Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 11 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 11 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.
Management principles are to serve the demands of the society, with respect to significance. [1]
(a) irrelevant
(b) developed
(c) under developed
(d) None of these
Answer:
(b) developed
Question 2.
Rahul Mehta purchased a car for ₹ 17 lakhs from an automobile company. Later on, he found defects in its engine. Suggest to him the appropriate authority, where he could file a complaint under Consumer Protection Act. [1]
(a) District Commission
(b) State Commission
(c) National Commission
(d) Supreme Court of India
Answer:
(a) District Commission
Question 3.
For delegation to be effective, it is essential that responsibility is accompanied with necessary [1]
(a) authority
(b) manpower
(c) incentives
(d) promotions
Answer:
(a) authority
Question 4.
A company wants to establish a new unit in which a machinery worth ₹ 15 lakh is involved. Which type of decision is involved here? [1]
(a) Dividend decision
(b) Investment decision
(c) Financing decision
(d) Both (b) and (c)
Answer:
(b) Investment decision
Question 5.
Budgets are known as ……… financial plans made for a period of one year or less. [1]
(a) long-term
(b) short-term
(c) medium-term
(d) Both (b) and (c)
Answer:
(b) short-term
Question 6.
Kumar wanted to purchase a fuel efficient car having the latest standards regarding minimisation of pollution. He saw as an advertisement offering such a car and visited the showroom of the company wherein the car was displayed. In his discussion, the marketing manager told him that the company is providing credit facilities, maintenance services and many other effective services which are helping in bringing repeat sales and developing brand loyalty. Identify the marketing function which the marketing manager was discussing with Kumar. [1]
(a) Branding
(b) Physical distribution
(c) Promotion
(d) Customer support services
Answer:
(d) Customer support services
Question 7.
Assertion (A) Delegation is a pre-requisite to the efficient functioning of an organisation. [1]
Reason (R) It enables a manager to use his time on high priority activities.
Alternatives
(a) Both Assertion (A) and Reason (R) are false
(b) Assertion (A) is true, but Reason (R) is false
(c) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(d) Both Assertion (A) and Reason (R) are true, but Reason ( R) is not the correct explanation of Assertion (A)
Answer:
(c) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Question 8.
A complaint can be filed against a seller, manufacturer or a dealer of goods whose goods are in any manner. [1]
(a) perfect
(b) flawless
(c) defective
(d) None of the above
Answer:
(c) defective
Question 9.
How planning reduces overlapping and wasteful activities? [1]
(a) It helps the manager to look into the future and choose amongst the various alternatives
(b) It serves as the base for coordination by avoiding confusion and misunderstanding
(c) It enables a manager to look ahead and anticipate changes
(d) None of the above
Answer:
(b) It serves as the base for coordination by avoiding confusion and misunderstanding
Question 10.
Neha runs a factory where in she manufactures shoes. The business has been doing well and she intends to expand by diversifying into leather bags as well as western formal wear thereby making her company a complete provider of corporate wear. This will enable her to market her business unit as the one stop for working women. Which type of structure would you recommend for her expanded organisation? [1]
(a) Functional structure
(b) Divisional structure
(c) Both (a) and (b)
(d) None of the above
Answer:
(b) Divisional structure
Question 11.
Ishita was suffering from hair loss problem. She wanted hair oil which would help her with this problem. She went to a departmental store and picked up Sun’s hair grow oil with a tagline ‘Bhulo balon ka Girna’. Then she read the price, read the instructions for use, its expiry date and other details. Identify the elements of product mix performed by oil selling company. [1]
(a) Branding
(b) Labelling
(c) Promotion
(d) Packaging
Answer:
(b) Labelling
Question 12.
Match the following on the basis of concepts of marketing. [1]
Column I | Column II |
A. Production concept | (i) Integrated marketing |
B. Selling concept | (ii) Product’s availability |
C. Societal marketing concept | (iii) Promotional efforts |
Codes
A — B — C
(a) (i) (ii) (iii)
(b) (ii) (iii) (i)
(c) (iii) (ii) (i)
(d) (i) (iii) (ii)
Answer:
(b) (ii) (iii) (j)
Question 13.
