Business Studies (215) - Oct' 2016 | NIOS SECONDARY Solved Papers

Time: 3 Hours
Maximum Marks: 100

1. Which of the following is not a feature of sole proprietorship?            1
(A) Single ownership (B) Agreement (C) Ease of formation (D) Unlimited liability
Ans.:- (B) Agreement
2. Which of the following is not an example of Consumer’s Co-operative Societies?      1
(A) Kendriya Bhandar (B) Apna Bazaar (C) Super Bazar (D) Urban Cooperative Banks
Ans.:- (D) Urban Cooperative Banks
3. Which of the following is an example of a government company?      1
(A) Coal India Ltd. (B) General Motors Ltd. (C) Hyundai India Ltd. (D) Philips India Ltd.
Ans.:- (A) Coal India Ltd.

4. Goods for which import duty is not paid are kept in which of the following kinds of warehouses? 1
(A) Private (B) Public (C) Government (D) Bonded
Ans.:- (D) Bonded
5. This is an electronic device that enables instant transmission of any matter. Which may be handwritten or printed like letters, diagrams, graphs, sketches etc.                1
(A) Fax (B) Voice-mail   (C) Telephone (D) Audio-conferencing
Ans.:- (A) Fax
6. A milk shaker along with Nescafe is an example of which of the following: 1
(A) Exchange schemes (B) Free samples (C) Coupons (D) Premium or bonus offer
Ans.:- (B) Free samples
7. Which of the following is a direct channel of distribution?     1
(A) Producer – Agent – Consumer
(B) Producer – Retailer – Consumer
(C) Producer – Wholesaler – Consumer
(D) Producer – Consumer
Ans.:- (D) Producer – Consumer
8. This Act formulates quality standards for goods and their certification.                            1
(A) Industries Act, 1951
(B) Bureau of Indian Standards Act, 1986
(C) Consumer Protection Act, 1986
(D) Prevention of Food Adulteration Act, 1954
Ans.:- (B) Bureau of Indian Standards Act, 1986
9. While deciding the location of the business the entrepreneur should consider:          1
(A) Sources of supply of raw material
(B) Nearness to the market
(C) Availability of labour and transportation
(D) All the above
Ans.:- (D) All the above
10. Self employment in small scale farming activities does not include:                1
(A) Dairy (B) Carpentry (C) Poultry (D) Fishery
Ans.:- (B) Carpentry

11. State any three limitations of a partnership firm.      3

Ans.:- The following are the limitations of partnership firm:

(i)     Unlimited Liability:- All the partners are jointly as well as individually liable for the debts of the firm to an unlimited extent. Thus, they can share the liability among themselves or any one can be asked to pay all the debts even from his personal properties.

(ii)   Uncertain Life:- The partnership firm has no legal entity separate from its partners. It comes to an end with the death, insolvency, incapacity or the retirement of any partner. Further, any dissenting member can also give notice at any time for dissolution of partnership.

(iii) Limited Capital:- Since the total number of partners cannot exceed 20, the capital to be raised is always limited. It may not be possible to start a very large business in partnership form.

12. State any three responsibilities of business towards creditors.          3

Ans.:- The responsibilities of business towards its creditors

a.       to make payment timely,

b.      to ensure safety of credit allowed by them and

c.       to follow norms of business as followed by others.

13. Explain briefly any two benefits of E-commerce.      3

Ans.:- Two benefits of E-Commerce are:-

(i)     Wider choice:- With the help of a well-developed computer networking system, business units can operate at the national as well as global level. The customers thus, have a wider choice of products and services.

(ii)   Improved customer services:- Supplier of goods and services can offer a wide range of services to the customers, before as well as after sales such as information about products, guidance for use, responding to customers’ querries about quality and usefulness of the product, etc.

14. State any three advantages of rail transport.               3

Ans.:- The following are the advantages of ‘Railway Transport’:

(i)      It is a convenient mode of transport for travelling long distances.

(ii)    It is relatively faster than road transport.

