APSET Paper 2 Mock Test - 4 (Commerce) - AP TET MCQ

The correct answer is Dog.

BCG Matrix: 

• The BCG matrix is a growth-share matrix developed by the Boston Consultancy Group.
• The matrix was developed in the 1970s by Bruce D. Henderson the founder of the Boston Consulting Group.
• The BCG matrix enables companies to analyze their business units and broad product portfolio.
• Thus, giving the company a clear picture of whether to invest, hold or divest a business unit.

Key Points

Based on the two dimensions – relative market share and market growth rate, the company can plot its business units into four categories: Cash Cows, Dogs, Stars, and Question Marks.  

Dogs:

• Dogs operate in a low-growth market and have a low market share.
• Dogs are known to put a strain on company resources.
• They are typically in the decline stage of the product lifecycle.
• The lack of demand coupled with a slow market creates a major hurdle for Dogs to increase their market share.
• For an SBU in this position, the firm should decide to curtail losses by divesting. 

Additional Information

Stars: 

• Stars operate in high-growth markets and have a high market share. As the name goes they are at the top of the game in their industry.
• Apart from a high market share, Stars enjoy customer loyalty, goodwill among stakeholders, high brand value, brand recall, etc.
• Managing a star requires ongoing investment to fend off competition in the high-growth market.

Cash Cows: 

• Cash Cows operate in low-growth markets but maintain a high market share.
• Cash Cows dominate the market they operate in and ensure steady cash flow for the company.
• They typically fall into the maturity stage of the product cycle.
• Cash Cows require less investment and are milked by the company for extra cash flow.

Questions Marks:

• Questions Marks also known as Problem Child operates in a high-growth market but has a low market share.
• The rationale is that the business unit has just started operations.
• Question Marks require steady investment so that they gain market share and turn into Stars.

Hence, According to the BCG matrix, for Dog positions of SBU, the firm should decide to curtail losses by divesting.

 Proposal: 

• In the Indian Contract Act 1872, a proposal is defined as a suggestion or offer made by one person to another, with an intention to enter into a contract.
• It is also referred to as an offer.
• The proposal should be definite and certain, and should be communicated to the person to whom it is made.
• Once the proposal is accepted, it becomes a promise or an agreement, forming a binding contract between the parties.
• However, if the proposal is rejected, it comes to an end and cannot be revived.

Important Points Section 6 of Indian Contract Act 1872: 

Revocation how made —A proposal is revoked—

1. by the communication of notice of revocation by the proposer to the other party;
2. by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;
3. by the failure of the acceptor to fulfil a condition precedent to acceptance; or
4.  by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance. 

Hence the correct answer is A, B, C and D only.

The correct answer is (a), (b), and (c).

• The Asia-Pacific Economic Cooperation (APEC) is a regional economic forum founded in 1989 to capitalize on the Asia-Pacific region's growing interconnectedness. The 21 members of APEC want to increase regional prosperity by fostering balanced, inclusive, sustainable, creative, and secure growth and by speeding up regional economic integration.
• To achieve these objectives, APEC member economies devised a framework in 1995 in Osaka, Japan, that identifies trade and investment liberalization, business facilitation, and economic and technical cooperation as the three core areas of cooperation, also known as the "Three Pillars" of APEC.
• APEC facilitates the movement of products, services, investments, and people across borders. Members promote this trade by facilitating speedier border customs procedures, improving business climates behind the border, and unifying legislation and standards across the region.

Hence, three pillars of the Asia-Pacific Economic Cooperation (APEC) are trade and investment liberalization, business facilitation, and economic and technical cooperation.

Pharmaceutical does not ignore regulatory agencies. They usually spend much time effort trying to influence the decisions made by them e.g. to get approval for the use of their drugs. The firms also go in for lobbying and may, at times, use threats or promises to achieve their desired.

Organizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives. The structure of the organization is the framework within which effort is coordinated.

The Coefficient Of Correlation Between X And Y = Covariance / (Standard Deviation Of X x Standard Deviation Of Y)

= -17.8 / (6.6 x 4.2)

= - 0.642

Surcharge is levied when the total income 1 Crore exceeds for domestic corporation.

