Plus Two Business Studies Model Question Paper 1

Kerala Plus Two Business Studies Model Question Paper 1 with Answers

Time : 2½ Hours
Cool off time : 15 Minutes
Maximum : 80 Score

General Instructions to Candidates:

• There is a ‘cool off time’ of 15 minutes in addition to the writing time of 2 hrs.
• Your are not allowed to write your answers nor to discuss anything with others during the ‘cool off time’.
• Use the ‘cool off time’ to get familiar with the questions and to plan your answers.
• Read questions carefully before you answering.
• All questions are compulsory and only internal choice is allowed.
• When you select a question, all the sub-questions must be answered from the same question itself.
• Calculations, figures and graphs should be shown in the answer sheet itself.
• Malayalam version of the questions is also provided.
• Give equations wherever necessary.
• Electronic devices except non programmable calculators are not allowed in the Examination Hall.

Answer all the questions from 1 to 7. Each carries 1 score. (Scores: 7 × 1 = 7)

Question 1.
Mr. Rahul is working as a production manager in Petro Ltd. Identify the level of management he belongs to.
a) Top level
b) Operative level
c) Middle level
d) Bottom level
Answer:
c) Middle level

Question 2.
Find the odd one
a) Unity of command
b) Division of work
c) Discipline
d) Functional foremanship
Answer:
d) Functional foremanship

Question 3.
It is the study to find out the best way of doing the job. Identify the technique.
a) Time study
b) Fatigue study
c) Method study
d) Motion study
Answer:
c) Method study

Question 4.
Complete the diagram

Answer:
a) Political Environment
b) Social Environment

Question 5.
The technique used by managers to study the relationship between cost, volume and profit is ………….
a) Budgetary control
b) Ratio analysis
c) Break even analysis
d) Management audit
Answer:
a) Budgetary control

Question 6.
Which of the following is not a money market instrument?
Answer:
a) Commercial bill
b) Commercial paper
c) Bonds
d) Certificate of deposit
Answer:
c) Bonds

Question 7.
Complete the series.
a) Manager: ………..
b) Entrepreneur: Profit
Answer:
Salary

Answer any 7 questions from 8 to 15. Each carries 2 score. (Scores: 7 × 2 = 14)

Question 8.
In a classroom debate Navami argued that ‘management is multidimensional?’ Do you agree? Why?
Answer:
Yes. Management is multidimensional. Management is series of activities like planning, organising, staffing, directing, controlling, etc. The different functional areas coverd by management are purchase, production, finance, marketing, human resources, sales, etc. So management is multidimensional.

Question 9.
Briefly narrate motion study.
Answer:
Motion study involves close observation of the movements of the workers and machines to perform a particular job. It helps to eliminate unnecessary movements of men, materials and machine.
This technique of management is given by F.W. Taylor.

Question 10.
It is the basis of all other functions of management.
a) Identify the function
b) State any two features of it.
Answer:
a) Planning
b) Features of Planning

• Planning is goal oriented
• It is the primary function of management

Question 11.
Recruitment is regarded as a positive process and selection is a negative process. Comment your views.
Answer:
Recruitment:

• It is the process of searching for candidates and making them apply for the job
• It is a positive process
• It is simple
• It is less expensive

Selection:

• It is the proces of selection of most suitable candidates
• It is a negative process
• It is complex
• It is more expensive

Question 12.
State the objectives of financial management?
Answer:
Objectives of Financial Management: The primary aim of financial management is to maximise shareholder’s wealth. It means maximisation of the market value of equity shares. It is the responsibility of the company to pay reasonable dividend and also to maximize the value of its shares.

Question 13.
What are the elements in the communication process in between the receiver and the sender?
Answer:
Sender → Message → Encoding → Channel → Receiver → Decoding → Feedback

Question 14.
Some products have certain unique features because of which people make special efforts in their purchase.
a) Identify the product discussed above
b) Write any two features of it.
Answer:
Speciality Products: Speciality products are those consumer goods which have certain special features because of which people make special efforts in their purchase. The buyers are willing to spend a lot of time and efforts on the purchase of such products. The demand for these goods is inelastic.

