SAMPLE QUESTION PAPER - 3

Business Studies (054)

Class XI (2024-25)

Time Allowed: 3 hours Maximum Marks: 80

General Instructions:
1. This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. In which of the following modes of entry, does the domestic manufacturer give the [1]
right to use intellectual property such as patent and trademark to a manufacturer in
a foreign country for a fee?

a) Lease b) Joint venture

c) Licensing d) Contract manufacturing

2. Expand SIDBI: [1]

a) Super Industrial Development b) Small Indian Development

Bank of India Bank of India

c) Small Industries Development d) Society Industrial Development

Bank of India Bank of India

3. A Government Company may be formed as which of the following: [1]

a) Public Company b) Private Company

c) Either Public or Private d) Neither Public nor Private

Company Company

4. ________ are agents who merely bring the buyer and the seller into contact. [1]

a) Commission agent b) Broker

 c) Stockist d) Selling agent

5. NSIC was set up in: [1]

a) 1975 b) 1965

c) 1955 d) 1982

6. An important C2C area of interactive commerce can be the formation of ________. [1]

a) consumers forum b) B2B commerce

c) insurance d) banking

7. Minimum number of members to form a private company is: [1]

a) 2 b) 7

c) 5 d) 3

8. Expand NSIC: [1]

a) National Small Industries b) National Small Indian

Centre Corporation

c) National Small Industries d) National Small Business

Corporation Industries Center

9. Which of the following statements is incorrect regarding Inter Corporate Deposits [1]
(ICD)?
A. They are made by one company with another company.
B. Unsecured long term deposits.
C. The minimum period of ICDs is 7 days which can be extended to one year.
D. The interest rate on ICDs may remain fixed or may be floating.

a) Only C b) Only D

c) Only A d) Only B

10. Assertion (A): Partnership at will get terminated when any partner gives notice of [1]
withdrawal from partnership to the firm.
Reason (R): Partnership at will exists at the will of the partners i.e. continues as
long as the partners want.
 a) Both A and R are true and R is b) Both A and R are true but R is
the correct explanation of A. not the correct explanation of
A.

c) A is true but R is false. d) A is false but R is true.

11. To selling only children garments is the example of: [1]

a) General Store b) Single-product shop

c) Single line shop d) Specific shop

12. The main objective of selling goods through consumer cooperative stores is to [1]
reduce the cost of the product by reducing the number of ________.

a) Wholesalers b) Consumers

c) Manufacturers d) Middlemen

13. Who has the power to take decisions in a Co-operative society? [1]

a) Government b) Members of the Co-operative

society

c) Customers d) Elected managing committee

14. Which of the following is an internal cause leading to sickness and closure of sick [1]
small business units?

a) Lack of skilled and trained b) Delayed payment

labour

c) Lack of demand for their d) Shortage of working capital

products

15. Social responsibility is: [1]

a) same as a legal responsibility b) broader than legal

responsibility

c) Much lower than legal d) narrower than legal

responsibility responsibility
16. Assertion(A): Current account is mostly suitable for business firms. [1]
Reason(R): Holder can deposit or withdraw money as and when required.

a) Both A and R are true and R is b) Both A and R are true but R is
the correct explanation of A. not the correct explanation of
A.

c) A is true but R is false. d) A is false but R is true.

17. State the full form of RWED: [1]

a) Rural and Women Experiential b) Rural and Women Employment

Development Development

c) Rural and Women Engagement d) Rural and Women

Development Entrepreneurship Development

18. Since the main objective of the business is to earn profits, which of the following is [1]
not an appropriate method of earning profits:

a) All of these b) Inflating the prices

c) Selling a good quality product d) Selling low-quality product at

at reasonable prices low prices

19. Which of the following is organised by individuals? [1]

a) Chemical Industry b) Cottage Industries

c) Railway Industry d) Atomic industry

20. Funding for Departmental Undertakings comes from which of the following [1]
sources:

a) Debentures b) Shares

c) Government Treasury d) Loans from Financial

Institutions

21. Differentiate between contract manufacturing and setting up wholly owned [3]
production subsidiary abroad.
22. Rohan, a student of business studies, wants to understand the interrelation between [3]
industry, trade, and commerce. Help him.

