Kerala Plus One Business Studies Question Paper March 2020 with Answers

Teachers recommend solving Kerala Syllabus Plus One Business Studies  Previous Year Question Papers and Answers Pdf March 2020 to improve time management during exams.

Kerala Plus One Business Studies Previous Year Question Paper March 2020

Answer the following questions from 1 to 9. Each carries 1 score. (9 × 1 = 9)

Question 1.
Which among the following is a personal cause of business risk?
a) Strike of employees
b) Famine
c) Change in technology
d) Flood
Answer:
a) Strike of employees

Question 2.
A government company* is any company in which the paid-up capital held by government is not less than——?
a) 49%
b) 50%
c) 51%
d) 26%
Answer:
c) 51%

Question 3.
Which among the following is not a function of warehousing?
a) Break the bulk
b) Price stabilization
c) Consolidation
d) Mail facilities
Answer:
d) Mail facilities

Question 4.
Cash withdrawal by a customer by using ATM is an example of model of e-business transaction.
a) B2B
b) B2C
c) IntraB
d) C2C
Answer:
b) B2C

Question 5.
Fill in the blanks as per hint given :
a) Obeyance of law – legal responsibility of business
b) Respecting religious sentiments of people
Answer:
b) Respecting religious sentiments of people

Question 6.
Which clause of memorandum of association defines the purpose of company is formed ?
a) Object clause
b) Capital clause
c) Liability clause
d) Name clause
Answer:
a) Object clause

Question 7.
The apex bank to provide financial assistance to small business is
a) NCEUS
b) RWED
c) WASME
d) SIDBI
Answer:
d) SIDBI

Question 8.
Identify the type of retail outlets that sell their goods through mail from the following:
a) Mail order house
b) Departmental stores
c) Supermarkets
d) Multiple shops
Answer:
a) Mail order house

Question 9.
The scheme to refund excise duties and customs duties to exporters on production of proof of export of goods to authorities is called
a) Manufacturing under bond scheme
b) duty drawback scheme
c) advance licence scheme
d) export promotion capital goods scheme
Answer:
b) duty drawback scheme

Answer any 6 of the following questions from 10 to 16. Each carries 2 Scores. (6 × 2 = 12)

Question 10.
Write a short note on the following in one or two sentences each.
a) Nominal parter
b) H.U.F
Answer:
a) Nominal Partner
Nominal partner (Quasi Partner) : A nominal partner neither contributes capital nor takes any active part in the management of the business. He simply lend his name to the firm. But, he is liable to third parties for all the debts of the firm. Joint Hindu Family Business (HUF) It refers to a form of organisation where in the business is owned and carried on by the members of a joint Hindu family. It is also known as Hindu Undivided Family Business (H.U.F). It is governed by Hindu succession Act, 1956. It is found only in India.

Question 11.
List any two features of a statutory corporation.
Answer:
Featu res of statutory corporation:

1. Statutory corporations are set up under an Act of Parliament and are governed by the provisions of the Act.
2. It is wholly owned by the state

Question 12.
Name any two types of payment mechanisms used in online shopping.
Answer:
a) Cash on delivery (COD)
b) Cheque
c) Credit Card
d) Debit Card
e) Net Banking
f) DigiyalCash

Question 13.
What do you mean by Retained Earnings?
Answer:
Retained Earnings (Ploughing Back of Profit): A company generally does not distribute all its earnings amongst the shareholders as dividends. A portion of the net earnings may be retained in the business for use in the future. This is known as retained earnings. It is a source of internal financing or self financing or ‘ploughing back of profits’.

Question 14.
Name any two types of products which are suitable for vending machines.
Answer:
Vending Machine is suitable for selling products like soft drinks, newspapers, platform tickets, chocolates, hot beverages, seeds of plants, magazines etc.

Question 15.
Write any two reasons for international business.
Answer:
Reasons for international business

1. Because of unequal distribution of natural resources and differences in productivity levels, a country cannot produce all that they need
2. Labour productivity and production costs differ among nations due to various socio-economic, geographical and political reasons.
3. Availability of various factors of production such as labour, capital and raw materials differ among nations.

