CBSE Sample Papers for Class 12 Business Studies Set 9 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 9 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Business Studies Set 9 with Solutions

Time : 3 hrs Max.
Marks : 80


  • This question paper contains 34 questions.
  • Marks are indicated against each question.
  • Answers should be brief and to the point.
  • Answers to the questions carrying 3 marks may be from 50 to 75 words.
  • Answers to the questions carrying 4 marks may be about 150 words.
  • Answers to the questions carrying 6 marks may be about 200 words.
  • Attempt all parts of the questions together.

Question 1.
“Planning involves application of mind and foresight “. Which importance of planning is highlighted here? [1]
(a) Promotes innovative ideas
(b) Facilitates decision-making
(c) Establishes standard
(d) Provides direction
(a) Promotes innovative ideas

Question 2.
Which of these is a factor affecting capital structure decision? [1]
(a) Risk consideration
(b) Flexibility
(c) Stock market conditions
(d) All of the above
(d) All of the above

Question 3.
Assertion (A) Consumers have the freedom to choose products of their choice. [1]
Reason (R) Right to be assured allows consumers to choose from different products available at competitive prices.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Question 4.
Johnny purchased a property worth ₹ 80 lakh and found it being defective. Suggest him the appropriate Commission to file his complaint. [1]
(a) District commission
(b) State commission
(c) National commission
(d) Both (b) and (c)
(a) District commission

Question 5.
Planning lays down the base for other functions of management. Which feature of planning is mentioned here? [1]
(a) Planning is a primary function of management
(b) Planning is futuristic
(c) Planning is a mental exercise
(d) Planning reduces the risk of uncertainty
(a) Planning is a primary function of management

Question 6.
Which of these is not a component of staffing? [1]
(a) Recruitment
(b) Selection
(c) Communication
(d) Training
(c) Communication

Question 7.
………………… are the techniques used to motivate people in an organisation. [1]
(a) Motivation
(b) Motivators
(c) Both (a) and (b)
(d) Motive
(b) Motivators

Question 8.
Statement I Business finance refers to the money required for carrying out business. Statement II Financing decision involves careful selection of assets, in which funds are to be invested. [1]
(a) Statement I is true and Statement II is false
(b) Statement II is true and Statement I is false
(c) Both the statements are true
(d) Both the statements are false
(a) Investment decision involves careful selection of assets, in which funds are to be invested.

Question 9.
Statement I If the demand of a product is inelastic, the firm is in a position to fix higher prices. [1]
Statement II In case the degree of competition is high, the firm is in a position to set high prices.
(a) Statement I is true and Statement II is false
(b) Statement II is true and Statement I is false
(c) Both the statements are true
(d) Both the statements are false
(a) The price of a product is affected by the nature and degree of competition. The price can be set upto the higher limit, if the extent of competition is low in the market and vice-versa.

Question 10.
Shyam and Suraj are newly appointed in ABC Ltd. Both have been assigned to work under the production department. Shyam is responsible for arranging all tasks and machines for the job and Suraj has to ensure that machine is in proper working condition for completing the job. Specify the position to which they are assigned. [1]
(a) Shyam-Inspector; Suraj- Inspector
(b) Shyam-Inspector; Suraj- Gang Boss
(c) Shyam- Gang Boss; Suraj- Repair Boss
(d) Shyam-Repair Boss; Suraj- Inspector
(c) Shyam-Gang Boss; Suraj-Repair Boss

Question 11.
Sushil bought a box of butterscotch icecream of a reputed brand from a local shopkeeper. On opening the box, he found a piece of stone in the box. He reported the matter to the shopkeeper, who forwarded his complaint to the concerned company. Within two days, representative of the company visited Sushil’s residence with an apology and as a replacement offered him a new icecream pack with two other flavours of icecream as compensation for the inconvenience caused to him. State the consumer right exercised by Sushil. [1]
(a) Right to be informed
(b) Right to seek redressal
(c) Right to safety
(d) Right to be assured
(b) Right to seek redressal

Question 12.
Match the following on the basis of ‘staffing’. [1]

Column IColumn II
A. Step staffing(i) Medical examination
B. Steps in section(ii) Placement and orientation
C. Importance of staffing(iii) Ensures survival of enterprises

A — B — C
(a) (i) — (ii) — (iii)
(b) (ii) — (iii) — (i)
(c) (iii) — (ii) –(i)
(d) (ii) — (i) –(iii)
(d) (ii) (i) (iii)

