ICSE Class 10 Commercial Studies Sample Paper 2024 with Solutions

SECTION A

(Attempt all questions from this Section.)

Question 1
Choose the correct answers to the questions from the given options. [16]
(Do not copy the question, write the correct answers only.)

(i) The main expectation of a Creditor is: [1 Mark]
(a) Regular payment of interest according to credit terms
(b) Prompt payment of all the taxes
(c) To Contribute to research and development
(d) To ensure regular supply of goods

Answer: (a) Regular payment of interest according to credit terms

Creditors lend money to a business and expect timely repayment of principal along with regular interest.

Teacher's Note:
a) Creditors are external stakeholders who provide debt finance.
b) Students must distinguish between expectations of owners, creditors, employees, and consumers.

(ii) Maya had purchased a washing machine which stopped working after two weeks. She lodged a complaint with the company but to no avail. Which consumer right is being violated in this case? [1 Mark]
(a) Right to safety
(b) Right to be informed
(c) Right consumer education
(d) Right to seek redressal

Answer: (d) Right to seek redressal

The right to seek redressal includes compensation against unfair trade practices and exploitation.

Teacher's Note:
a) Redressal means getting a remedy or compensation for a grievance.
b) Do not confuse safety rights with post-purchase grievance handling.

(iii) Distribution of free samples, price contests, clearance sales, etc. are examples of: [1 Mark]
(a) Consumer exploitation
(b) Capital receipts
(c) Sales promotion techniques
(d) Functions of the Central Bank

Answer: (c) Sales promotion techniques

These are short-term incentives to encourage the purchase or sale of a product or service.

Teacher's Note:
a) Sales promotion differs from advertising by offering immediate added value.
b) Memorise common examples like contests, rebates, and free samples.

(iv) A module of ERP which manages the flow of products from manufacturer to consumer and consumer to manufacturer is the: [1 Mark]
(a) Supply chain module
(b) Customer relationship module
(c) Sales module
(d) Purchase module

Answer: (a) Supply chain module

Supply chain management tracks the flow of goods, data, and finances related to a product from the source to the consumer.

Teacher's Note:
a) ERP modules integrate core business processes.
b) Supply chain focuses on logistics and material flow.

(v) ‘X’ pays Rs. 60 for one Kg of mangoes. The fruit vendor gives him 900 g of mangoes. Identify what has happened. [1 Mark]
(a) Consumer protection
(b) Consumer exploitation
(c) Consumer awareness
(d) Consumer rights

Answer: (b) Consumer exploitation

Short-weighing is an unfair trade practice resulting in consumer exploitation.

Teacher's Note:
a) Exploitation includes under-measurement, adulteration, and overcharging.
b) Read the numerical values carefully in such scenarios.

(vi) Which of the following is NOT considered as a Consumer Right? [1 Mark]
(a) Right to freedom of speech
(b) Right to consumer education
(c) Right to be informed
(d) Right to safety

Answer: (a) Right to freedom of speech

Freedom of speech is a fundamental constitutional right, not specifically a designated consumer right under consumer protection acts.

Teacher's Note:
a) The six basic consumer rights include safety, information, choice, representation, redressal, and education.
b) Look out for words like 'NOT' in objective questions.

(vii) Heavy expenditure on advertisement is classified as: [1 Mark]
(a) Miscellaneous Expenditure
(b) Revenue Expenditure
(c) Deferred Revenue Expenditure
(d) Capital Expenditure

Answer: (c) Deferred Revenue Expenditure

Heavy initial advertising is written off over multiple accounting periods as it provides long-term benefits.

Teacher's Note:
a) Deferred revenue expenditure is revenue in nature but benefits future years.
b) Do not confuse it with capital expenditure which creates physical assets.

(viii) When the CEO of a company retires the Sales Manager is given her place. Identify which of the following will be true in this context. [1 Mark]
1. The Sales Manager is being transferred
2. The Sales Manager will be getting a higher salary
3. The Sales Manager is getting promoted.
4. The Sales Manager will be getting the same salary.
(a) 1. and 2. are true
(b) 3. and 4. are true
(c) 2. and 3. are true
(d) 2. and 4. are true

Answer: (c) 2. and 3. are true

Moving to the CEO position represents upward vertical movement, implying a promotion with higher remuneration.

