CBSE Past Year Question paper - 2015 (All India Compartment), Business Study, Class 12 Commerce Notes | EduRev

Business Studies (BST) Class 12

Commerce : CBSE Past Year Question paper - 2015 (All India Compartment), Business Study, Class 12 Commerce Notes | EduRev

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 (Q1) On the eve of Diwali Kalpana purchased two kilograms of sweets from Koyal sweets. On consumption of sweets her two children and husband fell sick and were to be hospitalised. Kalpana wanted to file a case in the consumer forum but could not do so because she did not have any proof of buying sweets from Koyal sweets. What proof could Kalpana had obtained for filing the claim in the consumer court ?

 (A1)  1 Bill / Invoice.


(Q2) A consumer products manufacturing company is offering a number of consumer products like toiletries, detergent powder, food products etc. Identify the element of marketing mix referred here.

(A2) Product Mix.


(Q3) A Steel manufacturing company is diversifying and starting a thermal power plant. State with reason the effect of diversification on the fixed capital requirements of the company.

 (A3) Diversification of operations also govern the fixed capital requirements. If a company chooses to diversify its operations, then it certainly needs more fixed capital.


(Q4) Besides the dividend decision the finance function is concerned with two other broad decisions. Name these decisions.

(A4)  (i) Investment decisions : Investment decision relates to the careful selection of assets in which funds will be invested by the firm.

(ii) Financing decisions : Financing decision relates to the composition of relative proportion of various sources of finance.


(Q5) To make the sports day of the school successful the Headmaster of the school divided all the activities into task groups each dealing with a specific area like holding of events, arrangement of medals, refreshments etc. Each group was placed under the overall supervision of a senior teacher. The physical education teacher was made responsible for holding different events, the home science teacher for refreshments and the Maths teacher for medals.

Identify the function of management performed by the Headmaster in doing So.

 (A5) Directing : Directing is the guidance, the inspiration, the leadership of those men and women that constitute the real core of responsibilities of management.


(Q6) Define “Planning’.

(A6) Planning means looking ahead and chalking out future course of action to be followed. It is a systematic activity which determines when, how, and who is going to perform a specific job. In the words of M.E. Hurley, “Planning is deciding in advance what is to be done. It involves the selection of objectives, policies, procedures and programmes from among alternatives.”


(Q7) Which level Managers are responsible for coordination? State.

 (A7) Middle Level Managers are responsible for coordination. Middle level act as a link between top and lower level management. They cooperates with each other departments, top level and lower level management, so that organisation function smoothly.


(Q8) Why is management called an intangible force? State.

(A8) Management is intangible : Management is intangible, it cannot be seen with eyes. It can only be evidenced by the quality of the organisation and the results i.e., profits, increased productivity etc.


(Q9) State the limitations of informal organisation.

 (A9) (i) Informal organisation may become a disruptive force when it spreads rumours. This may work against the interest of the formal organisation. (ii) Informal groups may oppose change. Such resistance to change may delay or restrict growth. (iii) Informal groups over develop their code of conduct which every member has to follow. Such code of conduct or norm may go against the interests of the enterprise.


(Q10) Sultan was a regional Manager in ‘Homely Products Ltd.” for the last eight years. On the retirement of the Marketing Manager, Sultan applied for the same post because he was extremely ambitious and had dedicated all his energies to obtain the post of Marketing Manager. However, the top management decided to fill the position by selecting a better person from outside the company. Because of this Sultan was heartbroken and his performance declined. When the new Marketing Manager joined, one of his major problems was how to motivate and inspire Sultan to his former level of performance.

Suggest any three non-financial benefits that the new marketing manager may use to motivate Sultan.

(A10) (1) Status : Status means the position or rank of a person in the organisation. It can be high or low. The rank of an employee is directly linked with his authority, responsibility and other facilities. Therefore, the employees can be motivated by raising their rank or position. The attainment of a higher status fulfills the psychological, social and esteem related needs.

