Sample Paper (2024-25)

CLASS-XII-BUSINESS STUDIES

Time allowed: 3 Hours M.M-80

 This question paper contains 34 questions.

 Marks are indicated against each question.
 Answers should be brief and to the point.
 Answers to the questions carrying 3 marks may be from 50 to 75 words.
 Answers to the questions carrying 4 marks may be about 150 words.
 Answers to the questions carrying 6 marks may be about 200 words.
 Attempt all parts of the questions together.

1. In the paint industry, various raw materials are mixed in different proportions with petroleum
for manufacturing different kinds of paints. One specific raw material is not readily and
regularly available to the paint manufacturing companies. Bonier Paints Company is also facing
this problem and because of this there is a time lag between placing the order and the actual
receipt of the material. But, once it receives the raw materials, it takes less time in converting
it into finished goods. Identify the factor affecting the working capital requirements of this
industry.
a) Business Cycle Fluctuation
b) Availability of Raw Materials
c) Inflation
d) Credit Allowed

2. ‘Tech Vision Ltd. entered into the market with colored television and have now introduced
products like audio system, air-conditioners, washing machines, etc. The company is not only
offering the products but also handling complaints and offering after sales services. Identify
the element of marketing mix discussed here.
a) Product
b) Price
c) Place
d) Promotion

3. Assertion (A): Middle management and other decision makers are neither allowed to deviate
from the plan nor they are permitted to act on their own.
Reason(R): Planning in a way reduces creativity since people tend to think along the same lines
as others.
a) Both Assertion (A) and Reason(R) are true and Reason (R) is correct explanation of
Assertion (A)
b) Both Assertion (A) and Reason(R) are true but Reason (R) is not the correct explanation
of Assertion (A)
c) Assertion (A) is true but Reason(R) is false
 d) Assertion (A) is false but Reason(R) is true

4. Statement I: Rights Issue is new issue of shares offered to existing shareholders in proportion
to the number of shares they already possess.
Statement II: Rights Issue is a privilege given to all applicants to subscribe to a new issue of
shares according to the terms and conditions of the company.
a) Statement I is correct and Statement II is wrong
b) Statement II is correct and Statement I is wrong
c) Both the statements are correct
d) Both the statements are incorrect

5. A recent rate cut in the interest on loans announced by the banks encouraged Durgesh, a
science student of Progressive School, to take a loan from State Bank of India to experiment
and develop cars to be powered by fuel produced from garbage. He developed such a car and
exhibited it in the Science Fair organized by the Directorate of Education. He was awarded the
first prize for his invention. Identify the dimensions of business environment discussed in the
above case.
a) Economic environment and Technological environment
b) Political environment and Technological environment
c) Social environment and Economic environment
d) Technological environment and Social environment

6. Sugandha has been using ‘Crown Clean’, a famous detergent available in the market. On
watching numerous advertisements in the television, she decided to try a new brand of
detergent. When she went to the near-by store to purchase the same, she saw detergents of
other producers making similar claims of whiteness and stain Removing abilities. Hence, she
could not make up her mind as which detergent to purchase. Name the objection of
advertising being discussed in this case.
a) Undermines Social Values
b) Confuses the Buyers
c) Encourages Sale of Inferior Products
d) Some Advertisements are in Bad Taste

7. SK Food Ltd. is a famous multinational company. Mr. SK Nagi is its finance manager. He is trying
to increase the market value of capital invested by the equity shareholders. He already knew it
could be possible only when the price of the shares increases and the price of shares increases
only if financing, investment, and dividend decisions are taken optimally. He did the same and
achieved success. Which objective of financial management has been referred to here?
a) Maximizing the wealth of shareholders
b) Effectively utilization of funds
c) Ensures the safety of funds
d) Avoiding idle finance

8. Identify the concept of management not followed by the manager in the given image:
 a) Directing
b) Controlling
c) Delegation
d) Coordination

