CBSE Sample Papers for Class 12 Business Studies Paper 1 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 1.

CBSE Sample Papers for Class 12 Business Studies Paper 1

Board CBSE
Class XII
Subject Business Studies
Sample Paper Set Paper 1
Category CBSE Sample Papers

Students who are going to appear for CBSE Class 12 Examinations are advised to practice the CBSE sample papers given here which is designed as per the latest Syllabus and marking scheme as prescribed by the CBSE is given here. Paper 1 of Solved CBSE Sample Papers for Class 12 Business Studies is given below with free PDF download solutions.

Time: 3 Hours
Maximum Marks: 80

General Instructions

(i) Answer to questions carrying 1 mark may be from one word to one sentence.
(ii) Answer to questions carrying 3 marks may have about 50 to 75 words.
(iii) Answer to questions carrying 4 – 5 marks may have about 150 words.
(iv) Answer to questions carrying 6 marks may have about 200 words.
(v) Attempt all the parts of a question together.

Question 1:
Which principle of management is violated if an employee is asked to receive orders from two superiors?

Question 2:
The top management of ‘Raheja Ltd’ focuses on maintaining an effective two way communication with their employees. They aim to keep everyone well informed and involve employees in company’s activities and provide opportunities for them to give their feedback. What will the company achieve by following such a network of communication? Give any two points.

Question 3:
Banking sector reforms have led to easier credit terms and better services. This is an example of a key component of the business environment. Name this component.

Question 4:
Demonetisation is the act of stripping or discontinuing a currency unit of its status as legal. Why does demonetisation policy implement in a country?

Question 5:
What is the primary objective of financial management?

Question 6:
In Mumbai, Salman found impurities in a bottle of soft drink which he had bought. He approached the redressal forum. Which right is exercised by him?

Question 7:
Name the market where companies issue new securities.

Question 8:
What do you understand by the term recruitment?

Question 9:
What do you mean by informal organisation? State any two features of it.

Question 10:
Explain any three components of physical distribution.

Question 11:
Mr Giriraj Ajmera is working as a sales department head in ABC Ltd. Name the level of management at which he is working. Explain any two functions performed by him.

Question 12:
‘Drink Up’ and ‘Sweet Drink’ are two competing companies manufacturing aerated drinks. During the past financial year, Drink Up was able to produce 1,00,000 bottles at the cost of ₹5,65,000 and Sweet Drink was able to produce bottles at a cost of ₹3,54,375. Which company is more efficient?

Question 13:
Name the method of recruitment in the following cases:

  1. A company get applications on and off even without declaring any vacancy. However, as and when the vacancy arises, the company makes use of such applications.
  2. Recruitment by which most of the senior positions of the industry as well as commerce are filled.
  3. Casual vacancies of unskilled or semi-skilled jobs when there is a rush of order or when some permanent workers are absent.

Question 14:
‘Dreamz House’ is a company engaged in developing and promoting housing projects. The total capital of the company is ₹75,00,000, out of which ₹30,00,000 has been raised from loans. Compute the following:

  1. The debt-equity ratio of the firm
  2. The percentage of debt in the total capital of the firm.

Question 15:
What is National Stock Exchange of India (NSEI)? Explain its various segments.

Question 16:
Nimisha entered into Big Bazaar and purchased the products as per her needs. The sales person did not force her either directly or indirectly to buy the products. Secondly, the big retail chain provides the products after taking into consideration the following factors:
(a) Health of the consumers
(b) Fitness of the products
(c) Quality of the product
(d) Proper quantity at reasonable prices
(e) Customs and traditions of the consumers, etc.

  1. What values are cherished by an individual in the above case?
  2. Why should producers consider the above mentioned aspects?

Question 17:
You are a consumer. As per your viewpoints, what is consumer protection? Also, state its three importance.

Question 18:
In the rainy season, the level of impurities in the water bodies tend to rise, leading to an increase in the number of cases of jaundice and hepatitis. Keeping this in mind, the court passed an order that all schools must have water purifiers for the school children, keeping in view the below stated reasons:

  1. Society in general is more concerned about the quality of life.
  2. Innovative techniques are being developed to manufacture water purifier at competitive rates.
  3.  Incomes are rising and children at home are also drinking purified water.
  4. The government is also showing positive attitude towards the water purifier business.

Identify the different dimensions of business environment by quoting lines from the above para.

Question 19:
“Staffing is the part of human resource management.” Discuss.

Question 20:
A company Ltd manufacturing cosmetics, which enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector.

