CBSE Sample Papers For Class 11 Business Studies Mock Paper 1

Q1. _______________is the bustling emporium that was even visited by Chinese ships to acquire items such as frankincense and myrrh.

Opt:

Calicut

Bombay

Bangalore

Hyderabad

Ans: Calicut

Q2. Sierra is studying about the oldest form of public sector. She observes that the profit earned out of that form of Public sector enterprise is __________.

Opt:

Deposited with a NGO for donation completely

Deposited in private bank account

Deposited in the government treasury

Deposited in the account of finance ministry

Ans: Deposited in the government treasury

Q3. Ronnit was a worker in a factory manufacturing table lamps. After working as an employee for 10 years, he thought of starting his own business. But the greatest challenge before him was to choose an appropriate form of business which would suit his requirements.
Which of the following factor is not necessary to be considered by Ronnit before starting his business?

Opt:

Degree of control

Amount of capital

Design of the building

Nature of business

Ans: Design of the building

Q4. Olay Apparels Ltd. has a loan of ₹20,00,000 to pay. They are short of funds so they are trying to find means to arrange funds. The manager suggested to claim from insurance company against inventory lost due to fire in the warehouse. He actually meant that they can put their warehouse on fire and claim from Insurance company against stock insured. They will use the claim money to pay loan. Which principle is being ignored here?

Opt:

Mitigation

Utmost Good Faith

Contribution

Insurable Interest

Ans: Utmost Good Faith

Q5. Choose from the following, satellite based media services provided by cellular services.

Opt:

Radio paging

DTH

Fax

VSAT

Ans: DTH

Q6. Online transactions are used to make payments on e-business websites. Both the parties feel convenient to use these payments features for using the services. What kind of problems do these payments create for both parties?​

Opt:

​Security of transaction.​

​Default on payments.​

​Server error.​

​Only 1 & 3​

Ans: Only 1 & 3​

Q7. Choose among the following:

Assertion (A): For online shopping one has to register himself on the company’s website.

Reasoning (R):  For shopping products the customers will have to pick and drop items in the shopping cart.

Opt:

​Both A and R are correct, and R is the correct explanation of A.​

​Both A and R are correct, and R is not the correct explanation of A.​

​A is correct and R is incorrect.​

​A is incorrect and R is correct.​

Ans: ​Both A and R are correct, and R is not the correct explanation of A.​

Q8. Match the Column I with their respective feature in Column II

Opt:

A-ii, B-iv, C-iii, D-i

A-iv, B-i, C-ii, D-iii

A-i, B-iii, C-iv, D-ii

A-ii, B-iii, C-I, D-iv

Ans: A-ii, B-iii, C-I, D-iv

Q9. The formation of a public company consists of various steps. Identify the correct sequence.
1. Promotion
2. Capital subscription
3. Commencement of business
4. Incorporation

Opt:

i-ii-iii-iv

i-iv-ii-iii

iii-ii-iv-i

iv-iii-ii-i

Ans: i-iv-ii-iii

Q10. Fill in the blank:
Small businesses are unable to withstand competition from MNCs, in terms of the MNCs’_____________.

Opt:

Labour policies

ISO quality standards

Hallmark quality standards

Credit period allowed to suppliers

Ans: ISO quality standards

Q11. A sole trader can expand his business without diluting control by______________.

Opt:

Employing a servant

Getting into partnership

Getting his firm registered

Issuing shares to general public

Ans: Employing a servant

Q12. Preference shares are those shares that are ideal for risk-averse investors. The investors get a fixed dividend on these shares. The capital raised by the issue of preference shares is called preference capital. The preference shareholders receive dividends out of the net profits of the company before any dividend is declared to the equity shareholders. The preference shareholders have a preferential claim over the dividend and repayment of capital.

What benefit do preferential shareholders get during higher profits?

Opt:

​They may get a bonus.​

​They may get higher dividends.​

​They may get more dividends than equity shareholders.​

​Only A & B​

Ans: ​They may get higher dividends.​

Q13. Choose from the following:

Statement (A): International financing agencies include EXIM Bank and Asian development banks.

Statement (B): The IDR is a specific version of similar global depository receipts.

