CA Foundation Business & Commercial Knowledge Study Material Chapter 1 Introduction to Business – Test Questions

1. Classify the following into economic and non-economic activities.
(a) A mother cooking food for her children
(b) A teacher teaching in a coaching centre.
(c) A young boy helps an old man in crossing the road.
(d) The Chaat seller outside a school.
(e) A lady officer in Delhi Police

2. The income of a profession is called
(a) wage
(b) salary
(c) fee
(d) profit

3. In employment a person receives
(a) profit
(b) fee
(c) salary
(d) dividend

4. Income of a businessman is called
(a) wage
(b) salary
(c) fee
(d) profit

5. Which of the following is not a business activity:
(a) A housewife selling old newspapers
(b) A person selling vegetables in your locality
(c) A teacher teaching his daughter at home
(d) A painter painting houses of others

6. In which of the following occupations services of specialised nature are provided for fee
(a) Employment
(b) Business
(c) Profession
(d) Farming

7. Which of the following occupations involve maximum risk
(a) Employment
(b) Business
(c) Profession
(d) Teaching

8. Which of the following statements best describe economic activities.
(a) These activities are undertaken to earn money.
(b) These activities provide pleasure.
(c) These activities involve no risk
(d) These activities involve working outside the house.

9. The head of the joint Hindu family business is called
(a) Partner
(b) Manager
(c) Karta
(d) Member

10. The maximum number of partners in a partner-ship firm can be :
(a) 10
(b) 20
(c) 50
(d) 100

11. State whether the following statements are True or False:

(a) Taking photographs of mountains as a hobby is an economic activity.
(b) Teaching in a school is a non-economic activity.
(c) Service or employment is an economic activity.
(d) Business involves buying and selling of goods and services.
(e) Running a hair-cutting saloon is a business.
(f) Occupations of doctors, lawyers and char¬tered accountants are called professions.
(g) Economic activities are undertaken for earning a living.

12. Answer the following in Yes or No:

(a) A business activity can be carried out without sale or exchange.
(b) Business involves the creation of utilities.
(c) A business activity may be without a profit motive.
(d) Risk is an essential element of every business activity.
(e) Earning profits is the sole objective of business.
(f) Business is an economic activity.
(g) Profession involves greater risk than busi¬ness.

13. Name the following:

(a) The industry in which useful products are obtained from the earth and the sea.
(b) The trade in which goods are imported and exported to some other country.
(c) The branch of commerce which removes the hindrance of time.
(d) Buying and selling of goods in small quan-tities.

14. Fill in the blanks:

(a) Business = Industry + ………….
(b) …………. means the production of goods and services.
(c) Commerce includes ‘trade and ………….’
(d) Conversion of raw materials and component parts into finished products is known as …………… industry.
(e) Agriculture is an …………… industry.
(f) Transport removes the hindrance of ……………

15. State whether the following statements are True or False:

(a) Industry and commerce are interchangeable terms.
(b) Commerce is a wider term than trade.
(c) Trade between two countries is known as internal trade.
(d) Conversion of cotton into cloth is an example of genetic industry.

16. Match the following:


17. Answer in Yes or No:

(a) The sole proprietor is the exclusive master of his business.
(b) The liability of a sole proprietor is limited.
(c) A sole proprietorship has no legal existence apart from its owner.
(d) Sole proprietorship is the oldest form of business organisation.
(e) It is difficult to set up a sole proprietorship.

18. Fill in the blanks:

(a) Sole proprietorship is the …………… form of business enterprises, (latest/oldest)
(b) Sole proprietorship is most suitable form …………… for business, (small/large)
(c) Liability of a sole proprietor is …………… (limited/ unlimited)
(d) Sole proprietorship …………… a separate legal entity, (has/does not have)
(e) It is to set up a sole proprietorship firm, (easy/difficult)

19. Fill in the blanks:

(a) The membership of a joint Hindu family business is acquired by ……………
(b) The liability of the karta in a joint Hindu family business is ……………
(c) A member of the joint Hindu family business demand division/of …………… property.
(d) All the members of a joint Hindu family business …………… part in its man agement.
(e) A member of the j oint Hindu family business …………… call for account of past profits while leaving the business.

