CA Foundation Business & Commercial Knowledge Study Material – Meaning of Globalization

CA Foundation Business & Commercial Knowledge Study Material Chapter 4 Government Policies for Business – Meaning of Globalization

Meaning of Globalization

Globalization means reduction or removal of Government restrictions on the movement of goods and services, capital, technology and talent across national borders. It is the process of increasing economic interdependence between countries and their economic integration in the form of world economy. Markets become international and global firms consider the whole world as one market.

Globalization in India – Trends and Issues

The process of globalization of Indian economy began largely in 1991 due to the unprecedented balance of payments crisis. Since then the pace of globalization has gained momentum:

  • Foreign Direct Investment upto 100 per cent is now permitted in specified sectors.
  • Foreign investors can invest in Indian companies through GDRs without any lock-in period.
  • Indian companies are allowed to get themselves listed on overseas stock exchanges.
  • Guidelines for Euro issues were liberalised.
  • The Foreign Exchange Management Act (FEMA) has replaced the Foreign Exchange Regulations Act (FERA).

Impact of Globalization of Indian Economy

Globalization has made India a huge consumer market. There has been rapid increase in GDP and India’s exports. India has emerged as one of the fastest growing economies in the world. Our foreign exchange reserves are now huge and there has been rapid increase in foreign direct investment (FDI).


Positive Effects

  • Expansion of market
  • Growth of independent money market
  • Free flow of resources
  • Advancements in technology
  • Equilibrium in balance of payments
  • Development of infrastructure
  • Fligher living standards
  • International cooperation

Negative Effects

  • Cut-throat competition
  • Rise in monopoly
  • Increase in inequalities
  • Takeover of domestic firms
  • Removal of protection to domestic firms
  • Affect on national sovereignty

CA Foundation BCK Chapter 6 MCQ with Answers – Common Business Terminologies

Common Business Terminologies – CA Foundation BCK Chapter 6 MCQ Questions

1. A stock that provides regular dividends even during economic downturn is called
(a) Listed
(b) Crow Stock
(c) Income Stock
(d) Defensive Stock

2. Carrying forward a transaction from one settlement period to the next is known as
(a) Basket Trading
(b) Margin Trading
(c) Badla
(d) Option deal

3. Call is the opposite of
(a) Equity
(b) Bid
(c) Ask/offer
(d) Equity

4. A speculator who buys securities in anticipation of increase in prices is called
(a) Stag
(b) Bull
(c) Bear
(d) None of them

5. A bear market means
(a) A market wherein share prices are falling consistently
(b) A market wherein share prices are rising consistently
(c) A market wherein share prices are stable
(d) None of the above

6. Simultaneous purchase and sale of the same stock in two different markets is known as
(a) Basket trading
(b) Badla
(c) Arbitrage
(d) Margin Trading

7. Buying or selling all 30 scrips of sensex in pro-portion of their current weights in the sensex in one go is called
(a) Basket trading
(b) Arbitrage
(c) Badla
(d) Margin Trading

8. The relationship between the price of a share and the sensex is measurably
(a) Alfa
(b) Beta
(c) Book value
(d) Annuity

9. Combination of two or more firms into one firm is called
(a) Consolidation
(b) Yield
(c) Option
(d) None of the above

10. An option to buy a particular share at a specified price within a specified future period is known as
(a) Put option
(b) Bid
(c) Offer
(d) Case option

11. The value of a share printed on the share certificate is called
(a) Face value
(b) Market Value
(c) Future value
(d) Current value

12. Sensex is made up of how many scrips
(a) 50
(b) 30
(c) 40
(d) 20

13. Nifty consists of how many scrips
(a) 20
(b) 30
(c) 40
(d) 50

14. When a company makes first issue of shares to the general public it is called
(a) ADR
(b) GDR
(c) CD
(d) IPO

15. A textile firm enters into cement manufacturing business. It is an example of:
(a) Consolidation
(b) Diversification
(c) Liquidation
(d) Turnaround

16. The strategy used to minimize the risk and maxi-mize the return on an investment is called
(a) Hedge
(b) Index
(c) Bid
(d) Offer

17. The statistical measure of changes in prices on a stock exchange is:
(a) Dividend
(b) Index
(c) Beta
(d) Bid

18. A security whose price is derived from one or more underlying assets is a
(a) Blue Chip
(b) Derivative
(c) Hedge
(d) Index

19. Piecemeal sale of the assets of a division of the company is called
(a) Modernization
(b) Diversification

20. Total share holding of an investor is known as his/her
(a) Mutual Fund
(b) Holding Period
(c) Pastfolio
(d) Limit order

