CBSE Sample Papers for Class 11 Business Studies Set 4 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 11 Business Studies with Solutions Set 4 are designed as per the revised syllabus.

CBSE Sample Papers for Class 11 Business Studies Set 4 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.
In which of the following modes of entry, does the domestic manufacturer give the right to use intellectual property such as patent and trademark to a manufacturer in a foreign country for a fee? [1]
(A) Licensing
(B) Contract manufacturing
(C) Joint venture
(D) Public Private partnership
Answer:
(A) Licensing

Question 2.
Disinvestment of PSEs implies: [1]
(A) Sale of equity shares to private sector/public
(B) Closing down operations
(C) Investing in new areas
(D) Buying shares of PSEs by the government
Answer:
(A) Sale of equity shares to private sector/public

Question 3.
_______shareholders do not get the right to participate in the annual meeting of the company. [1]
Answer:
Preference

Question 4.
When did World Trade Organisation (WTO) [1]
Answer:
1 January, 1995

Question 5.
You want to invest a particular sum of money for a particular time period. Identify the type of account you should choose for this purpose. [1]
(A) Saving Account
(B) Fixed Deposit Account
(C) Current Account
(D) Recurring Deposit Account
Answer:
(B) Fixed Deposit Account

Explanation: A fixed deposit is repayable after the expiry of the specified period of time. The period may vary from 6 months to 5 years.

Question 6.
Which scheme has been introduced by Government of India to encourage an entrepreneurial culture, inculcate entrepreneurial values in the society and influence the mindset of people towards entrepreneurship? [1]
Answer:
Startup India Scheme

Explanation: Startup India is an initiative of the Government of India with an aim to promote and support the start-ups in India by providing bank finances. It was inaugurated by the former finance minister, Arun Jaitley.

Question 7.
If a company aims at fulfilling the social obligations then it has to compromise with its goal of profit maximization. Thus, social responsibility and profit maximization cannot go hand-in-hand. (True/False). [1]
Answer:
False

Question 8.
Identify the principle of insurance where it is the right of the insurer to stand in the place of the insured after settlement of a claim as far as the right of insured in respect of recovery from an alternative source is involved. [1]
(A) Utmost good faith
(B) Indemnify
(C) Insurable interest
(D) Subrogation
Answer:
(D) Subrogation

Question 9.
DIC stands for_______. [1]
Answer:
District Industries Centre

Question 10.
The_______is were responsible for the management and control of the joint Hindu Family Business. [1]
Answer:
karta

Question 11.
Which of the following statements is incorrect regarding debentures ? [1]
(A) Interest paid on debentures is tax deductible
(B) Debentures do not carry voting rights
(C) It is preferred by investors who want fixed income at lesser risk
(D) Issue of debentures dilutes the control of equity shareholders on management
Answer:
(D) Issue of debentures dilutes the control of equity shareholders on management

Question 12.
Buying and selling of goods is known as_______. [1]
Answer:
Trade

Question 13.
Which document is issued by a company to invite the public to subscribe for its securities? [1]
(A) Prospectus
(B) MOA
(C) AOA
(D) Share the certificate
Answer:
(A) Prospectus

Explanation: Document described or issued as a prospectus including any notice, circular, advertisement, or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any securities of a body corporate.

Question 14.
Whose involvement is necessary in order to implement the ethics policies in the firm so as to make an ethical business a reality? [1]
Answer:
Employees

Question 15.
Call centers only handle inbound voice-based business. (True/False) [1]
Answer:
False

Question 16.
e-commerce does not include: [1]
(A) A business’s interaction with its suppliers.
(B) A business’s interactions with its customers.
(C) Interactions among the various departments within the business.
(D) Interactions among the geographically dispersed units of the business.
Answer:
(C) Interactions among the various departments within the business.

Read the following text and answer Q.No. 17-20 the questions on the basis of the same:
Manish is a student pursuing a final year B.Tech. from IIT Kharagpur. His father Mr. Sambal Singh who owned a small general store in Jaipur had a heart attack and became completely paralyzed. There was no other source of income for the family, so, Manish left his studies and decided to take charge of his father’s general store. While checking the books of accounts, he found that his father had taken a loan of ₹ 2 lakhs from the Bank of Baroda to be repaid this year only, but the business is running into losses due to his father’s illness. Hence, his mother advised him to close the business and look for a job outside.

