Business Organiza on

Unit -1 – Business
Choose the correct answers

1. What is the main objec ve of a business organiza on?

a) To generate profit
b) To provide employment
c) To improve the economy
d) All of the above
Answer: d) All of the above

2. Which of the following is a characteris c of a business?

a) Profit earning
b) Risk-taking
c) Customer sa sfac on
d) All of the above
Answer: d) All of the above

3. Which of the following is NOT a type of business organiza on?

a) Sole proprietorship
b) Partnership
c) Corpora on
d) Coopera ve society
Answer: d) Coopera ve society

4. A business organiza on is primarily concerned with:

a) Maximizing employee sa sfac on
b) Maximizing social welfare
c) Maximizing profits and providing goods or services
d) Maximizing government revenues
Answer: c) Maximizing profits and providing goods or services

5. Which of the following is a feature of a Sole Proprietorship?

a) Owned by two or more individuals
b) Limited liability
c) Single ownership and full control
d) Profit sharing
Answer: c) Single ownership and full control
6. The concept of ‘limited liability’ is applicable to which type of business
organiza on?
a) Sole Proprietorship
b) Partnership
c) Corpora on
d) All of the above
Answer: c) Corpora on

7. A partnership business is formed by:

a) A single individual
b) Two or more individuals
c) A group of customers
d) None of the above
Answer: b) Two or more individuals

8. Which of the following is an example of a non-profit organiza on?

a) A retail store
b) A charity organiza on
c) A manufacturing company
d) A coopera ve society
Answer: b) A charity organiza on

9. A business organiza on that operates with the inten on of earning profits but
also contributes to social welfare is known as:
a) Public corpora on
b) Non-profit organiza on
c) Social enterprise
d) Coopera ve society
Answer: c) Social enterprise

10. Which type of business organiza on offers the most flexibility in decision-
making?
a) Sole Proprietorship
b) Partnership
c) Corpora on
d) Coopera ve society
Answer: a) Sole Proprietorship

