Question Bank 1

CHAPTER – 1
BUSINESS, TRADE & COMMERCE
Q.1. Multiple Choice Questions:
1. Which of the following does not characterize business activity?
(a) Production of goods and services (b) Presence of risk
(c) Sale or exchange of goods and services (d) Salary or wages

2. Which of the broad categories of industries covers oil refinery and sugar mills?
(a) Primary (b) Secondary
(c) tertiary (d) None of them

3. Which of the following cannot be classified as an auxiliary to trade?

(a) Mining (b) Insurance
(c) Warehousing (d) Transport

4. The occupation in which people work for others and get remunerated in return is known as:
(a) Business (b) Employment
(c) Profession (d) None of them

5. The industries which provide support services to other industries are known as:
(a) Primary industries (b) Secondary industries
(c) Commercial industries (d) Tertiary industries

6. Which of the following cannot be classified as an objective of business?

(a) Investment (b) Productivity
(c) Innovation (d) Profit earning

7. Business risk is not likely to arise due to:

(a) Changes in government policy (b) Good management
(c) Employee dishonesty (d) Profit earning

8. In 18th century, what was the main reason of slow down of Indian Foreign trade?
(a) Political Revolution (b) Industrial Revolution
(c) Green Revolution (d) All of these

9. Financial intermediaries facilitate channel of funds between:

(a) Lenders and Borrowers (b) Public and Government
(c) Buyers and Sellers (d) None of the above

10. Which one is the important mode of transport in India from economic point of view?
(a) Rail Transport (b) Road Transport
(c) Water Transport (d) Air Transport

11. Which city is known as Information Technology (IT) Hub of India?

(a) Gurugram (b) Pune
(c) Mumbai (d) Bengaluru

12. Who entered first in India for the purpose of trade during medieval period?
 Question Bank 2

(a) Portuguese (b) British

(c) Dutch (d) French

13. Which of the following merchant corporation(s) was/were arrive in India in 17th century?
(a) British East India Company (b) Dutch East India Company
(c) French East India Company (d) All of the above

14. Which one is not a part of unorganized sector of financial intermediaries?

(a) Indigenous Bank (b) Commercial Banks
(c) Pawn Brokers (d) Landlords

15. In second five year plan, Indian government allowed imports of capital goods for:
(a) Transport development (b) Industrial development
(c) Agricultural development (d) Financial development

16. Which of the following was/were the important trading centre(s) of India during British
period ?
(a) Madras (b) Calcutta
(c) Bombay (d) All of these

17. Which is the longest national waterway of India?

(a) Allahabad-Haldia (b) Sadiya-Dhubri
(c) Kollam-Kozhikode (d) Talcher-Dharma

18. Which of the following is/are the main reason(s) of decline in indigenous banking in India
after Independence?
(a) Nationalisation of banks (b) Denationalisation of banks
(c) Emergence of modern commercial banks (d) Both (a) and (c)

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

(a) Production of goods and services (b) Presence of risk
(c) Sale or exchange of goods and services (d) Salary or wages

20. Which of the broad categories of industries covers oil refinery and sugar mills?
(a) Primary (b) Secondary
(c) Tertiary (d) None of these

21. Which of the following cannot be classified as an auxiliary to trade?

(a) Mining (b) Insurance
(c) Warehousing (d) Transport

22. The occupation in which people work for others and get remunerated in return is known as:
(a) Business (b) Employment
(c) Profession (d) None of these

23. The industries which provide support services to other industries are known as:
(a) Primary industries (b) Secondary industries
(c) Tertiary industries (d) Commercial industries

24. Which of the following cannot be classified as an objective of business?

 Question Bank 3

(a) Investment (b) Productivity

(c) Innovation (d) Profit earning

25. Business risk is not likely to arise due to :

(a) Changes in government policy (b) Good management
(c) Employee dishonesty (d) Power failure

26. The uncertainty of rewards and a possibility of loss are known as:
(a) Risks (b) Rewards
(c) Profits (d) None of these

27. An economic activity which is concerned with the purchase or production and sale of goods
or provision of services with a view to earn income in the form of profits by satisfying the
needs of the people is known as :
(a) Business (b) Profession
(c) Employment (d) Charity

28. Employment refers to the occupation in which people work for others in accordance with the
service agreement and gets remuneration in the form of :
(a) Profits (b) Goodwill in society
(c) Wages/salaries (d) None of these

29. A business has two sets of objectives, one is social and another is economic objective. Which
of the following is not an economic objective of a business ?
(a) Productivity (b) Manager's development
(c) Market standing (d) Employee welfare

30. A business earning profits is able to honour its _____ on time. This increases the credit
worthiness of the business and builds up its reputation:
(a) Liabilities (b) Assets
(c) Banks (d) Sales

31. Primary objective of a business is earning profits. Activities like black marketing,
adulteration, etc. increases the profits of a business but must be avoided because:
(a) Such activities are against the economic objectives of business
(b) Such activities are against the interests of the owners of business
(c) Such activities are against the best interests of society
(d) None of the above

32. Industries can be classified into primary, secondary and:

(a) Banking (b) Tertiary
(c) Export (d) None of these

33. Industries that are concerned with extracting various products from natural resources are
known as:
(a) Extractive industry (b) Secondary industry
(c) Tertiary industry (d) Processing industry

34. Buying and selling of goods is known as:

 Question Bank 4

(a) Manufacturing (b) Trade

(c) Service (d) None of these

35. Buying of goods from a foreign nation for further selling them to a third nation is known as:
(a) Import (b) Export
(c) Trade (d) Entrepot

36. Providing loans and money transfer services to primary and secondary industries belongs to
which type of services?
(a) Transportation services (b) Banking and financing services
(c) Advertising services (d) None of these

37. Primary industry engaged in the activity of breeding and reproducing plants and animals is
known as :
(a) Extractive industry (b) Processing industry
(c) Genetic industry (d) Analytical industry

38. Various programmes are conducted to motivate managers in order to improve their :
(a) Personality (b) Productivity
(c) Personal satisfaction (d) None of these

39. Which of the following refers to the conveyance of raw material, semi-finished goods and
passengers from one place to another?
(a) Import (b) Communication
(c) Export (d) Transportation

40. One single transaction does not constitute business. Business deals in manufacturing or
trading goods and provision of services on:
(a) Occasional basis (b) Regular basis
(c) Periodical basis (d) None of these

41. An industry which is engaged in the building and restoring structures like : roads, bridges,
apartments, dams, etc. is known as :
(a) Primary industry (b) Tertiary industry
(c) Secondary industry (d) Construction industry

42. Finance is an asset for a business but sometimes it may cause risks to it as well. Which of the
following institutions help in removing financial hindrances for a business?
(a) SEBI (b) Amritsar Transport Company
(c) Banks (d) None of these

Q.2. State with reason whether the following statements are ‘True’ or ‘False’:
1. Transportation removes this hindrance of time.
2. Economic Objectives deals with fulfilling obligations towards the society.
3. Business risk increases with the size of business.
4. Business risk due to natural causes can be controlled.
5. Employment involves greater risk than business.
6. Advertising helps in removing the hindrance of information.

