Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 10 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 10 with Solutions
Time : 3 hrs Max.
Marks : 80
Instructions
- This question paper contains 34 questions.
- Marks are indicated against each question.
- Answers should be brief and to the point.
- Answers to the questions carrying 3 marks may be from 50 to 75 words.
- Answers to the questions carrying 4 marks may be about 150 words.
- Answers to the questions carrying 6 marks may be about 200 words.
- Attempt all parts of the questions together
Question 1.
The earlier approach of caveat emptor which means ‘Let the buyer beware’, has now been changed to ………. [1]
(a) caveat venditor
(b) caveat marketer
(c) caveat buyer
(d) None of the above
Answer:
(a) caveat venditor
Question 2.
BIS is a seal certified by Bureau of Indian Standards that the goods confirm to the prescribed ……… standards. [1]
(a) quantity
(b) quality
(c) Both (a) and (b)
(d) None of the above
Answer:
(b) quality
Question 3.
An ideal plan would be one which is most profitable, most feasible and has the least. [1]
(a) positive consequences
(b) negative consequences
(c) alternatives
(d) None of the above
Answer:
(b) negative consequences
Question 4.
Harish bought a pain relieving ointment after seeing it being displayed in the chemist’s shop. The ointment tube is packed in a cardboard box. The tubes were received by the chemist from the wholesaler in corrugated boxes containing 30 units. Identify the level of packaging involved in the above mentioned case. [1]
(a) Primary packaging
(b) Secondary packaging
(c) Transportation packaging
(d) All of the above
Answer:
(d) All of the above
Question 5.
Span of management refers to ……….. [1]
(a) the number of superiors that a manager can effectively supervise
(b) the number of customers that a manager can effectively supervise
(c) the number of subordinates that a manager can effectively supervise
(d) the number of creditors that a manager can effectively supervise
Answer:
(c) the number of subordinates that a manager can effectively supervise
Question 6.
In an organisation, the functional head and marketing director directs the subordinates throughout the organisation in his particular area. This means that subordinates receive orders from several specialists or managers working above them. This style of working is followed in which organisation? [1]
(a) Divisional organisation
(b) Functional organisation
(c) Staff organisation
(d) Matrix organisation
Answer:
(b) Functional organisation
Question 7.
Assertion (A) Depository holds securities in electronic form. [1]
Reason (R) Depository is formed for the purpose of free transferability of securities with speed, accuracy and security.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Question 8.
Name the outcome of the function of management which includes designing of roles to be filled by suitably skilled people and defining the inter-relationship between roles so that ambiguity in performance of duties can be eliminated. [1]
(a) Organisation structure
(b) Decentralisation
(c) Delegation of authority
(d) Controlling
Answer:
(a) Organisation structure
Question 9.
Seeing the need of connecting restaurants/ food outlets to people, Zomato established its app as a food delivery platform. Which importance of business environment is highlighted here? [1]
(a) It enables the firm to identify opportunities and getting the first mover advantage
(b) It helps in tapping useful resources
(c) It helps in coping with rapid changes
(d) It helps in improving performance
Answer:
(a) It enables the firm to identify opportunities and getting the first mover advantage
Question 10.
Mr. Ankit is working as a manager in ‘Nandini Designer Candles Ltd’. For Diwali festival, his company wants to launch a unique variety of candles. Arrange the following activities of Mr. Ankit regarding this in the correct sequence. [1]
(i) He recruits more skilled artistic workers.
(ii) He determines what activities and resources are required.
(iii) He plans a special festive collection for Diwali.
(iv) He ensures that deadline regarding delivery of goods are met.
Codes
(a) (i), (ii), (iv), (iii)
(b) (iii), (ii), (i), (iv)
(c) (iii), (ii), (iv), (i)
(d) (ii), (iii), (i), (iv)
Answer:
(b) (iii), (ii), (i), (iv)
Question 11.
Statement I In order to survive, an organisation must earn enough revenues to cover cost. [1]
Statement II Management increases effectiveness by reducing cost and increasing productivity.
