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Karnataka 1st PUC Business Studies Model Question Paper 6 with Answers

Time: 3.15 Hours
Max Marks: 100

Instructions to candidates:

  1. Write the serial number of questions properly as given in the question paper while answering
  2. Write the correct and complete answers.

Section – A

I. Answer any ten of following questions in a word or a sentence each. While answering Multiple Choice Questions, write the serial number/alphabet of the correct choice and write the answer corresponding to it. Each question carries one mark: ( 10 × 1 = 10 )

Question 1.
State a branch of commerce.
Answer:
The Branch of Commerce are:
(a) Industry
(b) Commerce

Question 2.
Name the form of business organization that is found only in India.
Answer:
Hindu undivided family business.

Question 3.
Mention any two forms of organizing public sector enterprises.
Answer:
The two types of form of organizing public sector enterprises are:
(a) Departmental undertaking.
(b) Statutory corporation. ,

Question 4.
Mention any one function of Insurance.
Answer:
Risk sharing.

Question 5.
What is B2B?
Answer:
B2B is a Business-To-Business Model in which transactions are done between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.

Question 6.
e-Commerce does not include
(a) A business’s interactions with its suppliers
(b) A business’s interactions with its customers
(c) Interactions among the various departments within the business
(d) Interactions among the geographically .dispersed units of the business.
Answer:
(c) Interactions among the various departments within the business.

Question 7.
Mention any one element of business ethics.
Answer:
Top management’s commitment is one element of business ethics.

Question 8.
How many members have to sign a memorandum of Association in the case of a private company?
Answer:
2 members have to sign a memorandum of association in case of a private company.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 9.
What is business finance?
Answer:
An activity of business covered with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of the business.

Question 10.
Centralized control in MNCs implies control exercised by
(a) Branches
(b) Subsidiaries
(c) Headquarters
(d) Parliament
Answer:
(c) Headquarters

Question 11.
Expand KVIC.
Answer:
Khadi and Village Industries Commission (KVIC).

Question 12.
Reconstruction of sick public sector units is taken up by
(a) MOFA
(b) MoU
(c) BIFR
(d) None of the above
Answer:
(c) BIFR

Section – B

II. Answer any ten of the following questions in two or three sentences each. Each question carries 2 marks: ( 10 × 2 = 20 )

Question 13.
State any two objectives of the business.
Answer:
Objectives of business are:
(a) Economic objectives, i.e. earning profits.
(b) Social objectives, i.e. providing employment.

Question 14.
Give the meaning of partnership deed.
Answer:
The written agreement which specifies the terms and conditions that govern the partnership is called the partnership deed.

Question 15.
What is disinvestment in PSEs?
Answer:
The Government can sell its enterprises completely to the private sector or disinvest a part of its equity capital held by it to the private sector companies or in the open market is called disinvestment in PSEs.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 16.
Mention any two types of Banks.
Answer:
Commercial Banks and Co-operative Bank.

Question 17.
State any two benefits of e-business.
Answer:
Two benefits of e-business are:
(a) Global reach/access
(b) Convenience

Question 18.
State any two elements of business ethics.
Answer:
The elements of business ethics are:
(a) Publication of a code.
(b) Top management’s commitment.

Question 19.
Give the meaning of minimum subscription.
Answer:
In order to prevent companies from commencing business with inadequate resources, it has been provided that the company must receive applications for a certain minimum number of shares before going ahead with the allotment of shares. According to the Companies Act, this is called the minimum subscription’.

Question 20.
What do you mean by the fixed capital requirement of a business?
Answer:
The funds are required to purchase fixed assets like land and building, plant and machinery, etc. in order to start a business.

Question 21.
State any two parameters used to measure the size of the business.
Answer:
Several parameters can be used to measure the size of business units. These include the number of persons employed in business, capital invested in the business, the volume of output or value of the output of the business, and power consumed for business activities’.