(2) Career Advancement Opportunity: Everybody wants to grow to the higher level in the organisation. Therefore, opportunity to develop skills and get promoted to higher levels is an important motivation.

(3) Employee Participation : It means involving employees in decision-making of the issues related to them e.g., encourage participation in joint management committees, work committees, canteen committees, etc.


(Q11) Keeping in mind the emerging nature of the securities market in India, Securities and Exchange Board of India (SEBI) was entrusted with the twin task of regulation and development of securities market. Out of this, state the developmental functions of Securities and Exchange Board of India (SEBI).


(A11) (i) SEBI regulates the business in stock exchanges and any other securities markets.

(ii) SEBI registers and regulates the working of sub-brokers, share transfer agents, bankers to an issue, trustees of trust deed, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisors and any such intermediaries who are associated with securities market in any manner.

(iii) Registers and regulates the working of venture capital funds and collective investment schemes including mutual funds.

(iv) Registers and regulates the working of depositories, participants, foreign institutional investors, credit rating agencies and such other intermediaries as the board may notify in this be half.

(v) Prohibits fraudulent and unfair trade practices relating to securities market.

(vi) Prohibits insider trading in securities.


(Q12) Name and define the process that helps in choosing the best person out of a number of prospective candidates for a job. (3)

(A12) Selection process : Following steps are followed in this process:

(i) Preliminary screening: Preliminary screening helps the manager to eliminate unqualified or unfit job seekers based on the information supplied in the application forms. Preliminary in terview helps to reject misfits for reasons, which did not appear in the application forms.

(ii) Selection tests: An employment test is a mechanism (either paper and pencil test or an exercise) that attempts to measure certain characteristics range from aptitude, such as manual dexterity to intelligence to personality.

Employment Interview : Interview is a formal, in depth conversation conducted to evaluate the applicants suitability for the job. The role of the interview isto seekinformation isto provide the same. Though, in present times, the interview also seeks information from interview.

(iii) Reference checks: Many employees request names, address and telephone numbers of references, for the purpose of verifying information and gaining additional information ofan applicant.

(iv) Selection decision : The final selection decision has to be made from the candidates who have cleared the tests, interviews and reference a checks.

(v) Medical examination: The candidate undergone for a medical fitness test as to check the physical and mental fitness of a candidate.

(vi) Job offer: Letter of appointment mentioning the date by which a candidate has to report on duty is handed over to the appointee who has cleared all hurdles.

Contract of employment : It includes various details such as pay, allowances, leave rules, sickness, work rules, hours of work, disciplinary procedure etc. It is prepared after the acceptance of job offer by the candidate and attestation form attested by him.


(Q13) There can be three different levels of packaging. Explain any two of them.



(A13) There can be three levels of packaging. These are as below :

(i) Primary packaging: It refers to immediate package of a product. It remains with the product until it is used. For example toothpaste tube, a match box etc.

(ii) Secondary packaging : It is an additional package which gives additional protection to the product. For example, a tube of shaving cream usually comes in a cardboard box. It is disposed off when the product is used.

(iii) Transportation packaging : Such packaging is used for storing or transporting the goods. It gives protection to goods and facilitate their transportation. For example, a big cardboard box which is containing 100 units of toothpaste is used for transportation.


(Q14) A company manufacture very sophisticated switch gears used in automatic cars. For this, the company uses hi-tech machines. Most of the times the workers of the factory remain idle because of lack of knowledge regarding the use of these hi-tech machines. The frequent visits by the engineers and constant supervision of the foreman results into high overhead charges. Explain the way by which this problem can be overcome. Also, state how this help the employees.


(A14) This problem can be overcome with the help of training. Training is the process of learning a sequence of programmed behaviour. It is the application of knowledge. It is a process by which the aptitutes, skills and abilities of employees to perform specific jobs are increased.