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement II is true and Statement I is false
(c) Both the statements are true
(d) Both the statements are false
Answer:
(a) Statement I is true and Statement II is false
Question 12.
Madhuban Oils Ltd. has the largest share of 60% in the market. The company’s policy is to sell only for cash. In 2021, for the first time company’s number one position in the industry has been threatened because other companies started selling oil on credit also. But, the manager of Madhuban Oils Ltd. continued to rely on its previously tried and tested successful plans, which didn’t work because the environment is not static. This led to decline in sales of Madhuban Oils Ltd. The above said case highlights the limitation(s) of planning which led to decline in its sales. Identify such limitation(s). [1]
(a) Planning does not guarantee success
(b) Planning may not work in dynamic environment
(c) Planning leads to rigidity
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)
Question 13.
Match the Column I with Column II on the basis of organising process. [1]
Column I | Column II |
A. Identification and & division of work | (i) Identify and divide the total work |
B.Departmentalisation | (ii) Allocation of responsibility |
(iii) Separation of products |
Codes
A — B
(a) (i) (ii)
(b) (ii) (iii)
(c) (i) (iii)
(d) (iii) (ii)
Answer:
(c) (i) (iii)
Question 14.
Lorenz industries is involved in the production of spare parts for trucks and buses. Sharad is working there as a foreman along with 20 more workers. The targets are constantly achieved by the foremen. There is orderliness and coordination in the work environment and all the workers are happy and satisfied. At which level of management, Sharad is working? [1]
(a) Top
(b) Middle
(c) Lower
(d) Shop floor
Answer:
(c) Lower
Question 15.
Which statement is incorrect about relationship between planning and controlling? [1]
(a) Planning without controlling is meaningless, controlling without planning is blind
(b) Planning is prescriptive, controlling is evaluative
(c) Planning and controlling are separable twins of management
(d) Planning and controlling are interrelated and interdependent
Answer:
(c) Planning and controlling are inseparable twins of management.
Question 16.
India’s population is expected to grow under 0.5 percent during 2031-41 due to decline in fertility rate and increase in life expectancy. These changes in India’s demography will also have implications such as the proportion of elementary school-going children will witness significant declines, lack of hospital beds and increase in retirement age. The related feature of business environment being described in the above lines is ………….. [1]
(a) totality of external forces
(b) dynamic nature
(c) interrelatedness
(d) relativity
Answer:
(c) interrelatedness
Question 17.
Identify the method of staffing illustrated in the picture in which Wipro Ltd. is taking interview. [1]
(a) Direct recruitment
(b) Placement agencies and management consultants
(c) Campus recruitment
(d) Employment exchange
Answer:
(c) Campus recruitment
Question 18.
Which of the following statements is incorrect? [1]
(a) Human resource management is a broader term than staffing
(b) Staffing is a one time function
(c) Internal recruitment is a most popular and economical method of recruitment
(d) Promotion of an employee will boost up the morale of existing employees
Answer:
(b) Staffing is a one time function
Question 19.
Statement I Unity of command means one employee getting orders and instructions from one supervisor.
Statement II Functional foremanship is the extension of principle of unity of command. [1]
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement I is false and Statement II is true
(c) Both the statements are true
(d) Both the statements are false
Answer:
(a) Statement I is true and Statement II is false
Question 20.
Yash worked in business development unit of an Edtech start up. He always achieve the targets on time and recently achieved his sales target one week in advance. This achievement was displayed on the notice board and the CEO of company awarded a certificate for the best performance to him. Due to his consistent performance, be was promoted to the post of sales manager. He encourages his team to form their own objectives and take decisions. He respects their opinions and support them. He also promotes informal group within the department so that the team members develop a sense of belongingness. [1]
What was the leadership style followed by Yash?
(a) Authoritative
(b) Democratic
(c) Both (a) and (b)
(d) Laissez Faire
Answer:
(b) Democratic
Question 21.
