✅ Correct Answer: Both the statements A and R are correct but R is not the right explanation of A

📘 Explanation:

• Assertion A: Foreign trade policy is an important instrument that incentivizes exporters. This is true because the policy provides benefits like subsidies, export incentives, and simplified procedures to encourage exports.

• Reason R: It is important for exporters to have knowledge of the foreign trade policy. This is also true because knowing the policy helps exporters comply with regulations and access various benefits.

However, Reason R does not explain why the foreign trade policy is an important instrument to incentivize exporters. Instead, it states a separate fact about exporters needing knowledge. If the Assertions and Reason was reversed, then R would be the correct explanation of A.

Thus, while both statements are correct individually, R is not the correct explanation for A.

✅ Final Answer: Both the statements A and R are correct but R is not the right explanation of A

✅ Correct Answer: Rs. 52,000 favourable

✅ Explanation:
Direct Material Price Variance (DMPV) measures the difference between the standard price and the actual price of materials, multiplied by the actual quantity of materials purchased.

Formula:

$$\text{Direct Material Price Variance}=(\text{Standard Price}-\text{Actual Price})\times \text{Actual Quantity Purchased}$$

Step-by-Step Calculation:

• Standard price = Rs. 5.00 per kg

• Actual price = Actual Cost of material purchased and consumed / Actual Quantity of material purchased and consumed = Rs. 4,68,000 / 1,04,000 kg = Rs. 4.50 per kg

• Actual quantity purchased and consumed = 1,04,000 kg

= (5.00 − 4.50) × 1,04,000 = 0.50 × 1,04,000 = Rs.52,000

Since the actual price is less than the standard price, the variance is favourable.

✅ Final Answer: Rs. 52,000 favourable.

✅ Correct Answer: (a), (b), (d) – Efficiency, Consistency, Unbiasedness

📘 Explanation of Each Property:

Point estimates are used to estimate the value of a population parameter based on sample data. The quality of point estimates can be measured by the following properties:

1. Efficiency:

   • A point estimator is efficient if it has the smallest variance among all unbiased estimators. In other words, it provides the most precise estimate with the least amount of variability.

2. Consistency:

   • A point estimator is consistent if, as the sample size increases, the estimator converges to the true population parameter. Larger samples lead to more accurate estimates.

3. Unbiasedness:

   • An estimator is unbiased if its expected value equals the true population parameter. In other words, on average, the estimator neither overestimates nor underestimates the parameter.

❌ Why (c) Adequacy is incorrect:

• Adequacy is not a standard statistical property of point estimates in formal estimation theory. The key properties usually discussed are efficiency, consistency, and unbiasedness.

✅ Final Answer: (a), (b), (d) – Efficiency, Consistency, Unbiasedness

✅ Correct Answer: (a), (b), (c), and (d)

✅ Explanation:

Entrepreneurs are influenced and motivated to start a business enterprise by a combination of personal, external, and situational factors. These include:

• (a) Ambitious factors:
  ✅ These are internal desires such as the urge for independence, achievement, self-fulfillment, and recognition. Many entrepreneurs are highly driven by personal ambition.

• (b) Compelling factors:
  ✅ These are push factors like job dissatisfaction, unemployment, economic necessity, or lack of career growth that force individuals into entrepreneurship as an alternative.

• (c) Facilitating factors:
  ✅ These are supportive conditions that make entrepreneurship easier, such as availability of capital, favorable government policies, market opportunities, and supportive infrastructure.

• (d) Family factors:
  ✅ Family background, such as coming from a business family, support from family members, and expectations to carry on family traditions, can be a strong motivator in pursuing entrepreneurship.

All four categories play a significant role in shaping entrepreneurial motivation, and often, a combination of these factors leads an individual to start a business.

Final Answer: (a), (b), (c), and (d)

✅ Correct Answer: (a) and (c)

✅ Explanation:
In the given scenario, Pearl Ltd. purchased a van for Rs. 12,000, making a down payment of Rs. 5,000 and signing a Rs. 7,000 note payable in 60 days. Let's analyze the effects:

1. Total Assets:
   The van is acquired for Rs. 12,000, increasing the total assets of the company by that amount. The cash payment of Rs. 5,000 reduces cash, but the net effect on total assets is an increase of Rs. 12,000 due to the addition of the van.

2. Total Liabilities:
   The note payable of Rs. 7,000 creates an obligation, which increases total liabilities by Rs. 7,000. The cash payment does not create a liability; it just reduces cash, so the total liabilities increase by Rs. 7,000, not Rs. 12,000.

