Sangam School of Excellence

TEST SERIES 3
Class 12 - Business Studies
Time Allowed: 3 hours Maximum Marks: 80

General Instructions:

1. This question paper contains 34 questions.

2. Marks are indicated against each question.

3. Answers should be brief and to the point.

4. Answers 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. Answers to the questions carrying 6 marks may be about 200 words.

7. Attempt all parts of the questions together.

1. Keeping in view the changes in consumer demands and preferences Tasitemaker Bakery has reduced the sugar [1]
and fat content in its products. This approach of business shows that management is:

a) A dynamic function b) An intangible force

c) A group activity d) A multidimensional activity

2. Adapting to a change in consumer preference towards online shopping, Fast-Service started a grocery delivery [1]
app. It is a platform that ensures 10-minute deliveries of groceries. Because of this service, Fast-Service earned
huge profit within a year. It planned to expand its operations and decided to raise funds by directly issuing its
securities to investors.
The market through which Fast-Service has decided to raise funds for its expansion is:

a) Money market b) Both Primary and Secondary markets

c) Secondary market d) Primary market

3. Assertion (A): Planning is futuristic. [1]
Reason (R): Planning is regarded as a forward looking function based on forecasting.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

4. Statement-I: The basic function of a Stock Exchange is the creation of a continuous market where securities are [1]
bought and sold.
Statement-II: The Stock Exchange provides both liquidity and easy marketability to already existing securities
in the market.

a) Statement-II is true and Statement-I is false. b) Both the Statements are true.

c) Statement-I is true and Statement-II is false. d) Both the Statements are false.
5. An efficient control system helps to: [1]

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 a) Efficient use of resources b) Boost employee's morale

c) All of these d) Achieve objectives

6. It is necessary for an investor to obtain Certificate of Deposits for ₹ ________ lakh. [1]

a) 10 b) 50

c) 25 d) 5
7. Identify the principle of management followed in the following pictorial representation. [1]

a) Initiative b) Division of Work

c) Equity d) Remuneration
8. Assertion (A): Delegation helps in the expansion of an organisation. [1]
Reason (R): It provides a ready workforce to take up leading positions in new ventures.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

9. Kundan Lal joined a food processing unit as a factory worker. Since he was expected to work on sophisticated [1]
machinery, he was asked to undergo special training.
Identify the training method with reference to the above lines.

a) Apprenticeship training b) Induction training

c) Internship training d) Vestibule training

10. From 2003, all transactions in securities are to be settled within two days after the trade date. This system is [1]
known as:

a) Rotational settlement system b) Automatic settlement system

c) Mutual settlement system d) Rolling settlement system

11. Which of the following statements is false regarding financial management? [1]
i. Money required for carrying out business activities is called business finance.
ii. For optimal procurement, different available sources of finance are identified and compared in terms of their
costs and associated risks.
iii. The objective of financial management is to minimise the current price of equity shares.
iv. All of the above.

a) Option (i) b) Option (iv)

c) Option (iii) d) Option (ii)

12. Sun-flag Iron Ltd. is manufacturing steel at its plant in India. It is enjoying increased demand for its steel as [1]
economic growth of the country is about 8%. It is planning to set up a new plant to avail the benefits of
increased demand. It is estimated that it will require about ₹ 4,000 crore for setting up of a plant and about ₹ 600
crore for other expenses to start the new plant. To collect the above mentioned funds, the sources to be used and

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 the quantity to be collected from different sources had to be considered. The concept discussed above is
________.

a) Financing decision b) Financial planning

c) Financial management d) Capital Structure

13. Match the concept of management in Column I with their respective definition in Column II: [1]

(a) Effectiveness (i) Doing the task correctly and with minimum cost.

(b) Efficiency (ii) Finishing the given task on time.

