ICSE Class 10 Commercial Studies Board Exam Question Paper 2020 with Solutions

ICSE Class 10 Commercial Studies Board Exam Question Paper with Solutions

SECTION A (40 Marks)

Attempt all questions from this Section

Question 1.
Distinguish between:

(a) Advertising and Publicity [2 Marks]

Answer:
1. Advertising is a paid form of non-personal promotion of goods, services, or ideas by an identified sponsor. Publicity is a non-paid form of communication and is not directly paid for by the sponsor.
2. Advertising is fully under the control of the advertiser regarding its timing, message, and placement, whereas publicity is controlled by the media and can be favorable or unfavorable.

Teacher's Note:
a) Emphasize that advertising involves a direct cost to the sponsor while publicity is generally obtained through news coverage free of cost.
b) Students often confuse publicity with public relations; remember publicity is a specific news item about a product or service.

(b) Capital and Revenue expenditure [2 Marks]

Answer:
1. Capital expenditure results in the acquisition, improvement, or extension of fixed assets, yielding benefits over multiple accounting periods. Revenue expenditure is incurred for the day-to-day operational running of the business and yields benefits within the current accounting period.
2. Capital expenditure is non-recurring in nature and is shown in the Balance Sheet, whereas revenue expenditure is recurring in nature and is debited to the Trading and Profit and Loss Account.

Teacher's Note:
a) Capital expenditure increases the earning capacity of the business, while revenue expenditure maintains the existing earning capacity.
b) Always quote the nature of benefit duration (short-term versus long-term) to secure full credit.

(c) Equity shares and Preference shares [2 Marks]

Answer:
1. Equity shares carry variable dividends depending upon the profits earned by the company, whereas preference shares carry a fixed rate of dividend.
2. Equity shareholders possess voting rights and control the management of the company, while preference shareholders generally do not have voting rights except under special circumstances defined by law.

Teacher's Note:
a) Preference shares enjoy preferential rights over equity shares regarding the payment of dividend and repayment of capital at the time of winding up.
b) Clearly distinguish the risk and return profile between the two types of shares.

(d) Internal and External Stakeholders [2 Marks]

Answer:
1. Internal stakeholders are individuals or groups directly involved in the operations and management of the organization, such as owners, board of directors, managers, and employees. External stakeholders are parties outside the organization who are affected by or have an interest in its activities, such as customers, suppliers, creditors, government, and the general public.
2. Internal stakeholders have direct decision-making power and operational control, whereas external stakeholders interact with the organization from the outside and influence or are influenced by its policies indirectly.

Teacher's Note:
a) Provide standard examples for both categories to make the distinction clear.
b) Ensure the classification focuses on the direct operational relationship with the business entity.

(e) Central Bank and Commercial Bank [2 Marks]

Answer:
1. The Central Bank is the apex financial institution of a country that regulates, controls, and supervises the entire banking and monetary system. A Commercial Bank is a financial institution that accepts deposits from the general public and grants loans for earning profit.
2. The primary objective of a Central Bank is to promote economic stability, control money supply, and manage currency issue, whereas the primary objective of a commercial bank is to earn profit through financial intermediation.

Answer:
E-tailing (Electronic retailing) refers to the selling of retail goods and services through the internet using electronic devices such as computers, tablets, and smartphones. It enables customers to browse catalogs, select products, and complete transactions online for home delivery.

Teacher's Note:
a) Mention that E-tailing is a subset of E-commerce focusing specifically on retail business-to-consumer (B2C) transactions.
b) Mention key examples like Amazon or Flipkart to illustrate the concept.

(b) What are Fixed Costs? [2 Marks]

Answer:
Fixed costs are those business expenses that do not change in total with the level of production or sales volume within a relevant range. They remain constant even if production output fluctuates or ceases temporarily.

Teacher's Note:
a) Give common examples such as rent, salaries of permanent staff, and insurance premiums.
b) Clarify that while fixed cost *in total* remains constant, fixed cost *per unit* decreases as production volume increases.

