Business Studies (215) - April' 2013 | NIOS SECONDARY Solved Papers (OLD COURSE)

Time: 3 Hours
Maximum Marks: 100

1. Which of the following is not an economic objective of business?                         1
(A) Creation of employment (B) Creation of customers (C) Profit earning (D) Regular innovation
Ans.:- (D) Regular innovation
2. Disposal of solid waste of industries mines and quarries causes                             1
(A) Noise pollution (B) Air pollution (C) Land pollution (D) Water pollution
Ans.:- (C) Land pollution

3. Dairy Farming is an example of which type of industry?         1
(A) Genetic industry (B) Secondary industry (C) Extractive industry (D) Tertiary industry
Ans.:- (A) Genetic industry
4. In a cooperative society, the principle followed is                                                         1
(A) One share one vote (B) One man one vote
(C) Multiple votes (D) No vote
Ans.:- (B) One man one vote
5. Which of the following is the liability of a minor partner?                                         1
(A) Unlimited liability (B) No liability (C) Limited liability (D) None of the above
Ans.:- (B) No liability
6. Communication through the use of various parts of human body is called          1
(A) Body language communication
(B) Gestural communication
(C) Oral Communication
(D) Verbal communication
Ans.:- (A) Body language communication
7. After sending an invoice, if the seller notice that the goods delivered to the buyer have been undercharged, he can rectify the mistake by preparing a                  1
(A) Credit note (B) Debit note (C) Letter of advice (D) Letter of regret
Ans.:- (B) Debit note
8. Santosh purchased a diesel car for Rs. 7 lacs from an automobile company and found its engine being defective. Despite many complaints the defect was not rectified. Suggest him the appropriate authority to file his compliant under Consumer Protection Act.             1
(A) District Forum (B) State commission (C) National commission (D) High court
Ans.:- (A) District Forum
9. Self employment provides opportunities of earning livelihood for those unable to pursue.1
(A) Wage employment (B) Confidence (C) Creativity (D) Higher education
Ans.:- (D) Higher education
10. What do you understand by ‘Guilds’ system?                            3
Ans.:- “Guilds” system means an organization of persons with related interests, goals, etc especially one formed for mutual aid or protection.

11. Explain any three characteristics of sole proprietorship.                                           3

Ans.:- Sole proprietorship has the following characteristics

a)      Ease of formation:- An ideal form of ownership should be easy to form. Ease of formation implies minimum of legal and other formalities. Sole proprietorship is easy to form.

b)      Single Ownership:- A single individual always owns sole proprietorship form of business organization. That individual owns all assets and properties of the business. Hence, he alone bears all the risk of the business.

c)       No sharing of Profits and Loss:- The entire profit arising out of sole proprietorship business goes to the sole proprietor. If there is any loss it is also to be borne by the sole proprietor alone. Nobody else shares the profit and loss of the business with the sole proprietor.

12. Explain the meaning of Bonded warehouse.                      3

Ans.:- Bonded warehouse:- These warehouses are owned, managed and controlled by government as well as private agencies. Private bonded warehouses have to obtain license from the government. Bonded warehouses are used to store imported goods for which import duty is yet to be paid.

13. Who is a partner by holding out?                                                                                         3

Ans.:- A partner by holding out means a person who is not a member of firm but allows himself/herself to be represented as a partner. Such person is responsible to person who has given loan to firm on his representation because loan has been given by assuming that he/she is member.

14. A factory owner gets has stock of goods insured, but he hides the fact that the electricity board has issued him a statutory warning letter to get his factory’s wiring changed later on, the factory catches fire due to short circuit. Can he claim compensation? Give the name of the principle involved in supports of your answer also explain this principle. 3

Ans.:- The factory owner cannot claim for compensation because it is a contract of indemnity. The claim for loss by fire is payable subject to two conditions viz.; (a) there must have been actual fire, and (b) fire must have been accidental, not intentional,

The basic principle applied with regard to claim is the principle of indemnity. The insured is entitled to be compensated for the amount of actual loss suffered subject to a maximum amount for which he had taken the policy. He cannot make profit through insurance. 