Question 15.
State any two responsibilities of a customer while purchasing and using goods and services.
Answer:

1. Be aware about various goods and services available in the market.
2. Buy only standardised goods as they provide quality assurance.

Answer any 4 questions from 16 to 20. Each carries 3 score. (Scores : 4 × 3 = 12)

Question 16.
‘Efficiency and effectiveness are the two sides of the same coin’.
Comment your views in the light of management.
Answer:
Efficiency and effectiveness are both commonly used management terms. Efficiency means whatever we produce or perform; it should be done in a perfect way. Efficiency refers to doing things in a right manner. It is defined as the output to input ratio and focuses on getting the maximum output with minimum resources. Effectiveness has a broader approach, which means the extent to which the actual results have been achieved to fulfill the desired outcome, i.e., doing accurate things. Being effective is about doing the right things, while being efficient is about doing things right.

Question 17.
Describe informal organisation and its two merits?
Answer:
Informal Organisation: Informal organisation refers to relationship between individuals in the organisation based on interest, personal attitude, emotions, likes, dislikes, etc. The network of social groups based on friendship is called informal organisation.

Advantages:

1. There can be faster spread of communication.
2. It helps to fulfil the social needs of the members and this enhances their job satisfaction.

Question 18.
“Directing function is regarded as the heart of the management process”. Give reasons to support this statement.
Answer:
Meaning: Directing referstothe process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives.

Importance of Directing:

• Directing helps to initiate action by people in the organisation towards attainment of desired objectives.
• Directing integrates employees’ efforts in the organisation in such a way that every individual effort contributes to organizational performance.
• Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership.
• Directing facilitates introduction of needed changes in the organization.

Question 19.
Explain any three rights of consumer under the consumer protection Act 1986.
Answer:

1. Right to be Heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with goods or services.
2. Right to seek Redressal: The consumer has a right to get relief in case the product or service falls short of his expectations.
3. Right to Consumer Education: The consumer must be educated about the rights and remedies available under different laws.

Question 20.
Describe the role and functions of entrepreneurs in their enterprise?
Answer:

• Dealing with public bureaucracy (concession, licenses and taxes)
• Managing the human relation within the firm.
• Managing customer and supplier relations.

Answer any 4 questions from 21 to 25. Each carries 4 scores. (Scores: 4 × 4 = 16)

Question 21.
Explain the importance of Principles of Management.
Answer:

1. Increase efficiency: The understanding of the management principles provides guidelines to the managers for handling effectively the complex problems.
2. Optimum utilization of resources: The principles of management helps in the optimum utilization of resources through division of work, delegation of authority, etc.
3. Scientific decision: Management principles help in thoughtful decision-making. Such decisions are free from bias and prejudices.
4. Meeting the changing environmental requirements: Management principles are flexible and can be modified to meet changing requirements of environment.

Question 22.
“Government of India withdrawn the old 500 and 1000 Rupee currency notes from 08.11.2016 onwards”
a) Identify the environment of the business it affected mostly.
b) State the features of this environment.
Answer:
a) Economic environment

b) Economic Environment: Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect the business enterprise.

Features of economic environment:

• It is the sum total of all economic forces prevailed in a country.
• It is related with all other environmental factors,

c) Factors of economic environment are always changing.

Question 23.
Explain briefly the various steps involved in the organising process.
Answer:

• Division of Work: The first step in the process of organising involves identifying and dividing the work that has to be done. Division of work leads to specialisation.
• Departmentation: The second step is to group similar or related jobs into larger units, called departments. The grouping of activities is known as departmentation.
• Assignment of duties: The next step is to allocate the work to various employees according to their ability and competencies.
• Establishing authority – responsibility relationship: The last step is creation of authority – responsibility relationship among the job positions. It helps in the smooth functioning of the organisation.

