APSET Paper 2 Mock Test - 9 (Commerce) - AP TET MCQ

The correct option is (i), (iii), (ii), (iv), (v)

Key Points Venture capital financing

• Venture capital financing refers to the type of funding that provides to early stage high potential and high-risk businesses or start-up businesses
• The process of venture capital financing involves mainly  five stages 

1)Deal orientation

2)Screening 

3)Due diligence

4)Deal structuring 

5)Exit plan

• Most start-up businesses is depending on such sources of finance and they are the more viable source and get funds in an easier way, and the young aspiring entrepreneurs who are ensuring minimal surety that business firms are getting more success.

Hence the correct answer is (i), (iii), (ii), (iv), (v)

The correct answer is (d) All of the above.

Self-Help Groups (SHGs) are informal associations of people who come together to find ways to improve their living conditions. They are typically composed of 10-20 members from the same socioeconomic background who come together to save money, provide loans to their members, and engage in social activities. SHGs play a significant role in promoting economic and social empowerment of poor women, providing micro-credit to their members, and promoting social awareness and participation.

Additional InformationHere's a breakdown of how SHGs contribute to these objectives:

Economic empowerment: SHGs encourage women to save money and provide them with access to loans, enabling them to start small businesses or invest in income-generating activities. This financial independence fosters economic empowerment and improves their livelihoods.

Micro-credit: SHGs operate a system of internal lending, where members take turns using the collective savings as loans. This micro-credit facility allows members to access financial resources without the stringent requirements of traditional banks, promoting entrepreneurship and economic activity.

Social awareness and participation: SHGs provide a platform for women to discuss social issues, share experiences, and learn from each other. This fosters social awareness, encourages participation in community decision-making, and promotes social cohesion

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

• Target Capital structure: The target capital structure refers to the mix of debt, preferred stock, and common equity that the company is striving to attain. In other words, it is the debt ratio the firm strives to achieve.
• Optimum Capital Structure: It refers to the best mix of debt-equity financing that maximizes the company's overall market value while minimizing its cost of capital. In other words, it is the debt-equity ratio that maximizes the value of the firm. 
• Cost of financial distress: The more debt a company will use to finance its operations, the more will be the chances of increased financial distressed cost. It refers to the perceived costs due to an increased ratio of debt in the firm. 
• MM preposition-II: Proposition -II of MM theory states that the cost of equity is directly related and incremental to the percentage of debt in the capital structure. The expected yield on the equity capital is equal to the pure equity return plus a premium for financial risk.

Relationship marketing is all about focusing on customer relationships and loyalty. It relates to repeat purchases by large customers by maintaining long-term relationships with them. The goal of relationship marketing (or customer relationship marketing) is to create strong, even emotional, customer connections to a brand that can lead to ongoing business, free word-of-mouth promotion, and information from customers that can generate leads.

When the expected level of EBIT exceeds the indifferent point for two alternative financial plans (Equity financing and Debt financing), then the use of debt financing (fixed cost source of the fund) would be advantageous to increase EPS and financial leverage would be favourable. The higher the degree of financial leverage, the more volatile the EPS. Since interest is a fixed expense, leverage magnifies returns and EPS.

Trading Agreements - An extensive tax, tariff, and trade treaty known as a trade agreement (known as a trade pact) frequently includes investment guarantees. It exists when two or more nations come to an agreement on conditions that facilitate trade between them.

Regional economic integration - 

• An agreement among nations in an area to lower and eventually eliminate tariff and non-tariff barriers to the free movement of goods, services, and production inputs amongst one another is known as regional economic integration.
• Economic integration can also be used to describe any form of agreement between nations to coordinate their trade, fiscal, and/or monetary policies. Clearly, there exists a wide range of integration levels.

• Regional economic integration has made it possible for nations to concentrate on issues pertinent to their stage of development and promote trade between neighbours.

Important Points

Regional economic integration can be divided into four primary categories are as follows - 

1. Free Trade Zones - The most fundamental type of economic collaboration is this. All trade restrictions between member states are eliminated, but each country is free to choose its own commercial relations with non-member countries. The North American Free Trade Agreement is one illustration (NAFTA). A trade bloc is basically a free-trade zone, or near-free-trade zone, formed by one or more tax, tariff, and trade agreements between two or more countries.

2. Customs Union - This kind offers economic cooperation similar to that found in a free-trade zone. Trade restrictions between members are eliminated. The members agree to treat trade with non-member nations similarly, which is the main distinction from a free trade area.

3. Common Market - This kind enables the development of economically interconnected markets among member nations. Any restrictions on the movement of labour and capital between member countries are also lifted.

4. EU - This kind is produced when nations enter into a trade agreement to abolish trade restrictions and implement shared economic objectives. The European Union is one illustration (EU).

Thus, Regional economic integration is defined as the creation of trading agreements between Blocs of countries.

