BUSINESS STUDIES
March 206 (PDF) · Answer key
Part III
Max: 80 scores
I. Questions 1 to 10 (1 score each)
1. The possibility of loss is known as (b) Risk
2. Minimum number of members in a public company is (b) 7
3. Indian Railway is an example of (d) Departmental Undertakings
4. Which of the following is not a feature of services? (c) Transparency
5. Which type of e-commerce takes place among various departments within a firm? (d) Intra-B
6. The socially determined moral principles which should govern business activities are known as Business Ethics
7. The person who takes initiative to form a Joint Stock Company is Promoter
8. Fill as per hint : (a) Equity share – Ownership Capital (b) Debenture – ? Borrowed Capital / Creditorship Capital
9. "I offer a wide variety of products at low cost under one roof." Who am I? Supermarket / Departmental Store
10. Find the odd one out: (a) Letter of credit (b) Commercial Invoice (c) Certificate of Origin (d) Bill of Lading (b) Commercial Invoice
II. Answer any 5 from 11 to 16 (2 scores each)
11. List out any two examples for a tertiary industry. 2
- Banking
- Transportation (also Insurance, Healthcare, etc.)
12. Write any two need for pollution control. 2
- Reduction of health hazards – prevent diseases from air/water/noise pollution.
- Environmental preservation – protect natural habitats for future generations.
13. Difference between private company and public company (any two points) 2
- Minimum members: private → 2, public → 7.
- Transfer of shares: private – restricted; public – freely transferable.
14. Give the meaning of the term ‘Management’. 2
Management is the process of getting things done through others to achieve organizational goals effectively and efficiently (planning, organising, staffing, directing, controlling).
15. State any two characteristics of business. 2
- Dealing in goods and services – production/procurement for human wants.
- Sale or exchange – transfer of goods for value (not personal consumption).
16. Explain the term "e-banking". 2
Electronic banking: conducting financial transactions (balance check, funds transfer, bill payments) via secure website or mobile app, without visiting a physical branch.
III. Answer any 4 from 17 to 22 (3 scores each)
17. Distinguish between money market and capital market. 3
- Time period: Money market = short term (<1 year); Capital market = long term (>1 year).
- Instruments: Money market – treasury bills, CP; Capital market – shares, debentures.
- Purpose: Money market → working capital; Capital market → fixed capital / expansion.
18. Three differences between Consumer and Business customer (industrial buyer). 3
- Purchase volume: consumer – small quantities; business – large bulk.
- Decision making: consumer – emotional / habit; business – rational / cost‑benefit.
- Purpose: consumer – final consumption; business – further processing / resale.
19. Various types of life insurance policies. 3
- Whole Life Policy – covers entire life; sum assured paid after death.
- Endowment Life Policy – fixed term; sum paid on death or expiry.
- Money Back Policy – periodic payments during term + balance at end.
20. Describe briefly the different types of equity shares. 3
- Authorized capital – maximum capital as per MOA.
- Issued capital – part offered to public.
- Subscribed capital – part taken up by public.
- Paid-up capital – actually paid by shareholders.
21. What is WTO? Write any two functions. 3
WTO: international organisation that sets global trade rules, ensures smooth and predictable trade flows.
- Forum for trade negotiations among member countries.
- Administers dispute settlement mechanisms.
22. Steps in export procedure. 3
- Receipt of enquiry and sending quotation / proforma invoice.
- Receipt of order / indent.
- Pre‑shipment finance (bank).
- Production / procurement of goods.
- Pre‑shipment inspection.
- Customs clearance.
IV. Answer any 4 from 23 to 27 (4 scores each)
23. "One man one vote" – merits of cooperative society. 4
- Equal voting rights: democratic control, no domination by a few.
- Social welfare: objective = member welfare, not profit.
- Ease of formation: simple registration under Cooperative Societies Act.
- Limited liability: members’ liability limited to capital contribution.
24. Telecom services enhancing business (any four). 4
- Cellular mobile services – voice/data connectivity for on‑the‑go communication.
- Internet services – email, research, marketing, website.
