ICSE Class 10 Commercial Applications Board Exam Question Paper 2012 with Solutions

ICSE Class 10 Commercial Applications Board Exam Question Paper with Solutions

SECTION A

Question 1
Give one difference between each of the following:

(a) Multi-level marketing and Tele-shopping. [2 Marks]

Answer:

Teacher's Note:
a) Multi-level marketing relies on direct selling through a network of independent distributors.
b) Tele-shopping relies on remote ordering via electronic media without direct face-to-face interaction.

(b) Implicit costs and Explicit costs. [2 Marks]

Answer:

Teacher's Note:
a) Implicit costs represent opportunity costs of using self-owned resources.
b) Explicit costs represent out-of-pocket expenses incurred by the firm.

(c) Cash credit and Overdraft. [2 Marks]

Answer:
1. Cash credit is a financial arrangement where a bank allows a borrower to withdraw money up to a specified limit against current assets or security, whereas overdraft is a facility extended to current account holders allowing them to withdraw money in excess of their account balance up to an agreed limit.
2. Cash credit is normally granted for a longer period and requires proper stock hypothecation, whereas overdraft is usually a short-term temporary arrangement.

Teacher's Note:
a) Both are credit facilities provided by commercial banks to business units.
b) State the security requirement or duration as the key differentiating factor.

(d) Book Keeping and Accounting. [2 Marks]

Answer:
1. Book keeping is the systematic recording of financial transactions in the books of accounts, whereas accounting is a broader process that includes summarizing, analyzing, interpreting, and communicating financial data.
2. Book keeping is routine and clerical in nature, whereas accounting requires analytical skills and professional judgment.

Teacher's Note:
a) Book keeping is the primary stage, while accounting begins where book keeping ends.
b) Clearly mention the scope difference for full marks.

(e) Institutional and Informative advertising. [2 Marks]

Answer:

Teacher's Note:
a) Institutional advertising focuses on building the corporate brand image.
b) Informative advertising focuses on educating consumers about specific product attributes.

Question 2
Give two conditions under which parity pricing is desirable. [2 Marks]

Answer:
1. When it is very difficult to measure cost.
2. When price leadership is well established, charging according to what competitors are charging may be the only safe policy.

Teacher's Note:
a) Parity pricing involves setting prices at par with major competitors in the industry.
b) Ensure both conditions are clearly stated to secure full marks.

Question 3
Briefly describe how advertising sustains the press. [2 Marks]

Answer:
1. Advertisements provide a major portion of the financial revenue for newspapers, magazines, and other print media.
2. Due to this substantial advertisement revenue, publishers are able to sell publications to readers at affordable prices and maintain high editorial quality.

Answer:
1. It shows the financial position and health of an organisation on a specific date.
2. It reveals the total assets and liabilities owned by the enterprise.

Teacher's Note:
a) Balance sheet is a statement of assets, liabilities, and capital.
b) Any two valid uses from the standard functions are acceptable.

Question 5
State any two merits of external recruitment. [2 Marks]

Answer:
1. Wide choice: External sources offer a wide choice in the selection of candidates because a large number of persons apply for jobs.
2. Fresh outlook: Recruitment of personnel from outside brings in new ideas and fresh thinking, helping the organisation to remain competitive.

Teacher's Note:
a) External recruitment brings fresh talent and diverse experience into the firm.
b) Mention heading and brief explanation for each point.

Question 6
Mention any two characteristics of public relations. [2 Marks]

Answer:
1. Public relations is a planned and sustained management function aimed at establishing and maintaining mutual understanding between an organisation and its public.
2. It involves evaluation of public opinion and ensuring that organisational policies and actions are in the public interest.

Teacher's Note:
a) Emphasize that PR is a continuous, planned effort, not a one-time activity.
b) Any two appropriate characteristics from standard textbook points are valid.

Question 7
What is meant by premium offer as one of the Sales Promotion techniques? [2 Marks]

Answer:
1. A premium offer involves offering a free or discounted item or gift along with the purchase of a main product.
2. It acts as an incentive to attract customers, stimulate immediate demand, and encourage brand switching.

Teacher's Note:
a) Premium offers provide extra value to the buyer to boost sales.
b) Give a brief example like a free mug with coffee powder for better clarity.

Question 8
Give two differences between the Production oriented stage and the Product oriented stage of Marketing. [2 Marks]

Answer:

Teacher's Note:
a) Production orientation assumes consumers prefer widely available and affordable products.
b) Product orientation assumes consumers favor products offering the best quality, performance, and features.

