ITL Public School Answer Key First Term ( ) Business Studies (054)(Set -A)

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1 ITL Public School Answer Key First Term (20-) Business Studies (0)(Set -A) Date:.09. Class: XI Time: hrs M. M: 00 General Instructions:. Answer to questions carrying mark may be from one word to one sentence. 2. Answer to questions carrying marks may be from 0-7 words.. Answer to questions carrying - marks may be about 0 words.. Answer to questions carrying marks may be about 200 words.. Attempt all parts of a question together. Differentiate between goods and services on the basis of Inconsistency. Ans. Goods : different customers have standardized demand but in services : different customers have different demand 2 Name the process which involves sale of the equity shares to the private sector and the public. Ans. Disinvestment Define the term Business risks. Ans.possibility of inadequate profits or even losses due to uncertainties or unexpected events. Employees Union of Bharat Textiles starts a retail store to make daily household articles at reasonable prices available to its members. Name this form of business organization. Ans. Consumers Cooperative society Distinguish between Joint Hindu Family Business and Co operative Society on the basis capital contribution. Ans. JHFB ancestral property & CS limited Mention one demerit of Government Company. Ans. govt only shareholder, so provisions of companies Act do not have much relevance. 7 A company took fire insurance policy for Rs. lakh. After three months, due to fire, insured suffered a loss of Rs. 2 lakh. How much money will the company get and why? Name the principle of insurance applicable here. Ans. The company will get Rs. 2 lakh as per principle of indemnity. ( ) 8 State Bank of India has donated water purifiers to several schools all over India. Which kind of social responsibility is highlighted here? Ans. Discretionary resp 9 What is meant by Point of Sales? Ans. A point of sale terminal is generally used at different retail outlets. These are electronically tied to a bank computer. When customer presents his debit card, the terminal automatically transfers money from the card holder s bank account to the bank account of the seller. 0 Name the document which invites the general public to subscribe to the shares and debentures of the company. Ans. Prospectus Name the enterprise under which a project or service is funded and operated through a partnership of government and one or more private enterprises. Give any two of its features. Ans. Public private partnership ( for naming) Features: i. It is an arrangement which facilitates partnership between govt, on the one hand and private enterprise on the other hand. ii. PPP is suitable for big projects whose gestation period is very long. iii. It combines the skills, expertise, resources and experience of both the public and private sectors to deliver better quality of services. iv. Both share the revenue in the agreed ratio. v. The private enterprise contributes major part of the capital. The govt may provide portion of the capital or extend infrastructure for the project. (any 2) 2 Explain any three types of postal services available in India. B.st XI of 8

2 Ans. i. UPC (Under Postal Certificate) This service is not rarely used whereas this service was frequently used before courier services. In UPC, the sender will deliver a parcel or letter with ordinary post at specified counter of post office. ii. Registered Post in this the sender obtains receipt & then the postal authorities will deliver that parcel or letters to addresses only. iii. Parcel Post It is a service of postal dept for sending parcels through the post across the country as well as outside the country. This is the most economical way of sending the parcels. iv. Speed Post It is a service to send the mail as fast as possible. In this the post office provides time bound delivery of mail, letters & other documents. The charges of speed post are higher than ordinary mail. v.courier Services These are provided by private post offices for providing desk to desk services. They are faster & more reliable. vi.other services Apart from these, many other services are provided by post offices such as : International money transfers; e bill post facility, etc. (any ) ( each) Commerce includes trade and auxiliaries to trade. Explain. Ans. trade is buying & selling of goods but auxiliaries are required to facilitate the purchase & sale of goods. Eg transport, banking. (2) Commerce includes both as it helps in maintaining a free flow of G & S. () Explain the following services provided by banks: i. Banker s Cheque ii. National Electronic Funds Transfer(NEFT) Ans. i. Banker s Cheque (Pay Order) It is almost similar to bank draft. It is payable within the town. So it is termed as local bank draft. Thus, banks issue banker s cheque for local purpose & issue bank draft