CBSE Sample Papers for Class 11 Business Studies Term 2 Set 1 with Solutions

Students can access the CBSE Sample Papers for Class 11 Business Studies with Solutions and marking scheme Term 2 Set 1 will help students in understanding the difficulty level of the exam.

CBSE Sample Papers for Class 11 Business Studies Term 2 Set 1 with Solutions

Time : 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.
• Section A: 2 marks questions are Short Answer Type Questions and are to be answered in 30-50 words.
• Section B: 3 marks questions are Short Answer Type Questions and are to be answered in 50-80 words.
• Section C: 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.

Section A
(2 Marks)

Question 1.
Define Entrepreneurship development. State the stages of the entrepreneurship development program. [2]
Answer:
Entrepreneurship development is the means of enhancing the knowledge and skills of entrepreneurs through training. The main focus of this development is to strengthen and increase the number of entrepreneurs.

The entrepreneurship development program is the process of improving the skills and knowledge of entrepreneurs through various training and development programs. An entrepreneurial development program consists of three broad categories:

• Pre-training Stage
• Training or Development Stage
• Post-training or follow-up Stage

Question 2.
‘Shriram Ltd.’ is dealing in electric vehicles. The demand for small electric vehicles has been increasing since a long time. They have planned to expand the company and need ₹ 2 crores. The finance manager, Rahul Sharma planned to raise funds through various sources. Identify the options Shriram Ltd. has to raise funds for the expansion of the company. [2]
Answer:
Shriram Ltd. has following options to raise funds:

• Debentures: Debentures are debt instruments used by companies to raise loans. These are important instruments for raising long-term debt capital. A company can raise funds through issue of debentures, which bear a fixed rate of interest.
• Bonds: Bonds are secured non-convertible debt instrument issued by the government or specialised financial institutions.
• Shares: Shares are the indication of a unit of ownership of the company. The owner of shares of a company is a shareholder of the company. (Any two)

Commonly Made Error

• Students get confused between bonds and debentures and the type of debt instruments. These seem similar to them.

Answering Tip

• Students should study the meaning and type of debt instruments thoroughly.

Question 3.
Explain the importance of foreign trade. [2]
Answer:
Foreign trade is the only source of specialization in the production of those goods for which a large number of resources and facilities are available in the country due to the unequal distribution of resources.

With the help of foreign trade, people get those goods which are not produced in their country and hence, it helps in improving their standard of living. Foreign trade also helps in the economic development of the nation.

Capital equipment and scarce raw material can be imported. Also, surplus commodities can be exported to other countries and foreign exchange may be earned.

Question 4.
Rohan is a dealer in grocery items. He has a warehouse to store extra items and deals with many small shops owners as well as customers to sell various products. Ritu is one of the tire shop owners who purchase the items from Rohan and sell them to the consumers further. What do you think is the difference between Rohan and Ritu? [2]
Answer:
Rohan is a wholesaler whereas Ritu is a retailer. A wholesaler buys in bulk from the producer and sells to the retailers for resale or intermediate use. A retailer buys from the wholesaler and sells to the ultimate consumer for final consumption.

Section – B
(2 Marks)

Question 5.
Rishi is a wholesale dealer in grocery goods. He has contacted several retailers to supply goods to them. He owned a warehouse to store goods. There are a variety of goods available with him. He also sells products to the customers, when they demand. He also serves the manufacturers of various goods by helping them in contacting the retailers. Explain which services are provided by wholesalers to the manufacturers? [3]
Answer:
Services offered by wholesalers to the manufacturers are:

1. A wholesaler acts as an intermediary between a manufacturer and a retailer as he buys goods from manufacturers and delivers them to the retailers.
2. Wholesalers provide market and sales assistance to the manufacturer as they are aware of the market trends. They undertake advertising and sales promotion activities.
3. Wholesalers receive bulk orders from the retailers and pass them on to the manufacturers. So, the manufacturers do not need to bother about selling in small quantities.
4. Wholesalers take delivery of goods when these are produced in a factory and keep them in their warehouses thereby bearing all the associated risks.

