Sample Question on Business Studies
Business Studies
Class : XI.D Marks
: 40
Time : 1.30
Answer
All The Questions
1.
State the different types of economic
activities. (3)
2.
Draw
the chart of classification of business
activities. (4)
3.
What
is meant by ‘partner by estoppel’? Explain. (2)
4.
Explain
business activities which are auxiliaries to trade. (5)
5.
What
do you understand by a sole proprietorship firm? Explain
its merits and
limitation? (5)
6.
What
is the role of profit in business? (3)
7.
What
is business risk? What are the different causes of
business Risk ? (6)
8.
What
factors are important to be considered while starting a
business?
Explain (7)
9.
Distinguish
between a Joint Hindu family business and partnership (5)
MARKING
SCHEME
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Question
Number
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Value points
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Marks Per
Point
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Total
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1.
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a) Business refers to those
economic activities consist of
production or purchase of goods for sales or exchange goods or
providing services with the object of earning profit.
b) A profession may be
defined as an occupation which involves the rendering of personal services of
special and expert nature , legal profession practiced by lawyers, medical
profession by doctors.
c)Employment is a kind of
human occupation where a person perform the work assigned to him by his
employer under an agreement or rules
of services in return for a remuneration called salary or wages .
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1
1
1
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3
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2.
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 |
4
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4
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3.
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Partner
by estoppel: A
person is considered a partner by estoppel if, through his/her own
initiative, conduct or behaviour, he/she gives an impression to others that
he/she is a partner of the firm. Such partners are held liable for the debts
of the firm because in the eyes of the third party they are considered
partners, even
though
they do not contribute capital or take part in its management.
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2
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2
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4.
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(i)
Transport and Communication: Production of goods generally takes
place in particular locations. Transport facilitates movement of raw material
to the place
of
production and the finished products from factories to the place of
consumption.
(ii) Banking
and Finance:
Business activities cannot be undertaken unless funds are available for
acquiring assets, purchasing raw materials and meeting other expenses.
Necessary funds can be obtained by businessmen from a bank.
(iii)
Insurance: Business
involves various types of risks. Factory building, machinery, furniture etc.
must be protected against fire, theft and other risks. Insurance provides
protection in all such cases.
(iv)
Warehousing helps business firms
to overcome the problem of storage and facilitates the availability of goods
when needed. Prices are thereby maintained at a reasonable level through
continuous supply of goods.
(v)
Advertising: Advertising
is one of the most important methods of
promoting
the sale of products, particularly, consumers goods like electronic goods,
automobiles, soaps, detergents etc.
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1
1
1
1
1
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5
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5.
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Sole
proprietorship refers to a form of business organisation which is owned,
managed and controlled by an individual who is the recipient of all profits
and bearer of all risks. This is evident from the term itself. The word
“sole” implies “only”, and “proprietor” refers to “owner”. Hence, a sole
proprietor is the one who is the only owner of a business.
Merits
a)
Quick decision making: A sole
proprietor enjoys considerable degree of freedom in making business
decisions.
b)
Confidentiality of
business information
c)
This provides maximum incentive to the sole trader
to work hard.
Limitations
a)
Limited resources: Resources of a
sole proprietor are limited to his/her personal savings and borrowings from
others.
b)
The decisions of sole trader may be wrong some
times.
c)
The duration of business is limited.
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1
2
2
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5
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6.
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§ It is a source of
income, and it provides the means for livelihood for the businessman.
§ Profit may earned to provide growth and
expansion of the businessman
§ Profit earning ability is considered to be
the index of business success.
§ Profit is the reward for the entrepreneur’s
taking business risk.
§ Profit provide economic power and status to
businessman
§ It can raise funds on easy terms.
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½
½
½
½
½
½
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3
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7.
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Risk
means possibility of loss. In business, risk is unavoidable. The term ‘business risks’ refers
to the possibility of inadequate profits or even losses due to uncertainties
or unexpected events.
