Students can access the CBSE Sample Papers for Class 12 Business Studies with Solutions and marking scheme Term 2 Set 7 will help students in understanding the difficulty level of the exam.
CBSE Sample Papers for Class 12 Business Studies Term 2 Set 7 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.
Explain giving reasons why firms with high debtors turnover ratio and high inventory turnover ratio require lesser amount of working capital.
Answer:
High debtors turnover ratio implies that the debtors of the firm are realised quickly. Similarly, high inventory turnover ratio implies that the stock is easily and quickly converted into cash. Since, the cash flow of the firm is maintained and the operating cycle is shorter one, amount of funds required for raw materials and expenses would be less, therefore, lesser amount of working capital is required.
Question 2.
“Controlling is an indispensable function in the process of management.” In the light of this statement, explain its importance.
Answer:
Controlling is an indispensable function of management due to the following reasons (any two)
(i) Accomplishing Organisational Goals It measures progress towards the organisational goals and find out deviations. In the absence of control system, activities may not be carried out according to plans.
(ii) Judging Accuracy of Standards Through an effective control system, managers can easily judge the accuracy of standards.
(iii) Making Efficient Use of Resources By exercising control, a manager seeks to reduce wastage and spoilage of resources.
Question 3.
The directors of a company want to modernise its plant and machinery by making a public issue of shares. They wish to approach stock exchange, while the finance manager prefers to approach a consultant for a new public issue of shares. Advise the directors whether to approach stock exchange or a consultant for new public issue of shares and why?
Answer:
I advise the directors to approach a ‘consultant’ as new issue of shares is not possible in stock exchange. Stock exchange is a secondary market, where, only existing securities are traded. For new public issue, primary market or the new issue market is an appropriate place.
Question 4.
Identify and explain the channel of communication followed by two heads of different departments communicating with each other.
Answer:
Formal communication, using horizontal line, is followed as the two departmental heads of same management level are exchanging information. It refers to the communication taking place through official channels in an organisation. It may be oral or written.
Short Answer (SA) Type II Questions (3 Marks)
Question 5.
Maxwell Ltd. is manufacturing auto spare parts on large scale. The company policy is that 5% of the daily production could be defective. From last two months, it is observed that about 10-12% of production is defective. Which function of management is reinsured to correct the above case? State the procedure to be followed to correct the things.
Answer:
The management function reinsured to correct the above case is controlling.
The procedure is as follows
(i) Find out the causes of deviation of defective percentage from 5 to 12.
(ii) Take corrective measures to control things.
Question 6.
Mr. A, the director of garment company, is planning to manufacture bags for the utilisation of waste material of one of his garment unit. He decided that his manufacturing unit will be set-up in a rural area of Uttar Pradesh, where people have very less job opportunities and labour is available at very low rate. He also thought of giving equal opportunities to men and women by employing them equally in this unit. Identify file first three steps of process of staffing for this unit.
Answer:
The first three steps of staffing process for this unit are
(i) Estimating Manpower Requirements It means to estimate the number of persons required in the unit.
(ii) Recruitment It is the process of searching for prospective employees and stimulating them to apply for jobs.
(iii) Selection It is the process of choosing most suitable candidate for the vacant job position.
Question 7.
Sana is a young professional employed in a multinational company. Her annual package is of ₹ 6 lakh. Since she lives with her parents, therefore she is able to save a major part of her earnings. Her friends are constantly advising her to invest in shares. But, she is not aware about the nitty-gritties regarding the functioning of the stock-exchange.
So, she decided to invest in equity through the primary market, assuming that this will help her to earn stable dividends. But her father, who was a retired bank officer told her that even dividends are not stable as they are affected by several factors.
(i) Is Sana’s father right in his assertion?
(ii) Explain the following as factors affecting ‘dividend decision’
(a) Stability of dividend
(b) Legal constraints
Or
Define dematerialisation of securities and write any two benefits of it.
Answer:
(i) Yes, Sana’s father is correct in his assertion.
(ii) Factors affecting dividend decision are
(a) Stability of Dividend Every company adopts the policy of maintaining the stability of dividend per share. From this point of view, a little change in profit should not be allowed to increase or decrease the dividend.
(b) Legal Constraints Certain provisions of the Companies Act put restrictions on payouts as dividend. Such provisions must be adhered to while declaring the dividend.
Or
Dematerialisation is the process by which the physical form of securities are converted into electronic form. When shares are converted into electronic form, they are held in demat account.
Benefits of dematerialisation are as follows (any two)
- Demat securities can be pledged or mortgaged to get loans.
- It reduces paper work.
- Securities of different companies can be held in a single demat account.
Question 8.
Which process prepares a blue print of an organisation’s future preparations relating to finance? Give two objectives, why this process is needed?
Answer:
Financial planning is a process which prepares a blue print relating to finance needs. It means estimating the finance requirements of a business and determining the sources of funds. Financial planning includes both short-terni and long-term planning. Following are the two objectives of financial planning.
(i) To Ensure Availability of Funds, whenever Required If adequate funds are not available, the business unit will not be able to honour its commitments and plans.
(ii) To See that the Firm does not Raise Funds Unnecessarily if excess of funds are available with the business unit, it will unnecessarily add to the cost and may encourage excess expenditure.
Long Answer (LA) Type Questions (5 Marks)
Question 9.
Aditya, a marketing manager achieved his target two months prior to his scheduled time. This achievement was displayed on the notice-board and a certificate for the best manager was awarded to him.
