ISC Class 12 Commerce Board Exam Question Paper 2024 with Solutions

ISC Class 12 Commerce Board Exam Question Paper with Solutions

SECTION A - 16 MARKS

Question 1

(i) Best Pest Control Services has seventy-five technicians who are experts in pest control. The management decides to train these technicians again in order to keep pace with the growing technological changes and improve pest control techniques. What type of training should the management impart to these technicians? [1 Mark]
(A) Orientation Training
(B) Job Training
(C) Refresher Training
(D) Safety Training

Answer: (C) Refresher Training

Refresher training is given to existing employees to update their knowledge and skills in line with new technological developments.

Teacher's Note:
a) Refresher training is specifically designed for experienced employees to keep them abreast of new methods and technologies.
b) Students often confuse this with orientation training, which is meant for new recruits.

(ii) A debenture issued by a company by creating a fixed or a floating charge on the company's assets is known as: [1 Mark]
(A) Non-convertible Debenture
(B) Mortgage Debenture
(C) Redeemable Debenture
(D) Unsecured Debenture

Answer: (B) Mortgage Debenture

Mortgage debentures are secured by a charge on the assets of the company.

Teacher's Note:
a) Secured or mortgage debentures provide greater security to investors.
b) Unsecured debentures do not carry any charge on assets.

(iii) With reference to Credit Card, which one of the following statements is INCORRECT? [1 Mark]
(A) The cardholder makes payments after using the card.
(B) Some incentives/gifts are made available to the cardholders.
(C) The cardholder has to deposit some money in advance with the issuer bank.
(D) In certain cases, the cardholder has to pay an annual fee for the credit card.

Answer: (C) The cardholder has to deposit some money in advance with the issuer bank.

Depositing money in advance is a feature of debit cards or prepaid cards, not credit cards.

Teacher's Note:
a) Credit cards operate on a credit limit granted by the bank based on creditworthiness.
b) Read each statement carefully to distinguish between credit and debit instruments.

(iv) A business firm should have extra funds to meet future emergencies. Identify the type of working capital indicated here. [1 Mark]
(A) Special
(B) Seasonal
(C) Initial
(D) Regular

Answer: (A) Special

Special working capital is kept aside to meet unforeseen contingencies or emergencies.

Teacher's Note:
a) Special working capital acts as a financial cushion during unexpected business downturns.
b) Regular working capital is meant for day-to-day routine operations.

(v) Principles of Management are not as accurate as principles of Science because: [1 Mark]
(A) they are absolute.
(B) they deal with human behaviour which is unpredictable.
(C) they are rigid
(D) they are not universally accepted

Answer: (B) they deal with human behaviour which is unpredictable.

Management principles apply to human beings, whose reactions cannot be predicted with absolute scientific precision.

Teacher's Note:
a) Pure science principles deal with inanimate objects under controlled conditions.
b) Management principles are flexible and modified according to changing situations.

(vi) An awareness of business environment enables an enterprise to take advantage of early opportunities instead of losing them to competitors. Which benefit of understanding the business environment is highlighted in the above statement? [1 Mark]
(A) Customer Focus
(B) Early Warning Signal
(C) First Mover Advantage
(D) Public Image

Answer: (C) First Mover Advantage

Identifying opportunities early helps a firm capture the market before competitors do.

Teacher's Note:
a) First mover advantage allows a business to establish a strong market presence.
b) Early warning signal alerts the firm to impending threats.

(vii) State whether the following are True or False:
(a) Recession is an inherent constraint in almost all manufacturing organisations.
(b) As a function of marketing, Warehousing creates time utility.
(c) Directing initiates action in an organisation.
(d) Customer orientation is a modern approach to marketing. [4 Marks]

Answer:
(a) False
(b) True
(c) True
(d) True

Teacher's Note:
a) Recession is part of the broader economic environment, not an inherent constraint of manufacturing itself.
b) Warehousing bridges the time gap between production and consumption, creating time utility.

