Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 12 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 12 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.
Which of the following highlight the nature of management principles? [1]
(a) Flexible
(b) Universally applicable
(c) Contingent
(d) All of the above
Answer:
(d) All of the above
Question 2.
Assertion (A) Directing is an ongoing process.
Reason (R) Without direction, organisational activities cannot continue further. [1]
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:
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
Question 3.
“Demand for reservation in jobs for minorities refer to an example of key component of general environment of business.” Name this component.
(a) Social environment
(b) Legal environment
(c) Political environment
(d) Economic environment
Answer:
(a) Social environment
Question 4.
To reach the mass customer in non-personal manner, the following element of promotion mix is used.
(a) Advertisement
(b) Sales promotion
(c) Personal selling
(d) Public relation
Answer:
(a) Advertisement
Question 5.
Management principles establish ……… between two variables. It indicates the consequences of implementing a particular principle over a given situation.
(a) mainly behavioural
(b) cause and effect relationship
(c) universal applicability
(d) contingent
Answer:
(b) cause and effect relationship
Question 6.
The type of organisational structure in which jobs of similar nature are grouped together on the basis of functions to form departments is called ……
(a) functional structure
(b) divisional structure
(c) informal structure
(d) grouped structure
Answer:
(a) functional structure
Question 7.
Which technique of scientific management has an objective to find out how long a person can perform the standard task without any adverse effects?
(a) Motion study technique
(b) Differential piece wage system
(c) Fatigue study technique
(d) Work study technique
Answer:
(c) Fatigue study technique
Question 8.
In a factory, Mr. Kapil is at the position of supervisor and there are thirty subordinates under him. He communicates with all the subordinates in a single line. Which type of communication network is being followed here?
(a) Inverted V
(b) Free flow
(c) Single chain
(d) Wheel
Answer:
(c) Single chain
Question 9.
Statement I Financial market facilitates easy purchase and sale of financial assets, thus providing liquidity to financial assets.
Statement II Capital market deals in instruments whose maturity period is upto one year.
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) Money market deals in instruments whose maturity period is upto one year.
Question 10.
Mishikesh Ltd is a MNC which produces printers. Currently, company is under huge losses due to the failure of its much hyped product in the market. R & D department and marketing department are blaming each other for this failure. In your opinion, Mishikesh Ltd is lacking which quality of management?
(a) Coordination
(b) Directing
(c) Planning
(d) Controlling
Answer:
(a) Coordination
Question 11.
Identify the role of communication that can be illustrated by the picture given above in which Mr. Anuj, the manager of Himco Ltd is discussing about the future goals to be achieved by the company.
(a) Effective communication decreases morale of employees
(b) Effective communication leads to less productivity and wastage of time
(c) Effective communication increases managerial efficiency in order to achieve goals
(d) Both (a) and (b)
Answer:
(c) Effective communication increases managerial efficiency in order to achieve goals.
Question 12.
Match the Column I with appropriate options in Column II.
Column I | Column II |
A. Prepaid expenses | (i) Fixed asset |
B. Outstanding expenses | (ii) Current asset |
C. Lorry | (iii) Current liability |
Codes
(a) (i) (ii) (iii)
(b) (ii) (iii) (i)
(c) (iii) (ii) (i)
(d) (ii) (i) (iii)
Answer:
(b) (ii) (iii) (i)
Question 13.
Which of the following statements is incorrect with regard to consumer? [1]
(a) A person who buys things to further sell them for consideration
(b) A person who uses things without the permission of the purchaser
(c) A person who gets things without consideration
(d) All of the above
Answer:
(d) A consumer is a person who buys things in consideration for cash for personal or commercial use. He/She can also be a person who uses things with the permission of the purchaser.
Question 14.
The tool of promotion which involves making use of short-term incentives designed to encourage the buyers to make immediate purchase of a product or a service is called …….. [1]
(a) advertising
(b) personal selling
(c) sales promotion
(d) public relations
Answer:
(c) sales promotion
Question 15.
Statement I Marketing management is generally related to creation of demand. However in certain situations, the manager has to restrict the demand.
