Commerce Multiple Choice Questions Answers

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) Speciality 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 subit 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

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
See Answer:

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%
See 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%
See 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