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Commerce Exam  >  Commerce Test  >  Business Studies (BST) Class 11  >  Test: Internal Trade - 2 - Commerce MCQ

Internal Trade - 2 - Free MCQ Practice Test with solutions, Commerce Business


MCQ Practice Test & Solutions: Test: Internal Trade - 2 (15 Questions)

You can prepare effectively for Commerce Business Studies (BST) Class 11 with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Internal Trade - 2". These 15 questions have been designed by the experts with the latest curriculum of Commerce 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 20 minutes
  • - Number of Questions: 15

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Test: Internal Trade - 2 - Question 1
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Which of the following is not concerned with Chambers of Commerce & Industry

Detailed Solution: Question 1

The correct answer is Option C - ICICI

  • ASSOCHAM is a trade association and a chamber that represents the interests of businesses and industry in India.

  • CII (Confederation of Indian Industry) is an industry association that works as a chamber for promoting trade, policy advocacy and cooperation between businesses.

  • FICCI (Federation of Indian Chambers of Commerce and Industry) is a leading chamber of commerce representing Indian business and industry.

  • ICICI is a financial institution (a bank and financial services company), not an organisation that functions as a chamber of commerce or industry; therefore it is not concerned with chambers of commerce and industry.

Test: Internal Trade - 2 - Question 2
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In new policy of government ________ Tax is being imposed instead of sales tax

Detailed Solution: Question 2

Explanation:
The new policy of the government is imposing a new tax instead of sales tax. The correct answer is option D, which is Value Added Tax (VAT). Here is a detailed explanation:
- What is Value Added Tax (VAT)?
- Value Added Tax (VAT) is a type of consumption tax that is levied on the value added at each stage of the supply chain. It is a tax on the final consumption of goods and services.
- VAT is imposed on the value added by businesses in the production and distribution process. It is collected by businesses on behalf of the government and is ultimately paid by the end consumer.
- Why is Value Added Tax (VAT) being imposed instead of sales tax?
- VAT is considered a more efficient and transparent form of taxation compared to sales tax.
- VAT allows for better tracking of the value added at each stage of the supply chain, which helps in reducing tax evasion and increasing tax compliance.
- VAT also provides the government with a stable and predictable source of revenue.
- Other options:
- State and Central sale Tax: This is not the correct answer as the question states that a new tax is being imposed instead of sales tax.
- Wealth Tax: This is not the correct answer as wealth tax is a tax on the net wealth of individuals or entities.
- Income Tax: This is not the correct answer as income tax is a tax on the income of individuals or entities.
In conclusion, the new policy of the government is imposing Value Added Tax (VAT) instead of sales tax. VAT is a consumption tax that is considered more efficient and transparent compared to sales tax.

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Test: Internal Trade - 2 - Question 3
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Which of the following is come under Fixed Shop Small Retailers? 

Detailed Solution: Question 3

Retailers who have a fixed shop and have a permanent place for business are called fixed shop retailers. General stores are one of the parts of Fixed shop retailers. They sell day to day essentials. General stores are found where it is convenient for the customers.

Test: Internal Trade - 2 - Question 4
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Who offers facilities of after sales services?

Detailed Solution: Question 4

Retailer- It refers to buying goods from the manufacturer or wholesalersomething and selling the same to the ultimate consumer . The retail trade generally deals in a variety of goods . Those who are engaged in retail trade are called retailers.

Test: Internal Trade - 2 - Question 5
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Buying and selling of goods and services in large quantities for the purpose of resale or intermediate use by _________

Detailed Solution: Question 5

Definition of Wholesale Trade

Wholesale trade refers to the buying and selling of goods and services in large quantities for the purpose of resale or intermediate use. It involves the sale of products to retailers, professional business users, or other wholesalers who then sell the goods to consumers or end-users.


Key Points
- Wholesale trade deals with the distribution of goods and services on a large scale.
- The primary customers of wholesalers are retailers, professional business users, and other wholesalers.
- Wholesalers purchase goods directly from manufacturers or producers at lower prices due to their bulk buying power.
- They then sell these goods to retailers or other businesses at a slightly higher price, allowing them to make a profit.
- Wholesalers provide a crucial link in the supply chain by bridging the gap between manufacturers and retailers.
- They often offer additional services such as storage, transportation, and packaging to facilitate the distribution process.
- Wholesale trade is characterized by the sale of goods in large quantities, typically in bulk or by the case.
- It requires a deep understanding of market trends, customer demands, and pricing strategies.
- Wholesale trade plays a vital role in the economy by ensuring the efficient flow of goods from producers to consumers.
Conclusion
Wholesale trade is essential for the smooth functioning of the supply chain and the distribution of goods to retailers and other businesses. By purchasing products in large quantities and selling them at a slightly higher price, wholesalers enable retailers to access a wide range of goods without having to deal directly with manufacturers. This intermediation process helps to drive economic growth and ensures the availability of goods to consumers.

