raja

Students should practice CA Foundation BCK Chapter 1 MCQ with Answers Business and Commercial Knowledge: An Introduction – CA Foundation BCK MCQ Questions based on the latest syllabus.

BCK CA Foundation Chapter 1 MCQ Questions – Business and Commercial Knowledge: An Introduction

1. On the basis of activities as a domain, the list does not include:
(a) Manufacturing
(b) Trading
(c) Commerce and Services
(d) Human Resource
Answer:
(d) Human Resource

2. On the basis of functions as a BCK domain, the list includes:
(a) Production
(b) Accounting, Finance and Taxa-tion
(c) Human Resource
(d) All of the above
Answer:
(d) All of the above

3. Economic laws, philosophy, Psychology, Sociology, etc. are related with the BCK domain:
(a) Mode
(b) Scale
(c) Underlying disciplines
(d) Focus
Answer:
(c) Underlying disciplines

4. As per Oxford online dictionary, a specified sphere of knowledge is called as ________.
(a) Business and Commercial Knowledge
(b) Domain
(c) Principle
(d) All of the above
Answer:
(b) Domain

5. Business and Commercial Knowledge as a domain is :
(a) Vast
(b) Eclectic
(c) Ever-evolving and expanding
(d) All of the above
Answer:
(d) All of the above

6. In case of business, the range of activities includes manufacturing, trading, services, retail & domestic trade, door to door selling, malls, weekly haats, etc. Therefore, BCK is.
(a) Vast
(b) Eclectic
(c) Ever-evolving and expanding
(d) All of the above
Answer:
(a) Vast

7. BCK has derived from various dis-ciplines like marketing, accounting & finance, operations, human behaviour, laws, economics, ethics, etc. Therefore, BCK is.
(a) Eclectic
(b) Uni-disciplinary
(c) Bi-disciplinary
(d) None of the above.
Answer:
(a) Eclectic

8. The businesses draw their strategies to beat their competitors. BCK has adapted the term “Strategy” from which of the following original discipline?
(a) Military
(b) Biology
(c) Chemistry
(d) None of the above
Answer:
(a) Military

9. The BCK Vocabulary includes “Bulls & Bears”. These have been taken from the discipline:
(a) Military
(b) Biology
(c) Chemistry
(d) None of the above
Answer:
(b) Biology

10. The information and communication technology has introduced several terms in the lexicon of BCK e.g. 24 X 7, B2B, B2C, etc. The impact of this evolution is the decline and demise of old businesses and newer ways of doing the business. On this basis, it can be said that BCK is.
(a) Vast
(b) Multi-disciplinary
(c) Eclectic
(d) Even-evolving and expanding.
Answer:
(d) Even-evolving and expanding.

11. The Chartered Accountants are responsible for putting in place a credible system of truthful and fair accounting and reporting of the society’s resources, their deployment and utilisation. Hence, the Chartered Accountants are the ________ of a nations resources.
(a) Custodians
(b) Investigators
(c) Supervisors
(d) None of the above
Answer:
(a) Custodians

12. The BCK is important for the Chartered Accountants (CA). Which of the following Statement(s) is/are correct in this regard?
(a) The CA cannot develop notions of cost, inventory, revenue, profit is, etc. in case of FMCG business.
(b) The CA’s shall be able to conduct audit diligently only when they understand the nuances of the corresponding business.
(c) The knowledge of law is not re-quired to CA
(d) All of the above
Answer:
(b) The CA’s shall be able to conduct audit diligently only when they understand the nuances of the corresponding business.

13. According to the English Journalist Joseph Rudyard Kipling, each one of us have six honest servants. These are ________.
(a) What, why, when, how, where & who.
(b) Honesty, Integrity, diligence, loyalty, truthfulness & positive.
(c) Technology, Service, education, mental level, background & Finance.
(d) None of the above.
Answer:
(a) What, why, when, how, where & who.

14. Which of the following is not a business magazine?
(a) Business word.
(b) Business Today.
(c) India Forbes.
(d) Hindu’s Year Book.
Answer:
(d) Hindu’s Year Book.

15. Which of the following is not a business Channel?
(a) CNBC TV 18
(h) ETNow
(c) NDTV Profit
(d) SAB TV
Answer:
(d) SAB TV

16. Which of the following is not an economic objective of the firm?
(a) Sales growth
(b) Improvement in market share
(c) Profits and return on investment
(d) Conservation of natural resources
Answer:
(a) Sales growth

17. Economic, Activities are driven cause of ________?
(a) Self-Interest
(b) Self-less motive
(c) Human welfare
(d) Self satisfaction
Answer:
(a) Self-Interest

18. Which of the following statements characterizes the best non-economic activities?
(a) Non-economic activities do not require any investment of re-sources
(b) These activities do not entail any operational costs
(c) These activities are undertaken by ascetics
(d) The underlying purpose of these activities is not earning of a livelihood but social, psychological or spiritual satisfaction.
Answer:
(d) The underlying purpose of these activities is not earning of a livelihood but social, psychological or spiritual satisfaction.

19. Usually non-economic activities are driven by the reasons:
(a) Emotional
(b) Sentimental
(c) Altruism
(d) Any of the above
Answer:
(d) Any of the above

20. The economic activities are dis-tinguishable merely by the present of motive.
(a) Livelihood
(b) Emotional
(c) Altruism
(d) All of the above
Answer:
(a) Livelihood

21. Which of the following is economic activity?
(a) Social, religions & cultural
(b) Personal & recreational
(c) Charity and patriotic
(d) Self-interest & rationality of what do I get in return.
Answer:
(d) Self-interest & rationality of what do I get in return.

22. Which of the following statement is false in respect of non-economic actinides?
(a) These can never have an economic dimension.
(b) These are not for livelihood motive.
(c) These are for selfless consent (i.e. altruism)
(d) These are for charity, patriotic, social, religious, etc.
Answer:
(a) These can never have an economic dimension.

23. Which of the following is not a characteristic of Economic Activities?
(a) Income generating.
(b) Productive.
(c) Saving, investment & wealth
(d) Personal satisfaction only.
Answer:
(d) Personal satisfaction only.

