CBSE Class 10 Elements of Business Sample Paper 2026 27 with Solutions PDF Download

1. Read the following Assertion (A) and Reason (R). Choose the correct option from those given below:
Assertion (A): E-mail has become an essential tool of communication for the modern business organisations.
Reason (R): E-mail facilitates quicker transmission of information, reduction in cost of communication, and easier storage/retrieval of business records. [1 Mark]
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) E-mail is a fast, cheap and reliable mode of business communication.
b) Always check whether the Reason correctly explains the Assertion before selecting an option.

2. The liability of equity shareholders is __________.
(Choose the correct option to fill up the blank) [1 Mark]
(A) Limited
(B) Zero
(C) Unlimited
(D) Equal

Answer: (A) Limited

Teacher's Note:
a) Equity shareholders' liability is limited to the unpaid amount on their shares.
b) This is a key feature that distinguishes a company from a partnership firm.

3. Identify, which of the following statements correctly describes the hire purchase system? [1 Mark]
(A) The buyer becomes the owner of goods immediately after taking possession.
(B) The buyer pays the full price in lump sum at the time of purchase.
(C) The buyer gets possession of goods immediately but ownership is transferred only after the last instalment is paid.
(D) The seller cannot repossess the goods in case of default.

Answer: (C) The buyer gets possession of goods immediately but ownership is transferred only after the last instalment is paid.

Teacher's Note:
a) Remember the difference between possession and ownership in hire purchase.
b) The seller can repossess goods if instalments are not paid.

4. Identify, which of the following is commonly sold through vending machines? [1 Mark]
(A) Furniture
(B) Snacks and beverages
(C) Jewellery
(D) Cars

Answer: (B) Snacks and beverages

Teacher's Note:
a) Vending machines are used for small, standardised, low-value items.
b) They are an example of non-store retailing.

5. Goods sold on approval basis are recorded as sales by the seller: [1 Mark]
(A) Immediately after the goods are dispatched.
(B) Only when the buyer approves or accepts the goods.
(C) As soon as payment is received in advance.
(D) When the goods are packed for delivery.

Answer: (B) Only when the buyer approves or accepts the goods.

Teacher's Note:
a) Under sale on approval, ownership passes only on acceptance by the buyer.
b) Until acceptance, goods remain the property of the seller.

6. Read the following Assertion (A) and Reason (R). Choose the correct options from those given below:
Assertion (A): Departmental stores generally require heavy capital investments.
Reason (R): Departmental stores operate on a large scale and maintain a variety of goods. [1 Mark]
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) Large scale of operations and variety of stock explain the heavy capital requirement.
b) Link cause and effect carefully in Assertion-Reason questions.

7. Identify, which of the following is an example of non-verbal communication. [1 Mark]
(A) Writing a report.
(B) Using facial expressions
(C) Speaking in a meeting
(D) Sending a text message

Answer: (B) Using facial expressions

Teacher's Note:
a) Non-verbal communication does not use spoken or written words.
b) Facial expressions, gestures and body language are common examples.

OR

Feedback in the communication process helps to _________.
(Choose the correct option to fill up the blank) [1 Mark]
(A) start the communication
(B) know if the message is understood
(C) encode the message
(D) create barriers

Answer: (B) know if the message is understood

Teacher's Note:
a) Feedback completes the communication cycle.
b) It tells the sender whether the message was received correctly.

8. Automated vending machine is an example of_____________retailing.
(Choose the correct option to fill up the blank) [1 Mark]
(A) Itinerant
(B) Non-store
(C) Large scale
(D) Wholesale trade

Answer: (B) Non-store

Teacher's Note:
a) Non-store retailing sells goods without a fixed shop, for example vending machines, mail order and online selling.
b) Do not confuse it with itinerant retailing, which involves moving sellers.

9. From the following, identify the correct example of a chain store: [1 Mark]
(A) A small roadside tea stall
(B) A weekly village market
(C) A branch of Big Bazaar in Delhi
(D) A street hawker

Answer: (C) A branch of Big Bazaar in Delhi

Teacher's Note:
a) Chain stores (multiple shops) are branches of the same large retail business under centralised management.
b) They must have uniform layout, pricing and policies across branches.

10. Read the following Assertion (A) and Reason (R). Choose the correct options from those given below:
Assertion (A): Mail order houses operate by sending catalogues or advertisements to customers, who place orders by mail or online.
Reason (R): Mail order houses do not require physical retail stores to sell their products. [1 Mark]
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) Mail order houses are a form of non-store retailing.
b) Absence of a physical store explains why catalogues and online orders are used.

