Students must start practicing the questions from CBSE Sample Papers for Class 11 Business Studies with Solutions Set 5 are designed as per the revised syllabus.

CBSE Sample Papers for Class 11 Business Studies Set 5 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.
Storage of goods for future consumption and safety purposes is known as warehousing. (True/False) [1]
Answer:
True

Question 2.
What is the minimum number of members required for a Joint Hindu Family business? [1]
Answer:
Two

Question 3.
All activities involving the removal of hindrances in the process of exchange are included in_______. [1]
(A) Trade
(B) Auxiliaries to trade
(C) Commerce
(D) None of these
Answer:
(C) Commerce

Explanation: Auxiliaries to trade means those activities which support or assist trade. These are an internal part of commerce in particular and business activity in general. The main auxiliaries are:
(i) Transportation and communication.
(ii) Warehousing
(iii) Banking and finance
(iv) Insurance
(v) Advertising

Question 4.
Who has the power to take decisions in a Cooperative society? [1]
(A) Members of the Co-operative society
(B) Elected managing committee
(C) Government
(D) Customers
Answer:
(B) Elected managing committee

Explanation: In a cooperative society, the power to take decisions lies in the hands of an elected managing committee. The right to vote gives the members a chance to choose the members who will constitute the managing committee and this lends the cooperative society a democratic character.

CBSE Sample Papers for Class 11 Business Studies Set 5 with Solutions

Question 5.
Global enterprises have certain disadvantages. Which of the following is incorrect in light of this statement? [1]
(A) Give rise to the growth of monopolies
(B) Always concentrate on selling items desirable for developing countries
(C) Lead to a concentration of power in few hands
(D) Concentrate more on selling consumer goods and luxury items
Answer:
(B) Always concentrate on selling items desirable for developing countries

Explanation: It is an advantage of global enterprises.

Question 6.
Environment protection can best be done by the efforts of. [1]
(A) Businesspeople
(B) Government
(C) Scientists
(D) All the people
Answer:
(D) All the people

Question 7.
What is the main objective of financial management? [1]
Answer:
Maximize owner’s wealth

Question 8.
Write the full form of UPI. [1]
Answer:
Unified Payments Interface

Question 9.
_______is the exchange of good & services between business and the consumers. [1]
Answer:
Business-to-consumer commerce (B2C)

Explanation: Business-to-Customers involves transactions between a business firm and its customers. B2C e-commerce transactions not only include activities such as the sale or purchase of goods and services but also other marketing activities through the online mode. It basically involves pre-sale activities (such as promoting products through advertisements) and pre-sale services (such as providing product information and cash-on delivery services) besides post-sale services (such as customer care services).

Question 10.
Which of the following terms is applicable for a service provider who provides services of a given kind to only one firm? [1]
(A) Verticals Third Party Service Provider
(B) Horizontals Third Party Service Provider
(C) Captive Service Provider
(D) None of these
Answer:
(C) Captive Service Provider

Question 11.
Name the source of finance having the least financial risk on the business. [1]
Answer:
Owner’s funds

Question 12.
NABARD was set up in 1992 to promote integrated rural development. (True/ False) [1]
Answer:
False

Question 13.
Write any one argument against CSR. [1]
Answer:
Lack of broad public support

CBSE Sample Papers for Class 11 Business Studies Set 5 with Solutions

Question 14.
Funds required for day-to-day business operations are known as_______. [1]
(A) Fixed capital
(B) Working capital
(C) Fixed and working capital
(D) None of the above
Answer:
(B) Working capital

Explanation: The financial requirements of an enterprise do not end with the procurement of fixed assets. No matter how small or large a business is, it needs funds for its day-to-day operations. This is known as the working capital of an enterprise, which is used for holding current assets such as stock of material, bills receivables, and for meeting current expenses like salaries, wages, taxes, and rent.

Question 15.
Name one Central tax which is included in GST. [1]
Answer:
VAT/Sales tax

Question 16.
Identify which of the following is not the service of retailers to consumers. [1]
(A) New product information
(B) After-sales service
(C) Wide selection
(D) Promotion
Answer:
(D) Promotion

Explanation: A wholesaler undertakes advertising and sales promotion of the product which automatically results in an increase in sales.

