KARNATAKA ICSE SCHOOLS ASSOCIATION

ISC STD. XII Preparatory Examination 2024

Subject – Commerce (Scheme of Evaluation)
Time Allowed: 3 Hours Maximum Marks: 80 Date: 11.01.2024
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(Candidates are allowed additional 15 minutes for only reading the paper.
They must NOT start writing during this time.)
Answer all questions in Section A, Section B and Section C. Section A
consists of objective / very short answer questions.
Section B consists of short answer questions.
Section C consists of long answer questions.
The intended marks for questions or parts of questions are given in brackets [ ]
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SECTION A – 16 MARKS

Question 1

(i) ITL Construction is facing a surge in project demands and urgently needs [1]
additional workers. To quickly fill casual vacancies, which source of recruitment
can the company utilize?

(a) Internship Programs

(b) Campus Placement

(c) Employee Referrals

(d) Employee Training Programs

(ii) Ananya invested in preference shares of Global Energy Corp. and was delighted [1]
to find out that in profitable years, she receives an extra share in the profit
beyond the fixed dividend. What type of preference shares does Ananya own?

(a) Redeemable preference shares

(b) Cumulative preference shares

(c) Participative preference shares

(d) Non-participative preference shares

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 (iii) What is the primary purpose of fixed capital in a company? [1]

(a) To cover day-to-day operational expenses

(b) To finance long-term investments in assets

(c) To manage short-term liabilities

(d) To pay off debts

(iv) In recent years, what type of banking service has gained popularity due to its [1]
ability to provide financial services without traditional banking infrastructure?

(a) Cryptocurrency banking

(b) Centralized banking

(c) Branch-based banking

(d) Mobile banking

(v) What does the term "esprit de corps" primarily refer to? [1]

(a) Individual performance

(b) Team spirit and camaraderie

(c) Personal discipline

(d) Leadership skills

(vi) Under which head of the SWOT analysis, will you classify a new competitor [1]
entering the market and intensifying competition for the company?

(a) Strength

(b) Weakness

(c) Threat

(d) Opportunity

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(vii) State whether the following are True or False [4]

(a) Inflation is considered a microeconomic factor that directly influences False

individual businesses.

(b) According to the traditional concept of marketing, market share is the False

main goal of a business enterprise.

(c) RTGS transactions can be performed multiple times on weekdays, and True
there is usually no restriction on the number of transactions.

(d) Coding tests can be used to assess the programming skills of a software True
developer before hiring them.

(viii) The principles of management are Universal in nature because they can be [1]
applied to all kinds and size of organization.

(ix) Barer debentures are transferable by mere delivery and the company does [1]
not keep any record of name and address of the debenture holder.

(x) What is meant by procedure? [1]

A procedure describes the exact manner in which a certain activity is to be
performed.
For example, an airline adopts passenger safety as one of its objectives.

(xi) Garv wants to buy a pressure cooker. How can he be sure about the quality [1]
of the pressure cooker?
Look for relevant certifications (e.g., ISI)

(xii) “Management is the art of getting things done through others.” Comment. [1]

According to BO Wheeler, “Business Management is a human activity which

directs and controls the organization and operations of business enterprises.
Management is centered in the administrators or managers of the firm who
integrate men, material and money into an effective operating unit.”
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(xiii) Assertion: Effective advertising campaigns play a crucial role in creating [1]
awareness and generating initial interest in a product.

Reason: The quality of customer service, including responsiveness to

queries and efficient issue resolution, enhances customer
satisfaction and fosters brand loyalty.

(a) Both Assertion and Reason are true, and Reason is the correct
explanation of Assertion.

(b) Both Assertion and Reason are true, but Reason is not the
correctexplanation of Assertion.

(c) Assertion is true but Reason is False.

(d) Assertion is False but Reason is true.