Question 17.
The form of the business organization formed by Sambal Singh is: [1]
(A) Joint Stock Company
(B) Partnership
(C) Sole Proprietorship
(D) Co-operative Society
Answer:
(C) Sole Proprietorship

Explanation: A sole proprietorship is an unincorporated business that is owned by one individual with no legal distinction between the
business and owner. In this form of business, the owner and the business are taken as one and the same person.

Question 18.
“Loan of ₹ 2 lakhs from Bank of Baroda to be repaid this year only, but the business is running into losses.” Identify the nature liability of the owner in the stated line. [1]
(A) Limited
(B) Unlimited
(C) No liability
(D) Partial liability
Answer:
(B) Unlimited

Explanation: The owner has unlimited liability. If the business fails, the creditors can recover their

Question 19.
_______decided to take charge of his father’s general store.” As per the stated line, what will be the status that Manish holds in the business of his father? [1]
(A) Partner
(B) Employee
(C) Trustee
(D) Owner
Answer:
(D) Owner

Question 20.
Which of the following shows merit and a demerit of the type of business organization mentioned in the above case? [1]
(A) Secrecy, Limited liability
(B) Sole recipient of profits and no diffusion of risk
(C) Secrecy and direct incentive
(D) Limited resources and unlimited liability
Answer:
(B) Sole recipient of profits and no diffusion of risk

Section – B (15 Marks)

Question 21.
Explain Profession.
OR
Briefly explain the occupation in which people work for others and get remunerated in return. [3]
Answer:
(1) Profession is an economic activity that requires Specialized knowledge and skill to be applied by individuals for earning their living.
(2) Those who offer specialized personal services are professionals.
(3) These professionals have to follow the guidelines or codes of conduct laid down by professional bodies.

OR

Employment:
It refers to the work in which people work for others and get paid in the form of wages or salaries. The persons who are employed by others are known as employees. The person who gives remuneration to the employees is known as an employer. In other words, it is a contract between the employer and the employee. Example: People who work in factories and receive wages.

Question 22.
What are the limitations of government companies? [3]
Answer:
(1) Since the Government is the only shareholder in some of the Companies, the provisions of the Companies Act does not have much relevance.
(2) It evades constitutional responsibility, which a company financed by the government should have.
(3) It is not answerable directly to the Parliament.
(4) The government being the sole shareholder, the management and administration rests in the hands of the government.
(5) The main purpose of a government company, registered like other companies, is defeated.

Question 23.
Explain the concept of transportation? [3]
Answer:

• Transportation helps in making goods available from their place of origin to the ultimate consumers.
• It includes both the auxiliary services and freight services by all modes like railways, airways, roadways.
• It is very important to have better infrastructure of roads with better quality for faster transportation.
• In agriculture sector there are many chances of loss ofgoods during storage and transportation.

Question 24.
Why finance is to be considered as life blood of any business? [3]
Answer:
(1) Money (finance) is needed to carry out of various activities of a Business.
(2) Finance is required to start and run a business as a car needs petrol to run, and a human needs blood to survive.
(3) Whether it is the fixed Capital requirements in a business i.e. to buy plant and machinery, furniture or working capital requirements i.e. to pay rent, salary, and for other day-to-day business operations. Finance plays an important role. Hence, it is considered to be the lifeblood of any business.

Question 25.
Write a note on NABARD. [3]
Answer:
(1) NABARD was set up in 1982 to promote integrated rural development.
(2) It has been adopting a strategy for the promotion of rural business.
Functions:

• It supports small industries, cottage, and village industries.
• It offers counseling and consultancy services in rural areas.
• It provides training and development programs for rural entrepreneurs.

Section – C (12 Marks)

Question 26.
Give the classification of funds on the basis of ownership.
OR
Mayank wants to invest his savings in financial security which provides higher returns and high liquidity control over business affairs. Suggest him the most suitable security and give three reasons to support your answer. [4]
Answer:
On the basis of ownership, the sources of finance can be classified into two parts:
(i) Owner’s funds
(ii) Borrowed funds
Owner’s funds:

• The funds provided by the owner of an enterprise are known as owner’s funds.
• These funds remain invested in the business for a longer period of time and are not refunded during the lifetime of the business.
• The owners have control over the working of the company and are paid dividends after the payment of dividends to preference shares.
• For example, equity shares retained earnings, etc.

