Principle of Commerce

(PRINCIPLE OF COMMERCE)
Ch. # 1
TRADE, COMMERCE & BUSINESS

MCQs
1- Business means:
(a) Industry and commerce (c) Selling and buying of goods
(b) Commerce (d) Track & Commerce
2- Industry includes:
(a) Transport compares (c) Insurance business
(b) Banking Indus (d) All of the above
3- Fishing should be classified as:
(a) Genetic industry (c) Construction industry
(b) Extracting industry (d) Manufacturing Industry
4- Fish culture should be classified as:
(a) Construction industry (c) General industry
(b) Extractive industry (d) Manufacturing industry
5- Which of the following is an extractive industry?
(a) Hunting (c) Cattle breeding
(b) Flour mills (d) Forest culture
6- Which of the following is not a manufacturing industry?
(a) Fruit canning (c) Iron and steel works
(b) Mining (d) Flour mills
7- Nurseris multiplying and selling plants should be classified as:
(a) Construction industry (c) Genetic industry
(b) Manufacturing industry (d) Extractive industry
8- A valid definition of a business purpose is to:
(a) Increase the wealth of the firm (c) Create a customer
(b) Serve the society (d) Maximum profits
9- Which of the following form of business organization is the oldest one?
(a) Sole proprietorship (c) Joint stock company
(b) Partnership (d) Co-operative undertaking
10- Human activities consists of:
(a) Command activities (c) Both (a) and (b)
(b) Uncommanded activities (d) None of them
11- The businessman is defined as a :
(a) Trader (c) Producer
(b) Distributor (d) All of them
12- The activities which are taken into account in a business are
(a) Social (c) Economic
(b) Political (d) Cultural
13- Economic activities means:
(a) Business activities (c) Employment activities
(b) Profession activities (d) All of them
14- The basic objective of business is:
(a) Earning profit (c) Social welfare
(b) Exchange (d) None of them
15- A business organization means:
(a) Joint stock company (c) Sole trader ship
(b) Partnership (d) All of them
16- A person who deals in ready made item is known as:
(a) Trader (c) Manufacture
(b) Worker (d) Distributor
17- Income from business is known as:
(a) Utility (c) Profit
(b) Satisfaction (d) Interest
18- Commerce is define as the activities which help in:
(a) Transferring goods from factory
(b) Buying of goods to consumers
(c) Transportation of goods
(d) Selling of goods

Page 49 of 66
 Principle of Commerce

19- Trade means:

(a) Business (c) Exchange
(b) Removal of obstacles (d) Buying and selling
20- Commerce is the component of:
(a) Business (c) Trade
(b) Industry (d) Agriculture
21- Industry is the component of:
(a) Business (c) Commerce
(b) Trade (d) Agriculture
22- The two parts of primary industry are:
(a) Constructive, genetic (c) Constructive, manufacturing
(b) Extractive genetic (d) Extractive, constructive
23- Two components of business
(a) Industry and trade (c) Commerce and industry
(b) Profit and loss (d) Trade and commerce
24- The kinds of human activities are
(a) Four (c) Two
(b) Three (d) Five
25- Basic objective of business is
(a) Exchange of goods (c) Service to society
(b) To earn profit (d) To earn foreign exchange
for government
26- By economic activities means
(a) Business (c) Business, profession and
employment
(b) Business and profession (d) Commerce
27- Commerce relates to
(a) Purchase and sale of goods (c) Exchange of goods
(b) Earn profit (d) Accelerate the economic
development
28- Common economic activities related to profit earning are called
(a) The commerce (c) The industry
(b) The trade (d) The business
29- The truck jobber has a business of
(a) Medicines (c) Sports goods
(b) Electronics or furniture (d) Eatables
30- Economic activities mean
(a) Profession (c) Employment
(b) Business (d) All these
31- Commerce is related to
(a) Production of goods (c) Exchange of goods
(b) Trade (d) Purchase of goods
32- Economic activities which relate to earning profit are called
(a) Trade (c) Business
(b) Commerce (d) Industry
33- The real or actual owner of goods is
(a) Agent (c) Both a and b
(b) Principal (d) None of a and b
34- Income from business is called
(a) Profit (c) Satisfaction
(b) Interest (d) Utility
35- Commerce is a department of
(a) Agriculture (c) Industry
(b) Trade (d) Business
36- Business is owned by
(a) Single person (c) Ten or twenty persons
(b) Sole person or more (d) All of the three
37- Industry relates to
(a) Production of goods (c) Trade
(b) Exchange of goods (d) Purchasing and selling of
goods
38- Industry is a part of
(a) Commerce (c) Business
(b) Trade (d) Finance

Page 50 of 66
 Principle of Commerce

39- Primary industry can be divided into two parts

(a) Genetic extractive (c) Manufacturing extractive
(b) Secondary extractive (d) Constructive genetic
40- Calculating machine is
(a) Punching machine (c) Photo stat machine
(b) Calculator (d) Stapler machine
41- The new latest machine of calculating is
(a) Calculator (c) Posting machine
(b) Computer (d) Invoicing machine
42- The method of Card Board Filing System is
(a) Old (c) Safe
(b) New (d) Famous
43- The important function of an office is
(a) To provide information (c) To purchase the goods
(b) To sell the goods (d) To improve the efficiency
of the management
44- The following is used for posting through posting machine
(a) Debit card (c) Credit card
(b) Ledger card (d) None of these
45- Method of preserving papers is called
(a) Indexing (c) Filing
(b) Storage (d) All of these

Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.
11. 12. 13. 14. 15.
16. 17. 18. 19. 20.
21. 22. 23. 24. 25.
26. 27. 28. 29. 30.
31. 32. 33. 34. 35.
36. 37. 38. 39. 40.
41. 42. 43. 44. 45.

