ICSE 2015 Commercial Applications Question Paper Solved for Class 10

Solving ICSE Class 10 Commercial Applications Previous Year Question Papers ICSE Class 10 Commercial Applications Question Paper 2015 is the best way to boost your preparation for the board exams.

ICSE Class 10 Commercial Applications Question Paper 2015 Solved

Section – A (40 Marks)
{Attempt ALL Questions)

Question 1.
State the difference between each of the following:
(a) Commodity market and Capital market.   [2]
(b) Skimming pricing and Penetrating pricing.   [2]
(c) Current Deposit Account and Saving Deposit Account.   [2]
(d) Training and Education.   [2]
(e) Money costs and Real costs.   [2]
Answer:

(a)	Commodity Market	Capital Market
	1. This is an organised market where commodities . are bought and sold according to prescribed rules and regulations. 2.   For example : Cotton	1. This is a specialised market for providing long-term finance to business enterprise. 2. It comprises specialised financial institutions, stock exchanges, investment trusts, insurance companies.
(b)	Skimming Pricing	Penetrating Pricing
	1.  Skimming pricing involves setting the price of a product at a high level. 2. The aim is to ‘sell to classes’ who don’t care how much they pay for a novel product. 3. This strategy is appropriate in case of a highly distinctive product which is aggressively promoted in the early stages of its life cycle.	1. Penetrating pricing involves setting the price at a low level. 2. The manufacturer seeks to sell to the masses. 3. Many firms use this strategy while launching fast moving consumer products. This strategy results in high sales volume in the early stage.
(c)	Current Deposit Account	Saving Deposit Account
	1. The current account is basically a transactional account which is preferred by business people. 2. The basic objective is to provide flexible payment methods to the business people and entities.	1. The savings banks accounts are preferred by individuals and provide liquidity for private and small business sometimes. 2. The basic objective is to enable the customer save his/ her liquid assets and also to earn money on that saving.
(d)	Training	Education
	1.  Training involves increasing knowledge and skills for a specific job. 2. Training is often given on the job. 3. Training is practical and job-oriented. 4. The burden of training falls mainly on the employer.	1. Education involves improving general knowledge and intelligence. 2.Education is generally imparted in schools and colleges. 3. Education is theoretical. 4. The burden of education falls mainly on the government and the student.
(e)	Money Costs	Real Costs
	1.It means the amount of money, which a producer spends on producing a particular commodity. 2.  It is the money expenditure incurred on buying or hiring inputs for producing a given amount of commodity.	1. It means the sacrifice, discomfort and pain involved in supplying the factors of production. 2. Money paid for hiring labour is money cost but the sacrifice and efforts made by the workers involved is real cost.

Question 2.
(a) What is meant by ‘Variable Cost’? [2]
(b) What is Tidal energy? [2]
(c) Mention any four main reasons for the rapid growth of public relations. [2]
(d) What is a ‘Balance Sheet ’ ? [2]
(e) State two essentials of a good advertisement. [2]
Answer:
(a) Meaning of Variable Cost
Variable costs are those costs which vary in amount with changes in the level of output or activity. Such costs increase and decrease in the same proportion in which the level of output increases or decreases. Variable costs vary in total amount but remain constant per unit of production. The behaviour of variable cost is shown in the following graph:

Production (in thousand Units) variable costs Thus, there is a linear relationship between volume of production and total variable costs.

(b) Meaning of Tidal Energy
Tides are caused by the gravitational force of the sun and the moon. The tides have a tremendous amount of mechanical energy. This energy can be used to generate electricity. Thus, tidal energy is derived from the tides of the oceans.

In India, three sites have been selected for generating tidal eriergy – Gulf of Kutch, Gulf of Cambay in Gujarat, Sundarbans, along the east-west of West Bengal. Tidal power is renewable, free of cost and can be a source of continuous supply of energy.

(c) The Main Reasons for the Rapid Growth of Public Relations are as follows :
(i) Communication Gap:
The need for communication between organisations and their public is being increasingly recognised. Public relations function is required to bridge this communication gap.

(ii) Population Growth:
A significant factor contributing to the development of public relations has been the increase in population and the resulting expansion of business, social and political organisations. Public relations function developed to explain organisational policies and actions to public and bring about better understanding.

(iii) Recognition of Social Responsibility :
Public relations has grown in importance as corporations recognise that they have a social responsibility to serve the public. Public services of corporations include financial contributions to community, social welfare, health and youth organisations, participation by employees in local government and education, and sponsorship of cultural education.

(iv) Big Government :
Growing government activity, legislation, taxes and criticism of business by politicians have all contributed to the expansion of public relations into the field of public affairs and relations with local, state and national governments, (v) Development of Communication Media : Tremendous growth in video and cable systems has enabled rapid and widespread transmission of information. Unprecedented progress is being made in the media of communication.

