Commerce - MCQ Important Questions and Answers Part - 3

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
Answer : 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 
Answer: 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 
Answer : 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) Departmentalization by customer
(C) Matrix structure 
(D) Departmentalization by territory 
Answer : C

30. 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 : D

31. Life insurance is a contract of which one of the following ?
(A) Indemnity 
(B) Guarantee 
(C) Contribution 
(D) Abrogation
Answer : 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 
Answer : B

33. Which of the following is not a feature of bonds ?
(A) Par value 
(B) Yield to maturity 
(C) Coupon rate 
(D) Maturity 
Answer : 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 
Answer : 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 
Answer : 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% 
Answer : 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 
Answer: 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 
Answer : 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 
Answer : A

40. What does management audit imply ?
(A) Complete audit 
(B) Detailed audit
(C) Efficiency audit 
(D) Interim audit 
Answer : 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 
Answer : 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
Answer : 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
Answer : 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’ 
Answer : 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 
Answer : D

46. What is reduction of paid-up share capital called ?
(A) External reconstruction 
(B) Internal reconstruction
(C) Reorganization 
(D) Redemption of capital 
Answer : 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 
Answer : 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 
Answer : 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 
Answer : 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 
Answer : B