CBSE Class 12 Business Studies: sample paper 2023-24

1. Raising debt (debt-equity from 1:1 to 2:1) increases fixed interest, yet EPS rises.

2. EPS rises with more debt only when the return on investment is higher than the cost of debt: favourable financial leverage (trading on equity). Option (D).

   1 mark

Answer: (D) Favourable financial leverage, as return on investment is higher than cost of debt

1. The sentence printed on the bottle tells the buyer what the product does and how to use it.

2. Information printed on the package is labelling. Option (D).

   1 mark

Answer: (D) Labelling

1. More women at work changes lifestyles and buying habits: formal wear, gadgets, cosmetics.

2. Changes in lifestyle and social trends belong to the social environment. Option (B).

   1 mark

Answer: (B) Social environment

1. After-sales service, complaint handling and maintenance keep customers satisfied.

2. Customer support services bring repeat sales and build brand loyalty. Option (C).

   1 mark

Answer: (C) Customer support services

1. Calling for information, issuing show-cause notices and conducting audits and enquiries of stock exchanges are means of supervising them.

2. These are SEBI's regulatory functions (registering, supervising and inspecting intermediaries and exchanges). Option (A).

   1 mark

Answer: (A) Regulatory function

1. The picture shows heads of markets, finance, production and human resources holding a "Company of the Year" banner, with the line "Together Everyone Achieves More as a TEAM".

2. Management gives a common direction to individual efforts so that the organisation's goals are achieved: achieving group goals. Option (A).

   1 mark

Answer: (A) Management helps in achieving group goals

1. The allocative function of a financial market channels household savings into the most productive investment uses.

2. Because funds go to the most productive uses, the household sector earns a higher rate of return on its savings. Option (B).

   1 mark

Answer: (B) Earning higher rate of return to household sector

1. Sales and customer satisfaction are below target; the production head advises immediate action to rectify the problem so that sales are achieved as per the plans.

2. Comparing performance with plans and taking corrective action is controlling. Option (C).

   1 mark

Answer: (C) Controlling

1. A, B and D are correct pricing-objective statements (short-run profit: high price; market share: low price; survival: discounts).

2. C is incorrect: product quality leadership calls for higher prices to cover high quality and research costs. Option (C).

   1 mark

Answer: (C) If a firm wants to attain product quality leadership, it should charge lower prices.

1. A is true: management aims at efficient use of resources (doing the task at minimum cost). R is true: management must balance efficiency with effectiveness (completing the task on time).

2. R adds that effectiveness must be balanced too, but it does not explain why management is concerned with efficiency, so it is not the correct explanation. Option (B).

   1 mark

Answer: (B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)

1. Decentralisation spreads decision making to lower levels; delegation is transfer of authority to a subordinate.

2. Keeping decision making at the top of the hierarchy is centralisation. Option (D).

   1 mark

Answer: (D) Centralisation

1. Employees measure output objectively, using personal observation and sample checking, in the same units as the standards.

2. This is measurement of actual performance. Option (D).

   1 mark

Answer: (D) Measurement of actual performance

1. Statement I is false: for products like agricultural produce that need long-term storage, warehouses are located near the place of production, not the market.

2. Statement II is true: more inventory improves customer service but raises carrying cost. Option (B).

   1 mark

Answer: (B) Statement II is true and I is false

1. Oshin spotted the government's interest in tourism early and set up 50 hotels before others.

2. Early identification of an opportunity let it gain the first mover advantage. Option (A).

   1 mark

Answer: (A) It enables the firm to identify opportunities and getting the first mover advantage.

1. Planning decides what to do; organising groups activities, assigns duties and sets up authority relationships so that the plans can be carried out.

2. Organising is therefore the means for translating plans into action (directing then initiates the action by people). Option (C).

   1 mark

Answer: (C) Organising

1. Statement I is false: converting electronic holdings into physical certificates is rematerialisation; dematerialisation converts physical certificates into electronic form.

