CBSE Sample Papers For Class 12 Business Studies Mock Paper 1

Q1. Match the dimension of business environment in Column I with its corresponding factor in column II.

Column I	Column II
A) Technological environment	i. Constitution of the country
B) Economic environment	ii. Educational system and Literacy rates
C) Social environment	iii. Innovations of existing products
D) Political environment	iv. Rates of savings and investment

Opt:

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

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

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

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

Ans:

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

Q2. Company WTY is an accounting firm. The management of the company found that it became difficult to keep records of all the clients. The company saw that other accounting firms have purchased accounting software. The company then decided that they should purchase one software application that will help them in maintaining records and tracing errors. Which level of management is responsible for analysing the business environment and the changes take place in the environment?

Opt:

Top level management

Middle level management

Supervisory level management

Operational level management

Ans:

Top level management

Q3. In an enterprise, there exist a formal relationship of authorities, duties and responsibility between different departments and positions. Such relationships defined among different departments is termed as

Opt:

Functional foremanship

Informal organisation

Grapevine network

Organisation structure

Ans:

Organisation structure

Q4. A company has a got a vacant position for the program manager. They need a person who has 4 or more years of experience in handling social work programmes. He should have a master’s degree in social work and worked in rural areas before. The work location is Ahmednagar. There is no compensation bar for the right candidate.

What should be done by the management if the candidate possesses all the qualities except the desired qualification?

Opt:

The candidate should be rejected.

The candidate should be selected for the next round.

The company should consider the equivalent qualification.

The company should consider the experience of the candidate only.

Ans:

The company should consider the equivalent qualification.

Q5. Trade bill is also called____________.

Opt:

Treasury bill

Commercial paper

Commercial bill

Certificate of deposits

Ans:

Commercial bill

Q6. Primi foods is a producer of sandwich sauces like mayonnaise, mustard, mint, etc. It is a well known brand name and popular among people. The company plans to introduce some new flavours of sauces. The company has a marketing budget of `5 lakhs and has decided to spend it on use of media like advertisements, billboards, etc. for making the product popular. Which element of marketing mix can be related to making new flavours of sauces popular?

Opt:

Product mix

Distribution mix

Price mix

Promotion mix

Ans:

Promotion mix

Q7. Tata Motors conducts a trade apprenticeship programme in which freshly passed out candidates who have an interest in developing their vocational skills are given trade specific skill training. This type of training programme helps them to gain employment and become economically independent. They are exposed to soft skills and the latest techniques and technologies of working. This training programme also helps the youth in pursuing higher education after the completion of the program. The course duration is for two years. The trainees are offered a stipend and free canteen and transport facilities. One who has passed 10^th or matriculation can apply for the same.

Which kind of professionals requires this type of training?

Opt:

Supervisor

Foreman

Technician

Officer

Ans:

Technician

Q8. The combination of various features related to the product or service to be offered such as quality, quantity, package, brand name, etc. are a part of____________.

Opt:

promotion mix

physical distribution mix

place mix

product mix

Ans:

product mix

Q9. Company C manufactures 6000 units of product in a month. The company makes sure that the manufacturing is done with optimum cost. The company employs the same number of workers for manufacturing the products. During rush time, the company asks workers to work overtime.

Identify the concept used by the organization C.

Opt:

Effectiveness

Efficiency

Controlling

Planning

Ans:

Efficiency

Q10. Company Y is a food manufacturing company. The company has allocated one head for two types of food divisions. The managers heading the two food divisions find it difficult to manage due to which the balance between the production and sales cannot be maintained properly.

Determine the principle of management missing in this case.

Opt:

Unity of direction

Unity of command

Discipline

Esprit de corps

Ans:

Unity of command

Q11. Advertising, personal selling, sales promotion and publicity are the methods of_________.

Opt:

warehousing

promotion

physical distribution

transportation

Ans:

promotion

Q12. What is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period known as?

Opt:

Treasury bill

Commercial bill

IPO

Commercial paper

Ans:

Commercial paper

Q13. There are two companies of tea making A and B. A company has good packaging and includes all the details about the product like manufacturing, expiry details and ingredients. The packaging also helps in proper delivery and dispatch of tea packets. While the company do not have good packaging of tea leaves. The product of this company is only sold in local markets. Due to lose packaging, the company’s product gets destroyed during transportation. Also, the consumer does not get information regarding the product manufacturing.

What benefit will the company have if the products are sold in good packaging condition?