(c) What is a Budget? [2 Marks]

Answer:
A budget is a formal financial and quantitative statement prepared for a specific future period of time, outlining the estimated revenues, expenses, and capital requirements of an organization to achieve its objectives.

Teacher's Note:
a) Emphasize that a budget serves as both a planning tool and a control mechanism for management.
b) Ensure keywords like future period, financial statement, and targets are included.

(d) Briefly explain Provident Fund. [2 Marks]

Answer:
A Provident Fund is a welfare scheme established for the financial security of employees after their retirement, resignation, or disablement, or for their dependents in case of death. Contributions are made regularly by the employee and generally matched by the employer into a designated fund that accumulates interest over time.

Teacher's Note:
a) Mention that it acts as a compulsory savings scheme providing social security to workers.
b) Reference statutory schemes like the Employees Provident Fund (EPF) in India.

(e) State two advantages of internal recruitment. [2 Marks]

Answer:
1. It is economical and cost-effective as it saves time and money spent on advertising, interviewing, and agency fees.
2. It boosts the morale and motivation of existing employees by providing opportunities for career advancement and promotion.

Teacher's Note:
a) Also note that internal candidates are already familiar with the organization culture, rules, and working methods, reducing induction time.
b) List any two clear points concisely to secure full marks.

Question 3.

(a) State two advantages of Campus Recruitment as an external source of recruitment. [2 Marks]

Answer:
1. It provides access to a large pool of young, talented, dynamic, and qualified fresh minds from reputed educational institutions.
2. It is a time-saving and systematic method where employers can conduct presentations, preliminary interviews, and selections directly at the educational institution in an organized manner.

Teacher's Note:
a) Highlight that campus recruitment brings fresh perspectives and modern technical knowledge into the organization.
b) Ensure both points clearly highlight the benefits specific to colleges or institutes.

(b) What do you mean by E-security? [2 Marks]

Answer:
E-security (Electronic security) refers to the measures, protocols, technologies, and practices implemented to protect digital information, computer systems, networks, and electronic transactions from unauthorized access, cyber attacks, theft, or damage.

Teacher's Note:
a) Mention tools like firewalls, encryption, passwords, and digital signatures as part of e-security.
b) Emphasize that it builds customer trust in online business and e-banking operations.

(c) What is meant by Industrial Relations? [2 Marks]

Answer:
Industrial relations refer to the harmonious or complex relationship and interactions that exist between employers, employees, trade unions, and the government within an industrial or organizational setting.

Teacher's Note:
a) Good industrial relations ensure industrial peace, higher productivity, and reduced labor turnover.
b) The term covers collective bargaining, grievance handling, and dispute settlement mechanisms.

(d) Briefly explain the principle of Utmost good faith of insurance. [2 Marks]

Answer:
The principle of utmost good faith (Uberrimae Fidei) dictates that both the insurer and the insured must disclose all material facts fully, truthfully, and honestly to each other before entering into an insurance contract, without concealing any vital information.

Teacher's Note:
a) If any material fact is concealed or misrepresented by either party, the insurance contract becomes voidable at the option of the aggrieved party.
b) Highlight that this principle applies to all types of insurance contracts, not just life insurance.

(e) ‘The Central Bank is a banker’s bank.’ Explain in brief. [2 Marks]

Answer:
The Central Bank acts as a banker’s bank because it holds a portion of the commercial banks' cash reserves (Cash Reserve Ratio), provides them with short-term financial accommodation by rediscounting eligible bills of exchange, and exercises control, supervision, and regulation over their operations.

Teacher's Note:
a) In this role, the Central Bank stands as a lender of last resort to commercial banks during financial distress.
b) Explain both the custodial role of reserves and the regulatory supervisory function.

Question 4.

(a) Briefly explain any two types of Selection tests. [2 Marks]

Answer:
1. Intelligence Test: Measures a candidate's general mental capacity, reasoning ability, memory, and capacity to grasp instructions and solve problems.
2. Trade (or Proficiency) Test: Measures the existing professional knowledge, practical skills, and proficiency acquired by a candidate in a specific trade or occupation.

