Students must start practicing the questions from CBSE Sample Papers for Class 11 Business Studies with Solutions Set 2 are designed as per the revised syllabus.

CBSE Sample Papers for Class 11 Business Studies Set 2 with Solutions

Time Allowed: 3 Hours
Maximum Marks: 80

General Instructions:

This Question paper contains five Sections- A, B, C, D & E.

  1. Section- A contains Questions 1 to 20 carrying 1 mark each.
  2. Section- B contains Questions 21 to 25 carrying 3 marks each. Answers to these Questions may be in about 50 to 75 words.
  3. Section- C contains Questions 26 to 28 carrying 4 marks each. Answers to these Questions may be in about 120 words.
  4. Section- D contains Questions 29 to 31 carrying 5 marks each. Answers to these Questions may be in about 150 words.
  5. Section- E contains Questions 32 to 34 carrying 6 marks each. Answers to these Questions may be in about 200 words

Section – A (20 Marks)

Question 1.
Himanshu has been running a textile mill. He wants to expand his business for which he is recruiting huge manpower. Which objective of business is being discussed in the above lines? [1]
(A) Economic
(B) Social
(C) Both (A) and (B)
(D) Neither (A) not (B)
(C) Both (A) and (B)

Explanation: Social Objective by recruiting manpower and economic objective by growing the business.

Question 2.
The Proforma invoice contains information about the product. It is sent by_______to_______. [1]
(A) Exporter, Exporter
(B) Exporter, Importer
(C) Importer, Exporter
(D) Importer, Importer
(B) Exporter, Importer

Explanation: A proforma invoice is a document that contains details as to the quality, grade, design, size, weight and price of the export product, and the terms and conditions on which their export will take place.

Question 3.
The business activity involves dealing in goods and services on what basis? [1]
(A) Irregular basis
(B) One-time basis
(C) Regular basis
(D) None of these
(C) Regular basis

Explanation: Business involves dealings in goods or services on a regular basis. One single transaction of sale or purchase, therefore, does not constitute a business. Thus, for example, if a person sells his/ her domestic radio set even at a profit, it will not be considered a business activity. But if he/ she sells radio sets regularly either through a shop or from his/her residence, it will be regarded as a business activity.

Question 4.
When the importer places an order with the exporter for the goods to be dispatched, which of the following documents are used: [1]
(A) Proforma invoice
(B) Indent
(C) Quotation
(D) Trade Enquiry
(B) Indent

Question 5.
A partner who apparently does not appear to be the partner but secretly manages the affairs of business is called_______Partner. [1]

CBSE Sample Papers for Class 11 Business Studies Set 2 with Solutions

Question 6.
Trade credit is given to those customers who do not have good financial standing and goodwill. (True/False) [1]

Question 7.
Which of the following is true regarding a minor as a partner? [1]
(A) Minor cannot become a partner in any firm even with the mutual consent of all other partners.
(B) Minor partner’s liability is limited to the extent of the capital contributed by him to the firm.
(C) Minor partner is eligible to take an active part in the management of the firm.
(D) Minor partner shares both the profits and the losses of the firm.
(B) Minor partner’s liability is limited to the extent of the capital contributed by him to the firm.

Question 8.
Which of the following is incorrect regarding the objectives of WTO: [1]
(A) Reduction of tariffs and other trade barriers imposed by different countries
(B) Engage in such activities which improve the standards of living, create employment, increase income, etc
(C) No emphasis on sustainable development
(D) Promote an integrated, more viable, and durable trading system
(C) No emphasis on sustainable development

Explanation: The basic objectives of WTO are similar to those of GATT, i.e., raising standards of living and incomes, ensuring full employment, expanding production and trade, and optimal use of the world’s resources. WTO objectives, moreover, talk of the idea of ‘sustainable development in relation to the optimal use of the world’s resources so as to ensure the protection and preservation of the environment.

