Class 12 Business Studies: CBSE Sample Question Papers- Term II (2021-22)- 4 | 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.

The step in the process of selection in which certain documents need to be executed by the employer and the candidate is Contract of Employment.

After the job offer has been made and candidate accepts the offer, certain documents need to be executed by the employer and the candidate. One such document is the attestation form. This form contains certain vital details about the candidate, which are authenticated and attested by him or her. Attestation form will be a valid record for future reference. There is also a need for preparing a contract of employment. Basic information that should be included in a written contract of employment will vary according to the level of the job.

The firm can use Commercial Paper instead of borrowing from the bank: Commercial Paper is a short-term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued mostly by large and creditworthy organizsations to raise short-term funds at lower rate of interest than market rates. The issuance of commercial paper is an alternative to bank borrowing for large companies that are considered to be financially strong.

Recruitment: Recruitment refers to the process of finding possible candidates for a job or a function. It has been defined as ‘the process of searching for prospective employees and stimulating them to apply for jobs in an organization.’ Advertising is commonly part of the recruitment process, and can occur through several means, e.g., newspapers, using TV programmes dedicated to job advertisement, through professional publication, using advertisements across internet, through a job center, through campus interviews, etc.

The step in the process of controlling discussed is Setting Performance Standards. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organization strives to work. Standards can be set in both quantitative as well as qualitative terms. For instance, standards set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, time to be spent in performing a task, all represents quantitative standards. Sometimes, standards may also be set in qualitative terms. Improving goodwill and motivation level of employees are examples of qualitative standards.

(i) Pay and allowances - Financial Incentive: Pay and allowances: For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance and other allowances. Salary system consists of regular increments in the pay every year and enhancement of allowances from time-to-time. In some business organizations, pay hike and increments may be linked to performance.

(ii) Employee Recognition Programmes - Non-Financial Incentive: Most people have a need for evaluation of their work and due recognition. They feel that what they do should be recognized by others concerned. Recognition means acknowledgment with a show of appreciation. When such appreciation is given to the work performed by employees, they feel motivated to perform/work at higher level. Some examples of employee recognition are: Congratulating the employee for good performance, displaying on the notice board or in the company news letter about the achievement of employee, installing award or certificate for best performance, distributing mementos, complementaries like T-shirts in recognition of employee services, rewarding an employee for giving valuable suggestions etc.

Communication that takes place without following the formal lines of communication is said to be informal communication. Informal system of communication is generally referred to as ‘grapevine’ because it spreads throughout the organization with its branches going out in all directions in utter disregard to the levels of authority. The informal communication arises out of needs of employees to exchange their views, which cannot be done through formal channels. Workers chit chatting in a canteen about the behavior of the superior, discussing about rumors that some employees are likely to be transferred are some examples of informal communications. The grapevine/informal communication spreads rapidly and sometimes get distorted. It is very difficult to detect the source of such communication. It also leads to generate rumors which are not authentic. People’s behavior is affected by rumors and informal discussions and sometimes may hamper the work environment.

OR
Maslow’s Hierarchy of Human Needs: Maslow classified all human needs into different categories and they were arranged by him in the order of their priority. This arrangement is known as the Hierarchy of Needs.
(i) Physiological needs: These needs are basic essential needs necessary for human survival and include the need for food, air, shelter, clothing, water, sleep, etc.
(ii) Security or safety needs: These refer to the needs for physical safety, protection and economic security which include safety of person and property and come into picture only when physiological needs are satisfied.
(iii) Social needs: These needs include love, affection, sense of belongingness, acceptance, approval and friendship or companionship.
(iv) Esteem needs: These needs refer to factors such as self-respect, independence, status, recognition, appreciation and attention and their satisfaction leads to increased confidence.
(v) 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.

Financing Decision: It refers to the determination as to how the total funds required by the business will be obtained from various long-term sources. Long-term financial sources chiefly include equity share capital, preference share capital, retained earnings, debentures, long-term loans, etc. The following factors affect the financing decision:

(i) Cost: The cost of raising funds through different sources is different. A prudent financial manager would normally opt for a source which is the cheapest.
(ii) Risk: The risk associated with each of the sources is different. From companies point of view debt is more risky than equity. So, a company should analyze its financial risk bearing capacity and choose a source accordingly
(iii) Floatation Costs: Higher the floatation cost, less attractive the source.
(iv) Fixed Operating Costs: If a business has high fixed operating costs (e.g., building rent, insurance premium, salaries, etc.), It must reduce fixed financing costs. Hence, lower debt financing is better. Similarly, if fixed operating cost is less, more of debt financing may be preferred.
(v) Control Considerations: Issues of more equity may lead to dilution of management’s control over the business. Debt financing has no such implication. Companies afraid of a takeover bid would prefer debt to equity.
(vi) State of Capital Market: Health of the capital market may also affect the choice of source of fund. During the period when stock market is rising, more people invest in equity. However, depressed capital market may make issue of equity shares difficult for any company.

(i) The function of management is ‘Controlling’. This is the third step of controlling process i.e., comparison of actual performance with established standards. This step involves finding deviations and their extent and in identifying the causes of such deviations.

(ii) Taking corrective actions: This is the last step of controlling process. By comparing actual performance with established standards, deviations are revealed. The remedial or corrective action is to be taken to remove deficiencies. Here, it involves change in working methods, material, machines, policies and procedures. It may also require improvement in the motivation, supervision and modifications in the business plans.

