Business studies assignment answers

Q1)

Industry refers to economic activities, which are connected with conversion

of resources into useful goods
1. Primary- Industries which deal with obtaining or offering raw materials which are
processed as commodities for the customers. Example: Farming, Fishing
2. Secondary- Industries which are essentially manufacturing or assembling
industries. ...
3. Tertiary- These industries act as a support system to the primary and secondary
industries

Q2)

Basis business profession employment

Q3)

Hindrance of place - removed by transportation agencies. Rail, air, sea, and land
transports bring the products to the place of the consumer.
Hindrance of time - removed by warehouses management agencies. Warehouses
removes problem of time
Hindrance of finance - removed by bank. The banks provide banking facilities to
consumers and the producer to make work faster.
Hindrance of risk - removed by insurance companies. The company buys the premium
for the safety of the company for the goods.
 Q4)
Sole proprietorship

1) Liability : Unlimited.
2) Members: Min and Max 1 member.
3) Continuity : Till the proprietor's
death , insolvency or
voluntary dissolution .

HUF

1) Liability: Karta - Unlimited, Co-parceners - Limited to their share of property.

2)Member : Head of the family karta , others become co-parceber by birth . Min : 2
coparceners and 1 karta , Max: no limit.
3) continuity:Perpetually continues.

Joint stock company

1)Liability: Limited to unpaid shares.

2)Member: Min - 7 , Max - no limit.
3) Continuity : perpetual succession

Q5)

Mr. Singh can not participate in the management, but still holds unlimited liability.

 The process followed here is Partner by Estoppel.

 It is a legally binding partnership that can arise when there is no formal partnership agreement in
place.
 A person who represents, or allows themselves to be represented, is liable to many things.
 As a partner in a firm by conduct or words is liable for the credit for loan obtained from the firm on the
basis of such representation presumption of partner.
 The partner makes no capital contributions and does not participate in management, but his liability is
unlimited
Q6)

If I were a lawyer, I would tell Sonam that I could not help her until her firm
is registered in the register of firms. Because Legal approach is possible
only when the partnership firm is registered.

Q7)

Cooperative societies are formed with the aim of helping their members. This type of business organisation is
formed mainly by weaker sections of the society in order to prevent any type of exploitation from the economically
stronger sections of the society.

: 1. Consumer Cooperative Society: Consumer cooperative societies are formed with the objective of protecting
the consumer interests

: 2. Producer Cooperative Society: Producer cooperative societies are formed with the objective of protecting the
interests of small producers

3. Credit Cooperative Society: These cooperative societies are set up with the objective of helping people by
providing credit facilities

4. Housing Cooperative Society: Housing cooperative societies are formed with the objective of providing housing
facilities to the members of the society

5. Marketing Cooperative Society: These societies are formed with the objective of providing small producers a
platform to sell their products at affordable prices and also eliminate middlemen from the chain, thus ensuring
adequate profits
Q8)

The forms of organisation which a public enterprise may take are as follows

(i) Departmental Undertaking: These enterprises are established as departments of the ministry and are
considered as part of an extension of the ministry itself

ii) Statutory Corporation: Statutory corporations are public enterprises brought into existence by a Special Act of
the Parliament, which defines its powers and functions.

iii) Government Company: According to the Indian Companies Act, 1956, a government company means any
company in which at least 51 per cent of the paid up capital is held by the Central Government, or by any State
Government or partly by Central Government and partly by one or more State Governments

Q9)

(i) Indian Railways : Departmental Undertaking

(ii) Indian Post and Telegraph : Departmental Undertaking
(iii) Steel Authority of India Limited (SAIL) : Government Company
(iv) Bharat Heavy Electricals Limited (BHEL): Government Company
(v) Life Insurance Corporation (LIC) of India : Statutory Corporation
(vi) State Trading Corporation : Statutory Corporation

Q10)

No, public sector companies cannot compete with private sector in terms of
projects and efficiency. The reasons are:

 Motive: The main objective of a public sector company is welfare of public

but for a private sector company it is profitability.
 Ownership: There is no or very less interference of government in the
private sector compared to the public sector.
 Management: The management of a public sector is usually less trained
and skillful compared to a private sector company.
 Q11)
Benefits are as follows:
 1. E-banking facilitates digital payments and promotes transparency in financial
statements
 2. Banks that offer internet banking are open for business transactions anywhere
a client might be as long as there is internet connection (Apart from periods of
website maintenance)
 3. E-banking helps in reducing the operational costs of banking services. Better
quality services can be ensured at low cost.

Q12)
• Ship or hull insurance: Since the ship is exposed to many dangers at sea, the
insurance policy is for indemnifying the insured for losses caused by damage to
the ship.
• Cargo insurance: The cargo while being transported by ship is subject to many
risks
• Freight insurance: If the cargo does not reach the destination due to damage or
loss in transit, the shipping company is not paid freight charges

Q13)
No, the factory owner cannot claim compensation as he did not disclose complete
facts about the property insured by him. The insurance company is not liable to
pay his claims. The principle of Utmost Good faith has been violated in this case.

