T ArihanthCBSE Business Studies Class 11 Term 1 Objective Question Ban

CBSE
New Pattern
Business Studies
Class 11 (Term I)
CBSE
New Pattern
Business Studies
Class 11 (Term I)
Author
Abhishek Jain
Nidhi Jain
ARIHANT PRAKASHAN (School Division Series)

ARIHANT PRAKASHAN (School Division Series)
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CBSE
New Pattern
Contents
Chapter
Evolution and Fundamentals of Business -
Chapter
Forms of Business Organisations -
Chapter
Private, Public and Global Enterprises -
Chapter
Business Services -
Chapter
Emerging Modes of Business -
Chapter
Social Responsibility of Business -
Practice Papers - -
CBSE
New Pattern
Syllabus
Theory : Marks Time : Minutes
Units Periods Marks
PART A FOUNDATIONS OF BUSINESS
. Evolution and Fundamentals of Business
. Forms of Business Organisations
. Public, Private and Global Enterprises
. Business Services
. Emerging Modes of Business
. Social Responsibility of Business and Business Ethics
Total
Project Work Part-
PART A FOUNDATIONS OF BUSINESS

UNIT - Evolution and Fundamentals of Business
History of Trade and Commerce in India: Indigenous Banking System, Rise of
Intermediaries, Transport, Trading Communities: Merchant Corporations,
Major Trade Centers, Major Imports and Exports, Position of Indian Sub-
Continent in the World Economy.
Business meaning and characteristics
Business, profession and employment-Concept
Objectives of business
Classification of business activities - Industry and Commerce
Industry-types: primary, secondary, tertiary Meaning and subgroups
Commerce-trade: types-internal, external; wholesale and retail and
auxiliaries to trade; banking, insurance, transportation, warehousing,
communication, and advertising meaning
Business risk-Concept
CBSE
New Pattern
UNIT - Forms of Business Organizations
Sole Proprietorship-Concept, merits and limitations.
Partnership-Concept, types, merits and limitation of partnership, registration
of a partnership firm, partnership deed. Types of partners
Hindu Undivided Family Business: Concept
Cooperative Societies-Concept, types, merits, and limitations.
Company - Concept, merits and limitations; Types: Private, Public and One
Person Company Concept
Formation of company - stages, important documents to be used in the
formation of a company
UNIT - Public, Private and Global Enterprises

Public sector and private sector enterprises Concept
Forms of public sector enterprises: Departmental Undertakings, Statutory
Corporations and Government Company.
UNIT - Business Services

Business services meaning and types. Banking: Types of bank accounts -
savings, current, recurring, fixed deposit and multiple option deposit account
Banking services with particular reference to Bank Draft, Bank Overdraft, Cash
credit. E-Banking meaning, Types of digital payments
Insurance Principles. Types life, health, fire and marine insurance concept
UNIT - Emerging Modes of Business

E - business: concept, scope and benefits
UNIT - Social Responsibility of Business and Business Ethics

Concept of social responsibility
Case for social responsibility
Responsibility towards owners, investors, consumers, employees,
government and community.
Role of business in environment protection
Project Work In Business Studies Only One Project :

Guidelines As Given In Class XII Curriculum
CBSE
New Pattern
Syllabus (Rationalised)
Part A: Foundation of Business
Units TOPICS
Unit 2 : Forms of Partnership vs Limited Liability Partnership (LLP)

Business organizations Private Company vs Limited Liability Partnership (LLP)
Choice of form of business organization
Unit 3 : Public, Private Global Enterprises – Feature. Joint ventures, Public

and Global Enterprises private partnership – concept
Unit 4 : Business Services Postal Service - Mail, Registered Post, Parcel, Speed
Post, Courier - meaning
Unit 5 : Emerging Modes Business Process Outsourcing (BPO): Concept,

of Business need and scope
Unit 6 : Social Responsibility Business Ethics - Concept and Elements

of Business and Business
Ethics
CBSE
New Pattern
CBSE Circular
Acad - 51/2021, 05 July 2021
About Latest Exam Scheme Term I & II
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CBSE New Pattern ~ Business Studies XI (Term I) 03
01
Evolution & Fundamentals
of Business
Quick Revision
1. History of Trade and Commerce Trade They comprised of commission agents,
and Commerce have played a vital role in brokers and distributors, both for wholesale
making India to evolve as a major actor in the and retail goods.
economic world in ancient times. The Indian sub-continent enjoyed the fruits of
A network of roads merging into the ‘silk favourable balance of trade, where exports
route’ helped India in establishing exceeded imports with large margins and the
commercial and political contacts with Indigenous Banking System benefitted the
adjoining foreign kingdoms. Commercial manufacturers, traders and merchants with
cities like Harappa and Mohenjodaro were additional capital funds for expansion and
discovered in the third millennium B.C. development.
The civilisation had established commercial 4. Transport means to take or carry people or
connections with Mesopotamia and traded in goods from one place to another by means of
gold, silver, copper, coloured gemstones, a vehicle, aircraft or ship.
beads, pearls, sea shells, terracotta pots, etc. In the ancient times, transport by land and
2. Indigenous Banking System played a water was popular. As a result, trade was
prominent role in lending money and carried out by both land and sea.
financing domestic and foreign trade with Roads as a means of communication had
currency and letter of credit. assumed key importance in the entire process
With the development of banking, people of growth, particularly of the inland trade and
began to deposit precious metals with lending for trade over land.
individuals, functioning as bankers or seths,
and money became an instrument for 5. Trading Communities Strengthened
supplying the manufacturers with a means of Punjabi and Multani merchants handled
producing more goods. business in the northern region, while the
Bhats handled business in the states of Gujarat
Documents such as Hundi and Chitti were in and Rajasthan.
use for carrying out transactions in which
money passed from hand to hand. In urban centres, such as Ahmedabad, the
Mahajan community, collectively represented
3. Rise of Intermediaries Intermediaries by their chief called Nagar seth dominated
played a prominent role in the promotion of the business.
trade.
04 CBSE New Pattern ~ Business Studies XI (Term I)
Other urban groups included professional Despite the growing commercial sector, the
classes, such as Hakims and Vaids (Physician), 18th century India was far behind Western
Wakil (Lawyer), Pundit or Mulla (Teachers), Europe in technology, innovation and ideas.
Painters, Musicians, Calligraphers etc. The British empire began to take roots in
6. Merchant Corporations The merchant India in the mid 18th century. They used
corporations were organised on formal basis. revenues generated by the provinces under its
They framed their own rules of membership rule for purchasing Indian raw materials,
and professional code of conduct, which even spices and goods.
kings were supposed to accept and respect. As a result, the continuous inflow of bullion
Trade and industry taxes were also a major on account of foreign trade stopped. This
source of revenue. Traders had to pay octroi altered the condition of the Indian economy
duties that were levied on most of the from being an exporter of processed goods to
imported articles at varying rates. the exporter of raw materials and buyer of
7. Major Trade Centres There were all kinds manufactured goods.
of towns—port towns, manufacturing towns, 10. India Begins to Reindustrialise After
mercantile towns, the sacred centres, and Independence, the process of rebuilding the
pilgrimage towns. Their existence indicates economy started and India adopted
prosperity of merchant communities and centralised planning. Despite these efforts, the
professional classes. Following were the Indian economy could not develop at a rapid
leading trade centres in ancient India pace. Lack of capital formation, rise in
(i) Pataliputra (Known as Patna today) population, huge expenditure on defence and
(ii) Peshawar (iii) Taxila inadequate infrastructure were the major
(iv) Indraprastha (v) Mathura reasons.
(vi) Varanasi (vii) Mithila As a result, India relied heavily on borrowings
(viii) Ujjain (ix) Surat from foreign sources and finally, adapted to
(x) Kanchi (xi) Madura economic liberalisation in 1991.
(xii) Broach (xiii) Kaveripatta In present scenario, the Indian economy is
(xiv) Tamralipti one of the fastest growing economies in the
8. Major Exports and Imports Exports world. Rising incomes, savings, investment
included spices, wheat, sugar, indigo, opium, opportunities, increased domestic
sesame oil, cotton, parrot, live animals and consumption and younger population ensures
animal products, pearls, sapphires, quartz, growth for ages to come.
crystal, lapis lazuli, granites, turquoise and 11.Human Activities People undertake various
copper etc. activities to satisfy their needs. These activities
Imports included horses, animal products, may be broadly classified into two groups
Chinese silk, flax and linen, wine, gold, silver, (i) Economic activities are carried out to satisfy
tin, copper, lead, rubies, coral, glass, amber, human needs.
etc. (ii) Non-economic activities are performed for
9. Position of Indian Sub-continent in World gaining social and psychological satisfaction.
Economy Between the 1st and the 7th 12.Types of Economic Activities
centuries CE, India was estimated to have the (i) Business refers to those economic activities,
largest economy of the ancient and medieval which are connected with the production or
world, controlling about one-third of the purchase and sale of goods or supply of
world’s wealth. The country was referred to as services with the main object of earning
‘Swaranbhumi’ in the writings of many profit.
travellers.
(ii) Profession includes those activities, which (ii) Social Objectives Business is an integral
require special knowledge and skill to be part of society. Some of the social objectives
applied by individuals in their occupation. of business are
(iii) Employment refers to the occupation in (a) Supply of good quality products and
which people work for others and get services.
remuneration in return. Those who are (b) Avoidance of unfair trade practices.
employed by others are known as (c) Generation of employment opportunities.
employees. (d) Protection of environment.
13. Concept of Business The term business is 16. Role of Profit in Business
derived from the word ‘busy’. Thus, business (i) Profit is a source of income for businessman.
means being busy. (ii) It is a source for business expansion and growth.
In the words of Prof. L.R. Dicksee, “Business (iii) It is a reward for risk taking.
refers to a form of activity pursued primarily (iv) It builds up reputation of business.
with the object of earning profits for the 17. Classification of Business Activities
benefit of those on whose behalf the activity is
(i) Industry refers to the business activities
conducted.”
which are concerned with the production or
14. Characteristics of Business Activities processing of goods and materials.
(i) Business activities are considered as an (ii) Commerce refers to the business activities
economic activities. which are concerned with facilitating the
(ii) Every business either manufactures goods it exchange of goods and services.
deals in or acquires them to be further sold 18. Types of Industry
to consumers.
(i) Primary Industry includes all those
(iii) Business involves sale or exchange of goods
industries which are connected with
or services for value.
extraction and production of natural
(iv) Business involve dealings in goods or
resources and reproduction and
services on a regular basis.
development of living organisms, plants, etc.
(v) The primary objective of business is to earn It is further sub-divided into two categories
profit.
(a) Extractive industries
(vi) In business, the returns on amount invested
are not certain. (b) Genetic industries
(vii) Business involves an element of risk. (ii) Secondary Industry is concerned with
using the materials which have already been
15. Objectives of Business extracted at the primary stage to produce the
(i) Economic Objectives Business being an finished goods. It is further sub-divided into
economic activity aims to achieve the two categories
following objectives (a) Manufacturing Industries convert raw
(a) Profit Earning Every businessman seeks material into finished products. These
to earn profit by satisfying the want of can be divided into four categories
consumers. No business can survive for ●
Analytical industry
long without earning sufficient profits. ●
Synthetic industry
(b) Survival Every business aims to ensure ●
Processing industry
that it continues to survive and exist in ●
Assembling industry
the future.
(b) Construction Industries includes those
(c) Growth Business must grow and expand industries which are engaged in
its activities. Growth is measured in terms construction of buildings, roads, dams,
of sales volume, market share, number of bridges, etc.
products, etc.
(iii) Tertiary Industry is concerned with These activities are generally referred to as
providing support services to primary and services because these are in the nature of
secondary industries. Various types of service facilitating the activities relating to industry
providing industries are and trade.
●
Transport ●
Banking Transportation, communication, banking,
●
Insurance ●
Warehousing insurance, warehousing and advertising are
●
Communication ●
Advertising regarded as auxiliaries to trade.
19. Commerce consists of activities involved in 21. Business Risk refers to the possibility of
removing the hindrances of persons, place, inadequate profits or even losses due to
time, risk, finance and information in the uncertainties or unexpected events. Business
process of exchange of goods and services. enterprises face two types of risk
20. Classification of Commerce It includes two (i) Speculative risks which involve possibility
types of activities of both, gain as well as the possibility of
(i) Trade refers to sale, transfer or exchange of loss.
goods. It helps in making the produced goods (ii) Pure risks which involve only the possibility
available to ultimate consumers or users. of loss or no loss.
Trade may be classified into two broad
categories
22. Nature of Business Risk
(i) Business risk arises due to uncertainties.
(a) Internal or Home Trade is concerned
with the buying and selling of goods and (ii) It is an essential part of every business.
services within the geographical (iii) Degree of risk depends mainly upon the
boundaries of a country. It can further be nature and size of business.
classified as (iv) Profit is the reward for risk taking.
●
Wholesale trade Retail trade
●
23. Causes of Business Risk
(b) External or Foreign Trade is (i) Natural Causes such as earthquake, flood,
concerned with the exchange of goods drought etc.
and services between persons or
(ii) Human Causes such as carelessness,
organisations operating in two or more
negligence, etc of employees.
countries. It can further be classified as
●
Import trade ●
Export trade (iii) Economic Causes such as price fluctuation,
●
Entrepot trade changes in the market conditions, etc.
(ii) Auxiliaries to Trade Activities which are (iv) Other Causes such as accidents, physical
meant for assisting trade are known as and technical disabilities, political
auxiliaries to trade. disturbances, etc.
Objective Questions
Multiple Choice Questions 8. Industries like sugar mill or oil refinery
1. ……… is used for carrying out are put under which category?
transactions in which money is passed (a) Primary (b) Secondary
from hand to hand in ancient times. (c) Tertiary (d) None of these
(a) Cheques (b) Bill of exchange 9. Match the following.
(c) Hundi (d) Demand draft
Column I Column II
2. Which place was prominent for skilled
artisans to work and convert raw A. Advertising (i) Hindrance of
material into finished goods which were persons
high in demand? (ii) Hindrance of
B. Warehousing
(a) Village (b) Karkhana place
(c) Jhopari (d) Chopal
C. Trade (iii) Hindrance
3. Which type of duty was used to be of time
charged on imported articles by king in (iv) Hindrance of
D. Transport
ancient times? information
(a) Import Duty (b) Sales Tax
(c) Export Duty (d) Octroi Codes
4. There is a time gap between production A B C D A B C D
and consumption of goods, therefore (a) (i) (ii) (iii) (iv) (b) (iv) (iii) (i) (ii)
warehousing is required, which (c) (i) (iii) (iv) (ii) (d) (iv) (i) (ii) (iii)
overcomes the problem of ……… . 10. Which of the following is not a
(a) funds (b) storage characteristic of business?
(c) time (d) place (a) Production (b) Exchange or sale
5. Patliputra was popularly known as (c) Wages or salaries (d) Risk element
commercial centre for ………. . 11. No business can survive without
(a) export of stones (b) import of horses enough amount of funds. Banks are
(c) centre of learning (d) centre of textiles providing financial assistance to the
businesses to overcome one of the
6. Identify the activity which is not an
following hindrance of trade.
auxiliary to trade?
(a) Hindrance of place
(a) Banking (b) Warehousing
(b) Hindrance of time
(c) Insurance (d) Mining
(c) Hindrance of finance
7. Unorganised sector is not directly (d) Hindrance of information
controlled by the RBI. This sector
12. Mr. Naresh Batra a businessman,
includes money lenders, indigenous
incurred some financial loss due to the
bankers, pawn brokers, traders and
dishonesty of his workers. This loss is
landlords. caused due to ……… .
(a) True (b) False
(a) natural (b) financial
(c) Can’t say (d) Partially true
(c) human (d) economic
13. One of the functions of financial 20. Due to which characteristic of

intermediaries includes liability-asset business, there is always a possibility
transformation under which they accept of losses being incurred, despite the
deposits as liability and convert them into best efforts put into the business.
assets, such as loan. (a) Uncertainty of returns
(a) True (b) False (b) Production or procurement of goods
(c) Can’t say (d) Partially true and services
(c) Economic activity
14. Which of the following is not a business (d) Profit earning
activity?
(a) Production of goods 21. GMR Industries entered the airports
(b) Work in a factory for wages space in early 2000 and is today
(c) Exchange of goods counted amongst the top 5 private
(d) Transportation airport developer and operators
15. Which of the following is not an economic globally.
activity? GMR Industries presently owns and
(a) Production (b) Trading in goods operates Delhi International Airport
(c) Professional (d) Social service and Hyderabad International
16. Arnav is working as sales executive in Airport. Apart from being the largest
XYZ Limited Company. He is getting private airport company in India,
` 40,000 per month. His job is to enhance GMR Industries is the only Indian
the sale of the company. Identify which airport developer to have developed
type of economic activity is highlighted in and operated airports outside India.
the case? Identify the type of industry being
(a) Profession (b) Employment discussed in above case.
(c) Business (d) None of these (a) Primary
(b) Secondary
17. Name the occupation in which people work (c) Tertiary
for others in return for wages or salaries? (d) None of the above
(a) Employment (b) Business
(c) Profession (d) None of these 22. Why should a business earn profit?
(a) To provide return to investors.
18. Support services to industrial\business
(b) To provide funds for future growth
activities are clubbed under
(c) To increase the reputation of business
(a) commercial industries (d) All of the above
(b) secondary industries
(c) primary industries 23. ……… includes activities which are
(d) tertiary industries connected with production, purchase
19. Which of the following is not a cause of and sale of goods with the aim of
business risk? earning profit.
(a) Break down of machinery (a) Business
(b) Efficient management (b) Profession
(c) Riot (c) Employment
(d) Changing government policy (d) Job
24. Match the various types of 28. Which one of the following may not be
manufacturing industry given in a factor behind starting a business?
column I with their respective example (a) Routine workload
given in column II. (b) Size of the firm
(c) Finance
Column I Column II (d) Location of the business
A. Analytical (i) Manufacturing
Industry cement by mixing 29. Name the two broad categories of
limestone, gypsum business activities.
and coal. (a) Trade and Commerce
B. Synthetic (ii) Manufacturing (b) Trade and Industry
Industry sugar from (c) Industry and Commerce
sugarcane. (d) None of the above
C. Processing (iii) Producing petrol
and diesel out of
30. Commerce includes activities relating
Industry
crude oil. to trade and ……… to trade.
(a) supporting (b) subsidiaries
Codes (c) auxiliaries (d) None of these
A B C A B C
(a) (i) (ii) (iii) (b) (iii) (ii) (i) 31. Apoorvi, from a young age had a deep
(c) (iii) (i) (ii) (d) (ii) (i) (iii) connection with traditional Indian
textiles and craftsmanship. She fulfilled
25. Which of the following is not a true her life long dream of making a career
statement? in fashion by leaving her professional
(a) The scope of commerce is narrower than life behind and pursued a design
business. programme at the Los Angeles School
(b) Commerce includes trade and auxiliaries to of Design and Merchandising.
trade. Thus, Apoorvi got real world fashion
(c) Foreign trade is purchase and sale by the
exposure. With her love for Indian
traders of the same country.
(d) Traders serve as a link between producers
fabrics and her arsenal of fashion
and consumers. knowledge, she now intends to glorify
these national treasures with her
26. The possibilities of inadequate profits readymade store ‘Armaniya’.
or even losses due to uncertainties are ‘Armaniya’ is an initiative to
known as ……… . incorporate a perfect mix of latest
(a) Business contingencies trends, luxury fabrics, Indian traditional
(b) Business risks weaves and culture, all under one roof.
(c) Business ventures
(d) None of the above She manages the business along with
two employees i.e., salesman and a
27. Chettis community is specialised in cashier. She usually takes advice from
trading and moving from one place to her father in case of any managerial
another place, sometimes with issue. Now-a-days, Apoorvi is facing a
thousands of oxen, heavily loaded with lot of problem as trends in the field are
food grains, salt and other daily use stuff. continuously changing, this
(a) True (b) False ever-changing market along with strong
(c) Can’t say (d) Partially false competition has added to the trouble of
declining sales.
Furthermore, One day Apoorvi found 36. Following are the characteristics of
her cashier doing some embezzlement business risks. Identify the incorrect one.
of funds. Which type of risk is she (a) Loss is the reward for risk bearing.
facing in the above said case? (b) Business risks are due to uncertainties.
(a) Pure risk (b) Speculative risk (c) Risk is an essential component of every
(c) Partial risk (d) None of these business.
(d) Degree of risk depends mainly upon the
32. Match the various causes of business nature and size of business.
risk in column I with their respective
statement in column II. 37. Transfer of interest exists in the case of
(a) profession (b) employment
Column I Column II (c) business (d) None of these
A. Natural (i) These include flood, 38. The banking system in India dated back
Causes earthquake, lightning, to 1750 BC. In ancient India, there is
etc.
evidence of loans from the Vedic
B. Human (ii) These include such period. From the writing of many
Causes unexpected events,
like dishonesty of
foreign travellers during Mughal period
employees. we came to know about the use of
various instruments in the then great
C. Economic (iii) These include
uncertainties relating commercial centres. In the Mughal
Causes
to demand for goods, period, historians found the evidence of
competition, price, etc. loan deeds which were called dastawez.
There were two types of dastawez – one
Codes was payable on demand and other was
A B C A B C payable after a stipulated time. The
(a) (i) (ii) (iii) (b) (ii) (i) (iii) most important class of credit
(c) (iii) (ii) (i) (d) (ii) (iii) (i) instruments of exchange evolved in
33. Business risk generated out of India at that time. Their use was most
carelessness or negligence of employees widespread in the twelfth century, and
would emerge due to which of the has continued till today.
following cause? On the basis of the given information
(a) Natural cause (b) Human cause about the banking system in India,
(c) Economic cause (d) Other cause identify the instrument of exchange
prominent in the great ancient
34. Earning of profit is considered to be the commercial centres of India.
subsidiary objective of the business.
(a) Bills of exchange (b) Hundi
The given statement is (c) Promissory note (d) None of these
(a) True (b) False
(c) Can’t say (d) Partially true 39. Human activities are of ……… types.
(a) one (b) two (c) three (d) four
35. The maritime route linked the east and
the west by Sea and were used for the 40. Which of the following is not an
trade of spices is known as ……… . example of non-economic activity?
(a) Sea route (b) Spice route (a) Patriotism (b) Teaching
(c) Railway route (d) None of these (c) Sentiment (d) Sympathy
41. Occupation in which people work for 47. The merchant community derived
others and get salary or wages in return power and prestige from guilds. Even
is termed as business. kings were supposed to accept and
(a) True (b) False respect the rules of these guilds. The
(c) Can’t say (d) Partially true guild chief dealt directly with the king
or tax collectors and settled the market
42. Changes in market conditions, changes toll on behalf of its fellow merchants at
in price or changes in fashion and tastes a fixed sum of money.
of customers refer to which type of risk?
(a) Pure risk
The guild merchants also acted as
(b) High risk custodians of religious interests. They
(c) Low risk undertook the task of building temples
(d) Speculative risk and made donations by levying a
corporate tax on their members. The
43. Economic activities may be classified commercial activity enabled big
into business, ……… and employment. merchants to gain power in the society.
(a) profession (b) occupation Identify the guild being specified in the
(c) vocation (d) work above case.
44. Mr X started business of buying and (a) Intermediaries
selling of refrigerators. The business of (b) Zamindars
Mr X will be considered as ……… . (c) Merchant corporations
(a) commerce (b) trade (d) None of the above
(c) selling (d) transaction
48. Recognise the assembling industry out
45. Neha cooks food at home for her family of these.
but Asha cooks food and sells it to (a) Poultry, cattlefarms
others in a restaurant. Who is engaged (b) Cement, brick
in business activity? (c) Sugar, cotton
(a) Neha (b) Asha (d) Television, computer
(c) Both Neha and Asha (d) None of these
49. The industry concerned with using the
46. Match the various types of Industries material which have already been
given in column I with their respective extracted at the primary stage is
example given in column II. (a) primary industry (b) tertiary industry
(c) secondary industry (d) None of these
Column I Column II
50. The type of industry which is engaged
A. Primary (i) Manufacturing
Industry Industry
in breeding plants and animals for their
use in further reproduction is ……… .
B. Secondary (ii) Transport Industry (a) extractive industry
Industry
(b) manufacturing industry
C. Tertiary (iii) Extractive Industry (c) genetic industry
Industry (d) construction industry
Codes 51. The best example of analytical industry

A B C A B C is
(a) (iii) (i) (ii) (b) (ii) (i) (iii) (a) cement (b) computer
(c) (i) (ii) (iii) (d) (iii) (ii) (i) (c) sugar mill (d) oil refinery
52. In which form of economic activity, 57. Which of the following cannot be
code of conduct is prescribed? classified as an objective of business?
(a) Business (b) Employment (a) Investment (b) Productivity
(c) Profession (d) None of these (c) Discovery (d) Profit earning
53. Activities which are meant for assisting 58. Match the concepts in column I with
trade are known as their respective statement in column II.
(a) Trade (b) Trade assistance
(c) Auxiliaries to trade (d) None of these Column I Column II
A. Business (i) Servant
54. Rohit and Gurvinder are partners
selling electronic products across India. B. Profession (ii) Body of specialised
They import the components from their knowledge and
technique
friend Atul who operates his business
from China and assembles them in C. Employment (iii) Exchange of goods
their factory established in a rural area and services
of Jharkhand. Most of the workers in Codes
the factory are children and women. A B C A B C
They are paid very less salaries thus (a) (i) (ii) (iii) (b) (ii) (i) (iii)
owners save on labour cost. They store (c) (iii) (i) (ii) (d) (iii) (ii) (i)
their stocks in a warehouse but do not 59. Which of the following comes under
take proper safety measures against fire, economic causes of risk?
burglary etc. There was a short circuit
(a) Flood, famine
in the factory and as a result most of the
(b) Negligence of workers, stoppage of work
stock was damaged.
(c) Demand for goods, competition
On the basis of the given information (d) None of the above
about Rohit and Gurvinder, specify the
type of business activity being 60. Mechanical failures, political
performed by Atul. disturbances and other unforeseen
events are
(a) Import trade (b) Entrepot trade
(a) natural causes (b) economic causes
(c) Industry (d) Export trade
(c) human causes (d) other causes
55. Which one is considered with
production or processing of goods and 61. Monica Khanna is a jewellery designer.
materials? She started her career from the scratch
(a) Trade (b) Industry
and took advanced designing course at
(c) Commerce (d) None of these jewellry product development center.
On the completion of the course, she
56. Profit can be re-invested in business. It got a job at Gitanjali Gems. Being an
is a good source of finance for experienced jewellery designer, Monica
expansion and growth of business. Khanna focuses on maintaining the
(a) True originality and creativity of the
(b) False ornaments that are custom designed
(c) Can’t say
and developed by her.
(d) Partially true
On the basis of the given information 66. Katherine wants to start a retail
about Monica Khanna, identify the type business of fashion items but changes in
of economic activity that Monica taste and preferences of customers may
Khanna is engaged in. result in loss in such type of business.
(a) Profession (b) Business She is hesitating as she is aware of risks
(c) Employment (d) All of these which are inherent in every business.
62. The production of goods takes place in She approaches her friend Kristina who
particular locations but they are used at is the owner of a retail shop. Kristina
different places. So, the obstacle of advises her to go ahead with her idea as
place is removed by she will get profit as return for
(a) banking (b) advertising undertaking risk. She also told her that
(c) insurance (d) transport some risks in business can be insured
by taking insurance policy.
63. The process of exchanging ideas,
information by speaking, writing etc. is On the basis of the given information
termed as about Katherine, identify the main
(a) Sender
features of business risk discussed in the
(b) Medium above case.
(c) Communication (a) Uncertainties
(d) None of the above (b) Degree of risk depends upon nature of
business
64. Match the concepts in column I with (c) Size of business
their respective statement in column II. (d) None of the above
Column I Column II 67. Advertising makes it possible for produ-