Training is important for the employees because:

(i) Increase in their market value : Trained employees have a better market value. Better market value means that other organisations are always willing to employ trained personnel at higher remuneration.

(ii) Fewer accidents : Trained employees are less prone to accidents as they handle the machines carefully.

(iii) Increase in capacity : Training enables the employee to perform his job with enthusiasm.

(iv) Higher morale : The trained employees have greater job satisfaction as they know their jobs. It helps to increase their morale.


(Q15) It helps a manager to extend his area of operations as without it, his activities would be restricted to only what he himself can do. Identify the activity referred to, in the above statement and state its elements.



(A15) Delegation means the process of entrusting responsibility and authority to another person and creating accountability. Thus, there are three elements of delegation :

(i) Authority : Authority means power to take decision. It means the right of an individual to command on his subordinates and take action within the scope of his position. The subordinates perform the task as per the guidelines of the superior. The authority flows from top to bottom i.e., the superior has authority over the subordinate.

(ii) Responsibility : Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior subordinate relationship because the subordinates is bound to perform the duty assigned to him by his superior.

(iii) Accountability : Accountability means answerable for the final outcome of the assigned task by an individual. The manager are not only accountable or answerable for their own performance but they are also for performance of their subordinates. It indicates that the manager has to ensure the proper discharge of duties of his subordinates.


(Q16) An environmental conscious company “GVN Ltd.” has its business in all parts of the country. The company follows certain well-defined business principles that result to minimize the employee turnover.

Following are some of the environmental factors followed by GVN Ltd.:

(1) Honour the law of the country as well as that of the states in which it operates.

(2) Respect the culture and customs of all states.

(3) Provide clean and safe products to enhance the quality of life throughout the country.

(4) Develop a culture in the company that enhances individual creativity and team work while honouring mutual trust and respect between management and labour.

From the above,

(i) Identify and state any one general principle of management and any one dimension of business environment.

(ii) Also, identify any two values which the above guiding principles and environmental factors are conveying to the society.



(A16) (i) (a) Initiative : According to this principle, the employees working in an organisation at all levels should be encouraged or motivated to take initiative in work related matters. Here, initiative means eagerness to take the first step without being asked to do so. Management should encourage intiative i.e., they should encourage employees to make and execute their own plans. This is because an initiative gives satisfaction to employees and bring success to the organisation.

(b) Social Dimension : Social environment consists of social and cultural forces within which firms operates. It consists of social customs, values and traditions.

(ii) (a) Obey the law & order. (b) Mutual Trust.


(Q17) How does the understanding of business environment help the management in the following?

(a) Identification of threats and early warning signals.

(b) Improving performance.



(A17) (a) “Threats' in the given statement refers to the unfavourable changes in the external environment which hinders the firm's performance.

(b) Better Performance : Analysis and understanding of the business environment helps the business to improve performance. It has been observed that enterprises, which continuously monitor and adjust themselves as per changing business environment, perform better as compared to enterprises, which keep a close eye towards the external environment.

(Q18) State any four factors affecting the requirements of working capital of a company.



(A18) The factors determining the working capital needs of an enterprise are stated below:

(i) Nature of Business: Nature of business plays an important role in deciding the working capital requirements of a business. A trading organisation requires lower amount of working capital as compared to a manufacturing organisation. Similarly, the working capital requirements of service industries are also low because they do not have to maintain inventories.

(ii) Scale of Operation : Those organisations which operate on higher scale of operations. The quantum of inventory debtors required generally high. Such organisations need large amount of working capital as compared to organisations which operate on a lower scale.

(iii) Business Cycles : Different phases of business cycles also affect the requirement of working capital of a firm. In the period of boom, the sales as well as production are higher and therefore, higher amount of working capital is needed. During the period of depression, working capital requirement is lower due to fall in sales as well as production.

Seasonal Factors : Some industries are influenced by seasonal variations. During the peak season, the level of operations is higher and hence, there is higher need of working capital and vice-versa.

