Advaniages to Statutory Auditor 221 Importantadvantages are: (5) Audited cost data helps him to determine the value of mocks, remuneration of manayrrial pesonnel, ete, with ease and accuracy. (ii) Data and statements of cost audit help him to prepare his audit programme and plan so that he concentrates more on thone aspecto which have not been adequately covered by cost audit. Advantages to Consumers (i) The direct benefit accrues where a statutory cost audit has been done to fixa reasonable price for the consumers. (ii) Since cost audit aims at ensuring efficiency in the organisation, this may also get reflected in reduced prices to the consumers. Advantages to Labour (i) If cost audit is done thoroughly labour also stands to gain through increased profitability in the shape of bonus and other benefits. (ii) Also it brings into focus the role of labour in improving efficiency in term of increased productivity. Advantages to Shareholders (i) There is correct valuation of all kinds of inventories. This may project a true picture of the organisation before shareholders and other investors and help them to assess its performance. (ii) External cost audit highlights efficiency or inefficiency, utilisation of manpower and other resources, adequacy of return, etc. Advantages to Government and Economy (i) It helps the government to settle accoumts where cost-plus contracts have been made. (ii) The government can intervene to protect the interests of the consumers, labour, shareholders and investors from exploitage or inefficient managements. (iii) At the national level, cost audit promotes cost consciousness and overall efficiency. This means that every rupee invested produces the maximum quantity of goods and services. Types of Cost Audit The main types of Cost audit are the following: (i) Cost Audit as an Aid to Management. The aim is to see that all information placed before management is relevant, reliable and prompt so that management can discharge its duties well. It must also be seen that no relevant or pertinent information is suppressed. (ii) Cost Audit on Behalf of a Customer. Often contracts are placed on "Cost Plus" basis. In other words, the customer will determine the final price to be paid on the basis of exact cost plus an agreed margin of profit. The customer, in such a case, usually gets cost accounts of the product concerned audited to establish correct cost and, therefore, price. (iii) Cost Audit on Behalf of Govemment. Sometimes the Government is approached with request for financial help or protection. Before taking a decision on the request, the Government may choose to get cost accounts of the applicant audited to establish whether the need for help is genuine or is a result of mere inefficiency. 1017. In case of multiple correlation, the number 1026. Spearman's method is the methe of variables involved are greater than (A) 3 (B) 4 calculating coefficient of correlathond on (C) 2 (D) 1 (A) Crvin Fischer 1018. Relationship of two or more variables is (C) Lorenz examined excluding some other variables (D) Karl Pearson in case of (A) Total correlation (B) Partial correlation (C) Multiple correlation 1027. Coefficient of correlation in case of freer (A)KarlPearson(B)Spearman 1019. Partial correlation is a type of cy distribution could not case of (A)KarlPearson(C)Leastsquaremethod(B) (D) None of the above (A) Simplecorrelation (B) Multiple correlation 1028. Correlation between price and demand (A) Negative (C) Both (A) \& (B) (C) Zero (B) Positive (D) None of the above (D) None of the abou 1020. When variations in the values of two 1029. Correlation between price and supply is (A) Negative variables have a constant ratio, there will (C) Zero (B) Positive be (D) Noneof the dobe (A) Linear correlation 1030. Correlation between income and demard is (B) Non-linear correlation (A) Negative (B) Positive (C) Zero correlation (C) Zero (D) None of the above (D) None of the abor 1031. Correlation between rainfall and popte 1021. Graph of variables having linear relation tion is will be (A) Negative (B) Positive (A) Curved (B) Hyperbola (C) Zero (C) Straight line (D) None of the above (D) None of the above 1022. Graph of variables having non-linear 1032. Which is the most widely used methodd relation will be calculating correlation? (A) Curved (B) Hyperbola (A) Scatter diagram (C) Straight line (D) None of the above (B) Karl Pearson's 1023. Karl Pearson's coefficient of correlation (C) Charles Spearman's method of measuring correlation is (D) None of the above (A) Graphic (B) Mathematical (C) Positional (D) None of the above 1033. Age of applicants of life insurance and the premium of insurance is 1024. Karl Pearson's coefficient of correlation is (A) Negatively correlated based on the assumption by (B) Positively correlated (A) Normality (B) Platykurtic (C) Zero Correlation (C) Leptokurtic (D) None of the above (D) None of the above BUSINESS ENVRONMENT AND INTERNATIONAL BUSINESS Why is BoP Important? The BoP statement provides a clear picture of the economic relations between different countries. It is an integral aspect of international financial management. To begin with, the BoP statement provides information pertaining to the demand and supply of the country's currency. The trade data shows a clear picture of whether the country's currency is appreciating or depreciating in comparison with other