SECTION B – 32 MARKS

Question 2 [4]
(i) “Planning is beneficial to all”. In the context, explain the importance of
Planning.
1. Focuses on objectives
2. Creates order
3. Reduces risk
4. Improves efficiency
5. Facilitates control
6. Increases coordination
7. Aids creativity and
8. Facilitates decision making
(Explain any four points)
OR

(ii) “Delegation provides the means whereby a manager multiplies himself.” Explain.

1. Relief to top executives

2. Scalar chain
3. Specialization
4. Quick decisions
5. Motivation of subordinates
6. Executive development
7. Growth and diversification
(Explain any four points)
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 Question 3 [4]
Briefly explain the types of working capital required by a business concern.

1. Permanent working capital

i. Initial working capital
ii. Regular working capital
2. Temporary or variable working capital
i. Seasonal working capital
ii. Special working capital

( Explain )

Question 4 [4]
What are equity shares? Explain any three advantages of issuing equity shares from
the point of view of a company.
Equity shares represent ownership in a company, providing shareholders voting
rights, a residual claim on assets, and potential dividends. Shareholders bear the
risks and enjoy the rewards associated with the company's performance. The
market value of equity shares fluctuates based on supply and demand in the stock
market.
Advantages of issuing equity shares from the point of view of a company.
1. No burden on earnings
2. Permanent capital
3. No charge on assets
4. Source of strength
5. Small nominal value
(Explain any three points) 1+3

Question 5 [4]
“Management is both Science and Art.” Comment.

Management as a science: Science is a systematized body of knowledge pertaining to a

specific field of study and contains generalizations that explain a phenomenon. It establishes
the cause and effect relationship between two or more factors and ascertains the underlying
principles governing the relationship. These principles are developed through the scientific
method and verification through testing. The principles are absolute truth having universal
application. As such science is characterized by four feature:

1. Existence of systematized body of knowledge

2. Use of scientific methods of observation
3. Principles based on experiments
4. Universal validity of principles
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 Management has a systematized body of knowledge it makes use of observation and
experience. Principles of Management are based on research and experience. These principles
are applicable in most situations. Management can be called as science because it contains all
the characteristics of science. However, management is a Social science it is comparatively a
young and soft science because its principles are not hard and fast laws.

Management as an art: Art is the bringing about of desired results through the application of
skills. It is concerned with the application of knowledge and skills.
Management is one of the most creative arts as it requires a vast knowledge and certain
innovating, initiating, implementing, and integrating skills in relation to goals, resources,
techniques and results. As an art, management calls for a corpus of abilities, intuition and
judgement and a continuous practice of management theories and Principles.
Management is an art because
i) The process of management does not involve the use of know-how and skill
ii) The process of management is directed towards the accomplishment of concrete results
iii) Like any other art management is creative in the sense that management creates new
situations needed for further improvement
iv) Management is personalized meaning thereby that there is no “best management”.
Every man in the profession has his individual approach and technique for solving
problems. The success of managerial tasks is related with the personality, character and
knowledge of the people involved.
To conclude management is both science and an art

Question 6 [4]
Discuss the Unity of Command and Unity of Direction principles as given by Henry
Fayol.

Unity of command:
According to this principle an employee should receive orders from one superior only
and be accountable to him. No person can serve several masters at the same time. If a
subordinate has more than one boss dual command will undermine authority, weaken
discipline, divide, loyalty and create confusion, delays etc. Principle of authority of
command is very relevant in large and modern organization as it helps in smooth
working of people.
Violating the principle of unity of command leads to the following adverse effects
1. Overlapping of orders and instructions
2. Confusion and indiscipline
3. Duplication of work
4. Divided loyalty and disobedience
5. Lack of responsibility
6. Disrespect for superiors
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Unity of Direction:

There should be one head and one plan for a group of activities having the same
objective. In the other words, each group of activities with the same objective must
have one plan of action and must be under the control of one superior. Without unity
of direction, unity of action and coordination of efforts are not possible.
Unity of direction should be differentiated from unity of command. Unity of command
relates to the functioning of people whereas unity of direction is concerned with the
activities. Unity of direction does not automatically lead to unity of command though
there cannot be unity of command without unity of direction. Unity of direction relates
to the functioning of the whole organization.

