TS SET Paper 2 Mock Test - 3 (Management) - TS TET MCQ

The form of learning in which people acquire new behaviours by systematically observing the rewards and punishments given to others is known as operant conditioning. It is a process by which humans and animals learn to behave in such a way as to obtain rewards and avoid punishments. It is also the name for the paradigm in experimental psychology by which such learning and action selection processes are studied.

• Sensitivity Analysis is the technique used in examining the effect of change in one variable at a time. A sensitivity analysis determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions.
• Simulation is the process of developing the frequency distribution of Net Present Value. Monte Carlo simulation performs risk analysis by building models of possible results by substituting a range of values, a probability distribution, for any factor that has inherent uncertainty.
• Hillier Model is the technique used in examining the chances of Net Present Value being greater than zero. According to the Hillier model, the risk associated with the project can be assessed through the standard deviation of expected cash flows.
• Decision tree is the technique used when investment at a future date is to be decided based on the probable outcome of previous investment. A decision tree is a decision support tool that uses a tree-like model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. A D/E ratio of 2 indicates that the company derives two-thirds of its capital financing from debt and one-third from shareholder equity, so it borrows twice as much funding as it owns (2 debt units for every 1 equity unit).
Flotation cost is the total cost incurred by a company in offering its securities to the public. They arise from expenses such as underwriting fees, legal fees and registration fees. Flotation costs make new equity cost more than cost of floating a debt.

According to the CAPM model, the cost of equity is represented by:
R_f + (R_m - R_f) β_j
(Where R_m indicates market rate of return, R_f indicates risk free rate of return and β_j indicates beta of stock j.)
The CAPM model indicates security with a positive alpha is one that is expected to yield an abnormal positive rate of return, based on the perceived risk of the security, and thus is under-p riced.

An impulse purchase or impulse buying is an unplanned decision to buy a product or service, made just before a purchase. One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer.

Under the modified accelerated cost recovery system (MACRS) an asset in the ‘5 years property class’ would typically be depreciated over 6 years.

• In personnel replacement chart company records showing present performance and promotability of inside candidates for the most important position.
• An activity of publicizing an open job to employees and listing its attributes like qualifications, supervisor and working schedule etc is called job posting.
• Succession planning is the ongoing process of systematically identifying, assessing and developing organizational leadership to enhance performance.
• Position replacement chart is a chart prepared for each position in a company to show possible replacement candidates and their qualifications.

Statement I: An activity cannot be represented by more than one arrow, but an arrow can represent one or more activities.

This statement is incorrect. In project network diagrams, an activity can indeed be represented by more than one arrow. In fact, it is common to have multiple arrows representing the same activity to indicate different dependencies or relationships with other activities. For example, an activity might have multiple predecessor activities or multiple successor activities, resulting in multiple arrows representing that single activity.

Statement II: The activities in a critical path can be preponed or postponed.

This statement is also incorrect. The critical path in a project network represents the longest path from the project's start to its completion, and it determines the minimum time required to complete the project. Activities on the critical path have zero float or slack, meaning they cannot be delayed without delaying the entire project. Similarly, they cannot be preponed or completed earlier without affecting the project's duration. The critical path activities must be executed as planned to ensure the project is completed within the shortest possible time.

Therefore, since both statements are incorrect, the correct answer is option (b): Both the statements I and II are incorrect.

Price Consumption Curve is a graphic representation which shows the ability of consumer to purchase quantity of goods/ products when the price of that commodity changes.

Hence, the correct answer is a- iv, b-ii, c-iii, d-i.

The correct answer is Summarizing.

Accounting principles are the common principles set up to maintain the similarity amidst the statement of accounts so that it conveys the same meaning to every individual using such statement of accounts and fulfil the reason of preparing accounts. In other words, it is a set of rules defining some concepts to be followed by the business to maintain the consistency of the records.

Essential features of accounting principles are:

• Usefulness: The Usefulness of accounting means it must useable to the users in their decision-making process. The information must be relevant to every user for their analysis process.
• Man-Made: Accounting principle made me man it is not made by nature. It made for universal acceptance so every organization will use the same method for their accounting.
• Flexible: The accounting principle is not hard to follow it is Flexible to follow. If the accountant feels the problem with the accounting principle so he can make an account in their own way. Accounting principles can be changed with time.
• Accepted by Everyone: The accounting principle is accepted by everyone from every organization. It uses the rule of accounting which is generally Accepted.
• Objectivity: A principle will be accepted based on facts and figures and there no personal bias. If there is personal bias then the users of information not believe in the financial statement of that company.
• Feasibility: Accounting principles must be easy to follow otherwise accountants will not the principles there is no compatibility.