Opt:

​
The product can have wider reach markets​

The product will get sold more​

​The consumer will promote the product​

​The distributer will not charge any commission​

Ans:

​The product can have wider reach markets​

Q14. ___________ refers to a sign that is prominently used by brands on all of their products’ packaging, labelling, and advertising.

Opt:

Trade name

Trademark

Brand name

Brand mark

Ans:

Trademark

Q15. __________is the use of more debts along with equity shares in the capital structure with a view to increase Earnings per share.

Opt:

Trading in Equity

Trading on equity

Trading of equity

Trading with equity

Ans:

Trading on equity

Q16. Equity and preference shares, debentures, bonds, bills of exchange and commercial papers are collectively called_____________.

Opt:

Capital market instruments

Financial market instruments

Money market instruments

Secondary market instruments

Ans:

Financial market instruments

Q17. One of the concepts of marketing management says that consumer satisfaction should not be blindly followed. Identify the concept.

Opt:

Production concept

Marketing concept

Societal concept

Product concept

Ans:

Societal concept

Q18. Choose from the following:

Assertion (A): Job rotation allows the trainers to interact with other employees.

Reason (R): It involves shifting the trainee from one department to another.

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.

Q19. Sumit works as a sales manager in a company which makes water purifiers. Sumit has given a lot of sales to the company. He has a few loyal customers who make purchases frequently from this company. One of those customers has asked him to give a personal discount on the product. Sumit said that he cannot do that because it is against the policy of the company.

What aspect of management is missing here due to which Sumit cannot move forward with personalised discounts?

Opt:

Responsibility

Accountability

Authority

Power

Ans:

Authority

Q20. Ms. P wanted to buy cosmetics. She wants to know the manufacturing and expiry date of cosmetics. Identify the right that is enforced by Ms. P here

Opt:

Right to Safety

Right To Consumer Education

Right to Seek Redressal

Right to be Informed

Ans:

Right to be Informed

Q21. Decentralisation is extending delegation to the lowest level.Comment.

Ans:

In decentralisation, authority is transferred to the bottom of the hierarchy so that every part of the workforce can take their own decisions effectively without any delay. When authority is delegated to every department and to every level of management, authority is said to have been decentralised. Decentralisation is the end result of all the delegation of authorities among all the managers and employees of the organisation.

Q22. Speciality Millet Ltd. has the largest share of 62% in the market. The company’s policy is to sell only for cash. In 2019, for the first time company’s number one position in the industry has been threatened because other companies started selling millet on credit also. But the managers of Speciality Millet Ltd. continued to go with its previously tried and tested successful plans which didn’t work because the environment is not static. This led to decline in turnover of Speciality Millet Ltd. The above case is signifying three limitations of planning which led to decline in it turnover. Identify these limitations.

Or

Rohan is a supervisor in Olex Ltd. He is at the lower level of management. He gives ‘on the job training’ the ways in which a task is to be done by the workers at the shop floor level. He meets his boss twice a week and provides a statement quantifying the numbers required in various activities at the shop floor for next 6 months. The boss approves his requirements and gives asks him to set targets about the next plan he thinks is good for the manufacturing unit. Rohan’s dedication is seen by all. In the above case state 2 types of plans that are highlighted. Which step of planning process is highlighted in the above case?

Ans:

Limitations of planning are:

• Leads to rigidity: Plans are drawn up with specific goals to be achieved within a specific time frame. These plans decide the future course of action and managers may not be in a position to change it.
• Reduces creativity: Plans are formulated b top management and other people cannot deviate from the plans. This reduces initiative and creativity.
• May not work in dynamic environment: Environment is dynamic and it consists of a number of dimensions: economic, political, physical, legal and social. The organisation has to constantly adapt itself to changes.

Or

The types of plans highlighted above are:

1. Method. He gives ‘on the job training’ the ways in which a task is to be done by the workers at the shop floor level.
2. Budget. He meets his boss twice a week and provides a statement quantifying the numbers required in various activities at the shop floor for next 6 months.

The step of planning process highlighted in the above case is ‘Setting Objectives’.

Q23. Goldstar Limited is a large home furnishing manufacturer. The company plans to give some benefit to its existing shareholders who have been loyal to the company. It offered them new issue of shares as per the current ratio of shares being owned by them. The CEO of the company appreciates the shareholders for trusting in the company. What method of floatation is cited in the above case?

Ans:

The method of floatation in above case is Rights issue.
It involves benefit provided to the existing shareholders of the company inviting them to subscribe to the new shares being issued by the company.
The shareholders are given the right to purchase new shares as per their current proportion of shares being held in the company.

