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Class 11 - Business Studies

Sample Paper - 01 (2022-23)

Maximum Marks: 80
Time Allowed: : 3 hours

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. Which of the following comes under Modern Small Industries?

a) Khadi
b) Handicrafts
c) Coir
d) Powerlooms
2. Limit of investment in small scale industry is ________.
a) ten crore
b) five crore
c) two crore
d) one crore
3. ________ consists of various organisations owned and managed by the government.
a) Public sector
b) Private sector
c) Service sector
d) Manufacturing sector
4. State which of the following statements regarding reasons for international business are correct:
a) All of these
b) International business transactions involve use of currencies of more than one country.
c) Labour productivity and production costs differ among nations due to various socioeconomic, geographical and
political reasons
d) Availability of various factors of production differs among nations
5. A warehouse keeper accepts goods for the purpose of ________.
a) export
b) selling
c) storage
d) packaging
6. B2B commerce means:
a) None of these
b) Firm's interactions with other business

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c) Firm's internal processes
d) Firm's interactions with its customers
7. Funds required for purchasing current assets is an example of:
a) Fixed capital requirement
b) Lease financing
c) Working capital requirement
d) Ploughing back of profits
8. An entrepreneur is called potential entrepreneur when he has ________.
a) Maximum ability and Minimum willingness
b) Maximum ability and Maximum willingness
c) minimum ability and minimum willingness
d) Minimum ability and Maximum willingness
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9. ________ are set up under an Act of parliament and are governed by the provisions of the Act.
a) Limited companies
b) Partnership
c) Private companies
d) Statutory corporations
10. Which of the following is the form of business organisation?
a) Mixed Sector
b) Private Sector
c) All of these
d) Public Sector
11. Where does WTO is headquartered.
a) Uruguay
b) Doha
c) Geneva
d) Washington
12. Which of the following statements is correct for wholesalers:
a) They undertake additional activities.
b) They generally take the title of the goods and bear the business risks in their own name
c) They engage in buying and selling of goods
d) All of these
13. Stages in the formation of a public company are in the following order
a) Capital Subscription, Promotion, Incorporation, Commencement of Business
b) Incorporation, Capital Subscription, Promotion, Commencement of Business
c) Promotion, Commencement of Business, Incorporation, Capital Subscription
d) Promotion, Incorporation, Capital Subscription, Commencement of Business
14. ________ means the process of establishment of a business unit by an individual.
a) Entrepreneur
b) All of these
c) Entrepreneurship
d) Enterprise
15. Which of the following is not an environmental problem:

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a) Afforestation
b) Danger to biological diversity
c) Ozone depletion
d) Global warming
16. In which of the following modes of entry, does the domestic manufacturer give the right to use intellectual property such
as patent and trademark to a manufacturer in a foreign country for a fee?
a) None of these
b) Joint venture
c) Licensing
d) Contract manufacturing
17. The small scale industry can enjoy the status of ________ if it supplies not less than 50% of its production to another
industry, referred to as the parent unit.
a) ancillary small industry
b) export-oriented unit
c) micro business industry
d) village industries
18. Cattle breeding farms, poultry farms, and fish hatchery come under which industry?
a) Genetic
b) None of there
c) Manufacturing
d) Extractive
19. The District Industries Centers Programme was launched on:
a) September 1, 1978
b) July 1, 1978
c) May 1, 1978
d) 15 August 1978
20. Which of the following industries is not reserved for public sector?
a) Arms
b) Atomic Energy
c) Rail Transport
d) Sugar Industry
21. The forwarding Agent of Paliwal Private Ltd., after getting the goods loaded on the ship gets the Mate's Receipt. What
will the Forwarding Agent have to do immediately after it? Explain briefly.
22. Folly is doing his business of buying and selling of garments products within India. He goes on business trips around his
state even on very short notice. Sometimes through his own car. There are no or very few formalities involved in Folly's
business. Payments are made and received in the home country currency only i.e., no exchange of currency is required.
i. Buying and selling goods within the geographical area of the country. Which type of trade is it?
ii. Give any two examples of such trade.
23. Distinguish between Pure risk and Speculative risk on the following basis:
i. Meaning
ii. Possibility of profits/loss
iii. Risk coverage.
OR
Name the six hindrances to trade.
24. Why is adequate finance necessary to start the business?
OR