OR
What are the various types of industries?

23. Name the various types of Itinerant Retailers. [3]

24. Discuss the various types of preference shares. [3]

OR
What do you mean by preference shares? Discuss its various merits.

25. Explain the services provided by the retailer to the consumer. [4]

OR
Deepa is a dealer of used books and runs a shop under the name of ‘Om Bookshop’ in
Kamla Nagar, Delhi. As the book shop is located within the area of Delhi University, it
is very famous among the college students as they can get the used books in good
condition and that too at a price much less than the MRP.
a. Deepa will be classified as which type of retailer and why?
b. Identify the category of the type of retail trade as identified in part (a) of the question
under which Deepa should be placed.
c. State three features of the type of retailer as identified in part (b) of the question.

26. Business is an organized institution that operates to provide goods and services [4]
under the incentive of private gain. Discuss.

OR
Explain how industry, trade, and commerce are interrelated.

27. Describe briefly any two applications of E-business. [4]

28. Explain briefly the following features of global enterprises: [4]

i. Huge capital resources
ii. Foreign collaboration
iii. Expansion of market territory
iv. Centralised control.
29. Enlist any four measures through which a business can promote its goodwill in the [4]
market?

30. What do you understand by Intellectual Property Rights? Explain. [4]

31. Tarun wants to import machinery from France for the manufacturing of automatic [6]
and high-quality guns. Explain the initial six steps that he needs to take in order to
import machinery from France.

OR
Discuss as to why nations trade.

32. Distinguish between a Co-operative society (organisation) and a Company. [6]

OR
Describe briefly different types of cooperative societies.

33. Qureshi had aspired to start a Thai food restaurant from his childhood. On [6]
completing his education he shared his childhood dream with his father. Therefore,
the father-son duo decided to approach a nearby bank for obtaining a loan. His
father's foremost concern was to raise finance for the business as his savings would
be insufficient for starting a business.
In the context of the above case answer the following:
a. Define the term business finance.
b. Briefly outline the importance of business finance.
c. The two types of funds on the basis of ownership are being discussed above.
Identify and differentiate between them by giving any three suitable points.

