TS SET Paper 2 Mock Test - 10 (Commerce) - TS TET MCQ

The correct answer is K Kasturirangan.

Key Points

• Krishnaswamy Kasturirangan is an Indian space scientist who served as the Director-General of the Indian Space Research Organisation (ISRO) between 1994 and 2003.
• He is currently the Chancellor of the Central University of Rajasthan and the National Institute of Technology.
• He is the chairman of the Karnataka Knowledge Commission and the former chancellor of Jawaharlal Nehru University.
• He was a member of the Rajya Sabha from 2003 to 2009, as well as the now-defunct Planning Commission of India.
• From April 2004 to 2009, he was the director of the National Institute of Advanced Studies in Bangalore. He has received the Padma Shri (1982), Padma Bhushan (1992), and Padma Vibhushan (1993) civilian honours from the Indian government (2000).

Important Points

• Dr. Manmohan Singh served as Governor of the Reserve Bank of India from 1982 to 1985, as Deputy Chairman of the Planning Commission from 1985 to 1987, and as India's Finance Minister from 1991 to 1996.
• From November 22, 1997, to September 6, 2003, Bimal Jalan was the Governor of the Reserve Bank of India.
• Duvvuri Subbarao was the Reserve Bank of India's 22nd Governor. 

Additional Information

• Reserve Bank of India:
  • First Governor: Sir Osborne Smith
  • First Indian Governor: Sir C D Deshmukh

Balance of payment:

1. The balance of payments of a country is the difference between all money flowing into the country in a particular period of time (e.g., a quarter or a year) and the outflow of money to the rest of the world.
2. These financial transactions are made by individuals, firms, and government bodies to compare receipts and payments arising out of the trade of goods and services.
3. The balance of payments consists of three components: the current account, the capital account, and the financial account.
4. The current account reflects a country's net income, while the capital account reflects the net change in ownership of national assets.

Key Points

Therefore, In the balance of payment account, the transfer payments are included in Current Account.

Unabsorbed Depreciation is that amount of unutilized depreciation which the assessee will not be able to claim as an expense due to lack of sufficient profit in the P&L Account. Such unabsorbed depreciation could not be set off in the same assessment year, It can be set off against any head of income and the remaining balance can be carried off for any number of periods.

Identifying the target market is the most important retail marketing decision that a retailer has to make. The target market indicates the market where the retailer can sell maximum products, where demand for customers is high and desired profits can be earned.

The correct answer is A-3, B-2, C-1, D-4

Key PointsSA 299 - Responsibility of Joint Auditors

SA 300 - Planning an Audit of Financial Statements

SA 510 - Initial Audit Engagements

SA 520 - Analytical Procedures

Additional InformationSA 570 - Going Concern

SA 580 - Written Representations

SA 700 - Forming an Opinion and Reporting on Financial Statements

SA 560 - Subsequent Events

(a) - (iii), (b) - (i), (c) - (iv), (d) - (ii) is correct.

• Interest rate risk: Systematic risk, also known as market risk, is the risk that is inherent to the entire market, rather than a particular industry sector.
• Financial risk: Unsystematic risk is inherent in a specific company or industry. Unsystematic risk is caused due to internal factors so it can be avoided and controlled.
• APM model: Arbitrage Pricing Model is a Multifactor model based on the idea that ideas return can be predicted using the linear relationship between the asset's expected return and a number of macroeconomic variables that capture systematic risk.
• CAPM model: Capital Asset Pricing Model is the simplest factor model that attempts to explain the return of an individual security or portfolio.

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 Sale of Goods Act, 1930 herein referred to as the Act, is the law that governs the sale of goods in all parts of India. It doesn’t apply to the state of Jammu & Kashmir.

Implied conditions according to the Sale of Goods Act.

(i) Seller’s title to goods is valid

(ii) Goods comply with description & sample

(iii) Quality or fitness of goods for the purpose specified by Buyer

(iv) Wholesomeness of eatables

The correct combination is (a) - (iii), (b) - (iv), (c) - (ii), (d) - (i).

This concept was originated by Paul Mazur. According to him, "Marketing is the delivery of standard of living." Prof. McNair made an important amendment in the definition. According to him, "Marketing if the creation and delivery of standard of living to the society." It is a consumer-oriented concept.

