CUET PG Commerce Mock Test - 2 - CUET PG MCQ

The correct answer is - Both (A) and (R) are correct and (R) is the correct explanation of (A)

Key Points

• Assertion (A): A reasonable sized sample drawn randomly from large sized population contains almost all the characteristics which exist in the population.
  • When a sample is drawn randomly from a large population, it tends to represent the population accurately.
  • This is because random sampling ensures that every member of the population has an equal chance of being included in the sample.
  • As a result, the sample will likely contain the same characteristics and diversity present in the larger population.
• Reason (R): The theory of sampling is based on two important laws of statistics, viz, law of statistical regularity and law of inertia of large numbers.
  • Law of Statistical Regularity: This law states that a reasonably large sample selected at random from a population is likely to be highly representative of the population.
  • Law of Inertia of Large Numbers: This law states that as the sample size increases, the sample mean approaches the population mean.
  • These laws are fundamental principles that underpin the validity of random sampling and ensure that samples accurately reflect the population.

The correct answer is Ind - AS - 7.

Key Points

• Ind - AS - 7 (Statement of Cash Flows):
  • Ind - AS - 7 defines cash equivalents as short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
  • According to this standard, bank overdrafts which are repayable on demand form an integral part of an entity’s cash management. Therefore, these overdrafts are included as a component of cash and cash equivalents.

Additional Information

• AS - 3 (Revised):
  • This standard deals with cash flow statements but is not applicable for entities following Ind AS. It is more relevant for non-Ind AS compliant entities.
• Ind - AS - 107 (Financial Instruments: Disclosures):
  • This standard requires disclosures of financial instruments, and does not specifically address the classification of bank overdrafts as cash and cash equivalents.
• Ind - AS - 18 (Revenue):
  • This standard pertains to revenue recognition and does not cover the treatment of bank overdrafts in cash and cash equivalents.

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

Key Points

• The Phillips curve is an economic theory that inflation and unemployment have a stable and inverse relationship. Developed by William Phillips, it claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment
• Taxable Capacity means the maximum capacity of the people of a country to bear the burden of taxation without much hardship. It is nothing but the maximum limit that a government can tax the people- Findlay Shirras
• The life-cycle hypothesis (LCH) is an economic theory that describes the spending and saving habits of people over the course of a lifetime. The theory states that individuals seek to smooth consumption throughout their lifetime by borrowing when their income is low and saving when their income is high.
• The concept was developed by economists Franco Modigliani and his student Richard Brumberg in the early 1950s.
• The concept of Money Illusion was given by Pigou.

The correct answer is MRSXY decreases

Key Points Indifference Curve:

• A graphical representation of a combination of products that gives a consumer a similar level of satisfaction and renders them indifferent is called an indifference curve.
• Every point on the indifference curve indicates that a person or consumer has no preference between the two goods because they provide him with equivalent utility.

Marginal Rate of Substitution:

• The quantity of a good that a customer is prepared to consume in comparison to another good, provided that the new item is as satisfying, is known as the marginal rate of substitution (MRS).
• The indifference theory use MRS to study consumer behaviour.

Important Points

• The IC curve shows how much of Good X is substituted for Good Y.
• As we move down the Indifference curve, the units of good X increases and units of good Y decreases implying decreasing MRS_xy

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

Key Points

• Hiring an underwriter (B):
  • The first step in the IPO process involves hiring an underwriter, typically an investment bank. The underwriter helps the company prepare for the IPO by determining the financial health and readiness of the company for the public market.
  • This step is crucial as the underwriter plays a key role in advising on the IPO process, preparing necessary documentation, and ensuring regulatory compliance.
• Registration for IPO (C):
  • After hiring an underwriter, the company must register for the IPO with the appropriate regulatory authorities, such as the Securities and Exchange Board of India (SEBI).
  • This step involves submitting a detailed prospectus outlining the company's financials, business model, risk factors, and other pertinent information.
• Verification by SEBI (A):
  • Following registration, the regulatory authority (SEBI) conducts a thorough verification of the submitted documents to ensure compliance with all legal and financial requirements.
  • This verification process is critical to protect investors by ensuring that all information provided by the company is accurate and complete.
• Pricing of IPO (D):
  • Once the regulatory authority approves the IPO, the next step is to determine the IPO price. This involves setting the price at which the shares will be offered to the public.
  • The pricing is typically decided through a book-building process where the demand for shares is gauged to arrive at an optimal price.
• Allotment of shares (E):
  • The final step in the IPO process is the allotment of shares to investors. This step involves distributing the shares to institutional and retail investors based on the demand and subscription levels.
  • Successful allotment marks the company’s transition to a publicly traded entity, and its shares begin trading on the stock exchange.

