CBSE Sample Papers for Class 12 Business Studies Term 2 Set 3 with Solutions

Students can access the CBSE Sample Papers for Class 12 Business Studies with Solutions and marking scheme Term 2 Set 3 will help students in understanding the difficulty level of the exam.

CBSE Sample Papers for Class 12 Business Studies Term 2 Set 3 with Solutions

Time allowed: 2 Hours
Maximum Marks: 40

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.

Question 1.
Water water everywhere and not a single drop to drink’. What does the statement indicate about one of the functions of management. (2)
Answer:
The statement indicates the staffing function of management. It aims at recruiting the right person for the right job. Staffing aims at selecting the most suitable candidates among the pool of prospective candidates.

(1) It caters to the human resource requirements of a business by determining the number and types of employees needed to perform various tasks designed in business as per their job profile.

(2) It analyses the existing number of employed personnel to verify whether they are overburdened or under-burdened with work.

(3) It compares within departments to establish excess of workforce for dismissal or deposing or transferring employees elsewhere as overstaffing is undesirable.

Question 2.
Name and define the process that helps in finding possible candidates for a job or a function. (2)
Answer:
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 organisation.

Question 3.
“A small enterprise cannot afford to install an expensive control system.” Why? (2)
Answer:
A small enterprise cannot afford to install an expensive control system because it is a costly affair as it involves a lot of expenditure, time and effort. It cannot justify the expenses involved. Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.

Question 4.
Working Capital facilitates day-to-day operations of the business. Name and explain any two factors. That affect the work capital requirements. (2)
Answer:
Following are the factors affecting capital structure of a company: (Any two)

(1) Nature of Business: The basic nature of a business influences the amount of working capital required. A trading organisation usually needs a smaller amount of working capital compared to a manufacturing organisation.

(2) Scale of Operations: For organisations which operate on a higher scale of operation, the quantum of inventory and debtors required is generally high. Such organisations, therefore, require large amounts of working capital as compared to the organisations which operate on a lower scale.

(3) Business Cycle: Different phases of business cycles affect the requirement of working capital by a firm. In case of a boom, the sales as well as production are likely to be larger and, therefore, a larger amount of working capital is required.

(4) Seasonal Factors: Most businesses have some seasonality in their operations. In peak season, because of higher levels of activity, larger amounts of working capital is required.

(5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods.

(6) Credit Allowed: Different firms allow different credit terms to their customers. These depend upon the level of competition that a firm faces as well as the credit worthiness of their clientele.

(7) Operating Efficiency: Firms manage their operations with varied degree of efficiency.

(8) Availability of Raw material: Higher the quantity of material to be stored, higher is the amount of working capital required.

(9) Growth Prospects: If the growth potential of a concern is perceived to be higher, it will require a higher amount of working capital.

(10) Level of competition: Higher level of competitiveness may necessitate higher stocks of finished goods to meet urgent orders from customers.

Question 5.
Explain how supervision helps in optimal utilisation of resources (3)
Answer:
Supervision is the process of guiding the efforts of employees and other resources to accomplish the desired objectives. It means overseeing what is being done by subordinates and giving instructions to ensure optimum utilisation of resources and achievement of work targets.

Supervising is continuously required at all levels of management that involves establishing performance schedules and standards, for work to proceed in a particular manner and a consistent level of performance is maintained.

This ensures that relevant resources are allocated and utilised especially by subordinates in the lower levels who are mainly responsible for working and completing the defined tasks and activities.

Question 6.
Leadership is required only for less efficient subordinates”. Do you agree? Give any four reasons to support your answer.
OR
Aditi was a regional sales manger in a publication company. Aditi applied for the vacant post of marketing managers in the company as she was extremely ambitious and dedicated all her energies to obtain the post of marketing manager. However, the top management of the company decided to fill this post by selecting a person from outside. This had an adverse effect on Aditi and her performance declined. When the new marketing manager joined, one of his major problems was how to motivate and inspire Aditi to her former level of performance? Suggest any three non-financial incentives that the new marketing manager may use to motivate Aditi. (3)
Answer:
No, I do not agree with this. The reasons for my disagreement are as follows:
(1) Clear vision: Leadership sets a clear vision and communicates them effectively to all subordinates at all levels of management

(2) Effective planning: Leadership entails generating a structured plan of action every day that will effectively meet pertinent goals on a given day.

