ICSE Class 10 Commercial Applications Board Exam Question Paper 2009 with Solutions

ICSE Class 10 Commercial Applications Board Exam Question Paper 2009 with Solutions

SECTION A (40 Marks)

(Attempt all questions from this Section)

Question 1: Give one difference between each of the following:

(a) Receipt and Income. [2 Marks]

Answer:
Receipt refers to the actual cash received by an organization during an accounting period, whereas income is the total revenue earned during a period, whether received in cash or accrued.

Teacher's Note:
a) Receipts represent cash inflows while income is a broader accounting concept of earnings.
b) Students often confuse cash receipt with revenue earned; ensure the timing difference is highlighted.

(b) Promotion and Transfer. [2 Marks]

Answer:
Promotion involves the advancement of an employee to a higher post carrying higher responsibilities, status, and pay, whereas transfer involves the shifting of an employee from one job, department, or branch to another without any significant change in rank, status, or pay.

Teacher's Note:
a) Promotion leads to upward mobility in the organizational hierarchy.
b) Transfer is a horizontal movement meant to fill vacancies or reallocate human resources.

(c) Normal cost and abnormal cost. [2 Marks]

Answer:

Teacher's Note:
a) Normal costs are controllable and expected in routine production.
b) Abnormal costs arise due to unexpected events like machinery breakdown or strikes and are treated as losses.

(d) Central Bank and Commercial Bank. [2 Marks]

Answer:

Teacher's Note:
a) The Central Bank acts as the apex financial institution of the country.
b) Commercial banks deal directly with the general public for banking services.

(e) Produce cost and Period cost. [2 Marks]

Answer:

Teacher's Note:
a) Product costs are inventoried until the product is sold.
b) Period costs are charged as expenses against the revenue of the specific period in which they are incurred.

Question 2:

(a) What is a brand? How is it different from branding? [2 Marks]

Answer:
Brand means any identification mark (such as trade name, mark, symbol, picture, design, colour etc.) used to identify the product of a seller and to differentiate it from the products of competitors.
Branding is the process of assigning a distinctive name to the product by which it is to be known and remembered. It is a general term concerning various activities such as giving a brand name to a product, designing a brand mark and popularising it.

Teacher's Note:
a) A brand is the identity or name itself, whereas branding is the comprehensive strategic process of creating that identity.
b) Ensure clear distinction between the noun (brand) and the verb/process (branding).

(b) Give two uses of Receipts and Payments Account. [2 Marks]

Answer:
1. It summarizes the total cash receipts and cash payments from all sources over a specific accounting period.
2. It serves as the basis for preparing the Income and Expenditure Account and the Balance Sheet of non-trading concerns.

Teacher's Note:
a) Receipts and Payments Account is essentially a classified summary of cash book transactions.
b) It does not show non-cash items like depreciation or outstanding expenses.

(c) Give two differences between recruitment and training. [2 Marks]

Answer:

Teacher's Note:
a) Recruitment precedes selection and training.
b) Training focuses on skill enhancement and capability building after an employee is hired.

(d) With the help of an example, explain the clearing house function of RBI. [2 Marks]

Answer:
The Central Bank acts as a clearing house for settlement of mutual claims of commercial banks. Since all commercial banks maintain accounts with the RBI, cheques drawn on different banks are cleared easily through book entries at the clearing house without physical transfer of cash.
(Note: Official marking scheme note: Answer not given due to out of present syllabus, provided as per standard board guidelines.)

Teacher's Note:
a) Clearing house operations minimize the movement of physical cash among banks.
b) RBI facilitates settlement through account transfers.

(e) On the basis of ownership, distinguish between a Product and a Service. [2 Marks]

Answer:
A product is tangible and its ownership can be completely transferred from the seller to the buyer upon purchase. A service is intangible and its ownership is never transferred; only the right to use or experience the service is acquired by the customer.

Teacher's Note:
a) Products can be possessed and stored.
b) Services are consumed at the point of production and cannot be owned as physical property.

Question 3:

(a) Why is it said that Marketing is Pervasive? [2 Marks]

Answer:
Marketing operates within the framework of total environment which comprises economic, social, legal, political and other forces. Marketing is required in business as well as in social and other organisations.

Teacher's Note:
a) Pervasive means universal or applicable everywhere.
b) Marketing activities are essential not just for profit-making commercial firms but also for non-profit and government entities.