Borrowed funds:

• The funds raised through loans or borrowings are known as borrowed funds.
• It is a combination of funds that are raised either by the way of credit or loan.
• They are permitted to fixed amount of interest.
• Borrowed funds are generally raised by issuing debentures through credit or loans. It is also termed debt financing.

OR

Equity shares:
(1) Equity shareholders do not get a fixed rate of dividend as in the case of preference shares but they enjoy higher dividends during large
profits to the companies. Fighter dividends appreciate the market value of equity shares in the market, maximizing the shareholders, wealth.
(2) Marketability of equity shares on the stock exchanges makes them a lucrative source of investment.
(3) Equity shares provide voting rights to the shareholders through which they can exercise control over management.

Question 27.
Distinguish between a Joint Hindu Family Business and Partnership. [4]
Answer:

Basis of difference	Joint Hindu Family Business	Partnership
(i) Governance	Governed by the Hindu law. Hindu Succession Act, 1956	Governed by Partnership Act, 1932.
(ii) Liability	The karta has unlimited liability, while the liabilities of other members are limited to the extent of their share in the business.	All the partners have unlimited liability.
(iii) Decision making and control	The karta is responsible for the management and control of the business.	All the partners jointly manage and control the firm.
(iv) Number of members	Minimum- 2 Maximum- No limit	Minimum- 2 Maximum- 50
(v) Minor	Minors can be members.	Minors cannot be members.

Question 28.
Define service. Name the services which are related to the following cases: [4]
(i) The services which help in removing hindrances of knowledge.
(ii) The services which help in removing hindrances of place.
(iii) The services which help in removing hindrance of time.
(iv) The services which help in removing hindrance of risk.
Answer:
Services are the non-physical, intangible parts of our economy, as opposed to goods, which we can touch or handle. Services, such as the banking, education, medical treatment, and transportation make up the majority of the economies of the rich nations. They also represent most of the emerging nations’ economies.
The services are related to the following cases:
(i) Advertisement Segment
(ii) Transport Segment
(iii) Warehousing Segment
(iv) Insurance Segment

Section – D (15 Marks)

Question 29.
“Earning of profit cannot be the objective of business any more than eating is the objective of living. A person cannot survive for a long-time and cannot lead a healthy life only by eating. A person has to perform other activities also such as social activities, religious, and patriotic activities. Similarly, a business with the sole objective of earning a profit cannot survive for a long-time to capture a big share in the market to create goodwill, and to have durable profits; businessmen must have social and individual objectives of the business. [5]
(i) In the context of the above discussion, state any four social and individual objectives of a business.
(ii) State any two reasons other than those mentioned in the paragraph why profit is a requirement of a business.
Answer:
(1) Social objectives:

• Supply of desired quality of products.
• Avoidance of unfair trade practices.
• Employment generation.
• Social service or community service.

Personal or individual objectives:

• Providing good working conditions.
• Payment of competitive, satisfactory wages and salaries.
• To provide various financial and nonfinancial incentives in order to motivate the workers.
• To provide opportunities for personal growth and development of employees.

(2) Profit is required in the business for:
(a) Expansion and growth: When profit is large, a part of it can always be reinvested for expansion or diversification of production and other operations.
(b) An index of performance: Profits indicate whether a business is being managed efficiently or not. Higher profits indicate the efficiency of management and lower profits indicate inefficiency of management. The success of a business can be judged by its ability to earn profit.

Question 30.
Explain any five features of departmental stores.
OR
State any five advantages of mail order business. [5]
Answer:
The main features of departmental store are as follows:
(1) Large size: A departmental store is a large retail room requiring large capital investment.
(2) Wide range: A departmental store deals with a wide range of products from low-priced to expensive goods. Different varieties of goods are available in different departments.
(3) Departmentally organised: The store is departmentally organised. Goods offered for sale are classified and each department specializes in one line of product.
(4) Central purchases: The purchase of all the departments is made centrally. The departmental managers give a list of their requirements to the general manager who makes purchases for all the departments.
(5) Central location: A departmental store is located at a central place or in shopping centers, so that people from different parts of the city can easily reach there.