(d) Meaning of ‘Balance Sheet’
Balance Sheet is a statement that shows the assets, liabilities and capital of an organisation on a particular date. It depicts the financial position of the organisation on a specified date. Balance sheet is used to judge the financial position of the firm at the end of the year and it enables the firm to meet its statutory obligations. Prospective investors can use the balance sheet for arriving at their investment decisions.

(e) A good advertisement should contain the following essentials:
1. Attention Value :
The first requirement of a good advertisement is that it must be able to attract the attention of those to whom it is directed. Most of the people are busy and pay a cursory attention to advertisements. Unless the advertisement draws their attention, it will go waste. The following techniques may be used to make the advertisement attractive :
(a) By using catchy but short headlines.
(b) By using pictures or drawings of the product being advertised.
(c) By inserting reply coupons for gifts or free literature.

2. Memorising Value :
The design and layout of the copy should be such that it has a lasting impression on the minds of the people. Repeated use of brand names and trademarks helps to make the advertisement memorable. A picture depicting the use of the product for a specific need is useful, e.g., a housewife nursing a burnt finger with Bumol. Association of the product with a symbol or sketch also helps to create a long, term impact on mind. For instance, the smiling baby has become associated with Murphy radios.

Question 3.
(a) What is Receipts and Payments Account ? [2]
(b) What is understood by the ‘Principle of Consistency ’ ? [2]
(c) What is meant by ‘Discounting of a Bill ofExchange ’ ? [2]
(d) What are the components of Marketing mix? [2]
(e) What is meant by In-house market? [2]
Answer:
(a) Meaning of Receipts and Payments Account
Receipts and Payments account is a summary of cash transactions. It is prepared by a non-trading organisation at the end of every accounting year. All cash receipts and cash payments are recorded irrespective of whether they belong to the current year, previous year or future year. Receipts and Payments Account is prepared at the end of the year from the Cash Receipts Journal and Cash Payments Journal. All the receipts and payments during an accounting period are included in it under suitable headings.

For example : Subscriptions received from members on different dates appear in the cash book but the total subscriptions received during the year appear in the Receipts and Payments Account.

(b) ‘Principle of Consistency’
The consistency principle requires accountants to be consistent from one accounting period to another in applying accounting principles, methods, practices, and procedures. In other words, the readers of a company’s financial statements can presume that the same rules and measurements were followed in all of the years being reported. If a change is made to a more preferred accounting method, Jhe effects of the change must be clearly disclosed.

The Financial Accounting Standards Board refers to consistency as one of the characteristics or qualities that makes accounting information useful.

(c) ‘Discounting of a Bill of Exchange’
If the drawer of the bill does not want to wait till the due date of the bill and is in need of money, he may sell his bill to a bank at a certain rate of discount. The bill will be endorsed by the drawer with a signed and dated order to pay the bank. The bank will become the holder and the owner of the bill. After getting the bill, the bank will pay cash to the drawer equal to the face value less interest or discount at an agreed rate for the number of days it has to run. This process is known as discounting of a bill of exchange.

(d) Meaning of ‘Marketing Mix’
Marketing mix refers to a combination of four P’s viz, product, price, promotion and place. These are closely inter-related because decisions in one area influence those in others. These constitute the core of a company’s marketing system.
Following are the components of Marketing mix :

1. Product Mix : It involves decisions regarding the size, design, colour, quality and other features of the product.
2. Price Mix : It involves decisions regarding the price of the product, discount, credit and terms of payment.
3. Promotion Mix : It includes advertising, personal selling and sales promotion. It helps in increasing demand for a product.
4. Place Mix : It refers to the combination of all decisions relating to make products available to consumers.

(e) Meaning of In-House Market
Door-to-door sales persons visit the homes of consumers and offer products to them. Before the visit, initial contact may be created through telephone or mailed in coupon. This is an effective method and offers great convenience to the customers.

In India, Eureka Forbes is selling its water filters and vaccum cleaners through this method. This is however, a time-consuming and costly method. In some cases, a host invites friends to a party. The salesperson demonstrates the products at the market and takes orders from the invitees. This offers a friendly and social environment for shopping.

Question 4.
Justify a reason either for or against each of the following:
(a) Services are not homogeneous. [2]
(b) Firms live forever (explain with reference.to the concept of accounting). [2]
(c) Public relations is a propaganda. [2]
(d) The cost of sugarcane is an avoidable cost. [2]
(e) A cheque is an inconvenient method of making payments. [2]
Answer:
(a) For
Because one may not get the same service quality each time.

(b) For
Accounts of a firm are prepared on the assumption that the firm will continue to exist forever, it is known as the ‘going concern concept’ of accounting. It is on the basis, this concept that the outstanding and prepaid expenses are recorded in the final accounts.

(c) Against

1. It involves analysing and understanding the attitudes and feelings of different stakeholders.
2. It requires continuous efforts to create and sustain a good public image of the organisation.

(d) For
The cost of sugarcane can be avoided by chasing down the sugar factory for one year.