As a well informed customer, what kind of quality certification marks you will look for before buying products? [3]
Answer:
As a well informed customer, following quality certification marks should be checked before buying products (any three)
- ISI It is related to consumer durable products.
- Hall Mark It is BIS certification scheme on gold jewellery items.
- Wool Mark It signifies 100% pure wool.
- FPO It contains specification and quality control requirements regarding the production and marketing of processed vegetables and fruits, stc.
- AGMARK It is a grade standard tor agricultural commodities and live stock products.
Question 22.
“To manage is to forecast and plan, to organise to command, to coordinate and to control,” enunciated by Fayol. Comment. [3]
Or
What do you understand by the technique ‘standardisation of work’? Also, mention its objectives.
Answer:
This statement states that management is a continuous process because it inwolves a series of inter-felated functions or elements to achieve stated objectives through the effective utilisation of human and material rescurces.
Question 23.
Explain
(i) Benefits of specialisation, and [3]
(ii) Development of personnel, as importance of organising
Or
What are derivative plans and why they are formulated?
Answer:
(i) Benefits of Specialisation Organising facilitates systernatic allocation of work amongst people. As each task is repetitively performed by a worker, it helps him to gain experience and achieve specialisation.
(ii) Development of Personnel Organising stimulates creativity amongst managers. This helps subordinates to develop newer skills and ability to deal with emerging challenges. This helps in development of personnel.
Or
Derivative plans are the supporting plans, which are formulated for executing the primary plan. When the primary plan is decided, the next logical step it to increase the sale of a product, the derivative plans would be to recruit and train employees, launch an advertising campaign, procure funds, etc.
Question 24.
Himanshu purchased a new car from Galaxy Motors for ₹ 25 lakh. He was offered free insurance for the first year and three free servicing to be availed after the car had covered 5,000 km, 10,000 km and 15,000 km respectively. When Himanshu took the car for the first free servicing, he was told that the car was not new and first service had already been availed on this car. He felt cheated and filed a complaint in the District Commission. Being not satisfied with the decision of the District Commission, he decided to file and appeal against it after two months. Can Himanshu appeal against the decision of the District Commission? Give reason in support of your answer. [3]
Answer:
No, Himanshu cannot appeal against the decision of District Commission in the National Commission under the Consumer Protection Act, 2019. Appeals against the order of District Commission can be filed in State Commission within 45 days of the passing of the order and in this case, Himanshu decided to file appeal against the decision of District Commission after 2 months.
Question 25.
Why the manager merit is considered as a science? Give reaons? [4]
Answer:
Points that validate management is a science are as follows
- Management has systematized body of knowledge.
- Some of the management principles are universal in nature.
- Management principles are also derived after continuous observations.
- In science, replication is possible but in management, it depends upon the situation.
By the explanation, we can conclude that management satisfies most of the features of science, but still it is not considered as a perfect science, rather it is an inexact science.
Question 26.
Rajat had opened an internet cafe in the 90’s to cash in on the boom of the internet. In the initial years, he got good profits. This made him carefree and he started taking his success for granted. But lately for the last few years, he is finding it difficult to even bear the expenses of his cafe, leave alone earning profits. [4]
(i) Which aspect or feature of business environment has Rajat ignored?
(ii) What changes in the macro environment has affected his business?
Answer:
(i) Rajat failed to consider that business environment is dynamic. It is right to say that business environment is dynamic because is everyday new changes are taking place in the business environment. For the survival of the company, it is necessary to scan or recognise these changes from time-to-time.
(ii) Rajat has been affected by the technological changes taking place in the macro environment. With the advent of cost-cutting technology and the introduction of laptops, tablets and smart phones, people can assess the internet easily from their personal gadgets. So, the business of internet cafes have suffered.
Question 27.
