ISC Class 12 Commerce Sample Paper 2024 with Solutions

SECTION A - 16 MARKS

Question 1

(i) ABC Company is hiring a new marketing manager. After reviewing the applications and resumes, the HR department shortlists five candidates who possess the required qualifications and experience. What will be the next step in the Selection Procedure? [1 Mark]
(A) Conducting a skill test of the shortlisted candidates
(B) Checking the references provided by the shortlisted candidates
(C) Conducting a background check on the shortlisted candidates
(D) Conducting a panel interview with the shortlisted candidates

Answer: (A) Conducting a skill test of the shortlisted candidates

After shortlisting, employment tests such as skill tests or intelligence tests are conducted to judge the capability of candidates before interviews.

Teacher's Note:
a) The selection process follows a logical sequence starting from preliminary screening, application blank, selection tests, employment interview, reference checking, medical examination, and final job offer.
b) Students often confuse the sequence of selection tests and reference checks; tests are always conducted before checking references or conducting final background checks.

(ii) Which one of the following is an example of a 'fair weather friend'? [1 Mark]
(A) Factoring
(B) Bank credit
(C) Trade credit
(D) Public deposits

Answer: (C) Trade credit

Trade credit is often called a fair weather friend because it expands automatically when business is flourishing and contracts or disappears during a recession or financial crisis.

Teacher's Note:
a) Trade credit arises spontaneously from normal business transactions between suppliers and buyers.
b) Remember that trade credit is not a dependable source of long term or crisis finance, hence the term fair weather friend.

(iii) The Companies Act and SEBI guidelines must be observed while raising funds from the public. Identify the factor of capital structure being referred to in this case. [1 Mark]
(A) Cost of financing
(B) Cash flow position
(C) Statutory requirements
(D) Capital market conditions

Answer: (C) Statutory requirements

Compliance with legal frameworks like the Companies Act and SEBI guidelines falls under statutory requirements.

Teacher's Note:
a) Every company must operate within the legal boundaries and regulatory guidelines set by governing bodies when designing its capital structure.
b) Do not confuse statutory requirements with cost of financing, which deals purely with interest rates and floatation costs.

(iv) Which one of the following statements is correct about IMPS? [1 Mark]
(A) It allows instant money transfers only between bank accounts of the same bank.
(B) It supports both mobile and internet-based money transfers.
(C) It is exclusively available for international money transfers.
(D) Transactions can only be initiated during banking hours.

Answer: (B) It supports both mobile and internet-based money transfers.

Immediate Payment Service (IMPS) enables instant interbank electronic fund transfers through mobile phones as well as internet banking channels 24x7.

Teacher's Note:
a) IMPS is managed by the National Payments Corporation of India (NPCI) and operates round the clock throughout the year.
b) Students must remember that IMPS is domestic, not international, and allows interbank transfers, not just intra-bank transfers.

(v) 'Science not Rule of Thumb' is a basic principle of F. W. Taylor's theory, which states that: [1 Mark]
(A) there should be healthy cooperation between employer and employees.
(B) there should be separation of planning from operational work.
(C) every job should be based on scientific study and analysis.
(D) working conditions must be standardised.

Answer: (C) every job should be based on scientific study and analysis.

Taylor emphasised replacing traditional hit-or-miss methods with scientific investigation and analysis to determine the best way of doing a job.

Teacher's Note:
a) Rule of thumb relies on personal judgment and trial-and-error, whereas scientific management relies on investigation, data, and standardisation.
b) Ensure students do not confuse this principle with Harmony, Not Discord or Cooperation, Not Individualism.

(vi) How has the increasing concern for environment and sustainability affected the consumer behaviour and trends? [1 Mark]
(A) It has led to a rise in demand for eco-friendly products.
(B) Consumers have become insensitive towards environment.
(C) It has led to a decrease in the popularity of organic products.
(D) It has reduced corporate social responsibility.

Answer: (A) It has led to a rise in demand for eco-friendly products.

Environmental awareness has created a consumer shift towards sustainable, green, and eco-friendly products.