(iii)   It is suitable for carrying heavy goods in large quantities over long distances.

15. What is meant by multiple shops? State any four features of multiple shops.             3

Ans.:- Multiple shops are usually owned and run by big manufacturers/producers. They open a number of branches at different localities in a city or in different cities and towns in a country. Thus, these shops are also called ‘Chain Stores.’

The following are the features of multiple shops:-

(i)      Under the same management and ownership these shops are operated at different places near the customers.

(ii)    All shops are decorated in the same manner to facilitate easy recognition by customers.

(iii)   Multiple shops deal in similar types of goods mostly of everyday use e.e., shoes, textiles, watches, automobile products, etc.

(iv)  The price is uniform in all the shops for similar items. The head office fixes the price. This practice avoids bargaining and cheating.

16. Explain briefly feasibility study and identifying entrepreneurial opportunities as functions of an entrepreneur.4

Ans.:- Functions of an entrepreneur are:-

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.

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’.

17. Describe briefly rights to be heard and right to seek redressal as provided in Consumer Protection Act, 1986. 4

Ans.:- Rights of consumers:-

Right to be heard:- This right has three interpretations. Broadly speaking, this right means that consumers have a right to be consulted by Government and public bodies when decisions and policies are made affecting consumer interests. Also, consumers have a right to be heard by manufactures, dealers and advertisers about their opinion on production and marketing decisions. Thirdly, consumers have the right to be heard in legal proceeding in law courts dealing with consumer complaints.

Right to seek redressal:- If and when any consumer has a complaint or grievance due to unfair trade practices like charging higher price, selling of inferior quality or unsafe products, lack of regularity in supply of services etc. or if the has suffered loss or injury due to defective or adulterated products, he has the right to seek remedies. He has a right to get the defective goods replaced or money refunded by the seller or dealer.

18. Explain briefly any four objectives of advertising.    4

Ans.:- Objectives of advertising:-

i.        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.

ii.      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.

iii.    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.

iv.     To increase sales:- We have learnt that advertising creates demands for new products and sustains the demand of old one. Thus, with increase in demand, the sale of the product also increases.

19. Distinguish between a ‘current deposit account’ and a ‘ saving bank account’.            4

Ans.:- The following are the differences between ‘Current deposit account and ‘Saving bank account:-

1.       Purpose:- Saving Account has been designed to encourage and promote savings whereas current account is designed to facilitated regular or frequent transactions.

2.       Ideal For:- Saving account is ideal choice for any individual who earns a steady or regular income like salaried employees. This type of account is also ideal for those who have any short term financial goals to meet like a future vacation, financing a wedding, buying a car etc. Whereas current account is more suited individuals who are required to carry out frequent money transfers like businessmen, firms, companies, organizations, public enterprises, etc.

3.       Monthly Transactions:- Savings account banks offering the facility of a savings account do usually put a limit on the maximum number of transactions which a holder can carry out in a month. The permissible limit without attracting any charge is usually anywhere between 3 to 5 transactions per month. Whereas current account do not have any limit on the maximum number of transactions which one can carry out. This is primarily because Current accounts serve the purpose of carrying out frequent transactions.

4.       Interest:- Savings account will usually earn you an interest between 4% to 6% on a pre-specified basis. Since these accounts do not allow unlimited transactions, it is easier to accumulate more funds over a period of time. Whereas current account in the case of current accounts, banks usually do not provide any interest. This is due to the flued nature of the account which allows frequent transactions.

20. What is mean by a private company? State any three features of a private company.4

Ans.:- According to Indian Companies Act 1956, Private Company means a company which has a minimum paid-up capital of one lakh rupees or such higher paid up capital, as may be prescribed, and by its articles.

Features of a private company

(i)      Restricts the right of its members to transfer their shares.

(ii)    Limits the number of its members to fifty only.

(iii)   Prohibits any invitation to the public to subscribe for any shares or debentures of the company.

