Below is a mixed-format assessment of 100 questions covering business concepts, accounting basics, governance, finance, stakeholders, operations, and economics.
Question types include MCQ, Fill in the blanks, Match the following, Odd man out, True/False, and Identify the wrong statement.
BUSINESS & ACCOUNTING CONCEPT TEST
Total Questions: 100
SECTION A – MCQs (1–40)
1. Which of the following is NOT a type of business organization?
A. Sole Proprietorship
B. Partnership
C. Corporation
D. Municipality
Answer: D
2. Manufacturing business primarily converts
A. Services into products
B. Raw materials into finished goods
C. Loans into capital
D. Customers into stakeholders
Answer: B
3. The main objective of a profit-making business is
A. Charity
B. Wealth maximization of owners
C. Public welfare
D. Social reform
Answer: B
4. Which stakeholder is interested mainly in job security?
A. Suppliers
B. Employees
C. Shareholders
D. Customers
Answer: B
5. A loan secured by property is called
A. Hypothecation loan
B. Mortgage loan
C. Pledge loan
D. Personal loan
Answer: B
6. When movable assets remain with borrower but are charged to lender, it is
A. Mortgage
B. Hypothecation
C. Pledge
D. Lease
Answer: B
7. When goods are physically delivered to lender as security, it is
A. Hypothecation
B. Mortgage
C. Pledge
D. Debenture
Answer: C
8. Which of the following is a service provider?
A. Automobile factory
B. Restaurant
C. Steel plant
D. Textile mill
Answer: B
9. Who is the residual claimant of profits?
A. Bondholder
B. Equity shareholder
C. Bank
D. Employee
Answer: B
10. Bondholders receive
A. Dividend
B. Interest
C. Bonus shares
D. Royalty
Answer: B
11. Dividend is paid to
A. Creditors
B. Employees
C. Equity shareholders
D. Government
Answer: C
12. Treasury stock represents
A. Shares issued to employees
B. Shares repurchased by the company
C. Shares issued to public
D. Debentures converted into shares
Answer: B
13. EBITDA stands for
A. Earnings before interest tax depreciation and amortization
B. Earnings before investment tax deduction and allocation
C. Earnings before income tax distribution and adjustment
D. Earnings before interest tax dividends and allocation
Answer: A
14. Trade receivable arises from
A. Borrowing
B. Sale of goods on credit
C. Purchase of assets
D. Investment
Answer: B
15. Note receivable is
A. Written promise to pay money
B. Inventory item
C. Cash equivalent
D. Share certificate
Answer: A
16. Which is NOT a current asset?
A. Cash
B. Inventory
C. Land
D. Trade receivable
Answer: C
17. Financial leverage arises from
A. Equity financing
B. Debt financing
C. Retained earnings
D. Inventory turnover
Answer: B
18. Indenture is associated with
A. Bond agreement
B. Lease agreement
C. Share subscription
D. Partnership deed
Answer: A
19. Collateral security means
A. Secondary security offered against loan
B. Primary asset purchased
C. Cash deposit
D. Share capital
Answer: A
20. Smart contracts operate using
A. Blockchain technology
B. Paper agreements
C. Email confirmations
D. Bank notes
Answer: A
21. Which department handles employee recruitment?
A. Production
B. Human Resource
C. Purchase
D. Logistics
Answer: B
22. The department responsible for raw material procurement
A. Sales
B. Purchase
C. Marketing
D. Finance
Answer: B
23. Raw Material + Direct Labour + Manufacturing Overhead =
A. Gross profit
B. Cost of goods manufactured
C. Net profit
D. Sales
Answer: B
24. Gross Profit =
A. Sales – Cost of goods sold
B. Sales – Operating expenses
C. Sales – Taxes
D. Sales – Interest
Answer: A
25. Inflation means
A. Fall in price level
B. Rise in general price level
C. Stability of prices
D. Currency appreciation
Answer: B
26. Deflation means
A. Increase in price level
B. Decrease in price level
C. High interest rate
D. High production
Answer: B
27. Skilled labour refers to
A. Workers requiring training or expertise
B. Workers without training
C. Volunteers
D. Managers
Answer: A
28. A fiduciary duty requires directors to
A. Maximize salary
B. Act in best interest of company
C. Work fewer hours
D. Serve government
Answer: B
29. Issued share capital means
A. Authorized shares
B. Shares offered to investors
C. Shares repurchased
D. Bonus shares
Answer: B
30. EPS measures
A. Earnings per shareholder
B. Earnings per share
C. Earnings per employee
D. Earnings per loan
Answer: B
31. Diluted EPS considers
A. Convertible securities
B. Taxes
C. Inventory
D. Fixed assets
Answer: A
32. Operating cycle refers to
A. Time between purchase of inventory and collection of cash
B. Production cycle only
C. Loan repayment cycle
D. Government fiscal year
Answer: A
33. A multilateral contract involves
A. Two parties
B. More than two parties
C. One party
D. Government only
Answer: B
34. Economies of scale arise when
A. Cost per unit increases
B. Cost per unit decreases with higher production
C. Production stops
D. Demand falls