Test: Internal Trade - 2 - Question 6
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The purchase of goods from a foreign country is called ____________

Detailed Solution: Question 6


To give a detailed solution, we can break down the answer into headings and bullet points:
Definition:
- The purchase of goods from a foreign country is known as import.
Explanation:
- Import is the process of bringing goods or services into one country from another country for sale or use.
- It involves purchasing products from a foreign country and bringing them into the domestic market.
- Importing goods allows countries to access products that are not available domestically or are cheaper to produce abroad.
- Imports can include a wide range of products such as raw materials, finished goods, machinery, electronics, and more.
- The import process involves various steps, including customs clearance, payment of import duties or taxes, and compliance with import regulations.
Other Options:
- Export: The sale or shipment of goods to a foreign country.
- Entreport: A location where goods are temporarily stored or transshipped during international trade.
- Re-Export: The process of exporting goods that were previously imported.
Therefore, the correct answer is Option B: Import, as it refers to the purchase of goods from a foreign country.

Test: Internal Trade - 2 - Question 7
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The persons who come in between the primary producer and the final consumer to promote trade is called as ____________

Detailed Solution: Question 7

The Middleman in Trade:
The persons who come in between the primary producer and the final consumer to promote trade are called middlemen. These individuals or entities play a crucial role in the distribution process by facilitating the movement of goods from producers to consumers.
Roles of Middlemen:
Middlemen perform various functions to ensure a smooth flow of goods and services in the market. These functions include:
1. Market Information: Middlemen gather and analyze market information such as demand, supply, prices, and consumer preferences. This information helps producers in making informed decisions about production and marketing strategies.
2. Procurement: Middlemen procure goods and services from producers in bulk quantities. They act as intermediaries between producers and buyers, ensuring a steady supply of products.
3. Storage and Warehousing: Middlemen provide storage and warehousing facilities to hold the goods in proper conditions until they are ready for distribution. This helps in maintaining the quality of products and ensuring their availability when needed.
4. Transportation: Middlemen arrange for the transportation of goods from the production site to the distribution centers or directly to the consumers. They choose the most efficient and cost-effective mode of transportation to ensure timely delivery.
5. Financing: Middlemen often provide financial support to producers by offering credit facilities. They may advance funds to producers to meet their immediate financial needs, enabling them to continue production and meet market demand.
6. Marketing and Promotion: Middlemen engage in marketing and promotional activities to create awareness and demand for the products. They employ various strategies such as advertising, sales promotions, and personal selling to attract customers.
7. Packaging and Labeling: Middlemen assist in packaging and labeling the products according to industry standards and consumer requirements. This enhances the marketability of goods and ensures compliance with regulatory guidelines.
8. Pricing: Middlemen play a role in determining the prices of goods based on factors such as production costs, market demand, and competition. They strive to strike a balance between profitability for producers and affordability for consumers.
Conclusion:
Middlemen act as intermediaries between producers and consumers, facilitating the smooth flow of goods and services in the market. Their roles and functions are vital in promoting trade and ensuring efficient distribution.

Test: Internal Trade - 2 - Question 8
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When goods are imported for the purpose of export is called as _________

Detailed Solution: Question 8

Answer:
The correct term for the import of goods for the purpose of export is called Entrepot. Here is a detailed explanation:
Definition:
Entrepot refers to a location or a trading post where goods are received for storage and then shipped or traded to other destinations.
Explanation:
When goods are imported for the purpose of export, it means that these goods are not intended for domestic consumption but rather for resale or distribution in foreign markets. The entrepot trade involves the following steps:
1. Import of goods: Goods are brought into a country from various sources.
2. Storage: The imported goods are stored in a designated location or trading post, which acts as an entrepot.
3. Re-export: The stored goods are then exported to other countries or markets, where they are sold or distributed.
Advantages of Entrepot Trade:
- Economies of scale: By consolidating goods from different sources, entrepot trade allows for larger shipments, which can result in cost savings.
- Tax benefits: Entrepot trade often involves the exemption or reduction of import duties and taxes, making it financially advantageous for businesses.
- Access to multiple markets: Entrepot trade enables companies to reach a wider customer base by exporting goods to different countries.
- Trade facilitation: Entrepot trade simplifies the process of international trade by centralizing storage and distribution activities.
In conclusion, when goods are imported for the purpose of export, it is known as entrepot trade. This trade practice offers several benefits for businesses, including cost savings, tax advantages, and access to multiple markets.