(i) Name and explain the incentive provided to him.
(ii) Identify the type of incentive.
(iii) List any three other incentives of the type identified in point (ii).
Or
Soumya is working in an Ed. Tech Company. She is getting handsome amount of salary along with health insurance. Due to her hardworking efforts, many students got 1st rank in UGC Net JRF exam but no recognition was given to her. Moreover, Vaishali is jealous from her success and always do conspiracy against her by provoking other colleagues. No colleagues want to talk to her.
Identify and explain the needs of Soumya discussed in the above para by quoting lines. Also, explain the need other than one discussed above that remains to be satisfied.
Answer:
(i) Employee recognition programme is the incentive given to Aditya. Recognition means
acknowledgement of work with a show of appreciation. With such appreciation, employees feel motivated.
(ii) Employee recognition programme is a non-financial incentive.
(iii) Three non-financial incentives are as follows
(a) Status The authority, responsibility, rewards, recognition, perquisites and prestige of job indicate the status given to a person holding a managerial position.
(b) Career Advancement Opportunity When employees are provided opportunities to grow in status and responsibility, they are satisfied and are committed to organisational goals.
(c) Job Enrichment This provides opportunity for growth and development of an employee on one hand and more autonomy and responsibility on the other, which becomes a source of motivation to the individual.
Or
(i) Line “She is getting handsome amount of salary along with health insurance”.
The quoted line depicts physiological needs and safety and security needs which are satisfied.
(ii) Line “No recognition nor appreciation was given to her”.
The quoted line depicts that her esteem needs are not satisfied. It is the need for respect and recognition.
(iii) Line “No colleagues want to talk to her”.
The quoted line depicts that her belongingness needs are not fulfilled. It is the need for love, affection, friendship, companionship, etc.
Other need which also remained to be satisfied is self-actualisation need. It refers to reaching to the aim of life. Once the employee accomplish everything that he desires, it means satisfaction of his actualisation need.
Question 10.
How does recruitment take place through placement agencies and recommendation?
Answer:
Recruitment takes place through placement agencies and recommendation in the following manner
(i) Placement Agencies Placement agencies provide a nationwide service in matching personnel demand and supply. They compile resumes of large number of candidates. When any organisation demands a particular profile, they provide suitable resumes to the organisation for the purpose of contacting them. Such agencies charge a fee for the service they provide to organisations.
(ii) 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 suggested candidate is well known.
The organisation prefer recommendation from employees having good reputation in the company. Also, the organisation can catch hold of existing employees if there is any problem with the new employee recommended by him.
Question 11.
Calculate the Earning Per Share (EPS) of TG Ltd. for each of the situation specified.
Total Funds used ₹ 50,00,000, Interest Rate @ 8% p.a.
Tax Rate 40%
Earnings before Interest and Tax (EBIT) ₹ 7,50,000
Debt
Situation I Nil, Situation II ₹ 15,00,000, Situation III ₹ 35,00,000
Or
Niharika, the finance manager of Woolmills Pvt. Ltd. a firm dealing in telecommunication equipment choose a capital structure which was highly geared.
(i) What do you understand by a highly geared capital structure?
(ii) What are the implications of choosing such a structure?
Answer:
Here, EBIT = Earning Before Interest and Tax; EBT = Earning Before Tax
EAT = Earning After Tax
Or
(i) Gearing is defined as the amount of debt in proportion to equity capital that a company uses to fund its operations. Highly geared capital structure is one which possesses high debt. High debt to equity ratio generally shows high gearing ratio.
(ii) Implications of highly geared capital structure are (any three):
- The fixed cost of company is higher, due to which, there will be lesser divisible profits for equity shareholders.
- Banks are reluctant to give loans to companies that are highly geared.
- Companies with highly geared capital structure are at high risk at time of economic slowdown.
- A very high gearing ratio is a sign of lack of discipline with respect to borrowings, due to which investors may not feel comfortable.
Question 12.
Rjio, a fashion and lifestyle brand, is a digital commerce initiative by Reliable
Industries. It has various categories of clothes, footwear, bags, etc. The company offers a wide variety of goods under each of these categories.
On their website, complete information regarding quality, price, quantity, etc is available so that consumers can choose accordingly. To give assurance about the quality of products, electronics have ISI mark on them whereas gold jewellery has Hallmark.
During winter, they are selling various apparels made from pure wool which have Woolmark. Priyanka, bought a kurti from the Rjio website and got its delivery within one day. On opening the parcel, she discovered that kurti has a hole in it. She filed a complaint on their toll-free number and their customer support team replaced her kurti within one week.
(i) Identify the rights followed by Rjio by quoting lines from the above text.
(ii) In case of grievances, can consumer file complaint to redressal agencies against e-commerce sellers.
Answer:
(i) Rights of consumers followed by Rjio are:
(a) Right to be assured, which is depicted from the lines, “The company offers a wide variety of goods under each of these categories.”
(b) Right to information, which is depicted from the lines, “On their website complete information regarding quality, price, quantity, etc is available so that consumer can choose accordingly.”
(c) Right to safety, which is depicted from the lines, “Electronics have ISI mark on them whereas gold jewellery has Hallmark.” “Apparels which are made from pure wool has woolmark.”
(d) Right to be heard followed by the company as is depicted from the lines, “She filed a complaint on their tollfree number.”
(ii) Yes, consumer can file complaint to redressal agencies against e-commerce sellers in case of
grievances under Consumer Protection Act, 2019.