UGC NET Commerce Questions Questions Latest UGC NET Commerce Questions Question 1: View this Question Online > Written plan containing the details regarding the conduct of a particular audit is called: 1. Audit Memorandum 2. Audit Planning Procedure 3. Audit Notebook 4. Audit Programme Super Teachers for all govt. CCT RU Tefal elal a eles Spears eed Answer (Detailed Solution B Option 4 : Audit ProgrammeUGC NET Commerce Questions Question 1 Detailed Solution The correct answer is Audit Programme < © Key Points Audit memorandum means a memorandum or letter issued during the coi fa for eliciting information, confirmation of facts, or any other matter consid sary by the audit officer in the conduct of an audit. Audit Planning refers to the design of an audit desc! dit strategy and guidelines to follow while performing the audit. It help: cessful completion of the audit process. & An audit notebook is maintained by the st itor to record the difficulties, mistakes, and errors noticed during the co: the iscuss further with the seniors or auditor before finalizing the audit repor An audit programme is an action plan that documents what procedures an auditor will follow to validate that an organization is in conformance with compliance regulations. & Additional Information An audit program also called an audit plan, is an action plan that documents what procedures an auditor will follow to validate that an organization is in conformance with compliance regulations. The goal of an audit program is to create a framework detailed enough for any outside auditor to understand. it should contain the following information: + the official examinations that have been completed; + conclusions reached; and + the reasoning behind each conclusion. Question 2: View this Question Online > From the following, select the right option with reference to the working capital: 1. Higher net working capital leads to higher liquidity and higher profitability2. According to hedging approach. current assets should be financed from long- term sources. 3. There is an inverse relationship between leneth operating cycle of a firm and its working capital requirements. 4. Trade-off plan, in gene idered an appropriate financing strategy for working capital. XO ion 4: Trade-off plan, in general, is considered an appropriate financing strategy for working capital. UGC NET Commerce Questions Question 2 Detailed Solution The correct answer is Trade-off plan, in general, is considered an appropriate financing strategy for working capital. © key Points Working Capital = Current Assets — Current Liabilities 1. Working capital affects both the liquidity as well as the profitability of a business. As the amount of working capital increases the liquidity of the business increases. However, since current assets offer low returns with the increase in working capital the profitability of the business falls. 2. There are two types of working capital permanent and temporary working capital. The hedging approach suggests that the permanent working capital requirement should be financed through long-term funds, while temporary working capital should be financed through short-term funds. 3. The length of the operating cycle refers to the number of days taken, right from procuring material to making collections against sales from customers. This can be measured in days or months. The length of the operating cycle is directly proportional to your working capital requirements. So, a longer period will attract a higher amount. 4. In evaluating a firm's net working capital position, an important consideration is a trade-off between profitability and risk. In other In words, the level of net working capital has a . bearing on profitability and risk. The trade-off between these variables is that regardless of how the firm increases its profitability through the manipulation of working capital, t consequence is a corresponding increase in risk as measured by the level of Net Capital. Important Points C2 Aggressive approach - The aggressive strategy is one of tl oO= of working capital management wherein the company's investments in | are kept at a minimum level, ie., limited investment in current assets. GSConservative approach - Conserve sey is one of the approaches of working capital management wherein the organization follows a strategy to invest a high amount of capital in current assets. Moderate/Hedging or Matching approach - In this strategy, a balance between risk and return is maintained in order to benefit more by more effective use of the funds. This approach classifies the requirements of total working capital into permanent and temporary. Question 3: View this Question Online > The current market price per share of New Age Li ie) . 80. The dividend expected a year from now is Rs. 4 and it is expecte row at a constant rate of 10 percent. The floatation (issue) cost for t! w issue be 8 percent. What is the cost of new equity? 1 prc xor 3. 5,00 percent 4. 5.43 percentAnswer (Detailed Solution Below) Option 1: 15.43 percent UGC NET Commerce Questions Question 3 Detailed Solution The correct answer is 15.43 percent o aRby x 100| + 6% O Cost of new equity Where, D; = Expected Dividend for Next Year Po = Current Market Price of Share xo G= Growth Rate =) f= Floatation Cost “A * Important Points Cost of new equity = mae x 100] +G% Cost of new equity goa_o.08y * 100] + 10% Cost of new equity = (5.434% + 10%] Cost of new equity 5.43% Question 4: View this Question Online > Preference share in India x mpany for amaximum period of:|. 10 years \or ~ 2.15 » . 