Most Important question for Business Studies Improvement Exam.

 

Business Studies Double Pass Question & Answers. 

1)  Name the stages in the formation of a Company 

         Promotion 

         Incorportation

         Capital Subscription 

         Commencement of Business 

2) Write the difference between Public and Private Company 

 

3) Itinerant Traders 

 Itinerant Traders - These types of traders are having no fixed place of business.

 Types of Itinerant Retailers: 

 1. Hawkers and Peddlers – Hawkers are the traders who carry their products on carts or bicycles, while peddlers carry their products on their back or head or in baskets or shoulder bags. 

 2. Market Traders – These traders sell their articles on fixed days in different market places.

 3. Street Traders / Pavement Traders – These traders generally arrange their articles at busy street corners, near railway stations etc.

 4. Cheap Jacks – They usually, hire small shops for a short period of time. Depending upon the scope of sale they keep shifting from one locality to another

4) Write the difference between Memorandum of Association and Articles of Association 

 

5) What is Sole Proprietorship. Explain its Merits and Demerits. 

 

6) List out any functions of a Promoter ? 

     (i) Identification of business opportunity 

     (ii) Feasibility studies 

       (iii) Name approval 

        (iv) Fixing up Signatories to the Memorandum of Association,

         (v) Appointment of professionals,

         (vi) Preparation of necessary documents.

7. What do you mean by Insurance. Explain any Six principles of Insurance . OR 

     Identify the service that removes the hindrance of risk in business. Explain its features. 

Insurance is a legal agreement where an insurance company promises to pay for a person's financial losses in exchange for a regular fee called a premium. It acts as a safety net that protects individuals and businesses from unexpected financial risks and damages.

  Six Principles of Insurance

• Utmost Good Faith: Both the buyer and the seller must share all material facts honestly without hiding any information.
• Insurable Interest: The person buying the policy must suffer a direct financial loss if the insured property or life is damaged.
• Indemnity: The insurance company only pays the actual amount of the loss to restore the buyer to their original position, ensuring no one makes a profit.
• Proximate Cause: The insurance company will pay for damages only if the loss was caused by the exact reason stated in the policy.
• Subrogation: Once the insurance company pays for the damage, they gain the legal right to claim recovery from any third party who caused the accident.
• Contribution: If a person buys insurance from multiple companies for the same item, all the companies will share and pay the loss proportionately.

8. Problems faces by MSME or Small Business Enterprises in India. 

 Problems of MSME (Small Business)

  . 

1. Finance: Small businesses face severe shortages of funds and struggle to get adequate loans for their operations.
2. Raw Materials: They struggle to source quality materials at affordable prices because their low buying volume reduces their bargaining power.
3. Managerial Skills: Usually run by a single owner, these businesses often lack professional expertise and cannot afford to hire expert managers.
4. Marketing: Weak marketing strategies leave small businesses heavily dependent on middlemen, who often exploit them.
5. Quality: Due to a lack of money and advanced resources, many small units fail to maintain industry quality standards.
6. Capacity Utilization: Many firms operate below their full capacity due to low demand, which hikes production costs and leads to business closure.

9. What is Retained Earnings. Write out its advantages. 

 Companies save a portion of their profits every year rather than distributing them. This money is kept in reserves and reinvested directly back into the business. It is used to fund future modernization, growth, and expansion.

Advantages 

 No dividend is to be paid. 

 No security is needed. 

No  sharing of  ownership and control. 

10.  What is global Enterprises or  MNC( Multi national Company ) . Point out six features of it. 

   

A global enterprise, also known as a Multinational Corporation (MNC), is a massive business organisation that operates, produces, or sells its products and services in multiple countries around the world while keeping its main headquarters in one home nation.

Features of Global Enterprises 

1)  Huge Capital Resources -  They possess massive amounts of wealth and can easily raise large sums of money by issuing shares, bonds, or borrowing from international banks. 

2) Foreign Collaborations: They frequently sign business agreements with local companies in host countries to share technology, use brand names, or manufacture products together.

 3) Advanced Technology: They use superior, world-class machinery and production methods to create high-quality goods that meet international standards

4) Centralised Control: Even though they have branches spread across many different nations, all major policies and decisions are controlled by the head office in the home country.

5) Expanded Market Territory: Their business operations extend far beyond their own national borders, allowing them to sell to a massive international customer base through global networks. 

6) Aggressive Marketing: They spend heavily on advertising, branding, and sales promotion to maintain a powerful global image and sell products quickly. 

11) Explain any four clauses of Memorandum of Association. 

