ICSE 2012 Commercial Studies Question Paper Solved for Class 10

Solving ICSE Class 10 Commercial Studies Previous Year Question Papers ICSE Class 10 Commercial Studies Question Paper 2012 is the best way to boost your preparation for the board exams.

ICSE Class 10 Commercial Studies Question Paper 2012 Solved

Section – A (40 Marks)
(Attempt All Questions)

Question 1.
Distinguish between:
(a) Stakeholders and Shareholders. (2)
(b) Verbal Communication and Non-verbal Communica-tion. (2)
(c) Internal Recruitment and External Recruit-ment. (2)
(d) Packing and Packaging. (2)
(e) Public Warehouses and Bonded Warehouses. (2)
Answer:
(a) Difference between Stakeholders and shareholders :

A shareholder owns part of a company through stock ownership, while a stake- holder is interested in the performance of a company for reasons other than just stock appreciation.
Shareholders are stakeholders in a corporation, but stakeholders are not always shareholders.

(b) Difference between Verbal Communication and Non-verbal Communication:
Verbal Communication : Verbal communication means communications through words. It can be either

(i) oral or
(ii) written.

(i) Oral communication means conveying of messages through spoken words, e.g., Face to face talks, interviews, lectures, and telephonic conversation, etc.
(ii) Written communication means transmission of message through written words, e.g., letters, circulars, fax messages, notices, reports, etc.

Non-verbal Communication :

Non-verbal communication is also known as Gestural communications.
Gestural communication involves use of gestures.
It refers to communications through body language without using words. A smile, twinkling of eyes, nodding of head, etc.

An internal recruitment strategy is one which promotes employees from within an organisation to fill upcoming positions whereas an E.R. strategy is one which systematically search the employee pool outside its own employees to fill positions.
Many firms use such devices as job posting boards, email flashes, internet posts to fill positions whereas in external recruitment many firms use advertisements in newspapers, job search websites, job fairs, etc.

(d) Difference between packing and packaging : Packing is an augmented activity that adds value to the product e.g., packing a soap or a utensil or many such products. Packaging is a part of the core product, which cannot be a choice e.g., packaged drinking water or package edible oil, milk etc.
Packing is a verb – as in ‘You pack something’ into a box. Packaging is a noun referring to the material used during the process of packing.

(e) Difference between Public Warehouses and Bonded Warehouses :

Public warehouses : Public warehouses can be used for storage of goods by traders, manufacturers or any member of the public after the payment of a storage fee or charges. The government regulates the operation of these warehouses by issuing licences for them to private parties.
These warehouses provide facilities like transportation by rail and road.

Bonded warehouses : Bonded warehouses are licensed by the government to accept imported goods prior to payment of tax and customs duty. Importers are not permitted to remove goods from the docks or the airport till customs duty is paid.
These warehouses have facilities for branding, packaging, grading and blending.

Question 2.
(a) What is meant by Deferred Revenue Expenditure ? (2)
(b) State any two expectations of suppliers from a business organisation. (2)
(c) What do you understand by Formal Communi-cation ? (2)
(d) Mention the Interpersonal Skills required for effective communication. (2)
(e) What do you mean by Sale on approval or Return ? (2)
Answer:
(a) Deferred revenue expenditure refers to the revenue expenses the benefit of which extends beyond the current accounting year. A portion of this expenditure is debited to the Profit and Loss Account in the current year and the remaining portion is shown as an asset in the Balance Sheet. This amount is charged as revenue expenditure in future years. For example, heavy advertising expenditure, heavy repairs and research expenses is incurred to introduce a new product in the market.

(b) Expectations of Suppliers from a Business Organisation : Every business organisation required a healthy and honest relation with suppliers in order to meet

All dealings with suppliers should be based on fair terms and conditions regarding prices, quality of goods, delivery of payments, etc.
Undercutting and other unfair trade practices should be avoided.
Suppliers should have correct information about the organisation’s financial position.

(c) Formal Communication : Formal communication is that which takes place through the formal channels of the organisation structure deliberately and consciously established by the management. It implies the flow of the information along the lines of authority formally established in the enterprise. Members of the enterprise are expected to communicate with one another strictly as per channels laid down in the structure. For example, when the chief executive issues decisions and instructions to the subordinates, there is a formal communication which flows downward. In the same manner formal communication flows upward when the subordinate reports to the superior. Such communications are generally in writing and may take any of the following forms:

Policy manuals
Procedural and rule books
Official meetings
Interviews
News bulletins, etc.

