Class 12 Business Studies Sample Paper Term 2 With Solutions Set E

Please refer to Class 12 Business Studies Sample Paper Term 2 With Solutions Set E below. These Class 12 Business Studies Sample Papers will help you to get more understanding of the type of questions expected in the upcoming exams. All sample guess papers for Business Studies Class 12 have been designed as per the latest examination pattern issued by CBSE. Please practice all Term 2 CBSE Sample Papers for Business Studies in Standard 12.

Sample Paper Term 2 Class 12 Business Studies With Solutions Set E

Short Answer Type Questions – I

1. ‘Its object is to attract potential employees with the necessary characteristics or qualification, in the adequate number for the jobs’.State the activities involved with this step of staffing function.
Answer. The step is Recruitment. The various activities involved with the process of recruitment includes
(i) identification of the different sources of labour supply,
(ii) assessment of their validity,
(iii) choosing the most suitable source or sources, and
(iiv) inviting applications from the prospective candidates, for the vacancies.

2. Fresh Fruits company is planning to setup a food processing unit in Kashmir with a production capacity of 10,000 litre of apple juice per day. For this purpose the company needs additional ₹ 80,00,000. As it involves committing the finance on a long term basis the financial manager of the company opted for both debt and equity to raise the required funds .Name the financial decision and explain why it’s crucial for any business.
Answer. The financial decision for raising funds for setting up new Processing unit is Capital Budgeting or long term Investment Decision. These decisions are very crucial for any business since they affect its earning capacity in the long run. The size of assets, profitability and competitiveness are all affected by capital budgeting decisions. Moreover, these decisions normally involve huge amounts of investment and are irreversible except at a huge cost.

3. Name the step of Staffing process which involves judgment about the performance potential of the candidate. State it’s purpose.
Answer. The step of Staffing process which involves judgment about the performance potential of the candidate is Selection. It serves two important purposes:
(i) it ensures that the organization gets the best among the available, and
(ii) it enhances the self esteem and prestige of those selected and conveys to them the seriousness with which the things are done in the organization

4. ‘An attempt to control everything results in controlling nothing’ . Identify and explain the aspect of controlling highlighted in the statement.
Answer. The aspect of control highlighted in the statement is Management by Exception which is an important principle of management .According to it only significant deviations which go beyond the permissible limit should be brought to the notice of management. In other words, only the essential and significant deviations that are beyond the acceptable limit should be controlled.

Short Answer Type Questions – II

5. Shiba is a supervisor at ‘Kesar Oil Factory’. The factory was producing 200 litre of oil every day. Her job is to make sure that the work goes on smoothly and there is no interruption in production. She is a good leader who gives orders only after consulting her subordinates and work out the policies with the acceptance of the group. She exercises more control by using forces within the group.
Identify and describe the leadership style being adopted by Shiba.
Answer.  The leadership style being adopted by Shiba is Democratic or Participative style of Leadership . Under such style of leadership, the leader encourages the members to participate in decision-making. This kind of leadership style is more common now-a-days, since leaders also recognise that people perform best if they have set their own objectives. They also need to respect the other’s opinion and support subordinates to perform their duties and accomplish organization goals.

6. State any three points of importance of motivation.
                                          OR
Define Directing. Enumerate the elements of Directing.
Answer. Three points of importance motivation are explained below:
(i) Motivation helps to change negative or indifferent attitudes of employee to positive attitudes so as to achieve organizational goals.
(ii) Motivation helps to reduce employee turnover and thereby saves the cost of new recruitment and training.
(iii) Motivation helps to reduce absenteeism in the organization.
                                                                                                              OR
Directing-directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organization to achieve its objectives.
Elements of Directing are :
(i) Supervision
(ii) Motivation
(iii) Leadership
(iv) Communication

7. List any three factors affecting the Fixed Capital requirement of a company.
Answer. Three factors affecting the Fixed Capital requirement of a company are explained below:
(i) Nature of business : As a trading concern needs a lower investment in fixed assets as compared to a manufacturing concern since it doesn’t require to purchase the plant and machinery.
(ii) Scale of operations : As a larger organization operating at a higher scale needs bigger plant and more space and hence higher investment infixed assets.
(iii) Choice of technique : As a capital intensive organization requires higher investment in plant and machinery, it also requires higher fixed capital than a labour intensive organization.

8. A domestic automobile company had monopoly market for small cars in India. The company was performing well , maintaining its profit and sales targets . Unfortunately this year their sales has reduced by 5 percent .The CEO of the company Mr. S. Parashar called a meeting and asked all Department heads to submit performance report of their respective departments .
Identify the function of management and explain the steps of this function mentioned in above case.
Answer. The function of management discussed above is Controlling.
The steps of Controlling mentioned above are:
(i) Setting Performance Standards: The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organization strives to work. Standards can be set in both quantitative as well as qualitative terms.
(ii) Measurement of Actual Performance: Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance. These include personal observation, sample checking, performance reports, etc.

