CBSE

Class 11 Business Studies Half Yearly (Set – A)

Indraprastha International School
SESSION: 2016 –17

General Instructions:

This question paper contains 27 questions.

Write answers neatly and legibly.
All the questions are compulsory.
Questions carrying 1 mark should be answered in one word to one sentence.
Questions carrying 3 marks should be answered in 50 to 75 words.
Questions carrying 4 marks should be answered in 100 words.
Questions carrying 5 marks should be answered in 150-200 words.
Questions carrying 6 marks should be answered in 250-300 words.
Attempt all parts of a question together.

1. “Business is undertaken with the objective of earning money.” Which characteristic

of business is highlighted in this statement? (1)

Ans. Business is an economic activity.

2. What is meant by auxiliaries to trade? (1)

Ans. Activities which are meant for assisting trade are known as Auxiliaries to trade.

3. The business assets of an organisation amount to Rs 100000 but the debts that remain
unpaid are Rs 150000. What course of action can the creditors take if the organisation is
a sole proprietorship firm? (1)

Ans. Creditors can recover the balance 50000 from the private /personal assets of the owner
Unlimited liability feature.

4. It is the prime responsibility of the insured to take reasonable steps to minimise

loss/damage to the insured property. Identify and state the principle of insurance
highlighted in the above statement. (1)

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Ans. Principle of mitigation.

5. When is insurable interest required to be present in case of a life insurance policy?

(1)

Ans. At the time of inception of policy.

6. Define Real time gross settlement fund transfer system. (1)

Ans. Definition to include the terms real time and gross settlement.

7. A cracker manufacturing firm has undertaken a fire insurance policy for Rs.12 lakhs.
After two months, due to fire it incurred a loss of Rs.7 lakhs. How much amount will the
firm get as compensation? (1)

Ans. 7 Lakhs

8. What is e- business? (1)

Ans. E-Business refers to conducting business activities over internet or any other computer
network.

9. Explain the privileges of a private company in respect of: (3)

a. Index of Members

b. Issue of Prospectus

c. No. of members

Ans. a) Index of members- A private company is not required to keep an index of members.

b) Issue of prospectus- A private company is not required to issue a prospectus.

c) No. of members - A private company can start with minimum two members whereas a
public company must have minimum 7 members.

10. Ketan and Prachi were friends who started a partnership business. They did not get
their firm registered as it was optional. Soon Ketan and Prachi started having conflicts.
Ketan wanted to approach a lawyer. If you were a lawyer, how would you guide them

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with the consequences of non registration of their partnership firm? (3)

Ans. Following are the consequences for non registration of a partnership firm:

a. Partner of an unregistered firm cannot file a case against the firm or other partners

b. The firm cannot file a suit against third parties

c. The firm cannot file a case against the partners

11. Some organisations are directly attached to a particular Ministry of the central or
state government and are under the direct control of the concerned Minister. The
business decisions are thus influenced by political considerations. (3)

a. Identify the form of public sector enterprise mentioned above.

b. Give any two examples of this form of public sector enterprise.

Ans. A. Departmental Undertakings

B. Any two of the following examples

Railways, Defence, Post and Telegraph

12. Bhawna is interested in opening an account in which amount can be deposited only
once for a fixed period of time. (3)

a. Identify the type of account which is most suitable for her.

b. Explain this type of bank account.

Ans. A. Fixed Deposit account (1 mark)

B-Explanation of Fixed deposit account (2 marks)

It is an account in which the amount is deposited with the bank for a fixed period of
time
The main purpose of this account is to enable the individuals to earn a higher rate of
interest on their surplus funds
The period of fixed deposit ranges from 15 days to 10 years

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 The amount can be deposited once in a fixed deposit account. If the investor wants to
make further investments under Fixed deposit account, separate accounts need to be
opened.
It is also known as term/time deposit.

13. Explain any three benefits of e-business. (3)

Ans. a. Ease of formation & lower investment requirements

b. Convenience

c. Speed

d. Global reach

e. Movement towards a paperless society

14. Distinguish between traditional business and e-business on the basis of (3)

a. Formation.

b. Nature of Contact with a supplier and customer.

c. Operating cost.