(viii) Assertion: Services cannot be standardised.
Reason: Services are homogenous in nature. [1 Mark]
(A) Both Assertion and Reason are true and Reason is the correct explanation of Assertion.
(B) Both Assertion and Reason are true, but Reason is not the correct explanation of Assertion.
(C) Assertion is true, but Reason is false.
(D) Assertion is false, but Reason is true.

Answer: (C) Assertion is true, but Reason is false.

Services are heterogeneous (variable), not homogenous.

Teacher's Note:
a) Heterogeneity means service delivery varies across providers and customers.
b) Read assertion-reason pairs carefully to check the validity of individual statements.

(ix) _______ organisations are formed spontaneously as a result of social interaction among employees in an organisation. [1 Mark]

Answer: Informal

Informal organizations emerge naturally from social relationships at the workplace.

Teacher's Note:
a) Informal organizations lack a formal structure.
b) Formal organizations are deliberately created by management.

(x) Management as a _______ refers to a systematised branch of knowledge and a separate field of study. [1 Mark]

Answer: discipline

Management is recognized as an academic discipline with its own theories and principles.

Teacher's Note:
a) Management as a discipline involves systematic body of knowledge.
b) Keywords like systematised branch of knowledge point directly to discipline.

(xi) Organisation and development of financial market has created a surge in primary and secondary capital market.
Which dimension of Macro environment is referred to in this statement? [1 Mark]

Answer: Economic environment

Financial markets and capital market trends form part of the economic environment.

Teacher's Note:
a) Economic environment includes interest rates, inflation, and capital market conditions.
b) Distinguish economic factors from social or technological factors.

(xii) Ms. Anamika visited a reputed dealer of electronic goods to buy a bluetooth headset. The salesman at the shop forced her to buy a particular brand of headset.
Which consumer right of Anamika was violated? [1 Mark]

Answer: Right to choose

Forcing a consumer to buy a specific brand violates their right to choose.

Teacher's Note:
a) The right to choose ensures consumers have access to a variety of goods at competitive prices.
b) Unfair trade practices restricting choice violate consumer rights.

(xiii) Which barrier to communication arises when the sender and receiver interpret a message differently? [1 Mark]

Answer: Semantic or Language barriers

Semantic barriers occur due to different interpretations of words and symbols by sender and receiver.

Teacher's Note:
a) Semantic barriers arise from faulty translations, symbols with different meanings, or technical jargon.
b) Clear communication requires shared understanding of terminology.

SECTION B - 32 MARKS

Question 2 [4 Marks]

(i) Decentralisation of authority implies a systematic dispersal of authority at all levels of management for decision making.
In the light of the above statement, explain any four merits of Decentralisation in an organisation.

Answer:
1. Relief to top management: It relieves top management from operational burdens, enabling them to focus on strategic planning.
2. Develops initiative amongst subordinates: It promotes self-reliance and confidence among lower-level managers.
3. Develops managerial talent for the future: It provides subordinates opportunities to handle challenging positions and prepares them for higher roles.
4. Facilitates growth: It fosters competition among departments, increasing productivity and profitability.

Teacher's Note:
a) Decentralization is an extension of delegation.
b) State any four clear points with appropriate headings for full marks.

OR

(ii) Though Planning is an important function of management, it may not always give desired results.
Justify this statement by explaining any four limitations of Planning. [4 Marks]

Answer:
1. Leads to rigidity: Well-defined plans can create rigidity as managers may feel constrained to adhere strictly to the plan even when circumstances change.
2. Dynamic environment: The business environment is constantly changing, making it difficult to accurately predict future trends.
3. Reduced creativity: Planning processes often involve top-down decision-making, limiting the involvement of middle management and other decision-makers.
4. Huge costs: Formulating detailed plans can incur significant costs in terms of time and resources.

Teacher's Note:
a) Planning is forward-looking but cannot foresee all uncertainties.
b) Give clear headings and brief explanations for each limitation.

Question 3 [4 Marks]

JSW Co. purchased goods on credit from SDW Co. and paid the amount after two months. Name the short term source of finance used by the buyer and state any three features of this source.