for outstations. The commission charged on pay order is less than that on a bank draft. Like a bank draft it will be honoured by the drawee bank & has no danger of being dishonoured. ii. National Electronic Funds Transfer (NEFT) refers to a nationwide system that facilitates individuals, firms and companies to electronically transfer funds from any bank branch to any individual, firm and company having an account with any other bank branch in the country. The funds transfers take place at a particular pt of time. NEFT transactions are settled in batches. During the week days NEFT transactions take place times a day (9:0 am, 0:0 am, 2:00 noon, :00 pm, :00 pm and :00 pm). On Saturdays NEFT transactions take place times a day (9:0 am, 0:0 am, 2:00 noon). What is the effect of conclusiveness of the Certificate of Incorporation? Ans. it is the birth certificate of the co. it becomes a legal entity with perpetual succession. It enters into valid contracts. ( mark for each) Distinguish between Departmental undertakings and Statutory corporation on the following basis:- (a) Funds (b) Audit procedure (c) Employees of the enterprises (d) Formation Ans;- x = Basis Departmental undertakings Statutory corporation Funds From government treasury and Borrowings from public and budget sales of services rendered Audit procedure As applicable to other not applicable Employees of the enterprises government activities Are govt emp and are subject to same rules n regulations Not govt employees Formation Estb as dept of ministry and are considered part or an extension of the ministry itself. By a special act in the parliament B.st XI 2 of 8

3 7 Explain the social responsibility of the business towards: (a) Workers (b) Government and community Ans. (a) Workers opportunities for meaningful work; provide right kind of working conditions; democratic rights of the workers to form unions; ensure fair wage & fair wage (2) (0. for each pt) (b)government and community respect laws of the country & pay taxes regularly & honestly; behave as good citizens & act acc to well accepted values of the society; protect natural env ; should avoid affluent, bad & dirty working env; develop a proper image in the society. (2) (0. for each pt) 8 Business is undertaken with the object of earning money. Which characteristic of business is highlighted in the above statement? Explain three other characteristics of business firm. Ans. Bs is an eco activity () other characteristics of bs firm: i. Production or procurement of G & S ii. Sale, exchange of G & S iii. Dealings in goods & S on regular basis. (0. for naming + 0. for expl) 9 Kunal & Co. prepared two documents for getting the company registered one defining the objectives of the company and other specifying the rules regarding internal management of the company. Identify these two documents and differentiate between them on any three basis. Ans. Memorandum of Association & Articles of Association ( for naming & for diff) Basis Memorandum of Association Articles of Association necessity It is necessary for every company to Not compulsory, a company may Position file it It is the main document and is subordinate to the Companies Act. adopt Table A. This is a subsidiary document & is subordinate to both the memorandum & companies Act. Relationship Defines the relationship of the company with outsiders Defines the relationship of the members and the company validity Acts beyond the MOA are invalid Acts beyond the AOA but within the scope of MOA are valid (deduct mark if basis not given ) 20 i. Name the type of bank which provides financial aid to industries, heavy turnkey projects and foreign trade. ii. Explain the three types of Marine Insurance Policies. Ans. i. Specialised bank () ii. three types of Marine Insurance Policies - a. Ship or hull insurance- The ship may be insured either for a fixed period or for a specific voyage. b. Cargo insurance- Insurance company may undertake to cover up the loss to goods, and compensate both for the cost of the goods and the expected profit. c. Freight Insurance- If the cargo does not reach its destination due to damage or loss in the transit the shipping company is not paid freight charges. The shipping company may undertake insurance for the same. ( for each pt) 2 Ajeet is a Company Secretary while his younger sister Geeta is working as a clerk in a government department. Name the economic activities in which they are engaged and differentiate among them on the basis of: (i) Mode of establishment (ii) Nature of Work (iii) Reward (iv) Code of conduct Ans. Ajeet is in a profession & Geeta is in employment ( ) Basis Profession Employment mode of establishment Membership of a professional body & certificate of practice App letter & service agreement B.st XI of 8