Ch. # 2
BUSINESS ORGANIZATION (A) SOLE TRADERSHIP
MCQS
1- In sole tradership. Finance is provided by the:
(a) Government (c) Trader
(b) Many people (d) Family members
2- The responsibility of the loss, in sole tradership is on:
(a) A single person (c) Manager
(b) Employees (d) All of them
3- A sole proprietor forms his business:
(a) After fulfilling the legal requirements (c) After govt.’s acceptance
(b) According to his own will (d) After the permission of
relatives
4- As compared to partnership, the formation of sole tradership is:
(a) Difficult (c) Easy
(b) No difference (d) None of them
5- The life of a sole proprietorship is:
(a) Short (c) Fixed
(b) Long (d) Unlimited
6- Sole proprietorship is generally carried on:
(a) Large scale (c) Mediums scale
(b) Small scale (d) Unlimited scale

Page 51 of 66
 Principle of Commerce
7- The number of participants in sole tradership is:
(a) Five (c) Three
(b) Four (d) One
8- Which one of the following is not important for sole proprietorship?
(a) Audit (c) Interest of owner
(b) Workers (d) Capital
9- Sole proprietorship is suitable for
(a) Large scale business (c) Small scale business
(b) Medium scale business (d) For all of these
10- Responsibility of sole proprietor in sole proprietorship
(a) Unlimited (c) On Govt
(b) Limited (d) None of three
11- In sole-proprietorship, the capital is
(a) Limited
(b) Depends upon sources of the owner
(c) Unlimited
(d) None of these
12- The Sole Proprietorship is
(a) Elastic (c) Durable
(b) Inelastic (d) None of these
13- Formation of sole proprietor business is
(a) Easy (c) Complicated
(b) Difficult (d) Impossible
14- In sole-proprietorship the capital is
(a) Limited (c) Dependent upon owner
(b) Unlimited (d) None of these
15- Sole proprietorship is
(a) Non-flexible (c) Flexible
(b) Durable (d) None of these
16- In sole proprietorship the responsibility of loss is on
(a) The manager (c) A single person
(b) Many people (d) The employees
17- Not important for sole trader ship
(a) Capital (c) Audit
(b) Interest of owner (d) Workers

Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.
11. 12. 13. 14. 15.
16. 17.

Ch. # 3

BUSINESS ORGANIZATION (B) PARTNERSHIP

MCQs
1- The maximum number of partners in a firm for a general business is:
(a) 10 (c) 30
(b) 20 (d) 40
2- The maximum number of partners in a firm has been specified by:
(a) The Contract Act, 1956 (c) The Partnership Act, 1932
(b) The Companies Act, 1956 (d) The Contract Act, 1932
3- The maximum number of partners in a firm carrying on banking business is:
(a) 5 (c) 15
(b) 10 (d) 20
4- The agreement of partnership:
(a) Must be in writing
(b) Must be oral

Page 52 of 66
 Principle of Commerce
(c) Must be in writing on a stamp paper
(d) Can be either oral or in writing
5- Dissolution of partnership must take place when:
(a) Business is running at a loss (c) A partner dies
(b) A partner becomes of unsound mind (d) A partner misbehavers

6- The partnership entity is:

(a) Legal entity (c) Both (a) and (b)
(b) Accountable entity (d) None of these
7- Partnership business is formed under the Partnership Act:
(a) 1932 (c) 1928
(b) 1930 (d) 1925
8- In banking business, the maximum no. of partners is:
(a) Twenty (c) Ten
(b) Fifteen (d) Five
9- In partnership business, the liability of a partner is normally:
(a) Limited (c) Unlimited
(b) Reduced (d) Negative
10- In ordinary partnership, the maximum number of partners is:
(a) Twenty (c) Five
(b) Ten (d) Two
11- In case of partnership deed, the best form is:
(a) Written (c) Verbal
(b) Written and registered (d) Oral
12- Registration of the partnership business is:
(a) Depends on the will of registrar
(b) Depends on the will of partners
(c) Necessary
(d) None of them
13- As compared to sole proprietorship, the partnership business is:
(a) Less flexible (c) Not flexible
(b) More flexible (d) Equally flexible
14- After the dissolution of partnership, the first payment is made to:
(a) Partners (c) Manager
(b) Family members (d) External creditors
15- Maximum number of partners in banking business
(a) 40 (c) 20
(b) 30 (d) 10
16- In partnership, the age of minor partner is
(a) Yrs (c) 22 yrs
(b) 18 yrs (d) Below 18 yrs
17- Partnership is formed under Partnership Act
(a) 1940 (c) 1913
(b) 1984 (d) 1932
18- In partnership business, participants individually are known as
(a) Partners (c) Firm
(b) Shareholder (d) Owners
19- Partnership business is formed under Partnership Act
(a) 1910 (c) 1932
(b) 1922 (d) 1990
20- The maximum number of partners in ordinary partnership is
(a) 50 (c) 20
(b) 30 (d) 10
21- The best form of a partnership deed is
(a) Verbal (c) Written and registered
(b) Written (d) None of these
22- Registration of the partnership business
(a) Is necessary (c) Upon the will of register
(b) Upon the will of partners (d) None of these
23- Partnership registered under the Act of
(a) 1932 (c) 1947
(b) 1984
24- The minimum number of partners in partnership
(a) Two (c) Ten
(b) Six (d) Twenty