Teacher's Note:
a) Other acceptable tests include aptitude tests, personality tests, and interest tests.
b) Clearly define the purpose of each test mentioned to secure full marks.

(b) What are Bonded Warehouses? [2 Marks]

Answer:
Bonded warehouses are licensed storage facilities authorized by the customs authorities to store imported goods on which import duties have not yet been paid. Goods are kept under customs lock and key until the duty is paid.

Teacher's Note:
a) Importers can withdraw goods in installments by paying proportionate duty, which helps in managing cash flow.
b) Re-export of goods stored in bonded warehouses is permitted without paying import duty.

(c) What do you mean by Insurance? [2 Marks]

Answer:
Insurance is a cooperative financial mechanism by which a large number of people pool their risks by paying a nominal sum (premium) to an insurance company, which undertakes to compensate the insured for financial loss arising from a specified uncertain event.

Teacher's Note:
a) It is based on the principle of pooling of risk and sharing of losses among many exposed to similar risks.
b) Define insurance as a contract of indemnity (except for life insurance) providing certainty of financial protection.

(d) State any two features of the Consumer Protection Act. [2 Marks]

Answer:
1. It applies to all goods and services across all sectors (private, public, and cooperative) unless specifically exempted by the central government.
2. It provides a three-tier quasi-judicial machinery (District Commission, State Commission, and National Commission) for the speedy and inexpensive redressal of consumer disputes.

Teacher's Note:
a) Mention that it protects and promotes the six consumer rights enshrined under the Act.
b) Ensure any two distinct and valid features are written.

(e) Explain in brief Credit Card Fraud. [2 Marks]

Answer:
Credit card fraud is a form of identity theft and financial crime where unauthorized individuals illegally obtain a victim's credit card details or physical card to make fraudulent purchases, withdraw cash, or transfer funds without the cardholder's consent.

Teacher's Note:
a) Common methods include skimming, phishing, data breaches, and stealing physical cards.
b) Emphasize the importance of keeping PINs, OTPs, and card credentials confidential.

SECTION B (40 Marks)

Attempt any four questions from this Section

Question 5.

(a) Explain any five objectives of Marketing. [5 Marks]

Answer:
1. Creation of Demand: To create and stimulate demand for products and services by identifying consumer needs and making them aware of the offerings.
2. Customer Satisfaction: To understand customer expectations and provide maximum satisfaction through quality goods and after-sales service.
3. Market Share and Expansion: To capture a larger share of the market and expand business operations locally and globally.
4. Profit Generation: To earn adequate profits through efficient sales and service delivery to ensure survival and growth of the enterprise.
5. Building Brand Reputation and Goodwill: To build a positive corporate image and brand loyalty through ethical marketing practices and consistent quality.

Teacher's Note:
a) State five clear headings with brief explanations to score full marks.
b) Ensure the dual focus on customer welfare and organizational profitability is highlighted.

(b) What is ERP? Explain any three modules of the ERP System. [5 Marks]

Answer:
ERP (Enterprise Resource Planning) is integrated business management software that collects, stores, manages, and interprets data from various business functions and departments in real-time through a centralized database.
Three modules of the ERP system are:
1. Financial Accounting Module: Manages financial data, general ledger, accounts payable, accounts receivable, asset management, and financial reporting.
2. Human Resource (HR) Module: Handles personnel data, payroll processing, recruitment, attendance tracking, performance appraisal, and training management.
3. Supply Chain Management (SCM) Module: Oversees procurement, inventory control, order fulfillment, warehousing, and logistics operations.

Teacher's Note:
a) Define ERP clearly before listing the modules.
b) Other valid modules include Customer Relationship Management (CRM) and Production Planning; choose any three well-explained modules.

Question 6.

