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Class 11 - Business Studies

Sample paper - 09 (2024-25)

Maximum Marks: 80
Time Allowed: : 3 hours

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. The fundamental reason behind international business is that the countries cannot produce equally well or cheaply all
that they need. This is because of the unequal distribution of natural resources among them or differences in their
productivity levels. Availability of various factors of production such as labour, capital and raw materials that are
required for producing different goods and services differ among nations.
The main reason behind international business is:
A. India is a poor country
B. India is a fully developed country
C. All Countries are interested in setting up businesses in India
D. Countries cannot produce equally well or cheaply all that they need
a) Only A
b) Only C
c) Only B
d) Only D
2. Which of the following is the main problem for small business?
a) Finance
b) Managerial skill
c) Raw material
d) All of these
3. Disinvestments of PSE's implies:
a) Sale of equity shares
b) Investing in new areas
c) Buying shares PSEs
d) Closing down private sector/public operations
4. The main objective of selling goods through consumer cooperative stores is to reduce the cost of the product by reducing
the number of ________.
a) Wholesalers
b) Consumers
c) Manufacturers
d) Middlemen

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5. RSBDC (The Rural Small Business Development Centre) was sponsored by which organization?
a) NABARD
b) RWED
c) DIC
d) SFURTI
6. PayPal is a good example of ________.
a) B2C activities
b) C2C activities
c) B2B activities
d) C2B activities
7. A government company is any company in which the paid-up capital held by the government is not less than
a) 49 percent
b) 51 percent
c) 25 percent
d) 50 percent
8. Which of the following is organised by individuals?
a) Chemical Industry
b) Cottage Industries
c) Railway Industry
d) Atomic industry
9. Which of the following statements is incorrect regarding debentures?
A. Interest paid on debentures is tax-deductible.
B. Debentures do not carry voting rights.
C. It preferred by investors who want fixed income at lesser risk.
D. Issue of debentures dilutes the control of equity shareholders on management.
a) Only C
b) Only B
c) Only D
d) Only A
10. Assertion (A): Sole proprietorship is the least regulated form of business.
Reason (R): There are minimal legal formalities and it is easy to start and close the sole proprietorship business as per
the wish of the owner.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
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11. ________ are agents who merely bring the buyer and the seller into contact.
a) Commission agent
b) Broker
c) Stockist
d) Selling agent
12. ________ retail business acts as a universal supplier of a wide variety of products.
a) Tele-shopping

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b) Multiple shop
c) Departmental store
d) Mail-order business.
13. What is the limit of members in case of a Private Company?
a) 10
b) 50
c) 2
d) 200
14. Which of the following are small industries?
a) More labour intensive and less capital intensive.
b) Less labour intensive and less capital intensive.
c) More labour intensive and more capital intensive.
d) Less labour intensive and more capital intensive.
15. Which of the following is a responsibility of a business towards the workers?
a) Providing opportunities to the workers for meaningful work
b) All of these
c) Right kind of working conditions
d) Fair wages

16. Assertion (A): In case of loss arising out of any mishap, the most proximate cause of the mishap should be taken into
consideration.
Reason (R): Principle of Proximate Cause says that the direct, most dominant and most effective cause of the loss
should be given priority.

a) Both A and R are true and R is the correct explanation of A.

b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
17. Expand EOUs
a) Essential Order Units
b) Export Order Units
c) Essential Operating Units
d) Export Oriented Units
18. Which of the following is an economic activity?
a) Social Activities
b) Patriotic Activities
c) Religious Activities
d) Profession
19. What do you mean by entrepreneurship?
a) Pursuing employment
b) Setting up of one's own business
c) Practicing profession
d) All of these
20. ________ consists of business owned by individuals or a group of individuals.
a) production sector
b) Service sector
c) Public sector

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d) Private sector
21. Explain different modes of entry into international business?
22. Explain the following features of business risk:
i. Business risks arise due to uncertainties.
ii. Risk is an essential part of every business.

OR

Write a short note on the history of commerce in India.

23. The brand 'Vishwas' was established in the year 1970 by PR Enterprises Ltd. to produce all kinds of stainless steel
tableware and kitchenware products. In due course of time, the brand became popular among consumers in India and
enjoys a huge market share. The company sells its products through a wide distribution network comprising different
kinds of retailers. Pranav has been selling the company's products for over two decades and now owns a retail outlet in
Nagpur wherein all kinds of tableware and cooking ware are available for sale.
In the context of the above case answer the following questions:
a. How would you classify Pranav as a type of retailer?
b. Name the category of the type of retail trade as identified in part (a) of the question under which he should be placed.
c. List any three features of the type of retail trade as identified in part (a) of the question.
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24. Discuss any three characteristics of debentures.