(d) Interpersonal Skills Required for Effective Communication :

Compassion : In order to communicate effectively, the communicator must understand the intelligence level and background of the receiver. He must know what information the receiver exactly needs and in what form. Matching of wave lengths is necessary for creating a meeting of minds.
Attention : Careful listening is essential for effective communication. The communicator should convey the message in such a way that the emotions and sentiments of the receiver are not hurt. Emphathetic listening and open mind are necessary for this purpose.
Clarity : Clarity of thoughts is the first essential of good communication. The message must be perfectly clear and free from all ambiguity. The language used should be simple. Different components of the message must be logical and well knit. Technical jargon and high sounding words should be avoided.
Brevity : All communication should be brief. Meaningless words and information overload spoil a message. Unnecessary repetition and over-elaboration should be avoided. The message should be concise and concrete.

(e) Sale on Approval or Return : Under this method, goods are actually sent to the prospective buyer for inspection and approval. If the buyer is satisfied with the quality of the goods, he intimates to the seller that he has approved the goods. After this it becomes a contract of sale. If he does not approve the goods, there can be no contract of sale and goods have to be returned. If the prospective buyer keeps the goods without notice of disapproval beyond the stipulated period, he is deemed to have agreed to purchase the goods.

Question 3.
(a) Mention any two points of dfirence between Advertising and Publicity. (2)
(b) Give two points of dijference between Fixed Cosi and Variable Cost. (2)
(c) Why is a Master Budget also known as Summary Budget? (2)
(d) What is Banking? (2)
(e) Selection is a negative process. Explain. (2)
Answer:
(a) Difference between Advertising and Publicity:

Basis	Advertising	Publicity
1. Target Group	It is targeted at ultimate consumers.	It is targeted at final consumers along with all types of middlemen.
2. Payment	The marketer pays for the advertisement.	The marketer does not pay for publicity.

(b)
Difference between Fixed Cost and Variable Cost :

Fixed Cost

Variable Costs

1. Fixed costs remain constant within a given period of time and range of activity in spite of a change in the volume of output.
2. Fixed costs are uncontrollable in the short-run.

1. Variable costs vary more or less proportionately with variations in the volume of output.

2. Variable costs are usually controllable.

(c) A Master Budget is also known as a Summary Budget because it is a summary of the budget schedules in capsule form made for the purpose of presenting one report on the highlights of the budget forecast. It is defined as “the summary budget, incorporating its component Junctional budgets, which is finally approved, adopted and employed. ” Thus, the master budget is a summarised form of all the budgets of a firm. This budget requires the approval of the Budget Committee before it is put into action.

(d) Banking: Commercial banks are an important institution of the economy for providing institutional credit to its customers. A banking company in India is the one which transacts the business of banking which means accepting, for the purpose of lending and investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheques, draft, order or otherwise.

(e) Selection is a Negative Process: Selection is the process of choosing individuals who have the requisite qualifications to fill the jobs. In other words, selection involves screening or evaluation of applicants to identify those who are best suited to perform the jobs which have fallen vacant in an enterprise.

Selection is frequently described as a negative process as it is a process of rejecting many unsuitable candidates to choose the few suitable applicants.

Question 4.
(a) Mention two methods of Off-the-Job Training. (2)
(b) What is meant by Industrial Disputes ? (2)
(c) State two disadvantages of Water Transport. (2)
(d) Mention any two documents used in Warehousing. (2)
(e) Why do we need The Consumer Protection Act, 1986 ? (2)
Answer:
(a) Off-the-Job Training : This method of training is designed to impart training to personnel by supplying them the required knowledge and skills away from the job and work place.
Some of the major methods of off-the-job training are as follows:

Lectures : Here, a subject specialist is invited to deliver lectures on specific subjects to enhance the knowledge of the participants. The specialist delivering the lectures allows participants to share with him the specialised knowledge.
Seminars and workshops : This method of training is aimed at creating an awareness of the knowledge of fundamentals. This is a knowledge-based method of training, which is widely used by educational institutions and professional bodies.