9. The Trading procedure on Stock Exchange has been replaced by online Screen based electronic
trading system. This is mainly done to eliminate problems like theft, fake forged transfers,
transfer delays and paper work Associated with share certificates or debentures in physical
form. This is a process where securities held by the investor in the physical form are Cancelled
and the investor is given an electronic entry or number so that he/she can hold it in an
electronic balance in an account. This has increased the equity cult among the people. Identify
the process mentioned above.
a) Dematerialization
b) Depository
c) National Stock Exchange
d) Securities and Exchange Board of India

10. With the help of controlling function the management can know not only about the deficiency
in the performance but it also helps management to know whether standards or plans are set
correctly or not. The importance of management discussed above is:
a) Ensure order and discipline
b) Facilitate coordination in action
c) Judging accuracy of standard
d) Making efficient use of resources.

11. Ragini is an enterprising businesswoman who has been running a fishery for the past ten years.
She has saved Rs. 20 Lakhs from her business. She shared with her family her desire to utilize
this money to expand her business. Her family members gave her different suggestions like
buying new machinery to replace the existing one, acquiring altogether new equipment with
latest technology, opening a new branch of the fishery in another village and so on. Since these
decisions are crucial for her business, involve huge amount of money and are irreversible
except at huge cost, Kishan wants to analysis all aspects of the decision, before taking any step.
Identify the financial decision to be taken by Ragini.
a) Financing decision
b) Dividend decision
c) Investment decision
d) Both (b) and (c)
12. An organization is working by clubbing similar related jobs under different departments. The
HR department is not in direct touch with the Marketing Department and this has created
problems. The HR head feels that he only knows about the HR department and similar is the
case with the Marketing department. However, the truth is both of them have limited and
specific skills. Which type of organization structure does this organization has?
a) Functional structure
b) Divisional structure
c) Both (a) and (b)
d) None of these

13. Assertion: Planning Increases Creativity

Reason: Decision makers not permitted to act on their own
Choose the correct alternative after reading above statements
a) Assertion is true and Reason is false
b) Assertion is false but Reason is true
c) Assertion and Reason are correct and Reason is correct explanation of Assertion
d) Assertion and Reason are correct and Reason is not correct explanation of Assertion

14. Sanskar and Pratik after finishing their graduation under vocational stream decided to start
their own travel agency which will book Rail Tickets and Air Tickets on commission basis. They
also thought of providing tickets within ten minutes through the use of internet. They
discussed the idea with their Professor Mr. Yogendra who liked the idea and suggested them to
first analyze the business environment which consists of investors’, competitors and other
forces like social, political etc. that may affect their business directly or indirectly. He further
told them about the technological improvements and shifts in consumer preferences that were
taking place and hence they should be aware of the environmental trends and changes which
may hinder their business performance. He emphasized on making plans keeping in mind the
threat posed by the competitors, so that they can deal with the situation effectively. This
alignment of business operations with the business environment will result in better
performance. Identify the component of business environment highlighted in the above Para.
a) Social environment
b) Technological environment
c) Economical environment
d) Both (a) and (b)

15. A company, which manufactures a popular brand of toys, has been enjoying good market
reputation. It has a functional organizational structure with Separate departments for
production, marketing, finance, human resources and research and development. Lately to use
its brand name and also to cash on to new business opportunities it is thinking to diversify into
manufacture of new range of electronic toys for which a new market is emerging. What type of
organizational structure should be followed by this company in this given situation?
a) Functional structure
b) Divisional structure
c) Both (a) and (b)
d) None of these

16. Statement I: Demutualization refers to the legal structure of an exchange whereby the
ownership, the management and the trading rights at the exchange are segregated from one
 another. Statement II: Demutualization refers to the process by which a public share company
converts into a mutual company.
Choose the correct option from the following:
a) I is true and II is false
b) II is true and I is false
c) Both I and II are true
d) Both I and II are false

