In This Post we are providing Chapter-13 Photosynthesis in Higher Plants NCERT MCQ for Class 11 Biology which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON PHOTOSYNTHESIS IN HIGHER PLANTS
Question 1. The rate of photosynthesis is controlled by (a) the rate of light reaction (b) the rate of dark reaction (c) the rates of both light and dark reactions (d) none of the aboveAnswer
Answer: (b) the rate of dark reaction
Question 2. The end product of the Calvin cycle is ______. (a) RuBP (b) PGAL (c) PGA (d) ADP + NADP
Answer: (a) RuBP
Question 3. The primary carbon dioxide acceptor in C4 cycle is (a) malic acid (b) phosphophenol pyruvate (c) rubisco (d) aspartic acid
Answer: (b) phosphophenol pyruvate Solution : The primary carbon dioxide acceptor in C4 pathway is phosphophenol pyruvate.
Question 4. The law of limiting factor was given by (a) Calvin (b) Blackman (c) Priestley (d) None of these
Answer: (b) Blackman Solution : Law of limiting factor was given by Blackman in 1905. If a chemical process is affected by more than one factor, then its rate will be determined by the factor which is nearest to its minimal value.
Question 5. The metabolic pathway which produces carbohydrate is (a) Calvin cycle (b) Glycolysis (c) Cyclic electron pathway (d) Krebs cycle
Answer: (a) Calvin cycle
Question 6. Manganese is required in (a) Chlorophyll synthesis (b) Nucleic acid synthesis (c) Plant cell wall formation (d) Photolysis of water during photosynthesis
Answer: (d) Photolysis of water during photosynthesis
Question 7. Oxidative phosphorylation refers to (a) Anaerobic production of ATP (b) The citric acid cycle production of ATP (c) Production of ATP by chemiosmosis (d) Alcoholic fermentation
Answer: (c) Production of ATP by chemiosmosis
Question 8. Which of the following is not an accessory pigment? (a) Carotene (b) Chlorophyll a (c) Chlorophyll b (d) Xanthophyll
Answer: (b) Chlorophyll a Solution : Chlorophyll a is a primary pigment.
Question 9. Besides water and CO2, which is more essential a raw material for food formation (a) light (b) oxygen (c) NAD (d) mineral salt
Answer: (a) light
Question 10. In actively growing young plants, the best data for estimating the rate of photosynthesis would be (a) ratio of oxygen evolved to carbon dioxide absorbed (b) increase in fresh weight (c) increase in dry weight (d) increase in carbohydrate
Answer: (a) ratio of oxygen evolved to carbon dioxide absorbed
Question 11. Discovery of Emerson effect has already shown the (a) two distinct photochemical reactions (b) light and dark reactions of photosynthesis (c) photophosphorylation (d) photorespiration
Answer: (a) two distinct photochemical reactions
Question 12. Translocation of sugar in flowering plants occurs in the form of (a) glucose (b) sucrose (c) starch (d) maltose
Answer: (b) sucrose
Question 13. Where are thylakoids and grana located? (a) Lysosomes (b) Mitochondria (c) Chloroplasts (d) Golgi apparatus
Answer: (c) Chloroplasts
Question 14. Who enunciated the law of limiting factor for photosynthesis? (a) Robert Emerson (b) Ruben (c) Blackman (d) Calvin
Answer: (c) Blackman
Question 15. Which one of the following statement is true for ATP? (a) ATP is prosthetic part of an enzyme (b) ATP is an enzyme (c) ATP is organic ions of enzyme (d) ATP is a Co-enzyme
In This Post we are providing Chapter-12 Mineral Nutrition NCERT MCQ for Class 11 Biology which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQON MINERAL NUTRITION
Question 1 : ‘Whip-tail’ disease in cauliflower is noted due to deficiency of
a) molybdenum
b) manganese
c) magnesium
d) nitrogen
Answer : molybdenum
Question 2 : Which of the following is correct set of micronutrient for plants?
a) Cu, Fe, Zn, B, Mn
b) Mo, Zn, Cl, Mg, Ca
c) Mg, Fe, Zn, B, Mn
d) Mg, Si, Fe, Cu, Ca
Answer : Cu, Fe, Zn, B, Mn
Question 3: A free living nitrogen-fixing cyanobacterium which can also form symbiotic association with the water fern Azolla is
a) Anabaena
b) Chlorella
c) Tolypothrix
d) Nostoc
Answer : Anabaena
Question 4 : Azotobacter and Beijerinckia are the examples of
a) non-symbiotic nitrogen-fixers
b) ammonifying bacteria
c) None of these
d) symbiotic nitrogen-fixers
Answer : non-symbiotic nitrogen-fixers
Question 5 : Which of the following is not performed by root hairs ?
a) CO2 uptake
b) Oxygen uptake
c) Water uptake
d) Mineral uptake
Answer : CO2 uptake
Question 6 : The plant ash is an indication of
a) mineral salts absorbed by plants
b) None of the above
c) waste product
d) organic matter of plant
Answer : mineral salts absorbed by plants
Question 7 : Hydroponics is
a) soilless culture
b) nutrient less culture
c) water less culture
d) none of these
Answer : soilless culture
Question 8 : Which element is required in the germination of pollen grain?
a) Boron
b) Chlorine
c) Potassium
d) Calcium
Answer : Boron
Question 9 : A trace element essential for plant growth and radio-isotope, which is used in cancer therapy is
a) cobalt
b) sodium
c) iron
d) calcium
Answer : cobalt
Question 10: Which one of the following elements in plants is not remobilised?
a) Calcium
b) Sulphur
c) Phosphorus
d) Potassium
Answer : Calcium
Question 11: Plants die from prolonged water-logging because
a) root respiration stops.
b) cell sap in the plants becomes too dilute.
c) nutrients leach down due to excess water.
d) soil nutrients become very dilute.
Answer : root respiration stops.
Question 12 : Which of the following minerals activate the enzymes involved in respiration?
a) magnesium and manganese
b) nitrogen and phosphorus
c) potassium and calcium
d) sulpur and iron
Answer : magnesium and manganese
Question 13 : Soil can easily become deficient in____________ because these ions are negatively charged and do not stick to negatively charged clay particles.
a) Nitrate
b) Ammonium
c) Both
d) None of these
Answer : Nitrate
Question 14 : Legumes’ roots have swellings called nodules that
a) contain nitrogen-fixing bacteria
b) increases the surface area for water uptake
c) provide a steady supply of sugar to the host plant
d) produce antibiotics that protect the plant from soil bacteria
Answer : contain nitrogen-fixing bacteria
Question 15 : Macronutrients are_____ than micronutrients
In This Post we are providing Chapter-11 Transport in Plants NCERT MCQ for Class 11 Biology which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON TRANSPORT IN PLANTS
Question 1 : Stomata open and close due to
a) turgor pressure of guard cells
b) pressure of gases inside the leaves
c) genetic clock
d) ircadian rhythm
Answer : turgor pressure of guard cells
Question 2 : Movement of ions or molecules in a direction opposite to that of prevailing electrochemical gradient is known as
a) active transport
b) brownian movement
c) diffusion
d) pinocytosis
Answer : active transport
Question 3 : Osmosis means movement of
a) solvent from low concentration of solution to higher concentration of solution.
b) solvent from higher concentration of solution to low concentration of solution.
c) solute from higher concentration to lower concentration.
d) None of these
Answer : solvent from low concentration of solution to higher concentration of solution.
Question 4 : Solution outside a cell has higher concentration than cytoplasm, then the solution is
a) hypertonic
b) acidic
c) isotonic
d) hypotonic
Answer : hypertonic
Question 5 : Which of the following is used as antitranspirant?
a) Phenyl mercuric acetate
b) Cobalt chloride
c) Naphthol acetic acid
d) Calcium carbonate
Answer : Phenyl mercuric acetate
Question 6: In rainy season, door gets swelled due to
a) imbibition
b) transpiration
c) diffusion
d) respiration
Answer : imbibition
Question 7 : Turgor pressure become equal to the wall pressure when
a) no exchange of water takes place
b) solute goes from cell into water
c) water enter the cell
d) water leaves the cell
Answer : no exchange of water takes place
Question 8 : Addition of a solute to pure water causes
a) negative water potential
b) more negative water potential
c) positive water potential
d) more positive water potential.
Answer : negative water potential
Question 9 : Which one of the following process help the water- soluble inorganic nutrients go down into the soil horizon and get precipitated as unavailable salts?
a) Leaching
b) Fragmentation
c) Catabolism
d) None of these
Answer : Leaching
Question 10 : Water logging of soil makes it physiologically dry because
a) this condition does not allow oxygen to enter the soil
b) this condition does not allow the capillary force to work
c) Both
d) None of the above
Answer : this condition does not allow oxygen to enter the soil
Question 11 : The phenomenon of plasmolysis is evident when cells are kept in
a) hypertonic solution
b) isotonic solution
c) None of the above
d) hypotonic solution
Answer : hypertonic solution
Question 12 : The casparian strip prevents water and minerals from entering the stele through the
a) apoplast
b) xylem vessel
c) plasmodesmata
d) symplast
Answer : apoplast
Question 13: If a soft stemmed plant, is cut horizontally near the base of its stem with a sharp blade on early morning of a humid day, drops of solution ooze through cut stem. This is due to
a) root pressure
b) bleeding
c) guttation
d) transpiration pull
Answer : root pressure
Question 14 : The movement of water up the stems of tall plants is least dependent on which of the following factors ?
a) Guttation
b) Transpiration
c) Cohesiveness of water molecules
d) Tension within column of water molecules
Answer : Guttation
Question 15 : The primary difference between the apoplast and the symplast is that the
a) apoplast is nonliving spaces and cell walls
b) apoplast relies on active transport.
c) symplast is nonliving spaces and cell walls
d) apoplast prevents passive diffusion
Answer : apoplast is nonliving spaces and cell walls
In This Post we are providing Chapter-10 Cell Cycle and Cell Division NCERT MCQ for Class 11 Biology which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ONCELL CYCLE AND CELL DIVISION
Question 1. Golgi complex and endoplasmic reticulum cannot be seen during (a) late telophase (b) late prophase (c) early anaphase (d) late metaphase
Answer: (b) late prophase Explanation: Cells, when viewed under microscope at the end of prophase, do not show golgi complex, endoplasmic reticulum, nucleolus and nuclear envelope.
Question 2. Cell plate grows from (a) walls to the centre (b) centre to the walls (c) in patches (d) simultaneously
Answer: (b) centre to the walls Explanation: Cell plate grows during cytokinesis from centre to the walls.
Question 3. Choose the correct sequence. A. Chromatin condensation B. Protein synthesis C. Duplication of centrioles D. Centrioles moves towards opposite poles (a) C, A, B, D (b) C, B, A, D (c) C, D, B, A (d) A, C, D, B
Answer: (b) C, B, A, D Explanation: Duplication of centrioles occurs in S-phase. Protein synthesis occurs in G2 phase. Chromatin condensation is followed by centrioles movement towards the poles. (Prophase)
Question 4. If you are provided with root-tips of onion in your class and are asked to count the chromosomes which of the following stages can you most conveniently look into: (a) Prophase (b) Anaphase (c) Telophase (d) Metaphase
Answer: (d) Metaphase
Question 5. Karyokinesis is the term used for (a) division of cytoplasm (b) division of nucleoplasm (c) division of nucleus (d) separation of daughter chromosomes
Answer: (d) separation of daughter chromosomes Explanation: Karyokinesis means separation of daughter chromosomes. Cytokinesis means division of cytoplasm.
Question 6. During which stage the chromosomes first become visible. (a) Anaphase (b) Metaphase (c) Prophase (d) Telophase
Answer: (c) Prophase
Question 7. In mitosis, nuclear envelope and nucleolus disappear during (a) Metaphase (b) Interphase (c) Prophase (d) Telophase
Answer: (c) Prophase
Question 8. Arrange the following events of meiosis in the correct sequence: I. Terminalization II. Crossing over III. Synapsis IV. Disjunction of genomes The correct sequences: (a) II, I, IV, III (b) III, II, I, IV (c) IV, III, II, I (d) I, IV, III, II
Answer: (b) III, II, I, IV
Question 9. The major event that occurs during the anaphase of mitosis, which brings about the equal distribution of chromosomes, is (a) splitting of the centromeres (b) splitting of the chromatids (c) replication of the genetic material (d) condensation of the chromatin
Answer: (a) splitting of the centromeres
Question 10. What type of plant is formed when colchicine is used in the process of development of Raphanobrassica? (a) Autotetraploid (b) Haploid (c) Triploid (d) Allotetraploid
Answer: (d) Allotetraploid
Question 11. Meiosis occurs for the human female in ______. (a) Pancreas (b) Liver (c) Ovary (d) Kidney
Answer: (c) Ovary
Question 12. Choose the correct sequence. A. Pachytene B. Zygotene C. Leptotene D. Diakinesis E. Diplotene (a) C, B, A, D, E (b) C, A, B, E, D (c) C, B, A, E, D (d) D, B, C, E, A
Answer: (c) C, B, A, E, D Explanation: These are the five phases of prophase I of Meiosis I based on the chromosomal behaviour.
Question 13. How many chromosomes are there in onion root tip cell? (a) 06 (b) 16 (c) 26 (d) 36Answer
Answer: (b) 16 Explanation: There are 16 chromosomes in onion root tip cell.
