MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION

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Subject Code : 815 Model Answer Page No : 1 / N

Q1 solve any EIGHT of the following:

i)Define the terms: (1 mark each)

(a) Industry: It is the part of business activity which relates to production, processing, or fabrication
of products.

(b) commerce : It is that aspect of business activity which is concerned with distribution of goods
and services produced by the industry.

ii)Define the terms: (1 mark each)

(a) management: Management means the process of conducting& managing various business
activities. It is an art of securing maximum results with minimum efforts to gain maximum benefits
& happiness for employee &employer& also to provide best services to the public.

(b)trade: Trade means buying selling and exchange of goods and services.

iii)Mention different channels of distribution of drugs with intermediates.

direct selling & Indirect selling

Direct selling‐ Mfger sells his goods directly to the customer.(1/2marks)

Indirect selling one or two middlemen are involved in bet. mfger &customer. (1 ½ marks)

Mfger →Retailer →customer

Mfger→ wholesaler→ Retailer →customer

Mfger→ distributor→ wholesaler→ Retailer → customer

iv) give the diagram of ideal layout for retail drug store.(2 marks)
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v) Define the term codification of drugs.Name the different methods of codification of drugs.

Codification is a method to assign a code symbol or no. to the item for its easy identification.(1/2
mark)

alphabetical method, Mnemonic method, Numerical method Combination system(1 ½ marks)

vi)Define the term inventory control & enlist various inventory control techniques.

Inventory control is defined as a proper control over maintenance of stock of goods(.(1/2 mark)

• ABC analysis

• Economic order quantity

• perpetual inventory system

• review of slow & non‐moving item

• setting of various levels use of material budgeting

• establishing an effective purchase procedure (1 ½ marks)

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(vii) What is EOQ?Give formula to calculate EOQ.

This technique is used to find out how much inventory should be ordered.(1 mark)

The correct quantity to buy is at which the ordering cost & inventory carrying cost is minimum.

algebraic formula.(1 mark)

EOQ= √ 2ab/cs

a =is annual consumption,

b=buying cost per order

c=cost per unit of material

s=storage &other inventory carrying cost.

(viii) Define the terms: .(1 mark each)

(a) salesmanship : personal selling it is an art of convincing & persuading the customers to buy

(b) advertisement:It is an art used to familiarize public with the product by informing of its
description uses its superiority over the other brands,sources of its availability & price etc.

(ix) Explain the advantages of window display.

1. Window display acts as a silent salesman for promoting sales.

2. It is a good method of advertisement.

3. It attracts the customers or passers by.

4. It makes a drug store decorative & attractive.

5. It creates good impression on the customer when they enter the store.

(x) Define the terms.: (1 mark each)

(a) recruitment: Is a process of exploring the source of supply of the required personnel &
stimulating the prospective employees to apply for jobs in the organisation.

Its purpose is to create a pool of candidates from which suitable person may be selected for job.

(b)training: Training is the scientific process of improving the knowledge & skill of the employees
for doing a particular job.

(xi) Define the terms( I mark each)

Assets: & liabilities

(xii) Define the term cheque and mention different types of cheques.
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A cheque is defined as an instrument in writing containing an unconditional order directing bankers

signed by account holder to pay a sum of money to the bearer of the cheque. Types of cheques‐
open cheque & crossed cheque.

Q 2 Solve any four.

(i) Define aids to trade. Discuss different aids to trade.

• Banking Exchange of goods with money is solved by services of banks and financial
institutions

• Transport Transportation overcomes Hindrance of Place

• Insurance Despite efficient transportation and packaging there may be loss of goods. This
may be overcome by providing insurance cover of the goods during transportation and
storage. Various types of insurances are fire, marine and general.

• Warehousing Goods are prepared before demand, so proper storage is required.

Warehousing facilities solve this problem

• Packaging The goods get spoiled or damaged during transportation. This hindrance is
overcome by proper and safe packaging of goods.