Production Cycle : Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Business organisations having longer production cycle will require more working capital where as business organisations having shorter production cycle will require lower working capital.

Credit Allowed : Different firms allow different credit terms to their customers. These depend upon the level of competition as well as credit worthiness of the clientele. A liberal credit policy results in higher amount of debtors and hence, increasing the requirement of the working capital.


(Q19) Your company has setup a coconut hair oil factory in Coastal Kerala, with a production capacity of 10,000 bottles of 100 milli-litre per day. The company plans to market the hair-oil with the brand name “Kale Kesh'. Design a label for the hair-oil bottles. (4)


(Q20) A company has been registered under the Companies Act with an authorized share capital of Rs.  400 crores. Its registered office is situated in Mumbai and manufacturing unit in a backward district of Karnataka. Its marketing department is situated in Hyderabad. The company is manufacturing consumer goods.

(i) With the help of a diagram suggest a suitable organization structure for the company.

(ii) State any three limitations of this organization structure.


(A20) (i) Functional Structure

BST,CBSE Class 12,CBSE Past year Question paper,Compartment,Business Study Class 12,Business Study

(ii) The following are the disadvantages of functional structure:

(a) Conflicts in Different Departments: Every manager is interested in his attaining the objectives of his own department. This leads to conflicts in different departments.

(b) Difficulty in Coordination: When the departments become too large then the coordination decreases and results in delay in action.

(c) Hindrance to Organisational Objectives: In this structure, all the workers make efforts to achieve the target of their department. They give less importance to the overall objectives.

(d) Inflexibility: Since, people with same skills and knowledge base develop a narrow thinking. It becomes difficult for them to appreciate others point of view. This leads to inflexibility.


(Q21) Explain any five semantic barriers to communication.


(A21) Semantic barriers take place due to use of wrong words, faulty translation, different interpretations etc. These barriers are discussed below:

(i) Badly Expressed Message : Sometimes a manager is not able to communicate his message clearly to his subordinate, due to omission of words, use of wrong words etc. which acts as a barrier to communication.

(ii) Symbols with different meanings : A symbol or a word can have different meanings. If the receiver misunderstands the communication, it becomes meaningless.

(iii) Faulty Translation : A policy and guidelines are received from top management by the superior in English language and has to be translated to the workers in the Hindi language. A faulty translation can create a problem.

(iv) Unclarified assumptions : Some communications may have certain assumptions which are subject to different interpretations. These assumptions must be clearly stated otherwise they may lead to hindrance in communication.

(v) Technical jargon : Sometimes specialist use technical jargon while explaining to workers who are not specialists in the concerned field. Therefore, such information may not be understood by workers.

(vi) Body language and gesture decoding: The improper match between the message meaning and body language leads to misinterpretation of the message communicated.


(Q22) ‘Jony India Ltd.’ is the manufacturer of large sized curved televisions. The company imparted training to its engineers at an advanced training centre at Germany. It sells its television sets throughout the country. The company had a substantial market share and had a loyal customer following because of the quality products. From the last financial year, the company had been unable to achieve its targets because of competition in the market. The company is planning to revamp its controlling system.

(i) Identify the concepts of management involved in the above para.

(ii) State the steps of the revamped controlling process to be followed by the company to solve this problem.

(iii) Also, state any one value which the company wants to communicate to the society.



A22) (a) Management is a Profession : Management is gradually becoming a profession because there are established principles of management which are being applied in practice and it involves specialised training. In addition, management is governed by ethical code arising out of its social obligations.

(b) (i) Setting Performance : The first step of controlling to set performance standards. The standards are those criteria on the basis of which the actual performance is measured. Standards can be set in both quantitative and qualitative terms.

(ii) Measurement of Actual Performance: After establishing standards the next step in the control process is to measure the actual performance. Following are points while measuring the actual performance:

(a) The figures regarding work progress should, as far as possible, be completely true.

