Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 5 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 5 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 principle of scientific management discards the old approach of rule of thumb? [1]
(a) Harmony, not discord
(b) Cooperation, not individualism
(c) Science, not rule of thumb
(d) Either (a) or (c)
Answer:
(c) Science, not rule of thumb
Question 2.
All other managerial functions are performed within the framework of the plans drawn. Identify the related feature of planning. [1]
(a) Planning focuses on achieving objectives
(b) Planning is pervasive
(c) Planning is futuristic
(d) Planning is primary function of management
Answer:
(d) Planning is primary function of management
Question 3.
In which of the following aspects, money market is different from capital market? [1]
(a) Participants
(b) Tenure of securities traded
(c) Liquidity of securities traded
(d) All of the above
Answer:
(d) All of the above
Question 4.
Assertion (A) As per critical point control system, a manager should first focus on key result areas.
Reason (R) It is not possible to keep a check on all the activities of the enterprise. [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:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
Question 5.
Which of the following statements is incorrect about the Securities Exchange Board of India (SEBI)? [1]
(a) It is a non-statutory body
(b) It was established in 1992
(c) It was established to protect the right of Investors
(d) None of the above
Answer:
(a) It is a non-statutory body
Question 6.
On the successful completion of two years in a company, Ankit received a letter confirming his job as a permanent employee. Identify the need of Ankit being fulfilled as per Maslow’s need hierarchy theory. [1]
(a) Self-actualisation needs
(b) Security needs
(c) Esteem needs
(d) Basic physiological needs
Answer:
(b) Security needs
Question 7.
Decisions related to investment in fixed assets are popularly known as …………………. [1]
(a) business finance decisions
(b) financial management
(c) capital budgeting decisions
(d) None of the above
Answer:
(c) Capital budgeting is the process of alocating resources for major capital expenditures or investments. Therefore, decisions related to investment in fixed assets are popularty known as capital budgeting decişions.
Question 8.
If a manager wants to introduce new accounting system, then there may be initial resistance from accounting staff. But, if manager explains the purpose, provides training and motivates them with incentive, the staff may cooperate with manager. Which importance of directing is highlighted here? [1]
(a) Initiate action
(b) Means of motivation
(c) Facilitates change
(d) Provides stability
Answer:
(c) Facilitates change
Question 9.
For the purpose of selecting employees for the post of ‘sales executives’ for its retail outlets, Reliance Fresh conducted a recruitment programme at Rajasthan University. Considering the vast number of job seekers, group discussions were conducted and the candidates who were selected had to face interviews and then they were offered job if they passed such interviews. Such programmes are often known as ……………. [1]
(a) advertisement
(b) campus recruitment
(c) campus selection
(d) direct recruitment
Answer:
(b) Mary organisations maintain a close lirk with universities and other educational instlutes to recruit fresh talent. In this case, Retiance Fresh visited the campus of these institutions to hire fresh talent, this process is known as campus recruitment.
Question 10.
Statement I Selling concept focuses on customer satisfaction. [1]
Statement II Packaging and labelling are same or synonyms of each other.
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:
(d) Seling concept focuses on incressing the sales to earn mavimum profit while packaging and labeling are two different elements of product mix.
Question 11.
Arrange the correct sequence of planning process in an order [1]
(i) Develop a strategic plan
(ii) Execute and manage your plan
(iii) Determine strategic position
(iv) Prioritise objectives
(v) Review and revise the plan Codes
(a) (i), (ii), (iv), (iii), (v)
(b) (i), (ii), (iii), (iv), (v)
(c) (iii), (i), (iv), (ii), (v)
(d) (iii), (iv), (i), (ii), (v)
Answer:
(d) (iii), (iv), (i), (ii), (v)
Question 12.