Q.3. Fill in the blanks Appropriate words :

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1. _______ activities are undertaken to earn a living.

2. _______ requires special knowledge and skills in the occupation to ear fees.
3. Occupation in which people work for others and get salary or wages in return is termed as _______.
4. _______ are the activities undertaken to satisfy social and psychological needs.
5. _______ includes activities which are connected with production, purchase and sale of goods with
the aim of earning profit.

ANSWERS
Ans.1.
1. (d) 2. (b) 3. (a) 4. (b) 5. (d) 6. (a) 7. (b) 8. (b)
9. (a) 10. (b) 11. (d) 12. (a) 13. (d) 14. (b) 15. (b) 16. (d)
17. (a) 18. (d) 19. (d) 20. (b) 21. (a) 22. (b) 23. (c) 24. (a)
25. (b) 26. (a) 27. (a) 28. (c) 29. (d) 30. (a) 31. (c) 32. (b)
33. (a) 34. (b) 35. (d) 36. (b) 37. (c) 38. (b) 39. (d) 40. (b)
41. (d) 42. (c)

Ans.2. 1. False : Warehousing removes this hindrance of time.

2. False : Social objective deals with fulfilling obligations towards the society.
3. True : A large scale business has a higher risk as compared to small scale business.
4. False : Natural causes are beyond the control of human beings.
5. False : Business involves high degree of risk as profits are uncertain and irregular. On the other
hand, employment does not involve risk as employee gets fixed and regular pay.
6. True : Advertising involves all those activities which are concerned with providing information
about the product to the consumers.

Ans.3. 1. Economics
2. Profession
3. Employment
4. Non – Economics
5. Business
 Question Bank 6

CHAPTER – 2
FORMS OF BUSINESS ORGANISATIONS
Q.1. Multiple Choice Questions :
1. The structure in which there is separation of ownership and management is called :
(a) Sole proprietorship (b) Partnership
(c) Company (d) All business organisations

2. The Karta in Joint Hindu family business has :

(a) Limited liability (b) Unlimited liability
(c) No liability for debts (d) Joint liability

3. In a cooperative society, the principle followed is :

(a) One share one vote (b) One man one vote
(c) No vote (d) Multiple votes

4. The board of directors of a joint stock company is elected by :

(a) General public (b) Government bodies
(c) Shareholders (d) Employees

5. Profits do not have to be shared. This statement refers to :

(a) Partnership (b) Joint Hindu Family Business
(c) Sole Proprietorship (d) Company

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

7. The head of the Joint Hindu Family business is called :

(a) Proprietor (b) Director
(c) Karta (d) Manager

8. Provision of residential accommodation to the members at reasonable rates is the objective

of:
(a) Producers’ Cooperative (b) Consumers’ Cooperative
(c) Housing Cooperative (d) Credit Cooperative

9. A partner whose association with the firm is unknown to the general public is called :
(a) Active Partner (b) Sleeping Partner
(c) Nominal Partner (d) Secret Partner

10. Minimum number of members to form a private company is :

(a) 2 (b) 3
(c) 5 (d) 7

11. Minimum number of members to form a public company is :

(a) 5 (b) 7
(c) 12 (d) 21
12. Application for approval of name of a company is to be made to :
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(a) SEBI
(b) Registrar of Companies
(c) Government of India
(d) Government of the State in which Company is to be registered

13. A proposed name of Company is considered undesirable if :

(a) It is identical with the name
(b) It resembles closely with the name of an existing company
(c) It is an emblem of Government, United Nations etc.
(d) In case of any of the above

14. A prospectus is issued by :

(a) A private company
(b) A public company seeking investment from public
(c) A public enterprise
(d) A public company

15. Stages in the formation of a public company are in the following order :
(a) Promotion, Incorporation, Capital Subscription
(b) Incorporation, Capital Subscription, Promotion
(c) Promotion, Incorporation, Capital Subscription
(d) Capital Subscription, Promotion, Incorporation

16. Preliminary Contracts are signed :

(a) Before the incorporation
(b) After incorporation but before capital subscription
(c) After incorporation but before commencement of business
(d) After commencement of business

17. Preliminary Contracts are :

(a) Binding on the Company
(b) Binding on the Company, if ratified after incorporation
(c) Binding on the Company, after incorporation
(d) Not binding on the Company

Q.2. True and False Answer Questions :

1. It is necessary to get every company incorporated, whether private or public.
2. Statement in lieu of prospectus can be filed by a public company going for a public issue.
3. A company can commence business after incorporation.
4. Experts who help promoters in the promotion of a company are also called promoters.
5. A company can ratify preliminary contracts after incorporation.
6. If a company is registered on the basis of fictitious names, its incorporation is invalid.
7. ‘Articles of Association’ is the main document of a company.
8. Every company must file Articles of Association.
9. If a company suffers heavy issues and its assets are not enough to pay off its liabilities, the balance
can be recovered from the private assets of its members.
10. A minor cannot become a member of the Hindu Undivided Family Business.
11. Registration is compulsory in case of Cooperative Society.
 Question Bank 8

12. The liability of all the partners in a partnership firm is limited to the extent of their share.
13. The ownership and management is in two different hands in case of a Joint Stock Company.
14. In case of ‘Limited Partnership’, all the partners have limited liability.

Q.3. Fill in the blanks with appropriate words :

1. _______ Cooperative Society is formed by consumers for obtaining good quality products at
reasonable prices.
2. _______ Cooperative Society is formed by small independent producers to sell their output
through one centralized agency.
3. Cooperative Society formed by small producers to procure inputs for production of goods to face
competition from large-scale producers is known as _______.
4. The cooperative society formed by farmers to jointly take up farming activities to gain benefits
of large-scale farming and higher productivity is termed as _______.
5. _______ is formed by people who want to procure residential accommodation at lower costs.
6. _______ Cooperative Society is formed to provide short-term financial assistance to the members.