Question 22.
Give the meaning of multiple shops.
Answer:
These are large-scale retail shops where they sell a similar range of commodities at the same price in all their shops. These shops are usually owned and run by big manufacturers/producers.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 23.
Define international business.
Answer:
According to Michael R. Czinkota, “International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of the individuals, companies, and organizations”. These transactions take on various forms which are often interrelated.

Question 24.
Give the meaning of proforma invoice.
Answer:
A proforma invoice is a document that contains details as to the quality, grade, design, size, weight, and price of the export product, and the terms and conditions on which their export will take place.

Section – C

III. Answer any seven of the following questions in 10-12 sentences. Each question carries 4 marks: ( 7 × 4 = 28 )

Question 25.
Explain the causes of business risk.
Answer:
(a) Natural causes: There are certain natural factors like floods, earthquakes, etc. that can damage the business. Nature is uncontrollable, so any loss due to natural calamities is unavoidable.

(b) Competition: When a business has strong competitors in the market and the manufacture indulges in cutthroat competition by cutting down the price of the goods or by producing the cheap quality of the product, which is a great hazard for business.

(c) Change in demand for the product: Consumer’s taste and preferences; will keep on changing. These changes result in changes in demand for the products. This leads to business loss.

(d) Use of modern technology: If a company is financially strong, and uses modem technology for production, per unit cost of production of goods decreases. For small business units, it is not possible to do so. It makes small business units suffer.

(e) Human causes: Businesses may also suffer due to man-made causes such as theft, forgery, lavish expenditure of top management, embezzlement of cash, etc. which leads to business loss.

(f) Change in government policies: Government policies are unavoidable for business. If a sudden change comes in monetary and fiscal policies of the government which is not favour¬able for business will lead to business loss.

(g) Mismanagement: Sometimes management is not capable to run the business due to the important use of business risk. Due to improper planning, lack of attainment of planned objectives increases the risk. All these can lead to bad cash flow, an increase in per-unit cost, etc.

Question 26.
State any four features of departmental undertakings.
Answer:

  • Formation: These enterprises are established as departments of the ministry and are considered part or an extension of the ministry itself.
  • Control: The administration of these undertakings is directly under the control of the concerned ministry or minister.
  • Capital: The required capital is provided by the government in the annual budget.
  • Income: The income of these departments should be deposited daily into the government treasury.
  • Management: The employees of the enterprise are Government servants and they are headed by Indian Administrative Service (IAS) officers and civil servants who are transferable from one ministry to another.

Question 27.
State any four benefits of a statutory corporation
Answer:
The benefits of the statutory corporation are:
(a) They enjoy independence in their functioning and a high degree of operational flexibility. They are free from undesirable government regulation and control.
(b) Since the funds of these organizations do not come from the central budget, the government generally does not interfere in their financial matters, including their income and receipts.
(c) Since they are autonomous organizations they frame their own policies and procedures within the powers assigned to them by the Act. The Act may, however, provide a few issues/ matters which require prior approval of a particular ministry.
(d) A statutory corporation is a valuable instrument for economic development. It has the power of the government, combined with the initiative of private enterprises.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 28.
Briefly explain the scope of e-business.
Answer:
The scope of e-business:

  • B2B Business-To-Business: B2B is a Business-To-Business Model in which transactions are done between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
  • B2C Business-To-Customer: B2C is Business-To-Customer in which Business transactions are conducted directly between a company and consumers who are the end-users of its products or services.
  • C2C Customer-To-Customer: Consumer-To-Consumer is a business model that facilitates the transaction of products or services between customers.
  • Intra-B Commerce: If parties involved in the electronic transactions are from within a business firm, then it is known as intra-B commerce.

Question 29.
State any four arguments for social responsibility.
Answer:
The arguments for social responsibilities are:
(a) Public Image: The activities of business towards the welfare of the society earn goodwill and reputation for the business. The earnings of a business also depend upon the public image of its activities. People prefer to buy products from a company that engages itself in various social welfare programs.

(b) Government Regulation: To avoid government regulations businessmen should discharge their duties voluntarily. For example, if any business firm pollutes the environment it will naturally come under strict government regulation, which may ultimately force the firm to close down its business. Instead, the business firm should engage itself in maintaining a pollution-free environment.