cers and trades to promote the goods
A. Economic (i) No minimum and services available in the market,
Activity qualification is
necessary thus removing the hindrance of risk.
(a) True
B. Non-economic (ii) Profit earning
(b) False
Activity
(c) Can’t say
C. Business (iii) Psychological (d) Partially false
satisfaction
68. The amount of loss or damage and
Codes compensation for injury can be recovered
A B C A B C by using which auxiliary to trade?
(a) (i) (ii) (iii) (b) (ii) (iii) (i)
(a) Advertising (b) Premium
(c) (ii) (i) (iii) (d) (i) (iii) (ii)
(c) Insurance (d) Policy
65. Which auxiliary to trade bridges the 69. The obligation of business firms to
time gap between production and contribute for society and work for it
consumption? refers to
(a) Advertising
(a) social responsibility
(b) Banking
(b) human responsibility
(c) Insurance
(c) company responsibility
(d) Warehousing
(d) None of the above
70. Mr. Y told Mr. T that for business, we 75. Sunstar Steel Ltd., a leading
need physical resources. Identify the manufacturer of iron and steel decided
physical resources given below. to setup a new factory in a remote area
(a) Bank (b) Warehouse in Rajasthan, so that unemployed youth
(c) Plant and machinery (d) None of these from the rural areas could get same
opportunities as those available in the
71. The lack of knowledge about what is urban areas. This initiative has raised
going to happen in the future is the standard of living of people in rural
(a) risk (b) uncertainty areas. All children in these families are
(c) Both (a) and (b) (d) None of these getting good education and these
72. Sunstar Steel Ltd., a leading families are also actively contributing to
manufacturer of iron and steel decided nation building process through their
to setup a new factory in a remote area dedicated work. Identify the activity
in Rajasthan, so that unemployed youth discussed in the given case.
from the rural areas could get same (a) Economic (b) Non-economic
opportunities as those available in the (c) Both (a) and (b) (d) None of these
urban areas. 76. It was in the early 1970s, when Sh. M.P.
This initiative has raised the standard of Sharma started the journey towards a
living of people in rural areas. All brighter future. Then the small sweet
children in these families are getting shop has now flourished into a family
good education and these families are owned enterprise which consists of
also actively contributing to nation many outlets in Delhi. These outlets
building process through their serve sweets and cuisines spanning
dedicated work. On the basis of the Indian, Continental, Chinese, South
given information, identify the Indian and Regional foods. Mehar
objective of business being followed by Sweets follows the casual dining
the company. concept and provides a warm and
(a) Organisational hospitable ambience in the outlets.
(b) Social Today, Mehar Sweets is a food business
(c) Personal group with special ventures focused on
(d) All of the above Bengali Sweets and Multicuisine.
73. “Greater the risk involved in a business, During Diwali season this year, the
higher is the chance of profit”. This shop owner employed women and
statement is true or false. children to meeting urgent orders and
(a) True
paid there marginal and limited salary.
(b) False He prepared more Bengali Sweets then
(c) Can’t say what he had sold last year. This way,
(d) Partially false Mehar Sweets generated more than the
74. The position of an enterprise in relation expected profit. On the basis of the
to its competitors is termed as given information about Mehar Sweets,
which objective of business is not being
(a) Market survival
fulfilled?
(b) Growth
(c) Market standing (a) Organisational (b) Social
(d) None of the above (c) Personal (d) All of these
77. Vijay Plastic Pvt. Ltd. are makers of 79. Start-ups are usually small and initially
plastic toys for children; earning a huge financed and operated by a handful of
profit. A research conducted by The founders or one individual.
Indian Council of Child Welfare on the These companies offer a product or
toys shows that colours used in service that is not currently being
manufacturing toys are harmful for the offered elsewhere in the market, or that
children. The test was conducted on the founders believe that it is being
toys manufactured by the company and offered in an inferior manner. What
case was filed against Vijay Plastic Pvt. does it take to Start-ups? A brilliant
Ltd. for using sub-standard colours. idea? A great team? Money? Yes.
However, managing director assured All of those things. But more than
that the company will use standard anything what it takes, is belief. A belief
colours only after certification from the that there is significance to the problem
research laboratory and the company being addressed, and that the solution is
will expand its production capacity by something which the consumer wants.
employing labour from unprivileged It is really amazing how most large
sections of the society. On the basis of companies have such humble stories of
the given information about Vijay starting up.
Plastic Pvt. Ltd., specify the type of
business activity performed by Vijay All of them started with nothing but just
Plastic Pvt. Ltd. plain conviction. Even with such
(a) Trade (b) Commerce conviction, they fail because of an
(c) Industry (d) None of these inherent factor present in business. On
the basis of the given information about
78. Go Earth Ltd. manufactures jute bags Start-ups, Identify this inherent factor
and its factory has been set-up in a which leads to failure of business
residential area. The company has enterprise.
employed unskilled and semi-skilled
(a) Industry
workers and it pays them lower wages (b) More of import trade
on the pretext of at least providing jobs (c) Business risk
as the employment opportunities in the (d) None of the above
area is quite limited. During the
production process, lots of residu is left. 80. Mariah had done a diploma in fashion
In order to decrease cost and increase designing. She is very creative. She saw
profitability, the company dumps this a picture of a party gown in an
residu in the residential area which is international fashion magazine, having
sold after a substantial time gap. a price tag of ` 50,000. She decided to
make that gown herself with some
This practice causes lot of customisation. She calculated that for
inconvenience to the residents of that making of gown, she has spent ` 4,000.
area. Identify and explain the objective
of management which is ignored by the Her friend liked the gown very much,
company. so Mariah sold that gown to her friend
(a) Organisational for ` 8,500 and made a profit of
(b) Social ` 4,500. Due to this transaction, Mariah
(c) Personal decided to open a boutique of making
(d) All of the above gowns and selling them in the market
with nominal profit. On the basis of the 83. Assertion (A) Speculative risks involve
given information, identify the relevant both the possibility of gain, as well as,
feature of business highlighted here. the possibility of loss.
(a) Production of goods and services
Reason (R) Speculative risks arise due
(b) Profit earning
to changes in market conditions,
(c) Dealing in goods and services on regular
basis including fluctuations in demand and
(d) Uncertainty of return supply.
84. Assertion (A) Business follows only
Assertion-Reasoning MCQs one objective and expect to achieve
Direction (Q.Nos. 81 to 85) There are excellence.
two statements marked as Assertion (A) Reason (R) Objectives are needed in
and Reason (R). Read the statements and every area where performance and
choose the appropriate option from the results affect the survival and prosperity
options given below of business.
(a) Both the Assertion (A) and Reason (R) are
true and Reason (R) is the correct 85. Assertion (A) Every profession restricts
explanation of Assertion (A) the entry on the basis of examination or
(b) Both the Assertion (A) and Reason (R) are education.
true, but Reason (R) is not the correct
explanation of Assertion (A) Reason (R) A strict code of conduct
(c) Assertion (A) is true, but Reason (R) is false exists in every profession.
(d) Assertion (A) is false, but Reason (R) is true
Case Based MCQs
81. Assertion (A) Obsessed with profit, Direction Read the following case study
business managers may neglect all
and answer questions 86 to 90 on the
other responsibilities towards
basis of the same.
customers, employees, investors and
society at large. Saloni, Rupali, Mukesh and Rakesh - all the
four are members of the same family. Saloni
Reason (R) There is hardly any sizable
business enterprise whose only passed her M.B.B.S examination recently.
objective is maximisation of profit. Immediately, she got the job of a doctor in a
government hospital. Rupali has completed
82. Assertion (A) For centuries, pepper her studies in engineering and has given her
remained the reason for rivalry and interview for the post of a production
conflict between various empires and manager in Sharda Cement Limited. She is
trade powers to dominate the route for waiting for the result and is quite hopeful of
its trade. her getting selected.
Reason (R) It was in the search for an
Mukesh has his own transport company. His
alternate route to India for spices that
company has about 150 vehicles. He had to
led to the discovery of America by
Columbus in the closing years of 15th suffer a heavy loss because of the pandemic
century and also brought Vasco da Corona (Covid-19). His company is on the
Gama to the shores of Malabar in 1498. edge of getting closed.
Rakesh is working in the Research and a wide range of products to its local and to
Development Department of Balaji Services foreign customers like namkeen, sweets,
Limited. His full attention is focused on bakery items, etc. under the same brand
effecting innovation in the services provided name. For fulfilling all the legal formalities to
by his company. He knows that in order to form the company, he appointed
sustain for a long-time in market, it is professionals. Now ‘Sampat Bhujia Ltd., is a
necessary to do something new and better. renowned name in snacks industry which
offered its products at competitive prices even
86. Identify the type of work done by while offering customer services like gift
Dr. Saloni.
packaging and free home delivery to become
(a) Employment (b) Profession
a household name.
(c) Business (d) Trade
‘Sampat Bhujia’ has an efficient marketing
87. Identify the class of company in which department working on minimising business
Rupali has given her interview. risks from their competitors by making
(a) Assembling Industry effective marketing plans, related to physical
(b) Synthetic Industry distribution, promotion of the brand, effective
(c) Processing Industry pricing policies and product development. It
(d) Analytical Industry
has also worked upon managing public
88. Which business risk is Mukesh’s opinion by developing relations with the
company struggling against? masses through sponsoring cultural and
(a) Human cause (b) Economic cause sporting events, maintenance of public parks,
(c) Natural cause (d) None of these etc.
89. Identify the objective of business being 91. Name the service used by ‘Sampat
fulfilled by Balaji Services Limited. Bhujia Ltd, to remove the hindrance of
(a) Profit making information.
(b) Creation of customers (a) Transportation (b) Warehousing
(c) Providing employment (c) Promotion (d) Marketing
(d) Innovation
92. For fulfilling all the legal formalities to
90. Identify the type of work done by form the company, he appointed
Mukesh. professionals. Who among the
(a) Employment (b) Profession following is appointed as a
(c) Business (d) None of these professional?
(a) Promoter (b) Broker
Direction Read the following case study (c) Banker (d) All of these
and answer questions 91 to 95 on the
basis of the same. 93. ‘Sampat Bhujia’ has an efficient
Sampat Prasad, a small shopkeeper in Jaipur, marketing department working on
Rajasthan used to sell the famous minimising business risks from their
‘Bhujia-Sev’. It was a quick-selling product for competitors. Which type of risk is this?
local customers. His son after completing his (a) Pure risk
(b) Speculative risk
studies joined his father’s business and
(c) Financial risk
wanted to expand the business by forming a
(d) Insurable risk
company named Sampat Bhujia Ltd, offering
94. It has also worked upon managing 96. Name the type of business activity eco
public opinion by developing relations electricity is engaged in
with the masses through sponsoring (a) primary industry
cultural and sporting events, (b) secondary industry
maintenance of public parks, etc. (c) service industry
Identify the objective fulfilled by the (d) trade
company by doing so.
97. Deepti wants to open her own business
(a) Economic (b) Social
of generation of electricity through
(c) Ethical (d) Legal
garbage. Specify the category of such
95. Which type of industry is ‘Sampat type of industry.
Bhujia Ltd.’? (a) Analytical
(a) Genetic (b) Construction (b) Extractive
(c) Manufacturing (d) Extractive (c) Synthetic
(d) Processing
Direction Read the following case study
and answer the questions 96 to 100 on the 98. “Deepti an electronic engineer after
basis of the same. completing her MBA from IIM
Kolkata”. Which type of economic
Deepti an electronic engineer after
activity highlighted in above lines?
completing her MBA from IIM Kolkata,
(a) Employment
wants to open her own business of generation
(b) Profession
of electricity through garbage. She knew that (c) Business
the demand for electricity is increasing day by (d) Job
day whereas it’s generation is not sufficient.
Secondly, India is facing the problem of 99. Which type of trade can be assumed in
garbage disposal also. She shared her business above case?
idea with some of her friends and they all (a) Internal (b) External
liked it and agreed to join the business as (c) Both (a) and (b) (d) None of these
owners. After detailed investigation about the 100. In the above case, hindrance of
idea, i.e., economically viable, technically information is being removed by
feasible, Deepti gave her idea a practical following which auxiliary?
shape and got her company incorporated as (a) Transportation
‘‘Eco Electricity Ltd.’’ After incorporation, the (b) Warehousing
company issued share capital of 1 crore in the (c) Advertising
capital market. (d) Banking
ANSWERS
Multiple Choice Questions
1. (c) 2. (b) 3. (d) 4. (b) 5. (a) 6. (d) 7. (a) 8. (b) 9. (b) 10. (c)
11. (c) 12. (c) 13. (a) 14. (b) 15. (d) 16. (c) 17. (a) 18. (d) 19. (b) 20. (a)
21. (b) 22. (d) 23. (a) 24. (c) 25. (c) 26. (b) 27. (b) 28. (a) 29. (c) 30. (c)
31. (a) 32. (a) 33. (b) 34. (b) 35. (b) 36. (a) 37. (c) 38. (b) 39. (b) 40. (b)
41. (b) 42. (d) 43. (a) 44. (b) 45. (b) 46. (a) 47. (c) 48. (d) 49. (c) 50. (c)
51. (d) 52. (c) 53. (c) 54. (d) 55. (b) 56. (a) 57. (c) 58. (d) 59. (c) 60. (d)
61. (c) 62. (d) 63. (c) 64. (b) 65. (d) 66. (a) 67. (b) 68. (c) 69. (a) 70. (c)
71. (b) 72. (b) 73. (a) 74. (c) 75. (a) 76. (b) 77. (c) 78. (b) 79. (c) 80. (c)
Assertion-Reasoning MCQs
81. (a) 82. (a) 83. (a) 84. (d) 85. (b)
Case Based MCQs

86. (a) 87. (b) 88. (c) 89. (d) 90. (c) 91. (c) 92. (d) 93. (b) 94. (b) 95. (c)
96. (b) 97. (d) 98. (b) 99. (a) 100. (c)
EXPLANATIONS
8. Sugar mill and oil refinery are processing 36. Loss is the reward for risk bearing is an
industries which is a part of secondary industry. importance of business risk.
10. Wages and salaries are a part of employment, 37. In profession and employment, no one can
not a business. transfer his interest or ownership to any one
12. This is a human cause because it could have because of inseparability.
been avoided if workers behaved in an 40. Teaching is an example of an economic activity
honest way. because it includes a monetary transaction.
14. Working in a factory for wages is an 41. It is not a business, it is termed as an
employment. employment.
15. Social service is undertaken with a motive of 48. The parts of television and computers are
getting psychological satisfaction. assembled for making a final product.
16. Sale of goods and services on a regular basis 55. Industry means production of goods and
is a part of business. services for the purpose of consumption.
19. Efficient management is a gain or prestige of 57. Discovery is not related with an economic
business. perspective which makes it unfit to be an
21. GMR industry is a construction based objective of business.
industry which is a part of secondary 67. Advertising helps to remove the hindrance of
industry. information.
25. Foreign trade means purchase and sale by the 84. Businesses not only follow one objective,
traders of different countries. there are many objectives of business like
27. Banjaras are the one who are specialised in economic, social, personal.
trading and moving from one place to another. 85. Every profession has an association which
34. Earning profit is the main objective of the restricts the entry.
business.
02
Forms of Business
Organisations
Quick Revision
1. Sole Proprietorship is a form of business The business is controlled by the head of the
organisation which is owned, managed and family, who is the eldest member and is called
controlled by a single individual, who is the ‘Karta’. All members have equal ownership
recipient of all profits and bearer of all the right over the property and are called
risks. ‘Co-parceners’.
2. Features of Sole Proprietorship 6. Features of Hindu Undivided Family
(i) Ease of formation and closure Business
(ii) Unlimited liability (i) Ease of formation
(iii) Sole risk bearer and profit recipient (ii) Limited liability of members, except Karta
(iv) Full control (iii) Dominance of Karta
(v) No separate entity (iv) Continued business existence
(v) Effective control
(vi) Lack of business continuity
(vi) Minor members
3. Merits of Sole Proprietorship
7. Partnership is the relation between persons
(i) Quick decision-making
who have agreed to share profits of a business
(ii) Confidentiality of information carried on by all or any one of them acting for all.
(iii) Ease of formation and closure
8. Features of Partnership
(iv) Direct incentive
(i) It comes into existence through a legal
(v) Sense of accomplishment agreement wherein the terms and conditions
4. Limitations of Sole Proprietorship governing the relationship among the
partners, sharing of profits and losses and
(i) Limited resources
the manner of conducting the business are
(ii) Limited life of a business concern specified.
(iii) Unlimited liability (ii) The partners of the firm have unlimited
(iv) Limited managerial ability liability.
5. Hindu Undivided Family Business is one (iii) The partners bear the risks involved in
of the oldest form of business organisation running a business as a team.
wherein the business is owned and carried on (iv) The partners share amongst themselves the
by the members of the Hindu Undivided responsibility of decision-making and
Family (HUF). control of day-to-day activities.
(v) Existence of the firm is affected by death, 12.Types of Partnership

retirement, lunacy, madness and insolvency (i) On the basis of Duration
of any of its partner.
Partnership at Will formed for an
(vi) The minimum number of partners needed to indefinite period.
start a partnership firm is two. However, as
Particular Partnership formed to carry out
per Rule 10 of The Companies
a specific venture.
(Miscellaneous) Rules 2014, at present the
maximum number of members can be 50. (ii) On the Basis of Liability
(vii) There exist a mutual agency relationship General Partnership Liability of all
among the partners, i.e. each partner is both members is unlimited.
an agent and principal. Limited Partnership One partner has
unlimited liability and the liability of other
9. Merits of Partnership
partners is limited to their share in the
(i) Ease of formation and closure partnership.
(ii) Balanced decision-making
13. Partnership Deed is a written agreement
(iii) More funds between two or more persons for managing
(iv) Sharing of risks the affairs of a partnership firm. Partnership
(v) Secrecy deed includes the following aspects
10.Limitations of Partnership (i) Name of the firm
(i) Unlimited liability (ii) Nature and location of business
(ii) Limited resources (iii) Duration of business
(iii) Possibility of conflicts (iv) Investment made by each partner
(iv) Lack of continuity (v) Distribution of profit and loss
(v) Lack of public confidence (vi) Duties and obligations of the partners
11.Types of Partner (vii) Salaries and withdrawals of the partners
(i) Active Partner takes actual part in carrying (viii) Terms governing admission, retirement and
out business of the firm on behalf of other expulsion of a partner
partners. (ix) Interest on capital and interest on drawings
(ii) Sleeping Partner does not take active part (x) Procedure for dissolution of the firm
in the day-to-day activities of the business. (xi) Preparation of accounts and their auditing
(iii) Secret Partner contributes capital and takes (xii) Method of solving disputes
active part in business, but his association 14. Registration of Partnership Firm
with the firm is hidden from the general Registration means the entering of the firm’s
public. name, along with the relevant prescribed
(iv) Nominal Partner allows the use of his particulars, in the Register of firms kept with
name and goodwill for the benefit of the the Registrar of Firms. Registration provides a
firm. conclusive proof of the existence of the firm.
(v) Partner by Estoppel is a person who It is optional to get a firm registered.
accepts by his conduct that he is a partner in However, non-registration deprives the firm
the firm. from a number of benefits like
(vi) Partner by Holding Out is represented as (i) A partner of an unregistered firm cannot file
a partner and he does not deny such a suit against the firm or other partners.
impression, despite of becoming aware of (ii) The firm cannot file a suit against a third party.
that fact. (iii) The firm cannot file a case against a partner.
15. Cooperative Society is a voluntary 21. Features of Joint Stock Company

association of persons formed for mutual benefit. (i)Artificial person
Its primary motive is welfare of the members. (ii)Separate legal entity
16. Features of Cooperative Society (iii)Formation is time consuming
(i) The membership of a cooperative society is (iv) Perpetual succession
voluntary. (v) Control of Board of Directors
(ii) Registration of a cooperative society is (vi) Limited liability of the members
compulsory.
(vii) Common seal to act as official signature of
(iii) The liability of members is limited to the the company
extent of the amount contributed by them as
(viii) Risk is borne by all the shareholders
capital.
(iv) The power to take decision lies in the hands 22. Merits of Joint Stock Company
of an elected managing committee. (i) Limited liability of the members
(v) It lays emphasis on the value of mutual help (ii) Easy transferability of shares
and welfare. (iii) Perpetual existence
17. Merits of Cooperative Society (iv) Scope of expansion
(i) Equality in voting status (v) Professional management
(ii) Limited liability 23. Limitations of Joint Stock Company
(iii) Stable existence (i) Complexity in formation
(iv) Economy in operations (ii) Impersonal work environment
(v) Support from government (iii) Lack of secrecy
(vi) Ease of formation (iv) Numerous regulations
18. Limitations of Cooperative Society (v) Delay in decision-making
(i) Limited resources (vi) Oligarchic management
(ii) Inefficiency in management (vii) Conflict of interest
(iii) Lack of secrecy 24. Types of Companies
(iv) Government control (i) Private Company means a company which
(v) Differences of opinion restricts the right of members to transfer
●
19. Types of Cooperative Society its shares.

(i) Consumer’s cooperative society has a minimum of 2 and a maximum of
●
(ii) Producer’s cooperative society 200 members, excluding the present and
(iii) Marketing cooperative society past employees.
does not invite public to subscribe to its
●
(iv) Farmer’s cooperative society
share capital.
(v) Credit cooperative society
(ii) Public Company means a company which
(vi) Cooperative housing society
is not a private company. According to
20. Joint Stock Company is an artificial person Companies Act, a public company is one
created by law, having a separate legal entity, which
with perpetual succession and a common seal. has a minimum of 7 members and no
●
The companies in India are governed by the limit on maximum members.

Indian Companies Act, 2013. As per Section has no restriction on transfer of shares.
●
2(20) of Act, 2013, a company means a is not prohibited from inviting the public
●
company incorporated under this Act or any to subscribe to its share capital.
other previous company law.
(iii) One-person Company means a company (iv) Commencement of Business A public

with only one person as its member having company has to apply to the Registrar of
limited liability. It is a company Companies for the certificate of
incorporated as a private company which commencement of business along with the
has only one member. declaration that
25.Stages in Formation of a Company Steps (a) Shares payable in cash have been
involved in the formation of a company are subscribed and minimum subscription
(i) Promotion It involves conceiving a business has been received.
opportunity and taking an initiative to form (b) Every director has paid in cash the
a company after exploiting the available money due on his/her shares.
business opportunity. The person who (c) No money is payable to applicants.
performs all the tasks during the promotion (d) The above requirements have been
stage is known as promoter. complied with.
Steps in Promotion The Registrar, upon satisfaction, issues
(Functions of a Promoter) Certificate of Commencement of Business.
(a) Identification of business opportunity This certificate is also a conclusive evidence
(b) Feasibility studies (include technical, of completion of formation requirements.
financial and economic feasibility) 26. Important Documents used in
(c) Name approval Formation of a Company
(d) Fixing up signatories to the (i) Memorandum of Association This
memorandum of association document defines the objectives of the
(e) Appointment of professionals company and its relations with the
(f) Preparation of necessary documents shareholders.
(ii) Incorporation means registration of the No company can legally undertake activities
company as a body corporate under the that are not contained in its Memorandum of
Indian Companies Act, 2013 and receiving Association.
‘Certificate of Incorporation’. A private Contents of Memorandum of Association
company can start its business immediately
(a) Name Clause
after obtaining the ‘Certificate of
Incorporation’. (b) Registered Office Clause
(c) Objects Clause
Steps in Incorporation
(d) Liability Clause
(a) Filing of necessary documents
(e) Capital Clause
(b) Payment of fees
(f) Association Clause
(c) Registration
(d) Certificate of incorporation (ii) Articles of Association This document
contains the rules and regulations for the
(iii) Capital Subscription A public company
internal management of a company. These
can raise funds from the public by issuing
should not contradict anything stated in the
shares and debentures. For this, it has to
issue a prospectus and undergo various other Memorandum of Association.
formalities. (iii) Prospectus A public limited company,
Steps for Raising Funds from Public limited by shares, must issue the prospectus
(a) SEBI approval to make an appeal to the public for
subscription of its shares.
(b) Filling of prospectus
(c) Appointment of bankers, brokers, According to Companies Act, 2013, “a
underwriters prospectus is any document that invites
deposits or offers from public for the
(d) Minimum subscription
subscription or purchase of any securities of
(e) Application to stock exchange
a body corporate.”
(f) Allotment of shares
Objective Questions
Multiple Choice Questions 6. A ……… partner is one whose
1. ................is a type of business unit association with the firm is unknown to
where a person is solely responsible for the general public.
providing the capital. (a) secret
(b) active
(a) Sole proprietorship
(c) sleeping
(b) Joint hindu family business
(d) nominal
(c) Partnership
(d) Cooperative societies 7. A group of five people decided to make
2. The liability of all the co-parceners a company and hence approached IQ
except the ......... is limited to their share Business Consultants, a professional
in the business, and consequently their unit for seeking appropriate advice.
risk is well-defined and precise. This company helped them in
identifying the different business
(a) karta (b) partners
opportunities and suggested to set up a
(c) members (d) shareholders
bags manufacturing company.
3. Partnership is the relation which subsists Before converting this business
between persons who have agreed to opportunity into a real project, IQ
combine their property, labour or skill in Business Consultants made certain
some business and to share the profits arrangements for conducting technical,
between them. financial and economic surveys.
(a) True (b) False
(d) Can’t say (c) Partly true For this, they took the help of specialists
like professional accountants, lawyers
4. In a cooperative society, which of the and engineers. On the basis of the
following principle is followed? given information above, what is this
(a) One share one vote (b) One man one vote group of five people called as?
(c) No vote (d) Multiple votes (a) Underwriters
(b) Promoters
5. The documents for registration of a (c) Board of directors
company were filed on 21st March, (d) Managers
2021. The Certificate of Incorporation
was issued on 28th March, 2021. But 8. It can continue as long as the partners
the date mentioned on the Certificate of want and is terminated when any
Incorporation was 27th March, 2021. partner gives a notice of withdrawal
From which date will the company be from partnership to the firm.
considered to be in existence and the (a) Partnership at will
contracts signed will be considered valid. (b) Particular partnership
(c) General partnership
(a) 21st March, 2021 (b) 28th March, 2021
(d) Limited partnership
(c) 27th March, 2021 (d) None of these
9. Match the forms of business farming of this kind of chilli on a large

organisation with their merits. scale nor was there a secured market
for their produce. Ayushi met 15
Column I Column II like-minded women of the area and
A. Cooperative (i) Confidentiality formed an organisation for doing the
society of information business of pickle manufacturing.
B. Sole (ii) Increase loyalty Each of them contributed ` 20,000 each
proprietorship and cooperation towards its capital and were equally
C. Joint hindu (iii) Balanced responsible for its management.
family decision-making On one hand, they assured the farmers
D. Partnership (iv) Service motive to purchase their chilli and on the other
hand, the organisation, with the help of
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A B C D A B C D
for the training of the farmers.
(a) (iv) (i) (ii) (iii) (b) (i) (ii) (iii) (iv)
(c) (iv) (iii) (ii) (i) (d) (iii) (ii) (i) (iv) They also employed 15 local
unemployed graduate girls for doing
10. Find out the liability of Anita in a the various operations of pickle making.
company, who is a shareholder, holding Identify the kind of organisation that
3,000 shares of ` 10 each. She has was formed by Ayushi.
already paid ` 6 per share. (a) Sole proprietorship (b) Joint hindu family
(a) ` 10,000 (b) ` 1,20,000 (c) Partnership (d) Company
(c) ` 18,000 (d) ` 12,000
13. Producer’s cooperative society is a
11. Suppose Amit is a shareholder in a society in which small farmers join
company holding 500 shares of `10 together and pool their resources for
each on which he has already paid ` 8 cultivating their land collectively.
per share. His liability in the event of (a) True (b) False
losses or company’s failure to pay debts (c) Can’t say (d) Partially true
can be only up to
(a) ` 4,000 (b) ` 5,000 14. Match the following business
(c) ` 1,000 (d) ` 2,000 organisation with their limitations.
12. Ayushi did her post-graduation from Column I Column II
SIS University, Ukhrul. She had offers A. Partnership (i) Government control
to join some reputed firms in
metropolitan cities like Delhi and B. Joint hindu (ii) Possibility of conflicts
family
Mumbai. Instead of joining any of these
firms, she decided to do some creative C. Cooperative (iii) Limited resources
work in Ukhrul. She observed that a society
special type of chilli is grown by the D. Sole (iv) Unlimited liability of
farmers in most of the villages in proprietorship karta
Ukhrul. This chilli has a distinct flavour
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and pickle made from this chilli has a A B C D A B C D
taste which may be liked by people (a) (ii) (iv) (i) (iii) (b) (i) (ii) (iii) (iv)
from the rest of the country. But the (c) (iv) (iii) (ii) (i) (d) (ii) (i) (iv) (iii)
farmers were neither trained for
15. It is optional for a partnership firm to They analysed the idea in terms of
get registered. technical, financial and economic
(a) True (b) False feasibility. Once they found all the
(c) Can’t say (d) Partially true aspects to be satisfactory, they decided
to start a company called ‘Grocery At
16. Abhishek and Nidhi want to start a your Doorstep Private Ltd’.
shop to sell Rajasthani sweets. They did
not know how to develop the They got the name registered with the
agreement for this purpose. So, they registrar of companies. On the basis of
approached a chartered accountant the given information, identify the step
who advised them to prepare a in the formation of company
document which may stipulate the highlighted in above case.
terms and conditions of the agreement. (a) Promotion
On the basis of given information, (b) Capital subscription
(c) Incorporation
name the document about which the
(d) Commencement
chartered accountant advised Abhishek
and Nidhi. 21. The principle of ‘one man one vote’
(a) MoA (b) AoA governs the cooperative society.
(c) Partnership deed (d) Prospectus (a) True (b) False
(c) Can’t say (d) Partially false
17. ‘Return of allotment’, signed by a
director or secretary is filed with the 22. A type of business organisation where a
registrar companies within how many person is individually responsible for
days of allotment of shares? capital, bearing risk and control of
(a) 15 days (b) 8 days management is called …… .
(c) 10 days (d) 30days (a) Joint stock company
(b) Cooperative society
18. A ……….. has its objectives for the
(c) Sole proprietorship
promotion of economic interest of its
(d) Partnership
members in accordance with
cooperative principles. 23. Match the following forms the business
(a) sole proprietorship organisation with their suitable example.
(b) joint hindu family business
Column I Column II
(c) partnership
(d) cooperative society A. Sole (i) Jassus & Siya
proprietorship Book Store
19. The cooperative society is compulsorily B. Cooperative (ii) Sharma
required to be registered under the society General Store
Cooperative Societies Act, ........ .
C. Private company (iii) Idea
(a) 1912 (b) 1956
(c) 1932 (d) 1965 D. Partnership (iv) Amul Milk
Union Ltd.
20. Ashish and Nipun felt that there was an
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opportunity of business in providing a
A B C D A B C D
service of online grocery stores to
(a) (i) (ii) (iii) (iv) (b) (ii) (iv) (iii) (i)
working people residing in Bengaluru. (c) (iv) (iii) (ii) (i) (d) (ii) (iii) (iv) (i)
24. The liability of members of a 29. Anish, Anuj and Harish mutually
cooperative society is ………….. to the decided to start a partnership business
extent of their capital contribution. of manufacturing bulbs. They also
(a) born (b) shared decided that Harish’s association with
(c) unlimited (d) limited firm will not be disclosed to general
public. Here, Harish will be associated
25. Mahesh Chandra Sharma operates a with firm as a sleeping partner.
business of iron and steel for the last 30
(a) True
years. His family is joint and has a lot of
(b) False
ancestral property. All the 15 family
(c) Can’t say
members are a part of this business. He
(d) Partially true
is the eldest male member in the family,
so he heads the business. He is liable to 30. Match the following forms of business
all the creditors of the business as he is organisation with the minimum number
the decision-maker. Sharma’s grandson of members required.
was born a few days ago and he is also
a member of the business. Column I Column II
On the basis of the given information A. Public company (i) 2
about Mahesh Chandra Sharma, which B. Sole proprietorship (ii) 10
form of business is being undertaken by
Mahesh Chandra Sharma? C. Cooperative society (iii) 7
(a) Partnership (b) Company D. Partnership (iv) 1
(c) Joint hindu family (d) Cooperative society
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26. ….. society aims to fight against the big A B C D A B C D
capitalists and enhance the bargaining (a) (i) (ii) (iii) (iv) (b) (iv) (iii) (ii) (i)
power of the small producers. (c) (ii) (iv) (iii) (i) (d) (iii) (iv) (ii) (i)
(a) Consumer’s cooperative 31. The society aims to eliminate
(b) Producer’s cooperative
middlemen and improve competitive
(c) Marketing cooperative
position of its members by securing a
(d) Farmer’s cooperative
favourable market for the products.
27. ….... society’s aim is to gain the benefits (a) Consumer’s cooperative societies
of large scale farming and increase the (b) Producer’s cooperative societies
productivity. (c) Marketing cooperative societies
(a) Consumer’s cooperative (d) Farmer’s cooperative societies
(b) Producer’s cooperative
(c) Marketing cooperative
32. Mr. Gupta, in order to promote local
craftsmen of Gujarat, formed an
(d) Farmer’s cooperative
organisation where in the persons
28. The directors take all decisions on voluntarily associate themselves to
behalf of the shareholders, keeping in promote common economic interest.
mind their own benefit. Identify the
The basic purpose of this organisation
demerit stated above.
was to help these craftsmen to find
(a) Delay in decision-making market for their products. It had a
(b) Numerous regulations
managing committee that was elected
(c) Lack of secrecy
on the basis of ‘one member one vote’.
(d) Oligarchic management
On the basis of the given information, Codes