OR

What is business finance? Why do businesses need funds? Explain.

25. Point out the advantages of the consumers' cooperative stores.

OR

Bindu and Rekha started a business in their own city. Both of them wanted to know the expectations the people, in
general, had from them. To know this, they made a survey. In the survey about 150 such people were included who could
be their possible customers. From the survey they came to know that mainly people wanted that, they should control the
fluctuations in the market and they should simplify the availability of goods.
What sort of business in your view is being done by Bindu and Rekha-Wholesale trade or retail trade? Also, explain how
from your answer the expectations of the people will be fulfiled.
26. Explain the following objectives of the business:
i. Earning profits
ii. Generation of employment
iii. Growth

OR

Harshit runs a well known departmental store in Delhi. He procures different kinds of products from all over the country
through railways, roadways, and airways. He also owns a godown to hold the stocks. He has also taken an insurance
policy worth Rs.10 crores for his business. Moreover, he has taken a loan of Rs. 2,00,000 from ICICI Bank in order to
meet short term financial needs of his business. He has placed information about his store on the hoardings, billboards,
etc. in order to popularize them.
In the context of the above case answer the following:

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i. What are auxiliaries to trade?
ii. Identify the different auxiliaries to trade that are being used by Harshit in his business by quoting lines from the
paragraph.
27. The data stored in the computer may be stolen or modified to achieve personal motives. Discuss the type of risk
highlighted in the given statement. Also, discuss how we can provide protection against such risks.
28. Statutory Corporation has several merits as compared to other public sector enterprises. Discuss any four such merits.
29. Business has to safeguard not only the interests of the parties but the interests of several other parties also. The other
parties are the employees, consumers, supplies, competitors/rivals, government, community and the world. Today, only
that business is regarded as good which along with the interests of the owner takes care of the interests of all these
parties also.
Which concept of business has been talked about in this statement? Identify that concept and state its meaning.
30. Explain the need for entrepreneurship development?
31. Write a detailed note on features, structure, objectives and functioning of WTO.

OR

List and explain various incentives and schemes that the government has evolved for promoting the country's foreign
trade.
32. Explain any three advantages and three disadvantages of a co-operative society.

OR

Why is partnership considered by some to be a relatively unpopular form of business ownership? Explain the merits and
limitations of partnership.
33. Ayushi is successfully running a bakery shop in her residential colony for the past many years. She has wisely invested
funds in different areas in order to ensure the smooth running of her business. She owns the manufacturing unit, whereas
the shop through which she operates is on rent. Recently, she took a loan from the bank to install air conditioners and
create provision for sitting for the customers by extending the shop area. Although she buys the majority of the
ingredients like flour, sugar, oil on 15 days credit from the local suppliers but sales are made only in cash.
In the context of the above case:
a. Identify and explain the various external sources of finance that Ayushi has employed in her business.
b. Distinguish between internal and external sources of funds (any four).
34. Define e-banking. Explain the various types of bank accounts.
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Class 11 - Business Studies

Sample paper - 09 (2024-25)

Solution

1. (d) Only D
Explanation: The reason for international trade is that there are some countries which cannot produce equally well or
cheaply all that they need.
2. (d) All of these
Explanation: The problems of traditional small scale units include a remote location with less developed infrastructural
facilities, lack of managerial talent, poor quality, traditional technology, and inadequate availability of finance.
3. (a) Sale of equity shares
Explanation: Disinvestment involves the sale of equity shares to the private sector and the public.
4. (d) Middlemen
Explanation: Since the Middlemen are eliminated, the members get products of good quality at cheaper rates
5. (a) NABARD
Explanation: RSBDC was sponsored by NABARD for micro, small and medium businesses.
6. (b) C2C activities
Explanation: C2C markets provide an innovative way to allow customers to interact with each other.
7. (b) 51 percent
Explanation: 51 percent
8. (b) Cottage Industries
Explanation: Cottage Industries are organised by individuals, with their private resources.
9. (c) Only D
Explanation: Debenture holders are a debt of the company and are not allowed to take their own decisions in the
company.
10. (a) Both A and R are true and R is the correct explanation of A.
Explanation: A sole proprietorship business has minimum legal restrictions and formalities. Its life depends upon the
life and wish of the sole proprietor. Therefore it is the least regulated form of business.
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11. (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.
12. (c) Departmental store
Explanation: The departmental store is a retail business which acts as a universal supplier of a wide variety of products.
13. (d) 200
Explanation: According to Sec (3) of Companies Act, 2013 the maximum limit of members in Private Limited
Company is 200 members.
14. (a) More labour intensive and less capital intensive.
Explanation: Small scale industries employed more labour and less capital .
15. (b) All of these
Explanation: Responsibilities towards employees are: to provide fair wages, to provide healthy working conditions, to
provide them with opportunities for promotion and development.