Question 7
Sunshine Ltd. Imported new machinery from Japan. However, the productivity of
the business did not improve with the use of his machinery. On investigation, it was
found that the workers were not able to operate the high-tech machinery effectively,
causing poor performance and wastages.

(i) What can be done by Sunshine Ltd. to overcome the above problem? [1]
Training Programs: Implement comprehensive training programs to familiarize the
workers with the new high-tech machinery. Training should cover not only the
technical aspects of operating the machinery but also best practices, safety protocols,
and troubleshooting techniques
(ii) Highlight any three advantages of the identified solution. [3]
a) Enhanced productivity
b) Reduced wastages and errors
c) Employee confidence and morale

Question 8
Jayesh went to purchase a packet of chips. The shopkeeper handed him a packet which did
not have the MRP, date of manufacture and date of expiry printed on it. Jayesh decided not
to buy the packet.

(i) Identify and explain the right of the consumer which has been violated in the above
case.
The right of the consumer that has been violated in this case is the "Right to
Information." Every consumer has the right to be informed about the product they
are purchasing, including essential details such as Maximum Retail Price (MRP), date
of manufacture, and date of expiry. [1]
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(ii) Briefly explain any three points highlighting the need for consumer protection. [3]
1. Consumer is the purpose of business
2. Business is a means of human welfare
3. Multiple objectives
4. Growth with social justice
5. Stakeholder approach
6. Responsibility with power
7. Theory of trusteeship
8. Business ethics
9. Self interest
(Explain any three points)

Question 9 [4]
(i) What is Branding? Give any three advantages of branding to the marketers.
Branding is the process of assigning a distinctive name or symbol to a product by which
it is to be known and remembered.
A brand is a name, term, sign, symbol or design or a combination thereof used to identify
the goods or services of a seller and to differentiate them from those of competitors.
Lux, Coca-Cola, Bata, Parker are examples of brands.
Advantages:
1. Product Differentiation
2. Facilitates advertising
3. Differential pricing
4. Lower selling costs
5. Ease in introduction of new product
6. Wider market
(Explain any three points) 1+3

OR

(ii) What do you mean by promotion mix? Explain any three of its elements.
Promotion mix refers to the combination of promotional methods or tools that a
company uses to communicate and persuade the target audience about its products or
services. It involves the strategic integration of various promotional elements to achieve
specific marketing objectives and enhance the overall effectiveness of the promotional
efforts.
Three elements of promotion mix are.
1. Advertising
2. Sales promotion
3. Personal selling
4. Publicity
(Explain any three points) 1+3
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 SECTION C – 32 MARKS
Question 10

(i) “In the present day competitive market, it is essential for a business to remain [5]
alert and aware of its environment.” Explain.
1. First mover advantage
2. Early warning signal
3. Sensitize the management
4. Basis of strategy
5. Intellectual stimulant
6. Image building
7. Continuous learning
(Explain any five points)
(ii) Distinguish between Micro and Macro environment. [3]

Aspect Micro Environment Macro Environment

Factors that directly impact Factors that are external to
a business and are within its the business and are beyond
Definition immediate control. its immediate control.
- Economic Conditions -
Political and Legal Factors -
Social and Cultural Factors
- Customers - Suppliers - - Technological Factors -
Competitors - Environmental Factors -
Components Intermediaries - Employees Global Factors
Nature Specific and Controllable Broad and Uncontrollable
Influence Direct Impact Indirect Influence
- Economic downturn
- Customer preferences impacting consumer
Examples affecting product design. spending.
Societal, Economic,
Scope Industry-specific Political, and Global

Question 11

(i) You are finance manager of a newly established company. The director has [5]
asked you to determine the amount of fixed capital requirement for the
company. Explain any five factors that you will consider while determining
the fixed capital requirement for the company.
1. Nature of business
2. Size of the business
3. Nature of products