Teacher's Note:
a) Modern consumer trends heavily reflect ecological consciousness and sustainable purchasing habits.
b) Options B, C, and D contradict real-world market trends and the impact of the social and natural environment on business.

(vii) State whether the following are True or False. [4 Marks]
(a) A Threat Analysis is an unfavourable condition in the Macro environment.
(b) The purpose of Future market is to make profits out of fluctuations in prices of products.
(c) A Supervisor does not act as a link between management and workers.
(d) Branding facilitates price control.

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

Teacher's Note:
a) Statement (c) is false because a supervisor acts as the vital direct link connecting operational workers with top management.
b) Students must evaluate each statement carefully across different management and financial concepts before answering True or False.

(viii) __________ is a principle where all the employees are encouraged to think out of box and execute the task in a better way. [1 Mark]

Answer: Initiative.

Teacher's Note:
a) Henri Fayol's principle of initiative allows subordinates to conceive and execute plans with freedom and creativity.
b) Spelling and precise terminology are crucial when identifying administrative principles.

(ix) __________ is a financial plan which states expected results of a given time period. [1 Mark]

Answer: Budget.

Teacher's Note:
a) A budget quantifies future plans and expectations in numerical or financial terms for a specified period.
b) Distinguish clearly between general planning and budgeting, which is specifically quantitative and time-bound.

(x) Sometimes multinationals are forced to leave a country due to the stringent policy of the government. Which component of Macro Environment leads to the departure of the multinational companies? [1 Mark]

Answer: Political and Legal Environment.

Teacher's Note:
a) Government policies, laws, and political stability form the core of the political-legal environment.
b) Mentioning either political environment or legal environment is accepted by examiners.

(xi) A consumer did not check the Woolmark certification mark on woollen clothes and purchased a sweater. Mention the responsibility of the consumer which was overlooked by the consumer while purchasing the sweater. [1 Mark]

Answer: Insisting on standardised products or checking quality certification marks like ISI, AGMARK, or Woolmark.

Teacher's Note:
a) Consumers have a responsibility to look for quality certification marks to ensure safety and standardisation.
b) This falls directly under the consumer responsibilities taught in consumer protection frameworks.

(xii) Which function of management binds all other functions? [1 Mark]

Answer: Coordination.

Teacher's Note:
a) Coordination is the essence of management that synchronises all activities and functions to achieve organisational goals.
b) Do not confuse coordination with controlling or planning; coordination permeates all managerial levels and functions.

(xiii) Assertion : Publicity is a very powerful tool of communication as it can make or ruin the image of a product. [1 Mark]
Reason : Consumers perceive the medium carrying news about a product as credible.
(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: (A) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.

Publicity carries high credibility because the message is delivered through independent media, making the reason a direct explanation of why publicity is so powerful.

Teacher's Note:
a) Publicity is non-personal communication that is not directly paid for by the sponsor, enhancing its perceived credibility.
b) Students must analyze whether the reason logically validates the cause behind the assertion.

SECTION B - 32 MARKS

Question 2

(i) Planning helps in achieving the objectives of the organisation by directing resources and efforts towards the common objectives. In the light of this statement, explain any four points on the importance of Planning. [4 Marks]

Answer:
1. Planning provides direction: By stating in advance what is to be done, planning shows the way to deal with future events and guides employee efforts towards organisational goals.
2. Planning reduces the risks of uncertainty: Planning enables a manager to anticipate changes and foresee potential risks by formulating appropriate responses and alternative courses of action.
3. Planning reduces overlapping and wasteful activities: It serves as the basis of coordinating the activities and efforts of different departments, thereby eliminating duplication and inefficiency.
4. Planning promotes innovative ideas: Since planning is the first function of management, new ideas can take the shape of concrete plans, encouraging creativity and forward-thinking among managers.

Teacher's Note:
a) Students must state four distinct points with clear headings and brief explanations.
b) Ensure keywords like direction, uncertainty, coordination, and innovation are clearly highlighted in the answer.