(e) Against
A cheque is a very convenient method of making payment. There is no need of counting and checking notes, when payment is made by a cheque.

Section – B (60 Marks)
(Attempt any FOUR Questions)

Question 5.
(a) Distinguish between a Product and a Service citing suitable examples. [5]
(b) Describe the various steps involved in Personal selling. [5]
(c) Explain the main principles of Accounting. [5]
Answer:
(a)

	Basis of Distinction	Product	Service
1.	Tangibility	Fully tangible (a) Can be felt and touched. (b) Can be fully standardised.	Intangible, may have physical evidence. (a) Cannot be touched. (b) Cannot be standardised.
2.	Inseparability of buyer and seller	Fully separable, remote transactions are possible.	Not separable, remote transactions not possible.
3.	Quality	Can be measured and controlled	Difficult to control and measure
4.	Inventory	Can be stored	Cannot be stored.
5.	Sensitivity to time	Low sensitivity, e.g., a soap can be bought in advance of need.	Highly sensitive, e.g., doctor’s services are needed when there is a patient.
6.	Risk	Product can be replaced.	Service delivered cannot be replaced.
7.	Customisation	Increases costs and restricts sales	Increases customer delight.
8.	Market relationship	Product and brand are the focus of transaction.	A very important link.
9.	Brand	Main strategy in product marketing.	People are equally important.
10.	Perishability	Usually durable	Usually perishable
11.	Ownership	Transferable	Not transferable

(b) Meaning of Personal Selling
Personal selling or salesmanship is the process of assisting and persuading a prospective buyer to buy a product or service in a face-to-face situation. It is the act of persuading people to purchase goods and services which will provide them lasting satisfaction. It involves winning the buyer’s confidence and creating a regular and permanent customer.

Steps in Personal Selling Process :
The process of personal selling consists of the following steps :
1. Preparation :
First of all a well-trained and motivated sales force is developed. Sales- persons must have knowledge of the firm and its products and services, competitors and their products and services, customers and selling techniques. They must be fully aware of the quality, uses, prices, etc., of the goods to be sold.

2. Prospecting :
Prospecting means locating and identifying the potential buyers. A list of prospective customers can be prepared with the help of dealers, salespersons, telephone and trade directories, etc. Information about the age, income, education, family background, tastes, preferences, etc., of prospective buyers should be collected. Collection of such information is called pre-approach.

3. Approach :
In this step, the salesperson makes face-to-face contact with the prospective buyer. The salesperson should introduce himself, greet the customer and start conversation with him/her so as to create a good first impression.

4. Presentation :
Now the salesperson displays and describes the product to be sold. He should tactfully demonstrate the product and explain its quality, utility, performance, etc. He should explain how the product meets the needs of the customer and arouses his interest.

5. Convincing :
At this stage, the salesperson handles the objections raised by the customer. Objections should be considered as sales opportunities. Instead of arguing or losing temper, the salesperson should understand the causes of objections and should try to convince the customer.

(c) Accounting is the language of business. In order to make this language precise, accounting authorities have developed certain basic rules. These man-made rules of accounting are called Generally Accepted Accounting Principles. These principles are accepted and used by accountants all over the world so that financial statements become comparable and useful to the users.

The basic principles of accounting are given below :
1. The Business Entity Concept :
According to this concept, a business firm is treated as a unit separate and distinct from its owners. A completely separate set of books is kept for the firm and business transactions are recorded from the firm’s point of view. The capital provided by the owner is treated as a liability of the firm. The concept of separate entity is necessary for ascertaining the true net profits and financial position of a business firm.

In the absence of this concept, the affairs of the firm will be all mixed up with the private affairs of the proprietor and the true picture of the firm will not be available. The assumption of business entity is applicable to all types of business – sole proprietorship, partnership and company.

For example, if A owns property worth ₹ 20 lakhs, out of which he invests ₹ 10 lakhs in his business then ₹ 10 lakhs will be his private property and ₹ 10 lakhs will be business property.

2. The Going Concern Concept:
It is assumed that the business will continue to exist for a long time in the future. Transactions are recorded on the assumption that the business will exist for an indefinite period of time. It is on this assumption that a distinction is made between capital expenditure and revenue expenditure. A firm is said to be a going concern when there is neither the intention nor the necessity to wind up its affairs.

In the absence of this assumption no outside parties would enter long-term contracts with the firm for supplying funds and goods. The going concern concept also implies that the existing liabilities will be paid at maturity. Unsold stock of goods are taken to the next year.

3. Money Measurement Concept :
On the basis of this concept, only those transactions are recorded in accounts which can be expressed in terms of money. For example, the retirement of the chairman of the company cannot be recorded because it is not possible to measure the monetary effect of retirement except in terms of gratuity and other benefits payable to the chairman.

Money is a common denominator. Thus, money measurement concept helps to make accounting records homogeneous, relevant, simple and understandable.