Q24. Differentiate between Production concept and Product concept of Marketing.

Or

Shashank has been appointed as a salesman in a water purifier products company. Which qualities according to you should he display to win over his customers and increase his sales?

Ans:

Basis	Production Concept	Product Concept
Focus	Is on quantity of product	Is on quality of product
Means	Through availability and affordability of product	Through improvement of quality of products
Ends	To earn profits through large volume of production	To earn profits through quality of product

OR

Qualities of a salesman which Shashank should display are: i. Psychological Attributes– He should be intelligent, be patient, be flexible and tactful, while handling customer requirements   ii. Technical Attributes– He should carry full knowledge about the-Product, customers, company and competitors. iii. Social Attributes– He should be polite, be self disciplined and be courteous, while dealing with different types of custom ers. iv. Communication Skills– He should be a confident speaker, be a good listener and be able to win customer’s confidence.

Q25. The HR department of Pawan Ltd is in the process of selecting candidates. Explain the different types of tests which Pawan Ltd can use for selecting candidates.

Or

The employees of a famous food chain, are trained through a structured programme that provides training in each area within the restraint only. The trainees learn the skills required for running each of the 10 workstations in the restaurant, from taking orders to the cooking area. This gives the employees a better understanding of all parts of the business and how the food chain functions as a whole. The trainee gets fully involved in the department’s operations and also gets a chance to test her own aptitude and ability. This way the organisation also finds it easier at the time of promotions, replacements or transfers. In context of the above case:

Identify and explain the type of training that the food chain provides to its employees. Is this training different from development?

Ans:

The different types of selection tests that can be conducted by Pawan Ltd are:

i. Intelligence test – This test is conducted to check the efficiency level of the employees in performing the job. This means assignment of the job related to vacant job position and testing the ability of the employees.

ii. Aptitude Test – This test is conducted to test the potential of learning new job of the candidate. This test helps to know the candidate will be performing in future.

iii. Personality Test – This test is conducted to find out the human behaviour of the candidate. This test relates to intelligence, aptitude, attitude and interest of the candidate.

iv. Trade Test – This test is conducted to check the basic knowledge and skill of the candidate related to vacant job position.

Or

Food chain here uses Job Rotation method of training its employees. This is a method of on-the-job training that involves shifting the trainee from one department to another or from one job to another.

Training is different from development.

Basis	Training	Development
Meaning	It is concerned with teaching technical skill only	It is concerned in teaching technical, human and conceptual skill
Focus	It focuses on present requirements of the organisation	It focuses on future requirement of the organisation
Time	Short term process	Long term process

Q26. What is the main proposition of the humanistic approach to personality? What did Maslow mean by self-actualisation?

Ans:

The main proposition of the humanistic approach is that people have an inborn tendency to actualise their inherited nature. They are motivated to express their talents, abilities, and potential. People tend to engage in goal-directed Post-Freudian and worthwhile activities. Those who are innately good, almost always pursue self-actualising behaviour. Self-actualisation is the highest need in the pyramid according to Maslow. After satisfaction of lower-level needs, a person can then try to achieve self-actualization. Very few people fulfill this need. A self-actualised person might have a knack for looking at problems in new ways of thinking along different lines than other people do.

Q27. Rita and Sudhakar are sales executives in an insurance company. They are assigned for the role of giving information to their clients related to the benefits of insurance. A client launched a complaint against the company for giving false information regarding the insurance plan, considering the above case, what can be the barriers to effective communication.

Or

State the different networks of grapevine communications.

Ans:

There are four major barriers to Effective communication:

1. Semantic Barriers: These are basically language related Barriers.

2. Psychological or Emotional Barriers: These are the outcome of the mental condition of the parties involved in the process of communication.

3.Organisational Barriers: Organisational structure greatly affects the capability of the employees with reference to communication process. 4.Personal Barriers: These are directly connected with the sender and the receiver.

Or

Generally Informal communication is termed as grapevine. Informal communication grows in all directions as it is the communication between individuals and groups, which are not officially recognised. This type of communication is the result of social interaction and satisfies social needs. Such informal paths are referred to as ‘grapevine’. Different networks of grapevine communications are:

·

Single Strand: In single strand network, each person communicates to the other in sequence.

·

Gossip: In gossip network, each person communicates with all on nonselective basis.

·

Cluster: In cluster, the individual communicates with only those people whom he trusts of these four types of networks.

