Practice Paper
TERM II (2021 – 2022)
Class – XI
Business Studies (054)
Time: 2 hours Maximum Marks: 40
General Instructions:
- This is a Subjective Question Paper containing 12 questions
- This paper contains 4 questions of 2 marks each, 4 questions of 3 marks each and 4 questions of 5 marks each.
- 2 marks questions are Short Answer Type Questions and are to be answered in 30-50 words
- 3 marks questions are Short Answer Type Questions and are to be answered in 50-80 words.
- 5 marks questions are Long Answer Type Questions and are to be answered in 80-120 words.
- This question paper contains Case/Source Based Questions.
1. What is international business?
International business refers to business which is carried on in two or more nations. It means carrying on business activities beyond national boundaries. These activities normally include the transaction of economic resources such as goods, capital, services (comprising technology, skilled labour, and transportation, etc.), and international production.
2. Describe Short-term Finance.
Short-term funds are those which are required for a period of not exceeding one year. It is used for meeting the short-term needs of the business. It is also known as working capital. Working capital is the capital required for meeting the day-to-day needs of the business, e.g. purchase of materials and payment of wages, salaries, rent, taxes, freight charges, etc. short-term finance is raised from public deposits, commercial banks, trade credit, factoring, customer advances, etc
3. State the meaning of intellectual property rights (IPR).
Intellectual property (IP) refers to the creations of the human mind, like inventions, literary and artistic works, symbols, names, images and designs used in business. Intellectual property is divided into two board categories: industrial property, which includes inventions (patents), trademarks, industrial designs and geographical indications, while the other is copyrights, which includes literary and artistic works, such as novels, poems, plays, films, musical works, artistic works, such as drawings, paintings, photographs and sculptures and architectural designs
4. List the two broad categories of Internal trade.
Internal trade can be divided into two distinct categories:
- Wholesale trade
- Retail trade.
5. Mention any three differences between departmental stores and multiple shops.
The differences between departmental store and multiple shops are:
| Basis | Departmental Stores | Multiple Shops |
| Location | Central Place | Where large customer approach |
| Range of products | Wide range of products | Specified range of products |
| Services offered | Maximum service to customer | Limited service to customer |
6. What are the aims of National Small Industries Corporation?
National Small Industries Corporation (NSIC) aims at providing:
- To make available indigenous and imported machines on easy hire-purchase terms.
- Source, supply, and distribute raw materials, both domestic and imported.
- To facilitate the export of the products of small business units.
- Mentoring and advisory services.
OR
What is District Industries Centers?
The District Industries Centers (DICs) give entrepreneurs all of the services and support they need to start small and village industries. The identification of feasible schemes, the preparation of feasibility reports, the organisation of financing, the provision of machinery and equipment, the provision of raw materials, and other extension services are the main functions of these centers.
7. A London based manufacturing co. manufacturing washing machines wish to add 2 new products in India namely AC’s and Refrigerators. Out of a lot of 10 applicants the co. chose two wholesale firms whose proposals were very competitive and attractive. The wholesaler firm of AC’s hired the services of a retailer Hari at competitive prices to sell AC’s in Delhi; Hari informs his wholesaler firm’s head that the consumers of Delhi wish that their houses are cold when they reach their homes in the scorching heat of Delhi. Explain three services rendered by retailers to wholesalers or manufacturers.
Three services rendered by retailers to wholesalers or manufacturers are as follows:
- Help in the distribution of goods
Assist in the dissemination of their products by making them available to end-users who may be dispersed across a vast geographic area. As a result, they supply place usefulness.
- Personal selling
Retailers relieve producers of this work and considerably assist them in the process of actualizing product sales by engaging in personal selling efforts.
- Enabling large scale operations
Allows them to function at a somewhat large scale, allowing them to focus totally on their other tasks.
8. “Finance is the lifeblood of business.” Is this statement true? Explain.
Yes, it is true that ‘Finance is the lifeblood of the business. No business firm can carry on its operation smoothly and successfully without the availability of the right amount of funds at the right cost and at the right time. In the absence of finance, the production and selling of goods and services are not possible.
In business, finance is required for:
- establishing an enterprise
- purchase of fixed and current assets
- expansion, growth, and modernization of business.
In modem business, the significance of business finance has increased due to an increase in the scale of business, use of capital-intensive techniques, shortage of finance, and increase in competition.
9. Describe the role of small business in rural India.
The following are some of the major roles played by small scale businesses in rural India
- They generate employment opportunities: Cottage and rural industries play a significant role in providing employment opportunities, particularly to people in rural areas. This proves to be a boon especially for the economically weaker sections of the rural society.
