Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 6 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 6 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.
Shareholders prefer higher dividend, as dividends are in the hands of – shareholders. [1]
(a) taxable at high rates
(b) taxable at nominal rates
(c) tax free
(d) None of the above
Answer:
(c) tax free
Question 2.
How many principles were given by Henry Fayol? [1]
(a) 12
(b) 13
(c) 14
(d) 15
Answer:
(c) 14
Question 3.
Lin Dang, HR Manager of Xio Ltd. expects his subordinates to work for happiness and pleasure of being in organisation. Which principle of management is being overlooked? [1]
(a) Equity
(b) Espirit de corps
(c) Remuneration of employees
(d) Unity of direction
Answer:
(c) Remuneration of employees
Question 4.
The element of delegation which relates to the obligation of a subordinate to properly perform the assigned duty is known as ……… [1]
(a) authority
(b) accountability
(c) responsibility
(d) centralisation
Answer:
(c) responsibility
Question 5.
In Mumbai, Salman found impurities in a bottle of soft drink which he had bought. He approached the redressal forum. Which right is exercised by him? [1]
(a) Right to be heard
(b) Right to be informed
(c) Right to seek redressal
(d) Right to consumer education
Answer:
(a) Right to be heard
Question 6.
Which of the following is not a part of marketing mix? [1]
(a) Price mix
(b) Promotion mix
(c) Place mix
(d) Labelling and branding
Answer:
(d) Labelling and branding
Question 7.
Assertion (A) Planning is futuristic. Reason (R) Panning is concerned with the future which is certain and does not require forecast. [1]
Alternatives
(a) Both Assertion (A) and Reason (R) are correct
(b) Assertion (A) is correct, but Reason (R) is incorrect
(c) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(d) Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A)
Answer:
(b) Planning is concerned with the future which is uncertain and requires forecast.
Question 8.
The manager of 180 Ltd. calculated total sales and revenue earned by each sales executive to conduct appraisals at the end of the year. Which step of controlling is highlighted here? [1]
(a) Setting performance standards
(b) Measurement of actual performance
(c) Comparing actual performance with standards
(d) Analysing deviations
Answer:
(b) Measurement of actual performance
Question 9.
Statement I Management principles are derived after observation and experimentation when certain conditions are present.
Statement II Principles of management are behavioural in nature and these can be applied to human beings only. [1]
Àlternatives
(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:
(c) Both the statements are true
Question 10.
Which of the following statements is not true with reference to planning? [1]
(a) Planning is a pre-requisite for controlling
(b) Planning does not leads to rigidity
(c) Planning enables a manager to look ahead and anticipate changes
(d) Planning facilitates co-ordination among departments and individuals in the organisation
Answer:
(b) Planning leads to rigidity
Question 11.
In Tysfo Ltd., the purchase department purchased 20 tonnes of raw material for the production department.
However, the production department required only 15 tonnes. Due to this reason, goods were produced beyond required level and were not accepted by sales department. As a result, many goods remained unsold. Identify the aspect of management lacking in the given case. [1]
(a) Planning
(b) Coordination
(c) Directing
(d) None of these
Answer:
(b) Coordination
Question 12.
Match the following on the basis of functions of marketing. [1]
Column I | Column II |
A. Gathering market information | (i) Conduct SWOT analysis |
B. Promotion | (ii) To persuade customers |
C. Product designing | (iii) Competitive advantage |
Codes:
A — B — C
(i) (i) — (ii) — (iii)
(ii) (ii) — (iii) — (i)
(iii) (iii) — (ii) –(i)
(iv) (i) –(iii) –(ii)
Answer:
(a) (i) (ii) (iii)
Question 13.
Statement I Advertising is the impersonal communication in case of promotion.
Statement II Production cost is the only important component while fixing up the price. [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:
(a) There are other important components as well like the utility and demand, extent of competition in market, government and legal regulation etc. which are considered while fixing up the price.
