Commerce & Accountancy MCQ & Objective Questions
Commerce & Accountancy is a vital subject for students aiming to excel in their school exams and competitive assessments. Mastering this field not only enhances your understanding of financial principles but also significantly boosts your exam scores. Practicing MCQs and objective questions is essential, as it helps you identify important questions and reinforces your exam preparation through targeted practice questions.
What You Will Practise Here
Fundamental concepts of accounting and financial statements
Key principles of commerce including trade, marketing, and economics
Important formulas related to profit and loss, balance sheets, and cash flow
Definitions of key terms such as assets, liabilities, and equity
Diagrams illustrating accounting processes and business models
Theory areas covering the role of commerce in the economy
Analysis of case studies relevant to real-world commerce scenarios
Exam Relevance
Commerce & Accountancy is a significant part of the curriculum for CBSE, State Boards, and various competitive exams like NEET and JEE. Questions often focus on practical applications of concepts, requiring students to solve numerical problems and interpret financial data. Common question patterns include multiple-choice questions that test both theoretical knowledge and practical understanding, making it crucial to be well-prepared.
Common Mistakes Students Make
Misunderstanding the difference between assets and liabilities
Confusing terms related to accounting principles
Overlooking the importance of accurate calculations in numerical questions
Neglecting to review the impact of transactions on financial statements
FAQs
Question: What are the key topics I should focus on in Commerce & Accountancy?Answer: Focus on financial statements, accounting principles, and key formulas to excel in this subject.
Question: How can I improve my performance in Commerce & Accountancy exams?Answer: Regular practice of MCQs and understanding the concepts thoroughly will enhance your performance.
Start solving practice MCQs today to test your understanding and boost your confidence in Commerce & Accountancy. Remember, consistent practice is the key to success in your exams!
Q. In CVP analysis, what does the contribution margin represent?
A.
Total sales minus total fixed costs
B.
Sales revenue minus variable costs
C.
Total costs minus total revenue
D.
Net profit before taxes
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Solution
The contribution margin represents sales revenue minus variable costs, indicating how much revenue is available to cover fixed costs and contribute to profit.
Correct Answer:
B
— Sales revenue minus variable costs
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Q. In CVP analysis, which of the following is considered a fixed cost?
A.
Direct materials
B.
Direct labor
C.
Rent expense
D.
Sales commissions
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Solution
Rent expense is considered a fixed cost in CVP analysis.
Correct Answer:
C
— Rent expense
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Q. In entrepreneurship, what does the term 'value proposition' refer to?
A.
The financial return on investment
B.
The unique value a product or service offers to customers
C.
The marketing strategy used to attract customers
D.
The operational efficiency of a business
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Solution
A value proposition is a statement that explains how a product or service meets customer needs and stands out from competitors.
Correct Answer:
B
— The unique value a product or service offers to customers
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Q. In inventory valuation, which method is NOT acceptable under accounting standards?
A.
FIFO
B.
LIFO
C.
Weighted Average Cost
D.
Specific Identification
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Solution
LIFO (Last In, First Out) is not accepted under IFRS accounting standards, although it is allowed under US GAAP.
Correct Answer:
B
— LIFO
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Q. In marginal costing, fixed costs are treated as:
A.
Product costs
B.
Period costs
C.
Variable costs
D.
Direct costs
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Solution
In marginal costing, fixed costs are treated as period costs and are charged in full to the profit and loss account.
Correct Answer:
B
— Period costs
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Q. In marginal costing, how is contribution margin calculated?
A.
Sales - Total Costs
B.
Sales - Variable Costs
C.
Sales - Fixed Costs
D.
Sales - Direct Costs
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Solution
Contribution margin is calculated as Sales minus Variable Costs.
Correct Answer:
B
— Sales - Variable Costs
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Q. In marginal costing, which costs are considered relevant for decision-making?
A.
All fixed costs
B.
All variable costs
C.
Only incremental costs
D.
Only sunk costs
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Solution
Marginal costing considers only incremental costs, which are relevant for decision-making regarding pricing and production.
Correct Answer:
C
— Only incremental costs
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Q. In marginal costing, which costs are treated as period costs?
A.
Fixed manufacturing costs
B.