Opt:

​Statement A is correct and statement B is incorrect.​

​Statement A is incorrect and statement B is correct.​

​Both statements A and B are correct.​

​Both statements A and B are incorrect.​

Ans: Both statements A and B are correct.​

Q14. The secondary products exported by India are_______________.

Opt: 

Agricultural and allied

Minerals and ores

Jewellery and perishable products

Petroleum and related products

Ans: Petroleum and related products

Q15. Match the Column I with their respective feature in Column II:

Opt:

A-ii, B-i, C-iii

A-iii, B-i, C-ii

A-i, B-iii, C-ii

A-ii, B-iii, C-i

Ans: A-ii, B-i, C-iii

Q16. Uday, a skilled potter, has a cottage industry located in a remote village near Tamil Nadu. Even after making pots which are better in quality and looks both, than the ones found in the international market, he is unable to earn money by selling them. Opt from the following, the limitation/problem he is facing.

Opt: Marketing problems

Lack of finance

Shortage of materials

Old production methods

Hawker

Street trader

Cheap jack

Periodic market trader

Ans: Marketing problems

Q17. On Fridays, Saturdays and Sundays, Rita sells flowers on the street of busy markets. This is to earn additional money and support her family. Identify the type of trader that Rita is.

Opt:

Hawker

Street trader

Cheap jack

Periodic market trader

Ans: Periodic market trader

Q18. In 2010 Chumbak began with the simple idea of creating a fun range of magnet souvenirs for travelers that attracted the big guys. It felt legit, and went for the next step, took on their own independent stores, packed with what we see today. Now, besides the metro cities, we can see Chumbak stores in Ahemdabad Chennai, Chandigarh, Bhopal, Goa, etc. Hence. this can be categorised as an example of

Opt:

Departmental store

Multiple shop

Vending machine

Supermarket

Ans: Multiple shop

Q19. A large global company provides IT services to other business firms. The CEO of the company decided to open a new office in another country, but his plan was unsuccessful due to non-compliance with legal laws and regulations of the country. The problem of international business highlighted here is

Opt:

Increased standard of living of people in other country

Blocking up of capital while operating in another country

Regulations and policies related to international trade

Difference in languages, preferences, customer choices, etc.

Ans: Regulations and policies related to international trade

Q20. Identify from the following, an institution that was established in 1995 to promote and foster the growth of small-scale units in India.

Opt:

District Industrial Centres

Central Bureau of Small Scale Industries

National Small Industries Corporation

Micro, Small and Medium Corporation

Ans: National Small Industries Corporation

Q21. Quikr, launched in 2008, is an online classified company based in Mumbai.

It provides the local community with a platform to help them buy, sell, rent and find something and address needs across many categories. These categories range from mobiles, real estate, cars, services, jobs, entertainment, furniture, electronics etc. It is currently available in 90 cities across India.

Identify the dimension of e –business undertaken by Quikr.

Ans: The dimension of e-business undertaken by Quikr is C2C Commerce (Customer to Customer Commerce).

In this, both the parties involved are customers. It allows sellers to access vast market of potential buyers from all over the world and is best suited for those products that do not have formally established market mechanism.

Q22. State the responsibilities of business towards the government.

                                                        Or

The Board of Directors of Vodafone Group Plc has adopted this code of ethics, which is applicable to all its concerned Officers to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; promote the full, fair, accurate, timely and understandable disclosure of the company’s financial results in accordance with applicable disclosure standards.

How would such code help Vodafone Group Plc?

Ans:

The responsibilities of business towards the government are as follows: –

1. A business organisation must respect the laws of the country laid down by the government where it is operating its activities.

2. Business must pay the taxes and duties lavied by the government for smooth functioning of various government schemes.

3. A business must behave as a good citizen and act according to the well accepted values of the society.

Or

Vodafone  Group Plc would derive the following benefits by establishing such code of ethics:
Improved public image

Earn people’s confidence & trust.

Lead towards greater success of business.

Develop a culture of care for people & environment and command a high degree of integrity in dealing with others.

Q23. Two brothers, Raman and Aman want to join their friend’s partnership business of software. Help them in knowing what kind of partners they can join as. (Any three).

