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Class – XII
Business Studies
Mock Test Paper – 5
Time Allowed: 3 Hours Maximum Marks: 80
General Instructions:
1) This question paper contains 34 questions.
2) Marks are indicated against each question.
3) The answer should be brief and to the point.
4) Answer to the questions carrying 3 marks may be from 50 to 75 words.
5) Answers to the questions carrying 4 marks may be about 150 words.
6) Answer to the questions carrying 6 marks may be about 200 words.
7) Attempt all parts of the questions together.

S. Questions Marks
No.
1. The earlier approach of caveat emptor which means ‘Let the buyer beware’, has now 1
been changed to
a) Caveat venditor
b) Caveat marketer
c) Caveat buyer
d) None of these
2. BIS is a seal certified by Bureau of Indian Standards that the goods conform to the 1
prescribed ____________ standards.
a) Quantity
b) Quality
c) Both (a) and (b)
d) None of these
3. The span of management refers to 1
a) The number of superiors that a manager can effectively supervise
b) The number of customers that a manager can effectively supervise
c) The number of subordinates that a manager can effectively supervise
d) The number of creditors that a manager can effectively supervise
4. Harish bought a pain-relieving ointment after seeing it being displayed in the 1
chemist’s shop. The ointment tube has a packet in a cardboard box. The tubes were
received by the chemist from the wholesaler in corrugated boxes containing 30 units.
Identify the level of packaging involved in the above-mentioned case.
a) Primary packaging
b) Secondary packaging
c) Transportation packaging
d) All of these
5. An ideal plan would be one which is most profitable, most feasible and has the least 1
a) Positive consequences
b) Negative consequences
c) Alternatives
d) None of these

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6. Seeing the need for connecting restaurants/food outlets to people, Zomato 1

established its app as a food delivery platform. Which importance of the business
environment is highlighted here?
a) It enables the firm to identify opportunities and getting the first-mover
advantage
b) It helps in tapping useful resources
c) It helps in coping with rapid changes
d) It helps in improving performance
7. Government of India set up a regulatory body to check various unfair trade practices 1
like price rigging, unofficial premium in new issues, unofficial private placements.
a) SEBI
b) NSDL
c) RBI
d) ASSOCHAM
8. Identify the step of organizing ‘’which is concerned with the allocation of jobs to the 1
members of each department according to their skills and competencies.’’
a) Identification and division of work
b) Departmentalization
c) Assignment of duties
d) Establishing reporting relationships
9. Madhuban Oils Ltd. has the largest share of 60% in the market. The company’s policy 1
is to sell only for cash. In 2019, for the first-time company’s number, one position in
the industry had been threatened because other companies started selling oil on
credit also. But, the manager of Madhuban Oils Ltd. continued to rely on its previously
tried and tested successful plans, which didn’t work because the environment is not
static. This led to a decline in sales of Madhuban Oils Ltd.
The above-said case highlights the limitation(s) of planning which led to a decline in
its sales. Identify such limitation(s).
a) Planning does not guarantee success
b) Planning may not work in a dynamic environment
c) Planning leads to rigidity
d) Both (a) and (b)
10. Debt is concerned to be cheaper than equity because for borrowers, interest on 1
debentures is a _______________ while dividend on equity is not.
a) Exempt from tax
b) Deductible expenditure
c) Non-deductible expenditure
d) None of these
Or
Under, which of the following methods, securities are not issued directly to the public,
but are offered through intermediaries like issuing houses or stockbrokers?
a) Offer through prospectus
b) Offer for sale
c) Private placement
d) E-IPO
11. If there is no planning, employees would work in different directions and would not 1
be able to achieve their goals. In light of this statement, identify the importance of
planning.
a) Planning reduces the risk of uncertainties
b) Planning facilitates decision-making
c) Planning provides direction
d) None of the above

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12. In an organisation, the functional head and marketing director directs the 1
subordinates throughout the organisation in his particular area. This means that
subordinates receive orders from several specialists or managers working above
them. This style of working is followed in which organisation?
a) Divisional organisation
b) Functional organisation
c) Staff organisation
d) Matrix organisation
Or
Match the Column I with Column II on the basis of the organizing process.
COLUMN I COLUMN II
A) Identification and 1) Identify and divide the total work
division of work
B) Departmentalizatio 2) Allocation of responsibility
n
3) Separation of products
Codes
A B
a) (1) (2)
b) (2) (3)
c) (1) (3)
d) (3) (2)
Read the following text and answer question no. 13-16 on the basis of the same.

