Practice Paper
TERM II (2021 – 2022)
Class – XI
Business Studies
Time: 2 hours Maximum Marks: 40
General Instructions:
1.This is a Subjective Question Paper containing 12 questions.
2.This paper contains 4 questions of 2 marks each, 4 questions of 3 marks each and 4 questions of 5 marks each.
3.2 marks questions are Short Answer Type Questions and are to be answered in 30-50 words.
4.3 marks questions are Short Answer Type Questions and are to be answered in 50-80 words.
5.5 marks questions are Long Answer Type Questions and are to be answered in 80-120 words.
SECTION – A
Q1. How do the small scale industries contribute to the Socio economic Development of India?
The small scale industries are an important part of the economy as they help to increase employment and the economic development by increasing the urban and rural growth and the role is to help increase the government infrastructure and reduce the issues like the pollution and poverty and slums etc
Q2. What is meant by internal trade?
Internal Trade also known as Domestic Trade is the buying and selling of goods and services within the confines of the international boundaries of a nation. So while import and export are important for the economy of a nation, most of its GDP contribution comes from internal trade.
Q3. Why is IPR Important for Entrepreneurs?
It encourages creation of new, path-breaking inventions, such as cancer cure medicines. It incentivises inventors, authors, creators, etc., for their work. It allows the work created by a person to be distributed and communicated to the public only with his/her permission. Therefore, it helps in the prevention of loss of income. It helps authors, creators, developers and owners to get recognition for their works
Q4. Define international business.
Manufacturing and trade beyond the boundaries of one’s own country is known as international business.
Q5. What is business finance? Why do business need funds? Explain
Finance, therefore, is called the life blood of any business. The requirements of funds by business to carry out its various activities is called business finance.
A business cannot function unless adequate funds are made available to it.
OR
What are the difference between ADR and GDR? Explain
The local currency shares of a company are delivered to the depository bank. The depository bank issues depository receipts against these shares. Such depository receipts denominated in US dollars are known as Global Depository Receipts (GDR).
The depository receipts issued by a company in the USA are known as American Depository Receipts.
ADRs are bought and soldin American markets like regular stocks. It is similar to a GDR except that it can be issued only to American citizens and can be listed and traded on a stock exchange of USA.
Q6. Explain the services offered by wholesalers to manufacturers.
The services offered by wholesalers to manufacturers are as follows:
(1). Information on demand:
The wholesaler informs the manufacturers about the interest for goods and the position of demand in the market.
(2). A large size of production:
It is the wholesaler who makes possible the large scale production by providing a manufacturer with bulk order.
(3). Facility of sales organisation:
The wholesaler buys the goods in bulk quantity from the manufacturers. The Manufacturer therefore need not to constitute a sales organizations separately.
(4) A facility of Advertisement:
The wholesaler sells its product and gives advertisement in large quantity.
(5) Financial assistance:
The wholesaler sometimes, provided the manufacturers with the financial assistance by advancing loans and advance payments for goods
(6) Inventory of goods:
The wholesaler maintains sufficient stock of the goods with it. The manufacturer, therefore need not to make a separate arrangement for storage of goods.
(7) Standardization of goods:
The wholesaler also discharges the function of grading and developing the standards for the goods.
(ANY 3)
Q7. What preferential rights are enjoyed by preference shareholders? Explain.
The preference shareholders enjoy a preferential position over equity shareholders in two ways:
i) receiving a fixed rate of dividend, out of the net profits of the company, before any dividend is declared for equity shareholders;
and (ii) receiving their capital after the claims of the company’s creditors have been settled, at the time of liquidation.
Q8. What are the services offered by retailers to consumers?
Some of the important services of retailers from the point of view of consumers are as follows
(i) Regular Availability of Products In order to buy products as and when needed retailer maintains the regular availability of the product.
(ii) New Products Information By arranging effective display of products and personal selling retailers, provide important information about their products.
(iii) Convenience in Buying Retailers are situated very near to the residential areas and remain open for long hours which enables customer to buy products of their requirement.
(iv) After Sales Service Retailers provide after sales services to the customers in the form of home delivery, supply of spare parts etc.
(ANY3)
Q9. Discuss advantages of international business to nation
Benefits to Nations:
(a) Earning of foreign exchange.
(b) More efficient use of resources.
(c) Improving growth prospects and employment potentials.
(d) Increased standard of living.
Benefits to Nations:
(a) Earning of foreign exchange: International business helps a country to earn foreign exchange which it can later use for meeting its imports of capital goods, technology, petroleum products and fertilizers, pharmaceutical products and a host of other consumer products which otherwise might not be available domestically.
(b) More efficient use of resources: As stated earlier, international business operates on a simple principle ‘Produce what your country can produce more efficiently and trade the surplus production generated with other countries to procure what they can produce more efficiently’. When countries trade on this principle, they end up producing much more than what they can, when each of them attempts to produce all the goods and services on its own. If such as enhanced pool of goods and services is distributed equally amongst nations, it benefits all the trading nations.
