Students can access the CBSE Sample Papers for Class 12 Business Studies with Solutions and marking scheme Term 2 Set 2 will help students in understanding the difficulty level of the exam.
CBSE Sample Papers for Class 12 Business Studies Term 2 Set 2 with Solutions
Maximum Marks : 40
Time : 2 Hours
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.
Short Answer (SA) Type I Questions (2 Marks)
Question 1.
Identify and explain the concept which suggests that only significant deviations which go beyond the permissible limit should be bought to the notice of management.
Answer:
Management by Exception It suggests that, if manager tries to control everything, he may end up in controlling nothing. Thus, in this context, it is stated that managers should first handle the deviations, which are beyond the specific range and they should not waste their time and energy in finding solutions of minor deviations.
Question 2.
Bhagyashri Enterprises is a company engaged in the marketing of air purifiers of a famous brand. The company has a functional structure with four main functions, purchases, sales, finance and staffing. To ensure the proper and optimum functioning of employees, company appointed a new personnel manager. However, the newly appointed personnel manager is of the view that there is no need for training the workers. Do you agree with his views? Give any two reasons in support of your answer.
Answer:
The manager is incorrect. Training is essential for workers.
The importance of training is a follows (any two)
(i) Training enhances the productivity of employees both in terms of quality and quantity.
(ii) Training increases employee morale, reduces absenteeism and employee turnover.
(iii) Training equips future manager, which can take over in case of emergency.
Question 3.
Explain the aspect of financial management that enables to foresee the fund requirements both in terms of ‘the quantum’ and ‘the timings’.
Answer:
Financial planning enables to foresee the fund requirements both in terms of the quantum and the timings. It is the process of estimating the financial requirements of an organisation specifying the sources of funds and ensuring that enough funds are available at the right time.
Question 4.
”Finance Manager of Meca Ltd. said that the public issue to raise funds may be expensive on account of various mandatory and non-mandatory expenses. Thus, we should allot the securities to institutional investors.” Identify the method suggested by finance manager to raise additional capital. Also, explain it.
Answer:
Private Placement It is the allotment of securities by a company to institutional investors and some selected individuals. It is considered beneficial because it helps to raise funds more quickly than a public issue and the cost of flotation is saved.
Short Answer (SA) Type II Questions (3 Marks)
Question 5.
Vinesh is engaged in transport business and transports handicraft products to different states. Stating the reason in support of your answer, identify the working capital requirements of Vinesh. He also wants to expand and diversify his transport business, explain any two factors that will affect his fixed capital requirements.
Answer:
In the transportaton business, lesser amount of working capital is required as Vinesh is engaged in service industry. A firm engaged in service industry needs less working capital.
Factors affecting the fixed capital requirement are:
- Growth Prospects Businessman wants to expand his business, in such a situation, company requires higher investment to meet the anticipated demand in future. Thus, the requirement of fixed capital will be higher.
- Diversification If the businessman diversify his business, this means larger amount of fixed capital is required.
Question 6.
Blue Bell School believes in all round development of children, focusing both on academics and on sports and extra-curricular activities. Many students of this school have secured ranks at the state level in the board exams and also some of the students have excelled at the state and national games.
One of the key reasons for such excellent performance of the students is that the school hires highly qualified teachers and pays them well. The school has presently vacancies for middle level classes. The internal sources have been exhausted. Explain any three sources of recruitment that the school can use for filling up these vacancies.
Answer:
For filling up the vacant posts, following external sources of recruitment can be used (any three)
(i) Direct Recruitment Under direct recruitment, a notice is placed on the notice board of the enterprise specifying the details of the jobs available. Job seekers assemble outside the organisation on the specified date and selection is done on the spot. This source may be used for the office staff, teachers and primary teachers.
(ii) Advertisement Advertisement in newspaper is generally used when wider choice is required. The advantages of advertising vacancies is that more information about the organisation and job can be given in the advertisement. It gives the management a wider range of candidates from which they can choose.
(iii) Employment Exchange Employment exchanges run by the government are regarded as a good source of recruitment. It helps to match personnel demand and supply by serving as a link between job seekers and employers.
(iv) Recommendations of Employees Employees of an organisation recommend the names of their friends, relatives and neighbours, which prove to be a good external source of recruitment. It is a reliable source as the background of the suggested candidate is well known.
