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Key Facts: GCE O/L Business & Accounting Studies Exam

Subject 60

Official Department of Examinations Subject Code

Department of Examinations, Sri Lanka

40 MCQs

Paper 1 Compulsory Multiple-Choice Questions

Department of Examinations, Sri Lanka

3 Hours

Total Examination Time (Paper 1: 1h + Paper 2: 2h)

Department of Examinations, Sri Lanka

Grade S

Minimum Passing Grade (35 Marks)

Department of Examinations, Sri Lanka

3 Languages

Administered in Sinhala, Tamil, and English

Ministry of Education, Sri Lanka

Sri Lanka GCE O/L Business & Accounting Studies (Subject Code 60) tests Grade 11 students on business principles and practical double-entry bookkeeping via Paper 1 (40 MCQs, 1 hour) and Paper 2 (structured problems, 2 hours).

Sample GCE O/L Business & Accounting Studies Practice Questions

Try these sample questions to review concepts for the GCE O/L Business & Accounting Studies exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which of the following statements correctly distinguishes human needs from human wants in business studies?
A.Needs are essential for biological survival and are limited, whereas wants are desires shaped by culture and are unlimited.
B.Needs are unlimited and change rapidly with technology, whereas wants are basic and fixed for all human beings.
C.Needs can only be satisfied by commercial goods, while wants are satisfied entirely by free goods.
D.Needs are created exclusively by business advertising, whereas wants exist naturally without external stimulation.
Explanation: Human needs are basic necessities required for survival, such as food, water, clothing, and shelter, which are limited in number and common to all people. In contrast, human wants are specific ways people satisfy those needs, shaped by culture, personality, and social status, making them diverse and virtually unlimited. Businesses create and provide products to satisfy both needs and wants.
2In the production of goods and services, which pair correctly matches a factor of production with its corresponding economic reward?
A.Land - Wages
B.Capital - Interest
C.Labour - Rent
D.Enterprise - Commission
Explanation: Capital refers to man-made resources used in the further production of wealth, and its economic reward is interest. Land earns rent, labour earns wages or salaries, and enterprise (the entrepreneur) earns profit as a reward for bearing business risks and coordinating the other factors.
3In the Sri Lankan tea industry, which activity belongs to secondary production?
A.Plucking green tea leaves on an estate in Nuwara Eliya
B.Transporting finished tea chests to the Colombo tea auctions
C.Processing and fermenting green leaves into black tea inside a factory
D.Insuring tea shipments bound for international export markets
Explanation: Secondary production involves manufacturing and processing raw materials into finished or semi-finished goods. In the tea industry, plucking raw leaves is primary production, processing them in a tea factory into black tea is secondary production, and transporting or insuring the tea belongs to tertiary production (commercial services).
4Which of the following is considered an internal environment factor of a business enterprise?
A.Statutory regulations enacted by the Parliament of Sri Lanka
B.Prevailing commercial bank lending interest rates
C.Technological breakthroughs achieved by foreign competitors
D.Skills, morale, and organizational culture of employees
Explanation: The internal environment comprises elements within the organization that management can directly influence or control, such as employee skills, leadership style, organizational structure, and company culture. External environmental factors, such as government legislation, bank interest rates, and competitor activities, originate outside the business and cannot be directly controlled by management.
5Under the Consumer Affairs Authority (CAA) Act No. 09 of 2003 in Sri Lanka, which of the following is a recognized statutory consumer right?
A.The right to be protected against goods and services that are hazardous to health and life
B.The right to obtain goods free of charge during promotional campaigns
C.The right to fix the retail price of consumer commodities independently
D.The right to return any purchased product at any time without proof of purchase
Explanation: The Consumer Affairs Authority Act protects consumers by guaranteeing the right to safety, which ensures protection against products and services hazardous to health or life. Other recognized consumer rights include the right to information, choice, representation, redress, and consumer education. Consumers do not possess a statutory right to free goods or arbitrary pricing.
6Tertiary economic activities are divided into direct services and commercial services (aids to trade). Which of the following is an example of a direct service?
