Commerce interview questions and answers by m riaz khan

Commerce interview preparation

1. COMMERCE
INTERVIEW
QUESTIONS AND
ANSWERS

By
M. Riaz Khan (MS-Finance)
Email: [email protected]
Cell# [phone]

2. Prepared By: M. Riaz Khan 0313-9533123
1. What is commerce?
Commerce refers to and includes all those activities
which are necessary to bring goods and services
from the place of their origin to the place of their
consumption

2. Into how many departments is commerce
mainly divided into? Which are they?
Into two. They are
 Trade
 Aids of trade

3. the trade is sub divided into two divisions,
which are they?
Home trade and foreign trade.

4. Into how many divisions the Home Trade is
divided?
Into two they are Whole sale and retail

5. Which are the two divisions of Whole sale?
They are import trade and export trade

6. When did the commerce begin to grow?
It is begun to grow only after the division of labor
and development of exchange. Once it started
growing, it spread its invisible thread throughout
the length and breadth of the world.

7. What is a company?
A company is an incorporated association which is
an artificial person, having an independent legal
entity, with a perpetual Succession, a common seal,
a common capital comprised of transferable shares
and carrying limited liability.

8. What is Audit?
An audit may be said to be such an examination of
books, accounts and vouchers of a business,
whether it is in a proper manner for the financial
period.

9. What is the minimum number of directors in
a Public Company?
At least two directors

10. What is public sector?
Central government, local authorities and the
public corporations that run nationalized
industries

11. What is Plant layout?
‘Plant layout’ means the arrangement and location
of different departments and of the machinery and
equipment within a department

12. What is Protocol?
The minutes or records of a diplomatic conference;
especially a note of agreement on a subsidiary
matters which supplements a treaty

13. What is Mortgage?
It is a transaction by which land or any other
property may be given as security for repayment of
a loan

14. What is Loan?
Something lent for the borrower’s temporary use,
especially money lent with conditions about
repayment and the payment of interest

15. What is an account?
An account is a book-keeping device used in
summarizing the increases and decreases in each
asset or equity item

16. What is a Balance Sheet?
It is the statement of account which is prepared at
the end of every financial year. It gives the total
picture of business at the point of time.

3. Prepared By: M. Riaz Khan 0313-9533123

17. What is Business?
Business is the sum of activities comprising buying
and selling goods, manufacturing goods or
providing services in order to make profit.

18. What is Guarantor?
A person who promises that if a second fails to
fulfill some obligation, then he will fulfill it instead
or pay money up to a specified limit to compensate
for any loss caused by the second person’s failure

19. What is Quoted price?
It is the price of a share commodity as stated in the
official list of the stock exchange commodity
market.

20. What is Share?
A unit for reckoning investor’s interests in the
contributed capital of a company

21. What is the other name for creditor ship?
Securities or Debentures

22. Who is called an Arbitrator?
A person chosen by the parties to a dispute to
suggest a way of settling the dispute

23. What is a Capital?
The tangible resources of a person or organization,
including cash, machinery, land, building, raw
material etc. are called capital

24. Who is sleeping partner?
A partner who contributes capital but will not take
part in business activities is called a sleeping
partner.

25. When did the government institute the
Companies Amendment Act?
In February 1963.

26. What is Debit?
It is the term using in double entry book keeping
for an entry made on the left-hand side of an
account

27. Who is a Floor Trader?
A person, usually a member of the stock exchange
entitled to trade on the floor of that exchange is
called floor Trader

28. What is Liquid Asset?
The asset of the business which comprises cash or
item which can easily and quickly be converted
into cash within a period of one year

29. Name the brand mark which has legal
restrictions:
Trade Mark

30. What is Stock Market?
An organized market for securities. Also called a
‘stock exchange’
The tangible resources of a person or organization,
including cash, machinery, land, building, raw
material etc. are called capital

31. What is Tap?
A large quantity of securities held by someone who
is able to sell to anyone who wants to buy is called
a tap.

