CBSE Sample Papers for Class 12 Business Studies Paper 4 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 4.

CBSE Sample Papers for Class 12 Business Studies Paper 4

Board CBSE
Class XII
Subject Business Studies
Sample Paper Set Paper 4
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 4 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:
A decision is taken to distribute certain part of the profit to shareholders after paying tax. What is this decision called?

Question 2:
“Management is an intangible force.” Explain.

Question 3:
What is the key feature of divisional structure?

Question 4:
Is directing necessary at planning stage? Give reason in support of your answer.

Question 5:
Which money market instrument is also known as zero coupon bond?

Question 6:
Mention any two parties who can file a complaint before the appropriate consumer forum.

Question 7:
Classify plans on the basis of duration of use.

Question 8:
Silver Tech Limited is a start-up company engaged in developing nano-technology for mobiles. The debt component is quite high in the capital structure of the company. Identify the risk which the company can face in future.

Question 9:
Give the various sources of recruitment and differentiate between the two internal sources.

Question 10:
Explain any three factors affecting capital budgeting decisions.

Question 11:
“Expenses on training is an investment and not a wastage.” Clarify. Also give any two advantages of training for the organisation.

Question 12:
Over the years, Brook Bond Taj Mahal tea has been a choice of millions of customers. The company uses the slogan ‘Waah Taj’ on its label. Their price range, quality and taste are different and unique from their competitors. What are the advantages of labelling a product shown in this case?

Question 13:
Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.” In the light of the above statement, explain any three features of management.

Question 14:
Give the positive and negative effects (any two) of the following principles of management:
(i) Equity
(ii) Stability of personnel

Question 15:
“Stock exchange works through its operators.” In the light of this statement, discuss any four types of operators working on a stock exchange.

Question 16:
Lately, many companies have planned for significant investments in organised retailing in India. Several factors have prompted their decision in this regard. Customers’ income is rising. People have developed a taste for better quality products even though they may have to pay more. The aspiration levels have increased. The government has also liberalised its economic policies in this regard and permitted even cent percent foreign direct investment in some sectors of retailing. In what ways, Indian managers have responded to change in the post liberalisation era?

Question 17:
Describe briefly multi-dimensional function of management.

Question 18:
How directing helps in efficient and effective functioning of the organisation? Explain by giving any four points.

Question 19:
A car manufacturing company sets a goal that in future they will expand their production by 15%. After measuring the performance, they noticed that the production has declined by 10% and the raw material is wasted by the production department.
(i) Can you find out, to which concept of controlling does it relate?
(ii) What values are being ignored in this case?

Question 20:
Name the decision, a financial manager takes keeping in view the overall objective of maximising shareholders’ wealth. Also, explain any four factors affecting the decision.

Question 21:
‘Millenium’ is a reputed B-school of Jaipur. It is offering lots of management degree programmes in the fields of finance, marketing, human resource, rural development, hospitality and information technology. The institute advertises that it has a 100% placement records, with many of its students being placed in top MNCs across the globe. The highest salary package to a student of the institute was
₹12.5 lakh per annum.
The advertisement also shows the campus to be well infrastructured. Influenced by this advertisement, hundred of students take admission in this institute. On taking admissions, the students learn that the campus shown in the advertisements was not the one that they were studying in and also that the institute is running only diploma and certificate courses, as it is not recognised by AICTE and therefore cannot issue degrees. The placement statistics were also misleading.
(i) As per your understanding, what are the values missing?
(ii) What steps should be taken by the student against these frauds?

Question 22:
”Some plans are formulated by companies to deal with situations that can occur again and again.” Identify the type of plan and explain any four of them.

Question 23:
Two managers are arguing that planning is looking ahead and controlling is looking back. As per your opinion, who is correct and why? Also explain how controlling helps in
(i) accomplishing organisational goals.
(ii) judging accuracy of standards.

Question 24:
My Car Ltd decided to set-up its new car manufacturing factory in the backward area of West Bengal where very less job opportunities were available. People of that area welcomed this effort of My Car Ltd. The company also decided to provide facilities like school, hospital, market, etc. in the factory premises so that people are attracted to join the factory as workers. My Car Ltd started earning huge profits. Another competing company asked its production manager Arvind to investigate the reasons of earning huge profits by My Car Ltd.