(i) Natural causes: Human beings have little
control over natural calamities like flood, earthquake, lightning, heavy
rains, famine, etc. These result in heavy loss of life, property and income
in business.
(ii) Human causes: Human causes include such
unexpected events like dishonesty, carelessness or negligence of employees,
stoppage of work due to power failure, strikes, riots, management inefficiency, etc.
(iii) Economic causes: These include
uncertainties relating to demand for goods, competition, price, collection of
dues from customers, change of technology or method of production, etc.
Financial problems like rise in interest rate for borrowing, levy of higher
taxes, etc., also come under these type of causes as they result in higher
unexpected cost of operation of business.
(iv) Other causes: These are unforeseen
events like political disturbances, mechanical failures such as the bursting
of boiler, fluctuations in exchange rates, etc., which lead to the
possibility of business risks.
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2
1
1
1
1
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6
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8
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Starting a Business
Business refers to those
economic activities consist of
production or purchase of goods for sales or exchange goods or
providing services with the object of earning profit.Starting a
business enterprise is similar to any other human effort in which resources
are employed to achieve certain objectives. Successful results in business
depend largely upon the ability of the entrepreneurs or the starters of a new
business to anticipate problems and solve them with minimum cost. Some of the
basic factors, which must be considered by anybody who is to start the
business are as follows:
(i) Selection of line of business: The first
thing to be decided by any entrepreneur of a new business is the nature and
type of business to be undertaken.
(ii) Size of the firm: Size of the
firm or scale of its operation is another important decision to be taken at
the start of the business. Some factors favour a large size whereas others
tend to restrict the scale of operation.
(iii) Choice of form of ownership: With respect
to ownership, the business
organisation may take the form of
a sale proprietorship, partnership,
or a joint stock company. Each
form has its own merits and demerits.
(iv) Location of business enterprise: An important
factor to be considered at the
start of the business is the place where
the enterprise will be located.
(v)
Financing the proposition: Financing is concerned with providing the necessary capital for starting
as well as for continuing the
proposed business.
(vi) Physical facilities: Availability
of physical facilities including machines and equipment, building and
supportive services is a very important factor to be considered at the start
of the business
(vii) Plant layout: Once the
requirement of physical facilities has been determined, the entrepreneur
should draw a layout plan showing the arrangement of these facilities.
(viii) Competent and committed worked force: Every
enterprise needs competent and
committed work force to perform
various activities so that physical
and financial resources are converted
into desired outputs.
(ix) Tax planning: Tax planning
has become necessary these days because there are a number of tax laws in the
country and they influence almost every aspect of the functioning of modern
business.
(x) Launching the enterprise: After the
decisions relating to the above mentioned factors have been taken, the
entrepreneur can go ahead with actual launching of the enterprise which would
mean mobilising various resources, fulfilling necessary legal formalities,
starting the production process and initiating the sales promotion campaign.
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2
½
½
½
½
½
½
½
½
½
½
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7
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9
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Joint Hindu
family business is a specific form of business organisation found only in
India. It is one of the oldest forms of business organisation in the country.
It refers to a form of organisation wherein the business is owned and carried
on by the members of the Hindu Undivided Family (HUF). It is governed by the
Hindu Law. The basis of membership in the business is birth in a particular
family and three successive generations can be members in the business. The
business is controlled by the head of the family who is the eldest member and
is called karta. All members have equal ownership right over the
property of an ancestor and they are known as co-parceners.
The inherent
disadvantage of the sole proprietorship in financing and managing an
expanding business paved the way for partnership as a viable option.
Partnership serves as an answer to the needs of greater capital investment,
varied skills and sharing of risks. The Indian Partnership Act, 1932 defines
partnership as “the relation between persons who have agreed to share the
profit of the business carried on by all or any one of them acting for all.”
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2 ½
2 ½
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5
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