Question 16.
Briefly explain ‘joint ventures’ as a mode of entry into international business.
Answer:
Joint Ventures: Joint venture means establishing a firm that is jointly owned by two or more independent firms. It can be brought into existence in three major ways.
a. Foreign investor buying an interest in a local firm.
b. Local firm acquiring an interest in an existing foreign firm.
c. Both the foreign and local entrepreneurs jointly forming a new enterprise

Answer any 4 of the following questions from 17 to 21. Each carries 3 Scores. (4 × 3 = 12)

Question 17.
Classify the following industries into Primary, Secondary and Tertiary.
a) Mining
b) Poultry farms
c) Oil refinery
d) Construction of dams
d) Banking
e) Advertising
Answer:

Primary Industry	Sepondary Industry	Tertiary Industry
Mining	Oil refinery	Banking
Poultry firms	Construction of dams	Advertising

Question 18.
Difference between traditional business and e-business. (Any Three)
Answer:
Differences between Traditional business and e- business

Traditional business	e- business
Its formation is difficult	Its formation is easy
Investment is very high	Investment is low
Physical presence is required	Physical presence is not required
Location is important	Location is not important
Operating cost is high	Operating cost is low
Contact with suppliers and customers is through intermediaries	Direct contact with the suppliers and customers
Business process cycle is long	Business process cycle is shorter
Inter personal touch is high	Personal touch is less
Limited market coverage	Access to the global market
Communication is in hierarchical order	Communication is in non hierarchical order
Transaction risk is less	Transaction risk is high

Question 19.
Who is a promoter of a company? List out any two function of him.
Answer:

1. The person who undertakes to form a company is called promoter.
2. Function of a promoter
   • Identification of business opportunity
   • Feasibility studies
   • Name approval
   • Fixing up signatories to the Memorandum of Association
   • Appointment of professional
   • Preparation of necessary documents

Question 20.
Briefly explain any three features of global enterprises.
Answer:
Features of Global Enterprise:

1. Huge capital resources: Multinational companies have the ability to raise huge funds from different sources such as equity shares, debentures, bonds etc. They can also borrow from financial institutions and international banks.
2. Foreign collaboration:-Global enterprises usually enter into agreements relating to the sale of technology, production of goods, use of brand name etc. with local firms in the host countries.
3. Marketing strategies:- They use aggressive marketing strategies in order to increase their sales in a short period. Their advertising and sales promotion techniques are normally very effective.
4. Centralised control: They have their headquarters in their home country and exercise control overall branches and subsidiaries.

Question 21.
Write any three differences between a share and debenture.
Answer:

Shares	Debentures
Shareholders are the owners of the company	Debenture holders are the creditors of the tcompany
Shareholders get dividends	Debenture holders get interest
Shareholders have voting right	Debenture holders have no voting right
No security is required to issue shares	Generally debentures are secured
Shares are not redeemable	Debentures are redeemable
It is owner’s fund	It is borrowed fund

Question 22.
Match the following :

(A)	(B)
a) Partnership	1) Co-parcener
b) H.U.F.	2) Service motive
c) Joint Stock Company	3) Partner
d) Co-Op-Society	4) Shareholder

Answer:

(A)	(B)
a) Partnership	1) Partner
b) H.U.F.	2) Co-parcener
c) Joint Stock Company	3) Share holder
d) Co-Op-Society	4) Service motive

Answer any 3 of the questions from 23 to 26. Each carries 4 Scores. (3 × 4 = 12)

Question 23.
What do you mean by a departmental undertaking? Give two examples.
Answer:
Departmental Undertaking: This is the oldest and most common form of organization. These are established as departments of the ministry and are financed, managed and controlled by either central govt, or state govt.. They are managed by government employees and work under the control of a minister. Eg. Railways, Post& Telegraph, All India Radio, Doordarshan, Defense undertakings etc.
Features

1. The enterprise is financed by annual appropriation from the budget of the Government and all revenue is paid to the treasury.
2. The enterprise is subject to accounting and audit control
3. It is subject to the direct control of the ministry.
4. Its employees are govt, employees and are recruited and appointed as per govt, rules.
5. They are accountablefto the concerned ministry.

Question 24.
‘E-business has several benefits’. Explain any four of it.
Answer:

1. e-business is relatively easy to start and requires lower capital.
2. Customers can buy goods at any time from any seller located in different parts of the world.
3. Business transactions can be made easily and speedily.
4. It helps the business units to operate at the national as well as the global level.
5. It helps to reduce clerical and paper work.
6. It helps to eliminate middlemen.

Question 25.
Explain any ‘four’ problems faced by small business in India.
Answer:
Problems pf small business Small businesses are faced with the following problems:

1. Small scale industries find it difficult to get adequate finance from banks and other financial institutions.
2. They are not able to get quality raw materials at reasonable prices.
3. Small business is generally operated by people who may not have all the managerial skills required to run the business.
4. Small business firms cannot afford to pay higher salaries to the employees. So productivity per Employee is relatively low and employee turnover is generally high.
5. Small business depends excessively on middlemen for marketing the products. Middlemen exploit them by paying low price and delayed payments.