4 nature of work Rendering of personalized, expert Performing work as per service services contract or rules of service Reward Professional fee Salary or wages Code of conduct Professional code of conduct to be followed Norms of behavior laid down by employer ( for diff) 22 Rahul, Bimal and Kiran decided to form a partnership firm by the name RBK Tours and travels. They all decided to contribute Rs.0,000 for starting a business firm. They divided different functions among themselves as per their areas of expertise. Rahul will take care of air plane, train and bus reservations; Bimal, a physically handicapped person will take care of accommodation booking. Kiran belonged to the weaker section of the society. She has done a computer course and will be responsible for online queries and credit card payments. They also decided to share the profits and losses of the business equally. i. The above para highlights certain merits of a partnership form of organization. Name any three such merits. Also quote the lines from the above para which highlight these merits. ii. Identify any two values depicted in the above para. Ans.i. a. Ease of formation & closure decided to form a partnership firm b. Balanced decision making They divided different functions among themselves as per their areas of expertise. c. More funds They all decided to contribute Rs.0,000 for starting a business firm d. Sharing of risks They also decided to share the profits and losses of the business equally. (any ) ( each) ii. 2 values Co operation, concern for disabled; women empowerment (any 2) ( each) 2 In spite of a dominant role the public sector could not do much for economic development of our country. Then also why is government of India not closing all public sector enterprises? Give five reasons in support of your answer. Ans. Role of public sector i. Development of infrastructure ii. Regional balance iii. Economies of scale iv. Check over concentration of economic power v. Import substitution (0. for naming + 0. for expl) 2 Vikas, a clerk in Supertech Constructions had a Savings bank account in Andhra Bank. He used to regularly take off from his bank to manage his savings bank account, make payment of bills, pay insurance premium or for making other type of payments. His manager introduced him with the concept of E banking and explained him the benefits of E - banking. Explain any three benefits which Vikas will get as a customer if he uses e banking for doing various transactions? Also explain any two benefits of e - banking to banks. Ans. Three benefits of e - banking to customers: i. 2 hours, days a year services ii. Make permitted transactions from office or house or while travelling via mobile phone iii. iv. Inculcates a sense of financial discipline by recording each transaction Unltd access to bank, not limited by walls of branch & less risk & greater security to customer. (any ) Two benefits of e - banking to banks: i. Provides competitive advantage to banks ii. Unltd network to bank & is not limited to the no of branches iii. Loads on branches reduced considerably (any 2) B.st XI of 8

5 2 According to a newspaper report, air pollution is increasing at an alarming rate in Delhi. Children and elderly are at high risk as cases of asthma and other breathing problems are increasing day by day. Thus, it has become imperative for every business firm to solve environmental pollution problems. Explain any five steps taken by business firms for environment protection. Ans. Some of the specific steps that a business can take for environmental protection are stated as below:- (any ). The top management should create, maintain and develop work culture for environment protection and pollution prevention 2. Such a commitment should be shared by all the employees of the company across all divisions.. Developing policies and programmes in various areas like treatment of wastes, purchasing good quality raw material, using scientific techniques etc.. Complying with the laws and regulations mage by Government. Participating in government programmes relating to environment protection like plantation of trees, clearing up polluted rivers, checking deforestation etc. Arranging educational workshops and training sessions with suppliers, dealers and customers to encourage their participation in pollution control programmes Ramesh is a sole proprietor. Over the past decade his business has grown from operating neighbourhood corner shop selling accessories such as artificial jewellery, bags, hair clips etc to a retail chain with three branches in the city. Although he looks after the varied functions in all the branches, he is wondering whether he should form a company to better manage the business. He also plans to open branches countrywide. (a) Explain three benefits of remaining a sole proprietor. (b) Explain three benefits of converting to Joint Stock Company. Ans.(a) any three x =. Quick decision making- A sole proprietor enjoys full freedom in making business decisions without consulting others. 