Arvind found that in both the companies there was systematic coordination among the various activities to achieve organisational goals. Every employee knew who was responsible and accountable to whom. The only difference was that in his organisation communication took place
only through the scalar chain, whereas My Car Ltd was allowing flow of communication in all the directions as well as quick . feedback.
(i) Identify the type of organisation which allows the flow of communication in all directions.
(ii) Also state the advantages of such type of organisation.

Question 25:
What do you mean by promotion mix? Explain its components.


Answer 1:
Dividend decision is taken to distribute certain part of the profit to shareholders after paying tax.

Answer 2:
Management is an unseen force whose presence can be felt when an organisation functions. Orderliness, discipline, cleanliness, etc all reflect the presence of good management. Hence, management is said to be an intangible force.

Answer 3:
The key feature of divisional structure is that it comprises of separate business units as divisions.

Answer 4:
No, directing is not necessary at planning stage, it is necessary at execution/operational stage.

Answer 5:
Treasury bill is also known as zero coupon bond.

Answer 6:
A complaint before the appropriate consumer forum can be made by the persons named here under:

  1. Any consumer
  2. A legal heir of a deceased consumer

Answer 7:
On the basis of duration of use, plans can be classified as follows:

  1. Single use plans
  2. Standing plans

Answer 8:
The company can face financial risk. It refers to a position, when a company is not able to meet its fixed financial charges namely interest, preference dividend, payment and repayment obligations. It arises due to higher use of debt.

Answer 9:
The sources of recruitment can be broadly classified as follows:
(i) Internal Sources These sources refer to recruitment within the organisation, from the existing staff and employees.
Two internal sources of recruitment are as follows:
(a) Transfers (b) Promotions
(ii) External Sources These sources refer to recruitment from outside the organisation.
Difference between Transfers and Promotions

The difference between transfers and promotions are:

Basis Transfers Promotions
Meaning It means shifting an employee from one job to another job, one department to another department or one shift to another shift. It means shifting an employee to a higher job position.
Movement It causes a horizontal movement of employees. It causes a vertical movement of employees.
Effect It leads to a change in duties and working conditions but not necessarily status and salary. It leads to a change in authority, responsibilities, duties, salary and status.

Answer 10:
Following are the three factors affecting capital budgeting decision:

  1. Cash Flows of the Project When a company takes an investment decision involving huge amount, it expects to generate some cash flows over a period. The amount of these cash flows should be carefully analysed before considering a capital budgeting decision.
  2.  The Rate of Return It is the most important criteria to decide the investment proposal, as a higher rate of return would induce more m ‘estment and vice versa.
  3. Investment Criteria The manager must compare and analyse the amount of investment, cash flows, interest rate, etc of various proposals and then take a decision.

Answer 11:
Expenses on training is an investment and not a wastage, as expenses incurred on training today will provide benefit to the organisation for a long-term in the form of increased efficiency of the employees.

The benefits of training and development to an organisation are as follows:

  1. Training is a systematic learning, always better than hit and trial methods which leads to wastage of efforts and money.
  2. It enhances employees’ productivity both in terms of quantity and quality, leading to higher profits

Answer 12:
Advantages of labelling which are shown in this case are as follows:
(i) It helps to assess the supermacy of a product over other competing products.
(ii) It raises the prestige of a product and guarantees the standard of the product.
(iii) It helps to establish brand loyalty of the customers towards the product.

Answer 13:
The above said statement is true. In the light of above statement, features of management are as follows:

  1. Management is a Goal-oriented Process Objectives refer to the end result to be achieved through operations. They are set for the organisation as well as all departments. Management seeks to achieve these objectives through co-ordinated efforts.
  2. Management is all Pervasive Management is necessary to conduct all types of activities whether it is a business or non-business activity. It is equally applicable in private and public enterprises, small and large enterprises, government and non-government enterprises. So, it is equally required in a petrol pump, a hospital, an office, whether in India, USA or Japan.
  3. Management is a Continuous Process Management is an ongoing process of planning, organising, staffing, directing and controlling which brings the management cycle back to planning.
  4. Group Activity An organisation is a collection of diverse activities and different individuals. Through
    coordination and teamwork, management unites the efforts of individuals to achieve organisational goals, alongwith the fulfilment of personal goals of the individuals.

