UP TGT Commerce 2019 Official Paper (Previous Year Paper)

The correct answer is Advertisement.

Key Points

• Communication can take the form of advertising. It is a marketing tactic that conveys numerous messages on goods or services, cost, and other topics.
• The purpose of the advertisement is to persuade and enlighten consumers about any service or good available on the market.
• Advertisement is the best way of promotion, as it expands the production rate and sale of any product.

Important PointsAdvertising is the best means of increasing sale because of its several benefits which are as follows:

• It aids the company in growing its market share and brand equity.
• It aids the business in efficiently and effectively reaching its target market.
• It aids the business in launching its new product and service offerings amid much excitement.
• It aids the business in gaining a market advantage and competitive edge.
• The customer is informed about the brand's products, history, and journey.
• It aids the business in achieving its sales goals and reaping greater earnings.

The correct answer is Peter F. Drucker

Key Points 

Management by objectives(MBO)

• It is a comprehensive management system based on measurable and participative set objectives. It has come a long way since it was first suggested by Peter F. Drucker in 1954 as a way of promoting managerial self-control.
• MBO emphasizes participatively established goals that are tangible, verifiable, and measurable.
• The appeal of this strategy is its ability to convert overall organizational objectives into specific objectives for organizational units and individual members; it works from the bottom up and from the top down.

Important Points

• Management by objectives (MBO) is a strategic management model that aims to improve organizational performance by clearly defining objectives that are agreed to by both management and employees.
• According to the theory, having a say in goal setting and action plans encourages participation and commitment among employees, as well as aligning objectives across the organization.
• Critics of MBO argue that it leads to employees trying to achieve the set goals by any means necessary, often at the cost of the company.

The correct answer is All of the above

Key Points

• An auditor is a person who checks the accuracy of transactions that have been documented in business.
• Auditors are required to ensure that procedures are being followed and that an organization's financial statements accurately reflect its operational and financial results.
• They mostly work on audits, which check the accuracy of financial records and the way they are presented in associated financial reports.

Important PointsFollowing types of fraud are checked by an auditor:

• Misappropriation or embezzlement of cash
• Misappropriation of Goods
• Fraudulent Manipulation of Accounts
• Teeming & Lading
• Window Dressing

The incorrect answer is Trade cycles.

Key PointsTrade Cycles:

• A trade cycle refers to fluctuations in economic activities specially in employment, output and income, prices, profits etc.
• A trade cycle is composed of periods of good trade characterised by rising prices and low unemployment percentages altering with periods of bad trade characterised by falling prices and high unemployment percentages
• Generally, a trade cycle is composed of four phases – depression, recovery, prosperity and recession.

Important PointsSocial Evils of Money

• Lack of money is the root cause of evils of money.
• Money has promoted a variety of unethical behaviours like gambling, fraud, robbery, murders and more.
• It fosters acquisitiveness and greed in people.
• It promotes tendencies to take advantage of other people.
• However, it is undeniable that misuse of money is a major contributing factor to the majority of the above-mentioned problems.

Hence, it can be concluded that trade cycles are not a social evil of money.

The incorrect answer is Skewness

Key Points

According to Spiegel, the degree to which numerical data tend to spread about an average value is called the variation or dispersion of data.

• There are two basic kinds of measure of dispersion : Absolute measures and Relative measures.
• The absolute measures of dispersion are used to measure the variability of a given data expressed in the same unit, while the relative measures are used to compare the variability of two or more sets of observations.

Important Points Following are the different measures of dispersion:

• Range:- Range is the simplest measure of dispersion. It is defined as the difference between the maximum value of the variable and the minimum value of the variable in the distribution.
• Quartile Deviation:- Q1 and Q3 are the first quartile and the third quartile respectively. (Q3 – Q1) gives the interquartile range. The semi interquartile range which is also known as Quartile Deviation (QD) is given by Quartile Deviation (QD) = (Q3 – Q1) / 2.
• Mean Deviation:- Mean deviation is defined as the average of the sum of the absolute values of deviation from any arbitrary value viz. mean, median, mode, etc.
• Standard Deviation:- Standard deviation (SD) is defined as the positive square root of variance.
• Variance:- Variance is the average of the square of deviations of the values taken from mean.

Thus, it is concluded that Skewness is not the measure of dispersion.

Hint

• Skewness is a measure of the asymmetry of a distribution. A distribution is asymmetrical when its left and right side are not mirror images.

The correct answer is Reserve Bank of India

Key Points

Reserve Bank of India:

• The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
• The Reserve Bank of India is the regulator of Indian Banking system.
• It controls the monetary policy concerning the national currency, the Indian rupee

Important Points Lender of Last Resort:

• As a Banker to Banks, the Reserve Bank also acts as the ‘lender of the last resort’.
• It can come to the rescue of a bank that is solvent but faces temporary liquidity problems by supplying it with much-needed liquidity when no one else is willing to extend credit to that bank.
• The Reserve Bank extends this facility to protect the interest of the depositors of the bank and to prevent possible failure of the bank, which in turn may also affect other banks and institutions and can have an adverse impact on financial stability and thus on the economy.

The correct answer is NITI Aayog

Key Points

NITI Aayog:

• Planning Commission was established as an advisory institution to form five plans in the country on the line of USSR on 15th March 1950.
• A cabinet resolution was passed to replace the planning commission with the newly formed NITI Aayog (National Institution for Transforming India) on 1st January 2015.
• The major difference between NITI Aayog and Planning Commission is in the approach to planning, i.e. the former will invite greater involvement of the states, while the latter took a top-down approach with a one-size-fits-all plan.
• NITI Aayog acts as a "think tank", providing both directional and policy inputs.
• While designing long-term strategic policies and programs for the Government of India, NITI Aayog advises the Centre and states on policy matters.
• The Governing Council of NITI Aayog includes the Prime Minister as its Chairman, Chief Ministers of all the States, and Lt. Governors of Union Territories (UTs).

The correct answer is All of the above.

Key Points

Classification of data

• Data classification is the process of analyzing structured or unstructured data and organizing it into categories based on file type, contents, and other metadata.
• Data professionals often have a specific goal when categorizing data.
• Data can be classified as quantitative, qualitative, geographical, and chronological.

Important Points

Quantitative data -

• Data which can be measured numerically in some quantity is called quantitative data.
• For example 100kg, 500ml, 3l, 56 inch etc.

Qualitative data -

• Data which involves some attributes is known as qualitative data.
• For example - beauty, intelligence etc.

Geographical data -

• Data related to some geographical location is called spatial or geographical data.
• For example - india's silk production, sikar's students enrolled in IIT.

The correct answer is Ledger

Key Points Trial balance:

• A trial balance is a report that lists the balances of all general ledger accounts of a company at a certain point in time.
• The accounts reflected on a trial balance are related to all major accounting items, including assets, liabilities, equity, revenues, expenses, gains, and losses.
• It is primarily used to identify the balance of debits and credit entries from the transactions recorded in the general ledger at a certain point in time.

Important Points Ledger as a Base for Trial Balance:

• A company's transactions are recorded in a general ledger and later summed to be included in a trial balance.
• A Ledger is a book that contains records of all transactions related to a particular account within a financial year.
• A trial balance is a sheet recording all the ledger balances categorized into debit and credit.
• A typical trial balance will have the name of the ledger and the balances.
• The Trial Balance is prepared based on the Ledger accounts and subsidiary books.

The correct answer is Decision Making.

Key PointsDecision-making is the process to select a course of action from a number of alternatives. The business decision-making process is a step-by-step process allowing professionals to solve problems by weighing evidence, examining alternatives, and choosing a path from there. This defined process also provides an opportunity, in organizational the end, to review whether the decision was the right one.

Important PointsSteps in Decision-Making Process

• Diagnosing, defining, and identifying the source of the problem
• Information gathering and analysis of the facts required to solve the problem
• Developing and evaluating alternative solutions to the problem
• Choosing the best decision from the alternative
• Communicating the decisions
• Implementing the decision

Additional InformationPlanning: Establishing an overall strategy, defining organisational goals, and creating a comprehensive set of plans to integrate and coordinate work within an organisation are all part of planning.

Forecasting: Using information from the past and present, forecasting is the activity of speculating on what will occur in the future.

The correct answer is George Elton Mayo

Key Points

Hawthorne experiments

• A group of researchers from the Harvard Business School led by Elton Mayo and Fritz Roethlisberger were asked to participate in the investigations in 1927 at the Hawthorne Works of the Western Electric Company in Chicago.
• The trial continued until 1932.
• The Hawthorne Experiment demonstrated that workers' productivity is not solely dependent on the physical environment in which they work and the amount of money they are paid in compensation.
• Employee happiness with their working environment has a significant impact on their productivity.
• Mayo believed that when assessing productivity efficiency, rational criteria were significantly less crucial than emotional factors.

Important PointsThe Hawthorne experiments consists of four parts. 

Illumination Experiment: 

• To determine the link between output and illumination, this experiment was carried out.
• The output rose along with the rise in light intensity.
• Even after progressively lowering the illumination to the desired level, the output continued to trend upward.
• Therefore, it was determined that there is no consistent correlation between worker output and factory illumination.
• There must be another element that had an impact on production.

Relay Assembly Test Room Experiment: 

• This phase sought to understand the effects of lighting on production as well as other elements including working hours, rest periods, and other physical conditions

Interviewing Programme: 

• The goal of this programme was to conduct a thorough analysis of the attitudes of the employees in order to understand the significance that their "working condition" has for them.
• Numerous employees were questioned by the researchers about their views on their jobs, working environment, and management.
• The researchers noticed that the workers' responses were reserved. Consequently, an indirect strategy was used in place of this approach, where the interviewer merely listened to what the workers had to say.
• The results supported the significance of social aspects in the overall workplace.

Bank Wiring Test Room Experiment: Finding of this study are as follows:

• Each person was limiting their productivity, the gang established its own "unofficial" performance requirement.
• Over time, individual production stayed largely unchanged, Informal groups are crucial to an organization's operation.

The correct answer is Books of original entry.

Key Points

• Vouching is the process of looking over vouchers to make sure that the entries made in the books are accurate.
• Verifying a transaction that has been recorded in the books of accounts using supporting documentation is referred to as this.
• The goal is to guarantee that transactions are accurate and supported by sufficient evidence.
• Additionally, it verifies the authorization used to make an entry in the client's books.

Important PointsObjectives of vouching

1. Inspecting the books of original entries to ensure that transactions and entries are accurately recorded.
2. To ensure that transactions and entries have been correctly verified by a reasonable person.
3. Check that transactions have been categorized and disclosed in compliance with accounting principles.
4. Ensure that no fraudulent transactions are entered into the accounting records.
5. Ensuring that all entries and transactions are properly backed by evidence.

The correct answer is Cost, Insurance and Freight.

Key Points

• An international shipping agreement known as cost, insurance and freight (CIF) details the fees paid by a seller to cover the costs, insurance, and freight of a buyer's order while the cargo is in route.
• Only commodities transported by water, sea, or ocean are subject to cost, insurance, and freight.

Important Points

1. Cost, insurance, and freight (CIF) is a term used in international trade that solely refers to products that are transported by water or the ocean.
2. The seller pays for the costs, insurance, and freight of a customer's order while it is in transit when using cost, insurance, and freight.
3. The expense of importing and shipping the products passes to the buyer once it has been delivered to the customer's destination port.
4. However, after the items have been carried onto the vessel, the risk is transferred from the vendor to the buyer.
5. Once the items are on the ship, the buyer assumes ownership of them, and if the cargo is destroyed while in transit, the buyer is required to make a claim with the seller's insurance provider.

The correct answer is Unity of purpose.

Key PointsIn order for many departments and organisations to operate in unison, management must perform the coordination function. As a result, departments, groups, and workers all act in one.

Important Points“Co-ordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of actions in the pursuit of a common purpose.”

Features of Coordination

• Rather than focusing on individual effort, coordination focuses on the integration of group efforts.
• Coordination is the coordinated application of necessary quantity and quality at the appropriate time.
• It is continuous and dynamic process.
• Three crucial components of coordination are balancing, timing and integrating.

The correct answer is Memorandum of Association.

Key Points

• Memorandum of Association is the  company's principal constitutional document.
• When a corporation is established, one of at least two founder members must draw it up and sign it.
• It must include the name and address of the company's registered office, the reasons for the company's formation, the amount of authorised capital, if any, and, if applicable, whether the company is a limited (or public limited) company.

