Competitive Exams: Commerce MCQs (Practice-Test 14 of 99)

  1. The quality of information is measured by its

    1. accuracy

    2. cost

    3. degree of statistical validity

    4. timeliness

  2. Which one of the following transactions can change the current ratio?

    1. Purchase of goods for cash

    2. Payment to outstanding trade creditors

    3. Acceptance on a Bill of Exchange written by a trade creditor

    4. Dishonour of a Bill of Exchange

  3. Which one of the following is not correctly matched?

      • Company
      • Authorized capital
      • Shares
      • Face value
      • Bonus shares
      • Market value
      • Preference shares
      • Fixed dividend
  4. Auditing is compulsory in case of

    1. Joint-stock Company

    2. Charitable Trust

    3. Cooperative Society

    4. All of the above

  5. Which one of the following statements is not correct in respect of private limited companies?

    1. Number of members is limited to 50

    2. Operations are restricted to a particular State

    3. Invitation to public for subscription to capital is prohibited

    4. Transfer of shares is restricted

  6. A company needs to issue prospectus

    1. for every Public issue

    2. for every Public issue as well as Rights issue

    3. for every Public issue. Rights issue and Bonus shares

    4. for every Public issue if it is a private limited company

    • Assertion (A): Management Audit should be conducted by a team of experts.
    • Reason (R): Management Audit is a critical examination of policy and practices of management from the highest level to downward in order to ascertain that sound management prevails in the business concern.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): If it is found that some errors and/or frauds are remaining undetected due to the fact that a statutory auditor depended upon test checking, then the said auditor will be held responsible for negligence in the performance of his duties.
    • Reason (R): A statutory auditor cannot, in any way, avoid or reduce the responsibility laid on him by the statutes.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): An auditor of a large business concern has to adopt test checking based on scientific statistical sampling technique instead of checking the whole of transaction of a particular class.
    • Reason (R): Test checking on scientific statistical sampling technique, reduces the volume of unnecessarily cumbersome audit work involved in detailed checking of all transactions.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Revenue expenditure is written off in the year in which it occurs.
    • Reason (R): The benefit of revenue expenditure is consumed in the year in which it arises.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Cash Flow Statement and Fund Flow Statement disclose same information.
    • Reason (R): Both are prepared out of the same data.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.
    • Reason (R): Liquid ratio analyses liquid assets and liquid liabilities of a business unit in order to assess the extent of liquidity.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): Profit and Loss Account, and Balance Sheet are financial statements showing financial position of a business unit.
    • Reason (R): Profit and Loss Account and Balance Sheet are prepared at the end of the financial year.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): The interest on debentures can be capitalized up to the complete construction of the fixed assets.
    • Reason (R): The construction of fixed assets could only be completed by the use of these funds.
    1. Both A and R are individually true and R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true

    • Assertion (A): The role of the Doctrine of Indoor Management is opposed to the rules of constructive notice.
    • Reason (R): The constructive notice seeks to protect the company against the outsider whereas the Doctrine of Indoor Management operates to protect outsider against the company.
    1. Both A and R are individually true & R is the correct explanation of A

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

    3. A is true but R is false

    4. A is false but R is true