3. Owner’s Equity:
   This transaction involves acquiring an asset (the van) financed by both cash and a liability. Since no immediate profit or loss is recorded, owner’s equity remains unaffected by this transaction.

4. Liquidity from a Short-Term Creditor's Perspective:
   The company now has a short-term liability of Rs. 7,000, which may actually reduce liquidity, not increase it. The business must repay the note payable in 60 days, which could reduce the company's ability to meet other short-term obligations.

✅ Final Answer: (a) and (c).

• Total assets will increase by Rs. 12,000.

• This transaction will not have an immediate effect on owner’s equity in the business.

✅ Correct Answer: Poisson Distribution

Explanation:

In Queuing Theory, the arrival pattern of customers over time is typically modeled using the Poisson distribution.

🔍 Why Poisson?

• The Poisson distribution describes the number of events (like customer arrivals) occurring in a fixed interval of time or space, assuming the events occur independently and at a constant average rate.

• It is ideal for modeling random arrivals, such as customers arriving at a service counter, calls to a call center, etc.

❌ Why the Other Options Are Incorrect:

1. Binomial Distribution

   • Used for a fixed number of trials with two outcomes (success/failure). Not suitable for modeling random arrivals over time.

2. Normal Distribution

   • Describes continuous data with a symmetric bell-shaped curve. Arrival patterns (discrete events per time unit) are not normally distributed.

3. Log-normal  Distribution

   • Often used for distribution of service times, not arrival patterns.

✅ Conclusion:

Customer arrivals in queuing theory typically follow a Poisson distribution.

✅ Correct Answer: (a) Observation, (b) Experimentation, (d) Survey method

📘 Explanation:

Primary data collection methods are those where the data is collected directly from the source. The following are the common primary data collection methods:

1. Observation:
   Directly observing the subject or phenomenon in its natural environment. This method is often used in behavioral research.

2. Experimentation:
   Conducting experiments where variables are controlled, and the effect on the dependent variable is measured. This method is typically used in scientific studies.

3. Survey method:
   Collecting data by asking respondents through questionnaires or interviews. This is a common method for gathering primary data in social science and market research.

❌ Why (c) Corporate database is incorrect:

• Corporate database refers to secondary data, not primary data. Secondary data is data that has already been collected by someone else for a different purpose, and corporate databases fall into this category.

✅ Final Answer: (a) Observation, (b) Experimentation, (d) Survey method

✅ Correct Answer: New Product – New Market

📘 Explanation:
In Ansoff’s 2x2 Matrix, mergers and acquisitions are most closely associated with the Diversification strategy when the acquiring firm enters both a new market and introduces a new product. This is especially true when a company acquires another in a different industry or market segment to broaden its scope, capabilities, and customer base. The goal is to reduce dependency on current markets or products and achieve growth through strategic expansion.

For example, a tech firm acquiring a health food company is diversifying into an entirely different product and market.

❌ Why the other options are incorrect:

• Present Product – Present Market (Market Penetration): This strategy focuses on increasing market share in existing markets using current products—typically through promotions, pricing, or improved service, not M&A.

• Present Product – New Market (Market Development): While M&A can support this strategy, it only applies when the acquired company helps sell existing products to new markets—not when new products are also involved.

• New Product – Present Market (Product Development): This applies when a company introduces new products to its current market—not when it enters new markets as well.

✅ Final Answer: New Product – New Market

✅ Correct Answer: The desire of a commodity backed by ability and willingness to pay is demand

✅ Explanation:
The definition of demand in economics is not just the desire for a commodity but also the ability and willingness to pay for it. This means that demand is the desire for a good or service coupled with the financial ability to purchase it. Without the ability to pay, the desire alone does not constitute demand.

❌ Why the other options are incorrect:

• Decrease in input prices causes a leftward shift in the supply curve: This statement is incorrect. A decrease in input prices actually causes the supply curve to shift rightward, not leftward, as producers can supply more at each price level.

• Demand for car and price of petrol are inversely related: This is often true in the short run, but it isn't always universally applicable to all consumers or situations. While rising petrol prices can reduce the demand for cars (especially gas-guzzling models), the relationship might not be strictly inverse in every case, as some might prioritize convenience or find alternatives like electric cars.

• Most demand functions are of the form, D = a + bP: This is incorrect. The correct form of a linear demand function is typically D = a - bP, where D is demand, P is price, a is a constant, and b represents the slope, which is usually negative because as price increases, demand tends to decrease.