Q14)
Goods are tangible, as in these have a physical presence and they can be touched, while services
are intangible in nature.

The purpose of both goods and services is to provide utility and satisfaction to the consumer

Q15)

 Principle of Utmost Good Faith: This requires both parties to disclose all relevant information regarding the
insured person’s health, age, or insurance terms. Failure to do so can lead to the cancellation of the policy.
Utmost Good Faith is at the core of any insurance policy.
 Principle of Insurable Interest: To take out insurance, the policyholder must have a financial stake in the
insured person’s or property’s well-being. In other words, they must suffer a financial loss if an adverse event
occurs.
 Principle of Indemnity: Under this principle, the insurer covers only losses resulting from third-party actions, not
losses caused by the insured. The goal is to restore the insured to their pre-loss financial position, and insurance
contracts are scrutinized to ensure this.
 Principle of Contribution: When multiple insurance policies cover the same insured person or item, the insurers
share the losses proportionately. If one insurer pays the full amount, the other may seek reimbursement.
 Principle of Subrogation: This principle is particularly relevant in auto, boating, and vehicle accident insurance.
After compensating for an accident, the insurer gains full rights over the insured property or vehicle. In case of
total damage, the insurer assumes ownership of any potential financial benefit.
 Principle of Loss Minimization: Policyholders are legally obliged to take reasonable steps to minimize damage
to themselves or insured property. Negligence in preventing further damage may give the insurer the right to
deny claims resulting from such negligence.
 Principle of Proximate Cause: In an accident or loss, the insurer investigates the causes outlined in the policy. If
the accident does not align with the reasons mentioned in the policy, the insurer may decline the claim. In cases
of multiple-stage accidents, the insurer looks to the primary cause mentioned in the terms and conditions for
claim resolution.

Q16)

(a) The business ethics of MNO Ltd. appear to be aligned with several key principles:

1. *Quality Products:* The company's commitment to providing quality products demonstrates an ethical focus on
delivering value to its customers.

2. *Employee Well-Being:* Providing various facilities to employees with 5 years of service reflects ethical
considerations for the well-being and job satisfaction of its staff.

3. *Community Development:* Offering free computer skills training to youth in remote areas shows an ethical
commitment to giving back to the community and addressing educational disparities.

(b) MNO Ltd. is fulfilling its social responsibilities towards several interest groups:

1. *Employees:* By providing facilities to employees with 5 years of service, the company is demonstrating social
responsibility towards its workforce, promoting job satisfaction, and fostering a positive work environment.

2. *Youth in Remote Areas:* Offering free computer skills training to youth in remote areas highlights social
responsibility towards disadvantaged communities. This helps bridge the digital divide and provides
opportunities for underprivileged youth to acquire valuable skills.

3. *Customers:* MNO Ltd.'s commitment to delivering quality products aligns with its social responsibility towards
customers. It ensures that customers receive value for their investments and are satisfied with the company's
offerings

Q17)

Need for Pollution Control:

1. Reduction of health hazards: There is increasing evidence that many diseases like cancer, heart attacks and lung
complications are caused by pollutants in the environment.

2. Reduced risk of liability: It is possible that an enterprise is held liable to pay compensation to people affected
by the toxicity of gaseous, liquid and solid wastes it has released into the environment

3. Cost savings: Cost savings are particularly noticeable when improper production technology results in greater
wastes which leads to higher cost of waste disposal and cost of cleaning the plants.
: 4. Improved public image: A firm that promotes the cause for environment will be able to enjoy a good
reputation and will be perceived as a socially responsible enterprise.

: 5. Other social benefits: Pollution control results in many other benefits like clearer visibility, cleaner buildings,
better quality of life, and the availability of natural products in a purer form

Q18)

Advantages

 Easy to Set Up: It is easy to set up an electronic business. You can set up an online business even by sitting at home if
you have the required software, a device, and the internet.

 Cheaper than Traditional Business: Electronic business is much cheaper than traditional business. The cost taken to
set up an e-business is much higher than the cost required to set up a traditional business. Also, the transaction cost is
effectively less.

 No Geographical Boundaries: There are no geographical boundaries for e-business. Anyone can order anything from
anywhere at any time. This is one of the benefits of e-business

Limitations

 Lack of Personal Touch: E-business lacks the personal touch. One cannot touch or feel the product. So it is difficult for
the consumers to check the quality of a product. Also, the human touch is missing as well.

 Delivery Time: The delivery of the products takes time. In traditional business, you get the product as soon as you buy
it. But that doesn’t happen in online business. This lag time often discourages customers.