OR

(ii) Delegation is the means by which managers assign a part of their jobs to other employees and gives them the authority to perform the assigned task. Justify this statement by providing any four advantages of delegation of authority. [4 Marks]

Answer:
1. Effective management: By passing routine work down the hierarchy, managers are relieved of heavy workloads and can focus on priority areas and strategic planning.
2. Employee development: Delegation empowers subordinates to use their initiative, gain practical experience, and develop skills for taking up higher responsibilities in future.
3. Motivation of employees: Trust and responsibility entrusted through delegation boost the self-esteem and morale of subordinates, fulfilling their psychological and social needs.
4. Facilitation of growth: Delegation provides the trained manpower and structural flexibility required for organisational expansion and diversification into new divisions or regions.

Teacher's Note:
a) Delegation involves transfer of authority, assignment of responsibility, and creation of accountability.
b) Clear differentiation between advantages to the superior, subordinate, and organisation fetches full credit.

Question 3. The needs of Fixed capital for a service industry are different from that of the manufacturing industry. State any four reasons for this difference. [4 Marks]

Answer:
1. Investment in plant and machinery: Manufacturing industries require massive investment in heavy machinery, tools, and factory premises, whereas service industries require minimal or no such physical production assets.
2. Scale of operations: Manufacturing units often operate on a large scale involving massive assembly lines, whereas many service enterprises operate on a smaller or digital scale with lower fixed asset requirements.
3. Technology dependence: Manufacturing relies heavily on heavy physical capital equipment, whereas service industries rely more on intellectual capital, software, and human talent.
4. Infrastructure requirements: Manufacturing businesses need extensive land, warehouses, and transport infrastructure, whereas service providers can operate out of flexible office spaces or virtual cloud setups.

Teacher's Note:
a) Fixed capital requirement depends directly on the nature of business operations.
b) Students must clearly contrast manufacturing features against service industry characteristics in each point.

Question 4. A company has large undistributed profits which it wants to capitalise. Name and explain the security which should be issued by the company. [4 Marks]

Answer:
1. Name of security: Bonus Shares (or Capitalisation Shares).
2. Explanation: Bonus shares are fully paid-up additional shares issued free of cost to the existing equity shareholders in proportion to their existing shareholdings.
3. Capitalisation of profits: When a company accumulates large reserves and surplus of undistributed profits over years, it converts these accumulated profits into paid-up capital by issuing bonus shares.
4. Shareholder benefit: It does not involve any cash outflow for the company, and shareholders get increased equity participation without making any fresh cash investment.

Teacher's Note:
a) Capitalisation of reserves through bonus shares strengthens the company's equity base without bringing fresh external capital.
b) The answer must explicitly state both the name of the security and the mechanism of capitalisation.

Question 5. To which level of management does the Board of Directors belong? State any three functions performed by it. [4 Marks]

Answer:
1. Level of management: Top-level management.
2. Function 1 - Framing overall objectives: Determining the overall objectives, mission, vision, and long-term strategic plans of the business enterprise.
3. Function 2 - Resource mobilisation: Assembling and mobilising necessary resources such as finance, physical assets, and top executive talent for the organisation.
4. Function 3 - Controlling performance: Reviewing the performance and overall financial health of various departments and ensuring accountability across the enterprise.

Teacher's Note:
a) The Board of Directors is the supreme policy-making body at the apex level of any corporate organisation.
b) Students must correctly identify the management level first before listing the required number of functions.

Question 6. Discuss the Unity of Command and Unity of Direction principles as given by Henry Fayol. [4 Marks]

Answer:
1. Unity of Command: This principle states that an employee should receive orders and be accountable to only one superior at a time. If an employee reports to multiple bosses, it leads to confusion, conflict, and divided loyalty.
2. Unity of Direction: This principle states that all units or groups of activities having the same objective should be grouped under one head and have one plan. It ensures concerted action and coordination towards a common goal.
3. Difference in focus: Unity of Command focuses on individual employee-superior reporting relationships, whereas Unity of Direction focuses on organisational activities and departmental goal alignment.
4. Impact on functioning: While Unity of Command prevents dual subordination and conflicting instructions, Unity of Direction prevents overlapping of effort and ensures smooth execution of unified plans.

