BUSINESS STUDIES CLASS XI HOTS QUESTIONS

                    BUSINESS STUDIES CLASS XI HOTS QUESTIONS

HOT QUESTIONS

Chapter 1    NATURE & PURPOSE OF BUSINESS

1.      Occupation in which people work for other and get remunerated in return  is known as ……………?

Ans  Employment

2.      Anita is going to temple, what type of activity is this?

Ans  Non-economic activity.

3.      “Business is an economic activity “.Do you agree? Why.

   Ans Yes, business is an economic activity because we get money in return.

4.      “Risk is an essential element of a business”. Why ?

 Ans. Bearing of risk is an essential element of the business no, business can  be run without some element of risk in it

5.     What do you mean by  Auxiliaries to Trade?

 Ans  Auxiliaries to trade means the activities which assist business  in  smooth exchange of goods services.

6.      Give two example of extractive industries?

Ans Mining ,Lumbering.

7.      What is Genetic industries  ?

Ans Genetic industries means parentage or heredity. Genetic industries  are  engaged in breeding  plants and animals for their use in further reproduction.

8.     What is Entrepot  or Re-export Trade?

Ans. It involves  import of foreign goods with a view to re-exporting  them  and making  profit  in the process.

9.      What is Retail trade .Give two examples of these?

Ans. It refers to sale of goods by the retailer to the customers, thus acting as a link between the wholesaler and the final consumer. Eg;-shops , vendors , pedlars ,etc.

10.         . “Profit maximization can’t be the sole objectives of a business.”Comment,

Ans. Profit  maximisation  should not be the sole motive of any business . The argument against  profit  maximization are as under :

(i)                Profit  maximization  ignores the interest of labour ,customer and  the society.

(ii)             Unfair means such as hoarding ,black marketing or adulteration may be followed to maximize profits.

11.          What is Market Standing ?

Ans. It refers to the market  position  

12.          Harish produces wheat for personal consumption. Will it be a business activity?

Ans No

13.          A person sells his old car at a profit. Can it be termed as business activity?

Ans No

14.          What type of industries are poultry farms and dealing with sapling of plants?

Ans Primary

15.          Name the territory industry which removes hindrance of knowledge.

Ans Advertising

16.           What term is used to refer to physical arrangements of machines and equipment needed to manufacture a product?

Ans Procurement

17.         Q6. Piyush running a shop to sell auto spare parts. What type of economic activity is this?

Ans Commercial activity

18.         Q7. Why does a businessman willingly undertake business risk?

19.         To eary profit

Chapter 2       FORMS OF BUSINESS ORGANISATIONS

1. Abdul is the sole owner of a shoe manufacturing factory. He took loan of Rs. 20 lakhs form Khan Finance Company for the expansion of his business. Because of continuous losses however, he was not able to repay the loan on time. Assets of the business were not enough for repaying liabilities in full. As a result, the Finance company asked him to repay their loan. He refused to do so on the ground that the loan was taken by his business and not by him for his personal use. The company filed a case against him. The court gave decision in favour of the company on the ground that Abdul was operating as the sole proprietor and a sole proprietor did not have a separate entity distinct from his own. The Court further stated that Abdul had unlimited liability and held him liable to repay the loan even by selling his personal property if need be

a. Name the form of business which is being carried out by Abdul

Ans. Sole proprietorship

b. What type of liability is enjoyed by Abdul?

Ans: Unlimited liability

c. Why did Court hold  Abdul responsible for paying his business liabilities out of his personal assets?

Ans Because Abdul was doing the business of sole proprietorship and this type of business has unlimited liability.

d. Name that characteristic of sole proprietorship which facilitates the sole proprietor to take all decisions related to his business without consulting anybody.

Ans. Control

2. Adlakha Pvt. Ltd the famous group of members submitted an application to the Registrar of Companies for the approval of the name for mobile manufacturing company. They selected “Nokia Ltd” as the name of the company so as to increase the sales because Nokia was a well known brand.

a. Who selects the name for the company?