identify the form of business A B C D A B C D
organisation set up by Mr. Gupta. (a) (ii) (iii) (iv) (i) (b) (iv) (iii) (ii) (i)
(a) Partnership (b) Cooperative society (c) (iv) (ii) (i) (iii) (d) (ii) (iv) (iii) (i)
(c) Joint hindu family (d) Company 37. Rohan, Shikha and Arti decide to start
33. The members of ….. society comprise of a business which is created by law and
consumers desirous of obtaining good only law can bring it to an end. Rohan
quality products at reasonable prices. has four sons so he wants that his
business should be such in which he
(a) consumer’s cooperative
(b) producer’s cooperative
can easily shift the ownership to his
(c) marketing cooperative sons whenever he wants.
(d) farmer’s cooperative Shikha believes that her functions
34. The aim of such societies is to protect should be performed by elected
the members from the exploitation of representatives. Arti suggests the
lenders who charge high rates of owners should be responsible for the
interest on loans. Identify the society losses of the business only to a limited
referred here. extent. On the basis of the given
(a) Consumer’s cooperative societies
information, which form of business
(b) Producer’s cooperative societies does the above case indicate?
(c) Credit cooperative societies (a) Joint stock company
(d) Farmer’s cooperative societies (b) Partnership
(c) Cooperative society
35. The members of these societies consist of (d) Sole proprietorship
people who are desirous of procuring
residential accommodation at lower costs. 38. The company form of organisation is
Identify the society referred here. governed by The Companies Act, ...... .
(a) Consumer’s cooperative societies (a) 1912 (b) 2013
(b) Producer’s cooperative societies (c) 1932 (d) 1965
(c) Marketing cooperative societies 39. A company is a creation of law and
(d) Cooperative housing societies
exists independent of its members.
36. Match the following forms of business Identify the feature of company
organisation on the basis of control and highlighted in the given line.
management. (a) Formation
(b) Separate legal entity
Column I Column II
(c) Perpetual succession
A. Company (i) Owner takes all (d) Artificial person
decisions, quick
decision-making 40. Which form of organisation is suitable if
B. Cooperative (ii) Separation between direct control over operations and
society ownership and absolute decision-making power is
management required in business?
C. Joint hindu (iii) Elected representative (a) Joint stock company
family managing committee
takes decisions (b) Cooperative society
D. Sole (iv) Karta takes (d) HUF
proprietorship decisions
41. Avantika wanted to pitch in to reduce 44. Members may come and members may
the financial crisis prevailing in her go, but the company continues to exist.
house and thought of working as a Identity the feature of company
cook. She started working in three highlighted here.
different households, one Punjabi, one (a) Perpetual succession
Gujrati and one South Indian family. (b) Formation
She soon realised that all the three (c) Separate legal entity
households had different cuisine. (d) Artificial person
It was indeed a challenge for her to 45. Samarth Sharma was born in Delhi and
learn the techniques of the cuisine. All is a fashion designer. He runs his
the families greatly appreciated the hi-fashion garments business from the
time frame within which she had posh Greater Kailash market of Delhi.
mastered the local cuisine. After After running the business for eight
working for them for a year, she years, Samarth feels that he should get
decided to open a small eating joint of his business registered in a way that he
her own along with two of her friends can save himself from the threat of
by the name ‘Eat point’. unlimited liability.
They decided to share profits and losses But at the same time, he doesn’t want
equally and that each of them will be anyone else to be a part of
liable for acts performed by the other decision-making or to interfere in his
two. Soon the eatery became a hot spot business. On the basis of the given
because of the fusion platter which was information, state the form of business
being offered. organisation to be formed by Samarth.
On the basis of the given information, (a) Partnership
identify the kind of business (b) Public company
organisation which was set up by (c) Private company
Avantika and her friends. (d) One person company
(a) Partnership 46. The shareholders do not have the right
(b) Cooperative society to be involved in the day-to-day
(c) Sole proprietorship functioning of the business. Which
(d) HUF characteristic of company is highlighted
42. Contracts assigned after incorporation here?
but before commencement of business (a) Risk bearing
are provisional contracts. (b) Common seal
(a) True (b) False (c) Liability
(c) Can’t say (d) Partly true (d) Control
43. The capital of a company is divided 47. The person or group of persons who
into number of parts, each one of which perform the work of promotion and
is called form a company is/are known as
promoter(s).
(a) Dividend (b) Profit
(c) Interest (d) Share (a) True (b) False
48. Match the following. On the basis of the given information

about Ayushman, identify the form of
Column I Column II business organisation started by ‘him’.
A. Indian Partnership Act (i) 1912 (a) Partnership
B. Hindu Succession Act (ii) 1932 (b) Company
C. Indian Companies Act (iii) 1956
(d) Cooperative society
D. Cooperative (iv) 2013
Societies Act 51. The board of directors enters into an
agreement with others by indicating the
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company’s approval through a ………. .
A B C D A B C D
(a) (i) (iii) (ii) (iv) (b) (iii) (ii) (i) (iv) (a) risk bearing
(c) (i) (ii) (iii) (iv) (d) (ii) (iii) (iv) (i) (b) common seal
(c) liability
49. The members can be asked to (d) control
contribute to the loss only to the extent
of the unpaid amount of shares held by 52. The risk of loss gets spread over a large
them. Identity the merit of a company number of shareholders. Identify the
highlighted here. feature of company highlighted here.
(a) Risk bearing
(a) Risk bearing (b) Common seal
(b) Common seal
(c) Liability (d) Control
(c) Liability
50. After passing his 12th class with (d) Control
entrepreneurship as an elective subject
‘Ayushman’ started his own business.
53. Ashima is a sole proprietor. Over the
past decade, her business has grown
He invested ` 4,00,000 as the seed
from operating a neighbourhood corner
capital which was gifted to him by his
shop selling accessories such as artificial
father.
jewellery, bags, hair clips and nail
He obtained a loan of `1,00,000 from polish to a retail chain with three
his friend Mansi, who was working as branches in the city.
an assistant manager in Bank of Baroda.
She looks after the varied functions in
In the first year, he incurred a loss of
all the branches, but now she wants to
` 1,00,000 and had to pay to his
change her form of business as she also
suppliers, their outstanding bills. This
has plans to open branches
created a financial problem for him and
countrywide. She is also planning to
he had to take another loan of
collect the funds by issue of shares.
` 1,00,000 from the Bank of Baroda on
the personal guarantee of his father. On the basis of the given information,
which form of business is suitable for
He started doing hard work, lowered
Ashima for the expansion of business?
the prices and informed his customers
about the qualities of goods sold by (a) Company
(b) Partnership
him. Because of this the sales increased
(c) HUF
four times and he earned a net profit of
(d) Cooperative society
` 1,75,000 in the second year.
54. Ravi and Akshay are doing separate The CEO of Northern Traders came to
business of installing centralised air know about the conspiracy of Ranbir
conditioning units in Meerut. They and terminated him from his services.
enter into a partnership contract to On the basis of the given information,
install centralised AC unit in a hotel in identify what type of member Ranbir is
Roorkee. Identify the type of in the organisation?
partnership being highlighted in the (a) Active (b) Dormant
given case. (c) Nominal (d) Estoppel
(a) General partnership
57. Registered office clause in MoA
(b) Particular partnership
contains the legal and recognised name
(c) Partnership at will
of the company, which has been
approved by the registrar of companies.
55. These partners take actual part in (a) True (b) False
carrying out business of the firm on (c) Can’t say (d) Partially false
behalf of other partners. Identify the
partner being referred here. 58. It is a new category of company
introduced to encourage startups and
(a) Active partner
young entrepreneurs wherein a single
(b) Sleeping or dormant partner
person can incorporate the entity. It
(c) Secret partner
(d) Nominal partner
also promotes the concept of
corporatisation of the business. It is not
56. Mr. John worked as a manager in the same as a sole proprietorship firm,
‘Northern Traders’ a trading company. in a way as it has separate legal
He decided to start his own business existence with limited liability. The sole
selling similar products. After preparing member of the company has to
all details, he realised that he does not mention a nominee while registering
have sufficient funds to start business the company. Which type of company
on his own. He discussed the business is being described in the given para?
plan with his friend Kishan and both (a) Public company (b) Private company
decided to join hands as partners. (c) One person company (d) None of these
They opened a bank account in the 59. Name the form of business organisation
Indian Bank for business transactions in which the members are jointly and
and prepared all documents to register individually liable for payment of firm’s
their business. Ranbir, John’s colleague debts.
in Northern Traders also wanted to be (a) Sole proprietorship (b) Partnership
part of business but did not want to (c) Company (d) HUF
leave a secured job.
So he decided to invest money in
60. Name the type of partner who is not
really a partner but is liable to third
business but not to take active part in
parties for the repayment of the firm’s
the activities. Ranbir used his position
to inform John about the important debts.
decisions and strategies followed by (a) Sleeping (b) Active
Northern Traders. (c) Nominal (d) Secret
61. After doing her M.Com. from 63. A person is considered a ………….
‘Himachal Pradesh University of partner if, through his/her own
Shimla’, Aparna went back to her initiative, conductor behaviour, he/she
village in Kinnaur district of Himachal gives an impression to others that
Pradesh. She wanted to contribute for he/she is a partner of the firm.
the development of women of her (a) active
village, so she formed an organisation, (b) sleeping or dormant
the membership of which was open for (c) secret
all the women villagers on a voluntary (d) partner by estoppel
basis by paying ` 500 only which will
be treated as their capital. 64. Indian Coffee House is a restaurant
chain in India. It has strong presence
Aparna knew that the land of her across India with nearly 350 coffee
village was suitable for the farming of houses. These are governed by
medicinal plants. So she motivated the managing committees elected by
members of her organisation for members. These are completely owned
growing medicinal plants in their fields and managed by employees only.
under the guidance and help of the
local agricultural department. These have also received appreciation
and support from Government and
It was also decided that the public. The voting rights in these are
organisation will purchase the produce
neither tied to investment nor
of each member and sell the same to
patronage. On the basis of the given
drug manufacturing companies at a
information about Indian Coffee
very good price which was not possible
for the members individually. The main House, which form of business
objective of the organisation is to organisation is highlighted in the above
render services to its members rather case?
than to earn profit. (a) Cooperative society
(b) Company
A computer training center for young
(c) HUF
boys and girls of the village was started
(d) Partnership
under the guidance of Aparna from the
surplus of the profits. 65. A partner by………….is a person who
On the basis of the given information, though is not a partner in a firm but
identify the kind of organisation that knowingly allows himself/herself to be
was formed by her. represented as a partner in a firm.
(a) Cooperative society (b) Company (a) active partner
(c) HUF (d) Partnership (b) sleeping or dormant partner
(c) secret partner
62. A …………. is one who allows the use (d) partner by holding out
of his/her name by a firm, but does not
contribute to its capital. 66. A public company publishes and files
(a) active partner its annual accounts and reports, as it
(b) sleeping or dormant partner helps company to maintain secrecy.
(c) secret partner (a) True (b) False
(d) nominal partner (c) Can’t say (d) Partially false
67. …………. is the most important 73. ……….. defines the rules regarding
document as it defines the objectives of internal management of a company.
the company. (a) Articles of association
(a) Articles of association (b) Partnership deed
(b) Partnership deed (c) Memorandum of association
(c) Memorandum of association (d) Certificate of incorporation
(d) Incorporation certificate
74. The purpose of this study is to assess if
68. …………….. clause contains the name the raw materials and technology
of the company with which the required to pursue a particular business
company will be known, which has proposal are easily available.
already been approved by the registrar (a) Economic feasibility study
of companies. (b) Financial feasibility study
(a) Name (c) Technical feasibility study
(b) Registered office (d) None of the above
(c) Objects
75. The ………… is a conclusive evidence
(d) Liability
of the regularity of the incorporation of
69. Application for approval of name of a a company.
company is to be made to (a) articles of association
(a) SEBI (b) partnership deed
(b) Registrar of companies (c) memorandum of association
(c) GOI (d) certificate of incorporation
(d) State government in which company is 76. A company cannot come into existence
registered
without
70. ………. clause defines the purpose for (a) electing directors
which the company is formed. (b) getting certificate of incorporation
(a) Name (c) issuing a prospectus
(b) Registered office (d) All of the above
(c) Objects
77. In a joint stock company, the board of
(d) Liability
directors are elected by the ……… .
71. ………….. clause limits the liability of (a) government (b) customers
the members to the amount unpaid on (c) shareholders (d) promoter
the shares owned by them.
78. The liability of a shareholders is limited
(a) Name
to the extent of the amount …….. on
(b) Registered office
the shares held by them.
(c) Objects
(d) Liability (a) paid (b) unpaid
(c) re-paid
72. …………… clause specifies the (d) None of the above
maximum capital which the company
will be authorised to raise through the 79. At which stage in the formation of a
issue of shares. company does it interact with the SEBI?
(a) Promotion (b) Incorporation
(a) Name (b) Capital
(c) Capital subscription (d) Commencement
(c) Objects (d) Liability
80. Name the process by which the shares 84. Assertion (A) Board of directors
of a company are allowed to be traded exercise direct control over the
on a stock exchange. business.
(a) Trading on shares Reason (R) Board of directors are the
(b) Listing of shares owners of the company.
(c) Mutualisation of shares
(d) None of the above 85. Assertion (A) Personal assets of the
partners may be used to pay-off
81. ……….. cooperative society is formed business debts in case of insufficiency of
by consumers for obtaining good business assets.
quality products at reasonable prices.
Reason (R) Partners of a firm have
(a) Consumers
unlimited liability.
(b) Producers
(c) Marketing 86. Assertion (A) Credit cooperative
(d) Farmers societies are established for providing
easy credit on reasonable terms to the
Assertion-Reasoning MCQs members.
Direction (Q.Nos. 82 to 86) There are Reason (R) Credit cooperative
two statements marked as Assertion (A) societies provide loans to members out
and Reason (R). Read the statements and of the amounts collected as capital and
choose the appropriate option from the deposits from the members and charge
options given below low rates of interest.
(a) Both Assertion (A) and Reason (R) are true
and Reason (R) is the correct explanation of
Assertion (A)
Case Based MCQs
(b) Both Assertion (A) and Reason (R) are true, Direction Read the following case study
but Reason (R) is not the correct and answer questions 87 to 91 on the
explanation of Assertion (A)
basis of the same.
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true Miss Jyoti, Rishi and Vijay are running a firm
in partnership. The main objective of their
82. Assertion (A) The managing firm is to make a high quality wheat available
committee elected by members of the to the public at a cheap rate.
cooperative society is generally not
A special characteristic of this firm is that the
professionally equipped to handle the
management functions effectively. liability of all the partners is unlimited. The
second special characteristic of the firm is that
Reason (R) Cooperative society is Miss Jyoti has a capital investment in the
unable to employ experts because of
company.
their inability to pay them high salaries.
She gets the share in profit and loss as well as
83. Assertion (A) Timely decisions of sole remains active in management. But the
proprietor help him/her to take outsiders are not aware of her being a partner.
advantage of market opportunities as Mr Rishi spends more time than the other
and when they arise. partners in business.
Reason (R) Sole proprietorship can be This is the very reason that he gets ` 1 lakh
easily started or dissolved at any time extra on account of his salary per month.
with minimum legal formalities.
Vijay introduced capital in the business but They are struggling against the problem of
does not take part in the management of the procuring the raw material at a reasonable
company. The business of the firm is growing rate and selling the produced goods at a
fast. With the increase in size of the business, reasonable rate.
the number of partners is also increasing. By Some prudent producers consulted all of
now, its number has reached 20. them and established a cooperative society.
87. Identify the type of partnership This society resolved the problems of the
highlighted in the given case. producers related to buying and selling.
(a) General partnership Similarly, in Nand Nagri too, there are several
(b) Limited partnership such people which produce several goods in
(c) Partnership at will small-small quantities. Some big buyers buy
(d) Particular partnership their goods at cheap rates and sell them at
88. Which of the following types of high rates in the market. They earn huge
partners is Miss Jyoti? profits. Small producers also made a society
(a) Active partner (b) Sleeping partner in order to get rid of their clutches and
(c) Secret partner (d) Nominal partner heaved a sigh of relief.
89. Identify the agreement on the basis of In Nand Nagri itself, there live a large number
which Rishi gets his salary. of people whose financial position is poor.
(a) Partnership deed Usually, they borrow money from the rich at a
(b) Memorandum of association high rate of interest. They also formed a society
(c) Both (a) and (b) which fully succeeded in making them get rid of
(d) None of the above the clutches of the rich.
90. Which of the following type of partner 92. Which form of business organisation is
is Vijay? discussed in the above case?
(a) Active (b) Sleeping (a) Joint stock company
(c) Secret (d) Estoppel (b) Cooperative organisation
(c) Partnership
91. Which of the following types of (d) Sole proprietorship
partners is Mr. Rishi?
(a) Active partner (b) Sleeping partner 93. Identify the cooperative society
(c) Secret partner (d) Nominal partner established by the people of
Dwarkapuri.
Direction Read the following case study (a) Cooperative Credit Society
and answer questions 92 to 96 on the (b) Marketing Cooperative Society
basis of the same. (c) Producers’ Cooperative Society
Some of the people of Dwarkapuri unitedly (d) Consumers’ Cooperative Society
established a cooperative society. Its objective
94. Tell the name of the cooperative society
was to purchase the goods of daily established by the producers of the
consumption directly from the producers and industrial area located in the proximity
sell to the members. By doing so, now they of Dwarkapuri.
are getting goods of a high quality at a (a) Cooperative Credit Society
reasonable rate. In the proximity of (b) Marketing Cooperative Society
Dwarkapuri, there is an industrial area in (c) Producers’ Cooperative Society
which there are several small producers. (d) Consumers’ Cooperative Society
95. Name the cooperative society formed 97. Identify the business organisation being
by the producers of Nand Nagri in run by Rama Narayan.
order to solve their problem. (a) Partnership
(a) Cooperative Credit Society (b) One person company
(b) Marketing Cooperative Society (c) Joint hindu family business
(c) Producers’ Cooperative Society (d) Private company
(d) Consumers’ Cooperative Society
98. Identify the company being run by
96. Identify the society formed by the Mr Maya.
financially poor people of Nand Nagri. (a) Partnership
(a) Cooperative Credit Society (b) One person company
(b) Marketing Cooperative Society (c) Joint hindu family business
(c) Producers’ Cooperative Society (d) Private company
(d) Consumers’ Cooperative Society
99. Identify Mr Krishna’s company, in
Direction Read the following case study which he is selected for the post of
and answer questions 97 to 101 on the finance manager.
basis of the same. (a) Public company
(b) One person company
The whole family of Rama Narayan is busy in (c) Private company
a special kind of business. They are running a (d) None of the above
business organisation which is found only in
India. Except Rama Narayan, the liability of 100. To which class does Mr Shayam’s
company belong?
all the other members is limited. Rama has a
(a) Public company
friend whose name is Mr Maya.
(b) One person company
He is also running a special kind of business. (c) Private company
He has established a company in which he is (d) None of the above
the only shareholder. In other words, he
himself has invested the whole capital. He has 101. What term is used for Rama Narayan in
nominated his wife in the company. his business?
(a) Owner (b) Member
Mr Maya has two sons, Krishna and Shayam. (c) Karta (d) Partner
Krishna has completed his studies of M.B.A.
and Shayam, his engineering studies. Krishna Direction Read the following case study
has been selected for the post of finance and answer questions 102 to 106 on the
manager in a company. basis of the same.
A special characteristic of his company is that Madhu, Himanshu and Ashu after completing
there is a ban on the transfer of its shares. On B.E. in civil engineering have jointly taken a
the other hand, Shayam, too has been project of constructing three government.
selected for the post of production manager in school buildings in a village near Agra, within
another company. the time period of 6 months. As per the
written agreement between them, only
At the time of his interview, Shayam made a
Madhu and Ashu will contribute the capital,
special observation that out of the total take all managerial decisions and Himanshu
number of seven of his interviewers, five of will contribute capital only but will not be
them were directors of the company. actively involved in management.
102. Himanshu will contribute capital only Such a firm will not depend on any owner or
but will not be actively involved in shareholder to decide its future course of action.
management. What type of partner Irrespective of members come and go; shares
Himanshu is? are bought and sold, dividends are earned
(a) Active (b) Dormant and distributed; such a form of business
(c) Nominal (d) Secret organisation goes on. It is managed
democratically, by the representatives chosen
103. Specify the kind of partnership
from the shareholders.
mentioned above.
(a) Limited partnership 107. Identify the form of business
(b) Particular partnership organisation highlighted in the above
(c) Partnership at will case.
(d) General partnership (a) Partnership
(b) Cooperative organisation
104. Identify the document which defines
(c) Joint stock company
the terms and conditions of such
(d) Sole proprietorship
partnership.
(a) MoU 108. “This form of business organisation is
(b) MoA separate from its owners”, which
(c) Partnership deed characteristics of above mentioned
(d) Partnership registration business is highlighted in the lines?
(a) Perpetual succession
105. If the partners are not able to complete (b) Separate legal entity
the project effectively and efficiently, (c) Artificial person
then who will be held liable for the (d) Profit sharing
losses for non-completion of the
project? 109. “Irrespective of members come and go;
(a) Madhu
shares are bought and sold, dividends
(b) Himanshu are earned and distributed; such a form
(c) Both Madhu and Mayank of business organisation goes on”,
(d) All three of them which characteristics of above
mentioned business is highlighted in
106. What type of partner Madhu and Ashu the lines?
are? (a) Perpetual succession (b) Separate legal entity
(a) Active (b) Dormant (c) Artificial person (d) Profit sharing
(c) Nominal (d) Secret
110. “It is managed democratically, by the
Direction Read the following case study representatives chosen from the
and answer questions 107 to 111 on the shareholders”. ……………. are chosen
basis of the same. by the shareholders.
(a) promoters (b) underwriters
Unlike a partnership or a proprietorship firm,
(c) board of directors (d) managers
this form of business organisation is separate
from its owners. 111. Such business organisation is created by
It is a separate legal entity and no single ……… .
member is liable for such an organisation’s (a) owners (b) shareholders
activities. (c) board of directors (d) law
ANSWERS
1. (a) 2. (a) 3. (a) 4. (b) 5. (c) 6. (a) 7. (b) 8. (a) 9. (a) 10. (d)
11. (c) 12. (c) 13. (b) 14. (a) 15. (a) 16. (c) 17. (d) 18. (d) 19. (a) 20. (a)
21. (a) 22. (c) 23. (b) 24. (d) 25. (c) 26. (b) 27. (d) 28. (d) 29. (b) 30. (d)
31. (b) 32. (b) 33. (a) 34. (c) 35. (d) 36. (a) 37. (a) 38. (b) 39. (b) 40. (c)
41. (a) 42. (a) 43. (d) 44. (a) 45. (d) 46. (d) 47. (a) 48. (d) 49. (c) 50. (c)
51. (b) 52. (a) 53. (a) 54. (b) 55. (a) 56. (b) 57. (b) 58. (c) 59. (b) 60. (c)
61. (a) 62. (d) 63. (d) 64. (a) 65. (d) 66. (b) 67. (c) 68. (a) 69. (b) 70. (c)
71. (d) 72. (b) 73. (a) 74. (c) 75. (d) 76. (b) 77. (c) 78. (b) 79. (c) 80. (b)
81. (a)
82. (a) 83. (b) 84. (c) 85. (a) 86. (a)
Case Based MCQs

87. (a) 88. (c) 89. (a) 90. (b) 91. (a) 92. (b) 93. (d) 94. (c) 95. (b) 96. (a)
97. (c) 98. (b) 99. (c) 100. (a) 101. (c) 102. (b) 103. (b) 104. (c) 105. (d) 106. (a)
107. (c) 108. (b) 109. (a) 110. (c) 111. (d)
EXPLANATIONS
5. Whatever the date mentioned in the certificate These lines indicate that this business is a
is treated as the date of incorporation. partnership business.
10. Liability of Anita in a company is `12,000 44. Perpetual succession means continuity of the
(3,000 × 4). business. It’s existence is not affected by
11. Liability of Amit is ` 1,000 (500 × 2). death, insolvency, coming or going of the
members.
12. “Each of them contributed ` 20,000 each
towards its capital and were equally 53. Company is suitable for Ashima because she
responsible for its management”. These lines wants to raise funds by issue of shares.
indicate that this business is partnership firm. 56. “So he decided to invest money in business
13. Farmer’s cooperative society is a society in but not to take active part in the activities”.
which small farmers join together and pool their These lines indicate that he is a dormant
resources for cultivating their land collectively. partner.
29. In the given case, Harish will be working as a 57. Registered office clause shows name of the
secret partner. state in which the office of the company is
located.
32. Cooperative organisations are those organisations
where persons voluntarily associate themselves for
66. According to Companies Act, a public
common economic interest.
company is required to publish and file its
annual accounts and reports, due to which it
37. Joint stock company is the only form of leads to lack of secrecy.
organisation which is created by law.
83. Sole proprietor can take timely decision and
40. In sole proprietor business, only one person get benefit of opportunities because he is not
is there, who alone takes every decision and required to take permission from anyone.
control all the activities of the business.
84. Board of directors are not the actual owners
41. “They decided to share profits and losses of the company. They are appointed by
equally and that each of them will be liable shareholders.
for acts performed by the other two”.
03
Private, Public and
Global Enterprises
Quick Revision
1. Private Sector and Public Sector It is financed by the government budget and all
Enterprises Indian economy consist of activities performed by it are an integral part of
both privately owned and government government functioning.
owned business enterprises therefore, it is They have not been constituted as autonomous
known as mixed economy. The economy, or independent institutions. They act through
therefore, may be classified into two sectors the offices of the government and its employees
viz, private sector and public sector. are government employees.
Private sector includes all those 3. Features of Departmental Undertakings
enterprises which are owned and managed (i) Funding of these enterprises comes directly
by individuals or group of individuals. The from the government treasury and an annual
various forms of organisation are sole appropriation for them is made in the budgets
proprietorship, partnership, joint hindu of the government.
family, cooperative society and company. (ii) They are subject to accounting and audit controls
Public sector includes all those applicable to other government activities.
organisations which are owned and (iii) Employees of the enterprise are government
managed partly or wholly by Central or servants and they are headed by civil servants
State government or by both. The and Indian Administrative Service (IAS)
organisations may also be a part of the officers.
ministry or come into existence by a (iv) They are considered as major sub-divisions of
Special Act of the Parliament. The government departments and subject to direct
government, through these enterprises control of the ministry.
participates in the economic activities of the (v) They are accountable to ministry as their
country. management is directly under the concerned
2. Departmental Undertakings are the ministry.
oldest and most traditional form of public 4. Merits of Departmental Undertakings
enterprises. It is under the control of (i) These undertakings facilitate the Parliament to
concerned minister of the department, who exercise effective control over their operations.
is answerable to government through (ii) These ensure a high degree of public
Parliament. accountability.
(iii) Revenue earned by these enterprises goes (iii) This organisation can sue and be sued, enter
directly to the government treasury. Thus, into contracts and acquire property in its
these undertakings help in increasing the own name as it has the status of body
government revenue. corporate.
(iv) Where national security is concerned, this (iv) This organisation is independently financed.
form is most suitable as it is under the direct It obtains funds by borrowings from the
control and supervision of the concerned government or from public through
ministry. revenues generated by sale of goods and
5. Limitations of Departmental Undertakings services. It has the authority to use its
revenues.
(i) These undertakings fail to provide flexibility,
which is essential for the smooth operations (v) This organisation is not subject to the same
of business. accounting and audit procedures applicable
to government departments. It is also not
(ii) The employees or heads of the departments
concerned with the central budget of the
of such undertakings are not allowed to take
government.
independent decisions, without the approval
of the ministry concerned. This leads to (vi) The employees of such enterprises are not
delay in decision-making. government or civil servants. Their
conditions, procedures, rules and regulations
(iii) These undertakings are unable to take
of work are prescribed under the provisions
advantage of business opportunities due to
of the Act itself.
bureaucrat’s over-cautious and conservative
approval which does not allow them to take 8. Merits of Statutory Corporations
risky ventures. (i) They are free from undue interference from
(iv) There is red tapism in day-to-day operations government control. Thus, they enjoy
and no action can be taken unless it goes freedom in functioning and have operational
through the proper channels of authority. flexibility.
(v) Lot of political interference through the (ii) As they are not financed from central
ministry unduly affects the working of the budget, the government does not interfere in
public enterprises. their financial matters.
(vi) Such enterprises are insensitive to consumer (iii) Due to autonomous set up, they have their
needs and do not provide adequate services. own rules and regulations, policies and
procedures for their independent
6. Statutory Corporations are created by
functioning. But the Act may provide few
Special Act of Parliament or state legislature.
matters and issues which require approval
The act defines their powers and functions, from particular ministry.
rules and regulations governing them and its
(iv) With a combination of initiative of private
relationship with government departments.
enterprises and power of government, they
These have a separate legal existence and
prove to be of value in economic
have the capacity of acting in its own name. development.
They have the power of governance as well as
considerable amount of operational flexibility 9. Limitations of Statutory Corporations
like private enterprises. (i) Autonomy exists on papers only. In reality,
all operations and actions are subject to
7. Features of Statutory Corporations
many rules and regulations.
(i) They are formed by a Special Act of
(ii) Government and political interference has
Parliament and governed by provisions of
always been there in major decisions,
the Act. The Act defines their objects,
especially where huge funds are involved.
powers and privileges.
(iii) Government often appoints advisors to the
(ii) This organisation is wholly owned by the
Corporation Board.
state.
This affects the freedom in decision-making Central Government and an annual