(a) State any five expectations of employees from a business organization. [5 Marks]

Answer:
1. Fair Wages and Remuneration: Adequate and timely compensation commensurate with their skills, efforts, and market standards.
2. Safe and Healthy Working Conditions: Proper ventilation, lighting, cleanliness, safety equipment, and hygienic environment at the workplace.
3. Job Security: Assurance of steady employment and protection against arbitrary termination or layoffs.
4. Opportunities for Growth and Promotion: Scope for career advancement, skill development, training programs, and internal promotions.
5. Recognition and Respect: Appreciation for good work, fair treatment, and respect for human dignity with a grievance redressal mechanism.

Teacher's Note:
a) Frame expectations clearly from the employee's point of view.
b) Cover both monetary and non-monetary expectations for a balanced answer.

(b) Describe any five utilities of a budget. [5 Marks]

Answer:
1. Planning Future Operations: It forces management to look ahead, anticipate future challenges and opportunities, and formulate clear operational plans.
2. Coordination: It promotes cooperation and coordination among different departments by aligning their individual targets with overall organizational goals.
3. Control of Expenditure: It acts as a benchmark to monitor actual performance, identify variances, and exercise cost control.
4. Resource Allocation: It ensures optimal and efficient allocation of financial, material, and human resources among various competing departments.
5. Performance Evaluation: It provides a standard for measuring managerial and departmental performance by comparing budgeted targets with actual results.

Teacher's Note:
a) Write five distinct points explaining how budgets aid managerial functions.
b) Keywords like planning, coordination, control, and performance evaluation must be clearly stated.

Question 7.

(a) Explain any five merits of road transport. [5 Marks]

Answer:
1. Door-to-Door Service: Road transport provides direct pick-up and delivery of goods from the producer's warehouse to the consumer's doorstep, reducing loading and unloading costs.
2. Flexibility of Route and Timing: Vehicles can be operated at any time and can change routes easily according to requirements, unlike railways or airways.
3. Suitability for Short Distances: It is the most economical, efficient, and fastest mode for transporting goods and passengers over short distances.
4. Service in Rural and Remote Areas: Roads can be constructed in hilly, rural, and remote areas where laying railway tracks is not feasible.
5. Less Risk of Damage: Due to fewer transfers of goods and careful handling, the risk of damage or pilferage in transit is relatively low compared to multi-modal transit.

Teacher's Note:
a) Focus on distinct advantages such as door-to-door connectivity and flexibility.
b) Ensure all five points are explained with clear headings.

(b) Explain: [5 Marks]
(i) ATM
(ii) Debentures

Answer:
(i) ATM (Automated Teller Machine): An electronic banking terminal that allows bank customers to perform financial transactions such as cash withdrawal, balance enquiry, mini-statement printing, and fund transfer independently without the direct intervention of bank branch staff, 24 hours a day.
(ii) Debentures: A debt instrument issued by a company under its common seal acknowledging a loan taken from the public. Debenture holders are creditors of the company and receive a fixed rate of interest at regular intervals irrespective of profit or loss.

Teacher's Note:
a) For ATM, mention 24x7 availability and basic functions.
b) For Debentures, highlight that debenture holders are creditors, not owners, and receive a fixed rate of interest.

Question 8.

(a) Explain any five features of the Environment Protection Act. [5 Marks]

Answer:
1. Broad Scope: The Act covers all forms of environmental pollution affecting air, water, land, and human beings, and lays down standards for the quality of environment.
2. Central Government Powers: It vests extensive powers in the Central Government to take all necessary measures for protecting and improving the quality of the environment and preventing pollution.
3. Stringent Penalties: It prescribes severe penalties, fines, and imprisonment for persons, industries, or authorities violating environmental standards or failing to comply with directions.
4. Hazardous Substance Regulation: It regulates the handling, storage, transport, and disposal of hazardous substances to prevent industrial disasters and environmental degradation.
5. Public Participation: It empowers any citizen to file a complaint in court against polluters after giving a statutory notice of 60 days to the competent central authority.

Teacher's Note:
a) Emphasize that the Act serves as umbrella legislation integrating various earlier environmental laws.
b) Mention governmental authority and penal provisions clearly.

