UGC NET Paper 2 Commerce Mock Test - 4 - UGC NET MCQ

The correct answer is Both (A) and (R) are true, but (R) is not a correct explanation of (A).

Key Points Assertion (A) is true and Reason (R) is also true, but Reason (R) does not explain Assertion (A).

• Assertion (A) states that the EXIM policy is liberal, market-oriented, and favours global trade. This is true because the EXIM policy has been gradually liberalized over the years to promote free trade and economic growth. The EXIM policy now allows for a wide range of imports and exports, with few restrictions.
• Reason (R) states that GATT has played a significant role in the liberalization of the economy. This is also true. GATT is a multilateral trade agreement that aims to reduce tariffs and other trade barriers. India is a member of GATT, and the EXIM policy has been aligned with GATT principles.

However, Reason (R) does not explain Assertion (A). The EXIM policy is not liberal, market-oriented, and favourable to global trade simply because of GATT. There are other factors that have contributed to the liberalization of the EXIM policy, such as the government's desire to promote economic growth and attract foreign investment.

In conclusion, Assertion (A) is true and Reason (R) is also true, but Reason (R) does not explain Assertion (A)

Therefore we conclude that the correct answer is A - III, B - IV, C - I, D - II.

The correct answer is Explicit

Key Points

• Explicit costs are normal business costs that appear in the general business and directly affect a company's profitability.
• Explicit costs have clearly defined amounts, which flow through to the income statement.
• Examples of explicit costs include wages, lease payments, utilities, raw materials, and other direct costs.
• Explicit costs are also known as accounting costs.
• They are easy to identify and link to a company's business activities to which the expenses are attributed.

The Correct answer is ‘Financial risk’.

 Key PointsFinancial risk:

• Financial Risk is nothing but the possibility of losing money on an investment or business.
• Examples of Financial Risk Are Credit risk, liquidity risk, and operational risk. Financial risk is a type of situation where interested parties lose money.

 Important PointsMarket risk: This option is incorrect because Market Risk is a risk associated with Market. It can be with the competitors, Product or services.

Inflation risk: This option is incorrect because Inflation risk is a risk that cause due to General price level changes in the economy.

Interest rate risk: This option is incorrect because Interest rate risk is a type of risk occurred due to change in rate of interest by central bank of country.

Financial risk: This option is correct because Financial Risk is nothing but the possibility of losing money on an investment or business. Examples of Financial Risk Are Credit risk, liquidity risk, and operational risk. Financial risk is a type of situation where interested parties lose money.

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

Key Points

Normal distribution:

• A normal distribution, also known as a Gaussian distribution, is a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.
• In graphical form, the normal distribution appears as a "bell curve".
• The height of individuals in a population often follows a bell-shaped curve, where the majority of individuals cluster around the mean height, with fewer individuals at the extreme ends.

Weibull distribution:

• The Weibull distribution is a continuous distribution that can be used to model the time to failure of a product.
• It has two parameters, shape and scale, that can be used to fit the distribution to the data.
• The shape parameter determines the shape of the distribution, and the scale parameter determines the scale of the distribution.
• The Weibull distribution is often used to model the lifetimes or failure times of devices or systems.
• It can describe both the early failure period characterized by a decreasing failure rate (infant mortality) and the later failure period characterized by an increasing failure rate (wear-out).

Exponential distribution:

• The period before a certain event occurs is frequently the focus of the continuous probability distribution known as the exponential distribution.
• Events occur continually, independently, and at a steady average pace during this process.
• The Exponential distribution is commonly used to model the time between events in a Poisson process.
• In the context of daily sales, it can represent the time intervals between consecutive sales events.

Poisson distribution:

• The Poisson distribution is a discrete distribution that can be used to model the number of events that occur in a fixed interval of time or space.
• It has one parameter, lambda, which is the expected number of events in the interval.
• The Poisson distribution is a good choice for modeling the number of defects in a production line because it can model a variety of defect patterns.
• The Poisson distribution is commonly used to model the number of rare events occurring in a fixed interval of time or space.
• In the context of defects in a production line, it can represent the number of occurrences of defects within a given time or space interval.

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

The correct option is Contingency approach

Key Points

• There are mainly four approaches available to study the organization's behavior

​1)Human resource approach

2)productivity approach

3)System approach

4) contingency approach

• The contingency approach is stress that there is no single way to manage effectively under all circumstances
• each situation demands different approaches based on the type and nature of the event 
• Depending on the individual and groups the approaches are applied 
• It is the duty of the manager to identify which approach should be undertaken for the particular situation 
• According to circumstances, the approaches may differ from one to another 
• As there is no such single approach that can be followed and it may differ from time to time

Hence the correct answer is Contingency approach.