✅ Final Answer: The desire of a commodity backed by ability and willingness to pay is demand.

✅ Correct Answer: Two Country, Two Commodity and One Factor Theory

📘 Explanation:

David Ricardo's Theory of Comparative Advantage (1817) is a foundational concept in international trade. It explains how and why countries benefit from trade even when one country is more efficient in producing all goods.

Key Assumptions of Ricardo’s Model:

• Two Countries (e.g., England and Portugal)

• Two Commodities (e.g., wine and cloth)

• One Factor of Production – Labor (only labor is considered for production, ignoring capital and land)

The theory argues that:

• A country should specialize in producing and exporting goods in which it has a comparative advantage (i.e., lower opportunity cost), not necessarily an absolute advantage.

• This specialization leads to more efficient global production and mutual gains from trade.

✅ Final Answer: Two Country, Two Commodity and One Factor Theory

✅ Correct Answer: (a) Statistically significant

📘 Explanation:

When conducting a hypothesis test, we compare the test statistic to a critical value or rejection region:

• If the test statistic falls into the rejection region, we reject the null hypothesis.

• This outcome means the result is unlikely to have occurred by random chance alone, given the null hypothesis is true.

🔍 This leads to the conclusion that the result is:

→ Statistically significant

This is exactly what option (a) states.

❌ Why other options are incorrect:

• (b) Statistically insignificant:
  This would mean we fail to reject the null — opposite of what the question describes.

• (c) Statistically critical:
  Not a standard term in hypothesis testing.

• (d) Confidence interval:
  Refers to the range of values within which a parameter is expected to fall — not related directly to the rejection region.

✅ Final Answer: (a) Statistically significant

✅ Correct Answer: Rs. 20,000 unfavourable

✅ Explanation:
Material Quantity Variance (MQV) is the difference between the standard quantity allowed for actual production and the actual quantity used, multiplied by the standard price per kg. It shows whether more or less material was used than expected for the actual output.

Formula:

MQV = (Standard Quantity Allowed − Actual Quantity Used) × Standard Price

Step-by-step Calculation:

• Standard quantity allowed = Standard material allowed per unit × Actual output in units = 100 kg/unit × 1,000 units = 100,000 kg

• Actual quantity used = 104,000 kg

• Standard price = Rs. 5 per kg

MQV = (100,000 − 104,000) × 5 = (−4,000) × 5 = Rs. 20,000

This is unfavourable because more material was used than the standard allowed for the actual production level.

✅ Final Answer: Rs. 20,000 unfavourable.

✅ Correct Answer: Lower indifference curves indicate a higher level of satisfaction

✅ Explanation:

1. Indifference curves slope downward to the right:

   • This is correct. Indifference curves represent combinations of two goods that give the consumer the same level of satisfaction. As you move along an indifference curve, increasing the quantity of one good generally requires a decrease in the quantity of the other good to maintain the same level of satisfaction. Hence, indifference curves slope downward to the right.

2. Indifference curves of imperfect substitutes are convex to the origin:

   • This is correct. When goods are imperfect substitutes, the consumer is willing to give up more of one good to get an additional unit of the other good, but at a diminishing rate. This results in a convex (bowed-inward) shape of the indifference curve.

3. Indifference curves neither intersect nor are tangent to one another:

   • This is correct. Indifference curves do not intersect because each curve represents a different level of satisfaction. If they intersected, it would imply that the consumer is simultaneously indifferent between two different levels of satisfaction, which is logically inconsistent. Indifference curves also cannot be tangent to each other, as this would imply two different levels of satisfaction at a single point.

4. Lower indifference curves indicate a higher level of satisfaction:

   • This is incorrect. Higher indifference curves indicate a higher level of satisfaction, not lower ones. The farther away an indifference curve is from the origin, the higher the level of satisfaction it represents because it implies more of one or both goods.

Thus, the incorrect statement is "Lower indifference curves indicate a higher level of satisfaction."

✅ Final Answer: Lower indifference curves indicate a higher level of satisfaction.

🛑This decision is considered at a plant level. If we consider at a broader level like Aggregate Planning, Demand and Supply Planning; the sequence differs.

✅ Correct Answer: What to produce, how to produce, how much to produce, how to determine price of the product

✅ Explanation: This sequence reflects the typical order in which internal decisions are made within a business firm in microeconomics. First, the firm decides what to produce based on market demand and strategic goals. Second, it figures out how to produce, choosing the most efficient production methods and resource combinations. Third, it determines how much to produce, balancing production capacity with demand forecasts. Finally, the firm sets the price of the product, considering costs, competition, and consumer willingness to pay.

