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Objective Type Question
Q. 1. (A) Choose the correct option :
Business is : (a) Art
(b) Science
(c) Both (a) and (b)
(d) None of the above.
The maximum no. of members in private company is : (a) 5
(b) 10
(c) 20
(d) 50. (Note: As per latest Companies Act, this is usually 200, but according to your options/textbook, (d) is marked as the answer).
Which work is the primary work of bank ? (a) Issue letter of credit
(b) Keep Valuables Safely
(c) To accept deposit
(d) To give loan to education.
Business ethic is important for : (a) General personal category
(b) Middle level management
(c) High level management
(d) All of the above.
Memorandum of Association is prepared : (a) Operators of company
(b) By company secretary
(c) By company auditors
(d) By Promoters.
Ans. 1. (c), 2. (d), 3. (c), 4. (d), 5. (d).
(B) Give answer in one word or sentence :
Name the form of business organisation which has one owner. Ans. Sole proprietorship.
The concept of business Ethic was originated where and when ? Ans. In 1970 in United States of America.
When was Unit Trust of India established ? Ans. 1st July 1964.
Where is Head Quarter of NSIC situated ? Ans. In New Delhi.
Whose risk is reduced by wholesale trader ? Ans. Retailers.
Q.2. What do you mean by Multinational Companies?
Ans:
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Multinational Companies (MNCs) are companies—
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that operate in more than one country.
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They have offices, factories, or branches in different countries.
Q.3. What do you understand by “E-business”?
Ans:
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E-business means—
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doing business activities through the internet.
Q.4. Define Shares
Ans:
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Shares are—
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units of ownership in a company.
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A person who buys shares becomes a part owner of the company.
Q.5. What do you mean by Rural Industry?
Ans:
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Rural Industry means—
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industries that are set up in villages or rural areas.
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They use local resources and provide employment to rural people.
Q.6. What is Indent?
Ans:
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Indent is an order—
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placed by an importer to a foreign exporter.
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It contains details like quantity, quality, price, and delivery of goods.
Q.7. Characteristics of Economic Activity
1. Profit Motive
Economic activities are done with the aim of earning money. People perform these activities to make profit and improve their standard of living.
2. Involves Money
These activities involve earning or spending money. Without money, an activity cannot be called an economic activity.
3. Regular Activity
Economic activities are performed regularly, not occasionally. For example, a person goes to work daily to earn income.
4. Production or Exchange
These activities involve production, distribution, or exchange of goods and services. They help in satisfying human needs.
Q.8. Advantages of Outsourcing (Any Three)
1. Cost Reduction
Outsourcing helps businesses reduce costs by assigning work to external experts. It saves money on labor, infrastructure, and other expenses.
2. Focus on Core Activities
It allows companies to focus on their main business activities. Non-core tasks are handled by outside experts, improving efficiency.
3. Access to Expertise
Outsourcing provides access to skilled professionals and advanced technology. This improves quality and performance of work.
Q.9. What do you mean by Incorporation of Company?
Ans:
-
Incorporation means—
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legal formation of a company.
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After incorporation, the company gets a separate legal identity.
Q.10. Why should the wholesaler be removed?
1. Increase in Price
Wholesalers add their profit margin, which increases the price of goods. Removing them can make goods cheaper for consumers.
2. Direct Link between Producer and Retailer
Without wholesalers, producers can directly supply goods to retailers. This reduces middlemen and improves communication.
3. Faster Distribution
Removing wholesalers reduces delay in supply. Goods can reach retailers and customers more quickly.
4. Better Control
Producers can have better control over pricing, quality, and supply when wholesalers are removed from the chain.
Q.11. Characteristics of Profession (Any Four)
1. Special Knowledge and Training
A profession requires special education and training. A person must have proper qualifications and skills to enter a profession like doctor, lawyer, or engineer.
2. Professional Body
Every profession has an association or professional body. It regulates the activities of members and ensures that they follow rules and standards.
3. Service Motive
The main aim of a profession is to provide service to society. Earning profit is secondary, while helping people is the primary objective.
4. Code of Conduct
Professionals must follow certain ethical rules and standards. This code of conduct ensures honesty, discipline, and responsibility in their work.
OR
Characteristics of Business (Any Four)
1. Economic Activity
Business is an economic activity because it involves earning money. It deals with production and distribution of goods and services.
