Previous Year Long Questions With Answers - Internal Trade | Business Studies (BST) Class 11 - Commerce PDF Download

Q. 1. What are the services offered by retailers to wholesalers and consumers ? (KVS 2013)
Ans. Retailers provide important services to consumers and wholesalers as they act as middle-men between them. Services to consumers:
(i) Ready or quick supply: The most important service of a retailer to consumers is to maintain regular availability of various products so that the buyers can buy the products whenever they need.
(ii) Wide variety: Retailers generally keep stock of a variety of products and different manufacturers. This enables the consumers to make their choice out of a wide selection of goods.
(iii) Guiding customers: By arranging the effective display of products and through their personal selling efforts retailers should provide the information of products to the customers.
(iv) Demonstration and after sale services: It can be done in the form of home delivery, supply of spare parts and attending to customers.
(v) Home delivery: It is an important part of after sale services and for a buyers decision for repeat purchase of the products.
(vi) Convenient location: They are situated very near to the residential areas and remain open for long hours which makes great convenience to the customers.
Services to wholesalers and manufacturers:
(i) Ready market: Retailers deal with individuals so the manufacturers and wholesalers will not make individual sales.
(ii) Providing information: By undertaking personal selling efforts retailers relieve the producers of this activity of individual selling.
(iii) Risk bearing: Retailers participate in the promotional activities of the product so that the product becomes popular and then it is less risk for the manufacturers.
(iv) Distribution of goods to distant places: Retailers help in distribution of goods to the final consumers and thus provide place utility.

Q. 2. What are the services of the wholesalers to its retailers?
Ans. The services of wholesalers to retailers are as follows:
(i) Availability of goods: The wholesaler provides a variety of same goods to the retailer and hence relieves him from the burden of collecting the goods from several manufacturers.
(ii) Risk sharing: A retailer does not have to bother about risk of storage, reduction in price, fluctuation in demand, etc. All these risks are borne by the wholesaler.
(iii) Grant of credit: The wholesaler grants credit facility to the retailer, thus enabling him to manage his business with a small amount of working capital.
(iv) Marketing support: The wholesalers undertake advertisements and other sales promotional activities in order to induce the consumers to purchase the goods. Thus, they provide marketing support to the retailers.
(v) Specialised knowledge: The wholesalers provide useful information to the retailers about the new products, their benefits, quality, etc. They also advise the retailers regarding the decoration of their shops, allocation of shelf space and demonstration of certain products.

Q. 3. What are the functions of wholesalers?
OR
Explain the services provided by wholesalers. (NCT 2010)
Ans. Services provided by wholesalers are as follows:
(i) Buying and assembling: The wholesaler buys the product from the manufacturer and collects the same at one place and supplies goods to the retailers according to their requirement.
(ii) Storage function: The wholesaler also performs the storage function. The goods are purchased by the wholesalers from the manufacturers and stored at warehouses in order to meet the demand of retailers. The wholesalers act as bridge between the production and consumption of goods.
(iii) Breaking the bulk: The wholesaler purchases goods from manufacturers in bulk and avails discounts. He sells goods in small quantities to the retailers which saves the retailers from maintaining large stocks.
(iv) Advertisement: A wholesaler undertakes advertising and sales promotion of the product which automatically results in the increase in sales.
(v) Market information: Wholesalers inform the retailers about the introduction of new products in the market. He also gets feedback from the retailers about the needs and preferences of customers. He passes the information to the producer to make necessary changes in the products.
(vi) Risk bearing: The wholesalers have to maintain optimum levels of stock in their go downs to meet the demands of the retailer. The retailer’s risk of maintaining go downs, price fluctuations, etc., are reduced to a great level.

Q. 4. Explain the features of Goods and Services Tax (GST)
Ans. Features of the GST model are:
(i) There are two components: one levied by the Central (referred to as Central GST), and the other levied by the States (referred to as State GST), Rates for Central GST and State GST approved appropriately.
(ii) The Central GST and the State GST are applicable to all transactions of goods and services.
(iii) The Central GST and State GST are to be paid to the accounts of the Centre and the States individually.
(iv) Since the Central GST and the State GST are treated individually, taxes paid against the Central GST are allowed to be taken as input tax credit (ITC) for the Central GST and can be utilized only against the payment of Central GST.
(v) Cross utilization of ITC between the Central GST and the State GST is not permitted except in the case of inter-State supply of goods and services.
(vi) The taxpayer needs to submit periodical returns, in common format, to both the Central GST authority and to the concerned State GST authorities.

Q. 5. Explain the benefits of Goods and Services Tax (GST)
Ans. Benefits of GST are:
(i) GST provides comprehensive and wider coverage of input credit set-off, you can use service tax credit for the payment of tax on sale of goods etc.
(ii) Many indirect taxes in state and central level have been included in GST. You need to pay a single GST instead of all.
(iii) Uniformity of tax rates across the states.
(iv) Ensure better compliance as aggregate tax rate reduces.
(v) By reducing the tax burden, the competitiveness of Indian products in international market has increased and thereby development of the nation.
(vi) Prices of goods are expected to reduce in the long run as the benefits of less tax burden would be passed on to the consumer.