NIOS Class 12 Business Studies Sample Question Paper

NIOS Class 12 Business Studies Sample Paper

Section – A

1. Any kind of external devices, like compact discs (CD’s) for computer, have become obsolete. Google, with its Google Drive service, Apple with its iCloud offering, enables the users store documents, photos, music and movies on web-based servers. Identify the feature of business environment being described in the above lines.

a) Sum total of all factors

b) Inter-relatedness

c) Uncertainty

d) Complex

Ans: (c) Uncertainty

2. (i) Liberalisation refers to the

a) Integrating the economy of a country with the world economy

b) Reduction in the number of industries reserved for the public sector

c) Reducing the role of public sector

d) Process of eliminating unnecessary controls and restrictions

Ans: (d) process of eliminating unnecessary controls and restrictions

3. An examples of ethical business practice is

a) To charge Maximum prices from the customer.

b) To use less weights for commodities.

c) To pay taxes to government correctly and promptly

d) Indulge in unfair trade practices

Ans: (d) Indulge in unfair trade practices

4. Which of the following does not explain the impact of government policy changes on business & industry

a) Increasing competition

b) More demanding market customers

c) Market orientations

d) Change in agricultural prices

Ans: (d) Change in agricultural prices

5. Which of the following is an importance of planning?

a) Leads to Specialization

b) Maximum Utilization of Resources at any cost

c) Reduce Creativity

d) Less expansion and growth

Ans: c) Reduce Creativity

6. _____________ is deciding in advance what is to be done in future.

a) Organising

b) Planning

c) Controlling

d) Budget

Ans: (b) Planning

7. Which of the following is not a limitation of planning?

a) Rigidity

b) Probabilistic

c) Expensive

d) Time Saving

Ans: (b) Probabilistic

8. The government of India introduced a radical change in economic policies in the year

a) 1995

b) 1981

c) 1991

d) 2002

9. Responsibility of business towards the shareholders or owners includes

1. To ensure safety of investment.

2. To provide regular, correct and adequate information on the financial aspects.

3. To provide fair and regular dividend.

4. To provide services such as housing, medical care, recreation etc.

Choose the correct option from the options given below:

a) Only 1 and 4

b) Only 1 and 3

c) 1,2, 3 and 4

d) 1,2 and 3 only

Ans: d) 1,2, and 3 only

10. The capital structure of a firm refers as a choice of that combination of ;

a) fixed Assets and current Assets

b) debt and equity

c) dividend and wealth

d) capital and profit

Ans: (b) debt and equity

11. There are two statements marked as Assertion (A) and Reason(R). Read the statements and choose the appropriate option from the options given below;

Assertion (A):- Equity Shareholders’ return consists of two components viz, dividends and capital gains.

Reason (R):- Dividend decision is concerned with taking decision with regard to the net profit distribution which is related either to pay dividend to shareholders or to retain in the business.

Alternative:

a) (A) is correct, but (R) is wrong

b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)

c) Both (A) and (R) are incorrect.

d) Both (A) and (R) are correct, and (R) is the correct explanation of (A)

Ans: b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)

12. __________ is a contract whereby one can use the assets of the other with due permission of the owner on payment of rent without purchasing them.

a) Rent Agreement

b) Lease

c) Conveyance deed

d) External Commercial Borrowings

Ans: b) Lease

13. Followings are the components of 4’P’s except

a) Product

b) Place

c) Price

d) Public

Ans: d) Public

14. Which of the following is not a Feature of Departmental Store?

a) The entire building is divided into a number of departments or sections.

b) In each department specific type of goods like stationery items, books, electronic goods, garments, jewellery etc. are made available.

c) These stores also provide the facility like free home delivery of goods, execution of telephonic order for goods, credit facility, etc.

d) Large amount of capital investment is required to start and run a departmental store

Ans: d) Large amount of capital investment is required to start and run a departmental store

