Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 2 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 2 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.
In existing staff is used to fill up the vacant job in the organisation…………… [1]
(a) promotion
(b) transfer
(c) Both (a) and (b)
(d) None of the above
Answer:
(c) Both (a) and (b)
Question 2.
A salesman has an order of 2,000 packets of chocolate immediately. The marketing manager is there but he cannot be approached because the salesman can consult the sales manager only. Which demerit of formal organisation is highlighted here? [1]
(a) Instability
(b) Difficult to understand human relationships
(c) Procedural delays
(d) Lack of initiatives
Answer:
(c) Procedural delays
Question 3.
……………….. refers to process by which skills and abilities of employees to perform specific jobs are increased. [1]
(a) Training
(b) Selection
(c) Development
(d) Both (a) and (C)
Answer:
(a) Training
Question 4.
Which of the following environment belongs to high inflation rate? [1]
(a) Social environment
(b) Economic environment
(c) Technological environment
(d) Political environment
Answer:
(b) Economic environment
Question 5.
In which case, a company should go to opt [1]
for equity rather than debt?
(a) If the stock market is rising
(b) if cash flow position is stronger
(c) If the firm has higher operating cost
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)
Question 6.
Assertion (A) Recruitment may be defined as the process of searching for prospective employees and stimulating them to apply for jobs in the organisation. [1]
Reason (R) Objective of recruitment is to create a pool of prospective candidates, for best selection of candidate.
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 7.
‘Twinkle Stars’ is a well-known resort for organising parties, especially for children. However, in past 6 months its popularity has reduced considerably as a new resort with better ambience and facilities has opened within its vicinity. Name the related feature of business environment which has influenced the business of ‘Twinkle Stars’ adversely. [1]
(a) Totality of external forces
(b) Dynamic nature
(c) Interrelatedness
(d) Uncertainty
Answer:
(a) Totality of external forces
Question 8.
Match the following: [1]
Column I | Column II |
A. Overseeing the activities of subordinates | (i) Motivation |
B. Influencing the behaviour of subordinates | (ii) Leadership |
C. Making subordinates to act in a desired manner | (iii) Supervision |
Codes
A — B — C
(a) (i) — (ii) — (iii)
(b) (ii) — (iii) — (i)
(c) (iii) — (ii)– (i)
(d) (i) — (iii) — (ii)
Answer:
(c) (iii) — (ii)– (i)
Question 9.
Aparna’s grandmother gave her shares worth ₹ 35 crore in her name and told her that these were gifted to her by Aparna’s late grandfather. When Aparna opened the bank locker to get the share certificates. she found many crumpled share certificates inside. To overcome this problem, financial market has adopted a new concept called [1]
(a) demutualisation
(b) dematerialisation
(c) Both (a) and (b)
(d) None of the
Answer:
(b) dematerialisation
Question 10.
Statement I Method study means finding the one best way of doing a task. [1]
Statement II Fatigue study means eliminating the unnecessary movements.
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) Fatigue study seeks to find out the amount and frequency of rest intervals to be given to workers in completing a task.
Question 11.
Identify the statement that defines the techniques of management. [1]
(a) It is a set of guidelines to take decisions and actions
(b) It is a procedure which involves a series of steps to be taken
(c) They are general rules for behaviour of individuals
(d) None of the above
Answer:
(b) It is a procedure which involves a series of steps to be taken
Question 12.
Which statement is not correct with respect to organisation structure’? [1]
(a) It ensures coordination among human and physical resources
(b) It ensures smooth flow of communication
(c) It specifies relationship between people, work and resources
(d) It establishes standards for controlling
Answer:
(d) it establishes standards for controlling
Question 13.
Which concept of control management is based on the belief that if you try to control everything you may end up controlling nothing? [1]
(a) Critical point control
(b) Key result areas
(c) Management by exception
(d) Deviations
Answer:
(c) Management by exception
Question 14.