A surcharge is an additional charge or tax to the tax being already levied. A surcharge of 10% on a tax rate of 30% effectively increases the combined tax rate to 33%. Marginal reliefs are also provided to individuals as sometimes an increase in tax liability after factoring surcharge becomes more than the increase in income above Rs 1 crore.

Mode = 20(given)

Mode = 3Median - 2Mean

Putting the values on formula we get,

20 = 3 x 25 - 2xMean

2Mean = 75 - 20

Mean = 55/2 = 27.50

The correct answer is Both I and II.Key Points

• Both wealth tax and gift tax are referred to as paper taxes because they are not widely enforced and are often evaded by taxpayers.
• Wealth tax is considered a paper tax because it is difficult to assess the true value of an individual's assets and is often avoided through offshore accounts or other means of hiding wealth.
• Gift tax is considered a paper tax because it is relatively easy to avoid by transferring assets in a way that does not trigger the tax.

Additional Information

• Wealth tax is a tax on the net wealth of an individual or organization, including assets such as cash, bank deposits, real estate, and investments.
• Gift tax is a tax on the transfer of property by one individual to another, without receiving anything in return.

As per section 138 of the Companies Act, 2013, a certain class of companies are required to appoint an internal auditor for conducting an internal audit.

This Internal audit of the company's functions and activities shall be conducted by a chartered accountant, a cost accountant, or such other professional as the Board may determine.

The correct answer is C, A, D, B, E.

Key Points

Estimating the demand equation using regression analysis typically involves the following sequence:

• Model specifications: The first step is usually to decide on the model to be used. This means specifying the dependent variable (which will usually be the quantity demanded) and the independent variables (these will be the factors we hypothesise to influence the quantity demanded).
• Obtaining data on each variable or its proxy: Once we have decided on the variables, the next step is to obtain data on each of these variables. The data has to be relevant and reliable.
• Deciding on the functional form of the demand equation: The functional form of the equation (for example, linear, logarithmic, etc.) is then selected based on the relationship expected between the variables.
• Estimating slope coefficients: Using the data and the form of the equation, the regression is run to estimate the slope coefficients, which tell us how much the dependent variable changes when the independent variables change.
• Evaluation of regression results: The final step is to evaluate the results, checking if the model fits the data well (through measures like R-squared), and if the results are statistically significant.

In the case of vertical combination, several independent businesses operating in successive stages in the same industry come together. It is also known as sequence combination, process combination or industry combination.

Hence, the correct option (D).

According to the passage, "The biggest challenge for Indian start-ups today is lack of access to risk capital especially early to pre-revenue stage. This must be addressed quickly if we want to create high-value product growth engine."

The biggest challenge for Indian start-ups is lack of access to risk capital especially early to pre-revenue stage.

According to the passage, "In my view, successful start-ups require passionate and persuasive founders, great vision, innovative technology, strong team, patient capital, good market timing and a little bit of luck."

So, 'Luck is not at all important for the success of start-ups' is not correct.

Cost accounting provides information to facilitate management accounting. Cost accounting information is basically used to determine the cost of each product and service. Standards are fixed for each of the product or activity to find the variances against the actual. Cost accounting information is also used to have a fixation of budget. Inventory valuation is based on the cost parameters. 

The Correct answer is ‘Industrial recession’.

 Key PointsRisk:

• Risk is the process of identifying, assessing, and controlling uncertainty in an entity's capital and earnings is known as risk management. These dangers arise from a variety of sources, including financial uncertainty, legal liabilities, technological issues, strategic management errors, accidents, and natural disasters.

 Important PointsCompany strike: This option is incorrect because Company strike is a type of risk that can be certain. it can be avoided by taking corrective actions.

Bankruptcy of a major supplier: This option is incorrect because Bankruptcy of a major supplier will not impact the Business.

Death of a key company officer: This option is incorrect because Death of a key company officer will not impact because usually company make Key Managerial insurance to protect such loss

Industrial recession: This option is correct because Industrial recession because it is specific risk factor which cannot be avoided by diversifying the company’s portfolio.

The correct answer is A - IV, B - III, C - I, D - II.