Question 9
What are the components of Price Mix? [2 Marks]

Answer:
The components of Price Mix include price policy, list price, discounts, allowances, credit terms, and terms of payment.

Teacher's Note:
a) Price mix refers to the decisions regarding pricing strategies and terms offered to customers.
b) List at least three correct elements for full credit.

Question 10
Explain any two themes or value of a good advertisement. [2 Marks]

Answer:
1. Prestige: This theme is used to popularize luxurious items like motor cars, refrigerators, and furniture where possession acts as a symbol of prestige.
2. Comfort: This theme is used to advertise products like fans and air conditioners that make daily life comfortable.

Teacher's Note:
a) Advertisement themes appeal to the psychological needs and desires of consumers.
b) State the theme name clearly followed by its application.

Question 11
List any two circumstances under which a bank can refuse payment of a cheque. [2 Marks]

Answer:
1. When the funds to the credit of the drawer are insufficient to make payment of the cheque.
2. When the cheque is post-dated and presented for payment before the date mentioned on it.

Teacher's Note:
a) Banks have a statutory obligation to honor customer cheques unless valid legal reasons exist.
b) Other valid grounds include material alteration or notice of customer's insolvency/death.

Question 12
Justify either for or against by giving two reasons for each of the following:
(a) Introduction stage in a Product Life Cycle is not very risky. [2 Marks]

Answer:
Against:
1. The introduction stage is very risky because a high percentage of new products fail during this period due to high costs and low sales volume.
2. Prices are usually high because of small-scale production and heavy promotional expenditure, leading to slow growth in sales.

Teacher's Note:
a) Students could answer either 'for' or 'against' with valid justification.
b) 'Against' is standard as introduction involves maximum uncertainty and high failure rate.

(b) Scope of Public Relations is narrow. [2 Marks]

Answer:
Against:
1. The scope of public relations is wide as it deals with diverse interest groups including employees, stockholders, consumers, distributors, suppliers, government, and media.
2. It encompasses all communication channels and public perception management required for overall organizational goodwill.

Teacher's Note:
a) Public relations extends far beyond simple publicity.
b) Provide two distinct stakeholder groups to support the argument.

(c) Advertisements eliminate middlemen. [2 Marks]

Answer:
For:
1. Advertisements establish direct contact between manufacturers and consumers, which can help in eliminating intermediaries.
2. Direct selling facilitated by advertising helps reduce distribution costs and final prices for consumers.

Teacher's Note:
a) Justification can be framed either for or against based on economic perspective.
b) Ensure logical points supporting the chosen stance are clearly stated.

(d) It is marketing which has converted yesterday's luxuries into today's necessities. [2 Marks]

Answer:
For:
1. Marketing focuses on improving the quality of living by providing a wide variety of quality products and services at reasonable prices.
2. Continuous product innovation and mass awareness campaigns have transformed items like refrigerators and washing machines from luxuries into necessities.

Teacher's Note:
a) Highlight the role of marketing in raising living standards.
b) Provide concrete examples of products in the explanation.

(e) A crossed cheque is a safer mode of payment as compared to an open cheque. [2 Marks]

Answer:
For:
1. Crossing provides protection against loss by ensuring the payment is routed through a bank account rather than paid as cash across the counter.
2. Open cheques carry high risk of theft or fraudulent encashment by unauthorized finders.

Teacher's Note:
a) Explain the mechanics of cheque crossing for clarity.
b) Emphasize the security aspect for the drawer and payee.

SECTION B

Question 13
(a) What do you mean by endorsement of a cheque? Explain any three types of endorsements. [5 Marks]

Answer:
Endorsement of Cheque: When a cheque is transferred by the payee to someone else, it must be endorsed by putting a signature at the back of the cheque. This act of signing is known as endorsement.
Types of Endorsements:
1. Full or Special Endorsement: When the endorser specifies the name of the endorsee and signs the cheque, e.g., 'Pay to A Sd/- X'. The endorsee must endorse it again to transfer it further.
2. Partial Endorsement: When the endorsement is made for a part of the amount of the cheque, e.g., endorsing a Rs. 1,000 cheque only for Rs. 500. Such endorsement is not legally valid unless part payment has already been made.
3. Facultative Endorsement: When the endorser waives his right of receiving notice of dishonor, e.g., 'Pay to Kishan Lal, notice of dishonor waived Sd/- Ram Lal'. The endorser remains liable even if notice is not given.