Answer: B
35. Monopoly means
A. One seller
B. Many sellers
C. Few sellers
D. Government ownership
Answer: A
36. Monopolistic competition involves
A. One firm
B. Many firms with differentiated products
C. No competition
D. Government control
Answer: B
37. Product life cycle stage after growth
A. Introduction
B. Decline
C. Maturity
D. Development
Answer: C
38. Which financial statement shows financial position?
A. Income statement
B. Balance sheet
C. Cash flow statement
D. Statement of equity
Answer: B
39. Auditor primarily provides
A. Business strategy
B. Independent assurance
C. Sales management
D. Production planning
Answer: B
40. Accountant mainly performs
A. Recording and reporting financial data
B. Legal judgments
C. Policy making
D. Political regulation
Answer: A
SECTION B – Fill in the Blanks (41–55)
41. ________ is the owner of a sole proprietorship.
Answer: Proprietor
42. Dividend is distribution of ________ to shareholders.
Answer: Profit
43. Mortgage loan is secured against ________.
Answer: Immovable property
44. Raw material + WIP + Finished goods are called ________.
Answer: Inventory
45. ________ is a short-term highly liquid investment.
Answer: Cash equivalent
46. The person responsible for managing risk is called ________.
Answer: Risk owner
47. ________ represents company’s mission translated into measurable targets.
Answer: Objectives
48. Shares repurchased by company are called ________.
Answer: Treasury stock
49. ________ accounting standards are used in the United States.
Answer: US GAAP
50. ________ is an international accounting standard system.
Answer: IFRS
51. Difference between revenue and COGS is ________.
Answer: Gross profit
52. Cash dividend is paid in ________.
Answer: Cash
53. Stock dividend is paid in ________.
Answer: Shares
54. Anti-social activity in business includes ________.
Answer: Fraud / corruption
55. Written promise to repay money is ________.
Answer: Promissory note
SECTION C – Match the Following (56–65)
Column A Column B
56. Purchase Department A. Recruitment
57. HR Department B. Raw material procurement
58. Finance Department C. Capital management
59. Production Department D. Manufacturing
60. Sales Department E. Customer sales
Answer:
56–B
57–A
58–C
59–D
60–E
Column A Column B
61. Mortgage A. Immovable property
62. Hypothecation B. Movable asset security
63. Pledge C. Goods delivered to lender
64. Equity shareholder D. Residual owner
65. Bondholder E. Interest income
Answer
61–A
62–B
63–C
64–D
65–E
SECTION D – True / False (66–80)
66. Service companies produce physical goods.
Answer: False
67. Equity shareholders bear highest risk.
Answer: True
68. Bondholders are owners of company.
Answer: False
69. Director has fiduciary duty toward shareholders.
Answer: True
70. Collateral security reduces lender risk.
Answer: True
71. Current assets are used within one year.
Answer: True
72. Gross profit equals sales minus operating expenses.
Answer: False
73. Inflation increases purchasing power.
Answer: False
74. Skilled labour requires training.
Answer: True
75. Financial leverage arises from debt.
Answer: True
76. Hypothecation requires possession of asset by lender.
Answer: False
77. Treasury stock increases number of outstanding shares.
Answer: False
78. Monopolistic competition has many sellers.
Answer: True
79. External economies of scale arise outside firm.
Answer: True
80. Nominee director represents interests of appointing party.
Answer: True
SECTION E – Odd Man Out (81–90)
81. Raw Material – WIP – Finished Goods – Building
Answer: Building
82. Mortgage – Hypothecation – Pledge – Dividend
Answer: Dividend
83. Cash – Inventory – Machinery – Receivable
Answer: Machinery
84. Sales – COGS – Gross Profit – Interest Income
Answer: Interest Income
85. HR – Purchase – Production – Shareholder
Answer: Shareholder
86. Inflation – Deflation – Recession – Inventory
Answer: Inventory
87. Auditor – Accountant – Director – Warehouse
Answer: Warehouse
88. Proprietor – Partner – Shareholder – Customer
Answer: Customer
89. Salary – Wages – Interest – Bonus
Answer: Interest
90. Mortgage – Loan – Indenture – Payroll
Answer: Payroll
SECTION F – Identify the Wrong Statement (91–100)
91. Equity shareholders receive fixed interest.
Answer: Wrong
92. Bondholders receive interest.
Answer: Correct
93. EBITDA includes depreciation.
Answer: Wrong
94. Current assets include inventory.
Answer: Correct
95. Treasury stock increases equity ownership.
Answer: Wrong
96. Smart contracts use blockchain technology.
Answer: Correct
97. Director must act in best interest of company.
Answer: Correct
98. Mortgage applies to movable property only.
Answer: Wrong
99. Gross profit equals sales minus cost of goods sold.
Answer: Correct
100. Operating cycle measures inventory purchase to cash collection period.
Answer: Correct
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