According to Pyle, “Marketing comprises both buying and selling activities.” This definition of marketing consists only of the purchase and sale. It ignores the functions of physical distribution and other auxiliary functions of marketing.

According to Philip Kotler "Marketing is a human activity directed at satisfying needs and wants through an exchange process" (Philip Kotler, 2013). It is clear from this definition that customer is the centre of marketing which begins with the identification of customer needs and wants and ends with his satisfaction.

According to Peter F. Drucker, "Marketing is a process which converts a resource distinct knowledge into a contribution of economic value in the market place. This definition recognizes marketing as a process in which the goods and services having economic value are manufactured and distributed". This presents the social approach to marketing.

The correct answer is 139; 140.

Key Points

• An auditor is a person with the right to access financial operations, which includes looking through books of accounts, paperwork, and vouchers, confirming the accuracy of financial records, going over them, and determining whether or not they adhere to generally accepted accounting principles (GAAP).
• They significantly contribute to preventing business firm frauds and also improve the organization's operational effectiveness.

Important Points

Section 139 of Companies Act,2013: Appointment of Auditor

• Every company must name a person or company as an auditor of the company at the first AGM, according to Section 139 of the Companies Act of 2013.
• From the end of the AGM in which he was appointed until the end of the sixth AGM, the person so appointed shall hold the office.
• Although the auditor will occupy the position for a period of five years, the topic relating to such an appointment will be brought up at each AGM for member ratification.

Section 140 of Companies Act, 2013: Removal, resignation of auditor and giving of special notice

• The auditor appointed under Section 139 may be removed from his position prior to the end of his term, in accordance with Subsection (1) of Section 140 of the CA 2013.
• Since the relationship with the auditors has developed over a period of five or ten years, depending on the situation, certain requirements must be followed to get rid of the auditors before their term expires.

The following steps should be taken in accordance with section 140(1) read in conjunction with Rule 7 of the Companies (Audit and Auditors) Rules, 2014, in order to remove the company's auditor from office prior to the end of his term:

1. Pass a Board Resolution (BR) at Board Meeting (BM) of company
2. Obtaining the prior approval of the Central Government (CG).
3. A Special Resolution (SR) must be passed by the company for removal of auditors before expiry of term of office.
4. Before taking any action for removal of auditor before the expiry of his term, the auditor concerned shall be given a reasonable opportunity of being heard.

Hence, it can be concluded that an auditor appointed under section 139 of the Companies Act, 2013 may be removed from office before the expiry of his term by a special resolution of the company in accordance with the provisions of section 140 of the Companies Act, 2013.

Snowballl sampling is not an example of probability sampling.

Snowball Sampling is also called network or chain referral sampling.

• To start with, the researcher identifies a small number of respondents having a set of characteristics of interest to the researcher.
• After collecting the required data from those respondents, the same respondents are asked to identify others having the same characteristics set.
• E.g., collecting data from drug addicts, rape victims, etc.

The correctly matched pairs are given below-

Task - Preparing forms

Element - Signing paycheques

Duty - Payroll processing

Position - Compensation policy administrator

Job - Compensation design manager

Occupation - Compensation specialist

Exim policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India. The foreign trade policy of India is guided by the Export-Import in known as in short EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992. The main objective of the Foreign Trade (Development and Regulation) Act is to provide the development and regulation of foreign trade by facilitating imports into and augmenting exports from India. Foreign Trade Act has replaced the earlier law known as the imports and Exports (Control) Act 1947.

Role-plays are not recommended for top-level positions. Interviews, presentations and group discussions are mandatorily required for top-level positions.

The correct answer is 30%

Key Points 

• The rate of tax applicable to a firm for A.Y. 2023-24 is 30%.
• The Finance Bill 2023 has introduced a new tax regime for firms. Under this new regime, firms will be taxed at a flat rate of 30%.
• The new tax regime is optional, and firms can choose to continue with the old regime if they prefer.
• However, the new regime is likely to be more beneficial for most firms.
• The new tax regime is expected to boost corporate tax collections.
• The government expects to collect an additional ₹1.45 lakh crore in corporate tax revenue in the next financial year.
• The new tax regime is also expected to simplify the tax filing process for firms.
• Under the old regime, firms had to file a separate return for each income head.
• Under the new regime, firms will be able to file a single return for all their income.
• The new tax regime is a positive development for the Indian corporate sector.
• It is expected to boost corporate tax collections, simplify the tax filing process, and make it easier for firms to do business in India.