(c) Process (iii) The primary functions or activities that management performs to get things done.

a) (a) - (i), (b) - (ii), (c) - (iii) b) (a) - (ii), (b) - (i), (c) - (iii)

c) (a) - (iii), (b) - (ii), (c) - (i) d) (a) - (i), (b) - (iii), (c) - (ii)
14. Statement I: Restrictive trade practice is a trade practice for the purpose of promoting sale, use or supply of any [1]
goods or service falsely represents its quality, standard, quantity, composition, style or model.
Statement II: Unfair trade practice is a trade practice which manipulates price or affect the flow of supplies in
the market relating to goods and services in such a manner that an unjustified cost is imposed on the consumer.

a) Both the Statements I and II are correct. b) Both the Statements I and II are not correct.

c) Statement II is correct and Statement I is not d) Statement I is correct and Statement II is not
correct. correct.
15. Super Fine Rice Ltd. has the largest share of 55% in the market. The company's policy is to sell only for cash. In [1]
2015, for the first time, the company's number one position in the industry has been threatened because other
companies started selling rice on credit also. But the managers of Super Fine Rice 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 Super Fine Rice Ltd.
The above situation indicates a limitation of planning which led to a decline in its sales. Identity the limitation.
a. Planning leads to rigidity
b. Planning may not work in a dynamic environment
c. Planning does not guarantee success
d. Planning involves hu

a) (a) and (d) b) (b) and (c)

c) (a) and (b) d) (c) and (d)

16. Statement I: In the process of marketing, the function of storage is performed by different agencies such as [1]
manufacturers, wholesalers and retailers.
Statement II: The marketing mix consists of various elements, popularly known as four Ps of marketing -
Product, Price, Packaging and Promotion.

a) Both the Statements I and II are not correct. b) Both the Statements I and II are correct.

c) Statement I is correct and Statement II is not d) Statement II is correct and Statement I is not
correct. correct.
17. Mudro Infratech got a short-term contract for building two villas within a period of ten months with the [1]
expectation to earn a huge amount of profit. The Works Manager accepted this challenge and completed the

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 work within the given time period. The profit of the company went up by 40% due to this temporary order. The
Finance Manager was aware that the company would not earn this huge profit in the near future. So, he decided
not to increase dividend per share as earnings for the year had gone up, but not the earning potential of the
company. He also knew that this increase in earnings was temporary in nature.
The factor affecting Dividend Decision being highlighted above is:

a) Stability of dividends b) Cash flow position

c) Growth opportunities d) Shareholders’ preference

18. Which of the following is NOT a factor affecting financing decision? [1]

a) Control considerations b) Cash flow position

c) Diversification d) Fixed operating costs

19. Planning in the absence of control is meaningless. What does this statement indicate in respect of both? [1]
i. Only planning is essential
ii. Only controlling is essential
iii. Both are essential
iv. Both are unnecessary

a) Only i b) Only iv

c) Both i and iv d) Both ii and iii

20. Statement I: Policies are general forms of standing plans that specifies the organisations response to a certain [1]
situation like the admission policy of an educational institution.
Statement II: Procedures describe steps to be followed in particular circumstances like the procedure for
reporting progress in production.

a) Statement I is correct and Statement II is not b) Both the Statements I and II are not correct.
correct.

c) Statement I is incorrect and Statement II is d) Both the Statements I and II are correct.
correct.
21. Identify the characteristic of management which states that the activities involved in managing an enterprise are [3]
common to all organisations whether economic, social or political. Also state two other characteristics of
management.
OR
Describe, in brief, any five functions of Operational or Lower Level Management in an organization.
22. Explain briefly any three semantic barriers to communication. [3]
OR
State any three measures to improve communication effectiveness.
23. Explain how the [3]
i. Risk consideration and
ii. Tax rate affect the choice of capital structure
24. Gopal, Mohan and Shyam are three friends having their separate small manufacturing units in an industrial [3]
estate. They are hard-working and honest and undertake their respective production activities following the good
practices of business. They use good quality raw materials and adopt standardised process. They fix the prices of