11. Read the following statements carefully:
Statement I: Equity Shareholders enjoy voting rights in company.
Statement II: Equity Shareholders get a fixed rate of dividend.
In the light of given statements, choose the correct option from the following: [1 Mark]
(A) Statement I is true, Statement II is false.
(B) Statement II is true, Statement I is false
(C) Both the statements are true.
(D) Both the statements are false.

Answer: (A) Statement I is true, Statement II is false.

Teacher's Note:
a) Equity shareholders have voting rights but do not get a fixed dividend.
b) Preference shareholders, not equity shareholders, get a fixed rate of dividend.

OR

Retained Earnings is also known as _______.
(Choose the correct option to fill up the blank) [1 Mark]
(A) Self- financing
(B) Internal financing
(C) Ploughing Back of Profits
(D) Trade Credit

Answer: (C) Ploughing Back of Profits

Teacher's Note:
a) Retained earnings are undistributed profits reinvested in the business.
b) It is a source of internal, owned finance for a company.

12. The board of directors of a Joint Stock Company is elected by__________
(Choose the correct option to fill up the blank) [1 Mark]
(A) Public
(B) Government bodies
(C) Shareholders
(D) Employees

Answer: (C) Shareholders

Teacher's Note:
a) Shareholders elect directors at the Annual General Meeting.
b) Directors manage the company on behalf of the shareholders.

13. Credit extended by one trader to another for the purchase of goods and services is called as _______. (Choose the correct option to fill up the blank) [1 Mark]
(A) Bank Overdraft
(B) Trade Credit
(C) Term Loan
(D) Lease Financing

Answer: (B) Trade Credit

Teacher's Note:
a) Trade credit is a short-term source of finance between businesses.
b) It does not involve a bank or financial institution directly.

14. A retail outlet that deals in a single line of products such is known as____________.
(Choose the correct option to fill up the blank) [1 Mark]
(A) Departmental Store
(B) Multiple Shop
(C) Super Market
(D) Specialty Store

Answer: (D) Specialty Store

Teacher's Note:
a) Specialty stores focus on one product line, for example only footwear or only books.
b) This is different from departmental stores which sell many product lines.

15. Buying goods on the basis of a small representative portion shown by the seller is known as___________ [1 Mark]
(A) Purchase by Description
(B) Hire Purchase
(C) Purchase by Sample
(D) Cash on Delivery

Answer: (C) Purchase by Sample

Teacher's Note:
a) In purchase by sample, the seller shows a small quantity as a sample of the bulk.
b) The bulk delivered must match the quality of the sample shown.

16. Read the following Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): Multiple shops operate under centralised management and follow uniform policies in all their branches.
Reason (R): In multiple shops, all major decisions regarding pricing, purchasing, and advertising are taken by the head office. [1 Mark]
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) Centralised control by the head office explains uniform policies in multiple shops.
b) This ensures consistency in pricing and branding across all branches.

17. In case of auction sale, a bid may be withdrawn__________
(Choose the correct option to fill up the blank) [1 Mark]
(A) after acceptance by the auctioneer
(B) before acceptance by the auctioneer
(C) after delivery of goods.
(D) after payment is made

Answer: (B) before acceptance by the auctioneer

Teacher's Note:
a) A contract of sale in auction is formed only when the auctioneer accepts the highest bid.
b) A bidder can withdraw the bid any time before this acceptance.

18. A credit note is issued by the seller to__________.
(Choose the correct option to fill up the blank) [1 Mark]
(A) Increase the amount payable.
(B) Acknowledge receipt of advance
(C) Reduce the amount receivable from the buyer
(D) Cancel the order

Answer: (C) Reduce the amount receivable from the buyer

Teacher's Note:
a) A credit note is usually issued for goods returned or overcharged amounts.
b) It reduces the buyer's outstanding balance in the seller's books.

19. Read the following text carefully: Riddhi Garments Ltd., headquartered in Jaipur, exports designer clothes to buyers in the USA and Australia. Earlier, the company's managers had to travel abroad frequently to finalise orders and resolve business issues. However, the company recently adopted a digital communication system that allows participants in different countries to interact face-to-face, share documents, and make presentations instantly through the internet. With the help of this system, Riddhi Garments Ltd. has been able to speed up decision-making, improve coordination with foreign clients, and significantly reduce travelling and accommodation expenses. In the light of the above text and common understanding, answer the following questions:

1. Identify the communication system adopted by Riddhi Garments Ltd. [1 Mark]

Answer: Riddhi Garments Ltd. has adopted video conferencing as its communication system.