2. Statement II is true: demat holdings remove the danger of theft, loss or forgery of certificates. Option (B).

   1 mark

Answer: (B) Statement II is true and I is false

1. Switching to electric cars to improve people's quality of life reflects social concern for the environment.

2. Electric cars are a technological change. So the dimensions are social and technological. Option (D).

   1 mark

Answer: (D) Social and Technological Environment

1. Identified sponsor bearing the cost = advertising (A-3); awareness stage and product preference with the aim of a sale = personal selling (B-1).

2. Managing public opinion and relations = public relations (C-4); tools aimed at customers, middlemen and salespersons = sales promotion (D-2). Option (A).

   1 mark

Answer: (A) A (3), B (1), C (4), D (2)

1. Experimentation, a systematised body of knowledge and universal validity are features of a science.

2. Practice and creativity are features of management as an art, not as a science. Option (C).

   1 mark

Answer: (C) Based on practice and creativity

1. Demonetisation aimed to curb corruption, check black money from undeclared income and stop the use of high-value (and counterfeit) notes for illegal activities.

2. Reducing real estate prices was not one of its aims. Option (B).

   1 mark

Answer: (B) Reduce the prices of real estate

1. Helps in achieving personal objectives: Employees learn from seniors and receive financial and non-financial incentives, so they grow and meet their own goals while contributing to the organisation's.

   1 mark

2. Helps in the development of society: The company behaves as a responsible part of society and makes good quality products.

   1 mark

3. Creates a dynamic organisation: Employees find new solutions in a rapidly changing environment, helping the organisation adapt smoothly.

   1 mark

Answer: Achieving personal objectives, development of society and creating a dynamic organisation.

1. Accomplishing organisational goals: Control measures progress, brings deviations to light and indicates corrective action.

   1 mark

2. Judging accuracy of standards: It shows whether standards are accurate and objective and helps revise them.

   1 mark

3. Making efficient use of resources: Activities follow standards, reducing wastage and spoilage. (Also: employee motivation, order and discipline, coordination in action.)

   1 mark

Answer: Controlling helps accomplish goals, judge the accuracy of standards and use resources efficiently (also motivation, discipline, coordination).

1. Saves time and effort of managers: Managers deal only with significant deviations.

   1 mark

2. Focuses attention on important areas: Managerial talent is better used on critical matters.

   1 mark

3. Facilitates delegation and morale: Routine problems are left to subordinates, which encourages delegation and raises their morale. (Also: identifies critical problems needing timely action.)

   1 mark

Answer: Management by exception saves managers' time, focuses attention on important areas and facilitates delegation (also identifies critical problems).

1. 1. Estimating manpower requirements was not done properly: the marketing staff are overworked, working overtime and on holidays.

   1 mark

2. It requires workload analysis (number and type of people needed for the work) and workforce analysis (number and type available); here the workload exceeded the workforce.

   1 mark

3. 2. Next step: recruitment, the process of searching for prospective employees and stimulating them to apply for jobs in the organisation.

   1 mark

Answer: 1. Estimating manpower requirements. 2. The next step is recruitment.

1. Provides liquidity and marketability: It offers a continuous market where existing securities can be bought and sold, so investors can invest and disinvest.

   1 mark

2. Pricing of securities: Prices are determined by demand and supply, giving constant valuation.

   1 mark

3. Safety of transactions: Membership is well regulated under the legal framework, ensuring safe and fair deals. (Also: contributes to economic growth, spreads equity cult, scope for controlled speculation.)

   1 mark

Answer: Liquidity and marketability, pricing of securities and safety of transactions (also economic growth, equity cult, speculation).

1. Selecting a broker: The investor approaches a registered broker, signs a broker-client agreement and fills a client registration form (PAN, address, bank and depository details); the broker opens a trading account.

   1 mark

2. Opening a demat account: The investor opens a demat (beneficial owner) account with a depository participant to hold and transfer securities electronically.

   1 mark

3. Placing the order: The investor gives the broker clear instructions on the number of shares and the price; the broker executes at the best price and issues an order confirmation slip.

   1 mark

Answer: Selecting a broker, opening a demat account and placing the order.

1. a) Directing initiates action: Directing is a key managerial function performed with planning, organising, staffing and controlling; while the other functions prepare the setting, directing starts action in the organisation.