Lorenz industries are involved in the production of spare parts for trucks and buses.
Sharad is working there as a foreman along with 20 more workers. The targets are
constantly achieved by the foremen. There are orderliness and coordination in the
work environment, and all the workers are happy and satisfied.
The company lays plan to integrate the efforts of all members towards the pre-
determined goals which are established in consultation with these members. This
plan of action also helps in reducing cost and increasing productivity.

During the planning process, the workers are encouraged and given an opportunity to
suggest their ideas and execute the plans. Overall pay and compensation provided by
the company help the employees to maintain a decent level of living, and it is well
within the paying capacity of the company. Also, it is known that the pay for men is
more than the compensation paid to women.
13. At which level of the management, Sharad is working? 1
a) Top
b) Middle
c) Lower
d) Shop floor
14. Which importance of management is highlighted in the lines, ‘’This plan of action also 1
helps in reducing the cost and increasing productivity’’?
a) Helps in achieving group goals
b) Increase efficiency
c) Helps in the development of society
d) Creates a dynamic organisation

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15. Which characteristic of management is highlighted in the lines, ’There are orderliness 1
and coordination in the work environment, and all the workers are happy and
satisfied’?
a) Pervasive
b) Dynamic
c) Multidimensional
d) Intangible
16. Which principle of management is violated in the lines, ‘’ Overall pay and 1
compensation provided by the company help the employees to maintain a decent
level of living, and it is well within the paying capacity of the company? Also, it is
known that the pay for men is more than the compensation paid to women’’?
a) Remuneration of employees
b) Initiative
c) Equity
d) Stability of personnel
Read the following text and answer question no. 17 – 20 on the basis of the
same.

Yash worked in the business development unit of an Edutech startup. He always

achieves the targets on time and recently achieved his sales target one week in
advance. This achievement was displayed on the notice board, and the CEO of the
company awarded a certificate for the best performance to him.

Due to his consistent performance, he was promoted to the post of sales manager. He
encourages his team to form their own objectives and take decisions. He respects
their opinions and supports them. He also promotes an informal group within the
department so that the team members develop a sense of belongingness.

In his new role, Yash is also supposed to communicate the policies of the CEO to the
members of his team. He helps to avoid misunderstandings and conflicts between
management and workers.
17. Which non-financial incentive was used by the CEO? 1
a) Status
b) Employee recognition
c) Job security
d) Employee participation
18. What was the leadership style followed by Yash? 1
a) Authoritative
b) Democratic
c) Both (a) and (b)
d) Laissez Faire
19. Which need is satisfied through informal groups? 1
a) Physiological
b) Security
c) Social
d) Esteem
20. Which function of supervisor is highlighted in the lines, ‘’In his new role, Yash is also 1
supposed to communicate the policies of the CEO to the members in his team. He
helps to avoid misunderstanding and conflicts between management and workers’’?
a) Interpersonal contact with workers
b) Link between workers and management
c) Promotes group unity
d) Influences workers

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21. ‘’To manage is to forecast and plan, to organize to command, to coordinate and to 3
control,’’ enunciated by Fayol. Comment.
Or
What do you understand by the technique ‘Standardisation of work’? Also, mention its
objectives.
22. Himanshu purchased a new car from Galaxy Motors for ₹25 lakh. He was offered free 3
insurance for the first year and three free servicing to be availed after the car had
covered 5,000 km, 10,000 km respectively. When Himanshu took the car for the first
free servicing, he was told that the car was not new and the first service had already
been availed on this car. He felt cheated and filed a complaint in the State Commission.
Being not satisfied with the decision of the State Commission, he decided to file an
appeal against it after two months.