15. _______ retailing is a type of small-scale retail trade in which retailers move around and sell a variety of items directly to the consumers.

a) Itinerant

b) Fixed shop

c) Departmental

d) Chain

Ans: a) Itinerant

16. Services Provided by the Wholesalers to manufacturers includes

a) Regular Supply

b) Risk Protection

c) Bulk Buying

d) Financial Help

Ans: c) Bulk Buying

17. Resources required for successful e-business implementation NOT includes

a) A Website

b) Technically Qualified Workforce

c) Adequate Computers

d) Big Office Building

Ans: d) Big Office Building

18. Arun decided to sell his old books to his friend’s brother, Rakesh. This is a__________ transaction:

a) B2B

b) B2C

c) Intra-B

d) C2C

Ans: c) C2C

19. Withdrawal of money from ATM is an example of_______type of transaction:

a) B2B

b) B2C

c) intra-B

d) C2C

Ans: b) B2C

20. In a B2B transaction both the parties involved are:

a) Manufacturer and Supplier

b) Customer and Customer

c) Wholesaler and Customer

d) Retailer and Customer

Ans: a) Manufacturer and Supplier

Section – B

Ques 21 to 35 below. Internal choices have been given wherever necessary

21. Fill in the Blanks:-

a) ________ refers to negative and unfavourable external factors that are likely to create hurdles for a firm.

b) ________ are the impact of govt. policy changes on business & industry.

Ans:

(a)Threats
(b) More Demanding Customers

22. In relation to types of business environment, match the Column 1 with Column 2.

Column 1	Column 2
I. Economic environment	a. Approaches adopted for production of goods and services
II. Political Environment	b. Regulations
III. Legal Environment	c. Government policies and attitude towards the business community
IV. Technological Environment	d. Strength of capital market

Ans: a) i-d, ii-c, iii-b, iv-a

23. Fill in the blanks:-

a) Manufacturing department may be sub-divided into stores, repairs, maintenance, production, etc. is an example of ___________

b) ______________ shifts the power of decision making to lower levels under a well-considered plan

Ans:

(a) Functional Structure
(b) Decentralisation

24. Give one word Answer –

a) What is known as the primary function of management ___________

b) A strategy is derived from ______________

Ans:

(a) Planning
(b) Methods

25. Fill in the Blanks –

a) ________ refers to planning regarding financial needs of the enterprise various sources of raising funds and their optimum utilization.

b) _______ refers to the structure of total capital funds raised by the company.

Ans:

(a) Financial planning
(b) Capital structure

26. Give One word:

a) Name the process that enables the management to foresee the fund requirements, both the quantum as well as the timing.

b) It is essentially the preparation of a financial blueprint of an organisation’s future operations. Identify the related concept.

Ans:

(a) Financial planning
(b) Financial planning

27. Which method of long-term financing, Public Deposit or Retention of Profits, are being referred to, in each of the following statements:

a) Management is less careful about funds utilization by this method.

b) To raise funds through this method, an advertisement is generally given through the newspapers.

Ans:

(a) Retained Earnings
(b) Public Deposit

28. Identify the features that relate to equity shares, preference shares and debentures

a) In case of winding up of the company, the capital is refunded after payment of debentures but before payment to equity shareholders.

b) Their holders are creditors of the company for a fixed period.

Ans:

(a) Preference shares
(b) Debentures

29. Give one word/phrase for the following statements:

a) The component of marketing that relates to channels of distribution.

b) The components that are combined to achieve the marketing goal

Ans:

(a) Place
(b) Marketing mix

30. Which method of price fixation is being referred to here

a) Rama fixes the price of shirts that he manufactures and sells at a price 10% higher than its cost.

b) Shyama introduces a new brand of biscuits at a low introductory price.