(3) Inspiration and motivation: Leadership involves demonstrating daily tasks, coaching, providing immediate feedback, recognising accomplishments, etc., that inspires and motivates subordinates/ colleagues at all levels to restore and revive commitment and enthusiasm in an organisation.

(4) Employee relations: Leadership entails an open and engaging relationship between the leader and their team members and develops a sense of ownership and a close alignment between individuals and team objectives.
OR
The non-financial incentives that the new marketing manager may use to motivate Aditi are:

(1) Career advancement opportunity:
A company must provide employees appropriate skill development programmes, and a sound promotion policy to achieve promotions.

(2) Employee recognition programme:
Recognition means acknowledgment with a show of respect and appreciation. Most people have a need for evaluation of their work and due recognition

(3) Employee empowerment:
Empowerment, means giving more autonomy and powers to subordinates in the completion of their work.

Question 7.
State the development functions of the Securities and Exchange Board of India. (3)
Answer:
The development Functions of Securities and Exchange Board of India are:

Training of intermediaries of the securities market.
Conducting research and publishing information useful to all market participants.
Undertaking measures to develop the capital markets by adapting a flexible approach.

Question 8.
“Controlling is an indispensable function of management. Without controlling the best of plans can go awry Do you agree? Explain any two reasons in support of your answer. (3)
Answer:
Yes, I agree that controlling is an indespensable function of management, importance of controlling is: (any two)

(1) Accomplishing organisational goals: The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action.

(2) Judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate and objective.

(3) Making efficient use of resources: By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms.

(4) Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they are appraised.

(5) Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation.

(6) Facilitating coordination in action:
Controlling provides direction to all activities and efforts for achieving organisational goals.

Question 9.
Xeno Ltd. is a global information technology consulting company with 45,000 employees serving over 600 clients in 23 countries. Its Chief Executive Officer, Mr Neil Suman guided the company through two decades of diversification and growth to emerge as one of the leading Indian companies in the software industry. The company has set standards in ensuring the best training opportunities for its employees. The Project Guidance Program is a 52 day structured training program offered to all recruits of varied backgrounds to be trained on essential behavioural and technical skills that prepares them to work in live customer projects. These recruits are hired from universities and management institutes for technical, professional as well as managerial jobs. It is to help the new employees in settling down quickly into the job by becoming familiar with the people, the surroundings, the job and the business.
(A) Identify the external sources of recruitment used by the company to hire new employees.
(B) Explain the method of training used by the company to train employees selected
by the source of recruitment identified in part (A)
(C) State three ways in which the Project Guidance Program can benefit Xeno Ltd.
OR
Controlling is a systematic process involving series of steps.” Explain (5)
Answer:
(A) Campus Recruitment

(B) Induction Training: It is a type of training given to help the new employee in settling down quickly into the job by becoming familiar with the people, the surroundings, the job and the business.

Avoiding wastage of efforts and money as training is systematic learning, better than hit and trial methods.
Enhancing employee productivity both in terms of quantity and quality leading to higher profits.
Equipping the future manager to take over in an emergency.
Reducing employees’ turnover as it increases employee morale and reduces absenteeism.
Helping the organisation in obtaining effective response in a fast changing environment.

OR
The steps involved in the controlling process are as following:

(1) Step 1: Setting performance standards: The first step in the controlling process is setting up performance standards. Standards serve as benchmark towards which an organisation strives to work.

(2) Step 2: Measurement of actual performance: Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner.