Key Points Here is an explanation of each of the terms:

Balanced Scorecard: This is a performance measurement framework that helps organizations to set goals, measure their performance, and track their progress towards their goals. It was developed by Robert S. Kaplan and David p. Norton in the early 1990s.
Economic Value-added Analysis: This is a financial performance measure that measures the amount of value created by a company for its shareholders. It was developed by Stern Stewart & Company in the 1980s.
VRIO framework: This is a business analysis framework that helps organizations to identify their resources and capabilities and assess their value, rarity, imitability, and organization. It was developed by Jay Barney in the 1990s.
Business intelligence: This is a broad term that refers to the collection, analysis, and presentation of data to help organizations make better decisions. It can be used to track performance, identify trends, and make predictions.

Important Points

Key-Points

Insurable Interest:

• The Marine Insurance Act (MIA), 1963 contains a clear definition of insurable interest.
• This definition states that there must be a physical object exposed to marine perils and the insured must have a legal relationship to the object.
• In consequence of this, he benefits from its preservation and is prejudiced by damage or loss happening to it or where he may incur liability in respect thereof.
• In the case of fire insurance, the insurable interest should exist at the time of contract and also at the time of loss whereas, in the case of marine insurance, the insurable interest must exist at the time of loss, even though it may have not existed when the insurance was affected.
• This is significant when one considers the mercantile practice, under which there is the possibility of the sale and purchase of goods during transit.
• The MIA states that when the goods are insured "lost or not lost" the assured may recover the loss, even though he may not have acquired his interest until after the loss, unless at the time of effecting insurance he was aware of the loss and the insurer was not.
• If the assured has no interest at the time of loss, they cannot acquire an interest in any act or election after he is aware of the loss.
• Arising from this, both a contingent and defeasible interest are insurable.
• A partial interest is also insurable.

Thus, from the above explanation, we can conclude that the above two statements are correct.

The paired sample t-test, sometimes called the dependent sample t-test, is a statistical procedure used to determine whether the mean difference between two sets of observations is zero. In a paired sample t-test, each subject or entity is measured twice, resulting in pairs of observations.

• (1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
• (2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promiser, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promiser authorized him to bring or defend the suit;
• (3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promiser, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promiser authorized him to compromise the suit.

However, As per Section 124 of the Indian Contract Act, a contract of indemnity is a contract by which one party promises to save the other party from loss caused to him.

There are generally two parties in indemnity contracts:

• The Indemnity holder is the one who is protected from any liability.
• The Indemnifier is the one who promises to reimburse the Indemnitee for any claims.

Key Points

Correlation:

• The intensity and direction of a relationship between two variables is indicated by a correlation coefficient, which is a number between -1 and 1.
• In other words, it shows how comparable two or more variables' measurements are across a dataset.

Important PointsCoefficient of Determination

The Coefficient of determination is obtained by squaring the correlation coefficient (r²).

• This is the percentage of variance that is shared by all the variables.
• Always falling between 0 and 1, the coefficient of determination is frequently given as a percentage.
• The coefficient of determination is used in regression models to measure how much of the variance of one variable is explained by the variance of the other variable.
• Coefficient of Determination = r²(square of correlation coefficient)
• A high r² indicates that a significant portion of one variable's variability is influenced by its relationship to the other variable.
• A low r² indicates that only a small percentage of the variability of one variable is explained by its link to the other variable.

Solution of the question:

• In the given question, correlation coefficient (r) is given = 0.8
• Coefficient of Determination = r²
• Hence, r² = (0.8)²
• r² = 0.64
• Percentage of variation is 0.64 x 100 = 64%

Hence, the percentage of variation in the dependent variable explained by the variation in the independent variable is 64%

Activities in the process of accounting:

Recording the business transaction in the books of entry:

• The first step in the accounting cycle is identifying transactions and recording them in the books of entry i.e. journal entry.
• Companies will have many transactions throughout the year so recordkeeping is essential for recording all types of transactions.
• Journal entries for every transaction must be created.
• The choice between accrual and cash accounting will dictate when transactions are officially recorded.