Question 26.
Write short note on the following:
a) Special economic zones
b) Contract manufacturing
Answer:
a) Special Economic Zone (SEZ): It is specifically a delineated dutyfree enclave, which is deemed to be a foreign territory for the purpose of trading and imposing duties. It provided an internationally competitive and duty free environment for the production of export of goods.

b) Contract Manufacturing (Outsourcing): When a firm enters into a contract with one or a few local manufacturers in foreign countries to get certain goods produced as per its specifications it is called contract manufacturing. It is also known as outsourcing and it can take place in following forms.

1. Production of certain components
2. Assembly of components into final products
3. Complete manufacture of the products

Answer any 3 of the following questions from 27-30. Each carries 5 Scores. (3 × 5 = 15)

Question 27.
‘We want to consider a lot of factors before starting a business.’ Explain any 5 of it.
Answer:
Choice of business organisation The important factors determining the choice of organization are:

1. Cost and Ease of formation:- From the point of view of cost, sole proprietorship is the preferred form as it involves least expenditure and the legal requirements are minimum. Company form of organisation, is more complex and involves greater costs.
2. Liability: In case of sole proprietorship and partnership firms, the liability of the owners/ partners is unlimited. In cooperative societies and companies, the liability is limited. Hence, from the point of view of investors, the company form of organisation is more suitable as the risk involved is limited.
3. Continuity: The continuity of sole proprietorship and partnership firms is affected by death, insolvency or insanity of theowners. However, such factors do not affect the continuity of cooperative societies and companies. In case the business needs a permanent structure, company form is more suitable.
4. Management ability: If the organisation’s operations are complex in nature and require professionalized management, company form of organisation is a better alternative.
5. Capital: If the scale of operations is large, company form may be suitable whereas for medium and small sized business one can opt for partnership or sole proprietorship.

Question 28.
‘Memorandum of Association ¡s the major document of a company.’ Briefly explain the different clauses of it.
Answer:
Contents of Memorandum of Association:

1. The name clause: Under this clause the name of the company is mentioned. A company can select any name subject to the following restrictions.
   • The proposed name should not be identical with the name of another company
   • A name which can mislead the public
   • In case of a public company the name should end with the word ‘Limited’ and in case of a private company the name should end with the word ’Private Limited’
2. Registered office clause: This clause contains the name of the state, in which the registered office of the company is proposed to be situated. It must be informed to the Registrar within thirty days of the incorporation of the company.
3. Objects clause: This is the most important clause of the memorandum. It defines the purpose for which the company is formed. A company is not legally entitled to undertake an activity, which is beyond the objects stated in this clause.
4. Liability clause: It states that the liability of members is limited to the face value of shares held by therfl or the amount
   guaranteed to be paid on winding up.
5. Capital clause: This clause specifies the maximum capital which the company will be authorised to raise through the issue of shares.
6. Association clause: In this clause, the signatories to the Memorandum of Association state their intention to be associated with the company and also give their consent to purchase qualification shares.

Question 29.
‘Business requires capital for long term and short term purposes.’
a) Briefly describe any two sources of long term capital.
b) Write any three merits ¿f ‘factoring’ as a financial service.
Answer:
a) Equity Shares:- Equity shares represents the ownership capital of a company. They do not enjoy any preferential right in the matter of claim of dividend or repayment of capital. Equity shareholders do not get a fixed dividend but are paid on the basis of earnings by the company. They bear the maximum risk. Equity shareholders are the owners of the company. They have right to vote and participate in the management.

Merits

1. Equity shares are suitable for investors who are willing to assume risk for higher returns
2. Payment of equity dividend is not compulsory.
3. Equity capital serves as permanent capital as it is to be repaid only at the time of liquidation of a company.

Debentures: A debenture is a document issued by a company under its seal to acknowledge its debt. Debenture holders are, therefore, termed as creditors of the company. Debenture holders are paid a fixed rate of interest.

Merits

1. It is preferred by investors who want fixed income at lesser risk
2. Debenture holder do not have voting right
3. Interest on Debentures is a tax deductable expense

c) Factoring: Factoring is a method of raising shortterm finance for the business in which the business can take advance money from the bank against the amount to be realised from the debtors. By this method, the firm shifts the responsibility of collecting the outstanding amount from the debtors on payment of a specified charge.

