ICSE Class 10 Commercial Studies Sample Paper 2025 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) Assertion: The concept of insurable interest is fundamental to all insurance contracts.
Reasoning: It ensures that the insured has a legitimate financial interest in the subject matter insured.
(A) A is true, and R is the correct explanation of A.
(B) A is true, but R is not the correct explanation of A.
(C) A is true, but R is false.
(D) A is false, but R is true.

Answer: (A) A is true, and R is the correct explanation of A.

Insurable interest is legally necessary for an insurance contract to be valid, which means the insured must stand to suffer a direct financial loss from the destruction of the insured object.

Teacher's Note:
a) Insurable interest prevents insurance from becoming a mere gambling contract.
b) Students must clearly distinguish between insurable interest (financial stake) and indemnity (compensation for actual loss).

(ii) Maya had purchased a washing machine which stopped working after two weeks. She asked for a replacement, but nothing was done. Which Consumer Right is being violated in this case?
(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 gives consumers the right to get compensation against unfair trade practices or exploitation, including replacement or repair of defective goods.

Teacher's Note:
a) Redressal includes replacement, repair, refund, or removal of defects.
b) Do not confuse this with the right to be heard or the right to safety.

(iii) Identify the insurance depicted in the picture below.
(A) Marine
(B) Health
(C) Fire
(D) Life

[Figure: A stethoscope resting on top of a medical insurance document alongside a family cutout figure.]

Answer: (B) Health

The stethoscope and family figures symbolize medical care and protection against health-related expenses, indicating health insurance.

Teacher's Note:
a) Health insurance covers medical and surgical expenses incurred by the insured.
b) Examine picture-based questions carefully for medical or financial symbols.

(iv) A module of ERP which manages the flow of products from manufacturer to consumer and consumer to manufacturer is the:
(A) Supply chain module
(B) Customer relationship module
(C) Sales module
(D) Purchase module

Answer: (A) Supply chain module

The supply chain management module tracks and coordinates the flow of goods, data, and finances as product moves from supplier to manufacturer to wholesaler to retailer, and consumer.

Teacher's Note:
a) SCM optimizes the efficiency of product delivery and inventory management.
b) Remember that CRM deals with customer interactions, whereas SCM handles physical goods and logistics.

(v) 'X' pays Rs. 60 for one kg of mangoes. The fruit vendor gives him 900 g of mangoes. Identify what has happened.
(A) Consumer protection
(B) Consumer exploitation
(C) Consumer awareness
(D) Consumer rights

Answer: (B) Consumer exploitation

Giving less quantity (900 g instead of 1 kg) while charging for the full amount constitutes short-weighing, which is a form of consumer exploitation.

Teacher's Note:
a) Short weight and adulteration are classic examples of unfair trade practices leading to exploitation.
b) Read the numerical values carefully to spot discrepancies in weight or measure.

(vi) Which of the following is NOT considered as a Consumer Right?
(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

Right to freedom of speech is a fundamental constitutional right under Article 19, not one of the specific consumer rights defined under the Consumer Protection Act.

Teacher's Note:
a) The six recognized consumer rights are safety, information, choice, representation, redressal, and consumer education.
b) Constitutional rights should not be confused with statutory consumer protection rights.

(vii) Heavy expenditure on advertisement is classified as:
(A) Miscellaneous Expenditure
(B) Revenue Expenditure
(C) Deferred Revenue Expenditure
(D) Capital Expenditure

Answer: (C) Deferred Revenue Expenditure

Heavy initial advertising expenditure is a revenue expenditure in nature but its benefit extends over multiple accounting periods, hence it is deferred over a few years.

Teacher's Note:
a) Deferred revenue expenditure is written off in installments over the years it provides benefits.
b) Standard advertising for routine operations is normal revenue expenditure, but massive launch campaigns are deferred.

(viii) When the Principal of a school retires the vice -principal is given her place. Identify which of the following will be true in this context.
I. The vice-principal is being transferred
II. The vice-principal will be getting a higher salary
III. The vice-principal is getting promoted.
IV. The vice-principal will be getting the same salary but her designation will change
(A) I and II are true
(B) III and IV are true
(C) II and III are true
(D) III and IV are true

Answer: (C) II and III are true

Stepping up from Vice-Principal to Principal involves moving to a higher position with greater responsibility, which constitutes a promotion (III) accompanied by an increase in pay (II).