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What are the advantages and disadvantages of preference shares?
25. List out any four disadvantages of international trade for the underdeveloped and developing countries.
OR
List out major affiliated bodies of the World Bank.
26. India is the largest milk producer in the world. Moreover, increasing demand for milk and milk product has made dairy
farming a profitable business. Considering these facts Raghu, an industrialist has decided to set up a dairy farm and a
cheese producing unit in Haryana. He plans to deal in an extensive range of Fresh Mozzarella, Processed Cheeses, Pizza
Cheese, Cheese Singles, Naturally Flavored Cheeses (with Black pepper, Garlic, Cumin, Herbs &
Spice), Mascarpone, Mozzarella & Grated Cheese for Pizza in various combinations.
In the context of the above case:
i. Identify the different kinds of industries Raghu wants to set up.
ii. State and explain the categories of types of industries to which the different kind industries as identified in part (i)
belong to.
OR
Karan is running a grocery shop in the nearby local market whereas his friend Priyanshu works as a finance manager in a
reputed IT company.
In the context of the above case:
i. Identify the different types of economic activities both the friends are engaged in.
ii. Distinguish between the two different types of economic activities as identified in part (i) of the question (any two
points).
27. After completing a course in gemology, Esha joins her father in the family business of fashion jewellery. Her father owns
two showrooms at different locations in the city and operates his business through them. However, Esha intends to
expand the business by venturing into online retailing. She also intends to introduce flexible manufacturing with the use
of computer networks wherein the marketing department can interact constantly with the production department and get
the customized products made as per the requirements of the individual customer.
a. How is the mode of business that Esha intends to adopt different from the one that her father has been following over
the years?
b. Distinguish between the two different modes of business as identified in part (a) of the question by giving any four
points.
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28. Why is the government company form of organization preferred to other types in the public sector?
29. Britannia Industries Ltd. is committed to helping secure every child's right to growth and development through good
food every day. The company is working in partnership with Global Alliance for Improved Nutrition (GAIN) and the
Naandi Foundation to supply iron-fortified Tiger biscuits to supplement the Mid-Day Meal program in schools. Iron
deficiency among Indian children is a key cause of school dropouts as well as decreased productivity. In keeping with its
core essence of "Swasth Khao Tan Man Jagao", the company constantly strives to find sustainable opportunities to drive
home the message of nutrition and good food habits among children at the right age.
In the context of the above case answer the following questions:
a. Identify the kind of social responsibility being discharged by Britannia Industries Ltd.
b. Briefly explain any two other kinds of social responsibilities.
30. Suhasini and some of her friends jointly set up 'Trimurti Limited'. The business of their company was to manufacture
blankets at a low rate. At the time of setting up the company, they issued 25000 shares of the face value of 100. In this
way, they started their business with a capital of 25 lac. Before collecting the money from the public, they decided that
they would issue such security as should not let the company undergo any fixed financial burden. Also, they wished to