ANSWERS
Ans.1.
1. (c) 2. (b) 3. (b) 4. (c) 5. (c) 6. (d) 7. (c) 8. (c) 9. (d)
10. (a) 11. (b) 12. (b) 13. (d) 14. (b) 15. (c) 16. (a) 17. (d)

Ans.2. 1. True : Both private as well as public company are required to get incorporated.
2. True : A statement in lieu of prospectus is prepared when public company is confident of raising
funds from private sources.
3. False : A private company can immediately commence its business after obtaining Certificate of
Incorporation. However, public company has to raise funds from public. So, public company has to
undergo one more stage of capital subscription.
4. False : Experts do not become promoters just because they are assisting the promoters in the
promotion of a company.
5. False : Preliminary contracts are not legally binding on the company and company cannot ratify
these contracts even after its incorporation as company was not in existence at the time of contract.
6. False : The Certificate of Incorporation once issued, is a conclusive evidence of the existence of
the company even if there were deficiencies in the formalities.
7. False : Memorandum of Association (MOA) is the main document of the company and Articles of
Association is subsidiary to the MOA.
8. False : It is not compulsory for every company to file Articles of Association. The Company may
also adopt Table, F, G, H, I or J of the Companies Act (as per the nature of company). For example,
Company Limited by Shares may adopt Table F of the Companies Act.
9. False : The shareholders (members) of a company are liable to the extent of the amount unpaid on
the shares held by them. Only the assets of the company can be used to settle the debts.
10. False : A minor can also be a member of the Hindu Undivided Family Business as inclusion of an
individual into the business occurs due to birth in the Family.
 Question Bank 9

11. True : Registration of a cooperative society is compulsory. After registration, a cooperative society
becomes a legal entity distinct from its members.
12. False : The partners of a firm have unlimited liability, i.e. their personal assets may be used to pay
off debts of the business in case of insufficiency of business assets.
13. True : Shareholders are the owners, but the company is managed by its Board of Directors, which
appoints the top management officials for running the business.
14. False : Limited Partnership is one in which liability o at least one partner is unlimited, whereas, rest
of the partners may have limited liability.

Ans.3. 1. Consumers
2. Marketing
3. Producers Cooperative Society
4. Farmers Cooperative Society
5. Cooperative Housing Society
6. Credit
 Question Bank 10

CHAPTER – 3
PRIVATE, PUBLIC AND GLOBAL ENTERPRISES
Q.1. Multiple Choice Questions :
1. A government company is any company in which the paid up capital held by the government
is not less than :
(a) 49 per cent (b) 51 per cent
(c) 50 per cent (d) 25 per cent

2. Centralised control in MNC's implies control exercised by :

(a) Branches (b) Subsidiaries
(c) Headquarters (d) Parliament

3. PSE's are organisations owned by :

(a) Joint Hindu family (b) Government
(c) Foreign Companies (d) Private entrepreneurs

4. Reconstruction of sick public sector units is taken up by :

(a) MOFA (b) MOU
(c) BIFR (d) NRF

5. Disinvestments of PSE's implies :

(a) Sale of equity shares to private sector/public (b) Closing down
(c) Investing in new areas (d) Buying shares of PSE's

6. The equity-based joint venture does not include :

(a) Cooperative Development (b) Company
(c) Partnership (d) Limited Liability Partnership

7. A government company is registered and governed by the provisions of the :

(a) The Public Sector Undertakings Act, 1981 (b) Reserve Bank of India Act, 1934
(c) Companies Act, 2013 (d) New Industrial Policy, 1994

8. The control of Central Government on departmental undertakings is very effective. This

control on departmental undertakings is subject to :
(a) Government control (b) IAS officers control
(c) Parliamentary control (d) Control by CAG

9. _____ are formed by a special Act of parliament. They are independently financed :
(a) Government companies (b) Statutory corporations
(c) Departmental undertaking (d) Public Company

10. Match the following with the correct option :

I. Departmental undertakings (i) Control of individuals
II. Statutory corporations (ii) Independent control
III. Government company (iii) Indirect parliamentary control
IV. Private sector companies (iv) Government control
 Question Bank 11

Codes
I II III IV
(a) (i) (iii) (iv) (ii)
(b) (ii) (i) (iv) (iii)
(c) (ii) (iii) (iv) (i)
(d) (iii) (ii) (iv) (i)

11. Navratan Ltd. is a company engaged in the production and distribution of heavy electrical
goods. Pattern of shareholding in the company is as follows :
(i) Government of India – 15% (ii) Government of Bihar – 26%
(iii) Government of Assam – 10% (iv) General Public – 49%
Navratan Ltd. can be classified as which of the following ?
(a) Small company (b) Government company
(c) Private company (d) None of the above

12. MNCs may collaborate with companies in the public and private sector. These foreign
collaborations have given rise to the growth of :
(a) Capital markets (b) Perfect competition
(c) Monopolies (d) Oligopolies

13. Joint venture is not a new concept in India. Which of the following is a popular example of a
joint venture in the Indian context ?
(a) Hero Honda (b) Voltas
(c) Reliance Jio (d) Bharat Sanchar Nigam Ltd.

14. All joint ventures are required government approval if a foreign partner or a NRI is involved.
However, if the joint venture is not covered under automatic route, the approval of _____ is
required :
(a) Foreign Investment Promotion Board (b) Securities and Exchange Board of India
(c) Reserve Bank of India (d) Ministry of Finance and Commerce

15. Many Indian companies have gone global and now can be classified as a MNC. Which of the
following MNC is not Indian ?
(a) Hindustan Unilever (b) Asian Paints
(c) Piramal Health care (d) Infosys

16. MNCs have huge capital resources, which is used by them in research, development and
innovation. But, it is usually seen that host countries do not gain much from this research.
This is due to :
(a) lack of capital at host countries
(b) Restrictive clauses imposed by home country
(c) Centralised control
(d) None of the above

17. Which of the following statements is not true ?

(a) Multinational corporations have huge capital resources.
(b) Multinational corporations use aggressive marketing techniques.
(c) Indian companies have failed to become MNCs.
(d) PPP model is a huge success in India.
 Question Bank 12

18. Departmental undertakings are financed by :

(a) Equtiy (b) Debentures
(c) Preference shares (d) Government treasury

19. Shares of a government company are held by government in the name of :

(a) Ministry concerned (b) Minister concerned
(c) Prime Minister of India (d) President of India

20. Joint venture is a partnership between two firms which is _____ in nature :
(a) Permanent (b) Medium-term
(c) Temporary (d) None of these

21. BMW and Toyota collaborate to pursue research on hydrogenfuel cells, vehicle electrification
and ultra lightweight materials. This is an example of :
(a) Partnership (b) Public private partnership
(c) Joint venture (d) Cooperative society

Q.2. State with reason whether the following statements are 'True' or 'False' :
1. Government Company is completely owned, managed and controlled by a government ministry.
2. India Post is an example of Statutory Corporation.
3. Departmental Undertaking is answerable to Parliament.
4. Government Company is established under a special Act of the Parliament.

ANSWERS
Ans.1.