Statement II The marketing management is only concerned with creating demand but not managing the demand effectively as per the situation in the market. (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:
(b) The marketing management is not only concerned with creating demand but also managing the demand effectively in certain situations.
Question 16.
JPA school is one of the best schools of Delhi NCR region. Recently, the management of school decided to promote some of good performing teachers to the head of departments as some of those HoDs recently left the job and were recruited by the adjoining school. GPA school which has recently started its operations. GPA school also checked the data for people who applied for job two months back but couldn’t make it. They also approached a government agency which serves as a link between job seekers and job providers. Which source of recruitment was used by GPA school?
(a) Internal
(b) External
(c) Both (a) and (b)
(d) None of these
Answer:
(b) External
Question 17.
In which forum is it compulsory to have a female member?
(a) State commission
(b) District commission
(c) National commission
(d) All of the above
Answer:
(d) All of the above
Question 18.
Which of the following statements is incorrect with respect to controlling?
(a) An efficient controlling system helps in achieving the objectives
(b) Ap efficient control system helps in keeping a close watch on the progress of the work
(c) Controlling reduces the employee morale by telling them in advance about what is expected from them
(d) Controlling motivates the employee to work according to the set policies
Answer:
(c) Controlling helps to boost the employee morale.
Question 19.
Smita Ltd., a manufacturer of mobiles achieves a breakthrough by developing a mobile which is water proof. This product has created a good image of the company in the market. This development is effectively communicated by the company to its dealers and prospective customers.
The company has also set-up a add to its public image. Name the term that is used for this activity.
(a) Advertising
(b) Sales promotion
(c) Public relation
(d) Personal selling
Answer:
(c) Public relation
Question 20.
Arrange the following stages of staffing in correct sequence and choose the correct answer from the given codes.
(i) Performance appraisal
(ii) Recruitment
(iii) Transfer
(iv) Selection
(v) Induction and orientation
Codes
(a) (ii), (i), (iv), (v), (iii)
(b) (ii), (iv), (v), (i), (iii)
(c) (iv), (ii), (v), (iii), (i)
(d) (i), (ii), (iv), (v), (iii)
Answer:
(b) (ii), (iv), (v), (i), (iii)
Question 21.
What do you understand by ‘right to be assured’ and ‘right to consumer education’ as per Consumer Protection Act, 2019?
Or
What can manufacturers, consumers and government do to remove the evils of advertising?
Answer:
According to Consumer Protection Act, 2019, these rights are as follows:
(i) Right to be Assured A consumer has a right to choose from a wide variety of products at competitive prices. This implies that the marketers should offer a wide variety of products in terms of quality, brand, prices, size, etc and allow the consumer to make a choice amongst them.
(ii) Right to Consumer Education The consumer has a right to acquire knowledge and to be a well-informed consumer throughout life. Many consumer organisations and some business are actively educating consumers.
Question 22.
Naveen, a post graduate in Economics, was;successfully running his family business. However, since last few months, his business is not performing well. Because of low performance and losses in his business, Naveen thought of taking employment and got a job of human resource manager in a company on the basis of his experience and effictency.
(i) Do you think his appointment is valid? Give reason.
(ii) Was it not necessary for him to be a part of professional association to attain the post? Give reason.
Answer:
(i) Yes, his appointment is valid, as there is no compulsion of holding a degree such as MBA, in order to become a manager.
(ii) No, it is not necessary for all managers to be a part of a professional association, because management is not yet a full-fledged profession.
Question 23.
You are the financial manager of a newly established company. The directors have asked you to determine the amount of working capital requirement for the company. Explain any two factors that you will consider while determining the working capital requirement of the company.
Answer:
Factors to be considered while determining the working capital requirement are as follows
(i) 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 as the sales as well as production will be small.
(ii) Availability of Raw Material If raw material required is freely available, lower stock levels may be sufficient and vice-versa. Lead time, i.e. time lag between placing the order and actual receipt of material is also a major determinant. A larger lead time will require larger amount of raw material to be stored, thus larger amount of working capital is required.