21. What is meant by a partnership form of organization? Also state any four features of this form. 5

Ans.:- Section 4 of the Indian Partnership Act, 1932, “a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”

The following are the features of partnership form:

(i)     Two or more Members:- At least two members are required to start a partnership business. But the number of members should not exceed 10 in case o banking business and 20 in case of other business.

(ii)   Agreement:- Whenever you think of joining hands with others to start a partnership business, first of all, there must be an agreement between all of the partners. This agreement contains- the amount of capital contributed by each partner, profit or loss sharing ratio, salary or commission payable to the partners, if any etc.

(iii) Sharing profits:- The main objective of every partnership firm is sharing of profits of the business amongst the partners in the agreed proportion. In the absence of any agreement for the profits sharing, it should be shared equally among the partners.

(iv)  Lawful Business:- The partners should always join hands to carryon any kind of lawful business. To indulge in smuggling, black marketing etc, cannot be called partnership business in the eye of the law.

22. Besides carrying mail through various means, post office also offers some special services to business firms. Explain any five such services.             5

Ans.:- Besides carrying mail through various means post office offers some special services to the business firms like:

a)      facilitating selling of goods through Value Payable Post;

b)      carrying letters from the customers without any pre-payment of postage through ‘Business Reply Post’,

c)       facilitating advertisement of the products through Media Post,

d)      providing reliable and time-bound parcel service through Express Post,

e)      offering various pre-mailing services to big mailers through Business Post.

23. ‘KPO involves off shoring of knowledge intensive business processes that require specialized domain expertise.’ In the light of this statement, explain any five benefits of KPO.5

Ans.:- Benefits of Knowledge Process Outsourcing:-

(i)     Accelerate Reengineering Benefits:- Reengineering aims for drastic improvements in critical measures of performance such as cost, services, quality and speed. But the need to increase efficiency comes into direct conflict with the need to invest in core business. As non-core internal functions are continually put on the back seat, systems become less productive and less efficient.

(ii)    Access to Top Class Capabilities:- Good and competent providers make  extensive investments in technology, people and methodologies. They acquire expertise by working with many clients facing similar challenges.

(iii) Cash Infusion:- Outsourcing often involves the transfer of assets from customer to the provider. Equipment, vehicles, facilities, and licenses used in the current operations contain value and are sold to the vendor. The vendor uses these assets to provide services back to the client.

(iv)  Optimal use of resources:- Every organization has limitations to the resources available to it. Outsourcing allows an organization to redirect its resources, mostly human resources, from non core activities toward activities which serve the core need of customer.

(v)    Solution to difficult problems:- Outsourcing is certainly one option for addressing the problem of managing difficult activities requiring core technical skills. 

24. Describe briefly any five functions of a retailer.               5

Ans.:- The following are the functions of retailers

(i)     Buying and Assembling of goods:- Retailers buy and assemble varieties of goods from different wholesalers and manufacturers. They keep goods of those brands and variety which are liked by the customers.

(ii)   Storage of goods:- To ensure ready supply of goods to the customer retailers keep their goods in stores. Goods can be taken out to these store and sold to the customers as and when required.

(iii) Credit facility:- Although retailers mostly sell goods for cash, they also supply goods on credit to their regular customers. Credit facility is also provided t o those customers who buy goods in large quantity.

(iv)  Personal services:- Retailers render personal services to the customers by providing expert advice regarding quality, features and usefulness of the items. They give suggestions considering the likes and dislikes of the customers.

(v)    Display of goods:- Retailers display different types of goods in a very systematic and attractive manner. It helps to attract the attention of the customers and also facilitates quick delivery of goods.

25. Explain briefly the role of businessmen and consumers self help groups for protection of consumer of consumer interest.        5

Ans.:- Role of businessmen and consumers self help groups for protection of consumer of consumer interest:-

As regards businessmen, it is expected that producers, distributors, dealers, wholesalers as well as retailers should pay due regard to consumer rights in their own interest. They should ensure supply of quality goods and services at reasonable prices. To prevent unfair practices, associations of traders, chambers of commerce and industry and manufacturers’ associations should entertain consumer complaints against their members and take proper action against those guilty of malpractice.