With the result, the market share of X Ltd has declined. The company followed a very centralised business model with directors and divisional heads making even minor decisions. Before 1991, this business model had served the company very well as consumers has no choice. But now, the company is under pressure to reform and decentralise.

  1.  What do you understand by decentralisation? Can an organisation in general, be fully centralised or fully decentralised?
  2. Explain any three advantages of decentralisation.

Question 21:
A stock exchange is an institution which provides a platform for buying and selling of existing securities. SEBI, as a watch dog performs various functions which protects the investors.

  1. Explain the regulatory and protective functions of SEBI.
  2. Name the values which SEBI strives to fulfil through its functions.

Question 22:
Discuss the importance of controlling.

Question 23:
ABC Ltd is facing a problem of declining market share due to increased competition in the market. In order to retain its share in the market, what logical steps should be followed by a manager?

Question 24:
Identify the principles of management violated in the following cases and explain them.

  1. Manav, a manager, speaks to people at all levels, including his as well as other departments.
  2. Manav, a manager, expects his subordinates to work for personal satisfaction and contentment, without any monetary reward.
  3. Manav, a manager, expects that his subordinate produces instant results, without giving him sufficient time to settle in the new environment.
  4. Manav, a manager, is not strict with his employees regarding timings and targets of work.

Question 25:
There are some barriers in communication which are concerned with encoding and decoding of message. Explain such barriers.


Answer 1:
Principle of unity of command is violated if an employee is asked to receive orders from two superiors.

Answer 2:
The company will have following achievements:

  1. Good communication helps in the smooth functioning of the enterprise.
  2. It increases managerial efficiency.

Answer 3:
This is an example of legal environment.

Answer 4:
Demonetisation policy is an attempt to make a cashless corruption free society and create a digital country.

Answer 5:
The primary objective of financial management is to maximise the shareholder’s wealth.

Answer 6:
Right to be heard is exercised by him.

Answer 7:
Companies issue new securities in primary market.

Answer 8:
Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation.

Answer 9:
Informal organisation is the system of social relationship among the members of formal organisation. It emerges on its own in a natural manner within the formal organisation structure.

Following are the features of an informal organisation:

  1.  It reflects human or social relationships among people.
  2.  It is unplanned and emerges spontaneously.
  3. Members develop independent channels of communication.

Answer 10:
The three main components of physical distribution are explained below:

  1. Order Processing A good physical distribution system provides an accurate and speedy processing of orders, in the absence of which goods would reach to the customer late or in wrong quantity, resulting in customer dissatisfaction.
  2. Transportation It is one of the major elements in the physical distribution of goods as it carries goods and raw materials from the point of production to the point of sale.
  3. Warehousing It refers to the act of storing and assorting products in order to create time utility. The basic purpose of warehousing is to arrange placement of goods and facilitates storing until the goods are sold.

Answer 11:
He is working at a middle level of management.
Functions performed by him are as follows:

  1. Interpretation of policies framed by top management to lower level.
  2. Recruiting and selecting the employees for their department.
  3. Cooperating with other departments for smooth functioning.

Answer 12:
Cost per bottle of Drink Up = \(\frac { 5,65,000 }{ 1,00,000 }\) = ₹ 5.65
Cost per bottle of Sweet Drink = \(\frac { 3,54,375 }{ 67,500 }\) = ₹ 5.25
Since, cost per unit of Sweet Drink is less, therefore it is more efficient.

Answer 13:

  1. Casual Callers Method In this method, company makes use of database of unsolicited applicants which are kept in file. Company recalls them to fill the current vacancies.
  2. Advertisement Method This method is used to fill the most of the senior positions of the industry as well as commerce.
  3. Direct Recruitment Method Through direct recruitment, casual vacancies of unskilled or semi-skilled jobs are filled, when there is a rush of order or when some permanent workers are absent.

Answer 14:
Total Capital of the Firm= ₹ 75,00,000
Debt = ₹ 30,00,000
∴ Equity = ₹ 45,00,000 (75,00,000-30,00,000)
CBSE Sample Papers for Class 12 Business Studies Paper 1 img14

Answer 15:
National Stock Exchange of India (NSEI) It is the latest, most modern and technology driven exchange. It was incorporated in 1992 and was recognised as a stock exchange in April 1993. It started its operations in 1994 in trading on the wholesale debt market segment.

Market Segments of NSEI The exchange provides trading in the following three segments:
(i) Wholesale Debt Market Segment This segment provides a trading platform for a wide range of fixed
income securities that include central government securities, treasury bills, state development loans, bonds issued by public sector undertakings, floating rate bonds, zero coupon bonds, index bonds, commercial paper, certificate of deposit, corporate debentures and mutual funds.