• Advertising and publicityAdvertising and publicity agencies overcomes Hindrance of

knowledge

(ii) What are the different forms of business organizations? Describe main features of sole
proprietorship.

• Sole proprietorship

• partnership

• The joint stock company

• Co‐operative society

Features

• S.P.has full Authority over the Affair of business.

• No major formalities are required to start the business.

• He has to arrange for the required capital.

• He has to bear the profit or loss.

• Ownership lies with one person only.

• The liabilities of the S.P. is unlimited.

(iii) Mention advantages & disadvantages of channels of distributions.

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Advantages: 1 there is reduction in the cost of marketing. 2 easy availability of goods at all
places. 3 reduction of financial burden 4 increase in sale of goods due to wholesalers & retailers.
5 uniform pricing. 6 more employment. Goods availability in remote areas.

Disadv. 1 increase in the price of products due to commission to wholesaler & retailer. 2 the
wholesaler & retailer do not supply goods in time. 3 artificial scarcity due to holding by the
wholesaler & retailer.

1. (iv) Enlist the documents required to open a new Medical retail drug store Application in
duplicate on form 19 of the D & C rules 1945.one copy for biological & other for non
biological drugs.

• a fees of Rs 1500 per licence to be deposited in the SBI or govt. Treasury

• An attested copy of D.Pharm from institute recognized by PCI.

• An attested copy of registration certificate by state pharmacy council.

• an attested copy of ssc certificate.

• Affidavit from a person if he is an employee.

• An affidavit on non judicial stamp paper attested by first class magistrate by each partner in
case of partnership firm, or by the owner.

• rent receipt in case or rented premises or affidavit from an owner.

• a copy of partnership deed in case of partnership.

• receipt of purchase of refrigerator.

• Plan of a premise.

(v) Describe the ABC technique of inventory control.

(Always Better Control)

This technique is used generally in big stores where large inventory items are stored.

The products are divided into three groups A,B & C., according to the cost of the material & money
value of consumption.

A items

In whole inventory there are few costly items which come under this group.

B items

The items under this group are neither costly nor cheap.
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C items

These items are cheaper in cost & represents 70% of total quantity of inventory.

A items B items C items

Covers 10% of inventory Covers 20% of inventory Covers 70% of inventory

Consumes about 70% of Consumes about 20% of total Consumes about 10% of
total budget budget total budget

Requires very strict control Requires moderate control Requires loose control

Low or no safety stock reqd. Low safety stock reqd. High safety sock reqd.

Needs maxi. Follow up. Needs periodic follow up. Needs close follow up.

Must be handled by senior Can be handled by middle Can be handled by any

officer management official of management

(vi) What are the different qualities necessary to become a successful salesman?

personal qualities

mental qualities

social qualities

vocational skills

Personal qualities

1. He should have attractive personality,

2. Good health, good physique, as the job involves lot of physical strain.

3. He should have clear voice, & the his talk should impress people.

4. He should be well dressed.

mental qualities
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He should have good memory, imagination, presence of mind, good judgment.

He should be intelligent to understand the nature & requirement of the buyers.

He should be able to think from the view of the customer.

social qualities

He should have liking for people & shd be able to mix with them.

He shd not be shy & reserved.

He should be a patient listener.

He should be polite & courteous.

Vocational skills

He shd know selling tech.

He shd have knowledge of the product, customers, & competitive products.