24. From the broader perspective, ________ may be defined as an economic activity comprising the entire spectrum of activities pertaining to production, distribution and trading (Exchange) of goods and Services.
(a) Business
(b) Employment
(c) Profession
(d) Economy
Answer:
(a) Business

25. The extraction of edible oil from rice bran, mustard, coconut, Soyboan, etc. represents:
(a) Pure agriculture
(b) Agro-based industries.
(c) Business
(d) Retail industry.
Answer:
(b) Agro-based industries.

26. Identify the economic activity:
(a) Cooking of food by the home-maker.
(b) Playing of piano as a hobby.
(c) Employment in a charitable or-ganisation.
(d) Exercising in a park.
Answer:
(c) Employment in a charitable or-ganisation.

27. Economic activities do not include ________.
(a) Profit earning
(b) Emotional sentimental
(c) Self interest
(d) Livelihood motive
Answer:
(b) Emotional sentimental

28. Identify which are of the following is economic activity?
(a) Cooking of food by Mr. X in a restaurant.
(b) Giving private tuitions.
(c) Dabbawalla picks up the food from home & delivers it to the office.
(d) All of the above.
Answer:
(d) All of the above.

29. Usually non-economic activities are driver by the reasons:
(a) Emotional
(b) Sentimental
(c) Altruism
(d) Any of the above
Answer:
(d) Any of the above

30. Identify non-economic activity:
(a) Music Composer.
(b) Ice Cream Vendor.
(c) Cycle repair shop.
(d) Elder sibling assisting the younger one in studies.
Answer:
(d) Elder sibling assisting the younger one in studies.

31. Transfer of interest is possible in:
(a) Business
(b) Profession
(c) Employment
(d) All of the above
Answer:
(a) Business

32. Professional codes are used as the ethnical guidance in case of:
(a) Business
(b) Profession
(c) Employment
(d) All of the above
Answer:
(b) Profession

33. Letter of appointment and service agreement are the mode of establishment in case of
(a) Business
(b) Profession
(c) Employment
(d) All of the above
Answer:
(c) Employment

34. Consider the following table showing columns for the nature of economic occupation and the corresponding characterization of income. And, then, choose the right solution option from the alternatives given below the table.
(a) i-c; ii-d; iii-e; iv-a; v-b
(b) i-b; ii-c; iii-d; iv-e; v-a
(c) i-b; ii-e; iii-a; iv-d; v-c
(d) i-c; ii-d; iii-e; iv-a; v-b
Answer:
(c) i-b; ii-e; iii-a; iv-d; v-c

35. The attribute of a profession does not include.
(a) Certificate of service from government
(b) Self imposed code of conduct
(c) Rendering of specialised nature of services
(d) All of the above
Answer:
(a) Certificate of service from gov-ernment

36. The periodic compensation, in case of employment, refers to:
(a) Wages
(b) Salaries
(c) Both (a) & (b)
(d) Lump Sum amount payable on retirement.
Answer:
(c) Both (a) & (b)

37. Business as a Institution is ________.
(a) Job creator
(b) Job seeker
(c) Both
(d) None of the above
Answer:
(a) Job creator

38. The entire spectrum of market oriented activities coming under industry, trade and commerce is ________.
(a) Business
(b) Profession
(c) Employment
(d) All of the above
Answer:
(a) Business

39. Which of the following is organic objective of business?
(a) Fitness of Human Resources
(b) Community Service
(c) Effective waste handling and disposal
(d) Economic Value Added
Answer:
(a) Fitness of Human Resources

40. The source of livelihood in case of business is:
(a) Professional fee
(b) Profit
(c) Wages
(d) Salaries.
Answer:
(b) Profit

41. 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
Answer:
(b) Employment

42. Which of the following statements distinguishes business from entrepre-neurship?
(a) Entrepreneurs are the business owners too
(b) All business owners are entrepreneurs too
(c) Entrepreneurs seek out new op-portunities and pursue innovative business ideas
(d) (a) and (b)
Answer:
(c) Entrepreneurs seek out new op-portunities and pursue innovative business ideas

43. Which are of the following does not require any investment?
(a) Small business
(b) Business
(c) Profession
(d) Employment.
Answer:
(d) Employment.

44. The Logo of Institute of Chartered Accountants of India (ICAI) is suggestive of ________.
(a) Integrity
(b) Vigilance
(c) Profession
(d) None of these
Answer:
(b) Vigilance

45. The Micro, Small, Medium and Large Enterprises are defined with respect to the:
(a) Number of employees
(b) Number of Products
(c) Area Served
(d) Size of investment.
Answer:
(d) Size of investment.

46. Which of the following occupations requires rendering of services based upon specialised knowledge and membership of an accreditation and assessment body?
(a) Employment
(b) Profession
(c) Business
(d) Agriculture
Answer:
(b) Profession

47. In which of the following case, the qualifications are strictly prescribed?
(a) Business
(b) Profession
(c) Employment
(d) Trading
Answer:
(b) Profession

48. Which of the following statement is false as regards profession?
(a) It is rendering of services of a specialized nature.
(b) Prescribed qualifications.
(c) Works under a certificate of practice from an established certification.
(d) The Source of livelihood is profit.
Answer:
(d) The Source of livelihood is profit.

49. Trading implies buying for the pur-poses of selling. Applying this criterion, tell which of the following activities would not qualify as trading?
(a) Purchase of goods in bulk quantity from the manufacturer and sale in smaller quantities to the retailers.
(b) Buying from the wholesaler and selling it to the consumers.
(c) Buying from the retailer for selfconsumption.
(d) Purchase of raw materials from the suppliers for further processing in the factory.
Answer:
(c) Buying from the retailer for selfconsumption.

50. Which one of following is true, in economics and finance?
(a) Risk and uncertainty are synonymous.
(b) Risk can be calculated in advance but not uncertainty.
(c) Uncertainty can be calculated but not rise.
(d) Under uncertainties, Risk must be zero.
Answer:
(b) Risk can be calculated in advance but not uncertainty.

51. Sustainable development/businesses imply:
(a) Consistent economic performance
(b) Attention to social problems
(c) Harmony with nature
(d) All of the above
Answer:
(d) All of the above

52. ________ Suggests that business must be assessed not only in terms of their economic returns but also on the basis of their social and ecological returns.
(a) The objectives of business.
(b) The Plurality of Business.
(c) The vision of Business.
(d) The mission of Business.
Answer:
(b) The Plurality of Business.