Teacher's Note:
a) Promotion involves higher status, responsibility, and salary.
b) Transfer involves horizontal shift without major change in status or pay.

(ix) On the basis of the information given identify the account. [1 Mark]
1. It contains items of revenue nature only.
2. It is prepared to ascertain the Gross profit or the Gross loss.
(a) Trading account
(b) Purchase account
(c) Sales account
(d) Profit and loss account

Answer: (a) Trading account

Trading account records direct trading operations and determines gross profit or gross loss.

Teacher's Note:
a) Profit and Loss account ascertains net profit or net loss.
b) Trading account includes direct expenses and direct incomes.

(x) Which of the following banks regulate the supply of money in the economy? [1 Mark]
(a) Commercial banks
(b) Indigenous banks
(c) Central bank
(d) Exchange banks

Answer: (c) Central bank

The central bank acts as the apex monetary authority controlling money supply and credit.

Teacher's Note:
a) Commercial banks create credit under central bank control.
b) The central bank holds the monopoly of note issue.

(xi) Individuals who are hired to do a specific job are known as: [1 Mark]
(a) Society
(b) Government
(c) Employers
(d) Employees

Answer: (d) Employees

Employees are hired by an organization to perform specific assigned tasks.

Teacher's Note:
a) Employers provide jobs, while employees execute them.
b) Basic terminology definitions are tested directly in such MCQs.

(xii) A __________ is an establishment for storage or accumulation of goods. [1 Mark]
(a) Bank
(b) Warehouse
(c) Budget
(d) Forecast

Answer: (b) Warehouse

Warehousing facilitates holding and preserving goods until they are distributed or sold.

Teacher's Note:
a) Warehouses remove the hindrance of time in trade.
b) Banks deal with finance, not goods storage.

(xiii) The RBI settles claims of other commercial banks by a process of book entries. It helps to stabilize the banking system in the economy. Which function of the Central bank is explained here. [1 Mark]
(a) Monopoly of note issue
(b) Government’s bank
(c) Clearing house function
(d) Developmental function

Answer: (c) Clearing house function

As a clearing house, the central bank settles inter-bank accounts through book entries.

Teacher's Note:
a) This function minimises actual cash movement between banks.
b) Read the scenario carefully to identify specific central banking services.

(xiv) _________ is an example of a Sales Promotion technique. [1 Mark]
(a) Free samples
(b) Pricing
(c) Marketing
(d) Banking

Answer: (a) Free samples

Free samples allow customers to try products, boosting sales promotion.

Teacher's Note:
a) Pricing and marketing are broader functional areas.
b) Sales promotion consists of short-term tools.

(xv) Imagine you are an accountant of Shah & Company. You have to pass an entry of interest received by the company. What will be the accounting treatment? [1 Mark]
(a) Asset side of balance sheet
(b) Liability side of balance sheet
(c) Credit side of trading a/c
(d) Credit side of profit and loss a/c

Answer: (d) Credit side of profit and loss a/c

Interest received is an indirect income, credited to the Profit and Loss Account.

Teacher's Note:
a) Direct incomes go to Trading Account; indirect incomes go to Profit and Loss Account.
b) All gains and incomes are credited.

(xvi) Identify the principal of insurance based on the given information. [1 Mark]
1. The insured must be benefitted by the existence of the insured subject and suffer a loss by its destruction.
2. It is the financial interest of the insured in the subject matter of insurance.
(a) Indemnity
(b) Insurable interest
(c) Utmost good faith
(d) Mitigation of loss

Answer: (b) Insurable interest

Insurable interest requires the policyholder to have a legally recognised financial stake in the insured subject matter.

Teacher's Note:
a) Without insurable interest, an insurance contract is a wager and void.
b) Indemnity ensures compensation up to the actual loss suffered.

