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Business Studies Multiple-Choice Questions (MCQs)

Business Studies is one of the Commerce subjects that covers topics related to business, marketing, finance, economics, accountancy, and organizational studies.

Business Studies MCQs: This section contains multiple-choice questions and answers on Business Studies. It will help the students to prepare well for their exams and to test their skills in business studies.

List of Business Studies MCQs

1. What is Business?

  1. Buying & Selling of Goods
  2. Commerce & Industry
  3. Trade
  4. None of the above

Answer: B) Commerce & Industry

Explanation:

Business implies Industry and trade. The industry is a financial movement, worried about the obtainment and handling of unrefined components into completed items, that arrive at the client. Trade is a business action, wherein trade for labor and products for esteem is done for an enormous scope.

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2. What is an Economic Activity?

  1. The activity of making, providing, purchasing, or selling goods or services.
  2. An industry in that part of the economy that creates services rather than tangible objects.
  3. It is a category of property that includes intangible creations of the human intellect.
  4. Services that focus on the creation, re-arrangement and interpretation of new and existing ideas.

Answer: A) The activity of making, providing, purchasing, or selling goods or services

Explanation:

Any action that involves producing, distributing, or consuming products or services is an economic activity.

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3. Hunting is what kind of Industry?

  1. Intellectual
  2. Interpretation
  3. Extractive
  4. Economic

Answer: C) Extractive

Explanation:

Hunting is an extractive industry. These industries extract or draw out products from natural sources. Raw materials that are mostly products of the soil are some basic supplies of extractive industries.

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4. Create a customer is a valid definition of?

  1. Business Purpose
  2. Factory Purpose
  3. Entrepreneur
  4. None of the Above

Answer: A) Business Purpose

Explanation:

A valid definition of a business purpose is to Create a customer. The customer is a foundation of a business and keeps it in existence.

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5. Individual Ownership is called as?

  1. Joint Trade Business
  2. Sole Proprietorship
  3. Co-Operative Society
  4. Partnership

Answer: B) Sole Proprietorship

Explanation:

A sole-trade organization is also called an Individual proprietorship. It is the type of entity that is fully owned and managed by one natural person (not a legal person/entity) known as the sole proprietor.

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6. Who takes no active part in Business?

  1. CEO
  2. Managing Director
  3. Dormant Partner
  4. Minor Partner

Answer: C) Dormant Partner

Explanation:

One who takes no active part in business is a dormant partner. But is entitled to a share of the profits, and subject to a share in losses; - called also sleeping, partner or silent partner.

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7. Whose property is not liable for the debts of a company?

  1. Owner
  2. Shareholders
  3. Employee
  4. Minor Partner

Answer: D) Minor Partner

Explanation:

In the case of the minor acting as a partner, his personal properties are not liable for the debts of the firm.

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8. In case of death or insolvency of a partner the firm is?

  1. Dissolved
  2. Carried on
  3. New owner
  4. None of the above

Answer: A) Dissolved

Explanation:

A partnership is dissolved in any case of death of any of the partners, by mutual consent, and by the insolvency of any of the partners.

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9. Whose liability is limited to the extent of value of business assets and his private assets?

  1. Partnership Firm
  2. Sole Proprietorship
  3. Co-Operative Society
  4. HUF

Answer: B) Sole Proprietorship

Explanation:

The liability of a sole proprietor is limited to the extent of the value of business assets and all private assets.

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10. Maximum number of partners allowed in Banking Business?

  1. Infinite
  2. 10
  3. 20
  4. 50

Answer: D) 50

Explanation:

Companies (Miscellaneous) Rules, 2014, provides that no association or partnership shall be formed, consisting of more than 50 persons for the purpose of carrying on any business that has for its objects the acquisition of gain by the association or partnership or by individual members thereof, unless it is registered as a company under the Act or is formed under any other law for the time being in force.

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11. In which firm the agreement is Oral or Written?

  1. Partnership
  2. Sole Proprietorship
  3. HUF
  4. Co-operative Society

Answer: A) Partnership

Explanation:

A partnership is an agreement between two or more persons who decided to do business and share its profits and losses. To have a legal relationship between the partners, the partnership agreement becomes the basis. The agreement can be in written form or oral form. An oral agreement is equally valid.

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12. Whose Liability is limited to the extent of his capital to the firm?

  1. Owner
  2. Partner
  3. Employee
  4. None of the above

Answer: B) Partner

Explanation:

Liability of partners in respect of the firms' debts is limited up the amount of his capital and loan to the firm.