Which of the following functions of marketing helps in making product more attractive and improving its performance? [1]
(a) Marketing
(b) Product designing and development
(c) Branding
(d) Promotion
Answer:
(b) Product designing and development
Question 14.
Shah Ltd. started the product offering with ACs. They have now started to sell other appliances as well including audio systems, TVs. washing machines, water purifiers. etc. The company also handles complaints and offer after-sale services. But later on, it somehow ignored after-sales services leading to a tarnished image of company. The top management quickly took the rectifying measures and protected as well as promoted the favourable image in eyes of public. Which element of promotion mix is highlighted in the lines, The top management quickly took the rectifying measures and protected as well as promoted the favourable image in eyes of public? [1]
(a) Advertising
(b) Sales promotion
(c) Public relation
(d) Both (b) and (c)
Answer:
(c) Public relation
Question 15.
Nitin, an architect, highly influenced by Swachh Bharat Abhiyan decided to clean the sumunding of his area. He formed a team of his friends. Various options were suggested, such as taking help of school or college students, local residents or while-collar workers, etc. It was finally decided to take help of local residents. They ail then enlisted various activities such as purchase of equipments, collection and disposal of garbage etc. which are required to complete the process.
The work was divided among different members. All the members liked working with each other as the flow of communication was in all the directions leading to faster spread of information as well as quick feedback. Which function of management is highlighted in the lines. They all then enlisted various activities such as purchase of equipments, collection and disposal of garbage etc. which are required to complete the process. The work was divided among different members? [1]
(a) Controlling
(b) Directing
(c) Staffing
(d) Organising
Answer:
(d) Organising
Question 16.
Identify the correct sequence of steps involved in the communication process [1]
(i) Sender
(ii) Message
(iii) Encoding
(iv) Media
(v) Decoding
(vi) Feedback
(vii) Receiver
Codes
(a) (i), (ii), (iii), (iv), (v), (vii), (vi)
(b) (ii), (i), (iii), (v), (iv), (vi), (vii)
(c) (i), (ii), (iii), (v), (iv), (vi), (vii)
(d) (i), (v), (iv), (iii), (ii), (vii), (vi)
Answer:
(a) (i), (ii), (iii), (iv), (v), (vii), (vi)
Question 17.
Which of the following is incorrect about assumption of Maslow’s theory? [1]
(a) Satisfaction of such needs influences their behaviour
(b) People’s behaviour is not based on their needs
(c) A person moves to the next higher level of the hierarchy only when the lower need is satified
(d) A satisfied need can no longer motivate a person, only the next higher level need can motivate him.
Answer:
(b) People’s behaviour is not based on their needs
Question 18.
Which of the following statements is incorrect? [1]
(a) Planning is an exclusive function of top management
(b) It there are no alternatives, there is no need for planning function of management
(c) Planning helps in maintaining cooperation between different departments, divisions and individuals
(d) Planning is closely connected with creativity and innovation
Answer:
(c) Planning helps in maintaining cooperation between different departments, divisions and individuals
Question 19.
Statement I Deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas.
Statement II Deviation can be positive, when actual performance is better than the standard performance.
Alternatives [1]
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer:
(c) Both the statements are correct
Question 20.
Analyse the picture in which Mrs. Rekha is asking about the functions and warranty period of the Mixer from the shopkeeper. Choose the correct option reflected in picture. [1]
(a) Consumer organisations
(b) Consumer awareness
(c) Both (a) and (b)
(d) None of the above
Answer:
(b) Consumer awareness
Question 21.
State any six factors influencing the recruitment, selection and training of employees. [3]
Or
Divesh and Hitesh are working in same organisation but in different departments. One day, at lunch time, Divesh came to Hitesh and informed him that many people are going to be retrenched soon from the organisation due to computerisation.
(i) Which type of communication is this?
(ii) State any two limitations of this type of communication.
Answer:
Factors influencing recruitment, selection and training of employees are:
- Supply and demand of specific skills
- Company’s vision and policy
- Technological advancements
- Legal and political considerations
- Human resource planning cost
- Unemployment rate
Or
(i) This type of communication is informal communication.