The correct answer is A, C & D only.

Key Points

• Accepting Deposits (A):
  • This is one of the primary functions of commercial banks, where they accept money from the public as deposits and provide a safe place for saving.
  • These deposits can be in the form of savings accounts, current accounts, or fixed deposits.
  • Importance: This function provides the banks with the necessary funds to lend, ensures the safekeeping of public money, and helps maintain the financial stability of the community.
• Discounting Trade Bills (C):
  • Commercial banks discount trade bills to provide immediate funds to businesses. It involves purchasing the bill before its due date and deducting interest.
  • This helps in maintaining liquidity for businesses and encourages smooth trade operations.
  • Importance: This service provides liquidity to businesses, allowing them to maintain cash flow and continue operations smoothly without waiting for the bill's maturity.
• Financing Foreign Trade (D):
  • Banks provide various financial services to support foreign trade, including issuing letters of credit and offering foreign exchange services.
  • They help in mitigating risks associated with international trade by providing guarantees and facilitating transactions.
  • Importance: These services reduce the risk of international trade and provide assurance and security to the trading parties, thus promoting global commerce.

Additional Information

• Agency Service (B):
  • While important, agency services like managing portfolios, paying bills, and collecting cheques are not considered primary functions of commercial banks.
  • Services Included: Portfolio Management, Paying Bills, Collecting Cheques.
  • Importance: While significant for customer convenience, these services are more about enhancing the overall service portfolio of the bank rather than its core banking activities.
• General Utility Service (E):
  • These services include providing lockers, issuing traveler’s cheques, and offering credit cards, which are also not primary functions but are significant in enhancing customer convenience.
  • Services Included: Lockers, Traveler’s Cheques, Credit Cards.
  • Importance: These utilities improve customer experiences and can boost the bank's competitiveness, but they are supplemental to the core banking functions.

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

Key Points

• ECGC (Export Credit Guarantee Corporation) (E):
  • Established in 1957, ECGC is a government-owned export credit provider. It provides export credit insurance, offering risk protection against non-payment by foreign buyers due to political or commercial risks, thereby supporting Indian exporters.
• UTI (Unit Trust of India) (C):
  • Founded in 1963, UTI is India’s oldest mutual fund, established to promote savings and investment among the public. It has played a significant role in the financial ecosystem, providing a variety of investment options to retail and institutional clients.
• EXIM Bank (Export-Import Bank of India) (B):
  • Established in 1982, EXIM Bank aims to provide financial assistance to exporters and importers and to function as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services.
• NABARD (National Bank for Agriculture and Rural Development) (A):
  • Formed in 1982, NABARD was created to promote sustainable and equitable agriculture and rural development. It provides credit for the promotion of agriculture, small-scale industries, and other economic activities in rural areas.
• SIDBI (Small Industries Development Bank of India) (D):
  • Established in 1990, SIDBI focuses on the growth and development of micro, small, and medium-scale enterprises (MSMEs) in India. It provides financial assistance and services to improve the performance and efficiency of MSMEs in the national economic scenario.

Additional Information

• ECGC’s Role: ECGC supports Indian exporters by offering insurance covers to banks and financial institutions to enable them to extend better loan facilities to exporters.
• UTI’s Impact: UTI has significantly contributed to the Indian mutual fund industry, playing a pivotal role in channeling household savings into equity markets, thereby aiding the growth of the capital market.
• EXIM Bank’s Contributions: EXIM Bank fosters, promotes, and finances international trade of India and offers a range of services, including buyer’s credit, lines of credit, and export credit.
• NABARD’s Focus Areas: NABARD concentrates on providing and regulating credit for the promotion and development of agriculture, cottage, and village industries, emphasizing the credit needs of rural India.
• SIDBI’s Initiatives: SIDBI works through various schemes and programs to support the MSME sector, including credit and refinance solutions, developmental initiatives for capacity building, and creating a conducive business environment for small industries.