20 years ~ Unlimited period Answer (Detailed Solution Below) Option 3 : 20 years UGC NET Commerce Questions Question 4 The correct answer is 20 years xe © Key Points + Under Section 55 of The Companies Act 2013, a company can issue preference shares liable to be redeemed at the end of twenty years. A company cannot issue an irredeemable preference share as per the Act. + Preference shares are redeemable and the company has to redeem out of profits it earned or out of the proceeds of fresh issue of shares made for such redemption. Question 5: View this Question Online > Dimensions of VALS™ framework to include which one of the following? 1. Consumer motivation and consumer resources O2. Consumer personality and consu 3. Consumer motiva er preferences a Sm consumer resources ‘Answer (De! Solution Below) Option 1: Consumer motivation and consumer resources UGC NET Commerce Questions Question 5 Detailed Solution The correct answer is Consumer_motivation and consumer resources 6 VALS (Values, Attitudes, and Lifestyles) is a framework developed by Arnold Mitchell and his colleagues in the year 1978 at SRI International + The main dimensions of the VALS segmentation framework are consumer motivation (the horizontal dimension) and consumer resources (the vertical dimension). + Consumers are inspired by one of three primary motivations: ideals, achievement, and self-expression. + The VALS is a system used for grouping consumers with the help of psychograp! segmentation. + Itwas developed in the 1970s and was inaugurated in 1978 by Mitchell at SRI International. ‘The VALS places adult customers into one of the eight segments based on sponses to the questionnaire. + The main scope of the VALS framework is the resources in verte jimension and primary motivation in the horizontal dimension. + The people in the vertical dimension are based and have enough resources like education, inco! leadership skills. + At the top of the VALS framework ai any of the 3 primary motivations. * which they are innovative nce, self-control, energy, and 10 have high resources that can have + At the bottommost are the ors motivation. within their means without primary © Additional information The eight categories of VALS are as follows: + Achievers Innovators Thinkers Believers Strivers Experiencers Makers SurvivorsQuestion 6: View this Question Online > Given below are two statements: Statement I: Policies are guides to action. rather than to thinking. Statement Il: Policies define an area within which a decision is to be made. Inthe light of the above statements, choose the most appropriate answer from the options given below: 1. Both Statement | and Statement Il are oO 2. Both Statement | and seem 3. Statement |i atement Il is incorrect 4. buen but Statement Il is correct Answer (De Solution Below) Option 4 : Statement | is incorrect but Statement Il is correct UGC NET Commerce Questions Question 6 Detailed Solution The correct option is @emt (I) "eta @, eifeor wer (Il) Hal v1 @ Key Points The policy is a critical element of effective management. The policy is becoming increasingly important in today's business world.The policy defines a specific area in which decisions are made according to the goals of the organization. Statement |is false. While policies serve as guides to action, they can also stimulate thinking and encourage critical evaluation of existing practices. Well-crafted policies often prompt individuals to consider alternative approaches or identify areas for improvement. Statement Il is true. Policies effectively establish a decision-making space, defining the parameters and considerations relevant to specific situations. They help individuals focus their efforts and make informed decisions withina defined framework. ¢ Types of policies 1. Personnel Policies: Clearly state the hours of operation, code of con i: and conditions of employment (hiring and termination), wages or sa any bonuses), insurance and health benefits, paid and unpaid leave, si retirement. 2. Disciplinary policies: address issues of honesty, performance, safety, and misconduct; determine what constitutes a violation of rene and determine how employees will be punished for violations of specific e fe 3. Safety policies: Use industry practice and S state, and federal laws as guidelines to establish rules that ibe behavior looks like, how to use safety equipment, how to report safet ae 4. Technology policies: determine ind isn't acceptable in terms of the Internet, email, and social media use for personal purposes in the workplace. 5. Privacy policies: protect your employees, the company, and your customers by setting a policy that promotes transparency and trust with your customers. 6. Payment Policies: Set the terms under which customers and suppliers can do business with your company. Set an acceptable payment deadline and determine the consequences if payment is overdue or not received. 7. Confidentiality Policy: Protect confidential information and ensure relationships with vendors, customers, and other suppliers are covered. 8. Whistleblower Policy: Ensure that your employees and the company are protected against retaliation through a policy. 9. Employee Performance Po! efine each employee's role, including the level of responsibility, scope of decision-making authority, overarching goals, and specific tasks. Establish clear methods for monitoring performance and encouraging employees through training. 10. Document and record retention policies: Create structured document retention and storage policies based on local, state, and federal requirementsQuestion 7: View this Question Online > According to Herzberg's Two Factor Theory, which one of the following is nota maintenance factor? 