(c) Improving growth prospects and employment potentials: Producing solely for the purpose of domestic consumption severely restricts a country’s prospects for growth and employment. Many developing countries could not execute their plans to produce on a large scale, and thus, create employment of people because their limited domestic market to absorb all the extra production. The strategy ‘export and flourish’ will help them not only in improving their growth prospects, but also to create opportunities for employment of people living in these countries.
(d) Increased standard of living: In the absence of international trade of goods and services, it would not have been possible for the world community to consume goods and services produced in other countries, that the people in these countries are able to consume and enjoy a higher standard of living
OR
Discuss advantages of international business to business.
Benefits to firms:
(a) Prospects for higher profits.
(b) Increased capacity utilisation.
(c) Prospects for growth.
(d) Improved business vision.
(e) Wayout to intense competition in domestic market.
Benefits to Firms:
(a) Increased capacity utilization: Generally, the firms whose products have good demand in the domestic market set up high production capacities for their products by planning for overseas expansion too. With the help of orders from foreign customers, they can utilize their surplus production capacities and hence earn higher profits.
(b) Prospects for higher profits: As compared to domestic business, international business can be more profitable. Business firms can earn higher profits by selling their products in countries where prices are high, particularly when the domestic prices are not satisfactory.
(c) Prospects for growth: Business firms with saturated demand for their products in the domestic market can improve their prospects of growth by entering into foreign markets. This is the prime reason which has prompted many of the multinational companies from the developed countries to tap markets of developing countries.
(d) Improved business vision: Business policies and strategic management have resulted in the growth of international business of many companies. The need to grow, become competitive, diversify and gain strategic advantages has created an international vision.
(e) Way out to intense competition in domestic market: The only was to achieve significant growth in intense competition in domestic market is internationalization. Hence, international business acts as a catalyst of growth for business firms facing tough competition in the domestic market.
Q10. What are multiple shops? Give two examples. State its four features.
Suitable meaning
Features a) Large size
b) Decentralised location
c) Cash sales
d) Centralised supply:
Q11. Describe the role of small business in rural India.
Small scale businesses help the economy in following ways:
1. Small scale industries especially rural and cottage industries play a major role in providing employment opportunities to the population in rural areas. It is very helpful for people who are economically weak.
2. Small scale industries play a role in distribution of income by providing the opportunity to set up industries all across the country.
3. As small scale businesses are active throughout the year they provide employment opportunities round the year and hence help in combating seasonal unemployment and improve conditions of the rural people.
4. Small scale businesses help drive the growth of economy. It accounts for 45% of overall exports which greatly contributes to economy.
5. It helps in developing the rural areas and stops inflow of rural population into urban areas in search of employment.
OR
What measures has the government taken to solve the problem of finance and marketing in the small scale sector?
Government has taken many measures and established various institutions and organisations to solve the problem of finance and marketing in the small scale sector.
1. In 1955 National Small Industries Corporation (NSIC) was set up to promote, aid and foster the growth of small business.
2. Small Industries Development Bank of India (SIDBI) as an apex bank was set up to provide direct and indirect financial assistance to small scale sector.
3. In 2004, Scheme of Fund for Regeneration of Traditional Industries was constituted to make traditional industries more productive through financial help.
4. The District Industries Center were established to provide financial and service support to entrepreneurs for establishing small industries.
5. NABARD besides agriculture, was also set up to support small, cottage and village industries.
Q12. Chemline Ltd. is a company engaged in the manufacturing of chemicals. The company is planning to expand its business. For this, it needs to raise funds of 500 crores. After analysing, Shiven Finance Manager of the company proposed to raise the funds through issue of ‘Debentures Shiven also gave number of reasons for his choice. After listening to all the points put forward by Shiven the Managing Director of the company is fully satisfied and asked
Shiven to go ahead with the issue. Discuss the reasons which might have been given by Shiven, which convinced the Managing Director to go for issue of Debentures.
Shiven must have explained merits of raising funds through issue of Debentures to the Managing Director
Debentures provide the following advantages over equity shares:
1. Issuing equity shares makes the shareholders own the company, and they become entitled to voting rights while debenture holders do not have any rights in the organisation. They get a fixed amount in form of payment. Debentures thus do not contribute towards dilution of ownership of company and can be issued without any risk.
2. For issuing shares, the company has to bear huge costs, also dividends payment is not tax deductible. For interest paid to debenture company receives tax deductions, so issuing debenture is beneficial.
3. Debentures are having a fixed rate of return. So if no profit is also earned, then also the company needs to pay the dividend, which is at a fixed rate, on the other hand, a company issuing equity shares and making profit needs to share more with the shareholders, which varies with the profit earned. Thus, it is better to issue debentures.