(ii) Capital Market Segment It provides an efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.

(iii) Future and Options Segment NSEI has also introduced trading in future and options contracts. This section provides us with an insight into the derivative segment of NSEI. Real time quotes and information regarding derivative products, trading systems and processes, clearing and settlement, risk management, statistics, etc are available here.

Answer 16:

  1.  The value of freedom is cherished by an individual as she is purchasing the product as per her needs and nobody is forcing her to buy a particular product.
  2. Producers should consider health, fitness, quality, quantity, customs and traditions, etc because it is essential for a business unit to consider the social aspects of business environment as the business exists in the society and it is the duty of a producer to produce the goods as per the needs and wants of the society. In order to survive in the long-run, these aspects should be considered.

Answer 17:
Consumer protection is a very wide term. It includes rights, responsibilities and various remedies available to consumers. It is not only beneficial for consumer, but it is equally important for businessman also.

The importance of consumer protection from the point of view of consumers are explained below:
(i) Consumer Ignorance In some countries like India, consumers are ignorant about the rights and reliefs which are available to them. Thus, it becomes necessary to educate them about the same, so as to achieve consumer awareness.

(ii) Unorganised Consumers Consumers need to be organised in the form of consumer organisations, which would take care of their interests. In India, we have consumer organisations and NGO’s, which are working in the field of educating consumers about their rights and promoting their interests.

(iii) Widespread Exploitation of Consumers In order to capture large market share, some traders, manufacturers and service providers are engaged in exploitative and unfair trade practices. Some of these are supply of defective and unsafe products, adulteration, false and misleading advertisements, etc. Therefore, they need protection against such malpractices of the sellers.

Answer 18:
The quoted lines from the given para, which are indicative of different dimensions of business environment are as follows:

  1. The court passed an order that all school must have water purifier.’ The quoted line is depicting legal environment. Business has to function within the framework of laws and regulations of the country. Legal environment exercises significant influence on business activities.
  2. ‘Society in general is more concerned about the quality of life.’ The quoted line is depicting the social environment as this environment consists of all the social and cultural forces within which business firms operate.
  3. ‘Innovative techniques are being developed to manufacture water purifier at competitive rates.’
    The quoted line is depicting the technological environment. It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services.
  4.  ‘Income are rising and children at home are also drinking purified water.’
    The quoted line is depicting the economic environment. It consists of the factors and forces concerning means of production and distribution of wealth. It includes all such forces of economic development which influence the product market scope of business.
  5. The government is also showing positive attitude towards the water purifier business.’
    The quoted line is depicting the political environment. It is concerned with the forces related with political stability, conditions that have strong impact on business.

Answer 19:
Human resource management is a wider term as compared to staffing. It includes staffing, record keeping, personal policy formulation, conducting personal research, providing expert’s services, etc. Hence, staffing is a part of the human resource management and not all of it.

Staffing function deals with the human element of management. It is important because the performance of an organisation depends upon its human resource, its competence and motivation. But, as organisations grow and number of employees increase, a separate department called Human Resource Department (HRD) is formed. It consists of specialists for all areas related to HRM.

The areas of human resource management can be divided into the following categories:

  1. Recruitment i.e. searching for eligible candidates.
  2. Providing expert services.
  3. Developing compensation and incentives plans.
  4. Handling grievances and complaints.
  5. Providing for social security and welfare of employees.
  6. Defending the company in law suits.

Answer 20:
(i) Decentralisation refers to systematic delegation of authority at all levels of management and in all departments of organisation to take decision.
While complete centralisation implies concentration of authority in a few hands, complete decentralisation implies greater autonomy to the lower levels of management. Therefore, an organisation cannot be completely centralised or decentralised. As an organisation grows in size, there is a tendency to move towards decentralised organisation. At the same time, decisions need to be centralised in priority areas and Key Result Areas (KRAs).

(ii) Advantages of decentralisation are given below:
(a) Develops Initiative amongst Subordinate Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower level managers are given freedom to take their own decisions, they learn to depend on their own judgement.

(b) Quick Decision-making In a decentralised organisation, since the decision-making power is entrusted to all the managers who perform the activities, there is no delay in decision-making and they are taken quickly.

(c) Facilitates Growth Decentralisation provides greater autonomy to the lower levels of management as well as divisional or departmental heads. This increases the productivity levels and the organisation is able to generate more profits, which can be used for growth and expansion purposes.