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16. (a) Both A and R are true and R is the correct explanation of A.
Explanation: It is due to the principle of proximate cause that the most direct, most dominant and most effective cause
of the loss is taken into consideration.
17. (d) Export Oriented Units
Explanation: The small scale industry can enjoy the status of an export-oriented unit if it exports more than 50 per cent
of its production.
18. (d) Profession
Explanation: Economic activities are related to production, distribution, exchange, and consumption of goods and
services(profession). Professionals involved in their profession to make money or earn their livelihood, hence it is an
economic activity.
19. (b) Setting up of one's own business
Explanation: Entrepreneurship means setting up own business for profits.
20. (d) Private sector
Explanation: The private sector encompasses all for-profit businesses that are owned or operated by an individual or
group of individuals.
21. The different modes of entering into the international business are as follows:
i. Exporting and importing: Exporting involves selling goods and services to other countries ad importing includes
purchasing goods and services from foreign countries.
ii. Contract Manufacturing: Here the firm enters into a contract with the manufacturer(s)in foreign countries to get
certain components or products.
iii. Licensing and Franchising: Licensing is a contractual agreement in which one firm grant access to its patents,
copyright, etc to another firm in a foreign country for as fee called royalty. Franchising is an agreement in which one
party grants right to another for use of technology etc in return of payment.
iv. Joint Ventures: It is the pooling of resources and expertise by two or more businesses to achieve goal.
v. Wholly Owned Subsidiaries:The parent company acquire full control over foreign country by making 100%
investment in equity capital.
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22. i. Business risks arise due to uncertainties: Future is uncertain and one cannot predict exactly what is going to
happen. Therefore, uncertainties and contingencies like natural calamities, changes in government policies, changes
in demand and prices, etc create risk for the business.
ii. Risk is an essential part of every business: Every business is subject to one or the other kind of risk. No business
can avoid risk. Though risk can be minimized but can't be eliminated.

OR

Trading and commerce had started from the pre-historic times when the people would trade through the system of barter.
They would exchange goods and services with each other without any form of money being used. Thereafter came the
system of trading through gold and silver coins.
Silk Routes, a network of roads helped in establishing commercial and political contacts with adjoining foreign
kingdoms and empires of Asia and the world.
23. a. Pranav will be classified as a fixed shop retailer.
b. The category of fixed shop retailers under which Pranav should be placed is Speciality shop.
c. The three features of the type of fixed shop retailers are as follows:
i. The amount of capital investment and scale of operation is relatively larger as compared to itinerant retailers.
ii. They deal in a wide variety of goods, including consumer durables as well as non-durables.

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iii. They enjoy greater credibility in the minds of buyers and strive to provide greater services to them like free home
delivery, guarantees, repairs, credit facilities etc.
24. Following are the characteristics of debentures:
i. Loan Instrument: A debenture is an instrument of loan.
ii. Fixed-Rate Of Interest: Interest is paid at a fixed rate every year and debentures are known as"fixed cost bearing
capital".
iii. Redeemable: A debenture is redeemable at a fixed and specified time.
iv. Creditors Not Owners: Debenture-holders are the creditors of the company, not owners.

OR

Business is concerned with the production and distribution of goods and services for the satisfaction of needs for the
society. For carrying out various activities, business requires money. Finance, therefore, is called the lifeblood of any
business. The requirement of funds by a business to carry out its various activities is called business finance. Or in
simple words Business finance refers to the money and credit employed in the business to purchase assets, goods, raw
materials etc. and for the other flow of economic activities.
A business needs funds for the purchase of plant and machinery, furniture, offices or intangible such as trademarks,
patents etc. and for the day to day operations, say to purchase raw materials, pay salaries to employees, etc.
25. Four advantages of consumer cooperative store are as follows:
i. Ease information: It is easy to form a consumer cooperative society. Any ten people can come together to form a
voluntary association and get themselves registered with the Registrar of Cooperative Societies by completing certain
formalities.
ii. Limited liability: The liability of the members in a cooperative store is limited to the extent of the capital
contributed by them. Over and above that amount, they are not liable personally to pay for the debts of society, in
case the liabilities are greater than its assets.
iii. Democratic management: Cooperative societies are democratically managed through management committees
which are elected by the members. Each member has one vote, irrespective of the number of shares held by him/her.
iv. Lower prices: A cooperative store purchases goods directly from the manufacturers or wholesalers and sells them to
members and others. Elimination of middlemen results in lower prices for the consumer goods to the members.

