CA-Foundation Questions

Business & Commercial

Knowledge

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 CA-Foundation Questions

Chapter – 01 – Introduction to Business

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 Chat 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 c) A teacher teaching his daughter at home
b) A person selling vegetables in your locality d) A painter painting houses of others
6. In which of the following occupations services of specialized 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 partnership 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.

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e) Running a hair-cutting saloon is a business.

f) Occupations of doctors, lawyers and chartered 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 business.
13. 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.
14. Answer in Yes or No:
a) The sole proprietor is the exclusive mater 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 from of business organization.
e) It is difficult to set up a sole proprietorship.
15. 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.
16. 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 partnership goes on forever.
f) A person becomes a partner on his birth in the family.

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 CA-Foundation Questions

17. 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.
d) 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 outsiders.
g) Every company must issue a prospectus to raise share capital.
18. Name the following:
a) A company in which the number of members cannot exceed 50:
b) A company having at least seven members:
19. 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
20. The form of business organization in which there is separation of ownership and management is called
a) Sole proprietorship b) Partnership c) Company d) All these.
21. 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.
22. State whether the following statements are True or False.
i) There is no chartered company in India.
ii) LIC is a statutory company.
iii) At least five persons are needed to from a public company.
iv) The minimum paid up capital of a private company must be Rupees five lakh.
v) A private company can invite public deposits.
vi) The shares of a public company are transferable.
vii) A subsidiary of a public company is also a public company.
viii) The concept of private company deemed to be public no longer exists in India.

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 CA-Foundation Questions

Chapter – 02 –Business Environment

QUESTIONS:
1. Which of the following is a characteristic of business environment?
a) Aggregative b) Dynamic c) Uncertain d) All of them
2. Which of the following is an element of micro environment?
a) Customers b) Competitors c) Suppliers d) All of them
3. Which of following relates to population?
a) Demographic environment c) Cultural environment
b) Social environment d) Natural environment
4. Understanding of environment enables a business enterprise to
a) Focus on customers c) Become aware of impending threat
b) Gain the first mover advantage d) All of them
5. Demonetization and GST are examples of changes in
a) Political environment c) Technological environment
b) Social environment d) Global environment
6. Merger of associate banks of SBI into SBI in an example of change in
a) Economic environment c) Social environment
b) Technological environment d) Demographic environment
7. Tick () the correct alternative.
ix) Demographic trends are a part of:
a) Economic environment III c) Political environment
b) Social environment d) Legal environment
8. State whether the following statements are True or False:
i) Wait and watch is a response of least resistance.
ii) Big and powerful firms adopt the response of gaining command over the environment.
iii) Innovative approach requires no feedback system.
iv) Adaptation response involves anticipation of changes in business environment.
9. State whether the following statements are true or false.
i) Privatization and globalization are components of economic liberalization.
ii) Pressures for structural adjustments are a reason for globalization.
iii) Denationalization is a form of privatization.
iv) Closure of small-scale firms is a positive effect of economic liberalization.
10. Age, family size, sex composition and other people related elements are part of
a) Political environment c) Demographic environment
b) Economic environment d) Natural environment

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 CA-Foundation Questions

Chapter – 03 –Business Organizations

QUESTIONS:
1. Who is the Chairman of Asian Paints Ltd.?
a) KBS Anand c) Ashwin Dani
b) Ashwin Choksi d) Champaklal Choksey
2. Axis Bank was founded in:
a) 1991 b) 1992 c) 1993 d) 1994
3. Who is the Chief Executive Officer of Axis Bank?
a) Sanjiv Misra c) Chanda Kochar
b) Amitabh Chaudhary d) Shikha Sharma
4. Bajaj Auto was founded at
a) Mumbai b) Kolkata c) Pune d) Bengaluru
5. Who is the Chairman of Bajaj Auto?
a) Sanjiv Bajaj b) Rajiv Bajaj c) Jamnalal Bajaj d) Rahul Bajaj
6. In which year Bharti Airtel was founded?
a) 1991 b) 1992 c) 1994 d) 1995
7. Who is the Chairman of Bharti Airtel?
a) Deepak Mittal b) Navin Mittal c) Sunil Mittal d) Anil Mittal
8. Cipla operates in which industry
a) Food b) Pharma c) Hotels d) All the above
9. Dr. Reddy’s laboratories was set up in
a) 1980 b) 1983 c) 1984 d) 1989
10. HDFC Bank was set up in
a) 1991 b) 1992 c) 1993 d) 1994
11. Which is India’s largest private sector bank
a) Axis Bank b) SBI c) ICICI Bank d) HDFC Bank
12. Which company was formed by seven engineers with a capital of Rs 10,000?
a) Asian Paints b) Bharti Airtel c) Infosys d) None of the above
13. ITC was originally named as:
a) Imperial Tobacco company c) Indian Tea company
b) Indian Tobacco company d) None of the above
14. Larsen & Toubro Ltd. was founded by
a) Indians b) Americans c) Danish d) Europeans