Question 6.
Define Start-up scheme. What are the benefits provided under the Start-up scheme? [3]
OR
What services do wholesalers to the retailers?
Answer:
Startup India is a flagship initiative of the Government of India, intended to catalyze startup culture and build a strong and inclusive ecosystem for innovation and entrepreneurship in India.

The benefits provided to recognized start-ups under the Start-up India initiative are:

1. Self-certification: Self-certify and comply under 3 environmental and 6 labor laws.
2. Tax exemption: Income tax exemption for a period of 3 consecutive years and exemption on capital and investments.
3. Startup patent application and IPR protection: Fast track patent application with up to 80% rebate in filing patents. (Any two)

OR

Services provided by wholesalers to retailers are:

1. Availability of goods: The wholesalers are in close contact with manufacturers, so they make the products readily available to the retailers.
2. Grant of credit: Wholesalers help retailers financially by providing them credit facilities, which enables the retailers to manage their business with small amount of working capital.
3. Marketing support: The wholesalers perform various marketing functions and provide support to the retailers through product promotion.
4. 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. (Any three)

Question 7.
Give the classification of small-scale enterprises/ MSME along with the criteria and their respective limits as defined by Government of India. [3]
Answer:

Parameter
Classification of Manufacturing and Service Enterprises :

• An industry is a Micro-Enterprise if investment in Plant and Machinery does not exceed Rs. 1 crore;
• An industry is a Small Enterprise if investment in Plant and Machinery does not exceed Rs. 10 crore ;
• An industry is a Medium Enterprise if investment in Plant and Machinery does not exceed Rs. 50 crore.

Parameter II

• An industry is a Micro-Enterprise if its turnover does not exceed Rs. 5 crore;
• An industry is a Small Enterprise if its turnover does not exceed Rs. 50 crore;
• An industry is a Medium Enterprise if its turnover does not exceed Rs. 250 crore. (Any three)

Question 8.
Ram opened a departmental store dealing in a variety of goods in his area. He deals in several goods which are necessary for the daily needs of consumers. Discuss three features of departmental stores. [3]
Answer:

1. A departmental store is a large establishment offering a wide variety of products, classified into well-defined departments, aimed at satisfying practically every customer’s need under one roof.
2. It has a number of departments, each one confining its activities to one kind of product, e.g., there may be separate departments for toiletries, medicines, furniture, groceries, electronics, clothing and dress material within a store.
3. They satisfy diverse market segments with a wide variety of goods and services. Everything from ‘a pin to an elephant is the spirit behind a typical department store.
4. May provide all facilities such as restaurant, rest rooms, etc. in order to provide maximum service to customers for whom price is of secondary importance.
5. Are generally located at a central place in the heart of a city which caters to a large number of customers.
6. Size of these stores is very large, hence, they are generally formed as a joint-stock company managed by a board of directors. There is a managing director assisted by a general manager and several department managers.

Section – C
[5 Marks each]

Question 9.
Explain the services offered by retailers to the consumers. [5]
OR
Explain any five sources of finance. [5]
Answer:
Services offered by retailers to their customers are:

1. The first and foremost service is the availability of goods produced by different manufacturers, which is provided by the retailers to its customers.
2. Some retailers provide credit facilities to their regular customers.
3. Many retailers provide after-sale services to its customers such as home delivery, supply of spare parts, etc.
4. Retailers generally keep a variety of products of different manufacturers, which enables the customers to buy the products as per their requirement and choice.
5. By arranging for effective display of products and through their personal selling efforts, retailers provide important information about the arrival, special features, etc. of new products to the customers.
6. Retail stores are situated very near to the residential areas and remain open for long hours which provides great convenience to the customers. (Any five)

OR

Sources of finance are:

1. Retained earnings: Retained earnings refer to the amount left with a company from its income after paying dividends to its customers.
2. Public deposits: These are the deposits invited by the companies from public to finance its working capital needs or medium-term fund requirements.
3. Debentures: Debentures are debt instruments used by companies and government to issue the loan. These are important instruments for raising long-term debt capital. A company can raise funds through issue of debentures, which bear a fixed rate of interest.
4. Issue of shares: The capital of a company is divided into small units called shares. Each share has a nominal value. The capital obtained by issue of shares is known as share capital.
5. Trade credit: Trade credit is the credit extended by one trader to another for the purchase of goods and services. Trade credit facilitates the purchase of supplies without immediate payment.
6. Bonds: Bonds are units of corporate secured non-convertible debt instruments issued by government or specialised financial institutions. (Any five)