Question 24.
“Planning and controlling are inseparable – twins of Management”. Comment.
Answer:

1. Planning and control are interdependent and inseparable functions of management.
2. Planning is a prerequisite for controlling.
3. Planning initiates the process of management and controlling complete the process.
4. Planning is prescriptive where as controlling is evaluative.

Question 25.
A decision in financier management is concerned with the quantum of finance to be raised from longterm sources.
a) Name the type of decision referred above.
b) Explain any three factors affecting this decision.
Answer:
a) Finance Decision

b)

1. Cash flow position of the business: In case the cash flow position of a company is good enough, then it can easily use borrowed funds.
2. Fixed operating costs: If a business has high fixed operating costs, lower debt financing is better.
3. Control considerations: Issues of more equity may lead to dilution of management’s control over the business.

Answer any 3 questions from 26 to 29. Each carries 5 scores. (Scores: 3 × 5 = 15)

Question 26.
It is an activity of thinking rather than doing.
a) Identify the activity.
b) Narrate its steps.
Answer:
a) Planning

b)

• Setting Objectives: The first step in planning is setting objectives. Objectives may be set for the entire organisation and for each department. The objective must be specific and clear.
• Developing premises:Planning is based on certain assumptions about the future. These assumptions are called planning premises. Forecasting is important in developing planning premises.
• Identifying alternative courses of action: The next step in planning is to identify the alternative courses of action to achieve the objectives.
• Evaluating alternative courses: The pros and cons of various alternatives must be evaluated in terms of their expected cost and benefits.
• Selecting an alternative: After evaluating the alternatives the manager will select that alternative which gives maximum benefit at minimum cost.
• Implement the plan: Implementation of plan means putting plans into action so as to achieve the objectives of the business.
• Follow up action: Plans are to be evaluated regularly to check whether they are being implemented and activities are performed according to schedule.

Question 27.
Explain the important factors affecting the working capital requirement of a business.
Answer:

1. Nature of Business: A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2. Scale of operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3. Business Cycle: In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4. Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5. Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.

Question 28.
It is the regulatory and developmental agency of Indian Securities market. Name the agency and narrate the different functions performed by them.
Answer:
a) Securities Exchange Board of India (SEBI)
b) 1) Regulatory Functions:

• Registration of brokers and sub-brokers and other players in the market.
• Registration of Mutual Funds.
• Regulation of stock brokers, portfolio exchanges, underwriters, etc.

2) Development Functions:

• Training of intermediaries of the securities market.
• Conducting research and publishing information useful to all market participants.
• Undertaking measures to develop the capital markets by adapting a flexible approach.

3) Protective Functions:

• Prohibition of fraudulent and unfair, trade practices.
• Controlling insider trading price rigging, etc. and imposing penalties for such practices.
• Undertaking steps for investor protection.

Question 29.
Describe the functions of labelling in the marketing of a product.
Answer:
Labelling: Labelling means putting identification marks on the package. It is a simple tag attached to the product.

Functions of Labelling:

• It describes the product, its usage, cautions in use, etc. and specify its contents.
• It helps in identifying the product.
• It helps grading the products into different categories.
• It helps in promotion of products.
• It provides information required by law.

Answer any 2 questions from 30 to 32. Each carries 8 score. (Scores: 2 × 8 = 16)

Question 30.
“Money is the only factor to motivate employees”
a) Do you agree with this statement?
b) Give detailed justification.
Answer:
a) Yes, I agree.
b) Financial and Non-Financial Incentives: Incentive means all measures which are used to motivate people to improve performance. These incentives may be –
Financial Incentives: Financial incentives refer to incentives which are in direct monetary form or measurable in monetary term and serve to motivate people for better performance. Financial incentives are:

• Pay and allowances: It includes basic pay, dearness allowances and other allowances.
• Commission: Under this system, a sales person is guaranteed a minimum wage as well as commission on sales. A commission plan motivates him to work better.
• Bonus: Bonus is an incentive offered over and above the wages/salary to the employees.
• Profit Sharing: Profit sharing is meant to provide a share to employees in the profits of the organisation.
• Co-partnership/Stock option: Under these incentive schemes, employees are offered company shares at a price which is lower than market price.
• Retirement Benefits: Several retirement benefits such as provident fund, pension, and gratuity provide financial security to employees after their retirement.
• Perquisites: It includes car allowance, housing, medical aid, and education to the children, etc., over and above the salary.