2. Profit Motive
The main objective of business is to earn profit. All business activities are planned to generate income.
3. Risk and Uncertainty
Business involves risk because future conditions are uncertain. There may be loss due to market changes or other factors.
4. Regular Activity
Business activities are carried out regularly. One-time transaction is not considered as business.
Q.12. Difference between Private Sector and Public Sector
| Basis | Private Sector | Public Sector |
|---|---|---|
| Ownership | Owned by individuals | Owned by government |
| Objective | Profit earning | Public welfare |
| Control | Controlled by private owners | Controlled by government |
| Decision Making | Fast decisions | Slow decisions |
| Capital | Private investment | Government funds |
| Example | Private companies | Government companies |
OR
Role of Public Sector in Industrial Development
1. Infrastructure Development
Public sector develops basic facilities like roads, electricity, and transport. These are necessary for industrial growth.
2. Balanced Regional Development
It sets up industries in backward areas to reduce regional imbalance and promote equal development.
3. Employment Generation
Public sector provides jobs to a large number of people, reducing unemployment.
4. Control of Monopoly
It prevents concentration of economic power and controls private monopolies.
Q.13. Elements of Business Ethics
1. Honesty
Business should be honest in dealing with customers, employees, and society. It builds trust and long-term relationships.
2. Integrity
Integrity means doing the right thing even when no one is watching. It ensures fair practices in business.
3. Fairness
Business should treat all stakeholders fairly. There should be no discrimination or exploitation.
4. Responsibility
Businesses must take responsibility for their actions and decisions. They should not harm society or environment.
OR
Social Responsibility towards Different Groups
1. Towards Customers
Provide good quality products at fair prices. Ensure safety and proper information about products.
2. Towards Employees
Provide fair wages, good working conditions, and job security. Respect their rights.
3. Towards Government
Pay taxes honestly and follow laws and regulations.
4. Towards Society
Work for social welfare, reduce pollution, and help in community development.
Q.14. Process of Incorporation of Company
1. Approval of Name
The company must select and get approval for its name from the Registrar of Companies.
2. Preparation of Documents
Important documents like Memorandum and Articles of Association are prepared.
3. Registration
Documents are submitted to the Registrar along with fees for registration.
4. Certificate of Incorporation
After verification, the Registrar issues a certificate. The company becomes legally formed.
OR
Methods of Remuneration of Promoters (Any Two)
1. Commission
Promoters may receive commission for their work in forming the company. It is paid as a percentage of profits.
2. Shares
Promoters are often given shares of the company as a reward. This makes them part owners of the company.
Q.15. Debentures and Their Kinds
Meaning of Debentures
Debentures are a type of loan taken by a company from the public. People who buy debentures are called debenture holders and they receive fixed interest.
Kinds of Debentures
1. Secured Debentures
These debentures are backed by company assets. If the company fails to pay, assets can be used to repay investors.
2. Unsecured Debentures
These are not backed by assets. They are riskier compared to secured debentures.
3. Convertible Debentures
These can be converted into shares after a certain period. Investors get ownership benefits later.
4. Non-Convertible Debentures
These cannot be converted into shares. They remain as debt and only interest is paid.
Or Why Debentures are not Popular in India
1. Fixed Interest Only
Debenture holders get only fixed interest. They do not get extra profit even if the company earns high profit, so investors prefer shares.
2. No Ownership Rights
Debenture holders are not owners of the company. They do not have voting rights, which makes them less attractive to investors.
3. Risk of Default
There is a risk that the company may fail to pay interest or repay the amount. This reduces the trust of investors.
4. Low Return Compared to Shares
Returns on debentures are generally lower than shares. Investors who want high returns prefer investing in equity shares.
5. Lack of Awareness
Many small investors in India are not fully aware of debentures. They prefer traditional investments like fixed deposits or gold.
6. Market Limitations
The market for debentures is not very developed in India. There is less liquidity, so investors may find it difficult to sell them easily.