(c) Survival and Growth: Every business is a part of society. So for its survival and growth, support from society is very much essential. The business utilizes the available resources like power, water, land, roads, etc. of the society. So it should be the responsi¬bility of every business to spend a part of its profit for the welfare of society.

(d) Employee Satisfaction: Besides getting a good salary and working in a healthy atmosphere, employees also expect other facilities like proper accommodation, transportation, education, and training. Employers should try to fulfill all the expectations of the employees because employee satisfaction is directly related to productivity.

Question 30.
Explain any four clauses of the memorandum of association.
Answer:
(a) Name Clause: It contains the name by which the company will be established. The approval of the proposed name is taken in advance from the Registrar of the companies.

(b) Objects Clause: It contains a detailed description of the objects and rights of the company, for which it is being established. A company can undertake only those activities which are mentioned in the objects clause of its memorandum.

(c) Capital Clause: It contains the proposed authorized capital of the company. It gives the classification of the authorized capital into various types of shares, (like equity and pref¬erence shares) with their numbers and nominal value. A company is not allowed to raise more capital than the amount mentioned as its authorized capital. However, the company is permitted to alter this clause as per the guidelines prescribed by the Companies Act.

(d) Liability Clause: It contains a financial limit up to which the shareholders are liable to pay off to the outsiders in the event of the company being dissolved or closed down.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 31.
Explain the financial needs of a business.
Answer:
(a) To purchase fixed assets: Every type of business needs some fixed assets like land and building, furniture, machinery, etc. A large amount of money is required for the purchase of these assets.
(b) To meet day-to-day expenses: After the establishment of a business, funds are needed to carry out day-to-day operations.
(c) To fund business growth: Growth of business may include expansion, of existing line’ of business as well as adding new lines. To finance such growth, one needs more funds.
(d) To bridge the time gap between production and sales: The amount spent on production is realized only when sales are made. Normally, there is a time gap between production and sales and also between sales and realization of cash. Hence during this interval, expenses continue to be incurred, for which funds are required.
(e) To meet contingencies: Funds are always required to meet the ups and downs of business and for pome unforeseen problems.

Question 32.
Explain the merits of retained earnings as a source of business finance.
Answer:
(a) Retained earnings are a permanent source of funds available to an organization.
(b) It does not involve any explicit cost in the form of interest, dividend, or floatation cost.
(c) As the funds are generated internally, there is a greater degree of operational freedom and flexibility
(d) It enhances the capacity of the business to absorb unexpected losses
(e) It may lead to an increase in the market price of the equity shares of a company.

Question 33.
Briefly explain the categories of enterprises as classified by MSMED Act, 2006.
Answer:
Small scale industry: A small-scale industrial undertaking is defined as one in which the investment in fixed assets of plant and machinery does not exceed rupees one crore.

Ancillary industry: The small-scale industry can enjoy the status of an ancillary small industry if it supplies not less than 50 percent of its production to another industry, referred to as the parent unit.

Export-oriented units: The small-scale industry can enjoy the status of an export-oriented unit if it exports more than 50 percent of its production.

Small scale industries owned and managed by women entrepreneurs: An enterprise pro¬moted by women entrepreneurs’ is a small scale industrial unit in which she/they individually or jointly have a share capital of not less than 51 percent.

Tiny industrial units: A tiny unit is defined as an industrial or business enterprise whose in¬vestment in plant and machinery is not more than Rs. 25 lakhs.

Small scale service and business enterprises: A small scale service and business enterprise are one whose investment in fixed assets of plant and machinery excluding land and building does not exceed Rs. 10 lakhs.

Microbusiness enterprises: Within the tiny and small business sector, micro-enterprises are those whose investment in plant and machinery does not exceed rupees one lakh.