 Security Issues: There are a lot of people who scam through online business. Also, it is easier for hackers to get your
financial details. It has a few security and integrity issues. This also causes distrust among potential customers

Q19)

Incentives given by the government to the industries set up in hurry, backward and rural area are as follows:

Land: Every state offers developed plots for setting up of industries. The terms and conditions may vary. Some states don’t
charge rent in the initial years, while some allow payment in instalments.

Power: Power is supplied at a concessional rate of 50 per cent, while some states exempt such units from payment in the initial
years.

Water: Water is supplied on a no-profit, no-loss basis or with 50 per cent concession or exemption from water charges for a
period of 5 years.

Sales Tax: In all union territories, industries are exempted from sales tax, while some states extend exemption for 5 years
period.

Octroi: Most states have abolished octroi.

Raw materials: Units located in backward areas get preferential treatment in the matter of allotment of scarce raw materials
like cement, iron and steel etc.

Finance: Subsidy of 10-15 per cent is given for building capital assets. Loans are also offered at concessional rates.

Industrial estates: Some states encourage setting up of industrial estates in backward areas.
20)

a) The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 addresses these issues relating to
definition, credit, marketing and technology upgradation. Medium scale enterprises and service related enterprises
also come under the purview of this Act. The MSMED Act, 2006 came into force w.e.f., October, 2006. Accordingly,
enterprises are classified into two major categories viz., manufacturing and services.
b) It is a small scale industry.
c) In the case of enterprises engaged in the manufacture or production of goods pertaining to any industries specified
in the first schedule to the Industries (Development and Regulation) Act, 1951, small enterprise have a limit of
investment in plant and machinery to be more than twenty-five lakh rupees but less than exceed five crore rupees.
d)Values followed by the company are as follows:
1. Employment generation: The company opted for labour intensive technique due to easy availability of labour and
to provide employment to local people.
2. Balanced Regional Development: The company set up food and beverages processing plant in the rural area of
Haryana thereby helping in balanced regional development.
3. Concern for society: The company opted for labour intensive technique thereby showing concern towards the
society

Q21)

Services offered by Retailers to Wholesalers and

Manufacturers:
 1. Helps in the distribution of goods: Retailers are last in the distribution chain. ...
 2. Personal selling: Retailers provide a personal touch in the buying and selling
process. ...
 3. Enabling large-scale operations: Retailers allow manufacturers and wholesalers
to be free from the tension of individual sales to final consumers

Q22)
NABARD
National Bank for Agriculture and Rural Development or NABARD is the main
regulatory body in the country’s rural banking system and is considered as the peak
development finance institution which is established and owned by the government
of India. This bank aims to provide and regulate credit to the rural areas, which will
be a first step towards enhancing the rural development in the country

dic

The aim of DIC is to promote Industrial Development in the District, in order to

generate employment opportunities, by facilitating entrepreneurs in establishing
Micro, Small and Medium enterprises by improving necessary conditions like
infrastructures development, skill development and providing financial support

Q23)

a) rohan displays her goods on bus-stands or pavements - Street traders: Retailers who are
commonly found at places where huge floating population gathers, for example, near railway stations
and bus stands, and sell consumer items of common use, such as stationery items, eatables,
readymade garments, newspapers and magazines.

(b) mangal goods from one street to another, from one locality to another - Peddlers and hawkers:
They are small producers or petty traders who carry the products on a bicycle, a hand cart, a cycle-
rickshaw or on their heads, and move from place to place to sell their merchandise at the doorstep of
the customers. They generally deal in non-standardised and low-value product
Q24)
A small scale retail shop can be located anywhere. It can provide
goods of daily use near the place of consumers.
The different types of small retailers are as follows :
1. General stores: These stores deal in a large variety of products required to satisfy the
day-to-day requirements of the customers. These are found in local markets and
residential areas. These stores remain open for long hours and provide convenience to
the consumers in buying goods of daily use such as stationery items, grocery items,
toiletries etc. They also provide credit facility to their regular customers.
2. Speciality shops : These shops deal in specific lines of products like shoes, toys, gifts,
children's garments electronic goods, etc. Such shops are becoming very common,
particularly in urban areas. In order to attract a large number of customers, these shops
are centrally located.
3. Street stall holders: These are small retailers generally found at places having a heavy
flow of population, such as street crossings, main roads, etc. They deal with low-quality
goods like toys, hosiery products, etc. They carry business operations on a very limited
space.
4. Second-hand goods shop : These retail shops deal in second-hand or used goods like
automobiles, furniture, books, etc. They cater to the needs of people having limited
means. The price of the goods sold by them is generally low. Sometimes, these shops
deal in antique items or goods having historical value. In such a case, they charge high
prices from customers having special interest in such goods.
5. Single line stores: These stores deal in a single product line such as watches, shoes,
tyres' readymade garments, books, etc. These stores are centrally located and keep a
wide variety of items of the same line.