❌ Why the other options are incorrect:

• What to produce, how much to produce, how to produce, how to determine price of the product: Misplaces the production method decision, which logically follows the product decision before determining quantity.

• How much to produce, what to produce, how to produce, how to determine price of the product: Illogical sequence; a firm cannot decide how much to produce before knowing what to produce.

• What to produce, how much to produce, how to determine price of the product, how to produce: Puts pricing before deciding on production methods, which can lead to inaccurate cost estimations and inefficiencies.

✅ Final Answer: What to produce, how to produce, how much to produce, how to determine price of the product.

✅ Correct Answer: Both the statements A and R are correct and R is the right explanation of A

📘 Explanation:

• Assertion A: Correct. Strategic decision-making involves choosing among various possible courses of action, and this responsibility primarily lies with the senior management. Their role is to set direction and define priorities that shape the future of the organization.

• Reason R: Also correct. Strategic management revolves around fundamental questions like:

  • What is our business?

  • What will it be?

  • What should it be?
    These questions drive the decision-making process and help in determining the long-term direction of the organization.

✅ Since the reason (R) correctly explains why strategic decisions are a senior management function (as they focus on answering these fundamental strategic questions), the correct answer is:

✅ Final Answer: Both the statements A and R are correct and R is the right explanation of A

✅ Correct Answer: (a) and (c)

✅ Explanation:

Psychological barriers in communication occur due to mental or emotional factors that distort the effective exchange of information. The correct reasons for psychological barriers are:

• Premature evaluation: This happens when individuals judge or evaluate a message before fully understanding or listening to it, causing misunderstandings.

• Lack of attention: If the receiver is distracted, uninterested, or not paying attention, it leads to poor communication, which is a psychological barrier.

• Poor retention: If the receiver cannot retain or remember the information conveyed, communication breaks down.

• Lack of reliance: If there is a lack of trust or confidence between the sender and receiver, it creates barriers to effective communication.

❌ Why the other options are incorrect:

• (b) Organizational facilities, status relationships: These are typically structural or environmental barriers, not psychological barriers. They relate to physical factors like space or hierarchical barriers in an organization, but do not directly affect the psychological reception of communication.

• (d) Hierarchy, Organization policies: These are related to organizational barriers rather than psychological ones. They involve formal structures and policies that affect communication flow but do not directly involve psychological factors like attention or perception.

✅ Final Answer: (a) and (c)

✅ Correct Answer: Strata

📘 Explanation:

In sampling, when we divide the population into homogeneous (or similar) subsets, these subsets are called strata. This is a key concept in stratified sampling, where the population is divided into strata based on certain characteristics, and samples are then drawn from each of these strata.

❌ Why the other options are incorrect:

• Clusters:
  In cluster sampling, the population is divided into groups (clusters), but the clusters themselves may not be homogeneous. Typically, clusters are formed by grouping together naturally occurring subgroups of the population, which may vary in characteristics.

• Samples:
  A sample refers to the actual subset of individuals selected from the population for the purpose of analysis. It is not a homogeneous group of subsets.

• Sample sizes:
  Sample size refers to the number of individuals or units chosen for the sample, not the subsets of the population.

✅ Final Answer: Strata

✅ Correct Answer: Scanning Phase → Segmentation Phase → Generative Phase → Review Phase

📘 Explanation:

The QUEST technique is a method used in external economic analysis, particularly in strategic management and planning. The steps of the QUEST technique include:

1. Scanning Phase:
   This phase involves gathering and analyzing information about the external environment to understand the broader context in which an organization operates.

2. Segmentation Phase:
   In this phase, the external environment is segmented into distinct groups or factors based on specific criteria that are relevant to the organization.

3. Generative Phase:
   This phase focuses on generating strategic options or potential scenarios based on the insights gathered in the previous phases.

4. Review Phase:
   The final phase involves reviewing the options or scenarios generated and assessing their feasibility, impact, and alignment with organizational objectives.

❌ Why the other options are incorrect:

• Conceptualization Phase → Evaluation Phase → Feedback Phase → Analysis Phase:
  This sequence does not accurately represent the steps of the QUEST technique. It sounds more like a general process model but doesn't align with QUEST's steps.