Match the following on the basis utility marketed. [1]
Column I | Column II |
A. Ideas | (i) Digital India |
B. Events | (ii) Film Festival |
C. Experience | (iii) Mountaineering |
Codes
A — B — C
(i) (i) – (ii) – (iii)
(ii) (ii) – (iii) – (i)
(iii) (iii) – (ii) – (i)
(iv) (i) – (iii) – (ii)
Answer:
(a) (ii) (ii) (ii)
Question 13.
Statement I Advertising is an impersonal form of communication.
Statement II Advertising lacks direct feedback. [1]
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:
(c) Both the statements are true
Question 14.
Oscar Ltd is involved in manufacturing of remotes of AC. Company usually manufactures 1,000 remotes per day.
The efforts of all departments are coordinated and interlinked and authority- responsibility relationship is established among various job positions. [1]
In this company, jobs of similar nature are grouped together and these jobs, as separate departments, are organised properly. This leads to creation of particular type of organisational structure. Company follows decentralisation, i.e. selective dispersal of authority.
Managers working at various levels are allowed to take their own decisions and they are personally accountable for their decisions. Which function of management is highlighted in the lines, “The efforts of all departments are coordinated and interlinked and authority-responsibility relationship is established among various job positions”?
(a) Coordination
(b) Planning
(c) Organising
(d) Controlling
Answer:
(c) Organising
Question 15.
Which of the following is incorrect with regard to the National Commission? [1]
(a) The members are appointed by central government.
(b) Where the aggrieved party was not satisfied with the order of the National Commission, the case can be taken to the Supreme Court of India.
(c) A complaint can be made to the National Commission when compensation exceeds ₹ 1 crore.
(d) None of the above
Answer:
(c) A complaint can be made to the National Commission for compensabion exceeding ₹ 10 crore.
Question 16.
Identify the responsibility of consumers from the picture above in which the doctor is suggesting the surgery to his patient. [1]
(a) Assert yourself to ensure that you get a fair deal
(b) Be honest in your dealings
(c) Learn about the risk associated with product and services
(d) Respect the environment
Answer:
(c) Learn about the risk associated with product and services
Question 17.
When does the Earning Per Share (EPS) of the company rise with higher debt? [1]
(a) When the rate of return on investment is higher than the rate of interest
(b) When the rate of return on investment is lower than the rate of interest
(c) When the rate of interest is more than the rate of return
(d) None of the above
Answer:
(a) When the rate of return on investment is higher than the rate of inferest
Question 18.
Higher working capital usually results in …………… [1]
(a) higher current ratio, higher risk and higher profits
(b) lower current ratio, higher risk and lower profits
(c) higher equity, lower risk and lower profits
(d) lower equity, lower risk and higher profits
Answer:
(a) It a company has a higher working capital then there will be a higher current ratio, fie. current assets over current abilities), higher risk and higher profits.
Question 19.
‘Riya Health Care Limited’, established with the objective of taking care of the people’s health. This was the first company of this type established in its field. There being no competition in the market was something good for the company. But when the company’s business was about to pick up, several competing companies got established in that field. Consequently, the comfortable position of the company came to an end. [1]
Hardly two years had gone since the company was established, when there occurred a big change in the priorities of the customers. Now they got tempted towards the local health promoting products instead of the company’s products. In this way, the company had to face great difficulties to keep itself established in the market. Which feature of business environment does the above event acquaint us with? [1]
(a) Dynamic nature
(b) Inter-relatedness
(c) Totality of external forces
(d) Specific and general forces
Answer:
(a) Dyneric nature
Question 20.
Rishabh has joined as a Creative Head in an entertainment company. He always ensures that the work has been divided into small and manageable activities and also the activities of similar nature are grouped together. Identify the related step in organising process being mentioned in the above lines. [1]
(a) Identification and division of work
(b) Departmentalisation
(c) Assignment of duties
(d) Establishing reporting relationships
Answer:
(d) Establishing reporting relationships
Question 21.
Mr. Daksh Mudgal, who is a vegetarian, went to a newly opened snacks corner. He asked the waiter for a menu but the waiter informed him that the menu cards are in printing. Then Mr. Mudgal specifically asked for the options available for vegetarians.