Important Points

1. The Memorandum of Association, which outlines information about the policies, plans, and securities issued by the firm, must be registered before it can be officially established.
2. Every firm must register its Memorandum of Association since it serves as the foundation for all businesses and outlines all of the important information about them, including their core values and motivations, which must be made clear prior to incorporation.
3. So, before the company is incorporated, a copy of the Memorandum of Association needs to be registered.

Additional Information

Article of Association: The "constitution of a firm" might be referred to as the articles of association (AoA).

• It specifies the guidelines that specify a company's internal operations.
• The organization's purpose and tactics for achieving its short- and long-term objectives are stated in the articles of association, which are also thought of as a user's guide for the organisation.
• The AoA typically contains information on a company's legal name, address, purpose, equity capital, organisational structure, financial provisions, and shareholder meeting provisions.

Prospectus: A prospectus is a written or printed statement made by or on behalf of a corporation that provides details about the character, nature, and intent of a share, bond, or other corporate securities offering and invites the public to buy the securities.

The correct answer is Personal Account.

Key Points

• Outstanding expenses are those expenses which have been incurred during the current accounting period and are due to be paid, however, the payment is not made. Such an item is to be treated as payable by the business.
• Examples – Outstanding salary, outstanding rent, outstanding subscription, outstanding wages, etc. Outstanding expenses are recorded in books of finance at the end of an accounting period to show the true numbers of a business.

Important PointsThe outstanding costs account is a representative personal account since it speaks for all of the outstanding expenses to a group of persons. In light of this, it qualifies as a personal account.

Additional InformationTypes of Accounts

Real Account: These account categories relate to possessions or assets. Intangible real accounts and Tangible real accounts are two further categories.

Rule: Debit what comes into the business, Credit what goes out of business.

Personal Account: These account types have a human relations component. These individuals could be real people, such as those listed on Raj's, Rajesh's, Ramesh's, Suresh's, etc. accounts. These individuals can also be created artificially, such as corporations, partnerships, bodies corporate, associations of individuals, etc., There can be personal representative accounts as well, like outstanding expenses A/c , prepaid expenses A/c etc.

Rule: Debit the receiver, Credit the Giver.

Nominal Account: These account kinds relate to profits or income and losses or expenses. As an illustration, consider the following examples: rent, commission received, salary, wages, transportation, etc.

Rule: Debit all the expenses and losses of the business, Credit the incomes and gains of business.

The correct answer is Labour productivity is low in agriculture.

Key PointsIn Indian agriculture the labour productivity is low because of employment of too many people in agriculture than what is actually needed.

Important Points

• Indian Agriculture the labour productivity is low because of employment of too many people in agriculture than what is actually needed, hence this statement is true.
• Land holding size is big, this statement is false because, Land Holding size is all in India due to overpopulation in the country. Due to the rapid growth of population and the existing law of inheritance, the agricultural land is divided equally among the mare children of the deceased farmer.
• Government procures the whole agricultural produce, the statement is false because government of India does not procure the whole agriculture produce, it is approx only 7 percent of total produce in the country.

The incorrect answer is Making entertainment.

Key Points

• Advertising is a form of marketing communication that aims to encourage consumers to try or purchase a product by influencing their decisions.
• This is one of an organization's most successful promotional tools for reaching the target market and advertising its goods.
• It disseminates to the customers the promotional message that includes all of the product's information.

Important PointsObjectives of Advertising

1. Product Introduction: Advertising helps customers become aware of new products on the market. It clearly outlines the benefits and characteristics of the new product the business has released.
2. Increasing Awareness: Advertising is the channel via which a company tells the larger market about its goods or services. It raises public knowledge of the company's products significantly.
3. Product Differentiation: Advertising also plays a significant influence in product differentiation. By clearly outlining the benefits and qualities of the product to buyers, it helps the company distinguish its goods from those of competitors.
4. Sales Growth: Advertising aids in boosting a company's overall sales growth. It disseminates knowledge about the product throughout a sizable population and convinces them to buy it.
5. Overcome Rivalry: Advertising helps companies deal with intense market competition. It makes it possible to provide thorough product information and sets it apart from those of competitors. It is a way for businesses to draw in a growing number of customers.
6. Enhances Goodwill: Advertising is effective at enhancing the company's goodwill and reputation in the marketplace. Repeated advertising boosts the brand's high-quality items while demonstrating the company's market presence. Customers have a more favourable perception of the brand as a result.
7. Customers' Education: Companies use advertising as a way to inform customers about their products. Through advertising, they educate consumers about the benefits and uses of their products.
8. Changing Attitudes: There is strong evidence that attitudes can be changed through advertising. The share of Camel cigarettes sold to kids climbed significantly after the R. J. Reynolds Company began airing its Joe Camel TV advertisements in the 1980s. However, persuasion can also lead to better results.

Hence, it can be concluded that Making Entertainment is not the main objective of Advertising.

The correct answer is All of the above

Key Points

• The term "journal" or "book of original entry" refers to the entire set of transactions that are initially recorded in the books.
• Journal is the original entry book where all company transactions are entered in chronological order after adhering to the debit and credit regulations.
• A journal is also called book of first entry, original entry or datewise entry.

Format of Journal:

The correct answer is Quantitative classification.

Key Points

• Classification is the process of classifying data into homogenous (similar) groups based on the shared traits between the categories.
• Raw data cannot be easily interpreted and cannot be used for further investigation.
• Users can compare and analyse data thanks to the data's arrangement.
• For instance, the inhabitants of a town could be divided into groups based on their sex, age, marital status, etc.

​Quantitative Classification: This kind of classification is based on quantifiable traits like height, weight, age, money, student grades, etc.

Additional Information

Methods/Basis of Classification

Quantitative Classification: This kind of classification is based on quantifiable traits like height, weight, age, money, student grades, etc.

Geographical Classification: Geographical classification is the process of categorising data with reference to specific geographic areas, such as countries, states, towns, districts, etc. It is often referred to as "spatial classification."

Qualitative Classification: According to this categorization, information is categorised based on traits or characteristics like integrity, good looks, intelligence, literacy, marital status, etc.

The population could be segmented, for instance, according to marital status (as married or unmarried)

Chronological Classification: A chronological classification is a grouping of data based on time, such as years, quarters, months, weeks, etc. This type of classification groups data either in ascending or decreasing order with respect to time. It is often referred to as "temporal classification."

The correct answer is option 4

Key Points

• According to the Indian Partnership Act of 1932, a partnership is a relationship between individuals who have decided to split the profits and losses of a commercial venture they are engaged in.

Important PointsAdvantages if registered partnership firm are as follows:

• The primary benefit of registration is that, in the event of a disagreement, a registered partnership partner may bring an action against both the other partners and the business as a whole.
• The registered firm can also sue third parties as well as any of its partners in its own name to enforce its claim.
• In order to assert their claim against the company, third parties who have business relationships with it may file a lawsuit.
• The new partner doesn't have to rely on the honesty of the other partners; instead, he can assert his rights against them.
• In accordance with the requirements of the Income Tax Acts, the registered firm may claim tax benefits.
• According to Section 33 of the Partnership Act, when a partner retires from the partnership, the ejected partner will be treated in the same manner.

The correct answer is Asset Account

Key Points Admission of partner:

• When a firm requires additional capital or managerial help or both for the expansion of its business a new partner may be admitted to supplement its existing resources.
• According to the Partnership Act 1932, a new partner can be admitted into the firm only with the consent of all the existing partners unless otherwise agreed upon.
• With the admission of a new partner, the partnership firm is reconstituted, and a new agreement is entered into to carry on the business of the firm.
• A newly admitted partner acquires two main rights in the firm–
• Right to share the assets of the partnership firm; and
• Right to share the profits of the partnership firm.

Important PointsOn admission of a partner, if there is an increase in the value of assets is debited to Asset account and revaluation account is credited.

Journal Entry:

 

Additional Information Revaluation account:

The revaluation account is a nominal account used to distribute and transfer profits and losses resulting from increases and decreases in the book value of assets and liabilities as a result of changes in profit sharing ratio, admission of a partner, retirement of a partner, and death of a partner.

The Correct Answer is Sqare kilometer.

Key PointsDensity population

• The number of individuals living within that specific location determines the population density, or the number of individuals divided by the size of the area.
• This measure describes how much people live per square kilometre.
• Density population is a measure of populations living per area, in India the area is normally taken as square kilometer.
• Density population = Number of persons/ Unit Area

The correct answer is Equal.

Key PointsInternational trade - The transfer of goods and services from one country to another is referred to as international trade. Alternatively put imports and exports.

Important PointsTheories of the cost differences international trade -

Adam Smith’s Absolute Advantage theory - Adam Smith states that the emergence of trade is a result of differences in the absolute cost of production. When producing a good, a nation has a clear advantage over rival nations if it can do it at a lower price.

David Ricardo's Advantage of Comparability theory - According to Ricardo's concept, a nation will export goods in which it has a comparative advantage and import those in which it has a disadvantage.

In above questions, Equal is not the cost differences international trade would not take place.

The correct answer is Classifying.

Key PointsLedger - After the transactions are recorded in the journal, it is then posted in the principal book called as ‘Ledger’. Ledgers are balanced at the end of the year to find out differences.

Important PointsLedger Posting -

• Ledger posting is the process of moving journal entries to the appropriate ledger accounts or
• Ledger posting is the process of entering data from the journal for specific records into the appropriate ledger accounts.
• Posting to the ledger is classifying phase of accounting.

Additional InformationClassification of ledger accounts - 

Generally all the ledger accounts are put into 5 categories:

• Assets
• Liabilities
• Capital
• Revenues/gains
• Expenses/losses

The correct answer is posting

Key PointsLedger:

• Ledger is that book of account; in which all types of accounts relating to assets, liabilities, capital, expenses, and revenues are maintained.
• A ledger is a complete set of accounts of a business enterprise.
• It is an account book that contains various accounts to which various business transactions of a business enterprise are posted.
• A ledger is a book of final entry because the transactions that are first entered in the journal or special purpose Books are finally posted in the ledger.

Important Points

Ledger Posting:

• Ledger posting refers to transferring debit and credit items from journal entries into their respective accounts. For making this successful we must first ensure that every single item contains a separate account.
• While posting entries, the account which has been debited in the journal entry must be debited in the ledger as well.
• But we have to mention the name of the other account as well.
• In the same manner, the account which is credited in the journal entry is recorded on the credit side of the ledger, but the reference is given to the other account in the entry.
• It is a custom to mention the words “To” and “By” as a prefix before debit and credit accounts respectively.

The correct answer is Oligopoly.

Key Points

Oligopoly:

• In economics, an oligopoly is a market structure made up of several large corporations that control a specific industry through trade restrictions such collusion and market sharing.
• Oligopolists use non-price competition and product differentiation to increase market profits while reducing market competition.

 Advertisement - 

• Advertising refers to the strategies and methods used to make people aware of certain goods, services, viewpoints, or causes in an effort to influence their behaviour.
• Advertising is spread through a variety of mass media, including new media as well as classic media including newspapers, magazines, television, radio, outdoor advertising, and direct mail.

Important Points

• Under oligopoly, advertising can become a life-and-death matter where a firm which fails to keep up with the advertising budget of its competitors may find its customers drifting off to rival products
• In oligopoly market situation, the producers are forced to advertise their product
• Aggressive advertising measures are undertaken with a view to capture the market share.

The correct answer is None of the above.

Key PointsVouching - Vouching is a part of an audit that aims to validate the transactions included in a company's book of accounts and is frequently referred to as "the backbone of auditing."

Important PointsThe objective of vouching are as follows - 

• To examine the accounting transactions recorded in the books of accounts by using  documented evidence
• To evaluate the reliability and adequacy of such documentary evidence
• To determine whether the transactions listed in the books of account are accurate
• To make certain that every transaction is accurately recorded in the books of accounts
• To ensure that all transactions and entries are backed by reliable evidence
• To guarantee that there are no fictitious transactions recorded in the books of accounts
• To ensure that all business-related transactions are accurately recorded in the books
• To ensure that each transaction has been duly validated by a trustworthy person.

 

The objective of vouching is to examine the authenticity of the transactions.

Hence, the objective of vouching is not getting knowledge of business transactions or non business transaction.

Mistake Points The answer to this question has been according to the revised answer key released by the official authority.

The correct answer is Giffen paradox.