(v) Web Publishing Internet is becoming a common source of recruitment these days. There are many websites like naukri.com, monster.com, etc designed to provide information to both job seekers and employers.
Question 7.
Which institution is known as the watch dog of securities market in India and why?
Answer:
Securities Exchange Board of India (SEBI) is the watch dog of the securities market as it performs various functions to regulate and protect the interests of investors while dealing with securities.
The functions performed by SEBI to facilitate this role are as follows (any two)
- Registration of brokers and sub-brokers in the market.
- Registration of collective investment schemes and mutual funds.
- Controlling takeover bids and imposing penalties for such practices.
- Prohibition of fraudulent and unfair trade practices.
Question 8.
“Every action in the organisation is initiated by directing.” In the light of this statement, describe any three importance of directing.
Or
“An ideal control technique is the one that checks every bit of performance.” Comment.
Answer:
Importance of directing is as follows
(i) Provides Leadership Effective directing provides motivation and leadership to the employees, which helps them to identify their potentials and realise their latent capabilities, leading to growth.
(ii) Introduces Changes Changes in an organisation are usually resisted by employees. Through effective direction, a manager can explain the purpose and benefit and offer incentives to adopt such changes to the employees.
(iii) Provides Stability Effective directing helps to develop cooperation and commitment on part of subordinates. This provides stability to the organisation and helps to achieve balance among various groups, activities and departments.
Or
This statement is not true. An ideal control system should concentrate on key aspects of performance. There are several activities to be controlled. In practice, it is not possible for management to control each and every activity due to limited time. Moreover, minor deviations from plans and targets are insignificant for success.
Therefore, an attempt to control everything is likely to be a futile exercise. Control system should focus attention on exceptional and key factors only. This will help to save time, efforts and money. Thus, critical point control is an ideal technique where focus is on the key result areas.
On the other hand, controlling each and every activity results in delays, increased cost and neglect of key items. The control system should be designed in such a manner that only significant deviations from the standards are reported to the higher level managers. Thus, management by exception technique should be followed and deviations within an acceptable range should be ignored.
Long Answer (I.A) Type Questions (5 Marks)
Question 9.
Which function of management is needed to ensure that the actual performance is in accordance with the set standards of performance? Also, state three features of this function of management.
Or
Write the meaning of motivation along with its process. Also, name the person who gave Need Hierarchy Theory.
Answer:
Controlling is needed to ensure that the actual performance is in accordance with the set standards of performance.
Controlling refers to the process of measurement of performance according to standards, measuring deviations and taking corrective action to achieve predetermined goals.
Features of controlling are (any three)
(i) Goal-oriented Process Controlling ensures that an organisation’s resources are effectively and efficiently utilised for the achievement of goals.
(ii) Pervasive Controlling is performed by all managers (top, middle, lower level) and its is performed in all types of organisation such as hospital, club, educational institution etc., so it is a pervasive function.
(iii) Continuous Ry analysing deviations and taking corrective action, it helps in formulating better plans for future. Thus, it is a function that brings management cycle back to planning and is regarded as continuous function.
(iv) Both a Backward Looking as well as Forward Looking Function Controlling is backward looking as it is a postmortem of past activities and it is also a forward looking process as it seeks to improve the future results by taking corrective action.
Or
Motivalien means a process of stimulating people to take action to accomplish desired goals. It is a psychological phenomenon which cannot be imposed or forced upon people. It is an intrinsic force which automatically comes from inside the people and induces them to work.
The process of motivation is as follows:
- An unsatisfied need of an individual creates tension, which stimulates his drives.
- These drives generate a search behaviour to satisfy such need.
- When the need is satisfied, the individual is relieved from tension.
The Need Hierarchy Theory was given by Abraham Maslow.
Question 10.
Markfed Foods Pvt. Ltd. has appointed a new HR manager, who has completed his MBA from the most renowned institution in India. He was a gold medalist and has also been acknowledged as the best trainee during his internship in a firm. Soon after his joining, the management noticed a drastic change in the attitude of workers towards their work.
They were willing to accept new challenges, take up more challenging jobs and were able to achieve targets efficiently and effectively. Soon, the company prospered and established its name in the market. On being enquired, he confessed that all this change is attributed to Maslow’s Theory of Motivation. Briefly explain Maslow’s Need Hierarchy Theory and also state the assumptions on which it is based.
