RKG01

HALF YEARLY EXAMINATION- 2019-20

CLASS - XII
SUBJECT-BUSINESS STUDIES
Time: 180 min. Max.Marks: 80
SET-1
MARKING SCHEME
Q.No. Answers Marks
1 Many Persons 1
2 Lower level management. 1
3 Opportunities' in the given statement refer to the positive changes in external 1
environment, which will help a firm to improve its performance.
4 D 1
5 Strategy 1
6 Organising 1
7 Economic 1
8 Capital required for day to day working of the organisation. 1
9 Performance appraisal 1
10 A-II,B-III,C-I 1
11 (a) True (b) false 1
12 d 1
13 Management by exception 1
14 d 1
15 (A)Make the debt relatively cheaper 1
16 organisational 1
17 (B) Call money are liquid 1
18 Knowing exactly what you want your men to do and seeing that they do it in the best 1
and the cheapest way.
19 c 1
20 Formal organization 1
21 1) Harmony, not discord 1.5*2=3
2) Cooperation ,not individualism
22 The overall objective of SEBI is to protect the interest of investors, promote the 1*3=3
development and regulate the securities in market. This may be elaborated as follows:
(i) To regulate stock exchanges and the securities industry to promote their
orderly functioning.
 (ii) To protect the rights and interests of investors, particularly individual
investors to guide and educate tem.
(iii) To prevent trading malpractices and achieve a balance between self –
regulation by the securities and its statutory regulation.
To regulate and develop a code of conduct and fair practice by intermediaries like
brokers, merchant bankers, etc. with a view to making them competitive and
professional.
23 The organization can overcome the problem faced by it by adopting informal 1+1+1=3
organization. The two benefits of informal organization are as follows:
I. It helps to fulfill the social needs of the members by giving them a sense of
belongingness in the organization and enhances their job satisfaction.
II. It contributes towards the fulfillment of organizational objectives by compensating
for inadequacies in the formal organization.
24 Meaning: it refers to filling and keeping filled posts with people. 1+2=3
Importance : Any two
(i) Helpful is Discovering and Obtaining competent Personnel Under staffing
latest techniques are used for recruiting and selecting the employees. As a
result, it becomes possible to search for and to select able employees for
different posts under the recruitment process, search for employees is
conducted and through selection they are selected.
(ii) Helpful in Better Performance Through the medium of staffing, right people
are posted right places. Thus, suitable people are Helpful in Better
Performance Through the medium of staffing, right people are posted right
places. Thus, suitable people are selected keeping in mind the importance of
organizational posts as a result it increases the efficiency and effectiveness
of employees.
(iii) Helpful in continuous Survival and Growth of the Enterprise Every enterprise
aspires for its continuous survival and growth. This is possible only when it
has human asset of supreme quality. This aspiration of an enterprise can be
fulfilled through staffing.
(iv) Helpful in Optimum Utilization of the Human Resource Under staffing all
the activities related to human resource are performed systematically. By
doing this the situation of over manning never arises. As a result, optimum
utilization of employees takes place and subsequently, labour cost is reduced.
Or
Steps in controlling process:
 (i) Comparison of actual performance with standards
(ii) Analyzing deviation
(iii) Taking corrective action
25 2+1=3
PARTICULARS LAST YEAR CURRENT YEAR
Share capital 40,00,000 40,00,000
Debt @ 10% --------- 2,00,000
EBIT 1,00,000
Interest on debentures 20,000
Earnings after int and 80,000
before tax
Tax@ 30% 24,000
EAIT 56,000
EPS 0.50 1.4
Gain in current year.
Trading on Equity.
26 Positive impacts of government policy changes are: 2+2=4
(i) Investment in Research and Development in the present scenario, business
units are investing more in research and development in order to associate
with latest technology. It has enabled the faster growth of industries.
(ii) Creation of products as per the Demand of customers With the entry of
MNC's in India, there has been increase in the demand of inuts. Now no
shortage of goods persists in the market. The customers are enjoying a
surplus and good quality products of different brands. This helps in making
the buyer sovereign to the market.
Negative impacts of government policy changes are:
(i) Threats from MNC with the entry of MNC in India. It has posed serious threat
to domestic business and industries, due to the comparative advantage they
have in terms of financial and technological resources.
(ii) Higher Labour Turnover Ratio with the entry of MNG's in India, there has
been tremendous increase in the labour turnover ratio. Hence, India industries
are finding it difficult to retain its best brains with them.
27 a) Staffing., Meaning 2+2=4
b) Recruitment-Internal Source of Recruitment
28 Planning does not guarantee success. The success of an enterprise is possible only are 4
properly drawn up and implemented. Any plan needs to be translated into action or it
becomes meaningless. Managers have a tendency to rely on previously tried and tested
successful plans. It is not always true that just because a plan has worked before it will
 work again. This kind of false sense f security may actually lead to failure instead of
success.
