization?

(A) Line (B) Line and staff (C) Functional (D) Matrix
Answer: Line
8. In ‘Direction’ who is given importance?

(A) To machines (B) To paper work (C) To man (D) To production
Answer: To man
9. Standard costing is a technique of–

(A) Planning (B) Organizing (C) Coordination (D) Control
Answer: Control
10. How is profit prior to incorporation treated as ?

(A) Revenue reserve (B) Secret reserve (C) Capital reserve (D) General reserve
Answer: Capital reserve
11. 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
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(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
12. 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
13. ……........… has been founded to act as permanent watchdog on the international trade.
(A) ISRD (B) ADS
(C) WTO (D) DIMF
Answer: WTO
14. 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
15. 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
16. 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%
17. 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
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18. 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
19. 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
20. Memorandum of Association contains–

(A) Objective clause (B) Name clause
(C) Capital clause (D) All of the above
21. ‘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
22. The ‘Doctrine of Indoor Management’ provides protection to the–

(A) Board of Directors (B) Shareholders
(C) Managing Director (D) Outsiders
Answer: Outsiders
23. 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
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(C) By passing a resolution in Annual General Meeting
(D) None of the above
Answer: By passing a resolution in Board Meeting
25. 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
27. 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
28. 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
29. 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
30. 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
31. Which of the following is an example of capital expenditure?

(A) Insurance Premium (B) Taxes and Legal expenses
(C) Depreciation (D) Custom duty on import of machinery
Answer: Custom duty on import of machinery
32. 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
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33. “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 organisation
(C) Committee structure (D) Multivariate Approach
Answer: Scalar chain
34. Maslow’s needs hierarchy theory relates to–

(A) Motivation (B) Leadership
(C) Communication (D) Directing
Answer: Motivation
35. 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
36. 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
37. Workmen’s Compensation Fund is a–

(A) Provision (B) Surplus
(C) Current liability (D) Loan
Answer: Surplus
38. 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
39. 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
40. 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
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41. 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
42. 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
43. 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.
44. Audit adopted by banking company is–

(A) Continuous Audit (B) Periodical Audit
(C) Internal Audit (D) Balance Sheet Audit
Answer: Continuous Audit
45. 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
46. According to ownership, Government Company means ……… Whose paid-up share capital’s
(A) 48%, shares are owned by Government
(B) 49% shares are owned by Government
(C) 50% shares are owned by Government
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(D) 51% shares are owned by Government
Answer: 51% shares are owned by Government
47. 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
48. Goodwill is–

(A) Floating Asset (B) Wasting Asset
(C) Fictitious Asset (D) Intangible Asset
Answer: Intangible Asset
49. 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
50. 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
51. Realized 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
52. 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
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COMMERCE MCQs WITH ANSWERS

1. Who is Father of Scientific Management?

2. Appointment of a Company Secretary is made by–

3. Bonus Shares are issued to–

4. Liability of a Company Secretary is–

5. The Life Insurance in India was nationalized in the year–

6. Memorandum of Association contains–

7. Which is the oldest form of organization?

8. In ‘Direction’ who is given importance?

9. Standard costing is a technique of–

10. How is profit prior to incorporation treated as ?

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

1 Usman Ghani 0313-9878187

12. Convertibility of the rupee implies–

14. Advance Income-tax is shown in the–

17. Interim Dividend is shown–

2 Usman Ghani 0313-9878187

20. Memorandum of Association contains–

21. ‘Table A’ is an alternative to–

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

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

29. Average profit of a firm Rs. 21,000

30. A Company can reissue its forfeited shares–

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

32. Control function of management implies–

4 Usman Ghani 0313-9878187

34. Maslow’s needs hierarchy theory relates to–

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

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

37. Workmen’s Compensation Fund is a–

39. Debtors turnover ratio is 4.

5 Usman Ghani 0313-9878187

42. A particular firm provided the following data for a year–

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

44. Audit adopted by banking company is–

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

6 Usman Ghani 0313-9878187

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

48. Goodwill is–

49. A Balance Sheet shows only–

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

51. Realized value of assets Rs. 60,000

7 Usman Ghani 0313-9878187

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