Surya Ltd. is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7% to 8 % and the demand for steel is growing. Therefore, it is planning to set-up a new steel plant to take benefit of such trends in demand. It is estimated that such an expansion will require about ₹ 5,000 crore to set-up and about ₹ 500 crore of working capital. As the finance manager of the company, state any four factors that would be considered while determining the capital structure for the new venture. [4]
Answer:
In this case, the various factors that are considered in determining the capital structure for the new venture will be
(i) Cost of Debt If the rate of interest on debt is high, the company should use less debt in its capital structure, and vice-versa.
(ii) Cost of Equity When a company increases debt, the financial risk faced by equity shareholders increases. Thus, debt can be used upto a limit. Beyond that point, cost of equity may go up and share prices may decrease.
(iii) Interest Coverage Ratio ICR refers to the number of times earnings before interest and tax covers the interest obligation. Higher the ICR, the company can borrow more funds and vice-versa.
(iv) Debt Service Coverage Ratio It refers to the ratio that takes care of deficiencies in the ICR. A higher DSCR indicates better ability of the company to meet its cash commitments and borrow more funds.
Question 28.
State any four functions of stock exchange in India. [4]
Or
State any four objectives of Securities Exchange Board of India.
Answer:
Following are the four functions of stock exchange
(i) Providing Liquidity and Marketability to Existing Securities The main function of a stock exchange is the creation of ready market where securities are bought and sold. It gives investors the chance to disinvest and reinvest. This provides both liquidity and easy marketability to already existing securities in the market.
(ii) Pricing of Securities Share prices on a stock exchange are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through which the prices of securities are determined. Such a valuation provides important instant information to both buyers and sellers in the market.
(iii) Safety of Transactions It is well regulated and its dealings are well-defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal in the market.
(iv) Contributes to Economic Growth In stock exchange, the process of disinvestment and reinvestment channelise the savings into productive investment avenues. This leads to capital formation and economic growth.
Or
The overall objective of SEBI is to protect the interests of investors, promote the development of and regulate the securities market. This may be elaborated as follows :
- To regulate stock exchanges and the securities industry to promote their orderly functioning.
- To protect the rights and interests of investors, particularly individual investors, and to guide and educate them.
- To prevent fraudulent activities and malpractices.
- To regulate and develop a code of conduct for intermediaries with a view to make them competitive and professional.
Question 29.
Identify the source of recruitment used in following cases [4]
(i) For recruitment of casual worker, an advertisement for the Diwali season is posted in a factory that makes cracker.
(ii) Ashoka Hotel goes to Institute of Hotel Management for recruitment of freshers.
(iii) Ultimate Technology Ltd. has a bond program where an employee can refer his friend or relative who is qualified for a post.
(iv) Tasty Treat Ltd, is searching for eligible candidate for the post of marketing executive using www, naukari.com.
Answer:
(i) Direct Recruitment Through direct recruitment, casual vacancies of unskilled or semi-skilled jobs are filled, when there is a rush of order or when some permanent workers are absent.
(ii) Campus Recruitment Many organisations maintain a close link with universities, vocational schools and management institutes, in order to recruit fresh talent and qualified personnel.
(iii) Recommendation of Employees Employees of an organisation recommend the names of their of friends, relatives and neighbours, which may prove to be a good external source of recruitment. It is a reliable source as the background of the suggested candidate is wellknown.
(iv) Web Publishing Internet is becoming a common source of recruitment these days. Many websites are designed to provide information about both job seekers and job opening.
Question 30.
Explain the limitations of planning [4]
(i) Planning may not work in a dynamic environment
(ii) Planning involves huge cost
Or
Explain the following importance of organising
(i) Adaptation to changes
(ii) Expansion and growth
Answer:
(i) Planning may not Work in a Dynamic Environment Business environment consists of social, economic, legal and other factors that keep on changing. The organisation has to adapt itself to such changes. But, planning cannot assess future trends exactly and thus fail in a dynamic environment.
(ii) Planning involves Huge Cost It usually involves a lot of time money, effort and cost of the managers. Sometimes the cost incurred may not justify the benefit derived from the plans.