Key PointsLaw of Demand - The quantity of demand and price of any good or service exhibit an inverse relationship while other factors remain constant, according to the law of demand in economics.  

It also implies that as the price of a certain good rises, demand for that same good falls and vice versa.

Important PointsException to the law of demand are as follows - 

Giffen Goods - Sir Robert Giffen introduced Giffen Goods concept. These goods are inferior in quality as compared to luxury products. In any case, Giffen products are that as the price raises, so will the demand for them also increases. And this feature is makes it an exception to the law of demand.

 Additional Information

Other exceptions to the law of demand are as follows - 

Necessary Goods and Services - People will continue to buy necessities even if the price increases. The prices of these products do not affect their demand.

Change in Income - The demand for a product will rise as a household's income rises since they may buy more things regardless of the price increase. In a similar vein, if their income has decreased, people might put off purchasing goods even if its price decreases.

The expectation of Price Change - There are instances when a product's price rises and the state of the market allows for possible price hikes. In such circumstances, customers might purchase more of these goods before the price rises further.

Veblen Goods - Diamonds, a priceless stone, are one example of these products. In this instance, when the commodity's price increases, consumers feel more prestigious purchasing such products and their demand increases. This is a law of demand exception.

In above question, Giffen paradox is an exception to the law of demand.

The correct answer is Internal Check.

Key PointsInternal Check:

• The process that entails a proper and rational distribution of work between the members of the staff of the organisation is called Internal Check because the internal control system's internal check is a crucial component.
• It is a system of assigning tasks to employees so that each employee's work is automatically and independently reviewed by another employee.

Additional InformationInternal Audit: An organisation's internal controls, including its corporate governance and accounting procedures, are assessed via internal audits. These audits help to maintain accurate and timely financial reporting and data collecting while ensuring compliance with laws and regulations.

Internal Evaluation- It means evaluation conducted by a person who is part of the project or a person under contract to the project.

Internal Management: The management within an organisation of any company or organisation is known as internal management.

The correct answer is Realisation account

Key Points

Dissolution of a firm-  According to Section 39 of the partnership Act 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm. This brings end to existing business firm. When the firm is dissolved the books of account are to be closed and profits or loss arising on realisation of its assets and discharge of liabilities is to be computed. 

On Dissolution all books of accounts are closed using the following accounts.

• Realisation Account
• Partner's capital Account
  

Cash & Bank Account.​

Important Points

Realisation A/c- prepared on Dissolution of Firm. The following transaction will be recorded in realisation account-

• All assets in balance sheet (except cash & bank balance)
• All liabilities in balance sheet (except balance of profit & loss, reserves & partner's capital account)
• Amount realised on assets
• Discharge of liabilities
• The profit & loss on realisation account transferred to partner's capital account.

When the partnership firm is dissolved, the Realisation account is opened in the books of the firm.

The correct answer is Frequency of each class.

Key PointsTally sheet:

• A tally sheet, also known as a check sheet, is a tool for gathering data by counting and observing things.
• It can be used to count things, determine how frequently something has occurred or will occur, or both.
• A sheet of paper and a pencil can be used as a tally sheet, while a computer application can be more sophisticated.

The correct answer is Mass audiences.

Key PointsPersonal selling - Personal selling, commonly referred to as face-to-face selling, is a sales technique where a single salesperson tries to persuade a consumer to purchase a product.

Important PointsThe features of personal selling is -

Personal Form or Personal contact - In personal selling the salesperson and the customers build a personal connection. In other words, both sides are in face each other.

Relationship Development - Through personal selling, a relationship is created between the salesperson and customer. A crucial role for this kind of interaction exists in sales.

Oral Conversation or Two way communication- The salesperson and the customer have an oral discussion about the product's features, such as the cost, color, form, design, manner of use, etc.

Quick response to Queries or Quick feedback - Customers can ask questions about the product. The salesperson provides prompt responses to these questions and allays the customer's concerns.

Acquiring Extra Information - Normally, a business is aware of the preferences of the customers before launching its product. However, during personal selling, when the salesperson is in close to the customers, he or she learns more about their preferences and tastes.

Genuine Sale - Under personal selling, the customers are not only given information about the product but are also given the opportunity to purchase it.

Therefore, Targeting Mass audiences is not feature of Personal selling. It is feature of Advertisement of Marketing.

The correct answer is Simplifying.

Key PointsAccounting Process - The accounting process is a set of procedures used by business entities to keep track of their financial transactions. 

Important PointsProcess of Basic Accounting - 

1. Finding a transaction and then recording it in a journal are the first steps in accounting.
2. After recording journal comes ledger classification
3. ultimately then accounts summarization.
4. Interpretation via Ratio analysis, followed by dissemination of the knowledge to financial statement users.

As a result, the accounting procedure does not include a Simplifying term.

The correct answer is Inverse.

Key PointsMoney - an active medium of exchange that consists of coins and banknotes; both of these items taken together.

Price level is the average of the prices of all the goods and services in an economy 

Important Points

• Value of money is what one unit of money can purchase or meant the purchasing power of money over goods and services.
• As a result, the term "  value of money" refers to the link between a unit of money and the goods and services that can be bought with it.
• Because goods and services are bought with a money unit at set prices, this demonstrates how the value of money is correlated with the level of price.
• However, there is an inverse relationship between the value of money and the level of prices.
• V = 1/P if V represents the worth of money and P the price level.
• The value of money decreases as prices rise and vice versa.
• Hence, The relationship between values of money and general price level is inverse.

Fiscal Policy limits the power of credit creation by Commercial Banks.

Fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals.

Changes in the level and composition of taxation and government spending can affect macroeconomic variables, including:

• aggregate demand and the level of economic activity
• saving and investment
• income distribution
• allocation of resources.

Therefore, Fiscal policy along with monetary policy limits the power of credit creation by Commercial Banks.

1. Banking Laws:

• Banking law is the broad term for laws that govern how banks and other financial institutions conduct business.
• Banking laws may exist in order to achieve many objectives. Some of these objectives include:
• Provide transparency for consumers
• Reduce risk for banking customers
• Avoid misuse of banks for purposes like money laundering
• Allow consumers to bank with confidentiality
• Prevent other crimes
• Prioritize bank lending according to economic and social priorities
• Provide fair banking and equal opportunities for banking
• Prevent terrorism
• Create fair debt collection practices
• Make credit card agreements fair to consumers
• Prevent banks from making unfair loans to insiders like officers and principal shareholders
• Allow customers to reasonably raise disputes

2. Business Pessimism: It is the feeling that bad things are more likely to happen than good things.

The correct answer is Balancing.

Key PointsDebit - represents either an increase in a company’s expenses or a decrease in company's revenue.

Credit - represents either a decrease in a company’s expenses or an increase in company's revenue.

Important PointsBalancing - 

• Balance is the term used to describe the difference between two sides of an account.
• The recorded transactions have two sides after being moved from the journal to the ledger accounts.
• Debit and credit are the two sides of the account.
• Typically, the debit side of the account is on the left, while the credit side is on the right.
• The balance or account balance is the distinction between the debit and credit sides.
• Therefore, the balance of an account is the difference between its two sides.

The correct answer is matching.

Key PointsThe Accounting Concept - 

• The basic principles or basic assumptions that underlie the theory and practice of financial accounting are referred to as the basic accounting concepts.
• These concepts were created by the accounting profession and serve as broad guidelines for all accounting tasks.

Important PointsMatching Concept - states that revenues earned over a period of accounting should match expenses incurred during that period.

• This implies that both the revenue and the expenses incurred to this revenue must be included in the same accounting period.
• Profit & Loss Account is prepared to determine net profit or loss of an enterprise for the year/period by adjusting expenses of the firm from revenue of the firm.
• The accounting concept that is used to prepare the Profit and Loss Account is known as Matching Concept.

Additional InformationCost Concept - According to the cost concept all assets must be valued at their purchase price, which takes into consideration the costs of acquisition, shipping, installation, and readying the asset for use.

Realisation Concept - According to the idea of revenue recognition, a company transaction's revenue should only be recorded in the accounting records once it has been realised.

Disclosure Concept - The disclosure concept in accounting refers to the requirement to provide all relevant and material information in financial statements and accompanying notes to ensure transparency and provide users with a complete understanding of an entity's financial position and performance.

The correct answer is Stabilisation of prices.

Key PointsMoney - an active medium of exchange that consists of coins and banknotes; both of these items taken together.

Important PointsFunctions of Money

Medium of exchange - Money can be used as a medium of exchange for all types of transactions involving products and services.

Measure of value - Money is used as a unit of measurement for value. All commodities and services have a monetary value that can be stated.

Storage of value - A store of value simplifies a store of wealth. Money can be stored for future use.

In above question, Stabilisation of prices is a function of Monetary Policy. Thus, Stabilisation of prices is not a function of money.

The correct answer is All of the above.

Key PointsPersonal selling - Personal selling is one-on-one face-to-face sales where the salesperson tries to persuade the customer to purchase a product recommended by the firm.

Important PointsTwo-way conversation -The ideal instrument for selling to individuals is this. Personal selling is an Oral communication & Conversation with customers. Salespeople can collect client feedback and give them the essential information about the company's offer.

Face to face interaction or Personal Attention -  Personal selling is concentrated and is focused on one person, and since publicity and advertising are mass communication instruments, the outcomes will be ineffectual.

Thus, Personal selling includes Oral communication, Face to face interaction & Conversation with customers.

The correct answer is Compound entry.

Key Points Journal entries - are records of the financial transactions that come in and goes out of your company.

Important PointsCompound entry - 

• Compound entries are that have at least two debits, one credit, or at least one debit and two or more credit items.
• For transactions that are of a similar character and take place on the same day, compound entries are made.

For example: Journal Entry for salaries and wages paid in cash

Additional Information Double entry - Every financial transaction has equal and opposite consequences in at least two independent accounts, according to the fundamental principle of double entry, which is the concept of modern bookkeeping and accounting.

The correct answer is Peter F. Drucker.

Key PointsManagement - 

• The administration and coordination of tasks to accomplish a goal is management.
• Setting the organization's strategy and organizing staff efforts to achieve these goals through the application of resources available are examples of such administration activities.

 Important Points

Peter F. Drucker defines, “Management is an organ; organs can be described and defined only through their functions.”

 Additional InformationHenri Fayol  said, "Managing involves forecasting, planning, organising, commanding, coordinating, and controlling the activity of others."

According to Terry, “Management is not people; it is an activity like walking, reading, swimming or running. People who perform management can be designated as managers, members of management or executive leaders.”

The correct answer is Restrictive trade practice.

Key PointsRestricting competition - Any actions that limit competition in a relevant market or that could undermine, distort, or otherwise negatively impact competition are considered to be practicing competition restriction.

Important PointsRestrictive trade practice - A restrictive trade practice is often one that prevents, distorts, or restricts competition in some way.

Restrictive trade practices are in particular those that: 

(a) Tend to impede the flow of capital or resources used in production. 

(b) Have a propensity to manipulate the prices, terms of delivery, or market supply of products and services so as to impose unnecessary expenses or limitations.

Thus, Restricting competition is a Restrictive trade practice.

Additional Information

• Monopolistic trade practice means by restricting, lowering, or otherwise managing production, supply, or distribution of commodities or services, one might sustain unjustified pricing for items or fees for services.
• Unfair trade practices are defined as unethical or dishonest business practices.

The correct answer is Cash Account.

Key PointsSalary - A salary is a set sum that is given to an employee on a regular basis regardless of the number of hours or volume of work completed.

Important Points Journal Entry on salary paid to Ramesh by Cash -

Thus, The salary paid to a clerk Ramesh should be credited to Cash account.

The correct answer is Peter Drucker.

Key PointsSystems Approach -The systems approach is a management strategy that encourages viewing every company issue as a hierarchy of sub-systems that makes up the system as a whole.

Important PointsAn approach to management that aimed to meld the earlier schools of thought first emerged in the 1960s. This strategy is frequently referred to as the "Systems Approach."

• Ludwing Von Bertalanffy,
• Lawrence J. Henderson,
• W.G. Scott,
• Deniel Katz,
• Robert L. Kahn,
• W. Buckley, and
• J.D. Thompson were among its early contributors.