Read the following text and answer Q.17-20 on the basis of the same:
Paras Manek is a successful businessman who is engaged in manufacturing auto spare parts. The products manufactured by his business enterprise Paras Manek Ltd. are sold not only in India but also exported to various countries such as Singapore, Switzerland, China, North Korea, etc. Trudy Ltd., a Russian company that wants to import auto spare parts from Paras Manek Ltd. has received an inquiry regarding the goods and trade.

Paras Manek Ltd. has replied to it in the form of a quotation. Finding it favorable, Trudy Ltd. has placed an order containing a description of goods, price, and other instructions, etc. But before exporting the goods it has to fulfill certain legal formalities like procuring an export license and preparing the documents related to goods, shipment, and payment.

Question 17.
_______but also exported to various countries such as Singapore, Switzerland, China, North Korea, etc.” Identify the type of business discussed above. [1]
(A) Domestic Business
(B) International Business
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(B) International Business

Explanation: Manufacturing and trade beyond the boundaries of one’s own country is known as international business. International or external business can, therefore, be defined as those business activities that take place across national frontiers.

Question 18.
In the case of export, a buyer sends an inquiry to an exporter to seek information about: [1]
(A) Availability of goods
(B) Price of goods
(C) Terms and conditions of trade
(D) All of these
Answer:
(D) All of these

Question 19.
“Paras Manek Ltd. has replied to it in the form of a quotation.” Identify the document stated here. [1]
(A) Proforma Invoice
(B) Indent
(C) Letter of Credit
(D) Enquiry
Answer:
(A) Proforma Invoice

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 20.
Which of the following documents contains a description of goods, price, and other instructions? [1]
(A) Proforma Invoice
(B) Indent
(C) Letter of Credit
(D) Enquiry
Answer:
(B) Indent

Explanation: It is a document in which the buyer (importer) orders for supply of requisite goods to the supplier (exporter). The order or indent contains information such as quantity and quality of goods to be imported, price to be charged, method of forwarding the goods, nature of packing, mode of payment, etc.

CBSE Sample Papers for Class 11 Business Studies Set 5 with Solutions

Section – B (15 Marks)

Question 21.
Ram, Karta of a family business, died in a road accident. His son received compensation from the insurance company. Can this income be treated as HUF income?
OR
Briefly explain the following types of partners: [3]
(i) Dormant Partner
(ii) Active Partner
(iii) Nominal Partner
Answer:
No, insurance compensation cannot be treated as the income of HUE It is an individual asset. On the death of Mr. Ram, this money should be handed over to his son, as this will be compensated for the loss of his father.

OR

(i) Dormant Partner: A partner who does not participate in the active business of a company or partnership, but is entitled to a share of the profits, and subject to a share in losses. This partner is also called a sleeping partner or a silent partner.
(ii) Active Partner: A partner who contributes capital and also actively participates in the management and affairs of the business is called an active partner. He shares the profits and losses of the business and his liability is unlimited.
(iii) Nominal Partner: A partner who allows the partnership firm to use his/her name but does not contribute any capital or take part in the management and affairs of the business. He does not share the profits and losses of the firm but he is liable to the creditors for the re-payment of the firm’s debts.

Question 22.
Why is the mobility of factors of production generally less among the countries than within the country? [3]
Answer:
(i) Because of legal restrictions on their movement across the nations.
(ii) Variations in the socio-cultural environment of different nations restrict the mobility of labor as it is found difficult to adjust to other countries’ sociocultural conditions.
(iii) Geographic influences and economic conditions also come a big way in the movement of factors of production across countries.

Question 23.
Give the meaning of Marine Insurance. [3]
Answer:
A marine insurance contract protects the owner of a ship or cargo against complete or partial loss or damage caused to the ship or cargo at sea. It provides protection against the perils of the sea such as a collision of the ship with a rock, an attack on the ship by enemies and pirates, and damage caused by fire. The insured pays a certain amount as a premium to the insurer.

Question 24.
Which institution issues bonds? How are they different from debentures? [3]
Answer:
Bonds are issued as long-term financial instruments by the Central Government, State Government, or any specialized financial institution.
Differences between debentures and bonds:
(1) A debenture may be issued by creating a charge on the company’s assets or without this charge. A bond can be issued only by creating a charge on the assets.
(2) A debenture may be redeemed in installments while a bond is redeemed in a lump sum.