21. Dividing a share with a face value of Rs. 100 each into 10 shares with a face value of Rs. 10 each is an example of
(a) Sheet selling
(b) Liquidation
(c) Diversification
(d) Stock split

22. Paid form of non-personal promotional of ideas, goods and services by an identified sponsor is called :
(a) Adventuring
(b) Sales promotion
(c) Personal Selling
(d) None of the above

23. The process of comparing the products and services with those of best in the industry to improve quality and performance is known as
(a) Advertising
(b) After-sale-Device
(c) Benchmarking
(d) None of the above

24. Commitment of customers to a particular brand is called
(a) Brand Equity
(b) Brand recognition
(c) Brand loyalty
(d) Benchmarking

25. A combination of several firms working together to build or buy something is known as:
(a) Business Modal
(b) Business Portfolio
(c) Combination
(d) Consortium

26. The values, beliefs and traditions shared by the members of a company is called
(a) Corporate culture
(b) Consortium
(c) Cross selling
(d) None of the above

27. Giving unique identity to a product to differentiate it from rival products means
(a) Direct marketing
(b) Differentiation
(c) Diversification
(d) None of the above

28. It is the process of eliciting support for a company and its activities from its employees. Name it
(a) Internal Marketing
(b) Direct Marketing
(c) Internet Marketing
(d) None of the above

29. A company created jointly by two or more companies for mutual advantage is called
(a) Consolidation
(b) Merger
(c) Joint Venture
(d) None of the above

30. Dividing the total market into several groups on the basis of consumer characteristics is known as:
(a) Market segmentation
(b) Market Development
(c) Market Research
(d) None of the above.

31. Offering existing products or their new version to a new customer group is called
(a) Market entity
(b) Market Positioning
(c) Market Development
(d) None of the above

32. Selecting the most attractive market segment for a particular product or product line is known as
(a) Market Positioning
(b) Market Entry
(c) Target Marketing
(d) None of the above

33. It is the exploitation of small market segments, name it
(a) Direct Marketing
(b) Niche Marketing
(c) Mass Marketing
(d) None of the above

34. A product’s customer benefit that no other product can claim is known as
(a) Opportunity
(b) Publicity
(c) Unique Selling Proposition
(d) None of the above.

35. The rate at which the Reserve Bank of India lends, money to commercial banks for long period is called
(a) Repo Rate
(b) Goring Rate
(c) Bank Rate
(d) None of the above

36. The money deposit made by the buyer to the seller of real estate during negotiation stage is known as
(a) Earnest Money Deposit
(b) Fixed Deposit
(c) Current Deposit
(d) None of the above

37. The document issued by a bank on behalf of the importer promise to pay money for imported goods is called
(a) Letter of credit
(b) Debt Card
(c) Bank Draft
(d) None of the above

38. The rate of interest offered by the Reserve Bank of India on deposit of surplus funds by commercial banks is known as
(a) Bank Rate
(b) Repo Rate
(c) Reverse Repo rate
(d) None of the above

39. Jan Dhan Account is an example of
(a) Current Account
(b) Fixed Deposit Account
(c) Zero Balance Account
(d) None of the above

40. The rate of interest at which banks borrow money for short periods from the Reserve Bank of India is called.
(a) Bank Rate
(b) Repo Rate
(c) Reserve Repo Rate
(d) None of the above

41. Profits, people and planet together constitute a company’s
(a) Vision
(b) Mission
(c) Triple Bottom Line
(d) None of the above

42. Integration of national economies into a world economy is called:
(a) Globalisation
(b) Privatization
(c) Liberalization
(d) None of the above

43. Molasses in sugar industry is an example of
(a) Joint product
(b) Unique product
(c) Byproduct
(d) None of the above

44. Sale of public enterprises to private sector is called
(a) Globalisation
(b) Privatization
(c) Liberalization
(d) None of the above

45. Financial recovery of a loss making company is known as
(a) Turn around
(b) Privatization
(c) Liberalization
(d) None of the above

46. The roadmap of a company future is
(a) Mission
(b) Vision
(c) Business Module
(d) None of the above

47. The statement that defines what a company is and what it does is called
(a) Mission
(b) Vision
(c) Business Module
(d) None of the above

48. Activities involved in physical involvement of goods from the factory to market etc. is called
(a) Logistics
(b) Merger
(c) Mission
(d) None of the above

CA Foundation BCK Chapter 2 MCQ with Answers – Business Environment

Business Environment – CA Foundation BCK Chapter 2 MCQ Questions

CA Foundation Business and Commercial Knowledge Study Material Chapter 2 Business Environment – Test Questions

1. Which of the following is a characteristic of business environment?
(a) Aggregative
(b) Dynamic
(c) Uncertain
(d) All of them.