Ans:

(a) Cost-based pricing
(b) Objective-based pricing

31. Which element of the promotion mix is being referred to in the following statements:-

a) It is a temporary incentive to induce trial or purchase of a new product ______

b) It is an effective promotion tool for machines, lubricant etc. ___________

Ans:

(a) Sales promotion
(b) Personal Selling

32. Identify the following and write ‘WT’ for wholesale trade and ‘RT’ for retail trade.

a) Dealing in limited variety of products.

b) Goods purchased from wholesalers for resale.

Ans:

a) Dealing in limited variety of products- WT
b) Goods purchased from wholesalers for resale – RT

33. Correct the following sentences

a) Producer is a middleman in the chain of distribution.

b) Presence of too many middlemen increases the price of the product.

Ans:

(a) Wholesaler/Retailer is a middleman in the chain of distribution.

(b) No change

34. State the full form of the following –

a) WWW

b) B2B

Ans:

(a) World Wide Web

(b) business-to-business

35. Identify the following in e-banking transactions–

a) A machine using which we can withdraw money from our deposit accounts at our convenience.

b) A system that allows the account holder to avail the banking facility over telephone

Ans:

(a) ATM, or automated teller machine
(b) net-banking

Section – C

Ques 36 to 51 below. Internal choices have been given wherever necessary

36. State any two relaxations available under the company Act 2013 to a one person company.

Ans:

a) There is no need to prepare a cash flow statement.
b) There is no necessity for the Annual General Meeting to be held.
c) The annual return can be signed by the Director and not necessarily a Company Secretary.
d) An OPC need to hold only one meeting of the Board of Directors in each half of a calendar year, and the gap between two meetings should not be less than 90 days.

37. (i) Explain any two internal Sources of Recruitment.

Ans:

(i) Transfer: It means the shifting of an employee from one job to another without changing the responsibilities and salary.
(ii) Promotion: It involves shifting or transferring employees to a higher job.

(ii) Explain any two sources of external recruitment

Ans: Some of the major types of external sources are as follows:

1. Advertisement in Newspapers
2. Employment Exchanges

38. The highly reputed companies (Blue Chip companies) are the major players of this type of money market instruments.

a) Identify the money market instrument highlighted in the above line.

b) What is the main purpose of instrument identified in (a)?

Ans:

(a) Commercial paper

(b) It is a popular instrument for financing the working capital requirements of business units

39. (i) Define Entrepot Trade with an example.

Ans: When the firm of a country imports goods for the purpose of exporting the same to the firms of some other country, with or without making any change, it is known as the entrepot trade or re-export trade for that country. For example, if an Indian company imports rubber from Thailand and exports it to Japan, then it is called Entrepot trade for India.

(ii) Define Export with examples

Ans: Exports can be cars, clothes, pencils, heavy machinery, software, or banking services. The limits to exports usually come in the form of government regulation. For example, if the good is needed domestically, the government may restrict exports of the good to regulate domestic supply and prices.

40. Arunodya Airlines company offered ‘Travel today pay fare later’ plan for its prospective customers.

a) Name the promotional tool used by the Arunodya Airlines.

b) State any one other product for which above-identified plan is quite common nowadays.

Ans:

(a) Deferred Payment Plan
(b) This plan is quite common nowadays in the case of TVs and air-conditioners.

41. (i) State any two avenues of self-employment.

Ans:

1. Trading;
2. Manufacturing;
3. Professionals;
4. Individualised services.

(ii) State any two avenues of Wage Employment

Ans:

(1) Small factory/shops
(2) Business firms
(3) Service organisations
(4) Government and Semi-Government organisations

42. Nipun was working in an enterprise on a daily wages basis. It was difficult for him to fulfill the basic needs of his family. His daughter fell ill. He had no money for his daughter’s treatment. To meet the expenses of her treatment, he participated in a cycle race and won the prize money. The cycle company offered him a permanent pensionable job which he happily accepted. By quoting lines from the above paragraph, identify the needs of Rahim that are satisfied by the offer of the cycle company. Also, explain two other needs of Rahim followed by above that are still to be satisfied.