Under district commission, he can file a complaint. The District Commission consists of a President and two other members, one of whom should be a woman. They all are appointed by the State Government concerned. A complaint can be made to the appropriate District Commission when the value of the goods or services along with the compensation claimed, does not exceed ₹ 1 crore. On receiving the complaint, the District Commission shall refer the complaint to the party against whom the complaint is filed. If required, the goods or a sample thereof, shall be sent for testing in a laboratory. The District Commission shall pass an order after considering the test report from the laboratory and hearing the party against whom the complaint is filed. In case the aggrieved party is not satisfied with the order of the District Commission, he can appeal before the State Commission within 45 days of the passing of the order.

OR
Following consumer rights were exercised by Sandeep:
(i) Right to be Informed: The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use, etc. It is because of this reason that the legal framework in India requires the manufactures to provide such information on the package and label of the product. Also, wherever necessary, the consumer must be informed about the safety precautions to be taken while using the product to avoid loss or injury. Taking the example of gas cylinder, the supplier must inform the user to stop the flow of gas with the help of the regulator when it is not in use.
(ii) Right to be Heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells. Many consumer organizations are also working towards this direction and helping consumers in redressal of their grievances. This right means that consumers have a right to be consulted by Government and public bodies when decisions and policies are made affecting consumer interests. Also, consumers have a right to be heard by manufactures, dealers and advertisers about their opinion on production and marketing decisions. Consumers have the right to be heard in legal proceedings in law courts dealing with consumer complaints.    

There are various methods of floating new issues in the Primary Market:

 (i) Offer through Prospectus: This involves inviting subscription from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital through an advertisement in the newspapers and in the magazines. The issues may be underwritten and also are required to be listed on at least one recognized stock exchange. The contents of the prospectus have to be in accordance with the provisions of the Companies Act and SEBI Disclosure and Investor Protection Guidelines. 

(ii) Offer for Sale: Under this method, securities are not issued directly to the public but are offered for sale through the intermediaries like issuing houses or stock brokers. In this case, a company sells securities in bulk at an agreed price to brokers who, in turn, resell them to the investing public. 

(iii) Private Placement: Private Placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. Access to the primary market can be expensive on account of various mandatory and non-mandatory expenses. Some companies, therefore, cannot afford a public issue and choose to use private placement. 

(iv) Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the ‘Right’ to buy new shares in proportion to the number of shares they already possess. 

(v) e-IPOs: A company proposing to issue capital to the public through the online system of the stock exchange has to enter into an agreement with the stock exchange. This is called an Initial Public Offer (IPO). SEBI registered brokers have to be appointed for the purpose of accepting applications and placing orders with the company. The issuer company should also appoint a registrar to the issue having electronic connectivity with the exchange. The issuer company can apply for listing of its securities on any exchange other than the exchange through which it has offered its securities. The lead manager co-ordinates all the activities amongst intermediaries connected with the issue.

(i) Training and Development

(ii) Benefits of training to ‘Moga Industries Ltd.’:

(a) Avoids wastage of efforts and money:  It avoids wastage of efforts and money as training is a systematic learning, better than hit and trial methods. 

(b) Enhances employee productivity: It enhances employee productivity both in terms of quantity and quality leading to higher profits.
(c) Equips the future manager: It equips the future manager to take over in an emergency.  
(d) Reduces employees’ turnover: It reduces employees’ turnover as it increases employee morale and reduces absenteeism.
(e) Effective response: It helps in obtaining effective response in a fast-changing environment.  

Factors affecting the requirements of fixed capital are as follows:

(i) Nature of Business: The type of business has a bearing upon the fixed capital requirements. For example, a trading concern needs lower investment in fixed assets compared with a manufacturing organization; since it does not require to purchase plant and machinery, etc.

(ii) Scale of Operations: A larger organization operating at a higher scale needs bigger plant, more space etc. and therefore, requires higher investment in fixed assets when compared with the small organization.
(iii) Choice of Technique: Some organizations are capital intensive whereas others are labour intensive. A capital-intensive organization requires higher investment in plant and machinery as it relies less on manual labour. The requirement of fixed capital for such organizations would be higher. Labour intensive organizations on the other hand require less investment in fixed assets. Hence, their fixed capital requirement is lower.
(iv) Technology Upgradation: In certain industries, assets become obsolete sooner. Consequently, their replacements become due faster. Higher investment in fixed assets may, therefore, be required in such cases. For example, computers become obsolete faster and are replaced much sooner than say, furniture. Thus, such organizations which use assets which are prone to obsolescence require higher fixed capital to purchase such assets.
(v) Growth Prospects: Higher growth of an organization generally requires higher investment in fixed assets. Even when such growth is expected, a company may choose to create higher capacity in order to meet the anticipated higher demand quicker. This entails larger investment in fixed assets and consequently larger fixed capital.
(vi) Diversification: A firm may choose to diversify its operations for various reasons, with diversification, fixed capital requirements increase e.g., a textile company is diversifying and starting a cement manufacturing plant. Obviously, its investment in fixed capital will increase.
(vii) Financing Alternatives: A developed financial market may provide leasing facilities as an alternative to outright purchase. When an asset is taken on lease, the firm pays lease rentals and uses it. By doing so, it avoids huge sums required to purchase it. Availability of leasing facilities, thus, may reduce the funds required to be invested in fixed assets, thereby reducing the fixed capital requirements. Such a strategy is especially suitable in high risk lines of business.
(viii) Level of Collaboration: At times, certain business organizations share each other ’s facilities. For example, a bank may use another’s ATM or some of them may jointly establish a particular facility. This is feasible if the scale of operations of each one of them is not sufficient to make full use of the facility. Such collaboration reduces the level of investment in fixed assets for each one of the participating organizations.
OR

 Rate of Return of Investment is (4,00,000/10,00,000) x 100 = 40%

EBIT after expansion = 40% × 14,00,000=5,60,000
Calculation of EPS:

The company should use Plan 2 in order to increase the return to the equity shareholders.