Ans Promoters

b. Would the proposed name be accepted by the Registrar of companies? Give reasons.

Ans No, the selected name of the company is the name of an already existing well known company. The proposed name should not be identical with or too closely resembling the name of an existing company.

3. A group of 10 persons appointed Srivastava Ltd as the promoters to form their company. Srivastava ltd purchased land on behalf of the company. But it did not disclose the material fact that the land was agricultural land. Later on, the company was not allowed to carry on its business operations by the government.

a. What is the mistake of Promoters?

Ans. Non disclosure of material information to the company.

b. what can the company do now?

AnsThe company can claim damages for the losses from promoters.

c. Why did government not allow the company to carry on its business operations?

Ans Because agricultural land is not meant to be used for business activities.

4. Rudra ltd issued prospectus, inviting public to subscribe for its shares. It came up with public issue for Rs. 20 crores of 20 lakh shares worth Rs. 100 each. It received applications for 16 lakh shares.

a. Should the company proceed with allotment of shares?

Ans No the company must receive applications for atleast 18 lakh shares.(minimum subscription ie. 90% of the total issue)

5. Vijay Ltd the famous group of promoters filed documents related to registration of the company with the registrar of companies on 8^th March 2011. The Registrar after getting satisfied about the completion of formalities for registration, issued Certificate of Incorporation to the company on 12^th March 2011. However the date mentioned on certificate was 8^th March. The company had entered into the contract of buying land from  X ltd on 10^th March 2011. Now X ltd is not interested in selling land as the value of the land is appreciated. It refused to honour the contract on the pretext of company not being in existence on 10^th March, 2011 as the Registrar of the companies had issued certificate of incorporation on 12^th March 2011.

a. Why did X company refuse to honour the contract?

Ans It wanted to take advantage of rising prices.

6. How can a company remunerate promoters for the services offered by them?

Ans A company can remunerate promoters for the services offered by them in the following ways :-

a. by way of commission on purchase price of property purchased through them

b. by allotting share or debentures of the company to them or giving them the option to buy same at a future date.

7. Why are promoters not considered as Trustees or Agents of the company even though they have performed various activities in order to get the company registered and commence the business?

Ans The promoters not considered as Trustees or Agents of the company because the company is yet to be incorporated.

8. Krishnan intends to start a business of toys’ manufacturing. He finds that the plastic needed to manufacture toys is available in the neighbouring country. The plastic cannot be imported because of poor political conditions in that country. Is his business idea feasible?

Ans No, it lacks technical feasibility.

9. What would the company do if it wishes to undertake a business included in the ‘other objects’ clause of Memorandum of Association.

Ans It would either pass a special or an ordinary resolution and get central government’s approval for same.

10. Sole proprietorship form of organization would be more sutiable where more personal skill is required. Give one example of such type of business activity.

Ans  Beauty parlour.

Ch 3   Public, private and Global enterprises   HOTS.

Q1. Braches of MNC are known by specific term name it.

Ans. Majority  owned foreign affiliates.

Q2.Why do business enterprise enter into the joint venture.

Ans. For expansion of business and development of new product.

Q3. Why was the system of memorandum of understanding introduced

Ans. To improve the performance of the public sector.

Q4.Who is the major share holder and has full controlled over the management of the government company.

Ans. Govt. company.

Q5. Which public sector enterprises has the authority to use its revenue.

Ans. Statutory corporation.

Q6. Which form of public sector enterprise is most suitable for of the point of view of national securities.

Ans. Departmental undertaking.

Q7.What is the main aim of public sector enterprise.

Ans. To render the services to the public .

       Economic development.

CH 4  BUSINESS SERVICES   HOTS

1.     Ram wants to remit eighty five thousand rupees.  Can he remit this amount through RTGS? Give reason for your answer. Which other option is available to him?