(ii) Limitations of informal communication are
- It tends to be unsystematic, irregular and untimely. It is neither reliable nor predictable.
- It is not easy to fix responsibility for actions taken on the basis of informal communication. The origin of such communication in not easily traceable.
Question 22.
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 three factors that would be considered while determining the capital structure for the new venture. [3]
Answer:
In this cast, the various factors that are considered in determining the capital structure for the new venture will be:
- Cost of Debt If the rate of interest on debt is high, the company should use less debt in its capital structure, and vice-wersa.
- 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. - Interest Coverage Ratio ICR refers to the number of times earnings before interest and tax covers the interest obligation. Higher the ICA. the company can borrow more funds and vice-versa.
Question 23.
What is the purpose of a brand name?
Or
State any three functions of packaging a product?
Answer:
A brand name is a word, design, symbol or a combination, thereof used to identify a product and distinguish it from those of competitors. The purpose of a brand name is as follows:
- To create a distinct image of the product and its seller in the market.
- To build reputation and goodwill for the manufacturer.
- To secure repeated sales through brand loyalty.
Or
The package of a product performs various functions for the product. Some of these are:
- Product Identification The package of a product helps the customer to easily identify the product in the market.
- Product Protection The package of a product protects it from spoilage, breakage, pilferage, leakege, damage, etc.
- Facilitate Use The package of a product helps the customer to open, handle and use the product more comeniently.
Question 24.
IT company Polaris Software is planning to set-up a new unit in Mumbai with a capacity for 800 professionals. The company currently has 1,200 professionals across its centres in Mumbai, and the new unit is expected to come up in the next six months. The company’s chairman and CEO said that the company was well on the track to meet its earlier announcement to increase the head count by 1,500 to 2,000 professionals in the current year. Which function of management is present here? Also, enlist its two features. [3]
Answer:
The function of management present here is planning. It tells us what is to be done, how and by whom. It bridges the gap between where we are and where we want to go. Features of planning are:
- Planning is primary function of management
- Planning is pervasive
Question 25.
What is meant by business environment? Explain ‘dynamic nature’ and ‘uncertainty’ as features of business environment. [4]
Answer:
Business environment is the sum total of all factors and institutions which operate outside the business enterprise, but affect its performance. Features of business enwironment are:
- Dynamic Business environment is dynamic as it keops on changing. These changes take place continuously in social, economic, political, legal and technological environment.
- Uncertainty Business environment is uncertain because it is very difficult to predict the changes, especially when they occur very frequently.
Question 26.
Explain how controlling helps in [4]
(i) Making efficient use of resources
(ii) Improving employee’s motivation
Or
Explain the following financial incentives.
(i) Productivity linked wage incentives
(ii) Co-partnership/stock option
Answer:
(i) Making Efficient Use of Resources By exercising control, a manager seeks to reduce wastage and spoilage of resources ‘ Each activity is performed in accordance with pre-determined standards and norms. This ensures that resources are used in the most effective and efficient manner.
(ii) Improving Employees Motivation A good control system ensures that employees knows well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. Thus, it motivates them and helps them to give better performance.
Or
(i) Productivity Linked Wage Incentives In this incentive, wages are given to employees, according to their performance. These incentives help to improve the productivity of employees by paying higher wages to efficient workers. e.g. Differential piece wage system.
(ii) Co-partnership/Stock Option In this system, employees are offered shares of the company at a price lower than the market price. Sometimes, management may allot shares in line of various incentives payable in cash. This gives a feeling of ownership to the employees, which motivates them to improve performance and contribute to the growth of the company.
Question 27.
XYZ Co is a newly established company. Company is not having the adequate finance to recruit the persons from outside. In this situation, which source of recruitment would be beneficial and why? [4]
Answer:
Internal source of recruitment will be beneficial. There are two important sources of internal recruitment, i.e. transfers and promotions and both are economical and fast. It is beneficial because of the following reasons:
- Transfer is the tool of training the employees to prepare them for higher jobs. Also, people recruited from within the organisation do not need induction training.
