Students must start practicing the questions from CBSE Sample Papers for Class 11 Business Studies with Solutions Set 9 are designed as per the revised syllabus.

CBSE Sample Papers for Class 11 Business Studies Set 9 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.
Which industry combines various ingredients into a new product? [1]
(A) Analytical industry
(B) Synthetical industry
(C) Processing industry
(D) Assembling industry
(B) Synthetical industry

Explanation: In this industry, two or more materials are mixed together to create a new product. For example, producing soap, biscuits, etc.

Question 2.
Which partner 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? [1]
Dormant Partner

Question 3.
Funding for Departmental Undertakings comes from which of the following sources: [1]
(A) Shares
(B) Debentures
(C) Government Treasury
(D) Loans from Financial Institutions
(C) Government Treasury

Explanation: The funding of these enterprises comes directly from the Government Treasury and is an annual appropriation from the budget of the Government. The revenue earned by these is also paid into the treasury.

Question 4.
Retained earnings also known as plowing back profits’ are a source of_______financing. [1]
(A) External
(B) Internal
(C) Temporary
(D) Borrowed
(B) Internal

Explanation: A company generally does not distribute all its earnings amongst the shareholders as dividends. A portion of the net earnings may be retained in the business for use in the future. This is known as retained earnings. It is a source of internal financing or self-financing or ‘plowing back profits. The profit available for plowing back into an organization depends on many factors like net profits, dividend policy, and age of the organization.

Question 5.
Name the organization which registers local small-scale industries and maintains their records. [1]
District Industries Centre.

CBSE Sample Papers for Class 11 Business Studies Set 9 with Solutions

Question 6.
Reconstruction of sick public sector units is taken up by. [1]
(B) MoU

Explanation: BIFF was established with the aim to revive and rehabilitate ‘sick’ undertakings and assist in the closure or liquidation potentially sick or non-viable industrial corporations.

Question 7.
Goods are_______in nature and services are_______in nature. [1]
Homogenous, Heterogeneous

Question 8.
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
(C) Commerce

Explanation: Commerce embraces all those activities which are necessary for maintaining a free flow of goods and services from the point of production to the point of ultimate consumption.

Question 9.
The business assets of a firm amount to ₹ 22,000 but the liabilities stand at ₹ 47,000. What course of action can the creditors take if it is a sole proprietorship firm? [1]
(A) Creditors can settle their account only to the extent of business assets available i.e., ₹ 22,000
(B) Besides using business assets of ₹ 22,000, creditors can use the personal property of the owner to the extent of ₹ 25,000
(C) Creditors can settle their account only to the extent of the owner’s personal assets are available
(D) None of these
(B) Besides using business assets of ₹ 22,000, creditors can use the personal property of the owner to the extent of ₹ 25,000

Explanation: Sole proprietor has unlimited liability. If due for some reason there are losses in business, his personal property can be utilized to pay the business debts. This discourages him to expand his business.

Question 10.
e-business may be defined as conducting activities of industry, trade, and commerce through the_______network. [1]
computer/ online

Question 11.
Noise is not merely a source of annoyance but it also possesses some serious health hazards. In light of this statement which of the following is incorrect? [1]
(A) It is caused by the running of factories.
(B) It is caused by vehicles.
(C) It cannot be controlled in order to protect the environment.
(D) It can be responsible for many diseases like loss of hearing etc.
(C) It cannot be controlled in order to protect the environment.

CBSE Sample Papers for Class 11 Business Studies Set 9 with Solutions

Question 12.
Which of the following does not cause any pollution? [1]
(A) Dumping of toxic wastes on land
(B) Dumping waste into rivers, streams, and lakes
(C) Recycling waste instead of disposal
(D) Smoke and other chemicals from manufacturing plants
(C) Recycling waste instead of disposal

Question 13.
Give an example of personal service. [1]

Question 14.
Which of the following is not an application of e-business? [1]
(A) Online bidding
(B) Online procurement
(C) Online trading
(D) Contract R&D
(D) Contract R&D

Question 15.
Raising money through retained earnings involves which of the following explicit costs: [1]
(A) Interest
(B) Dividend
(C) Flotation cost
(D) No explicit cost is incurred
(D) No explicit cost is incurred

Explanation: As there is no explicit cost of retained earnings, they are free of cost.

Question 16.
Small businesses in India take_______decisions as compared to large-sized organizations. [1]
(A) Quick
(B) Slow
(C) Delayed
(D) None of these
(A) Quick

Read the following case and answer Q.No. 17-20 on the basis of the same:
Kalakrati Industries is a company manufacturing stationery items. The company has set its objective of increasing revenue from ₹ 50 crores to 100 crores within 2 years. Unfortunately with the saturating domestic demand, underutilization of production capacity, etc., their objectives could not be achieved even after 3 years. In a long discussion in the meeting with all the managers, the company discussed the scope of international business and reached the decision to extend its market territory beyond the nation’s boundaries by selling goods to foreign countries.

For this, the company decided to import exclusive stationery items from Japan. After identifying a suitable exporter, Kalakrati Industries sent a written request to the exporter to provide information regarding price, terms, and conditions, etc. on which basis the exporter will be able to supply goods.

Question 17.
_______to extend its market territory beyond the nation’s boundaries.’ Identify the means through which the company can do so in light of the given case. [1]
(A) Improving promotion strategy
(B) Improving productivity
(C) Opening more retail outlets in the country
(D) Exporting the goods
(D) Exporting the goods

Explanation: Goods and services produced in one country but supplied to buyers in another are known as exports.

Question 18.
‘Unfortunately with the saturating domestic demand_______. In reference to the given statement which of the benefits of international trade suits this case? [1]
(A) Way out to intense competition in the domestic market
(B) Prospects for growth
(C) Prospects for higher profits
(D) Improved business vision
(C) Prospects for higher profits

Explanation: International business encourages many countries, especially developing ones to produce on a larger scale which not only helps in improving their growth prospects but also increases profits.

Question 19.
How will an increase in the production capacity of Kalakrati Industries benefit it? [1]
(A) Economies of scale
(B) Reduction in production cost
(C) Improve profit margin
(D) AH of these
(D) AH of these

Explanation: It is a written request made by an importing firm to the overseas supplier for providing information regarding the price and various terms and conditions for exporting goods.

CBSE Sample Papers for Class 11 Business Studies Set 9 with Solutions

Question 20.
_______is a written request to the exporter to provide information regarding price, terms, and conditions, etc. on which the exporter will be able to supply goods. [1]
(A) Trade Enquiry
(B) Proforma Invoice
(C) Quotation
(D) None of the above
(A) Trade Enquiry

Section – B (15 Marks)

Question 21.
Explain how industry, trade, and commerce are interrelated.
Name the services which are related to the following cases: [3]
(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.
Industry, commerce, and trade are closely related to each other in a number of ways:
(1) Industry is related to the production of goods and services and commerce helps to distribute the goods and services produced by the industry to the final consumer.
(2) Industry and commerce are interdependent on each other. They cannot survive in isolation as both are vital to each other. Commerce will be of no use in the absence of industry and industry cannot survive in the absence of commerce. Commerce is a creator of place and time utility and serves as the backbone of the industry, while industry provides the base for commerce.
(3) Trade is an integral part of commerce. It refers to the sale and purchase of goods and services. It provides a ground for commerce to play. It not only provides support to industry but also maintains a smooth flow of commerce at the same time.


(i) Advertisement segment.
(ii) Transport segment.
(iii) Warehousing segment.

Question 22.
Multinational corporations are of great advantage but they are not free from ill effects. Explain the ill effects of multinational corporations. [3]
Limitations of multinational corporations are as follows:
(1) Disregard national objectives: Sometimes, multinational companies disregard the national objectives. As a result, planning done by the government goes in vain.
(2) Depletion of national resources: Multinational companies are set up with profit motive only. They exploit natural resources in unbalanced manner. So, it is harmful to the economy.
(3) Threat of obsolete technology: Sometimes in the ‘technology transfer’ process, obsolete technology is transferred as a result of which the diseconomies of scale prevail.

Question 23.
What do you mean by ‘Inconsistency’ of services? [3]
Inconsistency of services means that homogeneous and standardized services can’t be provided each time by the service provider. Services have to be performed exclusively each time according to the different demands and different expectations of various customers. E.g., Cable operators offering channels as per customer viewership requirements is an example of the feature ‘consistency’.

Question 24.
A Company should have an ideal capital structure striking a balance between the owned funds and the borrowed funds. The finance manager should be efficient enough to do effective financial planning and take all the financial decisions – Investment decisions, financing decisions, and dividend decisions in such a way that the shareholder’s wealth is maximized. Excess of owned funds may reduce earnings per share and excess of borrowed funds may increase financial risks for the company. Enlist the different sources of owned capital and borrowed capital used by a company. [3]
Sources of Owner’s funds:

  • Equity shares,
  • Preference Shares,
  • Retained Earnings

Sources of Borrowed funds:

  • Trade Credits,
  • Loans from Banks,
  • Loans from Financial Institutions,
  • Debentures,
  • Public Deposits,
  • Commercial Paper,
  • Inter-corporate Deposits.

CBSE Sample Papers for Class 11 Business Studies Set 9 with Solutions

Question 25.
‘Protection of small-scale industries (SSI) by the Government is essential for equality of opportunity. Comment. [3]
The given statement is correct. Small-scale industries occupy a very important place in the industrial structure of the country. However, they cannot compete with the big industrial firms. They can flourish only when they are protected from large firms. The government has reserved the production of a number of products for the small-scale industry. Moreover, small-scale industries were also given concessions, so steps taken by the Government for their growth are justified.

Section – C (12 Marks)

Question 26.
If registration is optional, why do partnership firms willingly go through this formality and get themselves registered? State any four reasons. [4]
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:
(i) The partner of an unregistered firm cannot file a suit against any other partner to settle the disputes.
(ii) The partner of an unregistered firm cannot file a suit against the partnership firm.
(iii) The partner of an unregistered firm cannot file a suit against an outsider or third party for recovery of any claim.
(iv) Outsiders can file a suit on an unregistered firm for a claim.

Question 27.
How would you classify business activities?
“The motive of service dominates the working of the co-operative society.” How? Explain why three merits of the cooperative society. [4]
The business activities can be classified as industry and commerce.
Industry: includes all those activities that are concerned with the conversion of raw material into useful products (production). Using mechanical appliances and technical skills. For e.g. cement industry, textile industry, etc. The term industry is also used to mean a group of firms producing similar or related goods.
Commerce: embraces all those activities which are necessary for maintaining a free flow of goods and services from the point of production to the point of ultimate consumption. Thus providing a necessary link between producers and consumers. It includes both Trade and Auxiliaries to trade.


Cooperative societies lay emphasis on the values of mutual help and welfare. If any surplus is generated as a result of its operations, it is distributed amongst the members as dividends in conformity with the bye-laws of the society. Therefore it can be said that cooperative societies i.e., the aim is to earn some profit for the benefit of its members.
The advantages of consumer cooperative societies are as follows:
(1) Equality in voting rights: A cooperative society governed by the principle of one man one vote. Each member has an equal voting right
irrespective of his capital contribution to society.
(2) Ease of formation: Minimum of ten members are required to form a cooperative society. The procedure for the registration of the society is very simple and involves a few legal formalities.
(3) Limited liability: The members have limited liability to the extent of the capital contributed by them. Therefore they cannot held personally liable for the payment of debts.
(4) Support from the government: The government provides subsidies to these societies and charges a very low rate of interest on loans given to them. The rate of taxes is also very low.

Question 28.
Enlist any four measures through which a business can promote its goodwill in the market. [4]
A business can promote its goodwill in the market by adopting the following measures:
(i) Enlisting its shares in the market.
(ii) Manufacturing the best quality goods.
(iii) Providing efficient after-sale services.
(iv) Making provisions for the redressal of consumer grievances.

CBSE Sample Papers for Class 11 Business Studies Set 9 with Solutions

Section – D (15 Marks)

Question 29.
Abhaya limited, a famous group of promoters gets a contract of promoting a toy manufacturing company. Discuss in brief the steps which are required to be followed to form a toy manufacturing company.
Who has equal ownership right over the property of an ancestor? Highlight the mentioned form of business with its essential characteristics. [5]
The steps which are followed to form a toy manufacturing company (A Public Limited Company) are:
(1) Application for registration: An application in the prescribed format, duly signed by all the partners is to be submitted to the registrar of companies, containing the following information:

  • Name of the company.
  • Location of the company.
  • Memorandum of association.
  • Articles of association.
  • Written consent of directors.
  • Names and addresses of the directors.
  • Statutory declaration announcing that all the information is true and all the requirements of the act have been duly fulfilled.

(2) Fees: Required amount of fees is to be deposited to the registrar of companies.
(3) Issuance of certificate: When the registrar is satisfied with all the formalities, he enters the company’s name in the register and issues a certificate of incorporation.


A joint Hindu Family is a form of organization wherein the business is owned and carried by the members of the Hindu Undivided Family (HUF). Members of JUF have equal ownership right over the property of an ancestor and they are known as co-parceners.
Characteristics of a Joint Hindu Family Business are as follows:
(i) Formation: At least two members and ancestral property to be inherited by them is the basic requirement. An individual becomes a member by birth; therefore, no agreement is required.
(ii) Liability: The liability of Karta is unlimited while that of the other members is limited to the extent of their share.
(iii) Control: Karta has full control over the family business. All business decisions are taken by him only and are binding on the other members.
(iv) Limited liability of members: Except for the Karta, the liability of other members is limited to the extent of their share in the business.

Question 30.
“International business is more than international trade”. Comment.
Briefly explain the objectives of export trade. [5]
International trade comprises exports and imports of goods and forms an important component of international business. But the scope of international business has substantially expanded. International trade in services such as international travel and tourism, transportation, communication, banking, warehousing, distribution, and advertising has considerably grown. The other equally important developments are increased foreign investments and overseas production of goods and services.

Companies have started increasingly making investments in foreign countries and undertaking the production of goods and services in foreign countries to come closer to foreign customers and serve them more effectively at lower costs. All these activities form part of international business. So, we can say that international business is a much broader term and is comprised of both the trade and production of goods and services across frontiers.


The following are the objectives of export trade:
(i) Sale of surplus production: A country may produce more than it requires. Then in that case, the surplus may be sold to foreign countries.
(ii) Optimum utilization of domestic resources: Every country has some natural resources in plenty. These resources can be utilized to increase production and sell to those countries where these are in shortage.
(iii) Employment opportunities: International business helps the business enterprises focus more production which requires more manpower which means more employment opportunities.
(iv) Earning of foreign exchange: A country with surplus production may earn foreign exchange by selling goods and services other countries.
(v) Increase the national income: Earning of foreign exchange due to exports add to the national income of a country. This help in improving the standard of living of people.

Question 31.
Explain the features of Goods and Services Tax (GST). [5]
Features of the GST model are:
(1) There are two components: one levied by the Central (referred to as Central GST), and the other levied by the States (referred to as State GST), Rates for Central GST and State GST are approved appropriately.
(2) The Central GST and the State GST are applicable to all transactions of goods and services.
(3) The Central GST and State GST are to be paid to the accounts of the Centre and the States individually.
(4) Since the Central GST and the State GST are treated individually, taxes paid against the Central GST are allowed to be taken as an input tax credit (ITC) for the Central GST and can be utilized only against the payment of Central GST. Cross-utilization of ITC between the Central GST and the State GST is not permitted except in the case of inter-State supply of goods and services.

CBSE Sample Papers for Class 11 Business Studies Set 9 with Solutions

Section – E (18 Marks)

Question 32.
What steps can an enterprise take to protect the environment from the threats of pollution? [6]
The steps which can be taken by business enterprises for environmental protection are:
(1) A definite commitment by top management of the enterprise to create, maintain and develop a work culture for environmental protection and pollution prevention.
(2) Ensuring that commitment to environmental protection is shared throughout the enterprise by all divisions and employees.
(3) Developing clear-cut policies and programs for purchasing good quality raw materials, employing superior technology, using scientific techniques of disposal and treatment of wastes, and developing employee skills for the purpose of pollution control.
(4) Complying with the laws and regulations enacted by the Government for the prevention of pollution.
(5) Participation in government programs relating to the management of hazardous substances, clearing up of polluted rivers, plantation of trees, and checking deforestation.
(6) Periodical assessment of pollution control programs in terms of costs and benefits so as to increase the progress with respect to environmental protection.

Question 33.
Rajesh is the CEO of GALA trading company. In a board meeting, it has been decided to modernize the plant and machinery of the entire company for better production. The estimated cost for the new setup ₹ 5 crores. State the merits and demerits of issuing equity shares for this purpose.
What factors will you take into consideration for selecting the source of business finance? [6]
Three merits and three demerits of issuing equity shares:
(i) Permanent capital: Equity shareholders provide the permanent funds of the company as there is no fixed commitment to return the money or pay a fixed rate of dividend.
(ii) No charge on assets: For the issue of equity shares, a company is not required to mortgage its assets. This increases credit worthiness of the company.
(iii) No financial risk: Payment of dividends to the equity shareholders is not compulsory. Therefore, there is no financial burden the company.
(i) Risk of fluctuating Return: Investors who want steady income may not prefer equity shares as equity shares get fluctuating returns.
(ii) Legal formalities: More formalities and procedural delays are involved while raising funds through the issue of equity shares.
(iii) Cost involved: The cost of equity shares is generally more as compared to the cost of raising funds through other sources.


The following factors will be taken into consideration for selecting the source of business finance:

(1) Cost: It refers to the cost incurred in obtaining the funds and the cost of using the funds. So, while deciding about the source of funds both the costs should be taken into consideration.

(2) Flexibility and ease: Borrowings from banks and financial institutions involve many restrictions, and detailed investigation and documentation is needed. Therefore, the business firms may not prefer them in case other sources are easily available.

(3) Effect on creditworthiness: The creditworthiness of a business is affected by the use of certain sources. For example, the issue of secured debentures by a company may lead to the withdrawal of loans by unsecured creditors. It might become difficult for the company to raise further unsecured loans.

(4) Form of organization and legal status: The form of the legal status of business firms also affects the choice of the source of finance. For
example, a sole proprietorship or a partnership firm cannot obtain funds by issue of equity shares as these can be issued only by joint stock companies.

(5) Purpose and time period: The time period for which the funds are required also affects the selection of the source of funds. For example, if the funds are required for short period, sources such as trade credit, commercial papers, etc. can be used. For long term, sources such as issues of shares, debentures, etc. are preferred. Therefore, the purpose of the business should also be considered while choosing the source of finance.

(6) Tax benefits: Certain sources of funds like debentures and loans provide tax benefits. The interest payable them is tax deductible. Hence, organizations seeking tax advantage prefer to raise funds through debentures or loans.

Question 34.
Briefly explain the structure of WTO.
“Nations with strong international trade have become prosperous and have the power to control the world economy. Global trade can the  become one of the major contributors to the reduction ot poverty.” justify. [6]
Structure of WTO:

(1) WTO comprises of The Ministerial Conference, which is composed of international trade ministers from all member countries and is
responsible for setting the strategic direction of the organization and making all final decisions on agreements under its wings. The Ministerial Conference meets at least once every two years.

(2) The General Council is composed of senior representatives of all members responsible for overseeing the day-to-day business and
management of the WTO.

(3) The Trade Policy Review Body is also composed of all the WTO members. It periodically reviews the trade policies and practices of all member states.

(4) The Dispute Settlement Body is also composed of all the WTO members and oversees the implementation and effectiveness of the dispute resolution process for all WTO agreements.

(5) Council is composed of all members. They provide a mechanism to oversee the details of the general and specific agreements on trade in goods and services.

(6) The Secretariat and Director General undertake the administrative functions of running all aspects of the organization. The Secretariat has no legal decision-making powers but provides vital services, and often advice, to those who need it. The Secretariat is headed by the Director General, who is elected by the members.

(7) The Committee on Trade and Development and Committee on Trade and Environment have specific mandates to focus on these relationships, which are especially relevant to how the WTO deals with sustainable development issues.


Nations with strong international trade have become prosperous and have the power to control the world economy. Global trade can the become one of the major contributors to the reduction of poverty due to the following advantages of international trade to countries and firm:
Benefits of International Trade to Firm:
(1) Prospects for higher profits: As compared to domestic business, international business can be more profitable. A business firm can earn higher profits by selling its products in countries where prices are high, particularly when the domestic prices are not satisfactory.
(2) Prospects for growth: Business firms with saturated demand for their products in the domestic market can improve their prospects of growth by entering into foreign markets. This is the prime reason which has prompted many multinational companies from developed countries to tap the market of developing countries.
(3) Way out to intense competition in the domestic market: The only way to significant growth in intense competition in the domestic market is internationalization. Hence, the international business acts as a catalyst of growth for business firms facing tough competition in the domestic market.

Benefits of International Trade to a country:
(1) Earning of foreign exchange: International business helps a country to earn foreign exchange, which it can later use for meeting it imports of capital goods, technology, petroleum products, and fertilizers, pharmaceutical products, and a host of other consumer products which otherwise might not be available domestically.
(2) More efficient use of resources: International business operates on a simple principle, Produce what your country can produce more to efficiently and trade the surplus production so generated with other countries to procure what they can produce more efficiently. If such an enhanced pool of goods & services is distributed equally amongst nations, it benefits all the trading nations.
(3) Increased standard of living: In the absence of International trade of goods and services, it would not have been possible for community to consume goods and services produced in other countries that the people in these countries are able to consume and enjoy a higher standard of living.

CBSE Sample Papers for Class 11 Business Studies Set 9 with Solutions