Question 10.
Discuss any five advantages of chain/ multiple stores. [5]

Case/Source Based Question
Answer:

1. Economies of scale: As there is central procurement, multiple-shop organizations enjoy economies of scale
2. Elimination of middlemen: By selling directly to the consumers, multiple-shop organizations are able to eliminate unnecessary middlemen in the sale of goods and services
3. No bad debts: Since all the sales are made on cash basis, there are no losses on account of bad debts
4. Transfer of goods: Goods not in demand in a particular locality may be transferred to another locality where they are in demand reducing the chances of dead stock in these shops
5. Diffusion of risk: Losses incurred by one shop may be covered by profits in other shops reducing the total risk of an organization
6. Low cost: Because of centralised purchasing, elimination of middlemen, centralized promotion of sales and increased sales, multiple shops enjoy lower costs
7. Flexibility: If a shop is not operating at a profit, the management may decide to close it or shift it to some other place without really affecting the profitability of the organization as a whole (Any five)

Case/Source Based Question

Question 11.
Resham is engaged in business among various dealers within India. She coordinates with various manufacturers, retailers and customers. One of her friends, Ritu supplies her goods to various manufacturers in various other countries. One day, they met and talked about the differences in their trades. What differences would be there between domestic and international trade? [5]
Answer:

Domestic Trade	International Trade
It is conducted within the boundaries of a nation.	It is conducted outside the boundary of the nation.
It needs less capital to be invested.	It needs huge capital to be invested.
Profit is less in domestic trade.	Profit is huge in international trade.
It uses road, railway as mode of transport.	It uses sea and air routes for transportation.
Domestic trade can be conducted easily without much restrictions.	It is difficult to conduct this trade due to many legal restrictions.

Question 12.
‘Ratul Car Ltd.’ is a well-known company in the industry, which has more equity share capital than long term debt in its capital structure. They are planning to expand and establish a new site in the backward region and to hire the local people. It also has some amount as reserve of ₹2000 crore. In lieu of the above case, answer the questions below:

(i) What is the status of capital structure of the company? [1]
Answer:
The company’s financial structure is robust, with more equity share capital than the debt in its capital structure and a large cash reserve.

(ii) Which source of finance should be used by the company for establishing new units and why? [2]
Answer:
As the company has a large cash reserve, it should use retained earnings as a source of finance. When a company earns profits, a certain amount of those profits are kept in reserve for business’ future use and is known as retained earnings. The reasons to use retained earnings as a financing source are:

• No initial fees: These funds do not have any floatation costs or interest because these are raised internally.
• Increase in share price: A large quantity of retained earnings can cause the price of equity shares to rise.

(iii) What values does the company exhibit in the case above? [2]
Answer:
The values displayed by the company here are:

• Balanced regional development: The company is planning to expand the business to underprivileged sections of the society and contribute to the regional development.
• Women Empowerment: The company also intends to empower women by training them in skill development.

OR

‘Francis Ltd.’ a leading IT firm registered in India wants to hire resources from US for its growth and expansion. It also needs money for at least 2 years to meet its short-term needs. They are giving employment to underprivileged youth. They also generate 50% of their electricity through solar power.

Keeping in mind the above case, answer the following questions:

(i) Which two sources of finance should be used by the company to meet its requirement? Write characteristics of each source as well. [3]
Answer:
ADRs and Public Deposits can be used by ‘Francis Ltd/ to satisfy the company’s needs.

1. ADRs: These refer to American Depository Receipts and are issued by American companies to be traded in American Markets. It can only be issued to the citizens of America and can be traded in US stock exchanges.
2. Public Deposits: These are the deposits raised directly from the public by organizations. RBI regulates these deposits and companies generally solicit public contributions over a three-year term.

(ii) What values does the company exhibit in the above case? [2]
Answer:
The values demonstrated by the company are:

1. Environmental protection: The company uses solar power to generate 50% of its electricity, which conserves the resources.
2. Employment generation: The company is generating opportunities of employment by employing underprivileged young generation.