MH SET Paper 2 Mock Test - 1 (Commerce) - MAHA TET MCQ

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 WhatsApp Business.Key Points  As per the passage  "UPI, coupled with applications like Paytm, PhonePe, and Google Pay, have revolutionized peer-to-peer and peer-to-business transactions."

The correct option is the Demonetization drive of 2016.

Key Points As per the passage "The demonetization drive of 2016 acted as a catalyst, prompting a large segment of the population to pivot to digital transactions almost overnight."

The industry refers to a group of firms/companies that does related primary activities for their business.

Key Points

1. Managerial Economics:

• It is a branch of economics that deals with the theories, tools, concepts, and methodologies to solve practical problems of business.
• These business decisions will not only affect the daily decisions in the future but also will affect the economic power of long-term decisions.

2. Economies of Concentration:

• When the number of firms in an area increases then those firms enjoy some of the benefits like availability of raw materials, transport, and communication, research and invention, etc. and they also receive financial assistance from banking and non-banking institutions.
• Here we can conclude that the concentration of all firms in the industry leads to economies of concentration.

3. Labour Economics:

• It involves the study of the factors which affect the efficiency of workers, the determination of their pay and also their deployment between different occupations and industries.
• It studies the labour force as an element in the process of production. Labour force comprises of all those working like an employee, employer, and also self-employed workers.

4. Marketing Economies:

• It is a system where the laws of supply and that of demand directs the supply of goods and services.
• Marketing economies of scale occur when the firm is able to lower the unit cost of promotion and advertising through accessing effective marketing mediums.

Therefore, Economies of Concentration accrue all the firm in an industry.

The correct answer is 5 lakhs.

​Key Points

• To safeguard small investors from high-risk products, market regulator Sebi made a steep hike in the minimum investment size for any equity derivative product to Rs 5 lakh from Rs 2 lakh.
• It has been decided that the minimum lot size of an equity derivative contract could be increased to Rs 5 lakh.
• For stock derivatives, the lot size (in units of underlying) would be fixed as a multiple of 25, provided the lot size is not less than 50.

Additional Information

• SEBI stands for Securities and Exchange Board of India.
• The Securities and Exchange Board of India is the regulatory body for the securities and commodity market in India under the jurisdiction of the Ministry of Finance, Government of India.
• The headquarters of SEBI is in Mumbai.
• The Chairperson of SEBI is Ajay Tyagi., 

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

• Treasury bills: Treasury bills are risk-free, as individuals are backed by the highest authority in the country, and have to be paid even during the economic crisis.
• Beta: Beta is used in the capital asset pricing model which describes the relationship between systematic risk and expected return for assets.
• Capital budgeting: The time value of money is important in capital budgeting decisions because it allows small-business owners to adjust cash flows for the passage of time.
• Working capital: Working capital is also called circulating capital or revolving capital i.e. the money which circulates in various forms of current assets in a continuous manner. The amount always keeps on circulating or revolving from cash to current assets and back again to cash. Thus, it is known as the Operating cycle. 

Proactive planning involves designing a desired future and then inventing ways to create that future state. Not only is the future a preferred state, but the organization can actively control the outcome. Planners actively shape the future, rather than just trying to get ahead of events outside of their control.

The rate of consumer price inflation is 5.2% for the first half of the current fiscal year.

According to the passage, "It also raised its projection for consumer price inflation a bit to 5.2 percent for the first half of the current fiscal year."

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 correct answer is ​Buttle's Model.

Key Points

Buttle's Model:

• The Customer Relationship Management (CRM) value chain model is a model that shows firms how to build and implement CRM strategies.
• It was created in the year 2004 by Francis Buttle.
• This model's major goal is to connect an organization's internal and external processes in order to provide value for customers while making a profit. In addition, the concept can be used in both B2B (Business to Business) and B2C (Business to Customer) companies.

Additional Information

IDIC Model:

• The Peppers and Rogers Group created the IDIC model as a basic framework for adopting CRM in a range of settings.
• It was developed in the year 2004.
• IDIC stands for identify, differentiate, interact, and customize, which are the four steps of CRM deployment.

Payne's Model:

• The Five Forces CRM model was developed by Adrian Payne and Pennie Frow.
• Payne & Frow’s Five-Step Process Model ensures that the customer experience is consistent across all departments.

The Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law.

It replaced the archaic The Monopolies and Restrictive Trade Practices Act, 1969. Under this legislation, the Competition Commission of India was established to prevent the activities that have an adverse effect on competition in India. This act extends to whole of India.

