Worksheet Solutions: Business Services- 2 | Business Studies (BST) Class 11 - Commerce PDF Download

Assertion–Reasoning MCQs :

Q1: Assertion (A) Under life insurance contract, insurer agrees to pay a specified amount on the death of the assured, or on the expiry of a certain fixed period, whichever is earlier.
Reason (R) Loss arising on death of the assured cannot be measured in terms of money. That is why, the amount payable is fixed.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Ans: (a)

Q2: Assertion (A) Services are intangible which means they can’t be touched, but can only be felt or experienced by the consumers.
Reason (R) Services can be separated from the production activity.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Ans: (c)

Q3: Assertion (A) Business services are those services which are used by business enterprises for the production or sale of good and services.
Reason (R) Business enterprises are much dependent on business services as these services help the enterprises to carry on their activities smoothly.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Ans: (a)

Q4: Assertion (A) Life insurance policy can be taken for any amount.
Reason (R) In case of fire insurance policy, the insurer is liable to compensate for the loss only when the proximate cause of loss is fire.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Ans: (b)

Q5: Assertion (A) In order to minimise the impact of uncertainities, there is a need for insurance.
Reason (R) There are risks of death and disability human life, fire and burgalary risk for property.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Ans: (a)

Case Based MCQs

Vithal Rao has a shop in Chawdi Bazaar which deals in antique idols of various gods and goddesses. He has taken an insurance policy on his shop and the stock in the shop. While taking the policy, he conveyed his intention to the insurance company that he should be provided cover under all possible risk.
The insurance company convinced Vithal Rao that the policy was comprehensive and covered every probable risk. During the tenure of the policy, an earthquake occurred and the shop and stock of Vithal Rao were destroyed completely.
He approached the insurance company for compensation of loss. However, the insurance company refused to grant him compensation on the ground that ‘loss by act of God’ was not covered by the policy.
Q1: Identify the principle of insurance violated by the insurance company.
(a) Mitigation
(b) Utmost good faith
(c) Subrogation
(d) None of these
Ans: (b)

Q2: Which of the following is/are function(s) of insurance?
(a) Providing certainity
(b) Protection
(c) Risk sharing
(d) All of the above
Ans: (d)

Q3: The person or the firm who gets compensation is called
(a) Insurer
(b) Insured
(c) Premium
(d) Happening of an event
Ans: (b)

Q4: Do you think Vithal Rao has ‘insurable interest’ in the shop and the stock destroyed?
(a) Yes
(b) No
(c) Can’t say
(d) None of these
Ans: (a)

Q5: Which one of the following principles is not described in above case?
(a) Principle of utmost good faith
(b) Principle of indemmity
(c) Principle of mitigation
(d) Both (b) and (c)
Ans: (d)

Madhu is running a general store. The store was insured against natural disaster like flood, earthquake and fire from Hindustan General Insurance Company for the amount of ₹50 lacs.
Heavy raining in the city caused massive flood.This left the store without any security. The store was looted by people which was caught on CCTV.
She claimed from the insurance company the amount of damage of ₹13 lacs for the material and furniture spoiled from flood and also ₹ 5 lacs for the loss of material by theft, she also claimed another ₹ 25 lacs to convert the store into fully AC and additional floor for more storage space.
Insurer after assessing the damage to the property and stock due to flood and seeing the CCTV footage, accepted the claim of ₹ 13 lacs. Madhu argued that as she has being paying premium for ₹ 50 lacs, she should be paid the full claim of ₹ 43 lacs.
Q6: What is the fundamental principle of insurance on the basis of which insurer accepted a claim?
(a) Subrogation
(b) Mitigation
(c) Proximate cause
(d) None of these
Ans: (c)

Q7: According to you, how much compensation should be reimbursed by insurance company?
(a) ₹ 43 lacs
(b) ₹ 13 lacs
(c) ₹ 3 lacs
(d) ₹ 25 lacs
Ans: (b)

Q8: How many types of losses are there in proximate cause?
(a) Insured perils
(b) Uninsured perils
(c) Both (a) and (b)
(d) None of these
Ans: (c)

Q9: Identify the another principle of insurance involved by insurance company by accepting the claim amount of ₹ 13 lacs.
(a) Principle of indemnity
(b) Principle of mitigation
(c) Principle of utmost faith
(d) Principle of contribution
Ans: (a)

Q10: In which type of insurance, ‘Principle of Indemnity’ is not applicable?
(a) Marine insurance
(b) Fire insurance
(c) Life insurance
(d) None of these
Ans: (c)

Dhani Mani Bank is a private sector bank offering various services to its customers. It offers various types of bank account options to its customers.
Raksha being a businessman has chosen the type of account in which the deposits all the most liquid and there is no limit to the number of transactions or the amount of transactions in a day.
On the other hand, his mother has opened a type of account where she can conveniently deposit the money she saves. She has got cheque facility and lot of flexibility for deposits and withdrawal whereas Raksha’s sister Reema opened the account where she will deposit ₹ 2,000 per month for next 2 years and one of his employee opened an account which is a combination of savings account and fixed deposit account.
Q11: ‘‘On the other hand, his mother ____ the money she saves.’’
Identify the type of bank account used by his mother.
(a) Saving account
(b) Current account
(c) Recurring account
(d) None of these
Ans: (a)

Q12: Raksha’s sister Reema opened ____ for next year.’’
Identify the type of bank account used by Reema.
(a) Current account
(b) Recurring deposit
(c) Saving account
(d) Fixed deposit account
Ans: (b)

Q13: Which of the following account is not discussed in above case?
(a) Fixed deposit account
(b) Saving account
(c) Recurring deposit account
(d) Current account
Ans: (a)

Q14: ‘‘Raksha being a businessman ____ amount of transactions in a day.’’ Identify the type of bank account used by Raksha.
(a) Saving account
(b) Current account
(c) Fixed deposit account
(d) Recurring account
Ans: (b)

Q15: ‘‘One of his employee opened ____ and fixed deposit account.’’
Identify the type of bank account used by his employee.
(a) Saving account
(b) Current account
(c) Multiple option deposit account
(d) None of the above
Ans: (c)