Question 14.
Arrange the correct sequence of staffing process [1]
(i) Manpower planning
(ii) Placement
(iii) Recruitment
(iv) Training
(v) Selection
Codes
(a) (ii), (iii), (iv), (v) (i)
(b) (i), (iii), (v), (ii), (iv)
(c) (i), (v), (iii), (ii), (iv)
(d) (i), (iii), (ii), (v), (iv)
Answer:
(b) (i), (iii), (v), (ii), (iv)
Question 15.
Ananya’s grandfather while telling her about the past of Indian economy told her that even after opening up of our economy in 1991, foreign companies found it very difficult to cut through the bureaucratic red tape to get permits for doing business in India.
Sometimes it took months to process even their application in process. As a result, these companies were discouraged from investing in India but the situation has improved overtime. Identify the element of business environment which was the cause for discouragement to foreign companies based on above case. [1]
(a) Economical
(b) Social
(c) Political
(d) Legal
Answer:
(c) Political
Question 16.
Which of the following cannot be delegated? [1]
(a) Responsibility and accountability
(b) Authority and responsibility
(c) Accountability and responsibility
(d) All of the above
Answer:
(a) Responsibility and accountability
Question 17.
Mr. Reeshabh Bhandari is the chief manager in “Bhandari Pustak ‘Parkashans’. [1]
He is fond of continuing to present innovative ideas while planning for his business. His ideas are usually very significant. It has been observed several times that these ideas take the form of concrete plans. This is the reason that Mr. Bhandari’s contribution to the growth and prosperity of the company continues to be quite great.
Identify the ‘importance of planning’ described above.
(a) Planning provides direction
(b) Planning reduces the risk of uncertainty
(c) Planning reduces overlapping and wasteful activities
(d) Planning promotes innovative ideas
Answer:
(d) Planning promotes innovative ideas
Question 18.
Siraj is the founder and manager of ‘Beach house’ restaurant at Connaught Place, Delhi. The restaurant has multiple cuisines and is famous for exquisite Chinese cuisine. Siraj, who himself is a good chef, oversees the method of food preparation.
He issues the instruction to them in a very lucid and specific manner thereby ensuring smooth functioning of the restaurant. He keeps all his team members satisfied and motivated by constantly guiding them. He politely tells them the improvements in taste and presentation and also encourages them to innovate and be more creative in their work.
During weekends, offer times or other holidays, he also hires extra workers by placing a notice on the notice-board of the restaurant specifying the details of the jobs available,Which element of directing is highlighted by the line. Siraj, who himself is a good chef, oversees the method of Food preparation? (1)
(a) Motivation
(b) Leadership
(c) Supervision
(d) Communication
Answer:
(c) Supervision
Question 19.
Analyse the picture in which the incharge of all the departments are in chaos and unable to work properly. Which function of management is missing here? [1]
(a) Planning
(b) Controlling
(c) Directing
(d) Coordination
Answer:
(d) Coordination
Question 20.
Jatin Chopra, 29, a fitness trainer, was talking to his friend Ashish Jain about a popular consumer durable brand.
He said, “Brand X shows lot of advertisements for their products on television. However, when you go to the retail outlets, you can’t find these products there, on enquiry, customers gef to know that products are out of stock. It is not right on company’s part to advertise if they cannot meet the demand.”
Ashish commented, “I went to their store once to purchase a hair oil, the shopkeepers forced me to buy a particular brand of hair oil out of various available brands, irrespective of my willingness. In another case, when my friend purchased a box of cheese from Brand X, she found a piece of stone in the cheese. She reported this to company and later in the week, company apologised and offered her a replacement.”
Which consumer right is highlighted in the lines, “In another case, when my friend purchased a box of cheese from Brand X, she found a piece of stone in the cheese. She reported this to company and later in the week, company apologised and offered her a replacement.”?