1. Affiliation or Acceptance 2. Esteem or Status 3. Security or Safety oO . 4, Physiological Needs Nee / one or Status C NET Commerce Questions Question 7 Detailed Solution The correct answer is Esteem or Status © key Point Herzberg's theory of motivation and hygiene (the two-factor theory), which was established by Frederick Herzberg, Hygiene factors + Hygiene factors are those job factors that are essential for the existence of motivation in the workplace. + These do not lead to positive satisfaction long term. + Butif these factors are absent/if these factors are non-existent at the workplace, then they lead to dissatisfaction. + Hygiene factors are also called as dissatisfiers or maintenance factors as they are required to avoid dissatisfaction. Hygiene factors include: + Salary and benefits + Job security + Work environment = Job policies + Supervisory practices Company policies and administration Company reputationSA Motivational factor Ni + Anincrease in this factor will strongly satisfy the employees; a decrea eno influence on their satisfaction, According to Herzberg, hygiene factors cannot be reg rs. The motivational factors yield positive satisfaction. These factors are inherent to work. These factors motivate the employees to superi These factors are called satisfiers. Motivational factors include: Ice. + Achievement + Advancement + Variety + Independence + Interesting work + Responsibility + Accomplishment + Interpersonal relationships + Status Question 8: View this Question Online > Total revenue of a business firm vonage fo yo? 1. [EpI> 14. |Epi<0 Answer (Detailed Solution Below) Option 1: JEp| >1 UGC NET Commerce Questions Question 8 Detailed Solution The correct answer is option tIEpl > 1 4 Total revenues refer to the amount the company receives rating activities Total revenue increases due to an increase in * centage increase in quantity is greater than the percentage decrease in pric A Important Point: \ When the elasticity of de there is a proportional and direct relationship between the change in price and the demand for a product or service. Aproduct is inelastic if its elasticity is less than 1. The numerator (percentage change in quantity demanded) of the elasticity formula is less than the denominator (percentage change in price). ity = 0, then the product is “perfectly' inelastic, i.e. demand remains unchanged at anyQuestion 9: ,@] . View this Question Online > G Economists’ adjustment to reality on idual consumers' preferences, intelligence and environmental f led: 1. Rationality XN 3. Bounded rationality 4. Consumer sovereignty Answer (Detailed Solution Below) Option 3 : Bounded rationality UGC NET Commerce Questions Question 9 Detailed Solution co ( The correct answer is Bounded rationality of © key Points \e) Bounded rationality describes the way peop! 2 isions that de’ economic rationality because our ration isi .d by our ability to think, the information available to us, and time. Instead of est' decisions, we often make decisions that are satisfactory. Rationality is the process by which consumers choose the things that are best for them. The term homo economicus refers to rational choices and the attainment of maximum utility through those choices. Consumer sovereignty is the idea that consumers influence production decisions. Firms will respond to consumer preferences and produce the goods they demand.Question 10: View this Question Online > If the subject matter of insurance is the shi rine insurance is called: 1. Cargo insurance of’ 3: em oyage insurance Answer (Detailed Solution Below) Option 2 : Hull insurance UGC NET Commerce Questions Question 10 Detailed Solution The correct answer is Hull insurance 6 Marine insurance detined—A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, the losses incidental to marine adventure. Marine Cargo Insurance : covers loss of or damage to the goods carried ina vessel or aircraft, whether on domestic or international journeys. Marine Hull Insurance : covers loss of or damage to a vessel or aircraft or its machinery or equipment Marine Hull Insurance provides coverage for the following risks: ¢ aeDamage to the hull of the ship or vessel, including its machinery and Damage or loss to the ship due to fire, burglary and/or theft Accidental damage to the ship due to earthquake, lightning, etc. Damage done to other boats by the insured vessel (third mes Damage to the vessel during maintenance activity World-wide coverage for ocean-going vessels SOO” The subject matter of hull insurance is the vessel o eo are many types of designs of ships. Most of them are constructed of steel are capable of sailing on the sea in ballast in with cargo. ae TA Cargo insurance is essentially a risk management tool that protects the business against financial losses due to lost or damaged cargo. It covers up to the limit of an amount insured and is different from carrier liability. There are two types of Cargo insurance: + Land Cargo insurance + Marine Cargo Insurance Freight insurance is an agreement by which insured goods are underwritten (protected) in the event of damages caused by a risk covered in the policy. An insurance invoice is required for customs clearance only when the relevant data does not appear in the commercial invoice. According to the Indian Marine Insurance Act 1963, a voyage policy is a type of marine insurance policy that provides coverage for losses due to unforeseen risks to cargo during a specific voyage.