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have the capital from such a source as should enable the company to keep the capital for a long time. To collect the
capital Suhasini and her friends issued a prospectus. Through it, they told the public that in the coming years, the
company expected to earn a big profit and that the price of its shares would be very very high. As a result, investors
would be able to earn extra profit. In the prospectus, it was also said that the company would organize its meetings from
time to time and that the investors would be invited to these meetings. They would have the right to cast their votes in
these meetings. The company collected money from the public and the company's business started. The company started
earning more profit than what had been promised to the investors.
i. Identify the type of shares issued by 'Trimurti Limited.'
ii. Quoting the relevant lines write about the two advantages each to the investors and to the company from the shares
identified in (i).
31. Cafe Coffee Day (abbreviated as CCD) is an Indian cafe chain owned by Coffee Day Global Limited, a subsidiary of
Coffee Day Enterprises Limited. There are around 1,600 outlets of CCD across India. All the outlets of CCD are under
the control of the head office.
a. Identify the type of retail outlet being described in the given case.
b. State five features of the type of retail outlet as identified in part (a) of the question.
OR
Several middlemen remain present between the producers and consumers. Their presence causes an unnecessary
increase in the prices of goods. Some consumers of a locality resolved to free themselves from the clutches of the
middlemen. They think that the profit which goes to the middlemen should come to them.
You suggest to him what kind of business they should begin. All these people know nothing about business. Therefore,
tell them about the demerits or limitations of business also.
32. Briefly explain any five merits of issuing equity shares.
OR
Yamini bought three hundred 10% preference shares of ABC Ltd. in the year 2016. The face value of each share is
Rs. 100. She didn't receive any dividend on them during 2016 due to insufficient profits of the company. In the year
2017, the company made surplus profits. Calculate the amount of dividend payable to her in the year 2017 assuming that
she is holding:
a. Cumulative Preference Shares
b. Non-Cumulative Preference Shares
33. A new cooperative store has been set up in Delhi through registration under Delhi Cooperative Societies Act. It has been
set up to make bulk procurement of essential consumer goods from the various wholesalers and supply the same to the
public at large on reasonable prices, to enable those stores to sell the consumer goods to the public at lower prices than
those prevailing in the open market.
In the context of the above case answer the following questions:
a. Identify the type of cooperative society being described in the above lines.
b. State any three features of the type of cooperative so identified in part of the question.
34. Danush visited a new restaurant 'Darbaar' with his parents. They all liked the food served in the restaurant. After a week
Danush took his friends to 'Darbaar' and placed an order for the same dishes that he had liked during his previous visit.
But to his surprise, he found that the taste of the food was not as good as it was during his previous visit. As a result, he
felt very disappointed.
In the context of the above case, answer the following questions:
a. Identify the feature of services being discussed above.
b. Explain briefly three other features of services.

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Class 11 - Business Studies

Sample Paper - 01 (2022-23)

Solution

1. (d) Powerlooms
Explanation: Powerlooms comes under modern small industries.
2. (d) one crore
Explanation: A small scale industrial undertaking is defined as one in which the investment in fixed assets of plant and
machinery does not exceed rupees one crore.
3. (a) Public sector
Explanation: The pubic sector consists of various organisations owned and managed by the government.
4. (a) All of these
Explanation: All of the above reasons are correct for international trade.
5. (c) storage
Explanation: A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers,
importers, exporters, wholesalers, transport businesses, customs, etc.
6. (b) Firm's interactions with other business
Explanation: Firm's interactions with other business
7. (c) Working capital requirement
Explanation: The funds required for day to day operations i.e. to meet expenses like wages, salary, rent, insurance, etc.
and investment in current assets i.e. inventory, bills receivable, etc.
8. (a) Maximum ability and Minimum willingness
Explanation: Maximum ability and Minimum willingness
9. (d) Statutory corporations
Explanation: Statutory corporations are set up under an Act of parliament and are governed by the provisions of the
Act.
10. (c) All of these
Explanation: All of these
11. (c) Geneva
Explanation: At Centre William Rappard, Geneva, Switzerland, where the WTO headquarters is located, is a unique
place, with many United Nations and other international organizations, as well as missions to the WTO.WTO has a
global status similar to that of the IMF and the World Bank.
12. (d) All of these
Explanation: Wholesalers purchase in bulk from manufacturers and sell in small lots to retailers or industrial users.
They do not sell products to ultimate consumers.
13. (d) Promotion, Incorporation, Capital Subscription, Commencement of Business
Explanation: Promotion, Incorporation, Capital Subscription, Commencement of Business
14. (c) Entrepreneurship
Explanation: Entrepreneurship
15. (a) Afforestation
Explanation: Afforestation is a process of planting trees or sowing seeds to create a forest. This is good for nature and
the environment.
16. (c) Licensing
Explanation: Licensing refers to permitting another party in a foreign country to produce and sell goods under
trademarks. patents or copyrights in lieu of some fee.