Ans:

1. The physiological needs and safety needs of Nipun are being satisfied by the offer of the company.
2. The other needs of Nipun, followed by the physiological needs and safety needs that still need to be satisfied, are as follows:
- Affiliation/Belonging Needs: These needs refer to affection, sense of belongingness, acceptance and friendship. The organisation, by encouraging cooperative teamwork and by having accessible and kind superiors, can fulfil these needs of its employees.
- Esteem Needs: These include factors such as self-respect, autonomy status, recognition and attention. The organisation, by giving praise and recognition when the employees do well, and offering promotions, can fulfil the needs of its employees.

43. (i) Roshan is the chief chef of ‘Khidmat restaurant located in the city of Bengaluru. The place is known for its exquisite Mughlai cuisine, especially mutton biryani and kababs. All the food is prepared under Roshan’s purview. The various activities in the kitchen are initiated in accordance with his instructions. He is very clear and specific in issuing instructions to his subordinates in order to ensure the smooth working of the department. He personally oversees the method followed by the chefs for the preparation of each dish. He misses no opportunity to praise his subordinates for their good work. All his team members feel very happy and satisfied under his direction. He provides constant guidance to them in order to improve upon its taste and presentation, and also encourages them to innovate and be more creative in their work.

In the above context:

Identify the various elements of directing mentioned in the above paragraph by quoting lines from the paragraph.

Ans: The various elements of directing mentioned in the above paragraph are as follows:

Communication: “He is very clear and specific in issuing instructions to his subordinates to ensure smooth working of the department.”Supervision-. “He personally oversees the method followed by the chefs for the preparation of each dish.”
Leadership: “He provides constant guidance to them to improve upon its taste and presentation, and also encourages them to innovate and be more creative in their work.”
Motivation: “He misses no opportunity to praise his subordinates for their good work.”

(ii) After completing his bachelor’s in computer science, Abhijeet joined an IT consultancy firm. He observed there that the senior management more often communicated failures than successes. They rarely shared any good news related to the growth of the firm or gave any recognition to its employees for their extraordinary contributions towards the firm. As a result, Abhijeet never felt encouraged enough to work up to his full potential and started exploring other avenues for employment.

In the context of the above case:

1. Identify and explain the element of directing in the absence of which the employees don’t feel encouraged to work.

2. State the importance of this element as identified in part (1) by giving any two suitable points

Ans:

1. The element of directing being referred to is motivation.
2. The importance of motivation is described below:
- Improves performance: Motivation helps to improve the performance of both the employees and the organisation. This is because motivated employees contribute their maximum efforts to organisational goals.
- Reduces employee turnover: Motivation helps to reduce employee turnover and thereby saves the cost of new recruitment and training. This is due to the fact that the managers identify the motivational needs of employees and provide suitable incentives. Consequently, the employees feel satisfied and may not think of leaving the organisation.

44. State any three limitations of advertising. 3

Ans:

1. Advertising Multiplies Wants
2. Advertising adds to the Cost and Price of the product
3. Creation of Monopoly
4. Advertising may affect the Value-system of Society
5. Motivation for Wrong or Dangerous Deeds

45. (i) The space outside buses, company trucks (used to carry company’s own products) can be used to attract and inform the customers about the product, availability, price etc.

a) Which media of advertisement is highlighted in above line?

b) Generally for which products media of advertisement identified in (a) is suitable?

Ans:

(a) Outdoor Advertising
(b) Generally used for advertising products like shoes, lotions, creams, fans, cycles, etc.

(ii) A manufacturer of detergent powder wants to introduce detergent cake in the market under a new brand name. Which sales promotion tools should he use to attract the customers? Give reasons in support of your answer.

Ans: Sales promotion tools he should use to attract the customers are :

1. Distribution of Free Samples: As mentioned above, the distribution of free samples is a commonly used sales promotion tool.
2. Bonus Offer: At times, marketers offer extra quantity with standard products without any additional charge to the customer.
3. Price-off: To increase sales, or to reduce competition, many business firms cut down prices.
4. Free Offer: Many companies give ‘free’ offers to boost the sales of their products.