The correct answer is Orders of commission on certain combination.

Key PointsCompany - The term is derived from the Latin word (“com” meaning “with” or “together”; “panis” that is “bread”) Section 2(20) of Companies Act 2013 states that a company means any association of person registered under the present or the previous companies act.

Important PointsSection 31 of the Competition Act, 2002 deals with Commission orders on specific combinations -

(1) The Commission shall, by order, approve any combination, including any combination with respect to which a notice has been given pursuant to subsection (2) of section 6, where the Commission is of the opinion that such combination does not, or is not likely to, have an appreciable adverse effect on competition.

(2) If the Commission believes that the combination will have a significant adverse impact on competition, it must order that the combination not go into effect.

(3) When the Commission believes a combination will have, or is likely to have, a significant detrimental effect on the competition but that effect can be mitigated by making appropriate changes to the combination, it may suggest the necessary modifications to the parties to the combination and the combination itself.

Stakeholders - A stakeholder is a person who has an interest in a business and who has the potential to affect or be impacted by it. The main parties involved in a traditional business are its creditors, employees, customers, and suppliers.

Important PointsCorporate social responsibility -

• Corporate social responsibility (CSR) is a self-policing corporate strategy that enables an organization to be socially accountable to its customers, employees, and stakeholders.
• Corporate social responsibility (CSR) is a company's ongoing commitment to act morally, promote economic growth, and enhance the lives of its employees, their families, the local community, and society as a whole.
• It must fulfil its economic, legal, ethical, and discretionary obligations as a responsible corporate citizen.

The correct answer is Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of assertion (A).

Key PointsPrepaid Expenses

• Future expenses that are paid in advance are known as prepaid expenses.
• Prepaid expenses are first recognised as an asset on the balance sheet.
• The sum is recorded as an expense after the assets' benefits are realised over time.
• Example of Prepaid Expenses: Insurance is an excellent example of a prepaid expense, as it is customarily paid for in advance. If a company pays ₹12,000 for an insurance policy that covers the next 12 months, then it would record a current asset of ₹12,000 at the time of payment to represent this prepaid amount. In each month of the 12-month policy, the company would recognise an expense of ₹1,000 and draw down the prepaid asset by this same amount.

Liquid Assets:

• Liquid assets are those that can be quickly converted into cash.
• While assets are valuable belongings that can be turned to cash, not all of them can be sold for cash immediately or without incurring a loss.
• Cash, Bank balance, Accounts receivable, Treasury bills, notes, and bonds are some examples of liquid assets

Important Points Assertion (A): Prepaid expenses are not considered as liquid assets.

• The assertion is True as prepaid expenses are not considered liquid assets
  

Reason (R): Prepaid expenses cannot be converted into cash.

• The Reason (R) is also true & correctly explains the assertion (A) as prepaid expenses and income tax receivables, cannot be sold for cash, which is why they are not considered liquid assets.
• They are recorded as Other current assets, as prepaid expenses are the expenses that have been paid in advance before they are even due for payment. An obligation that is met in advance is an asset for the company,

Nicosia Model of Consumer Behavior was developed in 1966, by Professor Francesco M. Nicosia, an expert in consumer motivation and behavior. This model focuses on the relationship between the firm and its potential consumers. The model suggests that messages from the firm (advertisements) first influence the predisposition of the consumer towards the product or service.

The Nicosia model of Consumer Behavior is divided into four major fields:

Thus, option 2 is the correct answer as can be seen from the table above.

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

Key Points

Here's the explanation for each match:

A. Operating Profit:

Operating Profit is calculated by subtracting Total Variable Costs and Fixed Costs from Sales Revenue. Therefore, it matches (Sales × P/V ratio) - Fixed Cost.

B. Profit-Volume Ratio:

Profit-Volume Ratio is calculated by dividing Contribution Margin by Sales Revenue. This can be rewritten as (Unit sale price - Variable costs per unit)/Unit sale price. Therefore, it matches IV. (Unit sale price - Variable costs per unit)/Unit sale price.

C. Margin of safety:

Margin of safety is calculated by subtracting Breakeven Sales Volume from Actual Sales Volume. Therefore, it matches I. Actual sales volume - Breakeven sales volume.

D. Contribution margin:

Contribution Margin is calculated by subtracting Variable Costs from Sales Revenue. Therefore, it matches II. Sales Revenue - Total variable costs.

The correct answer is They are directly involved in financial decisions taken in the organization.