Village industry: Village Industry has been defined as any industry located in a rural area that produces any goods, renders any service with or without the use of power, and in which the fixed capital investment per head or artisan or worker does not exceed Rs. 50,000

Question 34.
Explain any four services of wholesalers to the manufacturer.
Answer:
Wholesalers services to producers are:
(a) Facilitating large-scale production: Wholesalers collect small orders from a number of retailers and pass on the pool of such orders to manufacturers and make purchases in bulk quantities. This enables the producers to undertake production on a large scale.

(b) Bearing risk: The wholesale merchants deal in goods in their own name, take delivery of the goods and keep the goods purchased in large lots in their warehouses. In the process, they bear lots of risks such as the risk of fall in prices, theft, pilferage, spoilage, fire, etc.

(c) Financial assistance: The wholesalers provide financial assistance to the manufacturers in the sense that they generally make cash payments for the goods purchased by them. To that extent, the manufacturers need not block their capital in the stocks.

(d) Expert advice: As the wholesalers are in direct contact with the retailers, they are in a position to advise the manufacturers about various aspects including customer’s tastes and preferences, market conditions, competitive activities, and the features preferred by the buyers.

Section – D

IV. Answer any four of the following questions in 20-25 sentences each. Each question carries 8 marks: ( 4 × 8 = 32 )

Question 35.
Explain the features of Sole Proprietorship.
Answer:
(a) Easy formation and closure: The process of forming a sole trading concern does not require any legal formalities such as registration. Hence it can be easily formed, saves time, money, and effort information. Closure of the business can also be done easily as it does not require any legal formalities. Thus, there is easy information as well as the closure of business.

(b) Liability: The liability of a sole trader is unlimited. Hence for business debts, not only his business assets but also his private assets become liable.

(c) No sharing of profit and risk: The sole trader enjoys all the profits of the enterprise and similarly bears all the losses or risks involved in the business.

(d) Free from government regulation: The sole trading concern is not required to undergo any special legislation of legal formalities.

(e) Easy formation: The process of forming a sole trading concern does not require any legal formalities such as registration. Hence it can be easily formed, saves time, money, and effort information.

(f) Quick decision making: As the sole proprietor is not answerable to anyone, he can take quick and prompt business decisions while managing the affairs of the organization.

(g) Business secrecy: A sole trader can maintain business secrecy and can fully exploit new ideas that come to his mind.

(h) Personal contact with customers: A sole trader can establish personal contact with his customers which helps him to maintain good relations with them and also to look into their individual choices, like, and dislike.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 36.
What are services? Explain their distinct characteristics.
Answer:
A service is any activity of benefit that one party can offer to another that is essentially intangible and doesn’t result in the ownership of anything. Its production may or may not be tied to a physical product.
(a) Intangibility: Services are intangible we cannot touch them are not physical objects. A consumer feels that he has the right and opportunity to see, touch, hear, smell or taste the goods before they buy them. This is not applicable to services. The buyer does not have an opportunity to touch smell and taste the services. While selling or promoting a service one has to concentrate on the satisfaction and benefit.

(b) Perishability: Services are deeds, performance, or acts whose consumption takes place simultaneously hence services cannot be stored, saved, returned, or resold once they have been used. Once rendered to a customer the service is completely consumed and cannot be delivered to another customer.

(c) Heterogeneity: Services are highly variable, as they depend on the service provider, and where and when they are provided. Service marketers face a problem in standardizing their service, as it varies with an experienced hand, customer, time, and firm. Service buyers are aware of this variability. So, the service firms should make an effort to deliver high and consistent quality in their service.

(d) Inseparability or Simultaneous Production and Consumption: Services are typically produced and consumed simultaneously. In the case of physical goods, they are manufactured into products, distributed through multiple resellers, and consumed later. But, in the case of services, it cannot be separated from the service provider. Thus, the service provider would become a part of a service.

(e) Lack of ownership: Lack of ownership is a basic difference between the service industry and a product industry because a customer may only have access to or use a facility but does not have any rights to secure ownership of the service. Payment is for the use of, access to, or hires of items.

