Please refer to Class 12 Business Studies Sample Paper with solutions provided below. All sample papers for Business Studies Class 12 have been designed as per the latest paper pattern issued by CBSE for the current academic year. Students should practice these guess papers for Class 12 Business Studies as it will help them to gain more understanding of the type of questions that are expected to be asked in upcoming Class 12 Business Studies exams. Please click on the links below to access free CBSE Sample Papers for Class 12 Business Studies.
Class 12 Business Studies Sample Paper Term 2 Set A
1. Identify and explain the two sources of the source of recruitment which can be used when the organisation
wants to fulfill with existing staff.
Answer: 1. Recruitment seeks to attract suitable applicants to apply for available jobs. If the organisation wants to fulfill the position with existing staff then it should go for internal recruitment. The two ways through which position can be fulfilled are:
Transfers: It involves shifting of an employee from one job to another, one department to another or from one shift to another, without a substantive change in the responsibilities and status of the employee. It may lead to changes in duties and responsibilities, working condition etc., but not necessarily salary.
Promotion: Business enterprises generally follow the practice of filling higher jobs by promoting employees from lower jobs. Promotion leads to shifting an employee to a higher position, carrying higher responsibilities, facilities, status and pay. Promotion is a vertical shifting of employees. This practice helps to improve the motivation, loyalty and satisfaction level of employees.
2. Meca Ltd. a reputed automobile manufacturer needs ` 10 crores as additional capital to expand its business. Atul Jalan, the CEO of the company wanted to raise funds through equity. On the other hand, the Finance Manager, Nimi Sahdev said that the public issue may be expensive on account of various mandatory and non-mandatory expenses. Therefore, it was decided to allot the securities to institutional
Name the method through which the company decided to raise additional capital.
Answer: Private placement is a method through which the company decided to raise additional capital.
Private Placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. Access to the primary market can be expensive on account of various mandatory and non-mandatory expenses. Some companies, therefore, cannot afford a public issue and choose to use private placement as a source to raise additional capital.
3. Explain the tests which will be used by the company to test the learning capacity, intelligence and level of knowledge of a candidate?
Answer: The company should conduct the following tests to know about the learning capacity, intelligence and level of knowledge of a candidate.
Aptitude Test: It is a measure of individual’s potential for learning new skills. It indicates the person’s capacity to develop.
Intelligence Tests: This is one of the important psychological tests used to measure the level of intelligence quotient of an individual. It is an indicator of a person’s learning ability or the ability to make decisions and judgments.
Trade Test: These tests measure the existing skills of the individual. They measure the level of knowledge and proficiency in the area of professions or technical training.
4. Lalita is trying to apply a function of management in her department. First she lets her team perform according to their best potential. Then in a meeting she asks her team to check what they have performed.
One day it was found, that the total number of units produced were 20 less than the set target. It was decided that no worker will go home unless this gap of 20 units is overcome.
(a) Which function of management is being performed by Lalita and her team?
(b) Explain any two advantages of the function of management performed by Lalita and her team.
Answer: (a) The function of management being performed by Lalita and her team is Controlling.
Controlling: Controlling means ensuring that activities in an organisation are performed as per the plans. Controlling also ensures that an organisation’s resources are being used effectively and efficiently for the achievement of predetermined goals.
(b) Two advantages of controlling are as follows:
(i) Accomplishing Organisational Goals: The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action.
(ii) Judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate or not. An efficient control system keeps a careful check on the changes taking place in the organisational environment and helps to review and revise the standards in light of such changes.
5. Kamini is a supervisor at ‘‘Shyam Bakery’’. The factory produces 20,000 packets of bread and biscuits every day. As a supervisor, Kamini ensures that work goes on smoothly and there is no interruption in production. She is a good leader who gives orders only after consulting her subordinates, working out the policies with the acceptance of the group. Identify and explain the leadership style being adopted by Kamini.
Answer: Leadership style adopted by Kamini is Participative or democratic style.
In democratic leadership style, members of the group take a more participative role in the decisionmaking process. This leadership style is more effective and lead to higher productivity and better contributions from group members as the group members are encouraged to share their thoughts, their problems are solved faster through better ideas and more creative solutions.
6. State any three features of Directing.
Define Motivation and its importance.
Answer: 6. Directing means giving instructions and guiding people in doing work. Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives.
The features of directing are:
(a) Directing initiates action: Directing is a key managerial function. A manager has to perform this function along with planning, organising, staffing and controlling while discharging his duties in the organisation. While other functions prepare a platform for action, directing initiates action in the
(b) Directing is a pervasive function: Every manager, from top executive to supervisor performs the function of directing. The directing takes place wherever there is a superior – subordinate relations exist.
(c) Directing is a continuous process: Directing is a continuous activity. It takes place throughout the life of the organisation irrespective of people occupying managerial positions.
Motivation means incitement or inducement to act or move. In the context of an organisation, it means the process of making subordinates to act in a desired manner to achieve certain organisational goals. In other words, motivation refers to the way a person is enthused at work to intensify his willingness to use his potentiality for the achievement of organisational objectives.