(b) These figures should be continuously prepared.

(c) The standards for measuring progress should be the same as were adopted at the time of determine standards.

(d) Progress measuring system should be quick to point out deviations.

(iii) Comparison of Actual Performance with standards : In this step, actual performance is compared with the standards and deviations are found. Deviations can be of two types :

(i) Negative Deviation and  (ii) Positive Deviation.

(iv) Analysing Deviations : The term Deviation in controlling means the difference between the actual performance and standards. It is important to determine the acceptable range of deviations. Also, deviation in key area of business need to be attended more urgently as compared to deviation in certain insignificant area.

(v) Taking Corrective Action: The last but the most important step in the process of controlling is taking corrective action. By now the deviations and there causes become known. Now, is the time for removing the hurdles in the actual work progress.

(c) Providing good quality products to its customers.


(Q23) Kamal, Khan and Devid are partners in a firm engaged in the distribution of dairy products in Madhya Pradesh. Kamal is a holder of Senior Secondary School Certificate from Central Board of Secondary Education with Business Studies as one of his elective subjects. Khan had done his post-graduation in Hindi literature and Devid in Dairy Farming. One day, there was a serious discussion between Khan and Devid regarding the nature of ‘Management as a Science’. Khan argued that Management was not a science whereas Devid was of the opinion that Management was a science. Kamal intervened and corrected both Khan and Devid about the nature of Management as a Science with the help of his knowledge of Business Studies. Explain, how Kamal would have been able to satisfy both Khan and Devid.


(A23) It is important to apply the characteristics of science to management in order to find out whether management is a science or not. Following are the main points:

(i) Systematised Body of Knowledge : It is necessary for science to be a systematised body of knowledge. Like science, management is also a systematised body of knowledge and has cause and effect relationship.

(ii) Principles based On experimentation : Principles of science are developed through observation and tested through repeated experiments. Also, principles of management are evolved on the basis of observation and repeated experimentation in various types of organisations.

(iii) Universal validity : Principles of science have universal application. Management principles are flexible and can be used in different situation with modification. So, these principles do

not have universal applicability.


(Q24) Describe the following rights of a consumer :

(a) Right to be informed (b) Right to seek redressal

(c) Right to choose



(A24) (a) Right to be Informed : The consumer has a right to have a complete information about the product i.e., its ingredients, date of manufacture, price, quantity cannot directions for use etc. It is the legal requirement in India that all such information should be on the package and label of the product.

(b) Right to seek Redressal : Every consumer has the right to seek redress against (a) Restrictive trade practices (which restrict competition in the market) or unfair trade practices. (b) Defective goods (c) Excess charging of price. (d) Deficient services (e) Supply of hazardous goods. He can claim replacement of defective goods, removal of defect in the product, refund of money or compensation for loss/injury suffered etc.

(c) Right to Choose : According to this right, a consumer has the right to choose from a variety of products at competitive prices. Therefore, the marketer should offer a wide variety of products with variety of qualities, brands, prices etc. and allow the consumer to make a choice amongst them.


(Q25) Explain the functions of Financial Market.



(A25) Financial markets play an important role in the allocation of scarce resources in an economy by performing the following important functions:

(i) Mobilisation of Savings and Channelising them into the most productive uses: A financial market offers mobility to the savings of people. It helps them to invest their savings in various financial assets or instruments and earn income and capital appreciation. Thus, financial market helps to channelise surplus funds into the most productive use.

(ii) Facilitates Price Discover : A financial market includes both the suppliers and investors of fund. The demand and supply of funds determine the price of various financial instruments. For example, price of share at a stock exchange is determined by its demand and supply by the buyer and the seller respectively.

(iii) Provide Liquidity to Financial Assets: Financial market provides a ready market for buying and selling of securities. The presence of this market assures investors that their investment can be really converted into cash.