Merits

1. Obtaining funds through factoring is cheaper than bank credit
2. Factoring provides steady cash inflow so that the company is able to meet its liabilities promptly.
3. It is flexible and ensures cash inflows from credit sales.

Question 30.
Describe how business impart its responsibility towards the following groups:
a) Owners
b) Employees
c) Government
d) Customers
e) Community
Answer:
Social Responsibility towards different interest groups:

• Responsibility towards share holders or owners
  1. Provide a fair and regular return on the investment of shareholders.
  2. Provide regular and accurate information the financial position of the firm.
  3. To ensure the safety of their investment.
• Responsibility Towards the workers :
  1. Providing fair wages
  2. Providing good working conditions and welfare amenities.
  3. Respect democratic rights of workers to form unions.
• Responsibility toward consumers :
  1. Supply right quality and quantity of goods and services at reasonable prices.
  2. Avoding unfair trade practices like adulteration, poor quality, misleading advertisement etc.
  3. Inform them about new products, its features, uses and other matters relating to the products.
  4. To handle the customers grievance promptly.
• Responsibility Towards Government –
  1. Respect the laws of the country
  2. Pay taxes regularly and honestly.
  3. act according to the well accepted values of the society.
• Responsibility towards community-
  1. Make employment opportunities
  2. Protect the environment from pollution.
  3. To uplift the weaker sections of society

Answer any 2 questions from 31 to 33. Each carries 8 Scores. (2 × 8 = 16)

Question 31.
‘A company can be described as an artificial person having a separate leagl entity, perpectual succession and common seal.’
a) List any 2 merits and 2 demerits of it.
b) Differentiate between private company and public company.
Answer:
a)

1. Limited liability: The liability of the shareholders is limited to the extent of the face value of shares held bythem. This reduces the degree of risk borne by an investor.
2.  Transferability of shares: Shares of a public company are freely transferable . It provides liquidity to the investor.

b)

1. Difficulty in formation:-The formation of a company is very difficult. It requires greater time, effort and extensive knowledge of legal requirements.
2. Lack of secrecy:- It is very difficult to maintain secrecy in case of public company, as company is requited to publish its annual accounts and reports.

c) Difference between a Public Company and Private Company

Basis	Private Company	Public Company
Members:	Minimum – 2 Maximum – 50	Minimum – 7 Maximum – Unlimited
Minimum number of directors:	Two	Three
Minimum paid up capital:	Rs 1 lakh	Rs 5 lakh
Transfer of shares:	Restriction on transfer	No restriction
Prospectus:	Need not issue prospectus	Can issue prospectus
Starting of business:	After getting Certificate of incorporation	After getting certificate of Commencement of business

Question 32.
Describe the various functions performed by commercial banks in India.
Answer:
Functions of Commercial Banks
1. Acceptance of deposits: A commercial bank accepts following types of deposits. They are

• Current deposit: This type of account is usually opened by business men.lt carries no interest. There are no restrictions on number of deposits or withdrawals.
• Savings deposit: Savings accounts are for encouraging savings by individuals. Banks pay rate of interest as decided by RBI on these deposits. Withdrawal from these accounts has some restrictions.
• Fixed deposit: Fixed accounts are time deposits with higher rate of interest. They cannot be withdrawn before the maturity period.

2. Lending of funds: The second important function of a commercial bank is to grant loans and advances out of the money received through deposits. These advances can be made in the form of overdrafts, cash credits, discounting trade bills, term loans, consumer credits and other miscellaneous advances.

• Cash Credit: Under this arrangement, the bank advances loan up to a specified limit against current assets. The bank opens an account in the name of the borrower and allows him to withdraw the money up to the sanctioned limit. Interest is charged on the amount actually withdraw.
• Bank Overdraft: Overdraft is an arrangement where customers are allowed to withdraw up to a level over and above their deposits in the current account. Interest is to be paid only on the actual amount of overdraft availed by him. OD is granted to businessmen against their current account.
• Discounting of bill of exchange: Under this, a bank gives money to its customers on the security of a bill of exchange before the expiry of the bill after deducting a small amount of discount.
• Term Loans: These loans are provided by the banks to their customers for a fixed period. Interest will be charged to the entire amount of loan.