4. Accounting Period Concept :
It is due to this concept that financial statements are prepared at regular intervals, generally one year. This period is called accounting period. The net profit/net loss of business is ascertained separately for each accounting period. Similarly, the financial position of business is ascertained on the last day of an accounting period. Under tax laws, the accounting period starts from 1st April and ends on 31 st March next year.

The entire life of firm is divided into time intervals for the purpose of financial reporting. In accounting, such a time interval is called accounting period. The accounting period is usually one year. Accounting statements are prepared at the end of each year so that the interested parties are able to judge the progress of business. This involves a process of estimation.

5. The Dual Aspect Principle:
This principle suggests that every debit has a corresponding and equal credit. There must be a giver of benefit and also a receiver of the same. This principle has given rise to the double entry system. It is due to this principle that both the sides of the Balance Sheet are equal and the accounting equation is always true, i.e.,
Capital = Assets – Liabilities

According to this principle, every business transaction has a double (dual) effect on the business. This double effect can be recognised only by recording both the aspects of every transaction. There are two sides of every transaction. If one account is debited, any other account must be credited and vice-versa. The system of recording transactions on the basis of this principle is known as ‘Double Entry System’. It is due to this principle that the two sides of the Balance Sheet are always equal.

The following accounting equation will always hold good at any point of time.
Assets = Liabilities + Capital
OR
Capital = Assets – Liabilities
Whenever a transaction is recorded it must be recorded in two or more accounts to balance the equation.

6. The Revenue Principle:
This principle suggests that revenue should be treated as realised whenever the ownership of goods changes. It is immaterial whether the revenue is received in cash or not.

7. The Expense Principle:
According to this principle, every cost which is incurred to earn revenue is known as expense. Costs incurred on manufacturing, selling and distributing goods and services are expenses. Expenses should be recognised whenever incurred, irrespective of whether cash is paid or not.

Question 6.
(a) Describe any two stages of Marketing. [5]
(b) ‘Advertising is a Social waste Give reasons in support of your answer. [5]
(c) Explain any two causes responsiblefor the destruction of the ecosystem. [5]
Answer:
(a) Stages of Marketing : From subsistence level and self-sufficiency to modem marketing has been a long journey. With specialisation, self-sufficiency gave way to barter system. Advent of money led to the rise of markets and exchange system. The evolution of modem marketing can be traced through the following stages :

1. Production-oriented Stage (1869-1930):
In this stage, the motto was to ‘sell what can be produced.’ There was acute shortage of goods and there was no need to create demand. Product was the focus of attention and communication with the buyer was not needed. Products were manufactured on the assumption that customers would search and buy well-built and reasonably priced products.

In this stage, production and engineering departments shaped the company’s goals and strategy. Production- oriented stage lasted till the Great Depression. Its main drawback is that customers do not always buy products which are inexpensive and easily available.

2. Sales-oriented Stage (1930-1950) :
The Great Depression resulted in a situation that questioned the thinking/strategy of business firms. Drastic changes in buying habits and behaviour of consumers, technological advancements in transportation and communication and growth of corporate form of organisation also changed the thinking. Thus, the sales-oriented stage was characterised by hard selling. In the process of agressive selling unscrupulous practices occurred.

3. Product-oriented Stage (1950-1960):
In this stage, marketers believed that customers will buy the product if its quality was good. Firm made efforts to improve product features and performance. This has been called marketing myopia which means short sightedness.

4. Marketing-oriented Stage (1960-1980):
The modem concept of marketing recognises the role of marketing as a direct contributor to profits are well as sales volume. In order to survive and grow in this highly competitive world, a company must first determine what consumers want. Then produce that will satisfy consumers.

Consumer is considered as the ‘king’ in this stage.

5. Societal Marketing Stage (1980) :
The societal marketing concept requires the marketers to build social and ethical considerations into their marketing practices. They must balance company profits, consumer satisfaction and public interest. The stages of marketing given above are also known as concepts or philosophies of marketing.

(b) Although advertising has a lot of benefits, it has been criticised on the following grounds :

1. It increases the prices of the products or services: Advertising increases the total cost of a product which is ultimately borne by the consumer. Hence, every product gets costlier due to advertisement.
2. It promotes unnecessary consumption: Advertising promotes the consumption of goods and services which are even not required by the people. Hence, it is a wastage of national resources.
3. It promotes the sale of inferior goods: Advertisers make false claims about a product and persuades innocent people to buy inferior and undesirable products.
4. It misleads the consumers : Consumers get misled by so many brands product. For example, there are many brands of bathing soap and detergent on TV. Each brand claims that it is better than others. Consumer gets confused.
5. Decline in moral values: In order to attract attention of the people, advertisers use indecent language and obscene photographs.