Question 24.
“Planning is not the remedy of all the deficiencies of the business.” In the light of this statement, discuss any three external limitations of planning.
Or
How planning leads to increased efficiency?
Answer:
Following are the external limitations of planning:
- Unforeseen Events Natural calamities like floods, earthquakes, etc are beyond the control of managers, that cause failure of plans.
- Political Outlook Political outlook towards industries and their intervention also affects the company’s plans.
- Environmental Changes Changes in social, economic, legal and technological environment may affect forecasting and planning.
Or
Planning determines in advance, what is to be done in future. It helps us in knowing as to what we will have to perform in order to achieve the objectives. Various activities of different departments and divisions are carried on in an effective manner, thereby, reducing overlapping and wasteful activities. It results in timely completion of tasks, reduces wastage and leads to increase in efficiency.
Question 25.
Explain any four regulatory functions of SEBI.
Or
Financial management is concerned with inflow and outflow of money. Do you agree? If yes, how?
Answer:
Following are the regulatory functions of SEBI (any four)
- Registration of brokers, sub-brokers and other players in the market.
- Registration of collective investment schemes and mutual funds.
- Regulation of stock brokers, portfolio exchanges, underwriters and merchant bankers and the business in stock exchanges.
- Regulation of takeover bids by companies.
- Levying fee or other charges for carrying out the purposes of the Act.
- SEBI conducts inspections, enquiries and audits of stock exchanges.
- Perform and exercise such power under Securities Contracts (Regulation) Act 1956, as may be delegated by the Government of India.
Or
Yes, financial management is concérned with inflow and outflow of money as it is concerned with taking decisions regarding optimal procurement and utilisation of funds.
For the effective procurement of funds, different available sources of finance are identified and compared in terms of cost and risk associated with them. Procurement of funds is done for both long-term needs as well as short-term needs. For long-term financing needs, the funds can be sourced through debt and equity.
Short-term financing involves management of working capital. Now, the funds so procured have to be invested in a manner that the returns are higher than the cost of funds. The outflow of money is through purchase of fixed assets, current assets, working capital needs, distribution of dividends, etc.
Question 26.
In Adi Compounds Pvt. Ltd, there is no restriction on flow of communication and each and every employee is free to approach any one for minor queries and problems.
Although, this flow of communication is fast, but it has led to leakage of confidential information.
(i) Identify and explain the network of formal communication being used by the company.
(ii) Mention a suitable network, that can be used by the company to protect the confidential information.
Answer:
(i) The network of formal communication being used by the company is free flow network. In this netwok, each person can communicate with others freely and therefore, communication is fast in this network.
(ii) In the given case, company can use ‘wheel network’. In this network, all subordinates working under a superior communicates through him only. The superior is at the ‘hub’ of the wheel, communicating with all at the same time.
Question 27.
Puvy Hitech Ltd has grown in size. It was a market leader but with changes in business environment and with the entry of MNCs, its market share is declining. To cope up with the situation, CEO starts delegating few of his authority to the General Manager, who also felt himself overburdened and with the approval of CEO, disperses some of his authority to various levels throughout the organisation. Identify and explain the concept of management discussed above. Also, mention any two importance of the concept so identified.
Answer:
The concept of management discussed in the given case is decentralisation. Decentralisation of authority means systematic dispersal of authority among all departments and at all levels of management for taking decisions and actions appropriate at the respective levels. An organisation is said to be decentralised when managers at middle and lower levels have been given the authority to take decisions for their respective areas.
Decentralisation is important because of the following reasons:
(i) Develops Initiative among Subordinates It helps to promote self-reliance and confidence amongst the subordinates. This is because, lower managerial levels have been given freedom to take their own decisions and they learn to depend on their own judgement.
(ii) Develops Managerial Talent for the Future Formal training along with experience of handling independent assignments helps to create a reservoir of qualified and capable managers, who can take up more challenging positions in the upcoming ventures of the organisation.
Question 28.
Identify the principles of management violated in the following cases.
(i) Arun, a supervisor, speaks to people at all levels, including his as well as other departments.