(a) Right to be heard
(b) Right to seek redressal
(c) Right to consumer education
(d) Right to safety
Answer:
(b) Right to seek redressal
Question 21.
XYZ Electronics, a smartphone manufacturer, introduced a new model with enhanced processing power, improved camera features and longer battery life to meet the growing demands and preferences of tech-savy consumers.
(i) Identify the marketing management philosophy adopted by XYZ Electronics.
(ii) Explain this philosophy on the basis of (a) Main focus (b) Means and ends [3]
Answer:
(i) XYZ Electronics adopted the product concept. With the increase in the supply of goods, customers started looking for products which are of high quality. Thus, the firm in this concept emphasises on quality or adds some extra. features in the product.
(ii)
- Main focus of the product concept is on quality, performance and features of product.
- Product improvement is the means and profit maximisation through product quality is the end.
Question 22.
As per the concept of marketing, mention any three items that can be marketed. [3]
Or
Sakshi purchased a bottle of soy sauce from the local grocery shop. The information provided on the bottle was not clear. She fell sick on consuming it.
She filed a case in the District Commission under Consumer Protection Act and got the relief.
(i) Identify the important aspect neglected by the marketer in the above case.
(ii) Explain briefly any two functions of the aspect identified in (i) above.
Answer:
In the context of marketing, anything that has a value to the buyer, can be a product’ Thus, apart from physical objects, anything of value to public can be marketed.
- Ideas Helpage India, blood donation, family planning, etc.
- Persons Actors. politicians, religious preachers, etc.
- Experiences Lunch with a celebrity, balloon riding experience, mountaineering, etc.
Or
(i) Labelling.
(ii) Functions of labelling are
(a) Describe the Product and Specify its Contents It specifies the contents and other features of the product. It enables the manufacturer to give clear instructions to the consumer about the proper use of his product. It helps to describe the product, its usage, cautions in use, contents, manufacturing and expiry dates, price. quantity, etc.
(b) Identification of the Product or Brand it gives a definite identity to the product or brand and therefore, the identification of a product becomes easy. e.g. The name Pears printed on toilet soaps helps us to know which soap out of several soaps is Pears.
Question 23.
What do you understand by organisation structure? Enumerate the need for creating organisation structure.
Or
Distinguish between ‘method’ and ‘budget’ as types of plans. [3]
Answer:
An organisation structure is the outcome of the organising process. It can be defined as the framework within which managerial and operating tasks are performed. It specifies the relationship between people, work and resources.
The need for creating an organisation structure arises when the business grows beyond a certain minimum limit, as it becomes difficult to coordinate the functions and activities of different members. So, in order to function smoothly and face environmental changes, it becomes necessary for an organisation to pay attention to its structure.
Or
Difference between method and budget
Basis | Method | Budget |
Meaning | It provides the prescribed ways or manner, in which a task is performed. | It is a statement of expected results, expressed in numerical terms. |
Purpose | They provide standardised ways of doing routine jobs. | They provide a basis for control of activities. |
Kind | They come under standing plans. | They come under single-use plans. |
Question 24.
How can the internal sources of recruitment be better than the external sources? Give three reason to support your answer. [3]
Answer:
The internal sources of recruitment can be better than the external sources due to the following reasons
- Internal recruitment creates a sense of security among the staff. Thus, it is largely supported by trade unions.
- Internal recruitment acts as a source of motivation for employees as they tend to work hard in the desire for promotions.
- Internal recruitment is less time consuming and less expensive because the organisation and the employees are already known to each other.
Question 25.
Dreamz House is a company engaged in developing and promoting housing projects. The total capital of the company is ₹ 75,00,000, out of which ₹ 30,00,000 has been raised from loans. Compute the following [4]
(i) The debt-equity ratio of the firm.
(ii) The percentage of debt in the total capital of the firm.
Or
What are the main objectives of financial management? Briefly explain.