2. Which of the following is an element of micro environment:
(a) Customers
(b) Competitors
(c) Suppliers
(d) All of them.

3. Which of following relates to population?
(a) Demographic environment
(b) Social environment
(c) Cultural environment
(d) Natural environment

4. Understanding of environment enables a business enterprise to
(a) focus on customers
(b) gain the first mover advantage
(c) become aware of impending threat
(d) All of them.

5. Demonetization and GST are examples of changes in
(a) Political environment
(b) Social environment
(c) Technological environment
(d) Global environment

6. Merger of associate banks of SBI into SBI is an example of changes in
(a) Economic environment
(b) Technological environment
(c) Social environment
(d) Demographic environment

7. Tick (✓) the correct alternative.
Demographic trends are a part of:
(a) economic environment III
(b) social environment
(c) political environment
(d) legal environment

8. State whether the following statements are True or False:
Wait and watch is a response of least resistance.
Big and powerful firms adopt the response of gaining command over the environment.
Innovative approach requires no feedback system.
Adaptation response involves anticipation of changes in business environment.

9. State whether the following statements are true or false.
Privatisation and globalisation are components of economic liberalisation.
Pressures for structural adjustments are a reason for globalisation.
Denationalisation is a form of privatisation.
Closure of small scale firms is a positive effect of economic liberalisation.

10. Fill in the blanks:

  1. Business environment is the totality of …………… forces
  2. Different elements of business environment are ……………
  3. When business environment changes rapidly and suddenly …………… increases.
  4. Industrial policy, monetary policy and fiscal policy are elements of …………… environment of business.
  5. Business gets …………… from the environment and supplies …………… to the environment.

11. Match the items in column A with those in column B


12. Age, family size, sex composition and other people related elements are part of
(a) political environment
(b) economic environment
(c) demographic environment
(d) natural environment.

CA Foundation BCK Chapter 3 MCQ with Answers – Business Organizations

Business Organizations – CA Foundation BCK Chapter 3 MCQ Questions

1. Who is the Chairman of Asian Paints Ltd. ?
(a) KBS Anand
(b) Ashwin Choksi
(c) Chimanlal Choksi
(d) Champaklal Choksey

2. Axis Bank was founded in:
(a) 1991
(b) 1992
(c) 1993
(d) 1994

3. Who is the Chief Executive of Axis Bank ?
(a) Sanjiv Misra
(b) Jairam Sridharam
(c) Chanda Cochar
(d) Shikha Sharma

4. Bajaj Auto was founded at
(a) Mumbai
(b) Kolkata
(c) Pune
(d) Bengaluru

5. Who is the Chairman of Bajaj Auto
(a) Sanjiv Bajaj
(b) Rajiv Bajaj
(c) Jamnalal Bajaj
(d) Rahul Bajaj

6. In which year Bharti Airtel was founded ?
(a) 1991
(b) 1992
(c) 1994
(d) 1995

7. Who is the Chairman of Bharti Airtel ?
(a) Deepak Mittal
(b) Navin Mittal
(c) Sunil Mittal
(d) Anil Mittal

8. Cipla operates in which industry
(a) Food
(b) Pharma
(c) Hotels
(d) All the above

9. Dr. Reddy’s laboratories was set up in
(a) 1980
(b) 1983
(c) 1984
(d) 1989

10. HDFC Bank was set up in
(a) 1991
(b) 1992
(c) 1993
(d) 1994

11. Which is India’s largest private sector hank
(a) Axis Bank
(b) SBI
(c) ICICI Bank
(d) HDFC Bank

12. Which company was formed by seven engineers with a capital of ? 10000
(a) Asian Paints
(b) Bharti Airtel
(c) Infosys
(d) None of the above

13. ITC was originally named as:
(a) Imperial Tobacco company
(b) Indian Tobacco company
(c) Indian Tea company
(d) None of the above

14. Larsen & Toubro Ltd. was founded by
(a) Indians
(b) Americans
(c) Danish
(d) Europeans

15. Reliance Industries Ltd. was founded by
(a) Anil Ambani
(b) Mukesh Ambani
(c) Akash Ambani
(d) Dhirubhai Ambani

16. State Bank of India was originally known as
(a) Centurion Bank
(b) United Bank of India
(c) Imperial Bank
(d) None of the Above

17. Which is the largest Commercial bank of India
(a) SBI
(b) ICICI Bank
(c) HDFC Bank
(d) Axis Bank

18. Which Company is the holding company of 100 independent companies of the Tata Group ?
(a) Tata Sons Ltd.
(b) TCS Ltd.
(c) Tata Steel Ltd.
(d) Tata Motors Ltd.

