PRACTICE QUESTIONS

CHAPTER 1: NATURE OF BUSINESS

1. Which is NOT true regarding differences between goods and services?
A) Tangible goods are generally produced and consumed simultaneously;
services are not.
B) Most goods are common to many customers; services are often unique
to the final customer.
C) Services tend to have a more inconsistent product definition than
goods.
D) Services tend to have higher customer interaction than goods.

2. People who are affected by a business and therefore have a stake in it are
called:
A) Shareholders
B) Option holders
C) Stakeholders
D) Customers

3. Which of the following groups may be considered to be stakeholders in the

activities of a nuclear power station?
(i)The government
(ii) Environmental pressure groups
(iii) Employees
(iv) Local residents
A) (i), (iii) and (iv)
B) (i), (ii), (iii) and (iv)
C) (iii) only
D) (i) and (iii) only

4. The most important factors of production are

A) Land, labour and capital
B) Water, earth and knowledge
C) Money, stocks and bonds
 D) Management, finance and marketing.

5. A garbage truck driver is an example which factor of production?

A) Labour
B) Entrepreneur
C)Land
D) Capital

6. A _____ is an aim or purpose, or an end to which effort is directed.

A) Resume
B) Destination
  C)Idea
D) goal

7. Aims expressed in measurable terms are called:

A) Goals
B) Objectives
C)Strategy
D)Destination

8. A mission statement...
A) is where the business wants to go in the future, it’s goals. It is a
statement of purpose.
B) stated, measurable targets of how to achieve business aims. They act as
stepping stones in achieving an overall aim. They give clear targets about
a business, so plans can be made to reach those targets
C) sets out the business vision and values that enables employees,
managers, customers and even suppliers to understand the underlying
basis for the actions of the business.

9. “Our core purpose is to create value for customers to earn their lifetime
loyalty." is an example of...
A) a business aim.
B) a business objective.
C) a company mission statement.
10. “We want to achieve sales of £10 million in European markets in 2017" is
an example of...
A) a business aim.
B) a business objective.
C) a vision from a company mission statement.

11. Which one of the following is not listed in the SMART acronym for
assessing a set of goals
A) Measurable
B) Adjustable
C) Specific
D) Time bound

12. Which of the following is an example of not-profit-organisation:

A) Public hospitals
B) Corporations
C) Audit firm
D) Insurance companies.

13. Which of the following is not an NPO

A) School
B) Hospital
C) Old age home
D) Orphanage

14. What does the "R" in SMART stand for?

A) Realistic- you must be able to accomplish the goal
B) Repeatable - you must be able to do the goal over and over again.
C) Responsible -a goal must allow you to take charge.
D) Respectful - a goal must allow you to be kind and polite

15. A short term goal is...

A) months to years
B) days to weeks
C) years to decades
D) next year
16. Iron ore, forest, water etc. are the example of which factors of
production?
A) Labour
B) Land
C) Capital
D) Natural resource

17. Which of the following statements about factors of production is false?

A) The term factor of production is another term for resources
B) The factor of production termed labour means human resources
C) The factor of production land means a natural resource
D) None of the above

18. All of the economic inputs that are required to produce goods and services
are called:
A) Factors of production
B) Demand
C) Supply
D) Capital for production

19. The ideas and emotional drive a person has to produce something that
other people will want to buy describes which factor of production?
A) Capital
B) Labour
C) Entrepreneurship
D) Land

20. Various groups of people might be interested in financial information

about an organisation, for various reasons.
Match up each of the following groups with the primary nature of their
interest in financial information.
Groups Interest
A) Shareholders 1 Ability to maintain and repay loans
B) Financiers 2 Potential social contributions and impacts
C) Employees 3 Management stewardship
D) Public 4 Attainment of performance objectives
21. A person who risks both time and money to start and manage a business is
called ___________. 
A) Overachiever
B) Supervisor
C) Entrepreneur
D) Narcissist

22. In business, stakeholders are defined as:

A) Only the people that purchase goods or services from a business.
B) Just the vendors that sells to the business.
C) All the people who stand to gain or lose by the policies and activities of
a business.
D) Only the employees that are effected by the policies of a business.

23. The amount of money a business earns above and beyond what it spends
for salaries and other expenses is called:
A) Savings
B) Cash receipts
C) Revenue
D) Profit

24. The activity of providing goods or services to others while operating at a

profit is called a _____________. 
A) Consumer advocating.
B) Business.
C) Barter systems
D) None of the above.

25. What is revenue?

A) The difference between the debit and the credit sides of an account.
B) Total sales during a stated period.
C) The money received by a business from customers.
D) All of the above
26. An entrepreneur:
A) Enforces government regulations
B) Takes the risk to earn profit
C) Sets the interest rates at banks
D) Manages financial investments

27. In case of ___________ Registration is compulsory

A) Sole Proprietorship
B) Partnership
C) None of these
D) Company
28. Profits do not have to be shared. This statement refers to
A) Company
B) Sole proprietorship
C) Joint Hindu family business
D) Partnership

29. A partner who is not actually involved in the partnership but lends his
name for public relations purposes is a:
A) silent partner.
B) general partner.
C) nominal partner.
D) dominant partner.

30. The main disadvantage of a general partnership is:

A) the unlimited liability of the partners.
B) disagreement amongst partners.
C) shared management.
D) difficulty of termination.

31. The simplest form of business ownership is a:

A) proprietorship.
B) partnership.
C) corporation.
D) cooperative.
32. Which of the following is probably the most important reason for
incorporating?
A)limited liability of shareholders.
B) more money for investment.
C) increased flexibility.
D) shared management.
33. A ___________ is a business with two or more owners:
A) corporation.
B) conglomerate.
C) partnership.
D) public corporation.

34. Which of the following is an advantage of a sole proprietorship?

A) ease of starting a business.
B) being your own boss.
C) pride of ownership.
D) all of the above.