Question 9.
Which of the following itinerant retailers are mostly found at places where a huge floating population gathers, namely railway stations and bus stands? [1]
(A) Street traders
(B) Hawkers and paddlers
(C) Cheap jacks
(D) Market trader
(A) Street traders

Explanation: Street traders are small retailers who are commonly found at places where a huge floating population gathers, for example, near railway stations and bus stands, and sell consumer items of common use, such as stationery items, eatables, ready-made garments, newspapers, and magazines. They are different from market traders in the sense that they do not change their place of business so frequently.

Read the following passage and answer 10-13 on the basis of the same:

Mr. Shailesh owns an oil factory in Rajasthan. Due to the illness of his parents living in the UK, he had to go to the UK There he joined a job. He asked his friend Mr. Vijay Arora to take charge of his company till he returns to India. Mr. Vijay took a fire insurance policy for this factory from Zokhim Free Insurance Pvt. Ltd. A month before he got the fire insurance policy, he received a notice from the electricity department to get the wiring of the company repaired. He didn’t inform the insurance company about it. He didn’t get the wiring of the factory repaired. After five months of taking the policy, the factory caught fire due to faulty wiring.

Question 10.
“Mr. Vijay took a fire insurance policy for this factory from Zokhim Free Insurance Pvt. Ltd….”. Which principle of insurance is relevant here?[1]
(A) Insurable interest
(B) Indemnity
(C) Good faith
(D) Contribution
(A) Insurable interest

Explanation: The person getting an insurance policy must have an insurable interest in the property or life insured. A person is said to have an insurable interest in the property if he is benefited by its existence and prejudiced by its destruction. Without insurable interest, the insurance contract is void.

Question 11.
“He didn’t inform the insurance company about it.” Identify the principle violated here. [1]
(A) Utmost good faith
(B) Insurable interest
(C) Proximate cause
(D) None of these
(A) Utmost good faith

Explanation: It is the duty of the applicant to disclose all the material facts relating to the risk to be covered. A material fact refers to the fact which would influence the mind of a prudent underwriter in deciding whether to accept a risk for insurance and on what terms.

CBSE Sample Papers for Class 11 Business Studies Set 2 with Solutions

Question 12.
“He didn’t get the wiring done”. Name the related principle not followed by Mr. Vijay Arora in the above-stated lines. [1]
(A) Subrogation
(B) Mitigation
(C) Indemnity
(D) Contribution
(B) Mitigation

Explanation: It is the duty of the insured to take reasonable steps to minimize the loss or damage to the insured property. If reasonable care is not taken like any prudent person then the claim from the insurance company may be lost.

Question 13.
In the above case, at what time the insurable interest must be present? [1]
(A) At the time of taking the policy
(B) At the time of loss
(C) Both (A) and (B)
(D) After receiving the claim
(C) Both (A) and (B)

Question 14.
Mayank wants to invest his savings in financial security which provides higher returns and high liquidity control over business affairs. Identify which of the following would be the most suitable security. [1]
(A) Trade credit
(B) Loan
(C) Debentures
(D) Equity shares
(D) Equity shares

Explanation: Equity shareholders are the owners of the company. The rate of dividend is paid after meeting all other claims. These shareholders have a right to vote and participate in the management of the company. They enjoy the reward as well as bear the risk.

Question 15.
Which of the following is true regarding small businesses? [1]
(A) More labor-intensive and less capital intensive
(B) More labor-intensive and more capital intensive
(C) Less labor-intensive and more capital intensive
(D) Less labor-intensive and less capital intensive
(A) More labor-intensive and less capital intensive

Explanation: MSMEs are the second largest employers of human resources, after agriculture. They generate more employment opportunities per unit of capital invested compared to large industries. They are, therefore, considered to be more labor-intensive and less capital-intensive. This is a boon for a labor-surplus country like India.