ECGC (Export Credit Guarantee Corporation):

• Export Credit Guarantee Corporation of India is administered by the Government of India through the Ministry of Commerce and Industry.
• It is fundamentally an export promotion organization with a motive to enhance the competitiveness of Indian exports by offering them credit insurance covers.
• ECGC was set up for ensuring the smooth functioning of Indian exporters by minimizing the risk associated with the payments emanating from other nations.
• ECGC insurance covers also assist the Indian exporters with better access to credit facilities from banks and other financial institutions.
• ECGC is the 5th largest credit insurance company dealing with the exports of any country.
• It also offers Overseas Investment Insurance to the Indian companies investing in Joint Ventures abroad in the form of loans or equity.

Therefore, ECGC is concerned with insurance.

Additional Information

ECGC offers the following types of guarantees to the exporter:

• Export finance guarantee
• Packing credit guarantee
• Post-shipment export credit guarantee
• Export production finance guarantee
• Transport guarantee
• Export performance guarantee

Key Points

Integral dimensions of a firm's credit policy:

• Each company should establish its own credit policy depending upon the ground situation and the environment in which it is operating. The main objective of the credit policy is to stimulate sales as well as control expenses and bad debts associated with granting credit.

Important Points

The following are the main components of a credit policy:

• Credit Standards
  • This variable deals with the granting of credit. On one extreme all the customers are granted credit and on the other extreme none of them are granted credit irrespective of their credit rating, but in today’s competitive environment this is not possible. In general, liberal credit standards lead to increased sales accompanied by higher incidence of bad debts, tying of funds in accounts receivable and increased cost of credit collection.
• Credit Period:
  • Credit period refers to the length of time provided to the buyer to pay for their purchases. During this period no interest is charged on the outstanding amount. The credit period generally varies from 30 to 90 days and in some businesses even a period of 180 days is allowed.
• Cash Discount:
  • Cash discount is offered to buyers to induce them to make prompt payment. The credit terms specify the percentage discount and the period during which it is available. Liberal cash discount policy implies that either the discount percentage is increased, or the discount period is increased
• Collection Effort:
  • The collection policy of a firm is aimed at timely collection of overdue amounts.
  • An efficient and rigorous collection program tends to decrease sales, shorten average collection period, reduce bad debts percentage and increase the collection expenses, whereas a lax collection program will have just the opposite effect.

Therefore, the correct answer is A, C, D and E only

Additional Information

Credit Appraisal:

• It is the process by which a lender/banker appraises the technical feasibility, economic viability and bankability including creditworthiness of the prospective borrower.

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (Manusmriti), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra).

• The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine.
• This was probably a pre-cursor to modern-day insurance.

Important Points

The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century.

• It came to India as a legacy of British occupation.
• General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British.
• In 1907, the Indian Mercantile Insurance Ltd. was set up.
• This was the first company to transact all classes of general insurance business.

From the above, we can say that Triton Insurance Company limited is the first general Insurance Company in India.

Additional Information

• 1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of India.
• The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices.

India still had a fixed exchange rate system in 1991, with the rupee tied to the value of a basket of key trading partners' currencies. Hence statement 1 is incorrect.

Government companies can be converted into private companies in two ways (i) by withdrawal of the government from ownership and management of public sector companies and or (ii) by outright sale of public sector companies. Disinvestment is the term for this process. Hence statement 2 is incorrect.

Features of LPG Policy 1991

• Abolition of Industrial licensing/ Permit Raj
• Public sector role diluted
• Beginning of privatization
• Free entry to foreign investment and technology
• Industrial location policy liberalized
• Abolition of phased manufacturing programmes for new projects
• Removal of mandatory convertibility clause
• Reduction in import tariffs
• Deregulation of markets
• Reduction of taxes Hence statement 3 is correct.

The elimination of restrictive trade practices was a key component of the LPG reforms. The Monopolies and Restrictive Trade Practices (MRTP) Act of 1969 designated all enterprises with assets of Rs. 100 crore or more as MRTP firms and subjected them to a number of restrictions. Following the reforms, these companies are no longer required to seek government clearance before making investment decisions. The Competition Act of 2002 replaced the MRTP Act. Hence statement 4 is correct.

The correct answer is Option 4.

Key Points

Primary Deficit: Primary deficit equals fiscal deficit minus interest payments. This indicates the gap between the government’s expenditure requirements and its receipts, not taking into account the expenditure incurred on interest payments on loans taken during the previous years.