The correct answer is Recording of financial data

Key Points

• Bookkeeping is actually just one part of the accounting process which deals with the recording of the transactions.
• It provides the primary information in the accounting process.
• Bookkeeping is the activities concerned with the systematic recording and classification of financial data of an organization in an orderly manner.
• It is essentially a record-keeping function done to assist in the process of accounting.
• It is mainly concerned with recording financial data relating to business operations.

Important Points 

Objectives of Bookkeeping:

• The main objective of book-keeping is to keep a complete and accurate record of all the financial transactions in a systematic orderly, logical manner. This ensures that the financial effects of these transactions are reflected in the books of accounts.
• Then the second main objective is to ascertain the overall effect of all recorded transactions on the final statement of the company. Book-keeping will eventually ascertain the final accounts of the company, namely the Profit and Loss Account and the Balance Sheet.

Confusion Points

• While designing the system of recording transactions is an important aspect of bookkeeping, the primary function of bookkeeping is indeed to actually record transactions.
• Designing the system of recording transactions is an important part of bookkeeping because it involves setting up the framework and procedures for how transactions will be recorded.
• But it's designed with the aim of actually recording the transactions accurately.

The correct answer is Prospectus.

Key Points Company - As per Section 2(20) of the Companies Act, 2013, the term “Company has been defined as a company incorporated under this Act or under any previous company law.”

Important PointsProspectus - Section 2(36) in The Companies Act, 1956 , prospectus means  any document described or issued as a prospectus and includes any notice, circular, advertisement or other document  inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate.

The incorrect answer is Arithmetic mean.

Key PointsArithmetic Mean:

• The sum of a subject's values divided by the entire number of values is the mean.
• Finding the central tendency of a value is best done using the mean.
• As a result, it is impossible to graphically identify the mean.

Important Points

• The median and mode are calculated by looking at the data. Therefore, it is simple to ascertain the values of the median and mode by looking at the graph provided the data are presented in a graphical format. As a result, the graphic determination of the median and mode is possible.
• Quartiles can also be depicted graphically with the help of cumulative frequency curve or ogive curve.

The correct answer is None of the Above

Key PointsSound Pollution:

• Noise pollution does not apply to all sounds.
• Noise pollution is defined by the World Health Organization (WHO) as noise that is louder than 65 decibels (dB).
• More specifically, noise becomes unpleasant over 120 decibels (dB) and hazardous above 75 dB.
• Noise becomes a pollutant when its sound level increases beyond 80 dB. DB corresponds to decibels.
• The exposure of a person to such elevated levels can cause harm to humans; however, the intensity of the noise pollution depends on the intensity and exposure time.
• it is advised that noise levels be kept below 65 dB during the day.

Hence, sound pollution arises when sound waves exceed 80 decibels

The correct answer is: indigenous bankers.

Key Points

• A segment of the financial market where financial instruments with high liquidity and short maturities are exchanged is referred to as the "money market."
• The money market has developed into a segment of the financial market for the buying and selling of assets with short maturities, such as treasury bills and commercial papers, of one year or less.

Important PointsIndigenous Bankers:

• The Indigenous banking system is a system of banking that involves private firms or individuals who act as banks by providing financial services such as loans and accepting deposits.
• The indigenous banking system is made up of indigenous bankers who do not fall under the purview of the government.

Hence, the indigenous bankers are part of the unorganized money market.

The correct answer is Customer's Account.

Key PointsDiscount:

• There are two different kinds of discounts: cash discounts and trade discounts.
• To expedite the collection of payment from the customers, cash discounts are permitted.
• The business may give a cash discount to hasten cash collection.

Important PointsA cash discount is a loss to the company and should be debited to the discount account by giving credit to the customer account.

The journal entry for Cash discount:

The correct answer is Cash Price.

Key PointsHire Purchase:

• In a hire purchase agreement, the seller agrees to let the buyer pay in instalments rather than the whole price for the asset.
• The buyer will put down a small deposit and pay the remainder, plus interest, in instalments.
• Until the final payment is made, the buyer will not become the owner.
• It is typically used for the purchase and selling of expensive gadgets, home appliances, and other long-term assets like furniture.

Important Points

• The hire-goal purchaser's is to become the asset's owner, therefore the asset account will be debited in full for the Cash Price of the asset.
• As a result, the transaction should be recorded in the hire-books purchaser's as a "credit purchase of an asset."
• Cash Price is the amount to be paid by the buyer on outright purchase of assets.

The correct answer is Equal to one.

Key PointsElasticity of Demand:

• The responsiveness of the quantity required of a good to changes in one of the variables on which demand depends is known as elasticity of demand.
• In other words, it is the ratio of the percentage change in the quantity demanded to the percentage change in one of the factors that affect demand.

Important Points

 

• If the demand curve is linear (straight line), it has a unitary elasticity at the midpoint.
• The total revenue is maximum at this point.
• Any point above the midpoint has elasticity greater than 1, (Ed > 1), and any point below the midpoint has elasticity lower than 1.

The correct answer is Forfeiture.

Key PointsSurrender of shares:

• To avoid forfeiture, surrender is a good option.
• A member who voluntarily returns their shares to the corporation is said to have surrendered their shares.
• It is a fast track to the drawn-out process of share forfeiture.
• If the holder so chooses, he may surrender shares that are at risk of forfeiture due to a failure to pay calls.
• If it is permitted by the business's articles of incorporation, the company may accept such a voluntary surrender of shares.

Important Points

• The effect of surrender of shares is the same as that of forfeiture of shares.
• The only difference between both is that surrender of shares is voluntary in nature, whereas forfeiture of shares is done by the company for non-payment of call money.
• The surrender as well as forfeiture of shares results in the cancellation of shares.
• The process for both scenarios is the same.

The correct answer is Currency and demand deposits.

Key PointsMoney:-Any item that is often used and accepted in business dealings involving the transfer of products and services from one person to another is referred to as money.

Important Points

• According to traditional approach/transaction approach of money, it is a commodity must have the quality of medium of exchange.
• As a result, the coins and currency notes which are issued by central bank and government and cheques of demand deposits which are issued by commercial banks will be called money.
• They are considered as money because they can be used to purchase goods and services.
• Thus, according to this approach money consists of (i) legal money and (ii) demand deposits.

It is written as :

M= CU+DD 

where, M= Money

CU = Currency

DD = Demand Deposits

Additional Information

• According to Liquidity Approach of Money, money is commodity must have quality of store of value.
• It includes time deposits of commercial banks, Mutual saving bank accounts and treasury bills.

The correct answer is Sacrifice ratio

Key Points

• Calculation of sacrificing ratio is necessary when the new partner will bring in 'premium for goodwill' in cash because it is then distributed among all the sacrificing partners at the time of passing adjustment entries.
• ​When the amount of goodwill brought in by a new or incoming partner into the firm at the time of his admission, it is termed as a premium for goodwill.
• At the time of his admission, he also brings some amount of capital along with the premium for goodwill into the firm.

Important Points

• "Goodwill" is an intangible asset/rights that are associated with the purchase of one company by another. It represents assets that are not separately identifiable.

Formula for Sacrificing Ratio:

Sacrificing ratio = Old profit sharing ratio – New profit sharing ratio

The correct answer is Office Manual.

Key Points

Office Manual: 

• A document outlining an organization's structure, employment policies, and the established system, routine, processes, methods, standards, rules, and regulations of an office operation is referred to as an office manual.
• An office manual is a guidebook that details the company, the product, and the employees' procedures.
• Depending on the business, this can be dissected in a number of different ways.
• However, in the end, employees are the ones who should be consulted for information on how to perform their duties, the consequences of mistakes, and other standards that must be understood in order to be a productive worker.

Additional InformationOrganisations Manual: This guidebook provides a thorough description of the company. Each person's power and duties are specified in great detail. It prevents misunderstandings and disputes between different people. This manual explains the level of authority and the connection between executives. A well-written manual makes it easier to delegate responsibility and govern the scope of management.

Organisation Chart: An organisational chart is a visual representation of a company's internal structure that shows the relationships, functions, and responsibilities of each individual within the organisation. It is one method of imagining a bureaucracy.

Management Guideline: The process or act of guiding, or "The one who illuminates the path by illuminating, illuminating, or advising." or "The one who sets an example for others in a certain behaviour."

The incorrect answer is Quantity of inputs.

Key PointsProduction Function:

• The link between the amounts of productive factors (such as labour and capital) used and the quantity of output obtained is expressed by the production function.
• It specifies the maximum amount of product that can be produced from every combination of variables, given that the best production techniques are applied.

Important PointsFeatures of Production Function

1. A production function is a representation of the functional relationship between the amount of input employed and the amount of output produced.
2. This shows the technical relationship between inputs and outputs which are in physical form.
3. It also denotes the flow of input that will produce the flow of output over a specific period of time.
4. The state of technology affects production. A change in the state of technology will also change the production function**.**
5. Improvement in the level of technology will increase the output level, even if the amount of input remains the same.
6. A production function has no monetary significance; It only shows the physical relationship.

The correct answer is Sales Return Account.

Key Points

• The customer may return products they have purchased for a variety of reasons.
• This needs to be documented as a sales return in the books of accounts.

Important Points

Sales Return A/c is a nominal account, and as per the golden rules of nominal account, debit all expenses and losses and credit all income and gains.

Customer A/c is personal account, and as per the golden rule of personal account debit the receiver and credit the giver.

The correct answer is Interest Suspense Account.

Key Points

• A credit sale system in which payments are made in instalments over time is known as an instalment payment system.
• In this method, the buyer receives both ownership and possession of the items at the time the contract is signed.
• The vendor cannot respond to the items while the instalment is being paid.
• In that circumstance, the vendor may only file a lawsuit against the customer to recoup unpaid debts.

Important PointsJournal Entries in the book of Buyer are as follows:

 

Hence, the correct answer is Interest Suspense Account.

The correct answer is in export trade.

Key PointsCharter Party:

• A charter party is a legally binding contract between a shipowner and an exporter that allows the exporter to hire a complete ship or a significant portion of a ship for a specific journey or for a set amount of time when shipping is very heavy.
• It is used in export trade.

 Important Points

There are three main types of charter parties:

1. Voyage charter parties: 

• This is a charter party for the carriage of a full cargo, not for a period of time, but at a stipulated rate per ton, for one voyage only, between named ports to be named on arrival in a given area.
• In a voyage charter party the charterer assumes no responsibility 
  

for the operation of the vessel but generally pays stevedoring expenses 

in and out.

2. Bareboat Charter Party:

• By this type of charter, the shipowner leases his entire vessel and the charterer has the responsibility of operating it as though it were his own vessel.
• As the name implies, the bare vessel is chartered.
• The shipowner has, for the period covered by the charter party, lost control of his vessel.
• The charterer pays all expenses: fuel, stores, provisions, harbour dues, pilotage, etc. and employs and pays the crew.

3. Time Charter Party:

• In a time charter, the vessel is hired for a specific amount of time.
• The shipowner manages the vessel, but the charterer gives orders for the employment of the vessel, and may sub-charter the vessel on a time charter or voyage charter basis.

The incorrect answer is these are non-performing assets.

Key PointsDead Stock:

• Unsellable inventory is referred to as dead stock.
• A company may have dead stock because it manufactured or ordered too many things, only to discover they weren't as popular as expected.
• Dead stock can also include misdelivered goods, faulty products, unsold seasonal goods, and outdated raw materials.

Important Points

They yield no profit to bank, this statement is true because:

• Inventory is an asset that a business invests in with the goal of making a profit.
• Dead stock, however, prevents that benefit from being realised and instead causes a direct loss of revenue.
• A product won't produce the anticipated return on its business investment if it becomes dead stock.

These include furniture and buildings this statement is true  because: 

• Dead stocks can be anything that is unsellable lying into your warehouse.

These are used to increase reputation this statement is true because

• Banks can use dead stock to increase their reputation.

These are non-performing assets, this statement is false because

• Loans or advances that are in default or in arrears are classified as non-performing assets (NPAs) whereas dead stocks are Unsellable inventory.

The correct answer is Unfavorable terms of trade.

Key Points

• The key element in any country's economic development is foreign trade.
• All imports and exports into and out of India are considered part of the country's foreign trade.
• Such operations are managed by the Ministry of Commerce and Industry at the Central Government level.

Important Points

• Payment of imports in rupees, this option is not a problem for India's foreign trade instead it is favourable condition for India's Foreign Trade.
• Increasing Quantity of exports is not a problem for foreign trade because it will boost balance of payment of economy.
• Unfavourable terms of trade can cause problems in foreign trade, like payment for export in international currency etc.