Arrange the correct sequence of the following functions of a manager in an organisation. [1]
(i) Motivation
(ii) Controlling
(iii) Organising
(iv) Planning
Codes
(a) (iv), (iii), (ii), (i)
(b) (iv), (iii), (i), (ii)
(c) (iii), (iv), (ii), (i)
(d) (iii), (iv), (i), (ii)
Answer:
(b) (iv), (iii), (i), (ii)
Question 15.
Ecozone Ltd. business is running successfully since last 2 years in Delhi. The management has decided to focus on other states as well to sell its products. Identify the organisational objective it is trying to achieve. [1]
(a) Growth objective
(b) Individual objective
(c) Social objective
(d) None of the above
Answer:
(a) Growth objective
Question 16.
Statement I Continuity of planning is related with the planning cycle. [1]
Statement II A plan is framed, implemented and is followed by another plan and so on.
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 17.
According to this principle of scientific management, “scientific management has for its foundation the firm conviction that true interest of the management and workers are one and the same; the prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and viceversa.” Identify the principle. [1]
(a) Science, not rule of thumb
(b) Co-operation, not individualism
(c) Harmony, not discord
(d) All of the above
Answer:
(c) Harmony, not discord
Question 18.
A scientist working in a factory for the betterment of the operational aspect studied all the steps involved in the manufacturing of the product. He very attentively noticed all sorts of movements to arrive at a simpler way of doing all the activities possible. With his hardwork, he was able to bring down the number of activities for the manufacturing of the final product from 34 to 22 . This work was able to bring down the labour charges and decrease the total time of production. Thus, he gave the organisation an added advantage. Which type of scientific technique is discussed here? [1]
(a) Motion study
(b) Functional foremanship
(c) Method study
(d) Fatigue study
Answer:
(c) Method study
Question 19.
Identify the process illustrated by the picture above in which the superior Mr. Peter’ is providing a part of his authority to James for making decisions. [1]
(a) Authority
(b) Delegation
(c) Responsibility
(d) None of these
Answer:
(b) Delegation
Question 20.
After completing his MBA education, Mr. Rohit took over the business of his father. Now he started making a practical use of his theoretical knowledge of management. He liked it very much. But right from the very beginning, he was faced with one problem. For the last three years continubusly, he had been observing that whatever the sales target he would fix, he never succeeded to achieve it fully.
He studied this problem thoroughly and found that it so happened because in the first year (of his taking over the business) the government at the centre changed; in the second year, there was a change in fashion and in the third year, several competing firms entered the market. Now he realised that planning does not foresee everything and that several problems come in the way of effective planning.
Identify the ‘limitation of planning’ in the event discussed above. [1]
(a) Planning leads to rigidity
(b) Planning may not work in a dynamic environment
(c) Planning reduces creativity
(d) Planning involves huge costs
Answer:
(b) Planning may not work in a dynamic environment
Question 21.
Mrs. Hansaben Shah had bought a silk saree from Alka Saree Center for ₹ 7,000. She wore the saree on a couple of occasions but even before a wash, it started tearing on its own. She complained to the dealer who said good once sold could not be taken back nor refund was possible. What right can be exercised by the buyer in this case? [3]
Answer:
The buyer can exercise right to seek redressal. As per the Consumer Protection Act, the consumer has a right to get relief in case the product falls short of his/her expectations.
Several reliefs are available like removal of delect in the product, compensation paid for ary loss, etc. So, she can exercise this right and can raise her voice against the dealer.
Question 22.
Explain how controlling helps in
(i) accomplishing organisational goals
(ii) judging accuracy of standards [3]
Or
What else is necessary to inspire employees if “money is not the only motivator”? Describe with two points.
Answer:
(i) Accomplishing Organisational Goals The controlling function measures the accomplishment against the standards and corrects deviations. This helps in ensuring that organisation is moving on the right track to achieve organisational goals.