Teacher's Note:
a) Promotion involves vertical movement to a higher rank with higher salary and status.
b) Check statement options carefully as option (B) and option (D) are identical in the question paper; the official key indicates II and III are true (Option C).

(ix) The National Pension Scheme seeks to provide old-age security to the citizens.
(A) True
(B) False

Answer: (A) True

The National Pension Scheme (NPS) is a voluntary, long-term retirement savings scheme designed to provide old-age income security to citizens of India.

Teacher's Note:
a) NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
b) It helps individuals build a retirement corpus through systematic investments during their working years.

(x) Which of the following banks regulate the supply of money in the economy?
(A) Commercial banks
(B) Indigenous banks
(C) Central bank
(D) Exchange banks

Answer: (C) Central bank

The central bank (such as the RBI in India) is the apex institution responsible for regulating money supply and credit in the economy using monetary policy tools.

Teacher's Note:
a) Commercial banks create credit, but the overall money supply is regulated and controlled by the Central Bank.
b) Quantitative and qualitative credit control instruments are used for this purpose.

(xi) Assertion: Central banks control credit.
Reasoning: Commercial banks issue bank drafts.
(A) A is true and R is the correct explanation for A
(B) A is true but R is not the correct explanation for A
(C) A is true, R is false
(D) A is false, R is true

Answer: (B) A is true but R is not the correct explanation for A

Both statements are factually correct statements in banking, but commercial banks issuing bank drafts does not explain why or how central banks control credit.

Teacher's Note:
a) Central banks control credit through bank rate, repo rate, CRR, SLR, and open market operations.
b) Always test if the 'Reasoning' provides the logical cause for the 'Assertion'.

(xii)         is an example of a Sales Promotion technique.
(A) Free samples
(B) Pricing
(C) Marketing
(D) Banking

Answer: (A) Free samples

Distribution of free samples is a popular sales promotion technique used to induce trial and boost immediate sales of a product.

Teacher's Note:
a) Other sales promotion tools include coupons, contests, discounts, and buy-one-get-one-free offers.
b) Pricing and marketing are broader functional areas, not direct promotional tools.

(xiii) Identify the picture.
(A) Bank
(B) Warehouse
(C) Budget
(D) Forecast

[Figure: Interior of a large modern warehouse showing high vertical storage racks stocked with palletized goods and forklift aisles.]

Answer: (B) Warehouse

The image depicts high-rise industrial racking systems used for storing commercial goods, which represents a warehouse.

Teacher's Note:
a) Warehousing bridges the time gap between production and consumption of goods.
b) Modern warehouses utilize vertical space and automated material handling equipment.

(xiv) 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.
(A) Monopoly of note issue
(B) Government's bank
(C) Clearing house function
(D) Developmental function

Answer: (C) Clearing house function

As the clearing house, the central bank facilitates the settlement of inter-bank accounts and claims through simple book entries without requiring massive physical cash transfers.

Teacher's Note:
a) This function minimizes cash handling and transaction costs for commercial banks.
b) The central bank acts as the banker's bank in maintaining these clearing accounts.

(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?
(A) Asset side of balance sheet
(B) Liability side of balance sheet
(C) Credit side of trading account
(D) Credit side of profit and loss account

Answer: (D) Credit side of profit and loss account

Interest received is an indirect income for the business, and all indirect incomes are credited to the Profit and Loss Account.

Teacher's Note:
a) Direct incomes appear in the Trading Account, while indirect incomes appear on the credit side of the P&L Account.
b) In journal entry form: Bank A/c Dr. To Interest Received A/c.

(xvi) Identify the principle of insurance based on the given information.
1. The insured must be benefitted by the existence of the insured object and must 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

The principle of insurable interest requires that the policyholder must have a legal and financial stake in the preservation of the subject matter insured.

Teacher's Note:
a) Without insurable interest, an insurance policy is legally a wager.
b) A person has insurable interest in their own life, property they own, and vehicles registered in their name.

Question 2

Write any two differences between: [2]

(i) Debit card and Credit card [2]

Answer:

Teacher's Note:
a) Debit cards deduct funds directly from the user's savings or current bank account.
b) Credit cards allow delayed payment where the bank pays on behalf of the customer who settles the bill later.

(ii) Advertising and Sales promotion [2]

Answer:

Teacher's Note:
a) Advertising is a non-personal mass communication tool.
b) Sales promotion consists of short-term incentives to encourage purchase.