Answer:
Total Capital of the Firm = ₹ 75,00,000
Debt = ₹ 30,00,000
∴ Equity = ₹ 45,00,000 (75,00,000 – 30,00,000)
(i) Total Capital of the Firm = ₹ 75,00,000
Debt = ₹ 30,00,000
Equity = ₹ 45,00,000 (75,00,000 -30,00,000)
Debt-equity Ratio \(=\frac{30,00,000}{45,00,000}=2: 3\)
(ii) Percentage of Debt in the Total Capital
\(=\frac{30,00,000}{75,00,000} \times 100=40 \%\)
Or
The main objectives of financial management are
- Effective utilisation of funds, by ensuring that benefits of an investment exceeds its cost.
- To raise funds at minimum cost and minimum risk, through effective financing decision.
- To ensure safety of funds by creating reserves, reinvesting profits etc.
- To maintain financial liquidity and profitability through working capital decision.
Question 26.
Explain the following rights of a consumer. [4]
(i) Right to be assured
(ii) Right to seek redressal
Answer:
(i) Right to be Assured Consumers have the freedom to choose products of their choice. This implies that the marketers should offer a wide variety of products in terms of quality, brand size, etc. so that the consumer can make a wise choice by comparing different products available at competitive prices.
(ii) Right to Seek Redressal This right assures justice to consumers against exploitation and includes compensation for any loss or injury suffered by the consumers, replacement of goods or repair of defects in the goods in order to provide satisfaction to consumers. Thus, the consumer has a right to get relief in case the product falls short of his expectations.
Question 27.
In the rainy season, the level of impurities in the water bodies tend to rise, leading to an increase in the number of cases of jaundice and hepatitis. Keeping this in mind, the court passed an order that all schools must have water purifiers for the school children, keeping in view the below stated reasons [4]
(i) Society in general is more concerned about the quality of life.
(ii) Innovative techniques are being developed to manufacture water purifier at competitive rates.
(iii) Incomes are rising and children at home are also drinking purified water.
(iv) The government is also showing positive attitude towards the water purifier business.
Identify the different dimensions of business environment by quoting lines from the above para.
Answer:
The quoted lines from the given para, which are indicative of different dimensions of business environment are as follows (any four)
- Legal Environment “The court passed an order that all school must have water purifier.”
- Social Environment “Society in general is more concerned about the quality of life.”
- Technological Environment “Innovative techniques are highly developed to manufacture water purifier at competitive rates.”
- Economic Environment “Income are rising and children at home are also drinking purified water.”
Question 28.
Explain the merits of external sources of recruitment. [4]
Answer:
External sources of recruitment offer the following advantages:
- Qualified Personnel An organisation can attract qualified and trained people to apply for vacant jobs in the organisation.
- Wider Choice External sources create a large pool of candidates to choose from, for the organisation.
- Fresh Talent The present employees may be insufficient or they may not fulfil the specifications of the jobs to be filled. External rectruitment provides wider choice and brings new blood in the organisation.
- Competitive Spirit New entrants and qualified freshers create competitive spirit which enforces existing staff to work harder to show better performance.
Question 29.
What is a depository and what services they offer to the investors? [4]
Or
“Money market is essential market for short- term funds”. Discuss.
Answer:
Depository is an institution or organisation, which holds securities (e.g Shares, debentures, bonds, etc) in electronic form, in which trading is done. Depositories provide following services to the investors.
- Maintain records of shareholding in electronic form.
- Enable deposit and withdrawal of securities to and from the depository through the process of dematerialisation and rematerialisation.
- Effect the transfer of securities traded in the depository mode on a stock exchange.
Or
Money market is a market where transactions are made in short-term securities or it is meant for those securities where the payment period is upto one year. Since, their maturity period is very short, they are also termed as near money.
These securities include call money, treasury bills, commercial bills, certificate of deposit, commercial paper, etc. Short-term financial instruments satisfy the requirement of short-term or working capital needs of commercial establishments.
Question 30.
