Previous Year Short Questions With Answers - Business Services Commerce Notes | EduRev

Business Studies (BST) Class 11

Commerce : Previous Year Short Questions With Answers - Business Services Commerce Notes | EduRev

The document Previous Year Short Questions With Answers - Business Services Commerce Notes | EduRev is a part of the Commerce Course Business Studies (BST) Class 11.
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Q. 1. A husband took a life insurance policy in his wife’s name. After 1 year, the couple got divorced and later on after 2 years, the wife died. Will the husband get compensation from the insurance company? (KVS - 2018)
Ans.
The husband will get compensation from the insurance company, because in the case of a life insurance policy, the insurable interest must be present at the time of taking policy. If the husband is making regular payment of premium even after divorce, then he will get the compensation for the death of his wife even after divorce.

Q. 2. What do you mean by ‘Inconsistency’ of services?
Ans.
Inconsistency of services means that homogeneous and standardised services can’t be provided each time by the service provider.Services have to be performed exclusively each time according to the different demands and different expectations of various customers.

Q. 3. Services are those separately identifiable,essentially intangible activities that provide satisfaction to the consumers. In context to business, how can you define services?
Ans. In context to business, services may be defined as all those economic activities that are intangible and imply an interaction between the service provider and the consumer. Business services include banking, insurance,transportation, warehousing, communication,etc.

Q. 4. State any three agency functions of a Commercial Bank.
Ans.
Agency functions of a Commercial Banks are as follows:
(i) Collection and payment of cheques.
(ii) Purchase and sale of securities.
(iii) Advise customers on financial matters.

Q. 5. Why are banks called debtors as well as creditors?
Ans. 
Debtor is a person who owes some amount of money to a person and creditor is a person who has to collect money from a person or to whom a person owes money.bank owes money to its depositors that is why it is called debtor. On the other hand, a bank grants loan also and all those who have taken loan owe money to banks. That is why a bank is also called creditor. A bank is a debtor for its depositors and creditor for its loan holders.

Q. 6. Write a short note on:
(i) ATM,
(ii) Debit Card.
Ans.
(i) ATM: Automated Teller Machine is 24 hours operated automatic machine, which helps in depositing and withdrawing money. It is done by inserting a plastic card (ATM Card) and entering Personal Identification Number (PIN)
(ii) Debit Card: It is the plastic card issued to a customer in lieu of his money deposited in bank. By using it, a customer can make immediate payment of purchased goods and services.

Q. 7. Give the important features of Recurring Deposit Account.
Ans. 
(i) In such account, money is deposited in regular instalment for a specified time period.
(ii) The rate of interest on it is higher than that on saving account.
(iii) In financial urgency the account can be terminated.

Q. 8. Expand these terms:
(i) UPI,
(ii) USSD,
(iii) AEPS.
Ans.
(i) Unified Payment Interface
(ii) Unstructured Supplementary Service Data
(iii) Aadhaar Enabled Payment System

Q. 9. Naresh took a fire insurance policy from NICL of ` 50 Lakh for his factory at the annual premium of ` 75,000. In order to avoid premium more than his amount he did not disclose that highly explosive chemicals are being manufactured in his factory. Due to fire his factory gets damaged. The insurance company NICL refused to make the payment for claim as it became aware about the highly explosive chemicals. Is Naresh entitled to claim? Explain the principle of insurance violated by Naresh.
Ans. 
No, Naresh is not entitled to receive the claim because he has violated Principle of ‘Utmost Good Faith’. Good faith or disclosure of all material facts: An insurance contract is a contract of good faith. Both parties to the contract are bound to likely affect the acceptance of the proposal by the insurance company. It is known as a contract uberrimae fidei, i.e. contract requiring absolute good faith and the disclosure of all material facts. In ordinary contracts, when consent to an agreement is caused by mis-representation, the agreement is voidable. But in an insurance contract, there should not only be no mis-representation but also no concealment of any material fact, otherwise, the policy becomes void. According to Lord Mansfield, “Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain from his ignorance of the fact and his believing the contrary.” The proposer is liable to disclose all material facts before the insurance company which are known to him. Every fact which is likely to influence the mind of prudent insurers in deciding whether to accept the proposal or not or in fixing the rate of premium is material fact.