• Preparation Phase → Divergent Planning Phase → Scenario Development Phase → Option Identification Phase:
  This sequence does not match the QUEST technique either. It focuses more on planning and scenario development rather than economic analysis.

• Development Phase → Scanning Phase → Evaluation Phase → Strategic Implementation Phase:
  This sequence mixes phases that relate more to general strategy development and implementation, which is not the core structure of QUEST.

✅ Final Answer: Scanning Phase → Segmentation Phase → Generative Phase → Review Phase

Correct Answer: Degeneracy

Details:

📘 Explanation:

In the context of linear programming and particularly in transportation problems, when the row minima and column minima rules simultaneously satisfy the allocation condition but the number of allocations is less than (m + n – 1) (where m = number of rows, n = number of columns), the solution is called degenerate.

🔍 What is Degeneracy?

• Degeneracy occurs when the number of basic variables (allocations) is less than (m + n – 1).

• This leads to difficulty in proceeding with the optimality test using methods like MODI (Modified Distribution Method).

❌ Other Options:

• Unboundedness: Occurs when the solution can increase indefinitely without violating any constraints.

• Infeasibility: Occurs when no solution satisfies all constraints.

• Post optimality analysis: Refers to analyzing the impact of changes in parameters after an optimal solution is found.

✅ Correct Answer: Delphi Technique

📘 Explanation:

The Delphi Technique is a structured method used for forecasting and decision-making based on the input of a panel of experts. It is characterized by:

• Anonymity of participants (they don't know who the other participants are)

• Geographical dispersion (experts do not need to be physically present)

• Iterative rounds of questionnaires or surveys

• Controlled feedback provided by a facilitator

• Aim to reach a consensus over multiple rounds

❌ Why Other Options Are Incorrect:

• Brainstorming Technique:

  • Involves open, face-to-face group discussion with no anonymity; not suitable for dispersed participants.

• Heuristic Ideation Technique:

  • A creative method based on trial and error or rules of thumb (heuristics), not designed for dispersed or anonymous participation.

• Decision Tree Technique:

  • A visual/analytical tool for decision-making under uncertainty, not a group-based forecasting method.

✅ Final Answer: Delphi Technique

✅ Correct Answer: (a)-(i), (b)-(iv), (c)-(ii), (d)-(iii)

✅ Explanation:

Let’s examine each match in detail:

✅ Final Answer: (a)-(i), (b)-(iv), (c)-(ii), (d)-(iii)

✅ Correct Answer: Policy Documents

✅ Explanation:

In the process of identifying opportunities, entrepreneurs typically rely on various sources that provide valuable insights into market trends, customer needs, and potential innovations. Let's analyze each option:

(a) Employees and ex-employees:
✅ Employees, as well as former employees, often have a deep understanding of a company's operations, challenges, and opportunities. Their feedback can help identify areas for improvement or potential market gaps that the company could explore.

(b) Dealers and Distributors:
✅ Dealers and distributors have direct interaction with customers and often have a clear view of market trends, customer demands, and emerging needs. Their insights are valuable for identifying opportunities to expand or enhance product offerings.

(c) Friends and Relatives:
✅ Friends and relatives can offer ideas based on their observations or experiences, providing different perspectives that can highlight new business opportunities. Their familiarity with the entrepreneur can also make them more willing to share helpful advice.

(d) Policy Documents:
❌ Policy Documents are primarily focused on regulations, guidelines, and strategic direction, but they are not typically a direct source for identifying new market opportunities. While they may guide decisions and business practices, they don't usually uncover specific market gaps or innovative ideas.

Final Answer: Policy Documents

✅ Correct Answer: Rs. 3,202 unfavourable

✅ Explanation: Overhead Spending Variance compares the actual overhead incurred (both fixed and variable) to the applied overhead based on standard rates for actual production. It reflects whether the company spent more or less on overheads than expected for the actual output.

📌 Formula:

Overhead Spending Variance = Actual Overhead − Applied Overhead

🧾 Step-by-step:

• Actual Overhead = Fixed (Rs. 12,850) + Variable (Rs. 2,352) = Rs. 15,202

• Applied Overhead = 1,000 units × Rs. 12 (standard total overhead rate) = Rs. 12,000

Overhead Spending Variance = 15,202 − 12,000 = Rs.3,202

Since actual spending exceeded the expected overhead, it is unfavourable.

✅ Final Answer: Rs. 3,202 unfavourable.