• Name Clause: States the official and approved name of the company, ending with "Limited" for public companies or "Private Limited" for private ones.
• Registered Office Clause: Specifies the state where the company’s main office is located, which determines its legal jurisdiction.
• Objects Clause: Defines the exact purpose of the business and lists all the commercial activities the company is legally allowed to perform.
• Liability Clause: States that the financial liability of the shareholders is limited only to the unpaid amount on the shares they hold.
• Capital Clause: Shows the maximum amount of share capital (authorised capital) the company is legally allowed to raise by selling shares.
• Association or Subscription Clause: Contains the signatures and declarations of the founding members, stating their agreement to form the company and take up a specific number of shares.

12) Explain the  Objectives of Business

1. Earring profits -Main aim of any business is to earn profit. No business can survive for long without adequate profit.

2. Innovation - Innovation means introduction of something new to the market.

3. Market standing (creation of customers) - Creation of customers or increase market share is an important objective of a business. on.

4. Productivity - Productivity means the efficiency of a business firm to produce its output.

5. Physical and financial resources: Business requires physical resources, and financial resources,

6. Social responsibility: Social responsibility refers to the obligation of business

      

13) Write Difference between Traditional and E- Business 

 

Basis	Traditional Business	E - business
Ease of formation	Difficult	Easy
Physical Presence	Required	Not Required
Operating Cost	High	Low
Setting Up Cost	High	Low

14) Indentify  5 Hindrances in the process of exchange of goods and services and activity undertake to remain these hindrances. 

15) What is Commercial banks.  Explain its functions. 

Commercial bank is a for-profit financial institution that takes deposits from people and businesses and lends that money out to others. 

 Functions of Commercial Banks

a) Accepting Deposits: It accepts deposits from the public in the form Fixed Deposits, Savings Bank Deposits, Current Deposits, Recurring Deposits etc.

b) Lending of Funds:It provide loans and advances out of the money received through deposits. These advances can be made in the form of overdrafts, cash credits, discounting trade bills, term loans, consumer credits and other miscellaneous advances.

C) Cheque facility: Collection of cheques is an important service provided by the bank to its customers. There are two types of cheques mainly (a) bearer cheques and (b) crossed cheques.

d). Remittance of funds: Commercial banks provides the facility of fund transfer from one place to another, on account of the interconnectivity of branches.

e) Allied services: It provides allied services such as bill payments, locker facilities, underwriting services. They also perform other services like buying and selling of shares and debentures of the companies.

16) Write three Forms in which a Public Enterprises can be formed 

      Departmental Undertakings 

      Statutory Corporations

      Government Companies 

17)   The table outlines the core hindrances (obstacles) in commerce and the corresponding aids to trade (solutions) that overcome them. 

Hindrance of Place	Transport
Hindrance of Risk	Insurance
Hindrance of Knowledge	Advertising
Hindrance of Time	Warehouse
Hindrance of Finance	Bank

18) These  table shows a two-column table matching business stakeholder groups with their corresponding social responsibilities.

Responsibility to owner	Fair profit / Return on Investment.
Responsibility to employee	Fair Salary / Fair Wages
Responsibility to government	Payment of tax
Responsibility to customer	Quality Products
Responsibility to community	Keep values of society

19)  Difference between Business, Profession , Employment. 

Basis of Comparison	Business	Profession	Employment
Nature of Work	Production, purchase, and sale of goods/services.	Rendering personalized, expert services.	Performing work assigned by the employer.
Qualification	No minimum qualification required.	Specialized knowledge and professional training required.	Qualification and training as prescribed by the employer.
Reward / Return	Profit	Fees.	Wages or salary.
Risk	High risk and uncertain profits.	Low risk.	No financial risk.
Code of Conduct	No specific code of conduct.	Strict professional code of conduct must be followed.	Norms and behavior rules laid down by the employer.
Transfer of Interest	Possible	Not possible.	Not possible.

20) Difference between International Trade and Domestic Trade 

Basis	Domestic Trade	International Trade
Where it happens	Inside one country.	Between different countries.
Money used	Uses the same currency.	Uses foreign currencies.
Rules & Taxes	Only one government's rules apply.	Multiple governments' rules and customs apply.
Risk	Low risk and easier transport.	High risk due to long distances and changing values.
Customers	Similar language and culture.	Different languages, cultures, and habits.

21) These table shows a matching list of key corporate and business terms related to company formation and regulation. 

Articles of Association	Rules for internal management
Memorandum of Association	The most important document of a company.
Prospectus	Invitation to the Public
Promoter	Conceives a business idea and takes steps to form a company.
SEBI	Guidelines for investor protection.

22) The table shows a matching or classification table linking sources of business finance and key characteristic.

Trade Credit	Credit Transactions
Factoring	Commission
Leasing	Contractual Agreement
Commercial Paper	Unsecured