Page 53 of 66
 Principle of Commerce
25- Active partner in partnership
(a) Invest capital (c) Sleeping partner
(b) Participate in management (d) Both A & B
26- The partner below the age of 18 years is called
(a) Junior partner (c) Major partner
(b) Minor partner (d) Active partner

Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.
11. 12. 13. 14. 15.
16. 17. 18. 19. 20.
21. 22. 23. 24. 25.
26.

Ch. # 4
BUSINESS ORGANIZATION (C) COMPANY
1- The minimum number of members in a private limited company is:
(a) 7 (c) 3
(b) 5 (d) 2
2- The maximum number of members in a private limited company is:
(a) 70 (c) 30
(b) 50 (d) 20
3- The minimum number of directors in a private limited company is:
(a) 1 (c) 3
(b) 2 (d) 4
4- The maximum number of members in a public limited company is:
(a) Limited (c) 50
(b) Unlimited (d) 70
5- The liability of shareholders of a public company is limited to the:
(a) Extent of their private assets (c) Nominal value of shares
(b) Paid-up value of share (d) None of these
6- The minimum number of members required for registration of a co-operative society is:
(a) Five (c) Fifteen
(b) Ten (d) Twenty
7- Companies which need not frame their own articles of association are:
(a) Private companies limited by shares
(b) Companies limited by guarantee
(c) Public companies limited by shares
(d) Unlimited companies
8- Which of the following documents contains rules and regulations for internal
management of the company?
(a) Prospectus (c) Articles of association
(b) Memorandum of association (d) None of these
9- Which of the following is the most important documents of the company?
(a) Articles of association (c) Annual report
(b) Memorandum of association (d) Prospectus
10- Which of the following documents defines the scope of the company’s activities?
(a) Articles of association (c) Statutory declaration
(b) Memorandum of association (d) Prospectus
11- Which of the following can be changed with retrospective effect?
(a) Articles of association (c) Prospectus
(b) Memorandum of association (d) Statutory declaration
12- Which of the following is the top administrative organ of the company?
(a) General manager (c) Board of directors
(b) Shareholders (d) Managing directors
13- The first directors of a company are appointed by:
(a) The articles of association (c) The promoters
(b) The shareholders in general meeting (d) None of these

Page 54 of 66
 Principle of Commerce
14- A public corporation means:
(a) Statutory corporation (c) Public company
(b) Government company (d) None of these
15- The “Return of allotment” has to be filed with the registrar in the case of:
(a) Allotment of debentures (c) Re-issue of forfeited shares
(b) Issue of shares by a private company (d) None of these
16- The charter of a company is its:
(a) Articles of association (c) Prospectus
(b) Statement is lieu of prospectus (d) Memorandum of association
17- Which of the following is not a distinctive feature of the co-operative form of business
organization:
(a) One share one vote system (c) Democratic management
(b) Corporate status (d) Service before self
18- A joint stock company’s letterhead must, by law, have the address of the:
(a) Factory (c) Managing director
(b) Registered office (d) Head office
19- The liability of shareholders of a public limited company is limited to the:
(a) Amounts called up (c) Nominal value of shares
(b) Paid up value of shares (d) Extent of their private assets
20- In the case of a deemed public limited company, the maximum number of members is
restricted of:
(a) 25 (c) 100
(b) 50 (d) 150
21- Economic oligarchy, fraudulent practice, bureaucratic management and difficulty in
formation are the limitations of a :
(a) Co-operative society (c) Sole proprietary concern
(b) Partnership firm (d) Joint stock company
22- The term “Capitalization” is used in relation to:
(a) Joint stock companies (c) Partnership
(b) Sole-proprietorship (d) Co-operative societies
23- A partnership firm cannot raise funds by:
(a) Partner’s capital (c) Partner’s loan
(b) Debentures (d) Bank loan
24- Watered capital means:
(a) Under-capitalization
(b) Over-capital means
(c) Excessive capital
(d) Part of the capital not represented by assets
25- Under-capitalization can be remedied by:
(a) Reduction of interest on debentures
(b) Redemption of debentures
(c) Redemption of preference shares
(d) Issue of bonus shares
26- Working capital can be used for the purchase of:
(a) Raw material (c) Land and building
(b) Goodwill (d) Machinery
27- Which of the following securities is not redeemable?
(a) Debentures (c) Preference shares
(b) Cumulative preference shares (d) Equity shares
28- Which of the following sources is not used for medium-term financing?
(a) Issue of preference shares (c) Issue of equity shares
(b) Issue of debentures (d) Term loans from banks
29- Which of the following issued for financing short-term requirements of a company?
(a) Issue of debentures (c) Issue of preference shares
(b) Issue of shares (d) Bank loan
30- When promoters want to retain control of the company, they should raise large
proportion of funds by:
(a) Preference capital (c) Equity capital
(b) Debentures (d) Both (a) and (b)
31- Working capital requirements can be raised by:
(a) Issue of shares (c) Re-investment of earning
(b) Issue of debentures (d) Loans from commercial banks
32- In which of the following, investment is most risky:
(a) Preference shares (c) Debentures
(b) Equity shares (d) Fixed deposits