✅ Correct Answer: (a) and (c)

✅ Explanation:

Whistle-blowing is generally seen as an ethical act when done in good faith to expose wrongdoing that affects the public interest. However, it becomes unjustified under the following circumstances:

• (a) Ulterior motive, Breach of trust:
  If the whistle-blower acts out of personal revenge, political gain, or to harm colleagues or the organization, the action loses its ethical grounding. Similarly, breaching confidentiality without valid cause undermines trust and is generally unjustifiable.

• (c) Insufficient evidence:
  Accusations made without credible or sufficient evidence can lead to false allegations, damage to reputations, and legal repercussions. Whistle-blowing requires a reasonable belief backed by facts, not assumptions or hearsay.

❌ Why the other options are incorrect:

• (b) To protect public interest:
  This is the primary justification for ethical whistle-blowing, especially when serious harm or legal violations are involved.

• (d) To inspire other employees:
  While not the main reason, if the whistle-blowing is genuine, this can be a positive side-effect rather than an unjustified motive.

✅ Final Answer: (a) and (c).

✅ Correct Answer: Organizations are experiencing acute pressure to change and pursue innovation as a means of securing business growth

✅ Explanation:
Bureaucratic structures are being questioned because modern businesses face pressure to innovate and adapt quickly to market changes. Bureaucracy, with its rigid rules and hierarchy, often hinders flexibility and creativity, making it harder for organizations to keep up with the fast pace of innovation and global competition. This lack of agility makes bureaucratic systems less suitable for today’s dynamic business environment.

❌ Why the other options are incorrect:

• Pressure of Globalization: This is a contributing factor but not the fundamental reason. The primary reason is the need for organizations to change and innovate rapidly.

• Organizations have grown so large: This is an outcome of growth, but it is more about innovation pressure rather than the inability to manage scale.

• Information Technology: IT may improve efficiency but does not fundamentally challenge the bureaucratic structure. The issue is the lack of flexibility in responding to market demands.

✅ Final Answer: Organizations are experiencing acute pressure to change and pursue innovation as a means of securing business growth.

✅ Correct Answer: Attitudes are beliefs, feelings, and action tendencies of individuals toward objects, ideas, and people

✅ Explanation:

Attitude refers to an individual’s predisposition to respond in a consistently favorable or unfavorable manner with respect to a given object, person, or idea. It is composed of three components, often called the ABC model:

1. Affective – How a person feels about something (emotions)

2. Behavioral – The action tendency or intention toward it

3. Cognitive – What a person believes or thinks about it

This definition captures the full structure of an attitude—making it the most comprehensive and correct description.

❌ Why the other options are incorrect:

• "Attitudes are learned": ✔️ True, but it's only part of the definition—not a full description.

• "Attitudes are organized and are core to an individual": ✔️ Partially true, but too abstract and not precise.

• "Attitudes are major determinants of human behaviour": ✔️ Correct insight, but this refers more to the function of attitudes rather than what they are.

✅ Final Answer: Attitudes are beliefs, feelings, and action tendencies of individuals toward objects, ideas, and people.

✅ Correct Answer: Forming, storming, norming, performing, adjourning

✅ Explanation:
This is the correct sequence of group development stages as proposed by Bruce Tuckman in 1965 (with the fifth stage, adjourning, added later in 1977). These stages describe the typical progression teams go through as they form, evolve, and eventually disband.

1. Forming – Team members come together and get to know one another. There is excitement, anxiety, and uncertainty about roles and expectations.

2. Storming – Conflicts and power struggles may arise as members assert their opinions. This stage tests the group’s ability to handle disagreements.

3. Norming – Members establish norms, roles, and stronger relationships. Cooperation increases and the group becomes more cohesive.

4. Performing – The group becomes fully functional and works efficiently toward achieving its goals.

5. Adjourning – The group disbands after achieving its objectives, often marked by reflection and recognition.

✅ Final Answer: Forming, storming, norming, performing, adjourning.

✅ Correct Answer: Source of funds

✅ Explanation:
The sale of a long-term investment is considered a source of funds. When a company sells a long-term investment (such as property, stocks, bonds, or other assets held for investment purposes), it receives cash or cash equivalents in return. This inflow of cash is classified as a source of funds because the company has gained liquidity by converting an asset into cash.

The sale of long-term investments typically appears in the cash flow statement under the "Cash flows from investing activities" section.

❌ Why the other options are incorrect:

• Application of funds: This refers to the use of cash or resources, such as purchasing new assets or paying off liabilities. The sale of an asset is not an application but rather a source of funds.