Teacher's Note:
a) This is a classic comparative management question where students frequently mix up command and direction.
b) Clearly highlighting the core definition and the distinction between individual reporting and organisational planning secures full marks.

Question 7. Mr. Raj, the CEO of a company, 'tried to control everything in his organisation but ended up controlling nothing'. Also, he did not focus on certain crucial areas like productivity. Briefly explain the two aspects of Controlling that were overlooked by Mr. Raj as the CEO of the company. [4 Marks]

Answer:
1. Management by Exception (Control by Exception): Mr. Raj tried to control everything rather than focusing on critical exception points. Management by Exception dictates that an executive should focus only on significant deviations or exceptional problems rather than routine minor matters.
2. Critical Point Control: Mr. Raj failed to focus on crucial areas like productivity. Critical Point Control requires managers to set control points on key result areas (KRAs) and vital bottlenecks that directly impact overall business success and productivity.

Teacher's Note:
a) The quote directly illustrates the pitfalls of failing to delegate and failing to prioritize vital monitoring metrics.
b) Students must identify and explain both Management by Exception and Critical Point Control accurately.

Question 8

(i) Which judicial authority should be approached by the family to file the complaint? [1 Mark]

Answer: State Commission.

Teacher's Note:
a) Under the Consumer Protection Act, cases involving claims exceeding Rs. 1 crore up to Rs. 10 crores are filed directly in the State Consumer Disputes Redressal Commission.
b) Since the car was purchased for Rs. 55 lakhs, which falls in this bracket, the State Commission is the correct forum.

(ii) Suggest two remedies available to the aggrieved party. [2 Marks]

Answer:
1. To remove the defect in the goods or replace the defective product with a new one free from defects.
2. To pay adequate compensation for any loss or injury suffered by the consumer due to the negligence of the manufacturer.

Teacher's Note:
a) Consumer forums have the power to grant various reliefs ranging from replacement, refund, and compensation to the removal of deficiencies.
b) Any two valid statutory remedies under the Consumer Protection Act are accepted.

(iii) Which other consumer court can be approached by the family of Mr. Akash if it is not satisfied with the judgement? [1 Mark]

Answer: National Consumer Disputes Redressal Commission (National Commission).

Teacher's Note:
a) The three-tier consumer dispute redressal machinery follows an appellate hierarchy: District Commission to State Commission to National Commission.
b) An appeal against the order of the State Commission lies before the National Commission.

Question 9

(i) Discuss any four features of good packaging. [4 Marks]

Answer:
1. Attractive appearance: Good packaging uses appropriate colours, designs, and graphics to catch consumer attention at the point of sale and stimulate impulse buying.
2. Adequate protection: It must protect the product from spoilage, breakage, leakage, and environmental damage during transit, storage, and display.
3. Convenience: The package should be easy to open, handle, carry, store, and dispose of for both retailers and consumers.
4. Informative labeling: It must display accurate product information such as ingredients, usage instructions, price, manufacturing date, and statutory warnings clearly.

Teacher's Note:
a) Packaging serves both functional protection and promotional marketing objectives.
b) Listing four clear features with brief explanations is essential for full marks.

OR

(ii) Differentiate between marketing and selling. [4 Marks]

Answer:

Teacher's Note:
a) A tabular difference with clear comparison parameters is the best way to answer this question.
b) Emphasize that selling is product-oriented, whereas marketing is customer-oriented.

SECTION C - 32 MARKS

Question 10

(i) Business Environment exercises tremendous influence on the working and success of business firms. Justify this statement by explaining any five benefits of Business Environment. [5 Marks]

Answer:
1. Identifying first mover advantage: Studying the business environment helps a firm identify upcoming opportunities and tap into them before competitors do.
2. Early warning signal: It acts as an early warning system that alerts management to impending threats or adverse environmental changes so corrective strategies can be adopted.
3. Tapping useful resources: A business draws resources like raw materials, finance, labor, and power from its environment and supplies its outputs back, requiring deep environmental alignment.
4. Coping with rapid changes: Modern business environments are highly dynamic. Environmental scanning helps managers understand emerging trends and formulate agile coping strategies.
5. Assisting in planning and policy formulation: Understanding environmental forces provides a solid factual base for framing future business plans, policies, and operational strategies.