Page 55 of 66
 Principle of Commerce
33- Which of the following sureties proves a burden an the finances of the company, when
company is not earning profits?
(a) Equity shares (c) Preference shares
(b) Debentures (d) None of these
34- A project, which may not add to the existing profits, should be financed by:
(a) Equity capital (c) Public deposits
(b) Debentures (d) Preference shares
35- Which of the following is not an ownership security?
(a) Debentures (c) Preference shares
(b) Equity shares (d) Public deposits
36- In which of the following, rate of interest/dividends is not fixed?
(a) Debentures (c) Equity capital
(b) Preference capital (d) Public deposits
37- In which of the following, interest / dividend is payable even if the company does not
earn profit?
(a) Preference capital (c) Equity capital
(b) Debentures (d) Public deposits
38- Debentures cannot be:
(a) Participating debentures (c) Irredeemable debentures
(b) Registered debentures (d) Bearer debentures
39- A company can purchase its own:
(a) Debentures (c) Equity shares
(b) Preference shares (d) All of the above
40- Control of management of the company mainly vests in:
(a) Preference shareholders (c) Debenture holders
(b) Equity shareholders (d) None of these
41- Deferred shares can be issued by:
(a) Private company (c) Both (a) and (b)
(b) Public company (d) None of these
42- The minimum number of persons in a listed public company is:
(a) Six (c) Eight
(b) Seven (d) Nine
43- The persons who work for the formation of company are called:
(a) The directors (c) The employees
(b) The owners (d) The promoters
44- In a joint stock company, the liability of shareholders is:
(a) Unlimited (c) Limited
(b) Zero (d) None of them
45- The shares of a joint stock company are:
(a) Of high value (c) Not for common person
(b) Transferable (d) Of law value
46- The business organization which can be dissolved through a legal procedure is:
(a) Joint stock company (c) Sole tradership
(b) Partnership (d) All of them
47- The memorandum of company is prepared by:
(a) Registrar (c) The promoters
(b) The exports (d) The employees
48- A company formed according to the royal charter is:
(a) Statutory company (c) Chartered company
(b) Modarba company (d) Registered company
49- A certificate of commencement is required by:
(a) Private company (c) Chartered company
(b) Public company (d) Non registered company
50- From the prospectus, what does a company get?
(a) Fame (c) Registration
(b) Prosperity (d) Capital
51- The debenture-holders of the company are its:
(a) Creditors (c) Managers
(b) Workers (d) Directors
52- In a public limited company, minimum number of directors is:
(a) Seven (c) Four
(b) Three (d) Five
53- The notice of special resolution must be given to the members:
(a) 14 days before (c) 21 days before
(b) 28 days before (d) 7 days before

Page 56 of 66
 Principle of Commerce
54- The directors are selected by:
(a) Shareholders (c) Promoters
(b) Board of directors (d) All of them
55- The details of the allotted shares is mentioned in:
(a) Statutory report (c) Monthly report
(b) Annual meeting report (d) Special meeting report
56- Co-operative society is formed under Act
(a) 1925 (c) 1935
(b) 1932 (d) 1984
57- The primary object of cooperative society is
(a) Earn profit (c) Members welfare
(b) Not to earn profit (d) To make ALLAH happy
58- The shares of a co-operative society can be transferred
(a) After 6 months (c) After one year
(b) At any time (d) All are wrong
59- The minimum number of members in a co-operative society
(a) 2 (c) 10
(b) 5 (d) 20
60- What is excluded from a co-operative society?
(a) Consumer (c) Wholesaler
(b) Retailer (d) Capitalist
61- The shares of a Co-operative Society
(a) Can be sold in the market (c) Can be used as security
(b) Cannot be sold in the market (d) All of these are correct
62- Maximum number of shareholders in private company
(a) 100 (c) 20
(b) 50 (d) 10
63- Minimum number of Directors in Public Limited Company
(a) Three (c) Seven
(b) Five (d) All of these
64- The persons who form the joint stock company
(a) Shareholders (c) Mangers
(b) Promoters (d) Auditors
65- In order to obtain loan from the public, company issues
(a) Shares (c) Dividend
(b) Debentures (d) All of three
66- In Public Limited Company the minimum numbers of shareholders are
(a) 2 (c) 10
(b) 7 (d) 20
67- Most important document of the company is
(a) Memorandum of association (c) Prospectus of the company
(b) Articles of association (d) Accounts of the company
68- The most important document of Joint Stock Company is
(a) Prospectus (c) Articles of Association1
(b) Memorandum of Association (d) Certificate of Commencement
69- The owners of the company are
(a) Shareholders (c) Debenture holders
(b) Promoters (d) Directors
70- A public company has to call general meeting after getting certificate of incorporation
within
(a) Six months (c) Twelve months
(b) Nine months (d) Eighteen months
71- Promotion is the beginning of
(a) Availability of capital (c) Formation of a company
(b) Development of country (d) None of these
72- In order to obtain loan, a public company
(a) Shares (c) Dividend
(b) Debentures (d) All of these
73- The persons who take part in the formation of Joint Stock Company are called
(a) Promoters (c) Shareholders
(b) Directors (d) Debenture holders
74- Audit of Joint Stock Company is
(a) Not compulsory (c) After every three years
(b) Must be each year (d) After every six months

