APSET Paper 2 Mock Test - 3 (Commerce) - AP TET MCQ

In terms of Section 22 of the Act, Reserve Bank has the sole right to issue banknotes in India.

• The Reserve Bank, in consultation with the Central Government and other stakeholders, estimates the number of banknotes that are likely to be needed denomination-wise in a year and places indents with the various currency printing presses for the supply of banknotes.
• The Reserve Bank in terms of its clean note policy provides good quality banknotes to the members of the public.
• In respect of coins, the role of RBI is limited to the distribution of coins that are supplied by the Government of India.
• The Government of India is responsible for the designing and minting of coins in various denominations as per the Coinage Act, 2011.

Important Points

• Under Section 22 of the Reserve Bank of India Act, RBI has sole right to issue currency notes of various denominations except one rupee note.
• The One Rupee note is issued by the Ministry of Finance and it bears the signatures of the Finance Secretary, while other notes bear the signature of Governor RBI. 

Thus, option 1 is the correct answer.

A correlation is simply defined as a relationship between two variables. The whole purpose of using correlations in research is to figure out which variables are connected. The correlational Hypothesis states merely that the variables occur together in some specified manner without implying that one causes the other. For example, Level of job commitment of the officers is positively associated with their level of efficiency. Here, we do not make any claim that one variable causes the other to change. That will be possible only if we have control over all other factors that could influence our dependent variable.

Devaluated assets is not a category of non-performing assets.

Debt is classified as NPA when payment due is not paid within 90 days. NPAs are classified into 3 categories:

• Loss assets
• doubtful debts
• Substandard assets

The correct answer is bearish.

Key Points

• The primary trend lasts from one to three years.
• Over this period, the markets exhibit definite upward or downward movement which is punctuated by shorter spans of a trend reversal in the opposite directions.
• The trend reversal is called the secondary trend.
• The primary trend is indicative of the overall pattern of movement.
• In Dow Theory, the primary trend is the major trend of the market, which makes it the most important one to determine.
• This is because the overriding trend is the one that affects the movements in stock prices.
• The primary trend will also impact the secondary and minor trends within the market.
• If the primary trend is upward, it is called a bullish phase of the market.
• If the primary trend is downwards, it is called a bearish phase.
• In a bullish phase, after each peak, there is a fall but the subsequent rise is higher than the previous one. The prices reach a higher level with each rise. After the peak has been reached, the primary trend now turns to a bearish phase.
• In a bearish phase, the overall trend is that of a decline in share values. After each fall, there is a slight rise but the subsequent fall is even sharper.

The correct answer is None

Key PointsAs per Article 279(5) GST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel) will be applicable as per the recommendation of GST council.

Alcohol liquor for human consumption, electricity, property are kept outside the purview of GST.

Important Points In India, under the Goods and Services Tax (GST) regime, the following applies to your list:

(I) Electricity: Exempt. Supply of electricity falls under Schedule III of the CGST Act, meaning it is exempted from GST.

(II) Sale of Property: Not applicable. GST applies to the supply of goods and services. Sale of property, whether commercial or residential, is considered a transfer of immovable property and not a supply of goods or services. Therefore, it does not attract GST.

(III) Petrol: Included in negative list. Petrol is one of the items listed in Schedule III of the CGST Act, making it exempt from GST.

(IV) Alcohol liquor for human consumption: Included in negative list. Similar to petrol, alcohol liquor for human consumption is also listed in Schedule III and is exempt from GST.

Therefore, none of the items listed will be charged to GST in India.

The black box model in marketing relates to consumer behavior.

The black box model of consumer behavior identifies the stimuli responsible for buyer behavior. The stimuli (advertisement and other forms of promotion about the product) that are presented to the consumer by the marketer and the environment are dealt with by the buyer’s black box.

Taxes like Gift tax, Estate duty, Wealth tax are paper taxes:

Excise duty is a form of tax imposed on goods for their production, licensing, and sale. It is an indirect tax.

