41. Building long-term mutually satisfying relations with key customers, suppliers, distributors in order to earn and retain their long-term preference and business is known as:

  • Option : A
  • Explanation : With reference to the definition of Shani and Chalasani, relationship marketing is “an integrated effort to identify, maintain, and build up a network with individual consumers and to continuously strengthen the network for the mutual benefit of both sides, through interactive, individualized, and value-added contacts over a long period of time”. Thus the relationship marketing is performed to benefit both the company and its customers. Through it, an increasing fraction of each customer’s business is received. It aims at building long term, mutually satisfying relations with customers, suppliers and distributors with the objective to earn and retain their lo ng-term preferen ce and businesses (Armstrong and Kotler).
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42. Which of the following are the rights of a Statutory Auditor?
(a) To receive remuneration
(b) To attend Board of Directors Meeting
(c) To attend the General Meeting
(d) To visit the branch office
Choose the correct answer from the following:

  • Option : C
  • Explanation : Statutory Audit: An audit which is undertaken under any specific statute or Act is called ‘statutory audit’. The term ‘statutory’ signifies anything regulated by laws of the state. Accordingly, a statutory audit is the official inspection of an organisation’s books accounts by an independent body as per the requirements of a statute. The objective of this audit is to ensure fair and accurate representations of the financial statements of an entity. The forms of organisations for which audit is mandatory in India under any statute are as follows:

    Statutory Audit is Applicable forRelevant Statute
    Joint Stock CompaniesCompanies Act, 2013
    Banking CompaniesBanking Regulations Act, 1949
    Electricity CompaniesElectric Supply Act, 1948
    Co-operative SocietiesCo-operative Societies Act, 1912
    TrustsRespective State Acts

    Non-statutory Audit: A non-statutory audit is such an audit which is neither required by the law nor by any regulatory authority. They are usually carried out at the will of an organisation or in some cases to adhere to the internal policies of the organisation. This audit is often used by sole proprietors, limited and unlimited liability partnership s, associations, clubs, charitable trusts etc. in order to enhance their reliability.
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43. Following are the steps in the activity-based cost allocation:
(a) Identification of the main activities
(b) Collection of cost pool
(c) Determination of the activity cost drivers
(d) Calculation of activity driver rate
(e) Charging the cost of activities to products
Select the correct sequence of the above steps:

  • Option : C
  • Explanation : Activity Based Costing refers to an approach to the costing and monitoring of activities, which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects, based on consumption estimates. The latter utilise Cost Drivers to attach activity costs to outputs.
    Activity Based Costing is a technique which involves identification of costs with each cost driving activity and making it as the basis of apportionment of costs over different cost objects/jobs/products/customers or services. Absorbing Overheads into the cost of product or service under Activity Based Costing involves the following steps:
    ∎ Identification of various activities within the organisation.
    ∎ Estimation of the cost of each activity.
    ∎ Apportionment of cost of support activities across primary activities on suitable basis.
    ∎ Determination of Activity Cost Drivers for each activity or Cost Pool.
    ∎ Calculation of Activity Cost Driver Rate.
    ∎ Assigning of Overheads to cost objects on the basis of Activity Cost Driver Rate.
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44. Which among the following is NOT a correct statement?

  • Option : B
  • Explanation : Definition: Hedge fund is a private investment partnership and funds pool that uses varied and complex proprietary strategies and invests or trades in complex products, including listed and unlisted derivatives.
    Put simply, a hedge fund is a pool of money that takes both short and long positions, buys and sells equities, initiates arbitrage, and trades bonds, currencies, convertible securities, commodities and derivative products to generate returns at reduced risk. As the name suggests, the fund tries to hedge risks to investor’s capital against market volatility by employing alternative investment approaches.
    Description: Hedge fund investors typically include high net worth individuals (HNIs) and families, endowments and pension funds, insurance companies, and banks. These funds work either as private investment partnerships or offshore investment corporations. They are not required to be registered with the securities markets regulator and are not subject to the reporting requirements, including periodic disclosure of NAVs.
    There are many strategies a hedge fund may use to generate returns. One such strategy is global macros, where the fund takes long and short positions in large financial markets based on the views influenced by economic trends. Then there are funds that work on market-neutral strategies. Here, the goal of the fund manager is to minimise market risks by investing in long/short equity funds, convertible bonds, arbitrage funds, and fixed income products.
    Another type includes event-driven funds that invest in stocks to take advantage of price movements generated by corporate events. Merger arbitrage funds and distressed asset funds fall into this category.
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