MH SET Paper 2 Mock Test - 9 (Commerce) - MAHA TET MCQ

Below is the explanation of the correct answer:

Hence Option 4 is the correct answer.

Budgets may be classified on the basis of:

(A) Functions

(B) Conditions

(C) Periods (time)

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.

1. Trade Creditors
2. Bank Overdraft
3. Bills Payable
4. Outstanding Expenses are current liabilities, so they are taken into account, but redeemable debentures is a non-current liability, so it is not taken.

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

The New Industrial Policy of 1991 comes at the center of economic reforms that launched during the early 1990s. All the later reform measures were derived out of the new industrial policy. The Policy has brought comprehensive changes in economic regulation in the country. As the name suggests, these reform measures were made in different areas related to the industrial sector.

The major aims of the new policy were; to carry forward the gains already made in the industrial sector; Correct the existing market distortion from the industrial sector; provide gainful and productive employment; to attain global competitiveness.

Key-Points

The main objectives of the Industrial Policy of the Government in India are:

1. to maintain a sustained growth in productivity;
2. to enhance gainful employment;
3. to achieve optimal utilization of human resources;
4. to attain international competitiveness; and
5. to transform India into a major partner and player in the global arena.

Important Points

Thus, to achieve these aims and objectives, the government took decisions like offering VRS to shed the excess load of workers, abolishing industrial licensing, disinvestment of the public sector, encouraging foreign direct investment, removal of mandatory convertibility clause, abolishing phased manufacturing program, referring sick units to The Board for Industrial and Financial Reconstruction, etc.

Option 4 is the correct answer.

The World Trade Organisation (WTO) is the only global international organisation dealing with the rules of trade between nations.

• At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
• The goal is to help producers of goods and services, exporters, and importers conduct their business.
• It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948.

The critical incident method of performance appraisal involves identifying and describing specific events (or incidents) where the employee did something really well or something that needs improvement. Thus, in the critical incident method of performance appraisal, the evaluator keeps a written record of significant events and how difficult employees behaved during such events.

Matrix organization aims to combine the benefits of decentralization with those of coordination. It usually requires employees from distinct departments to form a group to achieve a specific target.

A functional structure is common in organizations, not divisional structures that have outgrown the entrepreneurial structure. It is appropriate for small companies having few products.

An income tax is a tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income).

Income tax generally is computed as the product of a tax rate times taxable income. Taxation rates may vary by type or characteristics of the taxpayer.

In India, the nature of the income tax is progressive. The tax rate may increase as taxable income increases (referred to as graduated or progressive rates). 

The first income tax is generally attributed to Egypt. In the early days of the Roman Republic, public taxes consisted of modest assessments on owned wealth and property. The tax rate under normal circumstances was 1% and sometimes would climb as high as 3% in situations such as war.

Retirement oriented taxes, such as Social Security or national insurance, also are a type of income tax, though not generally referred to as such.

The correct answer is Merger.

Key Points

• Mergers
  • It is a way for companies to expand their reach, expand into new segments, or gain market share.
  • It is the combining of two or more companies into one organization. Hence, Option 3 is correct.
  • It is the voluntary fusion of two companies on broadly equal terms into one new legal entity.
  • The five major types of mergers are conglomerate, congeneric, market extension, horizontal, and vertical.

Additional Information

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.

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

Key PointsThe correct match is: 

Sale by Auction: A sale by auction is a public sale in which goods or property are sold to the highest bidder. The auctioneer, who is the person conducting the auction, will start the bidding at a certain price and then accept bids from interested buyers. The bidding will continue until there is only one bidder left, who will then be the buyer of the goods or property.

Breach of Warranty: A breach of warranty occurs when a seller fails to fulfill the terms of a warranty that they have made to a buyer. For example, if a seller sells a car with a warranty that it is in good working condition, but the car turns out to have a major problem, the buyer may be able to sue the seller for breach of warranty.

Sale by Description: A sale by description is a sale in which the goods are sold based on their description rather than physical inspection. This type of sale is often used for goods that are sold online or over the phone, where the buyer is not able to see the goods before they buy them. The seller is responsible for making sure that the description of the goods is accurate.

Transfer of Title: The transfer of title is the legal process of transferring ownership of property from one person to another. This can happen in a number of ways, such as through a sale, a gift, or an inheritance. When title is transferred, the new owner of the property is legally responsible for it.