Q.16. Difference between Invoice and Proforma Invoice
| Basis | Invoice | Proforma Invoice |
|---|---|---|
| Meaning | Final bill of sale | Estimated bill before sale |
| Purpose | Demand for payment | Information about price and terms |
| Time | Issued after sale | Issued before sale |
| Legal Status | Legally binding | Not legally binding |
| Payment | Payment is required | No immediate payment |
| Nature | Actual transaction | Proposed transaction |
OR
Difference between Wholesaler and Retailer
| Basis | Wholesaler | Retailer |
|---|---|---|
| Meaning | Sells goods in bulk | Sells goods in small quantity |
| Customers | Retailers | Final consumers |
| Quantity | Large quantity | Small quantity |
| Capital | Requires large capital | Requires less capital |
| Contact | No direct contact with consumers | Direct contact with consumers |
| Display | Less importance to display | More importance to display |
Q.17. Advantages of Joint Hindu Family (JHF)
1. Easy Formation
Joint Hindu Family business is easy to start. It does not require many legal formalities and is formed automatically by birth.
2. Strong Control
The Karta (head of family) has full control over business decisions. This helps in quick and effective management.
3. Continuity
The business continues even after death of a member. It is not affected by changes in membership.
4. Limited Liability of Members
Except Karta, other members have limited liability. Their risk is limited to their share in the business.
5. Loyalty and Trust
Family members work with trust and loyalty, which helps in smooth functioning of business.
OR
Merits of Partnership
1. Easy Formation
Partnership business is easy to form with less legal formalities and simple procedures.
2. More Capital
Partners contribute capital, so more funds are available compared to sole proprietorship.
3. Division of Work
Work is divided among partners according to their skills, improving efficiency.
4. Better Decision Making
Partners can discuss and take better decisions with combined knowledge and experience.
5. Risk Sharing
Business risk is shared among partners, reducing burden on a single person.
Q.18. Types of Warehouses
1. Private Warehouse
Owned by private companies for storing their own goods. It is mainly used by manufacturers and traders.
2. Public Warehouse
Available for general public to store goods by paying rent. It is useful for small traders.
3. Bonded Warehouse
Used to store imported goods without paying customs duty until goods are sold or released.
4. Government Warehouse
Owned and managed by government. It stores agricultural and other essential goods.
5. Cooperative Warehouse
Owned by cooperative societies to help members store goods at low cost.
OR
Advantages of Banks
1. Safe Custody of Money
Banks keep money safe and reduce the risk of theft or loss.
2. Easy Payment System
Banks provide cheque, ATM, and online payment facilities.
3. Loan Facility
Banks provide loans to individuals and businesses for various purposes.
4. Encourages Saving
Banks promote saving habits among people by offering interest.
5. Economic Development
Banks help in growth of economy by providing financial support to industries.
Q.19. Role of Small Scale Business in Rural India (Any Five)
1. Employment Generation
Small businesses create jobs in rural areas and reduce unemployment.
2. Use of Local Resources
They use local raw materials and skills, reducing wastage of resources.
3. Balanced Regional Development
They promote development in rural and backward areas.
4. Low Investment
These businesses require less capital and are easy to start.
5. Reduction of Migration
They reduce migration of people to cities by providing local employment.
OR
Problems Faced by Small Scale Industries
1. Lack of Finance
Small industries face shortage of funds and difficulty in getting loans.
2. Poor Technology
They use outdated technology, which reduces efficiency and quality.
3. Marketing Problems
They face difficulty in selling products due to competition from big companies.
4. Shortage of Raw Material
They do not get good quality raw materials at reasonable prices.
5. Lack of Skilled Labour
They often lack trained and skilled workers.
Q.20. Export Promotion Measures (Schemes & Incentives)
1. Financial Incentives
Government provides subsidies, tax benefits, and financial support to exporters to promote exports.
2. Export Promotion Councils
These councils guide exporters and help in finding foreign markets.
3. Duty Drawback Scheme
Exporters get refund of duties paid on raw materials used in exported goods.
4. Special Economic Zones (SEZs)
SEZs provide tax benefits and better infrastructure for export-oriented industries.
5. Export Credit Facility
Banks provide loans and credit at low interest rates to exporters.
OR
Difference between Indent and Order
| Basis | Indent | Order |
|---|---|---|
| Meaning | Request for supply of goods | Confirmation to buy goods |
| Given by | Importer through agent | Buyer directly |
| Nature | Preliminary document | Final agreement |
| Purpose | To get goods details | To place actual order |
| Binding | Not always binding | Legally binding |
| Stage | Before order | After indent |
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