34. State the types of life insurance policies. [6]

 Solution
SAMPLE QUESTION PAPER - 3
Business Studies (054)
1. Class XI (2024-25)
(c) Licensing
Explanation:
Licensing refers to permitting another party in a foreign country to produce and sell goods
under trademarks. patents or copyrights in lieu of some fee.
2.
(c) Small Industries Development Bank of India
Explanation:
Small Industries Development Bank of India (SIDBI) is a wholly-owned subsidiary of
IDBI.
3.
(c) Either Public or Private Company
Explanation:
A government company may be formed as a private company or a public company.
4.
(b) Broker
Explanation:
Brokers are agents who merely bring the buyer and the seller into contact. They execute
the orders as per the buyer without physically involving the buyer in the transaction.
5.
(c) 1955
Explanation:
NSIC was set up in1955 with a view to promote, aid, and foster the growth of small
business units in the country.
6. (a) consumers forum
Explanation:
The business originates from the consumer and the ultimate destination is also consumers,
thus the name C2C commerce. This type of commerce is best suited for dealing with
goods for which there is no established market mechanism.
7. (a) 2
Explanation:
Minimum number of members to form a private company is two.
8.
(c) National Small Industries Corporation
 Explanation:
National small industries corporation was set up in1955 with a view to promote, aid, and
foster the growth of small business units in the country.
9.
(d) Only B
Explanation:
Inter Corporate Deposits are unsecured short-term deposits made by a company with
another company.
10. (a) Both A and R are true and R is the correct explanation of A.
Explanation:
Partnership at will continues till the partners want and comes to an end when any of the
partner gives a notice of withdrawal from partnership.
11.
(b) Single-product shop
Explanation:
It is an example of Single-product shop.
12.
(d) Middlemen
Explanation:
Since the Middlemen are eliminated, the members get products of good quality at cheaper
rates
13.
(d) Elected managing committee
Explanation:
In a Cooperative Society, the power to take decisions lies in the hands of an elected
managing committee.
14. (a) Lack of skilled and trained labour
Explanation:
Small business firms cannot afford to pay higher salaries to employees.
15.
(b) broader than legal responsibility
Explanation:
Social responsibility is broader than the legal responsibility of business. It is a firm’s
recognition of social obligations even though not covered by the law, along with the
obligations laid down by law.
16. (a) Both A and R are true and R is the correct explanation of A.
Explanation:
 Since holders of current accounts can deposit or withdraw money as and when required, it
is suited best for businesses.
17.
(d) Rural and Women Entrepreneurship Development
Explanation:
RWED stands for Rural and Women Entrepreneurship Development.
18.
(b) Inflating the prices
Explanation:
Inflating the prices may earn profit in the short run but it is not acceptable in the long run,
as it is considered as malpractice.
19.
(b) Cottage Industries
Explanation:
Cottage Industries are organised by individuals, with their private resources.
20.
(c) Government Treasury
Explanation:
The funding of these enterprises come directly from the Government Treasury and are an
annual appropriation from the budget of the government.
21. Under contract manufacturing, a firm enters into a contract with some local manufacturers
in foreign countries to manufacture certain components of goods produced as per their
specifications. As a result, contract manufacturing is less risky and does not require
resources for setting up the production facilities.
However, in the case of a wholly-owned subsidiary, the company has to make 100%
equity investments in the foreign subsidiary and has to bear the entire losses in case of
failure of its foreign operations.
22. Industry, trade, and commerce are interrelated. Industry produces goods that are
distributed through commerce. No commercial activity is possible in the absence of
industry. At the same time, industrial production is meaningless without the distribution of
goods through commerce. If the industry is the backbone of commerce, commerce serves
as the lifeline of the industry.
OR
The different types of industries are as follows:
i. Primary Industries: These industries deal with obtaining or offering raw materials
which are processed as commodities for the customers. For example: Farming, Fishing.
 ii. Secondary Industries: These are concerned with using the materials which have
already been extracted at the primary stage. For example, manufacturing of steel is a
secondary industry.
iii. Tertiary industries: These are concerned with providing support services to primary
and secondary industries as well as activities relating to trade. These industries provide
service facilities like transport, banking etc.
23. i. Hawkers and Pedlars
ii. Market Traders
iii. Street Traders
iv. Cheap Jacks
24. The four main types of preference shares are callable shares, convertible shares,
cumulative shares, and participatory shares. Each and every type of preferred share has a
unique feature that may benefit either the shareholder or the issuer in the company.
OR
Preference shares are kind of shares which promise the holder a fixed dividend, whose
payment takes priority over that of ordinary shares. Benefits are in the form of an absence
of a legal obligation to pay the dividend, improves borrowing capacity, saves dilution in
control of existing shareholders, and no charge on assets.
25. Services provided by the retailer to the customers are as follows:
i. Regular availability of the goods: Retailers maintain regular availability of a variety
of products from different manufacturers. This helps the customers to buy the products
of their choice as and when they require it.
ii. Information about the goods: By effectively displaying the goods and through
personal selling efforts; retailers provide important information about the arrival of the
new goods, their special features, etc. thus helps them in making their purchase
decision.
iii. Convenience in buying: Firstly, retailers are situated very nearer to the residential
areas and remain open for long hours. Secondly, retailers sell the goods of the desired
variety in small quantities according to customers' requirements, therefore, providing
convenience to customers.
iv. Wider choice: Retailers generally keep stock of a wide variety of goods, produced by
different manufacturers. This enables the customers to make their choice out of the
wide variety available to select the best good.
v. After-sales service: Retailers sometimes provide home delivery and after-sales service
to consumers.
vi. Provide credit facilities: Retailers often sell goods on credit to their regular customers.
OR
 a. Deepa will be classified as a ‘Fixed Shop Retailer’ because she operates his business
from a permanently established shop.
b. Second-hand Goods Shop.
c. Three Features of Second-hand Goods Shop:
i. The shops may be located at street crossings or in busy streets.
ii. These shops may either be in the form of a stall with a temporary platform or may
have reasonably good infrastructure.
iii. The goods are generally sold at lower prices as they are used goods.
26. Yes, it is right to call business as an institution that provides goods and services for
earning profit because of certain characteristics of the business. Following are the main
characteristics of business:
i. Sale or exchange of goods and services for the satisfaction of human needs:
Business involves sale or exchange of goods and services. The production of goods or
services for self-consumption is not business.
ii. Deals in goods or services on a regular basis: Another important feature of the
business is that it must sell or exchange goods or services on a regular basis, one time
sale of goods is not considered as business.
iii. Profit motive: The main purpose of business is to earn a profit. If the profit motive is
missing in a transaction, then it cannot be considered as a business transaction.
OR
Industry, business, and trade are firmly identified with one another in various manners:
The industry is identified with the creation of merchandise and enterprises and trade
assists with conveying the products and ventures delivered by the business to the last
purchaser.
Industry and trade are bury subject to one another. They can't get by in disengagement as
both are imperative for one another. Trade will be of no utilization without industry and
industry can't get by without business. Business is a maker of spot utility and time utility
and serves the foundation of the industry, while industry gives the base to trade.
Trade is a basic piece of business. It alludes to the deal and acquisition of merchandise and
ventures. It gives ground to business to play. It offers help to industry as well as keeps up a
smooth progression of business simultaneously.
27. E-business deals with the buying and selling of products and services through a computer
network. The two applications of E-business are discussed below:
i. e-Procurement: It involves internet-based sales transactions between business firms
including both, "reverse auctions" that facilitate online trade between a single business
purchaser and many sellers, and, digital market places that facilitate online trading
between multiple buyers.
 ii. e-Delivery: It includes electronic delivery of computer software, photographs, videos,
books (e-journals) and other multimedia content to the other's computer. It also includes
the rendering of legal, accounting, medical and other consulting services electronically.
In fact, the internet provides the firms with opportunities for the outsourcing of a host
of Information Technology Enabled Services (ITES).
28. i. Huge capital resources: These enterprises have huge financial resources and also
possess the ability to raise funds from different sources. They are able to tap funds from
various sources. They can raise funds by issuing equity shares, debentures, etc. Because
of their high credibility in the market, the investors of the host countries are always
willing to invest in them. Because of their financial strength they are able to survive
under all circumstances.
ii. Foreign collaboration: Usually, these enterprises enter into agreements with
companies of the host countries. These agreements are made in respect of the sale of
technology, production of goods, patents, resources, etc.
iii. Expansion of market territory: As the network of operations of these enterprises
extends beyond their existing physical boundaries, they expand their market territory.
They operate through their branches, subsidiaries in host countries, and occupy
dominant positions in various markets.
iv. Centralized control: Despite the fact that branches of these enterprises are spread over
in many countries, they are controlled and managed by their Head Office (H. O.) in
their home countries only all these branches have to work within the broad policy
framework of the parent company. A common system for working of all the companies
under their control is evolved.
29. A business can promote its goodwill in by adopting the following measures:
i. By providing quality product and service.