The waiter informed him about the available options and Mr. Mudgal choose a particular sandwich. He again specifically asked the waiter if the sandwich was veg, to which the waiter replied affirmatively.
While eating, he found that the snack had non-vegetarian content. The packaging of the product did not display that the product had non-vegetarian content. Will Mr. Daksh Mudgal be able to claim compensation?
Which right of the consumer is violated here? [3]
Answer:
In the given case, there is a violation of the consumer right, ‘Right to Information’, According to the Amendment of the Regulations in Weight and Measurement Act, 2000, every product should bear a green dot for veg ingredients and brown for non-veg ingredients. This statusory provision was not fulfilled by the snack corner. Hence, Mr, Daksh Mudgal can claim compensation.
Question 22.
Mr. Mukesh is a sales representative in a popular DTH company. He is required to personally assist and persuade the prospective buyers to buy the product.
(i) Mr. Mukesh is involved in which element of the promotion mix?
(ii) Give any two features of that element. [3]
Answer:
(i) Mr. Mukesh is involved in personal selling.
(ii) The following are the two features of personal selling
- Face-to-face Dialogue In personal selling, a direct face-to-face dialogue takes place that involves an interactive relationship between the seller and the buyer.
- Development of Relationship Personal selling allows a salesperson to develop personal relationship with the prospective customers, which may facilitate in making sales.
Question 23.
Explain any three features of motivation. [3]
Or
Explain any three importance of directing in an organisation.
Answer:
The salient features of motivation are
(i) Motivation is a Psychological Phenomenon It is a personal and internal feeling like an urge, drives, desires and aspirations of human being, which influence human behaviour.
(ii) Motivation produces Goal-directed Behaviour Motivation inspires an employee to achieve goals. Thus, it encourages goal-directed behaviour.
(iii) Motivation is a Complex Process It is a complex process as all individuals are heterogeneous in their expectations, perceptions and reactions. Any type of motivation may not have uniform effect on all the members.
Or
Importance of directing is as follows:
- Provides Leadership Effective directing provides motivation and leadership to the employees, which helps them to identify their potentials and realise their latent capabilities, leading to growth.
- Introduces Changes Changes in an organisation are usually resisted by employees. Through effective direction, a manager can explain the purpose and benefit and offer incentives to adopt such changes to the employees.
- Provides Stability Effective directing helps to develop cooperation and commitment on part of subordinates. This provides stability to the organisation and helps to achieve balance among various groups, activities and departments.
Question 24.
Explain briefly any three functions performed by a supervisor: [3]
Or
Write the meaning of motivation along with its process. Also, name the person who gave need hicrarchy theory.
Answer:
Some basic functions performed by a supervisor are as follows
(i) Maintains Contact A supervisor maintains dayto-day contact and friendly relations with the workers. He guides and instructs them like a friend, philosopher and guide.
(ii) Maintains Group Unity A supervisor sorts out differences among workers in order to maintain group unity and harmony within organisation.
(ii) Ensures Performance A supervisor is responsible for the achievement of goals for which he motivates his employees and ensures performance in the organisation.
Or
Motivation means a process of stimulating people to take action to accomplish desired goals. It is a psychological phenomenon which cannot be imposed or forced upon people. It is an intrinsic force which automatically comes from inside the people and induces them to work. The process of motivation is as follows
- An unsatisfied need of an individual creates tension, which stimulates his drives.
- These drives generate a search behaviour to satisfy such need.
- When the need is satisfied, the individual is relieved from tension.
Question 25.
Mr Nitin Singhania’s father deals in the business of iron and steel. His father wishes that his son should join the family business but he wants to go to the USA for pursuing MBA. On the basis of emerging trends, what should he do? Give three reasons in support of your answer. [4]
Answer:
As per the emerging trends, Mr Sirghania should first earn his degree before joining and managing his family business with his father. Hence, he should go to USA for his MBA, because management is now developing as a protession because of the following reasons
- It has a well-defined body of knowledge consisting of principles and concepts.