Ans:

The different types of partners are:
i. Active partners – The partners who actively participate in the day-to-day operations of the business are known as active or working partners. They contribute capital and are also entitled to share the profits of the business. They are also liable for the debts of the firm.

ii. Sleeping partners – Those partners who do not participate in the day-to-day activities of the partnership firm are known as dormant or sleeping partners. They only contribute capital and share the profits or bear the losses, if any.

iii. Nominal partners – These partners only allow the firm to use their name as a partner. They do not have any real interest in the business of the firm. They do not invest any capital, or share profits and also do not take part in the conduct of the business of the firm. However, they remain liable to third parties for the acts of the firm.

Q24. Maya and Mohit are jointly running dairy farm which is a profitable avenue, Now they are planning to expand their business, They have various offers from their known ones either to convert their business in partnership or in cooperative organization, Guide Maya and Mohit by explaining the Difference between  partnership and cooperative organization.

                                                                                                                                       Or

The high quality and low price of the detergent NIRMA made for great value. After three years of selling NIRMA, Karsanbhai felt confident enough of starting on his own and quit his job.

Due to lack of precedence of setting up a business venture singlehandedly, his business initiative was considered very risky by his family.

Why was there a fear of failure in setting up a business single handedly by Karsanbhai Patel?

Ans:

Or

Entrepreneurs like Dr. Karsanbhai Patel, running sole proprietorship business face certain risks which could result in failure of the business.

The risks faced in Sole Proprietorships are:

Unlimited Liability – The owner has unlimited liability & in case of business failure, the creditors can recover their dues not merely from the business assets, but also from the personal assets of the proprietor.

Limited Managerial Ability –The sole proprietor has to assume the responsibility of varied managerial tasks like purchasing, selling, financing, etc. In case of lack of managerial skills, the business can fail.

Q25. In a report about development in village areas, it was stated that such areas have high capability which can contribute to their economic growth if industries are setup in these areas. The unskilled people can be employed in conducting activities like farming and mining. Also, there can be industries setup to contribute to infrastructure development of the villages. Different services like banking, transportation, communications, etc. can be setup so as to support such industries. Identify the different types of industries stated above by quoting the lines from the given para.

Or

‘Profit maximization cannot be the sole objective of any business’. Comment.

Ans:

• Primary Industries: These involve activities related to extraction and production of natural resources and reproduction and development of living organisms

Lines quoted: The unskilled people can be employed in conducting activities like farming and mining.

• Secondary Industries: It involves use materials that are already extracted by the primary industry. It also involves processing of materials to produce goods for final consumption or for further processing by other industrial units.

Lines quoted: There can be industries setup to contribute to infrastructure development of the villages

• Tertiary industries: They provide support services to primary and secondary industries, and trade related activities. It acts as auxiliaries to trade.

Lines Quoted: Different services like banking, transportation, communications, etc. can be setup so as to support such industries.                                           

                                                   Or

Earning profit is important, however, it cannot be the only objective of a business. According to Urwick, “Earning of profits cannot be the objective of a business any more than eating is the objective of living.”

Profit maximisation as the sole objective can be a cause of concern. It ignores the interest of various stakeholders. Businesses may undertake unfair trade practices such as hoarding, black marketing, adulteration, etc to blindly maximise profits. Through such practices business will not be able to earn goodwill of the people and society, and will not be able to survive and grow in the long run.

Infact, bsuiness has various other economic and social objectives to fulfill such as-

– Optimum utilisation of resources

– Bring innovative ideas in production and distribution of good

– Make available and supply good quality goods at reasonable prices

– Promote social welfare

– Cooperate with government, etc.

Hence, it can be concluded that though important, profit maximisation cannot be the sole objective of a business.

Q26. “If partners do not register their partnership firm, they will be deprived of certain benefits”.
In the light of this statement, state the effects of non-registration of a partnership firm.

Ans:

If a partnership firm is not registered, then the benefits the firm and the partners will be deprived of are as follows:
i. The partners cannot file a suit to enforce a right arising from the partnership contract against the firm.
ii. Any partner cannot file a suit to enforce a right arising from the contract against any past or present partner of the firm.
iii.  The firm cannot file a suit against a third party for the recovery of claims.
iv. The firm cannot file a suit against any of its partners.