46. What is the difference between Letter of Credit and Letter of Hypothecation in relation to external trade?

Ans: There are two alternative methods by which payment canbe received by the exporter.

(a) Letter of Credit: The exporter can get immediate payment on the strength of the letter of credit, which is issued by the importer bank in favour of the exporter. The exporter has to draw the bill to get the payment from the local branch of the bank (in the home country), which has issued the letter of credit on behalf of the importer.
(b) Letter of Hypothecation: If the exporter wants to receive payment immediately, he can get the bill (accepted by the importer) discounted with his bank. But for this purpose, he has to give a letter of hypothecation to his bank. A letter of hypothecation is a letter addressed to a bank attached to the bill of exchange, which is accepted by the importer. Through his letter of hypothecation, the exporter authorises the bank to sell the goods in case 3 of dishonour of the bill by the importer, so that the bank can realise the amount advanced by it to the exporter.

47. (i) State ant three differences between GATT and WTO.

Ans:

1. Conceptual Framework: GATT was basically a set of rules and regulations for multilateral trade agreements to promote international trade, while WTO is an institutional mechanism which attempts to regulate, monitor and liberalise international trade.
2. Institutional Existence: GATT does not have any institutional existence, while WTO bears a permanent institutional character with a functioning secretariat.
3. Nature of Participation: In the case of GATT, participating nations were contracting parties, while the WTO has membership for nations.
4. Scope of Application of Rules and Regulations: The rules and regulations of GATT were applicable for goods only, while in the case of WTO, it extends to both goods and services.

(ii) What are (i) Bill of Lading, (ii) Shipping order and (iii) Mate’s receipt?

Ans:

(i) Bill of Lading – It is a document issued by the shipping company after the cargo is loaded on the ship. It is an acknowledgement of goods by the shipping company. It is a document that shows the title to the goods and is freely transferable by endorsement and delivery.
(ii) Shipping order – The shipping bill is the main document based on which the customs office grants permission for the export. It contains full details regarding the goods being exported name of the vessel, the exporter’s name & address, the country of final destination, etc.
(iii) Mate’s receipt -A mate’s receipt is a receipt issued by the commanding officer of the ship when the cargo is loaded on board and contains the information about the name of the vessel, berth, date of shipment, description of packages, and condition of the cargo at the time of receipt on board the ship, etc.

48. Differentiate between Departmental undertaking and Public corporation on the basis of the followings:

(i) Establishment (ii) Legal Status (iii) Capital (iv) Management (v) Control and Accountability.

Ans: TYPE IN FROM THE PIC

Basis	Departmental Undertaking	Public Corporation
Establishment	By a ministry	By the parliament under a special act
Legal Status	No separate entity distinct from the Government	Separate entity to sue and be sued
Capital	Provided out of the budgetary appropriation	Provided wholly by the Government
Management	A government official from the ministry concerned	Board of Directors
Control and Accountability	Control rests with the minister and the ministry concerned	Parliament

49. (i) What are the recent trends in recruitment? Explain briefly.

Ans: Recent Trends In Recruitment

(i) E-Recruitment: Websites are the modern sources of recruitment where the job vacancies are advertised through worldwide web(www). This has the advantage of reducing the cost per candidate, saves time, is convenient and a faster way, for example, naukri.com, jobsearch.com, monster.com, etc.
(ii) Outsourcing: Recruitment Process Outsourcing is a form of business process outsourcing (BPO)" where an employer transfers all or part of its recruitment processes to an external service provider.
(iii) Internships: These employ fresh graduates, especially in technical areas, to work as summer interns and later on, they may be offered regular jobs on completion of their internship training.
(iv) Walk-in-interview: Under this method, the employer can insert a Walk-in or Talk-in advertisement in a leading newspaper or online. Those who walk in ( i.e come personally) or talk in ( i.e contact over the phone) are further asked to give their details for the job vacancy. This serves as a good source of recruitment when the vacancies arise all of a sudden and need to be filled immediately.