Ans.

Basis Traditional Business E-Business

Difficult to form as lot of
Easy to form as no investment is
procedural requirements & huge
Formation required in purchasing shops or
investment on purchasing shops
showrooms for display
etc is required
Nature of Contact
Direct contact with the supplier
with a supplier & Indirect through intermediaries
& customer
customer
High due to fixed charges
associated Low as a result of reliance on
Operating Cost with investment in procurement & network of relationships rather

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 storage, production, marketing & than ownership of resources
distribution facilities

15. “Profit is the primary motivating force for economic activity.” Do you agree? Give
any four reasons in support of your answer. (4)

Ans. Yes, I agree profit is the primary motivating force for economic activity. Following
reasons justify the role of Profit in business:

a. Survival-Explain

b. Expansion & Growth-Explain

c. Better Reputation & Goodwill-Explain

d. Reward for Risk taking-Explain

16. Mr Karan intends to start a business in the form a private limited company but he
has no idea about the formalities to be followed in the formation of a company. (4)

a. Suggest him a specialised person who will undertake all the formalities for the
formation of company.

b. Explain the three types of feasibility studies conducted by this specialised person to
investigate different aspects of the proposed business.

Ans. A-The specialised person who will undertake all the formalities for the formation of a
company is Promoter of a company and he will take the help of various experts and analysts.

B- ½ mark for identification & ½ marks for explanation of each of the Feasibility studies:

Technical Feasibility
Financial Feasibility

Economic Feasibility

17. a. Akshay has taken a life insurance policy hiding the fact that he is a heart patient;
later on he dies due to a heart attack. Is the insurance company liable to pay the
insured amount to the legal heirs of Akshay? Explain the principle of insurance

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violated above.

b. Rahul has taken fire insurance policy for his factory. Due to fire he suffered a loss of
Rs 4 lakh and he got the compensation for the same. The half burnt goods can be sold
for Rs 40,000. Who has the right over it and why? (4)

Ans. a. No, Insurance company will not be liable to pay the insured amount to the legal heirs
of Rishab ( 1 mark) because he has not disclosed about his heart problem at the time of
taking the policy ,thereby he has concealed an important Material fact which should have
been disclosed as per the Principle of Utmost Good faith ( 1mark for reason)

b. The insurance company has right over the goods (1)-Principle of subrogation (1)

18. Sahil got his house insured against fire for Rs 5 lakh with insurer X and for Rs 10
lakh with insurer Y. A loss of Rs 3 lakh occurred. How much compensation can he claim
from insurer X and Y? Explain the principle referred to above. (4)

Ans. Insurer A-100000 Insurer B-200000 (2 marks), Explanation of Principle of contribution.

19. What is outsourcing? What is the need for outsourcing? (4)

Ans. Meaning of Outsourcing-Outsourcing refers to contracting out some of its activities to a

third party which were earlier performed by the Organisation.

Need for Outsourcing –Any 3 of the Following Points

Focusing of attention
Quest for Excellence
Cost Reduction
Growth through Alliance
Boost to Economic Development

20. Why is commerce considered the backbone of industry and other business
activities? Give any five reasons. (5)

Ans. Commerce is considered as a backbone of Industry & other business activities because it
helps to remove the following hindrances:

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 Removes hindrance of place
Removes hindrance of time
Removes hindrance of risk• Removes hindrance of finance
Removes hindrance of information

21 Identify the document which lays down: (5)

a. The charter or constitution of the company & defines objectives & powers of the
company.

b. The rules & regulations for internal management of the company.

c. Explain the Name Clause, Objects Clause and the registered office clause of the
document identified in (a) above.

Ans. a. Memorandum of association

b. Articles of association

c. Explanation of Name clause

Explanation of Objects clause

Explanation of registered office clause

22 Malhotra Ltd. Is a company established in India. They extended their operations to

Dubai and U.S.A by establishing places of business in these countries. (5)

a. Which type of business enterprise is Malhotra Ltd? Define it.

b. Explain any 4 features of the type of global enterprise referred above.