Wealth tax:

• Levied on accumulated wealth or property of every individual.
• The tax was abolished in the 2016 budget.

Estate duty:

• It was imposed on the estate of a person which was inherited by him.
• The rate ranged from 4 to 40% of the value of the estate.
• It was imposed and collected by the central government but proceeds were passed on to states.
• It was abolished in March 1985 as the yield was too low.

Gift tax:

• Imposed in April 1958.
• Charged and collected every financial year on gifts received during the previous year.
• Again abolished in 1998 due to low yield.

The correct answer is (A), (B), (D), (E) only.

Key Points Assumptions of a regression model:

• The basic assumption of the linear regression model, as the name suggests, is that of a linear relationship between the dependent and independent variables.
• Here the linearity is only with respect to the parameters.
• Another assumption is that the independent variables are not correlated with each other.
• If there is a linear relationship between one or more explanatory variables, it adds to the complexity of the model without being able to delineate the impact of each explanatory variable on the response variable.
• The residuals in the linear regression model are assumed to be independently and identically distributed

Hence, the correct answer is (A), (B), (D), (E) only.

Statements I and II are incorrect as have not been stated in the passage. Statement III is correct as a case of fraud has been highlighted in the passage and is the main reason to link Aadhar with Taxpayers.

The Regression Coefficient is the constant ‘b’ in the regression equation that tells about the change in the value of the dependent variable corresponding to the unit change in the independent variable.

The Regression Coefficient is also called a slope coefficient because it determines the slope of the line i.e. the change in the independent variable for the unit change in the independent variable.

Key Points

Properties Of Regression Coefficient: 

1. The correlation coefficient is the geometric mean of two regression coefficients. Symbolically, it can be expressed as:
   Coefficient of correlation  = √(byx × bxy)r=(byx×bxy)−−−−−−−−−√
2. The value of the coefficient of correlation cannot exceed unity i.e. 1. Therefore, if one of the regression coefficients is greater than unity, the other must be less than unity.
3. The sign of both the regression coefficients will be the same, i.e. they will be either positive or negative. Thus, it is not possible that one regression coefficient is negative while the other is positive.
4. The coefficient of correlation will have the same sign as that of the regression coefficients, such as if the regression coefficients have a positive sign, then “r” will be positive and vice-versa.
5. The regression coefficients are independent of the change of origin, but not of the scale. By origin, we mean that there will be no effect on the regression coefficients if any constant is subtracted from the value of X and Y. By scale, we mean that if the value of X and Y is either multiplied or divided by some constant, then the regression coefficients will also change.

Thus, option 2 is the correct answer.

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

The RBI is the supreme monetary and banking authority in the country and controls the banking system in India. It is called the Reserve Bank' as it keeps the reserves of all commercial banks. Commercial banks may be defined as, any banking organization that deals with the deposits and loans of business organizations. Scheduled commercial banks (SCBs) account for a major proportion of the business of the scheduled banks. SCBs in India are categorized into five groups based on their ownership and/or their nature of operations. Scheduled commercial banks include public and private sector banks, foreign banks, regional rural banks, and cooperative banks.

Nationalisation of commercial banks has achieved its objectives is false because the nationalisation of commercial banks has not achieved its objectives yet.

The major objectives of nationalisation were: Increase in efficiency, better management, better service condition, check of undesirable activities, utilisation of savings for productive purposes, to meet the legitimate credit needs of private sector industry and trade, to foster the growth of the new and progressive entrepreneurs, to reduce the regional and sectoral imbalance in banking, etc. It has not achieved some of its objectives, i.e. deterioration in customer service, political interference, social banking inadequate, the window dressing of balance sheet and large scale irregularities.

Our first responsibility is to our customers are the ethics code.

For any kind of business their intent clearly in the opening line: "our first responsibility is to our customers". Our customer services team not only embodies this culture but, more specifically, takes responsibility for line six of the credo: "your orders will be serviced promptly and accurately". To ensure we are meeting these commitments, a number of measures have been put in place.