Primary deficit = Fiscal deficit – Interest payments

Since in this question Primary deficit= Rs. 10,000 crore while Interest Payments= Rs. 8000 crore, the Fiscal deficit would be, Rs 10,000 +Rs 8,000 i.e. Rs. 18,000

Hence, option 4 is correct.

The correct answer is Option 3.

Key Points

• The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, which includes transportation, food, and medical care.
• It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
• Changes in the CPI are used to assess price changes associated with the cost of living. The CPI is a statistic for identifying periods of inflation or deflation.
• It does not include things like savings and investments, and can often exclude spending by foreign visitors.
• The CPI statistics incorporates professionals, self-employed, poor, unemployed, and retired people in the country but excludes non-metro or rural populations, farm families, armed forces, people serving in prison, and those in mental hospitals.
• CPI-W measures the Consumer Price Index for Urban Wage Earners and Clerical Workers while the CPI-U is the Consumer Price Index for Urban Consumers.

The audit engagement letter, generally, should include a reference to each of the following except a description of the auditor’s method of sample selection.

Key Points An audit engagement letter is a written agreement used by auditors when signing a new client. This letter serves as a legal contract between both parties. It also defines their rights and responsibilities for their business relationship. The requirement for these letters comes from auditing and accounting standards. These require both the client and auditors to agree on the terms and conditions of an audit engagement.

Important Points

Auditors should only accept a new audit engagement or continue an existing audit engagement if the 'preconditions for an audit required by ISA 210 Agreeing to the terms of audit engagements are present.

ISA 210 requires the auditor to:

• Determine whether the financial reporting framework to be applied in the preparation of the financial statements is appropriate; and
• Obtain the agreement of management that it acknowledges and understands its responsibilities.

If the preconditions for an audit are not present, the auditor should discuss the matter with management, and should not accept the engagement unless required to do so by law or regulation.

Additional Information

What Are The Elements Of The Audit Engagement Letter?

1. The Objectives And Scopes Of The Audit Engagement
2. The Responsibilities Of The Auditor
3. The Responsibilities Of The Management
4. Identification Of The Applicable Financial Reporting Framework That The Entity Uses In Order To Prepare The Financial Statements
5. Reference To The Expected Form And Content Of Any Applicable Reports To Be Issued By The Auditors.
6. Others

The above sections are compulsory for any audit engagement letter. Apart from the above, this letter also includes other elements. These requirements come from ISA 210. The additional sections include the following.

• Reference to relevant professional standards, regulations as well as legislation that are applicable to the audit engagement.
• Limitations of an audit engagement
• Expectations that management will provide written representations
• The basis on which the fees are calculated
• Agreement of management to notify the auditor of subsequent events after the auditor’s report is signed
• Agreement of management indicating the provision of the draft financial statements in time to allow the audit to be completed by the deadline
• Form (and timing) of any other means of communication during the course of the audit
• The audit engagement letter may also cover other matters. These include the following.
• Any arrangements that concern the involvement of internal auditors and other staff of the entity
• Limitations to the auditor’s liability.

The correct answer is - a resolution by special notice

Key Points

• A resolution by special notice
  • This is a specific type of resolution that requires a special notice to be given to the company and its members.
  • Under the Companies Act, a company is required to give 28 days' notice for such a resolution before the meeting.
  • It is typically used for resolutions that are significant and could impact the management, such as the removal of a director before the expiry of their term.
  • The company must inform all members about this resolution at least 14 days before the meeting.

Additional Information

• Special Resolution
  • This type of resolution requires a higher majority, typically 75% of the votes, to pass.
  • It is used for more significant decisions such as altering the company's constitution, changing the company's name, or other major corporate changes.
• Ordinary Resolution
  • An ordinary resolution requires a simple majority (more than 50%) to pass.
  • This is the most common type of resolution used for regular business decisions within the company.
• Board Resolution
  • This resolution is passed by the board of directors, not the shareholders.
  • It is used for decisions within the authority of the board, such as appointing officers, approving financial statements, etc.

The correct answer is - March 31st

Key Points

• Financial Year in India
  • The financial year in India begins on April 1st and ends on March 31st of the following year.
  • This period is used by the government and businesses to calculate annual financial statements, budgets, and tax obligations.
  • The choice of these dates allows for the inclusion of the major business activities that typically conclude by the end of March.
  • Most companies and financial institutions also follow this timeframe for their accounting purposes.