Q27. Pal Spices Ltd., an exporter of spices, took a marine insurance policy with New India Insurance for ₹ 20 lakh and from National Insurance company for ₹ 10 lakh for its export shipment.

While in transit, the goods were destroyed due to a technical fault with a ship, wherein the sea water destroyed the goods kept in the storage area. Due to this, the company incurred a loss of ₹ 25 lakh. Pal Spices claimed the full amount insured as  compensation, from both the insurance companies in full.  Will by Pal Spices Ltd. be able to get the claim of 30 lakh from the insurance companies? How much claim will it get from each insurance company?

Or

We see that the market is driven by the complete focus on cutting the cost of logistics. Automation and implementation of smart warehousing solutions will drive the public warehousing market growth in the future.

Companies across the globe focus on minimizing the cost of logistics, particularly of warehousing. Many companies are choosing public warehouses for space on a need basis because it is seen that outsourcing their warehousing needs is much more economical than investing in storage and distribution systems. In addition, public warehouses are also flexible in terms of space available. Thus, as the economic environment becomes more challenging, companies will increasingly outsource warehouse services to reduce costs and preserve profit margins.

Identify the purpose solved by this business service.

Ans:

No, Pal Spices Ltd, will not be able to claim ₹ 30 lakh as compensation from the insurance companies.

As per the Principle of Indemnity, It would only get compensated for the amount of loss incurred by it, i.e. upto ₹ 25 lakh and not more than the amount of loss.

Moreover, since Pal Ltd has taken double insurance, according to the Principle of Contribution, both the insurance companies will contribute towards the loss in proportion to the amount assured by each.

Hence, New India Insurance will contribute ₹ 16.67 lakh (in the ratio 20:10) and National Insurance company will contribute ₹ 8.33 lakh.

Or

Warehousing service is an important service for businesses as storage has always been an important aspect of economic development.

Warehouses are not merely storage service providers but have become logistical service providers in a cost efficient manner.

That is ensuring available the right quantity, at the right place, in the right time, in the right physical form at the right cost.

There are modern warehouses that are automated with automatic conveyors, computer operated cranes and forklifts for moving goods and also usage of

logistics automation software’s for warehouse management.

Q28.

Ramesh wanted to start a small scale firm with the help of benefits offered under MSMED Act, 2006. He made an investment of ₹ 9 crore in plant & machinery and opened a medicine manufacturing firm in Baksa district in Assam. After few weeks, he imported a fully automated equipment of around ₹ 1.5 crore. He applied for registration under the Act, however, his application got rejected. Why was the application rejected?

Ans:

Ramesh’s application was rejected as the unit run by him does not fall under the category of a small scale unit as per the MSMED Act, 2006.

Ramesh is running a manufacturing enterprise. He made an investment of around ₹ 9 crore in plant and machinery. However, after his investment in automated equipment of ₹ 1.5 crore, the investment crossed ₹ 10 crore.  According to MSMED Act, 2006, manufacturing enterprise are enterprises whose investments in plant and machinery are upto ₹ 10 crore only.

Q29. Union Bank of India aims at offering a comprehensive range of products to meet all financial needs of customers. In its aspirations of becoming a financial supermarket, it has set up joint ventures with multinational companies, which are well known and recognised as leaders in their areas of expertise. It has tied up with KBC, Belgium to set up a joint venture for Mutual Fund Products – Union KBC Asset Management Company Ltd.

How would setting up joint ventures help Union Bank in achieving its goal of becoming a financial supermarket?

Ans:

Joint Venture provides a lot of benefits which can be helpful to Union Bank in many ways. These benefits are:
• Increased resources and capacity – The bank can pool its resources – financial, physical and human resources with those of its partners.
• Innovation – The bank can bring out new and innovative products and increase its customer base.
• Established Brand Name – Goodwill of the MNCs will be of great benefit to the bank.

Q30. Nia placed an order of a vacuum cleaner after seeing in catalogue. The specification of the product with respect to features, colour, price, etc. was stated in the catalogue. Also, at the back, it was specifically stated that the delivery of the order delivery will be based on valuable payable post Explain the type of retail trade discussed in given case.

Ans:

The type of retail trade discussed in above case is mail order houses.