(ii) Judging Accuracy of Standards A sound controlling system helps the management to verify whether the standards set are accurate and relevant or not. It keeps a careful check on the changes, which are taking place in the organisation.
Or
“Money is not the only motivator”. This statement is true in this context that an individual has certain psychological, emotional and social needs also. Money cannot satisfy them.
In order to satisfy these needs, following nonfinancial incentives are required
(i) Promotion If an individual gets promotion in the organisation, it satisfies him psychologically as he gets as feeling that his hardwork is recognised.
(ii) Job Security Every individual needs stability in terms of future income, job, etc. If their job is secure, they do not feel worried and work with greater zeal.
Question 23.
In 2019, Himang left his luxurious life in Bengaluru, where he worked as a management head for Xiom Ltd. He shifted to Palwal, Haryana to fulfil his father’s dream of converting their 35-acre ancestral land into a fertile farm.
For this, he set out specific goals along with the activities to be performed to achieve the goals.
Every activity was a challenge as he was clueless about farming. So, he decided to learn every activity from filling the land to sowing the seeds. Further, he had a thought to aid farmers by launching his own company ‘Creative Farming Pvt. Ltd.’ The above case highlights the features of planning function of management. Identify and explain any two such features. [3]
Answer:
Following are the features highlighted in the above said case
(i) Planning Focuses on Achieving Objectives Planning involves the determination of activities required to be undertaken to achieve objectives of organisation. Thus, it can be said that it focuses on achieving objectives.
(ii) Planning is a Continuous Process Planning is a never ending process. Plans are made for a specific time period. At the end of such time period, new plans have to be drawn. When plans are objective based and goals are achieved, new plans are drawn with new objectives. In the above case study. Himang is following a plan until he has created his own company.
Question 24.
Explain any three determinants of working capital requirements.
Or
Explain the working of a demat account.
Answer:
Following are the determinants of working capital requirements
(i) Nature of Business A trading organisation and a service industry firm usually needs a smaller amount of working capital as compared to a manufacturing organisation.
(ii) 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.
(iii) Credit Availed Just as a firm allows credit to its customers, it also may get credit from its suppliers. To the extent, it avails the credit on purchase, the working capital requirements are reduced.
Or
The working of a demat account is stated in the points below
- The Depository Participant (DP) either a bank, broker or financial services company may be identified.
- An account opening form is filled giving details of PAN Card, photograph and power of attorney.
- The physical certificate is to be given to the DP along with a dematerialisation request form.
Question 25.
Why does a financial manager consider wealth maximisation as the foremost objective?
Answer:
The main and foremost objective of financial management is to maximise the wealth of equity shareholders. The financial manager of a company takes this decision because the shareholders are the owners of the company. Financial decisions taken will determine the manner in which the funds are invested.
The return earned on investment will determine the value and price of the shares. The market price of the shares will increase if the benefit from the decision has exceeded its cost. Secondly, the objective of increase in value of equity shares automatically fulfils many other objectives like, increasing the profitability, maintaining liquidity, effective utilisation of funds and growth of the company.
Question 26.
Explain the various networks of formal communication.
Or
Discuss any two financial incentives and two non-financial incentives.
Answer:
The pattern through which communication flows within the organisation is indicated by communication network.
Some popular formal communication networks are as follows
(i) Single Chain In this network, communication flows from every superior to his subordinates in a single chain.
As shown in the diagram, communication flows from A to B, from B to C and so on.
(ii) 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. As shown in the diagram, B, C, D and E can only communicate through A.
(iii) Circular Network In this network, communication moves in a circle, from one person to another. But, communication is slow in this network. Each person can communicate with two adjoining colleagues.
Here, A can communicate with B and E, and likewise others communicate in the circle.