Journalising the transaction in the ledger accounts:

• Once transactions are recorded in journal entries, they must be posted in the general ledger accounts.
• The general ledger helps in the breakdown of all accounting activities by accounts.
• It allows a bookkeeper to monitor financial positions by account.

Preparation of Annual Financial Statements:

• After the adjustments are recorded as journal entries wherever necessary, the company generates its financial statements.
• For most companies, this statement will include income statements, balance sheets, and cash flow statements. 
• Lastly, a company closes its books at the end of the day on a specified closing date.
• The closing statement provides a report of analysis of performance over the period. 

Deriving meaningful inferences for business decisions:

• With the help of financial statements and closing statements, business owners can derive a meaningful inference about their business activities.
• It helps to ensure accuracy, consistency, and efficient financial performance analysis.

Indirect taxes are basically taxes that can be passed on to another entity or individual. They are usually imposed on a manufacturer or supplier who then passes on the tax to the consumer. The most common example of an indirect tax is the excise tax on cigarettes and alcohol.

GST is an indirect tax levied on the supply of goods and services. GST is majorly divided into four types: Central Goods and Service Tax (CGST), State Goods and Service Tax (SGST), Integrated Goods and Services Tax (IGST) and Union Territory Goods and Services Tax (UGST).

Customs Duty is a type of Indirect Tax which is levied on goods which are imported into India. In some cases, it is also levied when the goods are exported from India.

Samples

• A sample is a group of people or objects used in the study that is taken from a wider population for analysis. 
• It should be representative of the whole population for generalization of results. 

Important Points Sampling error:

• A sampling error is a sampling error occurred when the selected sample does not represent the entire population. 
• And result generated does not match the results to be obtained from the whole population.
• Here, the point estimate is the sample selected and a parameter is called the entire population.
• So, Sampling error or Estimation error is the difference between the point estimate (sample statistics) and the true value of the population parameter.

Hence, the difference between the point estimate and the true value of population parameter being estimated is known as Sampling error or Estimation error.

Additional Information

Probable error:

• The correlation coefficient that aids in determining the precise values of the coefficients is the Probable error coefficient. 
• The correlation coefficient, or probable error, is essentially what determines the value and accuracy of the coefficients.

Standard error:

• By utilizing standard deviation, the standard error is a statistical concept that assesses how accurately a sample distribution represents a population.
• The standard error shows how varied the population mean is likely to be from a sample mean.

The following is the explanation of the right answer.

Therefore, Option 1 is the correct answer.

The Reserve Bank of India (RBI) was established on April 1, 1935, in accordance with the provisions of the Reserve Bank of India Act, 1934.

Key Points

The main functions of RBI:

• ​Custodian of Country’s Foreign Currency Reserves: The Reserve Bank has custody of the country’s reserves of international currency, and this enables the Reserve Bank to deal with crises connected with adverse balance of payments position.
• Controller of Credit: Since credit, money forms the most important part of the supply of money, and since the supply of money has important implications for economic stability, the importance of the control of credit becomes obvious. Credit is controlled by the Reserve Bank in accordance with the economic priorities of the government.
• Printing of currency notes: The Reserve Bank has the right to print currency up to 10,000 rupee notes.
  • However, if the Reserve Bank wants to print anything higher, the government must amend the Reserve Bank of India Act.
  • In addition, when the Reserve Bank estimates the demand for banknotes each year, it must file a written request that government officials must sign off on before printing.
  • When making these final decisions, government officials rely heavily on advice from the Reserve Bank senior staff.

Important Points

•  While the Reserve Bank of India prints currency, the government of India directly handles the minting of coins.
• Coins are minted at the four mints: Alipore in South Kolkata, Saifabad in Hyderabad, Cherlapally in Hyderabad, and Noida in Uttar Pradesh.
• Although the government handles minting coins, the Reserve Bank issues them for circulation.

Given:

Two unbiased dice are rolled D1 and D2

Concept:

Probability = Number of desire event / Number of total event

Calculation:

⇒ Total number of events = 6² = 36

⇒ The sum on the top of the faces is greater than 10 will be possible in three cases (5, 6), (6, 5) and (6, 6)

⇒ Required probability = 3/36 = 1/12

∴ The probability that the sum on the top of the faces is greater than 10 is 1/12.