(b) Explain Promotion Mix. [2 Marks]

Answer:
Promotion Mix consists of all the activities aimed at persuading customers to buy the product. The various elements of promotion mix are advertising, personal selling, sales promotion, and publicity.

Teacher's Note:
a) It represents the specific combination of promotional tools used by a business.
b) A balanced promotion mix ensures effective communication with the target audience.

(c) Give two features of Salesmanship. [2 Marks]

Answer:
1. Salesmanship involves direct, personal or face-to-face contact between the seller or his representative and the buyers.
2. It involves contact with a limited number of persons.

Teacher's Note:
a) Personal touch is the core characteristic of salesmanship.
b) It aims at creating a permanent customer through persuasion.

(d) Describe the importance of Public Relations to a business enterprise. [2 Marks]

Answer:
The need for communication between business enterprises and their public is being increasingly recognised. Public relations function is required to bridge this communication gap and build a favorable corporate image.

Teacher's Note:
a) Public relations helps maintain goodwill with stakeholders.
b) It creates trust and credibility for the enterprise in the market.

(e) Give two differences between Direct and Indirect Labour Cost. [2 Marks]

Answer:
1. The labour which can be wholly and directly identified with a particular product is called direct labour whereas indirect labour means the labour which cannot be wholly and directly identified with a particular product.
2. Direct labour includes labour engaged in actual production of the product whereas indirect labour is the labour employed for performing tasks incidental to manufacture.

Teacher's Note:
a) Direct labour is treated as part of prime cost.
b) Indirect labour is treated as an overhead expense.

Question 4: Give two reasons either for or against each of the following:

(a) Ethics has no place in public relations. [2 Marks]

Answer:
Against:
1. Publicity not backed by good action is unethical. It will damage rather than improve the image of the organization.
2. Accurate and timely communication with the public is essential for good public relations.

Teacher's Note:
a) Ethics forms the foundation of long-term trust in public relations.
b) Misleading communication destroys corporate reputation permanently.

(b) Every transaction has four effects on accounting records. [2 Marks]

Answer:
Against:
1. Every business transaction has a double effect on the business, recording both aspects (debit and credit).
2. It is due to the principle of Dual Aspect that the two sides of Balance Sheet are always equal, representing two effects, not four.

Teacher's Note:
a) Dual aspect principle implies a two-fold effect (debit and credit) for every transaction.
b) Claiming four effects is mathematically and conceptually incorrect in double-entry bookkeeping.

(c) Training is very costly. [2 Marks]

Answer:
Against:
1. Training helps to improve the quantity and quality of work performance. Well-trained employees produce more and better goods.
2. By training, employees learn new and better methods of doing jobs, reducing wastage of resources and lowering the cost of production in the long run.

Teacher's Note:
a) Training is an investment rather than an expense.
b) Long-term benefits far outweigh the initial costs incurred.

(d) Banking is a relationship oriented industry. [2 Marks]

Answer:
For:
1. Banking is a service-based industry trying to satisfy the needs of the customer.
2. Banking is relationship-oriented as there is an agency relationship between the banker and the customer based on mutual trust and confidence.

Teacher's Note:
a) Customer retention depends heavily on personalized banking relationships.
b) Trust is the core asset in financial institutions.

(e) Public relations is just a gimmick. [2 Marks]

Answer:
Against:
1. Public relations is an essential element in the communication system that enables individuals to be informed on many aspects of subjects that affect their lives.
2. Public relations helps promotion of a company's goods or services and builds up a positive corporate image.

Teacher's Note:
a) PR is a scientific management tool, not a superficial trick.
b) It bridges the gap between organizational policies and public expectations.

SECTION B (60 Marks)

(Attempt any four questions from this section)

Question 5:

(a) How does open market operations help in credit control? [5 Marks]

Answer:
Open market operations refer to the sale and purchase of government securities and bonds by the Central Bank in the open market. When there is inflation (excess credit), the Central Bank sells securities to commercial banks and the public, absorbing cash from the banking system and reducing their lending capacity. Conversely, during deflation (deficient credit), the Central Bank buys securities, injecting cash into the economy to expand credit creation.
(Note: Official marking scheme note: Answer not given due to out of present syllabus, provided as per standard board guidelines.)