Question 14. Lambrush chromosomes are observed in (a) Mitotic prophase (b) Mitotic metaphase (c) Meiotic metaphase (d) Meiotic prophase
Answer: (d) Meiotic prophase
Question 15. Which of the following cellular structures always disappears during mitosis and meiosis? (a) Plasma membrane (b) Nucleolus and nuclear envelope (c) Plastids (d) none of these
In This Post we are providing Chapter-9 Biomolecules NCERT MCQ for Class 11 Biology which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON BIOMOLECULES
Question 1 : In RNA, thymine is replaced by
a) Uracil
b) Guanine
c) Both
d) None of these
Answer : Uracil
Question 2: Carrier ions like Na+ facilitate the absorption of substances like:
a) amino acids and glucose
b) glucose and fatty acids
c) fatty acids and glycerol
d) fructose and some amino acids
Answer : amino acids and glucose
Question 3 : An enzyme brings about
a) reduction in activation energy
b) increase in activation energy
c) increase in reaction time
d) decrease in reaction time
Answer : reduction in activation energy
Question 4 : The enzymes hexokinase which catalyses glucose to glucose-6-phosphate in glycolysis is inhibited by glucose- 6-phosphate. This is an example of
a) feedback allosteric inhibition
b) non-competitive inhibition
c) competitive inhibition
d) None of these
Answer : feedback allosteric inhibition
Question 5 : The enormous diversity of protein molecules is due mainly to the diversity of
a) amino acid sequences within the protein molecule
b) peptide bonds
c) R groups on the amino acids
d) amino groups on the amino acids
Answer : amino acid sequences within the protein molecule
Question 6: Length of one turn of the helix in a B-form DNA is approximately
a) 3.4 nm
b) 0.34 nm
c) Both
d) None of these
Answer : 3.4 nm
Question 7 : Which of the following sets contains polysaccharides?
a) Starch, glycogen, cellulose
b) Sucrose, maltose, cellulose
c) Galactose, starch, sucrose
d) Glucose, fructose, lactose
Answer : Starch, glycogen, cellulose
Question 8 : The most basic amino acid is
a) Arginine
b) Glycine
c) Histidine
d) Glutamine
Answer : Arginine
Question 9 : The helical structure of protein is stabilized by
a) Hydrogen bonds
b) Disulphide bonds
c) Peptide bonds
d) None of these
Answer : Hydrogen bonds
Question 10: The Km value of the enzyme is the value of the substrate concentration at which the reaction reaches to
a) ½ Vmax
b) Zero
c) ¼ Vmax
d) 2 Vmax
Answer : ½ Vmax
Question 11 : Which group contains biocatalysts?
a) Peptidase, amylase, rennin
b) Glucose, amino acids, fatty acids
c) Rhodopsin, pepsin, steapsin
d) Myosin, oxytocin, adrenalin
Answer : Peptidase, amylase, rennin
Question 12: Enzymes that catalyse removal of groups from substrates by mechanisms other than hydrolysis, and addition of groups to double bonds, are called
a) lyases
b) dehydrogenases
c) Both
d) None of these
Answer : lyases
Question 13 : Oils are rich in
a) Fats that are generally liquid at room temperature
b) Glycerol that possesses three hydroxyl groups
c) Esters of fatty acids
d) Saturated fatty acids
Answer : Fats that are generally liquid at room temperature
Question 14 : Bonds that do not exist in tertiary structure of proteins
a) Phosphodiester bonds
b) Hydrophobic etnractions
c) Ionic bonds
d) Covalent bonds
Answer : Phosphodiester bonds
Question 15 : Cleavage of specific covalent bonds and removal of groups without hydrolysis is the property of
ANSWER: Services are intangible activities that need face-to-face interaction between the customer (service purchaser) and the service provider (service seller) at the moment of delivery. There is no requirement that the services entail the manufacture or sale of products. The following two categories are used to categorise services.
Business Services: Banking, insurance, and warehousing are examples of business services.
Professional Services: Legal services, medical counselling, and tax consulting are examples of professional services.
The phrase ‘goods,’ in contrast to services, refers to actual and tangible things whose ownership is passed to the customer as soon as the product is purchased. Examples of goods are, plants and machinery etc..
Q.2 What is e-banking? What are the advantages of e-banking?
ANSWER: banking is the use of an electronic medium to execute different banking activities such as money transfers, account checks, and loan applications. Commercial banks provide these services to make it simple for its account holders to perform financial transactions online from any location and at any time.
The following are some of the benefits of e-banking.
Availability 24×7: E-banking is available 24 hours a day, 365 days a year. At any moment, a client can log into his or her own bank account and execute financial activities online. Customers benefit from increased flexibility and comfort because they do not have to visit their banks in person.
Convenient Access: Transactions may be done on mobile phones and PCs as needed.
E-banking Decreases Bank Workload: E-banking reduces bank workload by allowing a substantial part of tasks to be performed electronically.
Q.3 Write a note on various telecom services available for enhancing business.
ANSWER:The many sorts of telecom services that enable a firm to carry out its activities efficiently are listed below.
Cellular Mobile Service: This includes voice and non-voice transmission, as well as data transmission.
Radio Paging Service: This is a one-way communication system that sends out information in the form of a tone, numeric, or alphanumeric message.
Fixed-Line Service: This type of service entails the installation of fibre optic cables across the nation for the transmission of data, including voice and non-voice communications.
Cable Service: This service transmits media-related information to a designated operational region for which a licence has been obtained. The information flow is one-way with this sort of telecom service.
VSAT Service: VSAT stands for “Very Small Aperture Terminal” and refers to a satellite-based communication service that allows information to be sent to far-flung and remote locations. As a result, businesses benefit from a broader reach and greater flexibility.
DTH Service: DTH stands for Direct-To-Home, and it is a form of telecommunications service provided by DTH providers. Customers receive TV channels through satellites from the corporations. Customers may watch several channels by connecting their television to a tiny dish antenna and a set-top box.
Q.4. Explain briefly the principles of insurance with suitable examples.
ANSWER:The following are the specific principles of a legal insurance contract:
Absolute Good Faith: Both the insurer and the insured must believe in each other and the contract they have signed. For example, if Rahul has a heart condition, he should tell his insurance firm about it while purchasing a life insurance policy.
Insurable Interest: The insurable interest requires that the owner of a particular insurance policy has an insurable interest in the subject matter of the insurance policy. For example, a wife having insurable interest in her husband’s life due to financial dependency, a person’s interest in his property etc.
Principle of Indemnity: The goal of an insurance contract, according to the indemnity principle, is to restore the insured to the same financial position as before the loss. to he or she For example, if a person loses Rs. 1 lakh in a fire, the insurance company will only accept a claim up to Rs. 1 lakh and not more.
Principle of Proximate Cause: The proximate cause insurance principle states that the nearest or closest cause should be considered, and the insurance company will compensate only for the causes that have been mentioned in the insurance contract, or any proximate causes, and not the remote causes of damage. For example, if a person is injured in a fire, this should be included in the contract so that the individual may collect the insurance benefits.
Principle of Subrogation: Once the compensation is paid, the insurer gains ownership of the damaged item, preventing the insured from profiting from the sale of the damaged property. For example, if a person receives Rs. 1 lakh for a damaged stock, the stock’s ownership will be transferred to the insurance company, and the person will no longer have control over the stock.
Principle of Contribution: If an individual purchases many insurance policies for the same item, the insurers will pool their resources to reimburse the insured for the real loss. If a person A insures his or her home for Rs. 2 lakh with insurance B and Rs. 1 lakh with another insurer, say C, then in the event of a loss of Rs. 90,000, insurer B and insurer C will pay A Rs. 90,000 in total and no more.
Principle of Mitigation: The insured shall treat the insured thing with the same care as he or she would if the insurance were not present. For example, if a person obtains fire insurance, he or she should take all reasonable steps to minimise property damage in the event of a fire, just as he or she would have done if the insurance had not been purchased.
Q.5 Explain warehousing and its functions.
ANSWER:Warehousing is the process of keeping things in a systematic and orderly way in order to preserve their worth and quality. Warehouses provide not only storage but also logistical services by locating the appropriate amount in the right place at the right time and at the right price.
Storage: Warehouses make it easier to store products and raw materials that aren’t needed right away for sale or manufacture, while also protecting them from rotting and damage.
Value-added Services: They provide producers with value-added services such as product grading, packaging, and labelling.
Financing: The warehouse receipt can be used as collateral to borrow money from banks or other financial organisations by the owner of the products or raw materials kept in the warehouse.
Break the Bulk: Warehouses are responsible for dividing large quantities of items received from manufacturing companies into smaller quantities. The small batches are then transported as per the requirements of customers.
Consolidation: The warehouses gather and consolidate material/goods from various manufacturing units before dispatching them to a specific consumer via a single transportation package.
Q.6 What are services? Explain their distinct characteristics?
ANSWER:Services are intangible economic activities that need face-to-face interaction between the customer and the service provider at the point of delivery. Services do not require the manufacture or sale of products and are mostly given to meet the needs of individuals.
Business services (such as banking, insurance, and warehousing) and professional services are the two types of services (including legal services, medical advice and tax consultancy).
The following are the types of services:
Intangible: Because services cannot be seen or touched, they are intangible. They can only be experienced. As a result, the quality of services cannot be determined prior to their use. As a result, it becomes critical for service providers to provide services that meet the needs of the individuals involved.
Inseparable: Simultaneous activity of production and consumption makes the production and consumption of services seem to be inseparable. Unlike products, which are manufactured today and sold later, services must be consumed immediately once they are made accessible.
Inconsistent: There are no defined standards for services; they must be delivered according to the demand and expectations of service consumers at any given moment. Due to the fact that each service user has distinct interests and preferences, the type and quality of services offered varies per user.
Engagement: At the moment of service delivery, the involvement of both the service user and the service provider is required. In a school, for example, the instructor and the pupils are actively involved in the exchange of knowledge-transfer services.
Inventory: Services cannot be held in inventory and sold at a later date. They must be made available when service users request them. This is due to the fact that if services are not utilised immediately, they lose their value.
Q.7 Explain the functions of commercial banks with an example of each.
ANSWER:Commercial banks are responsible for the following tasks:
Deposits: Banks accept and pay interest on a variety of public deposits, including savings account deposits, current account deposits, and fixed account deposits. They owe it to the depositor to refund the money placed by him or her.
Funds Lending: Banks provide loans and advances based on the total amount of money they have on hand. Overdrafts, reduced trade bills, cash or consumer credits, and other types of advances are available. Banks make a lot of money from the interest they charge on these loans.
Extending the Cheque Facility: Banks collect checks written on other banks, thus acting as a clearing house. Bearer cheques (encashable instantly at bank counters) and crossed checks (only deposited in the payees’ accounts) are the two most common forms of cheques.
Funds Remittance: Banks assist clients in moving funds from one location to another. Bank draughts and pay orders can be used to make these transfers, and there are no commission fees.
Provision of Ancillary Services: In addition to their core duties, banks offer services such as lockers, underwriting, and bill payment. They also handle things like purchasing and selling stocks and debentures on behalf of their clients.
Q.8 Write a detailed note on various facilities offered by the Indian Postal Department.
ANSWER:The Indian Postal Department offers the services listed below.
Financial Facilities:
Post offices provide a range of savings options to the general public.These facilities are provided through the post office’s savings schemes like:
Public Provident Fund (PPF)
Kisan Vikas Patra
National Saving Certificate (NSC)
Recurring Deposit Scheme
Fixed Deposit Scheme
Mail Facilities:
Mail services include:
Parcel Facilities: They make it easier to transport an item from one location to another.
Registration Services: These services ensure that the article being sent is secure.
Insurance Facilities: These cover the risks associated with postal transmission.
The following are some of the mail services supplied by banks:
Postcards: This is the least expensive method of mail delivery.
Letter: It is enclosed in an envelope and guarantees the confidentiality of the information communicated.
Registered Mail: Registered mail ensures that the mail sent to the recipient is delivered or returned to the sender if it is not.
Additional Services:
Greeting cards, media mail, international money transfers, speed mail, passport services, and e-billing services are also offered by these departments.
Q.9 Describe various types of insurance and examine the nature of risks protected by each type of insurance.
ANSWER:The following three forms of insurance are available:
Life Insurance:
It is a contract between the insurer and the insured in which the insurer promises to pay the insured a predetermined sum in the event of the insured’s death or the insurance contract’s maturity, whichever happens first.
That is, if the insured person dies before the contract’s maturity date, the promised sum is paid to his or her family. If the insured lives to the end of the contract’s term, he or she will be paid the agreed-upon amount.
The insured pays a certain amount to the insurer as a premium in exchange for this guarantee. Life’s uncertainties necessitate the purchase of a life insurance policy.
Risk Covered: Life insurance plans protect us against two sorts of risks:
Risk of dying too early
Risk of dying too late
Fire Insurance:
In exchange for the premium paid, the insurer guarantees to make good any loss or damage caused by fire over a specified period of time, up to the amount specified in the policy.
The fire insurance policy is usually for a year and must be renewed on a regular basis.
A claim for fire damage must meet the following two requirements:
There must be a monetary loss.
Fire must be unintended and accidental.
Marine Insurance:
A marine insurance contract is an arrangement in which the insurer agrees to indemnify the insured against maritime losses in the way and to the extent agreed upon.
Risk Covered: Marine insurance protects against losses caused by marine perils, often known as sea perils. There are three factors to consider:
Hull Insurance: Because the ship is exposed to several dangers at sea, this insurance policy is designed to compensate the insured for losses incurred as a result of ship damage.
Cargo Insurance: Cargo or the goods in the ship is exposed to numerous dangers while being transported by ship, this insurance covers the risk of voyage.
Freight Insurance: If the cargo is damaged or lost in transit, the shipping business is not reimbursed for the freight payments, hence to avoid this scenario, the shipping company takes up this insurance policy.
Q.10 Explain in detail the warehousing services.
ANSWER:Warehousing was once thought of as a static unit for keeping and storing goods in a scientific and systematic manner in order to preserve their original quality, value, and utility, but it is now thought of as a logistical service that makes the right quantity, at the right place, at the right time available. The following are the different warehousing services:
Storage: Warehouses make it easier to store products and raw materials that aren’t needed right away for sale or manufacture, while also protecting them from rotting and damage.
Value-Ddded Services: They provide producers with value-added services such as product grading, packaging, and labelling.
Financing: The warehouse receipt can be used as collateral to borrow money from banks or other financial organisations by the owner of the products or raw materials kept in the warehouse.
Break the Bulk: Warehouses are responsible for dividing large quantities of items received from manufacturing companies into smaller quantities. The smaller quantities are then transported according to the requirements of clients to their places of business
Consolidation: The warehouses gather and consolidate material/goods from various manufacturing units before dispatching them to a specific consumer via a single transportation package.
Stockpiling: The seasonal storing of commodities for certain businesses is the next role of warehousing. Raw materials, which are not required immediately for sale or manufacturing, are stored in warehouses. They are made available to enterprises according to the number of consumers they have.
Price Stabilisation: Warehousing provides the role of price stabilisation by adapting the supply of products to the demand condition.