11. What is the primary objec ve of a business?

a) To generate profit
b) To serve society
c) To produce goods
d) To create employment
Answer: a) To generate profit
12. Which of the following is not a characteris c of business?
a) Profit mo ve
b) Produc on of goods or services
c) Non-profit oriented
d) Risk-bearing
Answer: c) Non-profit oriented
13. Which of the following is an example of industry?
a) Retailing
b) Manufacturing
c) Law services
d) Educa on
Answer: b) Manufacturing
14. Which of the following is the main difference between trade and industry?
a) Industry produces goods, while trade deals with the buying and selling of goods
b) Industry deals with services, while trade produces goods
c) Industry deals with finance, while trade deals with products
d) Trade deals with services, while industry produces products
Answer: a) Industry produces goods, while trade deals with the buying and selling of
goods
15. Which of the following best defines 'commerce'?
a) Buying and selling of goods
b) Produc on of goods
c) Distribu on of goods and services
d) The exchange of goods and services
Answer: d) The exchange of goods and services
16. Which of the following is a modern characteris c of business?
a) Profit maximiza on
b) Personalized service
c) Use of technology
d) Tradi onal methods
Answer: c) Use of technology
17. The 'professional' category in business includes:
a) Doctors and lawyers
b) Manufacturers
c) Retailers
d) Traders
Answer: a) Doctors and lawyers
18. Which of the following is an example of a service-oriented business?
a) Tex le mill
b) Restaurant
 c) Furniture manufacturing
d) Construc on of buildings
Answer: b) Restaurant
19. The main objec ve of commerce is:
a) Crea on of wealth
b) Distribu on of goods and services
c) Risk-bearing
d) Maximizing profits
Answer: b) Distribu on of goods and services
20. What is the dis nc on between trade and profession?
a) Trade involves the buying and selling of goods, while profession involves
specialized knowledge and skills
b) Trade deals with services, while profession deals with products
c) Trade is done by individuals, while profession is done by organiza ons
d) There is no dis nc on between trade and profession
Answer: a) Trade involves the buying and selling of goods, while profession involves
specialized knowledge and skills
21.Which of the following is a modern characteris c of business?
a) Centraliza on of authority
b) Professional management
c) Limited risk
d) Tradi onal methods of marke ng
Answer: b) Professional management
22.What is the primary aim of a business?
A) To create employment
B)To earn profits
C) To provide public services
D) To avoid compe on
Answer: B) To earn profits
23.Which of the following is an essen al feature of a business?
A) Personal income
B) Legal obliga ons
C) Profit mo ve
D) Government support
Answer: C) Profit mo ve
24.The buying and selling of goods and services is primarily known as:
A) Produc on
B) Commerce
C) Marke ng
D) Trade
Answer: D) Trade
25.What does 'business environment' refer to?
A) The physical loca on of a business
B) The surrounding economic, social, and poli cal factors affec ng business ac vi es
C) The internal func oning of a company
D) The company
Answer: B) The surrounding economic, social, and poli cal factors affec ng business
ac vi es
26.What is meant by 'business risk'?
A) The chance of earning profits
B) The uncertainty of making profits or losses
C) The risk of fraud
D) The legal risk in business transac ons
Answer: B) The uncertainty of making profits or losses
27.Which of the following is NOT a characteris c of business?
A) Profit maximiza on
B) Produc on of goods and services
C) Providing free services to the public
D) Exchange of goods and services
Answer: C) Providing free services to the public
28.What does the term 'liability' in a business context refer to?
A) The profits made by a business
B) The ownership rights of business owners
C) The debts and obliga ons of a business
D) The raw materials used in produc on
Answer: C) The debts and obliga ons of a business
28.What is the role of capital in business?
A) To help pay off business debts
B) To fund the produc on of goods and services
C) To avoid compe on
D) To maintain a steady profit
Answer: B) To fund the produc on of goods and services
29.Which of the following is an example of a non-economic objec ve of business?
A) Maximizing profits
B) Crea ng employment opportuni es
C) Expanding market share
D) Increasing sales revenue
Answer: B) Crea ng employment opportuni es
30.In a business, which of the following is typically a primary func on of marke ng?
A)Manufacturing products
B) Conduc ng market research
C) Managing business finance
D) Ensuring quality control
Answer: B) Conduc ng market research
31.Which of the following is a key factor in the success of a business?
A) Government regula ons
B) Market demand
C) Legal obliga ons
D) Compe on levels
Answer: B) Market demand
32.What does 'business con nuity' mean?
A) The ability of a business to survive during tough mes
B) The expansion of a business over me
C) The process of marke ng products
D) The ability to create a large customer base
Answer: A) The ability of a business to survive during tough mes
33.Which of the following is a major external factor that can affect a business?
A) Employee sa sfac on
B) Business loca on
C) Economic condi ons
D) Produc on techniques
Answer: C) Economic condi ons
34.Which of the following is NOT considered an element of a business environment?
A) Economic factors
B) Technological advancements
C) Poli cal factors
D) Organiza onal culture
Answer: D) Organiza onal culture
35.What does the term 'business model' refer to?
A) The marke ng strategy used by a company
B) The way a company creates, delivers, and captures value
C) The legal structure of a business
D) The business loca on and facili es
Answer: B) The way a company creates, delivers, and captures value
36.Which of the following is an internal factor that can impact a business?
A) Consumer preferences
B) Government regula ons
C) Organiza onal structure
D) Economic condi ons
Answer: C) Organiza onal structure
37.What is the role of business ethics?
A) Maximizing profits at any cost
B) Ensuring fair prac ces, transparency, and accountability
C) Avoiding government regula ons
D) Focusing only on customer sa sfac on
Answer: B) Ensuring fair prac ces, transparency, and accountability
38.Which of the following best describes the term 'trade'?
A) The act of producing goods
B) The exchange of goods or services for money
C) The financial opera ons of a business
D) The organiza on of workers in a company
Answer: B) The exchange of goods or services for money
39.The legal obliga ons of a business are mainly governed by:
A) The marke ng department
B) The business environment
C) Government policies and regula ons
D) The owners and stakeholders
Answer: C) Government policies and regula ons
40.Which of the following is an example of an economic objec ve of business?
A) Providing employment
B) Earning profits
C) Improving employee sa sfac on
D) Serving social welfare
Answer: B) Earning profits
41.In business, 'con nuity' refers to:
A) Expanding product lines
B) Ensuring the business can operate without interrup on
C) Training employees
D) Offering lower prices
Answer: B) Ensuring the business can operate without interrup on
42.Which of the following can directly impact the cost of produc on in a business?
A) Technological advancements
B) Customer preferences
C) Corporate social responsibility policies
D) Business loca on
Answer: A) Technological advancements