Consumers self help:- So consumers should, as far as possible, take care of their own interest and protect themselves from market malpractices. For this purpose, it is necessary that they should try to know about their rights and exercise them. They should not depend on the good sense of businessmen.

26. Give any six points of difference between self employment and wage employment.             6

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.

Work involved

Work involved is aimed at earning more and increasing the volume of business. The nature of work cannot be decided in advance and may vary.

The work to be performed by the employee is specific and per-decide.

27. Describe briefly the responsibilities of a consumer.                       6

Ans.:- Responsibilities of a consumer are:-

(i)     Responsibility of self-help:- It is always desirable that a consumer should not depend on the seller for information and choice as far as possible. As a consumer, you are expected to act in a responsible manner to protect yourself from being deceived.

(ii)   Proof of Transactions:- The second responsibility of every consumer is that the proof of purchase and documents relating to purchase of durable goods should be invariably obtained and preserved.

(iii) Proper claim:- Another responsibility that consumers are expected to bear in mind is that while making complaints and claiming compensation for loss or injury, they should not make unreasonably higher claims. Very often, consumers have to exercise their right to seek redressal in a court.

(iv)  Proper use of Product/services:- Some consumers, especially during the guarantee period, make rough use of the product, thinking that it will be replaced during the guarantee period. This is not fair on their part.

28. Explain briefly any two forms of fixed shop retailing under small scale.            6

Ans.:- Two forms of fixed shop retailing under small scale are:-

(a)    General store or Variety Store:- These stores, as the name suggest, deal with a variety of items of general use. They sell products mostly required by people for their daily use. For example, in a variety store you can find different items on toiletry, hosiery, biscuits and snacks items, grocery, cosmetic, gift items and stationery, etc. Normally these retailers make direct sale by cash only.

(b)   Single line Store:- These stores deal with a specific line of goods. You must have seen medicine shops, bookshops, toy shops, ready-made garment shops, etc. These are all single line stores. They sell goods of different size, brands, designs, styles and quality of the same product line.

29. Explain briefly the following principles of insurance:                 6

(a) Principle of indemnity

(b) Principle of subrogation

(c) Principle of insurable interest

Ans.:- (a) Principle of indemnity:- The word indemnity means to restore someone to the same position that he/she was in before the event concerned took place. This principle is applicable to the fire and marine insurance. It is not applicable to life insurance, because the loss of life cannot be restored.

(b) Principle of subrogation:- In the contract of insurance subrogation means that after the insurer has compensated the insured, the insurer gets all the rights of the insured with regard to the subject matter of the insurance. For example, suppose goods worth Rs. 20,000/- are partially destroyed by fire and the insurance company pays the compensation to the insured, then the insurance company can take even these partially destroyed goods and sell them in the market.

(c) Principle of insurable interest:- It means financial or pecuniary interest in the subject matter of insurance. It means that if there is a loss due to the damage of the insured property or to the assured life it will be the personal loss of the insured. A person has insurable interest in the property or life insured if the stands to gain from its existence or loose financially from its damage or destruction.

30. Describe briefly any three types of industries with suitable examples.             6

Ans.:- There are various types of industries. Some of the industries are

a)      Primary Industry:- Primary industry is concerned with production of goods with the help of nature. It is a nature-oriented industry, which requires very little human effort. e.g. Agriculture, farming etc.

b)      Genetic Industry:- Genetic industries are engaged in re-production and multiplication of certain spices of plants and animals with the object of sale. The main aim is to earn profit from such sale. e.g. plant nurseries, cattle rearing, poultry etc.

c)       Extractive Industry:- Extractive industry is concerned with extraction or drawing out goods from the soil, air or water. Generally products of extractive industries come in raw form and they are used by manufacturing and construction industries for producing finished products. e.g. mining industry, coal mineral, oil industry etc.


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