Page 57 of 66
 Principle of Commerce
75- Which business organization can be dissolved through a legal procedure?
(a) Partnership (c) Joint stock Company
(b) Sole trader ship (d) None of these
76- Which company requires a certificate of commencement?
(a) Private company (c) Charted company
(b) Public company (d) Executory company
77- After the formation of company, the first meeting of shareholders is called
(a) Annual general meeting (c) Extra-ordinary meeting
(b) Statutory meeting (d) None of these
78- Owners of company are its
(a) Debenture holders (c) Shareholders
(b) Creditors (d) All of these
79- The persons who manage the affairs of company are called
(a) Directors (c) Debenture holders
(b) Promoters (d) Shareholders
80- The most important document of a company is
(a) The memorandum (c) The articles
(b) The prospectus (d) All of these
81- The debenture holders of the company are its
(a) Workers (c) Directors
(b) Manager (d) Creditors
82- Who runs the management of the Joint Stock Company?
(a) Share holders (c) Directors
(b) Creditors (d) Debenture holders
83- The profit given to shareholders on their investment by a company is called
(a) Debenture (c) Dividend
(b) Share (d) Bonus
84- What does a company get from the prospectus?
(a) Capital (c) Registration
(b) Fame (d) All the three
85- An agent who is helpful in the sale and purchase of shares is
(a) Clearing agent (c) Forwarding agent
(b) Underwriter (d) Auctioneer
86- The most important document of Company is
(a) Memorandum of Association (c) Prospectus
(b) Articles of Association (d) Partnership deed
87- Audit is compulsory in
(a) Sole proprietorship (c) Joint Stock Company
(b) Partnership (d) Co-operative Society
88- The maximum number of share-holders in Joint Stock Company
(a) 50 (c) 20
(b) 30 (d) Unlimited
89- The Constitution or charter of Company prepared by
(a) Government (c) Registrar
(b) Promoters (d) President

Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.
11. 12. 13. 14. 15.
16. 17. 18. 19. 20.
21. 22. 23. 24. 25.
26. 27. 28. 29. 30.
31. 32. 33. 34. 35.
36. 37. 38. 39. 40.
41. 42. 43 44. 45.
46. 47. 48. 49. 50.
51. 52. 53. 54. 55.
56. 57. 58. 59. 60.
61. 62. 63. 64. 65.
66. 67. 68. 69. 70

Page 58 of 66
 Principle of Commerce
71. 72. 73. 74. 75.
76. 77. 78. 79. 80.
81. 82. 83. 84. 85.
86. 87. 88. 89.

Ch. # 5
MARKETING & ITS FUNCTION
MCQs
1- New issue market is an integral part of:
(a) Stock exchange (c) Capital market
(b) Money market (d) All of the above
2- Which of the following are components of organized sector of stock exchange?
(a) Stock exchanges (c) Commercial bank
(b) Investors in securities (d) All of the above
3- When an existing company offers its shares for sale to existing shareholders, it is
known as:
(a) Offer for sale (c) Bonus issue
(b) Right issue (d) Private placing
4- All of the following method are used to raise capital through the sale of new securities:
(a) Stock exchange placing (c) Rights issue
(b) By issue of prospectus (d) Private placing
5- Underwriting is a technique of selling:
(a) Second-hand securities (c) Both (a) and (b)
(b) New securities (d) None of these
6- Which of the following is not a speculator in the stock exchange?
(a) Stag (c) Bear
(b) Brokers (d) Bull
7- Which of the following spectators expects fall in the prices of securities in the near
future?
(a) Bull (c) Bear
(b) Stage (d) None of these
8- Which of the following speculative activities is based on disparity in quoted prices in
difference markets?
(a) Blank transfer (c) Option dealing
(b) Margin trading (d) Arbitrage
9- A speculative activity, which is undertaken to make profit out of differences in prices of
a security in two markets, is known as :
(a) Margin trading (c) Arbitrage
(b) Option dealing (d) None of these
10- When right to purchase securities is acquired, it is known as :
(a) Put option (c) Double option
(b) Call option (d) Single option
11- When a right to sell a security is acquired, it is known as:
(a) Put option (c) Double option
(b) Call option (d) Single option
12- Stock exchange deals with the:
(a) Issue of equity shares (c) Issue of debentures
(b) Issue of preference shares (d) Second hand securities
13- Purchase and sale of shares before or after official trading hours of stock exchange is
known as:
(a) Margin trading (c) Hammering
(b) Kerb trading (d) Short selling
14- Continuous forward selling to depress prices in the stock exchange is called:
(a) Bear hammering (c) Bear square
(b) Short selling (d) None of these
15- Mutual funds are to be operated by:
(a) Public sector banks (c) Financial institutions
(b) Private sector banks (d) Asset management companies
16- The government issued Modaraba Ordinance in January:
(a) 1984 (c) 1974
(b) 1980 (d) 1970