Question 16.
NABARD stands for which of the following? [1]
(A) National Bank for Agriculture and Rural Development
(B) National Bank for Agriculture and Road Development
(C) National Bank for Airways and Railways Development
(D) National Bank for Agriculture and Regional Development
(A) National Bank for Agriculture and Rural Development

Question 17.
If a company aims at fulfilling social obligations then it has to compromise with its goal of profit maximization. Thus, social responsibility and profit maximization cannot go hand-in-hand. The given Statements: [1]
(A) True
(B) False
(C) Depends on the nature of business
(D) Depends on the social obligation to be fulfilled
(B) False

Question 18.
What is the name of the written document which defines the ethical principles of conduct for the whole organization? [1]
(A) Act
(B) Code
(C) Order
(D) Resolution
(B) Code

Explanation: Enterprises with effective ethics programs do define the principles of conduct for the whole organization in the form of written documents which is referred to as the “code”. This generally covers areas such as fundamental honesty and adherence to laws; product safety and quality; health and safety in the workplace; conflicts of interest; employment practices; fairness in selling/ marketing practices; and financial reporting.

Question 19.
Which of the following does not result from conducting ethical business? [1]
(A) Improving public image
(B) Earning people’s confidence and trust
(C) Suffering losses
(D) Leading to greater success
(C) Suffering losses

Explanation: Conducting ethical business increases the goodwill of the business and hence increases the profits of the business.

CBSE Sample Papers for Class 11 Business Studies Set 2 with Solutions

Question 20.
E-commerce offers many benefits to consumers. Which of the following is not a benefit resulting from e-commerce? [1]
(A) Flexibility
(B) More options and choices
(C) Quick and Timely delivery
(D) Narrow outreach
(D) Narrow outreach

Explanation: E-commerce provides a wider customer base as sellers can reach customers from all over the world. In the case of of-commerce, geographical barriers become unimportant.

Section – B (15 Marks)

Question 21.
Ved has allowed Shrey and Gaurav for using his name for the sports equipment manufacturing unit but Ved will not take an active part in managing the firm and neither share profit and loss.
(i) Will Ved be considered as partner in a firm. If yes, which type of partner and why.
(ii) Also comment upon the kind of liabilities Ved will have to assume under such circumstances.
Amul is an indian cooperative based in Gujarat which was formed in 1946 and is a brand managed by a cooperative body, the Gujrat cooperative milk marketing federation which todayis jointly owned by 3.6 million milk producers in Gujrat. In the context of above case.
(i) What is a cooperative society?
(ii) Write any two merits of a cooperative society. [3]
(i) Yes, Ved will be considered as a Partner. He is a nominal partner in the firm because he has only lent his name and is neither taking part in the management nor participating in the profits and losses.
(ii) Under such circumstances Ved is accountable for all the financial liabilities arising in this business. His bears unlimited liability for the debts of the firm.


A cooperative society is a voluntary association of persons, who join together for mutual benefit. Its primary motive is welfare of the members. For example, consumers may join together to provide goods at cheaper rates by establishing direct contacts with producers/ manufacturers and thereby eliminating the middlemen.
Merits of a cooperative society:
(i) Ease of formation: Any ten adult persons can form a cooperative society. The registration procedure is simple involving a few legal formalities.
(ii) Defnocratic management/equality in voting status: The principle of ‘one member one vote’ prevails irrespective of the amount of capital contributed by a member.

Question 22.
Sameer has recently graduated from Delhi University. He is planning to open a new restaurant near the campus area. His father advised him to open a bank account in which he can deposit and withdraw money number of times in a day. Identify and explain the bank account being referred to above: [3]
Current Deposit Account: The account holder can deposit and withdraw money whenever desired. This account is generally opened by the businessman.

Question 23.
A factory owner gets his stock of goods insured, but he hides the fact that the electricity board has issued him a statutory warning letter to get his factory’s wiring changed. Later on, the factory catches fire due to short circuit of wring. Can he claim for compensation? If yes, explain. [3]
No, he cannot claim the compensation, as he has violated the principle of utmost good faith. He should have disclosed all the material facts to the insurance company.

Question 24.
Explain the classification of sources of funds on the basis of the period. [3]
The sources of funds on the basis of the period can be classified into three parts:
(1) Long-term sources: These include those sources which are required by the business firms for a period exceeding 5 years. For example, shares, and debentures.
(2) Medium-term sources: These include those sources that art required for a period of more than a year but less than 5 years. For example, public deposits, and borrowings from Commercial Banks.
(3) Short-term sources: These include those sources which are required by business firms for a period of less than 1 year. For example, trade credit, commercial papers.