Features of motivation are:
(a) Motivation is an internal feeling: The urge, drives, desires, aspirations, striving or needs of human being, which are internal, influence human behaviour.
(b) Motivation produces goal directed behaviour: Suppose, the employee is interested in promotion, it helps to produce a behaviour to improve performance of an employee.
(c) Motivation can be either positive or negative: Positive motivation provides positive rewards like increase in pay, promotion, recognition etc., Negative motivation uses negative means like punishment, stopping increments, threatening etc.
7. “Pure Ltd.” is a company manufacturing cotton yarn. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. There is availability of enough cash in the company and good prospects for growth in future. It is a well – managed organisation and believes in quality, equal employment opportunities and good remuneration practices. It has many shareholders who prefer to receive a regular income from their investments. It has taken a loan of ` 40 lakhs from IDBI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement. The above discussion about the company leads to various factors which decide how much of the profits should be retained and how much has to be distributed by the company.
(a) Identify the decision taken by Pure Ltd.
(b) Identify the factors by quoting lines which affect the decision – Stability of earnings, Shareholder’s preference and Contractual obligation.
Answer: (a) The decision taken by Pure Ltd. is dividend decision.
(b) The factors which affect the decision are stability of earnings.
“It has been consistently earning good profits for many years”
“‘It has many shareholders who prefer to receive regular income from their investments.’ Shareholder’s preference is kept in mind by the management before declaring dividends”.
“It has taken a loan of ` 40 Lakhs from IDBI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement.
8. Poonam is working in an Manufacturing Industry as a Production Manager. She has created an atmosphere of proper controlling in her department. In order to do so, she keeps herself aware about any dishonest behaviour and takes a stern action immediately. Recently, she has installed CCTV cameras to keep vigil on the employees.
(a) In the above case, which importance of controlling has been implemented by Poonam?
(b) Name one more importance of controlling other than the above highlighted.
(c) Can you suggest one more way by which Poonam could have implemented controlling?
Answer: (a) The importance of controlling implemented in the above case by Poonam is Controlling. It ensures proper order and discipline in the organisation.
(b) One more importance of controlling: Controlling helps in making efficient use of resources.
(c) Poonam could have implemented controlling by issuing balance score card to every employee. In this way, she could check their performance and contribution to the organisation on a daily basis.
9. Describe the Redressal Agencies under Consumer Protection Act, 2019.
What are reliefs available to the consumer?
Answer: To protect consumer rights, the Act mentions the establishment of three redressal mechanisms wherein the consumers can approach to address their grievances.
District Commission: District commission has a jurisdiction to entertain complaints where value of goods or services paid as consideration does not exceed one crore rupees. Either on the first hearing or at any later stage, it appears to district commission that there exists elements of settlement which may be acceptable to the parties, it may direct them to give their consent for settlement of dispute through mediation within five days. In case, the parties agree for settlement by mediation and give written consent, the district commission refers the matter for mediation and the provisions relating to mediation shall apply. However, in the event of failure of settlement by mediation proceeds with the complaint.
If the complaint alleges defect in goods which cannot be determined without proper analysis or test of goods, the commission obtains the sample of goods, seal it and refer to the appropriate authority for analysis. In case of services, the dispute is settled based on the basis of evidence brought to its notice
by the complainant and can ask for any required information document or records from the service provider for settlement. If any of the parties are not satisfied by the order of District Commission can appeal against such order to the State Commission on the grounds of facts or law within a period of forty five days from the date of order.
State Commission: It is established by the respective state government and ordinarily functions at the state capital. State Commission has a jurisdiction to entertain complaints where value of goods and services paid as consideration exceeds one crore but does not exceed ten crore rupees. If any of the
parties are not satisfied by the order of State Commission can appeal against such order to the National Commission within a period of thirty days of such order.
National Commission: The National Commission has territorial jurisdiction over the whole country.
National Commission has a jurisdiction to entertain complaints where value of goods or services paid as consideration exceeds ten crores rupees. If any of the parties are not satisfied by the order of National Commission can appeal against such order to the Supreme Court of India within a period of thirty days of such order.
Reliefs available to a consumer are following:
(a) To remove the defect in goods or deficiency in service.
(b) To replace the defective product with a new one, free from any defect.
(c) To refund the price paid for the product, or the charges paid for the service.
(d) To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence of the opposite party.
(e) To pay punitive damages in appropriate circumstances.
(f) To discontinue the unfair/restrictive trade practice and not to repeat it in the future.
(g) Not to offer hazardous goods for sale.
(h) To withdraw the hazardous goods from the market.
10. State various functions of Securities and Exchange Board of India (SEBI).
Answer: The Securities and Exchange Board of India was established by the Government of India on 12 April, 1988 as an interim administrative body to promote orderly and healthy growth of securities market and for investor protection. It was to function under the overall administrative control of the Ministry of
Finance of the Government of India. The SEBI was given a statutory status on 30 January, 1992 through an ordinance. The ordinance was later replaced by an Act of Parliament known as the Securities and Exchange Board of India Act, 1992.