Teacher's Note:
a) Look for keywords like "face-to-face", "internet" and "different countries" to identify video conferencing.
b) Do not confuse it with e-mail, which does not allow live visual interaction.

2. State any two features of this communication system. [2 Marks]

Answer:
1. It enables real-time audio and visual interaction, allowing participants at different locations to see and speak to each other instantly.
2. It allows easy sharing of documents and presentations, which speeds up decision-making and significantly reduces travelling and accommodation costs.

Teacher's Note:
a) Cost saving on travel is a commonly asked feature of video conferencing.
b) Mention both the technical feature (real-time interaction) and the business benefit (faster decisions).

20. "Vindhya Publications Pvt. Ltd." has been operating successfully for several years. Due to increasing demand and expansion plans across the country, the management is planning to convert it into a public company so that it can raise funds from the general public.
Question:
List any three features of a Public Company. [3 Marks]

Answer:
1. Separate legal entity: A public company has an existence independent of its shareholders and can own property and sue in its own name.
2. Perpetual succession: The company's existence is not affected by the death, insolvency or exit of any member.
3. Limited liability: The liability of shareholders is limited to the unpaid amount on the shares held by them.

Teacher's Note:
a) These three features explain why companies can raise large funds from the public.
b) Perpetual succession and limited liability are frequently tested features.

21. Read the following text carefully: Abhimanyu is the Sales Manager of AAMC Appliances Ltd. The company recently launched a new product and Abhimanyu wanted his sales team to understand its features clearly. He carefully prepared a presentation explaining the product specifications, pricing, and target customers. During the meeting, he used simple language and real-life examples to explain the details. After delivering the message, Abhimanyu asked the team members to share their understanding of the product and clarify doubts. He also requested weekly sales reports to check whether the team had understood the instructions properly. As a result, the sales team confidently explained the product to customers and sales increased steadily. In the light of the above text and common understanding, answer the following questions:

A) Identify the sender and the receivers in the above case. [2 Marks]

Answer:
1. Sender: Abhimanyu, the Sales Manager, who is conveying the information about the new product.
2. Receivers: The members of the sales team who receive and understand the message.

Teacher's Note:
a) In any communication case, first identify who initiates the message and who receives it.
b) A single sender can have multiple receivers, as seen here with the whole sales team.

B) Which step of the communication process is involved when Abhimanyu prepares a presentation? Explain briefly. [1 Mark]

Answer: The step involved is Encoding, in which Abhimanyu converts his ideas about product features, pricing and customers into a presentation using simple language and examples.

Teacher's Note:
a) Encoding means converting ideas into a message that can be understood by the receiver.
b) Preparing, drafting or designing a message is always classified as encoding.

22. Raman Ltd. is planning to expand its business operations. The Finance Manager suggests raising funds through equity shares, while the Managing Director prefers taking a long-term loan from a bank.
Questions:

A) Identify the two sources of finance being discussed. [1 Mark]

Answer: Equity shares represent Owner's Fund and a long-term bank loan represents Borrowed Fund.

Teacher's Note:
a) Owned funds come from the proprietors while borrowed funds come from outsiders.
b) Correctly classifying the source as owned or borrowed is essential in such questions.

B) State any two differences between these two sources of finance. [2 Marks]

Answer:
1. Definition: Owner's Funds are the amount invested by owners along with reinvested profits, while Borrowed Funds are raised through loans or borrowings from outside parties.
2. Control: Providers of Owner's Funds get a stake in the control of the enterprise, while providers of Borrowed Funds do not get any control over the business.

Teacher's Note:
a) Control and ownership are the most commonly tested points of difference.
b) Remember that borrowed funds must be repaid with interest, unlike owner's funds.

23. Radhika, a young rural girl, visited Delhi during her school holidays to meet her relatives. One afternoon, she accompanied her cousins to a large shopping outlet, located in the heart of the city. As she stepped inside, she was amazed to see the extensive variety of products available under one roof - from daily-use items to premium branded goods. She also noticed that the store provides additional facilities such as clean restrooms and a restaurant where customers can relax and eat.
Questions:

A) Identify the type of store visited by Radhika. [1 Mark]

Answer: Radhika visited a Departmental Store.