53. The choice of an appropriate form of business organization depends upon:
(i) Ease of formation
(ii) Liability of aspects
(iii) Capital adequacy
(a) Only I
(b) Onlvm
(c) i&m
(d) I, n & m
Answer:
(d) I, n & m

54. On the basis of size and scale of the activity undertaken, business may be classified as:
(a) Micro, Small, medium & large.
(b) Public and Private.
(c) Big and Small.
(d) Small Scale and Large Scale.
Answer:
(a) Micro, Small, medium & large.

55. Business ownership is a bundle of ________.
(a) Benefits.
(b) Rights.
(c) Obligations.
(d) Advantages.
Answer:
(b) Rights.

56. The shared ownership is beneficial because.
(a) There is sharing of risks.
(b) There is sharing of Profits.
(c) There is sharing of Benefits.
(d) There is sharing of Expenses.
Answer:
(a) There is sharing of risks.

57. ________ form of business is/are appropriate for retail business.
(a) Sole proprietorship
(b) Partnership
(c) Company
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)

58. Which form of business organisation has a separate legal entity?
(a) Hindu Undivided Family (HUF)
(b) Co-operative society
(c) Partnership firm
(d) Sole proprietorship.
Answer:
(b) Co-operative society

59. Which of the following Statement is incorrect?
(a) The Business ownership accrues because a person has invested money in it.
(b) A business may be owned single or jointly.
(c) Business may be organized as a Proprietary concern or a Corpo-rate concern.
(d) Joint family business is not a business.
Answer:
(d) Joint family business is not a business.

60. In case of ________, there is a separation of ownership and management.
(a) Sole Proprietorship.
(b) Partnership.
(c) Co-ownership.
(d) Company.
Answer:
(d) Company.

61. The choice of an appropriate form of business organisation largely depends upon:
(I) Ease of formation
(II) Continuity and stability
(III) Liability aspects
Correct option is –
(a) I and II
(b) II and III
(c) I and III
(d) I, II and ID.
Answer:
(d) I, II and ID.

62. Which of the following is not a form of organisation?
(a) Partnership
(b) Company
(c) Partners
(d) Sole Proprietorship
Answer:
(c) Partners

63. The size of structure of business depend on many factors which (are):
(a) In the control of enterprises
(b) Arbitrary and random
(c) Range from internal to external factors which are beyond the control of enterprises
(d) Beyond the control of enterprises.
Answer:
(a) In the control of enterprises

64. Which of the following Statement is incorrect as regards Corporate form?
(a) Life of business is entwined with the life of owner.
(b) Business is a Separate legal per-son.
(c) The life of business in independent from the lives of its owners.
(d) The business has distinct name.
Answer:
(a) Life of business is entwined with the life of owner.

65. The choice of form of business organisation depends upon:
(a) Funds required.
(b) Nature of Product.
(c) Risk Involved.
(d) All of the above
Answer:
(d) All of the above

66. Which one of the following does not have perpetual succession?
(a) Company
(b) Statutory Corporation
(c) Sole Proprietorship
(d) Co-operative Society
Answer:
(c) Sole Proprietorship

67. Sole proprietary business is suitable when market is:
(a) Non Existent
(b) National
(c) Local
(d) Global
Answer:

68. Which are of the following is the easiest and earliest form of business as a human occupation?
(a) Sole Proprietorship
(b) Co-ownership
(c) Partnership
(d) Company
Answer:
(a) Sole Proprietorship

69. Which of the following form of enterprise are the largest in India?
(a) Sole Proprietorship.
(b) Partnership.
(c) Company.
(d) LLP
Answer:
(a) Sole Proprietorship.

70. In relation to business organization structure, which one of the following is easy to form and wind up?
(a) A company
(b) A sole proprietorship
(c) Statutory corporation
(d) Public enterprises.
Answer:
(b) A sole proprietorship

71. In which of the following form of business organisation, the entrepreneur is regarded as economic hero who organizes production, uses creativity and ingenuity in innovation, bears risks and uncertainty.
(a) Sole Proprietorship.
(b) Partnership.
(c) Company.
(d) LLP
Answer:
(a) Sole Proprietorship.

72. Which of the following statements describes the best Joint Hindu/Hindu Undivided Family (HUF) Business?
(a) It is a form of business particular to and recognized as such in India
(b) Every family business is in fact a HUF Business
(c) In HUF businesses, there is a family involvement in business
(d) Either (a) or (c)
Answer:
(d) Either (a) or (c)

73. Members of HUF are known as ________.
(a) Partners
(b) Shareholders
(c) Members
(d) Co-parceners
Answer:
(d) Co-parceners

74. Head of HUF is known as ________.
(a) Karta
(b) Co-parceners
(c) Manager
(d) Head
Answer:
(a) Karta

75. In HUF:
(a) Liability of Karta is limited
(b) No liability of Karta
(c) Liability of Karta is unlimited
(d) Liability of everyone is unlimited
Answer:
(c) Liability of Karta is unlimited

76. HUF ________ be formed by a group of people who do not constitute a family.
(a) Cannot
(b) Can
(c) Should not
(d) May
Answer:
(a) Cannot

77. As per Income Tax Act, HUF is a Separate Entity from the joint family that comprises it. Therefore, HUF cannot earn income from which of the following source?
(a) Salary.
(b) House Property.
(c) Business and Profession.
(d) Capital Gain.
Answer:
(a) Salary.

78. The definition of HUF includes:
(a) Buddhist
(b) Jain & Parsi.
(c) Sikh.
(d) All of the above.
Answer:
(d) All of the above.