32. What is value Added Tax (V.A.T.)?
The principle of V.A.T. is that tax is levied at each
stage of the production of goods or services and on
the value added at each stage of the production

33. What is Vital Statistics?
It is the statistics concerned with births, deaths,
ages, health, marriages, diseases etc…

4. Prepared By: M. Riaz Khan 0313-9533123
34. What is Gratuity?
A gift given especially of a small sum of money
given in response to their service received or
anticipated

35. What is Gross National Product (G.N.P)?
It is the total value of all goods and services that
are produced by the people of a specified country
in a year

36. What is Wage?
It is the remuneration paid to the operative staff
whose output can be directly in an year

37. What is a By-product?
A commonly which can be sold, produced in the
process of manufacturing the main product.

38. Which is called a barometer of financial
health of a country?
Stock-Exchange

39. A document issued by a vendor giving credit
to the debtor is called:
Credit note

40. What is the term used with reference to
assurance policies?
Endowment

41. What is Petty Cash?
A small fund of cash held by an institution which is
used to make small and urgent payments

42. Who are entitled to take part in the control
and management of business in a company?
The board of directors elected by the shareholders

43. in a company who is responsible for
considering the legal aspects of company
activities?
The company secretary

44. What is a man hour?
It is a unit for measuring employment equivalent to
the employment of one person for one hour

45. Which audit is conducted only once in a
while and that also when the client desires?
Occasional audit

46. The bailment of goods as security for
payment of a debt is called:
Pledge

47. The selection of goods offered for sale by an
retailer is called:
Assortment

48. What is a person or party to whom an
assignment is made called?
Assignee

49. What is Tenor?
A bill of exchange may be payable sometime in the
future

50. Which value was measured in gold or
equivalent in US dollars?
Par value

51. What is the name of entry which is used in
Bank Column cash book to record the money
transaction?
Contra entry

52. The fixed cost of producing a quantity of a
good divided by the quantity produced is :
Average fixed cost

53. Which is the basic document of a company?
Memorandum of association

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54. Minimum number of persons who has to
sign the Memorandom of association?
Seven persons in the presence of one witness

55. In the charter of the company while
choosing a name which word should not be
included?
Co-operative

56. In the name of a company which word
should be used at the end?
Limited

57. Which are the most important clauses of the
memorandum?
The object clause

58. Which is a document containing a rules and
regulations for the internal management of the
company?
The article of association

59. What is the maximum number of partners
in Banking business?
Ten

60. What is the minimum number of members
in a public company?
Seven

61. Which bank note gives the bearer the right
to have its face value converted into gold or
some other commodity of value equivalent to
the amount stated?
Convertible bank-note

62. In which form the co-operative society,
distributes its surplus dividends to its
members?
In the form of bonus

63. Which is the technique designed to create
an artificial market to benefit a businessman?
Rigging the market

64. What is dead time?
Time lost through no fault of the employee and for
which he is usually paid at the full rate

65. What is a decision tree?
A diagram of a sequence of decisions, each of which
involve choosing between a known number of
alternatives and depends on the resultants of the
previous decisions

66. What is syndicate?
A group of people working together towards a
common objective usually profit is called a
syndicate.

67. In the aspect of banking business what is
the term used of giving loans to companies on a
large scale?
Wholesale banking

68. The profit margin which a retailer of goods
obtains forms his supplier is called:
Trade discount
69. What is the main distinction between an
Auditor and an Accountant?
It is the duty of the auditor to prepare the accounts,
the accounts has to be prepared by the accountant
where as the auditor is concerned with the detailed
and critical examination of the account book

70. What is the term used to indicate a
statement of what is owned and what is owed?
Assets and Liability statements

71. How is an asset expressed?
Assets Liabilities = owner’s equity

6. Prepared By: M. Riaz Khan 0313-9533123

72. What is Subsidy?
It is a method adopted by the government or a
company of supporting a price

73. in which organization, every subordinate
must obey his superior, whether be likes it or
not?
Formal organization

74. Which department is maintained in every
modern business house to obtain the good will
of the people?
Public relations departments

75. What is Quasi-loan?
It is an arrangement between two persons under
which one agrees to meet some of the other’s
financial obligations on condition that the later
reimburses him.