Important Points

Ind AS 1 — Presentation of Financial Statements:

• This Standard prescribes the basis for the presentation of general-purpose financial statements to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities.
• It sets out overall requirements for the presentation of financial statements, guidelines for their structure, and minimum requirements for their content.

Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors:

• This Standard's goal is to specify the standards for choosing and altering accounting policies, as well as the accounting treatment and disclosure of such modifications as adjustments to accounting estimates and error corrections.
• The objective of the Standard is to improve the financial statements of a business in terms of their relevance, dependability, and comparability through time and with those of other entities.
• Disclosure requirements for accounting policies, except those for changes in accounting
  policies are set out in Ind AS 1, Presentation of Financial Statements.

Ind AS 28 - Investments in Associates and Joint Ventures:

• The purpose of this Standard is to establish the requirements for applying the equity method for accounting for investments in associates and joint ventures, as well as to regulate the accounting for investments in associates.
• This Standard shall be applied by all entities that are investors with joint control of, or significant influence over, an investee.

Ind AS 34 - Interim Financial Reporting:

• This Standard's goals are to establish the minimum requirements for an interim financial report's content as well as the rules for asset recognition and cost accounting in full or consolidated financial statements for interim periods.
• Investors, creditors, and other parties are better able to comprehend an entity's capability to create earnings and cash flows as well as its financial situation and liquidity when interim financial reports are timely and accurate.
• This Standard does not mandate which entities should be required to publish interim financial reports, how frequently, or how soon after the end of an interim period. However, governments, securities regulators, stock exchanges, and accountancy bodies
• Often require entities whose debt or equity securities are publicly traded to publish interim financial reports.

The correct option is both uninsurable risk and due to uncertainty.

• The Knight’s Theory of Profit was proposed by Frank. H. Knight believed profit was a reward for uncertainty-bearing, not risk-bearing.
• Simply, profit is the residual return to the entrepreneur for bearing the uncertainty in business.
• Knight made his reputation with his book Risk, Uncertainty, and Profit

Important Points

•  Knight regards profit as the reward for bearing non-insurable risks and uncertainties.
• He distinguishes between insurable and non-insurable risks. Certain risks are measurable, and the probability of their occurrence can be statistically calculated.
• The risks of fire, theft, flood, and death by accidents are insurable

Hence, Knight's principle of profit is based on uninsurable risk, and due to uncertainty.

Capital budgeting is a process used to determine whether an organization's long-term investments are worth the funding of cash through the firm's capitalization structure. It is a method of estimating the financial ability of capital investment over the lifespan of the investment.

Key Points

Weighted Average Cost of Capital (WACC):

• WACC is referred to as a company's cost of capital.
• When each category of cost of capital employed is calculated proportionately then it is known as the Weighted Average Cost of Capital.
• The purpose of WACC is to the determine cost of capital structure based on the proportion of debt, equity, and preference stock it has.
• The company pays interest on its debts, a fixed yield on its preferred stock, and give a dividend to its equity holders.
• WACC is used as a hurdle rate in order to accept or reject a capital budgeting proposal.
• After accepting the proposal using this method, financing activities take place in the proportions specified, which leads to yield more returns on the basis of the cost spent on that project, which ultimately helps the firm to see an increase in the market price of its stock.

Therefore, both Assertion and Reason are true, and also Reason is the correct explanation of Assertion.

Important Point

WACC Formula:

WACC = (E/V x Re) + [(D/V x Rd) x (1 - T)]

Where,

1. E = market value of firm's equity,
2. D = market value of firm's debt,
3. V = total value of capital,
4. E/V = percentage of capital that is equity,
5. D/V = percentage of capital that is debt,
6. Re = cost of equity,
7. Rd = cost of debt,
8. T = tax rate.

The correct answer is Geographical indication.