(ii) Akarsh, a production manager, expects his subordinates to work for personal satisfaction and contentment, without any monetary reward.
(iii) Aman and Ayush, having same qualification, work as marketing professionals. Aman gets a salary of ₹ 12,000 per month, while Ayush gets ₹ 15,000 per month as he is a relative of marketing head.
(iv) Divakar, a production incharge, expects that his subordinate produce instant results, without giving him sufficient time to settle in the new environment. [4]
Answer:
(i) Scalar Chain This principle refers to the chain of authority and communication that runs from top to bottom and should be followed by managers, supervisors and their subordinates.
(ii) Remuneration of Employees According to this principle, the quantum and methods of remuneration payable to employees should be fair and reasonable.
(iii) Equity As per their principle, there should not be any discrimination among the employees on the basis of religion, language, caste, sex, belief or nationality.
(iv) Stability of Personnel According to this principle, employee turnover should be minimised to maintain organisational efficiency. A person should be given appropriate time to prove his abilities.
Question 29.
Nitish was working in ‘Apex Ltd’, a company manufacturing air conditioners. He noticed that the profits has started declining from the last eight months. As profit is directly related to the survival of the firm, so he analysed the business environment to find out the reasons for such decline.
(i) Identify the level of management at which Nitish was working.
(ii) State three other functions being performed by Nitish.
Answer:
(i) Nitish is working at the top level of management.
(ii) Others functions performed by top level management are as follows (any three)
- To analyse, evaluate and deal with the external environment.
- To determine the objectives and policies of the business.
- To coordinate the activities of different departments.
- To create an organisational framework consisting of authority-responsibility relationship.
Question 30.
Enlist any four needs as per Maslow’s theory along with individual and organizational examples.
Or
Controlling is a systematic process which includes a series of steps. Explain the first four steps involved in the controlling process.
Answer:
The need as per Maslow’s theory and the individual and organisational examples are (any four)
Needs | Individual Examples | Organisational Examples |
(i) Self-actualisation Needs | Self-fulfilment | Achievement of goals Status and recognition |
(ii) Esteem Needs | Self-respect | Cordial relations with colleagues |
(iii) Affiliation/ Belongingness Needs | Friendship | Organisational Examples |
(iv) Safety / Security Needs | Safety of property | Pension plan |
(v) Basic Physiological Needs | Hunger | Basic salary |
Or
Controlling is measuring and correcting the activities of subordinates to ensure that events confirm to plans. It is a systematic process involving a series of steps, which are are follows
(i) Setting Performance Standards The first step in the controlling process is to set 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 by opting 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) Analysing Deviations At this stage, acceptable and non-acceptable deviations are analysed.
Two methods are generally used:
- Critical Point Control It means keeping focus on key result areas where deviations are not acceptable and they should be attended on priority basis.
- Management by Exception It means that if a manager tries to control everything, he may end up in controlling nothing. Thus, he should first handle the significant deviations, which require his priority.
Question 31.
Neha and Rekha entered into a partnership business for manufacturing leather bags. Their products have been enjoying good market reputation. Separate departments have been created for production, marketing, finance, human resource and research. The brand name was well established in the market and the product market grew enormously. As the business flourished, they decided to produce leather jacket and leather shoes.
(i) Suggest an organisational structure to them.
(ii) Also discuss the advantages and limitations of such an organisational structure.
Answer:
(i) Divisional structure will be suitable for them. It is an organisation structure in which various departments are created on the basis of products, territory or region.
(ii) Divisional structure has the following advantages
- All the activities related to one type of product are grouped under one division, which brings integration and coordination in the activities.
- With more initiative and flexibility, decisions are taken much faster in divisional structure.
- It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.
- Fixation of responsibility and accountability is easy, as divisional heads are responsible for the profits and losses of their divisions.
Divisional structure suffers from the following limitations
- There is a duplication of physical facilities and functions, which leads to increase in cost.
- Greater autonomy to divisional heads may lead to misuse of authority.
- Managers in each division focus on their own objectives, without thinking of the organisational goals.