- Video conferencing – remote face‑to‑face meetings, training.
- VSAT – satellite communication for remote locations / multi‑branch links.
25. Public sector by Special Act of Parliament – identity & merits. 4
- (1) Identity: Statutory Corporation (Public Corporation).
- (2) Merits: Operational autonomy, flexibility (quick decisions), service motive (public welfare).
26. Classify sources of funds (internal / external). 4
| Internal sources | External sources |
|---|---|
| Retained earnings | Debenture, Equity share capital, Loan from banks, Trade credit, Preference shares, Public deposits, Lease financing |
(d) retained earnings internal; all others external.
27. Types of Itinerant Retailers. 4
- Peddlers/hawkers – move on bicycle/cart, sell low‑price items.
- Market traders – stalls in weekly markets (haats).
- Street traders (pavement vendors) – display on pavements.
- Cheap jacks – rent shop for short period, then move.
V. Answer any 2 from 28 to 31 (5 scores each)
28. What is e‑business? Describe online payment modes (any 3). 5
E‑business: conducting business processes on the internet (includes e‑commerce, customer service, internal transactions).
- Credit/debit cards – encrypted payment gateway.
- Net banking – redirect to bank’s login for authorisation.
- Digital wallets – stored credentials (Paytm, Google Pay).
29. Explain any five arguments in favour of social responsibility. 5
- Justification for existence – business uses society’s resources, must give back.
- Long‑term self‑interest – positive image ensures long‑term profit.
- Avoidance of government regulation – voluntary responsibility reduces strict laws.
- Better environment for business – pollution control, welfare create stable surroundings.
- Holding business accountable – social/environmental impact must be managed.
30. Match the following (Hindrance removal). 5
| A | B | Correct match |
|---|---|---|
| (a) Hindrance of Place | (ii) Transport | (a)-(ii) |
| (b) Hindrance of Risk | (iv) Insurance | (b)-(iv) |
| (c) Hindrance of Knowledge | (v) Advertising | (c)-(v) |
| (d) Hindrance of Time | (iii) Warehousing | (d)-(iii) |
| (e) Hindrance of Finance | (i) Banking | (e)-(i) |
31. Differentiate Memorandum of Association and Articles of Association. 5
| Basis | MOA | AOA |
|---|---|---|
| Definition | Principal charter, defines relation with outside world. | Subsidiary document, internal rules. |
| Objective | Defines scope & limits of company activities. | Governs internal management. |
| Relationship | Supreme; AOA subordinate. | Cannot contradict MOA. |
| Content | Name, office, objects, liability clauses. | Meeting rules, director appointment, share issue. |
| Necessity | Compulsory for all companies. | Compulsory for private co.; public may adopt Table A. |
VI. Answer any 2 from 32 to 34 (8 scores each)
32. (a) What is Insurance? (b) Explain any six principles. 8
(a) Insurance is a contract where insurer agrees to compensate specified loss / pay sum on occurrence of event, in exchange for premium. It provides risk management & certainty.
- Utmost good faith – both parties must disclose all material facts.
- Insurable interest – insured must suffer financial loss from the event.
- Indemnity – compensate only actual loss (general insurance).
- Proximate cause – nearest cause of loss decides liability.
- Subrogation – after compensation, insurer acquires insured’s rights against third parties.
- Contribution – if multiple policies, insurers share loss proportionally.
33. (a) Short note on wholesalers & retailers. (b) Services of wholesalers. 8
- Wholesaler: middleman buying bulk from manufacturers, selling to retailers. Functions: warehousing, grading, credit.
- Retailer: last link, sells directly to final consumers.
- Services to manufacturers: large-scale production facilitation, storage, financial support (prompt payment).
- Services to retailers: availability of goods, grant of credit, risk sharing (return of unsold goods).
34. (a) What is sole proprietorship? (b) Merits & demerits (three each). 8
(a) Business owned, managed, controlled by one individual. No legal distinction between owner and business.
- Merits: easy to form, quick decision making, direct motivation (all profit).
- Demerits: unlimited liability, limited financial resources, limited managerial ability.