Q3 i) An employer may evaluate his employee on the basis of following check list .( all 10 points 3 mks)

1. appearance

2.personality

3.alertness and promptness in dealing with customers

4.courtesy and attitude towards customer

5.personal acquaintance with customers

6.cooperation with colleagues

7.product knowledge

8. selling ability

9.suggestive selling

10.self improvement

The grades good, average, and poor may be given and than consolidated report is prepared and accordingly
they are suitably rewarded

Q3. ii) Bank is an institution carrying on certain kinds of financial business, dealing in money. Its buys and sells
money in the same way as a trader buys goods for resale at a profit (1 mks )
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Types of banks (1mks for any 4 banks)

1Commercial bank

2Saving banks

3 Land development banks

4Cooperative banks

5Industerial banks

6Exchange banks

7Mixed banks

Secondary functions of bank (1 mks for any 4 points)

It buys and sell shares/bonds / debentures on behalf of its customers

Lockers are provided to the customers for safe keeping of jewellery and important documents

It makes regular payment of subscription, insurance premium taxes ects on behalf of its customers

It collects interest/dividend on securities and shares belonging to its customers

Its accepts bill of exchange in respect of imported goods and also purchases bills of exchange

It helps people going abroad by arranging for foreign exchange

It provides assistance and advises the customers with regard to investment.

Q3. iii) Financial planning is defined as the process of deciding the financial activities or goals of organization.
it consist of amount of capital to be raised, determine the form and the proportionate amt of securities to be
raised and laying down effective polices for proper administration of financial plan.(1) Sources of finance ( 2
mks )

1. Owned capital

2. Loan capital can be long term finance which includes

(a) Shares

(b) Debentures

(c) Ploughing back of profit

(d) Financial institution

(e) public deposit

(f)Bank loans
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(g)Trade credit

(h)Installment credit

(i)customers advances

Q3. iv) Wholesalers are middle men between the manufacturers and retailers (1/2mrks)

The wholesaler perform the following important functions( 2 ½ marks for 5points)

1. Assembling they collects varieties of products from different manufacturers

2. Distribution they distribute goods to the retailer who are widely scattered

3. Warehousing they stores the goods of manufacturer for supply to retailer

4. Transportation : wholesaler moves the good from the place of production to his warehouse
and from there to the retailer

5. Financing : He provides credit facility to the retailer

6. Risk bearing : In pharmaceuticals the wholesaler bear the risk of theft, fire , fluctuating prices
breakage and expiry

7. Pricing : The wholesale prices and retail prices are fixed by the government

8. Grading and Packaging : The goods are graded and packed by the wholesaler as per the
requirement of the retailer

9. Market Research : The retailer passes the knowledge regarding the product from the
customer to the wholesaler and in return the wholesaler passes this knowledge to the
manufacturer.

Q3.v) The Following factors should be considered while selecting the site for starting a new drug
store (1/2 mark for each point)

1. Business Locality: Large number of people visit the market place to purchase the thing of
their requirement

2. Residential Area : People prefer to buy the required medicines during their evening walk

3. Developing area : In cities new localities are coming up very fast so it’s a ideal place to start a
new drug store.

4. Hospital: Prescription of the same hospital gives good business

5. Flow of traffic: Avoid location near traffic signals and fast moving traffic areas

6. Parking : There should be enough parking space outside the drug store

7. Drug store : Avoid the site near already existing drug store as it may lead to competition
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8. Near to hotel, school cinema hall and playground : It should be avoided to select such
locations , If the site is near to such places in that case maintain the products to be sold in
that place

Q3. vi) Salient features of hire purchase trading house: ( 1 Mrk)

1. Buyer gets credit from the seller against the security of lien on the goods purchased by him.

2. A Part payment is made at the time of purchase and rest in installment

3. The buyer becomes the owner of the goods only after the payment of total price

4. The seller is free to carry back the goods if the purchaser does not pay the installment.

5. The whole system works on agreement signed between the buyer and the seller without the
guarantor

Advantages( 1 Mrk)

1. This system provides facility to purchase costly goods which are not in the reach of middle class

2. The Small scale manufacturer can buy their machinery and tools without making total payment.

3. This system helps to increase the sale of costly and non essential items as it tempts large number
of people to buy the same.