Test: Internal Trade - 2 - Question 9
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A warehouse keeper accepts goods for the purpose of ____________

Detailed Solution: Question 9

Answer:
The purpose of a warehouse keeper is to accept goods for the following reasons:
Storage:
- Warehouse keepers accept goods for the primary purpose of storing them.
- They provide a secure and organized space for goods until they are needed or sold.
Inventory Management:
- Warehouse keepers play a crucial role in managing inventory.
- They ensure that goods are properly labeled, tracked, and accounted for.
Order Fulfillment:
- Warehouse keepers assist in fulfilling customer orders.
- They pick, pack, and ship goods as per customer requests.
Logistics Support:
- Warehouse keepers help in facilitating the movement of goods.
- They coordinate with transportation providers and ensure timely delivery.
Quality Control:
- Warehouse keepers inspect goods upon arrival to check for any damages or defects.
- They ensure that only high-quality goods are accepted for storage.
In conclusion, a warehouse keeper accepts goods primarily for the purpose of storage, but also plays a crucial role in inventory management, order fulfillment, logistics support, and quality control.

Test: Internal Trade - 2 - Question 10
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____________ can check the price fluctuations in the market by holding back the goods when prices fall and releasing the goods when prices raise.

Detailed Solution: Question 10

Wholesalers can check the price fluctuations in the market by holding back the goods when prices fall and releasing the goods when prices raise. Here's a detailed explanation of why wholesalers are able to do this:
- Wholesalers are the middlemen between manufacturers or producers and retailers. They purchase goods in bulk from manufacturers and sell them in smaller quantities to retailers.
- Due to their large scale of operations, wholesalers have the advantage of holding a significant amount of inventory.
- Wholesalers have a good understanding of market trends and price fluctuations. They closely monitor the market and keep track of changes in supply and demand.
- When prices in the market fall, wholesalers can choose to hold back their goods and not sell them immediately. By doing so, they can avoid selling at a lower price and potentially incur losses.
- On the other hand, when prices in the market rise, wholesalers can release their goods and sell them at a higher price. This allows them to capitalize on the increased demand and maximize their profits.
- By effectively managing their inventory and timing their sales, wholesalers can take advantage of price fluctuations in the market and optimize their profitability.
- This practice of holding back goods and releasing them strategically is a common strategy employed by wholesalers to mitigate the risks associated with price fluctuations in the market.
In conclusion, wholesalers have the ability to check price fluctuations in the market by holding back goods when prices fall and releasing them when prices rise. This allows them to adapt to market conditions and optimize their profitability.

Test: Internal Trade - 2 - Question 11
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____ are mobile traders who deal in low priced articles with no fixed place of business.

Detailed Solution: Question 11

Definition of itinerant traders:

Itinerant traders are individuals who engage in mobile trading without having a fixed place of business. They typically deal in low-priced articles and move from one location to another to sell their goods.


Characteristics of itinerant traders:

  • Mobile traders: They do not have a fixed location for their business and constantly move from one place to another.

  • Dealing in low-priced articles: Itinerant traders often specialize in selling inexpensive goods that cater to a wide range of customers.

  • No fixed place of business: Unlike retailers or street stalls, itinerant traders do not have a specific shop or stall where they operate.


Comparison with other options:

  • Agents: Agents are individuals or organizations that act as intermediaries between buyers and sellers. They typically work on behalf of a principal and may have a fixed place of business.

  • Street stalls: Street stalls are small temporary shops or stands set up on the streets or public spaces. While they may also deal in low-priced articles, they usually have a fixed location.

  • Retailers: Retailers are businesses that sell goods directly to consumers. They may have a fixed place of business, such as a store or shop.


Conclusion:

Based on the given information, itinerant traders best fit the description of mobile traders who deal in low-priced articles without a fixed place of business.