17. Ankit, a science student at Progressive School, decided to take a loan from the Union Bank of
India to experiment with and create automobiles that run on fuel made from waste after a
recent rate cut in the interest on loans declared by the Banks. He developed and exhibited a
car at the Science Fair organized by the Education Directorate. And he was awarded first prize
for his invention. Identify the organs of the business environment that were examined in the
case study above.
a) Economic environment
b) Technological environment
c) Social environment
d) Both (a) and (b)

18. Match the following P’s of Marketing Mix with their explanation and choose the correct
option:

COLUMN-I COLUMN-II
i. Price a.

ii. Product b.

iii. Promotion
c.

iv. Place d.

a) i-d, ii-a, iii-c, iv-b

b) i-b, ii-d, iii-a, iv-c
c) i-c, ii-a, iii-d, iv-b
d) i-d, ii-a, iii-c, iv-b
19. Pramod is a versatile manager. However due to the nature of his job most of the time of his
day is occupied with planning. One day his friend who runs an advertising company calls him
for a lunch. Pramod finds his friend very busy as his friend tells him that the company he is
working in is very busy these days in finding the right person for the right job. Soon Pramod
leaves after having a detailed discussion with his friend. During that lunch he learnt many
things from his friend and applied the things learnt in his company the best outcome was the
adaptable nature of the company that turned out to be after application of this learning. The
company earned more revenue by the end of the year. Which particular characteristic of
management was achieved by Pramod for his company?
a) A Dynamic Function
b) Intangible Force
c) Goal Oriented Process
d) Continuous Process

20. _______ are detailed statements about a project which outline the objectives, rules, policies,
procedure, tasks, budget etc. to implement any course of action.
a) Budget
b) Programme
c) Single Use Plan
d) Policy

21. A shopkeeper sold you some spices, claiming that they were pure. Later a laboratory test
formed that those were adulterated what precautions should you have taken before buying
and what remedies are available to you for the wrong act?

22. After setting the performance standards, the next step in the controlling process is the
‘measurement of actual performance’. Explain this step in the process of Controlling.
OR
Keshav and Kanha Company is a large manufacturing unit. Recently, the company had
conducted time and motion studies and concluded that on an average, a worker could produce
350 units per day. However, it has been noticed that the average daily production of a worker
is in the range of 250-285 units.
i. Name the function of management and identify the step in the process of this function
which helped in finding out that the actual production of a worker is less than the set
target.
ii. To complete the process of the function identified in and to ensure the performance as
per time and motion studies, explain what further steps a manager has to take.

23. Shubham, the director of a garment company, is planning to manufacture bags for the
utilization of waste material from one of his garments units. He has decided that his
manufacturing unit will set-up in a rural area of Odisha where people have very few job
opportunities and labor is available at very low rates. He also thought of giving equal
opportunities to men and women. For this, he wanted four different heads for sales, accounts,
purchase and production. He gave an advertisement and short listed ten candidates per post
after conducting different selection tests. Identify and state the next three steps for choosing
the best candidate out of the short-listed candidates
24. Name the decision which financial manager will take, keeping in view the overall objective of
maximizing shareholders’ wealth. Explain any two factors which affect this decision.
Or
“Money market is essentially a market for short-term funds’. In the light of this statement state
any three features of money market.

25. An organization has the policy of providing incentives in the form of monetary terms. It knows
that to improve the performance of the employees their needs must be satisfied. The company
has come up with a plan of increasing wages of workers who perform beyond a definite level.
By the end of the year the company has some other plans. It wants to give an incentive to the
workers over and above the wages. The workers have started putting more efforts. The
company has announced that after the month of March it will be giving shares to the
exceptionally performing workers. Company is hoping to get a good response from the
employees through this announcement in terms of better performance and contribution.
i. Which type of incentive is highlighted in the above case?
ii. Identify the various types of these incentives highlighted in the above case.
Or
Shailendra recently joined as the Managing Director of ABC Ltd., an apparel designing
company. He observed that the company had a number of experienced fashion designers on its
payroll. They regularly offered useful suggestions which were neither appreciated nor
rewarded by the company. Instead, the company outsourced its services to some renowned
fashion designers and paid them a good compensation for their services. Because of this, the
employees felt disheartened and stopped giving useful suggestion.
i. Identify the communication barrier discussed above.
ii. State the category of this communication barrier.
iii. Explain any other communication barriers of the same category.