Question 37.
Write a detailed note on various facilities offered by the Indian Postal Department.
Answer:
The postal services can be classified into two types:
(a) Mail services
(b) Financial services

Mail Services: Indian postal services are mainly concerned with the collection, sorting, and distribution of letters, parcels, packets, etc. Besides, a number of other services are also provided to the general public as well as business enterprises:
(a) Speed Post: Under this service, letters, documents and parcels are delivered faster, i.e., within a fixed time frame. This facility is available at specific post offices.

(b) Registered Post: To ensure that our mail is definitely delivered to the addressee otherwise it should come back to us. In such situations, the post office offers a registered post facility through which we can send our letters and parcels.

(c) Value Payable Post (VPP): The value payable system is designed to meet the requirements of persons who wish to pay for articles sent to them at the time of receipt of the articles or of the bills relating to them, and also to meet the requirements of traders and others who wish to recover, through the agency of the Post Office the value of article supplied by them.

(d) Electronic Money Order (EMO): EMO is the Money Order issued by the computerized Post Office for the payment of a sum of money to the “Payee” by the “Remitter” electronically. Data is transmitted electronically to the destination Post Office. Money is paid at the doorstep of the Payee by cash. The receiver has to submit identity proof.

(e) Instant Money Order (IMO): IMO is an instant web-based money transfer service through Post Offices (IMO Centre) in India between two resident individuals in the Indian Territory. The receiver has submitted 16 digit code as well as identity proof.

(f) E-Post: E-Post sends messages as a soft copy through the internet and at the destination, it will be delivered to the addressee in the form of a hard copy.

(g) Express Parcel Service: Express parcel is the ideal service for sending the parcel up to 3 5 kg within India. It is a service where the parcel will be picked from the doorstep of the customer and delivered to the doorstep of the receiver.

(h) Electronic Mail Service: Electronic mail is a method of exchanging messages from an author to one or more recipients.

Financial Services
(a) Public Provident Fund (PPF): Public Provident Fund (PPF) is a savings-cum tax-saving instrument in India. It also serves as a retirement-planning tool for many of those who do not have any structured pension plan covering them.

(b) Kisan Vikas Patra (KVP): Kisan Vikas Patra is a saving scheme that was announced by the Government of India that doubles the money invested in eight years and seven months.

(c) National Savings Certificate (NSC): National Savings Certificates popularly known as NSC is a saving bond, primarily used for small savings and income tax saving investments in India.

(d) Senior Citizen Savings Scheme (SCSS): The account may be opened by an individual:

  • Who has attained the age of 60 years or above on the date of opening of the account?
  • Who has attained the age 55 years or more but less than 60 years and has retired.

(e) Recurring Deposit account: In a recurring deposit account certain fixed amount is invested every month for a specified period and the total amount is repaid with interest at the end of the particular fixed period.

(f) Saving Bank Account: Saving bank account are introduced by the bank to mobilize small saving of low and middle-income group of people. The ‘saving account’ is generally opened in the bank by salaried persons or by persons who have a fixed regular income.

(g) Fixed deposit account: Fixed deposit means the money deposited by a customer with a bank for a fixed period of time for a fixed rate of interest. Fixed deposit is repayable on the expiry of a specified period of time.

Question 38.
What are retained earnings? Explain its merits and demerits.
Answer:
The company generally does not distribute all its earnings amongst the shareholders as dividends. A portion of the net earnings may be retained in the business for use in the future. This is known as retained earnings.

Merits:
(a) Retained earnings are a permanent source of funds available to an organization.
(b) It does not involve any explicit cost in the form of interest, dividend, or floatation cost.
(c) As the funds are generated internally, there is a greater degree of operational freedom and flexibility.
(d) It enhances the capacity of the business to absorb unexpected losses.
(e) It may lead to an increase in the market price of the equity shares of a company.