ii. Unique selling proposition.
iii. Satisfied customer base.
iv. Marketing and advertisement.
30. Intellectual property refers to the creations of the human mind, like inventions, literary and
artistic works, symbols, names, images and designs used in business. All inventions of
creations begin with an 'idea'. Once the idea becomes an actual product, i.e., Intellectual
Property, one can apply to the authority concerned under the Government of India for
protection. Legal rights conferred on such products are called 'Intellectual Property Rights'
(IPR). Hence Intellectual property refers to products of the human mind, hence, just like
other types of property, the owners of IP can rent, give or sell it to other people.
The following types of Intellectual Property Rights are recognized in India: Copyright,
Trademark, Geographical Indication, Patent, Design, Plant Variety, Semiconductor
 Integrated Circuit Layout Design. In addition to this, traditional knowledge also falls
under IP.
31. The initial six steps that he needs to take in order to import machinery are:
i. Trade inquiry and obtaining I.E.C. No.: Before starting the import procedure, he has
to obtain an I.E.C. (ImportExport Code) number. This number is used in filling the
formalities of the import procedures. To get this number, he has to apply to the regional
Import-Export Licensing Authority in the prescribed form.
ii. Obtaining Registration Cum Membership Certificate (RCMC) and placing an
order: He will get various benefits in the form of subsidies and exemption in excise
duty, tax, etc. To get these benefits, they have to show RCMC. After getting the I.E.C.
number, he will apply for RCMC.
The RCMC is issued by:
a. Import Promotion Council.
b. Federation of Indian Import Organisation.
c. Import Development Authority, etc. Along with the application, he has to submit a
bank certificate and IEC number. If the authority is satisfied, then they will issue
RCMC.
iii. Opening a letter of credit: Letter of credit is issued by his bank in favor of the
exporter. In this letter, the bank undertakes a guarantee for making payment on his
behalf. He will approach his bank and instructs the bank to issue a letter of credit in
favor of the exporter. He will instruct the bank about the documents to be collected
from the exporter before making payment.
iv. Arranging for finance: Importer makes arrangements for finance in advance to pay to
the exporter on the arrival of goods at the port.
v. Receipt of shipment advice: After loading of goods on the ship, the overseas supplier
dispatches shipment advice to the importer.
vi. Retirement of import documents: The overseas supplier prepares a list of necessary
documents and handed over to the banker for their onward transmission and negotiation
to the importer.
OR
Countries trade with each other when, on their own, they do not have the resources, or
capacity to satisfy their own needs and wants. By developing and exploiting their domestic
scarce resources, countries can produce a surplus and trade this for the resources they
need.
Clear evidence of trading over long distances dates back at least 9,000 years, though long-
distance trade probably goes back much further to the domestication of pack animals and
the invention of ships. Today, international trade is at the heart of the global economy and
 is responsible for much of the development and prosperity of the modern industrialised
world.
Nations trade because of the following reasons:
a. Unequal distribution of natural resources: Resources are unequally distributed in
natural resources. Some countries are abundant in one commodity and scarce in other,
while the opposite is true for some other country. It makes a case for international trade
and exchanging abundant commodity with scarce commodity by nations.
b. Unequal availability of factors of production: Different nations are endowed with
different factors of production which includes land, labour, capital and
entrepreneurship. For example, India is a labour abundant country. Therefore, it is
advisable for India to produce such commodities which use labour-intensive methods
and exchange it for those who use capital intensive methods. The USA is a capital
abundant country. Therefore, nations need to trade.
c. Theory of Comparative Cost Advantage: Due to these factors, some countries are in
an advantageous position in producing selected goods and services which other
countries cannot produce that effectively and efficiently and vice-versa.
d. Geographical Specialisation: The international business as it exists today is the result
of geographical specialization. Even within a country, each state specialises in those
goods for which it is geographically more suitable.
e. Cost minimization principle of firms: Firms get involved in international business to
minimize their costs and maximize their profits.
32. Difference between Co-operative society and Company:
Basis of
Co-operative society Company
difference
It is governed by the Co-operative It is governed by the
(i) Regulations
Society Act, 1912. Companies Act, 2013.
Shares can be easily
(ii) Transfer of The members of co-operative societies transferred in case of a public
share cannot transfer their shares. company but not in the case
of a private company.
The main aim of a co-operative society is
to render services to its members. The
The main aim of a company
(iii) Aim word cooperative means working
is to earn profits.
together and with others for a common
purpose
 For private company:
Minimum 10 members are required to
Minimum-2, Maximum-200,
(iv) Number of form a co-operative society, while there
For public company-
members is no limit on the maximum number of