35. Which of the following does not characterize business activity?

A) Production of goods & services
B) Presence of risk
C) Sale or exchange of goods and services
D) Salary and wages

36. Which one of the following may not be a factor behind starting a
business?
A) Routine workload
B size of the firm
C finance
D location of the business

37. Which of the broad categories of industries covers oil refinery and sugar
mills?
A) Primary
B) Secondary
 C) Tertiary
D) None of these
38. At least 10 adults, no maximum limit in case of ________
A) Cooperative Society
B) Joint Family
C) Partnership
D) Company
39. The capital of a company is divided into number of parts each one of
which are called
A) Share
B) Dividend
C) Profit
D) Interest

40. The structure in which there is separation of ownership and management

as per law is called
A) Company
B) All business organisations
C) Partnership
D) Sole proprietorship

41. Public sector companies are owned by the

A) Foreigner
B) Locals
C) Government
D) NGOs.

42. The organization who converting one resources into another are E.g. Coal
into electric.
A) Manufacturing
B) Service industry
C) Retail and distribution
D) Energy Sector.

43. Retailing and Distributors companies extract and refine raw material.
A) True
B) False
44. Intellectual production companies produce food and beverage products.
A) True
B) False

45. Which items best describe an organization?

A) Working together, collective goals, controlled performance
B) Synergy, clear roles, accepted leader
C)Team work, clear rules, collective goals
D) Defined hierarchy, clear objectives, formal rules

46. Which elements characterize the concept of a service?

A) Varied, tangibility, imperishable
B) Consistency, tangibility, simultaneity
C) Tangibility, inconsistency, simultaneity
D) Variability, simultaneity, perishability
CHAPTER 2: OWNERSHIP OF A BUSINESS
47. When we produce a good by exploiting natural resources it is called?
A)Tertiary sector
B) Primary sector
C) Service sector
D) Public sector

48. What is the secondary sector?

A)production of a good by exploiting natural resources
B) activities in which natural products are changed into other forms
through ways of manufacturing
C)activities, by themselves, do not produce a good but they are an aid or
support for the production process.
D)Mineral excavation

49. Name one functioning activity of the Tertiary sector?

A)goods that are produced would need to be transported by trucks or
trains and then sold in wholesale and retail shops
B) this sector gradually became associated with the different kinds of
industries
C) activities in which natural products are changed into other forms
through ways of manufacturing
D) produce a good by exploiting natural resources

50.  Which sector is also called the service sector?

A) Primary
B )Public
C) Industrial
D) Tertiary

51. Which of the following is owned by a single person:

A) Private Company
B) Public Company
C) Joint Venture
 D) Sole Proprietorship
52. Sole Proprietorship is most suitable for
A) Medium scale concerns
B) Large scale concerns
C) Small scale concerns
D) None of the above

53. Sole proprietorship business owner has

A) Restricted Liability
B) No Liability
C) Unlimited Liability
D) Limited Liability

54. Which of the following usually have unlimited liability?

A) a limited partner in a partnership
B) a shareholder in a corporation
C) the owner of a sole proprietorship
D) a member in a limited company

55. Which of the following statements is true?

A) Limited company status means that a company is only allowed to trade
up to a predetermined turnover level in any one year.
B) For organisations that have limited company status, ownership and
control are legally separate.
C) The benefit of being a sole trader is that you have no personal liability for
the debts of your business.
D) Ordinary partnerships offer the same benefits as limited companies but
are usually formed by professionals such as doctors and solicitors.

56. Which document contains the constitution of the company?

A) Article of association
B) Memorandum of association
C) Prospectus
D) Company news paper

57. Which one of the following is an unincorporated business?

A) Limited liability partnership
 B) General partnership
C) Public limited company
D) Private limited company

58. What is the simple difference between a public and private limited
company?
A) A public limited company is public and a private limited company is
private.
B) There are no differences.
C) The public limited company can quote shares in a stock exchange while a
private limited company cannot.
D)One does not deal with shares while the other does.

59. What are the main managers/owners of a public limited company called?
A) Owners and managers
B) Bosses and mentors
C) Directors and shareholders
D) Principals and boards

60. What is one advantage of a public limited company?

A) They are not regulated
B) They can tell private limited companies what to do.
C) They can buy an unlimited amount of vehicles.
D) Shares are easily transferable

61. What is one disadvantage of a public limited company?

A) Stock market vulnerability
B) Limited liabilities.
C) They cannot buy cars.
D) They cannot buy shares.

62. All limited companies can sell shares to the public.

A) True
B) False

63. One advantage of a partnership form of business organization is that:

A) All partners always have limited liability
 B) Shares can be sold on stock exchange
C) The business survives after the death of partners
D) The business has access to more capital than a sole trader

64. The principle followed in a co-operative society is

A) No vote
B) One man, one vote
C) Multiple votes
D) One share one vote

65. A ___________ is defined as an independent democratic organization,

owned and operated equally by all members, with objectives to fill
economic, social and/or cultural needs
A) Cooperative
B) Partnership
C) Private limited company
D) Joint venture

66. Which TWO of the following are characteristics of a public limited

company but not a co-operative?
A) Maximising the excess of income over expenditure not a primary
objective
B) Members can vote according to the number of shares owned
C) Shares can be bought and sold through personal transactions of the
members
D) All members are invited to attend the annual general meeting and
participate in decisions at the meeting

67. ADB is a business which is owned by its workers. The workers share the
profits and they each have a vote on how the business is run. Which of the
following should be used to describe ADB?
A) Public sector
B) Private sector
C)Not-for-profit
D)Co-operative
 68. What kind of business is BEST described by these statements? -I am the
only owner of my business.  -I take all the risks of doing business.  -I keep
all the profits. 
A) Sole proprietorship
B) Solo partnership
C) Partnership
D) Cooperative