OR

Both the expectations of the people can be fulfilled only by a wholesale trader. Therefore, it is clear that Bindu and
Rekha are doing wholesale trade. A wholesale trader can do both the desired services in the following manner:
i. Control on Market Fluctuations: A wholesaler controls huge fluctuations in the market by stocking goods.
Therefore, the prices remain under control. This directly benefits consumers.
ii. Easy Availability of Goods: The presence of the wholesaler makes it easy for a retailer to get the goods according to
the taste of the consumers at any time. Consequently, all things are readily available to consumers. In the absence of
the wholesaler, the retailers cannot perform this job easily.
26. i. Earning Profits: The chief objective of every business is to earn a profit. A business cannot survive without making
adequate profits. Profit is the excess of income over expenditure. The success of the business is assessed by the rate
of profit earning. Higher the profit earning more successful is the businessman and vice-versa.
ii. Generation of Employment Opportunities: The business enterprise should generate employment opportunities
without any discrimination on the basis of sex, caste, religion, creed, etc. While generating employment opportunities
business enterprises must give special consideration to handicapped and poor people. This will improve the
company's reputation in the mind of the public.
iii. Growth: It is important for a business organization to grow and expand their activities. To remain in the market,
management must exploit fully the growth potential of the organisation. Growth of a business can be measured in

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terms of an increase in annual production, sales turnover, number of employees, capital investment, market share, etc.

OR

i. Auxiliaries to Trade - It implies activities required to facilitate the purchase and sale of goods i.e. are meant for
assisting trade.
ii. The different auxiliaries to trade that are being used by Harshit in his business are:
a. Transport as he procures different kinds of products from all over the country through railways, roadways, and
airways.
b. Warehousing as he owns a godown to hold the stocks.
c. Insurance as he has taken an insurance policy worth Rs. 10 crores for his business.
d. Banking and Finance as he has taken a loan of Rs. 2,00,000 from ICICI Bank in order to meet short term
financial needs of his business.
e. Advertising as he has placed information about his store on the hoardings, billboards, etc. in order to popularize
them.
27. The type of risk highlighted is Data Storage and Transmission Risks. Information is power indeed. But think for a
moment if the power goes into the wrong hands. Data stored in the systems and enroute is exposed to a number of risks.
Vital information may be stolen or modified to pursue some selfish motives or simply for fun/adventure. You must have
heard of ‘virus’ and ‘hacking’. Do you know the full form of the acronym ‘VIRUS?’ It means Vital Information Under
Siege. Actually, virus is a program (a series of commands) which replicates itself on the other computer systems. The
effect of computer viruses can range from mere annoyance in terms of some on-screen display (Level-1 virus),
disruption of functioning (Level-2 virus) damage to target data files (Level-3 virus), to complete destruction of the
system (Level-4 virus). Installing and timely updating anti-virus programmes and scanning the files and disks with them
provides protection to your data files, folders and systems from virus attacks.
28. i. They enjoy independence in their functioning and a high degree of operational flexibility. They are free from
undesirable government regulation and control
ii. Since the funds of these organisations do not come from the central budget, the government generally does not
interfere in their financial matters, including their income and receipts.
iii. Since they are autonomous organisations they frame their own policies and procedures within the powers assigned to
them by the Act. The Act may, however, provide few issues/ matters which require prior approval of a particular
ministry.
iv. A statutory corporation is a valuable instrument for economic development. It has the power of the government,
combined with the initiative of private enterprises.
29. The name of this concept is the Social Responsibility of Business.
Social Responsibility of business refers to its obligation to take those decisions and perform those actions which are
desirable in terms of the objectives and values of our society.
Social Responsibility of business can be divided into four categories- Economic Responsibility, Legal responsibility,
Ethical responsibility and Discretionary responsibility,
Some of the specific responsibilities and enterprise may be outlined as:
i. Responsibility towards the shareholders or owners
ii. Responsibility towards the workers
iii. Responsibility towards the consumers
iv. Responsibility towards the government and community
30. Entrepreneurship development aims at individuals who want to start or possibly expand a business.
i. Entrepreneurship development programmes motivate people to establish a new business which in turn creates
employment opportunities.
ii. It helps in the formation of capital.