1. (b) 2. (c) 3. (b) 4. (c) 5. (a) 6. (a) 7. (c) 8. (c) 9. (b) 10. (d)
11. (b) 12. (c) 13. (a) 14. (a) 15. (a) 16. (b) 17. (c) 18. (d) 19. (d) 20. (c)
21. (c)

Ans.2. 1. False : Government Company managed by a board of directors nominated by the government.
2. False : It is an example of Departmental Undertaking.
3. True : All the departmental undertakings are accountable to parliament for their performances.
4. False : Statutory Corporation is established under a special Act of the Parliament.
 Question Bank 13

CHAPTER – 4
BUSINESS SERVICES
Q.1. Multiple Choice Questions :
1. DTH services are provided by :
(a) Transport companies (b) Banks
(c) Cellular companies (d) None of the above

2. Which of the following is not a function of insurance ?

(a) Risk sharing (b) Assist in capital formation
(c) Lending of funds (d) None of the above

3. Which of the following is not applicable in life insurance contract ?

(a) Conditional contract (b) Unilateral contract
(c) Indemnity contract (d) None of the above

4. The benefits of public warehousing includes_______ :

(a) Control (b) Flexibility
(c) Dealer relationship (d) None of these

5. CWC stands for _______ :

(a) Central Water Commission (b) Central Warehousing Commission
(c) Central Warehousing Corporation (d) Central Water Corporation

6. There are services which are experienced differently by different customers. These kind of
services depend upon customers preferences and demands, and are known as :
(a) Personal services (b) Social services
(c) Business services (d) Financial services

7. The amount deposited in a savings bank account of a person is an asset for the depositor,
while on the other hand it is a liability for the bank. Based on its nature it can be classified as
a:
(a) Time liability (b) Demand liability
(c) Long-term liability (d) None of these

8. Customers are required to deposit a specified sum of money every month in his account in
case of _____, which is also known as cumulative time deposit account :
(a) Savings account (b) Current account
(c) Recurring deposit account (d) Joint account

9. ______ is a temporary arrangement under which a depositor is allowed to draw by cheque

more than the amount to his credit upto a specified limit :
(a) Cash credit (b) Term loan
(c) Bank overdraft (d) Consumer credit
 Question Bank 14

10. A countrywide system through which person can electronically transfer from one bank
branch to another person having an account with the other bank branch in the country is
known as :
(a) Pay order (b) RTGS
(c) Bank draft (d) NEFT

11. State which of the following statements is false :

(a) Recurring deposit account is a time deposit account.
(b) Number of transactions every month is limited in savings bank account.
(c) A current account can be opened with an initial deposit of ` 5,000.
(d) Fixed deposit account is demand deposit account.

12. When the loss is the result of two or more causes, which of the following terms refers to the
direct cause of which the loss is the natural consequence ?
(a) Subrogation (b) Proximate
(c) Mitigation (d) Indemnity

13. When a property is insured by more than one insurance (i.e. in case of multiple insurance),
the insurers are to share losses in what proportion ?
(a) Ratio of premiums received (b) Ratio of duration of insurance
(c) Ratio of amount insured (d) Equal ratio

14. A contract by which the insurer, in consideration of a certain amount known as premium,
undertakes to pay to a person or his heirs a certain amount of money on his death or on
attaining a certain age is known as :
(a) General insurance (b) Life insurance
(c) Special insurance (d) Burglary insurance

15. If the cargo does not reach its destination due to damage or destruction in the transit, the
shipping company is not paid freight charges. To overcome losses suffered by such
circumstances shipping companies opt for :
(a) Ship insurance (b) Hull insurance
(c) Cargo insurance (d) Freight insurance

16. The policy designed to provide relief to the family of insured women, in case of their death or
disablement due to all kinds of accident / disablement / death arising out of problems
incidental to women only, is :
(a) Rajeshwari Mahila Kalyan Bima Yojana (b) Women's health Insurance
(c) Rajshree Mahila Kalyan Bima Yojana (d) None of the above

17. As per the basic principle of the fire insurance policy, it is the primary duty of the insured to
take reasonable steps to prevent fire from occurring and to minimize the losses or damage to
the insured property. It is the duty of the insured to behave with great prudence and not to
be careless just because he has an insurance cover. This principle is known as the principle
of:
(a) Indemnity (b) Proximate cause
(c) Subrogation (d) Mitigation
 Question Bank 15

18. A saving scheme run by post offices in India in which the invested money is doubled in eight
years and seven months is :
(a) Kisan Vikas Patra (b) National Savings Scheme
(c) National Savings Certificate (d) Fixed Maturity Investment Scheme

19. Indian postal department's international money transfer services which enables customers to
remit money to countries through a post office is in collaboration with :
(a) COX and kings financial services (b) State Bank of India
(c) Western union financial services (d) American express financial services

20. A one way and affordable communication system for transmitting information to persons
when they are on the move is known as :
(a) Cellular mobile services (b) Radio paging services
(c) Fixed line services (d) Cable services

21. Linkages and switched services aimed at providing one way entertainment services in a small
area of operations is known as :
(a) Direct to home services (b) Cable services
(c) Radio paging services (d) VSAT

22. A cheque which is deposited only to the payee's bank account is known as :
(a) Bearers cheque (b) Demand draft
(c) Crossed cheque (d) None of these

23. A electronic fund transfer system under which transfer of funds take place from one branch
of bank to another branch on real time and on gross basis is known as :
(a) NEFT (b) EFT
(c) RTGS (d) ATM

24. Postal services are offered by both the department of post and telegraph and private sector.
Postal services offered by private sector is known as :
(a) Speed post (b) Registered post
(c) Courier (d) Parcel

25. Satellite based entertainment media services provided by cellular companies over large areas,
with the help of a set top box and a small dish antenna are known as :
(a) Cable services (b) Direct to home
(c) FM radio (d) None of these

Q.2. State with reason whether the following statements are 'True' or 'False' :
1. Banks generally put certain restrictions on number of withdrawals from Current Account.
2. Principle of Indemnity is also applicable to the life insurance contract.
3. Saving Account is suitable for mobilization of savings of people.
4. There is no minimum limit under Real Time Gross Settlement (RTGS) for transfer of funds.
5. A fire insurance policy can be taken for any amount.
6. In a marine insurance contract, insurable interest must exist both at the time of making the contract
and at the time of loss.
 Question Bank 16

ANSWERS
Ans.1.
1. (d) 2. (c) 3. (c) 4. (b) 5. (c) 6. (a) 7. (b) 8. (c) 9. (c) 10. (d)
11. (d) 12. (b) 13. (c) 14. (b) 15. (d) 16. (a) 17. (d) 18. (a) 19. (c) 20. (b)
21. (b) 22. (c) 23. (c) 24. (c) 25. (b)

Ans.2. 1. False : There is no restriction on the number and amount of deposits and withdrawals.
2. False : Principle of Indemnity is not applicable to life insurance as loss arising on death of the
assumed cannot be measured in terms of money.
3. True : The main objective of savings account is to promote savings. By opening a savings account,
people can keep their surplus money safe in the banks and also earn interest on their deposits.
4. False : The minimum amount to be remitted through RTGS is ` 2 lakh.
5. False : The policy amount cannot be more than the value of subject matter.
6. False : The insurable interest must exist at the time of loss, but not necessary at the time when the
policy was taken.
 Question Bank 17

CHAPTER – 5
EMERGING MODES OF BUSINESS
Q.1. Multiple Choice Questions :
1. E-commerce does not include :
(a) A business's interactions with its suppliers
(b) A business's interactions with its customers
(c) Interactions among the various departments within the business
(d) Interactions among the geographically dispersed units of the business