69. In a sole proprietorship and partnership, owner(s) share profit, but liability
is ______ and they are known to be __________
A) Limited, unincorporated
B) Unlimited, unincorporated
C) Limited, incorporated
D) Unlimited, incorporated

70. What is a disadvantage of partnerships?

A) Ease of formation
B) Owners share responsibilities
C) Limited liability
D) Possibility of personality conflict

71. Limited companies such as private limited do NOT continue when

stockholders sell the stock.
A) True
B) False

72. Unlimited liability is when the owner is only limited to the amount he
invested.
A) True
B) False
 
73. An unincorporated business is one that does have a separate legal
identity.
A) True
B) False
  
74. One of the advantages of a joint venture is:
 A) Disagreements between partners
B) Knowledge about the country operated is ready with the partner
C) You share profits

75. Franchisor contributes to:

A) Use of name
B) Advertising
C) Ideas
D) All of the above
 
76. The best definition of a sole trader form of business organization is:
A) The business only employs one person
B) The business is owned by one person
C) The firm has a single customer
D) There is a single firm in the industry.
 
77. These are all true disadvantages of a Public limited company except:
A) Lots of legal formalities
B) Limited liabilities
C) High regulatory compliance
D) Higher taxes

78. One of the advantages of the franchise to the franchisor.

A) Expansion is not fast
B) Bad reputation from poor management would affect the franchisor
C) The franchisor doesn't have any responsibility over the franchisee

79. These are all true characteristics of a private limited company except:
A) More available capital
B) Limited liability
C) Incorporated business
D) The business and the owner don't have separate identities
 
80. These are all advantages of a joint venture except:
A) Both partners share costs
B) Risks are shared
C) Difficulties of different cultures
 
81. Public limited companies and private limited companies mean that they
are ___________ ownership and ______________ liability.
A) Private, unlimited
B) Public, limited
C) Private, limited
D) Public, unlimited

82. Private Sector companies are owned by the central or local government or
agencies.
A) True
B) False

83. Limited companies term limited liabilities means:

A) Risk is generally restricted to the amount that they have invested in the
company
B) Risk is linked to investor personal holdings.
C) That the funds they invest in the company are secured.
D) None of the above.

84. A limited company has a separate legal personality from its owners
(shareholders).
A) True
B) False.

85. The ownership and control of a limited company are not legally separate
even though they may be vested in the same individual or individuals.
A) True
B) False.

86. Controls management and staff, and is accountable to the shareholders,

but it has responsibilities towards both groups - owners and employees
alike.
A) Internal Auditors
B) Government agencies
C) NGOs
D) Board of Directors.
87. Public limited companies are also known as public sector companies.
A) True
B) False

88. Which of the following is not the advantage of a limited company?

A) Compliance cost
B) No restrictions on size.
C) Limited Liability
D) Ownership is legally separate from control.

89. Cooperative are owned by who share profit.

A) Workers or Customers
B) Govt. And NGOs
C) Owners and Management
D) None of the above.

90. An organization which is owned by its member rather than outside

investors are called
A) Co-operatives
B) Limited Company
C) Public Sector Companies
D) Mutual Association or Funds

91. Public sector companies can raise funds from which of the following ways?
A) Raising taxes
B) Making charges (service charges etc)
C) Borrowing
D) All of the above.

92. NGOs are directly linked with the local or central government and their
prime aim is to make profits.
A) True
B) False

93. Which of the following is not the example of Public Sector Company?
A) Government hospital.
B) Government Collages.
 C) Wall mart store
D) Police department.

94. NGO and Charities are not required to produce accounts in law.
A) True.
B) False.
CHAPTER 3: ORGANIZATION OF BUSINESS

95. Which of the following statements about an organisation chart is NOT

true?
A) An organisation chart provides a summary of the structure of a
business.
B) An organisation chart can improve internal communications within a
business.
C) An organisation chart can improve employees' understanding of their
role in a business.
D) An organisation chart can indicate functional authority but not line
authority within a business.

96. Which of the following is a correct definition of 'span of control'?

A) The number of employees subordinate in the hierarchy to a given
manager
B) The number of levels in the hierarchy 'below' a given manager's
C) The number of employees directly responsible to a manager

97. Y plc is a growing organisation which has recently diversified into a

number of significant new product markets. It has also recently acquired
another company in one of its overseas markets.
What would be the most appropriate form of organisation for Y plc?
A) Geographical departmentation
B) Divisionalisation
C) Functional departmentation

98. Which of the following principles of classical management is challenged

by matrix management?
A) Structuring the organisation on functional lines
B) Structuring the organisation on geographical lines
C) Unity of command
D) Decentralisation of decision-making

99. Which of the following is an advantage of centralisation?

A) It helps to develop the skills of junior managers
B) It avoids overburdening top managers in terms of workload and stress
 C) Senior managers can take a wider view of problems and consequences

100. Which of the following is a benefit of decentralisation?

A) Decisions are made at one place in the organisation
B) Reductions in bureaucracy
C) Better crisis management
D) Improves the motivation of junior managers

101. A narrow span of control would be suitable where

A) The team is not dispersed across a wide area
B) The work is of a routine nature
C) There is little similarity between team members' work
D) The team is very experienced

102. Nysslit Lerner plc, an organisation of some 400 employees, has an

average span of control of three, throughout its structure. From this,
which of the following inferences might one make? A) The work is
systematic and routine
B) The level of complexity in the work is high
C) The organisation is flat.

103. An organizational practice, according to which the decision making

freedom is available to lower level managers is known as:
A) Decentralization
B) Centralization
C) Congruency
D) Autonomy of effort.