(ii) The Manager must be aware of the sources of recruitment from where the suitable candidates can be hired. Mention and explain the sources of recruitment.

Ans: The sources of recruitment from which suitable candidates can be hired. These sources can be internal and external.

(A) Internal Sources: In any business, existing employees expect that they will have chances of promotion and will be considered for higher positions before outsiders are considered. The internal sources of recruitment include transfers and promotions.

(i) Transfer means shifting of an employee from one job to another without changing the responsibilities and salary and;
(ii) Promotion involves shifting or transferring employees to a higher job.

(B) External Sources: All vacancies cannot be filled from within the organisation. Existing employees may lack the required skills, initiative and qualifications needed for the jobs involved. Hence, managers have to recruit some people from outside the organisation.

i) Media Advertisements: You must have seen advertisements in newspapers about vacancies in organisations.
ii)Employment Exchanges: In India, employment exchanges have been set up by the government for bringing together job-seekers and employers who are looking for employees.

50. Companies have to get their securities listed in the stock exchange for the purpose of trading through stock exchange. Describe the steps involved in Trading procedure.

Ans: Trading procedure involves the following steps :

1. Selection of Broker: Firstly, the investor chooses the broker through whom he will buy or sell the securities.
2. Placement of Order: After fixing the broker, the investor places the order stating the name of the company, the number of shares to be bought or sold, and the price at which the transaction has to be made.
3. Trade by the Broker: Broker makes the deal if the desired price is quoted by any buyer/seller in his computer. Transactions on a stock exchange can be on a cash basis or carry over basis (badla).
4. Information to Investor: The broker informs the investor about the deal. The buyer arranges payment.
5. Settlement: All transactions are settled through the clearing house through electronic book entry.

51. (i) Small business plays a major role in the socio-economic development of any country. Do you agree with the above statement? Enumerate any four importance of small business.

Ans: Yes, I agree with the above statement.

The importance of small-scale businesses is increasing day by day due to the following factors.

1. The small business enterprises are capable of generating immediate and large-scale employment opportunities in our country.
2. They require less capital investment than large-scale business enterprises.
3. The cost of production is less due to the use of local resources and fewer Establishments and less running costs.
4. The small industries help in the effective mobilisation of the untapped resources of the country. With the help of local resources and indigenous technology, world-class products can be produced by village and cottage industries.
5. Small industries promote balanced regional development of the country. These can be easily set up near the source of resources that lead to the overall economic development of that place.

(ii) After passing Class 12, Sunita wants to start her own boutique. Her Mother has promised her to meet her initial financial requirement. She has been advised by her teacher that there are a number of government agencies providing help in various fields, and she can approach them. Name such agencies and state the nature of assistance these can provide in starting small businesses.

Ans: To start and run a business enterprise, one requires various resources and facilities. These may be in the form of technical, financial, marketing or training support. Such support is provided by the Government by establishing different institutions or organisations from time to time. Some of these institutions and their role in providing support.

1. National Small Industries Corporation Ltd.: The National Small Industries Corporation Ltd. (NSIC) was set up in the year 1955 to promote, aid and foster the growth of small industries in India. It provides a wide range of promotional services to small-scale industries.
2. State Small Industries Development Corporations: The State Small Industries Development Corporations (SSIDCs) are set up in various states of our country to cater to the developmental needs of small, tiny and village industries.
3. National Bank for Agriculture and Rural Development: The National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex institution for financing the agricultural and rural sectors.

Small Industries Development Bank of India: The Small Industries Development Bank of India (SIDBI) was set up in 1990 as a principal financial institution for promotion, financing and development of small-scale industrial enterprises.