Long Answer Type Question:
Q.1 What are services? Explain their distinct characteristics. Answer: A service is an act or performance offered by one party to another. They are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing desired change. According to Sir William B, “Service refers to social efforts which includes the Govt.to fight five giant evils – wants, disease, ignorance, squalor and illness in the society”. Characteristics of Services Service is an act or performance offered by one party to another. They are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing about a desired change in or on behalf of the recipient of the service. The term, service, is not limited to personal services like medical services, beauty parlors, legal services, etc. According to the marketing experts and management thinkers the concept of services is a wider one. The term services are defined in a number of ways but not a single one is universally accepted. The distinct characteristics of services are mentioned below:
Intangibility: Services are intangible. We cannot touch them, it is not a physical object. According to Carman and Uhl, a consumer feels that he has the right and opportunity to see, touch, hear, smell or taste the goods before they buy them. This is not applicable to services. The buyer does not have any opportunity to touch, smell, and taste the services. While selling or promoting a service one has to concentrate on the satisfaction and benefit a consumer can derive having spent on these services. For example: Railways sells a train ticket from A destination to B destination. Here it is the matter of consumer’s perception of services than smelling it or tasting it.
Inventory: Services too, are perishable like labour. Service has a high degree of perishability. Here the element of time assumes a significant position. There will be complete loss of labour. If labour stops working, it is a complete waste. It cannot be stored. Utilized or unutilized services are an economic waste. An unoccupied building, an unemployed person, credit unutilized, etc. are economic waste. Services have a high level of perishability.
Inseparability: Services are generally created or supplied simultaneously. They are inseparable. For example, the entertainment industry, health experts and other professionals create and offer their services at the same given time. Services and their providers are associated closely and thus, not separable. Donald Cowell states ‘Goods are produced, sold and then consumed whereas the services are sold and then produced and consumed’. Therefore inseparability is an important characteristic of services which proves challenging to service management industry.
Inconsistency: This character of services makes it difficult to set a standard for any service. The quality of services cannot be standardized. The price paid for a service may either be too high or too low as is seen in the case of the entertainment industry and sports. The same type of services cannot be sold to all the consumers even if they pay the same price. Consumers rate these services in different ways. This is due to the difference in perception of individuals at the level of providers and users. Heterogeneity “makes it difficult to establish standards for the output of service firm.
Involvement: In the sale of goods, after the completion of process, the goods are transferred in the name of the buyer and he becomes the owner of the goods. But in the case of services, we do not find this. The users have only an access to services. They cannot own the service. For example: a consumer can use personal care services or medical services or can use a hotel room or swimming pool. However, the ownership remains with the providers. According to Philip Kotler, “A service is an activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything” From this it is clear that the ownership is not affected in the process of selling the services.
Q.2 Explain the functions of commercial banks with an example of each. Answer: The main functions of commercial banks are accepting deposits from the public and advancing them loans. However, besides these functions there are many other functions which these banks perform. All these functions can be divided under the following heads: 1. Accepting deposits; 2. Giving loans; 3. Overdraft; 4. Discounting of Bills of Exchange; 5. Investment of Funds; 6. Agency Functions.
Accepting Deposits: The most important function of commercial banks is to accept deposits from the public. Various sections of society, according to their needs and economic condition, deposit their savings with the banks. For example, fixed and low income group people deposit their savings in small amounts from the points of view of security, income and saving promotion. On the other hand, traders and businessmen deposit their savings in the banks for the convenience of payment. Therefore, keeping the needs and interests of various sections of society, banks formulate various deposit schemes. Generally, there are three types of deposits which are as follows: (i) Current Deposits: The depositors of such deposits can withdraw and deposit money whenever they desire. Since banks have to keep the deposited amount of such accounts in cash always, they carry either no interest or very low rate of interest. These deposits are called Demand Deposits because these can be demanded or withdrawn by the depositors at any time they want. Such deposit accounts are highly useful for traders and big business firms because they have to make payments and accept payments many times in a day. (ii) Fixed Deposits: These are the deposits which are deposited for a definite period of time. This period is generally not less than one year and, therefore, these are called as long term deposits. These deposits cannot be withdrawn before the expiry of the stipulated time and, therefore, these are also called as time deposits. These deposits generally carry a higher rate of interest because banks can use these deposits for a definite time without having the fear of being withdrawn. (iii) Saving Deposits: In such deposits, money up to a certain limit can be deposited and withdrawn once or twice in a week. On such deposits, the rate of interest is very less. As is evident from the name of such deposits their main objective is to mobilise small savings in the form of deposits. These deposits are generally done by salaried people and the people who have fixed and less income.
Giving Loans: The second important function of Commercial Banks is to advance loans to its customers. Banks charge interest from the borrowers and this is the main source of their income. Banks advance loans not only on the basis of the deposits of the public rather they also advance loans on the basis of depositing the money in the accounts of borrowers. In other words, they create loans out of deposits and deposits out of loans. This is called as credit creation by Commercial Banks. Modern banks give mostly secured loans for productive purposes. In other words, at the time of advancing loans, they demand proper security or collateral. Generally, the value of security or collateral is equal to the amount of loan. This is done mainly with a view to recover the loan money by selling the security in the event of non-refund of the loan. At times, banks give loan on the basis of personal security also. Therefore, such loans are called unsecured loan. Banks generally give following types of loans and advances: (i) Cash Credit: In this type of credit scheme, banks advance loans to its customers on the basis of bonds, inventories and other approved securities. Under this scheme, banks enter into an agreement with its customers to which money can be withdrawn many times during a year. Under this set lip banks open accounts of their customers and deposit the loan money. With this type of loan, credit is created. (ii) Demand Loans: These are such loans that can be recalled on demand by the banks. The entire loan amount is paid in lump sum by crediting it to the loan account of the borrower, and thus entire loan becomes chargeable to interest with immediate effect. (iii) Short-term Loan: These loans may be given as personal loans, loans to finance working capital or as priority sector advances. These are made against some security and entire loan amount is transferred to the loan account of the borrower.
Over-Draft: Banks advance loans to its customer’s up to a certain amount through over-drafts, if there are no deposits in the current account. For this, banks demand a security from the customers and charge very high rate of interest.
Discounting of Bills of Exchange: This is the most prevalent and important method of advancing loans to the traders for short-term purposes. Under this system, banks advance loans to the traders and business firms by discounting their bills. In this way, businessmen get loans on the basis of their bills of exchange before the time of their maturity.
Investment of Funds: The banks invest their surplus funds in three types of securities—Government securities, other approved securities and other securities. Government securities include both, central and state governments, such as treasury bills, national savings certificate etc. Other securities include securities of state associated bodies like electricity boards, housing boards, debentures of Land Development Banks, units of UTI, shares of Regional Rural banks etc.
Agency Functions: Banks function in the form of agents and representatives of their customers. Customers give their consent for performing such functions. The important functions of these types are as follows:
Banks collect cheques, drafts, bills of exchange and dividends of the shares for their customers.
Banks make payment for their clients and at times accept the bills of exchange: of their customers for which payment is made at the fixed time.
Banks pay insurance premium of their customers. Besides this, they also deposit loan installments, income tax, interest etc. as per directions.
Banks purchase and sell securities, shares and debentures on behalf of their customers.
Banks arrange to send money from one place to another for the convenience of their customers.
Q.3 Write a detailed note on various facilities offered by Indian Postal Department. Answer: Indian Post and Telegraph Department provides various postal services all over India. India has been divided into 22 postal circles for this. There are 1,54,149 post offices in India. It has 5,64,701 letter boxes, which transmits 1575 crore mails every year. 5,01,716 villages have a public telephone and 26000 post offices are connected through the network. It links major 97 countries across the world. It provides speed post facility for over 1000 destinations in India Facilities of postal department are broadly divided into:
Financial Facilities: Post and Telegraph Department provides financial services using post office’s saving schemes like Public Provident Fund, Kisan Vikas Patra, National Saving Certificate, normal retail banking functions of monthly income schemes, recurring deposit account, savings account, time deposits and money order facility etc.
Mail Facilities: It consists of parcel facilities which consists of transmission of articles from one place to another which can be registered and insured. It also provides facilities for greeting post, (a range of delightful greeting card on all occasions) and Media Post (a way for Indian corporate to advertise their brands through aerograms, telegrams and letterboxes).
International Money Transfers: It enables money transfer from 185 countries in collaboration with Western Union Money Transfer.
Passport Facilities: It has joint hands with Ministry of External Affairs and accepts application for passport.
Speed Post: It has more than 1000 destinatiory in India. It covers 97 major countries of the world.
E-Bill Post: It is the latest addition in facilities by Indian Post whereby it collects bill payment across the counter for BSNL and Bharti Airtel.
Q.4 Describe various types of insurance and exercise the nature of risks protected by each type of insurance. Answer: There are many types of insurance. Some of them are shown with the help of diagram given below:
Q.5 Explain in detail the warehousing services. Answer:Primary warehousing services include the following:
Consolidation: Warehouse receives and consolidates goods from different production stations and dispatches it to customer on a single transportation shipment.
Break the Bulk: Warehouse breaks the bulk received according to the requirements of the client.
Stock Piling: The next function of warehousing is the seasonal storage of goods to select business.
Secondary Functions of a Warehouse
Protection of goods: A warehouse provides protection to goods from loss or damage due to heat, dust, wind and moisture, etc. It makes special arrangements for different products according to their nature. It cuts down losses due to spoilage and wastage during storage.
Risk Bearing: Warehouses take over the risks incidental to storage of goods. Once goods are handed over to the ware housekeeper for storage, the responsibility of, these goods passes on to the ware housekeeper. Thus, the risk of loss or damage to goods in storage is borne by the warehouse keeper. Since it is bound to return the goods in good condition, the warehouse becomes responsible for any loss, theft or damage etc., thus, it takes all precautions to prevent any mishap.
Financing: When goods are deposited in any warehouse, the depositor gets a receipt, which acts as a proof about the deposit of goods. The warehouses can also issue a document in favour of the owner of the goods, which is called warehouse keeper’s warrant. This warrant is a document of title and can be transferred by simple endorsement and delivery. So while the goods are in custody of the ware housekeeper, the businessmen can obtain loans from banks and other financial institutions keeping this warrant as security. In some cases, warehouses also give advances of money to the depositors for a short period keeping their goods as security.
Processing: Certain commodities are not consumed in the form they are produced. Processing is required to make them consumable. For example, paddy is polished, timber is seasoned, and fruits are ripened, etc. Sometimes warehouses also undertake these activities on behalf of the owners.
Grading and branding: On request warehouses also perform the functions of grading and branding of goods on behalf of the manufacturer, wholesaler or the importer of goods. It also provides facilities for mixing, blending and packaging of goods for the convenience of handling and sale.
Q.1 Explain the concept of public sector and private sector?
ANSWER: The private sector refers to the portion of the economy that is owned and controlled by people or businesses for the sole purpose of profit. To put it another way, it refers to all organisations that are not directly owned or run by the government. The private sector employs a substantial percentage of the workforce in most free economies (where the government plays a little role).
The following are the many sorts of businesses that make up the private sector.
Partnership
Joint Hindu Family
Cooperative societies
Sole proprietorship
The public sector is made up of organisations that are owned and run directly by the government. Bharat Heavy Electricals Ltd, Oil India Ltd, and Life Insurance Corporation of India are examples of public sector enterprises that are partially or entirely controlled by the national or state government.
Q.2 State the various types of organisations in the private sector.
ANSWER: Commercial firms held by an individual or a group of individuals make up the private sector. Profitability is the primary goal of the private sector. Individual investments or shareholder contributions are used to raise funds.
It mostly consists of:
Sole Proprietorship: It is a type of business in which a single person owns the whole company. He is in charge of managing, controlling, and bearing all of the business’s risks.
Partnership: A partnership is described as a group of two or more people who agree to run a business together, share the profits, and share the risks.
Joint Hindu Family: This business is owned and operated by a Hindu Undivided Family that is regulated by Hindu Law.
Company: A company is an artificial person that exists only in the eyes of the law, has perpetual succession, and has its own legal entity and common seal. It is divided into two categories:
Private and
Public.
Multinational Corporations: Multinational corporations have operations in one or more countries other than their home country. Take, for example, Google.
Q.3 What are the different kinds of organisations that come under the public sector?
ANSWER: The public sector is made up of organisations that are owned and run directly by the government. These organisations are either completely or partially controlled by the government.
The many types of public sector organisations are listed below:
Departmental undertakings: These businesses are run as ministry divisions and are regarded as an extension of the ministry. These businesses might be run by the federal or state governments. Railways is an example under this.
Statutory corporations: Statutory companies are public corporations created by a Special Act of Parliament that establishes their powers and functions. It is a legislatively constituted, financially independent corporate entity that has unambiguous authority over a certain region or kind of business activity.
Government companies: A government company, according to the Companies Act of 1956, is one in which the Central Government, any State Government, or a combination of the Central Government and one or more State Governments owns at least 51 percent of the paid-up capital. These are just for the purpose of conducting business.
Q.4 List the name of some enterprises under the public sector and classify them.
ANSWER: Following are the lists of some enterprises under the public sector and their classifications:
Departmental undertakings: Posts and Telegraphs, Indian Railways
Government company: Bharat Heavy Electricals Ltd, Hindustan Machine Tools Ltd.
Statutory corporations: Food Corporation of India (FCI), Life Insurance Corporation of India (LIC).
Q.5 Why is the government company form of organisation preferred to other types in the public sector?
ANSWER: A government business must have at least 51 percent of its shares owned by either the federal or state government. The Indian Companies Act of 1956 gave birth to this business structure.
The following are the reasons why the government-company structure is chosen above alternative public-sector structures.
In all management activities and decision-making procedures, a government firm has complete autonomy.
It is not subjected to excessive intervention in its activities by the relevant department.
It is a separate entity from the government, i.e., a government corporation is not the same as the government.
It offers affordable prices for goods and services while also ensuring safe marketing practises.
Q.6 How does the government maintain a regional balance in the country?
ANSWER: The government maintains regional balance in the country by giving special attention to regions that are falling behind, and public sector companies have been purposefully established. This aids in the creation of job possibilities as well as the economic development and expansion of rural and underdeveloped areas. At the same time, the government works to limit the expansion of private-sector businesses in previously developed regions.
Q.7 State the meaning of public private partnership.
ANSWER: Public- private partnership refers to the long term involvement and the participation of the private sector in the government based projects, wherein both, the public and private sector share costs, risks, finances, tasks, obligations, and technology with each other. However, normally the technical skills, and finances of the private sector are taken advantage of in the PPPs.
In this, the public partners can be ministries and government departments, whereas the private sector can be business, or investors with technical expertise. Power generation, infrastructure, water, railways, hospitals, are some areas of PPPs.
Q.8 Describe the industrial policy 1991 , towards the public sector?