104. The minimum freedom of managers and maximum constraints are main
features of:
A) Autonomy
B) Centralization
C) Decentralization
D) Functional autonomy.
105. What is a matrix organizational structure?
A) A structure where employee reports to two different managers
B) A structure where narrower span of control exists
C) A structure with wide span of control

106. Why would a company consider implementing a matrix organizational

structure?
A) It wants to challenge its employees, and thinks this is a good way to do
it.
B) It wants to give products adequate support by sharing staff from
different functions across multiple products.
C) It is concerned about communication, and wants to have multiple
channels of communication to increase the time needed to make
decisions.
D) It thinks it will be easier to determine who is responsible for operating
financial results.

107. What is not an advantage of a hierarchical structure?

A) Small span of control
B) Clear chain of command
C) Quick response to change
D) Discipline and stability

108. What is a virtual organisation?

A) An organisation that uses information and communications
technologies (ICT's) to coordinate activities without physical boundaries
between different functions
B) An organisation that uses internet technologies to sell products to
customers
C) An organisation that manages the supply chain using digital
technologies
D) An organisation that coordinates the workforce via video conferencing.

109. When organization is sub-divided into specialist departments, with each

department specializing in a particular type of activity. E.g. marketing,
finance and production. This type of departments are known as
A) Geographic
 B) Product / brand
C) Functional
D) Hybrid

110. One of the disadvantages of Geographical departmentation is its causes

duplication and inconsistency
A) True
B) False

111. Is the division of a business into autonomous regions or product

businesses, each with its own revenues, expenditures and capital asset
purchase programmers?
A) Decentralized
B) Divisionalisation
C) Hybrid
D) Functional.

112. Span of control is also called and known as span of management.

A) True
B) False.

113. Span of control means

A) Level of management in the organization
B) No of superior looking after one job
C) No of subordinate directly reports to its manager / superior.
D) No of managers responsible for internal control.

114. If manager have 7 subordinate the span of control will be 8.

A) True
B) False.

115. More non-supervisory work on the manager will result in a narrow span
of control.
A) True
B) False.
116. A tall organization with many management levels has a wide span of
control.
A) True
B) False.

117. Narrow span of control mean strict and close monitoring of subordinates
which result in demotivation of employees.
A) True
B) False

118. A span of control results in each manager supervising a small number of

employees.
A) Small or narrow
B) Large or wide
C) Tiny
D) None of the above

119. A system of management that occurs when more subordinates report

directly to a given manager.
A) Small or narrow
B) Large or wide
C) Tiny
D) None of the above.

120. A structure that allows a manager to communicate quickly with the

employees under them and control them more
A) Large or wide span of control
B) Small or narrow span of control
CHAPTER 4: SOURCES OF BUSINESS FINANCE.
121. Which of the following members of the finance function would be
responsible for deciding how much credit should be given to customers?
A) The financial manager
B) The financial accountant
C) The management accountant.

122. Under the lease agreement, the lessee gets the right to
A) Share profits earned by the lessor
B) Participate in the management of the organisation
C) Use the asset for a specified period
D) Sell the assets

123. Under the factoring arrangement, the factor

A) Produces and distributes the goods or services
B) Makes the payment on behalf of the client
C) Collects the client's debt or account receivables
D) Transfer the goods from one place to another

124. Internal sources of capital are those that are

A) Generated through outsiders such as suppliers
B) Generated through loans from commercial banks
C) Generated through issue of shares
D) Generated within the business

125. Government grants are generally offered to businesses in:

A) Prosperous areas
B) Economically deprived areas
C) Areas with high employment
D) Cold areas

126. Banks require collateral as security for their loans.

A) True
B) False
127. Share capital is
A) money given to a company by shareholders in return for a stake in the
business
B) Business borrowing capital from a financial institution
C) Capital shared amongst owners
D) Capital shared with shareholders

128. An 'Overdraft' is where a business is permitted to overspend on its bank

account up to an agreed limit.   
A) True
B) False
 
129. A 'Debenture' is?
A) A long term loan
B) A short term loan
C) an internal source of finance

130. External sources of finance do not include;

A) Leasing
B) Debentures
C) Bank loan
D) Retained earnings

131. Which of the following is the most feasible advantage of using

internal funds to purchase a new office building?
A) Limited impact on the firm's working capital
B) Lower level of gearing
C) Dilution of ownership
D) Increased value of fixed assets

132. Businesses might choose to use external sources of finance because

A) There are no interest charges
B) Potential cash flow problems are avoided
C) There is insufficient retained profit
D) There is an expected rise in interest rates
133. Which of the following is NOT a source of external financing for a public
limited company
A) Overdraft
B) Debentures
C) Retained profits
D) Share capital

134. Advantages of funding growth through a share issue in all those listed
below EXCEPT
A) An extra source of finance
B) Less financial risks due to the spreading of risks amongst shareholders
C) Control of the company is diluted
D) It acts as a form of motivation for employees who own shares in the
company

135. Which of the following is a drawback to a business that issues

debentures
A) Lenders do not have any voting rights
B) There is dilution of control
C) There is a dilution of ownership
D) The value of liabilities increases

136. Debenture holders

A) own a part of the company in which they hold debentures
B) Are paid a return from the profits of the company
C) Receive payments from companies before any shareholders
D) Are represented as current liabilities on the company's balance sheet

137. Debentures can best be described as a form of

A) short-term loan with variable interest rates
B) Medium-term loan with variable interest rates
C) Long-term loan with a fixed interest rate
D) Long term security giving the holder part ownership of the business

138. Which of the following is the least likely source of funds for a non-profit
organization?
A) Fund-raising events
 B) Charitable donations
C) Brand recognition
D) Sponsorship deals

139. The contract used to raise finance by selling the freehold of an asset and
then renting it back immediately on a long-term basis is known as
A) Working capital
B) Sale and leaseback
C) Fixed assets
D) Trade creditors

140. Which source of finance below would best be described as loan capital?
A) Ordinary share capital
B) Equity finance
C) Debt factoring
D) Debentures

141. There must be sufficient finance to pay for the daily running of the
business. This money is known as
A) Working capital
B) Work-in-progress
C) Retained profit
D) Buffer stocks

142. Which of the following is a disadvantage of leasing capital equipment?

A) It is cheaper in the long run to buy capital equipment
B) The firm might not have sufficient funds to purchase the equipment
C) Capital equipment needs replacing if technology is changing rapidly
D) The management of cash flow is easier with regular repayments

143. Which of the following is NOT a source of short term finance:

A) Trade Credit
B) Accounts Receivable
C) Accrued Wages
D) Commercial Bills
144. Credit extended in connection with goods purchased for resale is called:
A) Bank Overdraft.
B) Mortgage Finance.
C) Commercial Bills.
D) Trade Credit.