- Transfer has the benefit of shifting workforce from the surplus department to those departments, where there is shortage of staff.
- Employees are motivated to improve their performance. A promotion at higher level motivates the employees to improve their performance through learning and practice.
Question 28.
Mr Sharma purchased a book from a bookseller and took the cash memo of ₹ 800 which he paid for the book. Later, he found that the actual price of the book is ₹ 720, but the bookseller had put a sticker of ₹ 800 on the original price. Can Mr. Sharma recover the extra money that he paid? What other options are available to him against bookseller? [4]
Answer:
Mr Sharma is a cautious consumer. He had taken the cash memo for the book, he purchased. Therefore, he can recover the extra money (i.e. ₹ 80 ). Besides, as per the Consumer Protection Act, 2019, following options are also available to him against bookseller:
- He can return the book and ask for the repayment of ₹ 800 which he paid for buying the book.
- He can sue the bookseller for using unfair and restrictive trade practices.
- He can approach the consumer forum or consumer dispute redressal commission to file a complaint against the bookseller.
Question 29.
Mr. A is a teacher, having a reputed job with good earnings. He wants to trade on a stock exchange. Enumerate the first four steps involved for purchase and sale of securities in a stock exchange. [4]
Or
Define investment decisions. Why these decisions are crucial for a business?
Answer:
The procedure for purchase and sale securities in a stock exchange involves the following steps
Step 1 Selection of a Broker The first step is to select a broker, who will buy/sell securities on behalf of the investor/speculator. Brokers may be individuals, partnership firms or corporate bodies. Selection of broker is compulsory as trading can only be done by SEBI registered brokers, who are members of a stock exchange.
Step 2 Opening of a Demat Account with Depository Dematerialised (Demat) account refers to an account which an individual must open with the depository participant (banks, stock brokers) to trade in the listed securities in electronic form.
Step 3 Placing the Order The next step is to place the order with the broker, which can be done through telephone, cell phone, e-mail, etc. Instruction regarding which securities and how many securities are to be bought or sold should be clearly given to the broker.
Step 4 Executing the Order According to the instructions, the broker executes the order and buys or sells the required securities. The broker then issues a contract note. A copy of contract note specifies the name and the price of securities, names of parties, brokerage charges, etc which is signed by the broker.
Or
The decision which relate to how the firm’s funds are invested in different assets so that the firm is able to earn the highest possible returns on investment is known as investment decisions. Investment decisions are crucial because (any three)
- They affect the overall earning capacity of firm in long-run.
- These decisions normally involve huge outflow of funds.
- These decisions are irreversible or can be reversed at times at a huge cost.
- These decisions affect profitability, growth and competitiveness of the firm.
Question 30.
Identify the functions of the management in the following cases [4]
(i) Giving instructions and guiding employees about the task assigned.
(ii) Transferring an employee from one division to another.
(iii) Making assumptions about future business conditions in the economy.
(iv) Manager compares the actual performance with the planned performance.
Answer:
The function of management in following cases:
- In this case, directing function is followed Directing consists of guiding, communicating, motivating and leading people towards organisational goals.
- In this case, staffing is followed Staffing is the process of filling all positions in an organisation with adequate and qualified personnel.
- In this case, planning is followed Planning is the process of deciding in advance what to do, how to do, when to do and who is going to do it.
- In this case, controlling is followed. In this function, manager compares the actual performance with the planned performance and look towards finding deviations, if any.
Question 31.
(i) Explain any two networks of informal communication from the following [3+3=6]
(a) Single strand network
(b) Gossip network
(c) Probability network
(ii) Differentiate between autocratic and democratic leadership on any three basis.
Or
(i) Explain any two needs from the following needs given by Maslow.
(a) Basic physiological needs
(b) Safety/security needs
(c) Esteem needs
(ii) Differentiate between directing and supervision on any three basis.
Answer:
(i) Networks of informal communication are (any two)
(a) Single Strand Network In this network, each person communicate with another in a sequence.
(b) Gossip Network In this network, one person communicates with all at the same time.
(c) Probability Network In this network, any person can communicate with anyone else randomly.