Test: Internal Trade - 2 - Question 12
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Small scale Fixed retailers includes ____________

Detailed Solution: Question 12

Small-scale fixed retailers include:
A: Pedlars
- Pedlars are small-scale retailers who sell goods by traveling from place to place, typically on foot.
- They carry their merchandise with them and often sell items such as clothing, accessories, household goods, and small electronics.
- Pedlars may set up temporary stalls or display their goods on the streets or in public spaces.
B: General stores
- General stores are small-scale retail establishments that sell a wide variety of everyday items and household goods.
- They often stock a range of products including groceries, toiletries, cleaning supplies, stationery, and basic clothing.
- General stores are typically found in rural areas or small towns where there may be limited access to larger retail chains.
C: Cheap Jacks
- Cheap Jacks are small-scale retailers who specialize in selling low-cost or discounted merchandise.
- They may operate from small shops or temporary stalls and offer a wide range of products at affordable prices.
- Cheap Jacks often sell items that are overstocked, out-of-season, or slightly damaged, providing customers with bargain deals.
D: Hawkers
- Hawkers are small-scale retailers who sell their products by moving from place to place, often on foot or using bicycles or carts.
- They typically sell a specific type of product, such as street food, snacks, fruits, vegetables, or small household items.
- Hawkers may call out or display their goods to attract customers and often operate in busy marketplaces, street corners, or residential areas.
Overall, small-scale fixed retailers play an important role in providing convenience and accessibility to customers, especially in areas where larger retail chains may not be readily available. They offer a diverse range of products and often cater to specific needs and preferences of the local community.

Test: Internal Trade - 2 - Question 13
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This retail business acts as a universal supplier of a wide variety of products.

Detailed Solution: Question 13

A department store is a huge retail shop situated at a central place in the city, divided into a number of small shops or departments each dealing with one or two lines of goods and specialising in those lines. All such departments or speciality shops are under one roof and under one management and control.

Test: Internal Trade - 2 - Question 14
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The aim is to economies by buying in common and to retain their profits by selling in common.

Detailed Solution: Question 14


The given question asks to choose the option that aligns with the aim of economizing by buying in common and retaining profits by selling in common. Let's analyze each option and determine the correct answer.
Option A: Web Marketing
- Web marketing involves promoting and selling products or services online.
- It does not involve buying or selling in common or retaining profits together.
- This option does not align with the given aim.
Option B: Multiple Shop
- Multiple shop refers to having multiple retail outlets.
- While it may involve buying and selling together, it does not necessarily involve retaining profits in common.
- This option does not align with the given aim.
Option C: Teleshopping
- Teleshopping refers to buying products or services through television advertisements and phone calls.
- It does not involve buying or selling in common or retaining profits together.
- This option does not align with the given aim.
Option D: Consumer's Co-operative Store
- A consumer's co-operative store is a type of retail store owned and operated by its customers.
- Customers pool their resources to buy products in bulk, which allows for cost savings.
- Profits generated are shared among the customers as dividends or reinvested to benefit the customers.
- This option aligns with the aim of economizing by buying in common and retaining profits by selling in common.
Therefore, the correct answer is D: Consumer's Co-operative Store.

Test: Internal Trade - 2 - Question 15
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The risk of bad debts in this business is eliminated particularly when payment is received through V.P.P.

Detailed Solution: Question 15


Risk of Bad Debts in the Business:
- Bad debts refer to the situation where customers fail to pay their debts, resulting in financial losses for the business.
- It is important for businesses to minimize the risk of bad debts to maintain financial stability and profitability.
Payment received through V.P.P:
- V.P.P stands for Value Payable Post (also known as Cash on Delivery or C.O.D), which is a payment method where the customer pays for the goods upon delivery.
- When payment is received through V.P.P, the risk of bad debts is eliminated because the customer cannot refuse payment or default on the payment.
Identification of the Business:
- In order to determine the correct answer, let's analyze the given options and their relevance to the use of V.P.P payment method:
Option A: Co-operative store
- Co-operative stores generally operate on a membership basis and may not necessarily use V.P.P as their primary payment method.
Option B: Tele-shopping
- Tele-shopping refers to the practice of purchasing goods through television programs or online platforms. While V.P.P may be used in tele-shopping, it is not the only payment method used.
Option C: Mail order trading house
- Mail order trading houses typically rely on V.P.P as a common payment method. Customers place orders through mail or online, and payment is collected upon delivery.
Option D: Departmental store
- Departmental stores usually offer various payment methods, including V.P.P. However, it is not guaranteed that all departmental stores use V.P.P as the primary payment method.
Conclusion:
Based on the analysis, the most suitable option is Option C: Mail order trading house. This type of business relies heavily on V.P.P as a payment method, which effectively eliminates the risk of bad debts.

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This test contains 15 MCQs on Internal Trade - 2 with detailed solutions for each question. It is part of the Business Studies (BST) Class 11 course on EduRev, designed to align with the current Commerce syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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