2. Confidentiality of information- A sole proprietor can keep all business information confidential and maintain secrecy as he is not bound by law to publish the accounts of his business.. Direct incentive:- A sole proprietor directly reaps the benefits of his efforts as he is the sole recipient of all profit. The need to share profits does not arise.. Sense of accomplishment If the business is successful, it contributes to self satisfaction of the sole proprietor and creates a sense of accomplishment in him. (b)any three x = (0. mk for heading and 0. mk for explanation). limited liability 2. transfer of interest. perpetual existence. scope for expansion. professional management. 27 Rishabh, a brilliant student, lives in a remote district of Orissa and has done mechanical engineering. He has won a lottery of Rs. 0 lakhs. He wants to invest this money in some business opportunity. One of his friends suggested him to form a company. So he decided to manufacture tube lights and bulbs in his manufacturing unit and give jobs to unemployed youth in his village area. He has identified the business opportunity but is unaware about the other functions to be performed by him as a promoter of the company. Explain the other five steps to be performed by him as a promoter of the company. Ans. The other five steps to be performed by him as a promoter of the company are:. Feasibility studies- The promoters undertake detailed feasibility studies to investigate all aspects of the business they plan to start. The following feasibility studies are undertaken- (a) Technical feasibility- The promoter should ensure that the business opportunity he B.st XI of 8

6 intend to capitalize is technical feasible, which means it is possible to execute. The promoters need to ensure that the required raw material and technology is easily available. (b) Financial feasibility The promoters have to think about the funds required in executing the business opportunity and also the means to arrange it. (c) Economic feasibility- Only those projects should be taken up the promoters which are economical viable i.e; there is a possibility of earning profit. (2) 2. Name approval the proposed name of the company is to be approved by the registrar of the companies, for this the promoter makes an application to the ROC(Registrar of companies) giving names in order of priority. The approved name should not be misleading, or very similar to an existing company s name. (). Fixing up signatories to the Memorandum of Association The promoters have to decide who will act as the first Directors of the company as they will be signing the Memorandum of Association. They would give their written consent to act as Directors of the company and also agree to take up the qualifying shares. (). Appointment of professional Certain professional like bankers, auditors etc are appointed by the promoters who assist them in the preparation of necessary documents which are required with the Registrar of Companies. (). Preparation of necessary documents- the promoters takes up necessary steps to prepare the necessary documents which need to be submitted to the ROC like MOA, AOA, Consent of Directors etc. () (0. mk for heading and 0. mk for explanation) 28 Various multinational companies extend their operations and activities beyond the physical boundaries of their own country. They possess large amount of resources and also have the ability to raise funds from different sources. They usually enter into agreements with companies in different countries regarding sale of technology, production of goods, etc. Their products conform to international standards and quality specifications. i. Identify and explain any three features of multinational companies highlighted in the above para. ii. Quote the lines from the above para that indicate these three features. Ans. i. three features are : a. Expansion of market territory - Various multinational companies extend their operations and activities beyond the physical boundaries of their own country b. Huge capital resources - They possess large amount of resources and also have the ability to raise funds from different sources c. Foreign collaboration - They usually enter into agreements with companies in different countries regarding sale of technology, production of goods, etc d. Advanced technology - Their products conform to international standards and quality specifications. ( x 2) (Any points with their expl) ( for pt; 0. for expl & 0. for quoted line ) 29 a. A factory owner took a fire insurance policy for his factory without informing the insurance company that he received notice from electricity department to get the wiring of the factory repaired. After six months of taking policy the factory caught fire due to faulty wiring. Will the factory owner get compensation for the loss due to fire? Which principle of insurance is related with this case? Explain that principle. b. Rahul has taken fire insurance policy for his factory. Due to fire he suffered a loss of Rs. lakh and he gets the compensation for the same. The half burnt goods canbe sold for Rs.0,000. Who has the right over it? Why? Name and explain the principle involved here. Ans;- a. No,he will not get compensation as he has violated principle of utmost good faith A contract of insurance is a contract of uberrimae fidei i.e; a contract found on utmost good faith. Both the insured and the insurer should display good faith towards each other in regard to the contract. The insured must voluntarily make full, accurate disclosure of all facts, material to the risk being proposed and the insurer must make clear all the terms and conditions in the B.st XI of 8