145. Retained earnings mean expectation of profit in coming years.

A) True
B) False.
CHAPTER 5: INFORMATION SYSTEM

146. Processed data is called

A) Field
B) Information
C) Record
D) File

147. A storage device that is connected directly to a network is an example of

_____
A) network attached storage
B) storage area network
C) direct attached storage
D) RAID

148. Which of the following is an EIS?

A) External information system.
B) Extended information system.
C) Electronic information system.
D) Executive information system.

149. In terms of a system, finished products and information are examples of:
A) Feedback
B) Outputs
C) Control
D) Processing

150. Which of the following defines the scope of a system?

A) Interface.
B) Boundary
C) Process
D) Feedback mechanism.

151. Management information systems usually:

A)Serve managers interested in weekly, monthly, and yearly results, not
 day-to-day activities.
B)Help managers make decisions that are unique, rapidly changing, and
not easily specified in advance.
C)Provide managers with a generalized computing and
telecommunications capacity that can be applied to a changing array of
problems.
D)Perform and record the daily routine transactions necessary to the
conduct of business.

152. Decision support systems usually:

A)Serve managers interested in weekly, monthly, and yearly results, not
day-to-day activities.
B)Help managers make decisions that are unique, rapidly changing, and
not easily specified in advance.
C)Provide managers with a generalized computing and
telecommunications capacity that can be applied to a changing array of
problems.
D)Perform and record the daily routine transactions necessary to the
conduct of business.

153. Deciding where to locate new production facilities is an example of a

manufacturing and production information system operating at the:
A)Operational level.
B)Management level.
C)Knowledge level.
D)Strategic level.

154. Preparing short-term budgets is an example of a finance and accounting

information system operating at the:
A)Operational level.
B)Management level.
C)Knowledge level.
D)Strategic level.
 155. Information systems support an organization’s business operations,
managerial decisions making and strategic competitive advantage. Such
system is called as
A) Business process re-engineering
B) Globalization
C) Role of information system
D) Competitive advantage

156. Which of the following is an example of the system used by a company

to record sales and purchases?
A) A transaction processing system
B) A management information system
C) An office automation system
D) A decision support system

157. Which of the following costs, in regards to an information system, are

capital costs? (i)Hardware purchase costs
(ii)Routine system maintenance costs
(iii)Software purchase costs
(iv)Installation costs
A) (i), (ii) and (iii) only
B) (ii) and (iv) only
C) (ii), (iii) and (iv) only
D) (i), (iii) and (iv) only

\
CHAPTER 6: BUSINESS ETHICS

158. Which of the following would be included in the principles of Corporate

Social Responsibility? (i)Human rights
(ii)Employee welfare
(iii)Professional ethics
(iv)Support for local suppliers
A) (ii) and (iii) only
B) (i) only
C) (ii), (iii) and (iv) only
D) (i), (ii) and (iv) only

159. What is the name given to an approach to ethical decision-making which

considers the 'right' decision to be the one which results in the greatest
good to the greatest number of people in a given situation?
A) Utilitarianism
B) Deontology
C) Virtue ethics

160. Which of the following is an approach to ethics which combines a

concern for the law with an emphasis on managerial responsibility?
A) Compliance based
B) Integrity based
C) Environmental based
D) Economic based

161. Which of the following would raise ethical issues for a manufacturer of
fast-moving consumer goods?
(i)The materials used in manufacture of the goods
(ii)The quality of the goods
(iii)How the goods are advertised
(iv) How much its raw materials suppliers pay their staff
(v) How the goods are packaged
 A) (ii) and (iii) only
B) (i), (ii) and (iii) only
C) (ii), (iii) and (v) only
D) (i), (ii), (iii), (iv) and (v)
162. Of the three main sources of rules that regulate the behaviour of
businesses, the minimum level of acceptable behaviour is set by which?
A) Non-legal rules and regulations
B) Ethics
C) The law
D) Society

163. Which of the following is NOT part of a corporate code of ethics?

A) Professional ethics
B) Organisational culture
C) Organisational self-interest

164. Abner is the lead partner on the audit of DEF Inc. The client often gives
Abner corporate hospitality at major sporting events and small gifts, such
as a bottle of spirits, on his birthday. Which threat does this represent?
A) Self-interest
B) Self-review
C) Advocacy
D) Intimidation

165. XYZ carries out the audit of Delta Products Inc. Delta Products Inc is in
financial trouble and XYZ has had to qualify the audit report for the past
two years. The managing director of Delta blames the qualified audit
reports for her firm's continuing problems. She is threatening to sue XYZ
for poor work if they qualify the audit report for this year. What threat
does this represent?
A) Familiarity
B) Intimidation
C) Self-interest
D) Self-review

166. You have been asked to prepare management accounts while a

colleague is on holiday. Your supervisor tells you that the accounts should
 be printed out and left on each manager's desk. You query whether the
accounts should be put in an envelope marked 'confidential' but you are
told not to bother in order to save costs. What problem does this cause
you?
A) Confidentiality
B) Unprofessional behaviour
C) Objectivity
D) Integrity

167. All definitions of Corporate Social Responsibility recognize that:

A) Companies have a responsibility for their impact on society and
environment
B) The natural environment should be the main focus of CSR activities
C) Business ethics is a complicated issue
D) Companies must pay equal attention to business ethics and
sustainability

168. Which of the following does the term Corporate Social Responsibility
relate to?
A) Environmental practice.
B) Ethical conduct.
C) Human rights and employee relations.
D) All of the above.