Answer 14:
(i) Equity

Two positive effects of equity are given below:
(a) It ensures loyalty among the workers.
(b) It emerges cordial relation between workers and managers.

Two negative effects of equity, if violated are given below:
(a) Dissatisfaction among employees leading to greater employee turnover.
(b) It emerges poor relations between workers and managers.

(ii) Stability of Personnel

Two positive effects of stability of personnel are stated below:
(a) It encourages job security in the organisation.
(b) It increases motivation among employees.

Two negative effects of stability of personnel, if violated are stated below:
(a) It leads to increase in labour absenteeism.
(b) It Increases job insecurity thus, employees tend to leave jobs frequently leading to high turnover.

Answer 15:
There are four types of operators working on a stock exchange as given below:

  1. Bull A bull is a speculator, who expects rise in price. He buys securities with a view to sell them in future at a higher price and making profit out of it. In Mumbai Stock Exchange, he is known as Tejiwala.
  2. Bear A bear is a speculator, who expects fall in price. He sells securities which he does not want to possess. He is known as Mandiwala in Mumbai Stock Exchange.
  3. Broker He is a member of stock exchange. He buys and sells securities on behalf of outsiders, who are not the members of the stock exchange. He charges brokerage or commission for his services. He buys and sells all types of securities as demanded by investors.
  4. Jobber He is also a member of stock exchange. He buys and sells securities on his own behalf. He is specialised in one type of security and makes profit by selling the securities at a higher price. In Mumbai Stock Exchange, he is known as Tarawaniwala.

Answer 16:
Indian managers have responded to change in the post liberalisation era in the following ways:

  1. By consolidation of MNCs.
  2. By adopting varied strategies of markets.
  3. By focussing more on the interests of the customers.
  4. By adopting labour workforce management.
  5. By increasing production capacity.
  6. By high compensation levels.
  7. By implementing strategy of mergers and acquisitions.
  8. By adopting Capital structure reforms.

Answer 17:
Management is multi-dimensional i.e. management is a complex activity.

It has three dimensions which are discussed below:
(i) Management of Work All organisations exist for the performance of some work. It translates the work into goals, e.g. A product is produced in factory and then it is transported to the store where customers purchase it and their needs are satisfied.
(ii) Management of People Human resources are the greatest assets of an organisation. The task of management is to make people work towards achieving the organisational goals.
(iii) Management of Operations This refers to a production process, which entails the flow of input material and technology for transforming input into the desired output for consumption. It is interlinked with both management of work and management of people.

Answer 18:
The following four points highlight how directing helps in efficient and effective functioning of an organisation:
(i) Integrates Employees Directing integrates employees’ efforts in an organisation in such a way that every individual’s effort contributes to the welfare of the organisation. Thus, it ensures that employees work efficiently for the attainment of goals.
(ii) Improves Efficiency Directing guides employees to fully realise their potentials and capabilities. Through
this function, managers utilise the potential of employees and motivate them to work to the best of their ability and contribute their maximum effort towards the achievement of organisational objectives.
(iii) Facilitates Change Business environment is changing very frequently but people generally have a tendency to resist change. In this context, directing helps manager to persuade his subordinates to carry out changes from time to time and cope with changes in the environment.
(iv) Helps in Achieving Goals The work in the organisation starts with directing the employees towards the pre¬determined goals. Proper directing helps in unity of action and achieving organisational goals.

Answer 19:
(i) The concept of controlling which is being quoted is ‘comparing actual performance with standards’. After measuring the actual performance, it is being compared with the standards. In this case, the standard set is to increase production by 15% but actually it has declined by 10%. Infact the next step, i.e. ‘analysing deviations’ has also been undertaken and it is found out that raw materials have been wasted by the production department.
(ii) The values ignored here, are:
(a) Lack of commitment and hard work.
(b) Wastage of resources and lack of responsible behaviour towards achieving targets.