Key Points

•  Mysore silk can be included under the Geographical Indication (GI) tag. A GI tag is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
• Mysore silk is a type of silk that is produced in the Mysore region of Karnataka, India. It is known for its fine quality and soft texture. The silkworms that are used to produce Mysore silk are fed on mulberry leaves that are grown in the region. The climate and soil conditions in the Mysore region are also ideal for the production of silk.
• The GI tag for Mysore silk was granted by the Government of India in 2004. The tag protects the name "Mysore silk" from being used by other producers. It also helps to promote the sale of Mysore silk and to ensure that consumers get the genuine product

The correct answer is Both (i) and (ii)

Key Points Both statements (i) and (ii) are accurate descriptions of a perfectly elastic supply curve.

•  A Horizontal Supply Curve: A perfectly elastic supply curve is represented by a horizontal line where the price is constant regardless of the quantity supplied. It indicates that producers are willing to supply any amount of the good at one price, but nothing at any other price.
•  Price Elasticity of Supply = Infinity: When supply is perfectly elastic, the price elasticity of supply, which measures the responsiveness of the quantity supplied to a change in price, is indeed infinity. This is because even a very small change in price leads to an infinitely large change in the quantity supplied. In reality, perfectly elastic supply is more of a theoretical construct and is rarely observed because it requires that suppliers have the flexibility to ramp up production immediately and without limit in response to even a tiny increase in price and cease production completely in response to even a small decrease in price.

Additional Information Here are some additional points about perfectly elastic supply:

1. Industry Implication: Perfectly elastic supply situations are more likely to apply to industries where it's easy to rapidly increase or decrease production without significant costs.
2. Extreme Case: Perfectly elastic supply is an extreme case, often more theoretical than practical. Most real-world markets will exhibit some degree of elasticity, but not to the extent of being perfectly elastic.
3. Zero Revenue: If a firm attempts to charge more than the going price in a market with a perfectly elastic supply, it will find no buyers, and its revenue will drop to zero.
4. Infinite Quantity: Conversely, if it lowers the price, there is theoretically no limit to the quantity it could sell.
5. Product Homogeneity: Perfect elasticity is more likely in markets where the product is identical across suppliers, like in perfectly competitive markets. Here, buyers don't differentiate between products based on the brand or other characteristics. If a seller charges even slightly more, buyers will switch to a competitor's product.
6. No Seller Control Over Price: Producers are price takers in a market with a perfectly elastic supply, as they have no control over the price and must accept the market price.
7. Perfect Information: Such situations also assume perfect information, where everyone in the market is fully informed about prices, quality, and production costs.
8. Limitless Stock: A perfectly elastic supply assumes that producers have limitless stock and can supply any amount at a given price. As is evident, there are very few, if any, real-world examples of this — making it largely a theoretical concept.

Key Points
Gratuity is payable to an employee when an employee leaves employment after completing at least five years in service with an employer – so this is payable –

• On superannuation (means an employee who attains the age of retirement is said to be in superannuation)
• On retirement or resignation
• On death or disablement due to accident or disease (the time limit of 5 years shall not apply in the case of death or disablement of the employee)
• Gratuity is not paid as part of your regular monthly salary; it is only payable on the occurrence of any of the above events.

Gratuity Exemption – Section 10(10)

• If Gratuity is received by any employee while in employment then it is fully taxable in the hands of employee. While if gratuity is received in case of death or retirement or resignation, then exemption is available up to the following limits.

In Case of Government Employee

• Any gratuity received by an employee of Central Government, State Government or local authority is wholly exempt from tax. This exemption is not available to employees of Statutory Corporation.