- There are no restrictions on entry into the profession.
Even if Nitin wants to join his family business, the qualification would help him to manage his business efficiently and effectively. - The aim of all managers is to fulfill the service motive towards society.
Question 26.
Mr. Adarsh is a social activist. He was concerned with the pollution caused by the use of polythene bags. These bags are non-biodegradable and are a great threat for the water bodies and also adversely affect the quality of soil.
To ban the use of these bags, he filed a writ petition in the court. The court also identified the threats caused by these bags and passed an order banning the use of these bags as these bags are creating many environmental problems which affect the life of people in general and society in general is more concerned about quality of life.
The government decided to give subsidy to jute industry to promote this business and innovative techniques are being developed to manufacture jute bags at low rates with more innovation and better technology. GDP of country is expected to rise. Identify the different dimensions of business environment by quoting the lines from the above particulars. [4]
Answer:
(i) Legal Environment “The Court passed an order to ban polythene bags.”
(ii) Social Environment “Polythene bags are creating many environmental problems which affect the life of people in general and society in general is more concerned about quality of life.”
(iii) Political Environment “The Government decided to give subsidy to jute industry to promote this business.”
(iv) Technological Environment “Innovative techniques are being developed to manufacture jute bags at low rates.”
Question 27.
Discuss the importance of marketing in [4]
(i) growth of a firm
(ii) growth of an economy
Or
Explain the following functions of marketing
(i) Marketing planning
(ii) Product designing and development
Answer:
The process of marketing plays an important role in a firm and in the economy, as explained below
(i) Role in a Firm Marketing emphasises customer satisfaction as the key to survival and growth of an organisation. It helps to focus on the activities of the organisation on fulfilling the needs and wants of consumers, by designing the product according to them. This helps to develop brand loyalty and bring prosperity for the firm.
(ii) Role in the Economy Marketing acts as a catalyst in economic development of a country and helps in raising living standard of the people. Marketing inspires people to undertake various activities and to set-up enterprises for producing goods that are demanded in the market and ensure smooth flow of goods through efficient distribution system. It helps to establish linkages between the business, accelerating economic activity, leading to higher incomes, more consumption, increased savings and investment.
Or
(i) Marketing Planning Marketing develops appropriate marketing plans, so that the marketing objectives of the organisation can be achieved. e.g. A marketer of LED TVs, having 10% of the current market share, aims at enhancing his market share to 20% in the next two years. For this, they will have to develop a complete marketing plan covering various important aspects including the plan for increasing the level of production, promotion of products, etc.
(ii) Product Designing and Development Marketing activity also relates with designing and developing the product in such a way that it attracts the target customers. A good design can improve performance of a product and also give it a competitive advantage in the market. e.g If we plan to buy a car, we will not only consider its features like price, mileage, etc. but its design, shape, style also.
Question 28.
ITC Ltd is a multi-national company engaged in the business of FMCG goods. Mr. Anil is currently working in it as the head of its cosmetic products segment.
(i) What kind of organisational structure is being followed in ITC Ltd?
(ii) Mention any three advantages of such structure. [4]
Answer:
(i) ITC Ltd is divided into various segments based on the products in which it deals, therefore it can be said that divisional structure of management is being followed in ITC Ltd.
(ii) Following are the main advantages of divisional structure
- It helps managers to develop varied skills related to a product and facilitates managerial development.
- In divisional structure, foxation of accountability and responsibility is easy.
- With more initiative and flexbility, decisions are taken much faster in divisional structure.
Question 29.
Explain in brief the following methods of training [4]
(i) Apprenticeship programme
(ii) Induction training
Answer:
(i) Apprenticeship Programme it is a type of programme in which people are required to work under the supervision of an experienced guide for prescribed amount of time under his guidance e.g. Plumber, electricians, etc. During this period, stipend is paid to the trainee by the employer.