Question 2
Distinguish between:

(i) Debit card and Credit card [2 Marks]

Answer:

Teacher's Note:
a) Always write points of distinction in a tabular format for clarity.
b) Clearly state ownership of funds as the core differentiating factor.

(ii) Advertising and Sales promotion [2 Marks]

Answer:

Teacher's Note:
a) Advertising creates the pull effect over time.
b) Sales promotion provides immediate impetus to clear stock or drive sales spikes.

(iii) Central and Commercial banks [2 Marks]

Answer:

Teacher's Note:
a) Central bank holds monopoly of note issue and acts as banker to banks.
b) Commercial banks deal directly with public and create credit.

(iv) Capital and Revenue Receipts [2 Marks]

Answer:

Teacher's Note:
a) Capital receipts do not affect normal operating profit directly.
b) Revenue receipts form part of trading or operating income.

Question 3

(i) An association is formed by persons in an industry to protect and promote the interests of the workers. Identify the above and explain any one function that it performs. [2 Marks]

Answer:
1. Identification: Trade Union.
2. Function: Collective Bargaining - Negotiating with employers on behalf of workers regarding wages, working hours, and working conditions.

Teacher's Note:
a) Trade unions protect worker rights and prevent exploitation.
b) Ensure both identification and function are clearly stated for full marks.

(ii) What is Recruitment? [2 Marks]

Answer:
1. Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in an organization.
2. It is a positive process that aims to attract a large pool of candidates so that the best talent can be selected.

Teacher's Note:
a) Highlight that recruitment is a 'positive' process (unlike selection which is 'negative').
b) Focus on searching and attracting applicants.

(iii) What do you mean by Pricing? [2 Marks]

Answer:
1. Pricing is the process of determining what a company will receive in exchange for its product or service.
2. It involves setting a value that covers production costs, provides a reasonable profit margin, and matches market demand and competition.

Teacher's Note:
a) Price is the only element in the marketing mix that generates revenue.
b) Cost, competition, and demand are key determinants of pricing.

(iv) There are people who provide jobs to others. Identify them and give one expectation that they may have from a commercial organisation. [2 Marks]

Answer:
1. Identification: Employers / Owners / Entrepreneurs.
2. Expectation: Earn a fair return on investment (profit) and steady growth of the business.

Teacher's Note:
a) Employers risk capital and expect financial returns.
b) Ensure appropriate identification before stating the stakeholder expectation.

Question 4

(i) What is E-advertising? [2 Marks]

Answer:
1. E-advertising (Electronic Advertising) refers to the promotion of products and services using internet-based channels, websites, social media, and digital devices.
2. It enables businesses to reach a global audience instantly with targeted and interactive promotional content.

Teacher's Note:
a) Mention internet or digital platforms in the definition.
b) Highlight interactivity and wider reach compared to traditional media.

(ii) Explain in brief the principle of subrogation. [2 Marks]

Answer:
1. According to the principle of subrogation, once the insured is compensated for the loss of insured property, all rights of ownership over that property pass on to the insurer.
2. This prevents the insured from making a profit by recovering twice for the same loss (e.g., selling damaged salvage after claiming full compensation).

Teacher's Note:
a) Subrogation is an corollary of the principle of indemnity.
b) The insurer steps into the shoes of the insured after paying compensation.

(iii) How does modern advertising exert a corrupting influence on society? [2 Marks]

Answer:
1. Modern advertising often promotes materialism, impulse buying, and extravagant lifestyles.
2. Exaggerated or misleading claims can deceive consumers, target vulnerable audiences like children, and promote harmful products.

Teacher's Note:
a) Focus on social criticism aspects of advertising.
b) Mention exaggeration and creation of artificial wants.

(iv) What is Discounting of a bill of exchange? [2 Marks]

Answer:
1. Discounting a bill of exchange means encashing the bill before its maturity date through a bank.
2. The bank deducts a small fee (discount) and pays the remaining amount immediately to the holder, collecting the full amount from the drawee on maturity.

Teacher's Note:
a) It provides immediate liquidity to businesses holding trade bills.
b) The bank charges a nominal interest for early encashment.