In Case of Employees Covered by Payment of Gratuity Act:

An amount equal to the least of the following will be exempt from tax:

• 15/26 x Salary last drawn x No. Of completed years of service or part thereof in excess of 6 months.
• ₹ 20,00,000 (which has been hiked from Rs. 10 Lakh as per the amendment)
• Gratuity actually received

In case of employees Not Covered Under the Payment of Gratuity Act:

An amount equal to the least of the following will be exempt from tax

• ½ x Average salary of last 10 months preceding the month of retirement x Completed year of service (fraction of a year is ignored)
• ₹ 20,00,000
• Gratuity actually received

Important Points

Hence, Anil is not covered by the Payment of Gratuity Act, 1972, the exemption under sec 10(10) in respect of gratuity is least of the following:

• ½ x Average salary of last 10 months preceding the month of retirement x Completed year of service (fraction of a year is ignored) = 1/2 x 1,00,000 x 28 = 14,00,000.
• ₹ 20,00,000
• Gratuity actually received = ₹ 12,00,000.

Hence, the exemption under sec 10(10) in respect of gratuity is 12,00,000.

Fund flow statement: A fund flow statement is a statement prepared to analyze the reasons for changes in the financial position of a company between two balance sheets. It portrays the inflow and outflow of funds i.e. sources of funds and applications of funds for a particular period.

The correct answer is programmed. 

Key Points

• Programmed decisions tend to be well structured, routine and repetitive, occurring on a regular basis.
• They are usually made at lower levels in the organisation, have short-term consequences and are based on readily available information.
• Due to the fact that the organisation is frequently presented with the decision, a decision rule can be developed that tells the organisation or decision maker which alternative to choose once the information is available.
• The decision rule ensures that a definite method for obtaining a solution can be found and that the decision does not have to be treated as something new each time it occurs. Frequently simple formulae can be applied to the situation.
• Examples of programmed decisions include ordering raw materials or office supplies and calculating holiday pay, sick pay or redundancy payments. 
• Non-programmed decisions, in contrast, are new and unstructured and consequently a previously established decision rule cannot be applied.
• In other words, the organisation has no established procedures or records for dealing with the decision, which can therefore appear to be highly complex.
• Non-programmed decisions tend to occur at higher levels in the organisation, have long-term consequences and require a degree of judgement and creativity.
•  Examples of non-programmed decisions include the decision to try an unproven technology or to expand into a previously unknown market. 

BCR = PVB ÷ Initial Outlay 

PVB: Present Value of Benefits 

So, Net BCR (NBCR) = BCR – 1

A situation where any advantage given by one member of the WTO to another member is extended to all WTO members is referred to as the most favored nation.

Most-favoured-nation (MFN): treating other people equally. Under the WTO agreements, countries cannot normally discriminate between their trading partners.

Dumping in economics is a kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price below the price charged in its home market or below its cost of production. Therefore, when goods in the domestic market are sold at a high price and in the foreign market at a low price, it is a situation of dumping.

The Correct Answer is 26

Key PointsSteps to calculate missing frequency 

• Step 1 - Determine class in which mode lies - As mode given in the question is 48.6, the class in which mode lies is 40-55.
• Step 2 - Find the value of Z,l,h,f₀,f₁,f₂  -
• Z is the value of mode i.e. 48.6
• l is the lower class limit of modal class 40-55 i.e. 40
• h is the class interval of modal class. Class interval = Upper class limit - Lower class limit i.e. 55-40 = 15
• f₀ is the frequency preceding the modal class i.e. 20
• f₁ is the frequency of the modal class i.e. 44
• f2 is the frequency succeeding the modal class i.e. x.
• Step 3 - Put the data of step 2 in the formula of mode -
• Formula of Mode

Z =  

Important Points

Solution:

Z =  ​ 

48.6 = 

48.6 - 40 = 

8.6(68 - ) = 15 x 24

584.8 - 8.6 = 360

8.6 = 224.8

= 26.1

So the value of missing frequency f₂ is 26 (approx.)

The significant development in the sphere of foreign exchange was the introduction of the Foreign Exchange Management Act (FEMA). It was introduced to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and promoting the orderly development and maintenance of the foreign exchange market in India.