(iv) Free Flow In this network, each person can communicate with others freely and therefore, communication is fast in this network. In the diagram, A can communicate with B, C, D and E, B can communicate with A, E, C, D and so on
Or
Financial incentives used to motivate employees are
(i) Pay and Allowances For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance, house rent allowance, etc. Some organisations provide pay hikes and increments for better performance.
(ii) 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.
Non-financial incentives used to motivate employees are (any two)
(i) Status in business terms, status means ranking of positions in the organisation. The authonty, responsibility, rewards, recognition, perquisites and prestige of job indicate the status given to a person holding a managerial position. It satisties psychological and social needs of an individual.
(ii) Organisational Climate Better conditions in an organisation like individual autonomy, reward orientation, consideration to employees, risk taking, etc. provide an organisation to be different from the other organisations. Positive measures taken in these aspects helps to develop better organisational climate.
Question 27.
In each of the following cases, identify which principle of Fayol is being yiolated? Explain them.
(i) When the manager contracts with his cousin for supply of material, knowing that such materials are defective.
(ii) When chalks are kept in library and books in office.
(iii) A worker receiving orders from two bosses.
(iv) When no department has a separate plan of action.
Answer:
(i) Subordination of Individual Interest to General Interest According to this principle, in all situations, company’s interest or objectives should supersede the interest of any one individual.
(ii) Order According to this principle, there should be a place tor everything and everyone in an organisation and that thing or person should be found at its alloted place.
(iii) Unity of Command According to this principle, one subordinate should receive orders from one superior only at a given point of time. The principle is necessary to avoid contusion and contlict.
(iv) Unity of Direction According to this principle, there should be one head and one plan for a group of activities having the same objective. It means that the efforts of members of the organisation should be directed towards the achievement of a common goal. Common students often get confused between Mistake unity of command and unity of direction because of their similar nature. They should be careful while identifying these principles.
Question 28.
‘Switch Fibres Ltd’ is an electronic goods manufacturing company situated in Nandan Nagar, Gujarat. It is earning a very low revenue in comparison to a competing electronic goods manufacturing company, ‘Switchgears Ltd.’ situated in Maharashtra. Both Switch Fibre’s and Switchgear’s operations are affected directly by the investors, customers, competitors and suppliers, which are unique to their respective locations, In addition to this, individuals and firms of this field are affected indirectly by factors like the money supply, composition of families, etc.
(i) Identify the concept discussed in the above paragraph.
(ii) Also, state any three points of importance of the concept identified above.
Answer:
(i) The concept discussed here is ‘business environment’.
(ii) Importance of business environment are as follows
(a) It enables the Firm to Identify Opportunities and get the First Mover Advantage Opportunities are the positive trends that help tirms to grow. A good knowledge of business environment helps a manager to identify such opportunities earlier to take its benelit, rather than losing it to other competing enterprises.
(b) It helps the Firm to Identify Threats and Early Warning Signals Threats refer to the negative trends, which will finder the performance of the enterprise. The businessmen, who are able to scan and understand the business environment on time get a warning signal to deal with such negative changes.
(c) It helps in Tapping Useful Resources Environment is a source of various resources for business like finance, machinery, raw materials, etc. Contrary to this, business enterprise supplies goods and services to the society in the form of taxes, products, return on investment, etc. A good understanding of environment helps the tirm to convert such resources into output required by the environment and society.
Question 29.
Explain briefly the following internal sources of recruitment
(i) Transfer
(ii) Promotion
Or
Enumerate the following limitations of controlling.
(i) Difficulty in setting quantitative standards
(ii) Resistance from employees
Answer:
(i) Transfer it refers to shifting of an employee from one job to another or from one department to another department without any change in the responsibilities or position of an employee.
It is an important source of filling the vacancy in an organisation by shifting an employee from another department, It is also referred to as horizontal movement of employees.
(ii) Promotion It refers to shifting of employees from one job position to the other with higher level of authority. Here, employees move in upward direction within an organisational structure. There is also an increase in compensation or salary e.g Promotion of a clerk to the post of an accountant.