4. Even the people who have sufficient money will go for this system as they can invest their money
elsewhere to earn more profit

Disadvantages : ( 1 mrk)

1. People are tempted to buy things which they cannot afford.

2. Trader dealing in hire purchase scheme have to arrange for large capital to finance their
business

3. The goods purchased on hire purchase scheme are costlier as they have to pay the
interest on unpaid installment

Q4 .i) The following are different types of bank account ( 1mrk)

1. Saving account

2. Current account

3. Fixed Deposit account

4. Miscellaneous Deposit account

Various functions of the banks are(2 marks for four points)

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1.Services to depositor:

a) they Collect the amount of cheque, demand draft, hundis, local and foreign bills on behalf of their
depositor

b) They offer discounting facilities in respect of local and foreign bills of the depositor

C) They pay insurance premium subscription and taxes on behalf of the depositor

2. Services by way of loan:

a) overdraft : the overdraft facility permits the customer to overdraw from his account however the bank fix
the limit beyond which the customer cannot overdraw and the customer is required to pay specific rate of
interest on over drawn amount on daily basis. The over draft facility is allowed only against some security.

b) Cash credit : Bank fixes a limit up to which a customer may borrow money from it against some security
and interest is charged by the bank on the outstanding amount in cash credit account.

C) Loans : The bank gives Loans to the customer against some security of Mortgage.

d) Discounting of bill: The bank encash the Customers bill before they become due for payment and for this
service the bank charges a nominal discount

Q 4. ii) A cooperative society is a voluntary of persons who are financially strong, they come together with an
aim, not to get profit but to overcome instability arising out of want of adequate financial resources ( 1mrk)

The salient features of co operative society are as follows : (2 mrks for four points))

1. It is governed by corporative society Act 1912, it is a voluntary organization made by association of

person not the capital.

2. Managing committee is formed by electing members of society which frame the policies and manage
the affair of society

3. The capital of cooperative society is contributed by its members through purchase of limited amount
of share.

4. The shares of society cannot be transferred by members to others if the member wants to withdraw
his capital he has to return the shares

5. The distribution of profit is not related to the share capital contributed by each member even with a
small capital contribution a member can receive relatively large share in profit if he had a large
number of business transaction with the society

6. IT conducts business on cash basis and does not allow credit facility
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7. The surplus at the end of the year is not distributed as dividend, a portion of the balance is utilized
for the general benefit of the members and may be paid as a bonus to the employee and the
workers.

Q4. iii) Purchasing means buying or procurement of right type of material in the right quantity at the right
time and the right price. (1 mark)

Importance of Purchasing: Purchasing is very important with respect to following(2 marks)

1. Competitive price

2. Quality of Raw Material

3. Continuity of supply

4. Efficient inventory control and store keeping

5. Efficient record keeping and reporting.

Q4. iv) Scrap is residue incidentally obtained from manufacturing process it is usually of small value and
recoverable without further processing. E.g. Powder and fine granule obtained in processing of
tablets.(1mark)

Various procedures adopted for disposal of scrap are as follows (2 Mrks)

1. Scrap may be sold directly to the reprocessing Industry.

2. Scrap may be sold to scrap dealer through auction.

3. Costly machinery and spare parts may be sold to other similar organization.

4. If there is no way for disposal of scrap then it can be dumped in a dumping place

Q4. v) Profit and loss account is an account which reveals the net profit or net loss of a firm in course of
its business operation during financial year.(1 mark)

Specimen of profit and loss account .(2 Mrks)

Particulars Amount Particulars Amount

To Gross loss b/d By Gross profit b/d
To office & Administration Expenses. By Commission received
To Office Salaries By Rent received
To Wages By Interest as investment
To Office Rent By Interest on bank deposit
To Postage and Telegram By Interest on drawing
To Selling & Distribution Expenses By Discount received
To Finance Expenses By provision for discount on creditor
To Net Profit c/d to Capital A/c By Net loss c/d to Capital A/c
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Q4.vi)Features of Management: (1.5 Mrks for any three points0

1. Management includes elements like planning, implementing & controlling.

2. Management is an important process to achieve the pre determined objectives.

3. To achieve goals & plans of organization by controlling the efforts of all level of management.

4. Management implies skill and experience in getting things done through people.

5. Management is a art as well as science

6. Management is a function of executive leadership.)

Functions of Management: .(1.5 Mrks )

1. Planning : Planning is done to achieve the desired results. Proper planning involves the full
production utilization, Inventory control, and sales organization.