20. State whether the following statements are True or False:

(a) A joint Hindu family business is the result of a contract between the members of the family.
(b) Every member of a joint Hindu family business is an agent of the firm.
(c) There is no limit on the number of members in a joint Hindu family business.
(d) Female members of a family do not have a share in the joint Hindu family business.
(e) A joint Hindu family business is not dissolved on the death of a member.

21. Match the following:


22. Name the following:

(a) A partnership in which the liability of one or more partners is limited.
(b) A partnership which is set up for an indefinite period of time.
(c) The document containing the terms and conditions of a partnership.
(d) The partner who contributes capital but does not take active part in the management
(e) Person who lends his name and goodwill for the benefit of a partnership firm.

23. State whether the following statements are True or False:

(a) Registration of a partnership is legally compulsory.
(b) Limited partnership is not allowed in India.
(c) A partnership can take as many partners as it likes.
(d) A minor can become a partner.
(e) Partners may come and go but the part-nership goes on forever.
(f) A person becomes a partner on his birth in the family.

24. Name the following:

(a) The person who promotes a business.
(b) The document containing the bylaws of a company.
(c) The documents inviting subscriptions for shares and debentures.
(d) The amount of money which must be raised before allotment of share.

25. Mark the following statements True or False:

(a) A private company must file a statement in lieu of prospectus.
(b) A company which does not want to prepare its own Articles of Association can adopt Table A.
(c) A company wanting to raise capital must issue a prospectus.
(cl) A private company can start its business immediately after incorporation.
(e) Capital clause is a part of the Articles of Association
(f) The Memorandum of Association defines the relationship of a company with or out¬siders.
(g) Every company must issue a prospectus to raise share capital.

26. Fill in the blanks:

(a) A company is legally …………… from its members.
(b) Liability of every member in a company is ……………
(c) Registration of a company is ……………
(d) A company is managed by a ……………
(e) In a private company, there must be at least …………… members.
(f) A company has …………… succession.

27. Name the following:
(a) A company in which the number of members cannot exceed 50:
(b) A company having at least seven members:

28. Match the following:


29. The capital of a company is divided into number of parts, each one of which is called
(a) Dividend
(b) Profit
(c) Interest
(d) Share

30. The form of business organisation in which there is separation of ownership and management is called
(a) Sole proprietorship
(b) Partnership
(c) Company
(d) All these.

31. State whether the following statements are True or False:

(a) A joint stock company is separate legal entity.
(b) A company survives even if all its members die.
(c) A joint stock company is a voluntary association of persons.
(d) A joint stock company is less stable than a partnership.
(e) Registration of a joint stock company is optional.
(f) There can be no conflict of interest in a joint stock company.
(g) A company is an artificial legal person.

32. Fill in the blanks:

(a) The East India Company was a …………… company
(b) The Reserve Bank of India is a …………… company.
(c) Reliance Industries Limited is a …………… company.
(d) A does not have share capital.
(e) The liability of members of a company is unlimited.
(f) A company which holds 51% more of the shares of another company is called ……………
(g) Steel Authority of India Limited is a company.
(h) Coca Cola Corporation is a company.
(i) Minimum share capitalin a private company is Rs. ……………

33. State whether the following statements are True or False.

(a) There is no chartered company in India.
(h) LIC is a statutory company.
(c) At least five persons are needed to form a public company.
(d) The minimum paid up capital of a private company must be Rupees five lakh.
(e) A private company can invite public deposits.
(f) The shares of a public company are transferable.
(g) A subsidiary of a public company is also a public company.
(h) The concept of private company deemed to be public no longer exists in India.