(b) Industrial Disputes : Industrial dispute means any dispute between employers and employees or between employers and workmen or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person.
Industrial disputes may result in strikes, walkouts and secondary boycotts by workers and lockouts by management.

Water transport is not suitable for carrying perishable goods as its speed is low and the port of destination may be far away from the consumption centre.
There are a large number of risks inherent in carrying goods through sea.
The waterways may not be navigable due to seasonal changes.

(d) The documents used in warehousing are as follows :

Warehouse warrant : When goods are stored in a public/bonded warehouse, the warehouse keeper issues a warehouse warrant in favour of the owner of goods. This warrant is a document of title and can be transferred by simple endorsement and delivery. It is a document certifying that the specified goods have been deposited in the warehouse for safe keeping.
Warehouse keeper’s receipt : This is a receipt of acknowledgement of the goods by the warehouse keeper. It serves as a proof of storing the specified goods in the warehouse. It is not transferred by transferring the receipt.

(e) The Act recognises consumers’ right to safety, right to be informed, right to choose, right to be heard, right to seek redressal and right to consumer education.

Thus, we need the Consumer Protection Act for the following reasons:

To protect the interests of the consumers
To seek speedy and simple redressal to consumer disputes through a quasi-judicial machinery.
To inform and educate the consumer.

Section – B (40 Marks)
(Answer Any Four questions from this section)

Question 5.
(a) Distinguish between a Cheque and a Demand Draft. (5)
(b) Describe any two objectives of Brand Promotion. (5)
Answer:
(a) Distinguish between a Cheque and a Demand Draft:

Cheque	Demand Draft
1. A cheque is drawn by a person.	1. A demand draft is always drawn by a bank.
2. A cheque can be drawn payable to bearer.	2. A draft cannot be made payable to bearer.
3. In case of a cheque, the person who receives the payment has to pay collection charges.	3. In case of a draft, commission is paid in advance by the sender of money.
4. In case of a cheque, the payee does not receive cash immediately on presentation.	4. Demand drafts can be encashed immediately on presentation at the counter of the bank on which they are drawn.
5. The payment of a cheque can be stopped by giving a written notice to the concerned bank.	5.The payment of a demand draft cannot be so easily stopped.
6. In case of insufficient funds in the drawer’s account, the cheque is dishonoured.	6. There is no question of a draft being dishonoured because the draft amount is taken in advance by the bank.

(b) Objectives of Brand Promotion : Effective brand promotion drives the sales and builds the market share of a company. It promotes company’s products, reinforces their value to the customers and increases brand awareness. Owing to rightly directed brand promotion efforts, consumers reward the company through increased purchases and brand loyalty.

Generally, the following are considered to be the major objectives of brand promotion :

(i) Providing Information : A large part of a company’s brand promotional efforts has always been directed at providing proper and complete information to the customers about its various brands offered in the market. Brand promotion information contains the following things: new products launched; how they work; existing products; prices; selling centres; hours of sale; special schemes or offers such as percent off, discount, free gifts, more guarantee period; and so on.

(ii) Emphasizing the Value of the Brand: Brand promotion emphasizes the wonderful ownership utility of a brand to the buyers. For example, utility of owning a Mercedes Benz Car or an LG Air conditioner or LG Refrigerator. The name (brand) value of a product justifies its higher price in the market. Status-oriented advertisements usually highlight the value of the product and grace of its ownership.

(iii) Differentiating the Brand : A frequent objective of brand promotion is ‘brand differentiation’ which means to convince the potential (future) buyers about distinctive or unparallel (unmatchable) merits or features of the branded product that are not to be found in other competing products. For example, HCL company in its advertisement differentiates its personal computers on the feature of competing price while it says, “Leaders in Price”. Pepsi differentiates its brand by using the slogan, “The choice of a new generation.”

(iv) Stabilizing Sales : A firm’s sales may not be uniform throughout the year. Such sales fluctuations may be caused by cyclical, seasonal or irregular demand. Firm’s brand promotion strategy often has a goal of stabilizing these variations in demand. For example, coffee sales is seasonal (winter season choice). To stimulate its summer sales, a company may promote its new brand of ‘iced coffee’ (cold coffee).