Teacher's Note:
a) Business environment scanning enables enterprises to convert challenges into opportunities.
b) Students must explain five distinct benefits with clear headings and elaboration.

(ii) State any three components of the Economic Environment. [3 Marks]

Answer:
1. Economic policies: Government policies related to taxation, industrial licensing, foreign trade, monetary policy, and fiscal measures.
2. Economic indicators: Rate of economic growth, gross domestic product (GDP), inflation rates, per capita income, and employment levels.
3. Infrastructure facilities: Availability and development of banking networks, transport, communication, power supply, and financial markets in the economy.

Teacher's Note:
a) The economic environment comprises all economic factors that directly influence the functioning of a business.
b) Ensure distinct economic components are listed rather than general socio-cultural or political factors.

Question 11

(i) Equity shares constitute an important part of the share capital of the company. Yet they have some pros and cons in the business. Discuss any five disadvantages of issuing equity shares. [5 Marks]

Answer:
1. Risk of fluctuation in returns: Equity shareholders are residual owners, meaning their dividend earnings fluctuate widely based on company profits, offering no fixed income guarantee.
2. Dilution of control: Issuing additional equity shares increases the total number of voting shareholders, which can dilute the control and management power of existing promoters.
3. High cost of floatation: Raising capital through equity shares involves heavy expenditure on underwriting commission, brokerage, prospectus printing, and legal formalities.
4. Absence of trading on equity benefits: If a company relies entirely on equity capital, it misses out on the tax shield and higher EPS benefits associated with debt financing (trading on equity).
5. Permanent commitment: Equity capital cannot be redeemed during the lifetime of the company, locking up permanent capital even if funds remain idle or underutilised.

Teacher's Note:
a) Equity shares represent ownership capital carrying voting rights and residual claims.
b) Students must focus specifically on disadvantages as requested in the question prompt.

(ii) Electronic banking is banking over the internet and is a part of virtual banking. In the light of this statement, state any three forms of electronic banking. [3 Marks]

Answer:
1. Electronic Funds Transfer (EFT / NEFT / RTGS): Systems that allow direct transfer of funds from one bank account to another electronically without physical cash movement.
2. Automated Teller Machines (ATMs): Electronic terminals enabling customers to withdraw cash, check balances, and conduct basic banking transactions 24x7 without visiting a bank branch.
3. Net Banking / Mobile Banking: Digital banking platforms that allow customers to access their accounts, pay bills, transfer funds, and manage financial services over the internet using computers or smartphones.

Teacher's Note:
a) E-banking has revolutionised banking operations by providing round-the-clock remote financial access.
b) Mentioning any three distinct electronic banking channels is sufficient for full credit.

OR

(i) Preference shares are called hybrid securities in the capital market. Justify the statement by giving any three types of Preference shares. [5 Marks]

Answer:
1. Justification as hybrid security: Preference shares combine the features of both equity shares (dividend payment subject to profits and ownership claim) and debentures (fixed rate of dividend and preferential right to repayment of capital), earning them the title of hybrid securities.
2. Cumulative Preference Shares: Shares where unpaid dividends accumulate and carry forward to be paid out of future profits before any dividend is distributed to equity shareholders.
3. Participating Preference Shares: Shares that carry a right to participate in surplus profits of the company along with equity shareholders after a fixed dividend has been paid.
4. Convertible Preference Shares: Shares that give holders the option to convert their preference shares into equity shares after a specified period under agreed terms.

Teacher's Note:
a) Hybrid securities possess mixed characteristics of both ownership and debt instruments.
b) Ensure the justification point is stated clearly along with any three valid types of preference shares.