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 4. Method of production
5. Diversity of product lines
6. Mode of acquiring fixed assets
7. Intangible assets
(Explain any five points)

(ii) Write a short note on e-banking. [3]

E-banking, or electronic banking, revolutionizes the financial sector by
leveraging digital technology. It provides customers with online and mobile
platforms for banking services, including account management, fund
transfers, and bill payments. E-banking offers convenience, cost efficiency,
and global access, transforming traditional banking methods. With enhanced
security measures, it is a pivotal aspect of modern finance, though challenges
such as cybersecurity must be addressed. The continuous evolution of
technology promises further innovations in e-banking, shaping the future of
financial services.
OR
(i) Explain steps in staffing process. [5]
1. Human resource planning
2. Recruitment
3. Selection
4. Placement
5. Orientation
6. Training and development
(Explain any five points)

(ii) “Controlling is an indispensable function of management.” Do you agree? Give [3]

reasons in support of your answer.
1. Achieves organizational goals
2. Ensures efficient use of resources
3. Improves employee motivation
4. Ensures order and discipline
5. Facilitates coordination
6. Judges accuracy of standards
(Explain any three points)

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 Question 12

(i) State and explain any five principles of F W Taylor. [5]

1. Science not rule of thumb
2. Harmony not discard
3. Maximum not restricted output
4. Division of work and responsibility
5. Scientific selection training and development of workers
6. Standardization
7. Mental revolution
(Explain any five points)
(ii) “Management is all pervading.” Explain. [3]
Management is required in all types of organisations – business, family, club,
school, temple, army, government, cricket team etc. Similarly, management
is necessary in both small and large organisations. Management is found in
all countries and all points of time. The basic functions of Management are
performed at every level of authority top, middle and operating levels.
Therefore it is true to say management is all pervading.

Question 13

Read the case given below and answer the questions that follow.
Dunken Ltd. is a big and well-reputed company. The biggest challenge for the company is
managing many employees at the same time. As the company has various departments like
human resources, marketing, finance, etc., it is very necessary for the company to maintain unity
in different departments. All the employees work hard for the organisation. Despite their
different interest, they all perform various activities together so as to achieve the objectives of
the company. The career of employees is shown a developmental path through proper training
modules and job enrichment. Shankar is a manager who assigns all duties and responsibilities to
his employees in the department. He uses all sources to develop proper communication with
them and leaves no attempt to motivate them.

(i) “The career of employees is shown a developmental path through proper [2]
training modules and job enrichment.” In the light of this statement explain
motivation.
Motivation means a process of stimulating people to action to accomplish
desired goals.
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 A well-defined career path and opportunities for skill development contribute to
higher employee morale. When employees see a future for themselves within the
organization, they are likely to be more motivated and committed
(ii) Which function of management does Shankar perform in the company Dunken [1]
Ltd?
Directing – Directing is the interpersonal aspect of managing by which
subordinates are led to understand and contribute effectively and efficiently to
the attainment of enterprise objectives.
(iii) “As the company has various departments like human resource, marketing, [3]
finance, etc., it is necessary for the company to maintain unity in different
departments.” Explain coordination as an essence of management.
Coordination is not a separate function of Management. It is the very essence of
Management because it is inherent in all managerial functions.
In planning coordination is essential to ensure harmony between organizational
goals and departmental plans.
In organising coordination is required between authority and responsibility.
In staffing coordination is important for matching talent of employees with the
jobs assigned to them.
In directing motivation and leadership ensure functional harmony.
In controlling coordination is achieved by ensuring that actual results confirm to
the desired results.
Thus each function of Management is an exercise in coordination. The quality
of coordination is the crucial factor in the survival of organization.
(iv) “He uses all sources to develop proper communication with them and leaves [2]
no attempt to motivate them.” In the light of this statement explain any two
objectives of communication.
1. To elude educate and train people
2. To motivate employees
3. To promote managerial efficiency
4. To implement decisions quickly
5. To facilitate leadership
6. To carry out change
7. To create teamwork
8. To secure feedback
(Explain any two points)

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