• The person appointed as an auditor of the company shall sign the auditor’s report or sign or certify any other document of the company in accordance with the provisions of sub-section (2) of section 141.
• The qualifications, observations, or comments on financial transactions or matters, which have any adverse effect on the functioning of the company mentioned in the auditor’s report shall be read before the company in the general meeting and shall be open to inspection by any member of the company.

Non-programmed decisions are used for new, unique, unstructured and badly defined problems which are non-recurring in nature. The top-level of management makes these decisions. There is no pre-established policy to take non-programmed decisions. Therefore, in non-programmed decisions, conditions are highly uncertain because they deal with unusual problems. In this, situations are poorly structured and decisions being made are non-routine and complex.

The correct answer is Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of assertion (A).

Key PointsPrepaid Expenses

• Future expenses that are paid in advance are known as prepaid expenses.
• Prepaid expenses are first recognised as an asset on the balance sheet.
• The sum is recorded as an expense after the assets' benefits are realised over time.
• Example of Prepaid Expenses: Insurance is an excellent example of a prepaid expense, as it is customarily paid for in advance. If a company pays ₹12,000 for an insurance policy that covers the next 12 months, then it would record a current asset of ₹12,000 at the time of payment to represent this prepaid amount. In each month of the 12-month policy, the company would recognise an expense of ₹1,000 and draw down the prepaid asset by this same amount.

Liquid Assets:

• Liquid assets are those that can be quickly converted into cash.
• While assets are valuable belongings that can be turned to cash, not all of them can be sold for cash immediately or without incurring a loss.
• Cash, Bank balance, Accounts receivable, Treasury bills, notes, and bonds are some examples of liquid assets

Important Points Assertion (A): Prepaid expenses are not considered as liquid assets.

• The assertion is True as prepaid expenses are not considered liquid assets
  

Reason (R): Prepaid expenses cannot be converted into cash.

• The Reason (R) is also true & correctly explains the assertion (A) as prepaid expenses and income tax receivables, cannot be sold for cash, which is why they are not considered liquid assets.
• They are recorded as Other current assets, as prepaid expenses are the expenses that have been paid in advance before they are even due for payment. An obligation that is met in advance is an asset for the company,

Line and Staff Managers:

• Line managers usually have the final responsibility for achieving the organization's goals as they have the authority to direct the work of subordinates.
• Staff managers have the responsibility of helping and advising line managers in achieving organizational goals.
• HR managers perform staff functions.
• HR managers assist line managers in the decision-making process of an organization like recruiting, selecting, training, and compensating.
• Managing people, in a broader context, is every manager’s business and successful organizations generally combine the experience of line managers with the experience of HR specialists while utilizing the talents of employees to their greatest potential.
• HR managers have to win the hearts of employees working together with line managers and deliver results in a cost-effective manner.
• HR managers as indicated earlier are assuming a greater role in top management planning and decision making a trend that indicates the growing realization among executives that HRM can make significant contributions to the success of an organization.

Therefore, statement (A) is incorrect, but (R) is correct.

Merchandise exports Export merchandising is a method of offering retail goods, not services for sale in a foreign consumer market.

Merchandise imports are defined as goods that add to the stock of material resources in Australia as a result of their movement into the country.

Investment income is income that comes from interest payments, dividends, capital gains collected upon the sale of a security or other assets, and any other profit made through an investment vehicle of any kind. Generally, individuals earn most of their total net income each year through regular employment income.

A balance of payments deficit means the country imports more goods, services, and capital than they export. It must borrow from other countries to pay for its imports. In the long-term, the country becomes a net consumer, not a producer, of the world's economic output.

Brainstorming:

• Brainstorming is a group activity in which teams generate some creative ideas spontaneously to solve a specific problem.
• They come up with a vast collection of ideas without any fear of criticism and draw links between them to find out the potential solution.
• At first, even if the ideas seem a bit unrealistic, they are taken into consideration.
• In brainstorming sessions, the greater the number of ideas generated there is bigger the chance of producing radical and effective solutions. 

Therefore, ‘No ideas are ever criticized’ and ‘the more radical the ideas are the better’ – are the rules of the Brainstorming decision-making process.

Key PointsThe CAG (The Comptroller and Auditor General of India) shall within 60 days from audit report received u/s 143(5) have right to conduct a supplementary audit by the person authorised by him to require additional information on matters and in form as directed by him.