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13. A partner in a firm _____.

  1. Can Transfer his shares to an outsider
  2. Can Transfer his shares to an outsider with the permission of partners
  3. Cannot transfer his shares
  4. None of the above

Answer: C) Cannot transfer his shares

Explanation:

A partner in a firm cannot transfer his share to an outsider. A partner of a firm cannot transfer his interest in the firm to an outsider and make the transferee a partner without the consent of all the others.

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14. Who is the servant of the firm with a share in the profits?

  1. Manager
  2. Employee
  3. CEO
  4. Shareholder

Answer: A) Manager

Explanation:

A manager with a share in the profits is only a servant of the firm.

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15. Who is not entitled to the share of profits?

  1. Manager
  2. Shareholders
  3. Partners
  4. Nominal Partner

Answer: D) Nominal Partner

Explanation:

A nominal partner is a partner in the business who has no actual interest in the trade or its profits. However, the person allows his/her name to be used in the business.

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16. Minimum Members required in a PVT. Ltd firm are?

  1. 5
  2. 2
  3. 10
  4. 50

Answer: B) 2

Explanation:

The minimum number of members in a private limited company is 2.

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17. Companies Act 2013 govern?

  1. Partnership firm
  2. Co-Operative Society
  3. Joint Stock Company
  4. Sole Proprietorship

Answer: C) Joint Stock Company

Explanation:

A Joint-stock company is governed by the Companies Act 2013. A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders.

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18. What contains the rules regarding the activities of a company?

  1. Memorandum of Association
  2. Article of Association
  3. Partnership Deed
  4. None of the above

Answer: A) Memorandum of Association

Explanation:

A Memorandum of association of a firm contains rules regarding the constitution and activities of the company. A Memorandum of Association (MOA) is a legal document that specifies the scope of business activities of the company and information about the shareholding of the company.

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19. Whose liability is limited to the paid-up value of shares?

  1. Partners
  2. Manager
  3. Employee
  4. Shareholders

Answer: D) Shareholders

Explanation:

The liability of shareholders of a public company is limited to the paid-up value of shares. "Limited by shares" means that the liability of the shareholders to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company.

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20. Which firm is called invisible and intangible?

  1. Partnership
  2. HUF
  3. Company
  4. Co-Operative Society

Answer: C) Company

Explanation:

A Company is called an artificial person because It is invisible and intangible. The corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. It has neither a mind nor a body of its own.

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21. Membership in a Co-Operative Society is?

  1. Voluntary
  2. Compulsory
  3. Not Essential
  4. None of the above

Answer: A) Voluntary

Explanation:

Membership of a co-operative is voluntary. "Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, political, racial, or religious discrimination."

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22. Minimum members required for registration of a Co-Operative Society?

  1. 5
  2. 10
  3. 20
  4. 7

Answer: B) 10

Explanation:

A minimum of ten members are required to form a cooperative society. The Cooperative Societies Act does not specify the maximum number of members for any co-operative society.

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23. How can a member resign from a cooperative society?

  1. Withdrawing his capital
  2. Transferring his share to another person
  3. Transfer his shares to a fellow member.
  4. None of the above

Answer: A) Withdrawing his capital

Explanation:

A member of a co-operative society can leave the society by withdrawing his capital from the society.

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24. On Director's recommendation which capital is distributed as Dividend?

  1. Share Capital
  2. Preference Capital
  3. Build Up Capital
  4. None of the above

Answer: B) Preference Capital

Explanation:

Dividend on preference capital will be paid only when directors recommend.

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25. A Statutory Corporation means?

  1. Dependency on Union Government
  2. Public Company
  3. Private Company
  4. Public Corporation

Answer: D) Public Corporation

Explanation:

A public corporation means Statutory corporation. Statutory corporations are public enterprises brought into existence by a Special Act of Parliament.

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26. Which firm is a legal and accountable entity?

  1. Sole Proprietorship
  2. HUF
  3. Partnership Entity
  4. Co-Operative Society

Answer: C) Partnership Entity

Explanation:

The partnership entity is a legal entity and accountable entity. A legal entity has the legal capacity to enter into agreements or contracts, assume obligations, incur and pay debts, sue and be sued in its own right, and be held responsible for its actions.

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27. Who takes part in the incorporation of a company?

  1. Promoter
  2. Shareholder
  3. Owner
  4. None of the above

Answer: A) Promoter

Explanation:

A promoter is a person who takes part in the incorporation of a company. A promoter is the one, who undertakes to form a company with reference to a given object and sets it going, and takes the necessary steps to accomplish that purpose.

