Class 12 Business Studies: CBSE Sample Question Papers- Term II (2021-22)- 2 | Sample Papers for Class 12 Commerce PDF Download

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.

Staffing is that part of the process of management which is concerned with obtaining, utilizing and maintaining a satisfactory and satisfied work force. Today, staffing may involve any combination of employees including daily wagers, consultants and contract employees. Staffing recognizes the importance of every single person employed by an organization as it is the individual worker, who is the ultimate performer.

The basic purpose of SEBI is to create an environment to facilitate efficient mobilisation and allocation of resources through the securities markets. It also aims to stimulate competition and encourage innovation. This environment includes rules and regulations, institutions and their interrelationships, instruments, practices, infrastructure and policy framework. This environment aims at meeting the needs of the three groups which basically constitute the market, viz, the issuers of securities (Companies), the investors and the market intermediaries.

Training: Training refers to the process of increasing the knowledge, skills and abilities of employees for doing a particular job. It is a systematic and continuous process for improving skills. Training aims to enable the employees to perform their job better. It is a process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased. It is a process of learning new skills and application of knowledge. It attempts to improve their performance on the current job or prepare them for any intended job.

Development: Development refers to overall growth of the employees. It seeks to prepare employees for handling more responsible and challenging jobs by developing their hidden qualities and talents. Development refers to the learning opportunities designed to help employees grow. It covers not only those activities which improve job performance but also those which bring about growth of the personality, help individuals in the progress towards maturity and actualization of their potential capacities so that they become not only good employees but better individuals.

Controlling is one of the important functions of a manager. In order to seek planned results from the subordinates, a manager needs to exercise effective control over the activities of the subordinates. Controlling means ensuring that activities in an organization are performed as per the plans. Controlling also ensures that an organization’s resources are being used effectively and efficiently for the achievement of predetermined goals. Controlling is, thus, a goal-oriented function.

The following needs are given as per Maslow ’s Need Hierarchy Theory that will not be satisfied by the two incentives- basic pay and allowances (satisfies basic needs) and retirement benefits (satisfy safety and security needs) are as follows:

(i) Affiliation/Belonging Needs: These needs include affection, sense of belongingness, acceptance, approval and friendship or companionship.
(ii) Esteem Needs: These needs refer to factors such as self-respect, independence, status, recognition, appreciation and attention.
(iii) Self-Actualization Needs: It refers to the highest level of need in the hierarchy. It deals with the drive to become what one is capable of becoming by attaining one’s true potential and includes growth, self-fulfillment, etc.

Communication is defined as a process of exchange of ideas, information, views, facts, feelings etc., between or among people to create common understanding. In the words of Louis Allen, “Communication is the sum of all things one person does when he wants to create understanding in the mind of another. It involves systematic and continuous process of telling, listening and understanding”. 

Formal Communication: Formal Communication flows through official channels designed as per the organization chart. This communication may flow from a superior to a subordinate or from a subordinate to a superior or among same cadre employees or managers. The communication may be oral or written but is generally recorded and filed in the office.
OR
Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organization to achieve its objectives.
Directing initiates action: Directing helps to initiate action by people in the organization towards attainment of desired objectives. For example, if a supervisor guides his subordinates and clarifies their doubts in performing a task, it will help the worker to achieve work targets given to him.
Directing integrates employees’ efforts: Directing integrates employee’s efforts in the organization in such a way that every individual effort contributes to the organizational performance. Thus, it ensures that the individuals work for organizational goals. For example, a manager with good leadership abilities will be in a position to convince the employees working under him that individual efforts and team effort will lead to achievement of organizational goals.