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iii. Entrepreneurship development programmes aids in the formulation of projects.
iv. It helps in distributing economic activities in all the areas of the country thus resulting in balanced regional growth.
v. It also helps the entrepreneur to use local resources.
vi. Entrepreneurship development programmes help in creating employment opportunities which in turn leads to
improvement in the standard of living
vii. .Entrepreneurship development is the means of enhancing knowledge and skills of entrepreneur through several
classrooms and programmes and training.
31. Features of the WTO (World Trade Organization):
a. It governs trade in goods, services and intellectual property rights among the member countries.
b. It is a body created by an international treaty with the approval of the governments and legislatures of the member
states.
c. The decisions of the WTO are made by the governments of the member nations on the basis of consensus.
d. Unlike the GATT, it is a legal entity.
e. Unlike the International Monetary Fund (IMF) and the World Bank (WB), it is not an agent of the United Nations.

Structure of the WTO:

1. Ministerial Conference: The topmost decision making body WTO is the Ministerial Conference. It meets once in two
years.
2. General Council: The second level of WTO is the General Council. It consists of members, ambassadors and heads of
delegations. It meets several times a year in Geneva.
3. Other Councils: There are many other types of the council like Goods Council, Services Council, IP Council etc.
These councils deal with specific issues.

Objectives of the WTO:

i. Optimum utilization of resources: To facilitate efficient and fuller use of the world’s resources for sustainable
development.
ii. Durable training system: To provide an integrated, viable and durable trading system.
iii. Reduction of tariffs: To ensure a reduction of tariffs and other trade barriers imposed by different countries.
iv. Helps in improving the standard of living: To encourage activities which result in improving the standards of living,
creating employment, growth of income etc.

Functions of the WTO:

i. Reducing trade barriers
ii. Mitigating grievances
iii. Supervising Trade-Related Intellectual Property Rights
iv. Settling disputes
v. Following the rules

OR

The following are some of the schemes and incentives adopted by the government to promote exports:
a. Duty Drawback Scheme: Under the duty drawback scheme, exporters are either exempted from payment of excise
duties or are refunded a certain percentage of the excise duty paid earlier.
b. Export Manufacturing under the Bond Scheme: This bond scheme enables exporters to undertake the production
of goods meant for exports without paying an excise or other duties.
c. Exemptions from Payment of Sales Tax: The goods that are meant for imports are not subjected to sales tax. The
income earned by exporters (only those who run 100 per cent export-oriented units or units in export processing

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zones and special economic zones) from the export of goods is exempted from payment of income tax.
d. Advance License Scheme: Advance License Scheme allows exporters to use inputs (those that are domestically
produced or imported) without the payment of any duties.
e.
Export of Services:- In order to boost the export of services, various categories of service houses have been
recognized on the basis of the export performance of the service providers.
f.
Export Finance:- Finance is made available at concessional rates of interest to the exporters. Pre-shipment finance is
provided to an exporter for financing the purchase, processing, manufacturing or packaging of goods for export
purpose. Post-shipment finance is provided to the exporter from the date of extending the credit after the shipment of
goods to the export country.
g.
Export Processing Zones (EPZs):- Export processing zones are industrial estates usually situated near seaports or
airports with an objective to provide an internationally competitive duty-free environment for export production at
low cost. EPZs are now converted to Special Economic Zones (SEZs) which are free from all rules and regulations
governing imports and exports units except relating to labour and banking.
h.
100% Export Oriented Units:- The 100%. Export-oriented units scheme was introduced in early 1981 adopting the
same production regime as EPZs but a wider option in location. EOUs were established with a view to generating
additional production capacity for exports by providing an appropriate policy framework, flexibility of operations
and incentives.
32. Following advantages are offered by the cooperative society:-
i. Easy formation: A co-operative society can be started with minimum of 10 members. The registration procedure is
simple as it involves only a few legal formalities.
ii. Stable existence: Co-operative society enjoys a separate legal entity from its members, Death, insanity, retirement,
and insolvency of any member do not affect continuity of co-operative society.
iii. Support from Government: The co-operative society exemplifies the idea of democracy by promoting the value of
welfare, hence finds support from the government in the form of loans at a low-interest rate, low taxes, subsidies, etc.