2. Outsourcing :
(a) Restricts to contracting out of Information Technology Enabled Services (ITES)
(b) Restricts only to the contracting out of non-core business processes
(c) Includes contracting out of manufacturing and R&D as well as service processes — both core
and non-core, but restricts only to domestic territory
(d) Includes off-shoring

3. The payment mechanism typical to e-business :

(a) Cash on Delivery (COD) (b) Cheques
(c) Credit and Debit Cards (d) E-Cash

4. A Call Centre handles :

(a) Only in-bound voice based business
(b) Only out-bound voice based business
(c) Both voice based and non-voice based business
(d) Both customer facing and back-end business

5. It is not an application of e-business :

(a) Online bidding (b) Online procurement
(c) Online trading (d) Contract R & D

6. If compared to e-business, transaction risks in a traditional business are :

(a) Higher (b) Lower
(c) Transaction risks are same in both (d) No transaction risks at all

7. Various departments of an organization like purchase, marketing, production, HR, etc. can
interact with one another using :
(a) B2B commerce (b) B2C commerce
(c) Intra-B commerce (d) C2C commerce

8. M/s Systema Shyam is engaged in the preparation and publications of online advertisements
through banners and pop-ups, etc. Services provided by Systema Shyam are an example of :
(a) E-delivery (b) E-bidding
(c) E-promotion (d) E-procurement

9. Mr. Ramesh buys and sells shares and securities of various companies online, through a
platform provided by the Bombay stock exchange. Mr. Ramesh is engaged in which of the
following applications of e-business ?
 Question Bank 18

(a) E-procurement (b) E-trading

(c) E-bidding (d) None of these

10. Which one of the following is a factor which gives advantage to e-business over traditional
business ?
(a) Transaction risks (b) Investment requirement
(c) Ethical fallouts (d) Personal touch with customers

11. Rendering of legal, accounting, medical and other consultancy services, electronic delivery of
computer software, photographs and other multimedia services to the user's computer by
means of Information Technology Enabled Services (ITES) is known as :
(a) E-procurement (b) E-bidding
(c) E-delivery (d) E-trading

12. Which one of the four is not a key segment of outsourcing ?

(a) Contract manufacturing (b) Contract informatics
(c) Contract research (d) Contract registration

13. The term outsourcing has more popularly come to be associated with :
(a) Job-work (b) Knowledge Process Outsourcing (KPO)
(c) Business Process Outsourcing (BPO) (d) Legal process outsourcing

14. Call centre's working for various telecom companies are an example of :
(a) Business process outsourcing (b) Knowledge process outsourcing
(c) Legal process outsourcing (d) Industrial process outsourcing

15. Service providers who provide specialized service to only one or two categories of industries
such as automobile industry and FMCG are known as :
(a) Third party horizontal service providers (b) Third party vertical service providers
(c) Third party columnar service provider (d) None of the above

16. Not all resources are available in abundance in every country. The basic aim of global
outsourcing is to benefit from differences in the _____ across countries :
(a) Methods of production (b) Environmental conditions
(c) Prices of factors of production (d) None of the above

17. Job-work is an example of :

(a) Contract manufacturing (b) Contract research
(c) Contract sales (d) Contract informatics
ANSWERS
Ans.1.
1. (c) 2. (d) 3. (c) 4. (d) 5. (d) 6. (b) 7. (c) 8. (c) 9. (b) 10. (b)
11. (c) 12. (d) 13. (c) 14. (a) 15. (b) 16. (c) 17. (a)
 Question Bank 19

CHAPTER – 6
SOCIAL RESPONSIBILITIES OF BUSINESS AND BUSINESS ETHICS

Q.1. Multiple Choice Questions :

1. Social responsibility is :
(a) Some as legal responsibility (b) Broader than legal responsibility
(c) Narrower than legal responsibility (d) None of them

2. If business is to operate in a society which is full of diverse and complicated problems, it may
have :
(a) Little chance of success (b) Great chance of success
(c) Little chance of failure (d) No relation with success or failure

3. Business people have the skills to solve :

(a) All social problems (b) Some social problems
(c) No social problems (d) All economic problems

4. That an enterprise must behave as a good citizen is an example of its responsibility towards :
(a) Owners (b) Workers
(c) Consumers (d) Community

5. Environmental protection can best be done by the efforts of :

(a) Business people (b) Government
(c) Scientists (d) All the people

6. Carbon monoxide emitted by automobiles directly contributes to :

(a) Water pollution (b) Noise pollution
(c) Land pollution (d) Air pollution

7. Which of the following can explain the need for pollution control ?
(a) Cost savings (b) Reduced risk of liability
(c) Reduction of health hazards (d) All of them

8. Which of the following is capable of doing maximum good to society ?

(a) Business success (b) Laws and regulations
(c) Ethics (d) Professional management

9. Ethics is important for :

(a) Top management (b) Middle-level managers
(c) Non-managerial employees (d) All of them

10. Which of the following alone can ensure effective ethic programme in a business enterprise ?
(a) Publication of a code (b) Involvement of employees
(c) Establishment of compliance mechanisms (d) All of them

11. Corporate social responsibility is a term coined in India by :

(a) Partnership Act, 1932 (b) Companies Act, 2013
(c) SEBI (d) Environment (Protection) Act, 1986
 Question Bank 20

12. Ethical responsibility of a business includes :

(a) Behaviour of firm that is expected by the society
(b) Produce goods and services that society wants
(c) Voluntary obligations that a society assumes
(d) Paying various statutory dues

13. Responsibility of a business to prevent pollution can be categorized in which of the following
category ?
(a) Political responsibility (b) Discretionary responsibility
(c) Ethical responsibility (d) Economic responsibility

14. If a business is socially responsible towards its employees, it is able to check movement of
labour. What do you mean by labour movement ?
(a) Movement of labour from one employer to another
(b) Movement of labour from one employer to another
(c) Movement of labour from one country to another
(d) Movement of labour from villages to cities

15. Professional management education in universities and specialized management institutions

have created a separate class of professional managers who are more interested in :
(a) Profit maximization (b) Satisfying multiple interests of society
(c) Unethical business practices (d) None of the above

16. A business enterprise has a responsibility of providing fair returns to _____ on their capital
investment :
(a) Labour (b) Consumers
(c) Government (d) Investor

17. Which of the following is an act enacted for the environmental protection ?
(a) The Wildlife Protection Act, 1972 (b) Companies Act, 2013
(c) FEMA, 1999 (d) National Green Tribunal Act, 2010

18. A separate department for matters related to environment, department of environment was
created by Central Government in year :
(a) 1985 (b) 2005
(c) 1980 (d) 1990

19. Which of the following statement(s) is/are not true ?

(a) Pollution causes danger to biological diversity
(b) Controlling pollution can result in reduction of health hazards
(c) The wildlife protection act was enacted in 1992
(d) None of the above