(ii) Induction Training When a newly hired employee reports for work, he should be made familiar with the work environment and the fellow workers, superiors, subordinates and to the organisation as a whole. The new employee should be oriented to the new organisation and its policies, rules and regulations. In short, induction is socialising the employees to contribute towards the growth of an organisation.
Question 30.
What is fixed capital? Enumerate any two factors determining the fixed capital requirements of an enterprise. [4]
Or
Explain the concept of capital structure and state how cost of debt affects it.
Answer:
The capital invested in fixed assets like land and buildings, plant and machinery, furniture and fixtures, etc. is known as fixed capital. Fixed capital is that portion of the total capital which is represented by fixed assets. Fixed capital represents the permanent or long-term capital of an enterprise. Therefore, it is raised through long-term sources, like shares, debentures, long-term loans and retained earnings.
Factors determining fixed capital requirements are as follows:
(i) Nature of Business The nature of business has a great influence upon the foxed capital requirements. e.g. A manufacturing enterprise requires a large amount of fixed capital as compared to a trading or commercial cancer.
(ii) Scale of Operations A large scale enterprise generally requires greater fixed capital than a small scale enterprise. e.g. A large scale enterprise like Tata iron and Steel Company requires huge imvestment in fixed assets in comparison with a toy manufacturing unit.
Or
Capital structure refers to the proportion of debt and equity used for financing the operations of business. It refers to the mix between owner’s fund (equity) and borrowed funds (debts).
It can be calculated as debt-equity ratio \(\left[\frac{\text { Debt }}{\text { Equity }}\right]\) or as the proportion of debt in total capital known as financial leverage \(\left[\frac{\text { Debt }}{\text { Debt }+ \text { Equity }}\right]\). Capital structure of a business affects both the profitability and the financial risk.
In case of higher cost of debt, company prefer more of equity but company can employ more debt in its capital structure if the interest rate on debt is less.
Question 31.
(i) Explain any two of the following functions of SEBI. [3+3=6]
(a) Regulatory functions
(b) Development functions
(c) Protective functions
Answer:
(i) Functions of SEBI are (any two)
(a) Regulatory Functions
- 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.
- Levy fee or other charges for carrying out the purposes of the Act.
- SEBI conducts inspections, enquiries and audits of stock exchanges and intermediaries.
- Perform and exercise such power under Securities Contracts (Regulation) Act, 1956 , as may be delegated by the Government of India.
(ii) Differentiate between ‘primary market’ and ‘secondary market’ on any three basis. [3+3-6]
Or
(i) Explain any two of the following functions of stock exchange.
(a) Provides liquidity and marketability to existing securities
(b) Pricing of securities
(c) Safety of transactions
Answer:
Development Functions
- Training of intermediaries of the securities market.
- Conducting research and publishing information useful to all market participants.
- Undertaking measures to develop the capital markets by adopting a flexible approach.
(iii) State any three benefits which are offered by depository system.
Answer:
Protective Functions
- Prohibition of fraudulent and unfair trade practices.
- Controlling insider trading and imposing penalties for such practices.
- Undertaking steps for investor protection.
- Promotion of fair practices and code of conduct in securities market.
Question 32.
Ela is running a successful business of providing high-end beauty services to the upper section of society. Her parlour boasts of innovative beauty products. She has an in-house training programme for new employees. Also, she believes in high standards of performance and shares her profits with her employees. She also gives them yearly bonus and salary hikes. But still she feels that her employees are not as motivated as she wants them to be.
(i) Are financial incentives the only way to motivate employees? What are nonmonetary incentives? [6]
(ii) State and explain any four non-monetary incentives which contribute to the performance of employees.
Answer:
(i) No. financial incentives are not the only way to motivate employees. Employees can also be motivated with the help of non-monetary incentives.
Non-monetary Incentives These are not directly related with money. These incentives help in the satisfaction of top hierarchy needs like respect, self-actualisation, etc.