Or
(i) Difficulty in Setting Quantitative Standards Control system losses its effectiveness when standard cannot be defined in quantitative terms. This makes it difficult to compare and measure the performance with the standards. This may lead to create problems in human behaviour. job satisfaction and employee morale.
(ii) Resistance from Employees Employees often resist control as they consider it as restriction or boundation on their freedom. e.g. Employees might resist working under close supervision of CCTV’s and cameras.
Question 30.
Rakesh is working under his superior Neeraj. He always communicate useful ideas and suggestions to his superior regarding the reduction of cost, improvement in the product etc. Neeraj implements his suggestions and has always found favourable results but he never appreciates Rakesh for his suggestions. Now, Rakesh decides not to communicate any suggestion or idea to Neeraj. Identify the factor which acts as a communication barrier. Explain three other factors of the same group of communication barriers. (4)
Answer:
Lack of proper incentives which is a personal barrier of communication is being discussed here.
According to it, effective communication will not take place in an organisation which does not provide any motivation or incentive to its employees to communicate.
Some of the personal barriers of superiors and subordinates are:
- Fear of Challenge to Authority Sometimes, superiors withhold or suppress information in case they have fear of losing their authority ower the subordinates.
- Lack of Confidence of Superior is his Subordinates Effective communication suffers when a superior has no faith in his subordinates and is not willing to share important information with them.
- Unwillingness to Communicate The personal characteristics of an individual also influence the free flow of communication. A subordinate may not be willing to communicate with his superior if he perceives that it may adversely affect his interests.
Question 31.
Discuss any four points highlighting the importance of delegation for an organisation. Explain the following steps in the process of organising. (6)
(i) Identification and division of work
(ii) Departmentalisation
(iii) Assignment of duties
Answer:
Delegation of authority is important for an organisation because of the reasons discussed below
(i) Motivation of Employees Delegation provides a feeling of status and recognition to subordinates, as it is not only a process of sharing workload. but also involves trust of the superior on his subordinate. Entrustment of responsibility builds up his esteem and encourages him to perform better.
(ii) Facilitation of Growth Delegation helps in the expansion of an organisation by providing a ready workforce to take up leading positions in new ventures.
Trained and experienced employees are able to play significant role in launching new projects of the organisation.
(iii) Basis of Management Hierarchy Delegation of authority establishes superior-subordinate relationships, which are the basis of hierarchy of management. This helps employees to know ‘who has to report to whom’. Thus, duties and powers of each individual becomes clear.
(iv) Better Coordination The elements of delegation namely authority, responsibility and accountability helps to define the powers, duties and responsibilities related to various positions in an organisation.
This helps to avoid overlapping and duplication of work and facilitates coordination, as it gives a cleaf picture of the work being done at various levels.
Or
(i) Identification and Division of Work The first step in the process of organising involves identilying and dividing the work that has to be done in accordance with previously determined plans. Work is divided into manageable tasks, so that duplication can be avoided and workload can be shared among employees.
(ii) Departmentalisation Once work has been divided into small and manageable activities, then those activities which are similar in nature, are grouped together. This process is called departmentalisation. Departments can be created on the basis of products, functions and territory.
(iii) Assignment of Duties Once the departments are created, each department is placed under the charge of an individual, called department head. Then, each job is allocated to an individual, according to his knowledge and skill. There should be a proper match between the nature of jobs and the ability of an individual.
Question 32.
(i) Explain any two factors affecting long-term investment decision from the following (3+3=6)
(a) Cash flow of the project
(b) The rate of return
(c) Investment criteria involved
(ii) Distinguish between fixed capital and working capital on any three basis.
Or
(i) Explain any two of the following functions performed by stock exchange.
(a) Pricing of securities
(b) Safety of transactions
(c) Contributes to economic growth
(ii) Distinguish between primary and secondary market on any three basis.