Teacher's Note:
a) Wide variety under one roof and central location are typical clues for departmental stores.
b) Do not confuse it with a specialty store, which sells only one product line.

B) Quoting relevant lines from the passage, explain any three features of this type of store [3 Marks]

Answer:
1. Wide variety of goods under one roof: "extensive variety of products available under one roof - from daily-use items to premium branded goods" shows that departmental stores sell many types of products in one place.
2. Located in central areas of cities: "located in the heart of the city" shows that departmental stores are usually situated in prime locations for easy customer access.
3. Provides additional customer facilities: "provides additional facilities such as clean restrooms and a restaurant where customers can relax and eat" shows that these stores focus on customer comfort and convenience.

Teacher's Note:
a) Always quote the exact line from the passage before explaining the feature, as marks are given for the quotation.
b) Link each quoted line clearly to the feature it represents.

24. Read the following text carefully: Megha works as a sales executive in a reputed furniture showroom. She greets every customer warmly and patiently explains the features, price, and maintenance of different products. She never forces customers to buy but helps them compare options according to their budget and preferences. Megha remains calm even when customers raise complaints or ask repeated questions. She also keeps herself updated with the latest designs and trends in the market. Due to her polite behaviour and product knowledge, many customers specifically ask for her assistance.
State and explain any two qualities of a good salesman reflected in the above case. [4 Marks]

Answer:
1. Polite and courteous behaviour: Megha greets customers warmly and remains calm even when they ask repeated questions or raise complaints, which helps in building trust and creating a positive shopping experience.
2. Good product knowledge: She clearly explains the features, price and maintenance of products and keeps herself updated with the latest designs and trends, which helps customers make better purchasing decisions and increases their confidence in her.

Teacher's Note:
a) Always name the quality first and then explain it using details from the case.
b) Politeness and product knowledge are two of the most commonly asked salesman qualities.

25. Distinguish between Cash and Credit transaction on the basis of:
(a) Meaning (b) Time of payment [4 Marks]

Answer:
1. Meaning: A cash transaction is one in which payment is made immediately at the time of purchase or sale of goods or services, whereas a credit transaction is one in which goods or services are purchased or sold with a promise to make payment at a later date.
2. Time of payment: In a cash transaction, payment is made instantly or on the spot, whereas in a credit transaction, payment is made after a certain period of time as agreed between the buyer and seller.

Teacher's Note:
a) Always answer distinguish questions basis-wise, covering both transactions under each basis.
b) "Immediate payment" versus "deferred payment" is the key idea to remember.

26. Write short notes on:
(i) Internal Business Communication (ii) Non- Verbal Communication [4 Marks]

Answer:
1. Internal Business Communication: It refers to the exchange of information within an organisation among managers, employees and different departments. It helps in coordinating activities, giving instructions and sharing ideas, and may flow upward, downward or horizontally through meetings, e-mails, notices and reports.
2. Non-Verbal Communication: It is the transmission of messages without using spoken or written words. It includes facial expressions, gestures, body language, eye contact, posture and tone of voice, and helps to support or reinforce verbal messages.

Teacher's Note:
a) Mention the direction of flow (upward, downward, horizontal) for internal communication.
b) List at least two examples of non-verbal communication such as gestures or facial expressions.

27. Read the following text carefully: Rachit wanted to buy a laptop but did not have enough money to pay the full amount at once. He purchased the laptop from a showroom under the hire purchase system. He paid Rs. 10,000 as a down payment and agreed to pay the remaining amount in monthly instalments. The ownership of the laptop would be transferred to Rachit only after the last instalment is paid. If he failed to pay any instalment, the seller had the right to take back the laptop. In the light of the above text and common understanding, answer the following questions:

a) Identify the method of sale used in the above case. [1 Mark]

Answer: The method of sale used is the Hire Purchase System.

Teacher's Note:
a) Down payment plus instalments plus repossession right are the clues to identify hire purchase.
b) Do not confuse it with an ordinary credit sale, where ownership passes immediately.

b) State any two features of this system. [2 Marks]

Answer:
1. The buyer pays the price in instalments after making a down payment.
2. Ownership of the goods is transferred to the buyer only after the last instalment is paid.

Teacher's Note:
a) Instalment payment and delayed ownership transfer are the two core features examiners expect.
b) The seller's right to take back the goods on default is also a valid feature, but write only two.

c) Who will be the owner of the laptop before the last instalment is paid? [1 Mark]

Answer: The seller remains the owner of the laptop until Rachit pays the final instalment.