and leads to disagreements which further delay report is to be presented in
the decision. Parliament/State Legislature.
(iv) Corruption is rampant in these corporations, as (vii) This organisation obtains its funds from
the officials may misuse their autonomy and government shareholding and can also
indulge in unfair practices. raise the funds from the capital market.
10.Government Company is registered and 12.Merits of Government Company
governed by the provisions of the Indian (i) This company can be established by
Companies Act. It is established for purely fulfilling the requirements of the Indian
business purpose and in true spirit competes Companies Act. No separate Act in
with companies in the private sector. Parliament is required.
According to the Section 2(45) of the Companies (ii) It is relatively free from government and
Act, 2013, a government company means any political interference. It can function
company in which not less than 51% of the freely and smoothly under the general
paid-up capital is held by the central or state vigilance of the government.
government or both and includes a company (iii) It has a separate legal entity.
which is a subsidiary of a government company. (iv) It provides goods and services to
11.Features of Government Company consumers at a reasonable price. It helps
to control market and curb unhealthy
(i) This organisation is incorporated under the
business practices.
Companies Act, 2013 or any other previous
company law. 13.Limitations of Government Company
(ii) The company can file a suit in court of law (i) Government is the only shareholder in
against any third party and be sued. some of the companies. Thus, provisions
(iii) The company can enter into a contract and can of the Companies Act do not have much
acquire property in its own name. relevance.
(iv) Management of the company is regulated by (ii) A government company evades
the provisions of the Companies Act. constitutional responsibility, as it is not
answerable directly to Parliament for
(v) Employees of the company are appointed
non-performance of duties.
according to the rules and regulations as
provided under the Memorandum and Articles (iii) The government being the sole
of Associations of the company. shareholder, the management and
administration rests in the hands of the
(vi) This organisation is exempted from the
government. The main purpose of a
accounting and audit rules and procedures.
government company, registered like
However, an auditor is appointed by the
other companies, is defeated.
CBSE New Pattern ~ Business Studies XI (Term I)
Objective Questions
Multiple Choice Questions The business decisions are thus
influenced by political consideration.
1. A public sector company is incurring State the type of enterprise come under
heavy losses and government proposes
this category.
for closing the same. Which term is
related to this statement? (a) Statutory corporation
(b) Government company
(a) Disinvestment (b) Privatisation
(c) Departmental undertaking
(c) Demonetisation (d) Socialisation
2. In your neighbourhood market, there
are shops owned by sole proprietors or 8. Departmental undertaking is a form of
big retail organisations run by a public sector enterprise which is most
company. They belong to which sector? suitable for operations where national
(a) Public (b) Private (c) Social (d) Mixed
security is concerned.
(a) True
3. In India, railway is an organisation (b) False
wholly owned and managed by the (c) Can’t say
……… . (d) Partially true
(a) reliance (b) tata
9. Which policy was launched by
(c) government (d) railway department
Government of India in 1991?
4. Indian economy is a ……… kind of (a) JPG (b) GST
economy. (c) LPG (d) MPG
(a) global (b) mixed
10. Which of the following has the power
(c) capitalist (d) socialist
of the government and the considerable
5. Which of the following is not a type of amount of operating flexibility of
public sector enterprise? private enterprises?
(a) Joint hindu family business (a) Departmental undertakings
(b) Departmental undertaking (b) Statutory corporations
(c) Statutory corporation (c) Government companies
(d) Government company (d) All of the above
6. Public sector organisations may either 11. Public sector enterprises are
be partly or wholly owned by the accountable to public through ……… .
……… government. (a) parliament (b) government
(a) state (b) central (c) public (d) media
(c) foreign (d) central or state
12. Which is the oldest and most traditional
7. Some organisations are directly form of organising public enterprises?
attached to a particular ministry of the (a) Statutory corporation
central or state government and are (b) Public company
under the direct control of the (c) Government company
concerned minister. (d) Departmental undertaking
13. An organisation is working for the 18. Statutory corporations are formed by a
purpose of public welfare as a ministry Special Act of Parliament. The Act
of government. It is financed by defines their powers, objects and
government and all its income is privileges.
deposited in government treasury. (a) True
Identify which kind of public sector (b) False
enterprise is it? (c) Can’t say
(a) Partnership (d) Partially false
(b) Departmental undertaking
(c) Sole proprietorship 19. Which government enterprise is
(d) Company registered under Indian Companies
Act, 2013?
14. As India has adopted the framework of (a) Departmental undertaking
capitalist economy, thus all business (b) Public corporation
organisations can be grouped as (c) Government company
privately owned and government (d) Partnership companies
owned organisations.
(a) True 20. The private sector consists of business
(b) False owned by ……… .
(c) Can’t say (a) state government
(d) Partially true (b) central government
(c) individuals or group of individuals
15. If a public sector enterprise is making (d) ministers
losses continuously, it was referred to
the ……… . 21. Match the ‘forms of public enterprises’
(a) GIFR (b) CIFR in column I with their respective
(c) TIFR (d) BIFR forming statement in column II.
16. Government of India establishes its Column I Column II

enterprises in backward areas. By doing A. Departmental (i) Department of
this, which objective is fulfilled? undertaking Ministry
(a) Economies of scale B. Statutory (ii) Indian
(b) Regional balance corporation Companies Act,
(c) Development of infrastructure 2013
(d) Import substitution
C. Government (iii) Special Act of the
17. Which of the following roles are played company Parliament
by the public sector in the economy? Codes
(i) Regional balance A B C A B C
(ii) Economies of scale (a) (i) (iii) (ii) (b) (ii) (iii) (i)
(c) (i) (ii) (iii) (d) (ii) (i) (iii)
(iii) Check over concentration of
economic power 22. Conversion of a PSU into a private
(iv) Import substitution sector enterprise is termed as ……… .
(v) Development of infrastructure (a) Globalisation
(a) Only (i), (ii) and (iv) (b) De-urbanisation
(b) Only (i), (iii), (iv) and (v) (c) Privatisation
(c) Only (i), (ii), (iii) and (v) (d) Liberalisation
(d) All of the above
23. Navratan Ltd. is a company engaged in 27. Grow Co. ltd., registered under the
the production and distribution of Companies Act, 2013, was started with
heavy electrical goods. Pattern of a paid-up capital of ` 10,00,000. 40% of
shareholding in the company is as this paid-up capital is in the hands of
follows private individuals and the balance is
(i) Government of India 15% held by the government of Chennai.
(ii) Government of Bihar 26% Grow company belongs to which form
(iii) Government of Assam 10% of public sector enterprises?
(a) Statutory corporation
(iv) General Public 49%
Navratan Ltd. can be classified as which (c) Departmental undertaking
of the following? (d) None of the above
(a) Small company
(b) Government company 28. Public Ltd. company comes under
(c) Private company which sector?
(d) None of the above (a) Public sector (b) Joint sector
(c) Private sector (d) None of these
24. How many industries are now reserved
for public sector? 29. Public sector can be classified into
(a) 2 (b) 3 ……… divisions.
(c) 4 (d) 17 (a) 3 (b) 4
(c) 5 (d) 6
25. Statutory corporation is subject to the
government rules and regulations in the 30. Which PSU was the first to be
matter of accounting, budgeting and privatised successfully in India?
audit as applicable to departmental (a) LJMC (b) GAIL
undertaking. (c) ONGC (d) BHEL
(a) True (b) False 31. Private enterprises are accountable to
(c) Can’t say (d) Partially true the public through the Parliament.
26. Match the ‘forms of public enterprises’ (a) True (b) False
in column I with their respective (c) Can’t say (d) Partially true
example in column II. 32. Government has given autonomy to a
Column I Column II PSU to improve its performance but
held it accountable for specified results
A. Statutory (i) Railway
corporation under an agreement. What is this
agreement called?
B. Government (ii) Reserve Bank of
(a) MoA (b) AoA
company India
(c) MoU (d) GoU
C. Departmental (iii) National
undertaking Fertilisers Ltd. 33. ……… form of PSU has the greatest
autonomy.
Codes
A B C A B C (a) Departmental undertakings
(a) (i) (ii) (iii) (b) (iii) (i) (ii) (b) Public corporation
(c) (i) (iii) (ii) (d) (ii) (iii) (i) (c) Government company
34. Statutory corporation is a company in How will you classify the Reserve Bank
which minimum 51% of the paid-up of India as a form of public sector
capital is held by the State or the enterprise?
Central Government. (a) Departmental undertaking
(a) True (b) False (b) Statutory corporations
(c) Can’t say (d) Partially true (c) Government company
35. Strategic industries like defence and
atomic power work as ……… . 39. Disinvestment of PSUs implies
(a) departmental undertaking (a) sale of equity shares to public
(b) statutory corporation (b) investing in new areas
(c) government company (c) buying shares of PSUs
(d) None of the above (d) closing down private sector enterprise
36. Airtel is a big company providing 40. Which of the following is true about
telecom services to millions of people statutory corporations?
in India. Similarly, BSNL also provides (a) Statutory corporations are public
telecom services to many people. enterprises that come into existence by a
Government of India is holding 100% Special Act of the Parliament.
of the share capital of BSNL, whereas (b) Statutory corporations are subject to the
same accounting and audit procedures as
Airtel is not under the direct control of are applicable to government departments.
government. Identify the sectors in (c) Statutory enterprises are funded directly by
which Airtel and BSNL enterprises are the government treasury.
working. (d) The employees of statutory enterprises are
(a) Public and private (b) Public civil servants.
(c) Private (d) None of these
41. Departmental undertaking evades
37. ……… type of PSUs has the highest constitutional responsibility, as it is not
degree of political interference. answerable directly to Parliament for
(a) Public corporation non-performance of duties.
(b) Departmental undertaking (a) True
(c) Government company (b) False
(d) None of the above (c) Can’t say
(d) Partially false
38. The Reserve Bank of India (RBI) was
established under a Special Act of the 42. New economic policy was passed in the
Parliament, that lays down the objects, year ……… .
powers and functions of the (a) 1985 (b) 1993
corporation. (c) 1991 (d) 1980
It was established on 1st April, 1935 in 43. The Ministry of Railways is a ministry
accordance with the provisions of the in the Government of India,
Reserve Bank of India Act, 1934. RBI responsible for the country’s rail
formulates, implements and monitors transport. The ministry is headed by
the monetary policy and its main the minister of railways, a cabinet-level
objective is to maintain price stability minister who presents the rail budget
while keeping in mind the objective of every year in Parliament.
growth.
Indian railways is financed by the (iii) Bringing down government equity

government through allocation of funds in all non-strategic PSUs to 50
in the annual general budget of percent or lower.
Parliament. How will you categorise (iv) Fully protecting the interest of
Indian Railways as a form of public workers.
sector enterprise? (a) (i), (ii) and (iii)
(a) Private company (b) (i), (iii) and (iv)
(b) Government company (c) (i), (ii) and (iv)
(c) Departmental undertaking (d) (ii), (iii) and (iv)
49. In the 2001 resolution on industrial
44. Which form of PSU has its own MoA policy, the number of industries
and AoA? exclusively reserved for the public
(a) Private company sector was brought down.
(b) Government company This meant that the private sector can
(c) Departmental undertaking now enter all areas, except these and
(d) None of the above the public sector would have to
45. …………….is financed by the compete with them. Which of the
government through allocation of funds following areas are now exclusive for
in the Annual General Meeting. the public sector?
(a) Departmental undertaking (i) Atomic energy
(b) Statutory corporation (ii) Arms
(c) Government company (iii) Communication
(d) None of the above (iv) Railways
46. Which of the following enterprises has (a) (i), (ii) and (iii)
separate legal entity? (b) (i), (iii) and (iv)
(a) Departmental undertaking (c) (i), (ii) and (iv)
(b) Statutory corporation (d) (ii), (iii) and (iv)
(c) Government company 50. The public sector enterprises are to
invest and operate in certain spheres.
47. A government company is any Which of the following is not one of
company in which the paid up capital these core sectors?
held by the government is not less than (a) Civil aviation
(a) 49 percent (b) 51 percent (b) Pharmaceuticals
(c) 50 percent (d) 25 percent (c) Power generation plants
(d) Project management consultancies
48. Which of the following statements
regarding recent government policy 51. The shares of a government company
measures towards the public sector are purchased in the name of which of
is/are true? the following?
(a) The Indian Government
(i) Restructuring and reviving
(b) The President of India
potentially viable PSUs.
(c) The Chief Minister of the state, where the
(ii) Closing down of those PSUs that head office of the company lies
cannot be revived. (d) The Managing Director of the company
52. In a survey conducted by Government 54. Steel Authority of India Limited (SAIL)
of India, it was found that many is one of the largest steel-making
farmers of the country are unable to companies in India and one of the
secure loan for their agricultural needs. Maharatnas of the country’s Central
Keeping this in mind, the government Public Sector Enterprises.
decided to form a public enterprise Vision of SAIL is to be a respected
under a Special Act of the Parliament, world class corporation and the leader
which will be free from government in Indian steel business in quality,
interference and will have financial and productivity, profitability and customer
operational autonomy. satisfaction.
Which type of public enterprise would SAIL was incorporated on 24th
you suggest to the government? January, 1973 with an authorised capital
(a) Departmental undertaking of ` 2,000 crore and was made
(b) Statutory corporation responsible for managing five
(c) Government company integrated steel plants at Bhilai, Bokaro,
(d) None of the above Durgapur, Rourkela and Bumpur, the
Alloy Steel Plant and the Salem Steel
53. The telecom services have been Plant.
recognised in the world-over as an
important tool for socio-economic As government is the majority
development for a nation and hence shareholder (with 75% stake), it
telecom infrastructure is treated as a exercises control over affairs of the
crucial factor to realise the company. Which type of public sector
socio-economic objectives in India. enterprise is highlighted here?
(a) Departmental undertaking
Accordingly, the Department of
(b) Statutory corporation
Telecom has been formulating
(c) Government company
developmental policies for the (d) None of the above
accelerated growth of the
telecommunication services. The 55. Match the following.
department comes under the Ministry
Column I Column II
of Communications and is headed by a
cabinet-level minister. A. Departmental (i) Steel authority of
undertaking India Ltd.
It is financed by the government
through allocation of funds in the B. Statutory (ii) Life Insurance
Annual General Budget of Parliament. corporation corporation
Which type of public sector enterprise C. Government (iii) Post and
highlighted here? company telegraph
(a) Departmental undertaking Codes
(b) Statutory corporation A B C A B C
(c) Government company (a) (i) (ii) (iii) (b) (iii) (ii) (i)
(d) None of the above (c) (ii) (iii) (i) (d) (i) (iii) (ii)
Assertion-Reasoning MCQs Case Based MCQs

Direction (Q.Nos. 56 to 59) There are Direction Read the following case study
two statements marked as Assertion (A) and answer questions 60 to 64 on the
and Reason (R). Read the statements and basis of the same.
choose the appropriate option from the Sahil, Sarika, Saroj and Sunder are best
options given below friends. All of them have obtained the degree
(a) Both Assertion (A) and Reason (R) are true in Commerce from the same college. But they
and Reason (R) is the correct explanation of got admission in different courses in the
Assertion (A) university. Now they are doing their jobs in
(b) Both Assertion (A) and Reason (R) are true,
different departments.
but Reason (R) is not the correct
explanation of Assertion (A) Mr Sahil got selected for the post of Inspector in
(c) Assertion (A) is true, but Reason (R) is false the Railways. His father too is working in the
(d) Assertion (A) is false, but Reason (R) is true railways on a high post. Miss Sarika got selected
in the Reserve Bank of India for the post of a
56. Assertion (A) Departmental Manager. The whole bank is most appreciative
undertaking is most suitable when
of her style of working. Miss Saroj is working on
national security is concerned.
the post of Assistant Accountant in the
Reason (R) Departmental undertaking department of accounts in ‘Hindustan Machine
is established under a Special Act of the Tools’. Her recognition in the company is as a
Parliament. specialist in accounts. Mr Sunder is successfully
57. Assertion (A) Statutory corporation is working in the H.R. Department of ‘Tata
usually independently financed. Motors’. All the four friends are fully satisfied
with their respective jobs.
Reason (R) The revenue earned by
statutory corporation is a source of 60. Identify the type of Mr Sahil’s
income for the government as it goes enterprise.
directly to the treasury. (a) Departmental undertaking
58. Assertion (A) There is a need for (c) Private sector enterprise
separate legislation of the Parliament (d) Statutory corporation
for formation of government company.
61. Identify the type of enterprise in which
Reason (R) Government company can Miss Sarika is working.
be established by fulfilling requirements (a) Departmental undertakings
of the Indian Companies Act. (b) Government company
(c) Private sector enterprise
59. Assertion (A) Departmental (d) Statutory corporation
undertakings are unable to take benefit
of business opportunities. 62. Identify the type of company in which
Miss Saroj is working.
Reason (R) Departmental undertakings
(a) Departmental undertakings
do not undertake risky ventures due to
bureaucrat’s over cautious and
conservative approach. (d) Statutory corporation
63. Identify the type of company in which 67. The board of directors of the company
Mr Sunder is working. are appointed by
(a) Departmental undertakings (a) government (b) public
(b) Government company (c) shareholders (d) None of these
(c) Public sector enterprise
(d) Statutory corporation 68. “As government is the majority
shareholder, it exercises control over
64. Identify the type of Mr Sahil’s father the affairs of the company.” Which
enterprise. feature of government company
(a) Departmental undertakings highlighted in the given lines?
(a) Formation
(b) Ownership
(d) Statutory corporation
(c) Separate legal entity
(d) Audit procedure
and answer questions 65 to 69 on the 69. Capital of such corporations comes
basis of the same. from ……… .
Bharat Heavy Electricals Limited (BHEL) (a) Board of Directors (b) Government
owned and founded by the Government of (c) RBI (d) None of these
India, is an engineering and manufacturing
company based in New Delhi, India. It was Direction Read the following case study
established in 1964. BHEL is India’s largest and answer questions 70 to 74 on the
power generation equipment manufacturer. It basis of the same.
is managed by the board of directors Indian railway is a part of railway ministry. It
nominated by the government. As government is organised, financed and controlled by
is the majority shareholder, it exercises control railway ministry.
over the affairs of the company. The finances are allocated from government
65. How will you classify BHEL as a form treasury and whatever revenue it earns is
of public sector enterprise? deposited to government treasury only.
(a) Departmental undertakings It is treated as a part of government and even
(b) Government company the appointment, recruitment and selection of
(c) Private sector enterprise employees is done in the same way as that of
(d) Statutory corporation civil servant.
66. BHEL was formed according to which 70. Name the type of public sector
Act? enterprise railway is considered as
(a) Partnership Act (a) departmental undertaking
(b) Hindu Succession Act (b) statutory corporation
(c) Companies Act (c) government company
(d) Cooperative Societies Act (d) None of the above
71. What is the status of employees 73. What does it do with its revenue?
working in railways? (a) Deposited in railway account
(a) Civil servants (b) Deposited in personal account
(b) Private employees (c) Deposited in government account
(c) Self employed (d) None of the above
74. How employees are selected in
72. How does it get its finance? railways?
(a) From personal funds (a) Procedure of private companies
(b) From government treasury (b) Through placement agencies
(c) From RBI (c) Through government
(d) From SBI (d) None of the above
ANSWERS
1. (a) 2. (b) 3. (c) 4. (b) 5. (a) 6. (d) 7. (c) 8. (a) 9. (c) 10. (b)
11. (a) 12. (d) 13. (b) 14. (b) 15. (d) 16. (c) 17. (d) 18. (a) 19. (c) 20. (c)
21. (a) 22. (c) 23. (b) 24. (b) 25. (b) 26. (d) 27. (b) 28. (c) 29. (a) 30. (a)
31. (b) 32. (c) 33. (c) 34. (b) 35. (a) 36. (a) 37. (b) 38. (b) 39. (a) 40. (a)
41. (b) 42. (c) 43. (c) 44. (b) 45. (a) 46. (b) 47. (b) 48. (c) 49. (c) 50. (b)
51. (b) 52. (b) 53. (a) 54. (c) 55. (b)
56. (c) 57. (c) 58. (d) 59. (a)
Case Based MCQs

60. (a) 61. (d) 62. (b) 63. (c) 64. (a) 65. (b) 66. (c) 67. (c) 68. (b) 69. (b)
70. (a) 71. (a) 72. (b) 73. (c) 74. (c)
EXPLANATIONS
1. Disinvestment means to shut down the loss 25. It is not subject to the government rules and
making public sector undertakings or to sell regulations as it has a separate legal entity
out to private sector. and it is created by the Parliament.
2. Sole proprietorship is a form of private sector 29. Public sector can be classified as
enterprises. departmental undertaking, statutory
3. In India, there are only 3 organisations which corporation and government company.
are wholly owned and managed by 30. It was approved for privatisation in the year
government, one of them is railway. 1997, through sale of 74% stake to a strategic
partner and was finally divested in 2000.
5. Joint hindu family business is a form of private
sector enterprises. 31. Private enterprises are not accountable to
the public through Parliament.
10. These are public corporations brought into
existence by a Special Act of Parliament. It is 34. Government company means any company
a corporate body created by legislature and is in which minimum 51% of the paid-up
a corporate person. Thus, these have the capital is held by the state or the central
power of the government and the considerable government.
amount of operating flexibility of private 41. Government company evades constitutional
enterprises. responsibility, as it is not answerable
14. In India, all business organisations can be directly to Parliament for non-performance
grouped as privately owned and government of duties.
owned organisation, as the country has 50. This is a core sector where the government
adopted the framework of mixed economy. invested through public sector enterprises.
15. A board is set up by the government to revive 56. Statutory corporation is established under a
loss making public sector undertaking. That Special Act of Parliament.
board is Board of Industrial and Financial 57. The revenue earned by departmental
Reconstruction (BIFR). undertaking is a source of income for the
23. Total shareholding of central and state government as it goes directly to the
government is 51% (15 + 26 + 10 ). government treasury.
24. There are 3 public sector undertakings atomic, 58. There is no legislation required for the
arms and railway. formation of a government company.
04
Business Services
1. Business Services are those services which (iii) Recurring Deposit Account is opened by
are used by business enterprises for the those who want to save a fixed amount
conduct of their activities. every month for a specific period of time
and earn a higher interest rate.
2. Types of Business Services
(iv) Fixed Deposit Account is an account in
(i) Banking Every business requires finance to
which a lump-sum amount is deposited for
carry on its operations which are made
a specified time period which can range
available by banks.
from fifteen days to five years.
(ii) Communication It helps to educate the
(v) Multiple Option Deposit Account is a
consumer about the availability and utility
combination of savings account and fixed
of the product.
deposit account. In this account, the
(iii) Transportation It helps to carry raw depositor gives standing instruction to the
material and finished goods from one bank to convert the balance in his savings
location to another. account into a fixed deposit, if it crosses a
(iv) Insurance In order to protect the business given threshold limit.
from damage or risk, businessman should 5. Bank Draft is a type of cheque which is
get its plant, machinery, goods, etc. insured. drawn by a bank either on its own branch or
(v) Warehousing It helps to store the goods on another bank.
from the time of their production or 6. Bank Overdraft is a temporary
purchase until they are sold or consumed.
arrangement under which a depositor is
3. Banking It plays an important role in the allowed to overdraw his current account upto
economic development of a nation. Banking an agreed limit.
is an act of depositing money in banks and
This facility is provided against the security
withdrawing it when needed.
of some assets or on the personal guarantee
In other words, a bank accepts money on of the borrower.
deposits, repayable on demand and also
7. Cash Credit is a revolving credit
earns a margin of profit by lending money.
arrangement wherein the borrower is given
4. Types of Bank Accounts loan against his current assets.
(i) Savings Account is meant for individuals A credit limit is sanctioned and amount is
who want to save some amount of money credited in his account.
out of their income.
The borrower can withdraw any amount
(ii) Current Account is opened by within his credit limit. Interest is charged
businessmen who have a number of regular only on the amount actually withdrawn by
transactions with the bank, both deposits
the borrower.
and withdrawals.
8. e-Banking is a service provided by banks (vii) Internet Banking refers to the process of
that enables a customer to conduct banking carrying out banking transactions online. It
transactions, such as checking accounts, is usually used to make online fund
paying bills etc over the internet, using a transfers via NEFT, RTGS or IMPS.
personal computer, mobile telephone or (viii) Mobile Banking is referred to the process
handheld computer. of carrying out banking transactions
e-Banking includes a range of services like through a smart phone. It’s scope is
expending with the introduction of many
(i) Electronic funds transfer (includes two mobile wallets, digital payment apps, etc.
ways, i.e. RTGS and NEFT)
(ii) Automated Teller Machine (ATM) (ix) Bharat Interface for Money (BHIM) App
is a mobile app developed by National
(iii) Electronic Data Interchange (EDI)
Payments Corporation of India (NPCI),
(iv) Credit cards, etc. based on Unified Payment Interface (UPI). It
9. Types of Digital Payments supports all Indian banks through immediate
(i) Banking Cards These cards have been the payment service infrastructure and allows the
most used digital payment modes till now. user to instantly transfer money between
Credit cards, debit cards and prepaid cards bank accounts of any two parties.
are the main types of cards with 10. Insurance is a form of contract under which
authentication of PIN and OTP for severe one party agrees, in return of a consideration,
payments. to pay an agreed sum of money to another
(ii) Unstructured Supplementary Service party to compensate the loss of goods/life.
Data (USSD) The innovative payment Thus, it can be stated that insurance is a
service *99# works on USSD channel. This contract by which the loss likely to be caused
method can be used to carry out mobile by an uncertain event is compensated by the
banking transactions without the use of insurer.
mobile internet data. This service can be
used to initiate fund transfer and to make 11. Principles of Insurance
balance queries. (i) Utmost Good Faith A contract of
(iii) Aadhaar Enabled Payment System insurance is a contract of uberrimae fidei, i.e.
(AEPS) It is a way to make financial a contract based on utmost good faith. It
transactions from the bank account with the means that the insurer and the insured
help of your biometric authentication. It should display good faith towards each
can be used for all banking transactions. other by voluntarily making full, accurate
disclosure of all facts, material to the risk
(iv) Unified Payment Interface (UPI) UPI
being proposed and the insurer should
android apps enable all bank account
make clear all the terms and conditions in
holders to send and receive money from
the insurance contract.
their smart phones. One should have a
valid bank account and a registered mobile (ii) Insurable Interest means some financial
number linked with that account, to use this interest in the subject matter of the
service. insurance contract. The insured must have
an interest in the subject matter of
(v) Mobile Wallet is a virtual wallet that stores
insurance in such a way that he stands to
payment card information in an encoded
benefit by its safety and stands to suffer loss
format to allow secure payments. It is a
if it is damaged.
convenient way to make in-store payments
and can be used at merchants listed with (iii) Indemnity means security against loss.
mobile wallet service provider. According to this principle, the insurer
undertakes to put the insured, in the event
(vi) Point of Sale (PoS) Terminals refers to
of loss, in the same position that he
those machines that are installed at all
occupied immediately before the
stores where purchases are made by
happening of the event insured against.
customers using credit/debit cards.
(iv) Proximate Cause When the loss is the Depending upon the policy, premium may
result of two or more causes, the proximate be payable either in a lump-sum or in
cause means the direct, the most dominant instalments.
and most effective cause of which the loss is
the natural consequence. The insurer is 16. Types of Health Insurance
liable to compensate for the loss only if the (i) Individual mediclaim policy
proximate cause is covered under the policy. (ii) Family floater policy
(v) Subrogation According to this principle, (iii) Unit linked health plans
after the insured is compensated for the loss 17. Fire Insurance is a contract whereby the
or damage to the property insured by insurer, in consideration of the premium and
him/her, the right of ownership of such
subject to the conditions of the contract,
property passes on to the insurer.
undertakes to compensate the insured for any
(vi) Contribution This principle suggests that it
loss that may result due to the occurrence
is the right of an insurer to call upon other
liable insurers to contribute for the loss of of fire.
payment. It implies that in case of double A claim for loss by fire must satisfy the
insurance, the insurers are to share the following two conditions
losses in proportion to the amount assured (i) There must be actual loss.
by each of them. (ii) Fire must be accidental and
12. Life Insurance is a contract under which, non-intentional.
the insurer agrees to pay a specified amount 18. Elements of Fire Insurance
on the death of the insured, or on the expiry
(i) The insured must have insurable interest
of a certain fixed period, whichever is earlier.
both at the time of insurance and at the
13. Elements of Life Insurance time of loss.
(i) The contract must have all the essentials of (ii) The contract is based on utmost good faith.
a valid contract. (iii) This contract is a contract of strict
(ii) The assured should be honest and truthful indemnity.
in giving information to the insurance (iv) The insurer is liable to compensate only
company. when fire is the proximate cause of damage
(iii) Without insurable interest, the contract of or loss.
life insurance is void.
19. Marine Insurance is an agreement whereby
(iv) It is not a contract of indemnity. the insurer undertakes to indemnify the
14. Types of Life Insurance Policies insured, in the manner and to the extent
(i) Whole life policy thereby agreed, against marine losses caused
(ii) Endowment life assurance policy by perils of the sea, such as collision of ship
(iii) Joint life policy with the rock or ship attacked by the
(iv) Annuity policy enemies, or captured by pirates and any loss
due to the actions of the captain and crew of
(v) Children’s endowment policy
the ship.
15. Health Insurance is a contract between an
20. Types of Marine Insurance
insurer and an individual or group, in which
the insurer agrees to provide expenses (i) Ship or hull insurance
related to treatment and hospitalisation of (ii) Cargo insurance
specified diseases at an agreed-upon price. (iii) Freight insurance
Objective Questions
Multiple Choice Questions 7. Customers are required to deposit a
1. …… is a temporary arrangement under specified sum of money every month in
which a dpositor is allowed to draw by his account in case of ……, which is
cheque more than the amount available also known as cumulative time deposit
to his credit upto a specified limit. account.
(a) Cash credit (b) Term loan (a) savings account
(c) Bank overdraft (d) Consumer credit (b) current account
(c) recurring deposit account
2. There are services which are (d) joint account
experienced differently by different
customers. These kind of services 8. Mobile banking refers to the process of
depend upon customers preferences carrying out banking transactions
and demands and are known as online.
(a) Personal services (a) True (b) False
(b) Social services (c) Can’t say (d) Partially true
(c) Business services 9. Mr Kabir Khan desires to have two
(d) Financial services benefits from his bank account, first, to
3. The commission charged on banker’s earn higher interest on balance and
cheque is more than that on a bank draft. second, to face minimum risk of
(a) True (b) False
dishonouring a cheque. Which type of
(c) Can’t say (d) Partially true account should be opened by him in
Indus Bank?
4. Which of the following services (a) Current account
provides protection from risk? (b) Saving account
(a) Banking (b) Transportation (c) Multiple option account
(c) Insurance (d) Recurring account
(d) Postal and Telecom
10. A countrywide system through which
5. A company has undertaken a fire person can electronically transfer from
insurnace policy for ` 10 lakh. After two one bank branch to another person
months, due to fire it incurred a loss of having an account with the other bank
` 3 lakh. How much money will the branch in the country is known as
company get as compensation? (a) Pay order (b) RTGS
(a) ` 10 lakh (b) ` 3 lakh (c) Bank draft (d) NEFT
(c) ` 5 lakh (d) ` 2 lakh
11. ……… account is meant for people
6. The amount deposited in a savings who wish to save a part of their income
bank account of a person is an asset for to safeguard the future and can interest
the depositor, while on the other hand on it.
it is a liability for the bank. Based on its (a) Current account
nature it can be classified as a (b) Savings account
(a) time liability (b) demand liability (c) Recurring account
(c) long-term liability (d) None of these (d) Multiple option account
12. Match the following. 16. ……. is a contract of insurance, in which