2. Organinsing : It is the implementation of plans by giving responsibilities to the peoples of

organization to perform various activities such as purchasing, Production, quality control, distribution
etc.

3. Staffing : A right person should be selected for the job to get maximum output to target work done.

4. Directing : Management is the art and process of getting things done. The manager have the
responsibilities of supervising their sub – ordinates by giving proper instruction & checking the
performance etc.

5. Controlling : It ensures the performance of plans. To look the day to day working. There should be an
adequate control so that pre – determined planned objectives are achieved.

6. Co‐ordination : In the management of an organization objective are laid down which can ultimately
be fulfilled by co‐ordination with various departments

Q.No. 5

(i) Balance sheet: (1.5)

It is a statement showing the financial position of a business on a certain fixed date or at the close of
the accounting period. It gives information regarding assets and liabilities of the business on any
particular date.

Format of balance sheet (1.5)

Liabilities Amount Assets Amount

Rs. Rs.
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(ii) Various methods of ratio analysis: (01)

1) comparative financial statements

2) Common size financial statements

3) Fund flow analysis

4) Ratio analysis

Ratio analysis: (any two ratios from each subclass are expected) (02)

It is simple aand more informative method of analysis. A ratio is an arithmetical relationship

between two figures. Various ratios are classified as

a) Profitability ratios: These ratios are calculated to know end results of the business. Various
ratios under this
Gross profit
Gross profit ratio = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐X 100
Net sales

Net profit

Net profit ratio = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐X 100

Net sales

Operating profit

Operating profit ratio = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐X 100

Net sales

Net profit

Return on capital employed = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐X 100

Capital employed

Net profit after tax

Return on total assets = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐ X 100

Total assets
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Dividended per equity share

Payout ratio = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ X 100

Earning per share

2) Liquidity ratios: These are used to measure ability of firm to pay off its liabilities in time. Various
ratios under this

a) Current ratio: known as working capital ratio. It expresses relationship between current assets &
current liabilities

Current assets

Current ratio=‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Current liabilities

b) Liquid ratio : : known as acid test ratio. Liquid assets are those which can be converted into cash
within short period without any loss in value.

Liquid assets

Liquid ratio=‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Current liabilities

3) Activity ratios: known as turnover ratio. Used to measure efficiency with which firm uses its
esouces or assets. Various ratios under this

a) Invetory turn over ratio: Known as stock turn over ratio

Cost of goods sold

Invetory turn over ratio = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Average stock

Sales

b) Capital turn over ratio =‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Capital employed

4)Long term solvency ratios: Known as leverage ratio.solvency means liabilities as and when they
mature for payment. These ratios are calculated to see whether business would be able to meet its
long term commitments. Various ratios under this
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Long term debt

Debt equity ratio = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Shareholders equity

Long term debt

Debt to total capital = ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Total capital

(iii)Budget : (01)

It is a detailed plan of operation for some specific future period. It is an estimate prepared in
advance of the period to which it applies.

Objectives of budgetary control : (02)

1) Planning :‐ A sound planning is necessary for success of any firm. It is necessary to prepare
detailed programmes relating to production raw material, sales target, research programmes,
advertising.

2) Co‐ordination :‐ For effective planning co‐ordination between different department and

management is necessary. Budget control help to co‐ordinate various activities of the firm.

3) Control :‐ Control is necessary to ensure that all the plans and objectives are implemented
and achieved successfully. This is possible through budgetary control which controls by comparing
actual performance with pre determined plans.