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17. (a) ancillary small industry
Explanation: A small scale industry becomes an ancillary industry to another industry by supplying a minimum of 50
per cent of its production to the other industry which is referred to as the parent unit.
18. (a) Genetic
Explanation: Genetic industries are those industries that are engaged in re-production and multiplication of species of
plants and animals with the sole objective of sale and earning profit.
19. (c) May 1, 1978
Explanation: The District Industries Centers Programme was launched on May 1, 1978, with a view to providing an
integrated administrative framework at the district level.
20. (d) Sugar Industry
Explanation: Sugar Industry
21. After getting Mate's receipt, the forwarding agent has to go to the office of the shipping company and fill up a form. This
form is known as the 'Bill of Lading'. Now he will have to deposit the Bill of Lading and the Mate's Receipt in the office.
The Officer of the shipping company will keep the Mate's Receipt with himself and return the Bill of Lading to the
Forwarding Agent after putting his signatures.
22. i. Internal trade: Trade which takes place within a country is known as Internal Trade.
ii. Examples of internal trade are a mall and an exhibition.
23. Difference between Pure risk and Speculative risk on the following basis:
Basis of
Pure risk Speculative risk
Distinction

Pure risk involves no possibility of gain; Speculative Risk is the risk which involves three
(i) Meaning
either a loss occurs or no loss occurs possible outcomes: loss, gain or no change
(ii) Possibility The occurrence of this risk may result in loss The occurrence of this risk may result in the
of profits/loss only and no gains. possibility of both gains as well as loss.
(iii) Risk Insurance services provide coverage of such Such risks cannot be covered under insurance
coverage risks. provisions.

OR

i. Hindrance of persons.
ii. Hindrance of place.
iii. Hindrance of time.
iv. Hindrance of risk.
v. Hindrance of finance.
vi. Hindrance of information/Knowledge.
24. Business need finance to pay for their overhead costs as well as their day to day and variable expenses. Here are three
situations when businesses need to finance the most :
i. Starting a business: Huge amount of finance is needed to start a business that requires buying fixed assets, paying
rents, and other overheads as well as producing or procuring the raw material and goods to sell. The finance required
to start a business is known as startup finance.
ii. Expanding a business: when expanding a huge amount of capital is needed in order to buy more fixed assets or to
fund a takeover. Internal growth by developing new products also requires a notable amount of finance.
iii. A business in difficulties: A loss-making businesses money is needed to buy more efficient machinery or to cover
negative cash flow.

OR

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In a company, preference shareholders experience both advantages and disadvantages. On the upside, they collect
dividend payments before common stock shareholders receive such income. But on the downside, they do not enjoy
any voting rights that common shareholders typically have.
25. Following are the disadvantages of international trade for underdeveloped and developing countries:
i. Economic Dependence: Most of the underdeveloped and developing countries are totally dependent on the
exporting countries for importing the goods and services for their economic development. Too much dependence on
exporting countries has serious political and socio-economic implications.
ii. Dumping of goods: Many exporting countries in order to capture the market in underdeveloped countries, dump
their goods at throwaway prices. Though such goods are inferior and have a shorter life; they attract customers in
importing countries which results in a cut-throat competition for domestic industries.
iii. Adverse effect on BOP: Because of relatively more freedom in international trade, the underdeveloped and
developing nations are not in a position to compete with developed countries due to lack of competence. Thus, the
balance of payment remains negative on a long-term basis.
iv. Colonialism: International trade leads to colonialism in the world, which means the domination of developed
countries over-dependent underdeveloped countries to fulfill their mean interests.