A manager's ethical behaviour is required to lead the organization towards success and for the benefit of stakeholders such as employees, investors, creditors, etc., not dividing trade secrets to competitors is one of the ethical behaviours of managers. Keeping trade secrets securely and maintaining secrecy about business practices is an essential element to the success of an organization

The correct answer is Individual/HUF

Key Points

Section 80C of Income Tax Act, 1961: 

Eligibility: It is available for individuals and Hindu Undivided Families (HUFs)

Conditions for Deduction: 

The investments in the following schemes are deductible under the Section 80C of tax deduction: -

• PPF, EPF,
• LIC premium
• Equity-linked saving scheme
• Principal amount payment towards home loan
• stamp duty and registration charges for the purchase of property
• Sukanya smriddhi yojana (SSY)
• National saving certificate (NSC)
• Senior citizen savings scheme (SCSS)
• ULIP
• tax saving FD for 5 years
• Infrastructure bonds etc.

​

The maximum amount of Deduction: Rs. 1,50,000

Sales and Goods Act was created from the sections of the Indian Contract Act 1872.

The Indian Contract Act codifies the way we enter into a contract, execute it and the way we implement its provisions. The act is divided into total 266 sections. Important sections among those are

• Section 1 to 75 – General Provisions
• Section 76 to 123 – Sales of Goods
• Section 124 to 147 – Indemnity and Guarantee
• Section 148 to 181 – Bailment and Pledges
• Section 182 to 238 – Agency
• Section 239 to 266 – Partnership

A ‘Holder in due course’ of a Negotiable Instrument can sue on the instrument in his own name.

Key PointsSection 9 of Negotiable Instrument Act 1881 defines holder in due course as:

• “Holder in due course” means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.

Important Points

• A holder in due course of a negotiable instrument is a person who acquires the instrument in good faith, for value, and without notice of any defects or problems with the instrument.
• Such a holder has certain privileges and rights under the law, including the ability to sue on the instrument in their own name.
• This means that the holder can enforce the rights under the instrument without needing to involve the original parties to the instrument.
• The holder in due course is also protected from any defences or claims that may have been available against the original parties to the instrument.

The business entity concept states that the transactions associated with a business must be separately recorded from those of its owners or other businesses. Doing so requires the use of separate accounting records for the organization that completely exclude the assets and liabilities of any other entity or the owner.

Regression analysis is a measure of cause and effect relationship. In regression analysis, it's important to specify the relationship between the variables being used. The value of the dependent variable is assumed to be related to the value of the independent variables.

The profits calculated by marginal costing and absorption costing are different because of over and under absorbed overheads and differences in stock valuation. In marginal costing, work in progress and finished stocks are valued at marginal cost, but in absorption costing, they are valued at total production cost. So, profit will differ as different amounts of fixed overheads are considered in two accounts.

The correct answer is Motivation.

Key PointsCo-ordination - the functional organization of the various components of a complicated body or activity to allow them to cooperate.

Important PointsElement of Co-ordination are as follows -

Simplified Organization(Co-operation) -

• Overspecialization has a propensity to occur in large organisations.
• The organisation is split up into numerous units, each of which focuses only on its specific duty.
• Clear-cut Coordination will be ensured by an organization's structure and procedures that are well-known to all parties.
• All activities should be covered by organisational procedures, and it is important for everyone to know their responsibilities and how their work relates to that of others.

Effective Communication Techniques(Communication) -

• Effective communication leads to proper coordination and makes it easier for a corporate organization's members to cooperate.
• A constant flow of communication will make coordination and efficient operation of the business easier.

Special Coordinators(Mutual understanding)-

• Typically, special coordinators are appointed in large organisations. They typically serve as personnel to support the primary managers' activities.
• Another option is to establish a coordination cell.
• In order to coordinate interdepartmental work and relationships, the cell's primary duty is to gather pertinent information and distribute it to various heads of sections or departments.

Hence, Motivation is not an element of co-ordination

Additional Information

Harmonized Programs and Policies -

• Coordination is best implemented during the planning stage.
• It is important to double-check the plans created by various groups or individuals to make sure they all work together to form a cohesive whole.

Coordination by Committees -

• Conferences and meetings are used to coordinate management by committees.
• Occasionally, various committees, such as the purchase committee, production committee, sales committee, finance committee, etc., are chosen to oversee various managerial functions.
• These committees make decisions as a group by exchanging opinions and ideas, hence they have coordinating components.

Group Discussion -

• Group discussion is another technique for coordination.
• It provides opportunities for an open and unrestrained exchange of concepts, issues, suggestions, and solutions.

The Gross Annual Value of a property is the value at which the property might reasonably be expected to be let from year to year. It is more like a notional rent that one could have earned in case property had been let out.

Key Points

Calculation Of Gross Annual Value: 

Therefore, the gross annual value of the asset will be ₹ 4,90,000.

Social accounting (also known as social accounting and auditing, social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting or accounting) is the process of communicating the social and environmental effects of organizations' economic actions to particular interest groups within society and to society at large. It points to the fact that companies influence their external environment ( some times positively and many times negatively) through their actions and should therefore account for these effects as part of their standard accounting practices. Social accounting is in this sense closely related to the economic concept of externality. The main objectives of social accounting are to help society by providing different facilities by enterprise and to record them.