• Change in current assets: The sale of a long-term investment affects non-current assets, not current assets. Current assets typically include items like cash, receivables, and inventory, which are expected to be used or converted within one year.

• Change in current liabilities: The sale of a long-term investment does not directly affect current liabilities, which include obligations like accounts payable, short-term debt, or accrued expenses due within the next year.

✅ Final Answer: Source of funds. The sale of a long-term investment results in an inflow of cash, thus acting as a source of funds.

✅ Correct Answer: (a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)

📘 Explanation:

• Theory of Absolute Advantage was developed by Adam Smith (iv). It explains how countries benefit by specializing in producing goods they can make more efficiently than others.

• Factor Proportion Theory (also known as Heckscher-Ohlin theory) was proposed by Heckscher and Ohlin (iii). It states that countries export products that use their abundant factors of production intensively.

• Country Similarity Theory was put forward by Steffan Linder (ii). It suggests that countries with similar demand structures tend to trade more with each other.

• Product Life Cycle Theory was introduced by Raymond Vernon (i). It explains how a product’s production location shifts internationally through its life cycle stages.

✅ Final Answer: (a)-(iv), (b)-(iii), (c)-(ii), (d)-(i)

✅ Correct Answer: Enterprise Resource Planning (ERP)

📘 Explanation:

Enterprise Resource Planning (ERP) is an integrated system that enables organizations to plan, control, and manage their operations effectively. It connects various business functions—such as finance, HR, supply chain, procurement, and customer service—into a single unified system.

ERP systems also offer:

• Sophisticated planning and control features

• Real-time data sharing across departments

• Connectivity with suppliers, partners, and customers, improving collaboration and decision-making

❌ Why the other options are incorrect:

• Customer Relationship Management (CRM): Focuses specifically on managing a company's interactions with current and potential customers, not overall planning and control across all departments.

• Manufacturing Resource Planning (MRP): Primarily focuses on production planning, inventory control, and scheduling—limited to manufacturing functions, not enterprise-wide.

• Economic Order Quantity (EOQ): A formula-based inventory management technique used to determine the ideal order quantity that minimizes total inventory costs—not a system, and doesn’t provide broad connectivity or control functionalities.

✅ Final Answer: Enterprise Resource Planning (ERP)

✅ Correct Answer: (a) Sampling error

📘 Explanation:

The sampling error refers to the difference between the point estimate (a statistic calculated from a sample) and the true population parameter. Since a sample is just a subset of the population, this error arises due to the natural variability between the sample and the population.

❌ Why the other options are incorrect:

• (b) Estimation error:
  This is a more general term, but sampling error specifically refers to the difference between a sample statistic and the true population parameter.

• (c) Probable error:
  This refers to the estimated value of an error in measurements, not directly related to the difference between a sample statistic and the population parameter.

• (d) Standard error:
  The standard error is a measure of the variability or dispersion of a sample statistic (like the mean) across multiple samples, not the difference between the sample estimate and the true population parameter.

✅ Final Answer: (a) Sampling error

✅ Correct Answer: The process of identifying problems and opportunities and then resolving them

✅ Explanation:
Decision-making is best understood as a process, not just a one-time event. It involves:

1. Identifying a problem or opportunity

2. Gathering information

3. Evaluating alternatives

4. Choosing the best course of action

5. Implementing and reviewing the decision

This makes decision-making a systematic and dynamic process that requires judgment, analysis, and often collaboration — rather than a single act of choosing.

❌ Why the other options are incorrect:

• Decision on a particular course of action: This is just the end result of decision-making, not the process itself.

• Too self-evident requiring an answer: Some decisions may seem obvious, but that doesn’t define the nature of decision-making.

• Deciding on a choice after a series of brainstorming: Brainstorming is a technique used during the decision-making process, but it’s only one part of the whole.

✅ Final Answer: The process of identifying problems and opportunities and then resolving them.

✅ Correct Answer: Management Information Systems

📘 Explanation:

Management Information Systems (MIS) support middle management by providing routine summary and exception reports that assist in planning, controlling, and decision-making. MIS converts data from Transaction Processing Systems (TPS) into structured reports that help monitor and manage operations effectively.

❌ Why the other options are incorrect:

Artificial Intelligence Systems
These replicate human intelligence for tasks like learning and problem-solving—not for generating routine management reports.

Executive Support Systems (ESS)
Used by senior executives for strategic decisions and long-term planning, not for day-to-day management reporting.