(c) Destruction of Ecosystem
In recent decades, there has been rapid economic growth in India and several other countries. But development has led to increasing destruction of the ecosystem. The main causes of ecological damage are given below :
1. Population Growth :
Rapid growth of human population is a major cause of environmental problems. It has caused destruction of natural reasources, increasing extinction of species, soil erosion, falling water tables, pollution of rivers and increase of harmful emissions in atmosphere. Human population is growing beyond the carrying capacity of the planet.

As human population is growing and per capita consumption of resources is increasing, the ecosystem is being constantly destroyed. Need for more land is causing deforestation. Rural land is being converted into urban settlement and open spaces are vanishing. The mass scale destruction of flora and fauna has disturbed the ecological balance.

2. Industrialisation :
Setting up of more and more industries and expansion of existing industrial units is leading to clearing of forest land and fertile agricultural land. Biological diversity is being lost forever. Industrial wastes and manufacturing processes have a direct adverse effect on the environment. Industries produce chemicals, fertilisers, dyes, paints.

Industrialisation is an important cause of air pollution and water pollution.

3. Dwelling of Business Units:
In order to accommodate the migrating population to industries and commercial cities, more dwelling units are being developed.

4. Mining :
Mining involves removal of minerals and other materials from the earth’s crust for use by people. In India, more than 80,000 hectares of land is under the stress of mining activities. These activities involve removal of plant cover (deforestation) along with the underlying soil mantle and excavating overlying rock masses. Mining leads to :

1. disruption of surface and groundwater circulation
2. reshaping of topography
3. generation of greater volumes of waste (debris)
4. severe contamination of water by mine wastes
5. soil erosion (v0 landslides
6. degradation of land

5. Agriculture :
Growing of crops involves use of fertilisers and pesticides, creation of irrigation and drainage facilities and removal of weeds. These activities cause degradation of ecosystem in the following ways :

1. irrigation without sufficient drainage leads to accumulation of water (waterlogging) or salts (salinisation) and rise in the soil water table leading ultimately to degradation of soil quality.
2. excessive use of fertilisers and pesticides causes bio-accumulation in the foodchain. These agro-chemicals degrade the quality of soil and destroy the ecosystem.
   Urbanisation and wars also cause destruction of the ecosystem.

Question 7.
(a) Explain any two types of interviews conducted by an Enterprise in the selection of its employees. [5]
(b) “Real investment in today’s society is not in plant and machinery: it is in people With reference to the above statement, examine the importance of Human resources in a business organisation. [5]
(c) Distinguish between a Cheque and a Demand Draft. [5]
Answer:
(a) Interviews
Selection or employment interview is a formal conversation between a candidate and the employer to judge the former’s suitability for a job. It is a face-to- face encounter with the purpose of assessing the facial expression, postures, gestures and speaking skills of candidates. Interview is also beneficial to the candidate as he gets the opportunity to know about the job and the organisation.

The following types of interviews are used in selection of employees :
1. Structured or Patterned Interview:
This interview is systematically planned in advance and is conducted in a pre-planned manner. The questions to be asked and the time to be allowed to a candidate are decided in advance. This is the most common type of selection interview.

2. Unstructured or Non-Directive Interview :
This interview is not planned in advance. The questions to be asked and the expected reactions are not decided. Candidates are asked their views on relevant matters. This type of interview requires experienced interviewers.

3. Group Interview :
In this interview, a group of candidates are interviewed at the same time. They are given a problem for discussion and candidates express their views on the problem. The interviewers judge the views and initiative taken by the candidates.

4. Panel or Board interview:
In this type of interview, the candidate is interviewed by a panel or board of selectors. Different interviewers ask questions on different topics. The candidate is judged on the basis of combined rating by the panel.

5. Stress Interview :
The purpose of this interview is to see how candidates react to awkward questions and difficult situations. The interviewer deliberately adopts a hostile attitude by asking questions rapidly, by criticising the candidate, etc. The reactions of the candidate to stressful conditions is judged. If the candidate keeps himself cool he is selected.

(b) Human resources are the number of people working in an organisation together with their knowledge, skills, experience, attitudes, motivation and potential. Importance of Human resources in a business organisation are :
1. HR monitors the culture :
Some organisations say that HR owns the culture, but as in all other employee relations matters, it recommend that the ownership is spread across all employees.

2. HR owns the overall talent management processes :
In conjunction with other managers, HR leads the way in management development, performance management, succession planning, career paths, and other aspects of talent management. HR can’t do it alone and relies heavily on managers and executive staff to help plan and execute the strategies. But, HR has to bring new ideas and effective practices into the organisation.

3. HR is responsible for the overall recruiting of a superior workforce : HR must provide leadership, training, scheduling assistance, a systematic hiring process, recruitment planning processes.

4. HR recommends market-based salaries and develops an overall strategic compensation plan : HR provides guidance to managers as they determine the salary ranges within their organisations.

5. HR researches, recommends, and implements employee benefits programs that attract and retain your best employees : HR is also responsible for controlling costs and considering various options before recommending adoption.