79. ________ Successive generations of an undivided family are known as HUF.
(a) One
(b) Two
(c) Three
(d) Four.
Answer:
(c) Three

80. HUF can comprise members of a:
(a) Hindu & Sikh family
(b) Parsi family
(c) Buddhist family
(d) Muslim family
Answer:
(d) Muslim family

81. In a Hindu Undivided Family, liability of ________ is unlimited.
(a) Karta
(b) Co-parceners
(c) Both (a) and (b)
(d) Neither (a) and (b)
Answer:
(a) Karta

82. The Karta is Joint Hindu Family business has:
(a) Unlimited liability
(b) Joint liability
(c) Limited liability
(d) No liability for debts.
Answer:
(a) Unlimited liability

83. Who can be the head of Joint Hindu Family business?
(a) Karta
(b) Co-parcener
(c) Manager
(d) Director
Answer:
(a) Karta

84. Liability of other Co-parceners are:
(a) Limited upto the extent of share except Karta
(b) Unlimited upto the extent of share except Karta
(c) Unlimited
(d) Limited
Answer:
(a) Limited upto the extent of share except Karta

85. The liability of each member of the Hindu Undivided Family business is:
(a) Limited to a sum as declared by him in general public
(b) Unlimited
(c) Limited to the extent of his share in the business except karta.
(d) Limited to the extent of his share in the business including that of karta.
Answer:
(c) Limited to the extent of his share in the business except karta.

86. Which is not a merit of LLP?
(a) Designated partners have to do all compliance
(b) Separate Legal entity
(c) Both (a) & (b)
(d) None of the above.
Answer:
(a) Designated partners have to do all compliance

87. Income tax Act, HUF cannot card which type of ________.
(a) Profit
(b) Salary
(c) House Property
(d) Other Sources.
Answer:
(b) Salary

88. Which of the following is correct?
(a) Max. No. of members is 50 in case of private limited company.
(b) Freely transferable shares in case of private limited company.
(c) Max. No. of members-200 in case of private limited company.
(d) None of the above.
Answer:
(c) Max. No. of members-200 in case of private limited company.

89. In case of Hindu Undivided Family, the individual share of each coparcener:
(a) Depends upon his efficiency
(b) Keeps charging on the death or birth of coparcener
(c) Is fixed
(d) Keeps changing annually
Answer:
(c) Is fixed

90. Which of the following statement is correct with respect to HUF ________.
(a) HUF earns income from salary
(b) Four successive generations of an undivided family
(c) HUF enjoys a separate entity status under Income Tax Act, 1961
(d) All of the above
Answer:
(c) HUF enjoys a separate entity status under Income Tax Act, 1961

91. In case of HUF what are liabilities of Coparcener and Karta ________.
(a) Both have unlimited liability.
(b) Coparcener’s Lability is limited while Karta’s liability is unlimited.
(c) Karta’s liability is limited while Coparcener’s liability is unlimited.
(d) Both have limited liability.
Answer:
(b) Coparcener’s Lability is limited while Karta’s liability is unlimited.

92. Which of the following is part of HUF?
(a) Hindu and Sikh Family
(b) Parsi Family
(c) Both (a) and (b)
(d) None of the above
Answer:
(c) Both (a) and (b)

93. A partnership may be formed to carry on:
(a) Any trade
(b) Occupation
(c) Profession
(d) Social enterprise
Answer:
(d) Social enterprise

94. Which of the following is not a necessary feature of partnership?
(a) Sharing of Profit
(b) Sharing of losses
(c) Agency between partners
(d) Business Purpose
Answer:
(b) Sharing of losses

95. The agreement between partners must be ________.
(a) Verbal only
(b) Written only
(c) May be verbal or written
(d) In electronic form only.
Answer:
(c) May be verbal or written

96. To form a partnership, the mini-mum capital contribution should be:
(a) Rs. 1 Lakh
(b) There is no minimum limit
(c) Rs. 1 Crore
(d) Rs. 5 Lakh.
Answer:
(b) There is no minimum limit

97. ________ is a feature of partnership form of business.
(a) Separate legal entity from the firm
(b) Limited scope for raising finance
(c) The liability of a partner is limited to his contribution to capital
(d) Registration of partnership is compulsory
Answer:
(b) Limited scope for raising finance

98. There can be partnership between:
(a) Natural persons
(b) Artificial persons
(c) Partnership firms
(d) Any combination of natural and artificial persons
Answer:
(c) Partnership firms

99. The registration of partnership firm is:
(a) Compulsory
(b) Mandatory
(c) Statutorily required
(d) Optional.
Answer:
(d) Optional.

100. Which of the following is the feature of partnership?
(a) Agreement
(b) Unlimited liability
(c) Mutual Agency
(d) All of the above
Answer:
(d) All of the above

101. Which of the following is not a feature of LLP?
(a) Every partner is agent of LLP
(b) Legal entity separate from its partners
(c) Registrar of firm is the administering authority
(d) No limit on maximum No. of partners
Answer:
(c) Registrar of firm is the administering authority

102. Which is not a feature of LLP?
(a) Separate legal entity.
(b) All LLP have existence for fixed period.
(c) Partnership in an LLP is required to turn into an agreement.
(d) In an LLP, partners are not liable for the act of other partners.
Answer:
(b) All LLP have existence for fixed period.

103. ________ is the hybrid form of business organisation which contains the features of both the corporate from as well as proprietary form of business organisation.
(a) Partnership
(b) Company
(c) Sole Proprietorship
(d) Limited Liability partnership.
Answer:
(d) Limited Liability partnership.

104. ________ oversees the governance of the LLP.
(a) Ministry of Corporate Affairs
(b) State Government
(c) SEBI
(d) FEMA
Answer:
(a) Ministry of Corporate Affairs

105. Which one of the following is treated as a separate legal entity Afferent from its members?
(a) Sole proprietorship
(b) Hindu undivided family
(c) Partnership
(d) Limited liability partnership.
Answer:
(d) Limited liability partnership.

106. Which of the following is incorrect as regards LLP?
(a) Incorporation is mandatory
(b) No personal liability of partners except in case of fraud.
(c) ROC is the administrating authority
(d) The minimum number of members required is seven.
Answer:
(d) The minimum number of members required is seven.