Decision Support Systems (DSS)
Support non-routine, complex decisions using models and simulations—not structured, routine summaries.

✅ Final Answer: Management Information Systems

Correct Answer: Both the statements A and R are correct and R is the right explanation of A

Details:

✅ Assertion A:

"The addition of independent variable(s) causes the prediction error to become smaller"

• True.

  • When we add more relevant independent variables in a regression model, it typically improves the model’s fit, and hence, reduces the prediction error.

✅ Reason R:

"With addition of independent variable, R² becomes larger to cause smaller prediction error"

• True and a valid explanation.

  • R² (coefficient of determination) represents the proportion of variance in the dependent variable explained by the independent variables.

  • When new variables are added, R² increases (or remains the same), which indicates better explanatory power and hence a reduction in prediction error.

🧠 Key Point:

• While Adjusted R² is used to avoid overfitting in practice, the basic logic of R² increasing with more variables directly explains the reduction in error — which aligns with the reasoning in the question.

✅ Correct Answer: Rs. 4,800 unfavourable

✅ Explanation:
Labour Efficiency Variance (LEV) measures the difference between the standard hours allowed for actual production and the actual hours worked, multiplied by the standard labour rate. It indicates how efficiently labour time was used in production.

📌 Formula:

Labour Efficiency Variance = (Standard Hours Allowed − Actual Hours Worked) × Standard Labour Rate

🧾 Step-by-Step Calculation:

• Standard hours allowed per unit = 2 hours

• Actual output = 1,000 units

Standard hours allowed = 1,000 × 2 = 2,000 hours

• Actual hours worked = 2,240 hours

• Standard labour rate = Rs. 20/hour

LEV = (2,000 − 2,240) × 20 = (−240) × 20 = Rs.4,800

Because more hours were worked than allowed by the standard, the variance is unfavourable.

✅ Final Answer: Rs. 4,800 unfavourable.

✅ Correct Answer: Dangling

Explanation:

In project management and network diagrams (like PERT/CPM), when an activity is not connected to any intermediate or end event and has no effect on the project’s completion, it is referred to as a dangling activity.

🔍 Here's what the other options mean and why they are incorrect:

❌ Looping

• Looping refers to a cycle or repetition in the network, which is not allowed in PERT/CPM as these are acyclic processes.

❌ Dummy

• A dummy activity is used in network diagrams to show dependencies or logical relationships without consuming time or resources. It is a valid component, not an error.

❌ Slack

• Slack (or float) is the amount of time an activity can be delayed without delaying the project. It refers to scheduling flexibility, not disconnected activities.

✅ Conclusion: An activity not connected to any other and irrelevant to project completion is called a dangling activity.

✅ Correct Answer: Going concern concept

✅ Explanation:
The going concern concept assumes that a business will continue its operations for the foreseeable future and will not be liquidated or forced to halt its operations. This concept is fundamental to financial accounting because it justifies the deferral of certain expenses and revenues over time, and the valuation of assets based on their ability to generate future income.

For example, under this concept, assets are not immediately valued at their liquidation value but at their ongoing use value, assuming the business will continue operating in the normal course.

❌ Why the other options are incorrect:

• Accounting period concept: This concept refers to the practice of dividing the life of a business into time periods (e.g., months, quarters, years) for reporting and analysis purposes, but it does not make assumptions about the continuity of the business.

• Realization concept: This concept is related to revenue recognition, which dictates that revenue should only be recognized when it is earned and realizable, not when cash is received.

• Separate entity concept: This concept states that the business is a separate entity from its owners or shareholders, meaning the business's transactions are distinct from those of the owners.

✅ Final Answer: Going concern concept. This concept assumes that a business will continue its operations for the foreseeable future.

✅ Correct Answer: (c), (a), (e), (b), and (d)

📘 Explanation:

When entering a foreign market like India, the risk level increases as the mode of entry shifts from indirect, low-control methods to direct, high-control investments. The correct order in terms of increasing risk is:

1. Portfolio Investment (c): Low risk—no direct control, just financial investment in securities.

2. Co-operative Joint Venture (a): Shared risk and control with a local partner.

3. Equity Joint Venture (e): Higher commitment and equity involvement—moderate risk.

4. Branch Office (b): Full legal presence in the host country, facing local regulations and liabilities.

5. Wholly Owned Subsidiary (d): Highest risk—full control and full exposure to political, legal, and economic environments.

✅ Final Answer: (c), (a), (e), (b), and (d)