Question 6.
(a) Explain any two methods of conducting ‘Marketing Research. (5)
(b) Give any five reasons why people consider advertising a Social waste. (5)
Answer:
(a) Marketing Research : “Market research is the systematic recording, analysing and synthesising of data about marketing problems which lend to make it specialised.”
From the above definition, it is apparent that market research involves data analysis and a comprehensive application of that analytical study to make marketing function an effective revenue earner. It analyses how much to produce, how much to store, method of distribution, systematic consumer analysis, increasing competition from similar business houses, widening consumer demand, etc.

Two of the major methods of conducting market research are as follows :

Observation Method : Observation refers to the process of recognizing and noting events. Under this method, the behaviour of consumers is watched through personal observation or mechanical devices. The observation method avoids the pitfalls of questioning such as interference in the consumers activity, etc.
Survey Method : This method involves getting answers to specific questions from the entire market or a representative sample of it. A survey is a detailed enquiry to collect information from either the entire universe or part of it. When the survey of all the units of information is made, it is known as enquiry or Survey.

(b) Advertising as a Social Waste : Some people consider advertising a social waste because of the following reasons:

(i) Higher prices : Advertising involves huge expenditure there by increasing the cost of distribution. Manufacturer and traders charge higher prices from consumers to recover the money spent on advertising. However, excessive and unbalanced advertisements increase costs and prices. Effective advertisements help to reduce costs and price by widening markets.

(ii) Artificial living : Advertising multiplies the needs of people and encourages wasteful consumption. It persuades people to buy products which they do not need or cannot afford. People are encouraged to buy products even which are harmful to their health e.g., cigarettes, wine, etc. Advertising promotes artificial living and extravagance by creating demand for trivial goods.

(iii) Misleading : Advertising is often deceptive and misguides consumers. Exaggerated and false claims are made in advertisements to dupe innocent people. Bogus testimonials and other questionable means are used to sell goods of doubtful value.

(iv) Growth of monopolies : Advertising creates brand preference and restricts free competition. Large and well-established firms spend huge amounts on advertisements to kill new and small concerns. Advertising encourages the survival of the mightiest rather than of the best.

(v) Wastage of national resources : Manu- facturers create trivial and artificial differences in their products to develop brand loyalty through advertising. The natural resources, capital equipment and labour which go into the production of such items amount to waste as these could better be employed in creating new industries. Valuable stationery, time and energy used in advertisements go waste because most of the advertisements either escape the attention of people or are ignored by them.

(vi) Unethical: Many advertisements are highly objectionable because they undermine moral values and ethics. Vulgar advertisements offend public decent and encourage materialism in society. Advertisements may also spoil the landscape and divert attention of people driving on roads.

Question 7.
(a) Explain the term Social Security. Describe any two Social Security measures adopted in India. (5)
(b) Explain any two types of employment tests which are conducted to select employees for an enterprise. (5)
Answer:
(a) The concept of social security is essentially related to the high ideals of human dignity and social justice. It is primarily an instrument of social and economic justice. According to I.L.O., “Social security is the protection which society provides for its members through a series of public measures, unemployment, invalidity, old age and death, the provision of subsidies for families with children.” The purpose of social security is to provide an income up to a minimum and also medical treatment to bring the interruption of earnings to an end as soon as possible.

Social Security Measures adopted in India : India is a welfare state and thus social security is an essential component of government policy.
The Central and State Governments in India have introduced various types of social security measures and programmes, some of which are as follows :

(i) Provident Fund Scheme : The Central Government has established the provident fund scheme for employees in which every employee is entitled to become member of the scheme after completing a fixed period of continuous service. The employee and the employer contribute every month ten per cent of the basic wages. An employee can get advances and permanent withdrawals for construction of house, and other specified purposes, like serious illness. The accumulated amount of standing credit to an employee is payable on retirement, death or at the time of leaving service.

(ii) Group Insurance : Group Insurance is a scheme which provides insurance cover on the lives of several persons under one insurance policy or contract. The insurance on each life is, however, independent of that on the other lives.

The main features of group life insurance are as follows:

(a) Insurance is provided to all employees without any evidence of insurability.
(b) It provides risk coverage to the employees as long as they remain in the service of the employer.
(c) Group Life Insurance is basically a contract between the insurance company and the employer.