Ans

2.     A transport company took an accident insurance policy for all its vehicles.  A truck of that company carrying mangoes were unloaded to another truck.  It took two days.  During these two days, the mangoes got spoiled.  Will the company get compensation for the loss of mangoes from the insurance company or not? Which principle is related with this case?

3.     A husband took the life insurance policy of his wife for ten years.  After three years, the couple got divorced and latter on after three years, the wife died \.  Would husband get compensation from insurance company?  Give also reason for your answer?

4.     Under what principle of insurance, when the insured is compensated for the loss or damaged to the property by her/him, the right of ownership of such property passes on to the insurer?

5.     Sachin has taken a loan from Sourabh against the security of his factory. Can Sourabh take a fire Insurance policy of that factory?

6.     Amitabh insured his factory for Rs. 5,00,000 against fire due to he suffered a loss Rs. 2,00,000. How much amount he can recover from the insurance company? Why?

7.     Sujit has taken fire insurance policy for his factory due to fire he suffered a loss of Rs 2,00,000 and he gets the compensation for the same . The half burn goods can be sold for Rs. 30,000 . Who has the right over it and why?

8.     Ragini has insured her house for Rs. 5,00,000 against the fire , there is a fire and RAGINI SUFFERED A LOSS OF Rs. 1,00,000. Hoe can amount she can recover from his insurer.

9.     The insured must have an interest in the subject matter in the insurance. Which principal of insurance is being referred in this statement?

10.                        A company has undertaken a fire insurance policy for rs .8,00,000 after two months due to fire it  incurred a loss of Rs . 5,00,000. How much amount will the company get as compensation.

ANSWERS

20.         Not through RTGS as min amount is Rs.one lakh

21.         will not get compensation

22.         He will get compensation

23.         Principle of Subrogation

24.         Yes.

25.         Amitabh can recover Rs. 2,00,000 from the insurance company( not the policy amount,that is, Rs. 5,00,000) since he has suffered  a loss of Rs . 2,00,000 only.The purpose of insurance is to compensate for loss not to earn profit.

26.         Insurance company has the right over the amount realised on the half burn goods after it has paid the compensation for the loss to be insured. Sujata can not make any profit by selling the half burnt goods. Here principal of Contribution is affecting the case.

27.         Rs. 1,00,000.

28.         Principal of Insurable Interest.

29.         Rs. 5 lakhs.

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CH 5  Emerging modes of Business

HOTS

1.     Why e-business is referred as emerging modes of business. Discuss the factors responsible for these trends.

Ans. e-business means business with the help of computers electronically and is a new concept of business 24x7x365 .

 Factors Responsible for these Trends:

a.     Global competition

b.     Lower prices

c.      Better customer care

d.     Speed work

e.      Convenient

2.     Why it is difficult to set up an e-business in India.

Ans: Because it needs technological awareness and expertise knowledge of computer. 

3.     What are the ethical fall outs of e-business ?

Ans: 1. Chances of cheating as no face to face contact with the seller.

          2. fake websites.

4. What is Cryptography.

Ans: it refers to art of protecting information by transforming it in to an unreadable format called Cyphertext. Only those who possess secret key can transform the massage into plain text.

5.What is Encryption?

Ans: Converting the massage into the Code so that unauthorized person may not understand it.

6.     What is the function of Cyber Crime Cell?

Ans: it look into the cases of haking and take necessary action against the hackers and the cyber crime.

7.What is KPO.

Ans: it refers to obtaining high-end knowledge work from outside the organization in order to run the business successfully and in cost effective manner.

8.What is smart card.

Ans: it is typically a type of chip card , is a plastic card contains an Embedded computer chip either a memory or microprocessor type that stores and transact data . this data is usually associated with either value ,information or both.

9.What is captive BPO unit?

Ans: it provides services of given kind to only one firm. Example: General Electric.

10.What is VPN.