The correct answer is the Five lakh rupees, The listed company.

Key PointsAccording to Section 143(12), the auditor is only required to notify management and then the Central Government of an offence involving fraud against the company by its officials or employees if he is the first to see or identify it while carrying out his duties as an auditor.

 Important PointsRequired professionals while auditing

• Professionals must exercise their professional scepticism when conducting audits in order to detect fraud. Unless the financial implications of such acts are recorded in the books of account or financial statements of the firm, it may be difficult to identify activities that have the purpose to violate the interests of the company or produce unlawful gain or loss.
• In order to address the risk of a substantial misstatement caused by fraud, the auditor must take into account the requirements of the SAs insofar as they relate to the risk of fraud, including the definition of fraud as specified in SA 240, when planning and carrying out his audit processes.

Consequences of Not Meeting the Standards

• Any auditor who violates the requirements of Subsection 143(12) is subject to a fine of at least five lakh rupees and a maximum of twenty-five lakh rupees in case of the listed company.

Insurance has a deep-rooted history in India. Insurance is provided by the Insurance company which includes a person's life (called life segment) or covers loss of assets, property (called non-life or general segment). The insurance policies are purchased at fixed premiums.

Important Points

IRDA stands for Insurance Regulatory and Development Authority. 

• It was set-up in 2000.
• It has one chairman and five members (two as full time and three as part-time) nominated and appointed by the government.
• This authority is responsible for the regulation, development and supervision of the Indian Insurance industry.

Additional Information

Today, 57 insurance companies are operating in India of which 24 are in the life segment while 33 in the non-life segment:

• 1 Public sector life insurer- Life Insurance Corporation of India (LIC). 
• 4 Public sector general insurer 
• 2 specialised insurers- Agriculture Insurance Company of India Limited (AICIL) and Export Credit Guarantee Corporation of India (ECGC)
• 1 public sector re-insurer- General Insurance Corporation of India (GIC Re)
• 4 foreign re-insurers

An income earned which is not subject to income tax is called exempt income. As per Section 10 of the Income Tax Act, 1961, there are certain types of income that will be subjected to Income tax within a financial year, provided that they meet certain conditions and guidelines. 

Key Points

Income Exempt from Tax as per Section 10

Mentioned below is the list of a few incomes exempt from tax specific to Section 10:

1. Agriculture Income [Section 10(1)]
2. Amount received out of family income, Hindu Undivided Family (H.U.F.) [Section 10(2)]
3. Share of profit, [Section 10(2A)]
4. Interest paid to Non-Resident [Section 10(4)(i)]
5. Leave Travel Concession or Assistance [Section 10(5)]
6. Remuneration or Salary received by an individual who is not a citizen of India [Section 10(6)] a. Remuneration [U/s 10(6)(ii)] b. Remuneration received as an employee of foreign enterprise [U/s 10(6)(vi)] c. Employment on a foreign ship [U/s 10(6)(viii)] d. Remuneration received by an employee of foreign government [U/s 10(6)(xi)]
7. Tax paid by Government or Indian concern on Income of a Foreign Company [Section 10(6A), (6B), (6BB) and (6C)]
8. Perquisites/Allowances paid by Government to its Employees serving outside India [Section 10(7)]
9. Retirement Compensation from a Public Sector Company or any other Company [Section 10(10C)]
10. Amount received under a Life Insurance Policy [Section 10(10D)]
11. Statutory Provident Fund [Section 10(11)]
12. Recognized Provident Fund [Section 10(12)]
13. Superannuation Fund [Section 10(13)]
14. House Rent Allowance-HRA [Section 10(13A)]
15. Income of Scientific Research Association [Section 10(21)]
16. Income of a News Agency [Section 10(22B)]
17. Income of some Professional Institutions [Section 10(23A)]
18. Income of Mutual Fund [Section 10(23D)]
19. Exemption of income of a securitization trust [Section 10(23DA)j [w.e.f. A.Y. 2014-15]
20. Income of Investor Protection Fund [Section 10(23EA)]
21. Exemption of income of investor protection fund of depository [Section 10(23ED)] [w.e.f. A.Y. 2014-15]
22. Exemption for Certain Incomes of a Venture Capital Company or Venture Capital Fund from Certain Specified Business or Industries [Section 10 (23FB)]
23. Income of Registered Trade Unions [Section 10(24)]
24. Exemption of income to a shareholder on buyback of shares of unlisted company [Section 10 (34A) [w.e.f. A.Y. 2014-15]
25. Exemption of income from Units [Section 10(35)]
26. Exemption of income from Securitization Trust [Section 10(35A)] [w.e.f A.Y. 2014-15]
27. Long Capital gain (Below Rs. 1 Lakh)arising from sale of shares and units [Section 10(38)]