Dividend policy of a company sets the guidelines to be followed while deciding the amount of dividend to be paid out to the shareholders. The company needs to adhere to the dividend policy while deciding the proportion of earnings to be distributed and the frequency of the distribution. The following are the various factors/determinants that impact the dividend policy of a company:

• Investment opportunities for the company
• Expectations of the shareholders of the company
• Legal and financial restrictions for the company

Michael Porter developed three generic strategies that a company could use to gain competitive advantage, back in 1980. These three are: cost leadership, differentiation and Niche Strategy.

Administrative Entrepreneurship is centered around administrative techniques and functions. It gives a new option to handle prevailing or future situations in a more effective way that provides advantages and a competitive edge. Total quality management, job redesigning, new techniques of doing things, participative management or management by consensus are a few of the examples of administrative entrepreneurship that increase overall organisational efficiency and that nukes the firm successful and sustainable in the competitive market environment.

P and nP charts are control charts for attributes. They can use limit gauges and are easy to understand. P and nP charts cannot recognize different degrees of defectiveness in units.

P charts:

• P charts are used for evaluating fraction defectives when subgroup size is not constant.
• Control charts for defectives are used to identify samples which are out of acceptable limits. These charts provide information to the management to initiate corrective actions.

nP chart:

• It is the simplified version of P chart.
• This chart is used when number of items in a sample is constant.

So, only 3rd statement is correct.

Absence of maintenance factors create dissatisfaction among employees in work place.
They feels low confidence and presence of more grievances. This causes more effect of health of the employee’s causes absenteeism and high level of employee turnover.
So, we can say that absence of maintenance factors create dissatisfaction among employees in work place.

Capital economy the government intervention is absent.
Everything is controlled by the private owners for profit.
Capitalism is an economic and political system in which a country’s trade and industry are controlled by private owners.
This system is based on private ownership.
It is an economic system based on principle of free enterprises.

Factoring: 

• Factoring is a financial service provided by specialized agents to help manufacturers and traders etc. manage their receivables.
• It is a process of selling receivables to a third party at a discount.
• The supplier (exporter) assigns his accounts receivables in favor of the factor and gives notice of assignment to the debtor.
• The factors undertake collection/accounting and management of debts of their clients.
• A factor may either lend against accounts receivables or by purchasing invoices. He will take responsibility for collecting the debt.
• A factoring agency is a service provider to a firm that extends the services of Sales ledger administration and credit management.
• The factoring service may be offered with or without recourse.
• Factoring with recourse refers to the right of the factor to claim bad debts from his client, whereas, without recourse factoring, the risk of bad debt will be borne by the factoring agent himself.

Strategic Aspect of Green Management:

• According to Zoogah, D. (2010), five major platforms where sustainability principles can be applied in the transforming an organization to the wholly sustainable enterprise is as follows;
• “The Green products/services Portfolio” including waste and pollution management, resource replacement, sustainable design, and adaptive reuse.
• “The Green Workforce” including Human Resource strategies, culture, recruiting and retention, training, career path development, and diversity.
• “The Green Workplace,” including global locations, physical plants, ergonomics, virtual workplaces, green buildings, environmental discharge, waste and energy, use, and source.
• “The Green Function/Process Model,” including sustainability applied to traditional functions, enterprise-wide green process modeling to incorporate green practices and sustainable-management.
• “Green Management and Governance Principles,” including board and management accountability, sustainability test, compliance, incentives, ethics, reporting, and assurance.

Hence, the correct answer is four.

Competency Mapping:

• Competency Mapping is a process to identify key competencies for an organization and/or a job and incorporate those competencies throughout the various processes of the organization.
• Competency mapping often more narrowly defines roles within an organization.
• This specialization ensures employees can focus their talents on the most relevant tasks and rely on peers for support related to their expertise.
• As a result, organizations tend to experience outcomes like improved productivity and increased profits.

Hence, Competency mapping is derived from the concept of Specialization.

Income and expenditure account:

• The income and expenditure account is prepared by non-trading concerns at the end of the accounting period matching revenue receipts with revenue expenses to determine surplus or deficit.
• It is a nominal account that states that all the expenses are debited, and all the incomes are credited.
• It follows the accrual basis of accounting, meaning all the revenue transactions of this year are recorded regardless of whether they are received or not.

Key Points

Features of Income and expenditure account:

• Non-trading concerns prepare income and expenditure accounts, and it is similar to the profit and loss account made by the trading concerns.
• It is usually prepared at the end of the period.
• It is prepared on the accrual basis of accounting.
• It records non-cash items as well.
• Only items of only revenue nature are included, and capital items are excluded.
• The surplus or deficit balance at the end of it is then transferred to the capital fund account.
• It is based on the double-entry system of accounting

Encoding is a process by which a sender translates his thoughts into a series of symbols that he feels, will communicate the message to the intended receiver. (c) A channel is anything that links the sender with the receiver. (d) Decoding is the interpretation and translation of a message into meaningful information. (e) A feedback is a message that is generated by the receiver in response to the sender’s original message. (a) Modeling is not relevant in this context.