15. What is meant by ‘Fidelity Insurance’? 3

Ans.:- Fidelity Insurance:- As a protection against the risks of loss on account of embezzlement or defalcation of cash or misappropriation of goods by employees, businessmen may get policies issued covering the risks of loss on account of fraud and dishonesty on the part of employees handling cash or in charge of stores. This is called fidelity insurance policy. The employees may also be required to sign a fidelity guarantee Bond.

16. Describe any three objectives of advertising.    3

Ans.:- Objectives of advertising:-

(a)    To educate customers:- Can you remember the advertisement of Tata Namak on television? In this advertisement it is said that Tata Namak is good for health as it contains Iodine. This message educates you that iodine is good for health and Tata Namak contains iodine.

(b)   To create demand for new product:- You read in newspaper that a new type of pen called ‘Gel Pen’ is introduced in the market, which is very economical and convenient in writing. This motivates you to buy the said pen. This will create a demand for the new product launched in the market.

(c)    To retain existing customers:- you might remember that Nirma washing powder was a very popular detergent. But, after wheel powder came to the market the sale of Nirma suddenly decreased. Then the manufacturers of Nirma improved the product and advertised about the same in different media. After knowing this the persons who were earlier using Nirma did not switch over the Wheel and continued using Nirma.

17. What is meant by ‘Wise buying’?    3

Ans.:- A wise buyer does not regret his buying decision. Wise buying refers to buying the right type of products or services at eh right time, at the right place and at eh right price. It is a process of making a buying decision on the right manner, so that you do not regret in future.

18. What is a stale cheque?    3

Ans.:- Check presented at the paying bank after a certain period (typically six months) of its payment date. A stale check is not an invalid check, but it may be deemed an ‘irregular’ bill of exchange. A bank may refuse to honor it unless its drawer reconfirms it payment either by inserting a new payment date or by issuing a new check. Also called stale dated check.

19. Give any three features of an entrepreneur.                      3

Ans.:- Some of the major features of an entrepreneur are:-

i)        Identifying entrepreneurial opportunity:- There are many opportunities in the world of business. These are based on human needs like food, fashion, education, etc. which are constantly changing. These opportunities are not realized by common man, but an entrepreneur senses the opportunities faster than others do.

ii)      Turning ideas into action:- An entrepreneur should be capable of turning his ideas into reality. He collects information regarding the ideas, products, practices to suit the demand in the market. Further steps are taken to achieve the goals in the light of the information collected.

iii)    Feasibility study:- The entrepreneur conducts studies to assess the market feasibility of the proposed product or services of inputs required to run the enterprise. Such a blue print of all the activities is termed as a ‘business plan’ or a ‘project report’.

20. State any three qualities required for success in self employment.                     3

Ans.:- Qualities required for success in self employment are:-

a)      Mental abilities:- To be self-employed you need to have the ability to identify the most suitable area where there is opportunity of self-employment.

b)      Alertness and foresight:- A self employed person should be aware and alert about changes taking place in the market so as to adjust his operations.

c)       Self-confidence:- In self-employment, the owner has to take all decisions, he must also have confidence in himself to overcome problems and also while dealing with suppliers/creditors, and government officials.

21. Distinguish between Private Limited Company and Public Limited Company by giving any five points.          5

Ans.:- Difference between private limited and public limited companies:-

1)      In the case of a private company minimum number of persons required to form a company is two, while it is seven in the case of a public company.

2)      A private company has to have a minimum paid up capital of Rs. 1 lack, whereas a public company has to have a minimum paid up capital of Rs. 5 lacks.

3)      In case of a private company the maximum number of members must not exceed fifty whereas there is no such restriction on the maximum number of members in case of a public company.

4)      In private company the right to transfer shares is restricted, whereas in case of public company the shares are freely transferable.

5)      A private company cannot issue a prospectus, while a public company may invite the general public to subscribe for its Shares or Debentures.