   2 marks

2. b) Directing is a continuous process: It goes on throughout the life of the organisation, whoever occupies the managerial positions.

   2 marks

Answer: Directing initiates action, and it continues throughout the life of the organisation.

1. a) Autocratic (authoritarian) leadership: The leader gives orders and expects obedience; it works where production must be achieved on time and allows quick decisions.

   2 marks

2. b) Laissez faire (free-rein) leadership: The leader uses power only when essential; followers have high independence to set their own objectives and methods, and the manager only supports them with information.

   2 marks

Answer: Autocratic: the leader commands and decides alone. Laissez faire: followers enjoy wide freedom and the leader only supports.

1. No fresh talent: Filling vacancies internally reduces induction of new blood and risks inbreeding.

   1 mark

2. Lethargy: Employees sure of time-bound promotion may become lethargic.

   1 mark

3. Not possible for a new enterprise: A new firm cannot use internal sources, and no firm can fill all vacancies internally.

   1 mark

4. Competitive spirit hampered: Competition among employees may weaken. (Also: frequent transfers may reduce productivity.)

   1 mark

Answer: Internal sources block fresh talent, may cause lethargy, cannot serve a new enterprise and hamper competitive spirit.

1. Direct recruitment: A notice of vacancies is put up on the notice board and selection is done on the spot; suits casual vacancies.

   1 mark

2. Casual callers: A database of unsolicited applicants is kept and screened when vacancies arise.

   1 mark

3. Employment exchange: Government-run exchanges link job seekers and employers, especially for skilled and unskilled operative jobs.

   1 mark

4. Campus recruitment: Firms recruit from universities, vocational schools and management institutes. (Also: placement agencies, employee recommendations, labour contractors, advertising, web publishing.)

   1 mark

Answer: Direct recruitment, casual callers, employment exchange and campus recruitment (also placement agencies, recommendations, labour contractors, advertising, web publishing).

1. a) Right to be informed was violated: the book did not show its MRP.

   1 mark

2. Every consumer has the right to complete information about the product, including ingredients, date of manufacture, price, quantity and directions for use.

   1 mark

3. b) Right to seek redressal was exercised: Akshay filed a complaint (under the Consumer Protection Act, 2019 this is the District Commission) and got compensation.

   1 mark

4. It is the right to get relief when a product or service falls short of expectations: replacement, removal of defect, compensation, etc.

   1 mark

Answer: a) Right to be informed (violated). b) Right to seek redressal (exercised).

1. a) Taxation policy: If the tax burden on dividends is higher, companies prefer to pay lower dividends; if it is lower, higher dividends can be paid. (The scheme refers to dividend distribution tax on companies; that tax was abolished from 1 April 2020 and dividends are now taxed in the hands of shareholders, but the principle is the same.)

   2 marks

2. b) Cash flow position: Paying a dividend is a cash outflow, so the company needs enough cash available to declare a dividend, even if it has profits.

   2 marks

Answer: Higher tax on dividends favours lower dividends; dividends can be paid only if enough cash is available.

1. (i) Media: The internet is the channel or path through which the encoded message is sent to the receiver.

   1 mark

2. (ii) Encoding: Madhur is converting his message into communication symbols, here gestures.

   1 mark

3. (iii) Decoding: Ranbhir is converting the symbols back into the sender's meaning.

   1 mark

4. (iv) Receiver: Kamesh is the person who receives the sender's communication.

   1 mark

Answer: (i) Media, (ii) encoding, (iii) decoding, (iv) receiver.

1. Capital budgeting (long-term investment) decision.

   1 mark

2. Long-term growth: It affects the long-term growth and future prospects of the business.

   1 mark

3. Large amount of funds: A large sum (₹5 crore) is blocked in a long-term project, so it needs detailed analysis.

   1 mark

4. Irreversible: Once taken, it cannot be reversed without heavy loss. (Also: affects the returns and risk complexion of the firm.)

   1 mark

Answer: Capital budgeting decision; it must be taken with caution because it affects long-term growth, involves large funds and is irreversible (also affects risk and returns).

1. 1) Method study: Finds the one best way of doing a job, covering every activity from procurement of raw materials to delivery, to minimise cost and maximise quality and customer satisfaction (process charts, operations research).