107. What is the liability of each partner under LLP?
(a) Limited
(b) Unlimited
(c) Partially Limited
(d) None of the above
Answer:
(a) Limited

108. Which amongst the following is a feature of LLP?
(a) Separate legal entity
(b) Unlimited liability
(c) No perpetual succession
(d) Not a body corporate
Answer:
(a) Separate legal entity

109. Which corporation has both characteristics i.e. of a partnership and of a separate legal entity?
(a) Limited Liability Partnership (LLP)
(b) Company
(c) Partnership
(d) Statutory Body.
Answer:
(a) Limited Liability Partnership (LLP)

110. Limited Liability Partnership is constituted under ________.
(a) The Companies Act, 2013
(b) Limited Liability Partnership Act, 2008
(c) Partnership Act, 1932
(d) None is applicable.
Answer:
(b) Limited Liability Partnership Act, 2008

111. In case of LLP.
(a) Every partner is agent of Firm only.
(b) Every partner is agent of other partners only.
(c) Every partner is agent of both firm and other partners.
(d) Every partner is not an agent at all
Answer:
(b) Every partner is agent of other partners only.

111A. What is the maximum No. of partners in case of LLP?
(a) 02
(b) 50
(c) 07
(d) No Limit.
Answer:
(a) 02

112. LLP has:
(a) Liability of Partners
(b) In case of fraud, liability of partners becomes unlimited
(c) It was incorporated under LLP Act, 2009
(d) All of the above.
Answer:
(d) All of the above.

113. When FERA is converted into a FEMA:
(a) 1934
(b) 1928
(c) 1999
(d) 1997
Answer:
(c) 1999

114. In order to make the system of diffused ownership of joint stock companies and their management work, ________ provides an elaborate system of corporate functioning.
(a) Companies Act, 2013
(b) Competition Act, 2002
(c) SEBI Act, 1992
(d) None of the above
Answer:
(a) Companies Act, 2013

115. The Companies Act, 2013 provides registration for ________.
(a) One person company
(b) Small company
(c) Defunct company
(d) All of the above
Answer:
(d) All of the above

116. The Indian Companies Act provides for the registration of:
(a) Private Limited and Public Company
(b) One Person Company and Small Company
(c) Defunct Company
(d) All of the above
Answer:
(d) All of the above

117. CSR stands for:
(a) Cash Security Ratio
(b) Cash Supply Ratio
(c) Corporate Social Responsibility
(d) Consumer Satisfaction Ratio
Answer:
(c) Corporate Social Responsibility

118. Gas Authority of India Limited is an example of:
(a) Limited liability partnership
(b) Private limited company
(c) Public enterprise
(d) None of the above.
Answer:
(c) Public enterprise

119. The affairs of a company is over-seen by:
(a) Shareholders
(b) Employees
(c) Board of Directors
(d) Dividend Holders.
Answer:
(c) Board of Directors

120. The objectives of the Company can be traced from which of the following document?
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
(d) All of the above
Answer:
(a) Memorandum of Association

121. The company solicits Capital Contribution by the issue of ________.
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
(d) All of the above
Answer:
(c) Prospectus

122. The Indian Corporate sector is numerically dominated by ________ Companies.
(a) Public
(b) Private
(c) Government
(d) Small
Answer:
(b) Private

123. ________ has been the most recently introduced from of business organisation in India vide “The Companies Act, 2013”.
(a) One Person Company
(b) Private Company
(c) Public Company
(d) Defunct Company
Answer:
(a) One Person Company

124. As per Companies Act, 2013, ________ company be created for a future project or to hold an asset or intellectual property and has no Significant accounting transactions.
(a) Small Company
(b) Dormant Company
(c) Gestation Company
(d) Deferred Company
Answer:
(b) Dormant Company

125. Which of the following document of the company focuses on its internal regulation?
(a) Memorandum of Association
(b) Article of Association
(c) Prospectus
(d) Agreement
Answer:
(b) Article of Association

126. The minimum number of members in case of Private and Public companies are & respectively.
(a) 02 and 05
(b) 05 and 07
(c) 02 and 07
(d) 02 and 10
Answer:
(c) 02 and 07

127. What is the minimum number of directors in case of public companies?
(a) 01
(b) 02
(c) 03
(d) 07
Answer:
(c) 03

This Communication – BCR CA Foundation Study Material is designed strictly as per the latest syllabus and exam pattern.

Communication – BCR CA Foundation Study Material

Question 1.
What is communication? Explain the elements of the communication process.
Answer:
Communication is defined as the process of sharing (exchanging) information, ideas, thoughts, feelings, and emotions between two or more persons.

Process of Communication
The communication process consists of the following elements:

 

1. Sender: The sender is the person who initiates the process of communication. The sender may be a speaker, a writer, an actor, a painter, etc.
2. Encoding: The process of converting the message into words, symbols, pictures, etc. is called encoding.
3. Message: Message means whatever is to be communicated. It is the heart of the communication process.
4. Channel: The medium through which the message is sent is called a channel. It may be a speech, a letter, an e-mail, SMS, gesture, sound, etc.
5. Receiver: The person to whom the message is sent is the receiver. The receiver may be a listener, a reader, or a viewer
6. Feedback: The reaction or response to the message is called feedback
7. Noise: Any disturbance, hurdle, or barrier to communication is noise.

Question 2.
What are the various types of communication networks?
Answer:
The pattern used to share information is known as a communication network. The main types of communication networks are given below:

1. VERTICAL NETWORK: This network is used for communication between a superior and a subordinate. It is two-way communication in which immediate feedback can be available

 

2. CIRCUIT NETWORK: When two employees at the same level of authority communicate with each other, it is a circuit network.

 

3. CHAIN NETWORK: In this network, communication flows through the chain of command. The message flows from the chief executive downward to different levels of employees. In the following, diagram A gives commands to B, C, D, E, F, and G working at different levels in the hierarchy. In chain network communication gets delayed as it has to pass through several layers. Communication may be distorted due to filtering at various levels.

 

4. WHEEL: In this network, a single authority gives orders and instructions to all the employees around him. They also report directly to him. This network may be efficient for a small organization provided the central authority is competent. But in a large organization, all decisions cannot be taken by one person.

 

5. STAR NETWORK: In this network members of an organization communicate through multiple channels. They exchange information with each other freely without any obstacles. Star network encourages group communication and teamwork in the organization.

 

Question 3.
What is meant by non-verbal communication?
Answer:
Communication without using words is called non-verbal communication. Non-verbal communication may take the following forms:

(a) Body Language: Communication through facial expressions, gestures, stance, touch, and other physical signs is called body language. For example, leaning forward may indicate interest and acceptance whereas leaning backward may mean rejection and lack of interest. Body language (e.g. smile, frown, clenching of hands, etc. can transmit emotions that cannot be expressed through words. Body language constitutes a major part (about 55 percent) of all communication.