SECTION B

(Attempt any four questions from this Section.)

Question 5

(i) Briefly discuss five characteristics of a capital market. [5 Marks]

Answer:
1. Deals in Long-Term Funds: It provides long-term and medium-term finance to corporate entities and governments.
2. Comprises Two Segments: It includes the primary market (new issues) and the secondary market (stock exchange for existing securities).
3. Promotes Capital Formation: It mobilises savings from the public and channels them into productive industrial investments.
4. Involves Intermediaries: It functions through financial institutions, stockbrokers, underwriters, and mutual funds.
5. Regulated by Government Bodies: In India, it is strictly regulated and monitored by statutory bodies like SEBI to protect investors.

Teacher's Note:
a) List five distinct points with clear headings.
b) Emphasise long-term securities and regulatory oversight.

(ii) Write short notes on: [5 Marks]
(a) IMPS
(b) Right to be informed

Answer:
(a) IMPS (Immediate Payment Service): It is an instant interbank electronic fund transfer service in India operating 24/7 through mobile phones, internet banking, and ATMs.
(b) Right to be informed: It is a consumer right that ensures consumers are provided with adequate information regarding quality, quantity, purity, standard, and price of goods or services to make an intelligent choice and protect against unfair trade practices.

Teacher's Note:
a) Divide the 5 marks evenly between both sub-parts (2.5 marks each).
b) Keywords like 'instant 24/7' for IMPS and 'quality, price, and ingredients' for the Right to be informed are essential.

Question 6

(i) Discuss five objectives of pricing in detail. [5 Marks]

Answer:
1. Profit Maximisation: Setting prices to generate maximum surplus revenue over costs in the short or long run.
2. Market Share Leadership: Pricing aggressively to capture a large percentage of the total market volume and outcompete rivals.
3. Surviving in Competition: Fixing competitive prices to sustain business operations during intense market rivalry.
4. Product Quality Leadership: Charging premium prices to project high quality, exclusivity, and prestige.
5. Sales Growth: Setting accessible prices to accelerate volume sales and build a broad customer base.

Teacher's Note:
a) Pricing objectives guide the overall marketing strategy.
b) Elaborate each objective briefly with a distinct focus.

(ii) Write short notes on: [5 Marks]
(a) Health Insurance
(b) Debentures

Answer:
(a) Health Insurance: A contract under which an insurer agrees to indemnify the insured against medical expenses incurred due to illness or injury, covering hospitalisation and treatment costs.
(b) Debentures: A debt instrument issued by a company under its common seal acknowledging a loan taken from the public, carrying a fixed rate of interest and acting as a long-term source of capital.

Teacher's Note:
a) Clearly define health insurance as a contract covering medical contingencies.
b) Define debenture as acknowledgment of debt, highlighting that debenture holders are creditors, not owners.

Question 7

(i) Mention two demerits and three merits of Road transport. [5 Marks]

Answer:
Merits of Road Transport:
1. Door-to-Door Service: Provides direct delivery from the point of production to the consumer's doorstep, reducing handling costs.
2. Flexibility: Routes and timings can be adjusted easily according to individual requirements.
3. Suitability for Short Distances: Highly cost-effective and rapid for transporting goods over short distances.
Demerits of Road Transport:
1. Slow over Long Distances: Inefficient and time-consuming for long-haul cargo compared to railways or airways.
2. Weather and Road Hazards: Susceptible to disruptions caused by bad weather, road accidents, and traffic congestion.

Teacher's Note:
a) Ensure you cover exactly three merits and two demerits as requested.
b) Door-to-door service is the unique selling proposition of road transport.

(ii) (a) Mr. Shah took a Health insurance policy for Rs. 2 lakhs without disclosing proper facts. After three years he was admitted in hospital due to acute tuberculosis. During investigation it was found that he had been a chain smoker for the past five years. [5 Marks]
1. Will he be able to claim health insurance? Why?
2. Identify the Principle of insurance.
(b) Write a Short note on: Direct Cost.