169. A ________ is a problem, situation or opportunity requiring individual,

group or an organization to choose amongst several options that must be
evaluated as either right or wrong
A) Crisis
B) ethical issue
C) Fraud.

170. Thinking about negative outcomes before taking a decision is known as

A) Mirror test
B) Concentration test
C) Consequence test
171. What does the socio - economic view of social responsibility talk about?
A) Social responsibility goes beyond making profits to include protecting
and improving society's welfare
B) Encourage business
C) Financial return
D) None of the above
172.  Which of the following is a disadvantage of social responsibility?
A)Possession of resources
B)Ethical obligation
C)Public image
D)Violation of profit maximisation

173. Social responsibility hit shareholder interest in the following way. Select
the one incorrect.
A) Additional cost in order to protect environment and implement safety
laws.
B) Resources utilize on social objective which reduce funds, productivity
and profits.
C)Diversion of employee efforts in work.
D)It increases short term stock price
 CHAPTER 7: MARKETING CONCEPTS

174. Which of the following is the main function of marketing?

A) To maximise sales volume
B) To identify and anticipate customer needs
C) To persuade potential consumers to convert latent demand into
expenditure
D) To identify suitable outlets for goods and services supplied

175. Neill works as the procurement manager of JL Company, a large services

company. Information provided by Neill is most relevant to which of the
following elements of the marketing mix?
A) Physical evidence
B) Distribution (or place)
C) Price
D) Processes

176. In the context of marketing, the 'four Ps' as price, promotion, ______ and
_______Which TWO words correctly complete the above sentence?
A) Product
B) Positioning
C) Place

177. For what function in an organisation would demographic information

about social class be most relevant?
A) Human Resources
B) Marketing
C) Purchasing
178. U Ltd produces a portfolio of products and focuses its efforts and
resources on persuading customers to buy them. This is an example of
which type of 'orientation'?
A) Production
B) Sales
C) Marketing

179. Which of the following marketing mix activity is most closely associated
with newsletters, catalogues and invitations to organization-sponsored
events?
A) Pricing
B) Promotion
C) Distribution
D) Product

180. USP is defined as

A) Unique selling price
B) Unique sales preposition
C) Unique selling proposition
D) Unique strategy promotion

181. The process of setting a low initial price for attracting a large number of
buyers quickly to cover a large market share is known as
A) Going-rate pricing
B) Market penetration pricing
C) Value based pricing
D) Skimming pricing

182. Which among these is not the nature and characteristic of a service.
A) Intangibility
B) Durability
C) Variability
D) Perishability
183. Which of the following is not a characteristic of “Market Introduction
Stage” in PLC?
A) Demands has to be created
 B) Costs are low
C) Makes no money at this stage
D) Slow sales volume to start

184. Increased competition leads to price decrease, increasing public

awareness, sales volume increase significantly are the characteristics of
______________ in PLC.
A) Mature stage
B) Decline stage
C) Growth stage
D) Market introduction stage

185. ____________ outline the planned price, marketing budget, distribution

and describe the target market, planned product positioning, profit goals,
market share, sales for the first few years.
A) Product development
B) Business analysis
C) Marketing strategy
D) Test Market

186. __________ is one of the challenges presented by the Product Life Cycle
for a product.
A) Product development
B) New product development
C) Product testing
D) Poor margins

187. In “Product Life Cycle” a stage represents rapid growth of product sale
knows as
A)Market introduction phase
B)Growth phase
C)Saturation phase
D)Mature phase
188. The products enters maturity when
A) Decrease in profit
B) Increase in sale
 C) Sales stop growing and demand stabilises
D) Sales start growing

189. Costs are high, demand has to be created, customers have to prompted
to try the product, slow sales volume starts and makes no money at this
stage are the characteristics of which stage in PLC.
A) Saturation stage
B) Decline stage
C) Mature stage
D) Introduction stage

190. In which of the stages of product life cycle does the company reduces
sales promotion to take advantage of heavy consumer demand
A) Introduction
B) Growth
C) Maturity
D) Decline

191. Branding of a product

A) makes it more saleable
B) differentiates it from other products in the market
C) makes it more attractive for customer
D) none of the above

192. Pricing strategy of setting a high price when a product is introduced and
gradually reducing it is known as:
A) Price skimming
B) Penetration pricing
C) Dumping
D) Price discrimination

193. Market skimming works when

A)More number of buyers has a high current demand
B)High price reflects the image of a superior product
C)Both A & B
D)None of the above
 194. What is a niche market?
A) A market in which businesses sell to a large customer group with similar
needs.
B) A market in which businesses sell to a variety of customers.
C) A market in which businesses sell to a small customer group with
specific needs
D) A market in which businesses sell one product to many consumers
195. What is a mass market?
A) When a business sells different products to all consumers and markets
them in the same way.
B) When a business sells the same products to all consumers and markets
them in a different way.
C) When a business sells different products to all consumers and markets
them in a different way.
D) When a business sells the same products to all consumers and markets
them in the same way

196. Which of the following is not included in marketing?

A) Identifying wants/needs of consumers
B) Understanding competitors’ threats
C) Telling customers about products & persuading to buy
D) Developing forecasts to determine sales for the month

197. Which of the following is not a characteristic of a mass market?

A) Smaller quantity of products produced
B) Large customer base
C) High sales volume
D) Customer needs and wants are less specific

198. Chocolate flavoured ice-cream is.........

A) A product in a niche market
B) A product in both markets
C) A product in a mass market
D) Very tasty

199. A customized marketing strategy targets which of the following:

A) A market segment
 B) A mass market
C) Whole customer base
D) None of the above

200. Which of the following is not the element of marketing mix?

A) Product
B) Price
C) Quality
D) Promotion

201. Marketing mix is also referred as

A) 3Ps
B) 4Ps
C) 5Qs
D) 3S

202. Is a low price charged to persuade as many people as possible to buy the
product in its early stage or at the time of introduction of the new
product?
A) Skimming
B) Penetration pricing
C) Loot sale
D) Stock out sale.

