TS SET Paper 2 Mock Test - 4 (Commerce) - TS TET MCQ

 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.

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.

Key-Points

Statement I:

• Working capital is the difference between the current assets .e. accounts receivable, cash, inventories of raw material and fixed goods, and its current liabilities i.e. accounts payable, short-term debt, dividend, etc.
• It is that part of the capital which helps in financing the operating activities in order to achieve short-term goals.
• In other words, " Working Capital is the amount of funds necessary to cover the cost of operating the enterprise." 

Statement II:

• Circulating capital is also known as revolving capital as the money keeps on changing its form in a continuous manner.
• The money involved in circulating capital is used for core business operations and keeps on circulating from cash to current assets and back again to cash.
• It includes current assets like cash, operating expenses, finished goods inventory, raw materials, inventory in the process, and accounts receivable and one can be used to buy another. 
• In other words, "Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another."

Therefore, it is clear from the above explanation that both statements are correct.

The correct answer is Both (A) and (R) are true but (R) is NOT the correct explanation of (A).

Measures of Central Tendency:

• Often in statistics, we tend to represent a set of data by a representative value which would approximately define the entire collection.
• This representative value is called the measure of central tendency, and the name suggests that it is a value around which the data is centered.
• These central tendencies are mean, median, and mode.

Key Points

Median:

• Generally median represents the mid-value of the given set of data when arranged in a particular order.
• Median: Given that the data collection is arranged in ascending or descending order, the following method is applied:
• If the number of values or observations in the given data is odd, then the median is given by [(n+1)/2]th observation.
• If in the given data set, the number of values or observations is even, then the median is given by the average of (n/2)th and [(n/2) +1]th observation.
• Thus Assertion A is true.

Mode:

• In statistics, the mode is the value that is repeatedly occurring in a given set.
• We can also say that the value or number in a data set, which has a high frequency or appears more frequently, is called a mode or modal value.
• Mode is not affected by extreme values.
• Thus Reason R is also true.
• However, the Assertion and Reason are not related to one another and do not establish a relation between median and mode.

Hence, the correct answer is Both (A) and (R) are true but (R) is NOT the correct explanation of (A).

The functions of RBI includes:

• ​Credit control: RBI controls the credit created by commercial banks in India, using quantitative and qualitative methods.
• Monetary Policy: Under the Reserve Bank of India, Act,1934 RBI is entrusted with the responsibility of conducting monetary policy.
• Issue of Currency Notes: The Reserve Bank is the nation's sole note issuing authority.

​Commercial banks perform the function of credit creation in an economy.  Therefore, the money that is created by commercial banks is known as credit money. This is achieved by the commercial banks in the form of purchasing securities and providing loans.

Thus, Creation of credit is not a function of Reserve Bank of India.

The correct answer is National Securities Depositories Limited ​.

 Important Points

• National Securities Depositories Limited (NSDL) is the first and largest depository presently operational in India.
• The enactment of the Depositories Act in August 1996 paved the way for the establishment of NSDL.
• It was established in August 1996 
• It was promoted as a joint venture of the IDBI, UTI, and the National Stock Exchange.
•  Its tag line −Technology, Trust and Reach.
• It is a state-of-the-art infrastructure that handles most of the securities held and settled in dematerialized form in the Indian capital market.
• The Central Depository Services Limited (CDSL) is the second depository to commence operations and was promoted by the Bombay Stock Exchange and the Bank of India.
• Both these national-level depositories operate through intermediaries who are electronically connected to the depository and serve as contact points with the investors and are called depository participants.
• Mr G. V. Nageswara Rao is Managing Director & CEO of National Securities Depository Limited

Chi-square test:

• A chi-square test, also written as χ2 test, is a statistical hypothesis test that is valid to perform when the test statistic is chi-square distributed under the null hypothesis, specifically Pearson's chi-square test and variants thereof.
• Pearson's chi-square test is used to determine whether there is a statistically significant difference between the expected frequencies and the observed frequencies in one or more categories of a contingency table.
• In the standard applications of this test, the observations are classified into mutually exclusive classes.
• If the null hypothesis (that in the population there is no difference between the classes) is true, the test statistic computed from the observations follows a χ2 frequency distribution.
• The purpose of the test is to evaluate how likely the observed frequencies would be assuming the null hypothesis is true.
• Test statistics that follow a χ2 distribution occur when the observations are independent and normally distributed, which assumptions are often justified under the central limit theorem.
• There are also χ2 tests for testing the null hypothesis of independence of a pair of random variables based on observations of the pairs.
• Chi-square tests often refer to tests for which the distribution of the test statistic approaches the χ2 distribution asymptotically, meaning that the sampling distribution (if the null hypothesis is true) of the test statistic approximates a χ2 distribution more and more closely as sample sizes increase

where:

Oi = an observed count for bin i

Ei = an expected count for bin i, asserted by the null hypothesis.

• Chi-square goodness of fit test determines if a sample data matches a population.

Important Points

Goodness of fit:

• The goodness of fit of a statistical model describes how well it fits a set of observations.
• Measures of goodness of fit typically summarize the discrepancy between observed values and the values expected under the model in question

Use of Chi-square test:

• The chi-squared distribution has many uses in statistics, including:
  • Confidence interval estimation for a population standard deviation of a normal distribution from a sample standard deviation.
  • Independence of two criteria of classification of qualitative variables.
  • Relationships between categorical variables (contingency tables).
  • Sample variance study when the underlying distribution is normal.
  • Tests of deviations of differences between expected and observed frequencies (one-way tables).
  • The chi-square test (goodness of fit test).

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.

The correct answer is Insurance Regulatory and Development Authority

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.

In Section 10 of Income Tax Act, exempted incomes have been mentioned.

As per Section 10 of the Income Tax Act, 1961, there are certain types of income that will be exempt subject to income tax within a financial year, provided they meet certain conditions and guidelines. 

RBI Monetary Policy is the policy formulated by the Reserve Bank of India to regulate the money matters of the country.

• The policy takes into account the distribution of credit among users as well as the rate of interest on borrowing and ling.
• Since India is a developing country, monetary policy is significant in the promotion of economic growth.
• The policy involves measures taken to control inflation, regulate the supply of money and the cost of credit in the economy.
• The various instruments of monetary policy include variation in bank rates, other interest rates, supply of currency, etc.
• In addition to that, the current repo rate, reverse repo rate, marginal standing facility rate, and bank rate also come under the RBI Monetary Policy.

The Nasdaq Stock Market is an American stock exchange. It is the second-largest exchange in the world by market capitalization, behind only the New York Stock Exchange. The Nasdaq Stock Market has three different market tiers: 
Capital Market (small cap) is an equity market for companies that have relatively small levels of market capitalization. Listing requirements for such "small cap" companies are less stringent than for other Nasdaq markets that list larger companies with significantly higher market capitalization. 
Global Market (mid-cap) is made up of stocks that represent the Nasdaq Global Market. The Global Market consists of 1,450 stocks that meet Nasdaq's strict financial and liquidity requirements, and corporate governance standards. 
Global Select Market (NASDAQ-GS large-cap) is a market capitalization-weighted index made up of US-based and international stocks that represent the Global Select Market Composite. The Global Select Market consists of 1,200 stocks that meet Nasdaq's strict financial and liquidity requirements and corporate governance standards. The Global Select Market is more exclusive than the Global Market. Every October, the Nasdaq Listing Qualifications Department reviews the Global Market Composite to determine if any of its stocks have become eligible for listing on the Global Select Market.

The stock market theory which states that stocks are in equilibrium and impossible for investors to beat the market is classified as an efficient market hypothesis. The efficient-market hypothesis is a hypothesis in financial economics that states that asset prices reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information.

The definition that many marketers learn as they start out in the industry is: Putting the right product in the right place, at the right price, at the right time.