20. Which of the following level of management is required to follow ethics in a business
enterprise ?
(a) Top level management (b) Middle level management
(c) Bottom level management (d) All of the above
 Question Bank 21

21. It is the social responsibility of every business to take steps to check pollution and to protect
the environment. Any business which takes steps in this direction gets which of the following
benefits ?
(a) Reduction of capital investment (b) Increased customer satisfaction
(c) Reduction in workforce (d) Savings in costs

22. United Nations has identified ozone depletion as one of the major problems that causes
damage to natural environment. It is caused by :
(a) Emission of carbon mono-oxide by industries and vehicles
(b) Increase of O2 in environment
(c) Dumping of chemical wastes into water bodies
(d) Dumping of toxic wastes on land

Q.2. Identify whether the following statements are true or false :

1. Profit maximization by hook or crook should be the main aim of every business.
2. Business enterprise should not pay adequate and regular dividend to shareholders as they cannot
demand it.
3. Employees will stay with business only if they are satisfied with their working conditions.
4. Expenditure on social causes is a drain on business resources.
5. Business should adopt eco-friendly production and marketing processes to ensure environmental
protection.

ANSWERS
Ans.1.
1. (b) 2. (a) 3. (b) 4. (d) 5. (d) 6. (d) 7. (d) 8. (c) 9. (d) 10. (d)
11. (b) 12. (a) 13. (b) 14. (b) 15. (b) 16. (d) 17. (a) 18. (c) 19. (c) 20. (d)
21. (d) 22. (a)

Ans.2. True : (iii), (v); False : (i), (ii) and (iv).

 Question Bank 22

CHAPTER – 7
SOURCES OF BUSINESS FINANCE

Q.1. Multiple Choice Questions :

1. Equity share holders are called :
(a) Owners of the company (b) Partners of the company
(c) Executives of the company (d) Guardian of the company

2. The term 'redeemable' is used for :

(a) Preference shares (b) Commercial paper
(c) Equity shares (d) Public deposits

3. Funds required for purchasing current assets is an example of :

(a) Fixed capital requirement (b) Ploughing back of profits
(c) Working capital requirement (d) Lease financing

4. ADRs are issued in :

(a) Canada (b) China
(c) India (d) USA

5. Public deposits are the deposits that are raised directly from :
(a) The public (b) The directors
(c) The auditors (d) The owners

6. Under the lease agreement, the lessee gets the right to :

(a) Share profits earned by the lessor
(b) Participate in the management of the organization
(c) Use the asset for a specified period
(d) Sell the assets

7. Debentures represent :
(a) Fixed capital of the company (b) Permanent capital of the company
(c) Fluctuating capital of the company (d) Loan capital of the company

8. 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

9. The maturity period of a commercial paper usually ranges from :

(a) 20 to 40 days (b) 60 to 90 days
(c) 120 to 365 days (d) 90 to 365 days

10. Internal sources of capital are those that are :

(a) Generated through outsiders such as suppliers
(b) Generated through loan from commercial banks
(c) Generated through issue of share
(d) Generated within the business
 Question Bank 23

11. The amount required for purchasing building, plant and machinery is known as :
(a) Working capital (b) Authorised capital
(c) Fixed capital (d) Permanent capital

12. Every business requires funds to face the economic cycle. Economic cycle refers to the time
period between :
(a) Buying raw material and making sales
(b) Growth and recession
(c) Borrowing money and repaying it
(d) Commencement and winding up of business

13. In order to avoid failure in non-payment, fixed capital requirements should be met through
which type of sources of finance ?
(a) Long-term sources (b) Short-term sources
(c) Medium-term sources (d) None of the above

14. Difference between total current assets and current liabilities is known as :
(a) Fixed capital (b) Long-term borrowings
(c) Working capital (d) Provisions

15. Non-payment of debts on time results in :

(a) Higher interest costs (b) Loss of goodwill
(c) Fitness and penalties (d) All of the above

16. Debentures are issued at discount and redeemed at par but do not pay any interest are known
as :
(a) Bearer debentures (b) Redeemable debentures
(c) Non-convertible debentures (d) Zero-interest debentures

17. Which of the following is an international development bank ?

(a) ICICI (b) IDBI
(c) VTI (d) Exim Bank

18. Instead of distributing entire profits to the owners in the form of dividend, some profits are
re-invested in business in order to finance the future earnings of the business. This is known
as :
(a) Ploughing back (b) Dividend
(c) Working capital (d) Dividend stripping

19. Choose the most appropriate option among the following. "Inter-corporate deposits are_____
source for financing" :
(a) Short-term (b) Risky (for lender)
(c) Costly (d) All of the above

20. One of the demerits of loan from financial institutions is that, financial institutions may put
_____ in the board of directors of the borrowing company which restricts their power :
(a) Independent directors (b) Nominee directors
(c) Experts (d) Auditors
 Question Bank 24

21. If a company wants to raise finance from capital markets, then it can issue equity shares
specially targeted for American investors by issuing :
(a) ADR (b) GDR
(c) Commercial papers (d) None of the above

Q.2. State with reasons whether the following statements are True or False :
1. Equity shareholders are to be given dividend irrespective of the fact whether the company has
earned sufficient profits or not.
2. Retained Earnings can be used by both new as well as old company.
3. Public Deposits is not suitable for new companies.
4. As per the RBI guidelines, the minimum period of Inter-Corporate Deposits is 30 days.
5. Funds needed for day-to-day operations of business is termed as fixed capital.
6. Debenture holders are paid interest only when the company earns sufficient profits.
7. Retained earnings are dependable source of finance.
8. Preference shares create a charge on the assets of the company.
9. Equity capital is a source of permanent capital for the company.

ANSWERS
Ans.1.
1. (a) 2. (a) 3. (c) 4. (d) 5. (a) 6. (c) 7. (d) 8. (c)
9. (d) 10. (d) 11. (c) 12. (b) 13. (a) 14. (c) 15. (d) 16. (d)
17. (d) 18. (a) 19. (d) 20. (b) 21. (a)

Ans.2. 1. False : There is no obligation on the company to pay dividend as it depends on the profits available
and the decision of directors and members.
2. False : Retained earnings cannot be used by a newly established company and it has to rely on
external sources of finance.
3. True : Public Deposits is not suitable for new companies because of lack of public confidence in
their sound standing.
4. False : As per the RBI guidelines, the minimum period of Inter-Corporate Deposits is 7 days.
5. False : It is termed as working capital.
6. False : Debenture holders are paid fixed rate of interest at specified intervals, irrespective of the
fact whether the company has earned sufficient profits or not.
7. True : Retained earnings are dependable source of finance as they do not depend on investors
preference and market conditions and are permanent funds.
8. False : Preference shares are issued without creating any charge on the fixed assets of the company.
9. True : Equity capital serves as permanent capital as it is to be repaid only at the time of liquidation
of a company.
 Question Bank 25

CHAPTER – 8
SMALL BUSINESS & ENTREPRENEURSHIP DEVELOPMENT

Q.1. Multiple Choice Questions :