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 CA-Foundation Questions

15. Reliance Industries Ltd. was founded by

a) Anil Ambani b) Mukesh Ambani c) Akash Ambani d) Dhirubhai Amabni
16. State Bank of India was originally known as
a) Centurion Bank c) Imperial Bank
b) United Bank of India d) None of the Above
17. Which is the largest Commercial bank of India?
a) SBI b) ICICI Bank c) HDFC Bank d) Axis Bank
18. Which Company is the holding company of 100 independent companies of the Tata Group?
a) Tata Sons Ltd. b) TCS Ltd. c) Tata Steel Ltd. d) Tata Motors Ltd.
19. Which of the following are conglomerates?
a) Tata Sons Ltd. c) Reliance Industries Ltd.
b) L&T Ltd. d) All of these
20. Which information technology company began as an edible oil firm?
a) Infosys b) Microsoft c) IBM d) Wipro
21. Wipro was founded in:
a) 1948 b) 1958 c) 1945 d) 1968
22. Which banking company is known worldwide for its credit card?
a) Axis Bank b) ICICI Bank c) HDFC Bank d) American Express
23. Which company was set up in a garage?
a) Infosys b) HP c) Nestle d) Microsoft
24.Apple’s main business is
a) Fruits b) Computers c) Retailing d) None of the above
25. IBM Corporation was founded in
a) 1895 b) 1911 c) 1921 d) 1931
26.Which global firm has an Indian as its chief executive
a) HP b) IBM c) Microsoft d) None of the above
27. Good Food, Good Life is the Slogan of which company
a) Walmart b) Britannia c) Parle d) Nestle
28.Which company is world’s largest retailer?
a) Shoppers Stop b) Smart c) Spencer d) Walmart

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 CA-Foundation Questions

Chapter – 04 –Government Policies for Business

QUESTIONS:
1. The process of economic liberalization in India began mainly in
a) 1990 b) 1991 c) 1992 d) 1993
2. Partial or complete sale of a public sector enterprise is called
a) Liberalization b) Privatization c) Globalization d) None of them
3. Integration of national economies into a world economy is known as:
a) Privatization b) Globalization c) Liberalization d) All of them
4. The initial trigger for the policy of economic liberalization in India in 1991 was
a) Foreign exchange crisis c) Overpopulation
b) Shortage of cash d) None of them
5. Which of the following is an example of industrial reforms?
a) Delicensing of industry
b) Simplification of licensing products
c) Permission to public sector units to raise capital from the capital market
d) All the above.

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 CA-Foundation Questions

Chapter – 05 – Organizations Facilitating Business

QUESTIONS:
1. Which of the following is not a regulatory body?
a) SEBI b) RBI c) CCI d) SIDBI
2. Which of the following is not a development bank?
a) IFCI b) IRDAI c) SIDBI d) NABARD
3. SEBI was set up to regulate:
a) Imports and exports c) Capita markets
b) Insurance marker d) Agriculture
4. Which of the following is the banker’s bank?
a) SIDBI b) EXIM bank c) IDBI d) RBI
5. Which of the following seeks to check monopolies?
a) RBI b) CCI c) SEBI d) IRDA
6. Which of the following is not a method of credit control?
a) CRR b) SLR c) Moral Session d) FBI