(iv) Ledger : (01)

It is the principle or chief book which contains in a summarized and classified form, a permanent
record of all transactions of a business. A ledger is a collection of all the accounts debited or
credited in journal.

Importance of ledger :‐ (01)

1) The management can know on a particular date amount to be received or paid by going
through ledger.

2) Various transaction may be spread over in journal in various pages, but all transactions
are recorded on one page in ledger.

3) It is easy to prepare profit and loss account and balance sheet by using ledger.
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4) Accounts can be easily located by going through Index, which is provided at the beginning of the
ledger.

Format of ledger – (01)

Name of account

Date Particulars J.F. Amount Date Particulars J.F. Amount

(Rs.) (Rs.)

(v) Multiple Shop System :‐ (01)

It consist of a chain of stores in a city through out the state / country and are organised by a
centralized agency for selling the same kind of products these are owned and managed by a central
organization, the uniformity of operations is the basic feature of this system.

Advantages :‐ (01)

1) Prices are fixed and no bargaining is done.

2) Quality goods are sold.

3) Common advertisement is done from centralized place.

4) They work on cash and carry principle so chances of bad debt are minimum.

5) The problem of dead stock is eliminated.

Disadvantages:‐ (01)

1) These shops do not give any credit facility to the customer, which has negative effect on
sales.

2) Do not provide any home delivery service to the customer.

3) Staff employed may not give full attention towards customer satisfaction.

4) To run these shops heavy investment and faithful persons are required.
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(vi) Merits of Retail Trade of Drugs:‐ (1.5)

1) It form link between producer and customer and help in distribution of drugs.

2) Help to introduce new product in the market.

3) Keep large variety of goods and offer wide choice

4) It is last in distribution and in direct contact with customer and with physician.

5) Retail trade provides drugs in emergency cases.

Functions of Retail Trade of Drugs:‐ (1.5)

1) Assembling of drugs from different wholesalers.

2) Transportation from the wholesalers to retailer shop.

3) Store goods till they are demanded by the customer.

4) It grant credit facility to the regular customer.

5) Retail trade bears risk of non‐payment, fire, theft, spoilage, change in demand.

Q. No. 6

(i) Cashbook :‐ (01)

It is a book of accounts in which all receipts and payments of cash are recorded.

Types of cashbook and its format:‐ (03 marks may be allotted if any three formats are correct)
(03)

1) Single column cashbook

‘Dr’ ‘Cr’

Date Particulars L.F. Amount Date Particulars L.F. Amount

2) Double column cashbook ‐

‘Dr’ ‘Cr’

Date Particulars L.F. Discount Cash Date Particular L.F. Discount Cash
Rs. s Rs.
Rs. Rs.
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3) Triple column cashbook

‘Dr’ ‘Cr’

Date Particulars L.F. Discount Cash Bank Date Particular L.F. Discount Cash Bank
Rs. Rs. s Rs. Rs
Rs. Rs.

4) Petty cashbook

Stati‐onery
Particulars
Total Amt.

Total Amt.

yances Rs.
Particuars

Voucher

Postage

Cartage

Remark
Conve‐
Date

Date

Misc
No.

Rs.

Rs.
(ii)Partnership : (01)

It is defined as the relation between persons who have agreed to share the profits of a business
carried on by all or any one of them acting for all.

Kinds of partner: (01)

a) Active or working partner

b) Inactive or sleeping partner

c)Nominal partner

d) Partner in profit only

e)Secret partne

f) Partner by estoppel

g)Minor as a partner

Advantages of partnership: (any 4) (01)

1)Easy to form.