an insurer enters into a contract with
Column I Column II
another insurer to insure the whole or a
A. Insurable (i) Insurer is liable for the part of risk covered by the first insurer.
interest loss only when such (a) Double insurance (b) Hull insurance
loss is caused by the
perils, which are stated (c) Reinsurance (d) Burglary insurance
in the policy
17. Mr. Virat, a businessmen, has a current
B. Proximate (ii) A contract found on account in SBI, his current account
cause utmost good faith shows balance of just ` 40,000, while he
C. Utmost good (iii) Insured must have urgently needs ` 2,50,000 to pay off one
faith economic interest at of his creditors.
the time of enetering
into an insurance He approaches SBI to allow him to
contract withdraw ` 2,50,000, using the facility
extended by the bank to him due to his
Codes creditworthiness. The bank agrees to it.
A B C A B C Identify the facility which has been
(a) (i) (ii) (iii) (b) (i) (iii) (ii) provided by SBI to Virat.
(c) (iii) (i) (ii) (d) (ii) (i) (iii)
(a) Borrowing (b) Bank overdraft
13. When a property is insured by more (c) Banker’s cheque (d) None of these
than one insurance (i.e. in case of
18. A contract by which the insurer, in
multiple insurance), the insurers are to
consideration of a certain amount
share losses in what proportion?
known as premium, undertakes to pay
(a) Ratio of premiums received to a person or his heirs a certain
(b) Ratio of duration of insurance
amount of money on his death or on
(c) Ratio of amount insured
attaining a certain age is known as
(d) Equal ratio
(a) General insurance (b) Life insurance
14. When the loss is the result of two or (c) Special insurance (d) Burglary insurance
more causes, which of the following
terms refers to the direct cause of
19. If the cargo does not reach its
destination due to damage or destruction
which the loss is the natural
in the transit, the shipping company is
consequence?
not paid freight charges. To overcome
(a) Subrogation
losses suffered by such circumstances,
(b) Proximate
shipping companies opt for
(c) Mitigation
(d) Indemnity (a) ship insurance (b) hull insurance
(c) cargo insurance (d) freight insurance
15. In case of fire insurance policy, the
insurer is liable to compensate for the 20. It is a type of payment instrument in
loss only when the proximate cause of which money is loaded in advance to
loss is fire. make purchases. Identify which type of
digital payment method is described
(a) True
above?
(b) False
(c) Can’t say (a) Credit card (b) Debit card
(d) Partially true (c) Prepaid card (d) None of these
21. In recurring deposit account, the 25. Which of the following is not applicable
depositor enjoys the liquidity of saving in life insurance contract?
account and interest rate of fixed (a) Conditional contract
deposit account. (b) Unilateral contract
(a) True (b) False (c) Indemnity contract
(c) Can’t say (d) Partially true (d) None of the above
22. Abhinav took a fire insurance policy for 26. As per the basic principle of the fire
his property worth ` 5,00,000 with two insurance policy, it is the primary duty
insurers: ICICI Lombard General of the insured to take reasonable steps
Insurance Co. Ltd. for ` 4,00,000 and to prevent fire from occuring and to
Bajaj Allianz General Insurance minimise the losses or damage to the
Co. Ltd. for ` 20,000. insured property.
An electric short circuit in his property It is the duty of the insured to behave
caused fire and it resulted in a loss of with great prudence and not to be
` 1,50,000. careless just because he has an
insurance cover. This principle is
He filed a claim for ` 100,000 against
known as the principle of
each of the two insurance companies.
(a) indemnity (b) proximate cause
Which principle of insurnace has been
(c) subrogation (d) mitigation
highlighted in given case?
(a) Mitigation (b) Proximate cause 27. The minimum period of deposit in case
(c) Contribution (d) Indemnity of recurring deposit account is ………
and maximum is ……… .
23. Manav gets the information about the
rate of interest on fixed deposit by a (a) 12 months, 2 years (b) 6 months, 10 years
(c) 4 months, 1 year (d) 8 months, 3 years
telephonic conversation with an officer
of a bank. Name this type of banking. 28. Joint life policy is taken up by a person
(a) Internet banking (b) e-banking for his/her children to meet the
(c) Tele-banking (d) None of these expenses of their education or
marriage.
24. Hari took a fire insurance policy of ` 20
(a) True (b) False
lakh for his factory at the annual
premium of ` 24,000. In order to avoid
premium more than this amount, he did 29. A electronic fund transfer system under
not disclose that highly explosive which transfer of funds take place from
chemicals are being manufactured in one branch of bank to another branch on
his factory. real time and on grow basis is know as
Due to a fire, his factory gets severly (a) NEFT (b) EFT
damaged.The insurance company (c) RTGS (d) ATM
refused to make the payment for claim 30. A cheque which is deposited only to the
as it became aware about the highly payee’s bank account is known as
explosive chemicals. Identify the ……… .
principle of insurnace violated by Hari.
(a) Bearers cheque (b) Demand draft
(a) Insurable interest (b) Utmost good faith
(c) Crossed cheque (d) None of these
(c) Indemnity (d) Subrogation
31. Deepak has taken fire insurnace policy 36. Match the following.
of ` 9,00,000 for his factory. Due to fire, Column I Column II
he suffered a loss of ` 6,00,000. He
A. Subrogation (i) It is the duty of the
claimed the loss from the insurance insured to take
company and he gets the compensation reasonable steps to
within a month. minimise the loss to
the insured property.
Goods that were lost by fire were
scrapped for ` 70,000. Deepak wants to B. Contribution (ii) Insurer gets all the
rights against the third
keep this money with himself, while the party with respect to
insurnace company claims that ` 70,000 subject matter insured,
should be handed over to the company. after compensating the
loss.
Identify the principle of insurance
which is applicable is the given case. C. Mitigation (iii) This principle ensures
equitable distribution
(a) Utmost good faith (b) Insurable interest of losses between
(c) Subrogation (d) None of these insurers.
32. Which of the following is not a function Codes

of insurance? A B C A B C
(a) Risk sharing (a) (i) (ii) (iii) (b) (iii) (ii) (i)
(b) Assist in capital formation (c) (i) (iii) (ii) (d) (ii) (iii) (i)
(c) Lending of funds
37. The purpose of principle of ……… is to
put the insured, in the event of loss, in
33. Banks generally put certain restrictions the same position that he occupied
on number of withdrawals from current immediately before the happening of
account. the event.
(a) True (b) False (a) subrogation (b) indemnity
(c) Can’t say (d) Partially true (c) mitigation (d) None of these
34. Rakesh took the life insurance policy of 38. When a customer makes a payment
his wife. After one year, the couple got using the credit card, his account
divorced and after two years, his wife balance is automatically reduced.
met with an accident and died on the (a) True (b) False
spot. Rakesh entitled to get (c) Can’t say (d) Partially true
compensation from the insurance
company, if Rakesh was regularly
39. When a ship is insured against any type
of danger, it is know as
paying the premium amount?
(a) Life insurance
(a) Yes (b) No
(b) Fire insurance
(c) Can’t say (d) None of these
(c) Hull insurance
35. In case of cash credits, loan amount is (d) None of the above
credited in the borrower’s account and 40. In case of which card, a holder can
interest is charged on the total amount spend money only upto the balance in
credited. his account?
(a) True (b) False (a) Credit card (b) Debit card
(c) Can’t say (d) Partially true (c) Both (a) and (b) (d) None of these
41. Match the following. 45. The main objective of this account is to
enable the businessman to conduct its
Column I Column II business transactions smoothly.
A. Current (i) The rate of interest (a) Multiple opiton deposit account
account payable is very (b) Savings account
nominal.
(c) Recurring deposit account
B. Savings account (ii) It is also known as (d) Current account
term depsit account.
C. Fixed deposit (iii) Banks do not pay
46. Kavya took a marine policy worth
account any interest on these ` 2,00,000 to protect her goods from the
accounts. perils of sea. On the way, the goods
were spoiled by rats. She suffered a loss
Codes of ` 100,000. She filed a claim for loss
A B C A B C against the insurance company.
(a) (i) (ii) (iii) (b) (ii) (i) (iii)
(c) (iii) (i) (ii) (d) (i) (iii) (ii) Which principal of insurance is
highlighted in the given case?
42. This health insurance policy combines (a) Subrogation (b) Mitigation
health insurance with investment. The (c) Proximate cause (d) Contribution
insurer pays back a specified amount at
the end of the period. Identify which 47. Name the banking service in which the
policy is this? customer can conduct banking activities
(a) Individual mediclaim policy like managing savings, checking
(b) Family floater policy accounts, applying for loans etc over
(c) Unit linked health plans the internet.
(d) None of the above (a) Mobile banking (b) e-banking
(c) RTGS (d) None of these
43. State which of the following statements
is false? 48. Mr Ankit has a current account in State
(a) Recurring deposit account is a time deposit Bank of India, he is having many
account transactions of funds transfer every day.
(b) Number of transactions every month is One day he asked bank manager to
limited in saving bank account
transfer ` 40,000 to a client in Mumbai
(c) A current account can be opened with an
initial deposit of ` 5,000 immediately. The bank manager
(d) Fixed deposit account is demand deposit replied to transfer the fund immediately
account minimum amount should be ` 2,00,000.
Identify the concept discussed in the
44. ‘‘It is another type of digital payment above case.
method, in which ‘*99#’ can be used to
(a) NEFT (b) Digital cash
carry out mobile transactions.’’ (c) RTGS (d) None of these
Which type of digital payment is
described above? 49. Which of the following is the full form
of ATM?
(a) Unified Payment Interface (UPI)
(a) Automatic Take Money
(b) Unstructured Supplementary Service Data
(USSD) (b) Any Time Money
(c) Aadhaar Enabled Payment System (AEPS) (c) Automated Teller Machine
(d) None of the above (d) None of the above
50. Savings account is suitable for 56. Ankit’s warehouse was covered by a
mobilisation of savings of people. fire insurance policy of ` 10,00,000, two
(a) True (b) False years back, his warehouse caught fire.
(c) Can’t say (d) Partially true Ankit, immediately called up the
nearest fire station and started
51. Under …… insurance, subject matter is removing the goods from warehouse in
ship, cargo or freight.
order to save them from fire.
(a) life (b) marine
(c) reinsurance (d) None of these He took all reasonable steps to
minimise the loss or damage. As a
52. The validity period of a demand draft is result, the actual loss by fire to him was
(a) one month (b) two months ` 3,00,000 which could have gone up to
(c) three months (d) six months ` 7,00,000, if he had not acted as a
prudent person.
53. An arrangement by which a bank
allows its customer to borrow money After scrutiny of the loss, the insurance
upto the specified limit. company handed over the cheque of
(a) Cash credits (b) Pass book ` 3,00,000 to Ankit.
(c) Cash book (d) Account page Identify and state the principle of
54. Match the following. insurance, which was followed by Ankit
in the given case?
Column I Column II (a) Subrogation
A. Bank (i) Bank grant loans to (b) Mitigation
overdraft purchase houses, cars, (c) Contribution
computers etc. (d) Proximate cause
B. Cash credits (ii) It is a temporary
arrangement under 57. Banker’s cheque is also known as …… .
which a depositor is (a) Overdraft (b) Cash credit
allowed to draw by (c) Pay order (d) None of these
cheque more than the
amount to his credit 58. Nitesh insured his factory for ` 5,00,000
upto specified limt. against fire. Due to fire in his factory,
C. Term loans (iii) Arrangement by which he suffered a loss of stock worth
bank allows its customer ` 3,00,000. He is of the opinion that he
to borrow money upto can recover the entire policy amount of
specified limit.
` 5,00,000 from the insurance company.
D. Consumer (iv) Granted by banks for a
credits fixed period of time, Identify the relevant insurance
against security. principle in this regard.
(a) Subrogation (b) Mitigation
Codes (c) Indemnity (d) None of these
A B C D A B C D
(a) (ii) (iii) (iv) (i) (b) (iii) (i) (ii) (iv) 59. It is an electronic card issued by a
(c) (iv) (i) (iii) (iv) (d) (i) (ii) (iv) (iii) financial institution authorising the
holder to buy goods or services on
55. Which of the following is/are PoS credit.
terminals?
(a) Debit card (b) Credit card
(a) Physical PoS (b) Mobile PoS
(c) Both (a) and (b) (d) None of these
(c) Virtual PoS (d) All of these
60. Under which policy, policy money is Assertion–Reasoning MCQs

payable after the assured attains, a Direction (Q.Nos. 66 to 70) There are
certain age in monthly, quarterly, half two statements marked as Assertion (A)
yearly or annual installments? and Reason (R). Read the statements and
(a) Annuity policy choose the appropriate option from the options
(b) Life insurance policy given below
(c) Both (a) and (b) (a) Both Assertion (A) and Reason (R) are true
(d) None of the above and Reason (R) is the correct explanation of
Assertion (A)
61. ‘‘The insured must have an interest in
the subject matter of insurance’’. but Reason (R) is not the correct
Which principle of insurance is related explanation of Assertion (A)
to this statement? (c) Assertion (A) is true, but Reason (R) is false
(a) Principle of mitigation (d) Assertion (A) is false, but Reason (R) is true
(b) Principle of insurable interest
(c) Principle of proximate cause 66. Assertion (A) Business services are
(d) None of the above those services which are used by
business enterprises for the production
62. Anuj has taken a loan from Avi against or sale of good and services.
the security of his factory. Can Avi take
Reason (R) Business enterprises are
a fire insurance policy of that factory?
much dependent on business services as
(a) No
these services help the enterprises to
(b) Yes
(c) Can’t say
carry on their activities smoothly.
(d) None of the above 67. Assertion (A) Under life insurance
63. If a person take fire insurance policy contract, insurer agrees to pay a
from 3 insurers. During loss due to fire specified amount on the death of the
he will get assured, or on the expiry of a certain
(a) loss amount compensation from all three
fixed period, whichever is earlier.
separately Reason (R) Loss arising on death of the
(b) loss amount, which will be contributed by all assured cannot be measured in terms of
three money. That is why, the amount
(c) policy amount from all insurers payable is fixed.
68. Assertion (A) Life insurance policy can
64. Mobile wallets provide which kind of be taken for any amount.
services to the society?
Reason (R) In case of fire insurance
(a) Sending and receiving money policy, the insurer is liable to
(b) Making payments to merchants compensate for the loss only when the
(c) Online purchases
proximate cause of loss is fire.
69. Assertion (A) In order to minimise the
65. AEPS service can be availed only when impact of uncertainities, there is a need
Aadhaar number is registered with the
for insurance.
bank where account is held.
(a) True (b) False
Reason (R) There are risks of death
and disability human life, fire and
burgalary risk for property.
70. Assertion (A) Services are intangible 73. Raksha’s sister Reema opened ………
which means they can’t be touched, but for next year.’’
can only be felt or experienced by the Identify the type of bank account used
consumers. by Reema.
Reason (R) Services can be separated (a) Current account
from the production activity. (b) Recurring deposit
(c) Saving account
Case Based MCQs (d) Fixed deposit account
Direction Read the following case study 74. ‘‘One of his employee opened ………
and answer questions 71 to 75 on the and fixed deposit account.’’
basis of the same. Identify the type of bank account used
Dhani Mani Bank is a private sector bank by his employee.
offering various services to its customers. It (a) Saving account
offers various types of bank account options (b) Current account
to its customers. (c) Multiple option deposit account
Raksha being a businessman has chosen the (d) None of the above
type of account in which the deposits all the 75. Which of the following account is not
most liquid and there is no limit to the discussed in above case?
number of transactions or the amount of
(a) Fixed deposit account
transactions in a day. (b) Saving account
On the other hand, his mother has opened a (c) Recurring deposit account
type of account where she can conveniently (d) Current account
deposit the money she saves. She has got
cheque facility and lot of flexibility for Direction Read the following case study
deposits and withdrawal whereas Raksha’s and answer questions 76 to 80 on the
sister Reema opened the account where she basis of the same.
will deposit ` 2,000 per month for next 2 Vithal Rao has a shop in Chawdi Bazaar which
years and one of his employee opened an deals in antique idols of various gods and
account which is a combination of savings goddesses. He has taken an insurance policy
account and fixed deposit account. on his shop and the stock in the shop. While
71. ‘‘Raksha being a businessman ……… taking the policy, he conveyed his intention to
amount of transactions in a day.’’ the insurance company that he should be
Identify the type of bank account used provided cover under all possible risk.
by Raksha. The insurance company convinced Vithal
(a) Saving account Rao that the policy was comprehensive and
(b) Current account covered every probable risk. During the
(c) Fixed deposit account tenure of the policy, an earthquake occurred
(d) Recurring account and the shop and stock of Vithal Rao were
72. ‘‘On the other hand, his mother ……… destroyed completely.
the money she saves.’’ He approached the insurance company for
Identify the type of bank account used compensation of loss. However, the insurance
by his mother. company refused to grant him compensation
(a) Saving account (b) Current account on the ground that ‘loss by act of God’ was
(c) Recurring account (d) None of these not covered by the policy.
76. Identify the principle of insurance She claimed from the insurance company the
violated by the insurance company. amount of damage of ` 13 lacs for the material
(a) Mitigation (b) Utmost good faith and furniture spoiled from flood and also ` 5
(c) Subrogation (d) None of these lacs for the loss of material by theft, she also
claimed another ` 25 lacs to convert the store
77. Do you think Vithal Rao has ‘insurable into fully AC and additional floor for more
interest’ in the shop and the stock
storage space.
destroyed?
(a) Yes (b) No
Insurer after assessing the damage to the
(c) Can’t say (d) None of these property and stock due to flood and seeing
the CCTV footage, accepted the claim of ` 13
78. Which of the following is/are lacs. Madhu argued that as she has being
function(s) of insurance? paying premium for ` 50 lacs, she should be
(a) Providing certainity paid the full claim of ` 43 lacs.
(b) Protection
(c) Risk sharing 81. What is the fundamental principle of
(d) All of the above insurance on the basis of which insurer
79. The person or the firm who gets accepted a claim?
compensation is called (a) Subrogation (b) Mitigation
(c) Proximate cause (d) None of these
(a) Insurer
(b) Insured 82. Identify the another principle of
(c) Premium insurance involved by insurance
(d) Happening of an event company by accepting the claim
80. Which one of the following principles is amount of ` 13 lacs.
not described in above case? (a) Principle of indemnity
(a) Principle of utmost good faith (b) Principle of mitigation
(b) Principle of indemmity (c) Principle of utmost faith
(c) Principle of mitigation (d) Principle of contribution
(d) Both (b) and (c) 83. According to you, how much
Direction Read the following case study compensation should be reimbursed by
and answer questions 81 to 85 on the insurance company?
basis of the same. (a) ` 43 lacs (b) ` 13 lacs
(c) ` 3 lacs (d) ` 25 lacs
Madhu is running a general store. The store
was insured against natural disaster like flood, 84. How many types of losses are there in
earthquake and fire from Hindustan General proximate cause?
Insurance Company for the amount of ` 50 (a) Insured perils (b) Uninsured perils
lacs. (c) Both (a) and (b) (d) None of these
Heavy raining in the city caused massive 85. In which type of insurance, ‘Principle of
flood.This left the store without any security. Indemnity’ is not applicable?
The store was looted by people which was (a) Marine insurance (b) Fire insurance
caught on CCTV. (c) Life insurance (d) None of these
ANSWERS
1. (c) 2. (a) 3. (b) 4. (c) 5. (b) 6. (b) 7. (c) 8. (b) 9. (c) 10. (d)
11. (b) 12. (c) 13. (c) 14. (b) 15. (a) 16. (c) 17. (b) 18. (b) 19. (d) 20. (c)
21. (b) 22. (c) 23. (c) 24. (b) 25. (c) 26. (d) 27. (b) 28. (b) 29. (c) 30. (c)
31. (c) 32. (c) 33. (b) 34. (a) 35. (b) 36. (d) 37. (b) 38. (b) 39. (c) 40. (b)
41. (c) 42. (c) 43. (d) 44. (b) 45. (d) 46. (c) 47. (b) 48. (c) 49. (c) 50. (a)
51. (b) 52. (c) 53. (a) 54. (a) 55. (d) 56. (b) 57. (c) 58. (c) 59. (b) 60. (a)
61. (b) 62. (a) 63. (b) 64. (d) 65. (a)
66. (a) 67. (a) 68. (b) 69. (a) 70. (c)
Case Based MCQs

71. (b) 72. (a) 73. (b) 74. (c) 75. (a) 76. (b) 77. (a) 78. (d) 79. (b) 80. (d)
81. (c) 82. (a) 83. (b) 84. (c) 85. (c)
EXPLANATIONS
3. The commission charged on banker’s cheque branch to another individual, firm or
is less than that on a bank draft. company having an account with any other
bank branch in the country.
4. Insurance cannot stop the happening of a risk
or event but can compensate for losses 13. In case of insurance of a property by more
arising out of it and thus, provide protection than one insurer, the losses are to be shared
to the insured. between all the insurers in the ratio of the
amount insured by each of them.
5. All insurnace contracts of fire or marine
insurance are contracts of indemnity. The 17. It refers to a facility in which a customer is
compensation payable and the loss suffered allowed to overdraw his current account upto
are to be measured in terms of money. an agreed limit.
6. In case of money deposited into a savings 21. In multiple option deposit account, the
bank account, bank is liable for repayment as depositors enjoys the liquidity of saving account
and when demanded by the customer, and interest rate of fixed deposit account.
therefore it is a demand liablility of bank. 22. This principle suggests that it is the right of
8. Mobile banking is referred to the process of an insurer to call upon under liable insurers
carrying out banking transactions through a to contribute for the loss of payment.
smartphone. 24. In the contract of insurance, the insurer and
9. This account is a combination of savings and the insured should display good faith towards
fixed deposit account. In this account, the each other by voluntarily making full,
depositor can enjoy the liquidity of saving accurate disclosure of all facts, material to the
account and rate of interest of fixed deposit risk being proposed.
account. 25. Life insurance contract is not a contract of
10. NEFT stands for National Electronic Funds indemnity. The life of a human being cannot
Transfer. It is a countrywide system by which be compensated. That is why the amount
an individual, firm or company can payable in life insurance on the happening of
electronically transfer funds from one bank the event is fixed in advance.
28. Children’s endowment policy is taken up by 55. Physical PoS (Point of Sale) terminals are the
a person for his/her children to meet the ones that are kept at shops and stores.
expenses of their education or marriage. Mobile PoS terminals work through tablet or
32. Lending of funds is a banking function. smartphone. This is suitable for small business
33. There is no restriction on the number and owners. Virtual PoS use web based
amount of deposits and withdrawals from applications to process payments.
current account. 56. According to this principle, it is the duty of the
34. Rakesh is entitled to the compensation insured to take reasonable steps to minimise the
because in case of life insurance policy. loss or damage to the insured property.
The insurable interest must be present at 58. Fire insurance contract is based on the
the time of contract, so Rakesh will get the principle of strict indemnity. In the given case,
compensation for the death of his wife even Nitesh can recover the actual amount of loss
after divorce. i.e. ` 3,00,000 from the insurer.
35. A credit limit is sanctioned and the amount 62. In case of fire insurance, insurable interest has
is credited in borrower’s account and to be present both at the time of affecting the
interest is charged on the amount actually policy and also when the claim falls due.
withdrawn. 70. Services cannot be separated from the production
38. Credit card holder has to pay his balance in activity or the service provides i.e. services have
full, usually on a monthly basis. to be consumed as they are produced.
If the user does not pay the balance in full, 76. The principle of insurance violated by the
the issuer adds interest to the balance, and insurance company is that of ‘Utmost Good
this interest compounds for as long as the Faith’. According to this principle, both the
balance is outstanding. insurer and the insured should display good faith
43. Current account is known as demand towards each other in regard to the contract.
deposit while fixed deposit account is However, in the given instance, the insurer failed
known as term deposit or time deposit to inform the insured that the policy did not cover
account. loss to property by ‘act of God’.
46. According to this principle the insurer is 77. Yes, I think that Vithal Rao has ‘insurable
liable for the loss only when such loss is interest’ in the subject matter of insurance.
proximately caused by the perils, which are Insurable interest means some pecuniary
stated in the policy. interest in the subject matter. Vithal Rao was
financially dependent on the shop and derived
50. The main objective of savings account is to his earning from there. So, this accounts for the
promote savings. By opening a savings presence of insurable interest.
account, people can keep their surplus
money safe in the banks and also earn 83. The store was insured against natural disaster
interest on their deposits. the flood, earthquake and fire and actual loss
from flood is ` 13 lacs. So only ` 13 lacs will be
53. Cash credit limit is decided by the bank on reimbursed by insurance company as the case is
the basis of the borrower’s assets and related to principle of proximate cause.
personal reputation.
05
Emerging Modes
of Business
Quick Revision
1. e-Business refers to the conduct of industry (ii) B2C Transactions As the name implies, B2C
and commerce using a computer network (business-to-customers) transactions have
such as the internet. e-Business includes not business firms at one end and their customers
only e-commerce, but also other electronically on the other end.
conducted business functions such as
This category is related to electronic retailing.
production, inventory management, product
This variant of e-business enables a business
development, accounting and finance and
human resource management. to be in touch with its customers 24 hours
a day.
According to Philip Kotler, “electronic
B2C transactions may include
business is the general term for buying and
selling process that is supported by electronic
● Selling and distribution of goods,
means.”
● Conducting consumer surveys,
● After sales service,
2. Scope of e-Business On the basis of the ● Promotional activities,
parties involved in firm’s electronic ● Delivery of products
transactions, the scope of e-business extends
to the transactions between two business B2C transactions also give scope for C2B
firms, transactions between a firm and its transactions. C2B commerce provides
customers and the transactions carried on consumers with the freedom of shopping
within a firm itself. These transactions are at will.
explained below Customers can also make toll free calls to the
(i) B2B Transactions These transactions take call centres set up by the companies to make
place between two business firms. Hence, queries and lodge complaints, at no extra cost,
the name is B2B (business-to-business). A round the clock.
business interacts with a number of other (iii) Intra-B Transactions Here, parties involved
business firms which may be suppliers or in the electronic transactions are from within
vendors of diverse inputs.
a given business firm only. It enables the
Also they may be a part of the channel smooth flow of transaction within the different
through which a firm distributes its products departments of a specific firm.
to the consumers.
In other words, it can be said that a (iv) Global Reach Internet has a wide reach.
computer-based interaction among the On one hand, it allows the seller an access to
different departments makes it possible for the global market; on the other hand, it
the firm to reap advantages of efficient offers the buyer, freedom to choose products
inventory and cash management, greater from almost any part of the world.
utilisation of plant and machinery, effective (v) Movement towards a Paperless Society
handling of customers’ orders, effective Use of internet has considerably reduced
human resource management, etc. dependence on paperwork as most of the
Also, Intra-B transactions include firm’s work is done electronically through
interaction with employees, which is referred computers. Even the government
to as B2E commerce. departments and regulatory authorities are
Companies are also resorting to Virtual increasingly moving in this direction
Private Network (VPN) technology through whereby they allow electronic filing of
which employees can access to organisations returns and reports.
network and can work from anywhere 4. Limitations of e-Business
through computer network. (i) It lacks personal touch with customers as it is
(iv) C2C Transactions These transactions conducted over the internet.
originate from the consumer and they end (ii) Information can flow at the click of a mouse,
on the consumer. but the physical delivery of the product takes
This type of commerce is best suited for time. This incongruence causes a lot of
dealing in goods for which there is no inconvenience to the customers.
established market mechanism. (iii) e-business requires a high degree of
C2C transactions also involve the formation familiarity with the way a computer works
of consumers’ groups and forum, which on the part of both the parties which are
helps consumers to get solutions to their involved in the process of transaction.
problems and grievances. The absence of familiarity with digital
3. Benefits of e-Business technology is responsible for digital divide.
(i) Ease of Formation and Lower (iv) Internet transactions are risky because they
Investment Requirements e-Business is occur between cyber personalities. It
relatively easy to start. The benefits of becomes difficult to establish the identity of
internet technology are received by big or the two involved parties.
small business on a regular basis. (v) It is also responsible for many problems
Success of e-business depends on network such as hacking, problems of virus, etc.
(i.e. contacts) and not on investment (i.e. net (vi) People have a tendency to resist change as
worth). adjustment to new technology and new
(ii) Convenience It offers the advantage of environment cause a sense of insecurity. As
accessing anything, anywhere, anytime. It a result, people may resist an organisation’s
enables the customers to shop at their own plans of entering into e-business.
convenience 24 hours × 7 days a week. (vii) Many companies use an electronic eye on
(iii) Speed It is one of the most speedy modes of their employees by keeping track of e-mail
doing business. One can avail anything, accounts, files and websites used by them. It
anytime, anywhere at the click of a mouse. is not ethical on the part of the firms.
Objective Questions
Multiple Choice Questions 6. If compared to e–business, transaction
1. e–commerce does not include risks in a traditional business are ……… .
(a) a business interaction with its suppliers. (a) higher
(b) a business interaction with its customers. (b) lower
(c) interactions among the various (c) transaction risks are same in both
departments within the business. (d) no transaction risks at all
(d) interactions among the geographically
dispersed units of the business.
7. M/s Systema Shyam is engaged in the
preparation and publications of online
2. Which of the following is not a advertisements through banners and
transaction under the purview of pop-ups, etc. Services provided by
e–business? Systema Shyam are an example of
(a) Bank to business commerce (a) e-delivery (b) e-bidding
(b) Business to customer commerce (c) e-promotion (d) e-procurement
(c) Intra-business commerce
(d) Business to business commerce 8. In B2B transactions, a business interacts
with a number of other business firms
3. The transactions taking place between which may be suppliers or vendors of
business and customers are known as diverse inputs.
……… transactions. (a) True (b) False
(a) B2C (b) B2B (c) Can’t say (d) Partially true
(c) C2C (d) None of these
9. In C2B transactions, parties involved in
4. OLX market place is a platform for the electronic transactions are from
buying and selling services and goods within a given business firm only.
such as electronics, furniture, household (a) True (b) False
goods, cars and bikes. It connects local (c) Can’t say (d) Partially true
people to buy, sell or exchange used
goods by making it fast and easy for 10. Mr Ramesh buys and sells shares and
anyone to post a advertisement through securities of various companies online,
their mobile phone or on the web. through a platform provided by the
Identify the component of e–business Bombay stock exchange. Mr Ramesh is
being described in the given case. engaged in which of the following
(a) C2C (b) B2B applications of e-business?
(c) B2C (d) C2B (a) e-procurement (b) e-trading
(c) e-bidding (d) None of these
5. …… is not an application of e–business.
(a) Online bidding 11. Withdrawal of money from ATM is an
(b) Online procurement example of ……… transaction.
(c) Online trading (a) C2B (b) C2C
(d) Contract research and development (c) B2C (d) B2B
12. Which one of the following is a factor 18. ……… refers to the division of society
which gives advantage to e-business on the basis of familiarity and non-
over traditional business? familiarity with digital technology.
(a) Transaction risks (a) Online bidding (b) Digital divide
(b) Investment requirement (c) e–business (d) None of these
(c) Ethical fallouts
(d) Personal touch with customers 19. It involves internet-based sale
transactions between business firms,
13. C2C transactions originate from the including ‘Reverse Auction’ that
consumer and they end on the facilitates online trading between
consumer. multiple buyers and seller. What
(a) True (b) False application of e-business is described
(c) Can’t say (d) Partially true above?
14. As compared to e-business, there is less (a) e-communication (b) e-procurement
opportunity for inter–personal touch in (c) e-delivery (d) None of these
traditional business. 20. ……… is a pre-requisite for
(a) True (b) False implementation of e-business.
(a) Website
15. Rendering of legal, accounting, medical (b) Virtual private network
and other consultancy services, (c) Anti-virus
electronic delivery of computer (d) Payment mechanism
software, photographs and other 21. Which one of the following is not an
multimedia services to the user’s advantage of traditional business?
computer by means of Information
(a) Direct interaction with customer
Technology Enabled Services (ITES) is
(b) Low transaction risks than e-business
known as (c) Opportunity for physical sampling of goods
(a) e-procurement (b) e-bidding (d) Ease of going global
(c) e-delivery (d) e-trading
22. Out of the following, which is an
16. Meera wants to buy a new laptop with advantage of e-business?
latest features and want to sell the old
(a) Personal touch (b) Confidentiality
laptop before buying the new one. So,
(c) People acceptance (d) Paper-less
she listed her old laptop on quicker.
com. She received good response from 23. Match the following.
her post and was able to sell the laptop
Column I Column II
at good price.
Identify the component of e–business A. B2B (i) Transactions taking
being described above. commerce place betwen two or
more customers
(a) B2B transaction (b) B2C transaction
(c) B2B transaction (d) C2C transaction B. C2C (ii) Transactions taking
commerce place between
17. It is widely used and internationally business firms
recognised coding system to represent
characters in a standard way. What is this? C. B2C (iii) Transactions taking
commerce place between
(a) SSL (b) ASCII business to customers
(c) VPN (d) None of these
Codes Codes
A B C A B C A B C A B C
(a) (i) (ii) (iii) (b) (ii) (i) (iii) (a) (i) (ii) (iii) (b) (iii) (i) (ii)
(c) (iii) (i) (ii) (d) (i) (iii) (ii) (c) (ii) (i) (iii) (d) (i) (iii) (ii)
24. Virtual Private Network (VPN) 29. Various departments of an organisation

