Commerce Exam > Commerce Notes > Additional Study Material for Commerce > (HOTS) Questions - Business Arithmetic, Entrepreneurship, Class 12
(HOTS) Questions - Business Arithmetic, Entrepreneurship, Class 12 | Additional Study Material for Commerce PDF Download
Q1. Why Primary Market is also known as New Issue Market ? Give one reason. (2 marks)
Ans. Primary Market is also known as New Issue Market because when for the first time, entrepreneur for the purpose of obtaining capital funds decides to issue securities to the public its first sale is in the Primary Market.
Q2. “TFCI is playing vital role in the development of entrepreneurship in modern economy”. Comment. (TBQ) (3 marks)
Ans. “TFCI is playing vital role in the development of entrepreneurship in modern economy.” It is a specialized all India development financial institution to cater to the needs of the tourism industry. It provides financial assistance to enterprises for setting up or the development to tourism-related projects, facilities and services such as hotels, restaurants, holiday resorts, etc. It also provides advisory and merchant banking services in this field. The projects with a capital cost of ` 1 crore or above are generally eligible for assistance from TFCI.
Q3. Hari is an entrepreneur who wants to start an amusement park in Indore. He known that he needs a huge amount of initial capital. According to you which of the financial institution will be more suitable to him and why ? (TBQ) (3 marks)
Ans. Tourism Finance Corporation of India (TFCI) because it provides financial assistance to enterprises for setting up or the development of tourism-related projects, facilities and services such as hotels, holiday resorts, amusement parks, ets.
Q4. How is NABARD different from IFCI ? (TBQ) (2 marks)
Ans. NABARD provides credit for promotion of agriculture, small-scale industries, while TFCI is established to cater to the needs of the tourism industry.
Q5. Company A goes for public issue of 10,000 shares @ ` 10 each. Applications were received for only 5,000 shares. Can the company proceed with the process of issuing shares. (TBQ) (2 marks)
Ans. Company A cannot proceed with the process of issuing shares since minimum subscription of 90% is not received by the company. Company will have to refund the application money.
Value Based Questions:
Q1. By offering shares to its employees what values are promoted by a company ? (TBQ) (3 marks)
Ans.
(i) Making employees the shareholders of the company.
(ii) Letting them share the profits of the company.
(iii) Better industrial locations.
Q2. Mr. B the financial manager of ABC Company purchases 100 shares of the company just before the rights issue was announced. Is the behaviour of the manager ethical ? (TBQ) (1 mark)
Ans. No.
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FAQs on (HOTS) Questions - Business Arithmetic, Entrepreneurship, Class 12 - Additional Study Material for Commerce
| 1. What is business arithmetic and why is it important in entrepreneurship? |  |
Ans. Business arithmetic refers to the application of mathematical calculations and techniques in business operations. It includes various mathematical concepts such as profit and loss, percentages, interest rates, ratios, and more. It is important in entrepreneurship as it helps entrepreneurs in making informed decisions, analyzing financial data, estimating costs, managing budgets, and evaluating the profitability of their business ventures.
| 2. How can business arithmetic be used to determine the selling price of a product? | |
Ans. Business arithmetic plays a crucial role in determining the selling price of a product. By considering factors such as the cost of production, desired profit margin, and market demand, entrepreneurs can use various mathematical formulas and calculations to arrive at the appropriate selling price. These calculations may involve adding the cost of production, applying a markup percentage to cover overheads and profit, and considering market competition to ensure competitiveness.
| 3. What are some common financial ratios used in business arithmetic to evaluate the financial health of a business? | |
Ans. There are several financial ratios used in business arithmetic to assess the financial health and performance of a business. Some commonly used ratios include:
- Profitability Ratios: Such as gross profit margin, net profit margin, and return on investment (ROI).
- Liquidity Ratios: Such as current ratio and quick ratio, which measure a company's ability to meet short-term obligations.
- Solvency Ratios: Such as debt-to-equity ratio and interest coverage ratio, which assess a company's long-term debt obligations and financial stability.
- Efficiency Ratios: Such as inventory turnover ratio and accounts receivable turnover ratio, which measure how effectively a company utilizes its assets or manages its working capital.
| 4. How does business arithmetic help in financial planning and budgeting for entrepreneurs? | |
Ans. Business arithmetic is essential for financial planning and budgeting for entrepreneurs. It allows them to estimate costs, forecast revenues, and allocate resources effectively. By using mathematical calculations, entrepreneurs can determine their financial goals, set realistic budgets, track expenses, and identify areas for cost-cutting or investment. Business arithmetic helps entrepreneurs make informed financial decisions, minimize risks, and ensure the long-term sustainability and profitability of their business.
| 5. How can entrepreneurs use business arithmetic to analyze and interpret financial statements? | |
Ans. Entrepreneurs can use business arithmetic to analyze and interpret financial statements by applying various mathematical techniques. They can calculate financial ratios, such as profitability ratios, liquidity ratios, and solvency ratios, to assess the financial performance and health of their business. By comparing these ratios with industry benchmarks or previous periods, entrepreneurs can identify trends, strengths, and weaknesses. Additionally, business arithmetic enables entrepreneurs to perform trend analysis, conduct break-even analysis, and make informed financial decisions based on the interpretation of financial statements.
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