(OR)

a) No, I do not agree.
b) Financial and Non-Financial Incentives: Incentive means all measures which are used to motivate people to improve performance. These incentives may be –
Non-Financial Incentives: Incentives which are not measurable in terms of money are called Non- Financial Incentives. These incentives are essential for satisfying physiological, social and emotional needs. Some of the important non- financial incentives are:

• Status: status means ranking of positions in the organisation. Physiological, social and esteem needs of an individual are satisfied by status given to their job.
• Organisational Climate: It includes individual autonomy, reward orientation, consideration to employees, etc. These characteristics influence the behaviour of individuals in the organization.
• Career Advancement Opportunity: Managers should provide opportunity to employees to improve their skills and be promoted to the higher level jobs.
• Job Enrichment: It is a method of motivating employee by making the task to be performed by him more interesting and challenging.
• Employee Recognition Programmes: It includes Congratulating the employee for good performance, Displaying on the notice board about the achievement of employee, installing award or certificate fof best performance and Distributing mementos or complimentaries, etc.
• Employee Participation: It means involving employees in decision making of the issues related to them.

Question 31.
Explain the different factors which affect the fixation of the price of a product.
Answer:
Pricing: Price may be defined as the amount of money paid by a buyer in consideration of the purchase of a product or a service.

Factors Affecting Price Determination:

• Product Cost: One of the most important factors affecting price of a product or service is its cost of production and distribution. Fixed Costs, Variable Costs and Semi-Variable Costs are to be considered for determining the price.
• Demand: The price of a product is affected by the elasticity of demand of the product. If the demand of a product is inelastic, the firm is in a better position to fix higher prices.
• Competition: Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. In case of high competition, it is desirable to keep price low.
• Government and Legal Regulations: In order to protect the interest of public against unfair practices, prices of some essential products are regulated by the government under the Essential Commodities Act., e.g. Medicines.
• Pricing Objectives: Another important factor affecting the fixation of price of a product is pricing objectives, e.g. maximisation of profit, market share, etc.

Question 32.
Micro Ltd. decided to fill 10 posts of Accountant from outside the organisation. Advice them regarding the various sources of recruitment available to them.
Answer:
Meaning: Staffing is concerned with determining the manpower requirement of enterprise and includes functions like recruitment, selection, placement, promotion, training, growth and development and performance appraisal of employees in the organization.

• Direct Recruitment: Under the direct recruitment, a notice is placed on the noticeboard of the enterprise specifying the details of the jobs available. Job seekers assemble outside the premises of the organisation on the specified date and selection is done on the spot. It is suitable for filling casual vacancies.
• Casual Callers: Many reputed business organisations keep a database of unsolicited applicants in their office. These list can be used for recruitment.
• Advertisement: Advertisement in newspapers or trade and professional journals is generally used when a wider choice is required.
• Employment Exchange: Employment exchanges keep records of job seekers and will be supplied to business concern on the basis of their requisition.
• Placement Agencies and Management Consultants: These agencies compile bio-data of a large number of candidates and recommend suitable names to their clients.
• Campus Recruitment: Business enterprises may conduct campus recruitment in educational institutions for selecting young and talented candidates.
• Recommendations of Employees: Applicants introduced by present employees, or their friends and relatives prove to be a good source of recruitment.
• Labour Contractors: Labour contractors maintain close contacts with labourers and they can provide the required number of unskilled workers at short notice.

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