Commerce Questions for Competitive Exams 2021001

 

Commerce Questions for Competitive Exams

2021001

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1. 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 

(E) None of these

(Ans : B)

2. 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 

(E) None of these

(Ans : C)

3. For how many years the books of accounts of a company have to be preserved in good order ?

(A) For a period of not less than eight years immediately preceding the current year

(B) For a period of not less than five years immediately preceding the current year

(C) For a period of not less than six years immediately preceding the current years

(D) For a period of not less than four years immediately preceding the current year 

(E) None of these

(Ans : A)

4. 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 

(E) None of these

(Ans : D)

5. A limited company makes a net profit of Rs. 2,00,000 after writing off preliminary expenses amounting to Rs. 20,000 and providing for depreciation on assets amounting to Rs. 40,000 and gain of Rs. 10,000 on sale of a piece of machinery. What are the funds from operation ?

(A) Rs. 2,00,000 

(B) Rs. 2,40,000 

(C) Rs. 2,50,000 

(D) Rs. 2,60,000 

(E) None of these

(Ans : C)

6. Which of the following represents corporate sustainable reporting ?

(A) Publishing annual financial statement only

(B) Publishing annual financial statements and social accounts

(C) Publishing social and environmental accounts annually

(D) Publishing annual financial statements incorporating economic, social and environmental performances 

(E) None of these

(Ans : D)

7. Sometimes an auditor is called upon to review the operations of an enterprise for evaluating their cost-effectiveness. What is this kind of audit generally known as ?

(A) Cost Audit 

(B) Operations Audit 

(C) Tax Audit 

(D) Independent Financial Audit

(E) None of these

(Ans : A)

8. 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 

(E) None of these

(Ans : C)

9. 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 

(E) None of these

(Ans : B)

10. 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 

(E) None of these

(Ans : D)

11. 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 

(E) None of these

(Ans : D)

12. What is the renewal fees paid for a patent right ?

(A) Capital expenditure 

(B) Revenue expenditure

(C) Deferred revenue expenditure 

(D) Development expenditure 

(E) None of these

(Ans : B)

13. 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 

(E) None of these

(Ans : D)

14. 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

(E) None of these

 (Ans : D)

15. 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 

(E) None of these

(Ans : B)

16. Expenses need to be recorded in the period in which the associated revenues are recognised. This is to be ensured as per which one of the following accounting principles ?

(A) Revenue recognition 

(B) Cost benefit

(C) Matching 

(D) Periodicity 

(E) None of these

(Ans : A)

17. How is profit prior to incorporation treated as ?

(A) Revenue reserve 

(B) Secret reserve

(C) Capital reserve 

(D) General reserve 

(E) None of these

(Ans : C)

18. 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 

(E) None of these

(Ans : A)

19. 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 

(E) None of these

(Ans : A)

20. 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 

(E) None of these

(Ans : C)

21. 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

(E) None of these

(Ans : B)

22. 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 

(E) None of these

(Ans : C)

23. 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 

(E) None of these

(Ans : A)

24. 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 

(E) None of these

(Ans : B)

25. Under which one of the following is the term ‘Dominant Undertaking’ defined ?

(A) MRTP Act 

(B) FEMA 

(C) Companies Act 

(D) SEBI 

(E) None of these

(Ans : C)

26. 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 

(E) None of these

(Ans : B)

27. 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 

(E) None of these

(Ans : C)

28. Some organizations have escalator clause in their labour 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 

(E) None of these

(Ans : D)

29. 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 

(E) None of these

(Ans : C)

30. According to force-field theory, every behaviour 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 

(E) None of these

(Ans : D)

31. Life insurance is a contract of which one of the following ?

(A) Indemnity 

(B) Guarantee 

(C) Contribution 

(D) Subrogation 

(E) None of these

(Ans : B)

32. 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 

(E) None of these

(Ans : B)

33. Which of the following is not a feature of bonds ?

(A) Par value 

(B) Yield to maturity 

(C) Coupon rate 

(D) Maturity

(E) None of these

 (Ans : B)

34. 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

(E) None of these

 (Ans : C)

35. 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 

(E) None of these

(Ans : B)

36. 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% 

(E) None of these

(Ans : A)

37. 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 

(E) None of these

(Ans : C)

38. 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 

(E) None of these

(Ans : B)

39. 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 

(E) None of these

(Ans : A)

40. What does management audit imply ?

(A) Complete audit 

(B) Detailed audit 

(C) Efficiency audit 

(D) Interim audit 

(E) None of these

(Ans : C)

41. 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

(E) None of these

 (Ans : D)

42. 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

(E) None of these

(Ans : B)

43. 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 

(E) None of these

(Ans : C)

44. 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’ 

(E) None of these

(Ans : A)

45. 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 

(E) None of these

(Ans : D)

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

(A) External reconstruction 

(B) Internal reconstruction

(C) Reorganization 

(D) Redemption of capital

(E) None of these

 (Ans : B)

47. 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 

(E) None of these

(Ans : B)

48. 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 

(E) None of these

(Ans : C)

49. Debtors turnover ratio is 4. 

What is the average collection period ?

(A) 5 months 

(B) 4 months 

(C) 3 months 

(D) 2 months 

(E) None of these

(Ans : C)

50. 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 

(E) None of these

(Ans : B)

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