76. Which are the main principles in allocation
of office work?
They are specialization, correlation and business
connection

77. Who first suggested the separation of
manual work from mental labor through the
establishment of two departments?
Taylor

78. Which are the two departments suggested
by Taylor?
Planning and Operation

79. Which is a chief subsidiary object of
auditing?
Detection of Frauds and errors

80. What is Freight?
The money paid to a ship owner for carrying goods
by an exporter

81. Who is a journeyman?
A crafts man who, having finished his period of
apprenticeship

82. What is a Questionnaire?
A document especially reproduced in large
numbers containing a set of questions intended to
elicit useful information

83. Give another name for parent company?
Holding company

84. What function of the computer ensures that
the data are not distorted during processing?
Parity check

85. What is the term used with particular
reference to bills of exchange?
Endorsement

86. What is the price at which the supply curve
for a good and its demand curve intersect
called?
Equilibrium price

87. What is similar to overdraft except that it is
comparatively for a longer period?
Cash credit

88. What is the term Ad referendum means?
This term means that although the contract has
been signed, certain matters have been left over for
consideration when they actually arise

89. What is S.A.Y.E.?
Save While You Earn

90. Who are plural executives?

7. Prepared By: M. Riaz Khan 0313-9533123
A group of people (a committee or board) who
were given responsibility to exercise authority
jointly over Specified activities of others.

91. What is Boom boggling?
It is the wasteful or uneconomic labor indulged in
by a firm to boost cost of production.

92. What is Quid proquo?
One thing in return for another consideration

93. What is a paper gold?
Colloquial name for special drawing rights or
similar suggested schemes

94. What is Kennedy Round?
A extensive negotiations of multilateral tariff
agreements, within the limits set by the General
Agreement on Tariffs and Trade, investigated by
the late American President Kennedy.

95. What is the Hot money?
It refers to funds that move quickly from one
country to another in search of the highest rate of
interest.

96. What is a Garnishee order?
It is a court order attaching the funds of the
judgment debtor in the hands of a third party in
favor of the judgment creditor.

97. What is a Dead Rent?
A minimum amount payable, for example, on the
lease of mine.

98. What is a kite?
A cheque drawn by someone who knows there is
no money in the bank account he is drawing on.

99. What is Future Market?
An organized market for buying and selling future
contracts

100. What is Free Trade?
The unrestricted international trade either with no
customs duties or with customs duties which are
used to create revenue.

101. What is business cycle?
A recurring sequence of changes business activity.

102. What is a Bank?
According to Prof: John pagets “no one or nobody
corporate or otherwise can be a banker who does
not open current accounts; pay cheques drawn on
himself and collect cheques for customers”.

103. What is an exchange bank?
Exchange banks extent financial assistance to
foreign trade and deal in foreign exchange.

104. What is Quantitative credit control?
Quantitative credit controls are used when it wants
to control the total supply of money

105. What is Qualitative credit control?
Qualitative credit controls are used when it wants
to control the use of funds made available by the
commercial banks to customers

106. What is Open market operation?
Open market operations imply the purchase and
sale of government securities by the Central Bank
in the open market.

107. What is V.R.R.?
Variable Reserve Ration

108. Define Endorsement?
’Endorsement’ or ‘endorsement’ is the act of
signing the name of the maker of the holder of a

8. Prepared By: M. Riaz Khan 0313-9533123
negotiable instrument for the purposes of
negotiation.

109. What is Sans Frais endorsement?
It is an endorsement where the endorser specifies
that the endorsee or any subsequent holder need
not incur any expense on the instrument on his
account.

110. What is facultative Endorsement?
In a facultative endorsement, the endorser waives
some of his rights, like the right to receive notice of
dishonor.

111. Define bill of exchange?
The negotiable instruments act, 1881 defines a bill
of exchange as “an instrument in writing
containing an unconditional order, signed by the
maker, directing a certain person to pay a certain
sum of money only to, or to the order of a certain
person or to the bearer of the instrument.