·

Probability: In probability network, the individual communicates randomly with other individual.

Q28. To avoid the problem of shortage and surplus of funds what is required in financial management? Name the concept and explain any three points of its importance.

Ans:

Financial Planning is required to avoid the problems of shortage and surplus of funds. It ensures that adequate funds are available at the right time and also no funds are lying unutilised in the organisation

Importance of Financial Planning:

1) It helps in avoiding business shocks and surprises and helps the company in preparing for the future by preparing alternative financial plans.

2) It provides a link between investment and financing decisions on a continuous basis.

3) If helps in coordinating various business functions by providing clear policies and procedures.

Q29. Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose the company needs additional Rs. 80,00,000 for replacing machines with modern machinery of higher production capacity. The company wishes to raise the required funds by issuing debentures. The

debt can be issued at an estimated cost of 10%.The EBIT for the previous year of the company was Rs.8,00,000 and total capital investment was Rs.1,00,00,000. Suggest whether issue of debenture would be considered a rational decision by the company. Give reason to justify your answer. (Ans. No, Cost of Debt (10%) is more than ROI which is 8%).

Ans:

A company can issue debenture for raising fund if the cost of the debt is less than cost of capital.

In this case, the cost of capital for sunrises limited is 10% for the total capital of ₹80,00,000, cost of capital will be ₹8,00,000.

As per the previous year earnings statement, the company had net earnings of ₹8,00,000 for the capital investment of ₹1,00,000.

So total return on investment:

ROI = Return/Investment

ROI = 8,00,000/1,00,00,000 = 8 percent

Under the assumption, that company will operate under the same efficiency, the additional investment of 80,00,000 will be having net ROI of 8% which will be 6,40,000 against the cost of debt 8,00,000.

As for the project the cost of is 10% which is generating ROI of 8%. It would not advisable decision for a company to issue debenture when cost of debt is higher than cost of capital.

Q30. You need to purchase a gold ornament from a jeweller. What will be your responsibilities as a consumer, so that you are not exploited by the jeweller. State any four.

Ans:

A consumer should keep in mind certain responsibilities while purchasing, using and consuming goods and service

The responsibilities I need to exercise while purchasing the ornaments are:

i. Should buy only standardized goods as they provide quality assurance. Should look for Hallmark on jewellery.

ii. Should read labels carefully so as to have information about prices, weight, manufacturing etc.

iii. Should ask for cash memo on purchase of goods and services as it serves as a proof of the product

iv. Should learn about the risk associated with products and services and follow manufacturer’s instructions and use the products safely.

Q31. Coupons, Samples and bonus offer help in sales promotion”. Justify the statement.

Ans:

1) Samples : Free samples are distributed in small packs to stimulate consumer trails and pull in new products like shampoos, washing powders, coffee, etc. There are various ways employed for distribution. It can be done on a door-to-door basis, by demonstrations or inserting in another packet containing a similar product. For example, shampoo pouches are given free with tooth pastes. As the cost of sampling is high, the cost of the product goes up as special packaging is required and distribution costs are also quite high. Many samples are wasted since it might not go to consumers who are interested or to those who have tried the product.

2) Coupons: Coupons offer discounts usually 5% to 10% on the purchase of a product. For example, Reliance Textiles distribute discount coupons to their shareholders. Sometimes in the packet of a product there will be a discount coupon for the next purchase. Discount coupons are also printed in certain advertisements appearing in magazines. They have to be cut out and presented to the retailer while buying the product.

3) Bonus : Premiums are bonus items given free with the purchase of a product, e.g., a milk shaker along with Nescafe, or mugs with Bournvita, or a toffee along with a packet of chips. They are effective in getting consumers to try a new product. Sales promotion refers to short-term incentives, other than advertising and personal selling is aimed at stimulating market demand for products. Samples, coupons, bonus offers, discounts, contests and demonstrations are the important sales promotion techniques employed by manufacturers
Q32. What is meant by ‘Delegation’? Explain any four points which highlight the importance of delegation in an organisation.

Ans:

Delegation is the process a manager follows in dividing the work assigned to him so that he performs that part which only he can perform effectively and so that he can get others to help with what remains.

Importance of Delegation:-

a) Effective management:- By empowering the employees, the managers are able to function more efficiently as they get more time to concentrate on important matters.

b) Employee Development:- As a result of delegation, employee get more opportunities to utilise their talent and this may give rise to latent abilities in them.

c) Motivation of employees:- Delegation helps in developing the talents of the employees. It also has psychological benefits. When a superior entrusts a subordinate with a task, it is not merely the sharing of work but involves trust on the superior’s part and commitment.

d) Facilitation of Growth:- Delegation helps in the expansion of an organisation by providing a ready workforce to take up leading position in new venture.