203. is a price which gives company the highest level of profit or company
enjoy abnormal profit which restricts a lot of people to afford it?
A) Limited time offer
B) Penetration pricing
C) Limited edition.
D) Skimming

204. Price is a weapon against,

A) Traders
B) Customers
 C) Workers
D) Competitors

CHAPTER 8: HUMAN RESOURCE STRATEGIES

205. Which of the following would be classed as a 'selection' rather than a

'recruitment' activity?
A) Job description
B) Designing application forms
C) Screening application forms

206. A recruitment manager has prepared a statement of the key duties,

tasks and reporting responsibilities involved in a particular job, as the basis
for job interviewing. What name would be given to such a statement?
A) Job analysis
B) Job description
C) Job advertisement
D) Personnel specification

207. Selection tests such as IQ tests and personality tests may not be effective
in getting the right person for the job for several reasons. Which of the
following criticisms of the tests is NOT justified, however?
A) Test results can be influenced by practice and coaching rather than
genuine ability
B) Subjects are able to deliberately falsify results
C) Tests do not completely eliminate bias and subjectivity
D) Tests are generally less accurate predictors of success than interviews.

208. All of the following, except one, are areas of human resource
management that benefit from job descriptions. Which is the exception?
A) Job evaluation
B) Training needs analysis
C) Recruitment
 D) Employee flexibility

209. A financial consultancy firm has a job vacancy for a junior office assistant
at one of its offices. Which of the following would be the most suitable
external medium for the job advertisement?
A) Accountancy journal
B) National newspapers
C) Local newspapers

210. A policy of internal promotion, as opposed to external recruitment, can

have positive and negative effects. Which of the following would be
negatively affected by such a policy?
A) Innovation
B) Succession planning
C) Induction times

211. The first stage in the recruitment process is:

A) To write a job description
B) To write a person specification
C) To identify a vacancy
D) To liaise with recruitment consultants

212. Which is not an advantage of external Source of recruitment

A) New blood            
B) More competition              
C) Less expensive          
D) Less partial

213. ______________ is a selection test which judges the emotional ability

which will help to judge work in group
A) Personality test            
B) Intelligence Test                
C) Mental Ability Test                
D) None of the above

214. Promotion is a _____________ source of recruitment

A) Suitable
 B) Externals
C) Higher
D) Internal

215. _______________ is not an external source of recruitment

A) Local newspaper       
B) Internal advertisement              
C)Consultancy                    
D) Walk-in interview

216. Identifying the __________________ candidates and ______________

them to apply for the job is called Recruitment
A) Available, insisting        
B) Available, making       
C) Potential, Attracting       
D) Potential, insisting

217. Speed of Hiring is an advantage of ____________

A) Internal Source of Recruitment                                            
B) External Source of Recruitment

218. Which of the following statements about training would be the

foundation of an effective training policy?
A) Training is the responsibility of the HR department
B) Training is all cost and no quantifiable benefit
C) The important thing is to do lots of training
D) Training can be an effective solution to some performance problems

219. All the following, with one exception, are clear benefits of training and
development for an organisation. Which is the exception?
A) Increased organisational flexibility
B) Less need for detailed supervision
C) Enhanced employability of staff members
D) Improved succession planning
220. The HR manager of a firm has been asked to explain to the finance
director the quantifiable benefits of training programmes. Which of the
following might she hesitate to put forward?
A) Increased speed of working
B) Increased accuracy of work
C) Increased employee satisfaction
221. A job analyst’s task is to _________________.
A)advise management
B) integrate development activities
C) develop compensation plans
D) prepare job description
222. Job descriptions focus on the job, while job specifications focus on the
person
A) True
B) False

223. A measure to encourage employees to remain in the organization for a

long period of time is Known as ___________
A) Employee counseling 
B) Employee attrition
C) Employee retention
D) Employee compensation

224. Deal with organization, staffing levels, motivation, employee relations

and employee services.
A) Accounts Department
B) Administration
C) R&D
D) HR Department.

225. Which of the following is/are not objectives of human resource

management?
A) To meet the organization\s social and legal responsibilities relating to
the human resource.
B) To manage an organization\s relationship with its customers
C) To develop human resources that will respond effectively to change.
D) To obtain and develop the HR required by the organization.
226. Which of the following is not the Quality of a good job advertisement?
A) Concise
B) Attractive
C) Positive and honest
D) Disclosure of Confidential information
227. Kenco Company is looking to hire an interpreter for their international
clients. Company wishes that the post should be filled with in the company
labor pool. What advertising media company should use to fulfill this task?
A) They should publish advertising in the local news-paper
B) They should contact the job centers for this.
C. They should publish advertisement in the in-house magazine or Notice
board.
D) Use National electronic media for this task.

228. M.I.K Electric Company have a vacancy of senior manager production in

their cable department, for this job they need a person who have at least 5
years’ experience in the same post. The management was informed that it
is difficult to get the required skilled person from the local area. What
advertising media company should use from the following to fill this job?
A) Publish it in the National News-papers
B) Publish it in the Local News-papers
C) Notice board / in-house magazine.
D) Publish in weekly General Magazine

229. What method of selection is used by most companies for hiring an

employee?
A) References
B) Work Sampling
C) Interviews
D) Cognitive test

230. The ________ Defines what resources the organization needs to meet
its objectives and what source of labor (internal and external) are
available.
A) Human resource planning
B) Outsource decision
 C) Job specification
D) Person specification.