ANSWER: In terms of the public sector, the industrial policy of 1991 is as follows:
Reduction in the number of industries reserved for the public sector: 17 industries were set aside for the public sector in a 1956 resolution on industrial policy. In 1991, industrial policy decreased this number to eight. A review of the programme was conducted in 2001, and just three industries are currently designated for the public sector. Only atomic energy, weapons, and rail transportation are now considered public goods.
Disinvestment of shares of the selected public sector enterprises (PSEs): Disinvestment is the selling of equity shares to the private and public sectors. The goal was to collect funds and encourage broader involvement in the ownership of these businesses by the general public and workers. The government has decided to pull out of the industrial sector and cut its stake in all businesses. It was anticipated that this would result in improved management performance and budgetary discipline.
Policy Regarding Sick Units: The PSUs were to be treated as if they were private businesses. A sick PSU was sent to BIFR, which had to decide whether or not the PSU should be restarted. Workers at firms that had to close down felt a great deal of anger. The government, on the other hand, devised appropriate measures for the rehabilitation and financial recompense of those workers.
Memorandum of Understanding: New Memorandums of Understanding (MOUs) were signed between management and the ministries in question. These MOUs gave management more authority and set defined targets, allowing them to enhance performance.
Q.9 What was the role of the public sector before 1991 ?
ANSWER: The role of the public sector before 1991 are as followings:
Development of Infrastructure: Communication, transportation, energy supply, and financial infrastructure are all essential for industrial development. The private sector showed little interest in investing in heavy industries or developing them in any way since they lacked the qualified personnel and financial resources to build heavy industries quickly, as the economy demanded. As a result, only the public sector was capable of mobilising the massive sums of money necessary. As a result, this sector has been tasked with constructing infrastructure.
Maintaining Regional Balance: During the 1960s and 1970s, India had severe regional development inequalities. Some parts of the country were far more developed than others. The nation’s growth and development were hampered by regional inequalities. Public sector enterprises (PSEs) were established in backward and rural regions to achieve regional balance. These PSEs not only supplied jobs, but also aided the growth of supporting sectors in these regions, such as banking and transportation.
Economies of Scale: Natural gas and petroleum sectors, for example, profit from economies of scale (benefits derived from them are greater when operated on a large scale). The private sector was not large enough to operate these large-scale businesses in the years after independence since they required substantial capital expenditures. Small-scale operation of these industries was not an option since it would have resulted in Losses. As a result, the government was forced to create and run these businesses.
Import Substitution and Exports: One of the main goals of India’s economic planning was to achieve self-sufficiency. The goal was to limit imports while increasing exports at the same time. As a result, PSEs were formed to produce heavy machinery and engineering items in the country, limiting imports. Simultaneously, PSEs such as the Metals and Minerals Trading Corporation of India (MMITC) and the State Trading Corporation (STC) were created with the goal of increasing exports.
Check Over Concentration of Economic Power: The public sector keeps the private sector in check. Due to the concentration of wealth in a few hands in the private sector, only a few industrial firms were ready to engage in heavy industries. Inequalities in income arise as a result of this. As a result, the public sector is able to establish huge businesses that need significant investment, and the resulting revenue and benefits are shared among a large number of employees and workers.
Q.10Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer.
ANSWER: Because of the following factors, it is extremely difficult for public sector companies to compete with the private sector in terms of profits and efficiency:
Difference in Objective: A private company’s primary goal is to make a profit, whereas public sector companies’ primary goal is to provide social welfare, and thus they cannot be completely profit oriented.
Difference in Ownership: In public sector firms, the government is the single or primary shareholder. As a result, these firms’ management and administration are in the hands of the government, which may not implement economically effective policies owing to political concerns.
Management Differences: Public-sector firms are run and managed by government officials who may or may not have had professional training, whereas private-sector companies are run and managed by professionals. In the private sector, this leads to increased efficiency.
Operational Differences: The private sector operates in all areas with a reasonable return on investment, whereas the public sector mostly engages in the basic and public utility sectors, which have low returns.
Q.11 Why are global enterprises considered superior to other business organisations?
ANSWER: MNCs are regarded superior to other business organisations because they have:
Huge Capital Resources: MNCs have enormous capital resources since they can generate capital from all over the world. They may borrow from worldwide banks and a big number of investors who are prepared to invest in them for significant profits because of their goodwill.
International Collaborations: Multinational corporations (MNCs) typically join the market with the assistance of local private firms. This is mostly due to regulatory limitations put on them, as well as to capitalise on the Indian company’s brand image.
Product Innovation: Multinational businesses have fine-tuned their research and development centres for new product creation. This enables them to remain competitive and keep their big customer base.
Marketing Tactics: Global firms’ marketing strategies are considerably more successful than those of other companies. They employ aggressive marketing techniques to boost sales in a short amount of time. They have a more trustworthy and up-to-date market intelligence system, as well as more successful advertising and sales promotion tactics.
Market Expansion: Their operations and activities extend beyond the physical borders of their respective countries. Their worldwide image improves, and their market region increases, allowing them to establish themselves as global brands.
Centralised Control: They have a headquarters in their native nation and control all of its branches and subsidiaries. This control, however, is restricted to the parent company’s wide policy framework. There are no delays or disruptions in regular operations.
Q.12 What are the benefits of entering into joint ventures?
ANSWER: The following are some of the advantages of forming a joint venture:
Increased Resources and Capacity: In a joint venture, the separate businesses’ resources and operational capacities are combined. A joint venture has a stronger ability to extend and flourish than a single firm.
Access to New Markets and Distribution Networks: Forming a joint venture with a company in another location expands the market base for each of the companies involved.
Technology Access: A joint venture allows a firm to obtain new and current technology with less money, time, and effort than it would be possible for individual businesses to do so on their own.
Innovation: A joint venture, particularly one with a foreign partner, provides a company with fresh ideas and technology that aids in the development of new goods. In today’s complicated and competitive economy, these innovative tools help firms stay afloat.
Cheap Cost of Production: In comparison to other nations, India’s raw material and labour prices are quite low. As a result, multinational firms who form joint ventures with Indian companies gain greatly.
Established Brand Name: When two companies form a joint venture, one of them benefits from the goodwill of the other, which has already been established in the market.
Q.13 Make a list of Indian companies entering into joint ventures with foreign companies. Find out the apparent benefits derived out of such ventures.
ANSWER: The list of companies are:
Tata Sons and Singapore Airlines joint venture into Vistara
Bharti Enterprises (India) and French insurance major AXA, for the creation of Bharti AXA General Insurance Corporation Limited.
Hindustan Aeronautics Limited
Network 19 Media and investments
Brahmos Aerospace
Green Gas Ltd
Suntera Nigeria 205 Limited
Tata Global Beverages
Fratelli Wines
Mahindra-Renault Ltd
AirAsia India
The benefits derived from such ventures are:
Risk and cost spread.
Economies of scale
Access to new, improved, high-end technology.
Access to better, and innovative managerial practices.
Competitive advantage
Access to new markets.
Access to new distribution channels
Better utilization of resources that strengthen the firm.
The firm gets advantage from the goodwill and reputation of the other firm in the joint venture.
Better use of financial resources.
Higher profitability and market position due to higher efficiency, better technology, low costs.
Long Answer Type Question:
Q.1 Describe the Industrial Policy 1991, towards the public sector. Answer: Development of a country originates from industrial development. Industrially developed countries are also economically prosperous. The 2nd Five Year Plan also called the Mahalnobis Model lead to the promotion of heavy and key industries in India. The period 1950 onwards witnessed development of infrastructure, research and development, establishment of large scale along with many small scale industries, co-existence of public and private sector enterprises, growth of both consumer and capital goods industries. The industrial sector made a significant contribution to agriculture and trade. The industrial policy plays a key role in influencing the foreign trade policy, fiscal policy, the monetary policy, the economic policy of the country. Government of India declared its 1st Industrial Policy Resolution (IPR) in 1948. It divided the industries into four categories.
Industries that were to be state monopolies. These were limited to atomic energy, arms and ammunition and railways (3 in all).
Basic industries in which the state would have the exclusive right to new investment- 6 industries were included in this – iron and steel, shipbuilding, mineral oils, coal, aircraft production and telecommunication equipments.
Industries of national importance that the state might regulate and license in consultation with state government. 18 industries were placed in this category.
All other industries would be opened to the private sector without constraints. IPR 1948 remained in force till 1956. Two developments had taken place. One; the first plan which was initiated in 1951 was completed. Second, Parliament accepted the socialistic pattern of society. This led to IPR 1956.
Special features of IPR 1956 were as follows:
Specific and all-important roles assigned to the public sector – all industries were classified into 3 groups. These groups were called schedules A,B,C.
Schedule A – Exclusive responsibility of state. There were 17 industries in this.
Schedule B – Progressively state-owned – 12 industries.
Schedule C – Generally left to private sector. The state reserved the right to enter this if need be.
Protection to cottage and small scale industries.
Cautious approach towards foreign capital. IPR 1956 remained the basis of industrial policy till 1991.
Q.2 What was the role of the public sector before 1991? Answer: Before 1991, public sector was supposed to perform the following role in India:
Rapid Economic Development: It was required to make efforts so that the rate of economic development accelerates.
Provision of Infrastructure: Another expectation from public sector was to provide infrastructure in the form of better roads, more hospitals, more schools, better irrigation facilities etc.
Sound Industrial Base: We also needed public sector to develop a sound industrial base because Private Sector either did not have huge capital required for these or were not interested in this sector as they had a long gestation period.
Development of Backward Regions: Public sector also aimed at developing backward regions as it is necessary for the balanced development of a country. Private sector being profit minded does not take interest in investing in backward regions.
Generation of Surplus: Another expectation from public sector was to generate a surplus that could be used for investment in other sectors whereby the growth rate could be accelerated.
Creation of Employment Opportunities: Public sector also played its role in creating employment opportunities in organized sector so that poverty can be reduced and standard of living can be enhanced.
Control of Monopoly and Restrictive Trade Policies: Public sector also aimed at controlling monopoly and restrictive trade policies. Otherwise few private industrialists would have gained extreme economic power. It could be harmful for the nation as a whole.
Serving of Strategic National Interests: Public sector also plays its role in serving strategic national interests. They provide law and order, administrative services, police, defence, and many infrastructural facilities even when they are not given any profit as such in monetary terms.
Q.3 Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer. Answer: It is difficult for a public sector undertaking to compete with a private sector undertaking in terms of profits due to following reasons:
Motive of public sector is not profit: Public sector works not for profit but for social welfare. It gives first priority to social welfare then it is almost impossible for it to compete with private sector enterprise on the basis of profit which mainly works for profit only.
Public sector takes care of strategic industries: Public sector invests in strategic areas even when these industries have low return generating capacity and long gestation period. These industries do not give monetary returns but if we consider their return in development of our economy otherwise their return is really high.
Public sector provides many facilities free of fast to the weaker section of society: We can’t expect a government hospital or a government school to generate profits. Many public sector undertakings provide many facilities for free or at a very low cost due to the benefits that it gives to other sectors of the society.
It is difficult for a public sector undertaking to compete with a private sector undertaking in terms of efficiency due to following reasons:
Dependence on authorities for taking minor decisions: Public Sector undertakings follow a protocol for everything. It leads to delay in decision making and inefficiency in operations.
Job security: Workers of Public Sector enjoy job security. It reduces their performance as they know that in spite of bad performance there is no fear of losing job.
Red tapism and bureaucracy: In public sector undertakings there is red tapism and bureaucracy. It leads to inefficiency in operations.
Q.4 Why are global enterprises considered superior to other business organizations? Answer: Global enterprises are considered superior to other business organizations because it has following advantages which other business organizations may not have.
Huge capital resources: MNCs possess huge capital resources and they are able to raise lot of funds from various sources.
International operations: A MNC has production, marketing and other facilities in several countries.
Centralized control: MNCs have headquarters in their home countries from where they exercise their control over all branches and subsidiaries. It provides only broad policy, framework to them and there is no interference in their day to day operations.
Foreign collaboration: Usually they enter into agreements relating to sale of technology, production of goods, use of brand name etc. with local firms in the host country
Advanced technology: These organisations possess advanced and superior technology which enable them to provide world class products and services.
Product innovations: MNCs have highly sophisticated research and development departments. These are engaged in developing new products and superior design of existing products.
Marketing strategies: MNCs use aggressive marketing strategies. Their brands are well known and spend huge amounts on advertising and sale promotion.
Q.5 What are the benefits of entering into joint ventures? Answer: Benefits of joint ventures are as follows:
Greater resources and capacity: In a joint venture the resources and capacity of two or more firms are combined which enables it to grow quickly and efficiently.
Access to advanced technology: It provides access to advanced techniques of production which increases efficiency and then helps in reduction in cost and improvement in quality of product.
Access to new markets and distribution network: A foreign company gains access to the vast Indian market by entering into a joint venture with Indian company. It can also take advantage of the well established distribution system of local firms.
Innovation: Foreign partners in joint ventures have the ideas and technology to develop innovative products and services. They have an advantage in highly competitive and demanding markets.
Low cost of Production: Raw materials and labour are comparatively cheap in developing countries so if one partner is from developing country they can be benefited by the low cost of production.
Well known brand names: When one party has well-established brands and goodwill, the other party gets its benefits. Products of such brand names can be easily launched in the market.
Q.1 For which of the following types of business do you think a sole proprietorship form of organisation would be more suitable and why?
Grocery store
Medical store
Legal consultancy
Craft centre
Internet cafe
Chartered accountancy firm
ANSWER: Sole proprietorship is a form of business wherein only a single person is the owner of the business. He is the only one who manages and controls the business. Thus, among the given alternatives, this form of business would be more suitable for a grocery store, medical store, craft centre and internet cafe. The reason for this is that these types of businesses would require less initial capital, limited managerial ability and minimal legal formalities. Apart from these, direct personal contact with consumers is required in all the mentioned businesses which is possible only under a sole proprietorship form of business.
Q.2 Explain the following terms in brief:
Perpetual succession
Common seal
Karta
Artificial person
ANSWER:
Perpetual succession: This is one of the features of a Joint Stock Company. It means that a company has a separate legal entity and is not influenced by the death, insolvency or retirement of its members. A company is created by law; thus, it can only be ended by law. The company ceases to exist only when the procedure of its closing called ‘winding up’ is completed.