Teacher's Note:
a) Define endorsement accurately in the context of negotiable instruments.
b) Provide appropriate examples for each type of endorsement.

(b) Explain the following with an example for each:
(i) marginal cost. (ii) opportunity cost. [5 Marks]

Answer:
(i) Marginal Cost: Marginal cost is the cost of producing one additional unit of a product. It can be expressed as MCn = TCn - TCn-1. For example, if the total cost of producing 3 units is Rs. 300 and for 4 units is Rs. 380, the marginal cost of the 4th unit is Rs. 80.
(ii) Opportunity Cost: Opportunity cost is the benefit sacrificed for selecting a particular course of action, representing the next best alternative forgone. For example, if a firm invests Rs. 25,000 in a machine instead of depositing it in a bank earning 10% interest, the lost interest of Rs. 2,500 is the opportunity cost.

Teacher's Note:
a) Give formula and clear numerical/practical examples for both concepts.
b) Emphasize that opportunity cost is an implicit economic cost not recorded in formal books of accounts.

(c) Mention the various stages of 'Product Life Cycle'. How is Product Life Cycle advantageous? [5 Marks]

Answer:
Stages of Product Life Cycle:
1. Introduction Stage: Product is launched, sales are low, costs are high due to heavy promotion.
2. Growth Stage: Demand and sales grow rapidly, distribution widens, competition increases, prices fall.
3. Maturity Stage: Sales grow at a declining rate, markets stabilize, prices reduce due to stiff competition.
4. Decline Stage: Sales fall sharply, promotional expenditure is reduced to minimize losses.
5. Death Stage: Firms phase out the declining product and shift focus to other products.
Advantages of Product Life Cycle:
1. Helps the firm prepare an effective product plan.
2. Enables management to take proactive steps before product decline sets in.
3. Allows extension of the maturity stage through new uses.
4. Facilitates technological innovations to improve product quality and design.

Teacher's Note:
a) List all five stages clearly in chronological order.
b) State at least four practical management advantages.

Question 14
(a) Marketing is a wider term than selling. Explain. [5 Marks]

Answer:
1. Scope: Marketing is wider in scope as selling is merely a part of marketing.
2. Activities included: Marketing includes market research, product planning, pricing, promotion, and physical distribution, whereas selling focuses primarily on transfer of title and possession of goods.
3. Timing: Marketing starts before production takes place (through market research) and continues after sales (through after-sales service), whereas selling starts after production and ends with the sale.
4. Objective: Selling aims at maximizing sales volume through transfer of ownership, whereas marketing aims at long-term customer satisfaction and profitability.

Teacher's Note:
a) Highlight key operational differences between selling and marketing.
b) Use comparison parameters like scope, timing, and objective for structured presentation.

(b) Distinguish between Receipts and Payments Account and Income and Expenditure Account. [5 Marks]

Answer:

Teacher's Note:
a) Present differences in a clear tabular format across multiple parameters.
b) Ensure correct accounting classifications (Real vs Nominal account).

(c) What pricing strategy will be used to launch:
(i) a high end smart phone in the market.
(ii) shampoo in the market. [5 Marks]

Answer:
(i) Skimming Pricing Strategy should be used for a high-end smartphone. Under this strategy, a very high initial price is set to skim the cream of demand from innovators and early adopters, quickly recovering R&D and promotional investments. Prices may be reduced later to capture broader market segments.
(ii) Penetration Pricing Strategy should be used to launch shampoo in the market. This strategy involves setting a low initial price to rapidly gain market share, make the brand popular among the masses, and maximize market penetration for fast-moving consumer goods.

Teacher's Note:
a) Identify appropriate pricing policies based on product category.
b) Explain the rationale and objective behind each chosen strategy.

Question 15
Write short notes on:
(a) Matching Principle of Accounting. [5 Marks]

Answer:
1. According to the matching principle, expenses incurred in an accounting period should be matched with the revenues recognized during that same period to accurately calculate net profit.
2. It ensures that all costs associated with generating the period's revenue are recorded, regardless of whether cash was paid or received.
3. This principle is fundamental for accrual-based accounting and preparation of the profit and loss statement.

Teacher's Note:
a) Explain accrual concept and expense-revenue alignment.
b) State its significance in determining true net income.