(3) Step 3: Comparing actual performance with standards: This step involves comparison of actual performance with the standards. Such comparison will reveal the deviation between actual and desired results.

(4) Step 4: Analysing deviations: Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations.

(5) Step 5: Taking corrective action: The final step in controlling process is taking corrective action.No corrective action is required when the deviation are within acceptable limits.

Question 10.
“Determining the overall cost of capital and the financial risk of the enterprise depends upon various factors”. Explain any five such factors. (5)
Answer:
Overall cost of capital and the financial risk of the enterprise depends upon the following factors:

(1) Cost: The cost of all the sources of finance is different The rate of interest on Debt, fixed rate of dividend to be paid on preference share capital and the expectations of the shareholders on the equity share capital are in the form of costs.

(2) Risk: debt capital is more risky and from the point of view of risk it should not be used. .

(3) Floatation cost: From the point of view off loading cost, retained profit is the most appropriate source. Therefore, its use should be made.

(4) Cash flow position: If the cash flow position of the company is good, the payment of interest on debt and the refund of capital can be easily made. Therefore, in order to take advantage of cheap finance, Debt can be given priority.

(5) Level of fixed operating costs: In business there are two types of cost:

Fixed operating cost, e.g. rent of building, payment of salary, insurance premium, etc.
Fixed financial costs: e.g. interest on debt, etc.

If the level of fixed operating cost is in excess, it is better to keep the fixed financial cost at the minimum. Therefore, debt capital should not be used. On the contrary, if the level of fixed operating cost is low the use of debt capital is profitable.

(6) Control Consideration: the ultimate control of the company is that of the equity shareholders, greater the number of equity shareholder, the greater will be the control in the hands of more people. This is not a good situation, therefore from this point of view the equity share capital should be avoided. (any five)

Question 11.
The Return on Investment (ROI) of a company ranges between 10-12% for the past three years. To finance its future fixed capital needs, it has the following options for borrowing debt:
Option ‘A’: Rate of interest 9%
Option ‘B’: Rate of interest 13%
Which source of debt, ‘Option A’ or ‘Option B’, is better?
Give reason in support of your answer. Also state the concept being used in taking the decision. (5)
Answer:
Option ‘A’ is better.

This is because in this option, Return on Investment (10-12%) is higher than the Rate of interest (9%).
The concept being used in taking the decision is Trading on Equity.
Trading on equity refers to the use of fixed cost sources of finance such as preference shares, debentures and long term loans in the capital structure so as to increase the return on equity shares.

Question 12.
Aarushi buys a packet of dry cake from a cake shop without asking for the bill The pack does not bear any information other than the name of shop. After reaching home she finds the cake to be stale.
(A) Identify the consumer right that has been violated.
(B) State any four responsibilities that a consumer must keep in mind while purchasing any good.
OR
A shopkeeper sold you some spices, claiming that those were pure. Later, a laboratory test showed that those were adulterated. What precautions you should have taken before buying the products and what remedies are available to you for the wrong act? (5)
Answer:
(A) 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 manufacturers to provide such information on the package and label of the product.

(B) The responsibilities that a consumer must keep in mind while purchasing any good are: (any four)

Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods, FPO mark on food products, Hallmark on jewelry etc.
Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products safely.
Read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates, etc.
Assert yourself to ensure that you get a fair deal.
Be honest in your dealings. Choose only from legal goods and services and discourage unscrupulous practices like black-marketing, hoarding etc.
Ask for a cash memo on purchase of goods or services. This would serve as a proof of the purchase made.

OR
While buying a product or service, a consumer should take the following precautions:
(1) Date of manufacture and date of expiry.
(2) Net weight.
(3) Standardization mark.
(4) Maximum retail price.
(5) Directions for using the product, if any Remedies:

To remove the defect in goods or deficiency in service.
To replace the defective product with a new one, free from any defect
To refund the price paid for the product, or the charges paid for the service.
To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence of the opposite party.
To pay punitive damages in appropriate circumstances.