Moko Yoko Ltd. is a manufacturing company who manufactures two wheelers for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer base. But, now it is experiencing issue as it is unable to meet its targets with regard to sales and customers satisfaction.
Also, automobile industry in India has grown tremendously and many new players have come with better technology and pricing, which has increased the problems for the company. It is now planning to revamp its controlling system and take other steps necessary to rectify the problems it is facing. You are required to identify and explain the benefits that the organisation will drive from a good control system. [4]
Answer:
A good control system helps an organisation in the following ways (any four)
(i) Accomplishing Organisational Goals. The controlling function measures progress towards the organisational goals and brings to light deviations, if any and indicates corrective action. Thus, it guides the organisation and keeps it on the right track, so that organisational goals might be achieved.
(ii) Judging Accuracy of Standards A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system keeps a careful check on the changes taking place in the organisation.
(iii) 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 predetermined standards and norms. This ensures that resources are used in the most effective and efficient manner.
(iv) Improving Employee Motivation A good control system ensures that employees know 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 and helps them to give better performance.
Question 31.
(i) Explain any two importance of planning from the following [1.5 x 2=3]
(a) Planning establishes standards for controlling
(b) Planning promotes innovative idea
(c) Planing provides direction
Answer:
(i) Importance of planning are (any two)
(a) Planning establishes Standards for Controlling Planning involves setting up of objectives, which act as the standards against which actual performance is measured. This helps in finding deviations and taking corrective action in the controlling process.
(b) Planning promotes Innovative Ideas Planning is an intellectual process, which involves finding better ideas and methods to perform an activity. Thus, it helps in promoting innovative ideas.
(c) Planning provides Direction By Stating in advance how work is to be done, planning provides direction for action. It reduces aimless activity and makes action more meaningful.
(ii) Differentiate between single use plan and standing plan on any three basis. [3+3=6]
Answer:
Basis | Single Use Plan | Standing Plan |
Meaning | It refers to plan developed for a one-time project or event that has one specific objective. It applies to activities that do not repeat. | Standing plan is used over and over again because it focuses on organisational situations that occur repeatedly. |
Scope | Generally, it has a narrow scope as it is used for a specific situation. | It has a wider scope. |
Period | It is formulated for a short period. | It is formulated for long period. |
Or
(i) Explain any two elements of delegation from the following [1.5 x 2=3]
(a) Authority
(b) Responsibility
(c) Accountability
Answer:
(i) Elements of delegation are (any two)
(a) Authority The term authority implies the right of an individual to take decision and to command his subordinates. It flows from top to bottom
(b) Responsibility It is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior – subordinate relationships because the subordinate is bound to perform the duty assigned to him. Thus, it flows upward.
(c) Accountability It implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability. It is the obligation to carry out responsibility and exercise authority. It flows upward as subordinate will be accountable to his superior, generally enforced through regular feedback.
(iii) Differentiate between centralisation and accentralisation on any three basis.
Answer:
Basis | Centralisation | Decentralisation |
Meaning | It refers to concentration of authority at the top level. | It refers to the even and systematic distribution of authority at all levels. |
Suitability | It is suitable for small organisations. | It is suitable for large organisations. |
Delegation of Authority | There is no delegation as authority for decision-making is retained at the top level. | There is systematic delegation of authority at all levels of management. |
Question 32.
Read the statements given in point (i) and (ii), answer that follow [3+3=6]
(i) The production head of AMV Automobiles Ltd. instructs his foreman to go slow in producing the product but the sales manager wants more production in order to increase sales. Thus, he forced the production foreman to go fast.
(a) Which principle of management is violated in this case?
(b) State the consequences of such violation identified in point (a) above.
Answer:
(a) In this case, ‘principle of unity of command’ is violated as the production foreman is getting conflicting instructions and orders from two bosses i.e. one is production manager and other is sales manager.
(b) Following are the consequences (any two)
- It leads to creation of confusion in the mind of subordinates.