(iv) Reduces the Cost of Transaction: The financial market is a common platform where a person can simply buy/sell securities through brokers, who charge a nominal commission for their services. Thus, financial market reduces the cost of transaction.





(Q9) State any three advantages of informal organisation.


(A9)  (i) There is free flow of communication as well as quick feedback because the prescribed lines of communication are not to be followed.

(ii) It gives mental satisfaction to the members. This enhance their job satisfaction.

(iii) In the informal organisation the subordinates put their ideal before the superiors without any fear and hesitation. It helps to understand their difficulties.


(Q18) What is meant by financial planning ? State any three points of its importance.



A18) Financial planning is the estimation or determination of funds, which is required by an organisation to carry out its operations. It aims at choosing the best investment and financing alternative by focussing on their costs and benefits.

Importance :

(i)       Avoids business shocks and surprises : It helps in avoiding business shocks and surprises by making proper provisions regarding shortage or surplus of funds.

(ii)      Helps in coordination : It helps in co-ordination of various business activities such as sales, purchase, production, finance etc.

(iii)     Helps in avoiding wastage of finance : Proper planning helps in reducing wastage of financial resources and duplication of efforts.

(Q21) Explain the organisational barriers to communication.



(A21) The factors related to organisational structure, authority relationship, rules and regulations etc. act as barriers to effective communication. Organisational barriers are :

(i)   Complexity organisation structure : In an organisation where the number of managerial levels is large, the information gets delayed or sometimes it gets changed before it reaches the receiver.

(ii)  Organisational facilities Organisational facilities mean making available sufficient stationary, telephone, translator etc. If these facilities are not provided effective communication may hamper.

(iii) Organizational policy : If the organisational policy explicit or implicit, does not support free flow of communication, it may hamper the effectiveness of communication.

(iv) Rules and regulations : Rigid rules and regulations may act as hurdle to communication. Similarly, communication through prescribed channel may result in delays.

(v)  Status: Status of supervisor may create psychological distance between him and his subordinate. Sometimes, superiors do not like to save frank feedback from their subordinates.

(Q24) Explain the three-tier machinery under The Consumer Protection Act for redressal of consumers grievances.



(A24) Consumer grievances are redressed by the three-tier machinery under the Consumer Protection Act are:

(a) District Forum : Sec. 9, of the Act, provides for establishment of a District Forum by the State Government in each district of the State by notification.

(i) Composition: Sec. 10(1) provides that each district forum shall consist of:

(A) A person who is or has been or is qualified to be, a District judge who shall be its President.

(B) Two other members, one of whom shall be woman.

(ii) Every member of the District Forum shall hold office for a term of 5 years or upto 65 years of age whichever is earlier.

(iii) The salary and other allowances payable to and other terms and conditions of service of the members of District Forum shall be as may be prescribed by the State Government.

(iv) Any person who is aggrieved by the order of the District Forum can appeal against such order to the State Commission within 30 days.

(b) State Commission : The Act provides for the establishment of State Consumer Disputes Redressal Commission by the State Government by notification.

(i) Composition : Sec. 16(1) provides that each state commission shall consists of:

(A) person who is or has been a Judge of a High Court appointed by the State Government who shall be its President.

(B) Not less than two and not more than such no. of members as may be prescribed, one of whom shall be woman.

(ii) Every member of State Commission shall hold a office for

a period of 5 years and upto the age of 67 years, whichever is earlier.


(iii) Any person who is aggrieved by the order passed by State Commission can appeal against such order to National Commission within 30 days.

 (c) National Commission :

(i) Formation : Sec.9 provides for the establishment of National Commission by the Central Government by notification in the official gazette.

(ii) Composition : Sec.20 (1) provides that National Commission shall consist of:

(A)   A person who is or who has been judge of the Supreme Court, to be appointed by the Central Govt. who shall be its President.

Not less than 4 and not more than such number of members as may be prescribed and one of whom shall be woman.

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