Business and Commerce MCQ Questions and Solutions with Explanations | Commerce

Fully paid-up shares are called Stock. Fully paid shares are shares issued for which no more money is required to be paid to the company by shareholders on the value of the shares.

Insurance business is based on the theory of probability and law of large numbers. As the number of exposure units, or policyholders, increases, the probability is higher that the actual loss per exposure unit will equal the expected loss per exposure unit.

In order to control private sector insurance companies, the Government of India passed the IRDA Act (Insurance Regulatory and Development Authority Act, 1999) which enabled it to regulate the private sector companies in insurance business. One chairperson and not more than 9 members of whom not more than 5 would be full time members and they are appointed by the government. Those who have experience in life and general insurance, actuarial service, finance, economics etc., are appointed.

An office routine is a system. Routine is “a series of steps in performance of work, each step in the series being performed in the same order and in the same way every time.”

One-man-one-vote - is the principle adopted by Co-operative Societies. A cooperative society is formally used by people with limited means. The principle of one man one vote discourages members to invest large amounts in the society.

The liability of partners in a firm is Unlimited. Unlimited liability refers to the legal obligations general partners and sole proprietors because they are liable for all business debts if the business can't pay its liabilities.

A member of a company is Registered shareholder. A shareholder is a person who buys and holds shares in a company having a share capital. They become a member once their name is entered on the register of members.

The difference between the actual price and excess price of a share is called as Premium. The share premium account represents the difference between the par value of the shares issued and the subscription or issue price. Share premium account may also be known as additional paid-in capital and can also be called paid-in capital in excess of par value.

Dividend declared by a company may be paid in cash only. On the date of payment, the company reverses the dividend payable with a debit entry and credits its cash account for the respective cash outflow. Cash dividends do not affect a company's income statement. However, they shrink a company's shareholders' equity and cash balance by the same amount.

Equity shareholders are the owners of the company. Equity shares represent the ownership of a company and capital raised by the issue of such shares is known as ownership capital or owner's funds.