The correct answer is External sector.

Key PointsThe balance of payments deficit brought on by an overreliance on imports and other external factors caused India's economic crisis of 1991.

Important PointsIndian Economy Crises1991

• The balance of payments deficit brought on by an overreliance on imports and other external factors caused India's economic crisis of 1991.
• India's trade balance was in deficit at a time when the government was operating on a massive budget deficit, which contributed to the country's twin deficits, which began to deepen in 1985 as imports increased.
• Problems were also brought on by the fall of the Soviet Union, with whom India maintained currency exchange agreements.
• Due to the grave circumstances, towards the end of 1990, just three weeks' worth of imports could have been paid for out of India's foreign exchange reserves in the lead-up to the Gulf War.

The incorrect answer is Mass assembly room.

Key PointsHawthorne experiments"

• A group of researchers from the Harvard Business School led by Elton Mayo and Fritz Roethlisberger were asked to participate in the investigations in 1927 at the Hawthorne Works of the Western Electric Company in Chicago.
• The trial continued until 1932.
• The Hawthorne Experiment demonstrated that workers' productivity is not solely dependent on the physical environment in which they work and the amount of money they are paid in compensation.
• Employee happiness with their working environment has a significant impact on their productivity.
• Mayo believed that when assessing productivity efficiency, rational criteria were significantly less crucial than emotional factors.

Important PointsThe Hawthorne experiments consists of four parts. 

Illumination Experiment: 

• To determine the link between output and illumination, this experiment was carried out.
• The output rose along with the rise in light intensity.
• Even after progressively lowering the illumination to the desired level, the output continued to trend upward.
• Therefore, it was determined that there is no consistent correlation between worker output and factory illumination.
• There must be another element that had an impact on production.

Relay Assembly Test Room Experiment: 

• This phase sought to understand the effects of lighting on production as well as other elements including working hours, rest periods, and other physical conditions

Interviewing Programme: 

• The goal of this programme was to conduct a thorough analysis of the attitudes of the employees in order to understand the significance that their "working condition" has for them.
• Numerous employees were questioned by the researchers about their views on their jobs, working environment, and management.
• In the beginning, a direct strategy was employed, in which interviewees answered questions deemed crucial by management and researchers.
• The researchers noticed that the workers' responses were reserved. Consequently, an indirect strategy was used in place of this approach, where the interviewer merely listened to what the workers had to say.
• The results supported the significance of social aspects in the overall workplace.

Bank Wiring Test Room Experiment: Finding of this study are as follows:

• Each person was limiting their productivity, the gang established its own "unofficial" performance requirement.
• Over time, individual production stayed largely unchanged, Informal groups are crucial to an organization's operation.

The correct answer is Coefficient of variation

Key Points Dispersion:

• The degree to which numerical data is expected to deviate from an average value is known as statistical dispersion.
• In other words, dispersion aids in comprehension of data distribution.

Important Points Relative measure of dispersion:

• The distribution of two or more data sets is compared using the relative measures of dispersion.
• This measure compares values without units.
• Common relative dispersion methods include:
• Co-efficient of Range
• Co-efficient of Variation
• Co-efficient of Standard Deviation
• Co-efficient of Quartile Deviation
• Co-efficient of Mean Deviation

Additional Information Mean deviation: The term "mean deviation" refers to the arithmetic mean of the absolute departures of the data from a measure of central tendency (also called mean absolute deviation).

Standard deviation: The square root of the variance is known as the standard deviation i.e. S.D. = √σ.

Variance: The term variance refers to a statistical measurement of the spread between numbers in a data set.

The correct answer is Median.

Key PointsAn ogive graph is a type of statistical diagram that displays cumulative frequencies. It enables us to easily calculate the proportion of observations that are either less than or equal to a certain value.

Important Points

• The median of the given collection of data is determined using the Ogive graph or cumulative frequency graphs.
• We can quickly determine the median value if the cumulative frequency curves for less than and larger than are both plotted on the same graph.
• The median value is determined by the intersection of both curves at the x-axis.
• Ogives are employed in computing the percentiles of the data set values in addition to determining the medians.​​

Additional InformationArithmetic Mean: The ratio of the sum of all observations to the total number of observations is known as the Arithmetic Mean (AM) or average in statistics.

Mode: In statistics, the value that consistently appears in a particular set is referred to as the mode. Additionally, we can refer to the value or number in a data collection that occurs more frequently as the mode or modal value.

Median: In statistics, the median is the value that, when placed in order, falls in the middle of the supplied collection of data. Either ascending or descending order can be used to organise the data or observations.

The correct answer is Drawings account.

Key PointsWhen cash is withdrawn by the proprietor for his personal use, it is called a "draw" and should be debited to the drawing account.

Important PointsWhenever proprietor withdraws cash and goods from a business for their personal use, it is treated as a drawing.

The journal entry is as follows :—

 

Confusion Points

When the proprietor or partner withdraws cash from the business for personal use, the amount is debited to the drawings account and credited to the cash account.

At the end of the accounting period, an adjustment entry is passed to transfer the balance of the drawings account to the capital account.

The correct answer is Liquidity.

Key PointsThe phrase "near money" refers to non-monetary assets that are highly liquid and can be quickly converted into cash. It is also known as cash equivalents or quasi-money.

Important PointsA phrase from financial economics, "near money," also known as "quasi-money" or "cash equivalents," refers to non-monetary assets that are very liquid and may be changed into cash with little effort.

Examples of Near Money:

• Savings accounts
• Government treasury securities (T-bills)
• Money market securities
• Liquid foreign currencies (US dollar, Japanese yen)
• Certificates of deposit (CDs)
• Close to expiration bonds

The correct answer is Credit side.

Key PointsA three-column cash book, sometimes known as a triple-column cash book, has three money columns: one for recording discount, cash, and bank amounts on each side of the debit and credit sides.

Important Points

• The discount allowed column is located on the debit side and the discount received column is located on the credit side.
• The discount allowed and discount received columns represent two different accounts. They are not related.
• The discount columns are memorandum columns in nature. Therefore, two separate accounts, “Discount Allowed” and “Discount Received”, are opened in the ledger.
• Since discount allowed and discount received are unrelated, they are not balanced. Both columns are summed separately, and the aggregate is transferred to the ledger accounts.

Additional Information(Format of Three column cash book)

The incorrect statement is Registration of partnership is compulsory.

Important Points

Option 1: In the absence of partnership deed profit and loss is distributed among partners in equal ratio

• When there is no partnership deed or partnership deed is prepared, but it is silent on profit sharing ratio, in such a case rules of Partnership Act, 1932 will be applicable.
• According to which, profits or losses will be shared by the partners equally irrespective of their capitals.
• Hence, This statement is true

Option 2: Minor partner can get his share of profit

• This statement is true because according to section 30 of Indian Partnership Act 1932, a Minor Partner is entitled to the agreed-upon portion of the firm's profits.

Option 3: The relation between partners are created through deed

• The agreement between the partners put down in writing forms the Partnership Deed.
• It is a document containing the various aspects agreed upon by the partners. It is also called a Partnership Agreement or Articles of Partnership.
• Hence, This statement is true

Option 4: Registration of partnership is compulsory

• Part vii of the Indian Partnership Act, 1932 does not make registration of a partnership firm mandatory, however it is typically done because registration offers the firm numerous benefits.
• Partners are not required to register the business, and there are no consequences if they choose not to.
• Hence, this statement is false

The correct answer is Absence of selling costs.

Key PointsPerfect competition:

• Perfect competition is a special kind of market structure that enables several businesses to offer the same good or service
• . A lot of consumers want to buy those things.
• None of these businesses can set their prices for the goods or services they offer without losing clients to rival businesses.
• There are no obstacles in the way of any company trying to enter or leave the industry.
• Consumers are unable to distinguish between one company's product or service and that of its rivals due to the similarity of the final products produced by all sellers.

Important PointsFeatures of Perfect Competition Market

• Entry Barriers: This is not the feature of perfect competition market because under perfect competition market there is free entry and exit of firms.
• Interdependence: Because no firm is big enough to have an impact on market price in a perfectly competitive (PC) market, there is zero interdependence. Since the current market selling price can be reliably followed to optimise near-term earnings, all businesses in the PC market are price takers.
• Absence of selling cost: Since the assumption is that the product produced by all firms in the perfectly competitive industry is homogeneous, there is no need for a firm operating under perfect competition to undertake advertisement expenditure or to incur other types of selling costs, and each firm can sell as much of the product as it wants at the given price.
• Non Price Competition: Non-price competition is also known as selling cost, which is the term used to describe the costs incurred in order to boost a company's product sales. Since, there is no selling cost under perfect competition because enterprises cannot control the pricing and their products are all the same.

The correct answer is Theory 'X' and theory 'Y' both.

Key PointsTo help leaders examine their fundamental presumptions and impressions of others, Douglas McGregor proposed two theories that he called Theory X and Theory Y.

Important PointsTheory X:

• This theory was propounded by Mc Gregor.
• According to Theory X, people are inherently opposed to working.
• They can only be directed and subjected to coercive measures in order to be made to produce at work.
• Theory X places a strong emphasis on the authoritarian style of leadership, which is more focused on getting things done than on people.

Theory Y:

• This theory was also propounded by Mc Gregor.
• The management strategy advocated by Theory Y is more human-centered.
• The person is respected and cherished in this situation.
• According to Theory Y, when employees are in the ideal environment, they can realise their full potential and be very valuable to their employers.

The incorrect answer is the job of book-keeping is analytical in nature.

Key PointsBook Keeping:

• Book Keeping is the process of recording the financial transactions and events of a business in the books of account (Journal or Subsidiary Books).
• It is a part of accounting. The main aim of book-keeping is to maintain systematic records of financial transactions.
• “The art of keeping a permanent record of business transactions is called book-keeping

Important PointsThe job of book-keeping is analytical in nature, this statement is false because Book-keeping is actually a recording function, the analysis is done during accounting.

Book-keeping is an art as well as a science of recording business transactions, this statement is true because Book-keeping is the science and art of correctly recording in the books of account all those business transactions that result in the transfer of money or money’s worth.

Transactions are recorded in a certain set of books, this statement is true because, Book Keeping is concerned with identifying financial transactions and events; measuring them in money terms; recording them in the books of account (Journal or Subsidiary Books) in systematic manner and classifying them in ledger”.

Book-keeping is the method of recording in account books, this statement is true because, the main aim of book-keeping is to maintain systematic records of financial transactions.

The correct answer is Both (A) and (B).

Key PointsDurable Demand - Durable goods are those whose overall utility or usefulness is not depleted by short-term use. Such products have a long life span and can be used again.

Consumer's demand -The willingness and ability of customers to buy a certain amount of products and services within a specific time frame or at a specific point in time is known as consumer demand.

Important Points

• Furniture is Durable Demand because Furniture can be used for long time and repeatedly  that's why Furniture is durable demand.
• Furniture is consumer's demand because furniture is made according to tastes & preferences of consumer, price range, particular size etc.
• Hence, Furniture is both consumer demand and durable demand.

The correct answer is Capital Reserve Account.

 Key Points

• The corporation has shares that have been forfeited for sale. The corporation is required to dispose of the forfeited shares following their forfeiture.
• To reissue forfeited shares, the firm needs to pass a resolution at its board meeting. Reissuing forfeited shares amounts to the corporation merely selling its stock. These shares are not distributed by the corporation.

Important PointsJournal Entries for reissue of forfeited shares

Hence, the  balance of share forfeiture account is transferred to Capital Reserve Account.

The correct answer is The object of trial balance is to test the accuracy of the books.

Important PointsOption 1 - The object of trial balance is to test the accuracy of the books.

The goal of creating a trial balance is to verify that all debits and credits have been correctly recorded in the ledger and that all accounts have been balanced. It is a list of the accounts and their balances that serves as a summary of the ledger.

Thus, the primary objective of trial balance is to test accuracy of Ledger accounts not the books(includes profit & loss accounts And balance Sheets).That why this statement is not true.

Option 2 - Trial balance provides basis for preparation of final accounts.

The first stage in creating financial statements is having a tallied trial balance available. The trade and profit and loss account receives a transfer of all revenue and expense accounts from the trial balance, and the balance sheet receives a transfer of all liabilities, capital, and asset accounts. Thus, Trial balance provides basis for preparation of final accounts is True. 