(b) Paralanguage: Pitch, tone, quality, etc. of voice is known as paralanguage. The way one speaks, rather than words, reveals the intent of the speaker. Paralanguage constitutes about 38 percent of all communications.

(c) Aesthetics: Music, dancing, painting sculpture, and other forms of art serve as means of communication. These convey the feelings and thoughts of artists.

(d) Appearance: Dress and grooming create the first impression. In offices, there is a dress code. Formal dress for men may consist of shirt, trousers, coat and leather shoes. For women, it may consist of a saree, suit, shirt, trouser, or skirt.

(e) Symbols: Symbols may relate to religion, status, ego, etc. These convey a special meaning. For example, the number of stars on the shirt of a police officer reveals his/her status.

Question 4.
What are the barriers to communication?
Answer:
The various barriers in communication may be classified as under:

1. Language or Semantic Barriers: Difficult words, ambiguous words, jargon (terminology used in a specific field e.g. medical science), unfamiliar expressions have several meanings. People from different regions and nations may interpret the same words in different ways. Therefore, clear, simple, and easily understandable language should be used in communication.

2. Physical Barriers: These barriers arise due to noise, faulty equipment, distant locations, outdated technology, and lack of good infrastructure.

3. Technology Barriers: Anyone who is not familiar with modern communication technology (video conference, e-mail, SMS, WhatsApp, etc.) may fail to communicate effectively.

4. Physiological Barriers: Poor eyesight, difficulty in hearing, ill-health, and other such problems act as hurdles in communication.

5. Organizational Barriers: When the chain of command is unclear, an employee may not know whom to contact for a particular matter. Rigid and ambiguous structures, systems, and processes in an organization also hamper effective communication. Unclear roles and responsibilities cause confusion.

6. Cultural Barriers: People belonging to different cultures derive different meanings from the same message. People working in multinationals have to communicate with persons from different cultures. Lack of understanding of alien cultures inhibits communications. In this era of globalization, it is essential to understand cultural differences to communicate effectively.

7. Gender Barriers: Men and women often communicate in different ways. Men tend to talk in a logical and linear manner whereas women tend to use both logical emotions and are verbose. Men may blame women for transmitting too much information. Similarly, women may blame men for giving inadequate information. Gender bias is another barrier in communication. Male employees with the traditional mindset may find it difficult to take orders from a female boss.

8. Perception Barriers: Everyone perceives things in different ways. Two persons may interpret the same event/object differently. Differences in perception lead to miscommunication.

9. Emotional Barriers: Anger, jealousy, anxiety, lack of trust, fear of criticism, and similar feelings/sentiments hinder free and open communication. A disturbed or upset individual can neither convey nor receive information objectively.

10. Attitude Barriers: A shy introvert, lazy or frustrated worker cannot communicate effectively.

Question 5.
What are the essentials of Effective Communication? or What are the ‘7Cs’ of Communication? or Characteristics of Effective Communication.
Answer:

1. Clarity: The message must be expressed in simple and easy-to-understand language. Short sentences should be used and each idea must be stated in a separate paragraph.

2. Conciseness: Only necessary and relevant words must be used. Brevity is the essence of effective communication. There should be no repetitions & unnecessary words in the message.

3. Completeness: The message must be complete as omissions of necessary. facts create confusion and misunderstanding

4. Concreteness: Use facts and figures in place of abstract ideas. The mes¬sage must be expressed in precise words.

5. Coherence: Different elements of the message must be organized in a sequential and logical way. Words, sentences, and paragraphs must be inter-connected and there should be a smooth flow of information.

6. Courtesy: The sender of the message must take into consideration the feelings and viewpoints of the receiver. He should be polite, respectful, and honest. The message and its tune must not be offensive.

7. Correctness: The message must be accurate in all respects.

8. Attention and Listening: The receiver must pay full attention to the message. He should not only listen to the spoken words but also carefully observe the speaker’s body language. In the case of written messages, the reader must read between the lines.

9. Emotional Awareness & Control: Managing your own & other emotions & communicating keeping in mind the emotional state of others helps in smooth interaction & prevents the breakdown of the communication process.

Question 6.
Differentiate between the following:

1. Formal & Informal Communication
2. Written & Oral Communication

Answer:
1. Formal & Informal Communication

Basis & Distinction	Formal Communication	Informal communication
Meaning	A type of verbal Communication whereby the exchange of information takes place through predefined & formally established channels in the organization. It is also known as Official Communication.	A type of verbal as well as non-verbal communication in which the exchange of information does not follow any predefined & established channels in the organization. It is also known as Grapevine Communication.
Reliability	it is more reliable in nature since it takes place through formally authorized channels.	It is less reliable in comparison to formal communication.
Speed	This type of Communication is time-consuming and slow.	It is less time-consuming and very fast.
Secrecy	Full secrecy is maintained and assured informal Communication.	It is difficult to maintain secrecy in this type of Communication.
Disadvantage	There is a possibility of distortion due to the filtration of information as it moves up and down the chain of hierarchy.	There is a possibility of distortion of information on account of the spread of rumors and gossips.
Advantage	Since control can be exercised on formal channels of communication, this type of communication is more effective and is able to meet organizational objectives.	This type of Communication is efficient since employees can discuss their problems openly and this saves time and cost for the organization.
Evidence	As this Communication is generally written, documentary evidence is present.	This Communication is generally oral and is supported by non-verbal Communication, no documentary evidence is present.

2. Written & Oral Communication

Basis Distinction	Written Communication	Oral Communication
Meaning	interchange of ideas, messages, and information through words in writing is said to be written Communication.	The exchange of ideas, information, and messages through spoken words is said to be oral communication.
Literacy	Since this communication requires written words, literacy is necessary for communication.	Since this communication takes place through spoken words i.e. words of the month, literacy is not imperative.
Speed	The transmission of the message takes place slowly.	The transmission of messages is quick & speedy.
Evidence	Written communication involves proper records & documents.	There are no records in the case of oral communication.
Reference	Since this Communication is well documented it can be retained and referred to in the future.	Since there is no record of this type of Communication it cannot: be referred to in the future.
Feedback	The feedback generated in the case of written Communication takes time.	The feedback in the case of oral communication is prompt and immediate.