Demerits
(a) Excessive plowing back may cause dissatisfaction amongst the shareholders as they would get lower dividends.
(b) It is an uncertain source of funds as the profits of the business are fluctuating.
(c) The opportunity cost associated with these funds is not recognized by many firms. This may lead to sub-optimal use of the funds.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 39.
Who is a wholesaler? Explain services of wholesalers to the manufacturer.
Answer:
A wholesaler is an intermediary entity in the distribution channel that buys in bulk and sells to resellers rather than to consumers.
(a) Facilitating large-scale production: Wholesalers collect small orders from a number of retailers and pass on the pool of such orders to manufacturers and make purchases in bulk quantities. This enables the producers to undertake production on a large scale.

(b) Bearing risk: The wholesale merchants deal in goods in their own name, take delivery of the goods and keep the goods purchased in large lots in their warehouses. In the process, they bear lots of risks such as the risk of fall in prices, theft, pilferage, spoilage, fire, etc.

(c) Financial assistance: The wholesalers provide financial assistance to the manufacturers in the sense that they generally make cash payments for the goods purchased by them. To that extent, the manufacturers need not block their capital in the stocks.

(d) Expert advice: As the wholesalers are in direct contact with the retailers, they are in a position to advise the manufacturers about various aspects including customer’s tastes and preferences, market conditions, competitive activities, and the features preferred by the buyers.

(e) Help in the marketing function: The wholesalers take care of the distribution of goods to a number of retailers who, in turn, sell to a large number of customers spread over a large geographical area. This relieves the manufacturers from marketing activities and enables them to concentrate on the production activity.

(f) Facilitate continuity: The wholesalers facilitate continuity of production activity throughout the year by purchasing the goods as and when they are produced.

(g) Storage: Wholesalers take delivery of goods when these are produced in a factory and keep them in their godowns. This reduces the burden of manufacturers of providing storage facilities for the finished products.

Question 40.
Explain the scope of international business.
Answer:
Merchandise exports and imports: Merchandise means goods that are tangible, i.e. those that can be seen and touched. When viewed from this perceptive, it is clear that while merchandise exports mean sending tangible goods abroad, merchandise imports mean bringing tangible goods from a foreign country to one’s own country.

Service exports and imports: Service exports and imports involve trade in intangibles. It is because of the intangible aspect of services that trade in services is also known as invisible trade. A wide variety of services are traded internationally and these include tourism and travel, boarding and lodging, etc.

Licensing and franchising: Permitting another party in a foreign country to produce and sell goods under your trademarks, patents, or copyrights in lieu of some fee is another way of en¬tering into international business.

Foreign investments: Foreign investment is another important form of international business. Foreign investment involves investments of funds abroad in exchange for financial return.

Foreign investment can be of two types:
(a) Direct investments: Direct investment provides the investor a controlling interest in a foreign company. This is otherwise known as Foreign Direct Investment, i.e., FDI.

(b) Portfolio investments: A portfolio investment, on the other hand, is an investment that a company makes into another company by the way of acquiring shares or providing loans to the latter and earns income by way of dividends or interest on loans.

Section – E (PRACTICAL ORIENTED QUESTIONS)

V. Answer any two of the following questions: ( 2 × 5 = 10 )

Question 41.
As the owner of a business unit, what risks do you face in running it?
Answer:
The risk faced by the owner while running a business unit are :
(a) Internal risk
(b) External risk
(c) Speculative risk
(d) Pure risk
(e) Static risk
(f) Dynamic risk
(g) Insurable risk
(h) Non-insurable risk

Question 42.
As an online buyer, mention any five information-intensive products that can be delivered electronically to your computer.
Answer:
The five information-intensive products that can be delivered electronically are:
(a) Electronic Products
(b) Home Appliances
(c) Books
(d) Cosmetics
(e) Daily needs.

KSEEB Solutions 1st PUC Business Studies Model Question Paper 6 with Answers

Question 43.
Give a list of any five Institutions which support small businesses in India.
Answer:
Five institutions that support small businesses in India are :
(a) National Bank for Agriculture and Rural Development (NABARD).
(b) National Small Industrial Corporation (NSIC).
(c) Small Industrial Development Bank of India (SIDBI).
(d) Rural and Women Entrepreneurship Development (RWED).
(e) District Industries Centres (DICs).