Question 25.
Explain the nature and significance of business finance. [3]
Finance is the life blood of any business. It refers to the funds required by the business for carrying out various business activities. Availability of adequate funds is essential for the smooth functioning of a business. The capital contributed by the promoters may not be sufficient. Hence, the business firms have to look for other sources from where the fund requirements can be met.

CBSE Sample Papers for Class 11 Business Studies Set 2 with Solutions

Section – C (12 Marks)

Question 26.
Rashmi wants to set up a cooperative society that can protect the farmers in rural areas from the exploitation of money lenders who charge high rates of interest on loans. Through this, she will also promote saving habits in them.
(i) Identify the type of cooperative society she will form?
(ii) What are the functions of such a cooperative society?
Define partnership. State its any three important features. [4]
(i) Rashmi will form a credit cooperative society.
(ii) The functions of such a cooperative society are to provide loans to members out of the amounts collected as capital and to collect deposits from the members.


The partnership means an association of two or more persons, who can pool in required resources like capital, knowledge, expertise, skill, etc. in such a way, that together they can form a cohesive team leading their business towards the achievement of their common goals successfully.
Features of partnership:
(1) Liability: Partners are jointly as well as individually liable for payment of debts and this liability is unlimited. When the assets of the business are not sufficient to pay for its liabilities in full, personal assets of the partners can be used for making the payment.
(2) Risk bearing: The risk involved in running the business is jointly borne by the partners. Both profits and losses are shared by them in a pre-agreed ratio.
(3) Membership: Minimum two members are required to start a partnership business, while the maximum number of partners is 50 as per Rule 10 of the companies.

Question 27.
Explain any four features of a Multinational Company. [4]
Features of MNCs:
(1) International operations: Global MNCs run their foreign operations by establishing branches or subsidiary companies in host countries.
(2) Giant size: MNCs have huge bases of assets and revenues because of their huge size operations spread in a number of countries.
(3) Centralized control: MNCs have a centralized control system. All the decisions for subsidiaries or branches are taken by the headquarters of MNCs. The headquarters of MNCs exercise control over their foreign subsidiaries.
(4) Modem technology and management practices: Most of the MNCs compete in the international markets on the basis of their modem technology and efficient management practices. In fact, these global enterprises are sources of spreading modem technology and management practices in the world.

Question 28.
Explain briefly the role of small industries in rural India. [4]
Role of Small-Scale Industries in India: In India, more than 65% of the total population lives in rural areas. These areas have been deprived
of the benefits of industrialization and economic development. In light of this, small business has a good opportunity to play its role in these areas. This role is as follows:
(1) Generation of employment: The SSIs account for 95% of industrial units in India. They provide more employment than large-scale industries. They are the second largest employment generator after agriculture.
(2) Output generation: SSIs contribute nearly 40% of the gross industrial value added of the country. They produce a large variety of products,- garments, plastic goods, toiletries, food items, handicrafts, leather and rubber goods, etc.
(3) Balanced regional development: The SSIs produce simple goods using simple technologies. They can be set up anywhere in the country, using local resources. Thus, they lead to balanced regional development of the country.
(4) Reduction in income inequalities: They reduce income inequalities between rural and urban areas and contribute towards equitable distribution of income and wealth. This leads to improvement in standard of living of the rural population.

Section – D (15 Marks)

Question 29.
Explain any five characteristics of a business. [5]
Characteristics of business are as follows:
(1) An economic activity: Business is considered to be an economic activity because it is undertaken with the objective of earning money or livelihood and not because of love, affection, sympathy or any other sentimental reason.
(2) Production or procurement of goods and services: Before goods are offered to people for consumption, they must be either produced or procured by business enterprises. Thus, every business enterprise either manufactures goods it deals in or acquires them from producers to be further sold to consumers.
(3) Sale or exchange of goods and services for the satisfaction of human needs: Directly or indirectly, business involves the transfer or exchange of goods and services for the value.
(4) Dealing in goods and services on a regular basis: Business involves dealing in goods or services on a regular basis. One single transaction of sale or purchase does not constitute a business.
(5) Profit earning: One of the main purposes of business is to earn income by way of profit. No business can survive for long without earning profit.