Ans: Virtual Private Network with which meeting can be held with employees via teleconferencing / video conferencing.

11.What do you mean by Cookies in respect of Computer and internet.

Ans: persons who provide the relevant information about the customer such as name address and previous purchase payment record of e-transactions.

Ch 6  SOCIAL RESPONSIBILITY OF BUSINESS AND BUSINESS ETHICS

1. “The management of the company is responsible to safeguard the capital investment by avoiding speculative activities and investing the money in healthy business ventures to get good returns”. Which type of Social responsibility is the statement reflecting

Ans Discretionary Responsibility

2. Daksh ltd is an IT company having many shareholders. In its meeting with shareholders it presented a very rosy picture of the financial affairs of the company to attract more of them. Is the company showing a socially desirable behavior?

Ans No, the business has a social responsibility of providing full and accurate information about the working of business to its shareholders.

3. Mr. X supplies inferior quality of products at higher prices to consumers. Is he showing socially desirable behavior?

Ans.No, business has social responsibility towards consumers and hence, should supply better quality of products at reasonable prices to them.

4. K Ltd told their accountants to manipulate the accounts of the company in order to evade tax. Is the business showing socially desirable behavior?

Ans No, it is the social responsibility of business to pay taxes honestly and regularly.

5. Ram, a foreman in sugar cane factory works overtime. The management does not pay him for the extra hours of work. Is the business behaving in a socially responsible manner?

Ans No, it is the social responsibility of the business to provide fair wages to its workers.

6. X ltd is a leading manufacturer of hair oil. The product is not genuine but the company misleads consumers through false advertising. Is the company showing socially desirable behavior?

Ans No, the company should not follow un fair trade practices like misleading advertising, poor quality, adulteration etc. in view of its social responsibility towards consumers.

7. The government banned the running of any industry near the famous monument – Taj Mahal. But Bindals Ltd. Doesn’t go by the order of government and continue operating there. Is the business showing socially desirable behavior?

Ans No, it is the social responsibility of business not to create any pollution.

8. Shahid, a wholesaler selling rice, stopped the supply of his product in order to raise the demand and then supplied rice at higher prices. Is he showing socially desirable behavior?

Ans   No, it is the social responsibility of a business to ensure regular supply of its goods and services to consumers.

9. Why should a business enterprise give due importance to the conservation of government?

Ans  In order to enjoy a good reputation and to be called as a socially responsible enterprise

10. Chitkara ltd, is a famous steel manufacturing unit. The smoke, effluents and other waste release from its factories pollute the environment and affect the health of people. Is the business showing socially responsible behavior?
Ans   No, it is the social responsibility of business not to create any pollution.

Ch 7   Sources of finance

.

1. In terms of tax benefits which of two, preference share or debentures will be preferred by the organization.

Ans Debentures

2. Why are retained profit called self financing?

    Ans It arranged from internal sources only.

3. Name the source of finance which is available in the normal course of purchase of goods.

Ans Trade credit.

4. Because of festival season Nidhi Garments received double orders, advice the company various sources of finance which can be used to raise necessary finance for this purpose.

Ans Short term finance.

5. Name the fund needed for day to day operations of business.

Ans Working capital

6       . Debentures represent which type of capital?

Ans Borrowed finance

7       . It is unsecured promissory note, issued by firm to raise funds for a short period says 90 days to 364 days. Name this source of finance.

Ans Commercial paper.

8       . Name the agreement, whereby the owner of the assets grants the right to use the assets to another party in return for a periodic payment.

Ans Leasing

9       . The directors of the company have decided to setup a new plant at an estimated cost of 10 crores. State the source of finance available for this purpose.

Ans Equity preference debentures and other long-term sources.

10  . What are known as creditors hip securities?

Ans Debentures

 Ch 8 Small Business

HOTS

 Q. 1 Write the problems of Small scale industry.                

Ans.    Problems Of Small Scale Industries

Q2. What is the main aim of the private sector enterprise.