Question 7.
What are the main steps in the process of communication?
Answer:
Steps in the process of communication

• The purpose of reason
• The content or message
• The medium used for conveying the message (internet, written text, speech, etc.)
• Transmitting the message
• Messages are often misinterpreted due to external disturbances. These factors disrupt communication
• Receiving the message
• Deciphering/decoding the message
• Interpreting and figuring out what the real message is.

Question 8.
What is diagonal communication?
Answer:
Diagonal Communication.
It is part of the formal communication section. It refers to the cross-functional communication between different levels of employees in an organization. It is commonly found in large organizations. Diagonal communication is recommended as it reduces the gaps between communication and encourages direct talks with the third party. For example, a junior engineer directly reporting to the General Manager about the progress of a project.

Question 9.
Define visual communication.
Answer:
(a) Visual communication
Communication that happens through visual aids such as signs, graphic designs colors, illustrations, etc. is visual communication. It is a powerful medium these days, especially for office presentations. Visuals can also include pie charts, graphs, or any other colorful representation. It adds value to the content and forms a major part of audiovisual ppts.

This Nature of Contract – CA Foundation Law Study Material is designed strictly as per the latest syllabus and exam pattern.

Nature of Contract – CA Foundation Business Law Study Material

Question 1.
All contracts are agreements but all agreements are not contracts. Comment.
Answer:
As per section 2(h) of the Indian Contract Act, 1872, an agreement enforceable by law is a contract. Thus an agreement backed by enforceability by law i.e. the intention to create legal relations is regarded as a contract. An agreement is a prerequisite for the creation of a contract.

Every promise & every set of promises forming consideration for each other is an agreement. Thus when an offer made by a person is accepted by another, an agreement is said to be created. However, an agreement is a wider term in comparison to contracting. It includes even those agreements which are not enforceable since they were not created with an intention of forming legal relations, such as domestic, political or social agreements.

Thus agreement is the genus of which contract is the species & only those agreements grow into contracts that create legal relations.

Question 2.
Explain briefly the essentials of a valid contract.
Answer:
Section 10 provides “all agreements are contracts if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void”.

Offer and acceptance:
There must be a “lawful offer” and a “lawful acceptance” of the offer, thus resulting in an agreement.

Intention to create legal relations:
There must be an intention among the parties that the agreements should be attended by legal consequences and create legal obligations. Agreements of a social or domestic nature do not contemplate a contract.

Lawful consideration:
Consideration means “something in return”. An agreement is enforceable when each of the parties to it gives something and gets something in return. The payment of money is a common form of consideration. But it may also consist of an act, forbearance, and a promise to do or not to do something. Consideration must be real, valuable and lawful.

The capacity of parties:
The parties to an agreement must be competent to contract; otherwise, it cannot be enforced by a court of law. Every person who is competent to contract who is (a) of the age of majority, (b) of sound mind and (c) is not disqualified from contracting by any law.

Free consent:
The consent of the parties must be free ie. the parties should enter into a contract voluntarily and of free will. Section 14 lays down that consent is not free if it is caused by (a) coercion, (b) undue influence, (c) fraud, (d) misrepresentation or (e) mistake.

Lawful object:
The object of the agreement should be lawful. It should be authorised or sanctioned by law. The object of an agreement is unlawful if it is forbidden by law or is fraudulent or is immoral or opposed to public policy.

Agreement not expressly declared void:
The Indian Contract Act, 1872, has expressly declared certain agreements to be not enforceable at law, e.g. agreements in restraint of marriage, agreements in restraint of trade, wagering agreements etc. The parties to the agreement should ensure that their agreement does not fall in the category of these void agreements.

Certainty:
The terms of the contract should be certain and definite and not vague. Section 29 says “Agreements, the meaning of which is not certain or capable of being made certain are void.”

Possibility of performance:
Yet another essential feature of a valid contract is that it must be capable of performing. Section 56 lays down that “An agreement to do an act impossible in itself is void.” If the act is impossible in itself, physically or legally, the agreement cannot be enforced at law.

Writing and registration:
According to the Indian Contract Act, a contract may be oral or in writing. An oral contract is as much enforceable as a written contract. However, if there is a provision in any law prescribing that contracts should be in writing/ registered then, this formality of writing and registration should be followed.

Question 3.
“The law of contracts is not the whole law of agreements nor is it the whole law of obligations.” – Comment.
Answer:
Obligations may arise from different sources. The law of contract deals only with such legal obligations which arise from agreements. Obligations that are not contractual in nature are outside the purview of the law of contract. For example, the obligation to observe traffic rules does not fall within the scope of the Contract Act.

The other sources of obligations are obligations under the trust law or the law of tort or the fundamental duties under the Constitution etc. They are outside the purview of the Contract law since they are not voluntarily created through an agreement. Salmond has rightly observed: “The law of contracts is not the whole law of agreements, nor is the whole law of obligation. It is the law of those agreements which create obligations and those obligations, which have their source in agreements”.

Question 4.
Differentiate between:
(a) Void agreements & Void Contracts
(b) Voidable & Void Contracts
(c) Void Agreements & Illegal Agreements
Answer:
(a)

Void Agreement	Void contracts
An agreement not enforceable by law is said to be void.	A contract that ceases to be enforceable by law becomes void when it ceases to be enforceable.
It is void right from the beginning i.e., ab initio since one or more of the essentials of a valid contract are missing.	it becomes void subsequently. On account of change is law, change in circumstances or on an account of the subsequent impossibility of performance.
No restitution of benefits is allowed.	Restitution may be granted when the contract is discovered to be void or becomes void.

(b)

Void contracts	Voidable contracts
A contract that ceases to be enforceable by law becomes void when it ceases to be enforceable.	A contract which is enforceable by law at the option of one or inure of the Parties hereto, but not at the option of the other or others. Thus it is enforceable at the option of the aggrieved part’.
It ¡s valid at the time of Formation & remains valid till an event takes place which results in the contract ceasing to be enforceable.	It may be voidable right from the beginning or voidable subsequently. It remains valid if the aggrieved par1 does not elect to avoid it within a reasonable time.
A contract becomes void due to change in circumstances, change in law or subsequent impossibility of performance etc.	A contract is avoidable right from the beginning if consent is caused by coercion, undue influence, fraud or misrepresentation. A contract becomes voidable subsequently on account of breach of contract or failure to perform the contract at the time fixed if the time is of the essence of the contract.
Compensation is not payable.	The aggrieved party can claim damages for loss sustained by him if any.