OR

The following are the major affiliated bodies of the World Bank:-
a. IBRD: The International Bank for Reconstruction and Development (IBRD) was established in 1945 to assist in the
reconstruction of war affected countries. It mainly aims at facilitating the development of the poor nations of the
world.
b. IFC: The IFC or the International Finance Corporation, was formed in 1956 as a separate legal entity to provide
finance to the private sector in developing nations. The IFC is part of the World Bank Group. It has its own funds and
functions.
c. MIGA: MIGA refers to the Multinational Investment Guarantee Agency. It was established in April 1988 with the
objective of encouraging foreign direct investments in the less developed countries, insuring investors against·
political and non-commercial risks, providing advisory services, etc.
26. i. The different kinds of industries Raghu wants to set up are
(a) Primary Industry: Dairy Farming
(b) Secondary Industry: Cheese Production Unit
ii. The categories of types of industries discussed above are:
(a) Genetic Industry which is a type of Primary Industry. Genetic Industries are engaged in breeding plants and
animals for their use in future reproduction like dairy farming industry.
(b) Manufacturing Industry which is a type of Secondary Industry. Manufacturing industries are engaged in the
processing of raw materials to produce finished goods. Here Cheese Production Unit produces various combinations
of cheese.

OR

i. The different types of economic activities both the friends are engaged in are: Karan is doing Business whereas the
occupation of Priyanshu is Employment.
ii. The difference between Business and Employment is given below:
S.
Basis Business Employment
No.

1. Qualification There is no minimum qualification A person should be qualified in accordance with the
required for running a business nature of employment that he/she wishes to take up.

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successfully.
Profit earned is the reward for a
2. Reward An employee is paid salary/wages.
businessman.
27. a. Esha intends to start e-business, whereas her father is following the traditional business.
b. The difference between e-business and traditional business is as follow:
S. Basis of
Traditional business e-business
No distinction
Ease of The procedure involved in setting up the business is The procedure involved in setting up the
1.
formation difficult. business is simple.
Physical
2. Required Not required
presence
Cost of Investments are low as there is no need
3. High investment is needed
setting up for physical facilities

The operating cost is low since the

Operating cost is high due to fixed charges associated
Operating business operates on a network of
4. with an investment in procurement and storage,
cost relationships rather than ownership of
production, marketing, and distribution facilities.
resources.
28. The government company form of organization preferred to the other types in the public sector, due to the following
reasons:
i. It has a separate legal entity, apart from the government.
ii. It enjoys autonomy in all management decisions and takes actions according to business prudence.
iii. A government company can be established by fulfilling the requirements of the Indian Companies Act. A separate
act in the parliament is not required.
29. a. Discretionary responsibility is being discharged by Britannia Industries Ltd. as it is working towards the welfare of
the children purely on a voluntary basis.
b. The other two other kinds of social responsibilities are stated below:
i. Economic responsibility is the primary responsibility of a business enterprise and relates to the production of
goods and services that are as per the needs and wants of society and selling them at a profit.
ii. Legal responsibility means that every business must operate within the laws of the land.
30. i. Equity Shares
ii. a. Advantages to Company:
I. they decided that they would issue such security and fixed Financial Burden. (No fixed burden)
II. Also, they wished to have the capital from such a source as should enable the company to keep the capital for
a long time. (Arrangement of Permanent capital)
b. Advantages to Investors:
I. As a result, investors would be able to earn extra profit. (To earn a capital profit)
II. They would have the right to cast their votes in these meetings. (To participate in managerial activities)
31. a. The type of retail outlet being described is ‘Chain Stores or Multiple Shops’.
b. Five features of Chain Stores are:
i. Location: These shops are located in populated localities, where a sufficient number of customers can be
approached.
ii. Centralised Purchases: The head office makes all the purchases for all these multiple shops. Thereafter, goods
are dispatched to different shops as per their requirements. It saves the cost of operation of these shops.