22. State any three advantages and two limitations of water transport.                    5

Ans.:- Advantages of water transport:

(i)      It is relatively economical mode of transport for bulky and heavy goods.

(ii)    It is a safe mode of transport with respect to occurrence of accidents.

(iii)   The cost of maintaining and constructing routes is very low as most of them are naturally made.

Limitations of water transport:

(i)      The depth and navigability of rivers and canals vary and thus affect operations of transport vessels of different sizes.

(ii)    It is a slow moving mode of transport and therefore not suitable for transport of perishable goods.

23. Give any five secondary functions of a commercial bank.                         5

Ans.:- The following are the secondary functions of a commercial bank

1. Issuing letters of credit, travellers’ cheque, etc.

2. Undertaking safe custody of valuables, important document and securities by providing safe deposit vaults or lockers.

3. Providing customers with facilities of foreign exchange dealings.

4. Transferring money from one account to another and from one branch to another branch of the bank through cheque, pay order, demand draft.

5. Standing guarantee on behalf of its customers, for making payment for purchase of goods, machinery vehicles etc.

24. The Manager of Vani Enterprises dealing in cosmetics is facing the problem of poor sales. Suggest and explain any five promotional measures that she can undertake to improve the sales.

Ans.:- The manager can use the following promotional measures that she can undertake ot improve the sales:-

(i)     Free samples:- We might have received free samples of shampoo, washing powder, coffee powder, etc. while purchasing various items from the market. Sometimes these free samples are also distributed by the shopkeeper even without purchasing any item from his shop. These are distributed to attract consumers to try out a new product and thereby create new customers.

(ii)   Premium or Bonus offer:- A milk shaker along with Nescafe, mug with Bournvita, toothbrush with 500 grams of toothpaste, 30% extra in a pack of one kg. Are the examples of premium or bonus given free with the purchase of a product. They are effective in inducing consumers to buy a particular product.

(iii) Exchange schemes:- It refers to offering exchange of old product for a new product at a price less than the original price of the product. This is useful for drawing attention to product improvement. For example ‘Bring your old mixer-cum-juicer and exchange it for a new one just by paying Rs.500 etc.

(iv)  Price-off offer:- Under this offer, products are sold at a price lower thatn the original price. For example Rs.2 off on purchase of a lifebuoy soap, Rs. 15 off on a pack of 250 grams of Taj Mhal tea etc.

(v)    Coupons:- Sometimes, coupons are issued by manufacturers either in the packet of a product or through an advertisement printed in the newspaper or magazine or through mail. For example 20% off on purchase of 5 kg. Of Annapurna Atta.’ The reduced price under this scheme attracts the attention of the prospective customers towards new or improved products.

25. Write any five differences between self employment and wage employment.         5

Ans.:- Differences between self employment and wage employment:-


Self employment

Wage employment


Engage in activities on one’s own.

Engage in activities assigned by the employer.

Status or position

The position of the person is that of owner and may be that of an employer.

The position of the person is that of an employee.

Income or earning

Income or earning is not fixed. It depends on the ability of the owner.

Income of the employed person is fixed and may be increased, if the employee so decides.

Risk bearing

There is always risk of loss sometime and earnings may decline at times.

There is no risk of reduced income so long as the employee continues to work.

Freedom of work

The owner is free to decide how to run the business depending on the available opportunities.

The employee has to work according to the terms and condition of employment.

26. Why is consumer protection required in India? Explain in detail.      5

Ans.:- The necessity of adopting measures to protect the interest of consumers arises in India mainly due to their helpless position and the unfair business practices. No doubt consumers have the basic right to be protected from the loss or injury caused on account of defective goods and deficiency of services. However, consumers are unable to make use of their rights due to lack of awareness and ignorance. For example, as consumers we have the right to choose the goods of right quality from a variety of similar goods available in the market. But often we fail to make the right choice because of misleading advertisements by which we are carried away and buy sub-standard goods.