Ans. To earn maximum profit.

Q3. What do you mean by disinvestment.

Ans. Disinvestment means to selling the shares to the general public and private sector.

Q4. List any two feature for public private partnership.

Ans. Ensure economy efficiency and effectiveness and overall

Ø Small scale industries find it difficult to get loans from banks & other financial institutions.

Ø They are not able to get quality raw materials at reasonable prices.

Ø They are usually run by people who may not have managerial skills.

Ø They cannot pay higher salaries to employees so they leave the business.

Ø They face competition from global enterprises.

Ø They use outdated machineries & technologies.

Ø Their quality of goods is low.

Due to lack of marketing skills & lack of demand, half of the capacity is not utilized so the operating cost is more

Q. 5 Describe the role of small business in rural India.  6

Ans. The following points should be explained

Ø Generation of employment in rural areas

Ø Multiple source of income

Ø Prevent migration

Ø Mobilization of local resources

Ø Rural industrialization

Ø Reduction in  income inequalities

Ø Equitable distribution of national income

3. What is EOU? What is the Capital Investment limit in it?

Ans: Export Oriented Unit. 1 Crore.

4. What is the capital investment limit of Cottage Industries?

Ans: Not defined by Capital Investment Criteria

5. Explain various measures t6aken by the government to assist SSI?

Ans: 1. Protective measures

2. credit and finance

3. marketing assistance

4. institutional support.

6. Expand NABARD.

Ans: National Bank Agricultural for Rural Development.

7. What are the objectives of NABARD?

Ans: i). Financial Support to agriculture and small industries

ii) . Counseling and consultancies.

iii). Training and development program.

8. What is RSBDC.

Ans: Rural Small Business Development Centre

9. What is RWED

Ans: Rural and Women Entrepreneurship Development

10. What Is SFURTI.

Ans: Scheme of Fund for Regeneration of Traditional Industries.

 HOTS

Chapter 9: INTERNAL TRADE

Q1.Pin to plane is the motto of this type of business.

Ans. Departmental store

Q2. Bata, Domino’s are the example of such type of business.

Ans. Chain stores

Q3.Give one example of automatic vending machine.

Ans. ATM’s / Mother diary/ Coffee vending machine

Q4. What do you call retailers carrying business activities not from a fixed place?

Ans. Itinerant Traders

Q5.In which type of retail business, there is no face to face contact between prospective buyer and seller?

Ans. Mail order house.

Q6. On what basis retail business transactions are carried out by retailer to customer?

Ans. cash basis

Q7. On what basis wholesalers sell goods to retailers?

Ans. Credit basis

Q8. What do you call a business where defective goods are sold at reduced price?

Ans. Seconds Goods

Q9. Who informs the producers about the taste & preferences of consumers?

Ans. Wholesalers after getting information from retailers.

Q10. A person is selling goods by carrying it on a cycle. Identify the type of business he is carrying? What do you call such sellers.

Ans. Retail business. Hawkers & pedlars

Ch 10   INTERNATIONAL TRADE

Q1. Which document used in international business, is being talked about a most secure method of settling the payments in international business.

Ans. Letter of credit

Q2. What do we call the document prepared by shipping company to acknowledge the receipt of goods on ship?

Ans. Mates receipt

 Q3. Which document indicates the origin of goods exported?

Ans. Certificate of origin.

Q4. Which organization looks after free flow of international trade among world economies?

Ans. World trade organization

Q5. Which authority issues importer-exporter code number?

Ans. Directorate General of Foreign Trade.

Q6.Who appoints clearing & forwarding agent?

Ans. Exporter

Q7. Which organization superceded GATT?

Ans. WTO

Q8. Give the full form of GATT.

Ans. General agreement on trade & tariff.

Q9. Where is the headquarter of WTO?

Ans. Geneva

Q10. What do you invisible trade?

Ans. Trade in services is called as invisible trade.