(iii) Central and Commercial banks [2]

Answer:

Teacher's Note:
a) Every country has only one central bank which regulates the monetary system.
b) There are numerous commercial banks operating to earn profit by accepting deposits and granting loans.

(iv) Capital and Revenue Receipts [2]

Answer:

Teacher's Note:
a) Capital receipts do not affect normal operating profit in the short run.
b) Revenue receipts directly determine the net profit or loss of the enterprise.

Question 3

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

Answer:
The association referred to is a Trade Union.
Function: Protection - Trade unions safeguard workers against all sorts of exploitation by employers or political parties, ensuring fair wages and safe working conditions.

Teacher's Note:
a) Trade unions act as collective bargaining agents for employees.
b) They help resolve industrial disputes peacefully through negotiations.

(ii) What is Recruitment? [2]

Answer:
Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization.

Teacher's Note:
a) Recruitment is a positive process because it aims at attracting a large pool of applicants.
b) It is distinct from selection, which is a negative process involving elimination of unsuitable candidates.

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

Answer:
Pricing is the process of translating the value of a product or service in terms of money.

Teacher's Note:
a) Pricing is a crucial element of the marketing mix.
b) It directly affects the total revenue and profitability of a business firm.

(iv) State any two expectations of employers from a commercial organisation. [2]

Answer:
1. Safety of capital contributed by them.
2. Capital appreciation in the value of their investment.

Teacher's Note:
a) Owners or investors expect adequate return on their invested funds.
b) They also look for long-term growth and stability of the business enterprise.

Question 4

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

Answer:
Electronic advertising means sending advertising messages to consumers over the Internet. It is also known as online advertising, internet advertising, or web advertising.

Teacher's Note:
a) E-advertising utilizes websites, social media, search engines, and emails.
b) It offers precise targeting and global reach compared to traditional media.

(ii) Explain in brief the Principle of Subrogation. [2]

Answer:
The Principle of subrogation implies that after indemnifying the insured for his loss, the insurer becomes entitled to all the rights and remedies relating to the insured property. The insurer shall step into the shoes of the insured. Right of subrogation extends only to the extent of the sum insured.

Teacher's Note:
a) This principle prevents the insured from making a profit by recovering twice for the same loss.
b) It applies strictly to contracts of indemnity such as fire and marine insurance.

(iii) Modern advertising exerts a corrupting influence on society. Justify the statement giving two points. [2]

Answer:
1. Modern advertising degrades ethical and aesthetic values through indecent languages and photographs.
2. It also encourages social evils like drinking and smoking by glamorous portrayal.

Teacher's Note:
a) Critics argue that deceptive ads manipulate vulnerable consumers into unnecessary purchases.
b) Excessive commercialization can sometimes distort cultural and social norms.

(iv) Explain in brief Discounting of bills of exchange. [2]

Answer:
Discounting of bills of exchange implies procuring cash from a bank in exchange for credit instruments. The bank charges some commission for this service by paying a price lower than the face value of the credit instrument. The holder of the instrument remains liable to the bank if the instrument is dishonored on maturity.

Teacher's Note:
a) This facility provides immediate working capital to businesses without waiting for the credit period to expire.
b) The discount charged represents the interest for the unexpired period of the bill.

SECTION B

(Attempt any four questions from this Section.)

Question 5

(i) A market is used for trading long term securities. Identify the market and explain any four functions of the above. [5]

Answer:
The market referred to is the Capital market.
Functions of the Capital Market:
1. Promotion of thrift: Capital market inspires people to save money by offering incentives in the form of attractive rates of interest and dividend.
2. Liquidity: Securities used in the capital market are negotiable; investors can sell them at any time and convert them into cash as and when necessary.
3. Investment avenue: Capital market provides profitable avenues to investors and helps them to earn maximum available return on their funds.
4. Availability of capital: A capital market enables borrowers to obtain needed funds at a reasonable cost. It also enables the government to raise funds through bonds and other types of securities.

Teacher's Note:
a) Capital market deals in long-term debt and equity instruments.
b) It bridges the gap between savers and investors in the financial system.

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

Answer:
(a) IMPS (Immediate Mobile Payment Services): In order to use IMPS we have to register for mobile banking and then money can be sent in real time. This service is available 24/7 throughout the year including bank holidays. To make payment we can link our mobile number or Aadhaar card number to our bank account.
(b) Right to be informed: The consumer has the right to be informed about the quantity, quality, potency, purity, standard and price of the goods that he wishes to purchase. It is the responsibility of the distributor and manufacturer to give complete information about ingredients, date of manufacture, technical specifications, precautions if any to be taken in the use and maintenance of the product etc. This right is meant to protect the consumer from deceptive advertising, misleading labelling and warranties etc.