Common seal: It is an official signature of the company. Because a company is an artificial entity, it acts through its Board of Directors and other officials. The document through which the company gets into an agreement needs to have a common seal; otherwise, it would not be legally binding on the company.
Karta: Karta, apart from being the senior-most member of the family, is also the head of the Hindu Undivided Family. He has the absolute decision-making authority over the business which gives him unlimited liability. It is only the karta who has the right to enter into a legal contract with others.
Artificial person: This term is used to refer to the company. This is because though it has its legal identity-rights, liabilities and functions, it is not a human being. Also, it is a person existing in the eyes of the law but is dependent on the Board of Directors and other members to get its work done.
Perpetual succession: This is one of the features of a Joint Stock Company. It means that a company has a separate legal entity and is not influenced by the death, insolvency or retirement of its members. A company is created by law; thus, it can only be ended by law. The company ceases to exist only when the procedure of its closing called ‘winding up’ is completed.
Common seal: It is an official signature of the company. Because a company is an artificial entity, it acts through its Board of Directors and other officials. The document through which the company gets into an agreement needs to have a common seal; otherwise, it would not be legally binding on the company.
Karta: Karta, apart from being the senior-most member of the family, is also the head of the Hindu Undivided Family. He has the absolute decision-making authority over the business which gives him unlimited liability. It is only the karta who has the right to enter into a legal contract with others.
Artificial person: This term is used to refer to the company. This is because though it has its legal identity-rights, liabilities and functions, it is not a human being. Also, it is a person existing in the eyes of the law but is dependent on the Board of Directors and other members to get its work done.
Q.3 Compare the status of a minor in a joint Hindu family business with that in a partnership firm.
ANSWER:
Minor
Joint Hindu Family
Partnership Firm
Can become a member right after his birth
Cannot be a partner in a partnership firm
Enjoys equal ownership over the inherited property just like the rest of the other members of the family
Can be admitted to the benefits of the partnership firm with the consent of all the other partners
Q.4 If registration is optional, why do partnership firms willingly go through the legal formality of getting themselves registered? Explain.
ANSWER:
Registration for a partnership firm is not necessary. However, firms still voluntarily apply for registration. This is because it is a definite proof of the firm’s existence, and if a firm does not get itself registered, then it can lose out on many benefits. In addition, some serious consequences it can face because of non-registration are
Inability to file a suit by the partner of an unregistered firm against another firm.
Inability to file a suit against a third party for the recovery of claims. However, suits can be filed against a non-registered firm by a registered firm for their claims.
Inability to file a suit against any of its co-partners.
Q.5 State the important privileges available to a private company.
ANSWER: Important privileges available to a private company over a public company:
• Number of members required: The number of members required for the formation of a private company is two, while it is seven for a public company.
• Number of directors required: A private firm requires at least two directors, but a public company needs a minimum of three directors.
• Commencement of business: Business can be started by a private company as soon as it receives its certificate of incorporation. A public company, on the other hand, needs a certificate of commencement for starting the business.
• Index of members: There is no compulsion to maintain the index of members for the private company. On the contrary, it is mandatory to maintain an index of members for a public company.
• Issuance of loans to directors: For a private company, loans can be issued to the directors without prior permission of the government. On the other hand, for a public company, loans can be issued to the directors only after taking the permission of the government.https://6ca32cef050f567274fa29b397f1d939.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.htmlQuestion SA 4
How does a cooperative society exemplify democracy and secularism? Explain. Solution SA 4
A cooperative society is a voluntary association of persons who have come together and work together for the welfare of its members. This society conducts its election in a democratic manner, i.e. it follows the principle of ‘one man, one vote’. Every member of the society is entitled to one vote irrespective of the capital invested by him/her or the number of shares he/she has. This prevents any kind of discrimination in the body. Also, members have the right to join or leave the society anytime without any compulsion.
Moreover, the membership of the society is open to all without any kind of discrimination on the basis of religion, caste or sex. This signifies the secular nature of a cooperative society.Question SA 5
What is meant by ‘partner by estoppel’? Explain. Solution SA 5
A person who by his initiative, words, conduct or behaviour gives others an impression that he is a partner of the firm is known as ‘partner by estoppel’. Such partners do not contribute any capital and do not participate in management activities. They are also not entitled to any kind of profits or losses incurred by the company. However, they can be held liable to any loans, debts or credits by the third party as they are considered partners by them. In these kinds of cases, assets of such partners can be used to clear debts.
Long Answer Type question:
Q.1 What do you understand by a sole proprietorship firm? Explain its merits and limitations. Answer: If entrepreneur starts sole proprietor form of business, then he has the following advantages. Advantages of Sole Proprietor Form of Business: 1. Easy formation: The formation of sole proprietorship business is very easy and simple. No legal formalities are involved for setting up the business except a license or permission in certain cases. The entrepreneur with initiative and certain amount of capital can set up such form of business. 2. Direct motivation: The entrepreneur owns all and risks all. The entire profit goes to his pocket. This motivates the proprietor to put his heart and soul in the business to earn more profit. Thus, the direct relationship between effort and reward motivates the entrepreneur to manage the business more efficiently and effectively. 3. Better control: The entrepreneur takes all decisions affecting the business. He chalks out the plan and executes the same. His eyes are on everything and everyone. There is no scope for laxity. This results in better control of the business and ultimately leads to efficiency. 4. Promptness in decision-making: When the decision is to be taken by one person, it is sure to be quick. Thus, the entrepreneur as sole proprietor can arrive at quick decisions concerning the business by which he can take the advantage of any better opportunities. 5. Secrecy: Each and every aspect of the business is looked after by the proprietor and the business secrets are known to him only. He has no legal obligation to publish his accounts. Thus, the maintenance of adequate secrecy leaves no scope to his competitors to be aware of the business secrets. 6. Flexibility in operations: The sole proprietorship business is undertaken on a small scale. If any change is required in business operations, it is easy and quick to bring the changes. 7. Scope for personal touch: There is scope for personal relationship with the entrepreneur and customers in sole proprietorship business. Since the scale of operations is small and the employees work under his direct supervision, the proprietor maintains a harmonious relationship with the employees. Similarly, the proprietor can know the tastes, likes and dislikes of the customers because of his personal rapport with the customers. 8. Free from Government control: Sole proprietorship is the least regulated form of business. Regulated laws are almost negligible in its formation, day-to-day operation and dissolution. Disadvantages of Sole Proprietor Form of Business: The sole proprietorship business is not free from criticism. It suffers from certain limitations and drawbacks, because of its very nature and scope of operations. These points may be duly taken care of while entrepreneur adopting this mode of business. 1. Limited resources: The financial resources of any small business as an individual is limited. He mainly finances from his own savings or borrows from financial institutions, friends and relatives as per his capacity. Thus, limited resource is the major drawback of this form of business. 2. Limited managerial capability: Modern business requires updated managerial skills in each and every sphere of activity. We cannot hope a single individual to possess all the managerial, talents necessary to carry on a business efficiently. The limited financial resources of the sole proprietorship is a hindrance to hire the services of managers with expertise in different areas, thereby the growth of the business. 3. Unlimited liability: Since the liability of the sole proprietor is unlimited, the private properties of the proprietor is also at risk. When the business fails, the private properties of the owner are utilized to pay off the business debts. Thus, the proprietor must have to look this aspect carefully. 4. Uncertainty of continuity: The continuity of the business is uncertain because the business may come to an end due to the incapacity or death of the proprietor. Even if at all the business passes on to the successor of the proprietor, it is unlikely that they may pose the business acumen like that of the proprietor. The discontinuance of the business is a social loss. 5. Not suitable for large-scale business: The limited financial resources, limited managerial capability of the proprietor, risk to the private property etc. makes the proprietorship business unsuitable for large-scale business. This system of business cannot afford for large-scale operation. 6. Difficult to maintain personal contact: Even though there is scope for personal touch in sole proprietorship business, it is unlikely to happen when the business is undertaken in different areas. It is not so easy on the part of the proprietor to have personal contact with customers and suppliers at the same time.
Q.2 Why is partnership considered by some to be a relatively unpopular form of business ownership? Explain the merits and limitations of partnership. Answer: Partnership is considered by some to be relatively unpopular form of business ownership because:
Uncertainty of duration: A partnership suffers from a possible limited span of life. Legally, a partnership firm must be dissolved on the retirement, death, bankruptcy, or lunacy of any partner or demanded by any partner. The probability of any one of these events occurring when the number of partners is much greater than in the case of a sole proprietor.
Risks of additional liability: It is true that like the sole proprietor, each partner has unlimited liability. But his liability may arise not only from his own acts but also from the acts and mistakes of co-partners over whom he has no control.
Lack of harmony: The old saying that “too many cooks spoil the broth” can be apt for a business partnership. Harmony may be difficult to achieve, especially when there are many partners. Lack of centralized authority and conflicts in policy can disrupt the organization.
Difficulty in withdrawing investment: Investment in a partnership can be simple, but its withdrawal may be difficult or costly when this aspect is considered from the point of view of individual partners. This is so because no partner can withdraw his interest from the firm without the consent of all partners.
Lack of public confidence: A partnership may suffer from lack of public confidence
Lack of public confidence: A partnership may suffer from lack of public confidence because, like that of a company there is no legal mechanism to enforce the registration of a partnership firm and the disclosure of its affairs.
Limited resources: A partnership is good as it can be started with limited capital. However, it becomes a handicap in the growth and expansion phases of the business. There is a limit beyond which it is almost impossible for partners to collect capital. This limit is generally up to the personal properties of the partners.
Unlimited liability: Unlimited liability discourages partners to undertake risky ventures, and therefore, their risk-taking initiative is very risky.
Merits of Partnership
It is easy to set up.
It has more capital, which can be brought into the business.
Partners brings new skills and ideas to a business.
Decision-making can be much easier with more brains to think about a problem.
Partners share responsibilities and duties of the business.
Division of labour is possible as partners may have different skills.
Limitations of Partnership
There is an unlimited liability: All the partners are responsible for the debts of the firm and if the business goes bankrupt, all the partners will have to clear the debts even if they have to sell off their personal belongings.
Disagreement among the partners can lead to problems for the business.
There is a limit to the capital invested. Because of the fact that maximum 20 members are allowed, the business may find it difficult to expand after a certain limit.
There is no continuity of existence. Partnership is dissolved if one of the partners die or resigns or becomes bankrupt.
Q.3 Discuss the characteristics, merits and limitations of the cooperative form of organization. Also describe briefly different types of cooperative societies. Answer: It is important to choose an appropriate form of organization as it will determine: 1. Extent of control; 2. Extent of liability; 3. Availability of resources; 4. Legal formalities. All these in turn will determine profits of the business. Different types of cooperative societies are explained below:
Producer’s cooperative societies: The producer’s cooperatives are established by the small producers. The members of the society produce goods in their houses or at common place. The raw materials, tools, money, etc. are provided to them by the society. The output is collected by the society and sold in the market at the wholesale rate. The profit is distributed among the members in proportion to the goods supplied by each member.
Consumer’s cooperative societies: Consumer’s cooperative societies are established to remove middlemen from the field of trade. These societies purchase foods at the wholesale prices and sell these goods to the members at cheaper rates than the market prices. However, the goods are sold to the non-members at the market rates. The profit, if any, is distributed among the members in the shape of bonus according to their purchase ratio.
Marketing cooperative societies: The marketing cooperative societies are formed by the small producers for the promotion of trade. The two main objectives of these societies are, to sell the good at reasonable prices by eliminating middlemen and to make there ready for the product of the member. These types of societies are formed by the small agriculturalist and artisans. These societies collect the products of its members and make its grading and keep them in warehouses and sell them in the market at whole sale rate when the market is ready for these products. The profit is distributed among the members according to the ratio of goods supplied by them.
Credit cooperative societies: These cooperative societies are formed for the financial help of the members. These societies provide loans to the members at low rate of interest. In rural areas these provide loans to the farmers for the purchase of seeds, fertilizers and cattle. In urban areas these societies provide loan to its members for the purchase of raw materials and tools.
Farming cooperative societies: These societies are formed by the small agriculturalist to get the benefits of large scale farming. These societies provide help to the farmer for the improve method of cultivations by providing large scale farming tools such as tractors, threshers and harvesters, etc.
Housing cooperative societies: These societies are formed for the procurement of land for the construction of houses on a homogeneous basis. These societies are formed by those members who are intended to construct their own home. These societies provide loan to the members for the construction of houses. These also purchase construction materials in bulk and provide this material to its member at cheaper rates.
Q.4 Distinguish between a Joint Hindu family business and partnership. Answer: Differences between Joint Hindu family systems and sole proprietorship are given below:
Regulating law: A partnership is governed by the provisions of the Indian Partnership Act, 1932. A Joint Hindu family business is governed by the principles of Hindu law.
Mode of creation: A partnership arises out of a contract, whereas a Joint Hindu family business arises by the operation of law and is not the result of a contract.
Admission of new members: In a partnership no new partner is admitted without the consent of all the partners, while in the case of a Joint Hindu family firm, a new member is admitted just by birth.
The position of families: In a partnership women can be full-fledged partners, while in a Joint Hindu family business membership is restricted to male members only. After the passage of the Hindu Succession Act, 1956, families get only co-sharer’s interest at the death of a coparcener and they do not become coparceners themselves.
Number of members: In partnership the maximum limit of partners is 10 for banking business and 20 for any other business, but there is no such maximum limit of members in the case of Joint Hindu Family business.
Liability of members: In partnership, the liability of the partners is joint and several as well as unlimited. In other words, each partner is personally and jointly liable to an unlimited extent and if partnership liabilities cannot be fully discharged out of the partnership property each partner’s separate personal property is liable for the debts of the firm.
In a Joint Hindu family business, only the ‘Karta’ is personally liable to an unlimited extent, i.e., his self-acquired or other separate property besides his share in the joint family property is liable, for debts contracted on behalf of the family business.
Q.5 Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organization. Why? Answer: Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organization because of following merits:
Easy to start and close: It can be easily started and closed without any legal formalities.
Quick decision making: As sole trader is not required to consult or inform anybody about his decisions.
Secrecy: He is not expected to share his business decisions and secrets with anybody.
Direct incentive: Direct relationship between efforts and reward provide incentive to the sole trader to work hard.
Personal touch: The sole trader can maintain personal contacts with his customers and employees.
Social utility: It provides employment to persons with limited money who are not interested to work under others. It prevents concentration of wealth in a few hands.