Important PointsSection 143(6) – CAG (The Comptroller and Auditor General of India) Right to Supplementary Audit of Government Company

• On receipt of audit report of the govt company the C&AG can carry out supplementary audit with 60 days from the date of receipt of such audit report.
• The CAG will then comment on or supplement the audit report, which will then be sent by the company in accordance with section 143(6)'s first proviso to every member, trustee for debenture holder, and other parties entitled to copies of the audited financial statements under section 136(1).
• The audit report and the CAG's comments will also be placed before the AGM at the same time and in the same manner.
• The Annual Report on the operations and affairs of that firm must be prepared in accordance with Section 394(1) within 3 months of the AGM, before which the CAG's comments and the audit report are subject to Section 143's proviso (6).

Hence, it can be concluded that The Comptroller and Auditor General of India has the right to conduct a supplementary audit under Sec 143(6)(a).

An F-test (Snedecor and Cochran, 1983) is used to test if the variances of two populations are equal. This test can be a two-tailed test or a one-tailed test. The two-tailed version tests against the alternative that the variances are not equal. The one-tailed version only tests in one direction, that is the variance from the first population is either greater than or less than (but not both) the second population variance. For example, if we are testing a new process, we may only be interested in knowing if the new process is less variable than the old process.

The assertion is correct. International business has grown in more recent years at a faster pace than global production. The reason is given that growth through trade has increased, but growth through foreign direct investment has not is incorrect. The increasing inflow of FDI in recent years has also brought growth in the economy.

The basic objective of Export Promotion Councils is to develop and promote the exports of the nation. Each Council is in charge of the promotion of a specific group of projects, products, and services. The council helps in sponsoring the development of export-related industries.

Hence, the correct option (D).

The correct answer is all determinants of demand, other than own price of the commodity, remain constant

Key Points

•  The law of demand states that all else being equal, as the price of a commodity or service increases, the quantity demanded will decrease, and vice versa. This is also known as the inverse relationship between price and quantity demanded.
• This law is based on the assumption of "ceteris paribus", which means "all else being equal" in Latin. This assumption allows us to focus on the relationship between price and quantity demanded while ignoring other factors that could complicate the analysis.
• The other factors that could affect demand include income levels, prices of substitute goods, prices of complementary goods, expectations about future prices, demographic factors, and consumer tastes and preferences.
• For example, if we were trying to understand how the demand for apples changes when the price of apples changes, we'd have to assume that the consumers' incomes, the price of other fruits, consumer preferences for apples, etc., all remain constant or else those changes could impact the demand as well.
• Thus, the law of demand holds true when all determinants of demand, other than its own price, remain constant.

Important Points Here are some additional insights related to the law of demand:

• The law of demand is represented graphically with the demand curve, which slopes downwards from left to right. This graphical representation visually shows the inverse relationship between the price of a good or service and the quantity demanded.
• The law of demand is essentially a reflection of the consumer behavior of rational self-interest. When the price of goods rises, consumers tend to buy less because they are trying to get the most utility (satisfaction or need fulfillment) out of their limited budget, and vice versa.
• In certain cases, demand doesn't obey the law of demand. These are called Giffen goods and Veblen goods. In the case of Giffen goods (named after economist Robert Giffen), when price rises, people consume more - these tend to be inferior goods, for example, staple foods like bread or rice in very poor countries. Veblen goods (named after economist Thorstein Veblen) are luxury goods, where higher prices actually make the goods more desirable, encouraging more consumption.
• The law of demand also plays a crucial role in market equilibrium. It helps set the market price by interacting with the law of supply, and the point where the demand and supply curves meet is considered the market equilibrium.
• The concept of elasticity is closely linked to the law of demand. Price elasticity of demand measures the responsiveness of the quantity demanded to a change in the price. Some goods are highly elastic, meaning that a small price change can have a big impact on demand, while others are inelastic, meaning that demand doesn't change much when the price does.
• The law of demand is a fundamental principle of economics that helps businesses, governments, and individuals understand market dynamics, set prices, and predict responses to changes in price. However, it's important to remember that this law is a simplification of complex real-world phenomena and may not always apply due to other external factors and changing preferences.

Key Points

• An import or export agent acts as a middle person for the purchase or sale of products between both domestic and overseas companies.
• Responsibilities for this career vary depending on the field and type of company for which the agent works.
• Duties may also be different depending on where the agent is in the supply chain.