Or
(i) Adaptation to Changes It facilitates business enterprise to accommodate changes in the workload caused by business environment. In case of change, organisation paves the way for the revision of relationship at organisation levels.
(ii) Expansion and Growth Organising enables and enterprise to take up new challenges. e.g. More job positions, departments, new product lines, new geographical territories, etc. to increase sales/ profits, market share and growth of the enterprise.
Question 31.
(i) Explain any two factors affecting working capital from the following [3+3-6]
(a) Nature of business
(b) Scale of operations
(c) Seasonal factors
(ii) Compare debt and equity in terms of cost and risk.
Or
(i) Explain any two steps in trading and settlement procedure from the following
(a) Selection of broker
(b) Opening demat account
(c) Placing the order
(ii) Differentiate between money market and capital market on any three basis.
Answer:
(i) Factors affecting woring capital are (any two)
(a) Nature of Business The basic nature of a business influences the amount of working capital required.
A trading organisation and a service industry firm usually needs a smaller amount of working capital as compared to a manufacturing organisation.
(b) Scale of Operations Organisations which operate on a large scale, require high quantum of inventory and debtors.
Such organisations, therefore, require large amount of working capital as compared to organisations which operate on a lower scale.
(c) Seasonal Factors Some of the businesses have seasonal operations. During peak season, larger amount of working capital is required because of higher level of activity. As against this, the level of activity as well as the requirement for working capital will be lower during the lean season. (1.5×2=3)
(ii)
Or
(i) Steps in trading and settlement procedure are (any two)
(a) Selection of Broker The first step is to select a broker, who will buy/sell securities on behalf of the speculator/ investor. This is necessary because trading of securities can be done through SEBI registered brokers, who are members of stock exchange.
(b) Opening Demat Account Demat (Dematerialised) account refers to an account which an Indian citizen must open with the depository participant to trade in listed securities in electronic form. The securities are held in the electronic form by a depository.
(c) Placing the Order The next step is to place the order with the broker. The order can be communicated to the brcker either personally or through telephone, cell phone, e-mail, etc. The instructions should specify the securities to be bought or sold and the price range within which the order is to be executed. (1.5 x 2=3)
Basis | Money Market | Capitai Market |
Meaning | It is a market dealing in securities of shot-term funds, whose maturity period is upto one year. | It is a market dealing in securities for long-term funds, whose maturity period is more than one year. |
Participants | Major participants are RBI, commercial banks, financial institutions and finance companies. | Participants of capital market are financial institutions, banks, corporate entities, foreign investors and ordinary retail investor form the member of public. |
Instruments | Instruments traded are T-bills, commercial bills, certificate of deposits, etc. | Main instruments traded are shares, debentures, bonds, preference shares, etc. |
Question 32.
Read the statements given in point (i) and (ii) answer the question that follow [3+3-6]
(i) Jack Ltd announced an incentive of ₹ 15,000 to employees who do not take leave during the coming Diwali season and show better performance.
(a) Identify the type of incentive offered.
(b) Explain two more incentives of the same type.
(ii) Astha Ltd. assures its employees that inspite of recession, no worker will be retrenched from work.
(a) Identify the type of incentive offered.
(b) Explain two more incentive of the same type.
Answer:
(i) (a) The incentive offered is “productivity linked wage” which is a type of financial incentive provided to the employees.
(b) Two other financial incentives are:
- Pay and Allowance For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance, house rent allowance, etc. These incentives induce employees to improve performance.
- Bonus It is a one time reward for high performance. Bonus may be paid in cash or kind over and above the salary. e.g. Performance bonus, 100 % attendance bonus, festive bonus etc.
(ii) (a) The incentive offered is ‘job security, which is a non-financial incentive.
(b) Two other non-financial incentives are:
- Employee Recognition Recognition means acknowledgment of work with a show of appreciation. With such appreciation, employee feel motivated.
- Employee Empowerment It means giving more autonomy and power to subordinates. It makes people feel that their jobs are important, as a result of which, they contribute positively to the use of skills and talents in the job performance.