- They enable equitable income distribution: The capital requirements of small- scale businesses are low, mainly because of their use of labour-intensive production techniques, and this encourages entrepreneurs to start units on a small scale. Small- scale businesses are, therefore, set up all over the country. Many of them providing employment opportunities to people in rural areas. This triggers the redistribution of wealth and income, and enables the equitable distribution of income in rural areas.
- They help to accelerate growth: Small-scale businesses have been considered as a major propeller for the acceleration of economic growth and as an employment generator, particularly in the rural and backward areas of India.
- They mitigate disguised unemployment and alleviate poverty: Small-scale businesses use labour-intensive production techniques, and are, therefore, able to provide employment to the excess/surplus rural labour. Thus, small-scale businesses remove disguised unemployment from the agriculture sector and at the same time provide livelihood to the rural people. Hence, they contribute to alleviating rural poverty.
- They facilitate rural development and reduce migration from rural to urban areas: It is well known that a large number of people migrate from rural to urban areas in search of better employment opportunities and improved living standards. Small-scale businesses help reduce this migration by providing employment opportunities to rural people in their own regions. By doing so, small units also help mitigate the excessive pressure on urban infrastructure.
10. A manufacturing Co. opens shops at different locations in India. He sells goods on cash only. The shops have identical decorations. The prices of goods are fixed. In this way they eliminate unnecessary middlemen thus benefiting the consumers.
(a) Identify the type of shop referred to.
Multiple store or a chain store.
(b) Elaborate characteristics of such shops
The following are the characteristics of chain stores:
- The goods are dispatched to each of these shops from the head office, which is located in a reasonably populous area where a significant number of clients may be approached.
- The shop is under the direct supervision of a Branch Manager, who is responsible for its day-today management.
- The head office is in charge of creating policies and ensuring that they are executed.
- The prices of goods in such shops are fixed, and all sales are conducted in cash.
OR
Uma, a village girl, comes to Delhi to visit her relatives. She goes with her cousin to a shop, which is centrally located. She becomes astonished by the varieties of goods which are sold here.
(a) Identify this type of shop.
Departmental store
(b) Explain features of such shops
The following are some of the features of department stores:
- They draw a huge number of clients due to their central location.
- Provides a vast range of items under one roof
- Aims to provide maximum services to clients
- Organized on a very big scale, allowing them to reap the benefits of large-scale operations, notably in terms of purchasing goods.
- They spend a lot of money on advertising and other promotional efforts to assist them to increase their sales.
11. Differentiate between Equity Share and Preference Share
| Basis | Equity Share | Preference Share |
| 1. Preferential Right | Payment of equity dividend is made after the payment of preference dividend. | Payment of preference dividend is made before the payment of equity dividend. They have priority over equity shares. |
| 2. Repayment of Capital at Winding- up | Repayment of equity share capital is made after the repayment of preference share capital. | Repayment of preference share capital is made before the repayment of equity share capital. They have priority over the refund of capital. |
| 3. Rate of Dividend | The rate of equity dividend may vary from year to year depending upon the profits of the company. | The rate of preference dividend is fixed by the terms of the issue. |
| 4. Arrears of Dividend | In the case of equity shares, arrears of dividend cannot accumulate. It fluctuates with profit. | In the case of preference shares. Arrears of dividend may accumulate if such shares are cumulative |
| 5. Convertibility | Equity shares cannot be convertible. | Preference shares may be Convertible into equity shares. |
OR
Differentiate between Shares and Debentures.
| Point of Distinction | Shares | Debentures |
| 1. Nature | Part of capital. Owned funds of the company. | It is an acknowledgment of debt. |
| 2. Status of Holders | Owners of the company. | Creditors of the company. |
| 3. Right to return | Dividends cannot be claimed as a matter of rights | Interest can be claimed as a matter of right. |
| 4. Security | No charge on assets or mortgage as security. | Generally a charge on Assets as security to mortgage. |
| 5. Voting rights | Full voting rights | No voting rights and say in the management. |
12. Explain the benefits of International Business.
Benefits of International Business
To the Nations:
1. Earning of foreign exchange
2. More efficient use of resources
3. Improving growth prospects and employment potentials
4. Increased standard of living
To the Firms:
1. Prospects for higher profits
2. Increased capacity utilization
3. Prospects for growth
4. Way out of intense competition in domestic market
5. Improved business vision