Option 3 - Errors of principles do not affect the agreement of the trial balance.

Error of Principles arising due to wrong classifications of receipts and payments between revenue and capital receipts and revenue and Capital expenditure. Error of Principles is not result from incorrect transaction recording thus doesn't effect trail balance. Hence, its true.

Option 4 - Compensatory errors are also known as equalising errors.

Two or more errors committed in such a way that they nullify the effect of each other on the debits and credits is known as Compensatory errors. In this error, the trial balance will always be tallied and does not have any difference that why Compensatory errors are also known as equalising errors. Hence, it is true.

The correct answer is Middle level manager.

Key PointsManager - a person responsible for controlling or administering an organization or group of staff.

Important Points

Middle level manager - 

• The objectives specified by senior management are to be carried out by middle-level managers.
• They accomplish this by establishing objectives for their divisions and other business groups.
• General Manager, Plant Manager, Regional Manager, and Divisional Manager ,marketing managers are examples of positions held by middle managers.
• ***Thus, Mr. 'X' working as marketing manager of TCS is Middle level manager.*​

Additional Information

Top-level managers hold titles such as Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operational Officer (COO), Chief Information Officer (CIO), Chairperson of the Board, President, Vice president, Corporate head.

Lower-Level Management - have job titles such as office manager, Shift Supervisor, Department Manager, Foreperson, Crew leader, and Store manager.

The correct answer is Purchases A/c.

Key PointsPurchases A/c - Purchase is the price of purchasing inventory over a certain time period with the intention of selling it in the regular course of business.

Important Points

• M/s Stationery Mart has a regular business in selling stationery.
• So to sell stationery, he has to purchase stationery also.
• Purchasing of stationery is daily part of business for M/s Stationery Mart and
• These stationeries are purchases with the intention of selling to a customer and also have inventory of these goods at the end of the year.
• Therefore, this kind of cost are considered as purchases to the business. M/s Stationery Mart will debit the purchase of stationery to Purchases A/c in the books of accounts.

Journal Entry:

Additional InformationGeneral Expenses A/c - General expenses are the costs a business that incurs as part of its daily operations.

Examples of general expenses include rent, utilities, postage, supplies and computer equipment.

The correct answer is keep correct and complete record of business transactions

Key Points

• Bookkeeping is actually just one part of the accounting process which deals with the recording of the transactions.
• It provides the primary information in the accounting process.
• Bookkeeping is the activities concerned with the systematic recording and classification of financial data of an organization in an orderly manner.
• It is essentially a record-keeping function done to assist in the process of accounting.
• It is mainly concerned with recording financial data relating to business operations.

Important Points 

Objectives of Bookkeeping:

• The main objective of book-keeping is to keep a complete and accurate record of all the financial transactions in a systematic orderly, logical manner. This ensures that the financial effects of these transactions are reflected in the books of accounts.
• Then the second main objective is to ascertain the overall effect of all recorded transactions on the final statement of the company. Book-keeping will eventually ascertain the final accounts of the company, namely the Profit and Loss Account and the Balance Sheet.

The correct answer is the sale is made.

Key PointsAccrual Concept - In Accrual concept of Accounting, Revenues and expenses are recorded in books of accounts when they are generated or incurred, not when they are received or paid in cash.

Important Points 

• Business transactions are recorded as they take place rather than when the associated payments are paid or received.
• This concept is known as the accrual basis of accounting, is essential to the value of financial accounting data.
• Thus, sale of products is recorded when sales is made and not when cash is collected or when products are manufactured.

The correct answer is Non-price competition.

Key PointsMonopolistic Competition - 

• Monopolistic competition describes a market situation where there are numerous companies selling closely related but distinct products.
• Examples of monopolistic competition include markets for items like soap, toothpaste, air conditioning, etc.

Important Points

Non-price competition -

• Non-price competition is when two businesses engage in competition by providing giveaways, offering favorable credit conditions, etc. without altering the prices of their own goods.
• In monopolistic competition, suppliers compete on variables other than price.
• These elements include aggressive marketing, the development of new products, improved distribution, post-sale services, etc.
• Instead of lowering the price of their goods, suppliers spend a lot of money promoting them.
• Non-price competition is one of feature of monopolistic competition.

Additional InformationOther Feature of monopolistic competition -

Large number of sellers - In a market with monopolistic competition, there are many sellers with a small market share.

Free Entry and Exit of Firms - Just like in perfect competition, free entry and free exit also apply in monopolistic competition.

Product differentiation - Product differentiation is a strategy used by all brands in monopolistic competition to gain a competitive advantage over rival goods. This ensures that the brand's product does not have a perfect substitute.

The correct answer is Cost volume profit analysis.

Key PointsBreak even analysis - In Cost Accounting, break even analysis refers to the situation where total cost and total revenue are equal. In a break-even situation, a business recovers all of its expenses without making a profit or loss.

Important Points

• Cost-volume-profit (CVP) analysis is a technique used in cost accounting to determine how changes in variable and fixed costs affect a company's profit.
• It looks at the effects that different levels of costs and volume have on operating profit.
• CVP analysis, also known as Break Even Analysis, to understand how changes in costs (both variable and fixed)would affect their bottom line.
• One of the most common techniques is classifying expenses into fixed and variable costs.
• In short, Break even analysis is also known as Cost volume profit analysis.

The correct answer is Rs. 800 owed by a debtor was omitted to be included in the schedule of debtors.

Key PointsTrial Balance - A trial balance is a statement showing the balances, or total of debits and credits, of all the accounts in the ledger with a view to verify the arithmetical accuracy of posting into the ledger accounts.

 Important PointsOption 1 - A bill receivable, received from P for Rs. 1,200 was found entered in the Bills Payable Day Book as Rs. 1,200.

This is an error made where the entry has been passed through the wrong account. This will not affect trial balance.

Option 2 - A sum of Rs. 300 received from the estate of an insolvent debtor was found credited to his account which was already written off as bad.

This is the error of posting. The account of debtor written off as bad debt is removed from the debtors, when such amount is received, it is credited to bad debt's recovered account not to Debtors account because that account is no longer a part of debtors. This will not affect trial balance.

Option 3 - Rs. 800 owed by a debtor was omitted to be included in the schedule of debtors.

Since, the money is owed by the debtor, it should have been recorded in schedule of debtor. The error of will affect trail balance since this is one side error.

Option 4 - Old machinery sold on credit for Rs. 700, was passed through the sales book.​ 

In Here, amount Rs.700 should be credited to Machinery account, but it is credited to Sales Account by mistake. This is the error of posting to the wrong Ledger account. Error of posting to wrong ledger account doesn't affect trial balance.

The correct answer is Bank overdraft.

Key PointsBank Account - An continuing series of cash inflows and outflows on behalf of a customer are recorded by a banking institution in a record called a bank account.

Important Points

• A ledger account have both debit or a credit balance which is determined by which side of the account is greater than the other.
• Debit side of Bank Account includes all cash withdrawal, interest paid, ATM charges, cheque paid, others amount charged by Bank etc.
• Credit side of Bank Account includes all cash deposited, interest received, cheque deposited etc.
• Debit & credit of side a Bank account is opposite to Cash Account.
• When Debit side of a bank account is greater than credit side, it indicates withdrawals is greater than cash deposited which calls Bank Overdrafts.
• When credit side of a bank account is greater than debit side, it indicates Cash at Banks i.e.  cash deposits is greater than cash withdrawals.
• Thus, If debit side of a bank account is greater than credit side, it indicates Bank overdraft.

The correct answer is Cash account

Important PointsSale of Furniture:

• Sale of old furniture brings in cash for the Business.
• There is cash inflow, so Cash Account will be debited.
• Since Furniture is moving out of business it will be credited.

Journal Entry:

The correct answer is Purchasing power of money.

Key PointsMoney - an active medium of exchange that consists of coins and banknotes; both of these items taken together.

Price level is the average of the prices of all the goods and services in an economy.

Important Points

• Value of money is what one unit of money can purchase or meant the purchasing power of money over goods and services.
• As a result, the term "  value of money" refers to the link between a unit of money and the goods and services that can be bought with it.
• V = 1/P if V represents the worth of money and P the price level.
• The value of money decreases as prices rise and vice versa.
• Hence, Value of money refers to General purchasing power of money for goods and services.

The correct answer is Adam Smith

Key Points

Adam Smith

• He was a well-known philosopher and economist of Scotland.
• Adam Smith is considered the father of Modern Economics.
• In his book “The nature & causes of the wealth of the Nation’s 1776, he has described economics as the science of wealth.
• According to him, the economy is the study of wealth only, and it deals with its production and consumption.
• Only material goods which are scarce and useful are wealth.
• He gave his views in detail on the profitable trend of economics.
• In 1759, his first book 'The Theory of Moral Sentiment' was published.
• He is known as Father of Economics or Father of Capitalism.
• Classical free-market economic theory foundation was laid by him.
• His two famous works are the theory of moral sentiments in 1759 and an inquiry into the nature and causes of the wealth of nations in 1776.

Additional Information

Karl Marx

• He was a German philosopher, economist, historian, political theorist, sociologist, journalist, and pioneer of scientific socialism.

Friedrich Max Müller

• He was a German-born philologist and Orientalist, who lived and studied in Britain for most of his life.
• He was one of the founders of the western academic disciplines of Indian studies and religious studies.
• Müller wrote both scholarly and popular works on the subject of Indology.

The correct answer is Excess of minimum rent over royalty.

Key PointsRoyalty - A legally binding payment given to an individual or business in exchange for continued use of their assets such as copyrighted works, franchises, and natural resources is known as a royalty.

Important PointsShortworking - 

• The amount by which the minimum rent exceeds the real royalty is known as short working.
• In other terms, short working or redeemable dead rent refers to the amount when the minimum rent exceeds the real royalty.
• Short working is also called 'royalty suspense' by lessor.

​

The correct answer is decreasing.

Key Points

• India ranks second worldwide in farm outputs.
• The economic contribution of agriculture to India's GDP is steadily declining with the country's broad-based economic growth.
• Between 1970 and 2011, the GDP share of agriculture has fallen from 43% to 16%.
• It is largely due to the rapid economic growth in services, industrial output, and non-agricultural sectors in India between 2000 and 2010.

The correct answer is Only credit sales of goods

Key PointsSales Book: 

• A sales book serves as a record of each credit sale that a company makes.
• Unlike cash sales, which are documented in the cash book, credit sales are the only sales that are recorded in the sales book, one of the secondary books of accounts.
• The amount recorded in the sales book represents bills issued to customers.
• Another name for a sales book is a sales journal or a sales day book.

Format of Sales Book:

The correct answer is Monthly statements sent to customers

Monthly statements sent to customers are not relevant for vouching for cash sales. Monthly statements are issued to all customers irrespective of cash or credit sales.

Key Points

Vouching:

• Vouching is defined as the verification of entries in the books of account by examination of documentary evidence or vouchers, such as invoices, debit and credit notes, statements, receipts, etc.
• All such types of documentary evidence are known as vouchers.

Important Points Vouching Cash Sales:

Daily cash sales summary: This is the summary of the daily amount of cash sales made by the company. This is a principal document in vouching for cash sales.

Monthly statements sent to customers: This document is not relevant for vouching for cash sales since monthly statements are issued to all customers irrespective of cash or credit sales.

Salesmen's statement: This document is useful in vouching for cash sales since it is the statement maintained by the salesman through which all the sales are made.

Bank statement: All the cash sales are made by making payments in cash or through a bank. The bank statement shows all the money received against sales made. This proves a useful document in vouching cash sales.

The correct answer is Capital Expenditure

Key Points Capital Expenditure:

• Capital Expenditure refers to that expenditure which is incurred for acquiring fixed assets or assets which increase the earning capacity of the business.
• The benefits of capital expenditure extend to the number of years.
• Examples: Expenditure incurred for acquiring a fixed asset such as building, plant, and machinery, etc.

Additional Information

Deferred revenue expenditure: It refers to those expenses which are incurred during one accounting year, but benefits from the same are available wholly or in part in future periods also. Example: heavy expenditure on an advertisement, expenditure incurred on research and development, etc.

The correct answer is Alfred Marshall.

Key PointsMoney - an active medium of exchange that consists of coins and banknotes; both of these items taken together.

Important Points“Money is the pivot around which economic science clusters and the major part of the subject matter of economics is concerned with the functioning and malfunctioning of money.” as Marshall said.