Three disadvantages/demerits of co-operative society are as follows:

i. Limited Resources: A co-operative society is formed usually by people with limited means. The lower rate of
dividends offered on investment discourages members to invest large amounts in the cooperative society.
ii. Lack of skilled management: The members of the elected management committee may not have specialized
professional skills and experience to run the business efficiently. Due to limited funds, co-operative societies are not
able to attract, employ & retain managers or professionals.
iii. Lack of secrecy: There is no secrecy in this form of organization because all the affairs of the society are openly
discussed in the meetings of the society.

OR

A partnership is considered as an unpopular form of business owners because of the following reasons:
i. Uncertainty of duration- A partnership suffers from a possible limited span of life. Legally, a partnership firm must
be dissolved on the retirement, death, bankruptcy of any partner or demanded by any partner.
ii. Risks of additional liability- Each partner has unlimited liability but his liability may arise not only from his own acts
but also from the acts of co-partners.
iii. Lack of harmony- Harmony may be difficult to achieve, especially when there are many partners.

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iv. Difficulty in withdrawing investment- Investment can be simple but its withdrawal may be difficult because no
partner can withdraw his interest without the consent of all partners.
v. Lack of public confidence- There is no legal mechanism to enforce the registration of a partnership firm and the
disclosure of its affairs.
vi. Limited resources- A partnership is good as it can be started with limited capital. However, it becomes a handicap in
the growth and expansion phases of business.

Merits of Partnership:
i. Ease of Formation and Closure: A partnership firm can be easily formed and dissolved. No formal documents are
required to be prepared as required in the case of joint-stock companies.
ii. More Funds: In a partnership firm, capital is contributed by a number of partners. As a result, the business has got
large resources as compared to a sole proprietorship and the firm can undertake additional operations when needed.
iii. Flexible: The business is, abundantly mobile, flexible, and elastic being free from the legal restrictions on its
activities. The partners can introduce any change they consider desirable to meet the changed circumstances.

Limitations of Partnership:
i. Unlimited liability: All the partners are responsible for the debts of the firm and if the business goes bankrupt, all the
partners will have to clear the debts even if they have to sell off their personal belongings.
ii. A loss to the Society: The abrupt closure of the firm is a loss not to the firm but also to the society as a whole because
the society is deprived of its products and some workers become out of job.
iii. Restriction on Transfer of Interest: In partnership, no partner can transfer his interest to the third party. If he wants to
do so, he will have to seek the consent of all the other partners.
33. a. The various external sources of finance that Ayushi has employed in her business are stated below:
i. Trade credit: The credit extended by one trader to another in order to facilitate the purchase of goods and
services is know n as trade credit.
ii. A loan from a commercial bank: Commercial banks provide funds for varying purposes as well as time periods
in order to meet the diverse needs of the business.
b. The difference between internal and external sources of funds is as follows:
S.No Basis External Sources Internal Sources
External sources of funds consists of suppliers, Internal sources of funds refers to all
1. Meaning lenders, and investors, i.e., sources that lie outside an those sources that are generated from
organisation. within the business.

Use of external sources becomes essential when large The internal sources of funds can fulfill
2. Need
amount of money is required to be raised. only limited needs of the business.

The cost attached to raising funds from external

The cost of raising funds through internal
3. Cost sources is comparatively higher than those raised
sources is generally low.
through internal sources.

Normally, funds through external sources are raised No security of assets is required for
4. Security
against the security of some fixed assets. raising such capital.
34. E-banking means any user with a PC and a browser can get connected to the bank's website to perform any of the virtual
banking functions and avail of any of the bank's services. It eliminates the need for the bank's customers to visit the bank
to do the financial transactions. This digital medium of banking makes banking more accessible and convenient for
users.
Types of Bank Accounts are as follows:

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i. Saving Deposit Account: A person can open a savings deposit account by depositing a small sum of money. He can
deposit money and withdraw money from his account whenever required. The rate of interest on saving bank account
vary from bank to bank and also changes from time to time.
ii. Current Deposit Account: The account holder can deposit and withdraw money whenever desired. This account is
generally opened by the businessmen. On this deposit bank doesn't pay any interest on the balances.
iii. Fixed Deposit Account: A fixed deposit is repayable after the expiry of the specified period of time. The period may
vary from 6 months to 5 years. Such deposits offer a higher rate of interest.
iv. Recurring deposit Account: In this account, money is deposited in regular installments of a specified time period.
The total deposit along with interest is payable on maturity.
v. Multiple deposits: It offers the benefits of the current account option and savings account to the depositor.
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