- It results in ego clashes and conflict between the managers.
- There would be no discipline and order in the organisation.
(ii) Raghav, a manager of Micro Ltd, does not distribute the work amongst his subordinates, according to the capabilities. He has given the work on the basis of favouritism.
(a) Which principle of management is overlooked in this case?
(b) Give some of its violating effects.
Answer:
(a) The principle of ‘equity’ is overlocked as the manager is doing partiality in distributing the work.
(b) The violating effects of this principle are any two:
- It least dissatisfaction among employees.
- Labour turnover will increase in the organisation.
- It will result in poor relations between workers and managers.
Question 33.
Ram Rahim is the sales head of Good Fortune Ltd. His team includes three people. Each of the three team members supposed to sell 20 electric mixers in a month. [6]
At the end of the month of March, he checked the reports of sales persons. Two members sold less than 20 mixers, whereas one member sold more than 20 mixers.
He decided to hear the reasons of nonaccomplishment of target. The reasons they disclosed was the inadequate supply of mixers which lead to less sales.
Ram Rahim directed the production department to ensure timely supply of mixers in future.
(i) Name the function of management discussed above.
(ii) State the steps of function identified in part (i) by quoting the lines.
Answer:
(i) Controlling
(ii) Steps of controlling highlighted in case are
- Setting performance standards “Each of the three team members is supposed to sell 20 electric mixers in a month.”
- Measurement of actual performance “At the end of the month of March, he checked the reports of sales persons.”
- Comparing actual performance with standards
“Two members sold less than 20 mixers, whereas one member sold more than 20 mixers.” - Analysing deviations “He decided to hear the reasons of non accomplishment of target. The reasons they disclosed was the inadequate supply of mixers which lead to less sales.”
- Taking corrective actions. “Ram Rahim directed the production department to ensure timely supply of mixers in future.”
Question 34.
Explain any six factors affecting the decision that determines the amount of profit earned to be distributed and to be retained in the business. [6]
Or
Explain the following as factors affecting the requirements of working capital
(i) Nature of business
(ii) Scale of operation
(iii) Business cycle
Answer:
Dividend decision relates to how much of the company’s net profit is to be distributed to the shareholders and how much of it should be retained in the business for meeting the investment requirements. This decision should be taken, keeping in view the overall objective of maximising shareholders’ wealth.
Factors affecting Dividend Decision -The main factors affecting dividend decisions are discussed below:
(i) Amount of Earnings Dividends are paid out of current and past earnings. Thus, earnings is a major determinant of dividend decision.
(ii) Stability in Earnings A company having higher and stable earnings can declare higher dividends than a company with lower and unstable earnings.
(iii) Stability of Dividends Generally, companies try to stabilise dividends per share. A steady dividend is given each year. A change is only made, if the company’s earning potential has gone up and not just the earnings of the current year.
(iv) Growth Opportunities Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. Therefore the dividend declared in growth companies is smaller than that in the non-growth companies
(v) Cash Flow Position Dividend involves an outlow of cash. Availability of enough cash is necessary for payment or declaration of dividends.
(v) Shareholders’ Preference While declaring dividends, management must keep in mind the preferences of the shareholders. Some shareholders in general desire that atleast a certain amount is paid as dividend. The companies should consider the preferences of such shareholders.
Or
(i) Nature of Business The basic nature of a business influences the amount of working capital required.
A trading organisation and a service industry firm usually needs a smaller amount of working capital as compared to a manufacturing organisation. This is because operating cycle of trading company is small in comparison to manufacturing company which have to convert raw material into finished goods before any sale become possible.
(ii) Scale of Operations Organisations which operate on a large scale, generally need to maintain high level of inventory and debtors. Such organisations, therefore, require large amount of working capital as compared to the organisations which operate on a lower scale.
(iii) 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 thus, large amount of working capital is required. In case of depression, the requirement for working capital will be lower, since the sales as well as production will be less.