CBSE Class 11 Business Studies Question Paper Set 10 with Solutions

Answer: (d) All of the above. Profit funds expansion, signals efficiency and builds goodwill, so all three reasons are valid.

Teacher's Note:
1. Profit is the reward for risk and the fuel for growth of a business.
2. When an option says 'all of the above', check each statement separately before choosing it.

Answer: (c) They are created by a Special Act of Parliament (or State Legislature). Their funds, accounts and staff rules are independent of government departments.

Teacher's Note:
1. The words 'Special Act' are the identity mark of a statutory corporation.
2. Do not confuse it with a departmental undertaking, which is funded by the treasury and has civil-servant employees.

Answer: (a) Bank Draft. A draft is issued by the bank itself against payment by the customer, so the bank guarantees payment, while a cheque can be dishonoured for insufficient funds.

Teacher's Note:
1. A draft is drawn on the bank's own funds, so it is safe.
2. A cheque depends on the balance in the drawer's account and may bounce.

Answer: (c) Ratio of amount insured. Under the principle of contribution each insurer pays in proportion to the sum it has insured.

Teacher's Note:
1. Contribution prevents the insured from claiming more than the actual loss.
2. Remember that the ratio is based on sums insured, not on premiums.

Answer: (b) Supplying quality goods at reasonable prices is a responsibility towards consumers, not shareholders.

Teacher's Note:
1. Match each duty with the group it serves: owners, workers, consumers, government or community.
2. Fair return and true information are always the shareholders' due.

Answer: (b) workers. Meaningful work and good working conditions concern the employees.

Teacher's Note:
1. Look for the keywords work and working conditions to identify the group.
2. Other duties to workers include fair wages, security and participation in management.

Answer: (c) In a cooperative society voting follows the principle of one member, one vote, irrespective of the shares held.

Teacher's Note:
1. Democratic management with equal votes is a hallmark of cooperatives.
2. Voting by number of shares is a feature of companies, so do not mix the two.

Answer: (b) Particular Partnership, because it is formed for one specific project (the AC unit in one hotel) and ends when the project is complete.

Teacher's Note:
1. A particular partnership has a fixed purpose, while a partnership at will has no fixed period.
2. The words 'a hotel in Shirdi' show a single venture.

Answer: (a) Long term. Debentures are usually repaid after many years, so they are a long-term source.

Teacher's Note:
1. Shares and debentures are long-term sources; trade credit and bank overdraft are short-term.
2. Debentures carry a fixed rate of interest.

Answer: (b) Chain Store. A chain (multiple shop) is a network of identical shops with the same look and fixed prices, located in different places.

Teacher's Note:
1. Uniform appearance and fixed prices are the key features of chain stores.
2. A departmental store is one large store with many departments under one roof.

Answer: (c) Working capital requirement. Current assets such as stock and debtors are financed by working capital.

Teacher's Note:
1. Working capital meets day-to-day needs; fixed capital buys long-term assets.
2. Ploughing back of profits and lease financing are sources, not requirements.

Answer: (a) Limited Liability & Common Seal. In both, members' liability is limited and the registered body has a common seal, whereas a company does not work on a service motive.

Teacher's Note:
1. Compare each pair against both forms; one wrong half makes the option wrong.
2. Both are separate legal entities formed by registration.

Answer: (d) Utmost good faith. The insured must disclose all material facts truthfully, and Mr. Zed hid his heart condition.

Teacher's Note:
1. Insurance is a contract of utmost good faith because the insurer relies on what the insured declares.
2. Hiding material facts makes the contract voidable by the insurer.

Answer: (a) Peddlers and Hawkers. They move from place to place carrying goods on carts, cycles or on their heads.

Teacher's Note:
1. Hawkers move to customers, but street traders sit at a fixed spot such as a pavement.
2. Market traders open only on specific days.

Answer: (a) Inter corporate deposits. One company lends surplus funds to another for a short period, usually up to six months.

Teacher's Note:
1. Trade credit is credit on purchases from suppliers, not a loan from an unrelated company.
2. Cash credit and overdraft come only from banks.

Answer: (b) is false. Small enterprises are labour intensive and need less capital.

Teacher's Note:
1. Employment generation at low capital cost is the main strength of small business.
2. In 'false statement' questions, find the option that contradicts the textbook.

Answer: (a) Preference Shares. Redeemable preference shares can be repaid after a fixed period, while equity capital is not repaid during the company's life.

Teacher's Note:
1. Redemption means repayment.
2. Equity shares are permanent capital, so they are not redeemable.

Answer: Registration of a firm is not compulsory, but an unregistered firm suffers these consequences:
1. The firm cannot sue third parties for dues or breach of contract.
2. The partners cannot file a suit against the firm or against other partners to enforce rights under the partnership.
3. The firm cannot claim a set-off (adjustment) of its dues against a claim by third parties above a limited amount.
4. Rights of partners against each other cannot be legally enforced, though third parties can still sue the firm.