(b) Types of Business Assets. [5 Marks]

Answer:
Assets are economic resources owned by an organization and expressed in monetary terms. They are classified into:
1. Tangible Assets: Assets with physical existence that can be seen and touched, e.g., machinery, building.
2. Intangible Assets: Assets without physical existence, e.g., goodwill, patents.
3. Fixed Assets: Assets purchased for long-term use in business operations, not meant for resale, e.g., land.
4. Current Assets: Assets likely to be converted into cash within one year, e.g., debtors, bills receivable.
5. Liquid Assets: Current assets excluding stock and prepaid expenses that are readily convertible into cash.
6. Fictitious Assets: Deferred revenue expenditures that have no real physical value but are shown on the asset side temporarily.

Teacher's Note:
a) Classify assets based on liquidity, physical existence, and permanence.
b) Provide at least four primary categories with suitable examples.

(c) Drawbacks of Sales Promotion. [5 Marks]

Answer:
1. Artificial Incentives: Incentives offered through sales promotion are temporary, and consumers may expect discounts regularly.
2. Short-term Effect: Sales promotion schemes provide only short-term boosts; once incentives are withdrawn, sales often drop.
3. Doubt on Quality: Frequent promotional schemes can create a perception among consumers that the product is sub-standard or struggling to sell.
4. Increased Cost: Promotional expenses add to the overall cost, which manufacturers may eventually pass on to consumers through higher prices.

Teacher's Note:
a) Highlight the limitations of promotional tools in building long-term brand loyalty.
b) List at least four clear drawbacks for full marks.

Question 16
(a) Mention any five ways as to how 'Good Public Relations' help business enterprises. [5 Marks]

Answer:
1. Goodwill Building: Helps in building a positive corporate image and goodwill in the minds of consumers and the public.
2. Talent Acquisition: Assists enterprises in attracting and retaining talented and skilled personnel.
3. Sales Growth: Good public relations enhance corporate reputation, indirectly supporting sales volume and revenue growth.
4. Fund Raising: Facilitates collection of capital from the general public through shares, debentures, or deposits due to established trust.
5. Diversification: Aids in smooth business expansion and product diversification because stakeholders already trust the enterprise.

Teacher's Note:
a) Focus on strategic business advantages derived from positive PR.
b) State five distinct points clearly with explanatory sub-headings.

(b) Human Resource Management is the management of people at work. With reference to the above statement, explain the role of Human Resource Management in an organization. [5 Marks]

Answer:
1. Manpower Planning: Determining the number and type of personnel required by the organization.
2. Recruitment and Selection: Attracting qualified candidates and selecting the best fit for various job positions.
3. Training and Development: Enhancing employee skills, knowledge, and competencies to improve job performance.
4. Performance Appraisal: Evaluating employee contributions and providing constructive feedback.
5. Compensation and Motivation: Designing fair wage structures and incentive schemes to maintain high morale and motivation.

Teacher's Note:
a) Define HRM as an essential managerial function focusing on workforce optimization.
b) Detail key operational roles played by the HR department.

(c) Explain the following elements of Public Relation:
(i) Dialogue (ii) Persuasion. [5 Marks]

Answer:
(i) Dialogue: Dialogue refers to a purposeful two-way conversation between parties where opinions, facts, and viewpoints are exchanged. Unlike a monologue, effective dialogue involves active listening, mutual respect, prejudice reduction, and building mutual confidence between the organization and its public.

(ii) Persuasion: Persuasion is the process of convincing individuals or groups to accept an idea, product, or viewpoint, or to take specific action. It relies heavily on credible sources, logical reasoning, and appealing presentation of messages to influence public attitude positively.

Teacher's Note:
a) Define both communication elements within the context of PR.
b) Emphasize two-way communication in dialogue and credibility in persuasion.

Question 17
Case Study
September 19, 2011, The Strategist.
Marking the largest selling instant noodle Maggi's 25th anniversary in the country, it invited diehards to write in about the brand meant to them. The entries indicated "for a mother Maggi meant an ally; for a student in a hostel it meant a midnight snack." Some of these stories were picked up and splashed on Maggi's packaging.
(a) Distinguish between brand loyalty and brand equity. [3 Marks]

Answer:
1. Brand loyalty refers to the consumer's consistent preference and commitment to purchase a specific brand repeatedly due to trust in its superiority.
2. Brand equity represents the overall power, commercial value, and added strength that a brand name imparts to a product beyond its functional utility.

Teacher's Note:
a) Differentiate between consumer behavioral attachment (loyalty) and overall brand asset value (equity).
b) Keep the distinction precise and concise for 3 marks.