Answer:
The short-term source of finance used is Trade Credit.
Features:
1. Short-term nature: It involves short-term credit arrangements ranging from a few days to a few months.
2. Credit period: The credit period is usually short-term, allowing businesses to customize it based on needs and repayment capacity.
3. Interest-free: Unlike bank loans, trade credit usually does not involve explicit interest charges, though suppliers may offer discounts for early payments.

Teacher's Note:
a) Trade credit is granted automatically in the ordinary course of business.
b) Ensure both the source name and three features are clearly stated.

Question 4 [4 Marks]

The capital structure of XYZ Ltd. is highly geared. Explain any four factors that were considered by its Finance Manager while formulating such a capital structure for the company

Answer:
1. Cash Flow Position: A company must assess whether its projected cash flows are sufficient to cover fixed cash payment obligations.
2. Interest Coverage Ratio (ICR): A higher ratio indicates lower risk regarding meeting interest payments, allowing higher debt usage.
3. Debt Service Coverage Ratio (DSCR): Compares cash profits generated with total cash required for servicing debt and preference shares.
4. Return on Investment (ROI): A higher ROI indicates better profitability and allows a company to leverage debt to increase EPS.

Teacher's Note:
a) A highly geared capital structure implies a high proportion of debt.
b) Explain any four relevant factors clearly with financial reasoning.

Question 5 [4 Marks]

From the statements given below, identify and briefly explain each principle of management by Henri Fayol.
(i) A place for everything and everything in its place
(ii) Absence of nepotism and favouritism

Answer:
(i) Principle of Order: According to Fayol, orderliness should prevail in the organization, meaning there should be a specific place for every employee, material, tool, and piece of equipment.
(ii) Principle of Equity: Henri Fayol emphasized the importance of treating employees with fairness, justice, and impartiality, avoiding favoritism or nepotism.

Teacher's Note:
a) Principle of Order prevents wastage of time and resources searching for items.
b) Principle of Equity builds employee morale, loyalty, and a positive organizational culture.

Question 6 [4 Marks]

Ms. Jasdeep, the Production Manager in a reputed manufacturing company believes in planning to achieve the desired goals while Mr. Philips, the Sales Manager in the same company thinks that controlling is the best way to achieve the desired results.
Briefly explain the relationship between the two functions of management highlighted above.

Answer:
Planning and controlling are inter-related and interdependent. They are the inseparable twins of management.
1. Planning is blind without controlling: Planning provides the baseline standards against which actual performance is compared. Controlling is blind without planning.
2. Planning without controlling is meaningless: Controlling makes sure that performance adheres to plans by monitoring and analyzing performance to take corrective actions.

Teacher's Note:
a) Planning is forward-looking, whereas controlling is backward-looking.
b) Emphasize that both functions complement each other in achieving organizational goals.

Question 7 [4 Marks]

Differentiate between Recruitment and Selection by giving any four points.

Answer:

Teacher's Note:
a) Present differences in a tabular format with clear headings.
b) Recruitment precedes selection in the hiring process.

Question 8 [4 Marks]

(i) What is marketing research? State any two features of Marketing Research.

Answer:
Marketing research is the process of gathering, analyzing, and interpreting information about markets, consumers, competitors, and other relevant factors to support decision-making and strategic planning.
Features of Marketing Research:
1. Systematic Process: It follows a structured approach to collecting, analyzing, and interpreting data.
2. Objective and Unbiased: It aims to provide impartial and accurate information using rigorous methodologies to minimize biases.

Teacher's Note:
a) Marketing research provides actionable insights for managerial decisions.
b) Ensure both definition and two distinct features are clearly stated.

OR

(ii) What is branding? State any two merits of Branding. [4 Marks]

Answer:
Branding refers to the process of creating a unique identity, image, and perception for a product, service, or company in the minds of consumers.
Merits of Branding:
1. Brand Recognition and Recall: Effective branding makes a product or service easily recognizable and memorable to consumers.
2. Differentiation: Branding helps distinguish a product or service from its competitors by highlighting unique features and benefits.

Teacher's Note:
a) Branding adds value and trust to a product.
b) State the definition and two clear merits for full credit.