Teacher's Note:
1. Registration makes the firm able to go to court, so it protects the partners' legal rights.
2. Mention that non-registration does not make the firm illegal; it only limits the right to sue.

Answer: (a) Employment: he works for an employer and earns wages or salary.
(b) Profession: specialised knowledge and training are needed.
(c) Business: the hawker trades goods on his own risk for profit.
(d) Employment: Dhruv works for a company for a salary.
(e) Profession: an advocate needs a law degree and enrolment with the Bar Council.
(f) Business: he earns profit by his own enterprise, taking its risk.

Teacher's Note:
1. Business earns profit and bears risk, profession earns fees for specialised service, and employment earns wages or salary.
2. Ask two questions each time: who bears the risk, and is special training compulsory?

Answer: (a) It is a Consumer Cooperative Society. It is formed to protect consumers from exploitation by middlemen. It buys goods in bulk directly from producers or wholesalers and sells them to members (and others) at reasonable prices, which removes middlemen and keeps the budget balanced.
(b) It must have been formed under the Cooperative Societies Act, 1912 (or the relevant State Cooperative Societies Act), as at least 10 adult members are needed for registration.
(c) The liability of members is limited to the extent of the capital contributed by them.

Teacher's Note:
1. Buying in bulk to supply members at fair prices is the clue for a consumer society.
2. Write the Act with its year, and say that liability is limited to capital contributed.

Answer: Benefits of e-business to Govind (any three):
1. Ease of formation: no heavy investment in showrooms, so low set-up cost.
2. Convenience: orders can be taken round the clock, from any place.
3. Wider reach: he can sell to customers all over the country and abroad without dealers.
4. Speed and no middlemen: faster delivery and a better margin because dealers' commission is saved.
5. Better customer data for improving products.
OR
(a) Intra-business e-commerce. It uses the internal network (intranet) of the firm to connect employees and departments for sharing information and holding online meetings, which speeds up decisions and improves coordination.
(b) Types not mentioned:
1. B2B (business to business): transactions between two business firms, such as a manufacturer buying from a supplier online.
2. B2C (business to consumer): a business sells to final consumers online, as Myntra does.
3. C2C (consumer to consumer): consumers sell to one another through a platform, such as used goods on OLX.

Teacher's Note:
1. Link every benefit to Govind's problem of falling sales through dealers.
2. Intra-business e-commerce takes place inside one organisation, while B2B, B2C and C2C take place with outsiders.

Answer:

Teacher's Note:
1. Choose four proper bases and give both stores' view on each, preferably in a two-column table.
2. For the OR part, note services to consumers only and not to manufacturers or wholesalers.

Answer: Role of small business in India:
1. Employment generation: being labour intensive, they give jobs to millions at low capital cost, second only to agriculture.
2. Rural development: village and cottage industries use local raw materials and skills, give jobs in villages and reduce migration to cities.
3. Balanced regional development: they can be set up in backward and rural areas, spreading industry evenly.
4. Contribution to output and exports: they supply a large share of industrial output and exports.
5. Less inequality: they spread income and ownership among many people and help the poor and weaker sections.
6. Mobilising local resources: they bring savings and skills of rural people into productive use.
7. Supply to large firms: they supply components, so supporting large industries.

Teacher's Note:
1. Include at least four points and give rural employment and balanced regional growth a clear place.
2. Explain each point in a line, not as just a heading.

Answer:

Teacher's Note:
1. Compare both columns on each of the four given bases, and do not add other bases.
2. Personal touch is the main weakness of e-business and cost is its main strength.

Answer: Rationale of international business:
1. Unequal distribution of natural resources: minerals, oil, climate and soil differ from country to country, so countries must trade.
2. Difference in cost of production: a country imports a good that is cheaper to buy than to make at home.
3. Specialisation: countries produce what they make best (comparative advantage) and exchange the surplus.
4. Differences in technology and skills: some countries have better technology and skilled labour for particular goods.
5. Availability of labour and capital: labour-rich and capital-rich countries complement each other.
OR
Benefits to industry and trade:
1. Industries get a wider market and sell their surplus, so larger scale and lower cost.
2. Access to new technology, raw materials and machinery improves quality.
3. Competition abroad forces industries to improve efficiency.
4. Earning of foreign exchange helps imports and industrial expansion.
5. More employment and growth of trade, transport, banking and insurance.

Teacher's Note:
1. Start with the basic idea that no country has all resources, skills and low costs, then give four separate reasons.
2. In the OR part, focus on benefits to industry and traders, not to consumers.