A mail order house is a retail outlet that sell its products through mail, without having any direct personal contact with the customers.

For obtaining orders, the customers are reached through circulars, brochures, catalogues, advertisements in newspapers or magazines and price lists which are sent through post.

After getting the orders, the goods are sent as per the specifications through the post or by value payable post (VPP), which involves delivery of products through post to the customers only on making full payment for the same.

Q31. In today’s environment, both the employees and customers give importance to working for and spending their earnings with organisations that focus on following prioritize corporate social responsibility (CSR).

CSR is an effective business practice that supports sustainable development and has a positive impact on social, economic and environmental aspect of society.

CSR also has a good impact on an organisation’s image and helps in improving its brand.

Give reasons as to why business organisations should follow social responsibility.

Ans:

• Existence and growth of business: The prosperity and growth is possible only through continuous service to society. Profit motive is an important justification for a business and it is an outcome of satisfactory services to people. Therefore, satisfying the customers through social responsibility is necessary for the existence and growth of business.
• Avoidance of government intervention: Governmental intervention is undesirable for smooth running of a business as it limits the freedom of activities. If the firms voluntarily adopt social responsibility programmes, they can avoid this problem.
• Creating opportunities: The business institutions have valuable financial and human resources which can be effectively used for solving problems. In this way they can convert risky situations into profitable deals, create new opportunities as well as solve social problems.
• Long term interest of business: It is in the long term interest of the business to fulfill its social responsibility. The public image of the firm would improve when it supports social goals. If the firm fails to do so, the members of the society feel that business is not serving its best interest and they tend to withdraw their cooperation to the enterprise.
• Creating better business environment: A firm cannot do better in a society which is full of complicated problems. If the society has fewer problems, it will provide better environment for a firm to conduct its business. Therefore, it is in the interest of the business firms to take steps to minimise the problems of the society by acknowledging their responsibility towards them.
• Moral obligation of business: Most of the social problems have either been created or perpetuated by business enterprises themselves such as environmental pollution, unsafe workplaces, corruption in public institutions and discriminatory practices in employment. Hence, it becomes the moral obligation of business firms to get involved in solving these problems.

Q32. You are financial manager in a limited company and your company is in need of funds. Which factors you would consider before deciding the source of funds to be used?

Ans:

Financial needs of a business are of different types. There are various types of sources of funds also available in the market. No single factor can decide the selection of sources of funds. It will depend upon various factors.

Some of the major factors to be considered before choosing one alternative are as follows:

1. Cost: Cost is the amount of expenses which are to be made in procurement of funds and which are to be made in maintenance of funds in the way of interest and dividends. It is a major factor while deciding the sources of funds as it directly affect the profitability of the organisation.
2. Purpose and Period: Time period for which the funds are required is also considered for selecting an appropriate source. If funds are needed for a short period it should financed by short term sources of funds such as bank overdraft, trade credit, commercial paper etc. On the other hand if funds are needed for long period it should financed by long term sources such as shares, debentures, loan from banks or non-banking financial institutions, public deposits etc.
3. Risk: Risk related to the source of funds must be taken into consideration while selecting the source. There is a least risk in equity as the share capital has to be repaid only at the time of winding up and dividends need not be paid if no profits are available. A loan on the other hand, has a repayment schedule for both the principal and the interest. The interest is required to be paid irrespective of the firm earning a profit or incurring a loss.
4. Flexibility: The choice of a source of finance is greatly affected by the flexibility and ease of obtaining funds. Restrictive provisions, detailed investigation and more documentation in case of borrowings from banks and financial institutions may be the reason that a business organisation may not prefer it, if other options are readily available.
5. Control:  Some of sources of funds may affect the control and power of the owners on the management of a company. Issue of equity shares may dilute the control in the company as voting rights will go in some new hands also. On the other hand, debt providing financial institutions may take control of the assets or impose conditions as part of the loan agreement. A source should be chosen keeping in mind the extent to which the management is willing to share its control over business.
6. Tax Benefits: Various sources of funds should also be analysed in terms of their tax benefits. The organisation seeking tax advantage should issue debentures instead of preference shares as interest on debentures deductable expense for tax purpose while preference dividend is not tax deductible.