Teacher's Note:
a) IMPS enables instant inter-bank electronic fund transfers through mobile phones.
b) The Right to be informed helps consumers make rational choices and prevents unfair trade practices.

Question 6

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

Answer:
Five objectives of pricing are:
1. Target rate of return: An adequate return on investment is an important pricing objective; the idea is to secure a sufficient return on capital employed after covering the cost of production and distribution. Prices are so set that the total sales revenue exceeds the total cost by the estimated profit amount.
2. Price stability: A firm seeks to cut or eliminate cyclical price fluctuations and avoid price wars. All firms try to avoid price wars. No firm is willing to cut prices for fear of retaliation by other firms.
3. Market share: The sales of a firm in relation to those of competitors is a very meaningful mark for measuring the market position or success. Maintaining or improving the market share is a more profitable objective in growing markets. Firms manufacturing refrigerators, washing machines etc. reduce prices to capture a larger share of the growing demand in India.
4. Meet or prevent competition: In a market characterized by cut throat competition firms often take pricing decisions to meet or prevent competition. An established firm may cut prices drastically to prevent competitors from entering a market. Sometimes a company adopts below cost pricing to fight competition.
5. Profit maximization: Firms pursuing this objective try to earn as much money as possible. Small and little known firms may try to charge as much price as the customer can bear. Due to high profits new entrepreneurs will be attracted into the industry and prices will come down in the long run.

Teacher's Note:
a) Pricing objectives guide a firm's pricing strategy in alignment with overall business goals.
b) Companies may prioritize different objectives depending on market conditions and product lifecycle stages.

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

Answer:
(a) Debentures: Debentures constitute the borrowed funds of a company. They are known as creditor ship securities. Debenture capital may also be called debt capital. Debenture is a document or certificate issued by a company under its seal as an acknowledgement of its debt. It is also an undertaking to repay the specified sum with interest to the holder.
(b) Health insurance: Health insurance is this insurance for protection of health against various types of diseases. In case of ill health, the insured person receives the cost of treatment or hospitalization up to the insured amount. Health insurance also covers loss of income from sickness in addition to medical expenses. It is a contract of indemnity. Mediclaim is the most popular health insurance policy.

Teacher's Note:
a) Debenture holders are creditors of the company and receive fixed interest regardless of profits.
b) Health insurance mitigates the financial burden of medical emergencies for individuals and families.

Question 7

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

Answer:
Demerits of Road Transport:
1. Limited capacity: Motor vehicle can only carry a small load; it is not suitable for carrying bulky or heavy goods.
2. Undependable: Road transport becomes unserviceable during floods, snowfall etc.
Merits of Road Transport:
1. Flexibility: Road transport provides complete flexibility of movement. If one road is blocked the vehicle can be shifted to another road as per the need and convenience.
2. Door to door service: Road transport company provides complete service by loading the goods at the consigners door and unloading them at the consignee place.
3. Economy for short distances: For short distances and small loads road transport is quicker and economical because the cost of loading and unloading at intermediate points is eliminated. The most direct and shortest route can be used.

Teacher's Note:
a) Road transport acts as a feeder service to other modes like railways and airways.
b) It is highly vulnerable to weather conditions and traffic congestion.

(ii) (a) Mr. Mohan 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.
1. Will he be able to claim health insurance? Why?
2. Identify the Principle of insurance.
(b) Write a Short note on Direct Cost. [5]

Answer:
(a) 1. No. He did not disclose material facts to the insurance company regarding his smoking habit.
2. Principle of Utmost Good Faith.
(b) Direct Cost: Direct cost is the cost which is directly attributed to a particular cost unit or cost center. Example: direct labour, direct material and direct expenses. These costs can be directly and definitely identified with the particular unit of output.

Teacher's Note:
a) Concealment of material facts makes an insurance contract voidable at the option of the insurer.
b) Direct costs form the prime cost of production in cost accounting.