OR

The advantages of mail order business are as follows:
(1) Limited capital requirement: Mail-order business does not require heavy expenditure on building and other infrastructural facilities. There fore, it can be started with a relatively low amount of capital.
(2) Elimination of middlemen: The biggest advantage of mail-order business from the point of view of consumers is that unnecessary middle man between the buyers and sellers are eliminated. This may result in a lot of savings, both to the buyers as well as to the sellers.
(3) Absence of bad debt: Since the mail order houses do not extend credit facilities to the customers, there are no chances of any bad debt of non-payment of cash on account by the customers.
(4) Wide reach: Under this system, the goods can be sent to all the places having postal services. This opens wide scope for business as a large number of people throughout the country can be served through the mail.
(5) Convenience: Under this system, goods are delivered at the doorstep of the customers. This results in great convenience to the customers in buying these products.

Question 31.
“There are some restraining forces slow down the progress of companies that take up international business.” Justify the statement.
OR
Explain the historical perspective of WTO with the functions performed by it giving new dimensions to world trade. [5]
Answer:
There are many problems in international business. The restraining forces slow down the progress of companies that take up international business. The restraining forces are:

(1) Difference in languages and problem of distance: Each country has its own language in which its traders wish to prepare their trade documents right from trade enquiry or the letter of quotation to the payment documents. This works as a serious barrier between the traders of the different countries. Moreover, the distance between the trading countries increases the cost of transportation of goods,
making the price high and also creating risk of fraud, etc. as the traders may not have face-to-face contact between them.

(2) Import-export restrictions: At times, many countries put certain restrictions on their foreign trade to make their B.O.P. (Balance of Payment) favourable. They impose heavy tariffs or import duties, volume restrictions on both of their imports as well as their exports.
This hampers the smooth conduct of IT.

(3) Lack of proper information about foreign markets: In most of cases, new traders do not have adequate information about foreign markets and whatever information is provided by different agencies is either inadequate or does not fulfil their requirements. Thus, they fail to have clarity about the opportunities available to them for exports and imports.

(4) Heavy documentation: It requires so many legal formalities and many documents, which makes the trade procedure very cumbersome as well as complex. That’s why most of the small traders trade only through third parties rather than going directly and pay commissions to them which reduces their profit margins and increases the cost of transactions.

(5) Payment problems: In It, traders of an importing country wish to make payment in their own currency and the traders of exporting to countries want payments in their legal tender. In both situations, there may come the problem of foreign exchange. The fluctuations in the exchange rates may create problems and risk to the traders of both countries.

OR

WTO came into existence with effect from 1st January 1995 as a successor of GATT having 159 members now to promote and to facilitate the international trade among the member countries, to overcome various restrictions and discriminations. GATT was the outcome of the Bretton woods conference for the same purpose which remained in force till December 1994. GATT governs trade in goods only but WTO as the successor of GATT is wider in scope governing trade, not only in goods but also in services and intellectual property rights.

The major functions of WTO include:

Promoting an environment that is encouraging to its member countries to come forward to WTO in mitigating their grievances. Laying down a commonly accepted code of conduct with a view to reducing trade barriers including tariffs and eliminating discrimination in international trade relations. Acting as a dispute settlement body. Supervising the operations of the revised Agreements and Ministerial Declarations relating to goods services and TRIPS on a regular basis.

Section – E (18 Marks)

Question 32.
Discuss the forces which are responsible for increasing concern of business enterprises towards social responsibility.
OR
Build up arguments for and against social responsibilities. [6]
Answer:
The forces which are responsible for increasing concern of business enterprises towards social responsibility are:
(1) Threat of public regulation: Democratically elected government is meant to safeguard the interests of society. Thus, in case government feels that a business enterprise is behaving in a manner that is not socially desirable, then it can regulate the operations of that enterprise accordingly.
(2) Pressure of labor movement: Labour movement for ensuring fair gains for the working class throughout the world has become very powerful as labor has become far more educated and organized. This has forced business enterprises to pay due regard to the welfare of workers.
(3) Impact of consciousness: The development of education and mass media and increasing competition in the market have made the consumer conscious of his right and power in determining market forces. Thus, business enterprises are made to work more efficiently and produce better products at reasonable rates to satisfy their customers.
(4) Development of social standards: Business enterprises are not mere profit-making entities. For their long-term growth and existence, they require to fulfill the new standards of social welfare.
(5) Development of business education: Educated persons as consumers, investors, employees, or owners have become more sensitive towards social issues than was the case earlier when such education was not available.
(6) Relationship between social interest and business interest: No business enterprise can work in isolation from society. Thus, there should be a balance between business interests and social interests, such that the business can grow by doing the maximum good to society.