Q25)

1. Bill of Entry: It is an application form supplied by the customs office to the

importer. At the time of receiving the goods, the importer has to fill in three
copies of this form and submit the same to the customs office. It contains
information like the name of the ship, number of packages, marks on the
packages, name and address of the exporter, etc.
2. Bill of Lading: Bill of lading is a document prepared and signed by the master of
the ship acknowledging the receipt of goods on board. It contains terms and
conditions on which the goods are to be taken to the port of destination.
3. A shipment advice is a document sent by an exporter to an importer as proof that the
goods ordered have been shipped. It contains information about the bill of lading, name
of the vessel, date, port of export, description of goods, etc.

Q26)

1. Receiving trade enquiry and sending Quotation : Trade procedure starts when an exporter receives trade enquiry
in written form from the intending importer. In response to the trade enquiry, the exporter sends the quotation or a
performa invoice containing necessary details regarding the detailed condition of sale as delivery schedule, mode of
delivery, mode of packing, terms of payment and so on.

2. Receiving indent and sending confirmation: After receiving the quotation from the exporter, the importer sends
indent which contains all the important particulars of the transaction such as a description of goods, their price,
quantity, quality instructions regarding packing, marking, insurance, mode of payment, date and method of delivery
etc. For buying goods and the exporter confirms its receipt.

3. Obtaining letter of credit : Before despatching the goods, the exporter assesses the credit worthiness of the
importer. For this the import is requested to send a 'letter of credit' in favour of exporter. It contains an undertaking
of importer's bank that bills drawn by the exporter upto a specified amount shall be honoured by the importer.

4. Obtaining export license and completing other formalities : For exporting goods from India exporters are required
to obtain export license, import export code number, registration membership certificate, RBI code number and
registering with ECGC.

5. Obtaining preshipment finance and production or procurement of goods : After receiving a letter of credit, the
exporter obtains preshipment finance from his banker and starts manufacturing/procuring goods as per the
specifications of the export order.

6. Pre-shipment inspection : Before shipment of goods, export Inspection council/authority inspects the quality of
goods and if satisfied, issues export inspection certificate which certifies the quality of goods to be exported.

Q27)
The commanding officer of the ship issues this document to the exporter after cargo is loaded on the
ship- the Mate’s Receipt. A mate's receipt is a receipt issued by the commanding officer of the ship
when the cargo is loaded on board, and contains the information about the name of the vessel, berth,
date of shipment, description of packages, marks and numbers, condition of the cargo at the time of
receipt on board the ship, etc.

(ii) This document is prepared by the shipping company to acknowledge the receipt of goods on a
ship and gives the undertaking to carry them to the port of destination- a Bill of lading. After receipt of
the freight, the shipping company issues a bill of lading which serves as evidence that the shipping
company has accepted the goods for carrying to the designated destination.

(iii) This document is the most appropriate and secure method of payment to settle international
transactions: a Bill of exchange. On receiving the bill of exchange, the importer releases the payment
in case of sight draft or accepts the usance draft for making payment on maturity of the bill of
exchange. The exporter’s bank receives the payment through the importer’s bank and is credited to
the exporter’s account. The exporter can get immediate payment from his/ her bank on the
submission of documents by signing a letter of indemnity

Q28)
The eCommerce industry is full of cases where criminals have stolen the information about inventory
data, personal information of customers, such as addresses and credit card details. Damages to
networks of computers– attackers may damage a company's online store using worm or viruses
attacks.
Q29)

Corporate social responsibility in general refers to the responsibilities and duties of the businesses
towards the society. The Corporate Social Responsibility in India as governed by the Companies Act,
2013 (under Clause 135) applies to those companies which have an annual turnover of Rs. 1,000
crore and more, or those having a net worth of Rs. 500 crore and more, or a net profit of Rs. 5 crore
and more. The meaning of CSR as per Companies Act, 2013 can be understood with the help of the
following guidelines:
1. The companies are required to setup a committee for Corporate Social Responsibility consisting of
3 or more board members of the company, including at least one independent director.
2. The companies should spend at least 2% of their average net profits made during 3 immediately
preceding financial years, in regards with the Corporate Social Responsibility Policy.
3. In India, only those CSR activities should be taken by the company which are a part of Corporate
Social Responsibility Policy as formed on the recommendations of Corporate Social Responsibility
Committee.
4. The activities which a company may undertake under CSR, should be according to those as
specified under Schedule VII of the Act.
5. The activities which are exclusively meant for employees of the organisation or their family
members will not be considered as a part of CSR

Q30)
As per Article 366 (12A) of the Constitution of India, Goods and Services Tax means a tax on supply
of goods or services, or both, except taxes on supply of alcoholic liquor for human consumption. For
the time being, GST is not levied on petroleum products.