Teacher's Note:
a) It is a quantitative tool of monetary policy.
b) Direct impact is on the cash reserves of commercial banks.

(b) What is place mix? State its components. [5 Marks]

Answer:
Place mix relates to distribution of products and is an important element of marketing mix. A channel of distribution or trade channel is the route or path along which products flow from the point of production to the point of ultimate consumption or use. It starts with the producer and ends with the consumers, facilitated by intermediaries.
Components of Place Mix:
1. Channels of distribution: The routes through which goods move from the producer to consumers, deciding whether to sell directly or through intermediaries.
2. Physical distribution: All activities involved in moving products from manufacturers to consumers, consisting of transportation and storage of goods.

Teacher's Note:
a) Place mix ensures product availability at the right place and time.
b) Selection of appropriate channels impacts the final price and market reach.

(c) What are the qualities of a good salesman? Explain any three in detail. [5 Marks]

Answer:
The qualities of a good salesman are:
1. Good physique
2. Cheerful
3. Sincerity
4. Sensitiveness
5. Knowledge
Detailed explanation of any three qualities:
1. Good Physique: A good salesman must have sound health, good appearance, cheerful disposition and an impressive voice. He should be properly dressed.
2. Cheerful: Pleasing manners and a smiling face are necessary for a successful salesman. He should be polite and courteous.
3. Sincere: A good salesman is always loyal and committed to his work. He is dependable and courageous.

Teacher's Note:
a) Personality traits play a vital role in personal selling.
b) Product knowledge combined with communication skills ensures sales effectiveness.

Question 6:

(a) Mention two advantages and two disadvantages of cost plus pricing strategy of product life cycle. [5 Marks]

Answer:
Two Advantages:
1. It is a safe approach to pricing. It ensures full coverage of cost and helps in achieving a reasonable return on capital employed.
2. The method is logical and can be defended on moral grounds. It discourages cut-throat competition in the market.
Two Disadvantages:
1. It is very often difficult to determine accurately the cost per unit due to common overheads and joint products.
2. It fails to reflect market demand and competition.

Teacher's Note:
a) Cost-plus pricing guarantees profit margins under stable conditions.
b) It ignores consumer willingness to pay and competitive dynamics.

(b) Explain Asset and Liability. Name the different types of Liabilities. [6 Marks]

Answer:
Asset: An asset is a valuable economic resource owned or controlled by an enterprise that provides future economic benefits (e.g., machinery, building, cash).
Liability: A liability is a financial obligation or debt owed by an enterprise to outsiders payable in the future (e.g., creditors, bank loans).
Types of Liabilities:
1. Internal Liabilities (Capital/Equity owed to owners)
2. External Liabilities (Owed to outsiders)
3. Current/Short-term Liabilities (Due within an accounting year)
4. Non-current/Long-term Liabilities (Due after more than a year)
(Note: Official marking scheme note: Answer not given due to out of present syllabus, provided as per standard board guidelines.)

Teacher's Note:
a) Assets equal Liabilities plus Capital in the accounting equation.
b) Classification of liabilities helps in assessing liquidity and solvency.

(c) Distinguish between Advertising and Sales Promotion. [5 Marks]

Answer:

Teacher's Note:
a) Advertising builds long-term brand equity.
b) Sales promotion provides immediate incentives to boost short-term volume.

Question 7:

(a) Why are services becoming important? Give three reasons. [5 Marks]

Answer:
Services are becoming important due to the following reasons:
1. Economic Planning: Government of India launched five-year plans in 1951 to achieve rapid growth. Industrialization requires industrial infrastructure (transport, communication, power, insurance, banking finance, etc.), leading to the rapid expansion of services.
2. Increasing Urbanization: Shifting of population from rural to urban areas has led to a rise in demand for infrastructure, communication, public utilities, and distribution services.
3. Media and Technology: Modern technology and media have spurred tourism, hospitality, entertainment, event management, and professional services.

Teacher's Note:
a) The tertiary sector is the fastest-growing sector in modern economies.
b) Urbanization directly correlates with increased demand for specialized services.