Question 9 [4 Marks]

Mr. Deepak purchased a washing machine from a renowned e-commerce platform for Rs. 25000. He ensured that he received a cash memo. Unfortunately, his clothes got damaged in the first wash due to a manufacturing defect in the machine's rotator.
(i) Mr. Deepak can be called a responsible consumer. Give one reason to support this statement. [1 Mark]

Answer:
Mr. Deepak ensured that he received a cash memo for his purchase.

Teacher's Note:
a) A cash memo serves as proof of purchase during consumer disputes.
b) Responsible consumers always ask for cash memos and bills.

(ii) Which provision under Consumer Protection Act, 2019 enables Mr. Deepak to claim a compensation for the manufacturing defect in the washing machine? [1 Mark]

Answer:
Product Liability.

Teacher's Note:
a) Product liability holds manufacturers and sellers liable for harm caused by defective products.
b) It is a key addition under the Consumer Protection Act, 2019.

(iii) Mention any two points of mandatory information which e-commerce platform must provide to a consumer. [2 Marks]

Answer:
1. Clear and accurate product descriptions including features, specifications, dimensions, and warranties.
2. Transparent pricing information including total cost, taxes, shipping fees, and payment methods.

Teacher's Note:
a) E-commerce platforms must adhere to consumer protection e-commerce rules.
b) Transparent information prevents unfair trade practices online.

SECTION C - 32 MARKS

Question 10 [8 Marks]

(i) Explain any five external factors of Micro environment that influence a business organisation. [5 Marks]

Answer:
1. Customers: Their preferences, needs, and purchasing behavior significantly influence business strategies and product development.
2. Suppliers: They provide raw materials and components necessary for operations. Their reliability and pricing impact production costs.
3. Competitors: Competitors directly affect business market share, profitability, and strategic decisions.
4. Intermediaries: Distributors, wholesalers, and retailers play a vital role in distribution and sales.
5. Financers: They provide capital to businesses in exchange for a return on investment, influencing business growth and financial stability.

Teacher's Note:
a) Micro environment factors are specific to the organization and affect it directly.
b) Explain any five distinct micro environmental factors clearly.

(ii) State any three components of Social environment. [3 Marks]

Answer:
1. Culture: Encompasses beliefs, values, customs, and traditions shared by society.
2. Social Institutions: Established systems and structures within society such as family, education, and religion.
3. Population: Includes size, composition, and distribution, influencing societal dynamics.

Teacher's Note:
a) Social environment shapes consumer attitudes and societal expectations.
b) State three clear components for full marks.

Question 11 [8 Marks]

(i) Ms. Rubina, a first-time investor, does not understand the difference between securities with voting rights and securities without voting rights.
Give any five differences between the two types of securities to help her understand the difference. [5 Marks]

Answer:

Teacher's Note:
a) Use a table to clearly differentiate equity shares and debentures.
b) Cover key aspects like ownership, voting rights, and risk.

(ii) Expand UPI and briefly discuss its meaning. [3 Marks]

Answer:
Expansion: Unified Payments Interface.
Meaning: UPI is a real-time payment system developed by NPCI to facilitate instant money transfers between bank accounts in India using a mobile application via a Virtual Payment Address (VPA).

Teacher's Note:
a) UPI simplifies digital transactions without requiring entering bank account details.
b) State the exact expansion and a concise meaning.

OR

(i) Financial instrument: Demand draft
A demand draft is a secure and widely accepted method of payment commonly used for payment such as paying college fees, making investments, or conducting business transactions. It provides a guarantee of payment since the funds are prepaid by the purchaser to the bank before issuing the draft.
Yes, demand drafts can be issued online through internet banking platforms provided by banks. Customers can request and generate demand drafts electronically, specifying the beneficiary details and the amount to be paid. The bank then issues the demand draft and delivers it to the specified address or allows the customer to download and print it.
Features:
(a) Negotiable: Demand drafts are negotiable instruments, meaning they can be transferred from one party to another by endorsement.
(b) No Need to be a Bank Customer: Unlike some other banking services, demand drafts can typically be obtained by anyone, regardless of whether they have an account with the issuing bank. [5 Marks]

Answer:
The question provides information on Demand Drafts along with their features. The features stated are negotiability and no need to hold a bank account.