Page 59 of 66
 Principle of Commerce
17- Musharika is based on Islamic concept of:
(a) Interest (c) Tax
(b) Non-interest (d) None of them
18- The time period of short time finance is:
(a) Two years (c) More than one year
(b) One or less than one year (d) One and half year

19- In Modaraba, the person who works is called:

(a) Modarib (c) Worker
(b) Principle (d) Rab-ul-Mal
20- Modaraba is established for:
(a) Unlimited period (c) Both (a) and (b)
(b) Limited period (d) None of them
21- Period of short term finance is
(a) Two years (c) Three years
(b) More than one year (d) One year or less than one year
22- In the absence of agreement, what will be the interest rate on extra capital of a
partner?
(a) 12% (c) 6%
(b) 10% (d) 4%
23- In modaraba, the person who invests capital is called
(a) Businessman (c) Rab-ul-Mal
(b) Investor (d) Modarib

Answer Key

S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.
11. 12. 13. 14. 15.
16. 17. 18. 19. 20.
21. 22. 23.

Ch. # 6
ADVERTISEMENT, TRANSPORTATION AND COMMUNICATION
MCQS
1- The objective of advertisement is
(a) Introduce the things (c) To reach the things to consumer
(b) To save the things (d) All of these
2- Through advertisement, new goods are
(a) Produced (c) Introduced
(b) Sold (d) Spoiled
3- Advertising expenses are met by
(a) Consumers (c) Wholesaler
(b) Owners of the goods (d) Retailer
4- Due to correspondence a business
(a) Contracts (c) Effected negatively
(b) Expands (d) None of these
5- The advertisement
(a) Increases money (c) Is wastage of money?
(b) Saves money (d) Decreases money
6- Due to advertisement, the sale of goods
(a) Decreases (c) Remains same
(b) Increases (d) None of these
7- The Government has monopoly in
(a) Railway transport (c) Road Transport
(b) Air transport (d) Water transport
8- Which is the safest and effective means of transportation?
(a) Water (c) Land
(b) Air (d) All the three

Page 60 of 66
 Principle of Commerce
Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8.

Ch. # 7
INTERNATIONAL TRADE
MCQS
1- Export procedure begins with :
(a) Marine insurance (c) Shipping bill
(b) Indent (d) Mate’s receipt
2- Import procedure begins with:
(a) Indent (c) Marine insurance
(b) Shipping order (d) Mate’s receipt
3- When imports exceed exports, the balance of trade is:
(a) Favourable (c) Both (a) and (b)
(b) Unfavourable (d) None of these
4- When exports exceed imports, the balance of trade is:
(a) Favourable (c) Both (a) and (b)
(b) Unfavourable (d) None of these
5- When custom duty is levied, according to the measurements of goods, it is known as:
(a) Specific duty (c) Revenue duty
(b) Excise duty (d) Ad-valoren duty
6- A letter of credit (L/C) is produced by:
(a) An importer (c) Custom authorities
(b) An exporter (d) Shipping company
7- If complete ship is hired, the shipping company issues:
(a) Shipping order (c) Bill of entry
(b) Charter party (d) None of these
8- Which of the following is a document of the title to the goods?
(a) Bill of entry (c) Certification of origin
(b) Bill of lading (d) Letter of credit
9- If the importer wishes to re-export the goods, which of the following documents is
required to be prepared:
(a) Charter party (c) Bill of lading
(b) Shipping bill (d) Shipping order
10- Which of the following documents certifies the origin of the goods imported?
(a) Bill of sight (c) Mate’s receipt
(b) Consular invoice (d) Dock’s receipt
11- The bill of exchange drawn by exporter on the importer is known as:
(a) Bill of loading (c) Documentary bill
(b) Bill of entry (d) Bill of sight
12- Extrepot trade means:
(a) Import trade (c) Export trade
(b) Foreign trade (d) Goods imported for re-exporting
13- The importer cannot take delivery of goods unless he procures the:
(a) Bill of lading (c) Shipping bill
(b) Bill of sight (d) Mate’s receipt
14- The number of copies to be prepared for a bill of lading are:
(a) One (c) Three
(b) Two (d) Four
15- A bill of entry has usually:
(a) Four copies (c) Two copies
(b) Three copies (d) One copy
16- Primage is a payment made of:
(a) Insurance-in-transit (c) Packing of goods
(b) Loading the goods (d) None of these
17- A letter of credit is opened on behalf of:
(a) An exporter (c) An importer
(b) A buying agent (d) A bank