26. Though the company Aarti has started its recruitment timely the process is T1 ore it has
decided to use internet for its help so that it can get qualified personnels. The organization
knows that its challenges are not going to be over. It decides to have different types of good
quality tests at the stage of selection.
The three types of tests are:
 Test A will involve measuring the ability of the employees to learn new skills. This test
can somehow foretell the ability of an individual to develop.
 Test B will involve measuring the current existing skills of the employees. These skills
are the ones which are already possessed by the employees.
 Test C will check the applicant’s reaction to emotions evaluating, value based and
maturity evaluating questions. However, these tests are tough to be designed and
would pose challenge to the organization.
i. Which specific type of external recruitment is later adopted by the company.
ii. Which one more benefit will occur with this new adoption?
iii. Identify the different tests given in the above case.
Or
Mrs. Nayantara is working as the Human Resource Consultant in a firm that manufactures
cosmetics, which is facing a problem of high employee turnover. The CEO of the company has
invited suggestion from her for retaining the talented employees and reducing the employee
turnover. Mrs. Nayantara recommends that the good employees be rewarded in a way that it
 creates a feeling of ownership among the employees and at the same time, makes them
contribute towards the growth of the organizations.
i. Identify the incentive and explain its type which has been suggested by Mrs. Rajlaxmi
to the CEO of the company.
ii. Also explain any two other incentives of the same type.

27. Varun went to purchase a pack of chocolate for his son from a shop in the nearby market.
Despite his preference to buy a pack of a particular brand the shopkeeper forced him to buy
the pack of chocolate of another brand, by giving some odd justifications. After coming back
home, Varun was feeling very dissatisfied.
i. Identify and explain the right of the consumer being violated in the above mentioned
case.
ii. Briefly explain any two points highlighting the importance of consumer protection
from the consumer’s point of view.

28. Pratik Ltd., is a company manufacturing textile. It has a share capital of ₹ 60 lakh. In the
previous year, its earning per share was ₹ 0.50. For diversification, the company requires,
additional capital of ₹ 40 lakh. The company raised funds by issuing 10% debentures for the
same. During the year the company earned profit of ₹ 8 lakh on capital employed. It paid tax
@ 40%.
i. State whether the shareholders gained or lost, in respect of earning per share on
diversification. Show your calculations clearly.
ii. Also, state any three factors that favor the issue of debentures by the company as sort
of its capital structure.
29. Abhijeet is a lower-level manager. He stays at the shop floor. He oversees and guides the
workers, instructs them whenever required and ensures optimum utilization of resources so
that the goals at the shop floor could be achieved. He is very hard working. He tries to stay in
touch with the workers on a regular basis. He has made a weekly advice taking programme.
This programme in which suggestions from workers are taken is very important for creating a
feeling of common group. He himself was a worker for 15 years before he became a lower-
level manager. This is the reason why he knows everything about the machines and situations
on the shop floor. He gives guidance to the workers as they do their job, tells them how to
tackle the machines and continuously improve their output. Workers are very friendly with
him. He ensures that the workers do their work properly and gives his approval or disapproval
about their work on a continuous basis. The workers respect him. He is acting as a role model
to them and has motivated them to work more and more by setting his own example. The
middle level management is thinking of giving Abhijeet a bigger role in future.
i. Which element of directing is displayed by Abhijeet in the above case?
ii. Identify the importance of this element highlighted in the above case. Also identify the
lines.

30. ‘Star Shine 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 organization 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 loan of 40 lakh 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. Quoting
the lines from the above discussion identify and explain any four such factors.