Variable manufacturing costs
C.
Direct materials costs
D.
Direct labor costs
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Solution
In marginal costing, fixed manufacturing costs are treated as period costs and not included in product costs.
Correct Answer:
A
— Fixed manufacturing costs
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Q. In marginal costing, which of the following costs is included in product costs?
A.
Fixed manufacturing overhead
B.
Variable manufacturing overhead
C.
Selling and administrative expenses
D.
All of the above
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Solution
In marginal costing, only variable manufacturing costs are included in product costs.
Correct Answer:
B
— Variable manufacturing overhead
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Q. In marginal costing, which of the following costs is treated as a period cost?
A.
Direct materials
B.
Direct labor
C.
Variable manufacturing overhead
D.
Fixed manufacturing overhead
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Solution
In marginal costing, fixed manufacturing overhead is treated as a period cost and is expensed in the period incurred.
Correct Answer:
D
— Fixed manufacturing overhead
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Q. In marketing, what does the term '4 Ps' refer to?
A.
Product, Price, Place, Promotion
B.
People, Process, Product, Profit
C.
Planning, Performance, Positioning, Pricing
D.
Product, People, Process, Promotion
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Solution
The '4 Ps' of marketing are Product, Price, Place, and Promotion, which are essential elements for marketing strategy.
Correct Answer:
A
— Product, Price, Place, Promotion
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Q. In marketing, what does the term 'value proposition' mean?
A.
The price of a product
B.
The unique value a product offers to customers
C.
The distribution channels used
D.
The promotional strategies employed
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Solution
The value proposition is the unique value a product or service offers to customers, distinguishing it from competitors.
Correct Answer:
B
— The unique value a product offers to customers
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Q. In preparing final accounts, which financial statement shows the company's profitability?
A.
Balance Sheet
B.
Cash Flow Statement
C.
Income Statement
D.
Trial Balance
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Solution
The Income Statement shows the company's profitability over a specific period.
Correct Answer:
C
— Income Statement
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Q. In preparing final accounts, which statement is prepared first?
A.
Balance Sheet
B.
Income Statement
C.
Cash Flow Statement
D.
Statement of Changes in Equity
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Solution
The Income Statement is prepared first to determine the profit or loss, which is then used in the Balance Sheet.
Correct Answer:
B
— Income Statement
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Q. In the context of amalgamation, what is goodwill?
A.
The value of tangible assets
B.
The excess of purchase price over fair value of net assets
C.
The total liabilities of the acquired company
D.
The cash reserves of the acquiring company
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Solution
Goodwill is defined as the excess of the purchase price over the fair value of the net identifiable assets acquired in an amalgamation.
Correct Answer:
B
— The excess of purchase price over fair value of net assets
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Q. In the context of business environment analysis, what does the term 'stakeholder' refer to?
A.
Only shareholders of the company
B.
Any individual or group affected by the company's actions
C.
Competitors in the same industry
D.
Government regulations
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Solution
Stakeholders include anyone affected by the company's operations, not just shareholders.
Correct Answer:
B
— Any individual or group affected by the company's actions
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Q. In the context of business environment, what does the term 'macro environment' refer to?
A.
Internal company policies
B.
Industry-specific trends
C.
Broad external factors affecting all businesses
D.
Individual consumer behavior
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Solution
The macro environment includes broad external factors such as economic, political, and social influences that affect all businesses.
Correct Answer:
C
— Broad external factors affecting all businesses
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Q. In the context of business environment, what does the term 'market segmentation' refer to?
A.
Dividing a market into distinct groups
B.
Analyzing competitors
C.
Identifying customer needs
D.
Setting pricing strategies
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Solution
Market segmentation refers to the process of dividing a market into distinct groups of buyers with different needs or characteristics.
Correct Answer:
A
— Dividing a market into distinct groups
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Q. In the context of business management, what does SWOT stand for?
A.
Strengths, Weaknesses, Opportunities, Threats
B.
Systems, Workflows, Objectives, Targets
C.
Sales, Workforce, Operations, Technology
D.
Strategy, Workforce, Organization, Time
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Solution
SWOT analysis is a strategic planning tool that identifies Strengths, Weaknesses, Opportunities, and Threats related to a business.