Minimum-7, Maximum-No
members.
limit.
Managed and controlled by the elected Managed and controlled by
(v) Control
managing committee. the Board of Directors.
(Vi) Support in the form of low taxes,
No government support is
Government subsidies, loans at a low rate of interest,
provided to companies.
support etc are provided by the government.
OR
The various types of cooperative societies are described below:
i. Consumer's Cooperative Societies: It is formed by consumers for obtaining good
quality products at reasonable prices. The society aims to achieve economy in
operations by purchasing goods in bulk directly from the wholesalers and selling them
directly to the members, thereby eliminating the middlemen.
ii. Producer's cooperative societies: It is formed by small producers, who desire to
procure inputs for the production of goods to meet the demands of consumers. These
societies enhance the bargaining power of small producers. Profits among the members
are generally distributed on the basis of their contributions to the total pool of goods
produced or sold by the society.
iii. Marketing cooperative societies: The members consist of producers who wish to
obtain reasonable prices for their output through one centralised agency. These societies
perform marketing functions like transportation, packaging, etc., and selling the output
at the best possible price. Profits are distributed according to each member's
contribution to the pool of output.
iv. Farmer's cooperative societies: This society is formed by farmers to jointly take up
farming activities in order to gain the benefits of large scale farming and increase
productivity by providing good quality seeds, fertilisers, machinery and other modern
techniques for use in the cultivation of crops. Such a society is helpful in consolidating
the uneconomic, fragmented and small land holdings into viable economic holdings.
v. Credit cooperative societies: Providing easy credit on reasonable terms to the
members. Such societies provide loans to members out of the amounts collected as
capital and deposits from the members and charge low rates of interest.
vi. Cooperative housing societies: Helps people with limited income to construct houses
at reasonable costs. The members of these societies consist of people who are desirous
 of procuring residential accommodation at lower costs.
33. a. The funds required by the business to carry out its various activities is called business
finance.
b. Finance is called the lifeblood of any business. The need for funds arises from the point
when an entrepreneur decides to start a business. Funds are required to buy fixed assets
like plant and machinery. Som e funds are also required for meeting day-to-day
business operations, like purchasing raw materials, paying salaries to employees, bills
and so on. Moreover, funds are needed for the expansion of a business.
c. The two types of funds on the basis of ownership, being discussed above are owned
funds and borrowed funds. The difference between them is as follows:
S.
Basis Owned Funds Borrowed Funds
No
The funds that are invested by the
owners of an enterprise, like a sole
The funds raised through
proprietor or partners or
1. Meaning loans or borrowings are
shareholders of a company are
known as borrowed funds.
known as owner's funds. It also
includes retained profits.
These funds are provided for
These funds remain invested in the
a specified period, on certain
business for a longer duration and is
2. Time period terms and conditions and
not required to be refunded during
have to be repaid after the
the life period of the business.
expiry of that period.
Such capital forms the basis on The providers of these funds
Management
3. which owners acquire their right of do not acquire any right of
and control
control of management. control of management.
34. A life insurance policy is a protection against the uncertainty of life that is death. It
provides protection to the family a premature death of an individual. The various types of
life insurance policies are as follows:
i. Term insurance policy: This policy is a pure risk cover with the insured amount to be
paid only if the policyholder dies during the period of policy time. The intention of this
policy is to protect the policy holder's family in case of death.
ii. Endowment policy: In this policy, the term policy is defined for a specified period like
15, 20, or 25 years. The insurance company pays the claim to the family of the assured
on the event of his death within the policy term or on the event of the assured serving
the policy term.
iii. Whole life policy: In this policy, the insurance company collects premiums for the
insured for the whole life or till the time of his retirement and pays a claim to the family
of the insured only after his death.
iv. Money-back policy: Money back policy provides money on occasions when the
policyholder needs it for his personal reasons. The occasions may be marriage,
education, etc. The money will be paid back to the policyholder in a specified direction.
If the policyholder dies before the policy term, the sum assured will be given to his
family. A portion of the assured amount is payable at regular intervals. On survival, the
remainder of the sum assured is payable.
v. Annuities and pension: In an annuity, the insurer agrees to pay the insured a stipulated
sum of money periodically. The purpose of an annuity is to protect the insured against
risk as well as provide money in the form of pension at regular intervals. Over the
years, insurers have added various features to basic insurance policies in order to
address the specific needs of a cross-section of people.