Marketing Mix is one of the most fundamental concepts in marketing management. For attracting consumers and for sales promotion, every manufacturer has to concentrate on four basic elements/components. These are product, pricing, distributive channels (place), and sales promotion techniques. A fair combination of these marketing elements is called Marketing Mix.

• (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.

The correct option is Co-promotes state-level venture funds.

Co-promotes state-level venture funds is not a feature of Indian capital Market
Important PointsFeatures of Indian Capital Market are as follows:

• Serves as link between Savers and Investment Opportunities: As money is transferred from savers to risk-taking borrowers on the capital market, it forms an essential link between the saving and investing processes.
• LongTerm Investment :The ability to put their hard-earned money into long-term investments is beneficial to investors.
• Helps in Capital Formation :The capital market provides chances for those investors who have extra funds and wish to store them in an investment, so they can benefit from compound interest.
• Helps Intermediaries: It requires the assistance of intermediaries, such as brokers, banks, etc., to transfer shares and money from one investor to another, aiding them in running their businesses.
• Rules and Regulations : The government regulates and controls how the capital markets operate, giving it a secure environment for trading.

Additional InformationCapital Market: A capital market is a location where funding instruments like shares, bonds, debentures, debt instruments, and E T Fs can be traded. It is a way to raise money for private citizens, businesses, and governments.

Types of Capital Market

Primary Market:

• New securities that are launched in the stock market for the first time are primarily dealt with in the primary market.
• As a result, the fresh issue market is another name for it.
• The primary market's principal purpose is to make it easier for corporations to transfer newly issued shares to the general public.
• Financial institutions, banks, H N I, and others are the key investors in this type of market.

Secondary Market:

• Also known as the stock market, this market serves as the actual venue for the trading of securities.
• Here, securities are bought and sold.
• Current investors sell the securities, while new investors acquire the securities.

The following is the explanation of the right answer.

Therefore, Option 1 is the correct answer.

In tax laws, donation to approved and notified association for scientific research is allowed as 100% of the donation.

Section 80GGA allows deductions for donations made towards scientific research or rural development. This deduction is allowed to all assessees except those who have an income (or loss) from a business and/or a profession. 

Mode of payment: Donations can be made in the form of a cheque or by a draft or in cash; however cash donations in excess of Rs 10,000 are not allowed as deductions. 100% of the amount that is donated or contributed is considered eligible for deductions.

The correct answer is Social functions.

Key Points Functions performed by a financial system:

Mobilizing savings: The financial system helps to mobilize savings from individuals and institutions and channel them into productive investments. This enables businesses to access the capital they need to grow and create jobs.

Allocating capital: The financial system also plays a critical role in allocating capital to its most efficient uses. This means directing capital towards the most productive projects and businesses, which can result in higher economic growth.

Facilitating payments: The financial system enables individuals and businesses to make and receive payments for goods and services. This includes electronic transactions, checks, and credit and debit card payments.

Managing risk: The financial system provides tools for managing risk, such as insurance, hedging, and diversification. This helps to reduce the impact of unforeseen events, such as natural disasters or economic downturns.

Providing liquidity: The financial system provides a market for buying and selling financial assets, which provides liquidity to investors. This enables investors to quickly and easily sell assets if they need to raise cash.

Facilitating foreign exchange: The financial system enables individuals and businesses to exchange currencies when conducting international trade. This helps to facilitate global commerce and supports economic growth.

Promoting financial stability: The financial system helps to promote stability in the economy by ensuring that banks and other financial institutions are adequately capitalized, and by providing oversight and regulation to prevent excessive risk-taking.

Hence, the correct answer is Social functions.

AS - 6 was made mandatory from the accounting period beginning on or after 01 - 04 - 1995.

Accounting Standards are written policy documents issued by an expert accounting body or by the government or other regulatory body covering the aspects of recognition, measurement, treatment, presentation, and disclosure of accounting standards in financial statements. 

The probability sampling method is any method of sampling that utilises some form of random selection. In order to have a random selection method, you must set up some process or procedure that assures that the different units in your population have equal probabilities of being chosen. That's why both are synonymous.