Teacher's Note:
a) Possession and ownership are separate concepts in hire purchase; the buyer only has possession.
b) Ownership passes only after full payment is completed.

d) State two advantage of this system for buyers. [2 Marks]

Answer:
1. The buyer can use the product immediately without paying the full price at once.
2. The payment burden is reduced because the amount is paid in easy instalments over time.

Teacher's Note:
a) Immediate use and easier payment are the two most valued advantages of hire purchase for buyers.
b) Contrast this with cash purchase, where the full amount must be paid upfront.

28. Discuss the following:
(i) External Communication (ii) Vertical Communication [6 Marks]

Answer:
1. External Communication: It refers to the exchange of information between an organisation and people outside it, such as customers, suppliers, government agencies, investors and the general public. It helps in building business relationships, promoting products and maintaining the organisation's image, and takes place through advertisements, letters, meetings and social media.
2. Vertical Communication: It is the flow of information between different levels of management within an organisation. It can move downward, from managers to employees in the form of instructions and policies, or upward, from employees to managers in the form of feedback and reports, and it helps in coordination and decision-making.

Teacher's Note:
a) External communication always involves parties outside the organisation.
b) Vertical communication has two directions, upward and downward; mention both for full marks.

OR

Explain any two barriers of effective communication. [6 Marks]

Answer:
1. Language Barrier: Communication is effective only when the sender and the receiver understand the message in the same way. When they use different languages, the receiver may not understand the message at all. The use of difficult words or unfamiliar terms also makes the message hard to follow. If the message is unclear or badly worded, the receiver may give it a different meaning. All this leads to misunderstanding between the sender and the receiver, and the purpose of communication is not achieved.
2. Psychological Barrier: The state of mind of the receiver affects how a message is received. Emotions such as anger or fear can make the receiver react to the message instead of understanding it. Stress can prevent the receiver from concentrating on what is being said. Lack of interest may lead the receiver to ignore the message or pay only partial attention to it. As a result, the receiver does not understand or accept the message properly, and communication fails.

Teacher's Note:
a) Give one real business example for each barrier to strengthen the answer.
b) Barriers can be classified as language, psychological, physical or organisational; name the category clearly.

29. Distinguish between Public company and Private company on the basis of:
(a) Number of Members [2 Marks]
(b) Number of Directors [2 Marks]
(c) Transfer of Shares [2 Marks]

Answer:
1. Number of Members: A public company requires a minimum of 7 members with no maximum limit, whereas a private company requires a minimum of 2 members with a maximum limit of 200 members.
2. Number of Directors: A public company must have a minimum of 3 directors, whereas a private company must have a minimum of 2 directors.
3. Transfer of Shares: Shares of a public company are freely transferable, whereas in a private company there are restrictions on the transfer of shares.

Teacher's Note:
a) Remember the exact minimum member and director numbers, as these are frequently tested.
b) "Freely transferable" versus "restricted transfer" is the key distinguishing phrase for shares.

30. Explain any three importance of personal selling to a business organization. [6 Marks]

Answer:
1. Increases Sales: Personal selling allows direct communication with customers, explaining product features and persuading them to buy, which increases the chances of higher sales.
2. Builds Customer Relationships: Through personal interaction, salespersons develop trust and long-term relationships with customers, leading to repeat purchases and customer loyalty.
3. Provides Market Feedback: Salespersons interact closely with customers and collect valuable information about their needs, preferences and complaints, which helps the business improve its products and strategies.

Teacher's Note:
a) Give a clear heading and a short explanation for each point, as each point carries 2 marks.
b) Customer relationship building and market feedback are commonly overlooked but important points.

OR

Explain the importance of advertising. [6 Marks]

Answer:
1. Creates Awareness: Advertising informs people about new products that are launched in the market. It tells customers about the features of the product and its price. It also tells them where the product is available. In this way, customers come to know about the product and can make informed buying decisions.
2. Increases Demand and Sales: Effective advertising attracts the attention of customers towards the product. It creates a desire for the product and encourages people to purchase it. As more customers buy the product, the demand for it rises. This leads to higher sales for the business.
3. Builds Brand Image: Regular advertising keeps the name of the brand in front of customers again and again. This helps the business create a strong brand identity, so that customers easily recognise its products. Over time, it also builds trust among customers, and they prefer the brand over others.

Teacher's Note:
a) Awareness, demand generation and brand building are the three most important functions of advertising.
b) Use a real or hypothetical product example to make the explanation clearer.