OR

The arguments for social responsibilities are:

(1) Justification for existence and growth: Business exists for providing goods and services to satisfy human needs. Though profit motive is an important justification for undertaking a business activity, it should be looked upon as an outcome of service to the people. In fact, the prosperity and growth of a business is possible only through continuous service to society. Therefore, the assumption of social responsibility by a business provides justifications for its existence and growth.
(2) Long-term interest of the firm: A firm and its image stand to gain maximum profits in the long run when it has its highest goal as ‘service to society. Therefore, it is in its own interest if a firm fulfills its social responsibility. The public image of any firm would also be improved when it supports social goals.
(3) Avoidance of government regulation: Government regulations are undesirable because they limit freedom. Therefore, it is believed that businessmen can avoid the problem of government regulations by voluntarily assuming social responsibilities, which helps to reduce the need for new laws.

The arguments against social responsibilities are:
(1) Violation of profit maximization objective: Business exists only for profit maximization. Therefore, any talk of social responsibility is against this objective.
(2) Burden on consumers: It is argued that social responsibilities like pollution control and environmental protection are very costly and often require huge financial investments, which are likely to be shifted onto the consumers in the form of higher prices.
(3) Lack of social skills: According to this argument, social problems should be solved by specialized agencies as businessmen do not have the necessary understanding and training to solve social problems.

Question 33.
What do you understand by financial institutions? Write their merits and limitations. [6]
OR
Define debentures. What are the different types of debentures?
Answer:
Financial institutions have been established all over the country to provide financial assistance to business organizations. These institutions have been established by the central as well as state governments to fulfill the medium as well as long-term requirements of the business. Besides providing financial assistance, these institutions also conduct market surveys and provide technical assistance and managerial services to their clients. Some examples are IDBI, SIDBI, NABARD, etc.
Merits:
(i) They provide long-term finance which is not provided by commercial banks.
(ii) They provide funds during periods of depression when other sources are not available.
Limitations:
(i) The procedure for obtaining loan from these institutions is time-consuming and expensive. Moreover, it involves many formalities.
(ii) They impose many restrictions on the power of borrowing of the company.

OR

Debentures are the acknowledgment of debt taken by a company from the public for a fixed period of time at a given rate of interest.
The types of debentures are as follows:
(1) Secured and unsecured debentures: The debentures which create a charge on the assets of the company are called secured debentures which do not create any charge are known as unsecured debentures.
(2) First and second debentures: First debentures are the debentures that are repaid before other debentures are repaid. While debentures that are paid after the first debentures have been paid back are known as second debentures.
(3) Registered and bearer debentures: The debentures which are duly recorded in the register of debenture holders maintained by the company and can be transferred only through a regular instrument, of transfer are known as registered debentures while the bearer debentures are those which are transferable by mere delivery.
(4) Convertible and non-convertible debentures: The debentures that can be converted into equity shares after the expiry of a specified period are known as convertible debentures while the debentures that cannot be converted are known as non-convertible debentures.
(5) Zero interest debentures (ZID): The debentures which do not carry any explicit rate of interest are known as zero interest debentures. The return to the investor is equal to the difference between the face value of the debentures and its issued price.

Question 34.
Rekha Garments has received an order to export 2000 men’s trousers to Swift Imports Ltd. located in Australia. Discuss the first step of a procedure that Rekha Garments would need to go through for executing the export order. [6]
Answer:
Rekha Garments will have to do the following tasks in order to execute the export order:
(1) After receiving receipt of the order, they should first make a necessary inquiry about the credit worthiness of the importer, Swift Imports Ltd. They can also demand a letter of credit from the importer’s bank that it will honor payment up to a certain amount of export bills to the bank of the exporter to minimize credit risks.
(2) Becoming assured about payments, it will need to register itself and secure an Importer Exporter Code number in order to obtain an export license.
(3) After obtaining a license, this company will need to obtain pre-shipment finance from the exporter’s bank in order to purchase raw materials to undertake production and packaging.
(4) After obtaining the pre-shipment finance from the bank, Rekha Garments proceed to get the garments ready as per the specifications of the importer.
(5) After the goods are ready, Rekha Garments must get them inspected before exporting them.For this inspection, it must contact the Export Inspection Agency (ELA) or another designated agency for obtaining a certificate of inspection.
(6) After clearing the pre-shipment inspection, it will have to obtain excise clearance from the relevant Excise Commissioner. The excise the commissioner then examines the invoice and, if satisfied, issues the excise clearance to the exporter.