Fill in the blanks:

1. The primary goal of a business is to __________.
o Answer: earn profits
2. __________ refers to the buying and selling of goods and services.
o Answer: Commerce
3. The term __________ refers to the total value of goods and services produced in a
country within a specific me period.
o Answer: Gross Domes c Product (GDP)
4. __________ is the risk of not being able to predict profits or losses in business.
o Answer: Business risk
5. __________ is the process by which a business organizes its resources to produce
goods or services.
o Answer: Produc on
6. __________ is the environment in which a business operates, including factors such
as economic condi ons, legal frameworks, and market condi ons.
o Answer: Business environment
7. The legal structure of a business determines the __________ of its owners.
o Answer: liability
8. A business’s primary func on is to create value by __________ goods or services to
meet customer needs.
o Answer: producing
9. __________ refers to the economic resources required by businesses to produce
goods and services.
o Answer: Factors of produc on
10. The __________ environment includes factors such as government policies, laws,
and poli cal stability.
o Answer: Poli cal
11. __________ involves understanding consumer needs and market demand to ensure
that products meet expecta ons.
o Answer: Market research
12. In business, __________ refers to the ability of a company to con nue opera ng in
the long term without interrup on.
o Answer: Con nuity
13. __________ is the process of exchanging goods or services for money in a business
transac on.
o Answer: Trade
 14. __________ refers to the debts and financial obliga ons of a business.
o Answer: Liability
15. The __________ of business refers to the characteris c of earning profits while also
fulfilling social responsibili es.
o Answer: dual objec ve
16. __________ refers to the rela onship between businesses and the society in which
they operate, including fulfilling ethical and social responsibili es.
o Answer: Business ethics
17. __________ refers to the tangible and intangible assets that a business owns, which
contribute to its ability to generate profits.
o Answer: Capital
18. A business environment with high compe on o en leads to __________ in prices.
o Answer: reduc on
19. __________ refers to the knowledge, skills, and abili es that employees contribute
to a business to ensure its success.
o Answer: Human resources
20. The __________ factor in a business environment can include changes in technology
and innova ons that impact how goods and services are produced or marketed.
o Answer: Technological
21. The __________ environment in business focuses on the rela onship between
businesses and natural resources, such as land and climate.
o Answer: Natural
22. __________ refers to the shared principles, values, and behaviors within an
organiza on.
o Answer: Organiza onal culture
23. __________ refers to the process of determining the pricing, promo on, and
distribu on strategies for a product or service.
o Answer: Marke ng
24. __________ is the legal framework that businesses must comply with when
conduc ng their ac vi es.
o Answer: Legal environment
25. __________ refers to the process by which businesses adjust their strategies based
on external factors such as changes in economic condi ons.
o Answer: Adapta on

Matching-1
Set A:
Set B: Defini ons
Terms

1. Profit Money earned a er covering business expenses.

2. The act of star ng and running a business to produce goods or

Business services.

The exchange of goods and services between businesses and

3. Trade
consumers.

4.
The process of crea ng goods or services.
Produc on

5. The ac vi es related to the promo on and sale of goods or

Marke ng services.

Matching -2

Set A: Terms Set B: Defini ons

The financial gain a er subtrac ng expenses from

1. Profit
revenue.

2. Business The framework in which a business operates, including

Environment economic, social, and legal factors.