Important Points 

The correct match is given below:

As we know that,

When the assessee is in default or is deemed to be in default in making payment of tax, including the tax deducted at source section 201 (1). Penalty u/s 221is payable when an assessee is in default or is deemed to be in default in making the payment of tax and fails to pay the tax.

Failure to pay the advance tax as directed by the assessing officer section 273 (1). Officer, in the course of any proceedings in connection with the regular assessment for any assessment year, is satisfied that any assessee has furnished under clause (a) of sub- section (1) of section 209A a statement of the advance tax payable by him.

The false verification must be held to be indictable on its own terms. section 271 (1) (c), on the contrary, enables the officer to levy penalty only if he is satisfied, in the course of any proceedings, that the assessee has concealed particulars of his income.

The correct answer is Rs. 27,040

Key Points

Additional Information
Tax calculation in such cases is as follows:
Step 1: Add non-agricultural income with net agricultural income. Compute tax on the aggregate amount.
Step 2: Add net agricultural income and the maximum exemption limit available to the assessee (i.e., ₹ 2,50,000/ 3,00,000/5,00,000). Compute tax on the aggregate amount.
Step 3: Deduct the amount of income tax calculated in step 2 from the income tax calculated in step 1 i.e., Step 1 - Step 2.
Step 4: The sum so arrived at shall be increased by a surcharge, if applicable. It would be reduced by the rebate, if any, available u/s 87A.
Step 5: Thereafter, it would be increased by health and education cess @4%

The correct answer is option 4.

Concept:

Intellectual property rights:

Intellectual property rights (IPR) refer to the legal rights given to the inventor or creator to protect his invention or creation for a certain period of time. Intellectual Property is legally protected through patents, trademarks, copyrights, trade secrets, etc.​ 

Copyright:

Copyright grants legal rights to creators for their original works like writing, photograph, audio recordings, video, sculptures, architectural works, computer software, and other creative works like literary and artistic work. 

Patent:

A patent is usually granted for inventions. Unlike copyright, the inventor needs to apply (file) for patenting the invention.

Trademark:

A trademark includes any visual symbol, word, name, design, slogan, label, etc., that distinguishes the brand or commercial enterprise, from other brands or commercial enterprises.

Hence the correct answer is All the above.

(a) - 2, (b) - 4, (c) - 1, (d) - 3 is correct.

• Mercantilism theory: David Hume Mercantilism is an economic theory that advocates government regulation of international trade to generate wealth and strengthen national power.
• Theory of absolute cost advantage:  Adam Smith Absolute advantage is when a producer can produce a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than other producers.
• National competitive advantage theory: Michael Porter proposed the theory of competitive advantage in 1985.
• Factor endowment theory: Eli Heckscher A factor endowment represents how many resources a country has at its disposal to be utilized for manufacturing resources such as labor, land, money, and entrepreneurship.

Capital budgeting is the process a business undertakes to evaluate potential major projects or investments. Construction of a new plant or a big investment in an outside venture are examples of projects that would require capital budgeting before they are approved or rejected.

Key-Points

1. As part of capital budgeting, a company might assess a prospective project's lifetime cash inflows and outflows to determine whether the potential returns that would be generated meet a sufficient target benchmark. The capital budgeting process is also known as investment appraisal.
2. The original decision to undertake an investment in a particular foreign country may be determined by a mix of strategic, behavioral, and economic decisions.'
3. The specific project, as well as reinvestment decisions – should be justified by traditional financial analysis.
4. Multinational capital budgeting, like traditional domestic capital budgeting, focuses on the cash inflows and outflows associated with prospective long-term investment projects.
5. Multinational capital budgeting is capital budgeting for a foreign project using the same theoretical framework as domestic capital budgeting.

Important Points

1. Political risk management comes in the ambit of Multinational capital budgeting.
2. For each project, political risk must be evaluated, because the cash flows can be severely affected by the changes in the political environment.
3. The changes in the government would change the political philosophy thereby leading to a new economic environment.
4. An extreme form of risk is the ‘risk of expropriation’ and repatriation. In the case of expropriation, the projects and the parent’s cash flows tend to change drastically because in this case the funds are blocked in the country of the project.
5. The political stability of a country directly impacts borrowing costs, taxes, and regulation for businesses.
6. Kickbacks and other forms of corruption have serious repercussions for MNCs. For example, Turkey has experienced a number of economic and political setbacks that raised the cost of borrowing for the national government. Corruption allegations, tight lending conditions, and financial volatility within the country made it more challenging for corporate entities to operate there effectively.