Answer:
(i) Factors affecting long-term investment decision are (any two)
(a) Cash Flows of the Project When a business invests huge amount of money in a certain project, then it expects to generate some cash flows over a period. These cash flows are in the form of a series of cash receipts and payments over the life of an investment. These cash flows should be carefully analysed before selecting the desired project.
(b) The Rate of Return Each project is selected after comparing expected returns of different projects and the degree of risk involved in them.
(c) Investment Criteria involved The decision to invest in a particular project involves a number of calculations regarding the amount of investment, interest rate, cash flows and rate of return. There are number of capital budgeting techniques which are applied to evaluate investment proposals before selecting a particular project.
(ii)
Basis | Fixed Capital | Working Capital |
Time Period | Required for long-term. | Required for short-term. |
Purpose | Money is needed to buy fixed assets. | Money is needed to buy current assets. |
Nature | Remains sunk in business. | Revolves in business. |
Or
(i) Functions of stock exchange (any two)
(a) Pricing of Securities It helps in determining the prices of various securities that reflect their real worth, through the interplay of demand and supply. The stock market index like SENSEX, reflects the market direction and indicate day-to-day fluctuations in share prices.
(b) 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.
(c) 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.
Basis | Primary Market | Secondary Market |
Buying and Selling | Only buying of securities take place. | Both buying and selling of existing securities take place. |
Pricing | Prices of securities are decided by the company. | Prices are decided by the demand and supply of securities. |
Location | There in no fixed geographical location. | It is located at specified places. |
Question 33.
Ayesha purchased 1 litre carton milk from 24 x 7 convenience store. After drinking the milk, she felt irritation, rashes and tiny bumps all over her body. (6)
Her sister, Sarah saw the carton milk and realised that product has already expired. Sarah rushed to the store to inquire about the same. Salesman informed her to contact to the customer care center for the reason that they supplied them milk on daily basis.
Sarah connected with their customer care cell who refused to take her complaint. Now, Sarah wants to file complaint in district commission and wants to seek compensation for the treatment of her sister.
(i) Identify the responsibility neglected by Ayesha and the rights violated by the company.
(ii) Can Sarah file complaint in District Commission on behalf of her sister? Also, state who can file a complaint?
Answer:
(i) The responsibility neglected by Ayesha is that she didn’t check the expiry date of the product. Following rights are violated by the company
- Right to safety by supplying expired milk instead of safe product.
- Right to be heard is also not followed by the company as they refused to entertain her complaint.
(ii) No, Sarah cannot file complaint on behalf of her sister, Ayesha. As per Consumer Protection Act, 2019, following can file a complaint
- Any consumer.
- Any registered consumer association.
- Central or state government.
- A legal heir or representative of a deceased consumer.
Question 34.
Read the statements given in point (i) and (ii), answer the questions that follows (3+3=6)
(i) Neha, a school bag manufacturer, decided to improve the product for profit maximisation and thus, added a water bottle holder to the existing design.
(a) Identify the marketing management philosophy adopted by Neha.
(b) Explain this philosophy on the basis of main focus and means and ends.
(ii) Manvi, a shoe manufacturer for school students, decided to maximise her profit by producing and distributing at large scale and thereby, reducing the average cost of production.
(a) Identify the marketing management philosophy adopted by Manvi.
(b) Explain this philosophy on the basis of main focus and means and ends.
Answer:
(i) (a) Neha adopted the product concept. With the increase in the supply of goods, customers started looking for products which are of high quality.
(b) The main focus of the product concept is on quality, performance and teatures of product. Product improvement is the means and profit maximisation through product quality is the end.
(ii) (a) Manwi adopted the production concept. The focus of business activities was on production of goods as the demand for goods started picking up as the supply was low. Thus, it was believed that profit could be maximised by producing at large scale. thereby, reducing the average cost of production.
(b) The main locus of production concept is on quantity of product.
Availability and affordability of product is the means and profit through volume of production is the end.