1. Which of the following kinds of small industries provides employment to artisans ?
(a) Micro business enterprises (b) Large industries
(c) Ancillary industrial units (d) Cottage industries

2. M/s. ABS is a small enterprise engaged in the production of springs. It supplies its entire
output to tractor manufacturers. M/s. ABS can be classified as a :
(a) Ancillary industry (b) Tiny industry
(c) Secondary industry (d) Traditional industry

3. Who is at the top of hierarchy in the administrative setup for the promotion and development
of the small scale, agro and rural industries ?
(a) SIDO (b) NSIC
(c) Ministry of MSME (d) Ministry of Industrial Affairs

4. Small scale industries in India generate more _____ per unit of capital employed as compared
to large industries :
(a) Output (b) Taxes
(c) Jobs (d) Demand

5. Small scale industries are best suited for _____ as they produce goods on simple and flexible
technologies :
(a) Patented goods (b) Sophisticated goods
(c) Customised goods (d) High-tech gadgets

6. In India, it is often seen that due to lack of _____ small business have to operate at below full
capacity :
(a) Technical skills (b) Managerial skills
(c) Research and development (d) Marketing skills

7. Lack of marketing skills is the basic problem faced by small businesses. Marketing assistance
is being forwarded to small enterprises by Ministry of MSME through :
(a) KVIC (b) RSBDC
(c) SIDBI (d) NSIC

8. Government has various departments and programmes for the welfare of small businesses in
organized sector. For the development of unorganized sector, government constituted :
(a) NCEUS (b) WASME
(c) DIC's programme (d) SFURTI

9. There are many programmes for the welfare of women in India. Which of the following is a
programme to encourage women to establish entrepreneurial ventures ?
(a) WASME (b) RWED
(c) SFURTI (d) IRDP
 Question Bank 26

10. Scheme of Fund for Regeneration of Traditional Industries (SFURTI) was started in 2005.
This scheme is being implemented in collaboration with State Government by :
(a) Ministry of MSME (b) Ministry of Agri and Rural Industries
(c) NABARD (d) NSIC

11. Prime Minister Rojgar Yojana provides _____ to youth to establish their business if their
family income is less than ` 1,00,000 :
(a) Land and building (b) Soft skills
(c) Subsidised loans (d) Subsidised power

12. Government departments and institutions like Ministry of MSME, NABARD working in
India for small business. Which is a non-government organization for MSME working at
international level and is based in India ?
(a) RIICO (b) WHO
(c) WASME (d) SIDBI

13. Out of various small businesses, which type of industry produces goods and services in a
household premises using family labour ?
(a) Ancillary industries (b) Tiny industrial units
(c) Medium industries (d) Traditional industries

14. In India, industries are classified on the basis of investment in plant and machinery. Amount
of fixed capital investment in a village industry per head artisan cannot exceed is :
(a) ` 10,000 (b) ` 25,000
(c) ` 1,00,000 (d) ` 50,000

15. Out of the many government agencies and corporations working for the promotion and
welfare of small business, _____ is at the bottom of hierarchy and implements government
policies at ground level :
(a) Ministry of Agro and Rural Industries (b) District Directorate of Industries
(c) State Governments (d) District Industries Centres

16. What is the main purpose of entrepreneurship development ?

(a) To increase foreign trade (b) To increase number of entrepreneurs
(c) To increase GDP (d) To increase literacy

17. In India, the need of entrepreneurship development arises due to :

(a) Employment requirements (b) Capital formation
(c) Development backward areas (d) All of the above

18. Start-up India scheme aims to make :

(a) Young job creator (b) Young job seekers
(c) Young professionals (d) Young skills labours

19. _____ is an exclusive right granted in respect of an invention which may be product or
process that provides a new and inventive way of doing something or offers a new and
inventive technical solution to a problem :
(a) Patent (b) Procedure
(c) Copyright (d) Trade secret
 Question Bank 27

20. Trade secret is the information that :

I. Confers economic benefits
II. Is generally known to public
III. Is subject to reasonable efforts by the holder to maintain its secrecy
(a) Both I and II (b) Both II and III
(c) Both I and III (d) I, II and III

ANSWERS
Ans.1.

1. (d) 2. (a) 3. (c) 4. (c) 5. (c) 6. (d) 7. (d) 8. (a)

9. (b) 10. (b) 11. (c) 12. (c) 13. (d) 14. (d) 15. (d) 16. (b)
17. (d) 18. (a) 19. (a) 20. (c)
 Question Bank 28

CHAPTER – 9
INTERNAL TRADE

Q.1. Multiple Choice Questions :

1. Government levies taxes in order to generate funds to perform its various functions. In the
light of this statement, internal trade is liable to :
(a) Customs duty (b) Import duty
(c) GST (d) Export duty

2. Wholesalers perform various _____ functions which increases the demand of goods and
ultimately increases the profits for retailers and manufacturers :
(a) Financing (b) Marketing
(c) Distribution (d) Tax planning

3. Wholesaler not just buys goods from manufacturers but they also help manufacturer in
marketing of the product by :
(a) Storing goods in bulk quantities
(b) Making cash payment
(c) Transportation facilities
(d) Conveying retailers' feedback to manufacturer

4. Wholesalers offer various services to manufacturers. One of them is reduction of costs.

Wholesalers help manufacturer to reduce :
(a) Material costs (b) Labour costs
(c ) Manufacturing overheads (d) Storage costs

5. By purchasing in bulk from manufacturer and selling in smaller quantities to retailers,

wholesaler reduces _____ risks of retailers :
(a) Financial (b) Marketing
(c) Storage and theft (d) Production

6. Retail outlets that sell their merchandise through postal services are known as :
(a) Chain stores (b) Departmental stores
(c) Mail order houses (d) General stores

7. Retailers provide various services to the ultimate customers. One of such services is after sales
service. Retailers provide after sale services to consumers in form of :
(a) Regular availability of goods
(b) Credit facility
(c) Wide selection
(d) Rendering electronic parts services like AC service

8. There are some retailers who based on the potential of an area keeps changing their business
from one place to another, such retailers are known as :
(a) Hawkers (b) Peddlers
(c) Cheap jacks (d) None of these
 Question Bank 29

9. Under which of the following areas, departmental stores are not at an advantageous position
over smaller forms of retail businesses ?
(a) Number of customers (b) Operating costs
(c) Sales promotion (d) Scale of operations

10. Manufacturers sell goods directly through _____ and thus eliminates unnecessary middlemen
in the sale and purchase of goods :
(a) Street vendors (b) Multi brand retail stores
(c) Departmental stores (d) Chain stores

11. Who among the following can afford to spend considerable amount on promotional activities
to boost sales ?
(a) Hawkers (b) Departmental stores
(c) Periodic market traders (d) Street traders

12. _____ is a type of retail trading where business is carried on through post :
(a) Departmental store (b) Chain store
(c) Mail order house (d) Automatic vending machine