3. Produc on The process of making goods or providing services.

The ac vi es related to the promo on and sale of goods

4. Marke ng
or services.

The exchange of goods and services between businesses

5. Trade
and consumers.

One mark ques ons

1. Business:
 o The ac vity of buying and selling goods or services to earn profit.
2. Profit:
o The financial gain obtained a er subtrac ng business expenses
from revenue.
3. Commerce:
o The process of buying and selling goods and services.
4. Trade:
o The exchange of goods and services between businesses or
between businesses and consumers.
5. Produc on:
o The process of crea ng goods or providing services.
6. Marke ng:
o The ac vi es and strategies used to promote, sell, and distribute
products or services.
7. Entrepreneur:
o An individual who starts and runs a business, taking on financial
risks to do so.
8. Business Environment:
o The external factors such as economic, legal, and technological
condi ons that affect business opera ons.
9. Liability:
o The financial obliga ons or debts that a business is required to
pay.
10.Capital:
 The financial resources required to start and run a business.
11.Customer:
 An individual or organiza on that purchases goods or services from a
business.
 12.Investment:
 The alloca on of money into a business with the expecta on of earning
a return or profit.
13.Risk:
 The uncertainty or chance of loss in a business venture due to
uncontrollable factors.
14.Profit Maximiza on:
 The strategy of increasing business profits through higher sales, reduced
costs, or both.
15.Supply:
 The total amount of goods or services available for sale in the market.
16.Demand:
 The desire and ability of consumers to purchase goods or services at
various prices.
17.Market Research:
The process of gathering and analyzing data about consumer needs,
preferences, and behaviors.
18.Business Ethics:
 The moral principles that govern the behavior of individuals and
organiza ons in business.
19.Ownership:
 The legal right to possess and control a business or asset.
20. External Factors:
 Condi ons outside a business’s control, such as economic,poli cal, and
social influences that can impact opera ons
True or False Statements
1. Business is solely about producing goods, not services.
o False (Business involves both goods and services.)
2. Profit is the income a business earns from its opera ons, excluding
expenses.
o False (Profit is earned a er expenses are deducted from income.)
3. The principle of 'Unity of Command' states that an employee should
report to mul ple superiors.
o False (An employee should report to only one superior to avoid
confusion.)
4. Marke ng focuses on the promo on and sale of goods and services.
o True
5. Division of work increases efficiency by assigning specialized tasks to
employees.
o True
6. Business ethics involves adhering only to legal requirements, not to
moral standards.
o False (Business ethics involves both legal requirements and moral
principles.)
7. Subordina on of individual interest means personal goals should come
before organiza onal goals.
o False (Organiza onal goals should come before individual
interests.)
8. The principle of 'Equity' emphasizes trea ng all employees with fairness
and respect.
o True
9. Centraliza on means decision-making authority is spread out across all
levels of the organiza on.
o False (Centraliza on means decision-making is concentrated at the
top levels.)
10.Market research helps businesses understand customer needs and
preferences.
o True
11.The principle of 'Discipline' encourages employees to break rules for
be er performance.
o False (Discipline emphasizes following rules and regula ons.)
12.The 'Scalar Chain' refers to the chain of authority from top to bo om in
an organiza on.
o True
13.Ini a ve is the process of strictly controlling employee ac ons to ensure
desired outcomes.
o False (Ini a ve encourages employees to contribute ideas and
take responsibility.)
14.The 'Stability of Tenure of Personnel' principle encourages frequent
employee turnover.
o False (It encourages job security and reduces turnover.)
15.Business organiza ons can operate without understanding their external
environment.
o False (Understanding the business environment is crucial for
success.)
16.Trade involves the exchange of goods and services for money or other
goods.
o True
17.Order in business refers to organizing resources and people to avoid
chaos.
o True
18.A business environment includes only the economic factors affec ng a
business.
o False (It includes economic, legal, social, poli cal, and
technological factors.)
19.Unity of direc on means grouping ac vi es with the same objec ve to
achieve goals.
o True
20.Liability refers to the personal assets of a business owner in case of
bankruptcy.
True (Liability means the business owner’s financial responsibili es,
including personal assets in some cases)