CBSE Sample Papers for Class 11 Business Studies Set 2 with Solutions

Question 30.
What are the services of the wholesalers to its retailers? [5]
Differentiate between departmental stores and chain stores on the following basis :
(i) Location
(ii) Range of Product
(iii) Services offered
(iv) Pricing
(v) Class of Customers
The services of wholesalers to retailers are as follows:
(1) Availability of goods: The wholesaler provides a variety of the same goods to the retailer and hence relieves him from the burden of collecting the goods from several manufacturers.
(2) Risk sharing: A retailer does not have to bother about the risk of storage, reduction in price, fluctuation in demand, etc. All these risks are the borne by the wholesaler.
(3) Grant of credit: The wholesaler grants a credit facility to the retailer, thus enabling him to manage his business with a small amount of working capital.
(4) Marketing support: The wholesalers undertake advertisements and other sales promotional activities in order to induce the consumers to purchase the goods. Thus, they provide marketing support to retailers.
(5) Specialised knowledge: The wholesalers provide useful information to the retailers about the new products, their benefits, quality, etc. They also advise the retailers regarding the decoration of their shops, allocation of shelf space, and demonstration of certain products.


Ans. Differences between Departmental stores and Chain stores

S.No. Basis Departmental Stores Chain Stores
(i) Location A departmental store is located at central place where a large number of customers can be attracted to it. Multiple store/chain stores are located at a num­ber of places for approaching a large number of customer.
(ii) Range of product These stores carry a variety of products of different types to satisfy all the need of cus­tomers under one roof. The multiple store aims to satisfy the require­ments of customers relating to a specified range of their products only.
(iii) Services offered Departmental stores lay great emphasis to their customers like alteration of garments/ restrooms, restaurants etc. Multiple shop provides very limit­ed services confined to guarantee and repairs it the sold goods turnout to be defective.
(iv) Pricing The departmental stores do not have uni­form pricing policy for all the departments; rather they have to occasionally offer dis­counts, rebate etc. to clear the unsold stock. The multiple chain shops sell goods at fixed pric­es and maintain uniform pricing policy for all the shops.
(v) Class of customer These stores cater to the needs of relatively high income group of customers who care more for the services provided instead of the prices of goods. These chain stores cater to different types of cus­tomers including lower income groups who are interested in buying quality goods at reasonable price.

Question 31.
Discuss the several problems related to international business.
Write short notes on the following: [5]
(i) Bill of Lading
(ii) Mate’s Receipt
The problems in international business are as follows:
(1) Distance barrier: International business is carried across the borders of the country. When the markets are far moved by distance, the transportation cost becomes high and the delivery time tends to become longer. As a result, there is an increase in cost of the product.
(2) Differences in language: An international businessman often encounters problems arising out of differences in language. Even when the
same language is used in different countries, the same words or terms may have different meanings.
(3) Cultural differences: Cultural differences constitute one of the most important problems in international business. Many domestic markets are not free from cultural diversities.
(4) Political and legal differences: Political and legal differences also act as a major hurdle in international business. The complexity generally increases as more countries are included in the company”s portfolio.
(5) Difference in currency: The currency varies from nation to nation. This may cause problems of exchange rate fluctuations and currency
convertibility. The monetary system and regulations may also vary from nation to nation.


(i) Bill of Lading: Bill of lading is a document prepared and signed by the master of the ship acknowledging the receipt of goods on board.
It contains terms and conditions on which the goods are to be taken to the port of destination.
(ii) Mates Receipt- This receipt is given by the commanding officer of the ship to the exporter after the cargo is loaded on the ship. The mate’s receipt indicates the name of the vessel, berth, date of shipment, description of packages, marks and numbers, condition of the cargo at the time of receipt on board the ship, etc. The shipping company does not issue the bill of lading unless it receives the mate’s receipt.