Page 61 of 66
 Principle of Commerce
18- Mate’s receipt is issued by:
(a) The exporter (c) The captain of the ship of
his assistant
(b) The importer (d) The bank
19- A foul bill of lading is issued when:
(a) Goods are damaged (c) Goods are not properly trade
(b) Goods are a stolen property (d) None of these
20- Port Trust dues are payable by:
(a) Importer (c) Shipping company
(b) The forwarding agent (d) Exporter
21-The less developed countries, due to foreign trade:
(a) Becomes international slaves (c) Do not prosper
(b) Do not live alone (d) Do not progress
22-After sending the goods, what is prepared?
(a) Invoice (c) Bill of lending
(b) Receipt of mode (d) Promissory note
23-Delivery order is written by:
(a) Importer’s banks (c) Govt. agent
(b) Exporter (d) Owner of goods at port
24-The arrangement for the departure of goods is made by:
(a) Clearing agent (c) Underwriter
(b) Foreign agent (d) Commission agent
25-The exporter gets the certificate of origin from:
(a) Custom officials (c) Chamber of commerce
(b) Importing bank (d) Exporting bank
26-The indent in which the complete detail of goods is written is called:
(a) Open indent (c) Incomplete indent
(b) Close indent (d) Complete indent
27-If the trader does not want to get the goods himself, he issues to the officials:
(a) Delivery order (c) Bill of lending
(b) Bill of entry (d) Bill of sight
28-When expenses till custom duty are added into price, then it is called:
(a) Custom paid (c) Duty paid
(b) Inbound (d) Outbound
29-An importer trader gets himself registered under import and export control act:
(a) 1950 (c) 1952
(b) 1953 (d) 1975
23-The letter of credit is opened on the request of:
(a) Exporter (c) Market
(b) Importer (d) Government
24-Which of the following is not the method of selling goods in foreign countries?
(a) Personal visit (c) Home visits
(b) Travelling agents (d) Advertisements
25-An indent is also called:
(a) Inquiry letter (c) Bill of lending
(b) Marine insurance policy (d) Inquiry bill
26-On the settlement of matters, what is prepared by the exporter?
(a) Invoice (c) Consumer invoice
(b) Certificate of origin (d) All of them
27-An indent is accepted by:
(a) Personal agent (c) Travelling agent
(b) Importer (d) Exporter
28-Due to export, trade increase in:
(a) Employment opportunities occur
(b) Good relations with other countries
(c) Foreign exchange occurs
(d) All of them
29-Foreign trade is
(a) Wholesaler and retailer (c) To sale foreign goods
(b) To purchase foreign goods (d) To import and export goods
30-Literal meanings of trade are
(a) To exchange (c) To remove hindrance of time
(b) Buying and selling (d) Business

Page 62 of 66
 Principle of Commerce
31-Development of National Trade solve the problem of
(a) Water (c) Illiteracy
(b) Unemployment (d) All of these
32-Trade is a part of
(a) Industry (c) Commerce
(b) Business (d) Both 2nd and 3rd
33-International trade helps in
(a) Abolishment of monopoly (c) Stabilizing the price
(b) Increasing the production (d) All the correct
34-Whose role is important in trade?
(a) Trader (c) Producer
(b) Consumer (d) All of these
35-What is written on the bill of entry of goods?
(a) Value of insurance (c) Quality and type
(b) Quantity and price (d) None of these
36-An import trader can get himself registered under
(a) Import & export control Act 1950
(b) Import & export control Act 1952
(c) Import & export control Act 1975
(d) None of these
37-How many copies of bill of lading are prepared?
(a) Two (c) Three
(b) Four (d) Five
38-Trade is the component of
(a) Commerce (c) Industry
(b) Agriculture (d) None of these
39-Acceptance of indent by the
(a) Exporter (c) Importer
(b) Professional (d) None of these
40-Trade means
(a) Wholesaling (c) Import and Export
(b) Retailing (d) All of these
41-Who does write the delivery order?
(a) Exporter (c) Importer's bank
(b) Owner of goods at port (d) Government agent
41-Who does accept an indent?
(a) Exporter (c) Govt
(b) Importer (d) All of these
42-An agent who cannot get the possession, of goods from principal is
(a) Factor’ (c) Broker
(b) Commission agent (d) Underwriter
43-Imports and Exports are the kinds of
(a) Home trade (c) Provincial trade
(b) Foreign trade (d) None of these
44-The exchange of goods for goods is called
(a) Trade (c) Commerce
(b) Barter system (d) Industry
45-Home trade known as
(a) Import trade (c) Whole selling
(b) Export trade (d) Retailing and whole selling
(c)
Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.
11. 12. 13. 14. 15.
16. 17. 18. 19. 20.
21. 22. 23. 24. 25.
26. 27. 28. 29. 30.
31. 32. 33. 34. 35.
36. 37. 38. 39. 40.
41. 42. 42. 44. 45.