(b) Explain Cash Reserve Ratio and Statutory Liquidity Ratio. [5 Marks]

Answer:
Cash Reserve Ratio (CRR): The fraction of total deposits that commercial banks are legally mandated to keep in cash with the Central Bank.
Statutory Liquidity Ratio (SLR): The minimum percentage of deposits that commercial banks must maintain in the form of specified liquid assets (like cash, gold, or approved securities) with themselves before lending to customers.
(Note: Official marking scheme note: Answer not given due to out of present syllabus, provided as per standard board guidelines.)

Teacher's Note:
a) Both are key quantitative instruments used by RBI to control credit.
b) An increase in CRR or SLR reduces the lending capacity of commercial banks.

(c) Explain the present status of public relations by pointing out the reasons for its rapid growth. [5 Marks]

Answer:
The main reasons for the rapid growth of public relations are:
1. Communication Gap: The need for communication between organizations and their public is being increasingly recognized.
2. Population Growth: Increase in population and resulting expansion of business, social, and political organizations.
3. Recognition of Social Responsibility: Corporations realize they have a social responsibility to serve the public.
4. Big Government: Growing government activity, legislation, taxes, and criticism of business by politicians.
5. Development of Communication Media: Tremendous growth in media systems enabling rapid transmission of information.

Teacher's Note:
a) PR has evolved from simple publicity into an essential management function.
b) Corporate transparency requires robust public relations mechanisms.

Question 8: Write short notes on:

(a) Importance of HRD in a Commercial organisation. [5 Marks]

Answer:
The importance of human resource development in a commercial organisation is as follows:
1. Attracting and retaining required talent through effective human resource planning, recruitment, selection, and compensation policies.
2. Developing necessary skills and right attitudes among employees through training and performance appraisal.
3. Securing willing cooperation of employees through motivation and grievance handling.
4. Utilizing effectively the available human resources.
5. Ensuring that the enterprise will have in future a team of competent and dedicated employees.

Teacher's Note:
a) HRD treats employees as valuable assets rather than mere factors of production.
b) Continuous skill upgradation ensures organizational competitiveness.

(b) Institutional Advertising and Persuasive advertising. [5 Marks]

Answer:
1. Institutional Advertising: It presents information about the advertiser's business to create a favorable attitude and build goodwill/image. It is not intended to sell a specific product directly but to build corporate prestige. Examples include public awareness ads on road safety, family planning, and environmental protection.
2. Persuasive Advertising: This type of advertising is designed to persuade consumers to buy a specific product or service. Undertaken primarily by business firms, examples include advertisements for Colgate toothpaste, Coca-Cola, Lux soap, and Cadbury chocolate.

Teacher's Note:
a) Institutional ads focus on brand image and corporate reputation.
b) Persuasive ads focus on product features and driving immediate sales conversions.

(c) Role of balance sheet in decision making. [5 Marks]

Answer:
1. Balance sheet shows the assets owned by a trading organization, helping managers assess resource allocation.
2. It reveals the liabilities of the organization, indicating debt obligations.
3. It shows the overall financial position and solvency of the organization.
4. It depicts the capital fund and net worth of the organization.
5. It assists investors, creditors, and management in making investment, credit, and strategic financial decisions.

Teacher's Note:
a) Balance sheet provides a snapshot of financial health on a specific date.
b) Ratio analysis derived from balance sheet figures guides management decisions.

Question 9: Case Study

Price cuts have enabled FMCG companies like HLL and P & G to increase the sales volume. The sale of major detergent brands have increased by 15-17 percent. Analysts in fact expect Surf Excel to be a success story for HLL. The company expects more sale from the brand this year.
Launching sachets and positioning the brand in affordable category was necessitated by a number of highly competitive smaller brands in the market like Henko, Nirma and Ghari detergents. Friendly wash by many other smaller brands have challenged the giants by offering prices which attracted the value conscious Indian consumer. In fact unbranded players are offering packs which are twice the size of a branded product with similar or better quality at a cheaper price. Very clearly FMCG majors have to either maintain the plethora of freebees to push the brand or just simply cut prices.
The manufacturers attribute the price drops to internal cost efficiencies especially with the supply chain. Analysts say the FMCG companies will have to drop prices further to get the right value equation in the market. There is no other way to grow. The companies have tried innovations and relaunch. The fact is, there is a cut in the price and they cannot afford to overprice their product. The companies are just going to do what Nestle did sometime back to get the price equation right.