Long Answer Type Questions

9. Who is a consumer as per CPA 2019? Who can file a complaint in a consumer court?
                                                                  OR
Explain the importance of Consumer Protection from the point of a business.
Answer. Under the Consumer Protection Act 2019, a consumer is :
(i) a person who buys any goods or avails services for a consideration, which has been paid or promised, or partly paid and partly promised, or under any scheme of deferred payment.
(ii) It includes any user of such goods or beneficiary of services if such use is made with the approval of the buyer.
(iii) It applies to both offline and online transactions through electronic means or by teleshopping or direct selling or multilevel marketing.
(iv) However, any person who obtains goods or avails services for resale or commercial purpose is not treated as a consumer and is outside the scope of Consumer Protection Act 2019. 
Who can file a complaint in consumer court:
A consumer complaint can be filed by :
(i) one or more consumers,
(ii) any registered voluntary consumer association,
(iii) the Central or State Government,
(iv) heirs or legal representatives of the consumer.
(v) Where the consumer is a minor, the complaint can be filed by his parent or legal guardian.
                                                                OR
Importance of Consumer Protection from the point of view of business:
(i) Long-term Interest of Business: Now the businesses realize that it is in their long-term interest to satisfy their customers. As satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus, help in increasing the customer-base of business
(ii) Business uses Society’s Resources: Business organizations use resources which belong to the society. They, thus, have a responsibility to supply such products and render such services which are in public interest.
(iii) Social Responsibility: A business has social responsibilities towards consumers like other interest groups. Business organizations make money by selling goods and providing services to consumers. Thus their interest has to be well taken care of. 
(iv) Moral Justification: It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation. Thus, a business must avoid unscrupulous, exploitative and unfair trade practices.
(v) Government Intervention: A business engaging in any form of exploitative trade practices would invite government intervention or action. This can impair and tarnish the image of the company.

10. Differentiate between capital market and money market on the basis of:
(i) Participants
(ii) Instruments
(iii) Liquidity
(iv) Safety
(v) Returns
Answer. The major points of distinction between the two markets are as follows:
(i) Participants: The participants in the capital market are financial institutions, banks, corporate entities, foreign investors and ordinary retail investors from members of the public. Participation in the money market is by and large undertaken by institutional participants such as the RBI, banks, financial institutions and finance companies. Individual investors although permitted to transact in the secondary money market, do not normally do so.
(ii) Instruments: The main instruments traded in the capital market are – equity shares, debentures, bonds, preference shares etc. The main instruments traded in the money market are short term debt instruments such as T-bills, trade bills reports, commercial paper and certificates of deposit.
(iii) Liquidity: Capital market securities are considered liquid investments because they are marketable on the stock exchanges. However, a share may not be actively traded, i.e. it may not easily find a buyer. Money market instruments on the other hand, enjoy a higher degree of liquidity as there is formal arrangement for this.
(iv) Safety: Capital market instruments are riskier both with respect to returns and principal repayment. Issuing companies may fail to perform as per projections and promoters may defraud investors. But the money market is generally much safer with a minimum risk of default. This is due to the shorter duration of investing and also to financial soundness of the issuers.
(v) Return: The investment in capital markets generally yield a higher return for investors than the money markets. The possibility of earnings is higher if the securities are held for a longer duration.

11. The IT major CIPRA is terminating the employment of its senior managers, after evaluating their performance against predetermined standards if it is found lacking. With this disruption analysts say a large portion of the employees may become irrelevant unless they learn new skills and apply the knowledge to work on emerging technologies. CIPRA is ready to facilitate employee learning, through its in-house centres.
(i) Name the function of management performed by CIPRA to maintain a satisfactory work force.
(ii) Also state any four benefits of the step discussed above of this function of management.
Answer.  (i) The function of management performed by CIPRA to maintain a satisfactory work force is Staffing
(ii) Four benefits of the Training and Development are :
(a) Training is a systematic learning, always better than hit and trial methods which lead to wastage of efforts and money.
(b) It enhances employee productivity both in terms of quantity and quality, leading to higher profits.
(c) Training equips the future manager who can take over in case of emergency.
The benefits of training and development activity to the employees are as follows:
(i) Improved skills and knowledge due to training lead to better career of the individual.
(ii) Increased performance by the individual help him to earn more.

12. SARA Ltd. wants to raise funds of ₹ 40, 00,000 for its new project. The management is considering the following mix of debt and equity to raise this amount:
Answer. EBIT -EPS analysis

Under the third alternative the company will be able to take max advantage of trading on Equity as EPS is maximum in this alternative and ROI (8 lakh/40 lakh × 100 = 20%) is greater than cost of debt that is 10% with higher use of debt, this difference between RoI and cost of debt increases the EPS. No EPS always doesn’t rise with increase in debt because when the Company’s rate of return on investment (RoI) is less than the cost of debt, it reduces the EPS. This is a situation of unfavorable financial leverage. Trading on equity is clearly unadvisable in such a situation.
                              OR
Factors affecting Dividend Decision:
(i) Earnings: The dividend is paid out of the present and reserved profits. Therefore, greater amount of total profit will ensure greater dividend.
(ii) Stability of Earnings: A company having stable earnings is in a position to declare more dividends and vice-versa.
(iii) Cash flow position: The payment of dividend results in outflow of cash. The better the cash flow position of company, the better will be the capacity of company to pay dividends.
(iv) Stock market reactions: Share prices react positively and negatively on increase and decrease in dividend respectively. This possible impact on share prices should be considered while declaring dividend.
(v) Taxation policy: If tax on dividend is higher, the companies would prefer to pay fewer dividends whereas higher dividends may be declared if tax rates are relatively lower.