(b) Briefly, explain any five benefits of advertising to producers. [5 Marks]

Answer:
1. Increases Sales Volume: Advertising creates awareness and stimulates demand, leading to higher sales volume and business expansion.
2. Faces Market Competition: It helps producers effectively introduce new products, counter rival brand campaigns, and retain market share.
3. Creates Brand Loyalty: Consistent advertising builds brand recognition and consumer trust, creating a loyal customer base.
4. Economies of Scale: By boosting large-scale production to meet increased demand, producers benefit from lower per-unit production costs.
5. Assists Personal Selling: Advertising creates pre-sale awareness, making the job of salespersons much easier as customers are already familiar with the product features.

Teacher's Note:
a) Ensure the perspective is strictly from the producer's (manufacturer's) viewpoint.
b) Use standard commercial terminology like economies of scale and brand loyalty.

Question 9.

(a) What are the various ways by which consumers are exploited? [5 Marks]

Answer:
1. Overcharging: Charging prices higher than the Maximum Retail Price (MRP) or fair market value for goods and services.
2. Adulteration and Substandard Quality: Supplying impure, low-quality, expired, or adulterated goods that pose health hazards to consumers.
3. False and Misleading Advertisements: Making exaggerated, deceptive, or false claims regarding the quality, utility, efficacy, or features of a product.
4. Under-weighing and Under-measuring: Giving less quantity or weight than what the consumer has paid for by manipulating weighing scales or measurement units.
5. Deficient Services: Providing poor, negligent, or unsatisfactory after-sales service and failing to honor warranty commitments.

Teacher's Note:
a) List five common forms of consumer exploitation clearly with suitable headings.
b) Ensure real-world business context is maintained in each point.

(b) Explain: [5 Marks]
(i) NEFT
(ii) RTGS

Answer:
(i) NEFT (National Electronic Funds Transfer): An electronic payment system that enables individuals, firms, and corporations to transfer funds from one bank account to another on a deferred net settlement basis in batches throughout the day, with no minimum or maximum transfer limit.
(ii) RTGS (Real Time Gross Settlement): A high-value funds transfer system where transactions are settled continuously and individually on a real-time basis across bank accounts, with a minimum transaction limit usually set at Rs. 2 Lakhs, ensuring immediate finality of settlement.

Teacher's Note:
a) Highlight the key difference: NEFT works on batch settlement while RTGS works on continuous real-time gross settlement.
b) Mention settlement speed and transaction limits for both terms.

Question 10.

From the following Trial Balance of A. B. Chandra as on 31^st December, 2019. [10 Marks]

Trial Balance of A. B. Chandra
as on 31-12-2019

The closing stock was valued at Rs. 12,000.

You are required to prepare a Trading Account and a Profit and Loss Account for the year ending 31^st December, 2019 and a Balance Sheet as on 31^st December, 2019.

Answer:

Trading and Profit and Loss Account of A. B. Chandra for the year ending 31^st December, 2019

Balance Sheet of A. B. Chandra as on 31^st December, 2019

Working Notes:
1. Net Sales = Sales (Rs. 83,000) - Sales Returns (Rs. 3,000) = Rs. 80,000.
2. Net Purchases = Purchases (Rs. 31,250) - Purchases Returns (Rs. 1,250) = Rs. 30,000.
3. Gross Profit = Total Credit Side of Trading A/c (Rs. 92,000) - Total Debit Side excluding GP (Rs. 36,000) = Rs. 56,000.
4. Net Profit = Total Credit Side of P&L A/c (Rs. 56,750) - Total Debit Side excluding NP (Rs. 8,600) = Rs. 48,150.
5. Adjusted Capital = Opening Capital (Rs. 40,000) + Net Profit (Rs. 48,150) - Drawings (Rs. 2,800) = Rs. 85,350.

Teacher's Note:
a) Ensure opening stock, purchases, and direct wages are debited to the Trading Account, and indirect expenses are taken to the Profit and Loss Account.
b) Verify that closing stock is shown on the credit side of Trading Account and as an asset in the Balance Sheet.