Purpose of SEBI: The basic purpose of SEBI is to create an environment to facilitate efficient mobilisation and allocation of resources through the securities markets. It also aims to stimulate competition and encourage innovation.
Functions of SEBI are:
(a) Registration of brokers and sub-brokers and other players in the market.
(b) Registration of collective investment schemes and Mutual Funds.
(c) Regulation of stock brokers, portfolio exchanges, underwriters and merchant bankers and the business in stock exchanges and any other securities market.
(d) Regulation of takeover bids by companies.
(e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.
(f) Levying fee or other charges for carrying out the purposes of the Act.
(g) Performing and exercising such power under Securities Contracts (Regulation) Act 1956, as may be delegated by the Government of India.
(a) Training of intermediaries of the securities market.
(b) Conducting research and publishing information useful to all market participants.
(c) Undertaking measures to develop the capital markets by adapting a flexible approach.
(a) Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging etc.
(b) Controlling insider trading and imposing penalties for such practices.
(c) Undertaking steps for investor protection.
(d) Promotion of fair practices and code of conduct in securities market.
11. Blue Heavens Ltd. purchased a new machinery from Germany for manufacturing some auto components.
It was a cost-effective and quality production machine but during the production process, manager observed that the quality of the production was not as per standards. On investigation, it was found that there was lack of knowledge of using these hi-tech machines. So, frequent visits by engineers were required from Germany but this resulted in high overhead charges.
Suggest what can be done to develop the skills and abilities of employees for producing quality products by using these hi-tech machines. Also state how the employees or the organisation will be benefited by your suggestion.
Answer: Training should be provided to the employees of Blue Heaven Ltd. to develop their skills and abilities for producing quality products by using these hi-tech machines.
Training: It is a process of learning new skills and application of knowledge. It attempts to improve their performance on the current job or prepare them for any intended job.
There are various methods of training. These are broadly categorised into two groups: On-the-Job and Off-the Job methods.
On-the-Job methods refer to the methods that are applied to the workplace, while the employee is actually working. Off-the-Job methods are used away from the work place.
The benefits of imparting training to the employee are as follows:
(a) Better career: Training leads to better career opportunities for the employees as it helps to improve their skills and knowledge of doing the job.
(b) Increased earnings: Training leads to increased performance by the employees thereby helping them to earn more.
(c) Increased efficiency: Training makes the employees more efficient in handling machines and less prone to accidents.
(d) Improved motivation: Training increases the satisfaction and morale of employees thereby
motivating them to work with greater enthusiasm.
12. Somnath Ltd. is engaged in the business of export of garments. In the past, the performance of the company had been upto the expectations. In line with the latest technology, the company decided to upgrade its machinery. For this, the Finance Manager, Dalmia estimated the amount of funds required and the timings. This will help the company in linking the investment and the financing decisions on a continuous basis. Dalmia therefore, began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this,he wanted to be sure about the availability of funds from the internal sources of the business. For the remaining funds he is trying to find out alternative sources from outside.
Discuss the financial concept stated in the above para. Also state its objectives.
Kay Ltd. is a company manufacturing textiles. It has a share capital of ` 60 lakhs. In the previous year, its earning per share was ` 0.50. For diversification, the company requires an additional capital of ` 40 lakhs. The company raised funds by issuing 10% debentures for the same. During the year, the company
earned a profit of ` 8 lakhs on the capital employed. It paid tax @ 40%.
(a) State whether the shareholders gained or lost, in respect of earning per share on diversification.
Show your calculations clearly.
Answer: Financial planning is the preparation of a financial blueprint of an organisation’s future operations.
The objective of financial planning is to ensure that enough funds are available at right time. If adequate funds are not available, the firm will not be able to honour its commitments and carry out its plans. On the other hand, if excess funds are available, it will unnecessarily add to the cost and may encourage wasteful expenditure. It must be kept in mind that financial planning is not equivalent to, or a substitute for, financial management.
Thus, financial planning strives to achieve the following twin objectives:
(a) To ensure availability of funds whenever required: This includes a proper estimation of the funds required for different purposes such as for the purchase of long-term assets or to meet day-to-day expenses of business etc. Apart from this, there is a need to estimate the time at which these funds
are to be made available. Financial planning also tries to specify possible sources of these funds.
(b) To see that the firm does not raise resources unnecessarily: Excess funding is almost as bad as inadequate funding. Even if there is some surplus money, good financial planning would put it to the best possible use so that the financial resources are not left idle and don’t unnecessarily add to the cost.
Let us presume that the share capital of ` R.s. 60 lakh is made up of ` 6 lakh equity shares assuming that the
face value of each share is R.s. 10
- *0.50 x 6,00,000 = 3,00,000
Consequently EBT/EBIT in situation 1 = R.s.
Thus, on diversification, the earning per share fell down from0.50 to ` 0.40.