(b) How does a brand become famous? Explain with the help of an example. [2 Marks]

Answer:
1. A brand becomes famous through continuous advertising, strict quality control, and positive publicity.
2. For example, through persistent advertising and maintenance of quality standards, brands like Lux soap and Colgate toothpaste have achieved widespread recognition and fame.

Teacher's Note:
a) List the key drivers of brand popularity.
b) Provide a standard industry example to support the explanation.

(c) Examine the advantage of Branding. [5 Marks]

Answer:
1. Consumer Recognition: Saves time and effort for consumers in identifying and purchasing products easily.
2. Basis for Advertising: Forms the foundation for advertising, promotion, and mass selling efforts.
3. Reduced Selling Cost: Helps minimize selling expenses by lowering dependency on middlemen.
4. Uniform Quality: Ensures consistent standards of quality and design to consumers.
5. Prevention of Adulteration: Branded products are generally pre-packed, which prevents adulteration and preserves quality.

Teacher's Note:
a) Focus on benefits accruing to both consumers and manufacturers.
b) List at least five distinct advantages.

(d) "Brand name should be selected with utmost care."
List the essentials of a good brand name. [5 Marks]

Answer:
1. Brief and Simple: The brand name should be short and simple to read and understand.
2. Easy Pronunciation: It should be easy to pronounce, spell, and remember.
3. Attractive: It must be catchy, appealing, and attractive to customers.
4. Distinctive: It should be unique and difficult for competitors to imitate.
5. Stability: It should remain constant for a reasonable period to gain market popularity.
6. Legal Protection: It must be capable of registration and legal protection against infringement.

Teacher's Note:
a) Highlight the importance of brand naming in marketing strategy.
b) List at least five core characteristics of an effective brand name.

Question 18
Case Study
September 19, 2011, Mint.
The government wants to start specialized courses that will provide training in skills needed in the automobile industry, part of a wider effort to ensure the economy can take advantage of the expected influx of young people into the workforce.
The Indian auto industry annual sales rose 20% to Rs. 3.27 trillion in 2010-11 from the year before, according to the Society of Indian Automobile Manufacturers (Siam) an industry lobby. This is expected to rise four fold by 2020, according to Siam.
The automotive service sector is facing a shortage of about 3,00,000 skilled workers, according to a recent survey. Gujarat, for instance, may see at least 1,00,000 new job opportunities in the sector.
The backbone of India's skill development system is the network of Industrial Training Institutes (ITIs) managed to address the manpower shortage. This is part of the larger national mandate to train 500 million in a decade to help staff manufacturing units.
(a) Describe the need or importance of skilled labour in the Automobile Industry in India. [5 Marks]

Answer:
1. Efficiency and Productivity: Helps improve operational efficiency and profitability by matching qualified workers with jobs.
2. Job Satisfaction: Ensures employee satisfaction by aligning candidate capabilities with job requirements.
3. Reduced Turnover: Helps reduce labour turnover, absenteeism, and operational errors.
4. Quality Performance: Facilitates higher quality and quantity of manufacturing and service performance.
5. Motivation: Boosts employee morale and motivation levels within the organization.

Teacher's Note:
a) Explain why skilled labour is critical for high-tech sectors like automobiles.
b) List five clear organizational benefits.

(b) What is training? How is it different from education? [5 Marks]

Answer:
Training refers to imparting specific knowledge, skills, and aptitudes necessary to perform a particular job efficiently and develop worker potential.
Differences between Training and Education:
1. Focus: Training involves increasing job-specific skills, whereas education focuses on broadening general knowledge and intellectual capacity.
2. Application: Training is practical and job-oriented, whereas education is largely theoretical and academic.
3. Location: Training is typically imparted on-the-job or specifically for work roles, whereas education is imparted in educational institutions like schools and colleges.

Teacher's Note:
a) Provide a clear standard definition of training.
b) Contrast training with education across multiple parameters like focus, scope, and environment.

(c) Examine any two types of training towards development of human resources for the Automobile Industry. [5 Marks]

Answer:
1. Orientation or Induction Training: Training given to new employees to familiarize them with organizational rules, work environment, colleagues, tools, equipment, and company policies. It helps new recruits settle quickly into their roles.
2. Safety Training: Specialized training aimed at creating safety consciousness, teaching proper usage of safety equipment and machinery, and minimizing workplace accidents in automobile manufacturing plants.

Teacher's Note:
a) Select two relevant training methods applicable to industrial settings.
b) Explain the objective and application of each training type clearly.