Additional Information

• April 1st
  • This date marks the beginning of the financial year in India, not the end.
  • It is the starting point for the new fiscal year and all financial planning and budgeting activities commence from this date.
• December 31st
  • This date is the end of the calendar year, but it does not correspond to the end of the financial year in India.
  • Some countries, like the United States, use this date as the end of their fiscal year, but India follows a different schedule.
• April 30th
  • This date is not relevant to the financial year in India.
  • April 30th falls within the first month of the new financial year which starts on April 1st.

The correct answer is - Custom duty

Key Points

• Custom duty
  • Custom duty is a tax imposed on imports and exports of goods.
  • It is a significant source of revenue for the government but is not categorized as assigned revenue.
  • Assigned revenue refers to specific taxes or charges that are designated for particular purposes or transferred to another authority, which is not the case with custom duty.

Additional Information

• Entertainment tax
  • Entertainment tax is levied on commercial shows, movie tickets, exhibitions, etc.
  • This tax is usually collected by the state government and can be assigned for specific purposes.
• Surcharge on stamp duty
  • Surcharge on stamp duty is an additional charge on the primary stamp duty, which is typically levied on legal documents.
  • It is assigned revenue as it can be allocated for specific projects or transferred to local bodies.
• Surcharge on land revenue
  • Surcharge on land revenue is an extra charge imposed on the basic land revenue.
  • This surcharge can be designated for various developmental projects, making it an example of assigned revenue.

The correct answer is - Column Matrix

Key Points

• Column Matrix
  • A column matrix is a type of matrix which has only one column and multiple rows.
  • It is represented in the form of m x 1 , where m  is the number of rows.
  • Column matrices are useful in various mathematical computations and vector representations.
  • Example of a column matrix:
    
     

Additional Information

• Row Matrix
  • A row matrix has only one row and multiple columns.
  • It is represented in the form of 1 x n , where n is the number of columns.
  • Example of a row matrix:
    
• Square Matrix
  • A square matrix has an equal number of rows and columns.
  • It is represented in the form of n x n , where n is the number of rows and columns.
  • Square matrices are significant in linear algebra and matrix theory.
• Scalar Matrix
  • A scalar matrix is a special type of diagonal matrix where all the diagonal elements are equal.
  • It is a square matrix.
  • Example of a scalar matrix:
    

The correct answer is - Rs. 324

Key Points

• Simple Interest Calculation
  • Simple Interest (SI) is calculated using the formula SI = P * R * T / 100.
  • Where P is the principal amount, R is the rate of interest per annum, and T is the time period in years.
• Given Values
  • Principal amount (P) = Rs. 1200
  • Rate of interest (R) = 9% per annum
  • Time period (T) = 3 years
• Calculation
  • SI = 1200 * 9 * 3 / 100
  • SI = 32400 / 100
  • SI = Rs. 324

Additional Information

• Other Options Explained
  • Option 2 (Rs. 296): Incorrect, as the calculated simple interest does not match this value.
  • Option 3 (Rs. 326): Incorrect, as the calculated simple interest does not match this value.
  • Option 4 (Rs. 300): Incorrect, as the calculated simple interest does not match this value.

The correct answer is - (C), (B), (A), (D)

Key Points

• (C) Recognize that a decision needs to be made
  • This is the initial step in the decision-making process where the need for a decision is identified.
  • It involves understanding the problem or opportunity that requires a decision.
• (B) Generate multiple alternatives
  • Once the need for a decision is recognized, the next step is to generate various possible alternatives.
  • It involves brainstorming and coming up with different options or solutions.
• (A) Analyze the alternatives
  • After generating alternatives, each option is evaluated for its feasibility, risks, and benefits.
  • This step involves critical analysis to determine the most viable alternative.
• (D) Implement the selected alternative
  • The final step involves putting the chosen alternative into action.
  • It includes executing the decision and monitoring its outcomes.

Additional Information

• Decision-making process
  • The decision-making process is a series of steps taken to identify and evaluate options to make a choice.
  • Effective decision-making involves recognizing the need for a decision, generating alternatives, analyzing those alternatives, and then implementing the chosen solution.
  • This structured approach helps in making informed and rational choices.