technology is a technology due to like purchase, marketing, production,
which employees do not have to come HR, etc can interact with one another
to office. using
(a) True (b) False (a) B2B commerce (b) B2C commerce
(c) Can’t say (d) Partially true (c) Intra-B commerce (d) C2C commerce
25. Purchase of security lock system by 30. Following can be used to make
Honda from Atom Mortice is an payment in case of online shopping.
example of C2C transaction. (a) Credit card (b) Debit card
(a) True (b) False (c) Net banking transfer (d) All of these
31. Skylack enterprises is dealing in mobile
26. Intra-B commerce transactions may be accessories. With the continuous
conducted for increase in demand for mobiles, their
(a) human resource management business is expanding.
(b) promotional activities However, the MD observed that the
(c) selling and distribution of goods decision-making process in the
(d) after sale service enterprise is very slow and level of
27. The volume of B2B transactions is coordination is decreasing between the
much ……… than the volume of B2C various departments.
transactions. Tejas, an IT professional, suggested that
(a) lower (b) higher the company should have its own
(c) Both (a) and (b) (d) None of these internet to interact and deal between
various departments and persons within
28. Match the following. the firm. MD liked the idea and
Column I Column II implemented it immediately. Identify the
branch of e-business suggested by Tejas.
A. Business (i) Low transaction risk
due to personal (a) B2B transaction (b) B2C transaction
contact between the (c) Intra-B transaction (d) B2E transaction
parties
32. ……… refers to unauthorised access to
B. Traditional (ii) High transaction a computer network.
business risk due to lack of (a) Hacking (b) Cyber crime
personal contact (c) Ethical fall out (d) Problems of wires
between the parties
33. Purchase of bike by Aman from Akshay
C. Intra (iii) Parties involved in
using online Bikes 24 app is an example
business the electronic
transactions are of C2C transaction.
from within a given (a) True (b) False
business firm only (c) Can’t say (d) Parially true
34. Mail sent by purchase department to 38. An electronic facility of transferring

production department is example of funds through the internet is ………
which of the following? transfer.
(a) B2B (b) B2C (a) cash (b) net banking
(c) C2C (d) Intra-B (c) credit (d) None of these
35. Personal-inspection of goods is possible 39. Organisational structure is vertical or

under. tall in case of traditional business due to
(a) Traditional business direct command and communication.
(b) e–business (a) True
(c) Both (a) and (b) (b) False
(d) None of the above (c) Can’t say
(d) Partially true
36. Match the following.
40. The scope of e–business is ……… than
Column I Column II that of e–commerce.
A. Complaint lodged by a (i) B2C (a) narrow (b) wider
customer at the company’s (c) Both (a) and (b) (d) None of these
call centre
B. Withdrawal of money (ii) C2B
41. ‘‘It is the generic term for software
programme that retrieve, display and
from ATM
print information on world wide web’’.
C. Employees send their (iii) C2C Identify what term of e-business
daily report through referred here.
e–mail (a) ASCII (b) Browser
D. Sale of used books (iv) Intra-B (c) VPN technology (d) None of these
through e–bay. com
42. Which of the following are most
Codes popular browsers?
A B C D A B C D (a) Microsoft internet explorer
(a) (i) (ii) (iii) (iv) (b) (iv) (iii) (ii) (i) (b) Netscape navigator
(c) (ii) (i) (iv) (iii) (d) (i) (iii) (iv) (ii) (c) Mosaic
(d) All of the abvoe
37. Rapid automobiles Ltd is a well known
manufactures in the field of e-bikes. The 43. ‘‘Most shopping sites have ‘quote your
company makes online transactions for price’ option whereby you can bid for
purchase of tyres, battery etc. from the goods and services.’’ What
different business units. application of e-business is described
above?
Use of internet has given them much
(a) e-bidding/e-auction (b) e-promotion
wider choice of suppliers and company
(c) e-procurement (d) e-trading
finds this online buying very
convenient and time saving. Identify 44. What are the benefits of e–business?
the component of e-business being (a) Convenience
described above. (b) Global reach
(a) B2C commerce (b) B2B commerce (c) Movement towards a paperless society
(c) C2C commerce (d) Intra-B commerce (d) All of the above
45. Tata Sons and company used a 52. ……… is the electronic currency that
technology due to which employees do exists only in cyberspace.
not have to come to office. Instead (a) Plastic money (b) Digital cash
office goes to them and employees can (c) Currency note (d) All of these
work wherever they are with speed and
time convenience their meetings can be 53. There is greater opportunity for inter-
held online via tele/video conferencing. personal touch in case of e–business.
Identify which technology is used by (a) True (b) False
the company? (c) Can’t say (d) Partially true
(a) e-communication 54. Creating blogs to form various
(b) Virtual Private Network technology (VPN) consumer forums and pressure groups
(c) Both (a) and (b) through which an aggrieved customer
(d) None of the above can share his experience about a
46. B2C transactions include product is an example of
(a) selling and distribution of goods (a) B2C commerce (b) C2C commerce
(b) conducting consumer surveys (c) Intra B–commerce (d) B2B commerce
(c) delivery of product
55. DELTA Ltd is a leader in online selling
of sports item. Recently, the company
47. Cost of setting up the infrastructure like received an e-mail in its mail junk
building, machines, etc is ……… in folder from an anonymous person. On
traditional business than e–business. opening the e-mail and after clicking on
(a) high the link given in the mail, the entire
(b) low computer system of the company was
(c) Both (a) and (b) damaged. Identify the type of
(d) None of the above e–business risk that has caused damage
to the computer system of DELTA Ltd.
48. Which distribution channel is used in (a) Transaction risk
e–business? (b) Intellectual property and privacy risk
(a) Wholesaler (b) Retailer (c) Data storage and transmission risk
(c) Both (a) and (b) (d) None of these (d) None of the above
49. Sending quotation of supplying raw Assertion–Reasoning MCQs
material by one businessmen to another
is called Direction (Q. Nos. 56 to 59) There are
(a) B2B commerce (b) B2C commerce two statements marked as Assertion (A)
(c) C2C commerce (d) Intra-B and Reason (R). Read the statements and
choose the appropriate option from the
50. Name the risk(s) involved in options given below
e–commerce.
(a) VIRUS (b) Hacking and Reason (R) is the correct explanation of
(c) Both (a) and (b) (d) None of these Assertion (A)
51. Common name for ATM, debit card, but Reason (R) is not the correct
credit card, metro card etc is explanation of Assertion (A)
(a) electronic card (b) smart card (c) Assertion (A) is true, but Reason (R) is false
(c) visa card (d) master card (d) Assertion (A) is false, but Reason (R) is true
56. Assertion (A) e-business is one of the The CEO liked the idea and installed an
most speedy modes of doing business. internet for connecting all the employees in
Reason (R) e-business offers the line. VPN technology also used in the
convenience of doing business 24 hours company so that employees do not have to
× 7 days a week. come to office.
57. Assertion (A) e-business is relatively less 60. Which branch of e-business is
suitable mode of business in respect of suggested by Mr. Ravi?
certain products such as clothes, food (a) C2C commerce
itmes, toiletries etc. (b) Intra-B commerce
(c) B2C commerce
Reason (R) It lacks in warmth of
inter-personal interactions.
61. Which of the following is not a benefit
58. Assertion (A) B2C transactions have of e-business?
business firms at one end and their
(a) Convenience
customers on the other end.
(b) Ease of formation and lower investment
Reason (R) Selling used books is the requirements
example of B2C transaction. (c) Global Reach / Access
(d) Low personal touch
59. Assertion (A) B2B transactions are the
transactions in which a firm interacts 62. ‘‘Even short meetings …………… to
with other business. take fast action.’’ Identify which
Reason (R) Creation of utilities or benefit of e-business is described in
delivering value requires a business to above para.
interact with a number of other business (a) global reach
firms. (b) convenience
(c) speed
Case Based MCQs (d) movement towards a paperless society
Direction Read the following case study 63. ‘‘The CEO liked the idea ……………
and answer questions 60 to 64 on the basis connecting all the employees in line.’’
of the same. Which application of e-business is
Unique enterprises is dealing in auto spare discussed in above lines?
parts. With the expansion in business, the (a) e-trading
enterprise found that the decisions are delayed (b) e-delivery
and level of coordination is coming down. The (c) e-communication
CEO called for a meeting of all the managers. (d) e-auction
Ravi a newely appointed manager suggested 64. “VPN technology also ………… come
that company should have its own internet so to office.” What do you mean by VPN
that all the employees can interact and pass technology in above said lines?
important information to each other through (a) Virtual private network
internet. Even short meetings of different (b) Vertical private network
departments can be conducted through video (c) Very poor network
conferencing to take fast action. (d) None of the above
Direction Read the following case study 69. Which of the following is not an
and answer questions 65 to 69 on the e-business risk?
basis of the same. (a) Transaction risk
VDN Ltd. sells computer speakers online. (b) Data storage and transmission risk
Recently the company got an order of supply of (c) Risk of threat to intellectual property and
privacy
2 speakers from Ram (a customer). VDN Ltd.
(d) Risk of implementation
sent the speakers to Ram at the wrong address
which was not mentioned in the order. Direction Read the following case study
However, speakers were returned back to the and answer questions 70 to 74 on the
company, as the person at the wrong address basis of the same.
has denied the placement of order. Again, According to the latest UN Human
VDN Ltd. delivered the speakers to the Development Report, industrialised countries,
wrong address. with only 15 per cent of the world’s
Now, VDN Ltd. says that the company has population, are home to 88 per cent of all
not received the payment for the speakers internet users.
while Ram claims that he has already made Less than 1 per cent of people in South Asia
the payment through his credit card. are online even though it is home to one-fifth
65. ‘‘VDN Ltd sells computers speakers of the world’s population.
online’’ which branch of business is The situation is even worse in Africa. With
used by VDN Ltd? 739 million people, there are only 14 million
(a) B2C commerce (b) B2B commerce phone lines. That’s fewer than in Manhattan
(c) Intre-B commerce (d) C2C commerce or Tokyo. 80% of those lines are in only 6
66. ‘‘VDN Ltd sent the speakers …………… countries.
order.’’ Identify the type of transaction There are only 1 million internet users on the
risk highlight in above lines. entire continent compared with 10.5 million
(a) Default in delivery in the UK.
(b) Default in payment
Even if telecommunication systems were in
(c) Default in order taking/giving
place, most of the world’s poor would still be
excluded from the information revolution
67. ‘‘VDN Ltd delivered …………… wrong because of illiteracy and a lack of basic
address.’’ Identify the type of computer skills. In Benin, for example, more
transaction risk highlighted in above than 60 per cent of the population is illiterate.
paragraph. The other 40 per cent are similarly out of
(a) Default in delivery (b) Default in payment luck. Four-fifths of the websites are in English,
(c) Default in order taking (d) All of these
a language understood by only one in 10
68. ‘‘VDN Ltd says that the company people on the planet.
…………… his credit card’’. However, internet is still beneficial since it
Identify the type of transaction risk has a wide reach as on one hand it allows the
highlighted in above paragraph. seller and access to the global market, and on
(a) Data storage risk the other hand, it offers to the buyer, freedom
(b) Default in payment to choose, products from almost any part of
(c) Default in order taking the world.’’
(d) Default in delivery
70. Which limitation of e-business is 72. English has been given the status of a
brought forward by the above report? global language, yet it is understood by
(a) Low personal touch only 10% of the world population. Do
(b) Need for technology capability and you think it is justified?
competence of parties to e-business (a) Yes (b) No
(c) Order fulfillment speed (c) Partially No (d) None of these
(d) People’s resistance
73. ……… is the division of society on the
71. The report brings forth the fact that basis of familiarity and non-familiarity
only 1 % population of South Asia is with digital technology.
online, even though it is home to (a) VPN (b) Digital divide
one-fifth of the world’s population. (c) Internet transaction (d) None of these
What according to you can be the 74. ‘‘It has a wide reach as on one hand it
reasons for this? allows the seller and access to the global
(a) South Asian countries all mostly under market and on the other hand, it offers to
developed countries the buyer, freedom to choose, products
(b) The number of poor and illiterate from almost any part of the world.’’
population is quite high in these
countries Which benefit of e-business is described
(c) Infrastructure is lacking in these countries in above lines?
(d) All of the above (a) Speed (b) Ease of formation
(c) Global reach (d) Convenience
ANSWERS
1. (c) 2. (a) 3. (a) 4. (a) 5. (d) 6. (b) 7. (c) 8. (a) 9. (b) 10. (b)
11. (c) 12. (b) 13. (a) 14. (b) 15. (c) 16. (d) 17. (b) 18. (b) 19. (b) 20. (a)
21. (d) 22. (d) 23. (b) 24. (a) 25. (b) 26. (a) 27. (b) 28. (c) 29. (c) 30. (d)
31. (c) 32. (a) 33. (a) 34. (d) 35. (a) 36. (c) 37. (b) 38. (b) 39. (b) 40. (b)
41. (b) 42. (d) 43. (a) 44. (d) 45. (b) 46. (d) 47. (a) 48. (d) 49. (a) 50. (c)
51. (b) 52. (b) 53. (b) 54. (b) 55. (c)
56. (a) 57. (a) 58. (c) 59. (a)
Case Based MCQs

60. (b) 61. (d) 62. (c) 63. (c) 64. (a) 65. (a) 66. (c) 67. (a) 68. (b) 69. (d)
70. (b) 71. (d) 72. (b) 73. (b) 74. (c)
EXPLANATIONS
1. e-commerce does not include interactions among carried out over internet while e-commerce
the various departments within the business as in covers firms transactions with its customers
e-commerce, transactions take place through the and suppliers over the internet.
internet and it usually does not have any specific 48. No, distribution channel is used as
location for conducting the business. manufactures prefer to sell goods and services
4. OLX.com facilitates C2C i.e. customer to directly to customers.
customer transactions. These transactions 52. This type of currency has no real physical
originate from consumers and ends on properties, but offers the ability to use real
consumers. These types of transactions are best currency in an electronic format. This is a
suited for dealing in goods for which there is no form of electronic currency that exists only
established market mechanism, as in the case of in cyberspace.
second hand goods.
53. There is less opportunity for inter-personal
6. In case of traditional business, there is a direct and touch in case of e–business.
face-to-face contact between customer and business
which results in lower transaction risks.
54. An important C2C area of interactive
commerce can be the formation of
9. In intra-B transactions, parties involved in the consumers forum and pressure groups. You
electronic transactions are from within a given might have heard of Yahoo groups. Like a
business firm only. vehicle owner in a traffic jam can alert
10. e–trading involves securities trading, i.e online others via message on radio about the traffic
buying and selling of shares and other financial situation of the area he is stuck in, an
instruments. aggrieved customer can share his experience
with a product under and warn others by
12. In case of e-business, investment requirements are writing a blog, etc.
lower than that in traditional business as there is no
need for creation of physical facilities. 58. Selling used books is the example of C2C
transactions.
14. As compared to e-business, there is much more
opportunity for inter-personal touch in traditional 63. Meeting and conferences may be held by the
business. means of video conferencing.
22. Use of internet has reduced the dependence on 67. The intended delivery does not take place as
paperwork. Government departments and goods are delivered at wrong address, or
regulatory authorities also allow e-filling of goods other than ordered may be delivered.
returns and reports by the business firms in this This may be regarded as ‘default in
direction. delivery’.
24. Due to this technology, they can work wherever 68. Seller does not get the payment for the
they are with speed and time convenience. goods supplied whereas the customer claims
that the payment was made. This may be
25. It is an example of B2B transaction. referred to as ‘‘default in payment’’.
29. In case of Intra-B commerce, use of computer 69. The risks involved in e-business transactions
networks makes it possible for different can be classified in three categories
departments of a business to interact with each
other. (i) Transaction risk.
(ii) Data storage and transmission risk.
34. It is a computer based interaction among the
different departments which makes it possible for (iii) Threat to intellectual property and
the firm to reap advantages of efficient inventory privacy risk.
and cash management. 70. e-business not only requires the three
39. Organisational structure is vertical or tall in case traditional stills related to reading, writing
traditional business due to hierarchy or chain of and arithmetic, but it also requires a high
command. degree of familiarity with the way a
computer works.
40. e-business includes all types of functions as
production, finance, marketing and personal 73. Need for technology requirement is
administration as well as managerial activities like responsible for digital divide i.e. the division
planning, organising and controlling can be of society on the basis of familiarity and
non-familiarity with digital technology.
06
Social Responsibility
of Business
Quick Revision
1. Concept of Social Responsibility It refers Therefore, it is desirable that business
to the obligation of business towards various enterprises should assume social
groups in the society. Social responsibility of responsibilities.
business implies that a business should respect (v) Business institutions have valuable financial
the aspiration of society along with its profit and human resources. The business should
interest. It involves element of voluntary use these resources for producing socially
action on the part of business for the benefit desirable and good quality products.
of society. (vi) Business is capable of converting risky
According to Keith Davis, “social situations into profitable deals. It not only
responsibility refers to the businessman’s helps in solving problems but can also be
decisions and actions taken for reasons at least used effectively as an opportunity for growth.
partially beyond the firm’s direct economic or (vii) A society with fewer problems provides
technical interest.” better environment for a firm to conduct its
business. A society will have fewer problems
2. Arguments for Social Responsibility only if the business is socially responsible.
(i) The existence and growth of the business will (viii) Environmental pollution, unsafe workplaces,
be justified only if it continuously supplies discriminatory practices in employment, etc.
good quality products at reasonable price and are some of the problems which are created
does not indulge in unfair trade practices. by business enterprises. Social responsibility
(ii) It is in the long-term self-interest of the helps a business to assume the moral
business to fulfil its social responsibility obligation of recognising these problems and
towards various groups of society, like get involved in solving these problems.
workers, consumers, shareholders, etc.
3. Arguments against Social Responsibility
(iii) Businessmen can avoid the problem of
(i) Business exists only for profit maximisation.
government regulations by voluntarily
Therefore, any talk of social responsibility is
assuming social responsibilities, which helps
against this objective.
to reduce the need for new laws.
(ii) Businessmen are likely to simply shift their
(iv) People who are getting deficient goods or
burden of social responsibility by charging
services from business may resort to
higher prices from the consumers instead of
anti-social activities, which can harm the
bearing it themselves.
interest of business itself.
(iii) A businessmen does not have the necessary (vii) Professional management education in
understanding to solve certain social universities and specialised management
problems. Therefore, social problems should institutes has created a separate class of
be solved by other specialised agencies. professional managers. They are more
(iv) The public in general does not like business interested in satisfying multiple interests of
involvement or interference in social the society.
programmes. Therefore, business cannot 5. Kinds of Social Responsibility
participate in solving social problems (i) Economic Responsibility A business
because of lack of public confidence and enterprise is basically an economic entity
cooperation. and therefore, its primary social
4. Reality of Social Responsibility After responsibility is to produce goods and
reading both the arguments in favour of and services that society wants and sell them at a
against social responsibility, one may get profit.
puzzled regarding what the businessmen (ii) Legal Responsibility Every business has a
should do. To cope up with such a condition, responsibility to operate within the laws of
some real life situations are discussed below the land. Since these laws are meant for the
(i) If it is found that business institutions good of the society, a law abiding enterprise
operate in a socially irresponsible manner, is a socially responsible enterprise as well.
action is taken against them. This threat of (iii) Ethical Responsibility This includes the
public regulation is an important reason due behaviour of the firm that is expected by
to which business enterprises feel concerned society, but not codified in law.
for social responsibility. (vi) Discretionary Responsibility It signifies a
(ii) Labour movement for extracting gains for voluntary obligation that an enterprise
the working class throughout the world has assumes. e.g. providing charitable
become very powerful. This has forced contribution to educational institutions, etc.
business enterprises to pay due regard to the 6. Social Responsibility towards
welfare of workers. Different Interest Groups
(iii) Development of education, mass media and (i) Responsibility towards the Shareholders
increasing competition in the market has or Owners/Investors A business enterprise
made the consumer conscious of his rights has the responsibility to provide a fair return
and powers. to the shareholders or owners on their
Thus, it is necessary that a businessman capital investment and to ensure the safety of
should deliver good quality products to the such investment.
consumer. (ii) Responsibility towards the Workers An
(iv) It is the society that permits business to exist enterprise should try to give right kind of
and grow. New social standards consider the working conditions and must respect the
economic activities of business enterprises as democratic rights of the workers to form
legitimate, only if they fulfil their social unions. The worker must also be ensured of
responsibility. a fair wage.
(v) Development of business education has (iii) Responsibility towards the Consumers
made people like consumers, investors, Supply of right quality and quantity of goods
employees more aware about the and services to consumers at reasonable
importance of social responsibility for the prices constitutes the responsibility of an
business. enterprise towards its customers.
(vi) Business enterprises have started realising (iv) Responsibility towards the Government
the fact that social interest and business and Community A business should ensure
interest are complementary. They have also timely and honest payment of taxes and
realised that long-term benefit of business should abide by various rules and
lies in serving the society well. regulations laid down by the government.
It should also ensure that environment is not (iv) Noise Pollution is caused by running of
polluted. Business should act according to the factories and vehicles which is not only
well-accepted values of the society. annoying, but also causes serious health
problems like loss of hearing, mental
7. Corporate Social Responsibility is the disorder, etc.
responsibility of enterprises for their impacts
on society. Companies Act, 2013 has made it 10. Need for Pollution Control
mandatory for the following categories of the (i) It is needed to reduce health hazards like
company to be socially responsible. cancer, heart attacks, etc.
(i) Every company having a net worth of (ii) To reduce the risk of liability of business by
` 500 crores, or installing pollution control devices in its
premises.
(ii) Every company having a turnover of
(iii) It is also needed to save costs of operating
` 1,000 crores, or
business.
(iii) Every company having a net profit of (iv) A firm’s policies and practices for controlling
` 5 crores. waste will influence people’s attitude towards
The above categories of companies are its working and firm will be able to enjoy a
required to apportion (share out) 2% of the good reputation in the eyes of customers.
average net profit for the past three years to (v) Pollution control also results in many other
activities related to a social cause. benefits like clearer visibility, better quality
8. Business and Environmental Protection A of life and the availability of natural products
business is socially responsible towards the in a purer form.
community to ensure that the environment is 11.Role of Business in Environment Protection
not adversely affected by its activities. The (i) Top management of the enterprise should be
quality of environment is deteriorating rapidly committed to create, maintain and develop
particularly due to industrial activities. The work culture for environmental protection
basic reason for deterioration of environment and pollution prevention.
is pollution. (ii) This commitment should be shared
throughout the enterprise by all divisions
The introduction of harmful substances into
and employees.
the environment is referred to as pollution. It
(iii) They should develop clear-cut policies to
changes physical, chemical and biological
purchase good quality raw materials,
characteristics of air, land and water. Thus,
employing superior technology, using
environment protection is possible through
scientific techniques of disposal and
control of pollution. treatment of wastes, etc to control pollution.
9. Causes of Pollution The environmental (iv) Respect the laws and regulations that are
pollution arises due to following causes enacted by the government for prevention of
(i) Air Pollution is the result of the usage of pollution.
chemicals in industries or by the emission of (v) Participate in government programmes that
carbon monoxide by automobiles which are relating to management of hazardous
degrade the quality of air. substances, cleaning of rivers, plantation of
(ii) Water Pollution When toxic substances trees, etc.
enter rivers, streams, etc. and get dissolved (vi) Periodical assessment of pollution control
or lie suspended in water, it leads to water programmes should be done.
pollution. (vii) Educational workshops should be arranged
(iii) Land Pollution Dumping of toxic wastes on to impart technical information and share
land causes land pollution. This damages the experience with suppliers, dealers and
quality of land and makes it unfit for customers, to get them actively involved in
agriculture or plantation. pollution control programmes.
Objective Questions
Multiple Choice Questions 5. Match the statement given under Column I
1. Social responsibility of a business refers with correct option given under Column II.
to ……… efforts on the part of a Column I Column II
business to contribute to the welfare of
A. Responsibility (i) To supply right
society. towards the quality of goods at
(a) compulsory society reasonable prices
(b) voluntary B. Responsibility (ii) To protect natural
(c) legal towards the environment and
(d) ethical consumers avoid any type of
pollution
2. Economic responsibility includes the
behaviour of the firm that is expected C. Responsibility (iii) To ensure fair wages
towards and a fair deal from
by society, but not codified in law. government management.
(a) True (b) False
D. Responsibility (iv) To abide by rules
towards and regulations of
3. If business is to operate in a society workers the country
which is full of diverse and complicated Codes
problems, it may have A B C D A B C D
(a) little chances of success (a) (i) (iii) (ii) (iv) (b) (ii) (i) (iv) (iii)
(b) great chances of success (c) (iv) (iii) (ii) (i) (d) (i) (iv) (iii) (ii)
(c) little chance of failure
(d) no relation with success or failure 6. Corporate social responsibility is a term
coined in India by
4. Mercury Ltd. decided to donate 2% of (a) Partnership Act, 1932
its sales to Child Rights and You (CRY) (b) Companies Act, 2013
for improving the condition of children (c) SEBI
in India. (d) Environment (Protection) Act, 1986
This initiative by the company was 7. Craft enterprises pays wages to its
highly appreciated by the public and employees at a rate, which is much lower
their sales increased by 10%. Identify than the minimum wages prescribed by the
the interest group towards which government. The working conditions in the
Mercury Ltd. is discharging its social factory are inappropriate as there is lack of
responsibility? proper ventilation and there is a strict, rule
(a) Owners against formation of trade union. Against,
(b) Workers which ‘Group’, Craft Enterprises has
(c) Community or society ignored the social responsibility?
(d) Consumers (a) Consumers (b) Workers
(c) Society (d) Shareholders
8. Ethical responsibility of a business includes 14. Match the following.