Important Point

1. According to the Income Tax Act, rental income of a property is taxed under Section 24 in the hands of the owner, under the head 'income from house property'.

2. LATEST NEWS Budget 2020

No Dividend Distribution Tax (DDT) to be paid by Companies from FY 2020-21. Hence the dividend income will become taxable in the hands of taxpayers irrespective of the amount received at applicable income tax slab rates.

Therefore, option 1 is the correct answer.

Various Trade Agreements:

• Economic cooperation
  • It is a component of international cooperation that seeks to. generate the conditions needed to facilitate the processes of trade and financial. integration in the international arena by implementing actions with the purpose of. obtaining indirect economic benefits in the medium and long term.
• Free trade area
  • It is a region in which a number of countries have signed a free trade agreement and maintain little or no barriers to trade in the form of tariffs or quotas among one another. Free trade area.
  • This is the most basic form of economic cooperation. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with non-member nations.
  • There are no import tariffs or quotas on products from one country entering another.
  • Examples of free trade areas include EFTA: European Free Trade Association consists of Norway, Iceland, Switzerland and Liechtenstein. NAFTA: United States, Mexico and Canada (being renegotiated)
• Customs union
  • It is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff.
  • Customs unions are established through trade pacts where the participant countries set up common external trade policy.
  • The most famous example of a customs union is the European Union (EU)
  • Goods move between EU member countries without tariffs (duty-free).
  • In addition, all EU members charge non-member countries the same tariffs for imported goods.
• Common market
  • This is a formal agreement where a group is formed amongst several countries that adopt a common external tariff.
  • In a common market, countries also allow free trade and free movement of labour and capital among the members of the group. The trade arrangement is aimed at providing improved economic benefits to all the members of the common market.
  • The European community is an example of a common market organized for countries or members of the European Union.
• Economic union
  • It is a type of trade bloc which is composed of a common market with a customs union.
  • The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production and a common external trade policy.
  • Purposes for establishing an economic union normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries.
  • The economic union is established through trade pact.
  • The gulf economic council is one such example.

Hence if we see the sphere of influence the above trade agreement cover these can be arranged in a descending order in the following order C → A → B → E → D

 Market Demand: The total of each individual demand curve in a given market creates the market demand curve. It demonstrates the quantity of the commodity that people want at various price points.

Perfectly competitive market: According to economic theory, perfect competition exists when all businesses sell the same goods, market share has no impact on prices; businesses can enter or quit the market without any barriers, consumers have perfect or complete information, and businesses are unable to set prices.

Market Equilibrium: If the quantity demanded and the quantity provided are equal at the market price, the market is in equilibrium. The equilibrium price, or market clearing price, is the price at which the amounts supplied and demanded are equal, and the corresponding quantity is the equilibrium quantity.

Important PointsQD = 12 - 2P (Quantity Demanded) -- (1)

QS = 3 + P (Quantity supplied)-- (2)

 Condition for Market Equilibrium

Quantity demanded = Quantity supplied

Therefore,

 12 - 2P = 3 + P

  3P = 12 - 3

  3P = 9

  P = 3

Therefore, the equilibrium price is 3

Substituting the value of P in either (1) or (2)

QD = 12 - 2P 

QD = 12 - 2 x 3

QD = 12 - 6

 QD = 6

Therefore, the equilibrium Quantity is 3

Hence, the correct answer is P = 3, Q = 6

The correct combination is a - (ii), b - (iv), c - (i), d - (iii).

Perfect Competition is a type of market structure where many firms sell similar products – and profits are virtually non-existent due to fierce competition. With that said, it is important to realize that perfect competition is an abstract term used to compare against real-life markets.