6. HR is responsible for recommending and instituting strategies for people and the organisation that further the attainment of the organisations’ strategic goals : If the organisation is changing direction, developing new products, changing mission, vision, or goals, HR must lead the way with employee programs and processes.

7. HR makes sure that workplace activities, events, celebrations, ceremonies, field trips, and team building opportunities are occurring : Other employees plan and implement the activities with or without HR’s help, but the HR leader is generally responsible for monitoring the budget and providing committee oversight.

8. HR advocates for employees who have issues or conflict with management and coaches managers and executives who seek a more effective approach to working with particular employees : Not everyone loves each other but they need to develop effective working relationships for contributions and productivity. HR can help by knowing the players and taking on the necessary role of advocate, coach and/ or mediator.

The importance of HR is easily overlooked in the busy day-to-day in the workplace, but without contributions in each of these areas, the organisation would be less successful.

(c) Distinction between a Cheque and a Demand Draft

	Basis of Distinction	Cheque	Bank Draft/ Demand Draft
1.	Drawer	A cheque is drawn by a person.	A bank draft is always drawn by a bank.
2.	Bearer	A cheque can be drawn payable to bearer.	A draft cannot be made payable to bearer.
3.	Charges	In case of a cheque the person who receives the payment has to pay collection charges.	In case of a draft commission is paid in advance by the sender of money.
4.	Dishonour	A cheque is dishonoured if the funds in the drawer’s account are insufficient.	The draft amount is taken in advance by the bank. There is no question of a draft being dishonoured.
5.	Stop payment	The payment of a cheque can be stopped by giving a written notice to the concerned bank.	The payment of a bank draft cannot be so easily stopped.

Question 8.
Write short notes on:
(a) Persuasion and Empathy as elements of Public Relations. [5]
(b) Benefits of Training to a Business Enterprise. [5]
(c) Uses of Income and Expenditure Accounts. [5]
Answer:
(a) Meaning of Persuasion :
Persuasion is an important element of public relations. It is through some kind of communication that persuasion takes place. To persuade means to convince another person of some idea, product, service or institution, to induce a person or group or to do something. We are all engaged in persuasion. The young man is persuading his beloved to marry him.

The teacher is persuading his students to learn. The politician is persuading the voters to vote for him and his party. There are two forms of interaction between individuals and groups – force and persuasion. When one person compels another to do something it is interaction through force. This form of interaction is considered as an improper conduct in a civilised society. Interaction through persuasion involves convincing the other person. This is considered the right conduct.

A flexible approach is helpful in persuading others. Before engaging in persuasive communication, a person must settle a few questions in his mind : What do I want to accomplish? What are the interests of the people to whom I shall be talking? What are the facts I should tell them? A sense of human interest is necessary for anyone indulging in persuasion. The speaker has to ensure that people understand, approve and accept him and his words.

Experts have identified the following principles of persuasion:
(a) Acceptance of the message is a critical factor in persuasive communication. Therefore, to change attitudes of people, suggestion for change must first be received and accepted.
(b) A suggestion is more likely to be accepted if it is in conformity with needs and desires of people.
(c) A suggestion is more likely to be accepted when it is in hannony with group norms and loyalties.
(d) A suggestion in the mass media should be reinforced with face-to-face interaction.
(e) A suggestion is more likely to be accepted when the source is perceived as reliable or expert.

Meaning of Empathy:
Empathy means looking at things and events from the other’s point of view. It requires that the communicator be in tune with the communicate. The former should understand the attitude of the latter. For example, a good speaker should know the emotions and sentiments of his audience.

Empathy involves seeing and feeling matters as others see and feel. It enables an executive to be sensitive and sympathetic to the attitudes, expectations and problems of his workers and clients. A person with empathy can be receptive and appreciative of the ideas and opinion of others.

Empathy contributes to success of public relations in several ways. It fosters greater understanding and improves relationship with the client. Empathy tells an executive when he should talk and when he should remain silent. It tells when to be firm and when to be restrained. An empathic executive is more accurate in interpreting what a client says or does.

Empathy is different from sympathy. Empathy is feeling with the other person whereas sympathy means feeling sorry for the other person.

Empathy can be created in communications by adopting the ‘you attitude’. For example, in writing letters we should avoid T and ‘We’ and instead use ‘You’. In any case we should not forget that the reader’s point of view in the whole of the letter. An example of ‘you attitude’ is given below:

We attitude	You attitude
We have four differ­ent savings schemes in which our cus­tomers can invest their savings.	You have a choice of four savings schemes in which you can invest your savings.