(ii) Both RTGS and NEFT are secure but contrasting methods of transferring money electronically. In the light of this statement, give any three points of differences between RTGS and NEFT. [3 Marks]

Answer:

Teacher's Note:
a) Both RTGS and NEFT are operated by the Reserve Bank of India for secure electronic fund transfers.
b) A tabular comparison highlighting settlement, speed, and limits is the most effective presentation format.

Question 12

(i) Management is a human activity which directs and controls the organisation and operation of a business enterprise. In the light of this statement, explain any five objectives of Management. [5 Marks]

Answer:
1. Economic objectives - Survival: Ensuring the organisation survives long enough by earning enough revenues to cover operational costs.
2. Economic objectives - Profit: Earning adequate profit, which is essential for covering risks and sustaining business growth.
3. Economic objectives - Growth: Expanding business operations, increasing sales turnover, and enhancing market share over time.
4. Social objectives: Creating benefit for society by providing quality products at fair prices, generating employment, and engaging in corporate social responsibility.
5. Organisational / Human objectives: Satisfying the financial, social, and psychological needs of employees to keep them motivated and committed to the enterprise.

Teacher's Note:
a) Management objectives are broadly categorized into economic, social, and personal or organisational objectives.
b) Students must categorize and explain five distinct objectives clearly.

(ii) A company with a diversified product line has four product divisions, each specialised with physical facilities and human talents. Identify the organisation's structure and state its two advantages. [3 Marks]

Answer:
1. Identification: Divisional organisational structure.
2. Advantage 1 - Product specialisation: Division-wise grouping helps in developing varied product expertise and operational focus, facilitating product diversification and expansion.
3. Advantage 2 - Accountability and performance evaluation: Divisional heads are held directly accountable for profits and losses of their specific division, making performance appraisal easier and more transparent.

Teacher's Note:
a) A divisional structure groups enterprises based on product lines, where each division is self-contained with its own functions.
b) Correctly identifying the structure first is mandatory before awarding marks for the stated advantages.

Question 13. Read the case given below and answer the questions that follow.
Madhubala is planning to launch an online education portal for students. In order to understand the students' requirements, she conducted an online survey. Based on the feedback of the survey, she has decided to offer educational packages to the prospective buyers. She has decided to conduct an entrance test and give up to 30% off on tuition fees to the students scoring 95 marks and above in the entrance test.

(i) Give any two features of an online education portal as an intangible product. [2 Marks]

Answer:
1. Intangibility: Educational services cannot be touched, seen, or physically held before purchase, as they represent digital knowledge delivery.
2. Inseparability (Simultaneity): Production and consumption of online educational lectures happen simultaneously; they cannot be stored as inventory for future sale without real-time access.

Teacher's Note:
a) Services possess unique characteristics distinct from physical manufactured goods.
b) Quoting intangibility and inseparability correctly addresses the core features of service products.

(ii) Which element of the promotion mix is used by Madhubala? [1 Mark]

Answer: Sales Promotion (offering up to 30% off on tuition fees based on entrance test scores).

Teacher's Note:
a) Sales promotion includes short-term incentives such as discounts, rebates, and contests designed to encourage immediate purchase.
b) Identifying sales promotion correctly links the discount incentive mentioned in the case.

(iii) Differentiate the element of promotion mix, identified in (ii), from Advertising. [3 Marks]

Answer:

Teacher's Note:
a) Sales promotion is short-term and tactical, whereas advertising is long-term and strategic.
b) A structured comparison table ensures clarity and secures all awarded marks.

(iv) State any two benefits of conducting an online survey with prospective buyers. [2 Marks]

Answer:
1. Cost-effectiveness: Online surveys are economical to design, distribute, and analyze compared to traditional physical surveys.
2. Speed and reach: They allow quick collection of large volumes of feedback from a geographically dispersed target audience in real time.

Teacher's Note:
a) Market research helps businesses align their product offerings with actual consumer needs.
b) Mentioning speed, cost-efficiency, or wide reach earns full credit.