Answer: Arguments against social responsibility:
1. Violation of profit maximisation: business exists to earn profit and social spending reduces it.
2. Burden on consumers: the cost of social activities is passed on as higher prices.
3. Lack of social skills: managers are trained in business and not in solving social problems.
4. Lack of public support: society may not appreciate or support business involvement in social matters.
5. Business is only a part of society and social issues are the job of the government.
OR
Elements of business ethics:
1. Top management commitment: top leaders must follow ethics and set an example.
2. Publication of a code: a written code of conduct gives guidance to everyone.
3. Establishing compliance mechanism: systems to ensure the code is followed.
4. Involving employees at all levels: every employee should take part in framing and following ethical rules.
5. Measuring results: ethical performance is checked through audits.

Teacher's Note:
1. Use headings with a one-line explanation for each argument or element.
2. Give exactly four if the question says four, because extra points earn no marks.

Answer: (a) Mohit visited a Speciality (single line) store, because it deals only in kids wear. Sumit visited a Supermarket, because it sells clothes and grocery under one roof.
(b) Feature of a speciality store: it deals in one line of goods and the staff has expert knowledge, giving a wide choice within that line.
Feature of a supermarket: it is a large self-service retail store selling food, groceries and other goods at fair prices, with a wide variety under one roof.

Teacher's Note:
1. The goods sold decide the type of store: one line of goods means speciality store, many everyday items means supermarket.
2. Give exactly one feature per store, but explain it in a full sentence.

Answer: (a) Causa proxima (proximate cause): when a loss has many causes, the nearest or effective cause is considered. If it is an insured risk the insurer pays, otherwise not. Example: a ship carrying goods is damaged by a storm and later sinks; the goods are insured against fire only, so the claim is not payable if the loss is not caused by fire.
(b) Contribution: when the same property is insured with more than one insurer, the insured can claim only the actual loss, and all insurers share the loss in the ratio of the amount insured by each. Example: a house worth Rs 10 lakh is insured for Rs 6 lakh with insurer A and Rs 4 lakh with insurer B. If the loss is Rs 5 lakh, A pays Rs 3 lakh and B pays Rs 2 lakh.
(c) Subrogation: after paying the claim, the insurer gets the rights of the insured over the property or against third parties responsible for the loss. This stops the insured from profiting twice. Example: if a car is damaged by a negligent driver, the insurer pays the owner and then recovers the amount from that driver.

Teacher's Note:
1. Each principle needs a definition and a small example for the full two marks.
2. Contribution and subrogation both apply only to indemnity contracts such as fire and marine insurance.

Answer: (i) The most suitable source is retained earnings (ploughing back of profits): no fixed charge, no flotation cost and no dilution of control.
(ii) Merits:
1. It is the cheapest and most easily available internal source, with no flotation cost.
2. There is no fixed burden of interest or dividend and no dilution of control.
3. It is a permanent source that strengthens the financial base and builds confidence among investors and lenders.
Demerits:
1. Shareholders may be dissatisfied as dividends are reduced, and this may hurt the share price.
2. Profits may be kept unused if there is no suitable investment, and there is a risk of overcapitalisation or misuse of funds.

Teacher's Note:
1. Match the source against every condition in the case: no fixed charge, no flotation cost, no loss of control.
2. Write exactly three merits and two demerits.

Answer: It is a Joint Stock Company, defined as an artificial person created by law with a separate legal entity, perpetual succession and a common seal.
Features:
1. Artificial legal person: it is created by law, can own property, enter contracts and sue or be sued in its own name.
2. Separate legal entity: the company is distinct from its members, so the owners are not personally liable for its acts.
3. Formation: it is formed by a lengthy and costly process of registration under the Companies Act, 2013.
4. Perpetual succession: its existence is not affected by the death, insolvency or exit of members.
5. Control: it is managed by a Board of Directors elected by the shareholders.
6. Liability: the liability of members is limited to the unpaid value of the shares they hold.
7. Common seal: it acts through a seal as its official signature, and the transferability of shares is easy in a public company.

Teacher's Note:
1. Name the form (company) first and then explain at least five features with a line each.
2. Perpetual succession and separate entity are the two features hinted in the question, so explain them well.

Answer: (a) BHEL is a Government Company: it is registered under the Companies Act and the Government of India holds at least 51% of its paid-up capital.
(b) Features (any four):
1. It is registered under the Companies Act and is a separate legal entity.
2. At least 51% of the paid-up capital is held by the Government.
3. The directors are appointed by the Government according to its share.
4. It is managed under the Companies Act like any private company, but its accounts are audited by a chartered accountant appointed by the Central Government on the advice of the CAG.
5. Its employees are not civil servants and it can raise funds and be free from many government rules.
(c) Operational autonomy: being run as a company by its own Board, it can take day-to-day decisions on production, pricing, purchases and hiring quickly and without the usual government red tape, which improves efficiency and flexibility.

Teacher's Note:
1. Identify the form from the clues: registered company with majority government shareholding.
2. Link the merit to the case by showing how the Board's autonomy helps in quick decisions.