A.Warehousing paddy harvests in a central storage facility
B.Consultation provided by a medical practitioner to an individual patient
C.Underwriting marine insurance policies for cargo ships
D.Advertising commercial consumer products on national television
Explanation: Direct services satisfy human personal wants directly from the service provider to the consumer without intermediate trade involvement, such as healthcare consultations, teaching, haircutting, and legal advice. Commercial services (aids to trade), such as warehousing, transport, banking, insurance, and advertising, facilitate the smooth exchange and distribution of goods.
7A decision by the Central Bank of Sri Lanka to increase statutory reserve requirements and policy interest rates represents a change in which macro-environment dimension?
A.Political environment
B.Sociocultural environment
C.Economic environment
D.Technological environment
Explanation: Monetary policy decisions, interest rate adjustments, inflation levels, and currency exchange rates form key components of the economic environment. These economic forces directly influence business borrowing costs, consumer spending power, and corporate capital investment decisions across Sri Lanka.
8Which of the following practices is a legal requirement for retail traders under Sri Lankan consumer protection regulations?
A.Offering at least a 10% cash discount on all grocery items sold
B.Extending interest-free credit facilities to all regular neighbourhood customers
C.Selling all imported perishable food items exclusively below their cost price
D.Displaying the maximum retail price (MRP) clearly in Sri Lankan Rupees on packaged commodities
Explanation: Under the regulations of the Consumer Affairs Authority of Sri Lanka, retail traders are legally required to display prices clearly on goods and comply with Maximum Retail Price (MRP) orders specified in Sri Lankan Rupees. Selling above the stipulated MRP, concealing prices, or altering price tags constitutes a punishable statutory offense.
9Which action by a business management team best demonstrates the practice of business ethics?
A.Providing clear, accurate ingredient and allergen information on food packages without misleading claims
B.Understating annual business profits in financial statements to reduce corporate income tax liabilities
C.Discharging untreated industrial effluents into a nearby river during late night hours to save waste disposal fees
D.Forming an informal cartel with local competitors to artificially fix higher selling prices for essential goods
Explanation: Business ethics involves conducting business operations according to moral values, truthfulness, fairness, and social responsibility. Providing honest, complete product information protects consumer health and builds trust. The other options represent illegal, unethical practices that exploit consumers, the environment, or the state.
10A retail grocery store in Gampaha implements LankaQR code scanning at its checkout counters. How does this technological environment enhancement benefit the business?
A.It completely eliminates the requirement to record cash and bank transactions in the accounting books
B.It enables instant digital settlements, lowers physical cash handling risks, and accelerates cashier throughput
C.It legally exempts the retail business from paying turnover taxes and income levies to the government
D.It guarantees that supplier cost prices will remain fixed regardless of inflation
Explanation: LankaQR is a national standard for digital retail payments established by the Central Bank of Sri Lanka. Implementing LankaQR speeds up the checkout process, provides customers with convenient cashless payment options, directly transfers funds into the merchant's bank account, and reduces the risks and security costs associated with holding physical cash on store premises.

About the GCE O/L Business & Accounting Studies Exam

The Sri Lanka General Certificate of Education (Ordinary Level) Business & Accounting Studies (Subject Code 60) is a major Category 1 elective subject administered nationwide by the Department of Examinations, Sri Lanka, for Grade 11 candidates. The syllabus introduces students to essential commercial principles, the economic and statutory environment, consumer rights, double-entry bookkeeping, source documentation, books of prime entry, trial balances, final accounts for sole proprietorships, cost accounting fundamentals, and banking operations in Sri Lanka. Success in this subject provides a strong foundation for the GCE Advanced Level Commerce stream and professional accounting pathways. This practice bank offers 100 realistic practice questions featuring double-entry exercises and bookkeeping computations in Sri Lankan Rupees (LKR).