countries. Next, the country's BoP determines its potential as a constructive economic partner. In addition, a country's BoP indicates its position in international economic grow th By studying its BoP statement and its components closely, a country would be able to identify trends that may be beneficial or harmful to the economy and take appropriate measures. DH REGIONAL ECONOMIC INTEGRATION 144 There are several stages in the process of economic integration, from a very loose association of countries in a preferential trade area, to complete economic integration, where the economies of member countries are completely integrated. A regional trading bloc is a group of countries within a geographical region that protect themselves from imports from non-members in other geographical regions, and who look to trade more with each other. Regional trading blocs increasingly shape the pattern of world trade - a phenomenom often referred to as regionalism. Levels of Regional Economic Integration: Preferential Trade Area Preferential Trade Areas (PTAs) exist when countries within a geographical region agree to reduce or eliminate tariff barriers on selected goods imported from other members of the area. This is often the first small step towards the creation of a trading bloc. Agreements may be made between two countries (bi-lateral), or several countries (multi-lateral). Free Trade Area Free Trade Areas (FTAs) are created when two or more countries in a region agree to reduce or eliminate barriers to trade on all goods coming from other members. The North Atlantic Free Trade Agreement (NAFTA) is an example of such a free trade area, and includes the USA, Canada, and Mexico. Customs Union A customs union involves the removal of tariff barriers between members, together with the acceptance of a common (unified) external tariff against non-members. BUSINESS ENMIRONMENT AND INTERNATIONAL BUSINESS The European Union (EU) is the best known Ficomomic union, and came into force on Fecvember Ist 1993, following the stgning of the Maastricht Treaty (formally ealled the Treaty on Eirepean Unice.) Monetary Union Monetary union is the first major step towards macro-economic integration, and enables econiomies to converge even more clocely. Monetary urion involves scrapping individual currencies, and aderptiry a single, shared currency, such as the Euro for the Euro-17 countrien, and the East Caribbecan Deollar for 11 islands in the East Caribbean. This means that these is a common exchange rate, a common merietary policy, including interest rates and the regulation of the quantity of money, and a single central barik, such as the European Central Bank or the East Caribbean Central Bank: Fiscal Union A fiscal union is an agreement to harmonise tax rates, to establish common levels of public sector spending and borrowing, and jointly agree national budget deficits or surpluses. The majority of EU states agreed a fiscal compact in early 2012 , which is a less binding version of a full fiscal union. Feonomic and Monetary Union Economic and Monetary Union (EMU) is a key stage towards compete integration, and involves a single economic market, a common trade policy, a single currency and a common monetary policy. Complete Economic Integration Complete economic integration involves a single economic market, a common trade policy, a single currency, a common monetary policy, together with a single fiscal policy, inchuding common tax and benefit rates - in short, complete harmonisation of all policies, rates, and economic trade nules. TRADE CREATION AND DIVERSION When customs unions are established the flow of trade between countries involved in the new union and those outside will be affected. Customs unions eliminate barriers to trade between members, which is assumed to provide a considerable incentive to increase trade between members and to reduce trade between members and non-members. It is often easiest to appreciate the effect of a customs union by considering what happens when one country joins an existing union. Outside a union, and operating independently, a single nation will look to exploit its comparative advantage. In a free trade environment, countries will trade with who they like, attempting to exploit their own comparative cost advantage through specialisation. They will export goods they produce most efficiently, and import goods from low-cost countries who have exploited their own comparative cost advantage to produce cheap exports. In a situation where countries do not trade freely, by imposing tariffs, or by favouring one country over another in terms of tariff levels, trade will be distorted and the pattern of trade will change. Inefficient producers may be protected and encouraged, at the expense of more efficient imports. The creation of a customs union, with common external tariffs, will further alter the existing pattern of trade flows. The assumption is that before the union, members imposed differential tariffs on different countries to protect their own industries. Taking a hypothetical example from an actual historical period, we shall assume that, prior to joining the European 'common market' in 1973 , the UK could produce butter at 130 p per kilograms (kg), on average. At the same time, New Zealand could produce the same quantity for 100 p, and Denmark could produce it for 120 p. Hence, prior to the