Question 25.
Write a short note on National Small Industries Corporation (NSIC). [3]
Answer:
National Small Industries Corporation (NSIC) was established in the year 1955 in order to promote, aid, and foster the growth of small business units in the country. The functions of NSIC are as follows:

  • To create awareness about technological gradation.
  • To develop technology transfer centers and software technology parks.
  • To export the products of small business units in order to develop export worthiness.
  • To obtain, supply, and distribute indigenous and imported raw materials.
  • To provide mentoring and advisory services.

CBSE Sample Papers for Class 11 Business Studies Set 5 with Solutions

Section – C (12 Marks)

Question 26.
What do you understand by financial institutions? Write their merits.
OR
Mr. Anand recently got retired from his 60 years of service at Indian Oil, he received a good amount of money from his pension and other savings. He is thinking to invest his savings in financial security which provides higher returns and high liquidity control over business affairs. Suggest the most suitable security and give three reasons to support your answer. [4]
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.
Merits:
(1) They provide long-term finance, not provided by commercial banks.
(2) They provide funds during periods of depression when other sources are not available.

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. Higher dividends appreciate the market value of equity shares in the market, maximizing the shareholder’s wealth.
(2) Marketability of equity shares on the stock exchanges make them lucrative sources of investment.
(3) Equity shares provide voting rights to the shareholders through which they can exercise control over management.

Question 27.
The main objective of Public-Private Partnership (PPP) is to combine the skills, expertise, and experience of both the public and private sector.” In light of this statement, specify its main advantages. [4]
Answer:
Public-Private Partnership refers to the involvement of the private sector in Government projects aimed at a public benefit in the form of management expertise and monetary contribution.
Advantages offered by PPP are:
(1) The PPP approach enables the Government to overcome its budgetary and financial constraints.
(2) Leads to faster implementation of infrastructural projects with a high degree of efficiency.
(3) Benefits of the combined expertise of private and public sectors. Public-Private Partnership’s

Question 28.
According to India Partnership Act 1932, it is not compulsory for a partnership firm to get itself registered, then why do partners prefer to get the firm registered? [4]
Answer:
Legally it is not compulsory for a partnership firm to get itself registered. Nevertheless, partners prefer to get the firm registered to overcome the following limitations:

  • The partner of an unregistered firm cannot file a suit against any other partner to settle the disputes.
  • The partner of an unregistered firm cannot file a suit against the partnership firm.
  • The partner of an unregistered firm cannot file a suit against an outsider or third party for recovery of any claim.
  • Outsiders can file a suit on an unregistered firm for a claim.

Section – D (15 Marks)

Question 29.
Arun has just passed his 10th standard and has opted for Business Studies as his optional subject. During his initial classes regarding this subject, he is not able to understand the concept of business. You are the teacher of this subject explain to him any five characteristics of a business.
OR
What functions does the profit perform in a business? [5]
Answer:
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 transfer or exchange of goods and services for the value.
(4) Dealing 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.

OR

Functions of Profit:

(1) Source of income: It is the most important source of income and provides livelihood to businessmen. Everyone has to satisfy his/ her needs and hence no one is expected to undertake business activities without any earnings for the same.
(2) Source of finance: Profit is a source of finance for the expansion and diversification of business activities. A part of the profits can be retained for increasing the volume of the business. Retention of profit is always considered the best way for carrying out business activities.
(3) Efficient working: Profit is required for the efficient and smooth functioning of the business. It is considered a barometer for judging the performance of the business.
(4) Goodwill: Profit helps in building the reputation or goodwill of the business firms. With profit increasing over time, a business enterprise gains a reputation. Such goodwill creates market standing which ultimately helps to raise loans and thereby obtain credit more easily.
(5) Reward for risk-bearing: Risk is always associated with every business. A person who invests money in the business has to bear the risk also. In the eventuality of loss due to any risk, the businessman doesn’t stop the business. It is the profit element that motivates him to carry on with business even in the case of losses.