Q.6 What do you mean by incorporation of a company? What are the steps involved in corporation of a company? Answer: Incorporation of the company: It means registration of the company under Companies Act, 1956. The second stage involves the following steps:
Filling of documents: An application to the registrar for incorporation must be accompanied with following documents:
Memorandum of Association;
Articles of Association or statement in lieu of the prospectus (in case table A is adopted by public limited company);
Written consent of proposed directors;
Agreement (if any) with proposed managing director, manager, etc.;
Copy of registrar’s letter approving the company’s name;
Statutory declaration;
Notice of the exact address of the registered office.
Payment of fees: Along with the above documents, necessary fees is to be paid.
Certificate of incorporation: The registrar issues a certificate of incorporation after being satisfied. Certificate is a conclusive evidence of regularity of incorporation of a company irrespective of any deficiency in its registration.
Q.7 Explain different types of partners. Answer: Different types of partners are given below:
General/Active Partner: Such a partner takes active part in the management of the firm.
Sleeping of Dormant Partner: Although he does not take active part in the management of the firm, he invests money, shares profit and loss, has unlimited liability.
Secret Partner: He participates in business secretly without disclosing his association with the firm to general public. His liability is also unlimited.
Nominal Partner: Such a partner only gives his name and goodwill to the firm. He neither invests money nor takes profit. But his liability is unlimited.
Partner by Estoppels: He is the one who by his words or conduct gives impression to the outside world that he is a partner of the firm whereas actually he is not. His liability is unlimited towards the third party who has entered into dealing with firm on the basis of his pretension.
Partner by Holding out: He is the one who is falsely declared partner of the firm whereas actually he is not. And even after becoming aware of it, he does not deny it. His liability is unlimited towards the party who has dealt it with firm on the basis of this declaration.
Q.8 Explain meaning, features, merits and demerits of Sole Proprietorship. Answer: Sole Proprietorship means a business owned, financed and controlled by a single person who is recipient of all profits and bearer of all risks. It is suitable in areas of personalized services like beauty parlour, hair cutting saloons and small scale activities like retail shops. Features:
Single Ownership: It is wholly owned by one individual.
Control: Sole proprietor has full power of decision making.
No Separate legal entity: Business and businessman are not separate entities in the eyes of law.
Unlimited liability: The liability of owner is unlimited. In case the assets of business are not sufficient to meet its debts, the personal property of owner can be used for paying debts.
No legal formalities: No legal formalities are required to start, manage and dissolve such business organization.
Sole risk bearer and profit recipient: He bears the complete risk and there is nobody to share profit / loss with him.
Merits:
Easy to start and close: It can be easily started and closed without any legal formalities.
Quick decision making: As sole owner is not required to consult or inform anybody about his decisions.
Secrecy: He is not expected to share his business decisions and secrets with anybody.
Direct incentive: Direct relationship between efforts and reward provide incentive to the sole trader to work hard.
Personal touch: The sole trader can maintain personal contacts with his customers and employees.
Social utility: It provides employment to persons with limited money who are not interested to work under others. It prevents concentration of wealth in a few hands.
Limitations:
Limited financial resources: Funds are limited to the owner’s personal savings and his borrowing capacity.
Limited managerial ability: Sole trader can’t be good in all aspects of business and he can’t afford to employ experts also.
Unlimited liability: Unlimited liability of sole trader compels him to avoid risky and bold business decisions.
Uncertain life: Death, insolvency, lunacy or illness of a proprietor affects the business and can lead to its closure.
Limited scope for expansion: Due to limited capital and managerial skills, it cannot expand to a large scale.
Q.9 Explain meaning, features, merits and demerits of partnership firm. Answer: Partnership is a voluntary association of two or more persons who agree to carry on some business jointly and share its profits and losses. The partnership was evolved to overcome the shortcomings of sole proprietorship and Joint Hindu Family business. Features:
Two or more persons: There must be at least two persons to form a partnership. The maximum number of persons is 10 in banking business and 20 in non-banking business.
Agreement: It is an outcome of an agreement among partners which may be oral or in writing.
Lawful business: It can be formed only for the purpose of carrying on some lawful business.
Decision making and control: Every partner has a right to participate in management and decision making of the organization.
Unlimited liability: Partners have unlimited liability.
Mutual agency: Every partner is an implied agent of the other partners and of the firm. Every partner is liable for acts performed by other partners on behalf of the firm.
Lack of continuity: Firms existence is affected by the death, lunacy and insolvency of any of its partner. It suffers from lack of continuity.
Merits:
Ease of formation and closure: It can be easily formed. Only an agreement among the partners is required.
Larger financial resources: There are more funds as capital is contributed by number of partners.
Balanced decisions: As decisions are taken jointly by partners after consulting each other.
Sharing of risks: In it, risk gets distributed among partners which reduces anxiety, burden and stress on individual partner.
Secrecy: Secrecy can be easily maintained about business affairs as they are not required to publish their accounts or to file any report to the government.
Limitations:
Limited resources: There is a restriction on the number of partners and hence capital contributed by them is also limited.
Unlimited liability: The liability of partners is unlimited and they are liable individually as well as jointly. It may prove to be a big drawback for those partners who have greater personal wealth. They will have to repay the entire debt in case the other partners are unable to do so.
Lack of continuity: Partnership comes to an end with the death, retirement, insolvency or lunacy of any of its partners.
Lack of public confidence: Partnership firms are not required to publish their reports and accounts. Thus they lack public confidence.
Q.10 Explain meaning, features, merits and demerits of joint stock company. Answer: Joint stock company is a voluntary association of persons having a separate legal existence, perpetual succession and common seal. Its capital is divided into transferable shares. Features:
Separate legal existence: It is created by law and it is a distinct legal entity independent of its members. It can own property, enter into contracts, can file suits in its own name.
Perpetual existence: Death, insolvency and insanity or change of members has no effect on the life of a company. It can come to an end only through the prescribed legal procedure.
Limited Liability: The liability of every member is limited to the nominal value of the shares bought by him or to the amount, guaranteed by him.
Transferability of shares: Shares of public company are easily transferable. But there are certain restrictions on transfer of share of private company.
Common seal: It is the official signature of the company and it is affixed on all important documents of company.
Separation of ownership and control: Management of company is in the hands of elected representatives of shareholders known individually as director and collectively as board of directors.
Merits:
Limited liability: Limited liability of shareholders reduces the degree of risk borne by him.
Transfer of Interest: Easy transferability of shares increases the attractiveness of shares for investment.
Perpetual existence: Existence of a company is not affected by the death, insanity, insolvency of member or change of membership. Company can be liquidated only as per the provisions of companies Act.
Scope for expansion: A company can collect huge amount of capital from unlimited number of members who are ready to invest because of limited liability, easy transferability and chances of high return.
Professional management: A company can afford to employ highly qualified experts in different areas of business management.
Limitations:
Legal formalities: The procedure of formation of company is very long, time consuming, expensive and requires lot of legal formalities to be fulfilled.
Lack of secrecy: It is very difficult to maintain secrecy in case of public company, as company is required to publish and file its annual accounts and reports.
Lack of motivation: Divorce between ownership and control and absence of a direct link between efforts and reward lead to lack of personal interest and incentive.
Delay in decision making: Red tapism and bureaucracy do not permit quick decisions and prompt actions. There is little scope for personal initiative.
Oligarchic management: Company is said to be democratically managed but actually managed by a few people i.e., Board of Directors. Sometimes they take decisions keeping in mind their personal interests and benefit, ignoring the interests of Shareholders and company.
Q.11 Explain the meaning, features, merits and demerits of cooperative society. Answer: A cooperative society is a voluntary association of persons of moderate means, who unite together to protect and promote their common economic interests. Features:
Voluntary association: Everyone having a common interest is free to join a cooperative society and can also leave the society after giving proper notice.
Legal status: Its registration is compulsory and it gives it a separate identity.
Limited liability: The liability of the member is limited to the extent of their capital contribution in the society.
Democratic control: Management and control lies with the managing committee elected by the members by giving vote. Every member has one vote irrespective of the number of shares held by him.
Service motive: The main aim is to serve its members and not to maximize the profit.
State control: They have to abide by the rules and regulations framed by government for them.
Distribution of surplus: The profit is distributed on the basis of volume of business transacted by a member and not on the basis of capital contribution of members.
Merits:
Ease of formation: It can be started with minimum of 10 members. Registration is also easy as it requires very few legal formalities.
Limited liability: The liability of members is limited to the extent of their capital contribution.
Stable existence: Due to registration it is a separate legal entity and is not affected by death, lunacy or insolvency of any of its members.
Economy in operations: There is economy in operation due to elimination of middle man and voluntary services provided by its members.
Government support: Government provides support by giving loans at lower interest rates, subsidies and by charging less taxes.
Social utility: It promotes personal liberty, social justice and mutual cooperation. They help to prevent concentration of economic power in a few hands.
Limitations:
Shortage of capital: It suffers from shortage of capital as it is usually formed by people with limited means.
Inefficient management: Cooperative society is managed by elected members who may not be competent and experienced. Moreover it can’t afford to employ expert and experienced people at high salaries.
Lack of motivation: Members are not inclined to put their best efforts as there is no direct link between efforts and reward.
Lack of secrecy: Its affairs are openly discussed in its meeting which makes it difficult to maintain secrecy.
Excessive government control: It suffers from excessive rules and regulations of the government. It has to get its accounts audited by the auditor and has to submit a copy of its accounts to registrar.
Conflict among members: The members are from different sections of society with different view points. Sometimes when some members become rigid, the result is conflict.
Q.12 Explain different types of partners. Answer: The different kinds of partners that are found in partnership firms are as follows:
Active or managing partner: A person who takes active interest in the conduct and management of the business of the firm is known as active or managing partner. He carries on business on behalf of the other partners. If he wants to retire, he has to give a public notice of his retirement; otherwise he will continue to be liable for the acts of the firm.
Sleeping or dormant partner: A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in the management of the business. Such a partner only contributes to the share capital of the firm, is bound by the activities of other partners, and shares the profits and losses of the business. A sleeping partner, unlike an active partner, is not required to give a public notice of his retirement. As such, he will not be liable to third parties for the acts done after his retirement.
Nominal or ostensible partner: A nominal partner is one who does not have any real interest in the business but lends his name to the firm, without any capital contributions, and doesn’t share the profits of the business. He also does not usually have a voice in the management of the business of the firm, but he is liable to outsiders as an actual partner.
Partner by estoppel or holding out: If a person, by his words or conduct, holds out to another that he is a partner, he will be stopped from denying that he is not a partner. The person who thus becomes liable to third parties to pay the debts of the firm is known as a holding out partner. There are two essential conditions for the principle of holding out : (a) The person to be held out must have made the representation, by words written or spoken or by conduct, that he was a partner ; and (b) The other party must prove that he had knowledge of the representation and acted on it, for instance, gave the credit.
Partner in profits only: When a partner agrees with the others that he would only share the profits of the firm and would not be liable for its losses, he will own as partner in profits only.
Minor as a partner: A partnership is created by an agreement. And if a partner is incapable of entering into a contract, he cannot become a partner. Thus, at the time of creation of a firm a minor (i.e., a person who has not attained the age of 18 years) cannot be one of the parties to the contract. But under section 30 of the Indian Partnership Act, 1932, a minor ‘can be admitted to the benefits of partnership, with the consent of all partners. A minor partner is entitled to his share of profits and to have access to the accounts of the firm for purposes of inspection and copy. He, however, cannot file a suit against the partners of the firm for his share of profit and property as long as he remains with the firm. His liability in the firm will be limited to the extent of his share in the firm, and his private property cannot be attached by creditors. On his attaining majority, he has to decide within six months whether he will remain regular partner or withdraw himself from partnership. The choice in either case is to be intimated through a public notice, failing which he will be treated to have decided to continue as a partner, and he becomes personally liable like other partners for all the debts and obligations of the firm from the date of his admission to its benefits (and not from the date of his attaining the age of majority). He also becomes entitled to file a suit against other partners for his share of profit and property.
Other partners: In partnership firms, several other types of partners are also found, namely, secret partner who does not want to disclose his relationship with the firm to the general public. Outgoing partner, who retires voluntarily without causing dissolution of the firm, limited partner who is liable only up to the value of his capital contributions in the firm, and the like.
Q.1. List any five major commercial cities of ancient India?
ANSWER: Port towns, manufacturing towns, mercantile towns, the religious centre, and pilgrimage towns were all present. Their existence is a barometer of merchant communities’ and professional classes’ success. In ancient India, the following were the most important trade centres:
1. Pataliputra: Today, it is known as Patna. It was not just a commercial centre, but also a major stone export hub.
2. Peshawar: It was a major centre for the export of wool and the import of horses. In the first century A.D., it played a significant role in trade dealings between India, China, and Rome.
3. Taxila: It was a crucial crossroads on the important land route connecting India and Central Asia. It was also a financial and commercial banking centre. As a Buddhist learning centre, the city held a significant position. Here, the illustrious Taxila University blossomed.
4. Indraprastha: It was the royal road’s commercial intersection, where most east-west, south-south, and north-south routes intersected.
5. Mathura: It was a trading emporium, and the people here lived off it. Mathura and Broach were visited by many routes from South India.
Q.2. What is Hundi?
ANSWER: The hundi was a popular form of currency in the Indian subcontinent. It involved a contract that —
(i) guaranteed the payment of money, the unconditional promise or order
(ii) might be changed through proper negotiation.
As practiced by Indian merchant communities, the Hundi is as follows:
Name of Hundi
Broader Classification
Functions of Hundi
Dhani-jog
Darshani
There is no obligation for who receives payment if it is made to anyone.
Sah-jog
Darshani
Payable to a certain individual, someone who is ‘respectable.’ For who is responsible for who received payment.
Firman-jog
Darshani
Order a hundi and make it payment to the person who placed the order.
Dekhanhar
Darshani
Payable to the bearer or presenter
Dhani-jog
Muddati
Payable to anyone—no responsibility for who received payment, but payment over a set period.
Firman-jog
Muddati
Following a set term, a hundi is made payable to order.
Jokhmi
Muddati
Drawn in opposition to items that have been shipped. If things are lost in transit, the drawer or holder is responsible for the costs, and the Drawee is not responsible.
Q.3. List the major exports and imports in ancient India.
ANSWER: Ancient India’s major exports were spices, wheat, sugar, indigo, opium, sesame oil, cotton, parrot, live animals, and animal products—hides, skin, furs, horns, tortoise shells, pearls, sapphires, quartz, crystal, lapis, lazuli, granites, turquoise and copper etc. Major Imports in ancient India were of horses, animal products, Chinese silk, flax and linen, wine, gold, silver, tin, copper, lead, rubies, coral, glass, amber, etc.