(a) How did sales volume of detergents increase? [5 Marks]

Answer:
Sales volume of detergents increased through various sales promotion incentives such as percent-off, special discounts, free gifts, extra quantity packs, three-for-two offers, coupons, and contests. Launching sachets for brands like Henko, Nirma, and Ghari made products affordable to value-conscious consumers. Additionally, advertising and competitive price cuts enabled companies to attract new buyers, clear old stocks, and increase sales volume.

Teacher's Note:
a) Sales promotion techniques provide immediate stimulus to buyers.
b) Sachet marketing revolutionised rural and budget-conscious consumer segments in India.

(b) In view of the fact that unbranded products have put up a challenge to branded items, do you think branding is useless? Give reasons. [5 Marks]

Answer:
No, branding is not useless. Branding helps consumers identify and recognize products, simplifying purchase decisions and reducing time and effort.
Branding acts as a market identity: A brand helps position a company's product offering in terms of price level, quality, and service. Consumers use brand image as a proxy for quality and dependability, especially when evaluating complex products. Brand identity increases margins and profits by enhancing perceived quality.

Teacher's Note:
a) Brands create customer loyalty which protects against unbranded competition.
b) Consumers are often willing to pay a premium for trusted brand names.

(c) In addition to price cuts what other measures should FMCG firms take to grow in future. [5 Marks]

Answer:
To grow in future, FMCG firms should focus on:
1. Product Quality: Ensuring invariable packaging to prevent adulteration and preserve quality.
2. Advertising: Creating positive brand impact and increasing sales volume through targeted promotional campaigns.
3. Technological Advancement: Investing in research and development for continuous innovation and improvements across the product life cycle.
4. Dynamic Marketing: Adopting flexible techniques tailored to changing consumer tastes and preferences.

Teacher's Note:
a) Price cuts alone cannot sustain long-term growth without quality and innovation.
b) Continuous adaptation to consumer preferences ensures market leadership.

Question 10: Case Study

The Public sector banks are witnessing a period of transition in India. They are at the cross roads, where they, without giving up social responsibilities should remain healthy. They need to undertake risky experiments, yet to perform innovatively. They should make forays into new areas which are rarely taken up by them and lose no emerging opportunities. It should also be understood that absence of any bad advance is not a good sign of an efficient banking system. It only indicates immense conservatism. However, there is no guarantee for profit.
There should be a balance between liquidity and risk. Past sins should be forgiven. Novel and pragmatic techniques should be adopted without which banks would be in danger.

(a) Describe the importance of Public Sector Banks at present. [5 Marks]

Answer:
1. Fuller Employment: Promoting employment opportunities in accordance with national priorities.
2. Better Deal to Workers: Ensuring fair wages, security of service, and improved working conditions.
3. Greater Economy and Coordination: Bringing harmony and coordination among key economic sectors under state guidance.
4. Assistance in Economic Development: Financing schemes of national economic development through surplus profits.
5. Safety of Money: Providing secure deposit facilities and safe custody lockers for the public.

Teacher's Note:
a) Public sector banks form the backbone of India's financial inclusion policy.
b) They balance commercial viability with social welfare objectives.

(b) What are the functions other than main and agency functions that should be performed by these banks to be socially responsible? [5 Marks]

Answer:
1. Issuing Credit Instruments: Issuing letters of credit, drafts, and travellers cheques to facilitate fund transfers without carrying cash.
2. Underwriting Capital Issues: Underwriting shares and debentures issued by companies to support industrial growth.
3. Safe Custody of Valuables: Accepting jewellery, documents, and valuables for safe-keeping.
4. Advice and Information: Offering financial advice and creditworthiness information to customers and suppliers.

Teacher's Note:
a) These are general utility and advisory services provided by commercial banks.
b) They enhance the scope of banking utility beyond traditional deposit and lending.

(c) Our Public Sector Banks have a strong base. Do you think that they have to follow the foreign Commercial Banks in granting loans? Yes or No. Give reasons. [5 Marks]

Answer:
No. There is no guarantee for profit in blind imitation. There should be a balance between liquidity and risk. Past risks should be managed carefully, and novel, pragmatic techniques suited to the domestic environment should be adopted without endangering the stability of public sector banks.

Teacher's Note:
a) Public sector banks have unique social obligations distinct from foreign banks.
b) Blindly adopting high-risk lending models can jeopardize domestic financial stability.