Ans. Definition of Multinational Corporation-A multinational corporation is a company

whose business operations extend beyond the country in which it has been incorporated.

Features of multinational corporations:

a. Expansion of Market Territory

Quote-“Coca Cola a multinational enterprise is registered in USA & has its business

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operations in many countries of the world”

b. Centralised control Quote-“Its headquarters are located in USA which exercises control
over its branches & subsidiaries operated within the broad policy framework of parent
organisation”

c. Foreign collaboration Quote-“To manage its subsidiaries in different countries, the

company employs trained & professional managers & enter into agreements with host
countries for production of goods, resources etc”

d. Advanced Technology Quote-“To face international competition it uses sophisticated

technology that leads to greater productivity & better quality”.

23 Distinguish between life, fire and marine insurance on the basis of : (5)

a. Subject Matter.

b. Insurable interest.

c. Indemnity.

d. Surrender Value.

e. Element.

Ans.

Basis Life insurance Fire Insurance Marine

Physical property or
Subject matter Human Life Ship,cargo or freight
assets
To be present at the
To be present at the time of taking the
To be present only at
Insurable Interest time of taking the policy as well as at
the time of loss
policy the
time of loss
It is not a contract of
Principle of Principle of
Indemnity as entire
Indemnity Indemnity
amount is paid either

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 Indemnity at the maturity date is applicable as the is applicable as the
or actual loss or the sum actual loss or the sum
on the happening of assured, whichever is assured, whichever is
the event lower is received lower is received

A life insurance A fire Insurance A marine Insurance

contract has policy policy has no
Surrender value
surrender has no surrender or surrender
or paid up value paid up value. or paid up value
Life insurance
contract Fire insurance has Marine Insurance
Element contains both element only contains only element
of Protection & element of protection of Protection
investment

24. What do you mean by : (6)

a. B2B Commerce?

b. B2C Commerce?

c. C2C Commerce?

Ans. for each for correct explanation of each of:

a. B2B-Business to Business commerce -1 mark for explanation & 1 mark for example

b. B2C-Business to Customers-1 mark for explanation & 1 mark for example

c. C2C-Customer to Customer-1 mark for explanation & 1 mark for example

25. Neha is running a ladies boutique. She appointed two ladies to assist her in trading
activities at a salary of Rs.8000 per month. (6)

a. Which form of business organisation is reflected in the above Para?

b. Explain any three merits and two demerits of this form of business organisation.

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Ans. a. Sole Proprietorship

b. Merits-1 mark for each merit

Demerits- 1 mark for each demerit

26. Describe the industrial policy 1991 towards the public sector. (6)

Ans. The four points of Industrial Policy 1991

a. Reduction in the number of industries reserved for the Public sector from 17 to 8 -1 mark
for heading & 1 mark for explanation

b. Disinvestment of shares of a select set of Public Sector Enterprises-1 mark for heading & 1
mark for explanation

c. Policy regarding Sick Public sector units-1 mark for heading & 1 mark for explanation

27. Mr. Mahesh is an orthopaedic surgeon who has set up his own clinic. His wife Mrs
Savita operates her jewellery shop. Their daughter Chhavi loves children. She shared
her willingness to join an NGO and use her knowledge and skills to help the
underprivileged children. (6)
a. Give any two points of difference between the nature of tasks undertaken by Mr
Mahesh and his wife.
b. How would you classify the activity which Chhavi is willing to pursue?
c. By quoting the lines, state any one value depicted in the above case.

Ans. a) While Savita is into business, Mahesh is into profession

Commencement, nature of work, qualification, capital investment, Risk Element,

Reward/Return, Transfer of interest, Code of Conduct

b) Chavi is willing to pursue a non-economic activity, which can be defined as an activity

performed out of love for children and not with the motive of earning money.

c) Value Depicted: (1/2 mark each for any two of below; Love and Care for underprivileged
children

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