Commerce Objective Questions with Answers

Commerce Objective Questions with Answers

1. Current Ratio is 3•75, Acid Test Ratio is 1•25 Stock Rs. 3,75,000, calculate working capital.
(A) Rs. 3,00,000 (B) Rs. 4,00,000
(C) Rs. 4,12,500 (D) Rs. 4,25,000
See Answer:

2. From the information given below, calculate Debt service coverage Ratio–
Net profit after interest and Tax Rs. 40,000, Depreciation Rs. 5,000, Rate of Income Tax 50%, 10% Mortgage Debentures Rs. 60,000. Fixed Interest Charges Rs. 6,000, Debenture Redemption Fund Appropriation of Outstanding Debentures 10%.
(A) 4•06 times (B) 5•06 times
(C) 6•06 times (D) 7•06 times
See Answer:

3. Share premium account can be used for–
(A) Paying tax liability
(B) Meeting the cost of issue of shares or debentures
(C) Paying Dividend on shares
(D) Meeting the loss on sale of old asset
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4. Ploughing-back of profits means–
(A) Dividend declared but not claimed by shareholders
(B) Non-declaration of dividend in any year
(C) Profits earned from illegal sources and employed in business
(D) Retaining the earnings of business for future expansion programme
See Answer:

5. As per Schedule VI of the Companies’ Act, 1956, Forfeited Share Account will be–
(A) Added to paid up capital (B) Deducted from called up capital
(C) Added to capital reserve (D) Shown as a revenue reserve
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6. ‘Profit objective’ is of least priority in case of–
(A) Private enterprise (B) Public enterprise
(C) Department undertaking (D) Cooperative society
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7. Partnership may come into existence by–
(A) The operation of law
(B) An express agreement only
(C) An express or implied agreement only
(D) Inheritance of property
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8. A public company can start business–
(A) After incorporation
(B) After promotion
(C) After registration
(D) After getting certificate of commencement of business
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9. Consumers cooperative store is set up by the–
(A) Central Government (B) State Government
(C) Registrar of Cooperative Societies (D) Members
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10. ‘Object Clause’ of a Memorandum of Association can be altered by–
(A) Ordinary resolution
(B) Special resolution
(C) Special resolution and confirmation by Registrar of Companies
(D) Special resolution and confirmation by Company Law Board
See Answer:

11. Letter of Credit is presented by–
(A) Exporter (B) Importer
(C) Custom Officer (D) Shipping Company
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12. The Agreement of Partnership–
(A) Must be oral (B) Must be in writing
(C) Can be either oral or in writing (D) Must be in writing on a stamp paper
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13. Export procedure begins with–
(A) Indent (B) Shipping order
(C) Marine insurance (D) None of these
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14. ‘Self-help by mutual help’ is a feature of–
(A) Public enterprise (B) Public corporation
(C) Co-operative society (D) All of the above
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15. In India private sector entered into the Life Insurance business in the year–
(A) 1995 (B) 1998
(C) 2000 (D) 2001
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16. A company has issued a 20-year bond at Rs. 1000 par value with a coupon rate of 10 per cent. The required rate of return on similar bonds is 12 per cent. What is the current value of the bond ?
(A) Rs. 905•33 (B) Rs. 850•45
(C) Rs. 833•33 (D) Rs. 820•20
See Answer:

17. Consider the following statements–
Current ratio is increased by
1. issue of redeemable preference shares.
2. selling of old furniture for cash.
3. cash realized from debtors.
Which of the statements given above are correct ?
(A) 1 and 2 only (B) 2 and 3 only
(C) 1 and 3 only (D) 1, 2 and 3
See Answer:

18. 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
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Sundry Debtors – Rs.15,000
Bills Receivable (B/R) – Rs.12,500
Cash at Bank – Rs.17,500
Stock – Rs.15,000
Profit – Rs.20,000
Creditors – Rs.25,000
Bills Payable (B/P) – Rs.15,000
Sales – Rs.1,00,000
What is the Acid Test Ratio ?
(A) 1•5 : 1 (B) 1•125 : 1
(C) 16 2/3% (D) 50%
See Answer:

20. 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
See Answer:


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