Under certain circumstances, we are helpless in the sense of our inability to verify the quality of products. The clever shopkeeper can deceive us by his persuasive words.

27. What is Business correspondence? Explain the importance of Business correspondence.7

Ans.:- Business correspondence means the exchange of information in a written format for the process of business activities. Business correspondence can take place between organizations, within organizations or between the customers and the organization.

The following are the importance of Business correspondence:-

1)      Maintaining a Proper Relationship:- It is not always possible for any business or organization to reach to any person in particular. This will cost any business. Here, the business correspondence will be a rescue for any business.

2)      Serves as Evidence:- Any written form of communication serves as evidence. A business correspondence helps the person in a business to keep a record of all the facts. These written records will serve as evidence.

3)      Create and Maintain Goodwill:- It helps in creating and maintaining goodwill between a business and a customer. Any letter to enquire, complaint, suggestion or feedbacks helps a company to grow and maintain goodwill.

4)      Inexpensive and Convenient:- It is a cheap and convenient form of business communication.

5)      Formal Communication:- A business communication serves as a formal communication between two persons. It may be a seller and a buyer. It can be between an employee and the employer. The language used is formal and logical.

28. What is Departmental Store? Explain any five advantages of Departmental store?   7

Ans.:- A Departmental Store is a large-scale retail shop where a large variety of goods are sold in a single building. The entire building is divided into a number of departments or counters. In each department specific type of goods like stationery items, books, electronic goods, garments, jewellery etc. are available.

The following are the advantages of Departmental Store:-

(i)                 Convenience of shopping:- Since a large variety of goods are sold under one roof, we need not move from one bazaar to another or from one shop to another to buy goods.

(ii)               Wide choice of products:- A wide variety of products from different manufactures are sold in these stores. Thus, a customer has a wide choice of goods from which he/she can select the best product as needed.

(iii)             Economies of large-scale purchase and sale:- Departmental stores buys goods on large scale. So it can bypass wholesalers and gets the goods directly from the manufacturers. This way it enjoys the benefits of discounts from the manufacturers.

(iv)              Mutual advertisement:- While visiting departmental store customers are often attracted by goods displayed in different departments. Hence, there is a chance that the customers may buy goods other than those they originally had in mind. Thus, each department advertises for other departments.

(v)                Efficient management:- Since these stores are organised on a large scale basis, they normally employ efficient and competent staff to provide best services to the customers.

29. Describe the role of NGOs in protecting the interest of consumers.                    7

Ans.:- The role of NGOs has become increasingly more significant over the last two decades. There are now more than 800 such organisations in India. These organisations are registered under the Societies Registration Act or the Companies Act or as Charitable Trusts.

NGOs have undertaken various activities as part of the consumer movement. They perform several functions, like:-

(a)    Create awareness about consumer rights and educate the general public about consumer problems and remedies through seminars, workshops and training programmes.

(b)   Provide legal aid to consumers by way, of assistance in seeking legal remedy.

(c)    Undertake advocacy of consumers’ point of view as representative members of consumer protection councils and others official boards.

(d)   Publish periodicals and journals to disseminate information among readers about consumer problems, legal reporting and other emerging matters of interest. Most of these periodicals do not accept advertisements from business firms.

(e)   Make suggestions and recommend steps which government authorities should consider in policy making and administrative measures adopted in the interest of consumers.

30. “The businessmen are responsible for aggravating problem of pollution.” In the light of this statement explain the role of businessmen in checking pollution. 7

Ans.:- “The businessmen are responsible for aggravating problem of pollution.” In the light of this statement the role of businessmen in checking pollution are:-

(a)    Emission of gas and smoke from manufacturing plants.

(b)   Use of machines, vehicles etc. contributing to noise pollution,

(c)    Deforestation due to acquisition of forest lands for setting up plants.

(d)   Growth of urbanisation and industrialization.

(e)   Disposal of wastes and effluents into rivers and canals.

(f)     Disposal of solid wastes in the open space.

(g)    Mining and quarrying activities.

(h)   Increasing use of transport.


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