Exam sponsor: Department of Examinations, Sri Lanka (doenets.lk). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

The examination consists of two papers: Paper 1 contains 40 compulsory multiple-choice questions (1 hour, 40 marks). Paper 2 contains structured business theory questions and practical double-entry bookkeeping problems administered over 2 hours (60 marks). The marks are combined to form a final composite score graded from A (Distinction) to F (Fail).

Time Limit

Paper I and Paper II are sat in a single session of 3 hours 10 minutes

Passing Score

Grade S or higher

Exam / Certification Fees

Free for school candidates; nominal fee for private candidates

Exam sponsor website

Reported exam pass rate: Approximately 65% to 72% of candidates achieve a Grade S or higher nationally.. This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

20%

Business Fundamentals and Environment

Human needs and wants, goods and services, factors of production, classification of economic activities, internal and external business environments, business ethics, and consumer protection in Sri Lanka.

30%

Bookkeeping and Double Entry

The accounting equation (Assets = Liabilities + Equity), source documents (receipts, invoices, payment vouchers), books of prime entry (cash book, petty cash book, day books, general journal), ledger posting, and trial balance extraction.

25%

Final Accounts and Adjustments

Trading account, profit and loss account, and balance sheet (statement of financial position) for sole proprietorships, incorporating year-end adjustments for accrued expenses, prepayments, depreciation, and bad debt provisions.

15%

Cost Accounting and Banking Services

Cost classification (direct, indirect, fixed, variable), basic cost sheets and prime cost calculation, commercial banking services in Sri Lanka, current accounts, cheques and crossing, bank reconciliation statements, and electronic banking.

10%

Small Business and Trade

Entrepreneurship characteristics, business planning, wholesale and retail trade operations in Sri Lanka, retail trends, and basic principles of international import and export trade.

Preparing for the GCE O/L Business & Accounting Studies Exam

What You Need to Know

  • Passing score: Grade S or higher
  • Assessment: The examination consists of two papers: Paper 1 contains 40 compulsory multiple-choice questions (1 hour, 40 marks). Paper 2 contains structured business theory questions and practical double-entry bookkeeping problems administered over 2 hours (60 marks). The marks are combined to form a final composite score graded from A (Distinction) to F (Fail).
  • Time limit: Paper I and Paper II are sat in a single session of 3 hours 10 minutes
  • Exam / certification fees: Free for school candidates; nominal fee for private candidates Official sources

Using Our Practice Resources

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

Frequently Asked Questions

What is the format and duration of the GCE O/L Business & Accounting Studies examination?

The examination consists of two papers conducted on the same day: Paper 1 consists of 40 compulsory multiple-choice questions to be completed in 1 hour (40 marks). Paper 2 consists of structured and computational problems covering business concepts, books of prime entry, ledger accounts, and final financial statements over 2 hours (60 marks).

Are calculators permitted in GCE Ordinary Level Business & Accounting Studies?

No. Unlike the GCE Advanced Level examination, calculators are generally not permitted in GCE Ordinary Level examinations conducted by the Department of Examinations, Sri Lanka. Computational problems are structured with accessible numbers to test fundamental arithmetic, double-entry logic, and bookkeeping rules.

How is the final grade determined for Subject Code 60?

Marks from Paper 1 (out of 40) and Paper 2 (out of 60) are summed to give a total percentage score out of 100. Grades are awarded on the standard national scale: Grade A (Distinction, 75–100), Grade B (Very Good Pass, 65–74), Grade C (Credit Pass, 50–64), Grade S (Ordinary Pass, 35–49), and Grade F (Fail, 0–34).

In what languages is the examination offered?

The examination is administered simultaneously across Sri Lanka in Sinhala, Tamil, and English media. Candidates answer in the medium in which they are officially registered at school or as private candidates.

Why is Business & Accounting Studies important for secondary students?

Subject 60 is the primary commerce subject in the O/L curriculum. It provides essential life skills in financial management and consumer rights, and serves as the direct prerequisite foundation for students wishing to pursue the Commerce stream (Accounting, Business Studies, Economics) at GCE Advanced Level.