31. Every year a meeting is organized in the lawns of the owner of a company. In this meeting the
owner of the company grants some funds for the benefit of the families of the employees. The
employees on the other hand never resist any change or put excessive demands. The general
environment in the company is very supportive to the employees. The employee turnover ratio
is very low. Which concept of management is discussed here? Which principle of management
will be easily followed here?
Or
Polo Coolers are the leading manufacturers in their area. They have decided to increase the
productivity of their workers. For this they have chalked out a plan. They will be hiring
operational managers who to work at the lower level of management. They have decided to
keep eight managers over a single worker. Thus, every worker will have to report to all these
eight managers.
i. Which technique of scientific management is followed here?
ii. What will be the benefit?
iii. Also tell which principle of Fayol will be violated here?

32. Pramod Ltd. is engaged in producing electricity from domestic garbage. There is almost equal
division of work and responsibilities between workers and the management. The management
even takes workers into confidence before taking important decisions. All the workers are
satisfied as the behavior of the management is very good.
i. State the principle of management described in the above paragraph.
ii. Identify any two values which the company wants to communicate to society.
Or
An established firm has fifty years of experience in shipping industry. The company time and
again proves itself as one of the dominant figures in the market. The plan for the whole year is
given a lot of importance. According to the owner of the company their plans are the basic
structures upon which other important functions of management rest. It is important that the
plans are communicated to the employees. The top management ensures that the plans are
communicated and implemented at all levels and in all departments. To learn from past
mistakes is a habit of this successful company. They prepare plans for short term as well as
long term where it can be seen that throughout the year the plans are prepared one after
another. Shipping industry needs such dedicated companies. The goals are specific and the
activities to achieve these specific goals are undertaken. The company has planned a growth of
20% in revenue this year. Let’s see how much it’s possible for it to achieve it by the end of the
year.
i. In the above case identify the various features of planning highlighted.
ii. Which type of plan is indicated in the above case?

33. ‘Pritam Ltd.’ is a well-known automobile manufacturing company in India. The company plans
to increase the sale of its sedan cars by 20% in the next quarter. In order to achieve the desired
target, the marketing team of the company considers the impact of policy of the government
towards diesel vehicles and the level of competition in this segment of cars. They explore the
 various available options like offering more discount to dealers and customers, providing more
customer friendly finance options, lucky draws on test drives, increasing advertising, offering
more of free accessories on the purchase of the car, etc. A thorough analysis of the various
available options is done keeping in view the relative viability of each option. The company
decides to pursue the option of offering more discount to dealers and customers in order to
boost the sale of sedan cars. In order to implement the plan, they determine the various
discount packages and communicate the same to their product dealers. To make the
prospective consumers aware about the new available benefits, advertisements are made
through various sources of print and electronic media. The market analysts of the company
keep a close watch on the revenue from the sedan cars to study the effect of new initiatives by
the company to promote its sales.
In context of the above case:
i. Name the function of management described in the above paragraph.
ii. Identify and explain the various steps involved in process the function of management
as identified in part (a) by quoting lines from the paragraph.

34. Geeta, Tanmay and Rajesh were friends from college days and now they are doing different
kinds of business. They regularly meet and discuss their business ideas and exchange notes on
customer satisfaction, marketing efforts, product designing, selling techniques, social concerns
etc. In one of such meetings, Geeta drew the attention of Tanmay and Rakesh towards the
exploitation of consumers. She told that most of the sellers were exploiting the consumers in
various ways and were not paying attention towards the social, ethical and ecological aspects
of marketing, whereas she was not doing so. Tanmay told that they were under pressure to
satisfy the consumers, but stated that the consumers would not buy or not buy enough unless
they were adequately convinced and motivated for the same. Rakesh stressed that a company
cannot achieve its objectives without understanding the needs of the customers. It was the
duty of the businessmen to keep consumer satisfaction in mind because business is run by the
resources made available to them by the society. He further stated that he himself was taking
into consideration the needs of the customers. Identify the various types of thinking that
guided Geeta, Tanmay and Rajesh in the marketing efforts of their business. Also, state one
more feature of the various types of thinking identified that is not given in the above para.

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