Q. 10. Explain the following principle of insurance: Utmost good faith, Indemnity.
Ans.
(i) Utmost good faith: It is the duty of the insured to disclose all the material facts relating to risk to be covered. A material fact refers to the fact which would influence the mind of the prudent underwriter in deciding whether to accept a risk for insurance and on what terms.
(ii) Indemnity: The purpose of indemnity is to restore the insured person to approximately the same financial position that existed prior to the loss. The important word here is ‘approximately’ the same and the reason for this is to prevent the insured from profiting from insurance to reduce moral hazards. Indemnity can be defined as the compensation of loss or injury sustained.

Q. 11. Why is life insurance considered as a contract of assurance?
Ans. 
Assurance means the security for compensation. Under the contract of insurance, the compensation is paid by the insurer on the happening of an event. For example, in case of fire insurance, the compensation is given only when the insured suffers a loss due to fire. But in case of life insurance, the compensation is paid irrespective of happening of an event. In life insurance the compensation is paid either on the death or on expiry of a specific time period whichever comes earlier. Since payment of compensation is assured by the insurance company, that is why, life insurance is considered as a contract of assurance.

Q. 12. Classify and explain each type of services.
Ans. 
The services can be categorised as.
(i) Personal services
(ii) Social services
(iii) Business services

Q. 13. Explain any four functions performed by Insurance. 
Ans. Following functions are performed by insurance:
(i) Providing certainty: Insurance provides certainty of payment for the risk of loss due to happening of uncertain events. There are uncertainties of happenings of time and amount of loss. Insurance provides certainty to the assured for payment compensation against such losses.
(ii) Protection: Though Insurance can’t stop the happening of risk or event but provides protection against losses arising out of it.
(iii) Risk sharing: The other important function of insurance is risk sharing. On the happening of a risk/event the loss is shared by all persons exposed to it. The share is obtained from every insured member by way of premium.
(iv) Assist in capital formation: The accumulated funds received by way of premium paid by the insured are invested by the insurer in various income generating schemes. Thus, assisting in capital formation.

Q. 14. Write a short note on Health Insurance.
Ans. 
Under this insurance policy medical expenses of illness and disability are covered by the Insurance. Depending upon the policy, the premium may be payable either in lump-sum or in instalments. Health insurance usually provides either direct payment or reimbursement for expenses associated with illness and injuries. It is a contract of indemnity as the insured can claim on the basis of medical expenses.

Q. 15. Explain the following:
(i) Bank Overdraft
(ii) Speed Post
Ans. 
(i) Bank Overdraft: Is a temporary arrangement under which a depositor is allowed to draw by cheque more than the amount to his credit up to a specified limit.
(ii) Speed Post: This service provides fast time bound and guaranteed delivery of mail by the post offices on payment of extra charge than normal postal charges.

Q. 16. Ram wants to make long-term investment of his monthly savings along with tax benefits in post office investment schemes. Explain any two such schemes to Ram.
Ans. Ram can invest his monthly saving in:
(i) Public Provident Fund (PPF): Under it an account holder is required to deposit every year an amount ranging between ` 500 to ` 1.5 lakhs in his account for a period up to 15 years Interest is credited every year at the prescribed rate. Amount deposited every year in this account is subject to tax exemption.
(ii) National Saving Certificate: Ram can buy NSC for any amount (` 100 × more). The principal amount along with accumulated interest is paid on maturity (after 5 or ten years). Funds invested in NSC subject to an overall limit of ` 1.5 lakhs are eligible for tax benefits.

Q. 17. Discuss briefly the different types of mail services offered by the post and telegraph department?
Ans.
Following mail services are provided by the post and telegraph department:
(i) UPS (Under Postal Service): Under it the post office provides a certificate of posting on the payment of prescribed fee.
(ii) Registered Post: This facility ensures the sender of the mail that in case the mail is not delivered to the addressee, it comes back to the sender.
(iii) Parcel Post: Under this facility, the parcels of specified size and weight can be sent across the country as well as outside the country on the payment of parcel charges.
(iv) Speed Post: Under it, the post & telegraph department guarantees that all the speed mail received up to 5 p.m. at the specified post offices will be delivered within 24 hours and if it fails to do so, the extra fee changed will be refunded.

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