Q.4. What were the different types of Hundi in use by traders in ancient times?
ANSWER:The different types of Hundi are given below:
Name of Hundi
Broader Classification
Functions of Hundi
Dhani-jog
Darshani
There is no obligation for who receives payment if it is made to anyone.
Sah-jog
Darshani
Payable to a certain individual, someone who is ‘respectable.’ For who is responsible for who received payment.
Firman-jog
Darshani
Order a hundi and make it payment to the person who placed the order.
Dekhanhar
Darshani
Payable to the bearer or presenter
Dhani-jog
Muddati
Payable to anyone—no responsibility for who received payment, but payment over a set period.
Firman-jog
Muddati
Following a set term, a hundi is made payable to order.
Jokhmi
Muddati
Drawn in opposition to items that have been shipped. If things are lost in transit, the drawer or holder is responsible for the costs, and the Drawee is not responsible.
Q.5. What do you understand by maritime trade?
ANSWER: Ancient periods saw a lot of travel by land and water. Both land and water were used to maintain trade. Maritime trade refers to trading that takes place over water. Another key aspect of the global commerce network was maritime trade. Muziris is located on the Malabar Coast, which has a long history of international marine trade dating back to the Roman Empire.
Pepper was highly prized throughout the Roman Empire, and it was dubbed “Black Gold.” For centuries, the battle to control the route for this trade has been a source of rivalry and conflict between numerous empires and trading powers. The desire for an alternative route to India for spices led to Columbus’ discovery of America in the late 15th century, as well as Vasco da Gama’s arrival on the Malabar coast in 1498.
Calicut was such a thriving marketplace that Chinese ships came to buy products from the Middle East, such as essential oil and myrrh (fragrant resin used in perfumes and medicines), as well as pepper, diamonds, pearls, and cotton from India. Pulicat was a prominent port on the Coromandel Coast in the 17th century. Pulicat’s primary export to Southeast Asia was textiles.
Q.6. State the different types of economic activities.
ANSWER: Economic activities are those that allow us to earn a living. A worker at a factory, a doctor in his clinic, a manager in an office, and a teacher teaching in a school, for example, are all involved in economic activities to support their families. Economic activities are further split into three categories: business, profession, and employment.
Q.7 Why is business considered as economic activity?
ANSWER: The word ‘business’ comes from the word ‘busy.’ As a result, doing business entails being busy. In a more precise meaning, business refers to an occupation in which people routinely engage in activities linked to the purchase, manufacture, and/or selling of goods and services with the goal of making money.
The activity could include the production or purchase of items for resale, as well as the exchange of goods or the provision of services to meet the needs of others. People in every culture engage in a variety of activities to meet their requirements. These activities can be divided into two categories – economic and non-economic.
Economic activities are those that allow us to earn a living, whereas noneconomic activities are those that are done out of love, sympathy, feeling, patriotism, and other emotions. A factory worker, a doctor working in a clinic, a manager working in an office, and a teacher teaching in a school, for example, are all performing their jobs to make a living and are thus involved in economic activity. A woman preparing meals for her family or a boy assisting an elderly man across the street, on the other hand, are engaging in non-economic tasks because they are doing it out of love or sympathy. Business, professions, and employment are the three types of economic activity.
Business is classified as an economic activity since it is carried out with the goal of making money or sustaining one’s living, rather than out of love, affection, pity, or any other emotion. It should be noted that this activity can be carried out on a small, individual basis (e.g., purchase and sale by a shopkeeper) or on a larger, more formal, and organised size (e.g., purchase and sale by a cooperative society or enterprise).
Q.8. State the meaning of business.
ANSWER:The word ‘business’ comes from the word ‘busy.’ As a result, doing business entails being busy. In a more precise meaning, business refers to an occupation in which people routinely engage in activities linked to the purchase, manufacture, and/or selling of goods and services with the goal of making money. The activity could include the production or purchase of items for resale, as well as the exchange of goods or the provision of services to meet the needs of others.
Q.9. How would you classify business activities?
ANSWER: Business activities can be divided into two categories: economic and non-economic.
Economic activities are those that allow us to earn a living, whereas non-economic activities are those that are done out of love, sympathy, feeling, patriotism, and other emotions. A factory worker, a doctor working in a clinic, a manager working in an office, and a teacher teaching in a school, for example, are all performing their jobs to make a living and are thus involved in economic activity. Business, professions, and employment are the three types of economic activity that can be classified. A woman preparing meals for her family or a boy assisting an elderly man in crossing the street, on the other hand, are engaging in non-economic tasks since they are doing it out of love or sympathy.
Q.10. What are the various types of industries?
ANSWER:The various types of industries are given below:
Primary
This category includes all activities involving the extraction and production of natural resources, as well as the reproduction and growth of living beings, plants, and other living things.
Secondary
These are concerned with the use of materials that have previously been extracted in their raw form. These businesses process such materials to create goods for end users or for further processing by other businesses.
Tertiary
These are responsible for providing support services to main and secondary industries, as well as trade-related operations.
Q.11. Explain any two business activities which auxiliaries to trade are.
ANSWER: The following are two business activities that are related to trade:
1. Transport and Communication: Most items are produced in specific locations. For example, tea is primarily produced in Assam; cotton is primarily produced in Gujarat and Maharashtra; jute is primarily produced in West Bengal and Odisha; sugar is primarily produced in Uttar Pradesh, Bihar, and Maharashtra, and so on. These items, on the other hand, are required for consumption in various sections of the country. Transport, whether by road, rail, or coastal ships, removes the geographical barrier. Transport supports the movement of raw materials to manufacturing facilities and completed goods from manufacturers to consumer locations. Along with transportation, communication facilities are required so that producers, traders, and consumers may share information with one another. As a result, mail services and telephone services can be considered auxiliaries to commercial activity.
2. Banking and Finance: Business activities cannot be carried out without finances are available for the acquisition of assets, the purchase of raw materials, and other costs. Businessmen can receive necessary funds from a bank. As a result, banking assists businesses in overcoming their financial challenges. Overdraft and cash credit facilities, loans, and advances are common ways for commercial banks to lend money. Banks also handle cheque collection, transmission of payments to other locations, and bill discounting on behalf of traders. Commercial banks assist exporters in collecting money from importers in international trade. Commercial Banks also assist company promoters in raising funds from the public.
Q.12. What is the role of profit in business?
ANSWER: A business’s starting point is an objective. Every firm has a set of goals that it strives to attain. The things that businesspeople seek in return for what they do are referred to as objectives. The widespread perception is that business is conducted solely for profit. Every business is stated to be an attempt by businesspeople to make more money than they have spent or invested, or, in other words, to make profit, which is the difference between revenue and cost. Although profit cannot be the sole goal of a firm, its significance cannot be overlooked.
Every firm is an endeavour to earn more money than it has invested, and profit is the difference between revenue and cost. Profit may be a critical corporate goal for a variety of reasons:
• It is a source of revenue for entrepreneurs.
• It can provide a source of funding for a company’s expansion needs.
• It denotes the smooth operation of a business
• It might be interpreted as society’s endorsement of business’s utility.
• It helps to establish a company’s reputation.
Q.13. What is business risk? What is its nature?
ANSWER:The term “business risks” refers to the probability of low profits or even losses because of unknowns or unforeseeable events. Demand for a particular product, for example, may fall due to changes in consumer tastes and preferences or more competition from other providers. Longer sales and profits derive from lower demand. In another scenario, a scarcity of raw materials on the market could drive up the price. The company that uses these raw materials will have to pay extra for them. As a result, production costs may rise, thereby lowering earnings. Speculative and pure risk are two forms of risk that businesses confront on a regular basis. Speculative hazards include both the potential for profit and the potential for loss. Speculative risks develop because of changes in market conditions, such as fluctuations in demand and supply, price adjustments, or changes in client fashion and tastes. Market conditions that are favourable are more likely to result in gains, while those that are unfavourable are more likely to result in losses. Pure risks only have two outcomes: loss or no loss. Pure dangers include the possibility of fire, theft, or strike. Its occurrence may cause loss, whereas their absence may explain the absence of loss rather than gain. The following are the types of business risks:
1. Uncertainty creates business risks.
2. Risk is a necessary component of any business.
3. The degree of risk is mostly determined by the nature and size of the firm.
4. Profit is the payoff for taking risks.
2. Peshawar: It was a major centre for the export of wool and the import of horses. In the first century A.D., it played a significant role in trade dealings between India, China, and Rome.
3. Taxila: It was a crucial crossroads on the important land route connecting India and Central Asia. It was also a financial and commercial banking centre. As a Buddhist learning centre, the city held a significant position. Here, the illustrious Taxila University blossomed.
4. Indraprastha: It was the royal road’s commercial intersection, where most east-west, south-south, and north-south routes intersected.
5. Mathura: It was a trading emporium, and the people here lived off it. Mathura and Broach were visited by many routes from South Indian.
Long Answers Questions
Q.1. Discuss the development of indigenous banking system in Indian subcontinent.
ANSWER:The term “business risks” refers to the probability of low profits or even losses because of unknowns or unforeseeable events. Demand for a particular product, for example, may fall due to changes in consumer tastes and preferences or more competition from other providers. Longer sales and profits derive from lower demand. In another scenario, a scarcity of raw materials on the market could drive up the price. The company that uses these raw materials will have to pay extra for them. As a result, production costs may rise, thereby lowering earnings. Speculative and pure risk are two forms of risk that businesses confront on a regular basis. Speculative hazards include both the potential for profit and the potential for loss. Speculative risks develop because of changes in market conditions, such as fluctuations in demand and supply, price adjustments, or changes in client fashion and tastes. Market conditions that are favourable are more likely to result in gains, while those that are unfavourable are more likely to result in losses. Pure risks only have two outcomes: loss or no loss. Pure dangers include the possibility of fire, theft, or strike. Its occurrence may cause loss, whereas their absence may explain the absence of loss rather than gain. The following are the types of business risks: In ancient times, trade and commerce played a critical part in establishing India as a prominent economic player. In the third millennium B.C., commercial centres such as Harappa and Mohenjodaro were created. The civilisation established trade relations with Mesopotamia, trading gold, silver, copper, colourful gemstones, beads, pearls, seashells, terracotta pots, and other items. Metals thus began to supplement other commodities as money as economic life advanced due to their durability and divisibility. The advent of metallic money and its use stimulated economic activities because money acted as a means of exchange. Hundi and Chitti documents were used to carry out transactions in which money was transmitted from one person to another. The hundi was a popular form of currency in the Indian subcontinent. There was a contract involved which
(i) guarantee the unconditional payment of money, commitment, or order
(ii) People began to deposit precious metals with lending individuals acting as bankers or Seths as banking developed, and money became a vehicle for providing producers with a way of manufacturing more things. Credit transactions and the availability of loans and advances made business operations easier. The Indian subcontinent reaped the benefits of a favourable trade balance, with exports outnumbering imports by huge margins, and the indigenous banking system providing additional capital funding for expansion and development to manufacturers, traders, and merchants. Agricultural banks provide both short- and long-term loans to finance agriculturists. Commercial and industrial banks later arose to finance trade and commerce.
Q.2. Define business. Describe its important characteristics.
ANSWER: Business activities can be divided into two categories: economic and non-economic. The word ‘business’ comes from the word ‘busy.’ As a result, doing business entails being busy. In a more precise meaning, business refers to an occupation in which people routinely engage in activities linked to the purchase, manufacture, and/or selling of goods and services with the goal of making money. The activity could include the production or purchase of items for resale, as well as the exchange of goods or the provision of services to meet the needs of others.
• Production or procurement of goods and services: Business enterprises must either manufacture or buy commodities before they can be provided to the public for consumption. As a result, every commercial company either manufactures or purchases the goods it sells from producers to resell to consumers or users. Consumable commodities, such as sugar, ghee, pen, notebook, and so on, or capital goods, such as machinery, furniture, and so on, are examples of goods. Transportation, banking, energy, and other services are examples of services provided to consumers, businesses, and organizations.
• Sale or exchange of goods and services: Business involves the transfer or exchange of commodities and services for a monetary value, whether directly or indirectly. It cannot be deemed a business activity if things are created for personal consumption rather than for sale. Cooking food for the family at home is not a business but cooking meals at a restaurant and selling it to others is. As a result, one of the most important characteristics of a business is the sale or exchange of goods or services between the seller and the customer.
• Dealings in goods and services on a regular basis: Dealings in commodities or services on a regular basis are a part of business. As a result, a single sale or buy does not constitute a commercial transaction. It will not be deemed a business activity if a person sells his or her household radio set for a profit. However, if someone sells radio sets on a regular basis, whether through a shop or from his home, it will be considered a business activity.
• Profit earning: One of the primary goals of a business is to generate profit. Without profit, no company can last long. As a result, businesspeople make every attempt to maximize earnings, whether by boosting sales volume or cutting costs.
• Uncertainty of return: The lack of knowledge about the amount of money that the business will generate in a certain period is referred to as uncertainty of return. Every firm invests money to conduct its operations to make a profit. It’s not possible to predict how much money will be made. Furthermore, despite the best efforts put into the firm, there is always the chance of losses.
• Element of risk: The uncertainty associated with a loss exposure is known as risk. It is brought on by a negative or unfavourable occurrence. Changes in consumer taste as well as fashion, changes in production methods, workplace strikes or lockouts, increasing market competition, fire, theft, accidents, natural calamities, and so on are all risk factors. Risks are generally considered as an unavoidable part of doing business.
Q.3. Compare business with profession and employment.
ANSWER: Business activities can be divided into two categories: economic and non-economic. The difference between business, profession and employment is given below:
Basic
Business
Profession
Employment
Mode of Establishment
If necessary, the decision of the entrepreneur and other legal formalities
Membership in a professional organisation and a practice certificate
Letter of appointment and service agreement
Nature of Work
supplying goods and services to the public
Personalized, competent services are provided.
Performing work in accordance with a service contract or service rules
Qualification
No minimum qualification is Necessary
Qualifications, expertise, and training in a particular field, as stipulated by the professional body, are required.
Employer-mandated qualifications and training are required.
Reward or Return
Earned profit
Fees for professionals
Wages or salary
Capital Investment
Capital investment is necessary based on the size and nature of the company.
Capital investment is necessary based on the size and nature of the company.