(iii) Pension : Under the Employee’s Provident Funds and Miscellaneous Provisions Act, the Government of India has framed family pension scheme to provide family pension benefits to the employees. The scheme was launched with the objective of providing long term recurring financial assistance to the employee after retirement and to his family in case of premature death while in service.

Family pension is payable :

(a) to the widow of the deceased employee;
(b) to the eldest surviving minor son until he attains the age of 21 years (in the absence of the widow of the employee);
(c) to the eldest surviving unmarried daughter until she attains the age of 24 years or marries whichever is earlier (in the absence of widow of the employee);
(d) in the event of remarriage or death of the widow, the family pension will be granted to the minor son/daughter through the natural guardian.
Pension is payable at the rate of 50 percent of the pay drawn on the date of retirement. An employee can get a part of the pension computed and get a lump sum amount. The balance pension is paid every month.

(b) Employment Tests : Employment tests have become a popular technique of selecting employees. A test is a systematic comparison of the work behaviour of candidates on sample basis. Selection tests assess the attitude and performance of candidates with the help of psychological techniques. An attempt is made to assess the match between the applicants and job requirements.
Types of tests used in employing are as follows :

(a) Proficiency Tests : Proficiency testing is also called interlaboratory comparison. This testing compares the measuring results obtained by different laboratories.

(i) Achievement Tests : Achievement tests measure the skills and knowledge which the candidate already possesses at the time of testing. The candidate is asked to perform the job and his actual test performance indicates his proficiency. For example, the candidate for the post of a typist may be asked to type a page so as to judge his speed and accuracy.

(ii) Dexterity Tests : These tests are designed to ascertain how swiftly and efficiently a candidate uses his hands, fingers, eyes and other parts of the body. These tests are useful for judging candidates for a job which requires use of different parts of the body in a coordinated manner.

(iii) Intelligence Tests : These tests measure a person’s capacity for listening and comprehension in terms of his vocabulary, mental alertness, memory, reasoning, etc. An applicant’s intelligence quotient (IQ) can be judged through intelligence tests.

(b) Aptitude Tests : Aptitude means an individual’s potential for learning the skills required for a job. Aptitude tests measure a candidate’s capacity and his potential for development.

(i) Personality Tests : Personality tests are designed to judge the emotional balance, temperament and maturity of a candidate. They reveal the ability of an applicant to adjust to new situations and new persons. They are helpful for selecting persons for managerial jobs.

(ii) Interest Tests : These tests are aimed at assessing the type of work in which a candidate shows special interest and involvement. The type of jobs which will be satisfying to the employees can be identified with the help of interest tests.

Question 8.
(a) Mention any five differences between a Commercial Bank and the Central Bank of a country. (5)
(b) Briefly explain any five factors a businessman should keep in mind while selecting a suitable mode of transport. (5)
Answer:
(a) Distinction between the Central and a Commercial Bank : Following are the points of distinction between the Central Bank and a Commercial Bank :

Central Bank	Commercial Bank
(i) Central Bank is the apex bank which supervises and controls the entire banking system of a country.	(i) Commercial Bank is one of the banks in a country.
(ii) It is owned by the Government.	(ii) It is generally, owned by the shareholders.
(iii) Its purpose is to serve the country’s interest.	(iii) Its purpose is to earn profit.
(iv) It is a banker to the Government.	(iv) It is a banker to the general public.
(v) It has the mono-poly over note issue.	(v) It cannot issue notes.
(vi) it is the custodian of foreign exchange reserves of the country.	(vi) It is only an authorised dealer in foreign exchange.
(vii) It controls all other banks.	(vii) It functions under the control of the Central Bank.
(viii) It controls credit in the country.	(viii) It serves as an agent of the Central Bank.
(ix) There is only one Central Bank in a country.	(x) The chief executive of the Central Bank is called ‘Governor’.
(ix) There are several Commercial Banks in a country.	(x) The chief executive of the Commercial Bank is called ‘Chairman’.

(b) In order to select a particular means of transport, the following factors should be taken into consideration by a businessman:

(i) Cost : Water transport is the cheapest means of transport for carrying bulky goods over long distance, particularly when time is not the essential element. Railway ranks second in terms of cost of service. It is cheaper than road transport for heavy goods and long distance movement. However, for small consignments which are to be carried over short distance, road transport is the cheapest. Air transport is the costliest means of transport because its operational cost is too high and its capacity is limited.