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

Key Points

• Four Ps concept takes the seller's view of the market, not the buyer's view.
  • The Four Ps are Product, Price, Place, and Promotion.
  • From the buyer's viewpoint, these correspond to Four As: Acceptability, Affordability, Accessibility, and Awareness.
• Product (A) - Acceptability (II)
  • Acceptability refers to how well the product meets the needs and wants of the consumer.
  • It emphasizes the importance of customer satisfaction and product quality.
• Price (B) - Affordability (I)
  • Affordability addresses whether the consumer can afford the product.
  • It considers the perceived value and cost-effectiveness from the buyer’s perspective.
• Place (C) - Accessibility (IV)
  • Accessibility focuses on how easily the consumer can acquire the product.
  • It involves the distribution channels and the availability of the product in the market.
• Promotion (D) - Awareness (III)
  • Awareness relates to how well the target audience is informed about the product.
  • It includes advertising, public relations, and other promotional activities that inform and attract customers.

Additional Information

• Four Ps (Seller's Perspective)
  • Product: The goods or services offered by a business to meet consumer needs.
  • Price: The amount of money consumers must pay to obtain the product.
  • Place: The distribution channels used to deliver the product to consumers.
  • Promotion: The activities undertaken to make consumers aware of the product and persuade them to purchase it.
• Four As (Buyer's Perspective)
  • Acceptability: The extent to which the product meets consumer expectations and needs.
  • Affordability: The consumer's ability to pay for the product.
  • Accessibility: The ease with which consumers can obtain the product.
  • Awareness: The level of consumer knowledge about the product and its benefits.

The correct answer is: (A) - (III), (B) - (IV), (C) - (II), (D) - (I)

Key Points

• Specialty store (A - III)
  • A specialty store is characterized by carrying a narrow product line with a deep assortment. For example, a store specializing in shoes or electronics.
  • These stores focus on a specific category, providing expertise and a wide variety of choices within that category.
• Convenience store (B - IV)
  • A convenience store is a relatively small store located near residential areas. Examples include 7-Eleven or local corner shops.
  • These stores typically offer a range of everyday items such as snacks, drinks, and basic groceries, making them convenient for quick and easy access.
• Supermarket (C - II)
  • A supermarket is a large, low-cost, low-margin, high-volume, self-service operation designed to serve the consumer's total needs for grocery and household products. Examples include Walmart and Tesco.
  • Supermarkets provide a wide variety of food and household items, usually organized into sections or aisles.
• Department store (D - I)
  • A department store carries several product lines, typically including clothing, home furnishings, and household goods. Examples include Macy's and John Lewis.
  • These stores are often organized into different departments, each specializing in a particular type of product.

Additional Information

• Retailer Types
  • Different types of retailers cater to various consumer needs and shopping preferences.
  • Specialty stores focus on specific product categories, offering deep assortments and expertise.
  • Convenience stores provide quick access to everyday items, often with extended hours and close proximity to residential areas.
  • Supermarkets offer a wide range of grocery and household products at competitive prices in a self-service format.
  • Department stores offer a broad selection of merchandise across multiple categories, typically in larger, multi-level stores.

The correct answer is - (B), (A), (C), (D).

Key Points

• Production Concept
  • This is the earliest approach in marketing strategy, focusing on mass production and high efficiency.
  • Companies believed that consumers preferred products that were widely available and affordable.
  • The emphasis was on quantity over quality and the primary goal was to maximize production efficiency.
• Product Concept
  • This concept emerged as companies began to realize that consumers favored well-made products.
  • The focus shifted to product quality and innovation.
  • Companies assumed that a superior product would automatically attract customers.
• Selling Concept
  • As markets became more competitive, the selling concept took precedence.
  • This approach emphasized aggressive selling and promotional efforts to stimulate demand.
  • The primary belief was that consumers needed to be persuaded to buy products, often through heavy advertising and sales tactics.
• Marketing Concept
  • This modern approach focuses on identifying and meeting the needs and wants of consumers.
  • Companies adopting this strategy put the customer at the center of all business decisions.
  • It emphasizes creating value for customers and building long-term relationships.

Additional Information

• Societal Marketing Concept
  • This is an extension of the marketing concept, incorporating social responsibility and ethical considerations.
  • Companies adopting this approach aim to balance company profits, consumer desires, and societal welfare.
  • It emphasizes sustainable practices and aims to benefit both consumers and society at large.
• Holistic Marketing Concept
  • This approach considers the business as a whole and integrates all aspects of marketing to create a unified strategy.
  • It includes relationship marketing, internal marketing, integrated marketing, and socially responsible marketing.
  • The goal is to ensure that all departments and stakeholders work together harmoniously to deliver consistent and cohesive value to customers.