Section – E (18 Marks)

Question 32.
There is a system of selling where consumers directly interact with other consumers through electronic mode. Identify and explain this system. How in your opinion is this system beneficial to consumers? State any one limitation of such a system.
Explain the meaning of e-business. State its four benefits for the modern business. [6]
This system is called C2C commerce. It provides a market for those consumers who want to deal in goods for which there is no established market. This is a system of selling where consumers directly interact with other consumers through electronic mode. This system is beneficial to those consumers who are looking for niche products from very trustworthy sources like rented furniture. One limitation of this system is increased risk due to anonymity and non-traceability of parties.


E-business, also known as electronic business, is the conduct of business on the internet. Its scope is not only confined to buying and selling of products but also servicing customers and collaborating with business partners.
Benefits of e-business:
(i) Ease of formation and lower investment requirements: Unlike a host of procedural requirements for setting up an industry, e-business is relatively easy to start. The benefits of internet technology accrue to big and small businesses alike. In fact, the internet is responsible for the popularity of the phrase ‘networked individuals and firms are more efficient than networked individuals.
(ii) Convenience: The Internet offers the convenience of 24 hours, 7 days a week, 365 days a year business that allows shopping even after midnight.
(iii) Speed: The Internet has high speed. This benefit becomes all the more attractive in the case of information regarding intensive products.
(iv) Movement towards a paperless society: Dependence on paperwork has been considerably reduced through the internet. Many companies and even government departments and regulatory authorities are going in this direction.

Question 33.
Santosh is working as a finance manager in a German Company producing remote-operated high-end kitchen equipment. Considering festival demand, the company needs to increase its stock of raw materials and finished goods which will require funds of ₹50 Lakhs. The directors of the company have decided to expand the business by opening one more factory in India which will require funds of ₹ 3 crore and 1 branch is America requires ₹ 6 crore and1 a branch in Srilanka requires ₹ 5 crore investment.
(i) Advise Santosh about the various sources of finance available to meet fund requirements for buying stock of raw materials and finished goods.
(ii) In case the company does not want to borrow /raise capital from the general public and Banks, then through which financial instrument it can raise ₹ 50 lakhs for short period? Explain it. [6]
(i) Santosh can meet his working capital requirement for the short run through the following sources of finance:

  • Trade credit,
  • Public Deposits,
  • Loans from Commercial Banks,
  • Commercial Papers,
  • Overdraft,
  • Loans from financial institutions, etc.

(ii) Without involving general public and Banks, the option available to the German Company to meet its working capital requirement is: Intercorporate Deposit, Inter Corporate Deposit is an unsecured borrowing by a company from other corporate entities for short-term.

Question 34.
What do you understand by multiple shops and what are their features? [6]
What do you understand by mail order business? State its limitations
Chain stores or multiple shops refer to a network of retail shops established in localities spread in different parts of the country. These are owned and operated by the same organization and have the same merchandising strategies with the same products and displays. For example, Bata shoe stores, Raymonds, etc.
(1) These stores believe in serving the customers at their residential point or workplace rather than attracting them to a central place. For this reason, these stores are located in populous localities.
(2) The purchases for all stores are centralized at the head office. From there, the goods are transferred to various shops according to their requirements.
(3) Each retail shop is under the direct supervision of a branch manager. He is responsible for the daily operations of his shop. He has to send daily reports to the head office regarding cash deposits, sales, and requirements of the stock.
(5) The head office has full control over all the branches, formulates the policies, and ensures their implementation.
(5) The prices of goods are fixed and are sold on a cash basis.


The retail outlets which sell their products through the mail are referred to as mail-order houses. This type of trading involves no personal contact between the customer and the seller. The trader contacts the customer through advertisements in newspapers or magazines, circulars, catalogs, and price list sent to them by post. The advertisement gives a complete description of the price, delivery terms, terms of payments, features, etc. of the product.


  1. Lack of personal contact: Sometimes, the lack of personal contact between the buyers and the sellers results in misunderstanding and mistrust between the two.
  2. No ‘after-sales service: Both buyers and sellers are located very far away from each other and there is no personal contact between the two. Hence, it is very difficult to provide after-sales services to buyers.
  3. No credit facility: This system fails to provide credit facilities to customers. So, customers with scarce means are not interested in this system.
  4. Delayed delivery: The receipt and execution of orders through mail take a lot of time. So, there is a delay in the delivery of the products.