There is no capitalization required
Risk
Profits are unpredictable and sporadic, and there is a risk involved.
Fees are normally consistent and predictable; nonetheless, there is some risk.
Fixed and consistent pay; no or minimal risk
Transfer of Interest
With some formalities, a transfer is doable.
It is not possible.
It is not possible.
Code of Conduct
There is no established code of conduct.
It is necessary to adhere to a professional code of behaviour.
Employer-established standards of conduct must be followed.
Example
Shop, factory, etc
Legal, medical profession, Chartered accountancy, etc
Q.4. Define Industry. Explain various types of industries giving examples.
ANSWER: Business activities can be divided into two categories: economic and non-economic. The term “industry” refers to economic operations that involve the conversion of raw materials into usable items.
In general, the term “industry” refers to tasks using mechanical devices and technical expertise. These include activities such as manufacturing and processing items, as well as animal breeding and raising. The term “industry” can also refer to groups of businesses that produce comparable or related commodities. Cotton textile industry, for example, refers to all production units that produce cotton textile goods.
Primary
This category includes all activities involving the extraction and production of natural resources, as well as the reproduction and growth of living beings, plants, and other living things. They are split into the following categories:
Extractive Industries: These businesses take items from natural sources and extract them. Extractive industries provide some essential raw materials, which are primarily geographical or natural environment goods. Manufacturing industries frequently transform these industries’ products into a variety of other valuable commodities. Farming, mining, lumbering, hunting, and fishing are all important extractive industries.
Genetic Industries: These businesses are in the business of raising plants and animals for use in reproduction. Genetic industries include seed and nursery enterprises, for example. Furthermore, the activities of cattle breeding farms, poultry farms, and fish hatcheries are all subject to genetic regulation.
Secondary
These are concerned with the use of materials that have previously been extracted in their raw form. These businesses process such materials to create goods for end users or for further processing by other businesses. Secondary industries can be further classified into the following categories:
Manufacturing Industries: These businesses produce things by processing raw materials and converting them into finished goods. Through the conversion of raw materials or partially finished materials in their manufacturing activities, they produce a variety of finished products that we consume or use.
Construction Industries: These businesses are involved in the construction of structures such as buildings, dams, bridges, roads, tunnels, and canals. In construction, engineering and architectural skills are crucial.
Tertiary
These are responsible for providing support services to main and secondary industries, as well as trade-related operations.
Service facilities are provided by these industries.
As business operations, these could be regarded part of commerce because they support trade as auxiliaries. Transportation, banking, insurance, warehousing, communication, packaging, and advertising are all included in this area.
Q.5. Describe the activities relating to commerce.
ANSWER: Business activities can be divided into two categories: economic and non-economic. : There are two sorts of commerce activities: (i) trade and (ii) trade auxiliaries. Trade is defined as the buying and selling of products. However, several activities are required to make the buying and sale of commodities easier.
• Trade
Trade is an important aspect of business. It is the act of selling, transferring, or exchanging goods. It aids in the distribution of items generated to consumers or users.
Trade can be divided into two categories: internal and external.
Internal, domestic, or home trade refers to the purchasing and selling of goods and services within a country’s geographical borders.
The exchange of products as well as services between individuals or organisations operating in two or more countries is known as external or foreign trade.
• Auxiliaries to Trade
Auxiliaries to trade are activities that are designed to help with trade. Auxiliaries are an important aspect of business in general and trade.
These actions aid in the removal of numerous roadblocks that develop in the manufacture and distribution of goods. Auxiliaries to trade are explored briefly below:
1. Transport and Communication:
Most items are produced in specific locations. Transport supports the movement of raw materials to manufacturing facilities and completed goods from manufacturers to consumer locations. Producers, traders, and consumers can communicate with one another through communication facilities.
2. Banking and Finance: Business activities cannot be carried out without finances available for the acquisition of assets, the purchase of raw materials, and other costs. Businessmen can receive necessary funds from a bank. As a result, banking assists businesses in overcoming their financial challenges. Overdraft and cash credit facilities, loans, and advances are common ways for commercial banks to lend money. Banks also handle cheque collection, transmission of payments to other locations, and bill discounting on behalf of traders.
3. Insurance: Business entails a variety of hazards. The factory structure, machinery, and furnishings, among other things, must be safeguarded from fire, theft, and other threats. Material and goods in storage or in transportation are at danger of being lost or damaged.
Employees must also be protected from the dangers of accidents and occupational hazards. All these situations are covered by insurance.
4. Warehousing: Typically, things are not sold or consumed just after they are manufactured. They are kept in stock so that they can be used as needed. To avoid loss or damage, certain arrangements must be established for the storage of items. Warehousing aids businesses in overcoming storage issues and ensuring that items are available when needed.
5. Advertising: Advertising is one of the most effective ways to promote the sale of things, especially consumer goods such as electronics and automobiles, as well as soaps and detergents. Producers and traders are essentially unable to contact each customer. As a result, information about the goods and services available, their features, price, and so on must reach potential purchasers to promote sales.
Q.6. Explain any five objectives of business.
ANSWER: Business activities can be divided into two categories: economic and non-economic. The following are the business objectives:
1. Position on the market: The position of a company in the market in respect to its competitors is referred to as market standing. A company’s goal should be to establish a better position in terms of providing competitive products to customers and satisfying their needs.
2. Innovation: The introduction of new ideas or procedures into the way something is done or created is known as innovation. In any firm, there are two types of innovation.
(i) product or service innovation
(ii) product and service supply chain innovation in a variety of skills and activities. In a competitive environment, no firm can survive without innovation.
As a result, innovation becomes a critical goal.
3. Productivity: The value of output is compared to the value of inputs to determine productivity. It’s a metric for determining efficiency. To ensure long-term survival and success, every business must strive for increased productivity by making the best use of existing resources.
4. Physical and financial resources: Physical resources, such as plants, machinery, and offices, as well as financial resources, such as capital, are required for any firm to manufacture and sell goods and services to its consumers. The goal for the commercial enterprise should be to acquire these resources in accordance with their needs and to put them to good use.
5. Earning profits: Businesses run with a motive to earn profits on the capital which has been employed. If we talk about profitability, it refers to profit in relation to capital which is invested. A reasonable amount of profit for every business is must to earn so that its survival and growth can be ensured.
Q.7. Explain the concept of business risk and its causes.
ANSWER: Business activities can be divided into two categories: economic and non-economic. The term “business risks” refers to the probability of low profits or even losses because of unknowns or unforeseeable events. Demand for a particular product, for example, may fall due to changes in consumer tastes and preferences or more competition from other providers. Longer sales and profits derive from lower demand. In another scenario, a scarcity of raw materials on the market could drive up the price. The company that uses these raw materials will have to pay extra for them. As a result, production costs may rise, thereby lowering earnings.
Speculative and pure risk are two forms of risk that businesses confront on a regular basis. Speculative risks develop because of changes in market conditions, such as fluctuations in demand and supply, price adjustments, or changes in client fashion and tastes. Market conditions that are favourable are more likely to result in gains, while those that are unfavourable are more likely to result in losses. Pure risks only have two outcomes: loss or no loss. Pure dangers include the possibility of fire, theft, or strike. Its occurrence may cause loss, whereas their absence may explain the absence of loss rather than gain. A multitude of factors contribute to business hazards, which are characterised as follows:
1. Natural causes: Natural disasters such as floods, earthquakes, lightning, torrential rainfall, starvation, and other natural calamities are beyond human control.
2. Human causes: Unexpected events such as employee dishonesty, carelessness or neglect, work halt due to power outages, strikes, riots, management ineptitude, and so on are examples of human causes.
3. Economic causes: These include concerns about demand for goods, competition, price, customer debt collection, changes in technology or production methods, and so on.
Financial issues, such as an increase in borrowing interest rates or the imposition of higher taxes, are also examples of these types of causes since they result in greater unanticipated operating or company costs.
4. Other causes: Unforeseen occurrences, such as political upheavals, technical problems, such as a boiler exploding, variations in exchange rates, and so on, can all result in business hazards.
Q.8. What factors are to be considered while starting a business? Explain.
ANSWER: Business activities can be divided into two categories: economic and non-economic. The following are some things to think about while beginning a business:
1. Line-of-business selection: The nature and sort of business to be undertaken are the first decisions that an entrepreneur must make. He or she will undoubtedly want to pursue that field of industry and commerce that offers the greatest potential for profit. The decision will be impacted by market customer requirements as well as the entrepreneur’s technical competence and enthusiasm in developing a specific product.
2. Size of the firm: Another crucial decision to make at the outset of a business is the size of the company or the scope of its operations.
Some elements favour a broad scale of activity, while others tend to limit it. If the entrepreneur is certain that demand for the planned product will be strong over time and that he or she can secure the necessary financing, the firm will be launched on a large scale. A small firm would be a better alternative if market circumstances are unpredictable, and risks are high.
3. Choice of ownership structure: The business organisation can be a sole proprietorship, a partnership, or a joint stock corporation in terms of ownership. Each kind has its own set of advantages and disadvantages. The appropriate form of ownership will be determined by considerations such as the line of business, capital requirements, owner liability, profit split, legal formalities, company continuity, and interest transferability, among others.
4. Business enterprise location: The location of the company’s headquarters is an important issue to consider while starting a firm. Any blunder in this area might result in expensive production costs, inconvenient access to the proper kind of production inputs, or a failure to provide the best possible service to clients. The availability of raw materials and labour, as well as power and services such as banking, transportation, communication, and warehousing, are all key considerations when choosing a location.
5. Obtaining funding for the proposal: Financing is concerned with supplying the necessary funds for the prospective business’s start-up and continuation. Capital is needed to invest in fixed assets such as land, buildings, machinery, and equipment, as well as current assets such as raw materials, books, debts, finished goods stock, and so on. Day-to-day expenses necessitate the use of capital.
(a) the capital requirement,
(b) the source from which the money will be raised, and
(c) the best strategies to use the capital in the company.
6. Physical facilities: The availability of physical facilities, such as machines and equipment, as well as a building and associated services, is a critical issue to consider when starting a firm. The nature and scale of the business, the availability of cash, and the manufacturing process will all influence this selection.
7. Plant layout: The entrepreneur should design a layout plan outlining the organisation of physical facilities once the need for them has been determined. The physical arrangement of machines and equipment required to make a product is referred to as layout.
8. A capable and dedicated workforce: Every business requires a skilled and dedicated personnel to carry out numerous tasks to convert physical and financial resources into desired outcomes.
Because no single entrepreneur can accomplish everything, he or she must determine the need for qualified and unskilled workers, as well as administrative personnel. Plans should also be created for how staff will be trained and motivated to perform at their highest levels.
9. Tax preparation: Tax planning has been vital in recent years due to the country’s numerous tax rules, which affect practically every facet of modern business operation. The tax liabilities under various tax regulations, as well as its impact on business actions, must be considered in advance by the business’s creator.
10. Starting the business: Following the above-mentioned decisions, the entrepreneur can proceed with the actual launching of the business, which includes mobilizing various resources, completing essential legal formalities, commencing the production process, and launching a sales promotion campaign.
In This Post we are providing Chapter-8 Cell: The Unit Of Life NCERT MCQ for Class 11 Biology which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON CELL: THE UNIT OF LIFE
Question 1 : Which one of the following combination is mismatched?
a) Pili – Reproduction
b) Cell wall – Protective, determines shape, prevents from bursting
c) Flagella, Pili and Fimbriae – Surface structures of bacterial cell
d) Glycocalyx – may be capsule or slime layer
Answer : Pili – Reproduction
Question 2 : The fluidity of membranes in a plant in cold weather may be maintained by
a) increasing the number of phospholipids with unsaturated hydrocarbon tails
b) increasing the proportion of integral proteins
c) increasing concentration of cholesterol in membrane
d) increasing the number of phospholipids with saturated hydrocarbon tail
Answer : increasing the number of phospholipids with unsaturated hydrocarbon tails
Question 3 : The cell as a basic unit of structure of living beings was discovered by
a) Schleiden and Schwann
b) Gregore Mendel
c) Robert Hooke
d) Aristotle
Answer : Schleiden and Schwann
Question 4 : Which pair of structures are usually found in both plant and animal cells?
a) Cell membrane and nucleolus
b) Cell membrane and cell wall
c) Nucleolus and chloroplast
d) Nucleus and cell wall
Answer : Cell membrane and nucleolus
Question 5: Most abundant lipid in the cell membrane is
a) phospholipids
b) cerebrosides
c) glycolipids
d) None of these
Answer : phospholipids
Question 6 : Cell recognition and adhesion are facilitated by components of plasma membrane. These components are generally
a) glycolipids and glycoproteins
b) both lipids and proteins
c) protein molecules alone
d) None of these
Answer : glycolipids and glycoproteins
Question 7 : Smooth endoplasmic reticulum is well developed in the cells which synthesize
a) steorids
b) carbohydrates
c) proteins
d) all of these
Answer : steorids
Question 8 : Quasi-fluid nature of membrane is due to
a) Phospholipid
b) Peripheral protein
c) Integral protein
d) Sugar moiety
Answer : Phospholipid
Question 9 : Gas vacuole is present in
a) All of the above
b) Green photosynthetic bacteria
c) Purple photosynthetic bacteria
d) Blue green algae
Answer : All of the above
Question 10 : Which of the following feature is not associated with centrosome?
a) Lipid bilayer covering
b) Two centriole
c) Two cylindrical structures
d) Pericentriolar material
Answer : Lipid bilayer covering
Question 11 : What is the site of DNA and centriole duplication respectively
a) Nucleus, cytoplasm
b) Nucleus, nucleus
c) Cytoplasm, nucleus
d) Nucleus, nucleolous
Answer : Nucleus, cytoplasm
Question 12 : Cell wall
a) All are correct
b) Contains minerals like calcium carbonate in certain algae
c) Helps in cell to cell interaction
d) Helps in cell to cell interaction
Answer : All are correct
Question 13 : Golgi bodies are involved in
a) All of the above
b) Modification of proteins
c) Synthesis of glycolipids
d) Recycling of broken plasma membrane during endocytosis
Answer : All of the above
Question 14: Aleuroplasts, amyloplasts and elaioplasts
a) Store protein, starch and fat respectively
b) Help in photolysis of water
c) Store reserve food and pigments
d) Divide by multiple fission
Answer : Store protein, starch and fat respectively
Question 15 : Reformation of nucleolus, golgi complex and ER occurs in