(b) Following are the benefits of training to a business enterprise :

1. Increased Productivity: Training helps to improve the quantity and quantity of work performance. Well- trained employees produce more and more better quality products.
2. Better Safety : Training helps to improve the job knowledge and skills of employees. Trained employees operate machines and equipments more carefully and cause fewer accidents.
3. Expansion and Growth : With the help of trained staff an enterprise can expand and grow easily. Loss of a few employees does not threaten its survival. Trained employees can adapt more easily to technological advancement and competitive environment.
4. Less supervision : Well-trained employees are less dependent on supervision. They are more disciplined, self-dependent and responsible. Therefore, need and cost of supervision are reduced.
5. Reduced Turnover and Absenteeism : As trained employees feel more satisfied and interested in jobs, labour turnover and absenteeism are reduced.

(c) Income and Expenditure Account Meaning:
Income and Expenditure Account is an account prepared by a non-trading organisation to ascertain the surplus or deficit for an accounting year. It is equivalent to the Profit and Loss Account of a business concern.

It is a nominal account and is prepared with the help of Receipts and Payments Account and other relevant information. It contains all incomes and expenses relating to the current year, whether actually received/paid or not. Therefore, adjustments are made in the receipts and payments shown in the Receipts and Payments Account.

In Income and Expenditure Account incomes are shown on the credit side and expenses are shown on the debit side.
Uses: The main uses of Income and Expenditure Account are as follows :
(a) Income and Expenditure Account shows the surplus or deficit arising from the activities of a non-trading concern during a year.
(b) It shows all items of income and expenditure. With the help of this information, the organisation can take steps to increase income and reduce expenditure.
(c) It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
(d) It fulfils the statutory requirements because non-trading organisations are legally required to prepare it.

Question 9.
CASE STUDY
With a glorious history of more than 50 years blended with a futuristic outlook, The Presidency Bank has become a leading financial institution. The Bank with its customer centric approach values transparency and nurtures knowledge and learning. It believes in the quality of its people and their efforts and therefore takes continuous initiatives for hiring the best talent and ensuring their development, motivation and growth through intensive training.

The Bank offers excellent career opportunities to dynamic individuals. In addition to exposure to a variety of banking segments, the Bank also provides personal growth opportunities for its employees.

With reference to the above:
(a) Suggest a suitable source of recruitment for the Bank. Give reasons to support your answer. [5]
(b) What Employment tests should be conducted by the Bank to select its employees? [5]
(c) What type of Training methods should be adopted by the Bank to train its employees? Why? [5]
Answer:
(a) Internal sources of recruitment is suitable for the bank as that the employees already working in the organisation. The existing employees may be shifted from one place to another and from one post to another to fill up vacancies. The sources of internal recruitment are as follows :
1. Transfer:
A transfer means shifting of an employee from one place to another without any change in rank, responsibility and remuneration. It is a horizontal movement of the employee. Job vacancies in one factory, branch or office of the organisation may be filled by transferring surplus staff from another factory, branch or office.

2. Promotions :
A promotion means shifting an employee from a lower post to a higher post. It leads to increase in the pay, status and responsibility of the employee. Therefore promotions are considered as rewards. Promotions may be made on the basis of merit or seniority of employees. Apromotion involves a vertical movement or advancement of an employee.

3. Demotions:
An employee who is unable to perform his duties properly may be shifted to a lower post. Demotion involves reduction in the pay and status of the employee. It is considered a serious penalty and is therefore used in exceptional cases.

4. Ex-Employees :
The retired employees of the organisation may be recruited for a temporary period to meet abnormally high rush of work in an organisation.

(b) Tests have become a popular technique of selecting employees. Selection tests assess the attitude and performance of candidates with the help of psychological techniques.

Following are the tests that are conducted by the bank to select its employees:
(i) Achievement Tests:
Achievement tests measure the skills and knowledge which the candidate already possesses at the time of testing. These tests help to determine whether the claims made by the candidate about his knowledge and skills are correct or not. 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.

Achievement tests are of following types :
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.

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.

(ii) 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.

Aptitude tests are of following types :
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.

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.

(c) Following are the types of training methods that should be adopted by the bank to train its employees :
Methods of Training:
(i) Coaching or Mentoring :
In this method, the supervisor instructs and guides the trainee. The new employee leams the ins and outs of the job under the guidance of his supervisor. This mothod improves relationship between the worker and his supervisor. But the method can be effective only when the supervisor is competent and takes interest in training.

(ii) Under Study :
Under this method, the trainee is imparted training by a senior and experienced employee. The trainee is designated as the successor to the trainer and learners by observation and imitation. The purpose is to prepare the trainee to fill the vacancy arising from the retirement or promotion of the trainer.

(iii) Job rotation :
In this method, the trainee is periodically rotated from job to job. The purpose is to broaden his outlook and give a general background of different jobs. The trainee leams a variety of tasks and develops a better view of the organisation. But it may cause disruption in work routine. Few persons have the capacity to move from one job to another. Therefore, the persons to be trained and the jobs to which they are to be rotated should be selected carefully.

The training methods should be adopted by the bank to train its employees because such methods lead to increaseed productivity, better utilisation of resources, better safety and Higher Morale.