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iii. Centralised control: All stores are controlled by the head office, which formulates policies and gets them
implemented in different shops.
iv. Cash sales: All the sales at the multiple shops are made on a cash basis and cash is deposited daily into the bank
account on behalf of the head office and a report is sent to the head office in this regard.
v. Regular inspection: The head office normally appoints inspectors, who inspect the retails shops with respect to
the quality of customer service provided, adherence to policies of head office, and so on.

OR

These people will find "Consumers' Cooperative Store" useful to be set up because this is only the business organisation
which can save/free them from the clutches of middlemen. But before beginning this business, it is necessary for them to
be aware of its demerits.
Demerits of Consumers Co-operative Store:
i. Loss has to be faced when the market is dull.
ii. There is a possibility of quarrels because consumers form groups.
iii. There is a lack of speciality in these stores because the customers cannot play the role of businessmen successfully.
iv. The spirit of cooperativeness is lost because of the large number of members.
v. There is the facility of withdrawing one's capital. Sometimes, when a large number of members take out their capital,
it endangers the existence of the store.
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32. The capital obtained by the issue of equity shares is known as equity share capital. It is an important source of obtaining
long-term finance. Equity shareholders are the owners of the company. The rate of dividend is paid after meeting all
other claims.
Merits:
i. Equity shares do not create any obligation to pay a fixed rate of dividend.
ii. Equity shares can be issued without creating any charge over the assets of the company.
iii. It is a permanent source of capital and the company has to repay it except under liquidation.
iv. Equity shareholders are the real owners of the company who have voting rights.
v. In the case of profits, equity shareholders are the real gainers by way of increased dividends and appreciation in the
value of shares.

OR

a. On Cumulative Preference Shares, the unpaid dividend on shares gets accumulated and is due for payment in future
years.
Dividend due to Yamini in the year 2016 = 300 × 100 × 10/100 = Rs. 3000
Dividend due to Yamini in the year 2017 = 300 × 100 × 10/100 = Rs. 3000
Total dividend due to Yamini = Rs. 6000
b. On Non-Cumulative Preference Shares, the unpaid dividend on shares does not get accumulated and is not paid as
arrears in the future years. Therefore, only Rs. 3000 is due to Yamini as a dividend.
(Dividend due to Yamini in the year 2017 = 300× 100× 10/100 = Rs. 3000)
33. a. Consumer's Cooperative Society is being described in the above lines.
b. The three features of a consumer cooperative society are:
i. The society aims to protect the interests of consumers by achieving economy in operations by purchasing goods
in bulk directly from the wholesalers and selling them directly to the members thereby, eliminating the
middlemen.

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ii. The members comprise of consumers who are desirous of obtaining good quality products at reasonable prices.
iii. Profits, if any, are distributed on the basis of either their capital contributions to the society or purchases made by
individual members.
34. a. The feature of services being discussed above is 'Inconsistency'. It means unlike goods, services are not standardised.
It may differ from individual to individual and is based on consumer demands and expectations. Moreover, the
quality of services may also vary depending upon the approach of the service providers. The efficiency of a dedicated
and committed service provider will be more.
b. The three other features of services are:
i. Intangibility: Like goodwill of a business, services are intangible in nature. They cannot be touched. Since they
are purely experiential is nature the quality of services cannot be determined before consumption. Therefore, it is
essential that the service providers work deliberately towards creating desired services in order to ensure that the
consumer undergoes a favourable experience. For example, watching a movie should be a pleasant experience for
the audience.
ii. Inseparability: The presence of the customer is required and his/her interaction with the process of providing
services has to be managed. It is the simultaneous activity of production and consumption, thereby making both
of them inseparable.
iii. Inventory: Unlike goods, services cannot be produced and stored beforehand. The services have to be performed
as and when a consumer asks for it. Services are perishable therefore, the marketers may keep an inventory of the
related goods but not the services itself. For example, a beauty salon may only keep a ready stock of accessories
like a comb, water dispenser, hairdryer, scissors, etc. which are needed to provide a haircut service to a client, but
the service itself cannot be stored.

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