Thus, option 4 is the correct answer.

The correct answer is (3) Data processing system

Key Points

Data processing system is one of the following MIS systems which is designed to capture, collect or enter the data to process in a certain specified manner for further processing.

Additional Information

Business function processing system: Business processes are a collection of actions involving one or more business functions that assist in achieving the objectives of the organization.

Transaction processing system: The data transactions of an enterprise are gathered, stored, modified, and accessed using this kind of information system.

Data processing system: It is a kind of information system that gathers raw data, transforms it into a more useful format, and then stores it for later processing.

Integrated information processing system: It consists of various information sets that are logically connected.

Inflation accounting is a term describing a range of accounting models designed to correct problems arising from historical cost accounting in the presence of high inflation and hyperinflation. Inflation accounting is used in countries experiencing high inflation or hyperinflation. Inflation accounting is not fair value accounting. Inflation accounting, also called price level accounting, is similar to converting financial statements into another currency using an exchange rate. Under some (not all) inflation accounting models, historical costs are converted to price-level adjusted costs using general or specific price indexes.

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

The foreign trade of India is guided by the Export-Import policy of the Government of India. Exim Policy is prepared and announced by the central government. Exim Policy of India aims to develop export potential, improving export performance, encouraging foreign trade and creating a favorable balance of payment position.

Every society constructs its own social environment. Some of the customs, beliefs, practices and behaviours are similar across cultures, and some are not.

The political-legal environment is a combination of a lot of factors such as the current political party in power, the degree of politicization of trade and industry, the efficiency of the current government, government policies, current legal framework, the public attitude towards the economy, etc.

Computation of Income under the head "Salaries"

Therefore, his income from salary for the A.Y. 2015-16 will be Rs. 3,73,860.

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

Audit: Audit is an unbiased examination and evaluation of an organization's financial statements is performed to ensure that the financial records are a fair and accurate picture of the transactions they claim to represent.

Auditing is mainly performed to avoid any errors and frauds in the books of accounts so that true financial records are reflected to the public.

The correct answer is 234B and 234C.

Key Points

• Under the Income-tax Act, different types of interests are levied for various kinds of delays/defaults.
• Section 234B and 234C deals with non-payment or short payment of advance tax; and non-payment or short payment of individual instalment or instalments of advance tax (i.e., deferment of advance tax) respectively.

Important PointsSection 234B : Interest for default in payment of advance

• Interest under section 234B is levied in following two cases: When the taxpayer due advance tax but hasn't paid it, or
• When the amount of advance tax paid by the taxpayer is less than 90% of the assessed tax (meaning of assessed tax is discussed later).
• Rate of Interest: Interest rates Section 234B imposes interest of 1% per month or portion thereof for failure to pay advance tax. Simple interest is the nature of interest. To put it another way, the taxpayer is responsible for paying simple interest at a rate of 1% per month or fraction thereof for failure to pay advance tax. 
• Amount liable for interest: The amount of unpaid advance tax is subject to interest under section 234B. Interest is charged on the amount by which advance tax is underpaid if there is a shortfall in payment. The following formula is used to calculate the unpaid/short paid advance tax:

Amount of unpaid/short paid advance tax= Assessed Tax - Advance tax(if any)

Section 234C:  Interest for default in payment of instalment(s) of advance tax

• Rate of Interest: Interest is charged under section 234C at 1% per month or fraction thereof for failure to pay any instalments of advance tax. Simple interest is the nature of interest. In other words, if an individual advance tax instalment is not paid in full or is paid late, the taxpayer is responsible for simple interest at the rate of 1% per month or fraction thereof.
• Period of levy of interest Interest: Under section 234C is levied for a period of 3 months, in case of short fall in payment of 1st, 2nd and 3rd instalment and for 1 month, in case of short fall in payment of last instalment.
• Amount liable for interest Interest:  Under section 234C is levied on the short paid amount of instalment(s) of advance tax.