Question 13.
Two movies were planned to be released on the same date. However, just day before the release date, the team of one of the movies, decided to postpone it’s release date due to opposition of a group of people as some unethical content related to their religion was shown in that movie. The other movie released on it’s scheduled time and made huge profit, while other movie suffered loss. Identify the dimension of business environment highlighted in the above case. [1]
(a) Social environment
(b) Technological environment
(c) Legal environment
(d) Political environment
(a) Social environment

Question 14.
Ganga’s grandfather was unwell. He called Ganga and gave her a box containing cash and certain papers which were crumbled. He saw them carefully and found that these were share certificates. Ganga now wants to know the process through which he can trade in these shares. He also learnt about the trading procedures and got to know about SEBI as well. Which process would have been done by Ganga to facilitate trading? [1]
(a) Demutualisation
(b) Remutualisation
(c) Dematerialisation
(d) Rematerialisation
(c) Dematerialisation

Question 15.
Abhyas Limited has introduced inexpensive handwash packs in an effort to encourage the habit of health and cleanliness among the lower segments of society. Determine which marketing philosophy the organisation is using? [1]
(a) Product concept
(b) Production concept
(c) Marketing concept
(d) Societal marketing concept
(b) Production concept

Question 16.
Which of the following is not an importance of delegation of authority? [1]
(a) Effective management
(b) Relief to top managers
(c) Facilitation of growth
(d) Basis of management hierarchy
(b) In case of delegation of authority, ultimate accountability still lies with superiors, therefore they are not completely releived of their responsibility

Question 17.
Some friends joined together and set-up a multi-product company. Their company makes four different products. Three products of the company have been successfully launched in market. But the company has not succeeded to launch the fourth product in market. What sort of organisational structure, in your view, might have been adopted by the company? [1]
(a) Divisional organisation structure
(b) Functional organisation structure
(c) Both (a) and (b)
(d) None of these
(a) Divisional organisation structure

Question 18.
Which of the following statements is incorrect? [1]
(a) The objective of financial planning is to ensure that enough funds are available at right time.
(b) Financial planning is a substitute of financial management.
(c) Financial planning is the process of estimating the fund requirement of a business and specifying the source of funds.
(d) None of the above
(b) Financial planning is a substitute of financial management.

Question 19.
Which of the following statements is incorrect? [1]
(a) Maintaining adequate liquidity is a secondary objective of financial planning.
(b) Companies with lower ICR can borrow more funds.
(c) Stock market reaction is an important factor while making dividend decisions.
(d) None of the above
(b) Companies with lower ICR can borrow more funds.

Question 20.
Identify the symbol given in picture below and choose the correct option it denotes. [1]

(a) Brand mark
(b) Brand name
(c) Generic name
(d) Trade mark
(d) Trade mark

Question 21.
How do principles of management provide useful insights into reality? Explain. [3]
Write a short note on importance of management.
Principles of management are the statements of fundamental truth that explain the relationship between variable factors. These principles serve as guidelines for decision-making of managers. Management principles are important as they provide useful insights into reality.

The principles of management help the managers to increase their efficiency by increasing their knowledge and ability to understand the situations. They help the managers to learn from the past mistakes and conserve time by taking wise decisions quickly.

e.g. a manager can give his authority of taking day-to-day decisions to hisitier subordinate and deal only with exceptional situations, which require his)her expertise by following the principle of delegation of authority.


Managernent helps in achieving group goals by giving proper direction to the efforts of all individuals. It helps in optimum utilisation of resources and reducing costs through proper planning, organising, directing and controlling Through motivation and leadership, it helps an individual to achieve personal goals and helps in the development of society by providing employment opportunities and using ecofriendly techniques of production.

Question 22.
Riya is a dedicated employee at a software company. Dispite meeting targets and going above and beyond her job responsibilities, she feels undervalued and unappreciated by her superiors. She looks for recognition and acknowledgment of her hard work, although she is a permanent employee in the organisation. [3]
(i) Identify the needs which she was able to fulfill through that job by quoting the line. Also, identify the need which remained unfulfilled by quoting the lines.
(ii) Name any two other needs as well.

  • Physiological needs
  • Safety/Security needs “Although she is a permanent employee in the organisation”.