   1½ marks

2. Time study: Fixes the standard time for a well-defined job by taking several readings with time-measuring devices; used to decide the number of workers, frame incentive schemes and determine labour cost. (Also: motion study, which eliminates unnecessary movements.)

   1½ marks

3. 2) Meaning: Unity of command: one subordinate gets orders from and is responsible to only one superior. Unity of direction: each group of activities with the same objective has one head and one plan.

   1 mark

4. Aim: Unity of command prevents dual subordination; unity of direction prevents overlapping of activities.

   1 mark

5. Implications: Unity of command affects an individual employee; unity of direction affects the entire organisation.

   1 mark

Answer: 1) e.g. method study and time study. 2) Unity of command vs unity of direction differ in meaning, aim and implications.

1. 1) Discipline: Obedience to organisational rules and the employment agreement; it needs good superiors at all levels, clear and fair agreements and judicious penalties.

   1½ marks

2. Order: "A place for everything and everything in its place": people and materials in the right place at the right time for maximum efficiency. (Also: initiative, encouraging workers to make and carry out improvement plans.)

   1½ marks

3. 2) Perspective: Fayol: top level of management. Taylor: shop floor of a factory.

   1 mark

4. Unity of command: Fayol: staunch proponent. Taylor: did not consider it important, since under functional foremanship a worker gets orders from eight specialists.

   1 mark

5. Basis of formation: Fayol: personal experience. Taylor: observation and experimentation. (Also: applicability, focus, personality, expression.)

   1 mark

Answer: 1) e.g. discipline and order. 2) Fayol vs Taylor differ in perspective, unity of command and basis of formation (also applicability, focus, personality, expression).

1. Setting objectives: Objectives specify what the organisation wants to achieve, give direction to all departments and must be stated clearly.

   2 marks

2. Developing premises: Assumptions about the future (forecasts, existing plans, past policies) on which plans are based.

   2 marks

3. Identifying alternative courses of action: Once objectives and premises are set, the possible courses of action, routine or innovative, are identified.

   2 marks

Answer: Before evaluation: setting objectives, developing premises and identifying alternative courses of action.

1. a) Reduces overlapping and wasteful activities: Planning coordinates the activities of divisions and departments; clarity in thought and action lets work run smoothly without interruptions.

   2 marks

2. b) Establishes standards for controlling: Planning sets the goals against which actual performance is measured and deviations corrected; planning is a prerequisite for controlling.

   2 marks

3. c) Facilitates decision making: Planning makes managers look ahead, evaluate alternatives and choose the most viable one.

   2 marks

Answer: Planning coordinates work to avoid waste, provides standards for control and helps choose among alternatives.

1. 1(a) Transportation: physical movement of goods from where they are produced (Assam) to where they are needed, since users are widely spread.

   2 marks

2. 1(b) Factors for analysing transport needs: nature of the product and cost and location of the target market.

   1 mark

3. 2(a) Storage or warehousing: paddy is produced in one season but consumed all year; storage bridges the time gap between production and consumption and creates time utility.

   2 marks

4. 2(b) It ensures a smooth flow of products in the market and protects against unavoidable delays in delivery or sudden demand.

   1 mark

Answer: 1(a) Transportation; 1(b) nature of the product, cost and location of the target market. 2(a) Storage or warehousing; 2(b) smooth flow of products and protection against delays.

1. a) Functional structure: an organisational design that groups similar or related jobs together (digital marketing, backend, graphics designing).

   2 marks

2. b) Benefit: occupational specialisation: Emphasis on specific functions makes employees specialists and raises efficiency.

   1 mark

3. Benefit: control and coordination within a department: Similar tasks within a department make control and coordination easier.

   1 mark

4. Limitation: functional empires: Departmental objectives may be put above organisational objectives, as Mr Advait did.

   1 mark

5. Limitation: problems in coordination across departments: Information must be exchanged across functionally separate departments, which broke down here.

   1 mark

Answer: a) Functional structure. b) Benefits: specialisation, control and coordination within a department. Limitations: functional empires, poor coordination across departments.