CBSE Sample Papers for Class 11 Business Studies Set 5 with Solutions

Question 30.
“Spencers”, “Big Apple” and “Big Bazar” are examples of which type of fixed shop (large store)? Give any two merits of these types of stores.
OR
Identify the type of retail selling in which goods are supplied to the customers without the help of middlemen and without customers undertaking a journey to the retailer. Enlist any three merits of such retail business. [5]
Answer:
“Spencers”, “Big Apple” and “Big Bazar” are examples of departmental stores. A departmental store is a large retail outlet offering a wide variety of products, classified into well-defined departments under one roof. The main aim of this store is to satisfy all the needs of the customers.
Merits:
(1) Convenience in buying: Departmental stores, provide great convenience to customers by offering a large variety of products of the requirements in one place.
(2) Attract a large number of customers: Being centrally located, these stores are able to attract a large number of customers.

OR

(1) This is mail-ordered retailing, also known as shopping by post.
(2) Mail-order business offers the following benefits:

  • Elimination of middlemen which results in lots of savings for both buyers and sellers.
  • It does not require heavy expenditure on building and other infrastructure. Therefore, it can be started with limited capital.
  • Since the mail order business does not extend credit facilities to the customers, there is no risk of bad debts to them.

Question 31.
Explain briefly the following agreements of WTO: [5]
(i) Agreement on Agriculture (AOA)
(ii) Agreement on TRIPS
Answer:
(i) Agreement on Agriculture (AOA): This agreement ensures free and fair trade in agriculture. The developed countries have agreed to lower the customs duties on their imports and reduce subsidies for the export of agricultural goods.
(ii) Agreement on TRIPS: The agreement sets out the minimum standard of protection to be adopted by the parties in respect of seven intellectual properties viz, copyrights, trademarks, geographical indication, industrial design, laying out of integrated circuits, and trade secrets.

Section – E (18 Marks)

Question 32.
What are the major areas of social responsibility of business?
OR
What is the slope of outsourcing today? [6]
Answer:
The major areas of social responsibility in business
are:
(1) Economic responsibility: A business enterprise is basically an economic entity and, therefore, its primary social responsibility is economic i.e., produce goods and services that society wants and sell them at a profit. There is little discretion in performing this responsibility.
(2) Legal responsibility: Every business has a responsibility to operate within the laws of the land. Since these laws are meant for the good of society, a law-abiding enterprise is a socially responsible enterprise as well.
(3) Ethical responsibility: This includes the behavior of the firm that is expected by society but not codified in law. For example, respecting the religious sentiments and dignity of people while advertising a product. responsibility:
(4) Discretionary responsibility is completely voluntary in nature. It means that a business enterprise may choose to open a charitable school or hospital for the poor, grant aid to people affected by natural calamities, provide employment opportunities to the physically challenged, and so on.

OR

The scope of outsourcing can be understood from the following points:

(1) Financial services: In today’s competitive environment, with volatile economic conditions and high levels of regulations, fund managers, bank managers, and investment banks are identifying middle and block offices as an area where they can gain competitive advantage. The challenge however lies in finding new ways to lower costs, gain more flexibility and make processing more efficient without losing control. Financial services must be outsourced to a provider who has domain knowledge as well as experience which would set you apart from the rest.

(2) Technology translation services: The technology sector changes at such a faster pace that seems impossible to stay current on new developments. New developments in the sector can lead to new terminology being used by stakeholders on a daily basis. One cannot afford to have documents containing outdated terms and information which may prove that the technology used is not up-to-date. One must rely on professionals who stay up-to-date with respect to the latest trends in the world of technology so that one must be on the cutting edge of technology.

Question 33.
Jaya, Rohit, and Raman are three friends who have completed a vocational course in entrepreneurship after their school education. Finding the job market tough, they were contemplating the idea of setting up a small business using the skills they had learned in their course. They came across a notification given by the District Industries Centre located near the Industrial Estate in VKIA Jaipur, Rajasthan regarding a seminar on Government assistance for a small businesses. They attended the seminar and got useful information about Government assistance to SSIs. Jaya decided to open a micro-enterprise as a fruit processor in her village.

Rohit planned to start a business of providing courier services in Jaipur city. Raman planned to start a small shoe manufacturing factory in the backward area of Odisha.
(i) Give the limit of Investment in plant and machinery for Jaya’s small business
(ii) What is the limit of investment in plant and machinery in the case of Service Enterprises according to the MSMED Act?
(iii) Why promotion of Small Scale Industries is considered as a powerful instrument for development?
OR
Explain the process of an entrepreneurship development program. [6]
Answer:
(1) Jayais running a micro-enterprise of a manufacturing nature in which the investment limit in plant and machinery can’t exceed₹1 crore.
(2) Service Enterprise has the following investment limit if it is:

  • Microenterprise: Doesn’t exceed ₹1 crore.
  • Small enterprise: Not more than₹10 crore
  • Medium enterprise: Not more than ₹ 50 crore

(3) SSIs are promoted by the Government as a powerful instrument for rural development as SSIs.

  • Generate employment for rural artisans and seasonal employment for agricultural labor.
  • Prevent migration of rural population to urban areas.
  • Accelerate rural industrialization.
  • Contribute to the socio-economic development of rural areas.

OR

An Entrepreneurial Development Programme consists of three broad stages:
(i) Pre-training stage
(ii) Training or Development stage
(iii) Post-training or Follow-up stage

(1) I Stage Pre-training Stage: The first stage of the Entrepreneurial Development Programme is the pre-training stage. It includes the preparations required to launch the program. This stage involves the following main activities:

  • Creation of Infrastructure for training.
  • Development of training syllabus.
  • Selection of faculty.
  • Designing tools and techniques for the selection of trainees.
  • Formation of the selection committee.

(2) II Stage: Training or Development: The process of training helps an entrepreneur in gaining written and practical knowledge and to accept new technology. ED training is usually more effective when linked to finance and other services such as marketing, quality assurance, and productivity improvement. During this stage, the training program is implemented to develop motivation and skills among the participants. Some methods of training are:

  • Lecture method,
  • Individual instructions,
  • Group instructions,
  • Demonstration method,
  • Seminars,
  • Meetings,
  • Conferences, etc.

(3) III Stage: Post-Training or Follow-up: The third stage of the Entrepreneurial Development Programme is the post-training stage. This phase involves follow-up meetings and a follow-up register to ensure the success of the entrepreneurial development program. It includes the  preparing and maintaining a separate file for each trainee and passing the desired information to the entrepreneur well in time.

CBSE Sample Papers for Class 11 Business Studies Set 5 with Solutions

Question 34.
Your firm is planning to import machinery from Canada. Describe the procedure involved in importing. [6]
Answer:
The initial six steps that he needs to take in order to import machinery are:

(1) Obtaining I.E.C. No.: Before starting the import procedure, he has to obtain an I.E.C. (ImportExport Code) number. This number is used in filling the formalities of the import procedure. To get this number, he has to apply to the regional import-Export Licensing Authority in the prescribed form.

(2) Obtaining Registration Cum Membership Certificate (RCMC): He will get various benefits in the form of subsidies and exemptions in excise duty, tax, etc. To get these benefits, they have to show RCMC. After getting the I.E.C. number, he will apply for RCMC. The RCMC is issued by:

  • Import Promotion Council.
  • Federation of Indian Import Organisation.
  • Import Development Authority, etc. Along with the application, he has to submit a bank certificate and IEC number. If the authority is satisfied, then they will issue RCMC.

(3) Opening a letter of credit: Letter of credit is issued by his bank in favor of the exporter. In this letter, the bank undertakes a guarantee for making payment on his behalf. He will approach his bank and instructs them to issue a letter of credit in favor of the exporter. He will instruct the bank about the documents to be collected from the exporter before making payment.

(4) Arrival of goods: Goods are shipped by the exporter as per his specifications. When goods reach the importer’s country, the captain of the ship informs the dock officer and instructs him to receive the goods and record the details about the goods on the document called Import General Manifest. This document gives details of imported goods.

(5) Informing the importer: After the arrival of goods, the dock authorities inform the importer about the arrival of goods. The importer prepares a document called a bill of entry which contains details about the imported goods and submits this document to the customs officer to get customs clearance.

(6) Customs clearance: The customs officer examines the bill of entry carefully and assesses the custom duty to be paid by the importer after assessing the duty amount, the bill of entry is given to the appraiser officer who verifies the details given in the bill. If the appraiser officer is satisfied with the information given in the bill of entry, then he returns the bill to the importer for making payment of custom duty.