(ii) Social needs “She locks for recognition and acknowedgement other hard work”.
Other needs are:

  • Esteem/Ego needs
  • Self-actualisation needs

Question 23.
State any three examples of changes in business environment that affect business enterprises. [3]
State any three features of coordination.
Three examples of changes in business environment that affect business enterprises are:

  • Increase in taxes by government can make products expensive, causing reduced demand.
  • Technological improvements may render existing products obsolete.
  • Increased competition may reduce profit margins.


Three features of coordination are

  • Coordination is not a distinct function but it is the essence of management.
  • Coordination is an ongoing process, it is not a one-time function.
  • It is created deliberately by the efforts of a manager, it does not occur spontaneously.

Question 24.
Mansi, a shoe manufacturer for school students, decided to maximise her profit by producing and distributing at large scale and thereby, reducing the average cost of production. [3]
(i) Identify the marketing management philosophy adopted by Mansi.
(ii) Explain this philosophy on the basis of
(a) Main focus
(b) Means and ends
(i) Mansi adopted the production concept. The focus of business activities was on production of goods as the demand for goods started picking up as the supply was low. Thus, it was believed that profit could be maximised by producing at large scale, thereby, reducing the average cost of production.


  • The main locus of production concept is on quantity of product.
  • Availability and affordability of product is the means and profit through volume of production is the end.

Question 25.
Identify the functions of management in the following cases [4]
(i) Conducting interviews for the post of general manager.
(ii) Increasing supervision on the workers in a factory.
(iii) Grouping of activities to be carried out into departments and creating management hierarchy.
(iv) Finding out deficiencies in implementation of plans and taking corrective action.
(i) In this case, staffing is followed Staffing is the process of filling all positions in an organisation with adequate and qualified personnel.
(ii) In this case, directing is followed Directing consists of guiding, communicating, motivating and leading people towards organisational goals.
(iii) In this case, organising is followed Organising is the process of dividing work into sections and departments to improve efficiency.
(iv) In this case, controlling is followed Controlling is a goal-oriented function to ensure activities and resources are used efficiently.

Question 26.
Mr. Axe, one of the directors of XYZ Ltd, knew that bonus shares were to be announced in the next meeting and he expected the price to rise. He bought 10,000 shares from the stock market. By the end of few months, price rose by ₹9. He sold his shares and made huge profit. [4]
(i) Name the act of Mr. Axe.
(ii) Is it permitted?
(i) Mr. Axe is indulged in insider trading Insider Trading It means buying and selling of securities by those persons (Directors, promoters, etc), who have some secret information about the company and who wish to take advantage of such secret information. This hurts the interests of the general investors. It was very essential to check this tendency. Many steps have been taken to check insider trading through the medium of the SEBI.
(ii) Insider trading is illegal and is not permitted.

Question 27.
Explain any four non-financial incentives which are required to motivate employees. [4]
In order to satisfy psychological, emotional and social needs, following non-financial incentives are required
(i) Promotion If an individual gets promotion in the organisation, it satisfies him psychologically as he gets a feeling that his hardwork is recognised.

(ii) Job Security Every individual needs stability in terms of future income, job, etc. If their job is secure, they do not feel worried and work with greater zeal.

(iii) Employee Participation It means involving employees in decision-making process. This kind of programmes motivate employees and they feel that their suggestions are of worth.

(iv) Employee Recognition Programmes It means acknowledgment for participation. If an employee has performed well then a certificate or momentum should be presented to him. This will motivate him to perform better in future also.

Question 28.
Explain the following features of planning. [4]
(i) Planning is pervasive
(ii) Planning is a mental exercise
Differentiate between delegation and decentralisation.

PurposeTo lessen the burden of the manager.To increase’ the role of the subordinates in the organisation by giving them more autonomy.
ScopeIt has narrow scope as it is limited to superior and his immediate subordinate.It has wider scope as it implies extension of delegation to the lowest level of management.
StatusIt is a process followed to share tasks.It is the result of the policy decision of top management.
NatureIt is a compulsory act because no individual can perform all the tasks on his own.It is an optional policy decision. It is done at the discretion of the top management only.

Question 29.
A furniture manufacturer gets an order of manufacturing 100 chairs. He has six workers, who will do the work.
Each and every worker is specialised in completing one task only. One is good in cutting, second is good in shaping, third is good in finishing and so on. [4]
(i) If he wants to complete the target on time, which principle will help him?
(ii) What benefit company will have, by opting for this principle?
(i) Division of work is suitable for the above mentioned case, as this principle states that the whole work is divided into small tasks and should be assigned to the persons as per their capabilities and experience. This results in timely completion of work and leads to specialisation.