2) partner may pool their resources to collect funds

3) Division of work
 MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION
(Autonomous)
(ISO/IEC - 27001 - 2005 Certified)
__________________________________________________________________________________________________
WINTER – 12 EXAMINATION
Subject Code : 815 Model Answer Page No :20 / N

4) Secrecy is maintained

5) Risk of loss is shared among all partners

Disadvantages of partnership: (any 4) (01)

1)Large scale business may not possible to run because of limited resources due to limited partners
up to 20

2) Firm do not lasts for long time due to misunderstandings & lack of co‐operation of partners

3) No partner can transfer his capital to outsider without consent of all partners.

4) A dishonest or incompetent partner may land in difficulties.

5) The liabilities of partners are unlimited.

(iii)Departmental stores (01)

It is a big store in retail trade of wide variety of goods under the same roof. There may be separate
department for clothes, readymade garments, books, medicines however management is the same.

Merits (any 3) (1.5)

1) Customer does not have to run from one shop to another because everything is at the same place

2) Extensive advertisement is done.

3) Provide services as home delivery, after sales services, accepting orders on telephone.

4) Employ professionals and experts

Demerits (any 3) (1.5)

1) Initial cost of running business is very high.

2) Higher overhead charges & operational charges

3) Due to high operational charges, prices of goods increase.

4) Due to big rush, personal contact between owner of store and customer may not established.

(iv) Tender: (01)

It is a written offer to do some specified work or to provide required materials. Such offer is
accompanied by certain conditions like time period, quantity, nature of work.
 MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION
(Autonomous)
(ISO/IEC - 27001 - 2005 Certified)
__________________________________________________________________________________________________
WINTER – 12 EXAMINATION
Subject Code : 815 Model Answer Page No : 21 / N

Contract : (01)

When an adequate quantity of material is required to be supplied at regular interval of time or a big
job is required to be finished in considerable length of time is known as contract.

Types of tenders: (02)

1) Single tender: only one supplier is there as in case of patent and proprietary goods. Here tenders
are invited from one supplier only.

2) Closed tender: also known as limited tender because tenders are invited from a limited number
of suppliers who are on the approved list of supplier. Supply order is given to that supplier who have
quoted minimum rate with same specification.

3) Open tender: Also known as public tender or unlimited tender because here tender is not limited
to certain supplier. Here wide publicity is given by advertising.

4) Global tender: When material of international standards is to be purchased or work involving

huge costs is to be done then tenders are invited from all parts of the world. Tender invited in this
way are known as Global tender

(V) Methods of perpetual inventory control system: (02)

1) Bin card: This is maintained by store –keeper to keep record of all items of materials and goods in
his store.

2) Store ledger: It is kept in cost accounting department.

3) Continuous stock taking: Here only limited number of items is verified on a day.

Advantages of perpetual inventory control (01)

1) Due to continuous stock verification balance in stock can be known at any time.

2) Helpful to formulate purchase policies.

3) Detail & reliable check is obtained.

4) Stock verification make store keeper efficient.

Disadvantages of perpetual inventory control (01)

1) Balance is calculated but price is not considered.

2) Usage of drugs is not considered

 MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION
(Autonomous)
(ISO/IEC - 27001 - 2005 Certified)
__________________________________________________________________________________________________
WINTER – 12 EXAMINATION
Subject Code : 815 Model Answer Page No :22 / N

3) Drugs are not classified in groups for study

(vi) Different books of accounts: (02)

These are the books in which a transaction is recorded for the first time from a source document.
Later on transactions are transferred to the ledger.

1) Journal

2) Cash book ‐ a)Single column cash book,

b) Double column cash book,

c) Three column cash book

d) Petty cash book

3)Other day books‐ a) Purchase Book

b)Sales book

c)Purchases return book

d) Sales return book

Advantages of Journal: (01)

1) It is primary and initial book of record

2) Daily transactions are first of all recorded in this book

3) Transactions are recorded as per chronological order.

4) From these transactions are posted to the ledger.

Format of Journal (01)

Date Particulars L.F. Debit Credit

Amount Amount

(Rs) (Rs)