Teacher's Note:
a) Demand drafts provide secure payments guaranteed by the issuing bank.
b) Read the provided excerpt carefully to understand the context.

(ii) A company may issue sweat equity shares as per section 54 of Companies Act, 2013. Sweat equity shares means equity shares issued by the company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available intellectual property rights. Such shares cannot be resold by their holders within a period of 3 years. This is called lock-in period.
Following conditions are prescribed for issue of sweat equity shares:
(i) They must be of a class of shares already issued.
(ii) One year must have lapsed since company commenced business.
(iii) The issue must be authorised by a special resolution.
(iv) The share must be issued as per the SEBI Regulations. [3 Marks]

Answer:
The question outlines the provisions, definition, lock-in period, and conditions for issuing sweat equity shares under Section 54 of the Companies Act, 2013.

Teacher's Note:
a) Sweat equity shares reward employees and directors for intellectual property contributions.
b) Note the mandatory 3-year lock-in period.

Question 12 [8 Marks]

(i) Motivation is a psychological phenomenon which arises from human needs and wants.
In the light of above statement, explain Maslow's theory on Motivation. [5 Marks]

Answer:
Abraham Maslow's theory of motivation suggests that human needs can be arranged in a hierarchical order:
1. Physiological Needs: Basic biological needs required for survival, such as air, water, food, and shelter.
2. Safety Needs: Needs for physical, financial, and health security.
3. Love and Belongingness Needs: Social needs for affection, friendship, and acceptance.
4. Esteem Needs: Needs for self-esteem, recognition, status, and respect.
5. Self-Actualization Needs: The desire to fulfill one's full potential and become everything one is capable of becoming.

Teacher's Note:
a) Maslow's hierarchy moves progressively from lower-level physiological needs to higher-level self-actualization needs.
b) Explain all five levels of the hierarchy clearly.

(ii) Explain method as a type of Plan. [3 Marks]

Answer:
A method prescribes the prescribed ways or manner in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed.

Teacher's Note:
a) Methods increase efficiency and standardize operations.
b) Distinguish methods from procedures and rules.

Question 13 [8 Marks]

Read the case given below and answer the questions that follow.
Pooja has started a small company that manufactures steel and aluminium rods used by construction firms. She has made a large capital investment in this venture and also hired an excellent sales team. Their marketing approach is to contact the buyers directly and explain the features of their product. They have a complete control over the distribution of their products.
(i) Identify the type of product manufactured by Pooja's company. [1 Mark]

Answer:
Industrial products.

Teacher's Note:
a) Industrial products are used as inputs in manufacturing other goods.
b) Steel and aluminium rods sold to construction firms are industrial goods.

(ii) Briefly explain any two features of the product identified in subpart (i). [2 Marks]

Answer:
1. Bulk Purchase: Industrial goods are acquired in large quantities to meet extensive business operations.
2. Purpose: Industrial goods are primarily procured for production, resale, or business operations rather than personal consumption.

Teacher's Note:
a) Industrial goods have derived demand.
b) State two distinct features clearly.

(iii) State the channel of distribution used by the company in the above case. [1 Mark]

Answer:
Direct channel of distribution (Manufacturer to Industrial Customer / Zero-level channel).

Teacher's Note:
a) Direct selling is common for industrial goods due to technical specifications.
b) The case states they contact buyers directly.

(iv) Identify and briefly discuss any three objectives of the element of Promotion Mix used by the Sales team in the above case. [4 Marks]

Answer:
The element of promotion mix used is Personal Selling.
Objectives:
1. Increase Sales: The primary goal is to generate revenue by persuading customers to purchase products.
2. Introduce New Products: Personal selling is utilized to introduce new products to the market and educate potential customers.
3. Complete Selling Process: Personal selling guides customers through the entire sales process from initial contact to closing the sale.

Teacher's Note:
a) Personal selling involves personal communication between buyer and seller.
b) State the element and explain any three objectives clearly.