(ii) When workers are performing the task as per their specialisation, this will result in increased efficiency, reduced wastages, specialisation and timely completion of work.

Question 30.
Staffing process begins with estimating the manpower requirements, followed by recruitment, selection, placement and orientation. Explain the other steps involved in staffing process. [4]
“Control implies taking action.” Explain.
The other steps involved in the staffing process are as follows:
Step 5 Training and Development These involve improving job knowledge, skills and attitudes of employees on a regular basis so that they may perform their jobs efficiently.
Step 6 Performance Appraisal It means evaluating an employee’s current or past performance against the pre-determined standards.
Step 7 Promotion and Career Planning This step is required to address career related issues and promotional avenues for the employees. It is beneficial for both an employee and the organisation.
Step 8 Compensation It means all forms of pay or rewards given to an employee. It may be in the form of direct financial payments like wages, salaries, incentives, commissions, etc. or indirect payments like insurance, vacations, etc.


The purpose of control is not only to detect errors and defects in performance of work, but also to adopt remedial measures. Without taking corrective actions, control has no meaning. The base of controlling process is taking actions in order to ensure that the actual activities conform to the planned activities.
e.g. If actual output falls short of standard output, we take several actions like checking the raw material, checking the production activities, corrective actions may be taken, analysis of standards, reassignment of duties, bringing change in the style of production, etc.

Question 31.
Read the statements given in point (i) and (ii), answer the questions that follows [3+3=6]
(i) Mr. James’ lack of confidence in the competency of his employees caused discontentment in the company, leading to employees not being happy.
(a) Identify the communication barrier because of which employees are not happy.
(b) State two more barriers of same type, identified in part (a).
(ii) Tanuja is working in a multinational company. As an incentive, the company offered her to buy the shares of the company at a price less than the market price.
(a) Name and give the meaning of incentive offered to Tanuja.
(b) State any two more incentives of the same type.
(i) (a) Personal Barrier In the form of lack of confidence of superior on his subordinates’, as it indicates that Mr. James did not have confidence on the competency of his employees.

(b) Some personal barriers are given below

  • Fear of Challenge to Authority A superior is likely to withhold or suppress a message, if he perceives that it will adversely affect his authority.
  • Lack of Proper Incentive Employees may not take initiative to communicate in the absence of proper incentives or motivation.

(ii) (a) The incentive offered to Tanuja is financial incentive of co-partnership or stock option. Financial incentives are in direct monetary form and serves to motivate people for better performance.

(b) The other two financial incentives are:

  • Profit Sharing It means to provide employees, a share in the profits of the enterprise. This additional wages/salaries motivates them to improve performance and contribute to increase profits in future.
  • Retirement Benefits Several retirement benefits such as provident fund, pension, gratuity are provided to the employees as a financial security after retirement.

Question 32.
The e-retailing form of market was something unheard to the Indian customer in 2007. Flipkart which has created a niche for itself in terms of market share, goodwill and popularity in the online market to threat because of its smooth operations. It started with an initial capital of ₹ 4 lakh, it now aims for annual turnover of around ₹ 4,500 crore. Identify any four marketing functions performed by flipkart to reach this position used by the company in order to maximise the returns to the equity shareholders? The tax rate is 50%. Show the working. [6]
Explain the role of consumer organisations and NGOs in protecting and promoting consumer interests.
Marketing functions performed by flipkart are:

(i) Gathering and Analysing Market Information In order to identify the needs and wants of customers, the marketer gathers market information. He analyses the strengths, weaknesses, opportunities and threats of the enterprise. Such analysis helps the marketer to take decisions regarding diversification, improvement in product, expanding markets, etc. For this purpose, computers and online sites are increasingly used.

(ii) Marketing Planning After market research, the marketer has to develop an appropriate marketing plan to achieve the marketing objective of the organisation. It involves taking decisions as to what activities will have to be undertaken to achieve a marketing objective.

(iii) Transportation It involves physical movement of goods from one place to another. While production of a good takes place at a place, its consumers are spread over a vast area. Therefore, it is necessary to make available these goods to places where they are needed. Thus, transportation helps to create ‘place-utility’. Various factors such as nature of product, cost, location of target markets, etc are considered while taking decision regarding the mode of transportation to be used.