3. Secondary Functions: The secondary functions of commercial banks are as under:
a) Agency Functions

• Cheque facility: Bank collects customers cheque drawn on other bank. There are two types of cheques mainly : Bearer cheques, which are encashable immediately at bank counters Crossed cheques which are to be deposited only in the payees account.
• Payment of insurance premium, telephone charges, collection of dividend etc
• Purchase and sale of shares and debentures
• Acting as trustees or executors
• Providing credit information

b) General utility services

• Providing lockers for safe custody of jewellery and others valuables of customers
• Issuing letter of credit, pay orders, bank draft, credit cards, traveller’s cheques to customers.
• Underwriting issues of shares and debentures
• Providing foreign exchange to importers and traveller’s going abroad.

Bank DraftIt is a financial instrument with the help of which money can be remitted from one place to another. The payee can present the draft on the drawee bank at his place and collect the money. Bank charges some commission for issuing a bank draft.
Pay Order: It is almost like a bank draft. Banks issue pay order for local purpose and issue bank draft for outstations.

Question 33.
‘Wholesaler is the connecting link between producer and retailer.’
a) Explain any four services provide by them to producers.
b) Describe any two types of fixed shop small retailers.
Answer:
a) Departmental stores: A departmental store is a large scale retail shop selling amide variety of goods in different departments under one and management. Each department deals in separate line of goods like stationary, books, furniture, clothing etc. Consumers can purchase all goods from the departmental store.

Features of a departmental store

1. It is a large scale retail organization.
2. A number of retail shops in the same building.
3. It offers a wide variety of products under one roof.
4. It is located at central places of the city
5. The products are arranged in separate departments
6. Sales, control and management are centralized
7. It offers various services and facilities like free home delivery etc

Advantages

1. Central locations:- As these stores are usually located at central places they attract a large number of customers.
2. Convenience in buying: By offering large variety of goods under one roof, the departmental stores provide great convenience to customers in buying almost all goods of their requirements at one place.
3. Attractive services: A departmental store aims at providing maximum services to the customers.
4. Economy of large-scale operations: As these stores are organised in a very large-scale, the benefits of large-scale operations are available to them
5. Mutual advertisement:-All the departments are under one roof, so there is economy in advertising
6. Risk distribution:- If there is a loss in one department, it may be compensated from the profit of other departments.
7. Increased sales:- Central location, mutual advertisement etc. will help a departmental store to increase its sales.

Limitations

1. Lack of personal attention: Because of the large- scale operations, it is very difficult to provide adequate personal attention to the customers in these stores.
2. Inconvenient location: As a departmental store is generally situated at a central location, it is not convenient for the consumers who reside away from town.
3. High price: A departmental store charges high price for the products because of high operating cost.
4. High operating cost: As these stores give more emphasis on providing services, their operating costs tend to be high.
5. High advertisement cost: The success and prosperity of a departmental store depends on advertisement. Therefore, it should spent large amount on advertisement.6. Lack of effective control: Departmental store works through a large number of departments. It creates so many problems.
6. High risk:- A departmental store keeps a large stock of goods. So changes in fashion, taste, price etc will affect the profitability of the business.

b) Chain Stores or Multiple Shops: Multiple shop is a system of branch shops operated under a centralised management and dealing in similar line of goods. Branches are located through out the nation.
Features of multiple shops

1. It deals in one or two lines of products.
2. All branches are dealing in similar goods
3. It has centralized management and unified system of control
4. It eliminates middlemen.
5. It works on cash and carry principle
6. It has centralized buying and decentralized selling.
7. There is uniformity in operation in all branches.
8. It deals in goods of daily use and durables.

Advantages

1. It enjoys economies of bulk purchase because the goods for all branches are purchased by head office.
2. There is no risk of bad debts because all sales are on cash basis.
3. The advertisements for all branches are done by the head office. So there is economy in advertisement.
4. Multiple shops are located in towns and cities. They attract a large number of customers.
5. All branches of multiple shops are uniform in style, design and display of goods.
6. All the branches sell quality goods at uniform prices. It creates public confidence.
7. The economy in large scale buying, centralized management etc. reduce the cost of operations.
8. Products having no demand in one branch can be transferred to another branch. It reduces business risk.
9. Multiple shops enjoy the benefits of quick turn over because of country wide location.

Limitations

1. The multiple shops deal only in a limited range of products. So consumers have very little choice.
2. They will not provide any credit facilities to consumers.
3. There is lack of personal touch between the company and consumers because branches are managed by salaried managers.
4. Branch manager is only a salaried employee. He has no initiative to increase the profits.
5. As these shops deal in a limited line of goods, fall in demand will affect the business.