- Conflict may arise between different divisions on allocation of funds and other resources.
Question 32.
Read the statements given in point (i) and (ii), answer the questions that follows
(i) Recruitment by which most of the senior positions of the industry as well as commerce are filled.
(a) Identify the method of recruitment in this case.
(b) Explain any two disadvantages of such type of recruitment.
(ii) A clerk of the company is now appointed to the post of chief accountant.
(a) Identify the method of recruitment in this case.
(b) Explain any two advantages of such type of recruitment. [3+3=6]
Answer:
(i) (a) Advertisement Method (External source of recruitment) This method is used to fill the most of the senior positions of the industry as well as commerce.
(b) Disadvantages of external sources of recruitment are:
- Lengthy Process Recruitment from external sources involves a lot of time as business has to notify the vacancies and wait for applications to initiate the selection process.
- Costly Process Recruitment from external sources involves a lot of expenditure on advertising, selection and other processes.
(ii) (a) Promotion (Internal source of recruitment) It means shifting an employee to a higher post carrying higher salary, status and responsibility.
(b) Advantages of internal sources of recruitment
- Simple Process The process of selection and placement becomes simpler, as the background of the candidate is already known to the organisation.
- Inexpensive Recruitment from internal sources does not require much time, money and effort. Hence, it is very cost effective in nature.
Question 33.
Samartkon Printers Ltd is planning to raise funds of ₹ 80,00,000 for its new project.
The management is considering the following mix of equity and debt to raise this amount.
Alternative I – Equity ₹ 80,00,000, Debt -0
Alternative II – Equity ₹ 60,00,000. Debt -₹ 20,00,000
Alternative III – Equity ₹ 20,00,000. Debt – ₹ 60,00,000
Other details are as follows
(i) Interest rate on debt (a) 9%.
(ii) Face value of equity shares is ₹100 each.
(iii) Tax rate (a) 30%.
(iv) Earning Before Interest and Tax (EBIT) is ₹ 16,00,000.
(a) Which of the three alternatives will be beneficial for a company?
(b) Does Earning Per Share always rise with increase in debt?
Or
“Financial market plays an important role in the allocation of scarce resources in an economy.” Comment.
Answer:
(a)
As per above calculation, Alternative Ill will be beneficial for a company because of higher earning per share in this alternative.
(b) No, earning per share only rises with increase in debt when the rate of interest on debt is lower than the return on investment.
Or
Financial market plays an important role in the allocation of scarce resources in an economy by performing four important functions
(i) Mobilisation of SavIngs and Channelising Them into Most Productive Uses A financial market facilitates the transfer of savings from savers to investors. Thus, it helps in channelising surplus funds into the most productive uses.
(ii) Facilitating Price Discovery Households represent the supply of funds and the business firms represent the demand. The interaction between the demand and supply helps in the price discovery of financial asset, which is being traded in a particular market.
(iii) Providing Liquidity to Financial Assets Financial market facilitates easy purchases and sale of financial assets. In doing so, they provide liquidity, which means that financial asset are easily converted into cash whenever required.
(iv) Reducing the Cost of Transactions Financial markets provide a common platform where buyers and sellers meet. It helps in saving time, effort and money of the buyers and sellers at the time of trading in the market, by providing them valuable information.
Question 34.
(i) Explain any two importance of consumer protection from businessmen’s point of view from the following
(a) Long-term interest of business
(b) Business uses society’s resources
(c) Moral justification
(ii) State any three reliefs available to the consumer under the Consumer Protection Act, 2019. [3+3=6]
Or
(i) Explain any two functions of marketing from the following
(a) Product designing and development
(b) Storage and warehousing
(c) Transportation
(ii) Differentiate between packaging and labelling on any three basis.
Answer:
Basis | Packaging | Labelling |
Meaning | It refers to the process of designing and creating a package, container or wrapper for a product. | It refers to the process of designing and creating a label for a product. |
Purpose | The purpose of package is to provide protection to the product. | The purpose of label is to provide detailed information about the product. |
Use | A package facilitates use of the product. | A label does not facilitate use of the product |