(iv) Storage and Warehousing Usually, there is a time gap between production or procurement of goods and their sales. Therefore, it is necessary to make arrangement for storage of goods, in order to maintain a regular supply of goods in the market. It also helps to avoid delays in delivery, meeting contingencies in demand and stabilising the prices of products in the market. Thus, it helps to create ‘time-utility’. It is performed by intermediaries such as wholesalers, retailers, manufacturers, etc for the marketer.


Consumer organisations and NGOs are established or formed to protect and promote the consumer interest. They perform following functions

  • Educating the general public about consumer rights by organising training programmes, seminars and workshops.
  • Imparting knowledge about consumer problems, legal reporting, reliefs available and other matters of interest by publishing periodicals and publications.
  • Carrying out comparative testing of consumer products in accredited laboratories to test relative qualities of competing brands and publishing the test results for the benefit of consumers.
  • Encouraging consumers to strongly protest and take action against any unscrupulous, exploitative and unfair trade practices of the seller.
  • Providing legal assistance to consumers by providing aid, advice, etc. to seek legal remedy.
  • Filing complaints in appropriate consumer courts on behalf of the consumers.
  • Taking an initiative in filing cases in consumer courts in the interest of general public.

Question 33.
Vedansh Limited has a share capital of  ₹ 10,00,000 divided into shares of ₹ 100 each. For expansion purpose, the company requires additional funds of ₹ 5,00,000.
The management is considering the following alternatives for raising funds
Alternative 1 Issue of 5,000 equity shares of ₹ 100 each.
Alternative 2 Issue of 10% debentures of ₹ 5,00,000.
The company’s present Earnings Before Interest and Tax ( EBIT) is ₹ 4,00,000 p.a. Assuming that the rate of return of investment remains the same after expansion, which alternative should be [6]
Rate of Return of Investment \(=\frac{4,00,000}{10,00,000}\) x 100=40
EBIT after Expansion = 40% x 15,00,000= 600000
Calculation of EPS

Question 34.
(i) Explain any two steps in the process of planning from the following
(a) Setting objectives
(b) Developing premises
(c) Identifying alternative courses of action
(ii) Differentiate between ‘method’ and ‘budget’ as types of plan on any three basis. [3+3=6]


(i) Explain any two points of importance of ‘organising’ from the following
(a) Clarity in working relationships
(b) Optimum utilisation of resources
(c) Effective administration

(ii) Distinguish between functional and divisional structure on any three basis.
(i) Steps in the process of planning are (any two)
(a) Setting Objectives Objectives specify what an organisation wants to achieve. Therefore, the first step In planning is to set-up clear objectives for the organisation as well as all the departments of the organisation

(b) Developing Premises Premises are the base upon which pians are drawn. They may be foecasts, existing plans or past information. Therefore, the manager is required to make certain assumptions about the future, called premises,

(c) Identifying Alternative Courses of Action After the setting up of objectives, the managers make a list of alternatives through which the organisation can achieve its objectives as there can be many ways to achieve the objective and managers must know all those ways to reach these objectives. (1.5 x 2 = 3)


MeaningIt provides the prescribed ways or manner, in which a task is performed.It is a statement of expected results, expressed in numerical terms.
PurposeThey provide standardised ways of doing routine jobs.They provide a basis for control of activities.
KindThey come under standing plans.They come under single use plans.


(i) Importance of organising is as follows (any two)
(a) Clarity of Working Relationships Authority and responsibility are clearly defined in such a way that every person knows as to who is reporting to whom and for what, etc.

(b) Optimum Utilisation of Resources Proper allocation of resources helps in avoiding overlapping of work and ensures optimum use of all human, physical and financial resources.

(c) Effective Administration By clearly describing the jobs related duties, duplication of work and confusion can be avoided in the organisation. Thus, it ensures effective administration.


BasisFunctional StructureDivisional Structure
CoordinationCoordination is difficult for a multi-product company.Coordination is easy as all functions related to a particular product are integrated in one department.
Managerial DevelopmentManagerial development is difficult as each functional manager has to report to the top management.Managerial development is easier because a divisional manager has the autonomy as well as the chance to perform multiple functions.
CostIt is economical as the functions are not duplicated.It is costly as there is duplication of resources in various departments.

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