(a) behaviour of firm that is expected by the
Column I Column II
society.
(b) produce goods and services that society A. Responsibility (i) To provide
wants. towards the opportunities for
(c) voluntary obligations that a society assumes. shareholders personal growth
(d) paying various statutory dues. and development
9. Responsibility of a business to prevent B. Responsibility (ii) To ensure safety of

towards the such investment
pollution can be categorised in which of workers
the following category?
(a) Political Responsibility C. Responsibility (iii) To pay taxes
(b) Discretionary Responsibility towards the regularly and
government honestly
(c) Ethical Responsibility
(d) Economic Responsibility D. Responsibility (iv) To support right
towards the quality of goods
10. A business, enterprise has a consumers at reasonable
responsibility of producing fair returns prices
to ……… on their capital investment.
(a) labour (b) consumers Codes
(c) government (d) investor A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (ii) (i) (iii) (iv)
11. If a business is socially responsible (c) (iii) (ii) (iv) (i) (d) (i) (iv) (iii) (ii)
towards its employees, it is able to
check movement of labour. What do
15. ………… is the injection of harmful
substances into the environment that
you mean by labour movement?
changes the physical, chemical and
(a) Movement of labour from one department
biological characteristics of air, land
to another.
(b) Movement of labour from one employer to
and water.
another. (a) Pollution
(c) Movement of labour from one country to (b) Toxins
another. (c) Liquid and solid waste
(d) Movement of labour from villages to cities. (d) None of the above
12. Professional management education in 16. “According to Weights and Measures

universities and specialised Act, every eatable product should
management institutions have create a explicitly bear a green dot for
separate class of professional managers vegetarian contents and brown dot for
who are more interested in non-vegetarian ingredients”.
(a) profit maximisation However, this practice is not followed
(b) satisfying multiple interests of society by Swad Pvt Ltd a company engaged in
(c) unethical business practices the manufacturing of frozen snaks.
(d) None of the above Identify the kind of social responsibility
13. Employees will stay with business only being ignored by the company.
if they are satisfied with their working (a) Ethical Responsibility
conditions. (b) Economic Responsibility
(a) True (b) False (c) Legal Responsibility
(c) Can’t say (d) Partilly true (d) Discretionary Responsibility
17. Trendz Ltd is a leading manufacturer of 24. It is the social responsibility of every
garments. The company distributes its business to take steps to check pollution
defective products free of cost (after and to protect the environment. Any
getting them repaired from Nari Niketen business which takes steps in this
at lower cost) to the orphanage. Identify direction gets which of the following
and state the kind of social benefits?
responsibility, which the company is (a) Reduction of capital investment
trying to achive. (b) Increased customer satisfaction
(a) Legal (b) Social (c) Reduction in workforce
(c) Discritionary (d) Ethical (d) Savings in costs
18. Which of the following is an act enacted 25. The management of Mars Ltd.
for the environmental protection? manipulated its financial statements to
(a) The Wildlife Protection Act, 1972 show lesser earnings so that low rate of
(b) Companies Act, 2013 divident can be given. Identify the
(c) FEMA, 1999 group whose interest is being ignored?
(d) National Green Tribunal Act, 2010 (a) Customers (b) Shareholders
(c) Government (d) None of these
19. A separate department for matters
related to environment, department of 26. United Nations has identified ozone
environment was created by central depletion as one of the major problems
government in year that causes damage to natural
(a) 1985 (b) 2005 (c) 1980 (d) 1990 environment. It is caused by
(a) emissions of carbon mono-oxide by
20. ‘To adopt fair trade policies and industries and vehicles
practices’. It is a example of responsibility (b) increase of O 2 in environment
of business towards ………… . (c) dumping of chemical wastes into water
(a) owners (b) workers bodies
(c) government (d) consumers (d) dumping of toxic wastes on land
21. Supply of right quality and quantity of 27. …… pollution can be responsible for
goods to consumers at reasonable many diseases like loss of hearing,
prices constitutes the responsibility of mental disorder, increase in cholestrol
an enterprise towards government. level etc.
(a) True (b) False (a) Air (b) Water (c) Noise (d) Land
28. Helping people affected by natural
22. Air pollution is caused by the dumping calamities like floods or earthquakes is
of chemical waste into big rivers,
a discretionary responsibility of the
streams, lakes etc.
business.
(a) True (b) False
(a) True (b) False
23. When business firms use eco-friendly
method of production, then they are 29. Respecting the religious sentiments and
performing social responsibility towards dignity of people which advertising for a
…… group. product is an example of … responsibility.
(a) customer (b) shareholder (a) economic (b) discritionary
(c) employees (d) community/ society (c) ethical (d) legal
30. In addition to earning profits, a 36. Environmental protection can best be

businessmen has to fulfill certain social done by efforts of
obligations. Which of the following is (a) business people
not a social obligation? (b) government
(a) Keep customers satisfied (c) scientists
(b) Maintain law and order (d) All the people
(c) Keep employees happy
(d) Burden on consumers 37. Business should adopt eco-friendly
production and marketing processes to
31. Business is an economic institution, ensure environmental protection.
which exists with the basic aim of (a) True
……… maximisation. (b) False
(a) welfare (b) profit (c) Can’t say
(c) Both (a) and (b) (d) None of these (d) Partially true
32. Aquasure Ltd. manufactures RO water 38. Need for social responsibility arises due
purifiers. In order to increase sales of to the …………… .
their product, they encouraged their
(a) firm’s interest
salesman to make false claims to
(b) interest of society
customers about quality of their RO. This
(c) Both firm’s and society’s interest
increased the sale of their water purifiers. (d) None of the above
Identify the group whose interest is being
ignored by Squasure Ltd. 39. To participate in government
(a) Shareholders (b) Consumers programmes relating to management of
(c) Government (d) Society hazardous substances, cleaning of rivers
etc is a legal obligation for every
33. Star Ltd. uses rocks, trees, electric business.
poles, walls of historical monuments to
advertise its products. This advertising (a) True
policy has made their product known to (b) False
(c) Can’t say
the public. Identify the group whose
(d) Partially true
responsibility is ignored by Star Ltd.
(a) Government (b) Consumer 40. Legal provisions make it compulsory
(c) Society (d) Investor for certain classes of …… to be socially
responsible.
34. Noise pollution has resulted in ozone
depletion which is leading to climate (a) partnership firms
change and dangerous warning for the (b) cooperative societies
earth. (c) companies
(d) sole proprietorship firms
(a) True (b) False
(c) Can’t say (d) Partially true 41. Which of the following are laws enacted
35. Which of the following can explain the for environmental protection?
need for pollution control? (a) The Environment Act, 1986
(a) Cost savings (b) The Forests Conservation Act, 1980
Amended in 1988
(b) Reduced risk of liability
(c) The Hazardous Wastes Act, 1989
(c) Reduction of health hazards
42. A company is manufacturing fairness 46. Match the following.

cream using synthetic products and
bleach, but company is advertising its Column I Column II
cream as herbal cream. Also, company A. What is right and what (i) Social
did not mention the ingredients on the is wrong, is judged on responsibility
pack. What value(s) is are being the basis of socially
violated by the company? determined standards
of human behaviour.
(a) Unethical behaviour by cheating customers
(b) Violating rules of information by not given B. Business enterprises (ii) Environment
contents on packings should take some protection
(c) Unfair practices of wrong information in steps like top
advertising management
(d) All of the above commitment,
periodical assesment
43. Use of synthetic fertilisers and of pollution control
pesticides in agriculture leads to programmes etc.
(a) water pollution
C. Its obligation to take (iii) Business
(b) noise pollution
decisions and perform ethics
(c) land pollution actions which are
(d) air pollution desirable in terms of
objective and values
44. Which of the following is not an of our society.
argument in favour of social
responsibility? Codes
(a) Lack of broad public support A B C
(b) Converting problems into opportunities (a) (iii) (i) (ii)
(c) Better environment for doing business (b) (iii) (ii) (i)
(d) Maintenance of society (c) (ii) (i) (iii)
(d) (i) (ii) (iii)
45. Fast Track Ltd. is a leading manufacturer
of automobiles spare parts. The 47. Business people have the skills
managing director of the company is of to solve
the view that business is an economic (a) all social problems
institution, which exists with the basic (b) some social problems
objective of profit maximisation and (c) no social problems
assuming social responsibility is against (d) all economic problems
this objective. 48. The national society of professional
However, one of the newly appointed engineers had a code, which requires
manager tried to convince MD in professionals to
favour of social responsibility. Which (a) dissociate themselves from organisations
factor is highlighted by the manager to that are of a questionable character
the MD? (b) further the cause of public good
(c) advice clarity, the consequences of a
(a) Reality of social responsibility technical opinion is overruled by a non
(b) Need for social responsibility technical person
(c) Both (a) and (b) (d) All of the above
49. Which responsibility of the business is 53. Every business enterprise should install
not the responsibility of the business to pollution control devices in its premises
the government? to reduce pollution and avoid penalties.
(a) Following the pollution laws as set by the (a) True
government. (b) False
(b) Establishment of the industrial undertaking (c) Can’t say
as per the government norms. (d) Partially true
(c) Providing after sales service.
(d) Payment of taxes, fees, surcharge etc with 54. If an enterprise is creating good
the honesty. working environment for its workers,
then, in this case, which responsibility
50. E-choupal is an initiative of Indian is being fulfilled by the business?
Tobacco Corporation (ITC) Limited to
(a) Responsibility towards shareholders
link directly with rural farmers for
(b) Responsibility towards workers
procurement of agricultural produce. (c) Responsibility towards owners
E-choupal was conceived to tackle the (d) Responsibility towards consumers
challenge posed by the unique features
of Indian agriculture characterised by 55. Government intervention is costly to
fragmented farms, weak infrastructure businessmen and restricts their
and the involvement of numerous flexibility and freedom of making
intermediaries. Through E-choupal ITC decisions.
aims to change the quality of life and (a) True (b) False
the entire outlook of Indian farmers. (c) Can’t say (d) Partially true
Towards which interest group, is ITC
discharging its social responsibility? Assertion-Reasoning MCQs
(a) Shareholders Direction (Q. Nos. 56 to 60) There are
(b) Consumers two statements marked as Assertion (A)
(c) Community or society and Reason (R). Read the statements and
(d) Owners
51. Samarjeet has a sweet shop. During the options given below
festive season of Diwali, he purchased (a) Both Assertion (A) and Reason (R) are true
adulterated khoya and paneer at very and Reason (R) is the correct explanation of
low rates in order to make huge profits. Assertion (A)
As a result, many people fell sick after
consuming the sweets because of food explanation of Assertion (A)
poisoning. Do you think, Samarjeet is a (c) Assertion (A) is true, but Reason (R) is false
socially responsibile sweet seller? (d) Assertion (A) is false, but Reason (R) is true
(a) No (b) Partially yes
(c) Yes (d) None of these 56. Assertion (A) Legal obligations are the
compulsions which should be followed
52. An enterprise must behave as a good as per the provisions of law.
citizen is an example of its responsibility
towards Reason (R) Social responsibility is the
voluntary action on the part of business
(a) owners (b) workers
for its society.
(c) consumers (d) community
57. Assertion (A) Economic activities of 61. “Company is committed …… creed

business are legitimate even if business and gender etc”. Identify towards which
does not fulfil social responsibility. interest group, company is fulfilling its
Reason (R) Services to the society social responsibility?
increases the growth chances of (a) Government
business. (b) Consumer
(c) Community
58. Assertion (A) Social responsibility is a (d) Employees
legal responsibility of the business.
Reason (R) Companies Act, 2013, 62. “It not only abide by all the laws ……
provides for the social responsibility of and for taxes on time”. In this
business. paragraph, towards which interest
group company is fulfilling
59. Assertion (A) Social responsibility is responsibility?
restricted towards a particular section of (a) Government
society. (b) Consumer
Reason (R) Social responsibility ensures (c) Society
a fair remuneration for the work. (d) Employee
60. Assertion (A) A business should ensure 63. “It prefer to give fair …… quality”. In
timely and honest payment of taxes and the above lines, identify towards which
should abide by rules laid down by the interest group company is fulfilling its
government. social responsibility?
Reason (R) Business should act (a) Owners
according to the well accepted values of (b) Employees
the society. (c) Consumers
(d) Investors
Case Based MCQs 64. “Managers work effectively …… return
Direction Read the following case study to their shareholder”. In the above
and answer questions 61 to 65 on the lines, identify towards which interest
basis of the same. group company is fulfilling its social
Inn Trin Ltd is a well known company in responsibility?
telecom sector. The company is committed to (a) Shareholders/owners
treat everyone fairly with respect and dignity, (b) Community/society
regardless of difference in age, caste, creed, (c) Employees
gender etc. It not only abide by all the laws (d) Government
and pay taxes on time, but also make service 65. “The company is running a charitable
and participate in social service projects. It hospital …… that area.” In the above
prefer to give fair advertisement without any lines, identify towards which interest
exaggeration, and change fairly from its group company is fulfilling its social
customers and maintain quality. Its managers responsibility?
work effectively and efficiently and minimise
(a) Shareholders
waste to maximise the return to their (b) Community
shareholders. The company is also running a (c) Employees
charitable hospital to provide medical facility (d) Consumer
to the people of that area.
Direction Read the following case study 70. What proportion is required for
and answer questions 66 to 70 on the companies like Alpha-Beta, to spend on
basis of the same. activities related to social cause?
Dinesh is the CEO of a pharmaceutical (a) 5% of the average net profit for past 3 years
company ‘Alpha-Beta’ with net worth of ` 500 (b) 2% of the average net profit for past 3 years
(c) 3% of the average net profit for past 5 years
crores. The company is based in Jabalpur
(d) 2% of the average net profit for past 5 years
which is famous for its soft marble. Many
craftsmen make beautiful statues from the Direction Read the following case study
marble. However, they made barely enough and answer questions 71 to 75 on the
to fulfil their basic needs. basis of the same.
On researching about the probable reasons By the early 1990s, there was considerable
for their plight, Dinesh found that they were pressure for governments to create
unorganised and lacked the financial strength agreements concerning the environment and
to market their produce. its protection. In 1992, the United Nations
Conference on Environmental and
As a part of his CSR, Dinesh created a fund Development (UNCED) was held in Rio de
of ` 50 lakhs and advanced them a certain Janeiro. The main outcome of the conference
sum which enabled them to stock over their was Agenda 21, which marked an important
inventory. He also opened a school and a landmark in the sustainable development
health centre for these craftsmen. fight and inter country cooperation.
66. ……… is the reponsibility of Agenda 21 was the main document signed at
enterprises for their impacts on society. the conference. It was over 800 pages long
and represented a new global commitment to
(a) Corporate Social Responsibility
sustainable development.
(b) Company Social Responsibility
(c) Corporate Service Responsibility It was not a legally binding document, but
(d) None of the above was devised as a working plan which
countries would follow. The conference
67. Company is required to mandatorily, marked the start of global cooperation, which
abide the provisions of which of the was needed to deal with the many issues,
following law? including concern for the environment.
(a) Partnership Act, 1932 The concept is supporting, sustainable
(b) Companies Act, 2013 development. Many businesses have
(c) Environment Act, 1986 integrated a strategy of sustainability (taking
(d) None of the above into account its three main aspects-economic,
68. Is Dinesh fulfilling his social environment, social, etc). It makes good
responsibility? business sense for companies to be
environment-friendly as improved efficiency
(a) Yes (b) No
in manufacturing in turn leads to a more
(c) Can’t say (d) None of these
efficient use of natural resources.
69. Is it mandatory for Alpha-Beta Operating efficiently translates to competitive
company to spend money for the advantage for business and supports the
upliftment of the society? economic pillar of sustainability as well.
(a) Yes (b) No Therefore, all aspects of sustainability are
(c) Both (a) and (b) (d) None of these seen as complementary and mutually
interdependent.
71. Where was the United Nations This can be done by minimising waste
Conference on Environmental and and protecting human health and
Development (UNCED) organised? environmental quality. Identify which
(a) USA document is discussed above in the
(b) Rio De Janeiro given para?
(c) UK (a) Code of ethics
(d) India (b) Environment action plan
(c) Agenda 21
72. “It is an approach in which resources (d) None of the above
are used in balanced form to meet
human needs without causing much 74. United Nations has identified many
harm to the natural environment, with problems that cause damage to the
this approach present needs of human natural environment. What problem(s)
beings can be met along with sustaining is /are referred here?
resources for future generation.’’ (a) Ozone depletion
Which approach is discussed in above (b) Deforestation
paragraph? (c) Danger to biological diversity
(a) Environment protection (d) All of the above
(b) Sustainable development
(c) Corporate social responsibility 75. Which of the following can explain the
(d) Business ethics need for pollution control?
(a) To control waste
73. This document states, that responsible (b) Clearer visibility
businesses, should play a major role in (c) Availability of natural products in pure form
improving the efficiency of resource (d) All of the above
use.
ANSWERS
1. (b) 2. (b) 3. (a) 4. (c) 5. (b) 6. (b) 7. (b) 8. (a) 9. (b) 10. (d)
11. (b) 12. (b) 13. (a) 14. (b) 15. (a) 16. (c) 17. (c) 18. (a) 19. (c) 20. (c)
21. (b) 22. (b) 23. (d) 24. (d) 25. (b) 26. (a) 27. (c) 28. (a) 29. (c) 30. (d)
31. (b) 32. (b) 33. (c) 34. (b) 35. (d) 36. (d) 37. (a) 38. (c) 39. (b) 40. (c)
41. (d) 42. (d) 43. (c) 44. (a) 45. (a) 46. (b) 47. (b) 48. (d) 49. (c) 50. (c)
51. (a) 52. (d) 53. (a) 54. (b) 55. (a)
56. (b) 57. (d) 58. (a) 59. (d) 60. (a)
Case Based MCQs

61. (d) 62. (a) 63. (d) 64. (a) 65. (b) 66. (a) 67. (b) 68. (a) 69. (a) 70. (b)
71. (b) 72. (b) 73. (c) 74. (d) 75. (d)
EXPLANATIONS
2. Ethical responsibility includes the behaviour 23. It is trying to achieve the social objective. It
of the firm that is expected by society, but is trying to fulfill its social responsibility
not codified in law. towards the society, country and the
3. This is because of the fact that every business environment by taking a step to save the
makes use of society’s resources such as environment from pollution by using
human and physical capital. Thus in case a eco-friendly techniques.
society faces social problems such as 24. Measures aimed at environmental protection
unemployment, illiteracy, poverty and reduces wastages and increase in efficiency of
inadequate physical capital, they will affect workforce, thus results in cost savings.
the operations of a business adversely. 25. A business enterprise has the responsibility to
8. A business has four kinds of responsibilities provide a fair return to the shareholders or
economic, legal, ethical and discretionery. owners on their capital investment and to
Ethical responsibility requires a business to ensure the safety of such investment.
respect dignity of people, respecting their 30. Businessmen are likely to simply shift their
religious, social and human values. burden of social responsibility by charging
10. Owners and investors put their money into higher prices from the consumers instead of
business entities with a desire to earn returns bearing it themselves.
and security of their investment, therefore, it 32. Supply of right quality and quantity of goods
is a responsibility of a business to remunerate
and services to consumers at reasonable
them with fair returns.
prices constitutes the responsibility of an
11. Due to increasing want of a better lifestyle enterprise towards its customers.
and a better pay, labour keep moving from
one employer to another due to which
34. Air pollution has resulted in ozone depletion
which results in global warming. It is
businesses have to suffer shortage of skilled
considered as a warning signal for the earth
labour.
and is dangerous for all living beings.
16. A law abiding enterprise is a socially
responsible enterprise. Therefore, every
38. Business is a creation of society and it exists
to serve customers. Also, the employees of
business has a responsibility to operate
the business, the investors, its creditors are all
within the laws and fulfill their legal
part of society. Thus, a healthy relationship
responsibility by following the regulations
should always be there between the firm and
and paying various statutory dues.
the society to avail fruitful results.
17. There is a purely voluntary obligation that an
enterprise assumes. A business enterprise
39. It is the social responsibility of every business
to participate in government programmes
assumes this responsibility to show its
relating to management of hazardous
concern towards problems faced by the
substances etc.
society.
21. It constitutes the responsibility of an 43. Dumping of toxic wastes on land causes land
enterprise towards its customers. pollution. This damages the quality of land and
makes it unfit for agriculture or plantation.
22. Air pollution is the result of the usage of
chemicals in industries, factories and plants 45. Business enterprise should assume social
or by the emission of carbon monoxide by responsibility in addition to earning profit.
vehicles. Although business is an economic institution,
which operates with the basic aim of profit 57. It is the society that permits business to exist
maximisation, but it should give due and grow. New social standards consider the
importance to social problems in order to economic activities of business enterprises as
survive and to build good public image in legitimate, only if they fulfil their social
the long-run. responsibility.
47. Environment pollution, unsafe workplace, 59. Social responsibility is not restricted to particular
corruption in public institutions and section of society rather it is a responsiblility
discriminatory practices in employment are towards shareholders, workers, government,
some of the social problems which can be consumers, community or society.
solved with the help of business people.
67. Companies Act, 2013 is mandetory for the
51. Samarjeet is not a socially responsible company having net worth of ` 500 crores.
sweet seller as he is ignoring his social
68. Dinesh is fulfilling his social responsibility as he
responsibility towards cosumers and
has opened a school and a health centre for the
society.
craftsmen.
56. Every business has a responsibility to
69. The net worth of Alpha-Beta company is
operate within the laws of land and fulfil
` 500 crore. Therefore it is mandatory for them
their legal responsibility by paying
to spend money for the upliftment of the society.
statutory dues.
PRACTICE PAPER 1
Business Studies Class 11th (Term I)
Instructions
1. This paper has 40 questions, carrying 1 mark each.
2. All questions are compulsory.
3. Answer the questions as per the given instructions.
M.M. : 40 Time : 90 Minutes
Multiple Choice Questions 3. Match the ‘nature of services’ in

column I with their respective
Direction (Q. Nos. 1-20) All the statement in column II.
questions have four options out of which Column II
Column I
only one is correct. Choose the correct
option as your answer. A. Involvement (i) Simultaneous
activity of
1. Darshan Sharma prepares ‘Sohanpapri’ production and
consumption.
for customers during Diwali season
every year. He prepared more B. Inventory (ii) Perishable nature.
‘Sohanpapri’ due to increased demand C. Inseparability (iii) Participation of
with adulterated ingredients. He the customer.
employed women and children for D. Intangibility (iv) Can’t be seen and
packing and paid them less salary. This touched
way he generated good profit from
himself. Which objective of business is Codes
not fulfilled here? A B C D A B C D
(a) (iii) (ii) (i) (iv) (b) (iii) (i) (ii) (iv)
(a) Personal
(c) (i) (ii) (iii) (iv) (d) (ii) (i) (iii) (iv)
(b) Social
(c) Economical 4. Tea is mainly produced in Assam, while
(d) None of these cotton in Gujarat and Maharashtra but
2. Public enterprises are owned by the they are required for consumption in
public. different parts of the country. How can
this hindrance of place be removed?
(a) True
(b) False (a) Through warehousing
(c) Can’t say (b) Through banking
(d) Partially true (c) Through transportation
(d) Through advertising
5. An American firm ‘Zebsik Enterprise’ 8. If the required outlay for the project is
purchased handmade decorative pieces so large that it cannot easily be
from India, re-packaged and sold them arranged within the available means,
in its own name to Germany. The the project has to be given up. Which
above transactions represents aspect has been highlighted by
(a) Entrepot for Zebsik Enterprise, Export for aforesaid statement?
India and Import for Germany. (a) Technical feasibility
(b) Export for Zebsik Enterprise, Import for (b) Economic feasibility
India and Entrepot for Germany. (c) Financial feasibility
(c) Import for Zebsik Enterprise, Entrepot for (d) Professional feasibility
India and Export for Germany.
(d) Import for Zebsik Enterprise, Export for 9. Muskaan insured her cargo ship against
India and Entrepot for Germany. perils of sea through a Marine Insurance
Policy of ` 10,00,000. During the
6. Joint life policy is taken up by a person voyage, the sea water entered into the
for his/her children to meet the expenses ship and the cargo was damaged. She
of their education or marriage. suffered a loss of ` 3,00,000. She filed a
(a) True claim for the loss against the insurance
(b) False company.
(c) Can’t say
(d) Partially true
Which principle of insurance is
highlighted in the above case?
7. At present, Samanvi has ` 32,50,000 (a) Subrogation (b) Mitigation
balance in her Savings Bank Account in (c) Contribution (d) Proximate cause
Axis Bank. She has a good salary and at
10. The shares of a government company
the end of every month, her balance in
are purchased in the name of ……… .
the savings account increases. Ritvi,
(a) The PM of India
Manager of Axis Bank, also Samanvi’s
(b) The President of India
close friend, advised her to maintain an (c) The Governor
account which is a combination of both (d) The Finance Minister
savings account and deposit account.
11. Rapid Automobiles Ltd. is a well-
Ritvi told Samanvi that this account
known manufacturer in the field of
interlinks the savings bank account with
e-bikes. The company makes online
a deposit account and any amount in
transactions for purchase of tyres,
excess of a pre-determined amount is
battery, etc. from different business
automatically transferred to a fixed
units. Use of internet has given them
deposit and it will enable her to earn
much wider choice of suppliers and
better interest. Identify the type of bank company finds this online buying very
account advised by Ritvi to Samanvi. convenient and time saving. Identify
(a) Fixed deposit account the component of e-business being
(b) Recurring deposit account
described above.
(c) Multiple option deposit account
(a) C2C (b) B2B
(d) Saving deposit account
(c) B2C (d) B2G
12. It is the responsibility of every business 16. Some organisations are directly
to provide accurate and full information attached to a particular ministry of the
about its working as well as schemes of central or state government and are
future growth. under the direct control of the
Towards which interested group is this concerned minister. The business
social responsibility related to? decisions are thus influenced by
(a) Consumers
political consideration. State the type of
(b) Employees enterprise come under this category.
(c) Investors (a) Statutory corporation
(d) Government (b) Government company
13. ‘Indian Railways’ is a part of Railway (d) None of the above
Ministry. It is organised, financed and
controlled by Railway Ministry. The 17. Mercury Ltd. decided to donate 2% of
finances are allocated from government its sales to Child Rights and You (CRY)
treasury and whatever revenue it earns for improving the condition of children
is deposited to government treasury in India. This initiative by the company
only. It is treated as a part of was highly appreciated by the public
government and even the appointment, and their sales increased by 10%.
recruitment and selection of employees Identity the interest group towards
is done in the same way as that of civil which Mercury Lad in discharging its
servant. social responsibility.
(a) Consumer
Name the type of public sector
(b) Community
enterprise ‘Indian Railways’ is (c) Government
(a) statutory corporation (d) Employees
(b) government company
(c) departmental undertaking 18. There is a less opportunity for inter-
(d) None of the above personal touch in case of ……… .
(a) traditional business (b) retail business
14. Legal obligations are compulsory for (c) e-business (d) None of these
business to be followed as per
provisions of law, while social 19. e-Choupal is an initiative of Indian
responsibility is the voluntary action for Tobacco Corporation (ITC) Limited to
the betterment of society. link directly with rural farmers for
(a) True (b) False procurement of agricultural produce.
(c) Can’t say (d) Partially true e-Choupal was conceived to tackle the
challenge posed by the unique features
15. e-business only includes buying and of Indian agriculture characterised by
selling goods and services over the fragmented farms, weak infrastructure
internet. and the involvement of numerous
(a) True intermediaries. Through e-Choupal,
(b) False ITC aims to change the quality of life
(c) Can’t say and the entire outlook of Indian
(d) Partially true
farmers.
Towards which interest group, is ITC 23. Assertion (A) Every partner is both an
discharging its social responsibility? agent and a principal.
(a) Society Reason (R) Partner is an agent of other
(b) Consumers partners as he is bound by the acts of
(c) Employees
other partners.
(d) Shareholders
24. Assertion (A) Business is a non-
20. Which of the following statement(s) economic activity.
is/are not true?
Reason (R) Business is undertaken
(a) Pollution causes danger to biological
diversity with the aim of earning money.
(b) Controlling pollution can result in reduction 25. Assertion (A) It is in the long-term
of health hazards
interest of a business to assume social
(c) The Wildlife Protection Act was enacted in
1992
responsibility.
(d) None of the above Reason (R) Better social relationship
improves its public image and
Assertion-Reasoning MCQs prospects of growth in the long-run.
Direction (Q.Nos. 21 to 25) There are Case Based MCQs
two statements marked as Assertion (A)
and Reason (R). Read the statements and Direction Read the following case study
choose the appropriate option from the and answer questions 26 to 30.
options given below Sunaina and Seema Reddy are best friends.
(a) Both Assertion (A) and Reason (R) are true After completing a course in Fashion
and Reason (R) is the correct explanation of Designing, five years back, both of them
Assertion (A) started their own separate outlets in Delhi
and Chennai respectively to earn their
explanation of Assertion (A) livelihood.
(c) Assertion (A) is true, but Reason (R) is false Sunaina buys readymade garments from
(d) Assertion (A) is false, but Reason (R) is true various manufacturers and sells them in her
21. Assertion (A) Life insurance is a store. However, Seema Reddy designs her
contract of indemnity. own range of clothing. She gets them made
Reason (R) According to principle of through her team of designers and sells them
indemnity, the insured is entitled to directly under the brand name ‘Forever
recover the extent of the loss suffered Young’.
by him, up to the limit of the amount Although, both of them are making good
covered by the policy. returns on their investments but in past they
22. Assertion (A) Under e-business, have also incurred huge losses due to changes
communication can flow in any in the taste and preference of consumer and
direction. fashion. Also, despite being in business for
Reason (R) There is high transaction such a long time, they cannot say with
risk in e-business due to lack of personal certainty as to what amount of profit will be
contact between the parties. earned by them in future.
26. Identify the type of human activity All the four of them wished to serve the
Sunaina and Seema is doing. people in a better way by becoming bank
(a) Economic activity employees. All the four of them appeared in
(b) Non-economic activity the banking examination and passed with
(c) Both (a) and (b) good marks. Ramesh was appointed as a
(d) None of the above manager in ‘Doha Bank’. Roshan got the post
27. Identify the category of economic of P.O. in Punjab National Bank.
activity Sunaina and Seema is doing. Rohit and Shabnam were respectively
(a) Profession (b) Employment selected in the Federal Bank and Reserve
(c) Job (d) Business Bank of India. Both of them had not got the
28. “After completing a course in Fashion appointment letters yet.
Designing, five years back, both of 31. Identify the type of bank of Ramesh.
them started their own separate outlets (a) Public Sector Bank
in Delhi and Chennai respectively to (b) Private Sector Bank
earn their livelihood.” Which feature of (c) Foreign Bank
business is highlighted here? (d) Central Bank
(a) Uncertainty of return 32. Roshan was appointed as P.O. Identify
(b) Dealing in goods on regular basis
the type of his bank.
(c) An economic activity
(d) Element of risk (a) Public Sector Bank
(b) Private Sector Bank
29. “Seema Reddy designs her own range (c) Foreign Bank
of clothing”. Which nature of business (d) Central Bank
highlighted here?
33. To which class does the Federal Bank
(a) Art (b) Science
belong?
(c) Profession (d) None of these
(a) Public Sector Bank
30. “Although, both of them are making (b) Private Sector Bank
good returns on their investments but (c) Foreign Bank
in past they have also incurred huge (d) Central Bank
losses due to changes in the taste and
34. Identify the class of bank, the
preference of consumer and fashion.”
appointment letter of which is being
Which feature of business is highlighted
awaited by Shabnam.
here?
(a) Public Sector Bank
(a) Uncertainty of return
(b) Private Sector Bank
(b) Dealing in goods on regular basis
(c) Foreign Bank
(c) An economic activity
(d) Central Bank
(d) Element of risk
35. Out of these banks, which bank is
Indian commercial bank?
and answer questions 31 to 35.
(a) Federal Bank
Four friends Ramesh, Roshan, Rohit and (b) Reserve Bank of India
Shabnam completed their studies of B.Com (c) Punjab National Bank
and prepared themselves to enter the banking (d) Doha Bank
sector.
Direction Read the following case 36. Which type of business organisation
study and answer questions highlighted in the above case?
36 to 40. (a) Sole proprietor (b) Partnership
Dhruv, Sarthak and Dheeraj are three (c) HUF (d) Company
partners in a firm. The name of the firm 37. Identify the type of partner Dhruv is in
is ‘Friends Pustak Bhandar’. The latest ‘Friends Pustak Bhandar’.
books of almost all subjects remain
(a) Active (b) Secret
available at the Pustak Bhandar. (c) Nominal (d) Estoppel
All the three partners decided that 10%
of the total profit of the firm would be
38. Identify the type of partner Sarthak is in
‘Friends Pustak Bhandar’.
distributed among the poor children
(a) Active (b) Secret
every year. This has a very positive
(c) Sleeping (d) Estoppel
effect on the goodwill of the firm.
Dheeraj is a renowned businessman who 39. Identify the type of partner Dheeraj is in
allowed the use of his name by the firm ‘Friends Pustak Bhandar’.
but does not contribute capital. Sarthak (a) Nominal (b) Secret
had contributed capital to the firm but (c) Sleeping (d) Estoppel
does not participate in the management 40. Which feature of partnership highlighted in
of the firm. Dhruv actively participates in the above case?
the management and does business on (a) Sharing profits (b) Two or more partners
behalf of other partners. (c) Both (a) and (b) (d) None of these
PRACTICE PAPER 1
OMRSHEET
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11 a b c d 31 a b c d
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SIGNATURE OF EXAMINER WITH DATE MARKS SCORED