Page 63 of 66
 Principle of Commerce
Ch. # 8
WHOLE SELLING & RETAILING

MCQS
1- Which of the following is not included in home trade?
(a) Importers (c) Retailer
(b) Producers (d) Wholesaler
2- There are total:
(a) Two kinds of home trade (c) Four kinds of home trade
(b) Five kinds of home trade (d) Three kinds of home trade
3- Which of the following problem is solved due to home trade?
(a) Inflation (c) Unemployment
(b) Illiteracy (d) Recreation
4- Which of the following is not involved in home trade?
(a) Stability in prices (c) Decrease in expenditure
(b) Foreign currency (d) Tax saving
5- The document which carries the detail of sold goods is termed as:
(a) Payment receipt (c) Invoice
(b) Inquiry letter (d) Debit note
6- The wholesaler sells his goods to :
(a) Retailer (c) Manufacturer
(b) Consumer (d) Produce
7- In the godown of wholesaler, the quantity of goods is:
(a) Less (c) More
(b) Zero (d) Reasonable
8- Goods are bought by the wholesaler in:
(a) Considerable quantity (c) Reasonable quantity
(b) Less quantity (d) Abundant quantity
9- The wholesaler informs the public about his product through:
(a) Letters (c) Telephone
(b) Advertisements (d) All of them
10- The wholesaler creates a link between:
(a) Retailer and manufacturer (c) Consumer and manufacturer
(b) Retailer and consumer (d) None of them
11- A retailer sells his goods to:
(a) Manufacturer (c) Consumer
(b) Wholesaler (d) All of them
12- The expenses of small retailers are:
(a) High (c) Small
(b) Normal (d) Very high
13- A retailer generally buys goods from the:
(a) Wholesaler (c) Government
(b) Manufacturer (d) Industrialist
14- In a chain store, goods are sold at:
(a) Fixed price (c) Different prices
(b) Reasonable price (d) Minimum price
15- At a fixed price shop, things are always sold:
(a) On credit (c) On cash
(b) In exchange of things (d) All of them
16- The remuneration of an agent is called:
(a) Profit (c) Commission
(b) Salary (d) Wages
17- Middlemen means those persons who:
(a) Help in transferring goods from producer to consumer
(b) Buy items from manufacturer
(c) Buy goods from the retailer
(d) Buy goods from wholesaler
18- An agent who can receive the payment from buyer is known as:
(a) Export agent (c) Clearing agent
(b) Factor (d) Underwriter
19- A person who sells goods of merchant to another person is called:
(a) Middleman (c) Retailer
(b) Wholesaler (d) Agent

Page 64 of 66
 Principle of Commerce
20- The agent who receives goods on the port instead of the owner is called:
(a) Clearing agent (c) Warehouse keeper
(b) Export agent (d) Broker
21- The persons who sell their purchased goods are called:
(a) Middle-managers (c) Broker middlemen
(b) Merchant middlemen (d) None of them
22- An agent who cannot get the permission of goods from principle is known as:
(a) Commission agent (c) Export agent
(b) Factor (d) Broker
23- In the promotion of trade, an important role is played by:
(a) Wholesaler (c) Middleman
(b) Merchant middleman (d) Retailer
24- Retailer sells goods to
(a) Consumers (c) Industrialist
(b) Hawkers (d) Wholesaler
25- Tell about like and dislike of
(a) Retailer (c) Wholesaler
(b) Trader (d) Mill owner
26- Retailer sells the goods to
(a) Consumers (c) Industrialist
(b) Hawkers (d) Wholesaler
27- A retailer sells his goods to
(a) Wholesaler (c) Manufacturer
(b) Consumer (d) None of these
28- Normally a retailer buys goods form
(a) Wholesaler (c) Industrialist
(b) Government (d) Agent
29- The wholesaler gives order to manufacturers
(a) On spot (c) In advance
(b) According to need (d) None of these
30- Wholesaler purchases in
(a) Suitable quantities (c) Small quantities
(b) Bulk quantities (d) Not buying and selling

Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.
11. 12. 13. 14. 15.
16. 17. 18. 19. 20.
21. 22. 23. 24. 25.
26. 27. 28. 29. 30.

Ch. # 9

BUSINESS CORRESPONDENCE

MCQS
1- Advertisement, for poor is:
(a) Cause of financial tension and despair (c) Wastage of time
(b) Non-effctiveness (d) Reason of happiness
2- The advertisement:
(a) Is wastage of money (c) Increases money
(b) Saves money (d) Decreases money
3- Advertisement means:
(a) Sale of goods (c) Introduction of new goods
(b) Production of goods (d) Spoilage of goods
4- The important source of sending a voice message is:
(a) Video cassette (c) Internet
(b) Television (d) Radio

Page 65 of 66
 Principle of Commerce
5- The sales of goods, due to advertisement:
(a) Increase (c) Remain same
(b) Decrease (d) None of them
6- The most important part of a letter is
(a) Subject (c) Body of the letter
(b) Letter heading (d) Salutation
7- The types of letter are
(a) Five (c) Three
(b) Four (d) Two
8- A document having the complete detail of sold goods is called
(a) Inquiry letter (c) Payment receipts
(b) Debit note (d) Invoice
9- The person to whom the letter is sent is called
(a) Addressee (c) Truly
(b) Attention line (d) None of these
10- An official letter should be
(a) Concise (c) Long
(b) Suitable (d) None of these

Answer Key
S.# Ans S.# Ans S.# Ans S.# Ans S.# Ans
1. 2. 3. 4. 5.
6. 7. 8. 9. 10.

Page 66 of 66