One could argue that the U.S. airline industry is an oligopoly, controlled by the four main domestic carriers: American Airlines, Delta Airlines, Southwest Airlines, and United Airlines.

The Railways is a monopoly that has underinvested in capacity and created a systemic shortage. To squeeze the monopoly-induced artificial shortage to jack up fares is unfair.

The correct answer is Profits and Gains from Business or Profession.

Key Points Business: As per section 2(13) of the Act, “Business” includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture.

Profession: As per section 2(36) of the Act, “Profession” includes vocation.

Important Points

Sections 28 to 44DB deals with computation of income under the head “Profits and gains of business or profession”. The sections may be classified into:

1. Chargeability – Section 28
2. Computation – Section 29
3. Specific deductions – Sections 30 to 36, section 38
4. General deduction not specifically covered – Section 37
5. Amount not deductible – Section 40
6. Expenses or payments not deductible in certain circumstances - Section 40A
7. Deductions only on actual payment – Section 43B
8. Special cases of profits chargeable to tax – Section 41
9. Special provisions for computing income/cost of acquisition/ deduction – Sections 42, 43A, 43AA, 43C, 43CA, 43CB, 43D, 44A, 44C, 44DB
10. Special provision for computing income by way of royalty or fees for technical services connected with permanent establishment in case of non-resident – Section 44DA
11. Insurance business – Section 44
12. Presumptive taxation – Sections 44AD, 44ADA, 44AE, 44B, 44BB, 44BBA, 44BBB
13. Definition – Section 43
14. Maintenance of account – Section 44AA
15. Audit of accounts – Section 44AB

Additional Information

1. Income from Salaries: Section 15 to 17 of the Income Tax Act deals with the computation of income from salaries. Salary includes wages, annuity, gratuity, pension, etc. received by an employee from his employer.
2. Income from House Property: Section 22 to 27 of the Income Tax Act deals with the computation of income from house property. House property includes any building, land or other construction that is used for residential or commercial purposes.
3. Capital Gains: Section 45 to 55 of the Income Tax Act deals with the computation of income from capital gains. Capital gains are the gains that arise from the sale of a capital asset such as shares, property, jewellery, etc.
4. Income from Other Sources: Section 56 to 59 of the Income Tax Act deals with the computation of income from other sources. Any income that does not fall under the above four heads of income is taxable under this head. Examples include income from lottery, interest on bank deposits, etc.

The correct answer is Both assertion and reason are correct and reason is the correct explanation of the assertion.

Key Points

As per the passage, "Lastly, 'Positioning' is the strategic process that aligns the business’s offering with the needs of the targeted segments. It is achieved by developing a unique selling proposition (USP) that differentiates the product in the marketplace."

According to the given passage,

Many centuries ago people were already paying taxes. Six-thousand-year-old clay tablets were found, in what is now modern day Iraq, containing the earliest known tax records.

Thus, we can conclude that, 6000 years long have taxes been in existence.

According to the given passage,

The American Revolution was in part caused by what the colonists in America considered unfair taxation. The colonists had to pay taxes to England but were not represented in the English government. Their battle cry was, 'No taxation without representation.'

Thus, we can conclude that, 'No taxation without representation' was the battle cry of the American Revolution.

According to the given passage,

Nobles revolted against King John in 1215 because he asked for payment of new taxes, made current taxes greater, and tried to tax people to pay for a war effort. King John's leadership was not trusted by the people who felt they had no obligation to pay to support this war.

Thus, we can conclude that, the nobles revolted against King John because he made them pay taxes they hated.

Statement I: On every point on the straight-line demand curve, the point elasticities are all equal.

Statement II: On every point on the rectangular hyperbola shaped demand curve, the point elasticities are not equal.

Elasticity and demand slope: The slope of a straight-line demand curve, one with a constant slope, has constantly changing elasticity. It includes all five elasticity alternatives--perfectly elastic, relatively elastic, unit elastic, relatively inelastic, and perfectly inelastic. No two points on a straight-line demand curve have the same elasticity.

Rectangular hyperbola is a curve under which all rectangular areas are equal. When the elasticity of demand is equal to unity (ed = 1) at all points of the demand curve, then the demand curve is a rectangular hyperbola.