Question 8

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

Answer:
Five modules of ERP are:
1. HR module: The human resource module helps in efficient management of human resources. It helps to manage employee information, track employee records like performance reviews, designations, time and attendance payroll system etc.
2. Inventory module: The inventory module is used to track the stock of items which can be identified by using unique serial numbers. It can be used to track every item and trace its current location in the organization.
3. Sales module: This includes sales queries, enquiry analysis and handling quotation drafting, accepting sales orders, drafting invoices, dispatch and shipment of materials etc.
4. Purchase module: This takes care of all the processes which are a part of the procurement of materials. Like supplier vendor listing, sending quotation request to vendors receiving and recording quotations, analysis of the quotations and preparing purchase orders etc.
5. Finance and accounting module: The inflow and outflow of money or capital is managed by the finance module. It keeps track of all accounts related transactions like expenditures, balance sheet, bank statements etc.

Teacher's Note:
a) ERP integrates all core business processes into a single unified system.
b) Real-time data sharing across modules improves organizational efficiency and decision-making.

(ii) Write Short notes on: [5]
(a) Internal Recruitment
(b) Social Advertising Media

Answer:
(a) Internal recruitment: When job vacancies are filled in by people already working in the organization it is called internal recruitment. The two main sources of internal recruitment are:
- Promotions: Vacancies at higher levels may be filled by promoting people working at lower levels. It involves shifting of an employee to a higher post carrying a higher status and more salary.
- Transfers: Transfers mean shifting an employee from one branch or office to fill a vacancy in another branch office of the same company. This involves shifting an employee to a similar job without change in status and salary.
(b) Social advertising media: This refers to advertising about socially relevant issues or using social networks to promote a product or service and reach out to the target audience. The basic idea is to create awareness and make a difference. Example campaign for blood donation, Swachh Bharat abhiyan etc. or advertising a product or service on Facebook, Twitter, Instagram etc.

Teacher's Note:
a) Internal recruitment boosts employee morale and reduces induction costs.
b) Social media advertising leverages viral sharing and precise audience demographic targeting.

Question 9

(i) Differentiate between E-Commerce and Traditional commerce. State any five points. [5]

Answer:

Teacher's Note:
a) E-commerce operates globally over the internet without geographical barriers.
b) Traditional commerce relies heavily on face-to-face interaction and physical outlets.

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

Answer:
(a) Social Security: Social Security is the protection which society provides for its members through a series of public measures against economic and social distress that would otherwise cause substantial reduction or stoppage in earnings due to sickness, maternity, injury unemployment, old age, death etc. Some Social Security schemes in India are Provident fund scheme, pension scheme, maternity benefits, group insurance.
(b) EPA (Environment Protection Act): This act was passed in 1986 for the protection and improvement of the environment. Under this act the environment includes air, water, land, human beings and other living organisms, plants etc.

Teacher's Note:
a) Social security is vital for building a welfare state and protecting vulnerable citizens.
b) The Environment Protection Act empowers the central government to coordinate actions of state agencies for pollution control.

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 31st March, 2023. [10]

[Figure: Trial Balance table listing Capital (Cr. Rs. 80,000), Drawings (Dr. Rs. 4,000), Cash at Bank (Dr. Rs. 4,700), Purchase (Dr. Rs. 66,000), Sales (Cr. Rs. 1,15,000), Purchase Returns (Cr. Rs. 3,000), Sales Returns (Dr. Rs. 6,000), Discount (Dr. Rs. 1,200), Carriage Outwards (Dr. Rs. 1,800), Salaries (Dr. Rs. 18,000), Trade expenses (Dr. Rs. 3,600), Opening stock (Dr. Rs. 15,000), Bad debts (Dr. Rs. 1,800), Rent (Dr. Rs. 4,500), Machinery (Dr. Rs. 1,08,000), Furniture (Dr. Rs. 18,000), Debtors (Dr. Rs. 12,000), Creditors (Cr. Rs. 30,000), Stationery (Dr. Rs. 7,500), Commission received (Cr. Rs. 900), Loan (Cr. Rs. 43,200). Total: Dr. Rs. 2,72,100, Cr. Rs. 2,72,100. Closing stock on 31st March, 2023 was valued at Rs. 78,000.]

Answer:

TRADING AND PROFIT AND LOSS ACCOUNT OF MR. A.B.C FOR THE YEAR ENDING 31ST MARCH, 2023

BALANCE SHEET OF MR. A.B.C AS ON 31ST MARCH, 2023

Teacher's Note:
a) Closing stock is valued at cost or market price, whichever is lower, and appears on both the credit side of Trading Account and the asset side of the Balance Sheet.
b) Net profit is added to capital and drawings are deducted in the Balance Sheet liability side.