Answer:
(i) Basic Physiological Needs These are the basic needs, which a person is required to satisfy in order to survive. Hunger, thirst, shelter and sleep are some of the examples of these needs. In an organisation, basic salary helps to satisfy these needs.
(ii) Safety/Security Needs These needs are concerned with physical, economic and social security, in the form of job security, stability of income, etc.
(iii) Affiliation/Belongingness/Social Needs These needs are concerned with affection, sense of belongingness acceptance and friendship. It is fulfilled when employees have cordial relations with colleagues.
(iv) Esteem Needs These needs include factors such as self-respect, status and recognition. When these needs are fulfilled through job title, it enhances self-confidence and prestige of employees.
(v) Self-actualisation Needs It is the highest level of need in the hierarchy. It arises after the satisfaction of all previously discussed needs. These needs include growth, self-fulfilment and achievement of goals.
Assumptions of Maslow’s Need Hierarchy Theory. The main assumptions of Maslow’s need hierarchy theory are;
- People’s behaviour is based on their needs. Satisfaction of such needs influences their behaviour.
- People’s needs are hierarchical in order. They start from basic physiological needs and reach to high level needs.
- A satisfied need can no longer motivate a person, only next higher level need can motivate a person.
- A person moves to the next higher level need, only when the lower level need is satisfied.
Question 11.
There are two companies B and D. Total contribution of capital is ₹ 40 lakh each. The ratio of equity to total capital in company B is ₹ 10 lakh and debt is ₹ 30 lakh while in company D, the total equity capital is ₹ 40 lakh, sourced through equity. EBIT is ₹ 8 lakh, the interest rate on debt is @ 10% and the tax rate is 30%. Which company enjoys favourable financial leverage?
Or
Pawell Corporation, a large diversified manufacturer of aircraft components, is trying to determine the initial investment required to replace an old machine with a new, more sophisticated model. The present machine is working correctly but in order to upgrade it with new technology, they purchased a new machine for ₹ 8 lakh and an additional ₹ 2 lakh will be required to install it.
After the depreciation, the value of the machine becomes zero but the owner is not ready to analyse the situation. Finally, the firm has found that a buyer is willing to pay ₹ 5 lakh for the present machine and the firm refused it.
(i) Find out the decision taken by him and define it.
(ii) State the factors affecting such decision.
Answer:
As per the given details, company enjoying the favourable financial leverage can be identified as below
Company B is in the position of favourable financial leverage as use of debt increases the EPS and thus, the situation is considered as favourable for trading on equity.
(i) Indecision taken by him is ‘Long-term investment’ or ‘Capital-budgeting decision’. These decisions are defined as the decisions which relates to careful selection of assets in which the funds will be invested by firms. When decisions regarding fixed assets are taken, they fall under the category of investment or capital budgeting decision.
(ii) Factors affecting capital budgeting derision are
(a) Cash Flow of the Project When a business invests huge amount of money in a certain project, it expects regular and reasonable cash inflows from such an investment.
(b) Rate of Return Each project is selected after comparing expected returns of different projects and the degree of risk involved in them.
(c) investment Criteria Involved Decision to invest in a particular project involves a number of calculations regarding the amount of investment, interest rate, cash flows and rate of return.
(d) Risk Involved Since, there is an element of risk associated with every investment proposal, the company try to calculate the risk involved in every proposal and prefer the one with moderate degree of risk.
Question 12.
Amrish purchased a medicine from Mangal Medical Store for his son, who had high headache. Even after giving the medicine, his son’s condition did not improve and he had to be hospitalised. Doctor informed Amrish that medicine given to his son was spurious. Amrish complained about this to Mangal Medical Store.
As a result, medical store decided to file a complaint against the manufacturer in the Consumer Court. Can Mangal Medical Store do this? Give reason in support of your answer. Also, mention who can be a consumer as per Consumer Protection Act, 2019.
Answer:
Mangal Medical Store cannot file a complaint against the manufacturer in the Consumer Court because Mangal Medical Store is not a consumer in this case and it has obtained medicine for resale purpose/commercial purpose.
Under the Consumer Protection Act, 2019, the term ‘consumer’ has been defined as any person who buys goods or hires or avail any service for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment.
It also includes any user of such goods with the approval of the buyer or any beneficiary of services when such goods or services are availed of with the approval of the person concerned but does not include a person who avails such services for any commercial purpose.