19. Which of the following are conglomerates
(a) Tata Sons Ltd.
(b) L&T Ltd.
(c) Reliance Industries Ltd.
(d) All of these

20. Which information technology company began as an edible oil firm
(a) Infosys
(b) Microsoft
(c) IBM
(d) Wipro

21. Wipro was founded in:
(a) 1948
(b) 1958
(c) 1945
(d) 1968

22. Which banking company is known worldwide for its credit cards
(a) Axis Bank
(b) ICICI Bank
(c) HDFC Bank
(d) American Express

23. Which company was set up in a garage
(a) Infosys
(b) HP
(c) Nestle
(d) Microsoft

24. Apple’s main business is
(a) Fruits
(b) Computers
(c) Retailing
(d) None of the above

25. IBM Corporation was founded in
(a) 1895
(b) 1911
(c) 1921
(d) 1931

26. Which global firm has an Indian as its chief executive
(a) HP
(b) IBM
(c) Microsoft
(d) None of the above

27. Good Food, Good Life is the Slogan of which company
(a) Walmart
(b) Britannia
(c) Parle
(d) Nestle

28. Which company is world’s largest retailer
(a) Shoppers Stop
(b) Smart
(c) Spencer
(d) Walmart

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

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

1. Classify the following into economic and non-economic activities.
(a) A mother cooking food for her children
(b) A teacher teaching in a coaching centre.
(c) A young boy helps an old man in crossing the road.
(d) The Chaat seller outside a school.
(e) A lady officer in Delhi Police

2. The income of a profession is called
(a) wage
(b) salary
(c) fee
(d) profit

3. In employment a person receives
(a) profit
(b) fee
(c) salary
(d) dividend

4. Income of a businessman is called
(a) wage
(b) salary
(c) fee
(d) profit

5. Which of the following is not a business activity:
(a) A housewife selling old newspapers
(b) A person selling vegetables in your locality
(c) A teacher teaching his daughter at home
(d) A painter painting houses of others

6. In which of the following occupations services of specialised nature are provided for fee
(a) Employment
(b) Business
(c) Profession
(d) Farming

7. Which of the following occupations involve maximum risk
(a) Employment
(b) Business
(c) Profession
(d) Teaching

8. Which of the following statements best describe economic activities.
(a) These activities are undertaken to earn money.
(b) These activities provide pleasure.
(c) These activities involve no risk
(d) These activities involve working outside the house.

9. The head of the joint Hindu family business is called
(a) Partner
(b) Manager
(c) Karta
(d) Member

10. The maximum number of partners in a partner-ship firm can be :
(a) 10
(b) 20
(c) 50
(d) 100

11. State whether the following statements are True or False:

(a) Taking photographs of mountains as a hobby is an economic activity.
(b) Teaching in a school is a non-economic activity.
(c) Service or employment is an economic activity.
(d) Business involves buying and selling of goods and services.
(e) Running a hair-cutting saloon is a business.
(f) Occupations of doctors, lawyers and char¬tered accountants are called professions.
(g) Economic activities are undertaken for earning a living.

12. Answer the following in Yes or No:

(a) A business activity can be carried out without sale or exchange.
(b) Business involves the creation of utilities.
(c) A business activity may be without a profit motive.
(d) Risk is an essential element of every business activity.
(e) Earning profits is the sole objective of business.
(f) Business is an economic activity.
(g) Profession involves greater risk than busi¬ness.

13. Name the following:

(a) The industry in which useful products are obtained from the earth and the sea.
(b) The trade in which goods are imported and exported to some other country.
(c) The branch of commerce which removes the hindrance of time.
(d) Buying and selling of goods in small quan-tities.

14. Fill in the blanks:

(a) Business = Industry + ………….
(b) …………. means the production of goods and services.
(c) Commerce includes ‘trade and ………….’
(d) Conversion of raw materials and component parts into finished products is known as …………… industry.
(e) Agriculture is an …………… industry.
(f) Transport removes the hindrance of ……………

15. State whether the following statements are True or False:

(a) Industry and commerce are interchangeable terms.
(b) Commerce is a wider term than trade.
(c) Trade between two countries is known as internal trade.
(d) Conversion of cotton into cloth is an example of genetic industry.