Answer:
(a) 1. No, Mr. Shah will not be able to claim health insurance because he concealed material facts (smoking habit) at the time of taking the policy.
2. Principle of Utmost Good Faith (Uberrimae Fidei).
(b) Direct Cost: Expenses that can be directly and easily traced to a specific cost object, product, department, or project (e.g., direct material, direct wages used in manufacturing).

Teacher's Note:
a) Non-disclosure of material facts violates utmost good faith, making the contract voidable.
b) Direct costs form part of prime cost in cost accounting.

Question 8

(i) Explain any five modules of ERP. [5 Marks]

Answer:
1. Finance and Accounting Module: Manages ledger entries, accounts payable, accounts receivable, budgeting, and financial reporting.
2. Human Resources (HR) Module: Handles payroll, attendance, recruitment, employee records, and performance appraisal.
3. Supply Chain Management (SCM) Module: Tracks the flow of materials, inventory management, procurement, and logistics.
4. Customer Relationship Management (CRM) Module: Manages customer interactions, sales pipelines, after-sales service, and marketing data.
5. Manufacturing/Production Module: Oversees production scheduling, bill of materials, machine capacity, and quality control.

Teacher's Note:
a) ERP integrates various departmental functions into a single software system.
b) List and explain five clear modules with their specific functions.

(ii) Write Short notes on: [5 Marks]
(a) Internal Recruitment
(b) Social advertising media

Answer:
(a) Internal Recruitment: The process of filling vacant positions from within the organisation by promoting or transferring existing employees.
(b) Social Advertising Media: The use of social networking platforms (such as Facebook, Instagram, LinkedIn) to deliver targeted promotional advertisements to specific audience segments.

Teacher's Note:
a) Internal recruitment boosts employee morale and reduces induction costs.
b) Social advertising provides precise demographic targeting and high user engagement.

Question 9

(i) Briefly discuss five functions of a capital market. [5 Marks]

Answer:
1. Mobilisation of Savings: Channels idle savings from individual and institutional investors into productive industrial investments.
2. Capital Formation: Helps in increasing the country's capital stock by providing long-term funds to businesses.
3. Liquidity of Investments: Provides a ready marketplace (stock exchange) where investors can easily convert securities into cash.
4. Economic Growth: Finances infrastructure and large corporate projects, accelerating overall national economic development.
5. Evaluation of Securities: Helps in determining the fair market price of securities based on demand and supply forces.

Teacher's Note:
a) Capital market functions are vital for economic development.
b) Highlight liquidity, mobilisation, and capital formation clearly.

(ii) Write short notes on: [5 Marks]
(a) Social Security
(b) EPA

Answer:
(a) Social Security: Measures and welfare provisions established by the state or employers to protect workers and their families against financial distress arising from old age, sickness, unemployment, maternity, or workplace injuries.
(b) EPA (Environmental Protection Act): Legislation enacted to protect and improve the quality of the environment, prevent and control environmental pollution, and penalise industrial polluters.

Teacher's Note:
a) Social security ensures worker welfare and industrial peace.
b) EPA highlights business responsibility toward ecological sustainability.

Question 10

Prepare a Trading, Profit and Loss account of Mr. ABC for the year ending on 31st March, 2023 and a Balance Sheet as on 31 March, 2023. [10 Marks]

Answer:

Dr.                     Trading and Profit and Loss Account for the year ended 31st March, 2023                     Cr.

Balance Sheet as on 31st March, 2023

Working Notes:
1. Carriage Outwards is an indirect expense, charged to the Profit and Loss Account.
2. Gross Profit = (Sales - Sales Returns + Closing Stock) - (Opening Stock + Net Purchases) = (1,09,000 + 78,000) - (15,000 + 63,000) = Rs. 1,09,000.
3. Net Profit = Gross Profit + Commission - (Discount + Carriage Outwards + Salaries + Trade Expenses + Bad Debts + Rent + Stationery) = 1,09,900 - 38,400 = Rs. 71,500.

Teacher's Note:
a) Ensure all items from the trial balance are correctly classified into Trading, P&L, or Balance Sheet.
b) Verify that the Balance Sheet totals match on both sides (Rs. 2,20,700).