Q33. Have you ever heard about StudyTube, Slack, WhatsApp, WidgetBrain, Citigroup, Klout, TransferWise, etc.? These are some of the IT outsourcing examples of world-famous companies. Approximately, 75% of companies currently outsource IT services.

Taking in account the tech talent shortage, outsourcing is becoming more desirable than ever. This solves a number of problems ranging from cutting software development costs to the struggle in finding the needed specialists.  Why do you think there is a shift towards outsourcing of activities by businesses?

 Or

With the upgradation of technology, the way of carrying out various business activities are changing and facilitating business with the help of internet and technology seems good, But it suffers from few limitations kindly state the limitations of E-business.

Ans: 

There is a shift towards outsourcing of activities by businesses due to following benefits of outsourcing:

Focus on core: Businesses are now realising the importance of focusing on just a few or core areas where they have distinct capability or core competence, and contracting out the rest of the activities to their outsourcing partners

Reduction in costs: Division of labour and specialisation not only ensures improvement in quality but also reduction costs. Reason being the economies of scale that accrue to the outsourcing partners as they deliver the same service to a number of organisations.

Quest for excellence: Outsourcing enables the firms to pursue excellence in following two ways. They excel themselves in the activities that they can do the best by virtue of limited focus. Plus they excel by extending their capabilities through contracting out the remaining activities to those who excel in performing them.

Growth by the way of alliance: Not only financial returns, outsourcing also facilitates inter-organisational knowledge sharing and collaborative learning. To the extent one can avail the services of others, its investment requirements are reduced, others have invested in those activities for you.

Boost to economic development: Outsourcing stimulates entrepreneurship, employment and exports in the host countries.

Or

Following are the main limitations of e-business:

i)  Low Personal Touch: E-business lacks interpersonal interaction with the customers. For this reason, it becomes less suitable mode of business for products such as garments, jewellery etc., which require high personal touch with the customers.

ii) Time Delay in Physical Delivery: There is time gap between placing an order online and obtaining physical delivery of the goods. This may frustrate the customer.

iii) Risk in Transactions: Transactions occur over the internet. There is no personal contact between the parties. There is risk of impersonation, leakage of confidential information, data hacking etc. Hence, the transactions are riskier.

iv) Need for Technology: Both the parties need a fairly high degree of familiarity with modern technology. Persons who are not much aware about the internet cannot go for e-business.

v)  Resistance: Sometimes organisations planning entry in e-business face employees’ resistance. If the employees are not well versed with the IT skills, they think that it may harm their interests.

vi) Ethical Concerns: With the advanced technology, it is possible to keep a secret and close watch on one’s files on computer, e-mail account, web sites visited etc. It provokes some ethical concerns from the employees’ point of view.

Q34. Differentiate between domestic business and international business.

                                                                                   Or

Your firm is planning to import textile machinery from Japan. Describe the procedure involved in importing.

Ans:

Or

Following procedure would be followed for importing textile machinery from Japan:

1. IEC number, RCMC and import license: First step would be to obtain Import Export Code (IEC) number from Directorate General Foreign Trade Authority. I will also apply for import license.
2. Trade Enquiry: I will seek trade enquiry from various suppliers about the price and terms and conditions. Based on the quotations from suppliers, I will identify from whom I should import the goods.
3. Foreign Exchange: I will apply to a bank authorized by Reserve Bank of India to issue foreign exchange.
4. Placing the Order: After receiving the sanction of RBI for release of foreign exchange, I will place the order called ‘indent’ for the required goods.
5. Sending Letter of Credit: Usually, the exporter asks the importer to send a letter of credit, to be sure about the creditworthiness of the importer. I will obtain a letter of credit from my banker and send it to the exporter.
6. Retirement of Import documents: I will now retire the import documents by accepting the bill of exchange. I will receive the shipping documents.
7. Customs clearance and release of goods: I will obtain the delivery order on the back of bill of lading from the shipping company to take possession of the goods. I will the pay the ‘port trust dues’ and the dock dues. Then i will prepare the Bill of Entry for assessment of the customs import duty.
8. Taking Delivery of Goods: Having completed all the formalities and payment of customs duty, I or my clearing agent will take the delivery of goods from the dock.