(ii) The following are the four important types of non-monetary incentives
(a) Status It means the position or rank of a person in the organisation. It can be high or low. The rank of an employee is directly linked with his authority, responsibility and other facilities (e.g. A separate cabin, costly furniture, car, peon, PA, etc). Everybody has a wish for a higher status. Therefore, the employees can be motivated by raising their rank or position. The attainment of a higher status fulfils the psychological, social and esteem needs.
(b) Career Advancement Opportunity Every employee of the organisation wants to advance in his life. Promotion is an important example of advancement. When the avenues for promotion are available, the employees certainly get motivated.
(c) Employee Recognition Programmes Every employee wishes to be considered as an important part of the organisation. It means that he should have his own identity and he should appear to be distinctive. The manager should distribute work among the employees in such a manner which gives a feeling to every employee that his work is special and he alone is capable of doing it. ‘By getting such kind of importance, they are motivated and work harder in a more responsible manner.
(d) Employee Participation Employees get encouraged if they are allowed to participate in managerial works. Therefore, they offer their full cooperation in making successful the policies prepared with their help.
Question 33.
The first step in the process of planning is setting objectives. After that development of premises is done. Then various alternatives are identified. Explain the further process (steps) required to complete the process. [6]
Or
Distinguish between rule and method.
Answer:
The first step in the process of planning is setting objectives. After that development of premises is done. Then various alternatives are identified.
After this, the following steps are followed to complete the process of planning:
(i) Evaluating Alternative Courses After making the list of various alternates along with the assumptions supporting them, the manager starts evaluating each and every alternative and note down the positive and negative aspects of each alternative. After this, the manager starts eliminating the negative aspects and the one with maximum positive aspects is selected as the best alternative.
(ii) Selecting an Alternative This is the most crucial point of decision-making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences.
(iii) Implementing the Plan This is the step where other managerial functions also come into the picture. This step is concerned with putting the plan into action, i.e. doing what is required. e.g. If there is a plan to increase production, then more labour and machinery will be required. This step executes the main plan.
(iv) Follow up Action To see whether plans are being implemented and activities are performed according to schedule, is also a part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved properly.
Or
Basis | Rule | Method |
Meaning | Rules are specific statements that inform what is to be done. | It provides the prescribed ways or manner, in which a task has to be performed. |
Purpose | To maintain discipline and order. | To maximise efficiency and economy |
Source | Result of managerial thinking and values. | Result of research and experimentation |
Adherence | Calls for strict adherence and self-control. | Calls for standardisation and simpitication. |
Penalty | No tolerance limits, penalty is imposed for violation. | Tolerance limits laid down for deviations from the standard method. |
Question 34.
Read the statements given in point (i) and (ii), answer the questions that follows
(i) An organisation does not provide the right place for physical and human resources in an organisation. [3+3=6]
(a) Which principle is violated here?
(b) What are the consequences of it?
(ii) Ms. Sarah, a manager in charge of project assignments, consistently favours her close friends by assigning them high-profile projects, even when there are more qualified employees available.
(a) Which principle of management was violated by Ms. Sarah?
(b) What are the positive impacts of following the above identified principle? [3+3=6]
Answer:
(i) (a) ‘Principle of order’ is violated in this case. The principle states that there should be an orderly arrangement and specific place for everything (material order) and everyone (social order) in the organisation. Essentially, it means orderliness.
(b) Its consequences are (any two)
- Wastage of time and energy in search of men and material.
- Productivity will suffer, as resources would not be available at the right time.
- Obstacle in smooth working in the organisation.
(ii) (a) Principle of management violated by Ms. Sarah is ‘subordination of individual interest to general interest’.
According to this principle, in all situations, company’s interest or objectives should supersede the interest of anyone individual.
(b) Following can be the positive impacts of the above identified principle
- It brings a coordination between organisational and personal goals, as employees are more focused towards group goals, in order to get personal benefits.
- It facilitates achievement of organisational goals.