Q33. Explain ‘Policies’ and ‘Procedures’ as the types of Plans. Differentiate between the two on any four basis.

Or

“Defining organizational objectives” is the first step in the process of planning. Explain, in brief, the other steps of this process.

Ans:

Policies- Policies are framed to achieve the objectives. They determine how the work is to be done. In this way, policies decide the procedures to be adopted for completion of the job. They are determined by the top level, medium level & even lower level management. Eg. Mc Donald’s have a policy that it will not grant a franchise to an individual who already owns another fast food restaurant. Procedures – Series of related tasks that make up the chronological sequence and establish ways of performing the work to be accomplished are known as procedures. It explains what is to be done in a particular type of situation. It is a systematic way of handling events.

Policy	Procedure
Policy is a guide for thinking and decision making.	Procedure is a guide for action.
It is derived from objectives of the enterprise.	It is laid down to implement some policy.
It is more flexible.	It is rigid.
It is expressed in a form of general statement.	It is expressed in more specific terms.
It leaves some scope for manager’s discretion.	It gives no discretion to the person concerned with its implementation.

Or

Steps in the Process of Planning :

1. Defining organizational objectives – In order to begin with the plan a clear and definite objectives of the organisation is necessary. Plans are always made to solve the problems of the business, to attain a specific objective or to avail oneself of the benefits expected from any anticipated opportunity.

2. Collection and analysing information – Certain facts and information regarding the anticipated problems, requirements are to be collected and properly analysed. This analysis of the facts will prepare sound basis in the formation of plans.

3. Setting the objectives – The definite and clear objectives of the plans should be established in verifiable terms. Plans should also be objective oriented.

4. Determining planning premises – Planning is always based upon certain estimates and forecasts, which can never be cent per cent accurate. There are certain limitations which can be taken note of.

5. Budgeting implementation of plans require finance – It is therefore, necessary that budgets for master plan and different plans to be prepared. Plans for the arrangement of requisite funds should also be made. Budgeting keeps a check on extravagance and unnecessary expenses.

6. Examining alternative courses of action and selecting the appropriate course – All the factors of production can be put to different alternative uses. The planner has to ascertain the possible alternative courses of action. The management has to study effective utility of various factors of production

Q34. Explain the importance of principles of management.

Or

Differentiate between Taylor and Fayol on the basis of perspective, focus, concern, applicability, personality and contribution.

Ans:

The study of principles of management is important due to the following reasons:

i. Optimum utilisation of resources & effective administration: The principles of management serve as a guideline for doing work with greater efficiency. It helps managers to take a more realistic view of different managerial problems and to direct human behavior effectively.

ii. Fulfilling social responsibility: The principles of management advocate fulfillment of social responsibilities by corporate. It induces companies to take care of customer satisfaction, environment as well as fair dealings with business associates.

iii. Meeting changing environment requirement: The principles of management help the managers in adapting to the dynamic business environment. These are flexible in nature, can be modified according to the prevailing situation at a particular point of time.

iv. Management training, education and research: The principles of management provides conceptual framework for systematic training and development of future managers. It provides managers with useful insights into real world situations, more knowledge, ability and understanding of managerial situations and circumstances.

v. Provide managers with useful insights into reality: The principles of management increase managerial efficiency by increasing their knowledge, ability, understanding of managerial situations.

vi. Scientific decisions: Management principles help in scientific/ thoughtful decisions as they are based on objective assessment of the situation.

Or

Basis	Taylor	Fayol
Perspective	Taylor started his studies and approach from lowest level in the organisation.	Fayol started his studies and approach from the highest level in the organisation.
Focus	Focuses on eliminating wasteful movements and saving energy of workers	Focuses on development of principles for better management
Concern	Taylor’s techniques and principles are concerned with worker’s efficiency.	Fayol’s principles are concerned with management efficiency.
Applicability	Taylor’s techniques and principles are applicable to specialised situation.	Fayol’s principles are universally applicable.
Personality	Taylor developed a personality of scientist and became famous as Father of Scientific Management.	Fayol developed the personality of a researcher and practitioner and became famous as Father of General Management.
Contribution	Major contribution was development of scientific techniques and scientific principles	Main contribution was development of fourteen principles of general management