PRACTICE PAPER 2
Instructions
Multiple Choice Questions 2. Match the ‘various e-banking services’ in

Direction (Q. Nos. 1-20) All the column I with their respective statement in
questions have four options out of column II.
which only one is correct. Choose the Column I Column II
correct option as your answer.
A. Debit card (i) ‘Customer of a
1. Ram, Mohan and Sohan are good branch’ to ‘Customer
friends. Ram is working as a doctor of a bank’.
in a private hospital and getting
B. Credit card (ii) A card is issued to a
salary of `1,50,000 per month. customer in lieu of his
Mohan is a farmer and producing money deposited in
50 quintals wheat for his own the bank.
consumption. Sohan is working as a
teacher in a school and getting C. Core (iii) This is a sort of
banking overdraft facility.
salary of `40,000 per month. In
addition to that, Sohan teaches D. Bank draft (iv) Working as a
some slum area children in the outstation cheque
evening and does not charge
Codes
anything from them. It gives him a
A B C D A B C D
psychological and mental
(a) (i) (iii) (ii) (iv) (b) (i) (ii) (iii) (iv)
satisfaction. Which type of human
(c) (ii) (iii) (i) (iv) (d) (ii) (i) (iii) (iv)
activity is performed by Ram?
(a) Economic activity 3. Mr. Harish Kalra is a farmer and cultivates
(b) Non-economic activity sugarcane on a large piece of land in a
(c) Both (a) and (b) district in Maharashtra. Mr. Harish has sold
(d) None of the above his ancestral house for `40 lakhs.
His son, Saksham proposes him to 9. Anubhav took a fire insurance policy
establish a sugar mill with this money for his property worth `10,00,000 with
as the raw material sugarcane will be two insurers: Shri Ram General
available from their fields. Mention the Insurance Co. Ltd. for `8,00,000 and
type of industry in which Harish is Bajaj Allianz General Insurance Co.
engaged in. Ltd. for `4,00,000. An electric short
(a) Primary (b) Secondary circuit in his property caused fire and it
(c) Tertiary (d) Service resulted in a loss of ` 3,00,000. He filed
4. A departmentally run enterprise enjoys a claim for ` 3,00,000 against each of
corporate status. the two insurance companies. Which
(a) True (b) False principle of insurance is highlighted in
(c) Can’t say (d) Partially false the above case?
(a) Subrogation (b) Indemnity
5. Mr. Naresh Batra, a businessman, (c) Contribution (d) Mitigation
incurred some financial loss due to the
dishonesty of his workers. This loss is 10. …… organisation is formed by passing
caused due to ……… . a Special Act of Parliament of state
(a) natural cause (b) financial cause legislature.
(c) human cause (d) economic cause (a) Statutory corporation
6. Family floater health insurance policy (c) Departmental undertaking
covers the hospitalisation expenses of (d) None of the above
an individual upto a specified limit.
(a) True (b) False 11. Intra-B transactions involves a firm’s
(c) Can’t say (d) Partially true interactions with its employees.
(a) True (b) False
7. Name and discuss the benefits of (c) Can’t say (d) Partially false
banking service in which the customer
can conduct banking activities like 12. It is the moral obligation of business to
managing savings, checking accounts, get involved in solving social problems,
applying for loans, etc. over the internet. instead of expecting other social
(a) Mobile banking (b) Physical banking agencies dealing with them. It is related
(c) e-banking (d) None of these to which justification of social
responsibility?
8. Which of the following is not related to (a) Better environment for doing business
One Person Company? (b) Holding business responsible for social
(a) No person shall be eligible to incorporate problems
more than a One Person Company or become (c) Maintenance of society
nominee in more than one such company. (d) Converting problems into opportunities
(b) No minor shall become member or nominee
of the One Person Company or can hold 13. The control of central government on
share with beneficial interest. departmental undertakings is very
(c) Such company cannot be incorporated or effective. This control on departmental
converted into a company under Section 8 undertakings is subject to
of the Act.
(d) Such company can carry out Non-Banking (a) Government control
Financial Investment activities including (b) IAS officers control
investment in securities of anybody (c) Parliamentary control
corporates. (d) Control by CAG
14. Craft Enterprises pays wages to its 18. The transactions taking place between
employees at a rate which is much consumers and business are known as
lower than the minimum wages ……… .
prescribed by the government. The (a) B2B (b) B2C
working conditions in the factory are (c) C2C (d) None of these
inappropriate as there is lack of proper
ventilation and there is a strict rule
19. The management of Mars Ltd.
manipulated its financial statements to
against formation of Trade Union.
show lesser earnings so that low rate of
Against which ‘group’, Craft
dividend can be given. Identify the
Enterprises has ignored the social
group whose interest is being ignored?
responsibility?
(a) Society (b) Employees
(a) Community (b) Consumers
(c) Shareholders (d) Consumers
(c) Government (d) Workers
20. By providing quality product at
15. Chennai Pharmaceuticals Co. Ltd., reasonable price, business is fulfilling its
registered under the Companies Act, responsibility towards ……… .
2013, was started with a paid up capital
(a) society (b) government
of ` 50,00,000. 40% of this paid up (c) consumers (d) employees
capital is in the hands of private
individuals and the balance is held by Assertion-Reasoning MCQs
the government of Chennai. Chennai
pharmaceuticals belongs to which form Direction (Q.Nos. 21 to 25) There are
of public sector enterprises? two statements marked as Assertion (A)
and Reason (R). Read the statements and
options given below
and Reason (R) is the correct explanation of
16. Shivangi wants to buy a new laptop Assertion (A)
with latest features and want to sell the (b) Both Assertion (A) and Reason (R) are true,
old laptop before buying the new one. explanation of Assertion (A)
So, she listed her old laptop on (c) Assertion (A) is true, but Reason (R) is false
Quikr.com. She received good response (d) Assertion (A) is false, but Reason (R) is true
from her post and was able to sell the
laptop at good price. Identify the 21. Assertion (A) In case of fire insurance,
component of e-business being insurable interest must be present at the
described above. time of taking the policy as well as at
(a) C2C (b) B2B the time of loss of subject matter.
(c) Intra-B (d) B2G Reason (R) Fire must be the proximate
cause of damage or loss in a fire
17. Development of business education has
insurance policy.
made people aware of the importance
of social responsibility for the business. 22. Assertion (A) e-business has considerably
(a) True increased dependence on paperwork.
(b) False Reason (R) In case of e-business, most
(c) Can’t say of the work is done electronically
(d) Partially true through computers.
23. Assertion (A) The karta cannot be an 29. “He procures different kinds of
expert in all areas of management. products from all over India through
Reason (A) The inability of karta to railways, roadways and airways.”
decide effectively may result into losses Which feature of business is
for the organisation. highlighted in the given lines?
(a) Element of risk
24. Assertion (A) Auxiliaries to trade are (b) Uncertainty
generally referred as services. (c) Procurement of goods and services
Reason (R) Auxiliaries to trade facilitate (d) Sale of goods and services
activities relating to industry and trade.
30. “He has placed information about his
25. Assertion (A) Businessman often pass store on the hoardings, bill boards, etc.
the burden of social responsibility to in order to popularise them.” Which
consumers. auxiliary to trade is used here?
Reason (R) Businessman charging lower (a) Transportation (b) Advertising
prices to customers. (c) Banking (d) Insurance
Case Based MCQs Direction Read the following case study
Direction Read the following case study and answer questions 31 to 35.
and answer questions 26 to 30. Subhadra, Isha, Samriti and Kamlesh, all the
Mr. Liyaquat Ali Khan runs a departmental four of them are members of the same Kitty
store in Bhopal. He procures different kinds of Party. The speciality of their Kitty Party is that
products from all over India through railways, besides several entertainment programmes,
roadways and airways. He also owns a they also provide an opportunity to some of
godown to hold the stocks. He has also taken
the members to speak on some special
an insurance policy worth `15 crores for his
subject. Once, all the four of them got the
business. Moreover, he has taken a loan of
opportunity of speaking on the subject:
`3,00,000 from Axis Bank in order to meet
short-term financial needs of his business. He ‘Digital Payment System’. They shared their
has placed information about his store on the respective experiences as given below:
hoardings, bill boards, etc. in order to First of all Subhadra spoke on her payment
popularise them. system. She told that as and when she buys
goods from a mall, she scans the pattern
26. Mr. Liyaquat is doing which type of pasted on the ‘Payment Counter’ using her
human activity?
mobile and makes the payment easily.
(a) Economic (b) Non-economic
(c) Both (a) and (b) (d) None of these After this, Isha told about her own payment
system. She said that as and when she has to
27. Which type of economic activity is done make some payment, she uses the LOGIN
by Mr. Liyaquat? Id, LOGIN PASSWORD and
(a) Business (b) Profession TRANSACTION PASSWORD obtained
(c) Employment (d) None of these from her Bank. In this way, very easily and
28. “He also owns a godown to hold the with full safety she makes the payment.
stocks.” Which auxiliary to trade is used Samriti told that she made her payment quite
here? fast by using her VIRTUAL Id. Similarly,
(a) Transportation (b) Warehousing Kamlesh told that she had a mobile with
(c) Banking (d) Insurance BASIC FEATURES and she required no
internet to make her payments. In order to selected a place where the company’s
make the payment, she needed the registered registered office would be situated. Along
Mobile number and MMID of the receiver. with it, with the advice of business specialists,
She has to use the MPIN issued by her bank. it was also decided what procedure would be
followed for the issue and allotment of shares.
31. Identify Subhadra’s digital payment
system. All the friends wanted their company to have
(a) Internet banking a singular recognition, and people should get
(b) Quick response code immediate attraction towards its products. It
(c) Unified payment interface was felt that the very name of the company
(d) Unstructured supplementary service data could become a reason for its recognition.
32. Isha uses LOGIN Id, LOGIN After a detailed discussion, the company’s
PASSWORD and TRANSACTION name was decided as Trimurti Ltd. Then, they
PASSWORD to make her payments. jointly completed all the formalities of the
Identify her payment system. formation of the company.
(a) Internet banking 36. Which form of business is highlighted
(b) Quick response code in the above case?
(c) Unified payment interface
(a) Partnership (b) Company
(d) Unstructured supplementary service data
(c) Sole proprietorship (d) HUF
33. Samriti makes payments by using her 37. Which type of company highlighted in
VIRTUAL Id. Identify her payment the lines?
system.
(a) Public company (b) Private company
(a) Internet banking (c) One person company (d) None of these
(b) Quick response code
(c) Unified payment interface 38. “All of them jointly selected a place
(d) Unstructured supplementary service data where the company’s registered office
would be situated.” Which clause of
34. Kamlesh uses a mobile with BASIC MoA is being discussed in the given
FEATURES. Identify her payment
lines?
medium.
(a) Internet banking (c) Situation (d) Association
(b) Quick response code
(c) Unified payment interface 39. “After a detailed discussion, the
(d) Unstructured supplementary service data company’s name was decided as
Trimurti Ltd.” Which clause of MoA is
35. They all are using which facility of being discussed in the given lines?
banking?
(a) Bank draft (b) Cheque (c) Situation (d) Association
(c) e-banking (d) RTGS
40. “It was also decided what procedure
Direction Read the following case study would be followed for the issue and
and answer questions 36 to 40. allotment of shares”. Which document
A group of seven friends decided to jointly set is being highlighted in the lines?
up a public company in a rural area where (a) MoA (b) AoA
the people were facing a serious (c) Prospectus (d) None of these
unemployment problem. All of them jointly
PRACTICE PAPER 2
OMRSHEET
Instructions
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10 a b c d 30 a b c d
11 a b c d 31 a b c d
12 a b c d 32 a b c d
13 a b c d 33 a b c d
14 a b c d 34 a b c d
15 a b c d 35 a b c d
16 a b c d 36 a b c d
17 a b c d 37 a b c d
18 a b c d 38 a b c d
19 a b c d 39 a b c d
20 a b c d 40 a b c d

PRACTICE PAPER 3
Instructions
Multiple Choice Questions 3. Match the principles of insurance given

Direction (Q. Nos. 1-20) All the in column I with the suitable statement
questions have four options out of which in column II.
only one is correct. Choose the correct Column I Column II
option as your answer. A. Subrogation (i) It is the duty of the
insured to take
1. Ramu is a farmer and cultivates wheat reasonable steps to
on a large piece of land in a district in minimise the loss.
Rajasthan. Ramu has sold his ancestral B. Contribution (ii) Insurer gets all the
house for ` 60 lakhs. His son, Shyamu rights against the
third party with
proposes him to establish a flour mill respect to subject
with this money as the raw material matter insured.
wheat will be available from their fields. C. Mitigation (iii) The insurer and
Identify the type of manufacturing insured must disclose
industry Shyamu plans to set up. all the material facts
to each other.
(a) Analytical (b) Synthetical
(c) Processing (d) Assembling D. Good faith (iv) It ensures equitable
distribution of losses
2. Deepak Wadhwa and sons have been between insurers.
carrying on the business of diamond Codes
cutting since the last three generations in A B C D A B C D
Bhuj, Gujarat. Since Bhuj is prone to (a) (ii) (iv) (i) (iii) (b) (i) (ii) (iii) (iv)
earthquakes, the firm has decided to (c) (iv) (iii) (ii) (i) (d) (iii) (iv) (ii) (i)
insure their business premises and 4. In recurring deposit account, the
inventory with Star Insurance Company. depositor enjoys the liquidity of saving
Which cause of business risks, the account and interest rate of fixed
company is trying to minimise? deposit account.
(a) Human cause (b) Natural cause (a) True (b) False
(c) Economic cause (d) None of these (c) Can’t say (d) Partially true
5. Match the following. 9. Yogita, a business woman, has a

Column II
Current Account in Punjab National
Column I Bank (PNB). Her Current Account
(Types of
(Services) shows balance of just ` 50,000, while
Hindrances)
she urgently needs ` 3,00,000 to pay off
A. Warehousing (i) Hindrance of
place
one of her creditors. She approaches
PNB to allow her to withdraw
B. Transportation (ii) Hindrance of risk ` 3,00,000, using the facility extended
C. Insurance (iii) Hindrance of by the bank to her due to her credit
knowledge worthiness. The Bank agrees to it.
Identify the facility which has been
D. Advertisement (iv) Hindrance of provided by PNB to Yogita.
time
(a) Bank draft (b) Bank overdraft
Codes (c) RTGS (d) NEFT
A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (i) (iv) (ii) (iii) 10. ……… organisation is considered as a
(c) (iv) (iii) (ii) (i) (d) (iii) (ii) (iv) (i) part of government only.
6. A statutory corporation is a body (b) Government company
corporate. (c) Departmental undertaking
(a) True (b) False (d) None of the above
11. C2C commerce is best suited for
7. Nitesh insured his factory for dealing in goods for which there is no
` 25,00,000 against fire. Due to fire in established market.
his factory, he suffered a loss of stock (a) True
worth ` 23,00,000. He is of the opinion (b) False
that he can recover the entire policy (c) Can’t say
amount of ` 25,00,000 from the (d) Partially true
insurance company? State the relevant 12. Providing the right quality and quantity
insurance principle in this regard. of goods and services to people in the
(a) Subrogation (b) Indemnity society is the responsibility for which
(c) Mitigation (d) Contribution interest group?
8. Formation of a company is a complex (a) Employees
activity involving completion of legal (b) Community
(c) Consumer
formalities and procedures divided into
(d) Government
three distinct stages
(i) Incorporation. 13. ……… is a corporate body created by the
(iii) Promotion. legislature with defined powers, functions
(iii) Subscription of capital. and is financially independent with a
Which of the following choice represent clear control over a specified area.
the correct sequence of the steps? (a) Government company
(b) Public corporation
(a) (i), (ii), (iii) (b) (i), (iii), (ii)
(c) (iii), (ii), (i) (d) (ii), (i), (iii)
14. Supply of right quality and quantity of 18. ABC Ltd. is a leading marketing
goods to consumers at reasonable company of soft drinks. Its 32% of total
prices constitutes the responsibility of paid-up capital is held by central
an enterprise towards government. government and 21% is by Delhi
(a) True (b) False government. Identify the form of public
(c) Can’t say (d) Partially false sector enterprise.
15. Skylark Enterprises is dealing in mobile (b) Government company
accessories. With the continuous (c) Departmental undertaking
increase in demand for mobiles, their (d) None of the above
business is expanding. However, the
Managing Director (MD) observed that
19. ……… commerce refers to interaction
and dealings among various departments
the decision-making process in the
and persons within the firm.
enterprise is very slow and level of
(a) Business (b) Intra business
coordination is decreasing between the
(c) Inter business (d) All of these
various departments.
Tejas, an IT professional, suggested that
20. Trendz Ltd. is a leading manufacturer of
garments. The company distributes its
the company should have its own
defective products free of cost (after
internet to interact and deal between getting them repaired from Nar Niketan
various departments and persons within at lower cost) to the orphanage. Identify
the firm. MD liked the idea and the kind of social responsibility, which
implemented it immediately. Identify the company is trying to achieve.
the branch of e-business suggested by
(a) Society (b) Legal
Tejas.
(c) Ethical (d) Discretionary
(a) B2B (b) Intra-B
(c) C2C (d) B2C Assertion-Reasoning MCQs
16. According to the Weights and Measures Direction (Q.Nos. 21-25) There are two
Act, every eatable product should statements marked as Assertion (A) and
explicitly bear a green dot for Reason (R). Read the statements and
vegetarian contents and brown dot for choose the appropriate option from the
non-vegetarian ingredients. However, options given below
this practice is not followed by Swad (a) Both the Assertion (A) and Reason (R) are
true and Reason (R) is the correct
Pvt. Ltd., a company engaged in the explanation of Assertion (A)
manufacturing of frozen snacks. (b) Both the Assertion (A) and Reason (R) are
Identify the kind of social responsibility true, but Reason (R) is not the correct
being ignored by the company. explanation of Assertion (A)
(a) Legal (b) Economical (c) Assertion (A) is true, but Reason (R) is false
(c) Social (d) Discretionary (d) Assertion (A) is false, but Reason (R) is true
17. An enterprise must behave as a good 21. Assertion (A) Life insurance is not only
citizen. This is an example of its a protection but is a sort of investment
responsibility towards ……… . also.
(a) owners Reason (R) Under life insurance, à
(b) workers certain sum is returnable to the insured
(c) consumers at the time of death or at the expiry of a
(d) community certain period.
22. Assertion (A) The volume of B2B 26. Which type of human activity is Farhan
transactions is much higher than the going to do?
volume of B2C transactions. (a) Economic (b) Non-economic
Reason (R) To facilitate a single B2C (c) Both (a) and (b) (d) None of these
transaction, there are number of B2B 27. Which type of economic activity is
transactions. Farhan going to do?
23. Assertion (A) There is no separate law (a) Trade (b) Industry
that governs sole proprietorship. (c) Export (d) Import
Reason (R) Sole proprietorship is the 28. On which part of business, was the
most regulated form of business, it is information given to Farhan by
easy to start and close the business as business expert?
per the wish of the owner. (a) Trade (b) Industry
24. Assertion (A) Warehousing facilitates (c) Aids to trade (d) Profession
the availability of goods as and when 29. ‘‘How will the goods be brought from
required. distant places.’’ Which aid to trade will
Reason (R) Warehousing removes the help Farhan to overcome the problem
hindrance of place by providing facility highlighted in the given line?
of storage of goods. (a) Transportation (b) Warehousing
(c) Insurance (d) Advertising
25. Assertion (A) A business enterprise can
avoid the problem of government 30. Through which aids to trade, Farhan’s
regulation. financial problem will be solved?
Reason (R) A business voluntarily (a) Insurance (b) Advertising
assumes social responsibility. (c) Banking (d) Transportiation
Case Based MCQs Direction Read the following case study

Direction Read the following case study and answer questions 31 to 35.
and answer questions 26 to 30. Sparsh got two types of insurance policies. He
Farhan, a young man, wants to provide got his first insurance policy on his house. He
employment to the local people of his village. had his house insured by ‘National Insurance
He decided to do the wholesale business of Co.’ for ` 1,30,00,000. The company thought
mobile phones made by the latest technique. this risk to be too high. Out of this amount,
But so many questions began to crop up in his the ‘National Insurance Co.’ got insured for
mind: how will the goods be brought from ` 60,00,000 by ‘New India Insurance
distant places, how will the finance be Company.’
arranged, and how will the information on his Sparsh got the second policy for the insurance
modern business be conveyed to the people? of his life. He got his life insured by two
He consulted a business expert, Mr. Balram companies: ‘Aegon Life Insurance Co.’ and
who gave him information on the auxiliaries to ‘Aviva Life Insurance Co. India Ltd’.
trade, which could solve his problem. From both these companies, he got the
Farhan understood what the expert told him. Insurance policies for ` 50,00,000 and
He employed 50 workers and started his ` 30,00,000 respectively.
business.
31. Identify the type of life insurance Once they found all the aspects satisfactory,
contract got by Sparsh. they decided to start a company called
(a) Contract of Indemnity ‘convenience @ home’ private Ltd. They got
(b) Life Insurance Contract the name registered with the registrar.
(c) Re-insurance Contract
36. Which form of business organisation
discussed in the case?
32. Sparsh got two insurance policies on his (a) Partnership (b) Company
life. To which of the following states (c) Sole proprietor (d) HUF
does it indicate?
37. Which step of formation of company is
(a) Re-insurance
being discussed here?
(b) Double Insurance
(c) Contract of Indemnity (a) Promotion (b) Incorporation
(c) Capital subscription (d) Commencement
(d) Both (b) and (c)
33. As ‘National Insurance Co.’ thought the 38. “Rahul and Sanchali felt that there was
risk to be too high, it got the Insurance an opportunity of business in providing
done by another company. Identify this a service of online grocery stores for
type of insurance. working people.” Which step of
promotion is highlighted in the given
(a) Re-insurance
lines?
(b) Double Insurance
(c) Life Insurance Contract (a) Identifying business opportunity
(b) Feasibility studies
(c) Name approval
34. Identify the type of insurance contract (d) Appointment of professionals
on the house got by Sparsh. 39. “They analysed the idea in terms of
(a) Contract of Indemnity technical, financial and economic
(b) Life Insurance Contract feasibility.” Which step of promotion is
(c) Double Insurance highlighted in the given lines?
(a) Identifying business opportunity
35. Under which type of insurance, Sparsh (b) Feasibility studies
insured his house? (c) Name approval
(d) Appointment of professionals
(a) Life insurance
(b) Marine insurance 40. “Once they found all the aspects
(c) General insurance satisfactory, they decided to start a
(d) Health insurance company called ‘convenience @ home’
Direction Read the following case study private Ltd. They got the name
and answer questions 36 to 40. registered with the registrar.” Which
step of promotion is highlighted in the
Rahul and Sanchali felt that there was an given lines?
opportunity of business in providing a service
(a) Identifying business opportunity
of online grocery stores for working people. (b) Feasibility studies
They analysed the idea in terms of technical, (c) Name approval
financial and economic feasibility. (d) Appointment of professionals
PRACTICE PAPER 3
OMRSHEET
Instructions
ü û

10 a b c d 30 a b c d
11 a b c d 31 a b c d
12 a b c d 32 a b c d
13 a b c d 33 a b c d
14 a b c d 34 a b c d
15 a b c d 35 a b c d
16 a b c d 36 a b c d
17 a b c d 37 a b c d
18 a b c d 38 a b c d
19 a b c d 39 a b c d
20 a b c d 40 a b c d

ANSWERS
Practice Paper 1
1. (b) 2. (b) 3. (a) 4. (c) 5. (a) 6. (b) 7. (c) 8. (c) 9. (d) 10. (b)
11. (b) 12. (c) 13. (c) 14. (a) 15. (b) 16. (c) 17. (b) 18. (c) 19. (a) 20. (c)
21. (b) 22. (b) 23. (c) 24. (d) 25. (a) 26. (a) 27. (d) 28. (c) 29. (a) 30. (d)
31. (c) 32. (a) 33. (b) 34. (d) 35. (c) 36. (b) 37. (a) 38. (c) 39. (a) 40. (c)
Practice Paper 2
1. (a) 2. (c) 3. (a) 4. (b) 5. (c) 6. (b) 7. (c) 8. (d) 9. (c) 10. (a)
11. (a) 12. (b) 13. (c) 14. (d) 15. (b) 16. (a) 17. (a) 18. (b) 19. (c) 20. (c)
21. (d) 22. (d) 23. (a) 24. (a) 25. (c) 26. (a) 27. (a) 28. (b) 29. (c) 30. (b)
31. (b) 32. (a) 33. (c) 34. (d) 35. (c) 36. (b) 37. (a) 38. (c) 39. (a) 40. (b)
Practice Paper 3
1. (c) 2. (b) 3. (a) 4. (b) 5. (b) 6. (a) 7. (b) 8. (d) 9. (b) 10. (c)
11. (a) 12. (c) 13. (b) 14. (b) 15. (b) 16. (a) 17. (d) 18. (b) 19. (b) 20. (d)
21. (a) 22. (a) 23. (c) 24. (c) 25. (a) 26. (a) 27. (a) 28. (c) 29. (a) 30. (c)
31. (b) 32. (b) 33. (a) 34. (a) 35. (c) 36. (b) 37. (a) 38. (a) 39. (b) 40. (c)

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CBSE

ARIHANT PRAKASHAN (School Division Series)

Administrative & Production Offices

PART A FOUNDATIONS OF BUSINESS

UNIT - Public, Private and Global Enterprises

UNIT - Business Services

UNIT - Emerging Modes of Business

UNIT - Social Responsibility of Business and Business Ethics

Project Work In Business Studies Only One Project :

Unit 2 : Forms of Partnership vs Limited Liability Partnership (LLP)

Unit 3 : Public, Private Global Enterprises – Feature. Joint ventures, Public

Unit 5 : Emerging Modes Business Process Outsourcing (BPO): Concept,

Unit 6 : Social Responsibility Business Ethics - Concept and Elements

Hkkjr CENTRAL BOARD OF SECONDARY EDUCATION

Hkkjr CENTRAL BOARD OF SECONDARY EDUCATION

Hkkjr CENTRAL BOARD OF SECONDARY EDUCATION

13. One of the functions of financial 20. Due to which characteristic of

Codes 51. The best example of analytical industry

Column I Column II 67. Advertising makes it possible for produ-

Case Based MCQs

(v) Existence of the firm is affected by death, 12.Types of Partnership

15. Cooperative Society is a voluntary 21. Features of Joint Stock Company

19. Types of Cooperative Society its shares.

The companies in India are governed by the limit on maximum members.

(iii) One-person Company means a company (iv) Commencement of Business A public

9. Match the forms of business farming of this kind of chilli on a large

On the basis of the given information, Codes

48. Match the following. On the basis of the given information

Case Based MCQs

This affects the freedom in decision-making Central Government and an annual

16. Government of India establishes its Column I Column II

Indian railways is financed by the (iii) Bringing down government equity

Assertion-Reasoning MCQs Case Based MCQs

Case Based MCQs

12. Match the following. 16. ……. is a contract of insurance, in which

32. Which of the following is not a function Codes

60. Under which policy, policy money is Assertion–Reasoning MCQs

Case Based MCQs

24. Virtual Private Network (VPN) 29. Various departments of an organisation

34. Mail sent by purchase department to 38. An electronic facility of transferring

35. Personal-inspection of goods is possible 39. Organisational structure is vertical or

Case Based MCQs

8. Ethical responsibility of a business includes 14. Match the following.

9. Responsibility of a business to prevent B. Responsibility (ii) To ensure safety of

12. Professional management education in 16. “According to Weights and Measures

30. In addition to earning profits, a 36. Environmental protection can best be

42. A company is manufacturing fairness 46. Match the following.

57. Assertion (A) Economic activities of 61. “Company is committed …… creed

Case Based MCQs

Multiple Choice Questions 3. Match the ‘nature of services’ in

Do not write anything on the OMR Sheet

Students should not write anything below this line

SIGNATURE OF EXAMINER WITH DATE MARKS SCORED

Multiple Choice Questions 2. Match the ‘various e-banking services’ in

Do not write anything on the OMR Sheet

Students should not write anything below this line

SIGNATURE OF EXAMINER WITH DATE MARKS SCORED

Multiple Choice Questions 3. Match the principles of insurance given