The correct answer is Perfect competition.

Key PointsDemand - Demand is a term used in economics to describe a consumer's readiness to pay a price for a certain commodity or service as well as their desire to buy those goods and services.

Important Points

Perfect competition -

• A market is said to be Perfect competitive, when there are a large number of sellers and selling homogeneous product.
• There is freedom of entry and exit.
• Sellers have perfect knowledge about the market conditions.
• They are price taker.
• Price Elasticity of Demand of a firm is Infinite which means demand curve for Perfect competition is a Perfectly Elastic.

Additional Information

Duopoly - A duopoly is a type of oligopoly that is defined by 2 significant firms manufacturing the same or comparable goods and services in a market or industry. 

Monopoly - 

• Monopoly explained there is only one seller in the market when there is a pure monopoly.
• The monopolist sets the price.

Oligopoly:

• In economics, an oligopoly is a market structure made up of several large corporations that control a specific industry through trade restrictions such collusion and market sharing.

The correct answer is Thomas Gresham

Key Points

 Greham,s Law: 

• Greham's Law states that “bad money tends to drive good money out of cir­culation when both are full legal tender”.
• This law was propounded by Thomas Gresham.
• The term “bad money” does not mean coun­terfeit coins. It refers to coins that are worn, clipped, or underweight.
• When both "good money" and "bad money" are in use, people will utilise the "bad money" for purchases while hoarding the "good money."
• Humans have a natural tendency to keep the nicer coins and discard the somewhat old and worn out coins.

The correct answer is Marginal utility.

Key PointsUtility - Utility is the want satisfying capacity of a commodity. It is subjective entity and vary from person to person.

Important PointsMarginal utility - It is the additional utility derived from the consumption of an additional unit of a commodity. Marginal utility is also known as Marginal Satiety.

MU = Change in TU/Change in Quantity

MU= TU_n - TU_n-1 

Also, Marginal Utility is the additional utility made to be TU by the addition consumption of one more unit of a commodity.

Additional Information Total utility - It is the sum of utility derived from different units of commodity consumed by consumer. It is also sum of all MU.

The correct answer is All of the above.

Key PointsVouching - Vouching is a part of an audit that aims to validate the transactions included in a company's book of accounts and is frequently referred to as "the backbone of auditing."

Important PointsThe objective of vouching are as follows - 

• To examine the accounting transactions recorded in the books of accounts by using  documented evidence
• To evaluate the reliability and adequacy of such documentary evidence
• To determine whether the transactions listed in the books of account are accurate
• To make certain that every transaction is accurately recorded in the books of accounts
• To ensure that all transactions and entries are backed by reliable evidence
• To guarantee that there are no fictitious transactions recorded in the books of accounts
• To ensure that all business-related transactions are accurately recorded in the books
• To ensure that each transaction has been duly validated by a trustworthy person.

The correct answer is National publications.

Key PointsPrimary Data - 

• Primary data is a type of information that is gathered by researchers directly from primary sources using methods including tests, questionnaires, and interviews.
• The greatest type of data for study is primary data, which is typically gathered from the source—where the data initially originates from.

Important PointsThe method of collecting primary data are as follows - 

1. Direct Method
2. Indirect Method
3. Questionnaire Method
4. Local Correspondents Method
5. Enumeration Method

In above questions, 

• Direct interview is direct method of primary data
• Indirect  interview is indirect method of primary data
• Questionnaire method is also method of primary data.
• Data collected from National publications is types of  Secondary Data.

The correct answer is Error of principle.

Key PointsIn Accounting, errors can be broadly divided into two groups, which are as follows:

1. Error of principle
2. Clerical errors

Important PointsClerical Errors - Clerical errors are those that result from incorrect transaction recording. Three other categories of clerical errors are detailed below :

• Errors of Omission
• Errors of Commission
• Compensating Errors

In above questions, Error of principle is not a clerical error.

 Additional InformationErrors of commission: Errors caused due to wrong recording of a transaction, wrong totaling, wrong casting, wrong balancing, etc.

Errors of Omission - Errors caused due to omission of recording a transaction entirely or party in the books of account.

Errors of Principle - Errors arising due to wrong classifications of receipts and payments between revenue and capital receipts and revenue and Capital expenditure.

Compensating errors - Two or more errors committed in such a way that they nullify the effect of each other on the debits and credits.

The correct answer is Reserve Capital.

Key PointsReserve Capital:

• A company may set aside a portion of its uncalled capital to be called only if the company is wound up.
• The company's uncalled sum is referred to as 'Reserve Capital.'
• It is only available to creditors in the event of a company's liquidation.

Important Points Reserve Capital: According to Section 99 of the Companies Act 2013, Reserve Capital refers to that portion of uncalled share capital which shall not be called up, except in the event of winding up. It is not shown in the balance sheet of company and there's no compulsion to create reserve capital, a special resolution is required for creating reserve capital.

The correct answer is To hear

Key Points

The term 'Audire' means to hear/listen.

• The word 'audit' is derived from the Latin word 'audire' which means 'to hear/listen'.
• In the olden days whenever the proprietors of a business concern suspected fraud, they appointed a person to check the accounts and to hear the explanations given by the persons responsible for keeping the accounts.
• The audit during those days was interested in ascertaining whether the persons responsible for maintaining amounts had properly accounted for all receipts and payments to his principal and to locate frauds and errors. It was merely a cash audit.
• However, the object of the modern audit is not confined to cash verification but to report on the financial position of the undertaking as disclosed by its Balance Sheet and the Profit and Loss Account.

Thus, the term 'Audior' means listening.

The correct answer is Recording of original entries

Recording of original entries is not an objective of auditing.

Key Points

Auditing is the systematic and scientific examination of the books of accounts and records of a business so as to enable the auditor to satisfy himself that the Balance Sheet and the Profit and Loss Account are properly drawn up so as to exhibit a true and fair view of the financial state of affairs of the business and profit or loss for the financial period.

Important Points

Objectives Of Auditing:

Accounts And Statement Verification: 

• Evaluating the fairness & accuracy of books of accounts is the primary objective of Auditing.
• It checks each & every financial transaction thoroughly.

Checking Accounting Policies: 

• Every business or organization needs to follow some accounting policies.
• Books of accounts are prepared according to these accounting policies.
• If a business has an effective accounting system, its efficiency can be increased.
• It is the duty of the auditor to check the accounting policies of business & express his independent opinion.

Error And Fraud Detection: 

• Auditing helps in the easy finding of errors & frauds from the books of accounts.
• It is the duty of management to avoid & check errors & frauds.
• However, sometimes it becomes difficult for management to find out the errors.
• It is through auditing that helps managers to find out errors & frauds.
• An audit helps to detect various types of theoretical and clerical errors like errors of omission, errors of commission, compensating errors, etc.
• It also helps to detect any kind of deceit (fraud) in operations. After this managers take corrective steps against these errors or frauds.

Improves Quality Of Business Processes: 

• Auditing helps management in finding out the errors & frauds.
• Management can take corrective measures against these errors.
• Steps are taken so that they are not repeated again. This way it improves the quality of the business process & improves its efficiency.
• Also the employees of business work properly due to the threat of auditing.

Assurance To Investors: 

• Auditing assures that each & every figure represented in the financial statement is correct.
• It helps in evaluating every figure of business books of accounts.
• Financial statements after being audited are considered trustworthy by investors.
• Investors are fully assured by these financial statements.

The correct answer is Board of directors.

Key PointsAuditor: 

• An auditor is responsible for evaluating the accuracy and reliability of a business or organization's financial statements.
• The role of the auditor is to examine and confirm that the accounting information provided by an audited company accurately reflects the activities that the company has engaged in.
• At the conclusion of the audit, the auditor's responsibility is to compile a report that assesses the organization's level of accuracy and transparency.

Important Points

 Internal Auditor

• Internal Auditor is appointed by the Board of directors of the company and the main work of internal auditor is to examine the adequacy and effectiveness of internal control system.
• At the conclusion of the audit, the auditor's responsibility is to compile a report that assesses the organization's level of accuracy and transparency.

 Additional Information

Shareholders - They are the persons, company or organisation who owns share in the company. The shareholder receives dividend on the investment they made in the company.

Creditors - They are the persons from whom the business borrows money and purchased goods on credit.

Board of directors - They are top level decision makers who represent shareholders in the board meetings.

The correct answer is Minimum rent is reduced proportionately.

Key Points

• Regardless of the actual benefit to be received by the lessee, the royalty agreements typically include a condition requiring payment of a specified minimum amount to the lessor each year as royalty.
• This ensures the lessor of a predictable stream of income from his property.
• "Minimum Rent," "Dead Rent," etc. are terms for this base amount.
• The Minimum Rent may or may not change throughout the course of a year, it should be kept in mind. Payable to the lessor is the greater of the Minimum Rent or the actual royalty.

Important Points

1. The actual royalties generated during a strike or lockout will discharge any rental obligations (if actual royalty is less than Minimum Rent).
2. The Minimum Rent shall be decreased during a strike or lockout proportionately based on how long the stoppage lasts.

The correct answer is Journal.

Key Points

• The books known as subsidiary books are used to systematically record transactions with a similar character.
• They are also referred to as Daybooks or particular journals.
• It is difficult to enter all the transactions in one journal and publish them to different accounts in large company organisations.
• The journal is thus separated into numerous subsidiary books in order to facilitate the quick and correct recording of all transactions. There is a separate book for each sort of transaction.

Important PointsJournal Proper: It is a book in which all miscellaneous transactions which are not recorded in any other subsidiary book are called a journal proper, so any special discount given to customers shown in this book.

Additional InformationTypes of Subsidiary Book

1. Cash Book: A cash book is a prime entry book that keeps track of all transactions that a company makes using both cash and bank instruments.
2. Purchase Book - One of the special purpose books, a purchase book is where a business records all of its credit purchases.
3. Sales Book - A business enters all credit sales into a sales book, one of the subsidiary books.
4. Purchase Returns Book - A purchase returns book, often referred to as a returns outward book, is created to document the products that a company returns to its suppliers.
5. Sales Return Book - Also referred to as a returns inward book, a sales return book is created to keep track of the goods that customers return to a business.
6. Journal Proper - A journal proper is a book that contains all unrelated transactions that are not recorded in any other subsidiary books.
7. The Bills Receivable Book is a book that keeps track of all bills owed to a company; its total is displayed on the debit side of the B/R account.
8. The sum of the bills payable book is reported on the credit side of the B/P account. Bills Payable Book is one of the subsidiary books that records all bills payable by a business.

The correct answer is Audit programme.

Key PointsAudit programme:

An audit programme gives the audit team a basic plan describing the entity's operations, size, how to conduct the audit, workload distribution among team members, and an estimated timeframe for completion of the job.

Important Points

• An audit programme ensures that all crucial factors are taken into account when conducting the audit.
• An audit programme aids an auditor in distributing work among team members in accordance with their qualifications and expertise.
• It increases the audit team members' accountability for the work they do.
• The potential for miscommunication among team members about the execution of audit work is also decreased by an audit programme.
• While conducting the audit, it aids the auditor in determining the status of the audit work, its advancement, and how much is still required for performance.
• The audit working papers, which contain a record of the numerous audit procedures used and serve as proof against the claim of negligence, are prepared by the auditor.
• The auditor can capture pertinent data for future audits and references using the audit application.

Additional InformationAudit System: A computer software that is intended to help with the completion of audit procedures is typically an audit system.

The correct answer is Median.

Key PointsThe middle value of the provided collection of data, when organised in order, is known as the median in statistics. Both ascending and descending orders of the data or observations are acceptable.

Important Points

• The middle number or centre value within a set of data is known as the median. The middle value of an ordered array of numbers is the median.
• The data should first be ordered from least to greatest or from greatest to least value in order to get the median.
• A median is a value that is between the upper and lower halves of a population, a probability distribution, or a sample of data. For various types of distribution, the median varies.

Additional InformationMean: The mean, or average of the supplied numbers, is computed by dividing the total number of numbers by the sum of the given numbers. Sum of all observations divided by total observations equals the mean.

Mode: A mode is described as the value in a group of values that occurs more frequently. The value that appears the most frequently is this one. Example: Since the number 5 appears twice in the data set containing the following values: 2, 4,5, 5, 6, 7, the mode of the data set is 5.