112. What is maturity date?
A bill is said to be matured on the date which it
falls due for payment. This date id called the ‘due
date’ or the ‘maturity date’ of the bill.

113. What are Days of Grace?
A bill falls due only on the third day after the day
on which it is stated to be payable. These extra
days allowed for the payment of a bill is called the
‘Days of Grace’.

114. What is Inland Bill?
Bill drawn and made payable in India as well as bill
drawn upon a person residing in India is called an
Inland Bill.

115. What is Foreign Bill?
A foreign bill is one which is drawn in India and
made payable in a foreign country or drawn on one
who is a resident of a foreign country.

116. Define Promissory note?
Negotiable instrument act 1881 defines a
promissory note as “an instrument in writing
containing an unconditional undertaking signed by
the maker to pay a certain sum of money only, to or
to the order of a certain person”.

117. What is Insurance?
Insurance is a mechanism through which the
suffering of one man is minimized by sharing it
with many men.

118. What is Causa Proxima (Proximate
Cause)?
According to this doctrine when there are several
causes, only the proximate or nearest cause should
be considered. The distant and remote cause shall
be ignored.

119. What is Re-insurance?
Re-insurance means insuring an already insured
risk by the insurer. It is done mainly to reduce the
risk of the insurance company by sharing it with
other companies.

120. What is Double Insurance?
It is entirely different from re-insurance. In this
case the insured insures the same subject matter
with more than on insurance company.

121. What is the definition of Chambers of
Commerce?
“Chambers of commerce is an voluntary
association of merchants, financiers, manufactures
and other engaged in business for the purpose of
promoting and protecting the interests of its

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members and of the trade of the country as a
whole”.

122. Who is an agent?
An agent is a person who is employed by another
to represent him in dealing with other parties. The
person why is so represented by an agent is called
the principle.
123. Into how many types are the agents
classified?
Into two
1. General
2. Special

124. Who is a general agent?
General agent is one who is authorized to
undertake work of a general nature. E.g. Managing
Director or General Manager of a company.

125. Who is a Special agent?
Special agent is one who is appointed to undertake
some special work Eg. Agent appointed to sell a car
by its owner

126. Who is Broker?
Brokers acts as intermediaries between two
parties, in trade contracts.

127. Who is a Produce Broker?
These brokers arrange for the sale and purchase of
agricultural products such as coffee, tea etc..

128. Who is a Stock and Share broker?
They are engaged in the purchase and sale of
shares and other securities, of companies as well as
Government securities on a stock exchange.

129. Who is a Shipping broker?
They are brokers who transact business connected
with ship. They arrange charter parties, procure
cargo etc., on the behalf of their principles.

130. Who is a insurance broker?
They arrange various types of insurance in
connection with trade.

131. Who is a property broker?
They are mainly engaged in buying and selling
fixed assets like land, buildings etc.

132. What is Loco or Ex-factory?
This means the price quoted includes cost of goods
plus a nominal profit. The place of delivery would
be the suppliers factory or godown. The cost of
transport, insurance and other expenses should be
met by the buyer.

133. What is F.O.R. (Free on Rail)?
This indicates that the price covers the cost of
goods and all other expenses till the goods are put
into the railway wagon.

134. What is F.O.B (Free On Board)?
This includes cost of the goods and all other
expenses to be incurred in placing the goods on
board the ship.

135. What is F.A.S. (Free along Side)?
This includes all expenses like packing charges,
delivery of goods to the side of the ship etc. But it
doesn’t include charges for putting them on board.

136. What is C & F (Cost & Freight)?
This includes the cost of goods plus the freight
charges and other expenses for delivering the
goods at the importer’s port.

137. What is C.I.F. (Cost Insurance Freight)?
This includes the cost of goods, insurance, freight
and all charges upto to the port of import.

138. What is Marine Insurance?
Marine insurance is the oldest kind of insurance. It
is that branch of insurance which relates to ships
and their cargoes.