7 insurance contract. Any fact which is likely to affect the mind of a prudent insurer is material for this purpose b.the ins co has the right over the amount realized by selling the half burnt goods after it has paid compensation for the loss to the insured. Acc to the principle of subrogation, Rahul cannot make any profit by selling the half burnt goods. 0 A leading pharmaceutical firm is earning huge profits annually. It decides to spend some portion of its annual profits on upliftment of the society. It has organized health camps and is spreading awareness among general public for initiating healthy habits in themselves and their family members. It also conducts free medical tests and is giving free medical aid to weaker sections of the society once in six months. Should the firm assume social responsibilities as discussed above or should it utilize its profits on its further growth and expansion? Give four reasons in support of your answer. Ans. Either give arguments in favour or against (any ) Arguments in favour Justification for existence & growth, long term interest of the firm; avoidance of govt regulation; Maintenance of society. Arguments against Violation of profit maximization; Burden of consumers; Lack of social skills; Lack of broad public support (. x ) Answer Key First Term (20-) Business Studies (Set -B) Differentiate between goods and services on the basis of Inseparability. 2 Name the document which invites the general public to subscribe to the shares and debentures of the company. Ans. Prospectus Supply of learning materials to economically backward students by a business firm is an example of which kind of social responsibility? Ans. Discretionary resp A company took fire insurance policy for Rs. lakh. After three months, due to fire, insured suffered a loss of Rs. 2 lakh. How much money will the company get and why? Name the principle of insurance applicable here. Ans. The company will get Rs. 2 lakh as per principle of indemnity. ( ) Name the process which involves sale of the equity shares to the private sector and the public. Ans. Disinvestment Same as Set A Q2 7 Employees Union of Bharat Textiles starts a retail store to make daily household articles at reasonable prices available to its members. Name this form of business organization. Ans. Consumers Cooperative society Same as Set A Q 9 Distinguish between Joint Hindu Family Business and Co operative Society on the basis control and management. Ans. JHFB karta takes decisions & CS managing committee takes decisions 0 Mention one demerit of Government Company. Ans. govt only sh holder so the provisions of co act do not apply. Explain the following services provided by banks: i. Bank Draft ii. Real time gross settlement (RTGS) Ans. i. Bank Draft - A bank draft also called (demand draft or DD) is a financial instrument with the help of which money can be remitted from one person to another or from one place to another. A bank draft can be obtained after depositing the required amount in the bank. The bank charges some commission in lieu of issuing the bank draft. The payee can present/show the draft on the drawee bank at his place & collect the money. It is less risky for a creditor as it has no danger of being dishonored. ii.real time gross settlement (RTGS) - are funds transfer system where transfer of money B.st XI 7 of 8

8 or securities takes place from one bank to another on a real time or on gross basis. Settlement on real time means there is no waiting period in payment transaction. The transaction is settled as soon as it is processed. Gross settlement means the transaction is made on one to one basis without bunching or netting with any other transaction. Once processed, payments are final and irrevocable. It is the fastest possible system for transfer of money through the banking system. The min. amt in an RTGS transaction is Rs.2 lacs, but there is no upper ceiling. 9 Explain the social responsibility of the business towards: (a) Shareholders or owners (b) Consumers Ans. a. Shareholders or owners fair return, safety, full information about working b. Consumers right quality & quantity of G & S at reasonable prices; precaution against adulteration, poor quality (2 + 2) B.st XI 8 of 8