Quartile: The entire set is divided into four equal sections using quartiles. The first, second, and third quartiles are thus denoted by Q1, Q2, and Q3, respectively. Q2 is nothing more than the median because it represents the item's position on the list and is therefore a positional average. We must arrange the data in ascending order in order to determine the quartiles of a batch of data.

The correct answer is Capital fund.

Key Points

• A non-trading company's surplus or deficit can be determined by comparing the income and spending for a certain accounting period, which is what a "income and expenditure account" does.
• The income and expense account's remaining balance is moved to the balance sheet.
• The capital fund is added to the balance sheet's surplus balance.

Important Points

"When an Income and Expenditure account is closed, the surplus or deficit that was recorded there is transferred to a Capital fund account.''

The correct answer is R. C. Davis.

Key PointsRalph C. Davis has defined Management as – “Management is the function of executive leadership anywhere.”

Important PointsManagement:

• Management is the function of executive leadership.
• Managerial functions involve the work of planning, organizing and controlling the activities of others in accomplishing the organization s objectives.
• Management is Goal-oriented Process
• Management is All-pervasive
• Management is a Group Activity
• Management is a Dynamic Function

The correct answer is Recording of asset as expense.

Key Points

• A trial balance is a report that shows the balances in all of a company's general ledger accounts at a specific moment.
• All significant accounting items, including as assets, liabilities, equity, revenues, expenses, gains, and losses are tied to the accounts shown on a trial balance.
• It is mostly used to determine the balance of debits and credits entries from the transactions listed in the general ledger at a specific moment.

Important PointsErrors not affecting Trial Balance are as follows:

• Error of complete omission
• Wrong recording in the books of original entry
• Error of complete omission from posting to the accounts
• Errors of posting to the wrong account but on the correct side
• Compensating Errors
• Errors of principle

Under Trial Balance, Assets and Expenses are shown on debit side, it means it is posted on the correct side but in wrong account which will not affect the trial balance.

Additional InformationErrors affecting Trial Balance are as follows:

• Error of casting
• Error of carrying forward
• Error of balancing
• Error of posting to the correct account but with the wrong amount
• Error of posting to the correct account but wrong side
• Error of posting to the wrong side with the wrong amount
• Error of omitting to show an account in the trial balance
• Error of partial omission

The correct answer is All of these.

Key PointsAudit Report:

• The written report that auditors produce to provide their assessment of financial accounts is known as an audit report.
• The audit report that the auditor issues at the conclusion of the audit job likewise informs users as to whether the financial statements are present fairly in all key respects.

Important PointsAn Auditor gives a report on

• The truthfulness of account,
• Fairness of accounts,
• validity of accounts and
• reliability of accounts.

The correct answer is Broadcast media.

Key PointsIn today's media-saturated environment, media literacy, or the capacity to understand and digest media information, is particularly crucial.

Important Points

• For illiterate consumers ''Broadcast media'' is more useful as comparison to Print media, Posters/ Hoardings, Transit means.
• For illiterate consumers it is difficult for illiterate consumers to decode print media, and posters/hoardings.
• Examples of broadcast media are advertisement, radio etc. which can be easily decoded by illiterate consumers.

The correct answer is Production Function

Key Points

Production Function:

• The link between the amounts of productive factors (such as labour and capital) used and the quantity of output obtained is expressed by the production function.
• It specifies the maximum amount of product that can be produced from every combination of variables, given that the best production techniques are applied.

Important PointsFeatures of Production Function

1. A production function is a representation of the functional relationship between the amount of input employed and the amount of output produced.
2. This shows the technical relationship between inputs and outputs which are in physical form.
3. It also denotes the flow of input that will produce the flow of output over a specific period of time.
4. The state of technology affects production. A change in the state of technology will also change the production function.
5. Improvement in the level of technology will increase the output level, even if the amount of input remains the same.
6. A production function has no monetary significance; It only shows the physical relationship.

The correct answer is Two.

Key PointsQuestionnaire:

The purpose of a questionnaire is to collect information from respondents about their attitudes, experiences, and opinions. You can gather quantitative and/or qualitative data with questionnaires.

Important Points

• There are at least two options presented by alternative questions.
• Any positive yes/no question can be changed into an alternative question by adding and, a negative tag using an auxiliary, or the suitably tensed version of the verb do.

The correct answer is Subscribers to Memorandum of Association.

Key Points

• Simply said, a company's charter or bylaws are contained in its memorandum of association.
• Memorandum is defined as "memorandum of organisation of a company as originally established or as revised from time to time in pursuance of any earlier company law or of this Act" under the Companies Act of 2013.

Important Points

• Each member must print and sign the memorandum of association (7 members in case of Public Company and 2 in case of Private Company and 1 in case of One Person Company).
• A minimum of one witness who will verify the subscribers' signatures must be present when the memorandum is signed.
• In the case of a one-person business (OPC), the Memorandum of Association must include the nominee's name. The nominee will take over as a member of the company in the event of death or incapacity.

The correct answer is There is always an inverse relationship between price and demand.

Key PointsDemand - Demand is a term used in economics to describe a consumer's readiness to pay a price for a certain commodity or service as well as their desire to buy those goods and services.

Important Points

Law of Demand - 

• The link between the quantity wanted, and the price is expressed by the law of demand.
• The amount required rises with a decrease in price and falls with a rise in price, according to use Marshall's definition.
• As a result, it illustrates how price and demand are inversely related.
• The direction in which quantity requested shifts in response to a change in price is referred to as the law.

Thus, The law of demand states that if other things remain same there is always an inverse relationship between price and demand.

The correct answer is Walker.

Key Points

• According to Prof. Walker, 'Money is as money does. '
• This means that the term money should be used to include anything which performs the functions of money, viz., medium of exchange, measure of value, unit of account, etc.

Important Points

Money: A common means of exchange that is issued by the government and serves as the country's legal tender is referred to as money.

Primary Functions of Money:

• Medium of Exchange: Money, as a medium of exchange, means that it can be used to make payments for all transactions of goods and services
• Measure of Value: Money as measure of value means that money works as a common denomination, in which values of all goods and services are expressed

Secondary Functions of Money:

• Store of Value: Money's essential functions include the ability to retain and conserve it. Money can be kept in a wallet or other container for future use, and doing so is both affordable and practical.
• Transfer of Value: Money serves as a medium of exchange and facilitates the movement of value because it may be used to buy products both domestically and abroad.
• Standard of Deferred Payments: Deferred payments that must be made by persons can easily be paid with money. It is now accepted as the norm for payments made in the present or in the future.

The correct answer is All of the above

Key Points

Ledger:

• Ledger is that book of account; in which all types of accounts relating to assets, liabilities, capital, expenses, and revenues are maintained.
• The purpose of a ledger is to classify and group transactions and to find balance in each account.
• A ledger is a complete set of accounts of a business enterprise.
• It is an account book that contains various accounts to which various business transactions of a business enterprise are posted.
• A ledger is a book of final entry because the transactions that are first entered in the journal or special purpose book are finally posted in the ledger.
• Ledger posting refers to transferring debit and credit items from journal entries into their respective accounts. To make this successful, we must first ensure that every single item contains a separate account.

The correct answer is Subtracted from capital.

Key Points

• The capital should be reduced by the P/L account's negative balance.
• Owner stock in the business is referred to as capital, thus the unfavourable balance of the P&L statement must be subtracted from Capital.
• Owners are responsible for bearing losses that occur like the sharing of profits.

Important Points

Unfavourable balance of P/L A/c will be transferred to capital account and deducted from capital.

The correct answer is H. H. Gossen.

Key Points

• HH Gossen formulated the Law of Diminishing Marginal Utility (DMU).
• He formulated this law in 1854.

Important Points

• Marginal Utility is the change in total utility due to a one-unit change in the level of consumption.
• Law of Diminishing Marginal Utility
• It states that as a person consumes an item or a product, the satisfaction or utility that they derive from the product declines as they consume more and more of that product.
• In other words, the additional utility gained from an increase in consumption decreases with each subsequent increase in the level of consumption.
• Demand curves are downward-sloping in microeconomic models since each additional unit of a good or service is put toward a less valuable use.
• Marketers use the law of diminishing marginal utility because they want to keep marginal utility high for products that they sell.

The correct answer is Realisation Account.

Key PointsRealisation Account:

• It is a nominal account opened on the dissolution of a firm to ascertain the profit or loss on realisation of assets and payment of outsider's liabilities.
• This account is closed by transferring the balance (i.e., profit or loss on realisation) to partner’s capital accounts.

Important PointsProvision against assets such as Provision for Depreciation or Provision for Bad & Doubtful debts etc. are transferred to Realisation Account by passing a Separate entry which are as follows:

Additional InformationFormat of Realisation Account:

 

The correct answer is Punishment for frauds

Punishment for frauds is not an objective of auditing.

Key Points

Auditing is the systematic and scientific examination of the books of accounts and records of a business so as to enable the auditor to satisfy himself that the Balance Sheet and the Profit and Loss Account are properly drawn up so as to exhibit a true and fair view of the financial state of affairs of the business and profit or loss for the financial period.

Important Points

Objectives Of Auditing:

Accounts And Statement Verification: 

• Evaluating the fairness & accuracy of books of accounts is the primary objective of Auditing.
• It checks each & every financial transaction thoroughly.

Checking Accounting Policies: 

• Every business or organization needs to follow some accounting policies.
• Books of accounts are prepared according to these accounting policies.
• If a business has an effective accounting system, its efficiency can be increased.
• It is the duty of the auditor to check the accounting policies of business & express his independent opinion.

Error And Fraud Detection: 

• Auditing helps in the easy finding of errors & frauds from the books of accounts.
• It is the duty of management to avoid & check errors & frauds.
• However, sometimes it becomes difficult for management to find out the errors.
• It is through auditing that helps managers to find out errors & frauds.
• An audit helps to detect various types of theoretical and clerical errors like errors of omission, errors of commission, compensating errors, etc.
• It also helps to detect any kind of deceit (fraud) in operations. After this managers take corrective steps against these errors or frauds.

Improves Quality Of Business Processes: 

• Auditing helps management in finding out the errors & frauds.
• Management can take corrective measures against these errors.
• Steps are taken so that they are not repeated again. This way it improves the quality of the business process & improves its efficiency.
• Also the employees of business work properly due to the threat of auditing.

Assurance To Investors: 

• Auditing assures that each & every figure represented in the financial statement is correct.
• It helps in evaluating every figure of business books of accounts.
• Financial statements after being audited are considered trustworthy by investors.
• Investors are fully assured by these financial statements.

The correct answer is When the total utility is maximum, marginal utility is zero.

Key Points

• When the total utility is maximum, marginal utility is zero, this statement is true because unit of goods are consumed till saturation point and after it MU becomes negative.
• When total utility decreases, marginal utility remains constant, this statement is false because once When TU curve is falling, the MU curve becomes negative.
• Total utility and marginal utility are not inter related, this statement is false because both TU and MU are inter related.

Important PointsRelationship between Total Utility and Marginal Utility

• The TU curve begins from the origin, increases at a decreasing rate, reaches a maximum, and then starts falling.
• MU curve is the slope of the TU curve and given by MU= change in  TU/Change in Q .
• When TU is maximum, MU is zero. It is referred to as the saturation point. It indicates that units of the good are consumed till the saturation point.
• Once When TU curve is falling, the MU curve becomes negative.
• The falling part of the MU curve demonstrates the law of diminishing marginal utility.

The correct answer is All of the above

Key Points Modern Office Management:

• A key component of handling daily tasks like financial planning and the upkeep of employee and business records is modern office administration.
• The management of the contemporary office is in charge of acquiring and administrative successes through strategy.
• Designing, assessing, and executing work procedures used in offices and traditional office environments are all part of the office management duties.

Important PointsFunctions of a Modern office

1. Receiving Information: Both inside and outside the company may provide the information. Information considered to be received within the organisation is that which comes from various divisions and executives.

2. Recording Information​: The goal of maintaining records is to make information easily accessible to management at all times. The information obtained is transformed into a written record for this purpose. In a typical business office, records such as financial and cost accounts, orders, work in progress, staff hours, correspondence, etc. are preserved.

3. Arranging Information: The information obtained by an office is rarely presented in the form in which it is received; instead, facts must often be compiled from a variety of sources and may require computations, tabulations, etc.

4. Public Relations Function: An office must maintain friendly relationships with both the public and other departments inside the organisation. Therefore, it must also play a public relations function. The reputation and goodwill of the organisation are improved by effective public relations.