16. Match the following:


17. Answer in Yes or No:

(a) The sole proprietor is the exclusive master of his business.
(b) The liability of a sole proprietor is limited.
(c) A sole proprietorship has no legal existence apart from its owner.
(d) Sole proprietorship is the oldest form of business organisation.
(e) It is difficult to set up a sole proprietorship.

18. Fill in the blanks:

(a) Sole proprietorship is the …………… form of business enterprises, (latest/oldest)
(b) Sole proprietorship is most suitable form …………… for business, (small/large)
(c) Liability of a sole proprietor is …………… (limited/ unlimited)
(d) Sole proprietorship …………… a separate legal entity, (has/does not have)
(e) It is to set up a sole proprietorship firm, (easy/difficult)

19. Fill in the blanks:

(a) The membership of a joint Hindu family business is acquired by ……………
(b) The liability of the karta in a joint Hindu family business is ……………
(c) A member of the joint Hindu family business demand division/of …………… property.
(d) All the members of a joint Hindu family business …………… part in its man agement.
(e) A member of the j oint Hindu family business …………… call for account of past profits while leaving the business.

20. State whether the following statements are True or False:

(a) A joint Hindu family business is the result of a contract between the members of the family.
(b) Every member of a joint Hindu family business is an agent of the firm.
(c) There is no limit on the number of members in a joint Hindu family business.
(d) Female members of a family do not have a share in the joint Hindu family business.
(e) A joint Hindu family business is not dissolved on the death of a member.

21. Match the following:


22. Name the following:

(a) A partnership in which the liability of one or more partners is limited.
(b) A partnership which is set up for an indefinite period of time.
(c) The document containing the terms and conditions of a partnership.
(d) The partner who contributes capital but does not take active part in the management
(e) Person who lends his name and goodwill for the benefit of a partnership firm.

23. State whether the following statements are True or False:

(a) Registration of a partnership is legally compulsory.
(b) Limited partnership is not allowed in India.
(c) A partnership can take as many partners as it likes.
(d) A minor can become a partner.
(e) Partners may come and go but the part-nership goes on forever.
(f) A person becomes a partner on his birth in the family.

24. Name the following:

(a) The person who promotes a business.
(b) The document containing the bylaws of a company.
(c) The documents inviting subscriptions for shares and debentures.
(d) The amount of money which must be raised before allotment of share.

25. Mark the following statements True or False:

(a) A private company must file a statement in lieu of prospectus.
(b) A company which does not want to prepare its own Articles of Association can adopt Table A.
(c) A company wanting to raise capital must issue a prospectus.
(cl) A private company can start its business immediately after incorporation.
(e) Capital clause is a part of the Articles of Association
(f) The Memorandum of Association defines the relationship of a company with or out¬siders.
(g) Every company must issue a prospectus to raise share capital.

26. Fill in the blanks:

(a) A company is legally …………… from its members.
(b) Liability of every member in a company is ……………
(c) Registration of a company is ……………
(d) A company is managed by a ……………
(e) In a private company, there must be at least …………… members.
(f) A company has …………… succession.

27. Name the following:
(a) A company in which the number of members cannot exceed 50:
(b) A company having at least seven members:

28. Match the following:


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

30. The form of business organisation in which there is separation of ownership and management is called
(a) Sole proprietorship
(b) Partnership
(c) Company
(d) All these.

31. State whether the following statements are True or False:

(a) A joint stock company is separate legal entity.
(b) A company survives even if all its members die.
(c) A joint stock company is a voluntary association of persons.
(d) A joint stock company is less stable than a partnership.
(e) Registration of a joint stock company is optional.
(f) There can be no conflict of interest in a joint stock company.
(g) A company is an artificial legal person.

32. Fill in the blanks:

(a) The East India Company was a …………… company
(b) The Reserve Bank of India is a …………… company.
(c) Reliance Industries Limited is a …………… company.
(d) A does not have share capital.
(e) The liability of members of a company is unlimited.
(f) A company which holds 51% more of the shares of another company is called ……………
(g) Steel Authority of India Limited is a company.
(h) Coca Cola Corporation is a company.
(i) Minimum share capitalin a private company is Rs. ……………

33. State whether the following statements are True or False.

(a) There is no chartered company in India.
(h) LIC is a statutory company.
(c) At least five persons are needed to form a public company.
(d) The minimum paid up capital of a private company must be Rupees five lakh.
(e) A private company can invite public deposits.
(f) The shares of a public company are transferable.
(g) A subsidiary of a public company is also a public company.
(h) The concept of private company deemed to be public no longer exists in India.