Answer 21:
(i) (a) SEBI performs the following regulatory functions:

  •  Registration of brokers, sub-brokers and other players in the market.
  • Registration of collective investment schemes and mutual funds.
  • Regulation of takeover bids by companies.
  • Levying fee or other charges for carrying out the purposes of the Act.

(b) SEBI Perfoms the following protective functions:

  • Prohibition of fraudulent and unfair trade practices.
  • Controlling insider trading and imposing penalties for such practices.
  • Undertaking steps for investor protection.
  • Promotion of fair practices and code of conduct in securities market.

Because of the regulatory and protective functions performed by SEBI, it is a watch dog of security market.

(ii) The values which SEBI fulfils are:
(a) Safety
(b) Transparency
(c) Fairness

Answer 22:
A good control system helps an organisation in the following ways:
(i) Accomplishing Organisational Goals The controlling function measures progress towards the organisational goals and brings to light deviations, if any and indicates corrective action. Thus, it guides the organisation and keeps it on the right track so that organisational goals might be achieved.

(ii) Judging Accuracy of Standards A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system keeps a careful check on the changes taking place in the organisation.

(iii) 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. This ensures that resources are used in the most effective and efficient manner.

(iv) 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 will be appraised. Thus, it motivates and helps them to give better performance.

(v) Ensuring Order and Discipline The controlling function helps to minimise undesirable behaviour of employees by keeping a close check on their activities. Thus, it facilitates order and discipline in the

Answer 23:
Steps to be followed by a manager are enumerated below:

  1. Setting Objectives This is the first step in planning, objectives should be established for the entire enterprise and for each and every department.
  2. Developing the Planning Premises A business premises is an assumption on which the plans are based. Management makes assumptions for everything it plans.
  3. Search for Alternatives This involves collection of right type of data and its anaylsis.
  4. Evaluation of Alternatives After developing alternative courses, the management will evaluate the merits and demerits of various alternatives in the light of the objectives of the business and planning premises.
  5. Selection of Best Course of Action This is the stage of decision-making. Quantitative techniques may also be used to choose the best course of action.
  6. Follow up Planning provides the future course of action. Future is uncertain. A system of continuous evaluation of the plan may be designed and implemented.

Answer 24:
(i) Scalar Chain According to Fayol, Scalar chain refers to the chain of authority and communication that runs from top to bottom and should be followed by managers and their subordinates.
CBSE Sample Papers for Class 12 Business Studies Paper 1 img24The above figure illustrates the scalar chain. If D and G wants to communicate, the message should usually move up through C, B, A, E, F and then G whereas, the manager is communicating with all levels and all departments, without following the scalar chain.

(ii) Remuneration of Employees According to Fayol, the quantum and methods of remuneration payable to employees should be fair and reasonable. It should be satisfactory to both employers and employees, which gives them a reasonable standard of living and should be within the paying capacity of the company.

(iii) Stability of Personnel According to Fayol, employee turnover should be minimised to maintain organisational efficiency. Therefore, suppose an individual gets selected for a post, then he should be given appropriate time to prove his abilities.
We can say, that he should be kept at the post for a minimum fixed tenure. This ensures stability, so that he can get proper time to explore his skills.

(iv) Discipline It is the sincerity and obedience towards organisational rules and regulations, as these are necessary for the smooth functioning of an organisation.
According to Fayol, good superiors at all levels, fair agreements and judicious application of penalties are helpful in maintaining discipline. It means obedience on part of workers as well as managers.

Answer 25:
The barriers which are concerned with problems and obstructions in the process of encoding and decoding of message into words or impressions are called semantic barriers. Such barriers result in faulty translations, different interpretations, etc.

Types of semantic barriers are discussed below:
(i) Badly Expressed Message Sometimes due to inadequate vocabulary, usage of wrong words, omission of needed words, etc intended meaning may not be conveyed by a manager to his subordinates.

(ii) Symbols with Different Meanings A word may have several meanings. Receiver has to perceive the same meaning for the word used by the sender, e.g. the word ‘value’ has different meanings in the given examples: What is the value of this equipment? I value our relationship, You should value your time. Thus, the word should be perceived in the same sense as it is used by the sender otherwise, it leads to communication problems.

(iii) Technical Jargon It is a common situation, faced by many in an organisation. The specialists use technical language or words, while explaining the process to persons who are not aware about these terms and may not understand their actual meaning.

(iv) Faulty Translations Sometimes the communication is drafted in one language and translated in another language, e.g. a manager drafts an information in english and while translating, uses hindi. If he is not proficient in both languages, mistakes may creep in and lead to faulty translation in the process.

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