The correct answer is - (A), (B), (C), (D)

Key Points

• Prospecting and Qualifying
  • Prospecting involves identifying potential customers or leads who may be interested in the product or service.
  • Qualifying ensures that these leads have the ability, authority, and interest to make a purchase.
  • This step lays the foundation for the entire sales process, ensuring efforts are focused on viable prospects.
• Preapproach then Approach
  • Preapproach involves gathering information about the prospect and planning the sales approach.
  • Approach is the initial contact with the prospect, aiming to make a good first impression and set the stage for further interaction.
  • This step is crucial for understanding the prospect's needs and building rapport.
• Presentation and Demonstration
  • Presentation involves explaining the features, advantages, and benefits of the product or service to the prospect.
  • Demonstration provides a practical illustration of how the product works and how it can solve the prospect’s problems.
  • This step aims to convince the prospect of the product’s value and suitability.
• Handling Objections, Closing, and Follow-Up
  • Handling objections involves addressing any concerns or doubts the prospect may have about the product or service.
  • Closing is the step where the salesperson asks for the order and finalizes the sale.
  • Follow-up ensures customer satisfaction, addresses any post-purchase issues, and lays the groundwork for future sales.

Additional Information

• Preapproach
  • This step focuses on gathering as much relevant information as possible about the prospect before making contact.
  • Effective preapproach can significantly enhance the chances of a successful sale by tailoring the approach to the prospect’s needs.
• Handling Objections
  • Objections are a natural part of the selling process, and a skilled salesperson views them as opportunities to provide more information.
  • Addressing objections effectively can turn doubts into positive decisions.

The correct answer is - (A), (B), and (D) only

Key Points

• Informative Advertising
  • Informative advertising is aimed at creating awareness and providing knowledge about a product or service to potential customers.
  • It focuses on delivering detailed information to educate the target audience about various aspects of the product.
• Communicating Customer Value
  • This involves conveying the benefits and value that a product or service offers to its customers.
  • It helps potential customers understand why they should consider the product or service.
• Telling the Market About a New Product
  • One of the main objectives of informative advertising is to introduce new products to the market.
  • This includes highlighting the features, uses, and benefits of the new product to create awareness and interest.
• Explaining How a Product Works
  • Informative advertising often includes detailed explanations of how a product functions.
  • This helps potential customers understand the usage and technical aspects of the product.

Additional Information

• Maintaining Customer Relationships
  • This objective is more closely related to relationship advertising or customer relationship management (CRM).
  • While informative advertising can contribute to customer loyalty, its primary focus is on delivering information rather than maintaining relationships.

The correct answer is - (B), (C) and (D) only

Key Points

• (B). Meaningful
  • Advertising appeals should be meaningful to ensure they convey a significant message that resonates with the target audience.
  • A meaningful appeal helps in establishing a connection between the brand and the consumer by addressing their needs and desires.
• (C). Distinctive
  • Distinctiveness in advertising appeals is crucial to stand out from the competition.
  • Being distinctive captures the audience's attention and helps in creating a unique brand identity.
• (D). Believable
  • Believability is essential for building trust and credibility with the audience.
  • An advertising appeal must be realistic and convincing to ensure that the audience perceives the brand's message as truthful and reliable.

Additional Information

• (A). Entertaining
  • While entertainment can enhance engagement and make the advertisement more enjoyable, it is not always necessary for an appeal to be effective.
  • Entertainment alone does not guarantee that the message will be meaningful, distinctive, or believable.

The correct answer is - (C), (D), (B), (A)

Key Points

• Recognition of events and transactions in the financial statements (C)
  • This is the first step in accounting, where events and transactions are identified and recorded.
  • Recognition involves determining when an event or transaction should be recorded in the financial statements.
  • For instance, revenue is recognized when it is earned, and expenses are recognized when they are incurred.
• Measurement of these transactions and events (D)
  • Once recognized, the next step is measuring the transactions and events in monetary terms.
  • Measurement involves determining the amount at which the events and transactions will be recorded.
  • This includes determining the cost or value of assets, liabilities, income, and expenses.
• Presentation of these transactions and events in the financial statements (B)
  • After recognition and measurement, the transactions and events need to be presented in the financial statements.
  • Presentation involves organizing and summarizing the recorded information in a structured manner.
  • The financial statements include the balance sheet, income statement, cash flow statement, and statement of changes in equity.
• Disclosures relating to these transactions and events (A)
  • The final step involves making disclosures related to the transactions and events.
  • Disclosures provide additional information necessary for users to understand the financial statements fully.
  • This includes notes to the financial statements, which explain the accounting policies, significant assumptions, and other pertinent information.