Out of a total 68% of majority, 34% are the early majority and rest 34% are the late majority. The early majority are the person who are average in social and economic factors and are just before the average adopter in the social system.

As such early majority also is a bit over sales promotional efforts the right answer to this question is option two.

IMF and World Bank are Bretton Woods twins. These institutions promote international economic cooperation, but the basic difference in the nature of these institutions are: The World Bank provides long-term loans for promoting balanced economic development while IMF provides short-term loans to member countries for eliminating the balance of payment disequilibrium.

Balance of Payment is the systematic record of all the economic transactions of a nation with the outside world. It has three accounts

• Capital Account
• Current Account
• International Reserves Account

Issuing stock is a type of equity financing, meaning that management gives up ownership by allowing others to invest money and buy part of the company. Public issue through prospectus is the most popular method of issuing stocks of a company.
Under this method, the company issues a prospectus to the public inviting offers for subscription. The investors who are interested, apply for the securities they are willing to buy.

Franchise:

• A franchise is a kind of licence that enables a franchisee to use the franchisor's brand name to sell goods and services by having access to the franchisor's secret business techniques, procedures, and trademarks.
• The franchisee can market and sell these goods and services by acting as a parent company branch. It might even employ franchising rights to offer these goods through its own company.
• McDonald's, Levi's, dominos etc use same model for expansion

Important Points Advantages of franchising:

• Franchising lowers the danger of a company failing. Your company is built on a tested concept. Before investing, you might research previous franchises' track records of success.
• Products and services will already have a market share established. Therefore, market research won't be necessary.
• You may employ a well-known brand name or trademark. Any marketing efforts made by the franchise's owner, or "franchisor," are to your advantage.

Disadvantages of franchising:

• Costs can exceed your expectations. You may be required to agree to acquire products from the franchisor in addition to paying ongoing management service fees when you purchase a franchise.
• Typically, there are limitations on how you may operate the firm in the franchise agreement. It's possible that you won't be able to adjust for your regional market.
• You may find that after some time, ongoing franchisor monitoring becomes intrusive.

Hence, an exclusive right granted to a businessperson to sell a company's products (such as McDonald's Levi's) is Franchise.

Line organisation is the oldest and simplest form of organisation. According to this type of organisation, the authority flows from top to bottom in a concern. The line of command is carried out from top to bottom.

Statement (I) : In the applied sciences, normative science is a type of information that is developed, presented, or interpreted based on an assumed, usually unstated, preference for a particular policy or class of policies.

Statement (II) : Normative generally means relating to an evaluative standard. Normativity is the phenomenon in human societies of designating some actions or outcomes as good or desirable or permissible and others as bad or undesirable or impermissible. A norm in this normative sense means a standard for evaluating or making judgments about behavior or outcomes. Normative is sometimes also used, somewhat confusingly, to mean relating to a descriptive standard: doing what is normally done or what most others are expected to do in practice. In this sense a norm is not evaluative, a basis for judging behavior or outcomes; it is simply a fact or observation about behavior or outcomes, without judgment. Many researchers in this[clarification needed] field try to restrict the use of the term normative to the evaluative sense and refer to the description of behavior and outcomes as positive, descriptive, predictive, or empirical.

Inflation: When the price for goods and services in an economy often increase over a period of time, then it is said to be inflation.

• There are various causes of inflation, such as: raw material price goes up, increase in the money supply, increase in the wages etc.
• The degradation of the purchasing power of money is reflected in inflation.

Hyperinflation: It describes a situation in which prices increase at an unforeseen rate. 

• Hyper inflation is also known as Hydra headed monster of inflation.
• After 1932, Germany experienced this type of inflation, which caused the public to lose all faith in the value of national currency.
• There are various causes behind hyperinflation, such as: increase in the country's money supply, cost push inflation / demand pull inflation etc.
• A government that issues more money than the GDP of its country can bear can lead to hyperinflation.
• A very rapid growth in prices of goods and services in which money loses its value to the point where even barter may be preferable is known as hyperinflation situation.

Deflation: A broad fall in prices for goods and services is referred to as deflation, and it is often accompanied by a reduction in the amount of credit and money available to the economy. It is just inverse to inflation and also known as disinflation.

Hence, the correct answer is hyper- inflation.

Importance of financial statement analysis:

• Measuring the profitability
• Indicating the Trend of Achievements
• Assessing the Growth Potential of the Business
• Comparative Position in Relation to Other Firms
• Assess overall financial strength
• Assess solvency of the firm