Or
The given para describes the limitation of planning, which says that planning reduces
creativity. Planning is usually done by the top management and the rest of the
members just implement these plans. Due to this, the creativity inherent in managers
gets lost.
29 Any five points of importance of Business Environment. 1*5=5
, OR
(a) Importance: Business environment helps in tapping useful resources.
(b) Dimensions:
(i) Social: “The company dumps toxic wastes near the banks of the river.”
2+3=5
(ii) Legal: “Court has ordered to seal the manufacturing unit of the
company.”
30 Working capital is that part of total capital which is required to meet day-to-day 1+4=5
expenses, to pay raw materials to pay wages and other expenses of routine nature in the
production process or we can say it refers to excess of current assets over current
liabilities.
Working Capital = Current Assets – Current liabilities
Factors affecting working capital requirement are:
(i) Nature of Business The basic nature of a business influences the amount of
working capital required. A trading organization usually needs a lower
amount of working capital compared to a manufacturing organization. This
is because in trading there is not processing required. In a manufacturing
business, however, raw materials need to be converted into finished goods,
which increases the expenditure on raw material, labour and other expenses.
(ii) Scale of Operation The firms which are operating on a higher scale of
operations, the quantum of inventory, debtors required is generally high.
Such organizations, therefore, require large amount of working capital as
compared to the organizations which operate on a lower scale.
(iii) Production Cycle Production cycle is the time span between the receipts of
raw materials and their conversion into finished goods. Some businesses
have a longer production cycle while some have a shorter one working capital
requirement is higher in firms with shorter processing cycle.
(iv) Credit allowed Different firms allows different credit terms to their
customers. A liberal credit policy results in higher amount of debtors,
increasing the requirements of working capital.
 (v) Credit Availed just as a firm allows credit to its customers it also may get
credit from its suppliers. The more credit a firm avails on its purchases, the
working capital requirement is reduced.
Or
(i) It is dividend decision.
(ii) Factors affecting dividend decisions are:
(a) Earning the dividend is paid out of the present and reserved profits. Therefore,
greater amount of total profit will ensure greater dividend.
(b) Stability of Earning A company having stable earning is in a position to declare
more dividends and vice versa.
(c) Stability of Dividends Every company adopts the policy of maintaining the 1+4=5
stability of dividend per share. (Here the stability of dividend means that the
divident will, in no case, be allowed to fall. It is always good if the dividend
remain stable or increases.) From this point of view, little change in profit should
not be allowed any increase of decrease in the dividend.
(d) Growth Opportunities if the company has more opportunities for growth, then it
will require more finance. In such a situation, a major part of the income should
be retained and a small part of it should be paid as dividend.
31 a) Money Market : Commercial Paper.(1) 5
b) Two other instruments.(2)
c) Investment decision and Financing Decision.(2).
32 ( 1) 4 Principles are : 1.5*4=6
A) Division of work
B) Unity of direction
C) unity of command
D) Discipline
33 (a) Divisional Structure.(1) 6
(b) Diversified products.(1)
(c) Any four limitations (4)
Or
Decentralization is much more than mere transfer of authority to the lower levels of
management hierarchy. Its importance can be understood from the following points.
(i) Develops Initiative among Subordinates when lower managerial levels are give
freedom to take their own decisions they learn to depend on their judgment. A
decentralized policy helps to identify those executives, who have the necessary
potential to become dynamic leaders.
(ii) Develops Managerial /Talent for the Future Formal training plays an important
part in equipping subordinates with skills that help them rise in the organization,
but equally important is the experience gained by handing assignments
independently. It gives them a chance to prove their abilities and creates a
reservoir of qualified manpower.
(iii) Quick Decision Making in a Decentralized organization, however, since
decisions are taken at levels, which are nearest to the points of action and there
is no requirement for approval from many level the process in much faster.
(iv) Relief to top Management Decentralization leaves the top management with
more time, which they can devote to important policy decisions rather than
occupying their time with both policy as well as operational decisions.
(v) Facilitates Growth Decentralization awards greater autonomy to the lower levels
of management as well as divisional or departmental heads. This allows them to
function in a manner best suited to their department and develops a sense of 1*6=6
competition amongst the departments. Consequently, the productivity levels
increase and the organization is able to generate more returns, which can be used
for expansion purposes.
(vi) Better control Decentralization makes it possible to evaluate performance at each
level and the departments can be individually held accountable for their results.
The extent of achievement of organizational objectives as well as the
contribution of each department in meeting, the overall objectives can be
ascertained.