Additional Information

• Accounting Standards
  • Accounting standards are authoritative standards for financial reporting and are the primary source of generally accepted accounting principles (GAAP).
  • They are designed to improve the transparency, consistency, and comparability of financial statements.
  • These standards cover various aspects such as recognition, measurement, presentation, and disclosure of financial information.
• Importance of Proper Sequencing
  • Following the correct sequence ensures that the financial statements are accurate, reliable, and useful for decision-making.
  • Proper sequencing helps in maintaining the integrity of the financial reporting process.
  • Each step builds upon the previous one, ensuring a comprehensive approach to accounting.

The correct answer is - 2)(A), (B) and (C) only.

Key Points

• Debtors Method
  • This method involves preparing the branch account to ascertain the profit or loss made by the branch.
  • It takes into account opening and closing balances of debtors, cash sales, and credit sales.
  • The main advantage of this method is that it provides a clear understanding of the branch's credit sales and collections.
• Trading and Profit and Loss Account (Final Account) method
  • Under this method, a separate trading and profit and loss account is prepared for the branch.
  • It shows detailed information about the branch's sales, purchases, expenses, and gross profit or loss.
  • This method provides a comprehensive view of the branch's financial performance.
• Stock and Debtors method
  • This method is also known as the direct method and it involves ascertaining the value of stock and debtors at the end of the period.
  • It helps in determining the branch profit by considering the branch's closing stock, debtors, and expenses.
  • This method is useful for branches that do not maintain detailed accounts.

Additional Information

• Whole sale branches method
  • This method is used when branches operate as wholesale entities and involves invoicing goods at wholesale prices.
  • The trading results are determined by considering the wholesale prices rather than the cost price.
  • It is not applicable when goods are invoiced at cost, hence not included in the correct answer.

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

Key Points

• Formalization - The degree of definition in the roles that exist throughout an organization
  • Formalization refers to the extent to which rules, procedures, instructions, and communications are written and explicitly articulated.
  • This ensures that the roles and responsibilities within the organization are well-defined and clear to all members.
• Span of control - Scope of the work that any one person in the organization will be accountable for
  • Span of control is the number of subordinates that a manager or supervisor can directly control.
  • This concept is crucial for understanding the structure of the organization and ensuring effective management.
• Command and control - Refers to the way in which people report to one another or connect to coordinate their efforts in accomplishing the work of the organization
  • Command and control describe the hierarchical structure of an organization, dictating how instructions flow from the top management down to the employees.
  • This ensures that everyone knows whom they report to and how decisions are made and implemented.
• Specialization - Degree to which people are organized into subunits according to their expertise
  • Specialization involves dividing work into specific tasks, each performed by individuals with the relevant expertise.
  • This allows for greater efficiency and effectiveness as tasks are handled by those most skilled in particular areas.

The correct answer is 80CCD (2).

Note: The official paper has excluded this question; hence, option 4 has been revised accordingly to question statement.

Key Points

• 80CCD (2):
  • This section pertains to the employer's contribution to the employee's National Pension System (NPS) account.
  • The contribution made by the employer to the pension fund is tax-deductible under this section.
  • The contribution can be up to 10% of the employee's salary (Basic + Dearness Allowance).
  • This deduction is over and above the deduction available under Section 80C and Section 80CCD (1).
• 80CCD (1B):
  • This section provides an additional deduction of up to INR 50,000 for contributions made by an individual to the National Pension System.
  • This deduction is over and above the limit provided under Section 80CCD(1) but does not involve employer contributions.
  • Reason for exclusion: This section deals with individual personal contributions to the NPS, not employer contributions.
• 80C:
  • This section provides a broad range of deductions for various investments and expenses, including life insurance premiums, employee provident fund, Public Provident Fund (PPF), etc.
  • This section does not specifically cover employer contributions to pension funds.
  • Reason for exclusion: It does not specify employer contributions to pension funds.
• 10D:
  • This section deals with the tax exemption on the sum received under a life insurance policy, including any bonuses on such policy.
  • Reason for exclusion: It is unrelated to employer contributions to pension funds.