The correct option Older Population and less-educated sections.

Key Points As per the passage  "Cybersecurity threats, inadequate digital infrastructure in rural areas, and limited digital literacy among the older and less-educated sections of the society still persist."

The correct option is a Comprehensive regulatory framework.

Key Points As per the passage "However, this shift is not without challenges. Cybersecurity threats, inadequate digital infrastructure in rural areas, and limited digital literacy among the older and less-educated sections of the society still persist."

The correct option is Digital India Currency.

Key Points As per the passage "The government of India launched various initiatives including Jan Dhan Yojana, Aadhaar and Mobile number (JAM) trinity, and the Unified Payments Interface (UPI) system with a vision to transform India into a digitally empowered society."

 The correct answer is 800 USD Million.

Key Points Star status is a recognition given to exporters by the Government of India under the Foreign Trade Policy (FTP). It is awarded to exporters who have consistently met export targets and have made significant contributions to India's foreign trade. There are five levels of star status:

• One-star export house 
• Two-star export house
• Three-star export house
• Four-star export house
• Five-star export house

Important Points Export performance threshold for Star Status (in million USD):

For the purpose of extending rural banking and agro finance, the NABARD Refinances the banks extending rural finance. NABARD's refinance is available to State Co-operative Agriculture and Rural Development Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks (CBS), and other financial institutions approved by RBI. While the ultimate beneficiaries of investment credit can be individuals, partnership concerns, companies, State-owned corporations, or co-operative societies, production credit is generally given to individuals.

Increasing consumer awareness of a commodity or product, driving product sales and building brand credibility is Promotion. Promotions refer to the entire set of activities, which communicate the product, brand or service to the user.

There are five primary methods of Promotion:

• Direct selling
• Advertising
• Public relations
• Personal selling
• Sales promotion

The minimum amount of securities purchases through GSAP in the first quarter of the current fiscal year is Rs. 1 lakh crore.

According to the passage, "The RBI announced a government securities acquisition programme (GSAP), essentially a calendar of its bond-buying programme, starting with Rs. 1 lakh crore of securities purchases in the first quarter of the current fiscal year."

The rate of GDP growth that is predicted for FY22 is 10.5%.

According to the passage, "In Wednesday’s statement, the MPC retained its assessment of FY22 GDP growth of 10.5 percent."

The central bank extends the refinance facilities for the SIDBI  to help the MSMEs.

According to the passage, "The central bank also extended measures to improve credit flow to the economy, some of which were introduced last year to fight the pandemic. It extended its long-term repo operations (lending money to banks), extended refinance facilities for NABARD and SIDBI to help MSMEs."

Intellectual Property Rights (IPRs) protect the use of information and ideas that are of Commercial Value.
Important Point

The four types of intellectual property rights include:

1. Trade Secrets
2. Trademarks
3. Copyrights, and 
4. Patents

Key Points

The Economic and Commercial Value of Intellectual Property Rights (IPRs): IPRs as a Means of Protecting Business Interests, Encouraging Innovation and Technology Transfer and Promoting Trade and Investment. 

•  The valuation of IP is therefore essential in the framework of commercial transactions. Unfortunately, this aspect is often overlooked by businesses not experienced with these types of deals resulting in transactions that are either overvalued or undervalued and therefore unprofitable or sometimes disastrous situations leading to bankruptcy
• It is therefore essential to analyze and assess the value of the intellectual property during the negotiation process, before the conclusion of the commercial transaction
• A brand is generally subject to trademark protection. 
• Technology can be subject to patent, industrial design, and/or copyright protection
• Other types of intellectual property may also exist 

The correct answer is Both Assertion (A) and Reasoning (R) are true, and Reasoning (R) is the correct explanation for Assertion (A).

Key Points Both the assertion (A) and the reasoning (R) are correct.

Assertion (A): The implementation of a Vendor-Managed Inventory (VMI) system indeed shifts the responsibility of inventory management from the buyer to the supplier. In a VMI system, the supplier takes on the responsibility of monitoring the buyer's inventory levels and ensuring that the right amount of products is available at the right time. This shift in responsibility can lead to more efficient inventory management practices for both parties.

Reasoning (R): The reasoning is accurate. VMI systems allow suppliers to monitor stock levels at the buyer's site through various data-sharing methods such as electronic data interchange (EDI) or real-time monitoring systems. The supplier can then proactively replenish products as needed, based on actual demand or pre-agreed-upon inventory levels, ensuring seamless supply to the buyer. This helps in reducing stockouts, optimizing inventory carrying costs, and improving overall supply chain efficiency.

Therefore, both the assertion and reasoning are correct, and the reasoning provides a valid explanation for the assertion.

Diversification is the process of a company enlarging or varying its range of products or field of operation.

Quality is finding new products in the same line.

Variety refers to the production of one or more products.

Packing is the preservation of the product.