Competitive Exams: Commerce MCQs (Practice-Test 54 of 99)

    • Assertion (A): Existence of secret reserve contradicts the disclosed network of a business.
    • Reason (R): Secret reserve helps promote managerial efficiency.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): Entrance fees in case of non-profit concerns can be treated as revenue receipt or capital receipt.
    • Reason (R): Some accountants consider entrance fees to be recurring in nature, whereas others consider it to be nonrecurring.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): Performance ratios show where we are goin.
    • Reason (R): Balance Sheet ratios show how we stand.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): One single primary ratio that measures the final outcome of all recorded business activities is ROI.
    • Reason (R): In practice, however variations are also found in the ratio because capital and return are subject to different interpretations by firms.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and R are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): According to Accounting Standard 3 (revised) of the Institute of Chartered Accountants of India, a Cash Flow Statement should be divided into three heads cash flows from operating activities, cash flows from investing activities and cash flows from financing activities.
    • Reason (R): Operating activities involve income determining items and relate to changes in current assets and liabilities; investing activities concern changes in non-current assets and financial activities concern changes in non-current liabilities and shareholder & equity.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): It is the duty of the auditor to see that costing records as required under Section 209 (1) (d) of the Companies Act, 1956, have been maintained by certain class of companies.
    • Reason (R): Mere-maintenance of cost records does not make manufacturing companies cost-effective.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): Analytical Review is not the part of Company Statutory Audit.
    • Reason (R): Analytical Review goes beyond true and fair presentation of the financial position.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): Management audit is a statutory audit.
    • Reason (R): Management audit is performed through innovative ideas.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): The Companies Act. 1956 requires that internal audit must be carried out by a Chartered Accountant.
    • Reason (R): It is to help the management to protect the interests of the shareholders and the society.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): Certificate of Origin is an export-related document and it is issued by the Chamber of Commerce.
    • Reason (R): Certificate of Origin is used by importer to take delivery of goods.
    • Assertion (A): A company registered under the Companies Act, 1956 is a judicial person distinct from its members.
    • Reason (R): Corporate veil cannot be lifted.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): The doctrine of indoor management does not give absolute protection to outsiders who deal with a company.
    • Reason (R): Lithe majority of members have their way, the minority has its say.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

    • Assertion (A): The powers of Board of Directors that are to be exercised by Board only at its meeting cannot go beyond those prescribed under Section 292 of the Companies Act, 1956.
    • Reason (R): The members in general meeting cannot impose restriction on the exercise of powers by the Board of Directors.
    1. Both A and R are true and R is the correct explanation A

    2. Both A and H are true but R is NOT the correct explanation of A

    3. A is true but R is false

    4. A is false hut R is true

  1. Accounting is generally understood as

    1. summarization of business transactions

    2. language of the business

    3. source of business information

    4. means of communication

    Select the correct answer using the codes given below:

    1. 1 only

    2. 1 and 2

    3. 2 and 3

    4. 1.2, 3 and 4

  2. Which one of the following types of information, a creditor would be interested to gather while reading Annual Reports of an enterprise?

    1. Profitability

    2. Liquidity

    3. Continuity

    4. Solvency