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 their products with a reasonable profit margin. But all of them are worried about the malpractices like
manufacturing sub-standard, duplicate, and defective goods by the fellow manufacturers. Therefore, they
decided to form an organisation with a constitution of its own which is free from government interference. This
organisation would encourage consumers to strongly protest and take action against unscrupulous, exploitative
and unfair trade practices of sellers.
State three other functions which may be performed by this organisation in addition to those mentioned
above.
25. Kaveri is busy in preparing the financial blueprint for her organisation's future operations. She feels that detailed [4]
plans of action reduce waste and duplication of efforts. However, her friend, Sana feels that in an uncertain and
dynamic world, this type of planning may not work. Kaveri again stresses on her statement and explains why
this financial blueprint is important.
Identify the concept and state three points of its importance in addition to those explained in the above para.
26. Explain how controlling helps in achieving better coordination and better planning. [4]
OR
Describe briefly the steps in the process of controlling.
27. Damini D’Souza took over the reins of ‘Kinsa Retail’ as its Managing Director in India. ‘Kinsa Retail’ with its [4]
headquarter at Japan has been in the retail business for the last 40 years. It has regional offices in many countries
that take care of the shops in that region. As it is a large organisation, the regional officers have been given the
powers to decide and spend funds sanctioned to them by the headquarter for the welfare of the customers of their
region.
‘Kinsa Retail’ wants the highest possible standards of ethical conduct being followed, for which a code of
conduct is in place for putting values into practice. All employees as well as Board members are required to act
in accordance with the highest standards of personal and professional integrity when acting on behalf of the
company. Non-compliance involves a heavy penalty including termination of employment.
Explain any two principles of general management being followed by ‘Kinsa Retail’.
28. Describe the role of motivation in directing function of management. [4]
29. "Unicon Securities Pvt. Ltd" was established to deal in securities. It was registered as a stock broker with [4]
National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to trade in securities listed at these
exchanges. It is also a depository participant with CDSL and NSDL. In the first three years, it developed its
business successfully. After that the composition of Board of Directors changed. Some customers complained to
the customer care centre of the company that shares purchased by them and for which the payment has been duly
made, were not transferred to their D'mat Accounts by "Unicon securities Pvt. Ltd". The executive of customer
care centre promised the aggrieved customers that their shares will be transferred to their respective D'mat
Accounts very soon. But the company delayed the matter and didn't transfer the shares of the customers to their
D'mat Accounts. This eroded investors confidence and multiplied their grievances.
i. Identify the step of trading procedure in a stock exchange which has not been followed by "Unicon Securities
Pvt. Ltd".
ii. Name the Apex statutory body of capital market to whom customer can complain to redress their grievances.
iii. Define the term money market and mention it's features also
30. A consumer should keep in mind certain responsibilities while purchasing, using and consuming goods and [4]
services. State any four such responsibilities of a consumer.
31. Mr Naresh recently completed his MBA from one of the Indian Institutes of Management in Human Resource [6]

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 Management. He has been appointed as Human Resource Manager in a Truck, Manufacturing Company. The
company has 1,500 employees and has an expansion plan in hand that may require additional 500 persons for
various types of jobs. Mr Naresh has been given the complete charge of the company’s Human Resource
Department.
List out the specialised activities that Mr Naresh is supposed to perform as the Human Resource Manager of
the company.
32. State any five characteristics of business environment. [6]
OR
What do you understand by economic environment? List the main aspects of economic environment.
33. Kartik opens a bakery shop in the local market. With the increasing demand of his bakery products he feels it [6]
will be impossible for him to handle all the work himself. So he appoints Bhavana to perform tasks on his
behalf, thereby reducing his workload. It enables Kartik to use his time on high priority activities.
a. Identify and explain the concept of organising discussed in the above case.
b. Explain the two essential elements of the concept identified in (a) above.
34. Name the element of marketing mix in which a set of firms and individuals creates possession, place and time [6]
utility and helps in market offering. Also explain any five important functions performed by this element.
OR
There are a number of factors that affect the fixation of price of a product. State any five such factors.

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