13. In order to eliminate bad debts in full, under which arrangement, goods may be sent to
customers through bank and are delivered only on making full payment ?
(a) Departmental stores (b) Peddlers
(c) Mail order houses (d) Chain stores

14. Chain stores are a network of retail stores located across the country, these stores are
operated by manufacturers. Such stores deal in :
(a) Loose groceries (b) Second hand goods
(c) Factory seconds (d) Standardised and branded goods

ANSWERS
Ans.1.
1. (c) 2. (b) 3. (d) 4. (d) 5. (c)
6. (c) 7. (d) 8. (c) 9. (b) 10. (d)
11. (b) 12. (c) 13. (c) 14. (d)
 Question Bank 30

CHAPTER – 10
INTERNATIONAL BUSINESS
Q.1. Multiple Choice Questions :
1. Which of the following documents are not required for obtaining an export license ?
(a) IEC number (b) Letter of credit
(c) Registration cum membership certificate (d) Bank account number

2. Which of the following documents is not required in connection with an import transaction?
(a) Bill of lading (b) Shipping bill
(c) Certificate of origin (d) Shipment advice

3. Which of the following do not form part of duty drawback scheme ?

(a) Refund of excise duties
(b) Refund of customs duties
(c) Refund of export duties
(d) Refund of income dock charges at the port of shipment

4. Which one of the following is not a part of export documents ?

(a) Commercial invoice (b) Certificate of origin
(c) Bill of entry (d) Mate's receipt

5. A receipt issued by the commanding officer of the ship when the cargo is loaded on the ship
is known as :
(a) Shipping receipt (b) Mate receipt
(c) Cargo receipt (d) Charter receipt

6. Which of the following document is prepared by the exporter and includes details of the cargo
in terms of the shippers name, the number of packages, the shipping bill, port of destination,
name of the vehicle carrying the cargo ?
(a) Shipping bill (b) Packaging list
(c) Mate's receipt (d) Bill of exchange

7. The document containing the guarantee of a bank to honour drafts drawn on it by an exporter
is :
(a) Letter of hypothecation (b) Letter of credit
(c) Bill of lading (d) Bill of exchange

8. International trade requires movement of goods across the boundaries of a nation. Which of
the following is the cheapest mode of transporting goods to longer distances ?
(a) Road (b) Rail
(c) Ships (d) Air

9. The basic problem faced by those engaged in international trade is 'different countries have
different currencies'. In order to resolve this issue, which currency is considered as the most
popular currency in international trade ?
(a) US Dollars (b) British Pounds
(c) Japanese Yen (d) Indian Rupees
 Question Bank 31

10. International trade has its own advantages and disadvantages. Which of the following is not
an area which puts international trade at disadvantageous position ?
(a) Language (b) Time involved
(c) Intensive use of natural resources (d) Capacity utilization

11. International trade involves huge risk of non-payment. What is demanded by exporters from
the importer to minimize the risk of non-payment ?
(a) Bill of exchange (b) Cheque
(c) Letter of credit (d) Bill of entry

12. What is required to be submitted by exporter to avail tariff concessions on goods being
imported from a particular country ?
(a) Bill of entry (b) Certificate of origin
(c) Bill of lading (d) Certificate of incorporation

13. In case of exports, the captain (mate) of the ship issues mates receipts to the _____ when the
goods are loaded on board the ship :
(a) Importer (b) Exporter
(c) Shipping company (d) Port superintendent

14. At the final stage of export, relevant documents are submitted to the bank for the purpose of
getting the payment from the bank which is called as :
(a) Negotiation of the export (b) Negotiation of the documents
(c) Negotiation of Bill (d) None of the above

15. Every importer is required to secure the sanction of foreign exchange in India. All foreign
exchange transactions are regulated by the _____ of Reserve Bank of India (RBI) :
(a) Banking department (b) Excise and customs department
(c) Exchange control department (d) Exchange management department

16. World Trade Organisation (WTO) was founded in 1994 to deal with rules, and regulations of
international trade. Which of the following is not an objective of WTO ?
(a) Raising standards of living (b) Raising income
(c) Ensuring full employment (d) Boosting growth of developed countries

17. One of the objectives of the world trade organization is to raise the standard of living and
income of the people of member nations. WTO has helped India in achieving this by :
(a) Settlement of disputes (b) Price rise
(c) Trade links (d) Boosting exports

Q.2. Very Short Questions :

1. Define international trade.
2. What is the major reason underlying trade between nations ?
3. Mention any two essential conditions for international trade ?
4. Mention any two major documents related to goods for export transactions.
5. Mention any two major documents related to payment in foreign trade.
6. Mention any two major documents related to shipment for export transaction.
7. What is meant by trade enquiry ?
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8. What is meant by carting order ?

9. Mention first two steps involved in an export transaction.
10. Which document describes the particulars of the goods that are entering the country from abroad?
11. Which document contains the details of the imported goods ?
12. How can a clearing agent help the importer ?
13. When was WTO formed ?
14. How many countries are members of WTO ?
15. Can you specify any two functions of WTO.
16. Where is the headquarters of WTO ?
17. Which bill is defined as a receipt given by the airway company to the exporter for carrying the
goods to the importer ?
18. Which receipt is given by the shipping company to the exporter for carrying the goods to the
importer ?
19. Theoretically which organ is considered as the most significant organ of the WTO.
20. Name the international organization which is concerned with solving trade problems and providing
a forum for multilateral trade negotiations.

ANSWERS
Ans.1.

1. (b) 2. (b) 3. (d) 4. (c) 5. (b) 6. (a) 7. (b) 8. (c)

9. (a) 10. (d) 11. (c) 12. (b) 13. (d) 14. (b) 15. (c) 16. (d)
17. (d)

Ans.2.
1. International trade may be defined as the interchange of goods, services, capitals, technology, etc.
internationally.
2. Specialisation i.e., efficient utilization of resources which are scarce is necessary.
3. Economic freedom and government support.
4. The two major documents related to goods for export transactions are :
(i) Export invoice (ii) Certificate of origin
5. The two major documents are :
(i) Letter of credit (ii) Bill of exchange
6. The two major documents related are :
(i) Mate's receipt (ii) Shipping bill
7. Trade enquiry is a written request by an importer to the exporter for supply of information.
8. Carting order means the instruction to the staff at the gate of the port to permit the entry of the cargo
inside the dock.
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9. The two steps involved in an export transaction are :

(i) Receipt of enquiry and sending quotations
(ii) Receipt of order
10. Bill of entry
11. Import General Manifest
12. A clearing agent takes the delivery of goods from the custom authorities and sends the goods to the
place of importer.
13. 1st January, 1995
14. 159 countries are currently the members of WTO.
15. The two main functions of WTO are :
(i) Laying down code of conduct.
(ii) Acting as forum for settling trade disputes.
16. Geneva, Switzerland
17. Airway bill
18. Bill of lading
19. The Ministerial Conference
20. WTO