Question 33.
“Every action in the organisation is initiated through directing,” In the light of this statement, explain the term directing and mention any five points of it’s importance. [6]
Or
Discuss the process of controlling in detail.
Answer:
Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation through effective communication, so that there efforts result in achievement of organisational objectives.
Points that highlight the importance of directing function are:
(i) Initiates Action Directing helps to initiate action by people in the organisation towards the attainment of desired objectives. e.g. If a supervisor guides his subordinates and clarifies their doubts in performing a task, it will help workers to achieve work targets given to them.
(ii) Integrates Employees’ Efforts Directing integrates employees’ efforts in the organisation in such a way that every individual eflort confributes to the attainment of organisational objectives. Thus, it ensures that the individuals work for organisational goals.
(iii) Improves Efficiency Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership. A good leader can always identify the potential of his employees and motivate them to extract work upto their potential.
(iv) Brings Balance arid Stability in the Organisation Effective directing helps to bring stability and balance in the organisation since, it fosters cooperation and commitment among the people and helps to achieve balance among various group activities and the departments.
(v) Facilitates Changes Changes in an organisation are usually resisted by employees. Through effective direction, a manager can explain the purpose and benefit of such changes to the employees.
Or
Controlling process is a systematic process involving a series of steps which are as follows:
(i) Setting Performance Standards The first step in the controlling process is to set up the performance standards. Standards are those criteria, on which the actual performances are measured. These standards serve as a benchmark towards which an organisation strives to work.
(ii) Measurement of Actual Performance After the establishment of standards, the next step is measuring the actual performance with the set standards. This can be done with the help of several methods like personal observation, sample checking, performance reports, etc.
(iii) Comparison of Actual Performance with Standards In this step, the actual performances are compared with the established standards. Such comparisons reveal the deviation between planned and actual results.
(iv) Identifying and Analysing Deviations At this stage, acceptable and non-acceptable deviations are analysed while focusing on
- Critical Point Control it means keeping focus on key result areas where deviations are not acceptable and it should be attended on a priority basis.
- Management by Exception It means if a manager tries to control everything. he may end up in controling nothing. Thus, he should first handle the significant deviations on priority.
(v) Taking Corrective Action The most important step in the controlling process is taking corrective actions. After the deviations and their causes are analysed. the task is to remove the hurdles from the actual work plan. The purpose of this step is to bring the actual performance up to the level of expectations by adopting corrective measures.
Question 34.
Suhani has started her business of readymade garments. She manufactures clothes for infants. She uses only the best quality cloth and decides to charge only the minimum possible for her products. Her aim is to provide premium clothing range for the middle-income group. [6]
Being new to business, she seeks the help of her uncle, Mr Anil, who is a chartered accountant, to help her fix the price of her product so that she is able to meet the above objectives.
(i) Explain the factors to be considered while fixing the price of a product.
(ii) Explain to Suhani the meaning of price mix.
(iii) State any one method of pricing.
Answer:
(i) Suhani should consider following factors while fixing the price of a product.
(a) Product Cost This is the most important factor, as the marketing firms are interested in fixing the price of a product, in such a manner that it should cover all the costs of production, distribution and earn a margin of profit too.
(b) The Utility and Demand Firstly, the buyer must be ready to pay up to the point where the utility from the product is at least equal to the sacrifice made in terms of the price paid. Secondly. the price of a product affects the elasticity of demand as demand is having an inverse relationship with price Thus, these two things must be kept in mind while fixing the price
(c) Extent of Competition in the Market Price is settled in the market by the nature and degree of competition. The price tends to be higher when there is a lesser degree of competition and are lower when there is free competition.
(d) Government and Legal Regulations in order to protect the interest of consumer against unfair practices in the field of price fixing. Government should regulate the price of essential goods.
(ii) Price mix refers to important decisions which are related with the fixing of price of a commodity.
(iii) One method used for pricing is cost-plus method.