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 CA-Foundation Questions

Chapter – 06 – Common Business Terminologies

QUESTIONS:
1. A stock that provides regular dividends even during economic downturn is called
a) Listed b) Crow Stock c) Income Stock d) Defensive Stock
2. Carrying forward a transaction from one settlement period to the next is known as
a) Basket Trading b) Margin Trading c) Badla d) Option deal
3. Call is the opposite of
a) Equity b) Bid c) Ask/offer d) Equity
4. A speculator who buys securities in anticipation of increase in prices is called
a) Stage b) Bull c) Bear d) None of them
5. A bear market means
a) A market wherein share prices are falling consistently
b) A market wherein share prices are rising consistently
c) A market wherein share prices are stable
d) None of the above
6. Simultaneous purchase and sale of the same stock in two different markets is known as
a) Basket trading b) Badla c) Arbitrage d) Margin Trading
7. Buying or selling all 30 scrips of Sensex in proportion of their current weights in the Sensex in one go is
called
a) Basket trading b) Arbitrage c) Badla d) Margin Trading
8. The relationship between the price of a share and the Sensex is measurably
a) Alfa b) Beta c) Book value d) Annuity
9. Combination of two or more firms into one firm is called
a) Consolidation b) Yield c) Option d) None of the above
10. An option to buy a particular share at a specified price within a specified future period is known as
a) Put option b) Bid c) Offer d) Case option
11. The value of a share printed on the share certificate is called
a) Face value b) Market Value c) Future value d) Current value
12. Sensex is made up of how many scrips
a) 50 b) 30 c) 40 d) 20
13. Nifty consists of how many scrips
a) 20 b) 30 c) 40 d) 50
14. When a company makes first issue of shares to the general public it is called
a) ADR b) GDR c) CD d) IPO

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 CA-Foundation Questions

15. A textile firm enters into cement manufacturing business. It is an example of:
a) Consolidation b) Diversification c) Liquidation d) Turnaround
16. The strategy used to minimize the risk and maximize the return on an investment is called
a) Hedge b) Index c) Bid d) Offer
17. The statistical measure of changes in prices on a stock exchange is:
a) Dividend b) Index c) Beta d) Bid
18. A security whose price is derived from one or more underlaying assets is a
a) Blue Chip b) Derivative c) Hedge d) Index
19. Piecemeal sale of the assets of a division of the company is called
a) Modernization b) Diversification
20. Total shareholding of an investor is known as his/her
a) Mutual Fund b) Holding Period c) Past folio d) Limit order
21. Dividing a share with a face value of `100 each into 10 shares with a face value of `10 each is an
example of
a) Sheet selling b) Liquidation c) Diversification d) Stock split
22. Paid from of non-personal promotional of ideas, goods and services by an identified sponsor is called:
a) Adventuring c) Personal Selling
b) Sales promotion d) None of the above
23. The process of comparing the products and services with those of best in the industry to improve quality
and performance is known as
a) Advertising c) Bench marking
b) After-sale-Device d) None of the above
24.Commitment of customers to a particular brand is called
a) Brand Equity c) Brand loyalty
b) Brand recognition d) Benchmarking
25. A combination of several firms working together to build or buy something is known as:
a) Business Modal c) Combination
b) Business Portfolio d) Consortium
26.The values, beliefs and traditions shared by the members of company is called
a) Corporate culture c) Cross selling
b) Consortium d) None of the above
27. Giving unique identity to a product to differentiate it from rival products means
a) Direct marketing c) Diversification
b) Differentiation d) None of the above

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 CA-Foundation Questions

28.It is the process of eliciting support for a company and its activities from its employees. Name it
a) Internal Marketing c) Internet Marketing
b) Direct Marketing d) None of the above
29.A company created jointly by two or more companies for mutual advantage is called
a) Consolidation c) Joint Venture
b) Merger d) None of the above
30. Dividing the total market into several groups on the basis of consumer characteristics is known as:
a) Market segmentation c) Market Research
b) Market Development d) None of the above.
31. Offering existing products or their new version to a new customer group is called
a) Market entity c) Market Development
b) Market Positioning d) None of the above
32. Selecting the most attractive market segment for a particular product or product line is known as
a) Market Positioning c) Target Marketing
b) Market Entry d) None of the above
33. It is the exploitation of small market segments, name it
a) Direct Marketing c) Mass Marketing
b) Niche Marketing d) None of the above
34.A product’s customer benefit that no other product can claim is known as
a) Opportunity c) Unique Selling Proposition
b) Publicity d) None of the above
35. The rate at which the Reserve Bank of India lends, money to commercial banks for long period is called
a) Repo Rate c) Bank Rate
b) Goring Rate d) None of the above
36.The money deposit made by the buyer to the seller of real estate during negotiation stage is known as
a) Earnest Money Deposit c) Current Deposit
b) Fixed Deposit d) None of the above
37. The document issued by a bank on behalf of the importer promise to pay money for imported goods is
called.
a) Letter of credit c) Bank Draft
b) Debt Card d) None of the above
38.The rate of interest offered by the Reserve Bank of India on deposit of surplus funds by commercial
bank is known as
a) Bank Rat c) Reverse Repo rate
b) Repo Rate d) None of the above