The importance of financial planning can be explained as follows:

(i) It helps in forecasting what may happen in future under different business situations. By doing so, it helps the firms to face the eventual situation in a better way. In other words, it makes the firm better prepared to face the future. For example, a growth of 20% in sales is predicted. However, it may happen that the growth rate eventually turns out to be 10% or 30%. Many items of expenses shall be different in these three situations. By preparing a blueprint of these three situations the management may decide what should be done in each of these situations. This preparation of alternative financial plans to meet different situations is clearly of immense help in running the business smoothly.
(ii) It helps in avoiding business shocks and surprises and helps the company in preparing for the future.
(iii) It helps in coordinating various business functions, e.g., sales and production functions, by providing clear policies and procedures.  
(iv) Detailed plans of action prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.
(v) It tries to link the present with the future.
(vi) It provides a link between investment and financing decisions on a continuous basis.
(vii) By spelling out detailed objectives for various business segments, it makes the evaluation of actual performance easier. 

Management by Exception is a technique of analyzing the deviations. It has been established on the ground that if one attempts to control everything then it results in controlling nothing. Hence, those deviations which go beyond the allowable limit should be brought to the notice of the managers and minor or insignificant deviations can be overlooked. This saves time and energy of the managers to focus their attention on essential issues. Once identified, the deviations are analysed for their causes. 

Meaning of Consumer Protection: Consumer protection means the act of providing adequate protection to consumers against the unscrupulous, exploitative and unfair trade practices of manufacturers and service providers.

The importance of consumer protection from the consumers’ point of view can be understood from the following points:
(i) Consumer Ignorance: In the light of widespread ignorance of consumers about their rights and reliefs available to them, it becomes necessary to educate them about the same so as to achieve consumer awareness.
(ii) Unorganized Consumers: Consumers need to be organized in the form of consumer organizations which would take care of their interests. Though, in India, we do have consumer organizations which are working in this direction, adequate protection is required to be given to consumers till these organizations become powerful enough to protect and promote the interests of consumers.  
(iii) Widespread Exploitation of Consumers: Consumers might be exploited by unscrupulous, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black-marketing etc. Consumers need protection against such malpractices of the sellers.
OR
Under the Consumer Protection Act, 2019, a consumer is defined as:
(i) Any person who buys any goods for a consideration, which has been paid or promised, or partly paid and partly promised, or under any scheme of deferred payment. It includes any user of such goods, when such use is made with the approval of the buyer, but does not include a person who obtains goods for resale or any other commercial purpose.
(ii) Any person who hires or avails 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 includes any beneficiary of services when such 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.
A complaint can be filed by any of the following:
(a) One or more consumer on behalf of numerous consumer
(b) Any consumer
(c) Any registered Consumer ’s Association
(d) Government
(e) Legal heirs of a deceased consumer 

Objectives of SEBI are:

(i) To regulate stock exchanges and the securities industry in order to promote their orderly functioning.

(ii) To protect the rights and interests of the investors, particularly individual investors and to guide and educate them.

(iii) To prevent trading malpractices and achieve a balance between self-regulation and statutory regulation. 

(iv) To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers, etc. with a view to making them competitive and professional.

(v) To provide a market place in which the issuers can raise finances in an easy, fair and efficient manner.

(vi) To create an environment to facilitate efficient mobilisation and allocation of resources.

Q.11. There were two vacancies for the post of Assistant Manager in ‘Gyan Electrics Private Ltd.’ Parth, the Human Resources Manager identified one suitable candidate Vishwas from within the organization and promoted him to the post of Assistant Manager. For another post, the Manager Parth took help of a placement agency and selected Saleem. After six months, Parth observed that Vishwas’s performance was much better than Saleem’s performance though Vishwas was less qualified than Saleem. Hence, Parth decided that in future he will not make any appointment with the help of an outside source. Explain any five reasons on the basis of which Parth would have taken the above decision.