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28. Minimum Shareholders required in a Public Company?

  1. 5
  2. 6
  3. 8
  4. 7

Answer: D) 7

Explanation:

Section 3 of companies act 2013 (1) A company may be formed for any lawful purpose by— (a) seven or more persons, where the company to be formed is to be a public company; (b) two or more persons, where the company to be formed is to be a private company; or (c) one person, where the company to be formed is to be One Person Company that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration.

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29. Minimum Number of members a Private Company should have?

  1. 15
  2. 20
  3. 2
  4. 5

Answer: C) 2

Explanation:

A private company should have at least 2 members.

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30. From where a Partnership Firm cannot raise funds?

  1. Debentures
  2. Bank Loan
  3. Share Capital
  4. None of the above

Answer: A) Debentures

Explanation:

A partnership firm cannot raise funds by debentures. A common source of funding for a new or expanding partnership is the pockets, deep or otherwise, of the partners themselves.

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31. Which term related to joint stock companies?

  1. Share Capital
  2. Capitalization
  3. Dividend
  4. Debentures

Answer: B) Capitalization

Explanation:

The term Capitalization is used in relation to Joint-stock companies. Capitalization is the sum of a corporation's stock, long-term debt, and retained earnings.

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32. Raising more money than profitable used causes?

  1. Capitalization
  2. Excess Share Capital
  3. Over-Capitalization
  4. Dividend

Answer: C) Over-Capitalization

Explanation:

Over-capitalization results from raising more money than can be profitably used. Over-capitalisation takes place when a company raises more money by the issue of shares and debentures than can be profitably used.

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33. Equity Shares are?

  1. Non-redeemable
  2. Redeemable
  3. Non-Transferrable
  4. Transferrable

Answer: A) Non-redeemable

Explanation:

Equity shares securities are not redeemable. Issuing redeemable equity shares would mean the company is willing to pay back the entire amount of the money invested by the equity shareholders.

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34. Investment in Equity Shares is?

  1. Profitable
  2. Risky
  3. Most Risky
  4. Non – Profitable

Answer: C) Most Risky

Explanation:

Investment in Equity shares is most risky. The higher the volatility of a stock, or any asset, the higher its risk. Unit trusts that invest only in equities are at higher risk than those that invest in other assets.

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35. Which of the below is not an ownership security?

  1. Debentures
  2. Fixed Deposit
  3. Preference Shares
  4. Equity Shares

Answer: A) Debentures

Explanation:

Debentures are not ownership security. A debenture is a type of debt instrument that is not secured by collateral and usually has a term greater than 10 years.

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36. A private company can issue?

  1. Dividend
  2. Deferred Shares
  3. Bonds
  4. Vouchers

Answer: B) Deferred Shares

Explanation:

As indicated by the Companies Act 1956, no open restricted organization or which is an auxiliary of a public organization can give conceded shares.

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37. Share Warrants are issued by which company?

  1. NGO
  2. Co-Operative Society
  3. HUF
  4. Public Ltd. Company

Answer: D) Public Ltd. Company

Explanation:

Public restricted organizations might give share warrants. Warrants are sold by organizations as a method for raising capital. Albeit an organization could offer stock to fund-raise, the Securities and Exchange Commission directs the quantity of offers an organization is permitted to issue.

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38. Which of the following are Short Term Finance?

  1. Loan
  2. Bank Overdraft
  3. Mortgage Loan
  4. None of the above

Answer: B) Bank Overdraft

Explanation:

Bank overdraft is a decent wellspring of money for the Short term. An overdraft office permits the business to spend more cash than is kept in the ledger.

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39. The main monetary capacity of new issue market is to?

  1. Give Direction
  2. Provide Liquidity Securities
  3. Provide facilities for converting savings into investments
  4. None of the above

Answer: C) Provide facilities for converting savings into investments

Explanation:

The main financial capacity of the new issue market is to give offices to changing over saving into speculations.

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40. Which of coming up next are parts of coordinated area of stock trade?

  1. Investor in securities
  2. Stocks
  3. Banks
  4. Financial Institution

Answer: A) Investor in securities

Explanation:

Financial backers in protections are parts of the coordinated area of stock trade. The coordinated area of the capital market contains all the term-loaning monetary foundations (or advancement banks or non-banking monetary establishments, as 1DB1, ICICI, and so on), saves money with their medium-term and their dealer banking divisions or auxiliaries, LIC, GIC, UTI and the stock trades (a fundamental part of the capital market).

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41. Where was the first stock exchange set up in India?