Key Points

Operational management:

• Operational management at supervisory levels is primarily focused on overseeing and coordinating the day-to-day activities of a specific operational unit or department within an organization.
• While they play a crucial role in ensuring smooth operations and achieving operational goals, their involvement in financial decisions is generally limited.
• Financial decisions are usually handled by higher-level managers or the finance department.

Important Points

Examining the options:

They are responsible for improving the quality of output:

• Operational managers at supervisory levels are indeed responsible for monitoring and improving the quality of output.
• They oversee the production process, ensure adherence to quality standards, and implement quality improvement initiatives.

They come from the lowest level of management:

• \Operational managers at supervisory levels are typically positioned at the lower levels of the management hierarchy.
• They directly supervise the operational workforce and coordinate their activities to achieve organizational objectives.

They directly observe that safety standards are followed:

• Ensuring workplace safety is an important responsibility of operational managers at supervisory levels.
• They are responsible for implementing and enforcing safety policies and procedures, conducting safety inspections, and promoting a safe working environment.

Based on the above analysis, it is clear that option 1) They are directly involved in financial decisions taken in the organization is not directly related to the role of operational management at supervisory levels. Financial decisions are typically handled by higher-level managers or specialized finance professionals.

Key PointsConflicts:

• Conflicts are struggles that can occur when there is a direct difference of opinion or interest, so it's critical to know how to handle and settle them.
• Conflict between employees can arise in the workplace in a variety of situations, and when it happens, it is crucial to address the issue before it worsens.
• Conflict resolution techniques are necessary while responding professionally because conflict is frequently a result of human connection.
• Common conflict resolution strategies involve: Avoiding, Competing, Accommodating, Collaborating, Compromising.

Important Points Avoiding technique of conflict resolution:

• Avoiding conflict typically demonstrates a low concern for self and a low concern for others.
• Avoiding a conflict can show a great level of concern for others in some cultures that prioritise collective peace over individual goals.
• A general rule is that avoidance doesn't preclude communicating about the conflict.
• Avoiding is both unassertive and uncooperative. In this mode, you work to sidestep the conflict without attempting to satisfy either individual’s concerns.

Advantages of Avoiding:

• Reducing Stress: This mode allows you to avoid exacting or displeasing people and topics.
• Saving Time: Allows you to not waste time and energy on low-priority items.
• Steering Clear of Danger: Allows you to avoid inciting trouble.
• Setting Up More Favourable Conditions: Provides you with time to be more prepared and less distracted so that you may deal with the matter at hand.

Hence, when each party to a conflict has low concern for self as well as to other, they just ignore or withdraw from the conflict then it is known as Avoidance resolution technique.

The correct answer is "One way communication".

Key Points

• Personal selling is a part of promotional- mix and it is an art of person-to-person communication for persuading prospects or consumers in the sales process. For introducing effective marketing system, balancing of other marketing elements like, product development, pricing, distribution system, advertising etc. should be organised along with implementation of personal selling methodology.
• Advertising is a marketing tactic involving paying for space to promote a product, service, or cause. The actual promotional messages are called advertisements, or ads for short. The goal of advertising is to reach people most likely to be willing to pay for a company's products or services and entice them to buy.
• Role of advertising and personal selling is:
  • ​Persuading prospects - Sales representatives use their personal selling skills to increase the chances of a successful sale. They aim to understand a prospect’s needs and offer a solution to those needs in the form of a product or service that provides strong benefits and represents value for money. If prospects pose objections, sales representatives use their powers of persuasion to overcome the objections and convince prospects that they are making the right choice by buying a product or service.
  • Selling complex products - Companies that sell complex products must be able to demonstrate or explain products to potential customers and answer questions or queries. Sales representatives can present products in a logical way, focusing on the benefits that are relevant to different decision-makers, such as technical managers, purchasing officers or finance executives. Representatives use their experience to gauge a prospect’s response to their sales pitch and adjust their presentation to individual prospects’ levels of understanding or interest.
  • Managing the sales cycle - Personal selling is important to companies marketing products that require a long sales cycle. In business-to-business marketing, prospects move through a buying process that involves a number of stages, including identification of a need, development of a specification, selection of potential suppliers, evaluation of suppliers’ offerings and a final purchasing decision.
  • Two way communication - Personal selling is best tools for two-way communication. salesman can provide necessary information to customer about company’s offer, and also can collect information from customer. customer can actively with salesman to solve his doubts and objections

The correct answer is Issue of Bonus Shares

Key Points

Ordinary business is the business which must be transacted at an annual general meeting. As per section 102 of the Companies Act, 2013 following are ordinary business:

• The consideration of financial statements and the reports of the Board of directors and auditors;
• The declaration of dividend;
• The appointment of directors in place of those retiring;
• The appointment of, and the fixing of remuneration of, the auditors.