(c)
Difference between Void & Illegal agreements:
a. Scope: An illegal agreement is narrower in scope than a void agreement. All illegal agreements are void but all void agreements are not necessarily illegal. For E.g. an agreement with a minor is void, but not illegal.

b. Collateral Transactions: When an agreement is illegal, other agreements which are incidental or collateral to it are also tainted with illegality, hence void. However, agreements collateral to avoid agreement are not necessarily void.

c. Restitution: In the case of an illegal agreement, no right/remedy is available to either party. Hence money paid under an illegal agreement cannot be recovered. Under sec. 65 if an agreement is discovered to be void any person who has received advantage/benefit must restore it or make compensation for it.

d. Punishment: In case of an illegal agreement the parties may be punished under the criminal law, in case of a void agreement (which is not illegal) there is no such punishment.

Question 5.
Write Short Notes on:
(a) Unenforceable Contracts
(b) Quasi Contracts
(c) Unilateral Contracts
Answer:
(a) Unenforceable contract. An unenforceable contract is one, which suffers from some technical defect. It is valid in itself but is not capable of being enforced in a court of law because of non-observance of some technical formalities such as insufficiency of the stamp, want of registration, attestation etc. In some cases such contracts can be enforced if their technical defects are removed, for example, the defect of under stamping can be removed by affixing the right value of stamps.

(b) Quasi-Contract. Quasi-contract is a contract in which there is no intention on the part of either party to make a contract but the law imposes a contract upon parties. These are not actual contracts but they resemble a contract that is created by law under certain circumstances. Here, the law creates legal rights and obligations when there is no real contract. For example; obligation of Under of lost goods to return them or liability of person whom money is paid by mistake to repay it back.

(c) In the case of a unilateral contract, only one party has to perform his obligation and the other party has performed his obligation at the time of formation of the contract or before. If A buys a railway ticket for his journey from Nagpur to Bombay. A has performed his duty under the contract by paying the fare but the railways are yet to perform their promise i.e. of carrying him from Nagpur to Bombay. Such contracts are also called contracts with executed consideration or one-sided contracts.

Question 6.
Lekhpal promises today ? 5 lakhs to his son if the son passes the CA exams. On passing the exams, the son claims the money. Can the son file a suit against the father?
Answer:
No. Because it is a domestic agreement [no intention to create legal relations]

Question 7.
X, a coolie in uniform carried Y’s luggage from the railway platform to taxi without being asked by Y to do so. Y does not make any attempt to stop X from carrying the luggage. Is Y bound to make payment to X?
Answer:
Yes [implied contract: implied offer & implied acceptance (silence as a manifestation of acceptance)]

Question 8.
Arun has two cars – one of white colour and another of red colour. He offers to sell one of the cars to Basu thinking that he is selling the car which has white in colour. Basu agrees to buy the car thinking that Arun is selling the car which has red in colour. Will this agreement becomes a valid contract?
Answer:
No. [Hint – since consensus idem is missing]

Question 9.
Point out with reason whether the following agreements are valid or void:

1. Riya promised Samarth to lend Rs. 500,000 in lieu of consideration that Samarth gets Riya’s marriage dissolved and he himself marries her.
2. Aryan agrees with Mathew to sell his black horse. Unknown to both the parties, the horse was dead at the time of agreement.
3. Ravi sells the goodwill of his shop to Shyam for Rs. 4,00,000 and promises not to carry on such business forever and anywhere in India.
4. In an agreement between Prakash and Girish, there is a condition that they will not institute legal proceedings against each other without consent.

Answer:
1. Void Agreement – As per Section 23 of the Indian Contract Act, 1872, an agreement is void if the object or consideration is against public policy. The agreement in the given case is of the nature which interferes with marital rights & duties of a person and is therefore opposed to public policy, illegal and void ab initio.

2. Void Agreement – As per Section 20 of the Indian Contract Act, 1872, an agreement made on the grounds of a Bilateral Mistake of fact is regarded as void. The mistake of fact is with respect to the existence of subject matter at the time of formation of the contract.

3. Void Agreement – As per Section 27 of the Indian Contract Act, 1872, an agreement that is in restraint of trade is treated as void. However, a buyer of goodwill can exceptionally impose certain restrictions on the seller of goodwill, not to carry on the same business provided such restrictions are reasonable regarding the duration & place of business. The restrictions imposed in the given case are unreasonable and therefore the agreement is in restraint of trade & void.

4. Void Agreement – As per Section 28 of the Indian Contract Act, 1872, an agreement that is in restraint of legal proceedings is void. The agreement in the given case imposes an absolute restriction on the rights of the parties to institute legal proceedings & is therefore regarded as void.

Question 10.
Mr W boards a bus at a bus stop. He travels for some distance and on arrival at his destination, he makes a move to get off the bus. The conductor stops him and asks for the fare. He denies his duty to pay to say they did not form any contract comment.
Answer:
Hint: Implied contract – a contract that can be understood from the conduct of the parties – Mr W is bound to pay the fare for availing the transportation services.

Question 11.
State whether a contract is created in the following cases:-

1. Mr. R promises to supply 4 teakwood chairs to Mr. S for a price which shall be fixed by Mr. F.
2. Mr. P promises to pay Rs. 10 Lacs to Mr. T, if he brings back to life Mr. P’s dead wife.
3. A mother promises to give Rs. 500 to her son, if he accompanies her for shopping.
4. Mr. P promises to pay Rs. 10 Crores to Mr. N if he resigns from his party and joins Mr. P’s political party.

Answer:
Hint:

1. A valid contract is created – the terms of the contract should be certain or capable of being made certain.
2. No contract is created – the impossibility of performance – void ab initio.
3. No contract is created – domestic agreements are mere agreements and not contracts.
4. No contract is created – political agreements are mere agreements and not enforceable.