(ii) Carrying Capacity : Railways and waterways have larger carrying capacity than other means of transport. They are also cheaper when the whole wagon or vessel is booked for sending the cargo.

(iii) Speed : In respect of speed, air transport gets the first ranking while waterways is the slowest means of transport. Road transport has the merit of being faster than rail transport over short distance only because loading, unloading, assembling and shunting of wagons takes much time. However, for long distances, rail transport is faster than road transport.

(iv) Flexibility of Service : Water, rail and air transports are not flexible as they suffer from the problem of terminal. Goods have to be carried to and from the terminal in case the businessman desires to use any of these means of transport. But road transport is flexible. It covers the maximum areas of .the country and is capable of providing door-to-door service. It carries goods from one businessman to another and this requires loading and unloading only for once. Road transport also acts as a complementary service to the other modes of transport.

(v) Regularity of Service : Rail transport is the most regular service as it follows regular schedules and is generally uninfluenced by weather conditions. Road, water and air transport are greatly influenced by weather conditions. They may have to delay their trips or even cancel them sometimes. The impact of weather on roadways is comparatively less as compared to airways and waterways.

(vi) Safety : Roads are considered the safest means of transport. When the articles to be consigned require delicate handling, it is preferable to use road transport. Rails also provide sufficient safety to goods. They are less prone to accidents as compared to road vehicles. Airways and waterways are the most risky modes of transport.

Question 9.
(a) A well-trained employee is an asset to the enterprise. Mention any five advantages of training. (5)
(b) Explain the following principles of an Insurance contract,
(i) Utmost good faith
(ii) Subrogation (5)
Answer:
(a) A well-trained employee is an asset to the enterprise because of the following advantages of training :

Increased Productivity : Training helps to improve the quantity and quality of work performance. Well- trained employees produce more and better goods.
Better Utilisation of Resources : By training, employees learn new and better methods of doing jobs. They make better and economical use of materials and machinery. As a result, wastage of resources and cost of production are reduced.
Better Safety : Training helps to improve the job knowledge and skills of employees. As a result, the rate of accidents and damage to machinery and equipment are well under control, with minimum occurrence, due to proper handling by well-trained employees.
Higher Morale : A good training programme moulds employee attitudes towards work. He can handle job operations competently and in a confident manner. He can produce results and earn the rewards. This atmosphere is psychologically motivated. Moreover, employees who receive training feel that they are being taken care of by the management and this results in raising their morale.
Reduced Absenteeism : As trained employees feel more satisfied and interested in jobs, labour absenteeism is reduced.
Less Learning Period : A systematic training programme helps to reduce the time and cost required to reach the acceptable level of performance. The employees need not waste time in learning by trial and error or by observing others.

(b) Principles of a Insurance Contract : The principles of insurance are the rules of action or conduct adopted by the stakeholders involved in the insurance business.

Two specific principles of utmost significance to a valid insurance contract are the following:

(i) Utmost good faith : A contract of insurance is a contract of uberrimae fidel i. e., a contract found on utmost good faith. Both the insurer and the insured should display good faith towards each other in regard to the contract. It is the duty of the insured to voluntarily make full, accurate disclosure of all facts, material to the risk being proposed and the insurer to make clear all the terms and conditions in the insurance contract. Any fact, which is likely to affect the mind of a prudent insurer in deciding to accept the proposal of insurance or in fixing the rate of premium is material for this purpose. Failure to make disclosure of material facts by the insured makes the contract of insurance voidable at the discretion of the insurer.

(ii) Subrogation : It refers to 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. After the insured is compensated for the loss or damage to the property insured by him/her the right of ownership of such property passes on to the insurer. This is because the insured should not be allowed to make any profit, by selling the damaged property or in the case of lost property being recovered.

Question 10.
Prepare Trading, Profit and Loss A/c. and Balance Sheet of M/s. Banerjee Enterprises for the Year ended 31st March, 2010 from the following

Trial Balance as on 31.03.2010

Answer:
Trading Account for the year ending 31st March, 2010