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 CA-Foundation Questions

39.Jan Dhan Account is an example of

a) Current Account c) Zero Balance Account
b) Fixed Deposit Account d) None of the above
40. The rate of interest at which banks borrow money for short periods from the Reserve Bank of India is
called.
a) Bank Rate c) Reserve Repo Rate
b) Repo Rate d) None of the above
41. Profits, people and planet together constitute a company’s
a) Vision c) Triple Bottom Line
b) Mission d) None of the above
42.Integration of national economies into a world economy is called:
a) Globalization c) Privatization
b) Liberalization d) None of the above
43.Molasses in sugar industry is an example of
a) Joint product c) By product
b) Unique product d) None of the above
44.Sale of public enterprises to private sector is called
a) Globalization c) Liberalization
b) Privatization d) None of the above
45. Financial recovery of a loss-making company is known as
a) Turn around c) Liberalization
b) Privatization d) None of the above
46.The roadmap of a company future is
a) Mission c) Business Module
b) Vision d) None of the above
47. The statement that defines what a company is and what it does is called
a) Mission c) Business Module
b) Vision d) None of the above
48. Activities involved in physical involvement of goods from the factory to market etc. is called
a) Logistics c) Mission
b) Merger d) None of the above

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 CA-Foundation Questions

Business and Commercial Knowledge

Answer Key

Chapter 1 b TRUE 22 a TRUE

1 a Non-economic 15 a FALSE c FALSE b TRUE
b Economic b FALSE d FALSE c FALSE
c Non-economic c TRUE 14 a YES d FALSE
d Economic d FALSE b NO e FALSE
e Economic e TRUE c YES f TRUE
2 c 16 a FALSE d YES g TRUE
3 c b FALSE e NO h TRUE
4 d c FALSE
5 c d TRUE Chapter 2 Chapter 3 21 c
6 c e FALSE 1 d 1 c 22 d
7 b f FALSE 2 d 2 c 23 b
8 a 17 a TRUE 3 a 3 b 24 b
9 c b TRUE 4 d 4 c 25 b
10 c c TRUE 5 a 5 d 26 c
11 a FALSE d TRUE 6 a 6 d 27 d
b FALSE e FALSE 7 b 7 c 28 d
c TRUE f FALSE 8 i) FALSE 8 b
d TRUE g TRUE ii) TRUE 9 c
e TRUE 18 a Private iii) FALSE 10 d
f TRUE b Public iv) TRUE 11 d
g TRUE 19 d 9 i) FALSE 12 c
12 a NO 20 c ii) TRUE 13 a
b YES 21 a TRUE iii) TRUE 14 c
c YES b TRUE iv) FALSE 15 d
d YES c TRUE 10 c 16 c
e NO d FALSE 17 a
f YES e FALSE 18 a
g NO f FALSE 19 d
13 a FALSE g TRUE 20 d

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 CA-Foundation Questions

Chapter 4 Chapter 5 Chapter 6 26 a

1 b 1 d 1 d 27 b
2 b 2 b 2 c 28 a
3 b 3 c 3 c 29 b
4 a 4 d 4 b 30 a
5 d 5 b 5 a 31 c
6 d 6 c 32 c
7 a 33 b
8 b 34 c
9 a 35 c
10 d 36 a
11 a 37 a
12 b 38 c
13 d 39 c
14 d 40 b
15 b 41 c
16 a 42 a
17 b 43 c
18 b 44 b
19 a 45 a
20 c 46 b
21 d 47 a
22 d 48 a
23 c
24 c
25 d

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