Can Himanshu appeal against the decision of the State Commission? Give reasons in
support of your answer.
23. What do you understand by the dematerialization of securities and De mat account? 3
Or
To avoid the problem of shortage and surplus of funds, what is required in financial
management? Name the concept and explain any two points of its importance.
24. As a well-informed customer, what kind of quality certification marks you will look 3
for before buying products?
25. Rajat had opened an internet cafe in the ’90s to cash in on the boom of the internet. 4
In the initial years, he got good profits. This made him carefree, and he started taking
his success for granted. But lately, for the last few years, he is finding it difficult even
to bear the expenses of his café.
a) Which aspect or feature of the business environment has Rajat ignored?
b) What changes in the macro-environment has affected his business?
26. ‘A stock exchange is an institution which provides a platform for buying and selling of 4
existing securities.’’ Do you agree with this statement? Explain three functions of the
stock exchange.
27. ‘’Planning leads to rigidity and reduces creativity.’’ Explain this statement. 4
Or
Mohit runs a shoe manufacturing factory. He wants to expand his business. For
expansion, he contemplated to enter into the manufacturing of leather bags and
formal western wear apart from the running business of shoes. By doing this, his
company will be able to provide many products to working women under one root.
Which organisation structure will you suggest to him and why?
28. ‘’Management is the systematized body of knowledge that explains certain general 4
truths.’’ Explain the statement by giving three reasons to support your answer.
29. ‘’Selection is a negative process,’’ do you agree? Also, differentiate between 4
recruitment and selection on any two bases.
Or
Enlist any four needs as per Maslow’s theory along with individual and organizational
examples.

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30. Arnav is the production manager of Technomart Corporation. Due to heavy demand of 4
the company’s product and excessive load on production department, Arnav
delegated part of his authority and worked to his subordinate supervisor. Since the
supervisor was not proficient in handling the work. Work quality degraded, resulting
in poor quality output.

Thereafter, the manager is of the view that he is not responsible for the quality of
work, as he has delegated responsibility to his subordinate. Do you agree with his
viewpoint? Justify your answer by giving proper arguments.
31. Daksh Ltd requires an investment of ₹60,00,000 to earn Earnings before Interest and 6
Tax (EBIT) of ₹8,00,000. In order to raise ₹60,00,000, there are two proposals.
Proposal A
 6,00,000 equity shares of ₹10 each.
 Rate of tax = 20%

Proposal B
 4,00,000 equity shares of ₹10 each
 10% ₹20,00,000 debentures
 Rate of tax = 20%

Which proposal, if accepted, would ensure better earnings for the shareholders?
Decide on the basis of Earning Per Share (EPS).
32. Jack Ltd. announced an incentive of ₹15,000 to the employees who do not take leave 6
during the coming Diwali season and show better performance.
i) Identify and define the incentive which is granted to employees.
ii) Also, state the type of incentive and define it.
iii) Name two other types of incentives in the category identified in part (1).
iv) What type of needs is satisfied with these kinds of incentives?
33. ‘’Every action in the organisation is initiated through directing.’’ In light of this 6
statement, explain the term directing and mention any five points of its importance.
Or
ABC is a leading publishing company of the country. The company’s objective is to
provide error-free books for the students. But the company’s production department
is plagued with many shortcomings.
The authors are not given accurate parameters, constant changes are made in the
instructions given to the coordinators, and last-minute irrelevant additions are made
in the text. All these lead to wastage of resources, and the company’s objectives are
also not achieved, and the revenues are also falling.
The company has recruited a new production manager, replacing the old one. The
new production manager identified the need for that function of management in
which actual performance is compared with planned performance.
i) Identify the function of management discussed above.
ii) State the steps necessary to install that function in the organisation.
34. Suhani has started her business of readymade garments. She manufactures clothes for 6
infants. She uses only the best quality cloth and decides to charge only the minimum
possible for her products. Her aim is to provide premium clothing range for the
middle-income group. Being new to the business, she seeks the help of her uncle, Mr
Anil, who is a chartered accountant, to help her fix the price of her product so that she
is able to meet the above objectives.
i) Explain the factors to be considered while fixing the price of a product.
ii) Explain to Suhani the meaning of price mix.
iii) State any one method of pricing.

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Or
Marketing is a social process wherein people interact with each other in order to
persuade them to act in a particular way. However, there are certain distinguishing
features of marketing. Explain them.

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