Reasons on the basis of which ‘Parth’ would have taken the decision not to make appointment with the help of an outside source are:
(i) Employees are motivated to improve their performance. A promotion at a higher level may lead to a chain of promotion at lower levels in the organization. This motivates the employees to improve their performance through learning and practice. Employees work with commitment and loyalty and remain satisfied with their jobs. Also peace prevails in the enterprise because of promotional avenues
(ii) Internal recruitment also simplifies the process of selection and placement. The candidates that are already working in the enterprise can be evaluated more accurately and economically. This is a more reliable way of recruitment since the candidates are already known to the organization
(iii) Transfer is a tool of training the employees to prepare them for higher jobs. Also people recruited from within the organization do not need induction training
(iv) Transfer has the benefit of shifting workforce from the surplus departments to those where there is shortage of staff
(v) Filling of jobs internally is cheaper as compared to getting candidates from external sources.

Q.12. Samrat International Ltd. earned a net profit of ₹ 250 crore. Suhani, the finance manager of Samrat International Ltd., wants to decide how to appropriate these profits. Identify the decision that Suhani will have to take and also discuss any four factors which help her in taking this decision.
OR
‘Smart Stationery Ltd.’ wants to raise funds of ₹ 40,00,000 for its new project. The management is considering the following mix of debt and equity to raise this amount:

Other details are as follows: 
Interest Rate on Debt = 9% 
Face Value of Equity Shares = ₹100 each 
Tax Rate = 30% 
Earnings Before Interest and Tax (EBIT) = ₹ 8,00,000 
(i) Under which of the three alternatives will the company be able to take advantage of Trading on Equity? 
(ii) Does Earning Per Share always rise with increase in debt? Give reasons to support your answer.

(i) Dividend Decision
(ii) Factors affecting dividend decision are as follows:  
(a) Earnings: The dividend is paid out of the current and reserved profits. Therefore, any firm with greater amount of total profit will ensure greater dividend to its shareholders.
(b) Stability of earnings: Other things remaining the same, a company having stable earning is in a better position to declare higher dividends. As against this, a company having unstable earnings is likely to pay smaller dividend.
(c) Stability of dividend: Companies generally follow a policy of stabilizing dividend per share. The increase in dividends is generally made when there is confidence that their earning potential has gone up and not just the earnings of the current year. In other words, dividend per share is not altered if the change in earnings is small or seen to be temporary in nature.
(d) Growth opportunities: Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. The dividend in growth companies is, therefore, smaller, than that in the non– growth companies.
(e) Cash flow position: The payment of dividend involves an outflow of cash. A company may be earning profit but may be short on cash. Availability of enough cash in the company is necessary for declaration of dividend.
(f) Stock market reactions: Investors, in general, view an increase in dividend as good news and stock prices react positively to it. Similarly, a decrease in dividend may have a negative impact on the share prices in the stock market. Thus, the possible impact of dividend policy on the equity share price is one of the important factors considered by the management while taking a decision about it.
(g) Shareholders’ preference: While declaring dividends, managements must keep in mind the preferences of the shareholders in this regard. If the shareholders in general desire that at least a certain amount is paid as dividend, the companies are likely to declare the same. There are always some shareholders who depend upon a regular income from their investments.
(h) Taxation policy: The choice between the payment of dividend and retaining the earnings is, to some extent, affected by the difference in the tax treatment of dividends and capital gains. If tax on dividend is higher, it is better to pay less by way of dividends. As compared to this, higher dividends may be declared if tax rates are relatively lower. Though the dividends are free of tax in the hands of shareholders, a dividend distribution tax is levied on companies.
(i) Access to capital market: Large and reputed companies generally have easy access to the capital market and, therefore, may depend less on retained earnings to finance their growth. These companies tend to pay higher dividends than the smaller companies which have relatively low access to the market.
(j) Legal constraints: Certain provisions of the Companies Act place restrictions on dividend declaration and payout of dividend. These provisions have to be given due consideration while declaring dividend.
(k) Contractual constraints: Many times while granting loans to a company, the lender may impose certain restrictions on the payment of dividends in future in order to ensure that the company has sufficient funds to repay his loan, which should not be violated by the company.
OR

(ii) No, Earning Per Share does not always rise with increase in debt. EPS decreases when the company cannot earn greater profit than the value of debt.