231. The role of Human resource function in recruitment and selection will be
the following. State the one incorrect?
A) Assessing needs for human resources (HR planning)
B) Maintaining records of people employed
C) Keeping in touch with trends in the labor market
D) Provide help and assistance in production and planning
 CHAPTER 9: BUSINESS OPERATIONS OF A
MANUFACTURING COMPANY
232. Operational planning is taken under which level?
A)lower level
B Top level
C) Middle level

233. OPERATIONS MANAGEMENT is concerned with the transformation of

‘inputs’ into ‘outputs’ that meet the needs of the customer.
A) False
B) True

234. Operations management include

A) Purchasing
B) Warehousing
C) Transportation
D) All of the above

235. __________ refers to the transformation of the state of input in to

output.
A) transportation.
B) alteration.
C) inspection
D) all of these

236. ___________is the management of all activities directly related to the

production of goods and services:
A) production management
B) finance control
C) employee development
D) all of these
237. ______________refers to preserving goods in a protected environment.
A) alteration
B) inspection
C) storage
D) bargaining

238. _________refers to the verification of and confirmation towards the

requirements of an entity.
A) inspection.
B) pricing.
C) alteration.
D) none of these.

239. Which of the following is not an objective of operations management?

A) customer satisfaction
B) profitability
C) timeliness
D) employee punishment

240. ___________is measure of the quantity of output per unit of input.

A) productivity
B) marketability
C) sociability
D) none of these

241. Production of a good is broken up into many separate tasks each

performed by a different person
A) Division of labour
B) Specialisation

242. workers concentrate on different tasks within a firm; not mastering all
aspects of production
A) Division of labour
B) Specialisation

243. division of labour reduces productivity

 A) False
B) True

244. Advantages of specialisation and division of labour in the production of

goods. Which is untrue?
A) The division of labour requires less training time
B) firms produce on a larger scale. i.e. economies of scale
C) big production task is manageable by spreading the work out
D) The division of labour can make jobs highly repetitive

245. Advantages of specialisation in trade. Which is untrue?

A) Countries produce goods with a high opportunity cost
B) Economic growth
C) countries can import necessary goods
D) Increased competition

246. Which one of the following is not a method of departmentalization?

A) By function
B) By competitor
C) By product
D) By geography

247. A company that has created a research and development department, a

production department, a marketing department, a sales department and
distribution department has utilized what type of departmentalization?
A) Functional
B) Customer
C) Product
D) Process

248. Which one of the following characteristics does not relate to

departmentalization?
A) It’s a way to structure an organization
B) There is more than one way to divide an organization into
departments
C) It’s a method of organization that does not work well with
public organizations
 D) Part of the advantage of departmentalization involves
developing departmental personnel expertise

249. Why is delegation an important management tool?  

A) It helps you to dump your work on someone else.
B) It allows you to get rid of the distasteful tasks & assign to someone else.
C) It is a tool to help you achieve more and develop your people at the
same time.
D) It allows you to punish the smart alecks with so much work they will
never dig out.
 CHAPTER 10: INDUSTRTIES IN PAKISTAN
250. The biggest Industry of Pakistan is ?
A)cement
B)Sugar
C)Textile
D)Paper

251. Industry is one of the factors necessary for:

A) national development
B) provincial development
C) Federal development
D) Central development
ANSWERS:
1. A
2. C
3. B
4. A
5. A
6. D
7. B
8. C
9. C
10. B
11. B
12. A
13. A
14. A
15. B
16. B
17. D
18. A
19. C
20. A3,B1,C4,D2
21. C
22. C
23. D
24. B
25. B
26. B
27. D
28. B
29. B
30. A
31. A
32. B
33. C
34. D
35. B
36. A
37. B
38. C
39. A
40. A
41. C
42. A
43. B
44. B
45. A
46. D
47. B
48. B
49. A
50. D
51. D
52. C
53. C
54. C
55. B
56. B
57. B
58. C
59. C
60. D
61. A
62. B
63. D
64. B
65. A
66. B,C
67. D
68. A
69. B
70. D
71. B
72. B
73. A
74. B
75. D
76. B
77. B
78. B
79. D
80. C
81. C
82. B
83. A
84. A
85. B
86. D
87. B
88. A
89. A
90. A
91. D
92. B
93. C
94. A
95. D
96. C
97. B
98. C
99. C
100. D
101. C
102. B
103. A
104. B
105. A
106. B
107. C
108. A
109. C
110. A
111. B
112. B
113. C
114. B
115. B
116. B
117. A
118. A
119. B
120. A
121. A
122. C
123. C
124. D
125. B
126. A
127. A
128. A
129. A
130. D
131. C
132. C
133. C
134. C
135. D
136. C
137. C
138. C
139. B
140. D
141. A
142. A
143. D
144. D
145. B
146. B
147. A
148. D
149. B
150. B
151. A
152. B
153. D
154. B
155. C
156. A
157. D
158. D
159. A
160. B
161. D
162. C
163. C
164. A
165. B
166. A
167. A
168. D
169. B
170. C
171. A
172. D
173. D
174. B
175. C
176. A,C
177. B
178. B
179. B
180. C
181. B
182. B
183. B
184. C
185. C
186. B
187. B
188. C
189. D
190. B
191. B
192. A
193. C
194. C
195. D
196. D
197. A
198. C
199. A
200. C
201. B
202. B
203. D
204. D
205. C
206. B
207. D
208. D
209. C
210. A
211. C
212. C
213. A
214. D
215. B
216. C
217. A
218. D
219. C
220. C
221. D
222. A
223. C
224. D
225. B
226. D
227. C
228. A
229. C
230. A
231. D
232. A
233. B
234. D
235. B
236. A
237. C
238. A
239. D
240. A
241. A
242. B
243. A
244. D
245. A
246. B
247. A
248. C
249. C
250. C
251. A