Important PointsPrimary functions of Domestic-based export agents are as follows:

• The agent may travel abroad, do research, prepare an export plan, advise the exporter on how to adapt their marketing mix, make contact with potential buyers, negotiate deals with the buyers, take care of all promotional activities, handle the logistics and documentation, and much more.
• All of these tasks, the export will do on the exporter’s behalf.
• The exporter normally pays the agent for the expenses they have incurred marketing the firm’s products and handling the export administration, and will generally earn a commission on any sales generated.
• In essence, the export agent becomes the exporter’s export department. In some cases, the principal will want to keep tight control over the agent’s activities, while in other instances, the agent is given free rein.

Buying Process: Set of procedures used to identify products for purchase, verify quality and compliance of products and vendors, carry out purchasing transactions, and verify that operations associated with purchasing have been executed appropriately. Different organizations have buying processes of varying complexity, depending on the industry in which they work and the nature of the products being purchased.

According to D. Katz, morale has four dimensions are: 

• Job satisfaction
• Satisfaction with wages and promotional opportunities,
• Identification with the company
• Pride in the workgroup.

The correct answer is to promote cross border investment in developing countries.

• The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank Group.
• MIGA  mandate is to promote cross-border investment in developing countries by providing guarantees (political risk insurance and credit enhancement) to investors and lenders.
• MIGA  guarantees protect investments against noncommercial risks and can help investors obtain access to funding sources with improved financial terms and conditions.

​World Bank composed of 5 institutions:​​

• World Bank is headquartered at Washington and established in the year 1945
• The president of the World Bank Group is David Malpass.
• There are 189 members of the world bank.
• World Banks important publications are Ease of Doing Business Report, World Development Report and Human Capital Index.
  The current president of the World Bank is Ajay Banga. He began his five-year term on June 2, 2023.

Key-Points

1. Pareto analysis

• It is a formal technique useful where many possible courses of action are competing for attention. In essence, the problem-solver estimates the benefit delivered by each action, then selects a number of the most effective actions that deliver a total benefit reasonably close to the maximal possible one.
• Pareto analysis is a creative way of looking at causes of problems because it helps stimulate thinking and organize thoughts. However, it can be limited by its exclusion of possibly important problems that may be small initially, but which grow with time. In terms of inventory management, the Pareto principle can be declared as 20% of inventory items by type account for 80% of annual consumption value.

2. The net income (NI) 

• This approach is also called the traditional approach.
• This is an approach in which both costs of debt and equity are independent of capital structure. The components which are involved in it are constant and don't depend on how much debt the firm is using. This theory was proposed by David Durand.

3. Net operating income

• It measures an income-producing property's profitability before adding in any costs from financing or taxes.
• The operating expenses used in the NOI metric can be manipulated if a property owner defers or accelerates certain income or expense items.
• The NOI metric does not include capital expenditures.

4. Miller – Orr Model

• It deals with cash inflows/outflows that change on a daily basis.
• The model works in terms of upper and lower control limits, and a target cash balance. As long as the cash balance remains within the control limits the firm will make no transaction.

Therefore, the correct match is:

Hence Option4 is the correct answer.

According to the Indian Companies Act, 1956 Section 229, an audit report must be signed by a company auditor.

Key PointsSection 229 of Indian Companies Act, 1956 - Right to Signature on Audit Report:

• The auditor's report, as well as any other document of the company required by law to be signed or certified by the auditor, may be signed only by the company's designated auditor, or in the event of a partnership, only by a partner in the firm practicing in India.

Additional Information

1. Audit Report - An audit report is a written assessment of a company's financial statements by an auditor. The report is formatted in accordance with widely acknowledged auditing standards (GAAS). GAAS mandates or allows various deviations in the report depending on the conditions of the audit work in which the auditor engages.
2. Board of Directors - The Board of Directors (BOD) is an elected corporate body that represents the interests of a company's stockholders. The board of directors sits at the top of the organization and is in charge of ensuring that the company achieves its goals in a timely manner.
3. Company Auditor - An auditor is a person who has the authority to review and verify financial papers for accuracy, as well as to ensure that organizations comply with tax laws. They protect companies from fraud, point up anomalies in accounting methods, and, on rare occasions, act as consultants, assisting companies in identifying ways to increase operational efficiency.
4. Company Secretary - The board of directors selects the corporate secretary. In most cases, the person is a member of the board of directors. Corporate secretaries are in charge of ensuring that their company is properly managed. They make certain that the company complies with all legal and regulatory requirements, as well as that the board's decisions are carried out.