  1. Delhi
  2. Calcutta
  3. Bombay
  4. Bangalore

Answer: C) Bombay

Explanation:

The first stock exchange was set up in India in Bombay. The Bombay Stock Exchange (BSE) is the first and largest securities market in India and was established in 1875 as the Native Share and Stock Brokers' Association.

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42. Who controls the Stock Exchanges in India?

  1. RBI
  2. Banks
  3. SEC
  4. SEBI

Answer: D) SEBI

Explanation:

The securities exchange in every nation currently is administered/constrained by the comparing overseeing bodies in that country. Ex: SEC (Securities Exchange Commission) for USA , SEBI (Securities and Exchanges Board of India) for India. Prior Stock Exchanges in India were kept on being managed straight by the Government of India. In the year 1988 the Government of India comprised SEBI to go about as the autonomous controller of Stock trades, the essential market, Mutual Funds and so forth Protections Scam of 1990-91 dominated by the stockbroker Harshad Mehta, uncovered by writer Sucheta Dalal, provoked Government to make SEBI a legal and independent administrative board with liabilities, to cover both turn of events and guideline of the market.

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43. A speculator who applies for new share is?

  1. Middle Man
  2. Jobbler
  3. Employee
  4. Stag

Answer: D) Stag

Explanation:

A theorist who applies for the new offer is a stag. A financial backer or theorist who prefers another issue, anticipating that the price of the stock should rise quickly upon the beginning of exchange is known as a stag. The sole point of a stag is to offer the offers before long assignments to understand an easy gain.

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44. Common People can deal in stock exchange through?

  1. Directly
  2. Banks
  3. Broker
  4. Financial Institution

Answer: C) Broker

Explanation:

Dealings in stock exchanges can be done by the public only through brokers. A stockbroker is a professional who executes buy and sell orders for stocks and other securities on behalf of clients. A stockbroker may also be known as a registered representative, investment adviser, or simply, broker.

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45. What does speculation in Stock Exchange means?

  1. Buying and selling securities in hope of profit
  2. Making secret profits
  3. Gambling in securities
  4. None of the above

Answer: A) Buying and selling securities in hope of profit

Explanation:

Speculation in the stock exchange means buying and selling securities in the hope of making a profile due to changes in prices.

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46. When right to sell is acquired, it is termed as?

  1. Double Option
  2. Single Option
  3. Call Option
  4. Put Option

Answer: D) Put Option

Explanation:

At the point when an option to sell a security is gained, it is known as put choice. In finance, a put or put choice is a securities exchange gadget that gives the proprietor the right, however not the commitment, to sell a resource (the hidden), at a predefined value (the strike), by a foreordained date (the expiry or development) to a given party (the vender of the put).

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47. What does Stock Exchange deal with?

  1. Issue of Debentures
  2. Issue of securities
  3. Issue of second hand securities
  4. Issue of preference shares

Answer: C) Issue of second hand securities

Explanation:

Stock trade manages the recycled protections. In short, it manages existing or recycled protections, and henceforth it is called an auxiliary market. Permits dealings just in recorded protections: truth be told, stock trades keep an authority rundown of protections that could be bought and sold on its floor.

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48. In which account Dividend & Interest take place?

  1. Profit & Loss Account
  2. Current Account
  3. Savings Account
  4. Personal Account

Answer: A) Profit & Loss Account

Explanation:

Profit and premium are charged to benefit and misfortune account. Debentures premium is a business discounted and hence, it is a charge against benefit and as such benefit and misfortune account is charged with the aggregate sum of revenue payable during the bookkeeping year whether or not the organization has procured the benefit.

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49. In which year SEBI was established?

  1. 1989
  2. 1992
  3. 1993
  4. 1997

Answer: B) 1992

Explanation:

SEBI came into force in 1992. Securities and Exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market. It became an autonomous body by The Government of India on 12 May 1992 and was given statutory powers in 1992 with SEBI Act 1992 being passed by the Indian Parliament.

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50. Indexing is?

  1. Aid to filing
  2. Method of maintaining books
  3. Journal
  4. Method of maintaining account books

Answer: D) Method of maintaining account books

Explanation:

Indexing is an important method of maintaining account books. Indexes are used to quickly locate data without having to search every row in a database table every time a database table is accessed.

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More Commerce MCQs
Basic Accounting MCQs Capital Market MCQs
Goods & Services Tax (GST) MCQs Cooperative Society MCQs
Sole Proprietorship MCQs Partnership MCQs
Depreciation MCQs All Commerce MCQs

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