Correct Answer:
A
— Strengths, Weaknesses, Opportunities, Threats
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Q. In the context of business planning, what does the term 'market segmentation' refer to?
A.
Dividing a market into distinct groups of buyers
B.
Creating a single marketing strategy for all customers
C.
Analyzing competitors' market share
D.
Identifying potential investors
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Solution
Market segmentation involves dividing a market into distinct groups of buyers with different needs or characteristics to tailor marketing strategies.
Correct Answer:
A
— Dividing a market into distinct groups of buyers
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Q. In the context of consumer behavior, what is 'cognitive dissonance'?
A.
The discomfort experienced after making a purchase
B.
The process of gathering information before a purchase
C.
The influence of social factors on buying decisions
D.
The evaluation of alternatives before making a decision
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Solution
Cognitive dissonance is the discomfort experienced after making a purchase, often leading consumers to seek reassurance about their decision.
Correct Answer:
A
— The discomfort experienced after making a purchase
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Q. In the context of depreciation, what does 'salvage value' refer to?
A.
The initial cost of the asset
B.
The estimated resale value at the end of its useful life
C.
The total depreciation expense over the asset's life
D.
The market value of the asset
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Solution
Salvage value refers to the estimated resale value of an asset at the end of its useful life.
Correct Answer:
B
— The estimated resale value at the end of its useful life
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Q. In the context of entrepreneurship, what does 'innovation' refer to?
A.
The process of managing existing products
B.
The introduction of new ideas or products
C.
The reduction of business risks
D.
The expansion of market share
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Solution
Innovation in entrepreneurship refers to the introduction of new ideas, products, or processes that create value.
Correct Answer:
B
— The introduction of new ideas or products
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Q. In the context of final accounts, what does the term 'net profit' refer to?
A.
Total revenue minus total expenses
B.
Total assets minus total liabilities
C.
Gross profit minus operating expenses
D.
Total income minus taxes
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Solution
Net profit is calculated as total revenue minus total expenses.
Correct Answer:
A
— Total revenue minus total expenses
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Q. In the context of GST, what is the rate of GST applicable on the supply of services?
A.
5%
B.
12%
C.
18%
D.
28%
Show solution
Solution
The standard rate of GST applicable on the supply of services is 18%.
Correct Answer:
C
— 18%
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Q. In the context of income tax, what does 'taxable income' refer to?
A.
Total income before deductions
B.
Total income after deductions
C.
Income from exempt sources
D.
Income from capital gains only
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Solution
Taxable income refers to total income after deductions.
Correct Answer:
B
— Total income after deductions
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Q. In the context of inventory valuation, which method is least likely to affect the reported net income during periods of rising prices?
A.
FIFO
B.
LIFO
C.
Weighted Average
D.
Specific Identification
Show solution
Solution
FIFO (First-In, First-Out) is least likely to affect reported net income during periods of rising prices, as it results in lower cost of goods sold and higher net income.
Correct Answer:
A
— FIFO
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Q. In the context of management, what does 'delegation' refer to?
A.
Assigning tasks to subordinates
B.
Setting organizational goals
C.
Evaluating employee performance
D.
Creating a company budget
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Solution
Delegation is the process of assigning tasks and responsibilities to subordinates to enhance efficiency and empower employees.
Correct Answer:
A
— Assigning tasks to subordinates
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Q. In the context of management, what does SWOT analysis stand for?
A.
Strengths, Weaknesses, Opportunities, Threats
B.
Systems, Workflows, Objectives, Tactics
C.
Strategies, Workforce, Operations, Technology
D.
Sales, Workforce, Outcomes, Trends
Show solution
Solution
SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats, and is used for strategic planning.
Correct Answer:
A
— Strengths, Weaknesses, Opportunities, Threats
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Q. In the context of management, what does the term 'delegation' refer to?
A.
Assigning tasks to subordinates
B.
Setting goals for the organization
C.
Monitoring employee performance
D.
Creating a budget
Show solution
Solution
Delegation refers to the process of assigning tasks and responsibilities to subordinates to enhance efficiency and empower employees.
Correct Answer:
A
— Assigning tasks to subordinates
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