Answer 20:
The above said decision is financing decision. It is concerned with the decisions about how much funds are to
be raised from which long-term source, i.e. by means of shareholders funds or borrowed funds.
The factors affecting financing decisions are : (any four)

  1. Cost The cost of raising funds from different sources are different. A wise finance manager opts for the cheapest source of finance.
  2. Risk The risk associated with each of the source is different. The source which involves least risk should be preferred.
  3. Cash Flow Position of the Company A stronger cash flow position may make debt financing more viable than funding through equity.
  4. Control Considerations Issue of more equity may dilute shareholders’ control over the business. Therefore, a company afraid of a takeover bid may prefer debt to equity.
  5. State of Capital Market If the stock market is rising, then it is easy to sell equity shares. But in a depressed capital market, the company has to opt for debt financing.

Answer 21:
(i) As per our opinion, the social and ethical values are missing. They are cheating the students, who are the pillars of nation. If they will be successful in their career, they can contribute a lot towards the development of our nation. But by providing misleading information, they are cheating students and spoiling their careers.
(ii) Following steps should be taken by the students:
(a) Students should boycott against this and provide all information of cheating and fraud to the local print media.
(b) Students should not blindly believe on the words of counsellors. They should collect all relevant information from different possible sources. –
(c) They should ask for redressal against unfair practices of the institute and can also ask for the
”Some plans are formulated by companies to deal with situations that can occur again and again.” Identify the type of plan and explain any four of them.

Answer 22:
Standing plans are formulated by companies to deal with situations that can occur again and again.
The types of standing plan are as follows : (any four)

  1. Objectives It can be said to be the desired future position that the management would like to reach.
  2. Strategy A strategy is a comprehensive plan for accomplishing an organisation’s objectives.
  3. Policy These are general statements that guide thinking or channelise energies towards a particular direction.
  4. Procedure It describes the exact manner, in which a certain activity is to be performed.
  5. Method It provides the prescribed ways or manner, in which a task has to be performed, considering the objectives.

Answer 23:
In my opinion, both are correct.
Planning is forward looking as plans are prepared for future and are based on forecasts about future conditions. On the other hand, controlling is looking back. It implies that it is like a postmortem of past activities to find out deviations from the standards.
However, it should also be noted that planning is backward looking also as it is guided by past experience and feedback report of controlling function and controlling is forward looking, as it does not end only by comparing the past performance with standards, it also helps in finding the reason for deviation and suggest the measures.
Thus, from the above description, we can conclude that planning and controlling are both forward as well as backward looking.
Controlling is essential as it helps in

  1. Accomplishing Organisational Goals It measures the accomplishment of work against the standards and corrects deviations. This helps in ensuring that organisation is moving on right track to achieve the organisational goals.
  2. Judging Accuracy of Standards A sound controlling system helps the management to verify whether
    the standards set are accurate and objective. It keeps a careful check on the changes, which are taking place in the organisation and in the environment, thereby helping to review and raise the standards in the light of such changes.

Answer 24:
(i) The type of organisation discussed here is informal organisation.
Interaction among people at work gives rise to a network of social relationships among employees. This is called informal organisation, e.g. meeting in a cafeteria, drama group in an organisation and cricket teams of organisational personnel, are all examples of informal organisations.
(ii) Advantages of informal organisation are as follows :

  • Prescribed lines of communication are not followed. Thus, it facilitates quick feedback and spreads information faster.
  • It provides a sense of belongingness and gives due respect to social and psychological needs.
  • It provides the necessary environment for individual creativity and innovation.
  •  It contributes to fulfilment of goals, promoting the feeling of cooperation among employees.

Answer 25:
Promotion Mix It refers to combination of promotional tools used by an organisation to achieve its
communication objectives. It consists of all the activities aimed at persuading customers to buy the product.
It includes communication activities undertaken to inform and convince customers.
Various components used by the marketers are given below:

  • Advertising It is a non-personal visible communication which is paid for by an identified sponsor.
  • Sales Promotion It refers to short-term activities or incentives which are aimed at encouraging purchase of products.
  • Personal Selling It involves direct and face to face personal interactions between the sales person and potential customers.
  • Public Relations This is the communication of a product, brand or business by placing information about it in the media without paying for the time or media space directly.

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