Thus, if the four items of business mentioned above is transacted at Annual General Meeting, then it is considered as ordinary business and every other business transacted at Annual General Meeting will be considered as special Business.

Line and Staff Managers:

• Line managers usually have the final responsibility for achieving the organization's goals as they have the authority to direct the work of subordinates.
• Staff managers have the responsibility of helping and advising line managers in achieving organizational goals.
• HR managers perform staff functions.
• HR managers assist line managers in the decision-making process of an organization like recruiting, selecting, training, and compensating.
• Managing people, in a broader context, is every manager’s business and successful organizations generally combine the experience of line managers with the experience of HR specialists while utilizing the talents of employees to their greatest potential.
• HR managers have to win the hearts of employees working together with line managers and deliver results in a cost-effective manner.
• HR managers as indicated earlier are assuming a greater role in top management planning and decision making a trend that indicates the growing realization among executives that HRM can make significant contributions to the success of an organization.

Therefore, statement (A) is incorrect, but (R) is correct.

DSSs include knowledge-based systems. A properly designed DSS is an interactive software-based system intended to help decision-makers compile useful information from a combination of raw data, documents, and personal knowledge, or business models to identify and solve problems and make decisions. DSS uses the summary information, exceptions, patterns, and trends using the analytical models. A decision support system helps in decision-making but does not necessarily give a decision itself. The decision-makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions.

Characteristics of a DSS

• Support for decision-makers in semi-structured and unstructured problems.
• Support for managers at various managerial levels, ranging from the top executives to line managers.
• Support for individuals and groups. Less structured problems often require the involvement of several individuals from different departments and organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for a variety of decision processes and styles.
• DSSs are adaptive over time.

Performance Appraisal is defined as the formal evaluation of an individual's Job Performance. It also involves giving feedback to the individual concerned and developing constructive solutions for further improvement.

The World Trade Organisation (WTO) is the only global international organisation dealing with the rules of trade between nations.

• At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
• The goal is to help producers of goods and services, exporters, and importers conduct their business.
• It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948.

A firm producing a large number of products will follow the pricing strategy known as product line pricing. Product line pricing refers to the practice of reviewing and setting prices for multiple products that a company offers in coordination with one another. This strategy aims to maximize the sales of different products by creating more complementary, rather than competing products.

Human Resource Management (HRM) is the term used to describe formal systems devised for the management of people within an organization. The responsibilities of a human resource manager fall into three major areas: staffing, employee compensation and benefits, and defining/designing work.

The probable error of a correlation coefficient can be obtained by applying the following formula:

P. E.

r = coefficient of correlation

N = number of observations

The correlation coefficient is a statistical measure that calculates the strength of the relationship between the relative movements of two variables. The values range between -1 and 1. A calculated number greater than 1 or less than -1 means that there was an error in the correlation measurement. A correlation of -1 shows a perfect negative correlation, while a correlation of 1.0 shows a perfect positive correlation. A correlation of 0.0 shows no relationship between the movement of the two variables.

As we know that,

Simple ranking: The Simple Ranking Method using Reference Profiles (or SRMP) is a Multi-Criteria Decision Aiding technique based on the outranking paradigm which allows to rank decision alternatives according to the preferences of a decision maker.

Paired comparison: Paired compariso is the rank comparison rating method is easy and understandable where ratings are to be used as criteria.

360-degree appraisal: Synergita’s holistic 360-degree feedback helps get performance & development feedback from peers, subordinates, superiors, cross-functional managers, customers and other internal & external stakeholders.

Graphic rating: Graphic rating evaluation lists the traits required for the job and asks the source to rate the individual on each attribute such as dependability and creativity. so used for Order of rating from best to worst.

Comparative Advantage theory states that each country should produce those goods in which it has a comparative/relative advantage because of the presence of opportunity costs which gives the country a relative advantage in the production of one good.

Correct match:

Authoritarian or autocratic - the leader tells his or her employees what to do and how to do it, without getting their advice. the leader allows the employees to make the decisions, however, the leader is still responsible for the decisions that are made.

The democratic/participative leadership style places significant responsibility on leaders and their staff. This is true for all organizations — from private enterprises and government agencies to educational institutions and nonprofit entities.

Democratic leadership, also known as participative leadership or shared leadership, is a type of leadership style in which members of the group take a more participative role in the decision-making process.

Correct arrangement: