CBSE Sample Papers for Class 12 Business Studies Set 8 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 8 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Business Studies Set 8 with Solutions

Time : 3 Hr.
Max. Marks : 80

General Instructions:

• This question paper contains 34 questions.
• Marks are indicated against each question.
• Answers should be brief and to the point.
• Answers to the questions carrying 3 marks may be from 50 to 75 words.
• Answers to the questions carrying 4 marks may be about 150 words.
• Answers to the questions carrying 6 marks may be about 200 words.
• Attempt all parts of the questions together.

Question 1.
Anne is involved in manufacturing dark chocolates. She adopted environmental friendly methods of production. Which management objective is achieved here?
(a) Individual
(b) Organisational
(c) Social
(d) economic (1)
Answer:
(c) Social objective

Explanation: It involves the creation of benefit for society. Every organisation has a social obligation to fulfill, which involved using eco friendly methods of production, giving employment opportunities, etc.

Question 2.
Functional foremanship is an extension of
(a) Division of work
(b) Discipline
(c) Subordination of individual interest
(d) Espirit de corps (1)
Answer:
(a) Division of work

Explanation: Principle of the division of work is given by Henry FayoL As per this principle the work is divided into small tasks/jobs. A trained and competent specialist is required to perform each job. Thus, it leads to specialisation.

Question 3.
After implementation of plan, planning ends. True/false (1)
Answer:
False

Explanation: After implementation of plan, follow up action is required.

Related Theory
Which step come after implementation of plan in the process of planning? Answer Follow up action

Question 4.
Which of the following is a policy matter?
(a) Delegation
(b) Decentralisation
(c) Formal organisation
(d) Informal organisation (1)
Answer:
(b) decentralisation

Explanation: Decentralization is the orderly assignment of authority, throughout the various levels of management. It describes the way in which power to take decisions is allocated among various levels in the organisational hierarchy.

Question 5.
KFC does not give its franchise to any other company, which is running a food business. This is related to which type of plan?
(a) Policy
(b) Procedure
(c) Rules
(d) All of the above (1)
Answer:
(a) policy

Related Theory
Which one of the following is a type of plan?
(a) Policy
(b) Procedure
(c) Rules
(d) All of the above
Answer,
(d) All of the above

Question 6.
“It is used for inter-bank transactions. It is short-term finance repayable on demand with a maturity period of one day to fifteen days”. Name the instrument.
(a) Call money
(b) Commercial papers
(c) Treasury bill
(d) None of the above (1)
Answer:
(a) call money

Explanation: Call money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio.

Question 7.
SEBI recently called far information and issued a show cause notice to NSE and its 14 officials seeking explanation on the Preferential Access allegations at the Exchange’s Co-location facility. State the related function of SEBI in the given case.
(a) Regulatory Function
(b) Development Functions
(c) Protective Functions
(d) All of the above (1)
Answer:
(a) Regulatory Function

Explanation: Keeping in mind the emerging nature of the securities market in India, SEBI was entrusted with the twin task of both regulation and development of the securities market.

Question 8.
“To promote orderly and healthy growth of securities market and protection of investors, SEBI was set up”. Identify the objective of SEBI in the given statement.
(a) Protection to the investors
(b) Prevention of malpractices
(c) Fair and proper functioning
(d) All of the above (1)
Answer:
(a) Protection to the investors

Explanation: The primary objective of SEBI is to protect the interest of people in the stock market and provide a healthy environment for them.

Question 9.
Saman Khan is the CEO of F&Y corporations. She wants to finanace capital with the cheapest source. Suggest her the source of finance to choose.
(a) debenture
(b) equity share capital
(c) preference share
(d) retained earning (1)
Answer:
(d) retained earning

Explanation: retained earning is the cheapest source of finance.

Question 10.
Identify the incorrect statement:
(a) Consumer protection has a moral justification for business.
(b) In addition to rights, a consumer also has some responsibilities.
(c) A complaint can only be made to a District Forum when the value of the goods or services in question, along with the compensation claimed, exceeds ? 20 lakhs
(d) The Consumer Protection Act provides for six consumer rights. (1)
Answer:
(c) A complaint can only be made to a District Forum when the value of the goods or services in question, along with the compensation claimed, exceeds ? 20 lakhs

Explanation: A complaint can only be made to a District Forum when the value of the goods or services in question, along with the compensation claimed, does not exceed Rs. 20 lakhs

Question 11.
A decision to acquire a new and modern plant to upgrade an old one is a:
(a) financing decision
(b) working capital decision
(c) investment decision
(d) None of the above (1)
Answer:
(c) investment decision

Explanation: The investment decision, therefore, relates to how the firm’s funds are invested in different assets.

Question 12.
Which of the following states need of the consumer protection?
(a) Widespread exploitation of consumers
(b) Unorganized consumers
(c) Social responsibility
(d) All of the above (1)
Answer:
(d) All of the above

Question 13.
…………. is the only element of marketing mix, which generate revenue.
(a) Product
(b) Price
(c) Place
(d) Promotion (1)
Answer:
(b) Price

Question 14.
Which of the following element of marketing mix cover customer support services?
(a) Product
(b) Price
(c) Place
(d) Promotion (1)
Answer:
(a) Product

Question 15.
“Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging etc.” State the related function of SEBI in the given case.
(a) Regulatory Function
(b) Development Functions
(c) Protective Functions
(d) All of the above (1)
Answer:
Protective Functions

Explanation: Keeping in mind the emerging nature of the securities market in India, SEBI was entrusted with the twin task of both regulation and development of the securities market.

Question 16.
Aman Chaudhri decides to invest Rs. 2,00,000 in plants and machinery. Name the decision made by Aman Chaudhri.
(a) management of working capital
(b) Budgets
(c) capital budgeting
(d) financing (1)
Answer:
(c) capital budgeting

Explanation: A long-term investment decision is called a Capital Budgeting decision. It involves committing the finance on a long term basis.

Question 17.
Statement I: The consumer has a right to seek redressal.
Statement II: The consumer has a right to be protected against goods and services which are hazardous to life and health
Choose the correct option from the options given below:
(a) Statement I is true and II is false
(b) Statement II is true and I is false
(c) Both the statements are true
(d) Both the statements are false (1)
Answer:
(c) Both the statements are true

Explanation: A consumer has a right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers. It also includes right to fair settlement of the genuine grievances of the consumer.

Question 18.
Match the concept in column I with the respective concept in column II

Column A		Column B
(A)	Implementing a plan	(I)	Middle level management
(B)	Formulating policies	(II)	lower level management
(C)	Interpret plans and set actions	(III)	Top level management

(a) (II), (III), (I)
(b) (I), (III), (II)
(c) (I), (III), (II)
(d) none of the above (1)
Answer:
(a) (II), (III), (I)

Question 19.
“These agencies are run by government and help to match personnel demand and supply by serving as link between job seekers and employers.” Name the source of the recruitment.
(a) Promotion
(b) Direct recruitment
(c) Campus recruitment
(d) Employment exchange (1)
Answer:
(c) Employment Exchange

Explanation: Employment exchange run by the government are regarded as a good source of recruitment.

Question 20.

Identify the characteristic of the management in the given diagram in which together everyone achieves more as a team.
(a) Management is a continuous process
(b) Management is a dynamic activity
(c) Management is all pervasive
(d) Management is a group activity (1)
Answer:
(d) Management is a group activity.

Explanation: Management is a group activity. Every member of the group has a different purpose for joining the organisation but as a member of the organisation they work towards fulfilling the common organisational goals.

Question 21.
Explain the objectives of Financial Planning.
OR
What is meant by ‘Financial Management’? State the primary objective of Financial Management. (3)
Answer:
Objectives of financial planning are given underneath:
(i) To ensure availability of funds whenever required which involves estimation of the funds required, the time at which these funds are to be made available and the sources of these funds.

(ii) To see that the firm does not raise resources unnecessarily as excess funding is almost as bad as inadequate funding. Financial planning ensures that enough funds are available at right time.

OR

Financial Management means planning, organising, directing and controlling the financial activities of an organisation.
Primary objective of Financial Management: The primary objective of financial management is to maximize shareholders wealth, i.e. to maximize the market price of equity shares of the company.

Caution
Students should be well versed in primary objectives of financial management Many students give all the objectives of financial management when asked primary objective asked.

Question 22.
State the three components of physical distribution?
OR
Singapore Airlines announced discounted fares, starting as low as ₹ 1,099 for domestic destinations operated by its Indian Joint of employees whereas some other are Venture carrier and ₹ 2,099 for international flights operated by other group airlines under a limited period offer.
(A) Identify the medium of communication which can be used by the firm to inform a large number of people about the new fares.
(B) Also, state any two merits of the communication tool, apart from the one discussed above. (3)
Answer:
The following are the components of physical Distribution (any three):

1. Transportation is the means of carrying goods and raw material from the point of production to the point of sale.
2. Warehousing refers to the act of storing and assorting products in order to create time utility in them.
3. Inventory Control: A very important decision in respect of inventory is deciding the level of inventory.
4. Order Processing: A good physical distribution system should provide for an accurate and speedy processing of orders.

OR

• Advertising.
• Merits of advertising: (Any two)
• Advertising enhances customer satisfaction and confidence, as they feel more comfortable and assured about the product quality and hence feel more satisfied.
• With the developments in art, computer designs, and graphics, advertising has developed into one of the most forceful and expressive medium of communication.
• Advertising is a very economical mode of communication if a large number of people are to be reached.

Question 23.
What is meant by a ‘consumer’ as per the provisions of Consumer Protection Act, 2019? (3)
Answer:
Under the Consumer Protection Act, 2019 a consumer is defined as:
(A) Any person who buys any goods for a consideration, which has been paid or promised, or partly paid and partly promised, or under any scheme of deferred payment. It includes any user of such goods, when such use is made with the approval of the buyer, but does not include a person who obtains goods for re-sale or any commercial purpose.

(B) Any person who hires or avails of any service, for a considerbtion which has been paid or promised, or partly paid and partly promised, or under any system of deferred payment. It includes any beneficiary of services when such services are availed of with the approval of the person concerned, but does not include a person who avails of such services for any commercial purpose.

Question 24.
“A leader who has only good physical feature and required knowledge and competence cannot inspire others.” In the light of this statement explain three qualities of a good leader. (3)
Answer:
Apart from good physical features, a leader should posses the following qualities (any three):
Integrity: A leader should posses high level of integrity and honesty. He should be a role model to others regarding the ethics and values.

Initiative: A leader should have courage and initiative. He should not wait for opportunities come to his way, rather he should grab the opportunity and use it to the advantage of organisation.

Motivation skills: A leader should be an effective motivator. He should understand the needs of people and motivate them through satisfying their needs.

Self Confidence: A leader should have high level of self confidence. He should not loose his confidence even in most difficult times. In fact, if the leader lacks self confidence, he can not provide confidence to his followers.

Question 25 .
The Government of India has recently come up with an amendment to Section 6 of the “Payment of Wages Act, 1936” to allow employers of certain industries to make payment through various electronics modes of payments.

The amendment will be applicable to all the public sector undertakings for wages disbursement using e-payment options. This is another milestone in the direction to further push to cashless economy. Identify and explain any two dimensions of business environment which relate to the above mentioned case.
OR
It is heartening that the implementation of compliance requirements of the “Companies Act, 2013” has progressed substantially with NIFTY 500 companies. Data shows a significant increase in women’s participation in the top management of Indian Companies from 5% few years ago to 13% now.

Even companies which are not in NIFTY 500 have undertaken drives to increase women’s participation across different areas of work. The government had also announced that it would support such companies. Identify and explain the dimensions of business environment discussed above which brought about the change. (4)
Answer:
In the above case various dimension of business environment is discussed. These dimensions are given underneath:
(A) Political Environment: Political environ-ment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.

(B) Legal Environment: Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government centre, state or local It is imperative for the management of every enterprise to obey the law of the land.

(C) Technological Environment: Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

OR

The dimensions of Business environment discussed above which brought about the above change are:
(A) Legal environment: Legal environment includes various legislations passed by the Government,. administrative orders issued by government authorities, court judgments, as well as the decisions rendered by various commissions and agencies at every level of government- Center, State, Local. Non-Compliance of laws can land the business enterprises into legal problems.

(A) Political environment: Political environ-ment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. Attitudes of the government officials may have either positive or negative impact upon business.

Caution
Only those dimensions should be provided in the answer which are highlighted in the given case.

Question 26.
“Some learning opportunities are designed and delivered to improve skills and abilities designed to help in the growth of the individuals in all respects.” Identify and explain the concept to which this statement relate.
OR
Human Resource Management includes many specialized activities and duties which the human resource personnel must perform. In the light of this statement, explain any two such duties performed by Human Resource Manager. (4)
Answer:
“Some learning opportunities are designed and delivered to improve skills and abilities of employees”- the given statement is related with training.

Training is any process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased. It is a process of learning new skills and application of knowledge. It attempts to improve their performance on the current job or prepare them for any intended job.

“Some other are designed to help in the growth of the individuals in all respects”- the given statement is related to development Development refers to the learning opportunities designed to help employees grow. It covers not only those activities which improve job performance but also those which bring about growth of the personality, help individuals in the progress towards maturity and actualisation of their potential capacities so that they become not only good employees but better men and women.

OR

The four activities performed by Human resource personnel are as follow:
(i) Recruitment: Recruitment may be defined as the process of searching for prospective employees and stimulating them to apply for jobs in the organisation. The information generated in the process of writing the job description and the candidate profile may be used for developing the ‘situations vacant’ advertisement

(ii) Selection: Selection is the process of choosing from among the pool of the prospective job candidates developed at the stage of recruitment. Even in case of highly specialised jobs where the choice space is very narrow, the rigour of the selection process serves two important purposes:

(i) it ensures that the organisation gets the best among the available, and

(ii) it enhances the self-esteem and prestige of those selected and conveys to them the seriousness with which the things are done in the organisation.

(iii) Performance appraisal after the employees have undergone a period of training and they have been on the job for some time, there is a need to evaluate their performance. All organisations have some formal or informal means of appraising their employee’s performance. Performance appraisal means evaluating an employee’s current and/ or past performance as against certain predetermined standards.

Question 27.
State any four methods of floatation of new issues in the primary market. (4)
Answer:
Methods of floatation in the primary market
(i) Offer through Prospectus is a method of floating new issues by inviting subscriptions from the public through issue of prospectus.

(ii) Offer for Sale is a method in which the securities are not issued directly to the public but through intermediaries like issuing houses or stock brokers.

(iii) Private Placement refers to the allotment of securities by a company to institutional investors and some selected individuals.

(iv) Rights Issue is the privilege given to existing
shareholders to subscribe to new issue of shares in proportion to the number of shares they already hold.

Question 28.
It is deciding in advance what to do and how to do. It is one of the basic managerial functions. Identify this function. Explain the features of this function. (4)
Answer:
Planning is deciding in advance what to do and how to do. It is one of the basic managerial functions.
Features of Planning:
(a) Planning is the primary function of management/Primacy of Planning: Planning lays foundation for other functions of management It serves as a guide for organizing, staffing, directing and controlling. All the functions of management are performed within the framework of plans laid out. Therefore planning is the basic or fundamental function of management

(b) Planning is looking ahead: Planning is done for future. It requires peeping in future, analyzing it and predicting it. Thus planning is based on forecasting. A plan is a synthesis of forecast. It is a mental predisposition for things to happen in future.

(c) Planning is an intellectual process: Planning is a mental exercise involving
creative thinking, sound judgement and imagination. It is not a mere guesswork but a rotational thinking. A manager can prepare sound plans only if he has sound judgement, foresight and imagination. Planning is always based on goals, facts and considered estimates.

Caution
Do not confuse with significance and features of planning. These two are different concepts.

Question 29.
How would you argue that the success of a business enterprise is significantly influenced by its environment? (4)
Answer:
A business enterprise cannot operate in isolation, it had to interact with the external elements of the environment it surrounds, and in same manner changes in that environment will also affect the functioning of that business enterprise. The external forces in the environment are very important for the success of a business enterprise.
Following points will show how important business environment is for the success of a business enterprise:

(i) It helps in getting the first movers advantage: studying and analysing
business environment will help a business enterprise to identify business opportunities which can be exploited by the business enterprise for its growth and success, in few cases it gives enterprise a first movers advantage over other competitors which guarantee success of business enterprise.

(ii) Helps in tapping useful resources: analysing the business environment provide the business enterprise with data of many unutilized resources to be tapped, for growth and success of the business enterprise.

(iii) Helps cope up with the change: by analysing the business environment, a manager can figure out that how to make business enterprise adapt the change.

Question 30.
Mention the impacts of government policy changes on Business and Industry. (4)
Answer:
Impact of government policy changes on Business and Industry are:
(i) Demanding customers: Customers become more demanding as there is an increase in competition, the choice of goods and services for the consumers also increases.

(ii) Export orientation: As the government reduces the restrictions on export, the production has become market oriented That is, the enterprises produce as per the demand products in international markets.

(iiii) Technological development: As competition increases firms tend to find new and innovative ways to survive in the market.

Question 31.
Which function of management helps in obtaining right people and putting them on the right jobs? Also state the significance of this function by given 5 points.
OR
“Internal sources of recruitment are more economical for an organisation but it has some drawbacks too”. With reference to this statement, discuss recruitment and its drawbacks. (6)
Answer:
The function of management which helps in obtaining right people and putting them on the right jobs is staffing. It begins with workforce planning and includes different other function like recruitment, selection, training,

development, promotion, compensation and performance appraisal of work force. In other words, staffing is that part of the process of management which is concerned with obtaining, utilising and maintaining a satisfactory and satisfied workforce. Significance of Staffing: Significance of staffing can be seen by the points given underneath:

Proper staffing ensures the following benefits to the organisation:

1. it helps in discovering and obtaining competent personnel for various jobs;
2. It makes for higher performance, by putting right person on the right job;
3. It ensures the continuous survival and growth of the enterprise through the succession planning for managers;
4. It helps to ensure optimum utilisation of the human resources. By avoiding overmanning, it prevents under -utilisation of personnel and high labour costs. At the same time it avoids disruption of work by indicating in advance the shortages of personnel; and
5. It improves job satisfaction and morale of employees through objective assessment and fair reward for their contribution.

OR

Recruitment refers to the process of finding possible candidates for a job or a function. It has been defined as ‘the process of searching for prospective employees and stimulating them to apply for jobs in an organisation.’
The drawbacks of using internal sources of recruitment are as follows:

1. When vacancies are filled through internal promotions, the scope for induction of fresh talent is reduced. Hence, complete reliance on internal recruitment involves danger of ‘inbreeding’ by stopping ‘infusion of new blood’ into the organisation;
2. The employees may become lethargic if they are sure of time-bound promotions
3. A new enterprise cannot use internal sources of recruitment. No organisation can fill all its vacancies from internal sources;
4. The spirit of competition among the employees may be hampered;
5. Frequent transfers of employees may often reduce the productivity of the organisation.

Question 32.
Explain any four points of difference between marketing and selling. (6)
Answer:

Basis	Marketing	Selling
Concept	Marketing is a wider term consisting of number of activities like identification of customer needs, developing the product to satisfy those needs from awakening prices. and purchase waiting the potential buyers to buy the same.	Selling is a part of process of marketing and is concerned with promoting and transferring possession and ownership of goods from the setier to the buyer.
Focus	Satisfying customer needs is the focus of marketing.	Selling focuses on transfer of title and possession of goods from seller to consumers for users.
Strategies	Marketing uses integrated marketing efforts involving strategies in respect of promotion, product, pricing and physical distribution.	Selling involves efforts like promotion and persuasion.
Central point	In marketing the term is to develop the product and other strategies as per the customer needs.	In selling focus is on bending the customer according to the product.
Profit maxi­mization	aims at maximizing of customer satisfaction as a route to profit maximization.	Selling aims at maximizing profit through sales volume.
Start and end of activities	Marketing begins before production and continues even after the sale has taken place.	Selling begins after production and end with the sale of goods

Question 33.
Describe the nature of principles of manage-ment.
OR
Explain the following principles of general management,

1. Discipline
2. Cooperation not individualism (6)

Answer:
Nature of principles of management can be understand by the points given underneath:

Universal Applicability:
The principles of management are intended to apply to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector, manufacturing as well as the services sectors. However, the extent of their applicability would vary with the nature of the organisation, business activity, scale of operations.

(i) Mainly behavioural: Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature.

(ii) Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed as per requirements. For example, employees deserve fair and just remuneration.

(iii) Formed by practice and experimentation: The principles of management are formed by experience and collective wisdom of managers as well as experimentation. For example, it is a matter of common experience that discipline is indispensable for accomplishing any purpose.

(iv) General guidelines: The principles are guidelines to action but do not provide readymade, straitjacket solutions to all managerial problems. This is so because real business situations are very complex and dynamic and are a result of many factors.

(v) Flexibile: The principles of management are not rigid prescriptions, which have to be followed absolutely. They are flexible and can be modified by the manager when the situation so demands. They give the manager enough discretion to do so.

(vi) Cause and effect relationships: The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases. As such, they tell us if a particular principle was applied in a particular situation, what would be its likely effect. The principles of management are less than perfect since they mainly apply to human behaviour. In real life, situations are not identical. So, accurate cause and effect relationships may be diffcultto establish.

Related Theory
State the characteristics of principles of management.

Caution
Students write principles of management instead of their nature due to lack of conceptual clarity.

OR

Discipline: discipline is obedience and outward mark of respect. To ensure smooth operation in a business, it is essential that members of an organisation respect the rules that govern it. Fayol believed that discipline can be maintained by employing superiors at all levels, by maintaining contractual agreements between workers and superiors and by penalising workers in case of errors made by them.

For example, in ABC limited and labour union has entered into an agreement where workers are agreed to revive the business out of losses, in return management promises them to raise their wages. Here discipline means the workers and management both will honor their commitment Cooperation not individualism: Cooperation is an action of working together.

Taylor states employees and management should cooperate with each other that could lead to high morale and team spirit. It is the extension of harmony, not discord. Principle of cooperation states that management should ignore the suggessions made by its employees and at the same time worker should desist from strike and making unwanted demand from management.

Harmony not discord: According to Taylor there should not be any conflict between the managers and the workers. He emphasised that there should be complete harmony between the managers and the workers. Both should realise that each or-re is important to achieve the objectives of the organisation

Question 34.
“Communication is transfer of information from the sender to the receiver with the information being understood by the receiver”. In the light of this statement explain various elements of communication. (6)
Answer:
Communication has been defined as a process. This process involves elements like source, encoding, media/channel, receiver, decoding, noise and feedback.
Elements of communication:
(a) Sender: Sender means person who conveys his thoughts or ideas to the receiver. The sender represents source of communication.

(b) Message: It is the content of ideas, feelings, suggestions, order, etc., intended to be communicated.

(c) Encoding: It is the process of converting the message into communication symbols such as words, pictures, gestures etc.,

(d) Media: It is the path through which encoded message is transmitted to receiver. The channel may be in written form, face to face, phone call, Internet etc.,

(e) Decoding: It is the process of converting encoded symbols of the sender.

(f) Receiver: The person who receives communication of the sender.

(g) Feedback: It includes all those actions of receiver indicating that he has received and understood message of sender.

(h) Noise: Noise means some obstruction or hindrance to communication. This hindrance may be caused to sender, message or receiver.