Question 32.
Differentiate between primary and secondary market on any four basis. [6]
Or
(i) In which two categories, the finance needs of a firm can be categorised into?
(ii) Explain any five factors while determining the working capital requirement for the company.
Answer:
Differences between primary market and secondary market are
Basis | Primary Market | Secondary Market |
Nature of Securities | New securities are issued by new and existing companies. | Here, sale and purchase of existing securities is dealt with. |
Capital Formation | It directly promotes capital formation as there is flow of funds from savers to investors. | It indirectly promotes capital formation by enhancing the liquidity of securities. |
Buying and Selling | Only buying of securities takes place and securities are not sold here. | Both buying and selling of securities takes place. |
Price Determination | Management of the company determines the prices of securities to be issued. | Price of securities are determined by market forces of demand and supply (for the securities). |
Or
(i) The finance needs of a business can be categorised into following two categories
(a) Fixed capital needs
(b) Working capital needs
(ii) The main factors to be considered while determining the working capital requirement of a company are
(a) Nature of Business The basic nature of a business influences the amount of working capital. 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, their quantum of inventory and debtors required is generally high. Such organisations, therefore, require large amount of working capital as compared to the organisations which operate on a lower scale.
(c) Business Cycle Different phases of business cycles affect the requirement of working capital by a firm. In case of a boom, the sales as well as production are likely to be larger and therefore larger amount of working capital is required. As against this, the requirement for working capital will be lower during the period of depression, since the sales as well as production will be less.
(d) 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.
(e) Production Cycle Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Some businesses have a longer production cycle while some have a shorter one. Duration and length of production cycle affect the amount of funds required for raw materials and expenses.
Question 33.
Mr. Inderjeet had started a business of supplying components required in the manufacturing of solar panels.
He had started his business five years back and with growing demand, he had opened two more offices. One in Bhopal and the other in Chennai, in addition to the head office in Delhi. He has to travel a lot, from one city to another, related to his business. [6]
He tries to look after all the aspects of the business. He also takes all the major decisions himself. For the last couple of months, he is facing a number of problems. He is not able to meet his orders on time, raw material supply is being affected and productivity is falling. His son Dinesh, a management student advises him to change his style of functioning and delegate his authority.
(i) What does delegation of authority means?
(ii) Delegation of authority is important for effective organisation. How? State by giving three reasons.
(iii) ‘Authority can be delegated, but accountability cannot be’. Explain.
Answer:
(i) Delegation of authority refers to the transfer of authority from superior to subordinate for the completion of tasks.
(ii) It is a key element in effective organising because of the following reasons
(a) Organisational Growth Delegation helps in expansion and growth of an organisation by providing trained and experienced individuals. It provides a ready work force to take up leading positions in new ventures or projects.
(b) Better Coordination Delegation of authority helps to avoid overlapping of duties and duplication of perfect. It also helps in develope and maintaining effective coordination amongst various departments, levels and functions of management.
(c) Basis of Management Hierarchy: It establishes superior-subordinate relationships, which are the basis of the hierarchy of management Every individual in knows that he accountable to whom.
Question 34.
Read the statements given in point (i) and (ii), answer the questions that follow [3+3=6]
(i) Seema is the manager of the western division of a large corporate house.
(a) At what level does she work in the organisation?
(b) Explain any two functions performed by her.
(ii) Amit supervise and control the workers. He ensures the proper arrangement of material and tools to start the process.
(a) At which level does Amit work in the organisation?
(b) Explain any two functions performed by him.
Answer:
(a) Seema being the manager of the western division of the organisation is working at middle level management. She and other managers like her act as a link between the top management and the operational management.
(b) The following are her basic functions:
- Interpreting the policies formulated by the top management.
- To make sure that each department under he division has the required personnel and staff for carrying out the assigned work.
(ii) (a) In this case, Amit works at the operational level management. This management level includes the groups or members, who are concerned with execution of the work.
(b) The following are his basic functions:
- Interact with actual workforce and pass on middle level managers’ instructions to the workers.
- To represent workers’ grievances and suggestions before the management.