Question 10.
CASE STUDY
Mbees Tech Ltd. has added its latest addition the Zt and Zht smartphones to its smartphone family. These have created a record ofsorts by selling more than 1 lac phones in three days since they were launched.

However Mr. Pawan, CEO of Mbees Tech Ltd., believes that the Company could have bettered their sales if the supply was met as per the demand for its exciting new range of smartphones.

Mr. Pawan also added that the company stands to deliver on its promises and hence the production capacity has been increased to meet the ever rising demands of its newly launched smartphones that have unmatched features at highly competitive prices.

With reference to the above :
(a) Explain the pricing strategy that Company has adopted to sell its new smart-phones. [5]
(b) Suggest a suitable media to advertise the newly launched smartphones of M/s Mbees Tech Ltd. [5]
(c) Explain the stage of the product life cycle of the smartphones as mentioned in the above case study with the help of a diagram. [5]
Answer:
(a) Pricing strategies provide a framework within which pricing decisions can be taken systematically to achieve the pricing objectives. These strategies provide guidelines for deciding and implementing prices for different products and markets. A sound pricing strategy facilitates a balanced and rational approach to pricing decisions. For this, skim the cream pricing strategy is appropriate because the product is meant for rich people.

Skimming pricing is effective for new and distinctive products due to the following reasons :
(a) In the early stages, the product is distinctive and imitation has not taken effect. Therefore, price is less likely to affect the sales volume i.e., the demand is inelastic.
(b) High price in the initial stages will provide funds for expansion into the big volume segments of the markets.
(c) Skimming pricing takes the cream of the market before attempting to penetrate the more price sensitive sections of the market.
(d) The strategy can be used to feel out the market. It is easier to start out with a high initial price and reduce it later than to set a low price initially and then raise the price to cover unforeseen costs.
(e) By setting initial price at a high level the manufacturer can restrict demand to the level which he can meet.

(b) Advertising media are the channels through which the advertising copy or message is brought to the notice of present and potential buyers. There are following suitable media to advertise the newly launched smartphones of M/s Mbees Tech Ltd.
1. Newspapers :
Newspapers are popular and widely used medium of advertising. Its main advantages are :
(a) Newspapers have wide circulation. Therefore, this medium has a very wide coverage.
(b) Due to wide coverage cost per reader is low.
(c) There is continuity as the message can be repeated daily.
(d) There is flexibility as the message can be modified frequently.
(e) Regional newspapers can be used to focus on selected areas.

2. Films :
Film slides containing advertisements are shown in cinemas before the start of the feature film and during intermission. Along with the photo of the product there is a running commentary on its features and uses. It has the following advantages :
(a) It is very effective due to the combined effect of spoken words and visual.
(b) It has a wide coverage as a large number of people visit cinema in a day.
(c) The advertisement can be shown in selected cinema to focus on a selected region.

3. Outdoor Advertising :
This is a very old medium. It consists of posters, billboard, neon sign, wall writings, signboards on buses and other public vehicles, etc.
Its advantages are :
(a) It attracts attention quickly.
(b) It has a long life.
(c) It has a wide appeal.
(d) It is very selective in terms of geographical coverage.
(e) It is economical.

(c) Stages of the company’s product life cycle are as follows :
1. Introduction Stage :
During this stage, the product is bom. It may be entirely a new product or a new version of some basic product. The firm informs the market about the existence and features of the product. Competition is virtually absent, market is limited, prices are relatively high and little is known about the product innovation.

Growth in sales volume is at a low rate due to lack of knowledge on the part of consumers and limited distribution. Prices are usually high because of small scale of production and heavy promotional expenditure. Thus, the introduction stage is characterised by high costs, low sales volume, limited distribution and high prices. This stage is very risky because a high percentage of new products fail during this period.

The following diagram shows the product life cycle of a company.

2. Growth Stage :
In this stage, the demand and sales grow rapidly. Distribution is widened competition increases, and prices fall. The firm may increase sales by entering new markets. Profits rise and improvements may be made in the product.

3. Maturity Stage:
During this stage, sales continue to grow but at a declining rate. Competition increases further and markets get stabilised. Profits are reduced due to competition. This stage is characterised by product differentiation, product improvement and identification of new product segments.

4. Decline Stage :
This stage is characterised by either the product’s gradual displacement by new and superior products or change in consumer’s buying behaviour. Sales fall down sharply and promotional expenditure has to be reduced drastically to minimise loss. The emphasis is on efficient distribution at lowest cost. Unless new uses of the product are found the sales may decline rapidly and the product may soon go out of the market.

5. Abandonment of Product:
Most firms shift their attention to other products, gradually phasing out the declining product. They abandon the product in order to make better use of their resources. Preferences of consumers may change and new innovations enter the market to take the place of the abandoned products.

Some firms try to postpone abandonment by introducing new models with unique features. In case of heavy losses and no future, the firm may sell out and merge with a stronger enterprise.